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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
dated as of the 21st day of June, 1999
by and between
PETROCHEMNET, INC.,
PETROCHEMNET HOLDINGS, INC.,
PCN MERGER SUB, INC.
and
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and
▇▇▇▇ ▇. ▇▇▇▇
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made
as of the 21st day of June, 1999, by and among PETROCHEMNET, INC., a Delaware
corporation ("PetroChemNet"), PETROCHEMNET HOLDINGS, INC., a Delaware
corporation ("Holdings"), PCN MERGER SUB, INC., a Delaware corporation and
wholly-owned subsidiary of Holdings ("MergerCo"), the stockholders of Holdings,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "Stockholders"),
and ▇▇▇▇ ▇. ▇▇▇▇ ("▇▇▇▇").
W I T N E S S E T H:
WHEREAS, PetroChemNet wishes to acquire all of the outstanding
capital stock of CheMatch, Inc. ("CheMatch"), all of the outstanding capital
stock of which is owned by ▇▇▇▇ and Holdings; and
WHEREAS, for various business reasons, the parties wish to enter into
certain transactions that are described herein in order to facilitate such
acquisition; and
WHEREAS, in connection with these various transactions, the Board of
Directors of each of PetroChemNet, Holdings, and MergerCo deem it advisable and
in the best interests of that company and that company's stockholders that
MergerCo merge with and into PetroChemNet pursuant to this Agreement, the Plan
of Merger set forth as Exhibit A hereto (the "Plan of Merger") and the
applicable provisions of the laws of the State of Delaware, with PetroChemNet as
the surviving corporation, such transaction sometimes being herein called the
"Merger," and that, following the Merger, certain shares of capital stock of
Holdings held by the Stockholders be repurchased by Holdings in exchange for
cash, substantially all of the assets and liabilities of Holdings, subject to
certain exceptions as provided herein, and certain other consideration, such
assets and liabilities to be distributed to a newly-formed company owned or
controlled by the Stockholders ("New ▇▇▇▇▇▇"), together with certain cash
payments to be made by Holdings to those
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Stockholders (the transactions involving the repurchase of shares of capital
stock of Holdings from the Stockholders by the Company being referred to herein
as the "Stock Repurchase Transactions"); and
WHEREAS, the Boards of Directors of each of PetroChemNet and MergerCo
(the "Constituent Corporations") have approved and adopted this Agreement as a
plan of reorganization (a "tax-free reorganization") within the provisions of
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code of 1986, as
amended (the "Code").
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. PLAN OF REORGANIZATION
1.1 THE MERGER.
(a) THE MERGER. At the Effective Time (as defined in
Section 2 below), MergerCo shall be merged with and into PetroChemNet pursuant
to this Agreement and the Plan of Merger and the separate corporate existence of
MergerCo shall cease. PetroChemNet, as it exists from and after the Effective
Time, is sometimes hereinafter referred to as the "Surviving Corporation," and
PetroChemNet and MergerCo, as they exist prior to the Effective Time, are
sometimes referred to as the "Constituent Corporations."
(b) EFFECTS OF THE MERGER. The Merger shall have the
effects provided therefor by the provisions of the Delaware General Corporation
Law ("DGCL"). Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time (i) all the rights, privileges, powers and
franchises, of a public as well as of a private nature, and all property, real,
personal and
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mixed, and all debts due on whatever account, including without limitation
subscriptions to shares, and all other choses in action, and all and every other
interest of or belonging to or due to the Constituent Corporations shall be
taken and deemed to be transferred to, and vested in, the Surviving Corporation
without further act or deed; (ii) all property, rights and privileges, powers
and franchises and all and every other interest of the Constituent Corporations
shall be thereafter as effectively the property of the Surviving Corporation as
they were of the Constituent Corporations; and (iii) all debts, liabilities,
duties and obligations of the Constituent Corporations shall become the debts,
liabilities and duties of the Surviving Corporation and the Surviving
Corporation shall thenceforth be responsible and liable for all the debts,
liabilities, duties and obligations of the Constituent Corporations and neither
the rights of creditors nor any liens upon the property of the Constituent
Corporations shall be impaired by the Merger, and may be enforced against the
Surviving Corporation.
(c) ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS AND
OFFICERS. The Certificate of Incorporation of the Surviving Corporation from and
after the Effective Time shall be the Certificate of Incorporation of
PetroChemNet as in effect immediately prior to the Effective Time until
thereafter amended in accordance with the provisions therein and as provided by
the DGCL. The Bylaws of the Surviving Corporation from and after the Effective
shall be the Bylaws of MergerCo as in effect immediately prior to the Effective
Time, continuing until thereafter amended in accordance with their terms and the
Articles of Incorporation of the Surviving Corporation and as provided by the
DGCL. The initial directors of the Surviving Corporation shall be the directors
of Holdings in office immediately prior to the Effective Time, in each case
until their successors are duly elected and qualified, and the initial officers
of the Surviving Corporation shall be the officers of PetroChemNet in office
immediately prior to the Effective Time, in each case until their successors are
duly elected and qualified.
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1.2 CONVERSION OF SECURITIES IN THE MERGER. At the Effective Time, by
virtue of the Merger and without any action on the part of PetroChemNet,
Holdings, or any Stockholder, the shares of capital stock of each of the
Constituent Corporations shall be converted as follows:
(a) Capital Stock of PetroChemNet. Each issued and
outstanding share of common stock, no par value per share, of PetroChemNet
("PetroChemNet Common Stock") shall be converted into and exchanged for three
hundred (300) shares of validly issued, fully paid and non-assessable common
stock, $0.01 par value per share, of Holdings (the "Holdings Common Stock").
Each outstanding option, right, warrant or other similar security of
PetroChemNet shall be converted into one option, right, warrant or similar
security of Holdings with the same rights, preferences and other characteristics
of such PetroChemNet option, right, warrant or similar security, except that
each such option, right, warrant or similar security shall be exercisable or
convertible into such number of shares of Holdings Common Stock as equals the
number of shares of PetroChemNet Common Stock into which it was exercisable or
convertible immediately prior to the Effective Time multiplied by three hundred
(300). Each stock certificate or other instrument of PetroChemNet evidencing
ownership of outstanding shares of capital stock or other securities of
PetroChemNet shall, from and after the Effective Time, evidence ownership of an
appropriate number of shares of the type of capital stock or other securities or
rights of Holdings as is contemplated in this subsection (a). The shares of
Holdings Common Stock and/or other securities, as appropriate, to be received by
the holder of shares of capital stock and other securities of PetroChemNet
pursuant to the Merger are referred to as the "Merger Consideration." All such
shares of capital stock or other securities of PetroChemNet that were
outstanding immediately prior to the Merger, when so converted, shall no longer
be outstanding and shall automatically be canceled and retired and shall cease
to exist, and
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each holder of a certificate or other instrument representing any such shares or
other securities shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration to be issued or paid in consideration
therefor upon the surrender of such certificates or instruments in accordance
with Section 1.3 of this Agreement.
(b) Conversion of Shares of Capital Stock of MergerCo.
Each issued and outstanding share of common stock, $0.01 par value per share, of
MergerCo shall be converted into and exchanged for one share of validly issued,
fully paid and non-assessable common stock, no par value per share, of the
Surviving Corporation. All such shares of capital stock of MergerCo that were
outstanding immediately prior to the Merger, when so converted, shall no longer
be outstanding and shall automatically be canceled and retired and shall cease
to exist, and Holdings, as the sole holder of certificates representing any such
shares shall cease to have any rights with respect thereto, except the right to
receive the number and class of shares of capital stock of the Surviving
Corporation to be issued or paid in consideration therefor upon the surrender of
such certificate in accordance with Section 1.3 of this Agreement.
(c) Dissenter's Rights. Notwithstanding anything in this
Agreement to the contrary, shares of PetroChemNet Common Stock that are issued
and outstanding immediately prior to the Effective Time and which are held by
any stockholder of PetroChemNet who has the right (to the extent such right is
available by law) to demand and receive payment of the fair value of his, her or
its shares of PetroChemNet Common Stock (the "Dissenting Shares") pursuant to
the provisions of Section 262 of the DGCL (the "Appraisal Statute"), shall not
be converted into or be exchangeable for the right to receive the Merger
Consideration, but shall be governed by the Appraisal Statute unless and until
such holder shall have failed to perfect or shall have effectively withdrawn or
lost such right under the Appraisal Statute (holders of shares of PetroChemNet
Common Stock who
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demand appraisal of such shares under the Appraisal Statute and who have not (i)
failed to perfect, (ii) withdrawn or (iii) lost such appraisal rights shall be
referred to as "Dissenting Stockholders"). If any such holder shall have so
failed to perfect or shall have effectively withdrawn or lost such right, such
holder's shares of PetroChemNet Common Stock shall thereupon be deemed at the
Effective Time to have been converted into and to have become exchangeable for
the right to receive the applicable Merger Consideration without any interest
thereon. If any Dissenting Stockholders shall become entitled to receive payment
for their Dissenting Shares pursuant to the Appraisal Statute, such payment
shall be made by the Surviving Corporation. PetroChemNet shall give the other
parties prompt notice of any written demands for appraisal, withdrawals of
demands for appraisal and any other documents delivered and/or received by it
pursuant to the Appraisal Statute, which parties shall jointly agree on all
negotiations and proceedings with respect to demands for appraisal under the
Appraisal Statute. The parties acknowledge that, pursuant to the Appraisal
Statute, PetroChemNet shall be required to deliver to each of its stockholders
who do not waive their rights under the Appraisal Statute notice of the
availability of such rights within 10 days after the Effective Time, and each of
the parties agrees to take all such actions as may be required to effect such
delivery and otherwise comply with the provisions of the Appraisal Statute.
1.3 EXCHANGE OF CERTIFICATES IN CONNECTION WITH THE MERGER.
(a) Surviving Corporation to Provide Common Stock.
Promptly after the Effective Time, Holdings shall cause to be made available the
shares of Holdings Common Stock and other securities issuable pursuant to
Section 1.2 and the Plan of Merger in exchange for outstanding shares of capital
stock and other securities of PetroChemNet.
(b) Certificate Delivery Requirements. At the Effective
Time, the PetroChemNet stockholders shall deliver to the Surviving Corporation
the certificates (the "Certificates")
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representing PetroChemNet Common Stock, duly endorsed in blank by the holder
thereof, or accompanied by blank stock powers, and with all necessary transfer
tax and other revenue stamps, acquired at the holder's expense, affixed and
canceled. Each holder promptly shall cure all deficiencies with respect to the
endorsement of the Certificates or other documents of conveyance with respect to
the stock powers accompanying such Certificates. The Certificates so delivered
shall forthwith be canceled. Until delivered as contemplated by this Section
1.3(b), each Certificate shall be deemed at all times after the Effective Time
to represent only the right to receive upon such surrender the Merger
Consideration as provided by this Section 1 and the provisions of the DGCL.
(c) No Further Ownership Rights in Capital Stock of
PetroChemNet and MergerCo. (i) All Holdings Common Stock, and other Holdings
securities delivered upon the surrender for exchange of shares of PetroChemNet
capital stock and securities in accordance with the terms hereof shall be deemed
to have been delivered in full satisfaction of all rights pertaining to such
PetroChemNet capital stock and securities, and following the Effective Time, the
Certificates or other instruments representing shares of PetroChemNet Common
Stock or other PetroChemNet securities existing prior to the Merger shall have
no further rights to, or ownership in, shares of capital stock, warrants or
other securities of PetroChemNet. There shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the shares
of capital stock of PetroChemNet which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates or other instruments
representing shares of capital stock or other securities of PetroChemNet are
presented to Holdings for any reason, they shall be canceled and exchanged as
provided in this Section 1.3.
(ii) All shares of capital stock of the Surviving
Corporation delivered upon the surrender for exchange of shares of capital stock
of MergerCo in accordance with the terms hereof
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shall be deemed to have been delivered in full satisfaction of all rights
pertaining to such shares of capital stock of MergerCo, and following the
Effective Time, the certificates representing shares of capital stock of
MergerCo existing prior to the Merger shall have no further rights to, or
ownership in, shares of capital stock, warrants or other securities of MergerCo.
There shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of capital stock of MergerCo which
were outstanding immediately prior to the Effective Time, and there shall be no
further registrations of transfers on the stock transfer books of MergerCo or
the Surviving Corporation of the shares of capital stock of MergerCo which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, certificates or other instruments representing shares of capital stock or
other securities of either of the Constituent Corporations are presented to
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Section 1.3.
(d) Lost, Stolen or Destroyed Certificates. If any
certificates or other instruments evidencing shares of capital stock or other
securities of PetroChemNet or MergerCo shall have been lost, stolen or
destroyed, Holdings or the Surviving Corporation, as the case may be, shall
cause one or more appropriate certificates or instruments to be issued
representing shares of capital stock or other securities of the Surviving
Corporation or Holdings, in accordance with the provisions of Section 1.2 and
this Section 1.3, upon the making of an affidavit of that fact by the holder
thereof; provided, however, that the corporation issuing those certificates or
instruments may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificates to
deliver a bond or other indemnity in such sum or form as it may reasonably
direct as indemnity against any claim that may be made against the issuing
corporation with respect to the certificates and/or instruments alleged to have
been lost, stolen or destroyed.
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(e) No Liability. Notwithstanding anything to the contrary
in this Section 1.3, neither the Surviving Corporation nor any other party
hereto shall be liable to a holder of shares of PetroChemNet or MergerCo capital
stock for any amount paid to a public official pursuant to any applicable
abandoned property, escheat or similar law.
1.4 STOCK REPURCHASE TRANSACTIONS. Immediately following the
consummation of the Merger, at the Closing, Holdings shall repurchase from each
Stockholder, and each Stockholder shall sell to Holdings, that number of shares
of Holdings Common Stock held by such Stockholder as is set forth on Annex II
hereto, in exchange for (a) the cash, shares of Holdings Common Stock and
warrants to acquire Holdings Common Stock detailed on such Annex, and (b)
substantially all of the business assets that Holdings held immediately prior to
the Closing (other than (i) the rights of Holdings arising under this Agreement
and the other agreements and instruments executed in connection with the
transactions contemplated hereby, (ii) the outstanding shares of capital stock
and other securities of CheMatch, (iii) the intra-company advances from Holdings
to CheMatch as in effect as of the Effective Time; (iv) the CheMatch On-line
domain name and any and all trademark registration involving the CheMatch name
or registered marks, and (v) the other assets, if any, identified in the ▇▇▇▇▇▇
Stock Repurchase Agreement as being retained by Holdings or otherwise not being
transferred pursuant thereto) (the "▇▇▇▇▇▇ Business Assets"), subject to the
assumption by New ▇▇▇▇▇▇ of all liabilities of Holdings as in effect immediately
prior to the Effective Time, or at any time prior thereto, excluding only those
liabilities identified on Schedule 1.4 hereto which are to be retained by
Holdings (which retained liabilities shall include, without limitation, the
liabilities of Holdings arising out of or in connection with this Agreement and
the transactions contemplated hereby) (the "Assumed Liabilities"), as
contemplated by the ▇▇▇▇▇▇ Stock Repurchase Agreement (the "▇▇▇▇▇▇ Stock
Repurchase Agreement"), substantially in the form of Exhibit C hereto. The
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warrants shall be issued to each of the Stockholders pursuant to separate
warrant agreements (the "Warrant Agreements"), substantially in the form of
Exhibit B hereto, between the Company, on the one hand, and each such
Stockholder, on the other hand, and the ▇▇▇▇▇▇ Business Assets shall be assigned
to, and the Assumed Liabilities shall be assumed by, New ▇▇▇▇▇▇, all as
contemplated by the ▇▇▇▇▇▇ Stock Repurchase Agreement. The transactions
described in this Section 1.4 are sometimes referred to in this Agreement as the
"Stock Repurchase Transactions."
2. CLOSING
The consummation of the Merger, the Stock Repurchase Transactions and
the other transactions contemplated by this Agreement (hereinafter referred to
as the "Closing") shall take place at the offices of ▇▇▇▇▇ ▇▇▇▇▇, Cohn, Ferris,
Glovsky & Popeo, P.C., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as
soon as practicable after all conditions to the Closing shall have been
satisfied or waived, or at such other time and date as PetroChemNet, Holdings,
the Stockholders and ▇▇▇▇ may mutually agree, which date shall be referred to as
the "Closing Date." On the Closing Date, a Certificate of Merger shall be filed
with the Secretary of the State of Delaware in accordance with the provisions of
the DGCL, and the Merger shall become effective upon the date of such filing or
at such later time on or after the Closing Date as may be specified in the
Certificate of Merger (the "Effective Time"). Promptly following the Effective
Time, the parties shall consummate the Stock Repurchase Transactions in
accordance with the provisions of the ▇▇▇▇▇▇ Stock Repurchase Agreement. The
parties agree that the transactions contemplated hereby and by the Battery
Documents will occur in the order set forth in the charts attached as Appendix
A.3 hereto.
3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS AND
HOLDINGS
To induce PetroChemNet to enter into this Agreement and consummate
the transactions
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contemplated hereby and by the Plan of Merger, each of Holdings, the
Stockholders and ▇▇▇▇, jointly and severally (except as otherwise provided
therein), represents and warrants to PetroChemNet as set forth in Section A.1 of
Appendix A hereto, which representations and warranties are incorporated in this
Section 3 by reference and are deemed to be part of this Agreement.
4. REPRESENTATIONS OF PETROCHEMNET
To induce Holdings, the Stockholders and ▇▇▇▇ to enter into this
Agreement and consummate the transactions contemplated hereby and by the Plan of
Merger, PetroChemNet represents and warrants to Holdings, the Stockholders and
▇▇▇▇ as set forth in Section A.2 of Appendix A hereto, which representations and
warranties are incorporated in this Section 4 by reference and are deemed to be
part of this Agreement.
5. COVENANTS PRIOR TO CLOSING
5.1 ACCESS AND COOPERATION; DUE DILIGENCE.
(a) Between the date of this Agreement and the Closing Date, Holdings
shall, and shall cause CheMatch to, afford to the officers and authorized
representatives of PetroChemNet full and free access to, and the right to
inspect, all of the sites, properties, books, records, documents and contracts
of Holdings and CheMatch of any kind, shall permit them to consult with the
officers, employees, accountants, counsel, agents, customers and suppliers of
Holdings for the purpose of making such due diligence investigation of Holdings
and CheMatch as PetroChemNet may wish to make, and shall furnish PetroChemNet
with such additional financial and operating data and other information as to
the business and properties of Holdings and CheMatch as PetroChemNet may from
time to time reasonably request. The Stockholders and Holdings shall, and shall
cause CheMatch to, cooperate with PetroChemNet, its representatives, engineers,
auditors and counsel in the preparation
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of all documents or other material which may be required or which PetroChemNet
reasonably may request in connection with the transactions contemplated by this
Agreement. PetroChemNet, Holdings and the Stockholders shall, and Holdings shall
cause CheMatch to, treat all information obtained in connection with the
negotiation and performance of this Agreement or the due diligence
investigations conducted with respect hereto as confidential in accordance with
the provisions of Section 11 hereof. Notwithstanding the foregoing, no
information or access, inspection or consultation rights or other related rights
shall be required to be given to PetroChemNet, its officers or representatives
pursuant to this Agreement to the extent the same would disclose the customer
data base, customer lists, attendees at conferences, pricing lists, invoices,
petrochemical data bases, the so-called "Annuals" or studies, payroll records
with respect to specific employees, or reasonably related information of
Holdings or its predecessor ▇▇▇▇▇▇ & Company Incorporated ("Old ▇▇▇▇▇▇").
(b) Between the date of this Agreement and the Closing Date,
PetroChemNet shall afford to the officers and authorized representatives of
Holdings and ▇▇▇▇ full and free access to, and the right to inspect, all of the
sites, properties, books, records, documents and contracts of PetroChemNet of
any kind, shall permit them to consult with the officers, employees,
accountants, counsel, agents, customers and suppliers of PetroChemNet for the
purpose of making such due diligence investigation of PetroChemNet as Holdings
or ▇▇▇▇ may wish to make, and shall furnish them with such additional financial
and operating data and other information as to the business and properties of
PetroChemNet as they may from time to time reasonably request. PetroChemNet
shall cooperate with Holdings and ▇▇▇▇, and their representatives, engineers,
auditors and counsel in the preparation of all documents or other material which
may be required or which they reasonably may request in connection with the
transactions contemplated by this Agreement.
5.2 CONDUCT OF BUSINESS PENDING CLOSING. Between the date hereof and
the Effective
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Time, Holdings shall, and shall cause CheMatch to, and PetroChemNet shall:
(a) carry on its business in substantially the same manner as it has
heretofore and not introduce any material new method of management, operation or
accounting;
(b) maintain its properties and facilities, including those held
under leases, conditional sales or similar agreements in as good working order
and condition as at present, ordinary wear and tear excepted;
(c) perform all of its obligations under agreements relating to or
affecting its respective assets, properties or rights;
(d) keep in full force and effect present insurance policies or other
comparable insurance coverage;
(e) use all reasonable commercial efforts to maintain and preserve
its business organization intact, retain its present officers and key employees
and agents and maintain its relationships and goodwill with suppliers, customers
and others having business relations with it;
(f) maintain compliance with all permits, laws, rules and
regulations, consent orders, and all other orders of applicable courts,
regulatory agencies and similar governmental authorities, and maintain in effect
all existing permits, rights, easements, and other authorizations necessary or
desirable for the conduct of its business;
(g) maintain present debt and lease instruments and not enter into
new or amended debt or lease instruments; and
(h) maintain or reduce present salaries and commission levels for all
officers, directors, employees and agents, except for ordinary and customary
bonuses and salary increases for employees (other than the Stockholders) in
accordance with past practice.
5.3 PROHIBITED ACTIVITIES. Except as contemplated by this Agreement
or disclosed in
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writing to the other parties hereto on or before the date of this Agreement, (x)
between the Holdings Balance Sheet Date and the Closing Date, Holdings and
CheMatch have not and from the date hereof, without prior written consent of
PetroChemNet, shall not, and (y) between the PetroChemNet Balance Sheet Date and
the Closing Date, PetroChemNet has not and from the date hereof, without the
prior written consent of Holdings, shall not:
(a) make any change in their Articles of Incorporation or By-laws, or
authorize or propose the same, in any event without the prior written consent of
PetroChemNet (in the case of changes relating to Holdings or CheMatch) and
without the prior written consent of Holdings (in the case of changes relating
to PetroChemNet);
(b) issue, sell, pledge, dispose of or encumber, or authorize or
propose the issuance, sale, pledge, disposal or encumbrance of, any securities,
options, warrants, calls, conversion rights or commitments relating to its
securities of any kind, authorize or propose any other change in its equity
capitalization, or issue or authorize the issuance of any debt securities (other
than, in the case of Holdings, as contemplated by the Werlang Transactions, the
▇▇▇▇ Transactions and the Battery Ventures Transactions, as those terms are
defined in this Agreement);
(c) (i) declare, set aside or pay any dividend, or make any
distribution (whether in cash, stock or property) in respect of its stock
whether now or hereafter outstanding, (ii) split, combine or reclassify any of
its capital stock, (iii) issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for any shares of its capital
stock, or (iv) purchase, redeem or otherwise acquire directly or indirectly or
retire for value any shares of its stock;
(d) enter into any contract or commitment, including contracts to
provide services or goods to customers, or incur or agree to incur any liability
or make any capital expenditures, except contracts, commitments or expenditures
made or entered into in the ordinary course of business
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(consistent with past practice) or which involve an amount not in excess of
$10,000;
(e) increase the compensation payable or to become payable to any
officer, director, stockholder, employee or agent, or make or agree to make any
bonus or management fee payment to any such person except ordinary and customary
bonuses and regularly scheduled periodic salary increases to non-stockholder
employees;
(f) grant any severance or termination pay to, or enter into any
employment or severance agreement with any of its employees, officers or
directors;
(g) establish, adopt, enter into, make any new grants or awards under
or amend, any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, employee
stock ownership, deferred compensation, employment, termination, severance or
other plan, agreement, trust, fund, policy or arrangement for the benefit of any
Holdings or CheMatch employee, officer or director;
(h) revalue any of its assets, including without limitation, writing
down the value of inventory or writing off notes or accounts receivable other
than in the ordinary course of business consistent with past practice;
(i) make any material Tax election (as defined in Section A.1.22 of
Appendix A) other than in the ordinary course of business and consistent with
past practice, change any material Tax election, adopt any material Tax
accounting method other than in the ordinary course of business and consistent
with past practice, change any material Tax accounting method, file any material
Tax return (other than any estimated tax returns, payroll tax returns or sale
tax returns) or any amendment to a material Tax return, enter into any closing
agreement, settle any Tax claim or assessment, or consent to any Tax claim or
assessment;
(j) guarantee the obligation of any other person or entity except by
the endorsement of
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negotiable instruments for deposit or collection in the ordinary and usual
course of business;
(k) purchase or sell any securities for investment;
(l) extend credit to customers departing from its normal and
customary trade, discount and credit policies, consistent with past practices;
(m) create, assume or permit to exist any mortgage, pledge or other
lien or encumbrance upon any of its assets or properties whether now owned or
hereafter acquired;
(n) sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the ordinary course of business (consistent with
past practice);
(o) negotiate for the acquisition of any business or the start-up of
any new business or enter into any partnership, joint venture or similar
business arrangement;
(p) merge or consolidate or agree to merge or consolidate with or
into any other corporation, except for the merger of Old ▇▇▇▇▇▇ with and into
Holdings;
(q) waive any of its material rights or claims, provided that such
party may negotiate and adjust bills in the course of good faith disputes with
customers and suppliers in a manner consistent with past practice;
(r) initiate any litigation, arbitration, mediation or other
proceeding other than for routine collection of bills;
(s) commit a material breach of, or amend or terminate any, material
agreement, permit, license or other right;
(t) enter into any other transaction that is (i) not negotiated at
arm's length, (ii) outside the ordinary course of business consistent with past
practice or (iii) prohibited hereunder;
(u) take any action of the character described in Section 1.25 of
Appendix A which would have been required to be disclosed pursuant thereto had
such action been taken after the Holdings
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Balance Sheet Date (in the case of Holdings or CheMatch) or the PetroChemNet
Balance Sheet Date (in the case of PetroChemNet) and before the date of this
Agreement; or
(v) authorize or enter into an agreement to do any of the foregoing.
5.4 NO SHOP. None of the Stockholders, Holdings, CheMatch, nor any
agent, officer, director or any representative of any of them shall, during the
period commencing on the date of this Agreement and ending with the earlier to
occur of the Closing or the termination of this Agreement in accordance with its
terms, directly or indirectly:
(a) solicit, encourage or initiate the submission of
proposals or offers from any person for;
(b) participate in any discussions pertaining to; or
(c) furnish any information to any person other than
PetroChemNet relating to; any acquisition or purchase of all or a material
amount of the assets of, or any equity interest in, Holdings or CheMatch or a
merger, consolidation or business combination of Holdings or CheMatch with or
into any other person or entity. The Stockholders promptly shall notify
PetroChemNet orally (to be confirmed in writing as soon as practicable
thereafter) if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated with any Stockholder, Holdings or CheMatch, such
notification to include the identity of the party making such offer, proposal or
contact and the specific terms of such offer or proposal.
5.5 NOTIFICATION OF CERTAIN MATTERS. Each party hereto shall give
prompt notice to the other parties hereto of (a) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which would be
likely to cause any representation or warranty of it, him, or her contained
herein to be untrue or inaccurate at or prior to the Closing; (b) any failure of
it, him, or her
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to comply with or satisfy, any covenant, condition or agreement to be complied
with or satisfied by such person hereunder; (c) the filing of any suit, or the
initiation of any other action or proceeding, or if, to any party's knowledge,
any person or entity overtly threatens any suit, action or proceeding, (i)
seeking to restrain or prohibit the consummation of any of the transactions
contemplated hereby, or (ii) which reasonably could be expected to materially
and adversely affect the properties, assets, business, operations, or financial
condition of Holdings, CheMatch or PetroChemNet; or (d) the initiation, or, to a
party's knowledge, overt threat to initiate, by a governmental entity or agency
any investigation that may result in any such suit, action or proceeding. The
delivery of any notice pursuant to this Section 5.5 shall not, without the
express written consent of the other parties, be deemed to (x) modify the
representations or warranties hereunder of the party delivering such notice, (y)
modify the conditions set forth in Sections 6 and 7, or (z) limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
5.6 COOPERATION IN OBTAINING REQUIRED CONSENTS AND APPROVALS. Each
party hereto shall cooperate in obtaining all consents and approvals required by
Sections 6.4 (which shall nonetheless continue to be the responsibility of the
Stockholders and Holdings) and 7.4 (which shall nonetheless continue to be the
responsibility of PetroChemNet).
5.7 ACTIONS WITH RESPECT TO CLOSING. Holdings, the Stockholders and
▇▇▇▇ shall use their best efforts to bring about the satisfaction of the
conditions precedent to the Closing contained in Section 6 and to cause the
covenants and agreements of Holdings, the Stockholders and ▇▇▇▇ contained in
this Section 5 to be satisfied and performed by it, him and her. PetroChemNet
shall use its best efforts to bring about the satisfaction of the conditions
precedent to the Closing contained in Section 7 and to cause its covenants and
agreements contained in this Section 5 to be satisfied and performed by it.
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5.8 TAX MATTERS.
(a) Indemnification for Taxes.
(i)The Stockholders shall indemnify and hold
PetroChemNet and Holdings harmless from, and shall be entitled to any refund of,
any and all Taxes (i) imposed on the Stockholders, New ▇▇▇▇▇▇ or any other
member of the affiliated group that includes New ▇▇▇▇▇▇ or the Stockholders
(other than Holdings and CheMatch) for any taxable year, and (ii) imposed on
Holdings or CheMatch in respect of its income, business, property or operations
or for which Holdings or CheMatch may otherwise be liable for any taxable period
that ends before the effective time of the merger of Old ▇▇▇▇▇▇ into Holdings
and, with respect to any taxable period beginning before and ending after that
effective time, the portion of such taxable period ending before that Effective
Time (hereinafter, the "Interim Period") (the Interim Period and any taxable
period that ends before that effective time being collectively hereinafter, the
"Pre-Closing Period"), but only to the extent (x) with respect to CheMatch, that
such Tax liability exceeds the sum of (i) the amount of the provision for Taxes
for such period reflected on the CheMatch May Balance Sheet and (ii) the amount
of any liability reflected on the CheMatch May Balance Sheet as a reserve for
future Tax disputes, or (y) such Tax refund exceeds the amount of any deferred
Tax asset reflected on the Holdings or CheMatch May Balance Sheet, as
applicable. Holdings shall indemnify and hold the Stockholders harmless from,
and shall be entitled to any refund of, any and all Taxes imposed on Holdings or
CheMatch (or any successor thereto) in respect of its income, business, property
or operations for any taxable period that begins on or after the effective time
of the merger of Old ▇▇▇▇▇▇ with and into Holdings (except to the extent any
such liability is expressly assumed by or allocated to New ▇▇▇▇▇▇ in accordance
with the provisions hereof or the other documents executed in connection with
the transactions contemplated hereby) and, with respect to any taxable period
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beginning before and ending after the Effective Time, the portion of such
taxable period commencing on or after the effective time of the merger of Old
▇▇▇▇▇▇ with and into Holdings (hereinafter, the "Post-Closing Period") (except
to the extent any such liability is expressly assumed by or allocated to New
▇▇▇▇▇▇ in accordance with the provisions hereof or the other documents executed
in connection with the transactions contemplated hereby). The amount of any
indemnity payment required to be made by an indemnifying party pursuant to this
Section 5.8 shall be determined after giving effect to the present value of any
tax benefit realized or realizable by the indemnified party in connection with
or as a result of the incurrence of the tax liability for which the indemnity
payment is to be made. Holdings shall calculate such present value by using the
applicable federal rates (as defined in Section 1274(d) of the Code) in effect
as of the twentieth (20th) day preceding the date of the indemnification
payment. Upon a refund or credit with respect to a Tax for which an indemnity
payment has been made pursuant to this Section, the indemnified party shall
promptly pay to the indemnifying party the amount of such refund (plus any
interest received with respect to such refund) or shall promptly pay to the
indemnifying party the amount of such credit at the time such credit reduces the
Tax liability of the indemnified party. In all other respects, the
indemnification provided for in this Section shall be effected in accordance
with the provisions of Section 9 hereof. To the extent that the Stockholders are
responsible for the payment of any Tax on income of Holdings (or its
predecessor) for the Pre-Closing Period beginning on December 1, 1998 pursuant
to the provisions of this Agreement, Holdings agrees to take all steps
reasonably requested by the Stockholders in connection therewith, subject to
receipt of either (x) evidence reasonably satisfactory to Holdings that the
taking of such steps will not subject Holdings to any additional Taxes or other
liability or (y) an indemnification from the Stockholders from and against all
such additional Taxes and other liabilities.
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(b) Tax Audits. In connection with an audit by any taxing
authority for any taxable period ending on or prior to the Effective Time, with
respect to Taxes for which the Stockholders may be required to make
indemnification pursuant to subsection (a) of this Section, Holdings shall, and
shall cause CheMatch to, make available to the Stockholders and its
representatives such records and documents in their possession as may be legally
requested by such taxing authority or reasonably requested by the Stockholders
in order to defend against matters affecting Holdings and CheMatch involved in
such audit. Holdings will, at the Stockholders' expense, cause the employees of
Holdings or CheMatch or those assigned to Holdings or CheMatch to cooperate with
and assist such taxing authority, as required by such taxing authority in the
completion of such audit, and will advise the Stockholders of the commencement
and progress of any such audit, following receipt of notice thereof by Holdings.
Holdings will, at the Stockholders' expense, cause the employees of Holdings or
CheMatch or those assigned to Holdings or CheMatch to cooperate with and assist
tax personnel and tax counsel of the Stockholders, as may be reasonably
requested by the Stockholders: (i) in the conduct of all tax audits of Tax
returns, including a claim for refund or amended return for any taxable period
ending on or prior to the Effective Time to the extent that such audit may
involve the operations of Holdings or CheMatch; (ii) in connection with any
claim for refund or amended return; and (iii) in the collection and assembly of
data necessary for the filing of any Tax return, to the extent that such data is
based on the operations of Holdings or CheMatch. The Stockholders upon request
will furnish to PetroChemNet and Holdings copies of all returns filed for
Holdings or CheMatch which cover any portion or all of any taxable period prior
to the Closing.
(c) Preparation of Tax Returns; Payment of Taxes.
(i) The parties agree to file all Tax returns
from and after the Effective
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Time in a manner consistent with the provisions of this Agreement, unless a
contrary treatment is required by law.
(ii) Following the Closing, Holdings shall have
all responsibilities for filing all federal, state and local returns and paying
all the Taxes due with respect thereto required to be filed by Holdings or
CheMatch on a separate return basis, whether due with respect to taxable periods
ending prior to or subsequent to the Effective Time (except for the filing of a
Form 1120 of Old ▇▇▇▇▇▇ with respect to the year ended November 30, 1998, which
the Stockholders shall cause to be filed after the Effective Time); provided,
however, that nothing contained in the foregoing clause shall in any manner
terminate, limit or adversely affect any right of PetroChemNet or Holdings to
receive indemnification pursuant to any provision in this Agreement.
(iii) Except as otherwise provided in this
Section, Holdings shall be responsible for filing all tax returns required to be
filed by or on behalf of Holdings or CheMatch after the Effective Time. Holdings
shall file the tax returns of Holdings and CheMatch required for periods
beginning before and ending after the Effective Time in a manner consistent with
past practices, unless a contrary treatment is required by law. For purposes of
the preceding sentence, a determination by Holdings' auditors that a contrary
treatment is required by law shall be binding and conclusive. The Stockholders,
on the one hand, and Holdings, on the other hand, shall, subsequent to the
Effective Time, provide written notice to the other party of the filing of any
amended tax return or claim for refund that, in the reasonable opinion of the
person making such filing, will materially and adversely affect the other party
(or parties) or their affiliates, taking into account the provisions of this
Agreement.
(iv) Cooperation. The Stockholders and Holdings
shall cooperate fully with each other and make available to each other in a
timely fashion such Tax data and other
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information as may be reasonably required for the preparation of any Tax returns
required to be prepared and filed or on behalf of Stockholders, New ▇▇▇▇▇▇, Old
▇▇▇▇▇▇, Holdings or CheMatch hereunder, or in connection with the preparation or
filing of any election, consent or certification.
(d) Effective Period. The agreements contained, and
indemnification provided for, in this Section shall remain in effect for a
period of one year past the statute of limitations governing the duration of
either party's rights or liabilities in any particular instance.
5.9 AGREEMENT TO VOTE IN FAVOR OF MERGER. Each of the Stockholders,
▇▇▇▇, and each of the directors of PetroChemNet hereby covenants and agrees to
vote all shares of Holdings and PetroChemNet Common Stock owned by them in favor
of the transactions contemplated hereby at any meeting of such stockholders
called to approve such transactions, or on any resolution of the stockholders by
written consent adopted to approve such transactions, and to take all such other
actions as may be consistent with their fiduciary duties to cause such
transactions to be approved by Holdings and PetroChemNet respectively.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PETROCHEMNET
The obligation of PetroChemNet to effect the Merger and the other
transactions to which it is a party that are contemplated to occur as provided
in this Agreement at or before the Closing is subject to the satisfaction, at or
before the Effective Time, of the following conditions, any or all of which may
be waived by PetroChemNet in its sole discretion:
6.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
of the representations and warranties of the Stockholders, Holdings and ▇▇▇▇
contained in this Agreement shall be true, correct and complete in all material
respects on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date; all of the
terms, covenants, agreements and conditions of this Agreement, and the other
agreements
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entered into by the parties in connection with the transactions contemplated
hereby, in each case to be complied with, performed or satisfied by Holdings,
the Stockholders and ▇▇▇▇ on or before the Closing Date shall have been duly
complied with, performed or satisfied in all material respects; and a
certificate dated the Closing Date and signed by each of the Stockholders and
▇▇▇▇, certifying as to the fulfillment of the foregoing conditions, shall have
been delivered to PetroChemNet.
6.2 NO LITIGATION. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or provision challenging the
Merger, the Stock Repurchase Transactions or the other transactions contemplated
to occur at or before the Closing, or limiting or restricting conduct or
operation of the business of Holdings, the Surviving Corporation or CheMatch
following the Merger shall be in effect, nor shall any proceeding brought by an
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, seeking any of the foregoing be pending.
There shall be no action, suit, claim or proceeding of any nature pending or
threatened, against PetroChemNet, Holdings, CheMatch, the Stockholders or ▇▇▇▇,
their respective properties or any of their officers or directors, that could
materially and adversely affect the business, assets, liabilities, financial
condition, results of operations or prospects of Holdings, the Surviving
Corporation or CheMatch after the Closing.
6.3 OPINION OF COUNSEL. PetroChemNet shall have received an opinion
from counsel to the Stockholders, dated the Closing Date, in substantially the
form annexed hereto as Exhibit E.
6.4 CONSENTS AND APPROVALS. All necessary consents of and filings
with any (i) governmental authority or (ii) agency or third party (with respect
to Material Contracts, as defined in Section A.1.16 of Appendix A.1 hereto),
relating in any instance to (A) the consummation by PetroChemNet, Holdings, the
Stockholders, ▇▇▇▇ and New ▇▇▇▇▇▇ of the transactions contemplated
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herein or the agreements executed in connection herewith or (B) the continuation
by Holdings after the Closing of the business and operations, including those
currently contemplated to occur at or before the Closing, of each of the
Surviving Corporation and CheMatch as contemplated by this Agreement, shall have
been obtained and made, all applicable waiting periods, if any, shall have
expired, and no such approval or consent shall have imposed any condition or
requirement which, in the sole judgment of PetroChemNet, makes consummation of
the Merger and the other transactions contemplated hereby inadvisable.
Notwithstanding the foregoing, neither CheMatch, the Stockholders, ▇▇▇▇ nor any
of their affiliates or representatives shall be required to take any action
prior to the Closing other than that taken on or before the date of this
Agreement, regarding or involving the U.S. Commodities Futures Trading
Commission (the "CFTC") or any law, rule or regulation with respect to which the
CFTC has any jurisdiction.
6.5 CHARTER DOCUMENTS. Holdings shall have delivered to PetroChemNet
(a) copies of the Articles of Incorporation of Holdings and CheMatch, certified
by the Secretaries of State of the States of Texas and Delaware, as applicable,
and (b) copies of the By-laws of Holdings and CheMatch, certified by the
Secretary of Holdings or CheMatch, as applicable.
6.6 SHARING AND RELATED AGREEMENT. CheMatch and New ▇▇▇▇▇▇ shall have
entered into a Sharing and Related Agreement in substantially the form of
Exhibit I hereto.
6.7 DUE DILIGENCE REVIEW. PetroChemNet shall be fully satisfied in
its sole discretion with the results of its review of, and its other due
diligence investigations with respect to, the business, operations, affairs,
prospects, properties, assets, existing and potential liabilities, obligations,
profits or condition (financial or otherwise) of Holdings and CheMatch.
6.8 STOCK REPURCHASE AGREEMENT. The ▇▇▇▇▇▇ Stock Repurchase Agreement
shall have been executed by Holdings, the Stockholders and New ▇▇▇▇▇▇, and such
▇▇▇▇▇▇ Stock Repurchase
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Agreement shall be in full force and effect, with consummation of the Stock
Repurchase Transactions scheduled to occur on the Closing Date immediately after
the Effective Time.
6.9 BATTERY AGREEMENT. The "Initial Closing" (the "Battery Ventures
Transactions") contemplated to take place on or prior to the Closing Date,
pursuant to the Preferred Stock and Warrant Purchase Agreement, dated as of June
21, 1999, by and between Holdings, Battery Ventures V, LLC ("Battery") and the
other parties named therein (the "Battery Agreement"), shall have closed prior
to the transactions contemplated hereby to take place at the Closing.
6.10 MATERIAL ADVERSE CHANGE. No material adverse change in the
business, operations, affairs, prospects, properties, assets, existing and
potential liabilities, obligations, profits or condition (financial or
otherwise) of Holdings or CheMatch, shall have occurred, and PetroChemNet shall
have received a certificate signed by the Stockholders dated the Closing Date to
such effect.
6.11 ▇▇▇▇ ▇▇▇▇ TRANSACTIONS.
(a) Holdings and ▇▇▇▇ shall have entered into that certain Share
Exchange Agreement (the "▇▇▇▇ Share Exchange Agreement"), substantially in the
form of Exhibit E hereto, pursuant to which (i) Holdings shall have purchased
from ▇▇▇▇ and ▇▇▇▇ shall have sold to Holdings at the Closing and immediately
prior to the Merger, all of ▇▇▇▇'▇ shares of capital stock of CheMatch in
exchange for the consideration set forth on Annex II hereto and (ii) ▇▇▇▇ shall
be made a party to the Stockholders Agreement and Reg Rights Agreement (as those
terms are defined in Section 6.13) and granted the rights contemplated to be
granted to him thereby.
(b) In addition, Holdings and ▇▇▇▇ ▇▇▇▇ shall have entered into an
employment agreement (the "▇▇▇▇ Employment Agreement"), in substantially the
form of Exhibit F hereto, pursuant to which Holdings shall have agreed to employ
▇▇▇▇ ▇▇▇▇ from and after the Closing on the terms and conditions set forth
therein. The transactions contemplated by this Section 6.11 are sometimes
referred to as the "▇▇▇▇ Transactions."
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6.12 BENEFIT PLANS. New ▇▇▇▇▇▇, Holdings and PetroChemNet shall have
reached agreement on the transfer to, and assumption by, New ▇▇▇▇▇▇ of all of
Holdings' and CheMatch's assets and liabilities under all of Holdings' and
CheMatch's Benefit Plans (as defined in Section A.1.20 of Appendix A).
6.13 STOCKHOLDER AGREEMENTS. Each of Holdings, Battery, the
Stockholders and ▇▇▇▇ shall have entered into (i) a stockholders agreement in
substantially the form of Exhibit 2.01B(v) to the Battery Agreement (the
"Stockholders Agreement") and (ii) a registration rights agreement in
substantially the form of Exhibit 2.01B(viii) to the Battery Agreement (the "Reg
Rights Agreement").
6.14 WERLANG TRANSACTIONS. Holdings, CheMatch and ▇▇▇▇▇ ▇▇▇▇▇▇▇
("Werlang") shall have entered into that certain Termination and Settlement
Agreement (the "Werlang Agreement"), substantially in the form of Exhibit G
hereto, and shall have consummated the transactions contemplated to occur
pursuant thereto at the Closing (as defined therein) (the "Werlang
Transactions").
6.15 OFFICERS AND DIRECTORS. All of the officers and directors of
Holdings and CheMatch prior to the Effective Time shall have resigned in writing
effective as of the Effective Time except one nominee of the Stockholders on the
Board of Directors of Holdings, and except that ▇▇▇▇ shall be appointed to the
position set forth in the ▇▇▇▇ Employment Agreement.
6.16 VALUATION. PetroChemNet shall have received a written valuation
of Old ▇▇▇▇▇▇, the predecessor in interest of Holdings, in form and substance
satisfactory to it in its sole discretion.
6.17 TAX TREATMENT. PetroChemNet shall be satisfied in its sole
discretion as to the likely tax consequences of the Merger, the Stock Repurchase
Agreement and the other transactions contemplated to occur at the Closing.
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6.18 ▇▇▇▇▇▇ AGREEMENT. The ▇▇▇▇▇▇ Agreement (as defined in Section
A.1.3 of Appendix A) shall have been terminated with respect to the securities
of, and other rights and interests in and to, Holdings and CheMatch, and
PetroChemNet shall have received evidence, in form and substance satisfactory to
it in its sole discretion, of such termination.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDERS, HOLDINGS AND
▇▇▇▇
The obligation of the Stockholders, Holdings and ▇▇▇▇ to effect the
Merger and/or the other transactions to which such party is a party that are
contemplated to occur as provided in this Agreement at or before the Closing is
subject to the satisfaction, at or before the Effective Time, of the following
conditions, any or all of which may be waived by such party:
7.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
of the representations and warranties of PetroChemNet contained in this
Agreement shall be true, correct and complete in all material respects on and as
of the Closing Date as though such representations and warranties had been made
as of such date; all of the terms, covenants, agreements and conditions of this
Agreement to be complied with, performed or satisfied by PetroChemNet on or
before the Closing Date shall have been duly complied with, performed or
satisfied in all material respects; and a certificate to the foregoing effect
dated the Closing Date and signed by the President or any Vice President of
PetroChemNet, certifying as to the fulfillment of the foregoing conditions,
shall have been delivered to Holdings, the Stockholders and ▇▇▇▇.
7.2 NO LITIGATION. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or provision challenging the
Merger, the Stock Repurchase Transactions or the other transactions contemplated
to occur at or before the Closing, or limiting or restricting the conduct or
operation of
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the business of Holdings, CheMatch or New ▇▇▇▇▇▇ following the Closing shall be
in effect, nor shall any proceeding brought by an administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, seeking any of the foregoing be pending. There shall be no action,
suit, claim or proceeding of any nature pending or threatened, against
PetroChemNet, Holdings, CheMatch, the Stockholders or ▇▇▇▇, their respective
properties or any of their officers or directors, that could materially and
adversely affect the business, assets, liabilities, financial condition, results
of operations or prospects of Holdings, CheMatch or New ▇▇▇▇▇▇.
7.3 OPINION OF COUNSEL. The Stockholders shall have received an
opinion from counsel for PetroChemNet, dated the Closing Date, in substantially
the form attached hereto as Exhibit H.
7.4 CONSENTS AND APPROVALS. All necessary consents of and filings
with any governmental authority or agency or third party relating to the
consummation by PetroChemNet and Holdings of the transactions contemplated
herein shall have been obtained and made, all applicable waiting periods, if
any, shall have expired, and no such approval or consent shall have imposed any
condition or requirement which, in the sole judgment of the Stockholders, makes
consummation of the Merger and the other transactions contemplated hereby
inadvisable.
7.5 CHARTER DOCUMENTS. PetroChemNet shall have delivered to Holdings
(a) a copy of its Certificate of Incorporation, certified by the Secretary of
State of Delaware, and (b) a copy of its By-laws, certified by its Secretary.
7.6 STOCK REPURCHASE TRANSACTIONS. The Stock Repurchase Agreement
shall have been executed by Holdings, and such Stock Repurchase Agreement shall
be in full force and effect, with consummation of the Stock Repurchase
Transactions scheduled to occur on the Closing Date.
7.7 ▇▇▇▇ ▇▇▇▇ EMPLOYMENT AGREEMENT. The ▇▇▇▇ Transactions
contemplated to take place at or prior to the Closing Date pursuant to the ▇▇▇▇
Exchange Agreement and the ▇▇▇▇
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Employment Agreement shall have closed simultaneously with or prior to the
transactions contemplated to take place at the Closing.
7.8 STOCKHOLDER AGREEMENTS. Each of Holdings, Battery and certain of
PetroChemNet's stockholders shall have entered into the Stockholders Agreement
and the Reg Rights Agreement.
7.9 BATTERY AGREEMENT. The Battery Ventures Transactions contemplated
to take place on or prior to the Closing Date pursuant to the Battery Agreement
shall have closed prior to the transactions contemplated hereby to take place at
the Closing.
7.10 VALUATION. The Stockholders shall have received a written
valuation of Old ▇▇▇▇▇▇ in form and substance satisfactory to them in their sole
discretion.
7.11 DUE DILIGENCE REVIEW. Holdings shall be fully satisfied in its
sole discretion with the results of its review of, and its other due diligence
investigations with respect to, the business, operations, affairs, prospects,
properties, assets, existing and potential liabilities, obligations, profits or
condition (financial or otherwise ) of PetroChemNet.
7.12 WERLANG TRANSACTIONS. The Werlang Transactions contemplated to
take place at or prior to the Closing Date pursuant to the Werlang Agreement
shall have closed simultaneously with or prior to the transactions contemplated
to take place at the Closing.
7.13 TAX TREATMENT. Each of the Stockholders, Holdings and ▇▇▇▇ shall
be satisfied in its sole discretion as to the likely tax consequences of the
Merger, the Stock Repurchase Agreement and the other transactions contemplated
to occur at the Closing.
7.14 SHARING AND RELATED AGREEMENT. CheMatch and New ▇▇▇▇▇▇ shall
have entered into a Sharing and Related Agreement in substantially the form of
Exhibit I hereto.
8. INFORMATION RIGHTS.
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For so long as each Stockholder and ▇▇▇▇ holds capital stock of
Holdings representing not less than 50% of the total voting capital stock of
Holdings that he or she will own upon completion of the transactions
contemplated hereby, including the ▇▇▇▇▇▇ Stock Repurchase Agreement, Holdings
shall provide to each such Stockholder and/or to ▇▇▇▇ the following:
(a) Monthly Reports: as soon as available and in any event
within 30 days after the end of each calendar month, consolidated and
consolidating balance sheets of Holdings and its subsidiaries as of the end of
such month and consolidated and consolidating statements of income and retained
earnings of Holdings and its subsidiaries for such month and for the period
commencing at the end of the previous fiscal year and ending with the end of
such month, setting forth in each case in comparative form the corresponding
figures for the corresponding period of the preceding fiscal year, and including
comparisons to monthly budgets, a cash flow analysis for such month, a schedule
showing each expenditure of a capital nature exceeding $50,000 during such
month, and a summary discussion of Holdings' principal functional areas, all in
reasonable detail and duly certified by the chief financial officer of Holdings
as having been prepared in accordance with generally accepted accounting
principles consistently applied; provided, however, that such financial
statements (i) need not include footnotes which are not customarily included in
such financial statements; (ii) shall be subject to year-end adjustments; and
(iii) until the first anniversary of the date hereof, shall be prepared by
Holdings' management (not necessarily including a chief financial officer) in a
manner consistent with financial statements of Holdings delivered pursuant to
Section 3.07 of the Battery Agreement, provided that such financial statements
shall be subject to certain other adjustments which in the aggregate are not
material to such financial statements;
(b) Quarterly Reports: to the extent not otherwise provided to
any Person, as soon as available and in any event within 45 days after the end
of each of the first three quarters of
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each fiscal year of Holdings, consolidated balance sheets of Holdings and its
subsidiaries as of the end of such quarter and consolidated statements of income
and cash flows of Holdings and its subsidiaries for such quarter and for the
period commencing at the end of the previous fiscal year and ending with the end
of such quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding period of the preceding fiscal year,
and including comparisons to quarterly budgets and a summary discussion of
Holdings' principal functional areas, all in reasonable detail and duly
certified by the chief financial officer of Holdings as having been prepared in
accordance with generally accepted accounting principles consistently applied;
provided, however, that such financial statements (i) need not include footnotes
which are not customarily included in such financial statements; (ii) shall be
subject to year-end adjustments; and (iii) until the first anniversary of the
date hereof, shall be prepared by Holdings' management (not necessarily
including a chief financial officer) in a manner consistent with financial
statements of Holdings delivered pursuant to Section 3.07 of the Battery
Agreement, provided that such financial statements shall be subject to certain
other adjustments which in the aggregate are not material to such financial
statements;
(c) Annual Reports: as soon as available and in any event
within 90 days after the end of each fiscal year of Holdings, a copy of the
annual audit report for such year for Holdings and its subsidiaries, including
therein consolidated balance sheets of Holdings and its subsidiaries as of the
end of such fiscal year and consolidated statements of income and of Holdings
and its subsidiaries for such fiscal year, setting forth in each case in
comparative form the corresponding figures for the preceding fiscal year, all
such consolidated statements to be duly certified by the chief financial officer
of Holdings (if Holdings has a chief financial officer) and by such independent
public accountants of recognized national standing approved by a majority of the
Board of Directors;
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(d) Budgets: as soon as available after approval by the
Board of Directors, a business plan and monthly operating budgets for the
forthcoming fiscal year;
(e) Notice of Adverse Changes: promptly after the
occurrence thereof and in any event within 10 days after each occurrence, notice
of any material adverse change in the operations or financial condition of
Holdings or any material default in any other material agreement to which
Holdings is a party;
(f) Written Reports: promptly upon receipt or publication
thereof, any written reports submitted to Holdings by independent public
accountants in connection with an annual or interim audit of the books of
Holdings and its subsidiaries made by such accountants or by consultants or
other experts in connection with such consultant's or other expert's review of
Holdings' operations or industry, and written reports prepared by Holdings to
comply with other investment or loan agreements;
(g) Notice of Proceedings: promptly after the commencement
thereof, notice of all actions, suits and proceedings of the type described in
Section 3.04 of the Battery Agreement before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting Holdings or any subsidiary;
(h) Stockholders' and SEC Reports: promptly upon sending,
making available, or filing the same, such reports and financial statements as
Holdings or any subsidiary shall send or make available to the stockholders of
Holdings or file with the Securities and Exchange Commission; and
(i) Other Information: such other information respecting
the business, properties or the condition or operations, financial or other, of
Holdings or any of its subsidiaries as any such holder may from time to time
reasonably request.
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9. INDEMNIFICATION
9.1 GENERAL INDEMNIFICATION.
(a) Stockholder's Indemnification. The Stockholders and ▇▇▇▇ jointly
and severally covenant and agree to indemnify, defend, protect and hold harmless
Holdings, PetroChemNet, CheMatch and the Surviving Corporation and their
respective officers, directors, employees, stockholders, assigns, successors and
affiliates (other than ▇▇▇▇ and the Holdings director nominee of the
Stockholders) (individually, a "PetroChemNet Indemnified Party") from, against
and in respect of:
(i) all liabilities, losses, claims, damages, punitive
damages, causes of actions, lawsuits, administrative proceedings (including
informal proceedings), investigations, audits, demands, assessments,
adjustments, judgments, settlement payments, deficiencies, penalties, fines,
interest (including interest from the date of such damages) and costs and
expenses (including without limitation reasonable attorneys' fees and
disbursements of every kind, nature and description) (collectively, "Damages")
suffered, sustained, incurred or paid by any PetroChemNet Indemnified Party in
connection with, resulting from or arising out of, directly or indirectly:
(A) any breach of any representation or warranty
of the Stockholders or ▇▇▇▇ set forth in this Agreement or any of the other
Transaction Documents (as defined in Section A.1.2 hereof) or any certificate,
document or instrument delivered (i) prior to the effective time of the merger
of Old ▇▇▇▇▇▇ with and into Holdings, by or on behalf of Holdings or (ii) at any
time by or on behalf of the Stockholders or ▇▇▇▇ in connection with the
transactions contemplated hereby or thereby;
(B) any breach or nonfulfillment of any covenant
or agreement on the part of the Stockholders, ▇▇▇▇ or, prior to the effective
time of the merger of Old ▇▇▇▇▇▇ with and
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into Holdings, Holdings in this Agreement or any other Transaction Document; or
(C) the business, operations or assets of (1)
Old ▇▇▇▇▇▇ prior to the effective time of the merger of Old ▇▇▇▇▇▇ with and into
Holdings or (2) CheMatch prior to the Closing Date, or the actions or omissions
of (i) the Stockholders, (ii) ▇▇▇▇, (iii) the directors, officers, shareholders,
employees or agents of Old ▇▇▇▇▇▇ prior to the effective time of the merger of
Old ▇▇▇▇▇▇ with and into Holdings, and (iv) CheMatch's directors, officers,
shareholders, employees or agents prior to the Effective Time;
(D) the business, operations or assets of New
▇▇▇▇▇▇ from and after the Effective Time; and
(ii) any and all Damages incident to any of the foregoing
or to the enforcement of, or any appeal in any judgment arising out of, this
Section 9.1(a); provided, however, that ▇▇▇▇ shall not be liable for any Damages
resulting from (x) the breach of a representation or warranty relating
exclusively to Holdings or its predecessors (as opposed to a representation or
warranty relating to CheMatch) or the business, operations or assets of New
▇▇▇▇▇▇, (y) any breach or nonfulfillment of any covenant or agreement on the
part of the Stockholders or Holdings in this Agreement or (z) the business,
operations or assets of Holdings, the actions or omissions of the Stockholders
(as they relate exclusively to Holdings) or Holdings' directors, officers,
shareholders, employees or agents prior to the Effective Time; and provided
further, that the Stockholders shall not be liable for any Damages resulting
from any breach or nonfulfillment of any covenant or agreement on the part of
▇▇▇▇ in this Agreement or the acts or omissions of ▇▇▇▇ after the Effective
Time.
(b) PetroChemNet Indemnification. Holdings and PetroChemNet hereby
covenant and agree to indemnify, defend, protect and hold harmless the
Stockholders, ▇▇▇▇, New ▇▇▇▇▇▇ (and its officers, directors, employees,
stockholders) and their respective successors, assigns and affiliates
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(individually, a "Stockholder Indemnified Party") from, against and in respect
of:
(i) all Damages suffered, sustained, incurred or paid by
any Stockholder Indemnified Party in connection with, resulting from or arising
out of, directly or indirectly:
(A) any breach of any representation or warranty
of PetroChemNet set forth in this Agreement or any certificate, document or
instrument delivered by or on its behalf in connection herewith; or
(B) any breach or nonfulfillment of any covenant
or agreement on the part of PetroChemNet in this Agreement, or any breach or
nonfulfillment of any covenant or agreement on the part of PetroChemNet, the
Surviving Corporation, CheMatch or Holdings after the Effective Time; or
(C) the business, operations or assets of
PetroChemNet prior to the Closing Date, or the actions or omissions of
PetroChemNet's directors, officers, shareholders, employees or agents prior to
the Effective Time; and
(ii) any and all Damages incident to any of the foregoing
or to the enforcement of, or any appeal in any judgment arising out of, this
Section 9.1(b).
9.2 LIMITATION AND EXPIRATION. Notwithstanding the above:
(a) there shall be no liability for indemnification under
Section 9.1 unless, and solely to the extent that, the aggregate amount of
Damages exceeds, in the aggregate with respect to all claims for Damages,
$10,000 (the "Indemnification Threshold");
(b) the aggregate amount of any one Stockholder's or
▇▇▇▇'▇ liability under this Section 9 shall not exceed, with respect to ▇▇▇▇,
$180,000, and with respect to each of the other Stockholders, $300,000;
provided, however, that there shall be no limitation of liability with respect
to Damages arising out of or in connection with a breach of the representations
and warranties
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contained in Sections A.1.4, A.1.5 or A.1.22 of Appendix A or in connection with
the indemnification obligations set forth in Section 5.8 hereof;
(c) the indemnification obligations under this Section 9
shall terminate, with respect to all indemnification obligations other than
those arising under Sections A.1.4, A.1.5 or A.1.22 of Appendix A and the
covenants set forth in Section 10 hereof or Section 5.8 hereof, (i), on the
later of (x) thirty-six (36) months after the Effective Time (the "Third
Anniversary") or (y) the final resolution of any and all claims or demands
("Claims") under this Agreement pending as of the Third Anniversary. The term
"Indemnification Deadline Date" refers to the dates specified in clauses (x)
above, and the term "Pending Claims" refers to the Claims referred to in (y)
above. From and after the applicable Indemnification Deadline Date, the
indemnification obligations under this Section 9 shall survive only to the
extent of Pending Claims.
9.3 INDEMNIFICATION PROCEDURES. All Claims for indemnification under
this Section 9 shall be asserted and resolved as follows:
(a) If an Indemnified Party has a Claim against another
party hereunder (an "Indemnifying Party") which does not involve a Claim being
asserted against or sought to be collected by a third party, the Indemnified
Party shall with reasonable promptness send a Claim Notice (as defined below)
with respect to such Claim to the Indemnifying Party. If the Indemnifying Party
does not notify the Indemnified Party within the Notice Period (as defined
below) that it disputes such Claim, the amount of such Claim shall be
conclusively deemed a liability of the Indemnifying Party. If the Indemnifying
Party shall object in writing to any Claim made in accordance with this Section
9.3(a), the Indemnified Party shall have thirty (30) days to respond in a
written statement to the objection of the Indemnifying Party. If after such
thirty (30) day period there remains a dispute as to any Claims, the parties
shall attempt in good faith for sixty (60) days to agree
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upon the rights of the respective parties with respect to each of such Claims.
If the parties should so agree, a memorandum setting forth such agreement shall
be prepared and signed by both parties. If no such agreement can be reached
after good faith negotiation, either the Indemnified Party or the Indemnifying
Party may initiate a proceeding to have their respective obligations hereunder
determined.
(b) If any Claim for which an Indemnifying Party would be
liable to an Indemnified Party hereunder is asserted against an Indemnified
Party by a third party, the Indemnified Party shall with reasonable promptness
notify the Indemnifying Party of such Claim, specifying the nature of such Claim
and the amount or the estimated amount thereof to the extent then feasible
(which estimate shall not be conclusive of the final amount of such Claim) (the
"Claim Notice"). The Indemnifying Party shall have 30 days from the receipt of
the Claim Notice (the "Notice Period") to notify the Indemnified Party (i)
whether or not the Indemnifying Party disputes the Stockholder liability to the
Indemnified Party hereunder with respect to such Claim and (ii) if the
Indemnifying Party does not dispute such liability, whether or not it wishes, at
the sole cost and expense of the Indemnifying Party, to defend against such
Claim, provided that the Indemnifying Party is hereby authorized (but not
obligated) prior to and during the Notice Period to file any motion, answer or
other pleading and to take any other action which the Indemnifying Party shall
deem necessary or appropriate to protect the Stockholders' interests. If the
Indemnifying Party notifies the Indemnified Party within the Notice Period that
the Indemnifying Party does not dispute its obligation to indemnify hereunder
and wishes to defend the Indemnified Party against such Claim, then, except as
hereinafter provided, the Indemnifying Party shall have the right to defend by
appropriate proceedings, which proceedings shall be promptly settled or
prosecuted by it to a final conclusion; provided that, unless the Indemnified
Party otherwise agrees in writing, the Indemnifying
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Party may not settle any matter (in whole or in part) unless such settlement
includes a complete and unconditional release of the Indemnified Party. If the
Indemnified Party wishes to participate in, but not control, any such defense or
settlement, the Indemnified Party may do so at the Indemnified Party's sole cost
and expense. If the Indemnifying Party elects not to defend the Indemnified
Party against such Claim, whether by failure of the Indemnifying Party to give
the Indemnified Party timely notice as provided above or otherwise, then the
Indemnified Party, without waiving any rights against the Indemnifying Party,
may settle or defend against any such Claim in the Indemnified Party's sole
discretion, and the Indemnified Party shall be entitled to recover from the
Indemnifying Party the amount of any settlement or judgment and, on an ongoing
basis, all indemnifiable costs and expenses of the Indemnified Party with
respect thereto, including interest from the date such costs and expenses were
incurred.
(c) If at any time, in the reasonable opinion of the
Indemnified Party, notice of which shall be given in writing to the Indemnifying
Party, any such Claim seeks material prospective relief which could have a
materially adverse effect on the assets, liabilities, financial condition,
results of operations or business prospects of any Indemnified Party, Holdings
or any subsidiary thereof (with respect to the PetroChemNet Indemnified
Parties), or New ▇▇▇▇▇▇ (with respect to the Stockholder Indemnified Parties),
the Indemnified Party shall have the right to control or assume (as the case may
be) the defense of any such Claim and the amount of any judgment or settlement
and the reasonable costs and expenses of defense shall be included as part of
the indemnification obligations of the Indemnifying Party hereunder. If the
Indemnified Party should elect to exercise such right, the Indemnifying Party
shall have the right to participate in, but not control, the defense of such
claim or demand at the sole cost and expense of the Indemnifying Party.
(d) Nothing herein shall be deemed to prevent the
Indemnified Party from making
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a Claim, and an Indemnified Party may make a claim hereunder, for potential or
contingent Claims or demands provided the Claim Notice sets forth the specific
basis for any such potential or contingent Claim or demand to the extent then
feasible and the Indemnified Party has reasonable grounds to believe that such a
claim or demand may be made.
(e) An Indemnified Party's failure to give reasonably
prompt notice to an Indemnifying Party of any actual, threatened or possible
Claim or demand which may give rise to a right of indemnification hereunder
shall not relieve the Indemnifying Party of any liability which the Indemnifying
Party may have to the Indemnified Party unless the failure to give such notice
materially and adversely prejudiced the Indemnifying Party.
(f) The parties will make appropriate adjustments for any
Tax benefits, Tax detriments or insurance proceeds in determining the amount of
any indemnification obligation under Section 9, provided that the Indemnifying
Party shall not be obligated to seek any payment pursuant to the terms of any
insurance policy.
9.4 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. For the
purposes of asserting Claims under this Section 9, all representations and
warranties made by the parties in or pursuant to this Agreement or in any
document delivered pursuant hereto will survive the Closing and will remain in
effect until, and will expire upon, the Third Anniversary, provided, however,
that the indemnification obligations with respect to any Pending Claim (and the
related representations, warranties and covenants) will survive until the final
resolution of such Pending Claim.
Each party shall be entitled to rely upon the representations and
warranties of the other party or parties set forth herein regardless of any
investigation or audit conducted before or after the Closing Date or the
decision of any party to complete the Closing.
10. NONCOMPETITION
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10.1 PROHIBITED ACTIVITIES.
(a) As additional consideration for PetroChemNet's consummation of
the transactions contemplated hereby, if the Closing occurs, each of the
Stockholders covenants and agrees with and for the benefit of Holdings, CheMatch
and the Surviving Corporation that such Stockholder shall not, for a period of
four years following the Closing Date, for any reason whatsoever, directly or
indirectly, for himself or herself or on behalf of or in conjunction with any
other person, persons, company, partnership, corporation or business of whatever
nature:
(i) call upon any person who is, at that time, an employee
of Holdings, CheMatch or the Surviving Corporation in a managerial capacity or
other key position for the purpose or with the intent of enticing such employee
away from or out of the employ of his or her employer; or
(ii) own an interest in or operate any Internet-based
trading platform that deals in petrochemicals or products relating to
petrochemicals unless neither Holdings, CheMatch, the Surviving Corporation or
any of their respective successors or assigns (including any subsequent direct
or indirect purchaser of the CheMatch On-Line system) (collectively, a
"Holding-related Party") no longer owns or operates such an Internet-based
trading system. The restrictions in this clause (ii) shall in no event restrict
the ability of the restricted parties, among other things, from providing verbal
counseling and advice, single client or group conferences in person (and related
written materials for those conferences) regarding the information described in
the preceding sentence, as well as providing any written advice regarding the
same in its newsletters, periodicals and other specific client-based special
reports, studies or advice. Notwithstanding the foregoing, the provisions of
this subsection (ii) shall not be deemed to prohibit the Stockholders from
holding, or acquiring additional, securities of Holdings or acquiring as an
investment not more than one percent
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(1%) of the capital stock of a competing business, the stock of which is traded
on a national securities exchange or over-the-counter market.
(b) As additional consideration for the Stockholders' consummation of
the transactions contemplated hereby, each of Holdings and PetroChemNet
covenants and agrees with and for the benefit of the Stockholders that neither
Holdings, the Surviving Corporation nor any other Holdings-related Party under
the direct or indirect control of Holdings or the Surviving Corporation shall
for a period of four (4) years after the Closing Date, for any reason
whatsoever, either directly or indirectly, for itself or in conjunction with any
other person, persons, company, partnership, corporation or business of whatever
nature, call upon any person who is at that time an employee of New ▇▇▇▇▇▇ in a
managerial capacity or other key position for the purpose or with the intent of
enticing such employee away from or out of the employ of New ▇▇▇▇▇▇.
10.2 DAMAGES. Each of the parties hereto who are subject to the
covenants set out above acknowledges and agrees that (i) because the beneficiary
of those covenants would not have entered into this Agreement but for the grant
by such party of the covenants contained in this Section, (ii) because of the
difficulty of measuring economic losses to such party or their affiliates as a
result of a breach of the foregoing covenants, and (iii) because of the
immediate and irreparable damage that could be caused to such party for which it
would have no other adequate remedy, the foregoing covenant may be enforced by
the beneficiary of those covenants in the event of any threatened or actual
breach thereof, by injunctions and restraining orders. The foregoing shall be in
addition to and without prejudice to or in limitation of any other rights the
party enforcing such covenants may have in law or equity as a result of any such
threatened or actual breach.
10.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that
the foregoing covenants in this Section 10 impose a reasonable restraint on the
parties bound thereby in light of the activities
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and business of the beneficiaries thereof and their affiliates on date of the
execution of this Agreement and the current plans of such parties and their
affiliates; but it is also the intent of the parties that such covenants be
construed and enforced in accordance with the changing activities and business
of those parties throughout the term of this covenant.
10.4 SEVERABILITY; REFORMATION. The covenants in this Section 10 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. If any provision of this
Section 10 is determined by a court of competent jurisdiction to be
unenforceable, void or invalid in whole or in part, this Agreement shall be
deemed amended to delete or modify, as necessary, the offending provisions or
portions thereof and to alter the bounds thereof, including specifically, any
time, place and manner restrictions contained in any of the restrictive
covenants contained herein, in order to render it valid and enforceable, and the
Agreement shall thereby be reformed. In any event, the balance of this Section
and this Agreement shall be enforced to the fullest extent possible without
regard to such unenforceable, void or invalid provisions or part thereof.
10.5 INDEPENDENT COVENANT. All of the covenants in this Section 10
shall be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of the party or
parties bound by the covenants against the party enforcing the same or any other
party, whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement of such covenants. The covenants contained in Section
10 shall not be affected by any breach of any other provision hereof by any
party hereto and shall have no effect if the transactions contemplated by this
Agreement are not consummated.
10.6 MATERIALITY. Holdings, PetroChemNet and the Stockholders hereby
agree that this covenant is a material and substantial part of this transaction.
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10.7 OTHER NEW ▇▇▇▇▇▇ SERVICES. Notwithstanding anything in this
Section 10 to the contrary, New ▇▇▇▇▇▇ retains the right to offer or deliver its
consulting services via other alternative marketing and/or delivery modes as may
best fit its business objectives that do not involve a violation of an express
provision in this Section.
10.8 LIMITATION ON INDEMNITY OBLIGATIONS. Notwithstanding any
provision of this Agreement to the contrary (including without limitation the
indemnity provisions set out in Section 9), no Stockholder shall be personally
liable for a breach of the covenants set out in this Section 10, nor for the
breach of any covenants to which the Stockholder has personally agreed to in the
Alliance Agreement included in the Transaction Documents, nor shall he or she be
obligated for any indemnity or contribution for a breach of those covenants,
unless that Stockholder either alone or with any other person, persons, company,
partnership, corporation or business of whatever nature, engaged (whether for
himself or herself or on behalf of any such other person or party, and whether
directly or indirectly) in the activity that resulted in that breach of such
covenants.
11. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
11.1 STOCKHOLDERS AND ▇▇▇▇. The Stockholders and ▇▇▇▇ recognize and
acknowledge that they have had in the past, currently have, and in the future
may possibly have, access to certain confidential information of CheMatch, the
Surviving Corporation and/or PetroChemNet, such as lists of customers,
operational policies, and pricing and cost policies, that are valuable, special
and unique assets of CheMatch's and/or PetroChemNet's respective businesses. The
Stockholders and ▇▇▇▇ agree that they shall not disclose confidential
information with respect PetroChemNet, and
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additionally that, if the Closing occurs, they shall not disclose confidential
information with respect to CheMatch, the Surviving Corporation or Holdings
(other than with respect to the ▇▇▇▇▇▇ Business Assets, as to which only ▇▇▇▇
shall have such obligation, and such obligation with respect to ▇▇▇▇ may be
enforced only by any of the Stockholders or their assigns) to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
except to authorized representatives of the party or its assigns to which such
information relates, and to counsel and other advisers, provided that such
advisers (other than counsel) agree in writing to the confidentiality provisions
of this Section 11.1 prior to such disclosure, unless (a) such information
becomes known to the public generally through no fault of the disclosing party,
(b) disclosure is required by law or the order of any governmental authority of
competent jurisdiction under color of law, or (c) the disclosing party
reasonably believes, on the advice of counsel, that such disclosure is required
in connection with a lawsuit involving the disclosing party (or its successors)
as to which such information relates, provided, that prior to disclosing any
information pursuant to clause (a), (b) or (c) above, the disclosing party
shall, if possible, give prior written notice thereof to the party (or its
successors) as to which such information relates and provide such other party
with the opportunity to contest such disclosure, and, with respect to
disclosures made pursuant to clauses (b) and (c), shall only make such
disclosures as specifically shall be required by such law or order or the
reasonable dictates of such lawsuit. In the event of a breach or threatened
breach by a Stockholder or ▇▇▇▇ of the provisions of this Section, the party as
to whom such information relates (or its successors) shall be entitled to an
injunction restraining the disclosure, in whole or in part, of such confidential
information. Nothing herein shall be construed as prohibiting the enforcing
party from pursuing any other available remedy for such breach or threatened
breach, including without limitation the recovery of Damages.
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11.2 PETROCHEMNET AND, AFTER THE CLOSING, HOLDINGS, THE SURVIVING
CORPORATION AND CHEMATCH. PetroChemNet recognizes and acknowledges that it had
in the past, currently has, and in the future may possibly have, access to
certain confidential information of Holdings, its predecessors, and CheMatch,
such as lists of customers, operational policies, and pricing and cost policies
that are valuable, special and unique assets of that party's business.
PetroChemNet agrees that, prior to the Closing, or if there shall not be a
Closing, it shall not disclose confidential information with respect to
Holdings, its predecessors or CheMatch, and if there is a Closing, Holdings, the
Surviving Corporation and CheMatch jointly and severally agree that none of them
shall disclose confidential information with respect to the ▇▇▇▇▇▇ Business
Assets, to any person, firm, corporation, association or other entity for any
purpose or reason whatsoever, except to authorized representatives of the party
to whom such information relates and to counsel and other advisers, provided
that such advisers (other than counsel) agree in writing to the confidentiality
provisions of this Section 11.2 prior to such disclosure, unless (a) such
information becomes known to the public generally through no fault of the
disclosing party or, if there is a Closing, through no fault of Holdings, the
Surviving Corporation or CheMatch, (b) disclosure is required by law or the
order of any governmental authority under color of law, or (c) the disclosing
party reasonably believes that such disclosure is required in connection with a
lawsuit to which it is a party, provided, that prior to disclosing any
information pursuant to clause (a), (b) or (c) above, the disclosing party
shall, if possible, give prior written notice thereof to the party as to whom or
which such information relates (and in the case of the ▇▇▇▇▇▇ Business Assets,
also to the Stockholders) and provide that party with the opportunity to contest
such disclosure, and, with respect to disclosures made pursuant to clauses (b)
and (c), shall only make such disclosure as specifically shall be required by
such law, order or the reasonable dictates of such lawsuit. In the event of a
breach or threatened breach by any such disclosing party
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of the provisions of this Section, the party to whom or which such information
relates (and in the case of disclosure relating to the ▇▇▇▇▇▇ Business Assets,
also the Stockholders) shall be entitled to an injunction restraining the
disclosure, in whole or in part, of such confidential information. Nothing
herein shall be construed as prohibiting the enforcing party from pursuing any
other available remedy for such breach or threatened breach, including without
limitation the recovery of damages.
11.3 DAMAGES. Because of the difficulty of measuring economic losses
as a result of the breach of the foregoing covenants in Sections 11.1 and 11.2,
and because of the immediate and irreparable damage that would be caused for
which they would have no other adequate remedy, the parties hereto agree that,
in the event of a breach by any of them of the foregoing covenants, the covenant
may be enforced against them by injunctions and restraining orders.
11.4 SURVIVAL. The obligations of the parties under this Article 11
shall survive the termination of this Agreement.
12. FEDERAL SECURITIES ACT REPRESENTATIONS
12.1 ECONOMIC RISK; SOPHISTICATION. Each Stockholder, ▇▇▇▇ and
PetroChemNet represents and warrants to the others that such party has not
relied on any purchaser representative, on any other party to this Agreement or
any other person, in connection with the acquisition of shares of Holdings
Common Stock as contemplated by this Agreement. Each such party represents to
and warrants that the others that such party (a) has such knowledge,
sophistication and experience in business and financial matters that such party
is capable of evaluating the merits and risks of an investment in the shares of
Holdings Common Stock, (b) fully understands the nature, scope and duration of
the limitations on transfer of the Holdings Common Stock contained in this
Agreement and the other agreements executed in connection herewith and (c) can
bear the economic risk of an
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investment in the shares of Holdings Common Stock and can afford a complete loss
of such investment. Each such party further represents to and warrants that such
party had an adequate opportunity to ask questions and receive answers from the
persons who will be officers of Holdings after the Effective Time concerning any
and all matters relating to the transactions described herein including without
limitation the background and experience of the persons who will be officers and
directors of Holdings after the Closing, the plans for the operations of the
business of Holdings, the Surviving Corporation and CheMatch, the business,
operations and financial condition of Holdings, the Surviving Corporation and
CheMatch, and any plans for additional acquisitions and the like. Each party has
asked any and all questions in the nature described in the preceding sentence
and all questions have been answered to that party's satisfaction.
12.2 SALES OF STOCK. By his or her execution and delivery of this
Agreement, ▇▇▇▇ and each Stockholder represents and warrants to PetroChemNet and
Holdings that such party does not have any contract, undertaking, agreement or
arrangement, written or oral, with any other person to sell, transfer or grant
participations in any shares of Holdings Common Stock or its predecessors other
than pursuant to the Werlang Agreement (as defined in Appendix A.1 hereto) and
the ▇▇▇▇▇▇ Agreement (as defined in Appendix A.1 hereto). By its execution and
delivery of this Agreement, PetroChemNet represents and warrants to each
Stockholder, ▇▇▇▇ and Holdings that, to the best knowledge of PetroChemNet, none
of its shareholders has any contract, undertaking, agreement or arrangement,
written or oral, with any other person to sell, transfer or grant participations
in any shares of Holdings Common Stock.
13. TERMINATION
13.1 TERMINATION. This Agreement may be terminated at any time prior
to the Closing Date solely:
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(a) by mutual consent of the boards of directors of PetroChemNet and
Holdings;
(b) by the Stockholders and Holdings as a group, on the one hand, or
by PetroChemNet, on the other hand, if the Closing shall not have occurred on or
before the date that is 10 days after the date of this Agreement; provided that
the right to terminate this Agreement under this Section 13.2(b) shall not be
available to either party (with the Stockholders, ▇▇▇▇ and Holdings deemed to be
a single party for this purpose) whose misrepresentation, breach of warranty or
failure to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Closing to occur on or before such date;
(c) by the Stockholders and Holdings as a group, on the one hand, or
by PetroChemNet, on the other hand, if there is or has been a material breach,
failure to fulfill or default on the part of the other party (with the
Stockholders, ▇▇▇▇ and Holdings deemed to be a single party for this purpose) of
any of the representations and warranties contained herein or in the due and
timely performance and satisfaction of any of the covenants, agreements or
conditions contained herein, and the curing of such default shall not have been
made or shall not reasonably be expected to occur before date then set as the
Closing Date; or
(d) by the Stockholders and Holdings as a group, on the one hand, or
by PetroChemNet, on the other hand, if there shall be a final nonappealable
order of a federal or state court in effect preventing consummation of the
Merger or the Stock Repurchase Agreement; or there shall be any action taken, or
any statute, rule regulation or order enacted, promulgated or issued or deemed
applicable to the Merger or the Stock Repurchase Agreement by any governmental
entity which would make the consummation of the Merger or the Stock Repurchase
Transactions illegal.
13.2 EFFECT OF TERMINATION. If this Agreement is terminated pursuant
to Section 13.1 hereof, this Agreement shall forthwith become void and there
shall be no liability or obligation on the
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part of any party hereto or its officers, directors or stockholders.
Notwithstanding the foregoing, (i) the provisions of this Section 13.2 and
Section 9 (indemnification), Section 11 (confidentiality) and the provisions of
Section 14 (including without limitation Sections 14.5 and 14.7), shall remain
in full force and effect and survive any termination of this Agreement; (ii)
each party shall remain liable for any breach of this Agreement prior to its
termination; and (iii) in the event of termination of this Agreement pursuant to
Section 13.1(c) above, then notwithstanding the provisions of Section 14 below,
the breaching party (with the Stockholders, ▇▇▇▇ and Holdings deemed to be a
single party for purposes of this Section 13.2), shall be liable to the other
party to the extent of the expenses incurred by such other party in connection
with this Agreement and the transactions contemplated hereby, as well as any
Damages in accordance with applicable law, subject to the provisions of this
Agreement regarding the payment of and limitations on expenses and Damages.
14. GENERAL
14.1 COOPERATION. Holdings, the Stockholders, ▇▇▇▇ and PetroChemNet
shall each deliver or cause to be delivered to the other on the Closing Date,
and at such other times and places as shall be reasonably agreed to, such
additional instruments as the other may reasonably request for the purpose of
carrying out the transactions contemplated by this Agreement. The Stockholders
and ▇▇▇▇ shall also cooperate and use their best efforts to have the present
officers, directors and employees of New ▇▇▇▇▇▇ cooperate with Holdings and
CheMatch on and after the Closing Date in furnishing information, evidence,
testimony and other assistance in connection with any Return (as such term is
defined in Section A.l.22 of Appendix A.1) filing obligations, actions,
proceedings, arrangements or disputes of any nature with respect to matters
pertaining to all periods prior to the Closing Date. Holdings shall also
cooperate and use its best efforts to have those who become officers, directors
and employees of Holdings after the Merger cooperate with the Stockholders on
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and after the Closing Date in furnishing information, evidence, testimony and
other assistance in connection with any Return filing obligations, actions,
proceedings, arrangements or disputes of any nature with respect to matters
pertaining to all periods after the Closing Date that may relate either to
Holdings, its predecessors or CheMatch with respect to prior to the Closing or
New ▇▇▇▇▇▇ with respect to periods after the Closing.
14.2 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the
parties hereunder may not be assigned (except by operation of law) and shall be
binding upon and shall inure to the benefit of the parties hereto, the
successors of PetroChemNet and the Surviving Corporation, and the heirs and
legal representatives of the Stockholders and ▇▇▇▇.
14.3 ENTIRE AGREEMENT. This Agreement (which includes the Appendices,
Exhibits, Schedules and Annexes hereto) sets forth the entire understanding of
the parties hereto with respect to the transactions contemplated hereby. It
shall not be amended or modified except by a written instrument duly executed by
each of the parties hereto. Any and all previous agreements and understandings
between or among the parties regarding the subject matter hereof, whether
written or oral, are superseded by this Agreement including without limitation
the letter of intent dated March 19, 1999, by and among PetroChemNet, CheMatch,
the Stockholders and ▇▇▇▇, as the same may have been amended or modified on
before the date hereof.
14.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered (which deliveries may be
by telefax) by the parties. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any of the other
counterparts.
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14.5 BROKERS AND AGENTS. Except as provided in the next sentence,
PetroChemNet, Holdings, CheMatch, the Stockholders (as a group) and ▇▇▇▇ each
represents and warrants to the others that the representing party has not
employed any broker or agent in connection with the transactions contemplated by
this Agreement and agrees to indemnify the others against all loss, cost,
damages or expense relating to arising out of claims for fees or commission of
any broker or agent employed or alleged to have been employed by such
indemnifying party. Notwithstanding the foregoing, the Stockholders and ▇▇▇▇
have engaged ▇▇▇▇▇ Investment Partnership, Ltd. or an affiliate thereof
("▇▇▇▇▇") to provide certain financial advisory and related services in
connection with the transactions that are the subject of this Agreement, and the
compensation to be paid to ▇▇▇▇▇ for such services shall be included in the
costs to be paid as provided in Section 14.7 below.
14.6 [INTENTIONALLY OMITTED]
14.7 EXPENSES. PetroChemNet and, after the Closing, Holdings, shall
pay in cash at the Closing (or, if acceptable to the Stockholders in their sole
discretion, promptly thereafter) the fees, expenses and disbursements of the
Stockholders, ▇▇▇▇ and their agents, representatives, accountants, financial
advisors and counsel incurred in connection with the negotiation, preparation,
execution, delivery and consummation of the transactions contemplated by of this
Agreement, any preliminary letter or letters of intent, confidentiality
agreements and the related transactions, which shall include among others the
fees, costs and expenses of ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇, Attorney at Law, the law
firm of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ and the appraisal firm of Howard, Frazier,
Barker, Elliot, Inc., in connection with the valuation referenced in Section
6.16 hereof, and all filing and related fees and expenses relating to the
creation of Holdings, New ▇▇▇▇▇▇ and MergerCo (including, without limitation,
the merger of Old ▇▇▇▇▇▇ into Holdings) (collectively, "Stockholder Costs and
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Expenses"); provided, however, that the aggregate liability of PetroChemNet
pursuant to this Section 14.7 shall be the sum of (a) the first $70,000 of
Stockholder Costs and Expenses, and 50% of all Stockholder Costs and Expenses
above $70,000. Except as otherwise provided in the preceding sentence, each
party hereto shall pay its own fees, costs and expenses incurred in connection
with negotiation, preparation, execution, delivery and consummation of the
transactions contemplated by this Agreement.
14.8 [INTENTIONALLY OMITTED].
14.9 NOTICES. Any notice, request, claim, demand, waiver, consent,
approval or other communication which is required or permitted hereunder shall
be in writing and shall be deemed given if delivered personally or sent by
telefax (with confirmation of receipt), by registered or certified mail, postage
prepaid, or by recognized courier service, as follows:
If to PetroChemNet, the Surviving Corporation or (if after
to the Merger) Holdings to:
PetroChemNet, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:
(Fax: ▇▇▇-▇▇▇-▇▇▇▇)
with a required copy to:
Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, PC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
(Fax: ▇▇▇-▇▇▇-▇▇▇▇)
If to Holdings prior to the Merger to:
PetroChemNet Holdings, Inc.
c/▇ ▇▇▇▇▇▇ & Company, Incorporated
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
16800 Greenspoint Park, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
-▇▇-
▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(Fax: ▇▇▇.▇▇▇.▇▇▇▇)
with a required copy to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇, Attorney at Law
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(Fax: ▇▇▇.▇▇▇.▇▇▇▇)
If to the Stockholders to:
[insert name of the Stockholder]
c/▇ ▇▇▇▇▇▇ & Company, Incorporated [if the
notice is sent before or at the Closing, and to
▇▇▇▇▇▇ & Company Incorporated, if the notice is
sent after the Closing]
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(Fax: ▇▇▇.▇▇▇.▇▇▇▇)
with a required copy to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇, Attorney at Law
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(Fax: ▇▇▇.▇▇▇.▇▇▇▇)
If to ▇▇▇▇ to:
▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(Fax: ▇▇▇.▇▇▇.▇▇▇▇)
or to such other address as the person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, claim, demand, waiver, consent, approval or other communication shall
be deemed to have been given as of the date so delivered, telefaxed, mailed or
dispatched and, if given by any other means, shall be deemed given only when
actually received by the addressees.
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14.10 GOVERNING LAW. This Agreement shall be governed by and
construed, interpreted and enforced in accordance with the laws of the State of
Delaware, without regard to its conflicts of laws provisions. Except as
expressly set forth in Section 9, all disputes arising out of, in connection
with or with respect to this Agreement, the subject matter hereof, the
performance or non-performance of any obligation hereunder, or any of the
transactions contemplated hereby shall be adjudicated in a court of competent
civil jurisdiction sitting in the City of Houston, Texas and nowhere else. Each
of the parties hereto hereby irrevocably submits to the jurisdiction of such
court for the purposes of any suit, civil action or other proceeding arising out
of, in connection with or with respect to this Agreement, the subject matter
hereof, the performance or non-performance of any obligation hereunder, or any
of the transactions contemplated hereby (collectively, "Suit"). Each of the
parties hereto hereby waives and agrees not to assert by way of motion, as a
defense or otherwise in any such Suit, any claim that it is not subject to the
jurisdiction of the above courts, that such Suit is brought in an inconvenient
forum, or that the venue of such Suit is improper.
14.11 SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid or
unenforceable in any jurisdiction, the remainder hereof, and the application of
such provision to such person or circumstance in any other jurisdiction or to
other persons or circumstances in any jurisdiction, shall not be affected
thereby, and to this end the provisions of this Agreement shall be severable.
The preceding sentence is in addition to and not in place of the severability
provisions in Section 10.4.
14.12 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provision of this
Agreement is intended, nor will be interpreted, to provide to create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, employee, partner of any party hereto or any
other person or entity.
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14.13 MUTUAL DRAFTING. This Agreement is the mutual product of the
parties hereto, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of each of the parties, and shall not be
construed for or against any party hereto.
14.14 FURTHER REPRESENTATIONS. Each party to this Agreement
acknowledges and represents that it has been represented by its own legal
counsel in connection with the transactions contemplated by this Agreement, with
the opportunity to seek advice as to its legal rights from such counsel. Each
party further represents that it is being independently advised as to the tax
consequences of the transactions contemplated by this Agreement and is not
relying on any representation or statements made by the other party as to such
tax consequences.
14.15 AMENDMENT; WAIVER. This Agreement may be amended by the parties
hereto at any time prior to the Closing by execution of an instrument in writing
signed on behalf of each of the parties hereto. Any extension or waiver by any
party of any provision hereto shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
PETROCHEMNET, INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title:
PETROCHEMNET HOLDINGS, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title:
PCN MERGER SUB, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title:
STOCKHOLDERS:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇:
/s/ ▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇
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APPENDIX A
A.1 REPRESENTATIONS AND WARRANTIES OF HOLDINGS, THE STOCKHOLDERS AND
▇▇▇▇
Notwithstanding anything in this Appendix A.1 or the Agreement to the
contrary, ▇▇▇▇ makes no representation or warranty as to the matters set forth
in this Appendix A.1 that relate to Holdings or MergerCo.
A.1.1 DUE ORGANIZATION. (a) Neither the Stockholders nor ▇▇▇▇ has taken
any action that would cause either of Holdings and MergerCo not to be a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, duly authorized and qualified to do business under all
applicable laws, regulations, ordinances and orders of public authorities to
carry on its business in the places and in the manner as now conducted except
where the failure to be so authorized or qualified would not have a material
adverse effect on the business, operations, affairs, prospects, properties,
assets, profits or condition (financial or otherwise) of Holdings (a "Holdings
Material Adverse Effect"). Holdings is the successor by merger to the assets,
business and liabilities of Old ▇▇▇▇▇▇. True, complete and correct copies of
the Certificate of Incorporation and By-laws, each as amended to date, of Old
▇▇▇▇▇▇ have been provided to PetroChemNet on or before the date hereof. The
Certificate of Incorporation and By-laws of Old ▇▇▇▇▇▇ are referred to herein as
the "▇▇▇▇▇▇ Charter Documents." The minute books of Old ▇▇▇▇▇▇, as heretofore
made available to PetroChemNet (and as shall be delivered to PetroChemNet at
Closing), are correct and complete in all material respects, and reflect all
resolutions adopted by its incorporators, stockholders and directors (including
by any committees of the board of directors of each such corporation). Neither
the Stockholders nor ▇▇▇▇ has taken any actions with respect to Holdings or
MergerCo that is not reflected in the minute books of Old ▇▇▇▇▇▇ as heretofore
made available to PetroChemNet.
(b) CheMatch is a corporation duly organized, validly existing and is
in good standing under the laws of the State of Texas and is duly authorized and
qualified to do business under all applicable laws, regulations, ordinances and
orders of public authorities to carry on its business in the places and in the
manner as now conducted except where the failure to be so authorized or
qualified would not have a material adverse effect on the business, operations,
affairs, prospects, properties, assets, profits or condition (financial or
otherwise) of CheMatch (a "CheMatch Material Adverse Effect"). Notwithstanding
anything in this clause (b) or any other provision of this Appendix A, the
representations and warranties included in this Appendix A regarding CheMatch as
they relate to matters that are within the jurisdiction of the U.S. Commodities
Futures Trading Commission (the "CFTC") are limited in all respects to those
matters, and only those matters, set out in clause (c) of this Section A.1.1.,
and Holdings, the Stockholders and CheMatch expressly disclaim any other express
or implied representation or warranty regarding CheMatch as it relates to
matters that are within such jurisdiction, except as provided in that clause
(c). Texas is the only jurisdiction in which CheMatch is authorized or qualified
to do business. True, complete and correct copies of the Articles of
Incorporation and By-laws, each as amended to date, of CheMatch have been
provided to PetroChemNet on or before the date hereof. Such Articles of
Incorporation and By-laws are referred to herein as the "CheMatch Charter
Documents." The minute books of CheMatch, as heretofore made available to
PetroChemNet (and as shall be delivered to PetroChemNet at Closing), are correct
and complete in all material respects, and reflect all resolutions adopted by
its incorporators, stockholders and directors (including by any committees of
its board of directors).
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60
(c) CheMatch is not aware that its activities, including its
ownership and operation of the CheMatch On-Line system, violate any provision of
the U.S. Commodity Exchange Act, or any law, rule or regulation administered by
the CFTC (the "Commodities Laws, Rules and Regulations"). CheMatch has provided
to PetroChemNet a copy of the letters submitted to the CFTC on its behalf by
▇▇▇▇▇▇▇▇ ▇. ▇▇▇, Attorney at Law, regarding the proposed or actual activities of
CheMatch. Although subsequent discussions between various staff members and ▇▇.
▇▇▇ have occurred, to the best knowledge of CheMatch, the CFTC has neither
responded definitively in writing to those letters regarding the matters that
are the subject of those letters nor taken a definitive position with respect to
the matters that are the subject of those letters.
A.1.2 AUTHORIZATION; VALIDITY.
(a) Neither the Stockholders nor ▇▇▇▇ has taken any action
that could cause the representatives of Holdings and MergerCo executing this
Agreement and each of the other agreements and instruments executed and
delivered by either or both of them in connection with the transactions
contemplated hereby (collectively, the "Transaction Documents") not to have the
full legal right, corporate power and authority to enter into and bind Holdings
and MergerCo to the terms of this Agreement and the other Transaction Documents.
▇▇▇▇ and each of the Stockholders has the full legal right, corporate or other
power and authority to enter into this Agreement and the other Transaction
Documents and to consummate the transactions contemplated hereby and thereby.
Neither the Stockholders nor ▇▇▇▇ has taken any action that could cause the
execution and delivery of this Agreement by Holdings and MergerCo and the
performance by Holdings and MergerCo of the transactions contemplated herein and
therein not to have been duly and validly authorized by the respective Boards of
Directors of such corporations or this Agreement and each of the other
Transaction Documents not to have been duly and validly authorized by all
necessary corporate action. This Agreement is, and when executed, each of the
other Transaction Documents will be, a legal, valid and binding obligation of
▇▇▇▇ and the Stockholders, enforceable against each of them in accordance with
its terms.
(b) Neither the Stockholders nor ▇▇▇▇ has taken any action that could
cause the shares of Holdings Common Stock to be delivered to the stockholders of
PetroChemNet at the Closing in connection with the Merger not to be duly
authorized, validly issued shares of common stock of Holdings, fully paid and
nonassessable, or issued in violation of the preemptive rights of any persons.
A.1.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement and the other Transaction Documents, the consummation of any
transactions herein or therein referred to or contemplated and the fulfillment
of the terms hereof and thereof shall not:
(a) conflict with, or result in a breach or violation of any
Old ▇▇▇▇▇▇ or CheMatch Charter Documents;
(b) materially conflict with, or result in a material default
(or an event which would constitute a default but for any requirement
of notice or lapse of time or both) under any document, agreement or
other instrument to which Old ▇▇▇▇▇▇ was, or CheMatch is, a party, or
result in the creation or imposition of any lien, charge or encumbrance
on any of
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61
Holdings', MergerCo's or CheMatch's properties pursuant to (i) any law
or regulation to which Holdings or CheMatch or any of its or their
property is subject (provided, however, that no representation is made
with respect to the Commodities Laws, Rules and Regulations), or (ii)
any judgment, order or decree to which Old ▇▇▇▇▇▇ or CheMatch is bound
or any of its or their property is or was subject. Notwithstanding the
foregoing, the provisions of an Agreement, entered into in August 1997
between CheMatch and ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "Werlang Agreement"), may
require a payment to be paid to Werlang by the Stockholders in
connection with the transactions contemplated hereby if the
transactions contemplated by the Werlang Agreement are not consummated
concurrently with the transactions contemplated hereby, and the
provisions of a Stock Option Agreement, dated as of December 1, 1996
(the "▇▇▇▇▇▇ Agreement"), by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, includes certain rights in favor of ▇▇. ▇▇▇▇▇▇ to purchase
shares of common stock of Old ▇▇▇▇▇▇ from ▇▇. ▇▇▇▇▇, which ▇▇▇▇▇▇
Agreement shall not be in effect with respect to the shares of Old
▇▇▇▇▇▇, Holdings or CheMatch as of the Effective Time. Copies of the
Werlang Agreement and the ▇▇▇▇▇▇ Agreement, as in effect on the date
hereof, have been provided or made available to PetroChemNet on or
before the date of this Agreement;
(c) result in termination or any impairment of any material
permit, license, franchise, contractual right or other authorization of
CheMatch; or
(d) violate any law, order, judgment, rule or regulation to
which Old ▇▇▇▇▇▇ or CheMatch is or was subject or by which old ▇▇▇▇▇▇
or CheMatch is or was bound (provided, however, that no representation
is made with respect to the Commodities Laws, Rules and Regulations or
with respect to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976).
A.1.4 CAPITAL STOCK. (a) The authorized capital stock of Old ▇▇▇▇▇▇
consists of 1,000,000 shares of common stock, $0.01 par value per share, of
which 150,000 shares are issued and outstanding (not including any shares that
may be held in its treasury or otherwise have been canceled prior to the date
hereof). Neither the Stockholders nor ▇▇▇▇ has taken any action to affect or
alter in any manner the authorized or issued capital stock of Holdings or
MergerCo except as expressly contemplated by this Agreement. All of the issued
and outstanding shares of the capital stock of Old ▇▇▇▇▇▇ have been duly
authorized and validly issued, are fully paid and nonassessable and are owned of
record and beneficially by the Stockholders in the amounts set forth in Annex I
hereto free and clear of all liens, encumbrances and claims of every kind
(except as may be contemplated by the ▇▇▇▇▇▇ Agreement as it relates to shares
of capital stock of Old ▇▇▇▇▇▇ held by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, all of which
encumbrances shall be terminated prior to the Closing Date). Neither the
Stockholders nor ▇▇▇▇ has taken any action that could cause any of the shares of
capital stock of Holdings or MergerCo not to be duly authorized and validly
issued, fully paid and nonassessable or owned of record and beneficially by the
Stockholders in the amounts set forth in Annex II hereto free and clear of all
liens, encumbrances and claims of every kind (except as may be contemplated by
the ▇▇▇▇▇▇ Agreement as it relates to shares of capital stock of Old ▇▇▇▇▇▇ held
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, all of which encumbrances shall be terminated prior to the
Closing Date). All of the outstanding shares of the capital stock of Old ▇▇▇▇▇▇
that were issued on or before the date hereof were offered, issued, sold and
delivered by Old ▇▇▇▇▇▇ in compliance with all applicable state and federal laws
concerning the issuance of securities, and neither the Stockholders nor ▇▇▇▇ has
taken any action that could
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cause any of the shares of capital stock to be issued by Holdings to be issued
other than in compliance with all applicable state and federal laws concerning
the issuance of securities. None of the shares of capital stock of Old ▇▇▇▇▇▇
was issued in violation of the preemptive rights of any person or entity, and
neither the Stockholders nor ▇▇▇▇ has taken any action that could cause any of
the shares of capital stock to be issued by Holdings to be issued in violation
of the preemptive rights of any person or entity.
(b) The authorized capital stock of CheMatch consists of
10,000 shares of common stock, par value $.01 per share, of which 3,750 shares
are issued and outstanding. All of the issued and outstanding shares of the
capital stock of CheMatch have been duly authorized and validly issued, are
fully paid and nonassessable and are owned of record by Holdings or ▇▇▇▇, and
beneficially by Holdings and ▇▇▇▇, free and clear of all liens, encumbrances and
claims of every kind. All of the issued and outstanding shares of the capital
stock of CheMatch were offered, issued, sold and delivered by CheMatch in
compliance with all applicable state and federal laws concerning the issuance of
securities. Further, none of such shares was issued in violation of the
preemptive rights of any persons or entities.
A.1.5 TRANSACTIONS IN CAPITAL STOCK. No option, warrant, call,
subscription right, preemptive right, conversion right or other contract or
commitment of any kind exists which may obligate Holdings, MergerCo or CheMatch
to issue, sell or otherwise cause to become outstanding any shares of capital
stock or other equity securities of Holdings, MergerCo or CheMatch, other than
the Werlang Agreement and the Battery Agreement and other than as contemplated
by this Agreement. Neither Holdings, MergerCo nor CheMatch has any obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any of its
equity securities or any interests therein or to pay any dividend or make any
distribution in respect thereof, other than as provided in the Werlang Agreement
and except as contemplated by this Agreement; provided, however, that the
representations in this Section relating to Holdings (from and after the
effective time of the incorporation of Holdings) and MergerCo are limited to the
best knowledge of the Stockholders and ▇▇▇▇.
A.1.6 [INTENTIONALLY OMITTED.]
A.1.7 SUBSIDIARIES. Holdings has no subsidiaries other than CheMatch
and MergerCo, and does not presently own, of record or beneficially, or control,
directly or indirectly, any capital stock, securities convertible into capital
stock or any other equity interest in any corporation, association or business
entity other than CheMatch, nor is Holdings or CheMatch, directly or indirectly,
a participant in any joint venture, partnership or other noncorporate entity
other than indirect investments via mutual funds and similar professionally
managed investment vehicles, the investment policies of which are not controlled
by Holdings, CheMatch or the Stockholders.
A.1.8 [INTENTIONALLY OMITTED.]
A.1.9 INTELLECTUAL PROPERTY
(a) Set forth on SCHEDULE A.1.9 and SCHEDULE A.1.13 is a true, complete
and correct list of all intellectual property CheMatch owns, or has the right to
use, sell or license and which is utilized in its business as presently
conducted and as presently contemplated to be conducted after
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the Merger (such intellectual property and the rights thereto are collectively
referred to herein as the "CheMatch IP Rights"). Except as set forth on SCHEDULE
A.1.9, CheMatch owns all such CheMatch IP Rights. Neither Holdings nor CheMatch
has granted, nor to the Stockholders' and CheMatch's knowledge after good faith
inquiry, does there exist by implication or operation of law, any license,
interest or other right in respect thereof which does or which will, subsequent
to the Closing, permit or enable anyone other than CheMatch to use any of the
CheMatch IP Rights except (i) for those CheMatch IP Rights, if any, that are
included in the ▇▇▇▇▇▇ Business Assets and (ii) each customer of the CheMatch
On-Line service is granted a non-exclusive license, without the right of
sublicense, to use the CheMatch On-Line software in connection with such
customer's use of such service.
(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not constitute a
breach of any instrument or agreement governing any CheMatch IP Rights (the
"CheMatch IP Rights Agreements"), will not cause the forfeiture or termination
or give rise to a right of forfeiture or termination of any CheMatch IP Rights
or impair the right of CheMatch or Holdings to use, sell or license any CheMatch
IP Rights or portion thereof, except for the occurrence of any such breach,
forfeiture, termination or impairment that would not singly or in the aggregate,
result in a Material Adverse Effect on CheMatch or Holdings and except with
respect to the CheMatch IP Rights, if any, that are transferred to New ▇▇▇▇▇▇ as
part of the ▇▇▇▇▇▇ Business Assets.
(c) Except as set forth SCHEDULE 1.9 (i) neither the marketing,
license, sale or use or intended use of any product, service or technology
currently used, licensed or sold or under development by CheMatch violates any
license or agreement between CheMatch and any third party or, to the knowledge
of CheMatch, infringes any intellectual property right of any other party; and
(ii) there is no pending or, to the knowledge of CheMatch, threatened claim or
litigation contesting the validity, ownership or right to use, sell, license or
dispose of any CheMatch IP Rights, nor has CheMatch received any written notice
asserting that any CheMatch IP Rights or the proposed use, sale, license or
disposition thereof conflicts or will conflict with the rights of any other
party.
(d) CheMatch has taken reasonable and practicable steps designed to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in the United States in, all CheMatch IP rights.
(e) To CheMatch's knowledge, none of the computer software, computer
firmware, computer hardware (whether general or special purpose) or similar or
related items of automated, computerized or software systems that are used or
relied on by CheMatch or sub-licensed to CheMatch in the conduct of its business
will malfunction, will cease to function, will generate incorrect data or will
product incorrect results when processing, providing or receiving (i)
date-related data from, into and between the Twentieth (20th) and Twenty-First
(21st) centuries or (ii) date-related data in connection with any valid date in
the Twentieth (20th) and Twenty-First (21st) centuries, causing a material
adverse effect on CheMatch. No representation is made, however, as to any
Microsoft software or ZetaFax software used by CheMatch in connection with the
operation of its business.
A.1.10 FINANCIAL STATEMENTS. (a) Holdings has provided to PetroChemNet
(a) true, complete and correct copies of Old ▇▇▇▇▇▇'▇ unaudited Consolidated
Balance Sheets as of November 30 of each of the years 1996, 1997 and 1998 (the
end of each of its three most recent completed fiscal years), unaudited
Consolidated Statements of Income, unaudited Consolidated Statements of
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Changes in Shareholders' Equity, and unaudited Consolidated Statements of Cash
Flows for each of Old ▇▇▇▇▇▇'▇ three most recent completed fiscal years, in each
case, together with the Accountant's Review Report of ▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.,
certified public accountants, Houston, Texas (collectively, the "Reviewed
Holdings Financials") and (b) true, complete and correct copies of Old ▇▇▇▇▇▇'▇
Balance Sheet (the "Holdings May Balance Sheet") as of May 31, 1999 (hereinafter
referred to as the "Holdings Balance Sheet Date") and Statements of Income for
the six-month period then ended (collectively, the "Holdings Interim
Financials"; and together with the Reviewed Holdings Financials, the "Holdings
Financial Statements"). The Holdings Financial Statements have been prepared
from the books and records of Old ▇▇▇▇▇▇ and CheMatch. The Reviewed Holdings
Financials were reviewed in accordance with the Statements on Standards for
Accounting and Review Services issued by the American Institute of Certified
Public Accountants. The Holdings Interim Financials do not include normal
year-end adjustments, which in the aggregate would not be material in amount or
effect, do not include footnote information and may not accurately reflect the
ownership of shares of capital stock of CheMatch by ▇▇▇▇. Except as provided
above, each of the Consolidated Balance Sheets included in Holdings Financial
Statements presents fairly the financial condition of Holdings as of the dates
indicated thereon, and each of the Statements of Income, Cash Flows and Retained
Earnings included in Holdings Financial Statements presents fairly the results
of its operations for the periods indicated thereon, subject in the case of the
Holdings Interim Financials, to normal year-end adjustments, which in the
aggregate would not be material in amount or effect, and to customary footnote
information which, if included might affect the interpretation of the
information included thereon.
(b) Holdings has provided to PetroChemNet on or before the
date hereof true, complete and correct copies of CheMatch's Balance Sheet (the
"CheMatch May Balance Sheet") as of the Holdings Balance Sheet Date and Income
Statement for the six-month period then ended (collectively, the "CheMatch
Financial Statements"). The CheMatch Financial Statements have been prepared
from the books and records of CheMatch, and do not include normal year-end audit
adjustments, which in the aggregate would not be material in amount or effect,
and do not include footnote information and may not accurately reflect the
ownership of shares of capital stock of CheMatch by ▇▇▇▇. Except as provided
above, each of the Balance Sheets included in the CheMatch Financial Statements
presents fairly the financial condition of CheMatch as of the dates indicated
thereon, and each of the Income Statements included in the CheMatch Financial
Statements presents fairly the results of its operations for the periods
indicated thereon, subject to normal year-end adjustments, which in the
aggregate would not be material in amount or effect, and to customary footnote
information which, if included might affect the interpretation of the
information included thereon.
A.1.11 LIABILITIES AND OBLIGATIONS.
(a) Except as disclosed on SCHEDULE A.1.11(A) attached hereto,
and except for (i) liabilities of Holdings arising as a result of the
transactions contemplated hereby, to the extent such liabilities arise
other than by reason of a breach by the Stockholders or ▇▇▇▇ of any of
their representations, warranties or covenants set forth herein, and
(ii) liabilities arising as a result of actions of the officers and
directors of Holdings other than those actions of the officers and
directors of Old ▇▇▇▇▇▇ taken prior to the effective time of the merger
of Old ▇▇▇▇▇▇ with and for Holdings for which Holdings becomes liable
by
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operation of law upon consummation of the merger of Old ▇▇▇▇▇▇ with and
into Holdings, Holdings is not liable for or subject to any liabilities
except for:
(i) those liabilities reflected on the Holdings May
Balance Sheet and not heretofore paid or discharged;
(ii) those liabilities arising in the ordinary course
of its business consistent with past practice under any
contract, commitment or agreement specifically disclosed in
this Agreement or not required to be disclosed in this
Agreement because of the term or amount involved or otherwise;
and
(iii) those liabilities incurred, consistent with
past practice, in the ordinary course of business and either
not required to be shown on the Holdings May Balance Sheet or
arising since the Holdings Balance Sheet Date, which
liabilities in the aggregate are of a character and magnitude
consistent with past practice.
Except as otherwise expressly provided in the ▇▇▇▇▇▇ Stock Repurchase
Agreement, all of such liabilities are included as part of the Assumed
Liabilities that New ▇▇▇▇▇▇ is assuming in connection with the Stock Repurchase
Transactions. For purposes of this Section A.1.11 and Section 9.1 of this
Agreement, the term "liabilities" shall include without limitation any direct or
indirect liability, indebtedness, guaranty, endorsement, claim, loss, damage,
deficiency, cost, expense, obligation or responsibility, either accrued,
absolute, contingent or otherwise and whether known or unknown, fixed or
unfixed, ▇▇▇▇▇▇ or inchoate, liquidated or unliquidated, secured or unsecured;
provided, however, that no representation or warranty is made in this Section
A.1.11 as to any Tax related liability, all of which are limited exclusively to
those representations and warranties set out in Section A.1.22 hereof.
(b) Except as disclosed on SCHEDULE A.1.11(b) or any other
Schedule attached hereto or as otherwise expressly contemplated by the
Transaction Documents, CheMatch is not liable for or subject to any
liabilities except for:
(i) those liabilities reflected on the CheMatch May
Balance Sheet and not heretofore paid or discharged;
(ii) those liabilities arising in the ordinary course
of its business consistent with past practice under any
contract, commitment or agreement specifically disclosed in
this Agreement or not required to be disclosed in this
Agreement because of the term or amount involved or otherwise;
and
(iii) those liabilities incurred, consistent with
past practice, in the ordinary course of business and either
not required to be shown on the CheMatch May Balance Sheet or
arising since the Holdings Balance Sheet Date, which
liabilities in the aggregate are of a character and magnitude
consistent with past practice.
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A.1.12 ACCOUNTS AND NOTES RECEIVABLE. SCHEDULE A.1.12 hereto sets forth
an accurate list, as of June 16, 1999, of the accounts and notes receivable of
CheMatch (including without limitation receivables from and advances to
employees and the Stockholders), which includes an aging of all accounts and
notes receivable showing amounts due in 30-day aging categories.
A.1.13 PERMITS AND INTANGIBLES. Each of Holdings and CheMatch owns or
holds all licenses, franchises, permits and other governmental authorizations,
including without limitation permits, titles (including without limitation motor
vehicle titles and current registrations), fuel permits, licenses, franchises,
certificates, or any United States trademarks, trade names, patents, patent
applications and copyrights, the absence of any of which could have a Holdings
or CheMatch Material Adverse Effect (the "Material Permits"), except that
Holdings and CheMatch do not currently own or hold, but have applied for,
certain Material Permits identified on SCHEDULE A.1.13 as having been applied
for, with respect to which the failure of CheMatch to own or hold such Material
Permits as of an earlier time than they will issue upon approval of such
application will not have a CheMatch Material Adverse Effect. SCHEDULE A.1.13
hereto sets forth an accurate list and summary description, as of the date
hereof, of all Material Permits of Holdings and CheMatch. To the knowledge of
the Stockholders those Material Permits are valid, and neither Holdings nor
CheMatch has received any notice that any governmental authority intends to
modify, cancel, terminate or not renew any of those Material Permits. Each of
Holdings and CheMatch has conducted and is conducting its business in compliance
with the requirements, standards, criteria and conditions set forth in those
Material Permits and other applicable orders, approvals, variances, rules and
regulations and is not in violation of any of the foregoing except where such
non-compliance or violation would not have a Holdings or CheMatch Material
Adverse Effect. The transactions contemplated by this Agreement will not result
in a default under or a breach or violation of, or adversely affect the rights
and benefits afforded to Holdings and/or CheMatch by, any of its respective
Material Permits. Notwithstanding anything in this Section A.1.13 to the
contrary, no representation or warranty is made with respect to the matters
described in this Section as they are affected by the Commodity Laws, Rules and
Regulations.
A.1.14 ENVIRONMENTAL MATTERS. (a) (i) Holdings has complied with and is
in compliance with all federal, state, local and foreign laws, statutes (civil
and criminal), common laws, ordinances, codes, regulations, rules, notices,
permits, judgments, requirements, standards, guidelines, judicial and
administrative orders and decrees applicable to it and its properties, assets,
operations and businesses relating to pollution, worker and public health and
safety, and/or environmental protection (collectively "Environmental Laws"),
including without limitation Environmental Laws relating to air, water, land and
the generation, release, storage, use, handling, transportation, treatment,
discharge, disposal or other handling of Wastes, Hazardous Wastes and Hazardous
Substances (as such terms are currently defined in any applicable Environmental
Law), except to the extent that noncompliance with any Environmental Law, either
singly or in the aggregate, does not and would not have a Holdings Material
Adverse Effect; (ii) Holdings has obtained and adhered to all necessary permits
and other approvals necessary to treat, transport, store, dispose of and
otherwise handle Wastes, Hazardous Wastes and Hazardous Substances and has
reported, to the extent required by all Environmental Laws, all past and present
sites owned and operated by Holdings where Hazardous Wastes or Hazardous
Substances have been treated, stored, disposed of or otherwise handled, except
to the extent that a failure to do so, either singly or in the aggregate, does
not and would not have a Holdings Material Adverse Effect; (iii) there have been
no emissions, spills, discharges, releases or threats of releases (as defined in
Environmental Laws) at, from, in or on any property owned, leased
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or operated by Holdings except as permitted by Environmental Laws or where such
emissions, spills, discharges, and releases do not and could not have a Holdings
Material Adverse Effect; (iv) Holdings knows of no on-site or off-site location
to which Holdings has transported or disposed of Wastes, Hazardous Wastes and/or
Hazardous Substances or arranged for the transportation of Hazardous Wastes and
Hazardous Substances, which site is the subject of any federal, state, local or
foreign enforcement action or any other investigation which could lead to any
claim against Holdings or CheMatch for any clean-up cost, remedial work, damage
to natural resources or personal injury, including without limitation any claim
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended (CERCLA); and (v) Holdings neither has nor will have any
liability in connection with any release of any Hazardous Waste or Hazardous
Substance into the environment, except to the extent that such liability does
not and would not have a Holdings Material Adverse Effect. For purposes of this
Appendix A, the term Environmental Laws includes, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA"), 42 U.S.C. '9601 et seq., the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. '6901 et seq., the Federal Water Pollution
Control Act, 33 U.S.C. '1251 et seq., the Clean Air Act, 42 U.S.C. '1857 et
seq., the Occupational Safety and Health Act of 1970, 29 U.S.C. '651 et seq.,
and the Toxic Substances Control Act, 15 U.S.C. '2601 et seq.
(b) (i) CheMatch has complied with and is in compliance with
all Environmental Laws, including without limitation Environmental Laws relating
to air, water, land and the generation, release, storage, use, handling,
transportation, treatment, discharge, disposal or other handling of Wastes,
Hazardous Wastes and Hazardous Substances (as such terms are currently defined
in any applicable Environmental Law), except to the extent that noncompliance
with any Environmental Law, either singly or in the aggregate, does not and
would not have a CheMatch Material Adverse Effect; (ii) CheMatch has obtained
and adhered to all necessary permits and other approvals necessary to treat,
transport, store, dispose of and otherwise handle Wastes, Hazardous Wastes and
Hazardous Substances and has reported, to the extent required by all
Environmental Laws, all past and present sites owned and operated by CheMatch
where Hazardous Wastes or Hazardous Substances have been treated, stored,
disposed of or otherwise handled, except to the extent that a failure to do so,
either singly or in the aggregate, does not and would not have a CheMatch
Material Adverse Effect; (iii) there have been no emissions, spills, discharges,
releases or threats of releases (as defined in Environmental Laws) at, from, in
or on any property owned, leased or operated by CheMatch except as permitted by
Environmental Laws or where such emissions, spills, discharges, and releases do
not and could not have a CheMatch Material Adverse Effect; (iv) CheMatch knows
of no on-site or off-site location to which Holdings has transported or disposed
of Wastes, Hazardous Wastes and/or Hazardous Substances or arranged for the
transportation of Hazardous Wastes and Hazardous Substances, which site is the
subject of any federal, state, local or foreign enforcement action or any other
investigation which could lead to any claim against CheMatch or Holdings for any
clean-up cost, remedial work, damage to natural resources or personal injury,
including without limitation any claim under CERCLA; and (v) CheMatch neither
has nor will have any liability in connection with any release of any Hazardous
Waste or Hazardous Substance into the environment, except to the extent that
such liability does not and would not have a CheMatch Material Adverse Effect.
A.1.15 REAL AND PERSONAL PROPERTY. (a) SCHEDULE A.1.15(a) hereto sets
forth an accurate list of all owned and leased real property, all personal
property included in "depreciable plant, property and equipment" on the Holdings
May Balance Sheet and all other personal property owned
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or leased by Holdings with a value in excess of $25,000 (i) as of the Holdings
Balance Sheet Date and (ii) acquired since the Holdings Balance Sheet Date,
including in each case true, complete and correct copies of leases for material
equipment and all real properties on which are situated buildings, warehouses,
workshops, garages and other structures used in the operation of the business of
Holdings and also including an indication as to which assets are currently
owned, or were formerly owned, by the Stockholders or any other person or entity
that directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with Holdings ("Affiliates"). All fixed
assets used by Holdings that are material to the operation of its business are
either owned by Holdings or leased under an agreement which is listed on
SCHEDULE A.1.15(a).
(b) SCHEDULE A.1.15(b) hereto sets forth an accurate list of
all owned and leased real property, all personal property included in
"depreciable plant, property and equipment" on the CheMatch May Balance Sheet
and all other personal property owned or leased by CheMatch with a value in
excess of $25,000 (i) as of the Holdings Balance Sheet Date and (ii) acquired
since the Holdings Balance Sheet Date, including in each case true, complete and
correct copies of leases for material equipment and all real properties on which
are situated buildings, warehouses, offices and other structures used in the
operation of the business of CheMatch and also including an indication as to
which assets are currently owned, or were formerly owned, by the Stockholders or
business or personal Affiliates of CheMatch or the Stockholders. Except as
otherwise set forth on SCHEDULE A.1.15(b), all of the material machinery and
equipment of Holdings listed on SCHEDULE A.1.15(b) are in good working order and
condition, and fit for the purposes for which they were intended, ordinary wear
and tear excepted. All leases set forth on SCHEDULE A.1.15(b) are in full force
and effect and constitute valid and binding agreements of Holdings and, to the
knowledge of Holdings, the other parties thereto in accordance with their
respective terms. All fixed assets used by Holdings that are material to the
operation of its business are either owned by Holdings or leased under an
agreement which is listed on SCHEDULE A.1.15(b), other than the ▇▇▇▇▇▇ Business
Assets to be conveyed pursuant to the Stock Repurchase Transactions none of
which will CheMatch or Holdings, after the Effective Time, have any ownership,
leasehold or other right or interest in or to except as contemplated by the
Sharing and Related Agreement between New ▇▇▇▇▇▇ and CheMatch. SCHEDULE
A.1.15(b) includes without limitation true, complete and correct copies of all
title reports and title in effect. CheMatch has no plans or projects involving
the opening of new operations, expansion of any existing operations or the
acquisition of any real property or existing business, to which management of
CheMatch has made any material expenditure in the two-year period prior to the
date of this Agreement, which if pursued by CheMatch, would require additional
expenditures of capital.
A.1.16 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS.
SCHEDULE A.1.16 hereto contains an accurate list of (a) all significant
customers (i.e. those customers representing 5% or more of CheMatch's revenues
for the 12 months ending on the Holdings Balance Sheet Date, or who have paid to
CheMatch $25,000 or more in any of the past four fiscal quarters) and (b) all
material contracts, commitments, leases, instruments, agreements, licenses or
permits to which Old ▇▇▇▇▇▇ or CheMatch is or was a party or to or by which it
or its properties are or were subject or bound (including without limitation
contracts with significant customers, joint venture or partnership agreements,
contracts with any labor organizations, loan agreements, indemnity or guaranty
agreements, bonds, mortgages, options to purchase land, liens, pledges or other
security agreements) (i) as of the Holdings Balance Sheet Date and (ii) entered
into since the Holdings Balance Sheet Date (collectively, the "Holdings/CheMatch
Material Contracts"). Holdings has made
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available to PetroChemNet on or before the date hereof true, complete and
correct copies of the Holdings/CheMatch Material Contracts. Except to the extent
set forth on SCHEDULE A.1.16 hereto, (x) none of CheMatch's significant
customers have canceled or substantially reduced or, to the knowledge of the
Stockholders, are currently attempting or threatening to cancel or substantially
reduce service or commitments, (y) each of Old ▇▇▇▇▇▇ and CheMatch has complied
with all of its material commitments and obligations and are not in default
under any of the Holdings/CheMatch Material Contracts and no notice of default
has been received or threatened with respect to any thereof and (z) there are no
Holdings/CheMatch Material Contracts that were not negotiated at arm's length
with third parties not Affiliated with Old ▇▇▇▇▇▇ or CheMatch or any officer,
director or Stockholder, other than the intercompany transactions between Old
▇▇▇▇▇▇ and CheMatch themselves.
A.1.17 TITLE TO REAL PROPERTY. Neither Holdings nor CheMatch owns any
real property.
A.1.18 INSURANCE. SCHEDULE A.1.18 hereto sets forth an accurate list,
as of the Holdings Balance Sheet Date, of all insurance policies carried by Old
▇▇▇▇▇▇ and CheMatch, all of which will be assigned to New ▇▇▇▇▇▇ in connection
with the Stock Repurchase Transactions. Holdings has made available to
PetroChemNet on or before the date hereof true, complete and correct copies of
all current insurance policies, all of which are in full force and effect.
Except as set forth on SCHEDULE A.1.18, neither Old ▇▇▇▇▇▇ nor CheMatch has been
denied any insurance coverage which it has requested or which has been requested
on its behalf.
A.1.19 COMPENSATION; EMPLOYMENT AGREEMENTS. SCHEDULE A.1.19 hereto sets
forth an accurate list, as of the date hereof, of all officers, directors and
key employees of CheMatch, listing all employment agreements with such officers,
directors and key employees as of (a) the Holdings Balance Sheet Date and (b)
the date hereof. CheMatch has no written employment contracts, commitments or
arrangements with any person, and no oral arrangements with any party other than
▇▇▇▇, which oral arrangement has been completely and accurately described to
PetroChemNet on or before the date hereof and which arrangement shall be
terminated without liability to CheMatch or Holdings on or prior to the
Effective Time except for salary and benefit payments unpaid and accrued through
the Effective Time in customary amounts. Holdings has no contracts, commitments
or arrangements with any person, whether written or oral, which is not included
as part of the Assumed Liabilities.
A.1.20 EMPLOYEE BENEFIT PLANS; LABOR MATTERS. All employee benefit
plans, programs and policies (whether formal or informal, and whether maintained
for the benefit of a single individual or more than one individual) maintained
or contributed to by Holdings for the benefit of any current or former employee
of Old ▇▇▇▇▇▇ or CheMatch or in which such employees are entitled to participate
are listed in SCHEDULE A.1.20 (the "Benefit Plans"), and copies of all such
written plans and policies, written descriptions of all such oral plans and
policies, and all other documentation relating to such plans and policies
previously have been delivered or made available in writing to PetroChemNet. All
rights and interests of Old ▇▇▇▇▇▇, Holdings and CheMatch in and to the Benefit
Plans will be included in the ▇▇▇▇▇▇ Business Assets, and all liabilities of Old
▇▇▇▇▇▇ Holdings and CheMatch under the Benefit Plans, including all liabilities,
if any, which may arise from the assignment thereof without the prior consent of
the insurers thereunder, will be assumed by New ▇▇▇▇▇▇ in connection with the
Stock Repurchase Transactions. Except as disclosed on SCHEDULE A.1.20: (a) each
Benefit Plan and the administration thereof complies, and has at all times
complied,
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in all material respects with the requirements of all applicable law, including
without limitation the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and the Internal Revenue Code of 1986, as amended (the
"Code"), and each Benefit Plan intended to qualify under section 401(a) of the
Code so qualifies, and each trust which forms a part of any such plan is
tax-exempt under section 501(a) of the Code; (b) no Benefit Plan subject to Part
3 of Title I of ERISA has incurred any "accumulated funding deficiency" within
the meaning of section 302 of ERISA or section 412 of the Code; (c) no liability
has been incurred or is expected to be incurred under Title IV of ERISA to any
party with respect to any Benefit Plan, or any other plan presently or
heretofore maintained or contributed to by Holdings or CheMatch, any predecessor
to Holdings or CheMatch, or any entity that is or at any time was a member of a
controlled group, as defined in Section 412(n)(6)(B) of the Code, which includes
or included Holdings or CheMatch ("Controlled Group Member"); (d) neither
Holdings, CheMatch nor any Controlled Group Member has incurred any liability
for any tax imposed under section 4971 through 4980B of the Code or civil
liability under section 502(i) or (l) of ERISA; (e) the "amount of unfunded
benefit liabilities" within the meaning of section 4001(a)(18) of ERISA does not
exceed zero with respect to any Benefit Plan subject to Title IV of ERISA; (f)
no Benefit Plan is a multiemployer plan within the meaning of section 3(37) of
ERISA; (g) no Benefit Plan provides health or death benefit coverage beyond the
termination of an employee's employment, except as required by Part 6 of Title I
of ERISA or section 4980B of the Code, (h) no material "reportable event"
(within the meaning of section 4043 of ERISA) has occurred with respect to any
Benefit Plan or any plan maintained by a Controlled Group Member since the
effective date of said section 4043; (i) no suit, actions or other litigation
(excluding claims for benefits incurred in the ordinary course of plan
activities) have been brought against or with respect to any Benefit Plan; (j)
all contributions to Benefit Plans that were required to be made under such
Benefit Plans have been made as of the Holdings Balance Sheet Date, and all
benefits accrued under any unfunded Benefit Plan will have been paid, accrued or
otherwise adequately reserved in accordance with generally accepted accounting
principles as of such date and Holdings and CheMatch will have performed by the
Closing Date all material obligations required to be performed as of such date
under Benefit Plans, and (k) no employee of Holdings or CheMatch is represented
by a labor union or organization, no labor union or organization has been
certified or recognized as a representative of any such employee, there are no
pending or, to the knowledge of the Stockholders, threatened representation
campaigns concerning union representation involving any employee or efforts of
any labor union or organization (or representatives thereof) to organize any
employees. Neither Holdings nor CheMatch is bound by or subject to (and none of
its respective assets or properties is bound by or subject to) any arrangement
with any labor union. No employees of Holdings or CheMatch are represented by
any labor union or covered by any collective bargaining agreement and, to the
best of the Stockholders' knowledge, no campaign to establish such
representation is in progress. There is no pending or, to the best of the
Stockholders' knowledge, threatened labor dispute involving Holdings or CheMatch
and any group of its or their employees nor has Holdings or CheMatch experienced
any labor interruptions over the past three years, and each of Holdings and
CheMatch considers its relationship with its employees to be good. If reasonably
requested by PetroChemNet, Holdings and/or CheMatch shall terminate any Benefit
Plan substantially contemporaneously with the Closing.
A.1.21 CONFORMITY WITH LAW; LITIGATION. Neither Old ▇▇▇▇▇▇ nor CheMatch
has violated any law or regulation or any order of any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over it, which violations individually or in
the aggregate could have a CheMatch or Holdings
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Material Adverse Effect; and except to the extent set forth on SCHEDULE A.1.21,
there are no material claims, actions, suits or proceedings, pending or, to the
best of the Stockholders' knowledge, threatened, against or affecting Holdings
or CheMatch, at law or in equity, or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over it and no notice of any claim, action,
suit or proceeding, whether pending or threatened, has been received.
Notwithstanding anything in this Section A.1.21 to the contrary, no
representation or warranty is made in this Section with respect to the matters
described in this Section as they are affected by the Commodity Laws, Rules and
Regulations or the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended.
A.1.22 TAXES. . Except as set forth on SCHEDULE A.1.22, (a) each of
Holdings (including without limitation its predecessor, ▇▇▇▇▇▇ & Company,
Incorporated, a Texas corporation) and CheMatch has timely filed or shall timely
file all requisite federal, state and other Tax (as defined below) returns,
reports and forms ("Returns") for all periods ended on or before the Closing
Date, and all such Returns are timely and complete in all material respects;
provided, however, that an extension has been filed for with respect to the tax
year beginning December 1, 1997, and ending November 30, 1998 return for ▇▇▇▇▇▇
& Company, Incorporated and CheMatch, and any Tax due with respect to that
period has not been paid; (b) there are no examinations in progress or claims
against Holdings or CheMatch for Taxes for any period or periods and no notice
of any claim for Taxes, whether pending or threatened, has been received; (c)
each of Holdings and CheMatch has a taxable year ended on November 30 in each
year; (d) each of Holdings and CheMatch currently utilizes the cash method of
accounting for income Tax purposes and such method of accounting has not changed
in the past five years; (e) each of Holdings and CheMatch has made (or there has
been made on its behalf) all current estimated Tax payments required to have
been paid on or before the Closing Date in an amount sufficient to avoid any
underpayment penalties; and (f) copies of (i) any Tax examinations, (ii)
extensions of statutory limitations for the collection or assessment of Taxes
and (iii) the Returns of Holdings and CheMatch (without the schedules thereto)
with respect to the tax years ended November 30, 1996 and 1997 have been made
available to PetroChemNet on or before the date hereof.
For purposes of this Agreement, the term "Tax" shall be
understood to include any tax or similar governmental charge, impost or levy
(including without limitation income taxes, franchise taxes, transfer taxes or
fees, sales taxes, use taxes, gross receipts taxes, value added taxes,
employment taxes, excise taxes, ad valorem taxes, property taxes, withholding
taxes, payroll taxes, minimum taxes or windfall profit taxes) together with any
related penalties, fines, additions to tax or interest imposed by the United
States or any state, county, local or foreign government or subdivision or
agency thereof; provided, however, that, subject to the accuracy in all material
respects of the representations and warranties of the Stockholders and ▇▇▇▇ set
forth herein, the term Tax shall not include any Tax arising out of or relating
to any of the following: the merger of ▇▇▇▇▇▇ & Company, Incorporated, a Texas
corporation with and into Holdings, the repurchase of shares of capital stock of
Holdings from the Stockholders as contemplated by this Agreement, the issuance
of shares of CheMatch to ▇▇▇▇, the exchange of shares of capital stock of
CheMatch owned by ▇▇▇▇, the transactions contemplated by this Agreement related
to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or the other transactions contemplated by this Agreement to
occur at the Closing.
A.1.23 NO VIOLATIONS. Neither Holdings nor CheMatch is in violation of
any Charter Document, and neither Holdings nor CheMatch, nor to the best
knowledge of the Stockholders, is
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any other party thereto, in default under any Holdings/CheMatch Material
Contract (the Holdings/CheMatch Material Contracts, together with the Charter
Documents of those two companies, being referred to herein as the
"Holdings/CheMatch Material Documents"); and, except as set forth in this
Agreement, including without limitation the Schedules hereto, (i) the rights and
benefits of Holdings and CheMatch under the Holdings/CheMatch Material Documents
will not be materially and adversely affected by the transactions contemplated
hereby and (ii) the execution of this Agreement and the agreements executed and
to be executed pursuant hereto and the performance of the obligations hereunder
and thereunder and the consummation of the transactions contemplated hereby and
thereby will not result in any violation or breach or constitute a default
under, any of the terms or provisions of the Holdings/CheMatch Material
Documents or the Holdings/CheMatch Charter Documents. None of the
Holdings/CheMatch Material Documents requires notice to, or the consent or
approval of, any governmental agency or other third party to any of the
transactions contemplated hereby to remain in full force and effect or give rise
to any right to termination, cancellation or acceleration or loss of any right
or benefit.
A.1.24 GOVERNMENT CONTRACTS. Neither Holdings nor CheMatch is a party
to any governmental contract subject to price redetermination or renegotiation.
A.1.25 ABSENCE OF CHANGES. Since the Holdings Balance Sheet Date,
except as contemplated herein or as set forth on SCHEDULE A.1.25 there has not
been:
(a) any damage, destruction or loss (whether or not covered by
insurance) that would have a Holdings or CheMatch Material Adverse
Effect;
(b) any change in the authorized capital of Old ▇▇▇▇▇▇ or
CheMatch or in their outstanding securities or any change in their
ownership interests or any grant of any options, warrants, calls,
conversion rights or commitments;
(c) any declaration or payment of any dividend or distribution
in respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of Old ▇▇▇▇▇▇
or CheMatch;
(d) any increase in the compensation, bonus, sales commissions
or fee arrangement payable or to become payable by Old ▇▇▇▇▇▇ or
CheMatch to any of its officers, directors, stockholders, employees,
consultants or agents, except for ordinary and customary bonuses and
salary increases for employees in accordance with past practice, and
except that Old ▇▇▇▇▇▇ paid certain bonuses to certain of its officers;
(e) any work interruptions, labor grievances or claims filed,
or any similar event or condition of any character, materially
adversely affecting the business or future prospects of Holdings or
CheMatch;
(f) any sale or transfer, or any agreement to sell or
transfer, any material assets, property or rights of CheMatch to any
person, including without limitation the Stockholders and their
Affiliates;
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(g) any cancellation, or agreement to cancel, any indebtedness
or other obligation owing to CheMatch, including without limitation any
indebtedness or obligation of the Stockholders or any Affiliate
thereof, not including, however, the negotiation and adjustment of
bills in the course of good faith disputes with customers and suppliers
in a manner consistent with past practice;
(h) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of the
assets, property or rights of CheMatch or requiring consent of any
party to the transfer and assignment of any such assets, property or
rights;
(i) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets with
a value in excess of $20,000 or outside of the ordinary course of
business of CheMatch;
(j) any waiver of any material rights or claims of CheMatch;
(k) any material breach, amendment or termination of any
Holdings/CheMatch Material Contract, license, permit or other right to
which Holdings or CheMatch is a party;
(l) any other change that by itself or together with other
changes, has had a CheMatch or Holdings Material Adverse Effect; or
(m) any other action by Holdings or CheMatch outside the
ordinary course of businesses.
A.1.26 BANK ACCOUNTS; POWERS OF ATTORNEY. SCHEDULE A.1.26 hereto sets
forth an accurate list, as of the date of this Agreement, of:
(a) the name of each financial institution in which Holdings
or CheMatch has any account or safe deposit box;
(b) the names in which the accounts or boxes are held;
(c) the type of account; and
(d) the name of each person authorized to draw thereon or have
access thereto.
SCHEDULE A.1.26 also sets forth the name of each person, corporation,
firm or other entity holding a general or special power of attorney from Old
▇▇▇▇▇▇ or CheMatch and a description of the terms of such power.
A.1.27 RELATIONS WITH GOVERNMENTS. Neither Holdings nor CheMatch has
made, offered or agreed to offer anything of value to any governmental official,
political party or candidate for government office nor has it otherwise taken
any action that would cause Holdings or CheMatch to be in violation of the
Foreign Corrupt Practices Act of 1977, as amended, or any law of similar effect.
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A.1.28 APPRAISAL. The valuation of Old ▇▇▇▇▇▇ referred to in Section
6.16 of the Agreement has been prepared by a third party independent of, and not
affiliated with, Old ▇▇▇▇▇▇, CheMatch and each of the Stockholders and, to the
knowledge of the Stockholders, such valuation is complete and accurate in all
material respects and accurately reflects the value of Old ▇▇▇▇▇▇ as of the
date(s) set forth in such valuation.
A.1.29 DISCLOSURE. No representation or warranty by Holdings or the
Stockholders contained in this Agreement, and no representation, warranty or
statement contained in any list, certificate, Schedule or other instrument,
document, agreement or writing furnished or to be furnished to, or made with,
PetroChemNet pursuant hereto or in connection with the negotiation, execution or
performance hereof, contains or will contain any untrue statement of a material
fact or omits or will omit to state any material fact necessary to make any
statement herein or therein not misleading.
A.1.30 ABSENCE OF CLAIMS AGAINST COMPANY. None of the Stockholders has
any Claims against Holdings or CheMatch except for (a) items specifically
identified on SCHEDULES A.1.11 and A.1.16 as being Claims of or obligations to
the Stockholders and (b) continuing obligations to the Stockholders as employees
of Holdings relating to his or her employment thereby. ▇▇▇▇ has no Claims
against Holdings or CheMatch except for (a) items specifically identified on
SCHEDULES A.1.11 and A.1.16 as being Claims of or obligations to ▇▇▇▇ and (b)
continuing obligations to ▇▇▇▇ as an employee of CheMatch relating to his
employment thereby.
A.1.31 COMPLETE COPIES OF MATERIALS. Each of Holdings and CheMatch has
delivered or made available in writing to PetroChemNet true and complete copies
of each agreement, contract, commitment or other document (or summaries of same)
that is referred to in the Schedules attached as part of this Appendix A or that
has been requested by PetroChemNet or its counsel, except for certain
proprietary information of Holdings that, by the terms of this Agreement,
expressly is not required to be delivered to PetroChemNet.
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A.2 REPRESENTATIONS OF PETROCHEMNET
A.2.1 DUE ORGANIZATION. PetroChemNet is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and is duly authorized and qualified to do business under all applicable laws,
regulations, ordinances and orders of public authorities to carry on their
respective businesses in the places and in the manner as now conducted except
for where the failure to be so authorized or qualified would not have a material
adverse effect on the business, operations, affairs, prospects, properties,
assets, profits or condition (financial or otherwise) of PetroChemNet (a
"PetroChemNet Material Adverse Effect"). True, correct and complete copies of
the Certificate of Incorporation and the By-laws, each, as amended,
(collectively, the "PetroChemNet Charter Documents") of PetroChemNet have been
delivered to Holdings. PetroChemNet is not in violation of any PetroChemNet
Charter Document. The minute books of PetroChemNet as heretofore made available
to the Stockholders and ▇▇▇▇, are correct and complete in all material respects,
and reflect all resolutions adopted by its incorporators, stockholders and
directors (including by any committees of its board of directors).
A.2.2 AUTHORIZATION; VALIDITY OF OBLIGATIONS. The representatives of
PetroChemNet executing this Agreement have the corporate power and authority to
enter into and bind PetroChemNet to the terms of this Agreement. PetroChemNet
has the full legal right, corporate or other power and authority to enter into
this Agreement and the transactions contemplated hereby. The execution and
delivery of this Agreement by PetroChemNet and the performance by PetroChemNet
of the transactions contemplated herein have been duly and validly authorized by
the Board of Directors of PetroChemNet and, to the extent required by law or the
PetroChemNet Charter Documents, by the shareholders of PetroChemNet, and this
Agreement has been duly and validly authorized by all necessary corporate
action. This Agreement is a legal, valid and binding obligation of PetroChemNet
enforceable against PetroChemNet in accordance with its terms. Subject to the
accuracy in all material respects of the representations and warranties of the
Stockholders as they relate to Holdings and Old ▇▇▇▇▇▇ contained herein, this
Agreement is, and each of the documents contemplated to be executed and
delivered by Holdings to the Stockholders and/or ▇▇▇▇ in connection with the
transactions contemplated hereby will be, upon such execution and delivery
thereof by Holdings, enforceable against Holdings in accordance with its and
their terms.
A.2.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement, the consummation of any transactions herein referred to or
contemplated by and the fulfillment of the terms hereof will not:
(a) conflict with, or result in a breach or violation of the
Certificate of Incorporation or By-laws of PetroChemNet;
(b) materially conflict with, or result in a material default
(or an event which would constitute a default but for any requirement
of notice or lapse of time or both) under any document, agreement or
other instrument to which PetroChemNet is a party, or result in the
creation or imposition of any lien, charge or encumbrance on any of
PetroChemNet's properties pursuant to (i) any law or regulation to
which either PetroChemNet or any of its property is subject, or (ii)
any judgment, order or decree to which PetroChemNet is bound or any of
its property is subject;
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(c) result in termination or any impairment of any material
permit, license, franchise, contractual right or other authorization of
PetroChemNet; or
(d) violate any law, order, judgment, rule or regulation to
which PetroChemNet is subject or by which PetroChemNet is bound, except
that no representation or warranty is made with respect to the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended.
A.2.4 CONFORMITY WITH LAW. PetroChemNet has not violated any law or
regulation or any order of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over either it which would have a Material Adverse Effect on
PetroChemNet, except that no representation or warranty is made with respect to
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976. There are no material
claims, actions, suits or proceedings, pending or, to the knowledge of
PetroChemNet, threatened, against or affecting PetroChemNet, at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over it and no notice of any claim, action, suit or proceeding,
whether pending or threatened, has been received which, if decided adversely to
PetroChemNet could have a Material Adverse Effect on PetroChemNet.
A.2.5 CAPITALIZATION OF PETROCHEMNET AND OWNERSHIP OF COMPANY COMMON
STOCK. The authorized capital stock of PetroChemNet consists of 20,000 shares of
PetroChemNet Common Stock, of which 7,032 shares are issued and outstanding as
of the date hereof, and (ii) warrants, options and other rights to purchase
securities convertible into 5,277 shares of PetroChemNet Common Stock. All of
the issued and outstanding shares of capital stock of PetroChemNet have been
duly authorized and validly issued, are fully paid and nonassessable and are
owned of record and beneficially in the amounts set forth on Annex III hereto
free and clear of all liens, encumbrances and claims of every kind. All of the
outstanding shares of capital stock of PetroChemNet have been offered, issued,
sold and delivered by it in compliance with all applicable state and federal
laws concerning the issuance of securities. Further, none of such shares were
issued in violation of the preemptive rights of any stockholders.
A.2.6 TRANSACTIONS IN CAPITAL STOCK. Except as set forth in Section
A.2.5, no option, warrant, call, subscription right, preemptive right,
conversion right or other contract or commitment of any kind exists which may
obligate PetroChemNet to issue, sell or otherwise cause to become outstanding
any shares of capital stock or other equity securities of PetroChemNet. Except
as disclosed on SCHEDULE 2.6 hereto, PetroChemNet has no obligation (contingent
or otherwise) to purchase, redeem or otherwise acquire any of its equity
securities or any interests therein or to pay any dividend or make any
distribution in respect thereof.
A.2.7 FINANCIAL STATEMENTS. PetroChemNet has provided to the
Stockholders and ▇▇▇▇ true, complete and correct copies of PetroChemNet's
Balance Sheet (the "PetroChemNet March Balance Sheet") as of March 31, 1999
(hereinafter referred to as the "PetroChemNet Balance Sheet Date") and
Statements of Income for the three-month period then ended (collectively, the
"PetroChemNet Financial Statements"). The PetroChemNet Financial Statements have
been prepared from the books and records of PetroChemNet and present fairly the
financial position of PetroChemNet as of the dates thereof and the results of
operations for the periods covered thereby,
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subject to normal year-end adjustments, which in the aggregate would not be
material in amount or effect, and to customary footnote information which, if
included might affect the interpretation of the information included thereon.
A.2.8 LIABILITIES AND OBLIGATIONS.
(a) Except as disclosed on SCHEDULE A.2.8(a) attached hereto,
PetroChemNet is not liable for or subject to any liabilities except
for:
(i) those liabilities reflected on the PetroChemNet
March Balance Sheet and not heretofore paid or discharged;
(ii) those liabilities arising in the ordinary course
of its business consistent with past practice under any
contract, commitment or agreement specifically disclosed in
this Agreement or not required to be disclosed in this
Agreement because of the term or amount involved or otherwise;
and
(iii) those liabilities incurred, consistent with
past practice, in the ordinary course of business and either
not required to be shown on the PetroChemNet March Balance
Sheet or arising since the PetroChemNet Balance Sheet Date,
which liabilities in the aggregate are of a character and
magnitude consistent with past practice.
For purposes of this Section A.2.8, the term "liabilities" shall
include without limitation any direct or indirect liability, indebtedness,
guaranty, endorsement, claim, loss, damage, deficiency, cost, expense,
obligation or responsibility, either accrued, absolute, contingent or otherwise
and whether known or unknown, fixed or unfixed, ▇▇▇▇▇▇ or inchoate, liquidated
or unliquidated, secured or unsecured.
A.2.9 NO VIOLATIONS. PetroChemNet is not in violation of any Charter
Document, and to the best knowledge of PetroChemNet, neither PetroChemNet nor
any other party thereto, is in default under any material contracts,
commitments, leases, instruments, agreements, licenses or permits to which
PetroChemNet is a party or to or by which it or its properties are subject or
bound (including without limitation contracts with significant customers, joint
venture or partnership agreements, contracts with any labor organizations, loan
agreements, indemnity or guaranty agreements, bonds, mortgages, options to
purchase land, liens, pledges or other security agreements) (collectively, the
"PetroChemNet Material Contracts"); and except as set forth in this Agreement,
including without limitation the Schedules hereto, (i) the rights and benefits
of PetroChemNet under the Material Contracts will not be materially and
adversely affected by the transactions contemplated hereby and (ii) the
execution of this Agreement and the agreements executed and to be executed
pursuant hereto and the performance of the obligations hereunder and thereunder
and the consummation of the transactions contemplated hereby and thereby will
not result in any violation or breach or constitute a default under, any of the
terms or provisions of the Material Contracts or the Charter Documents of
PetroChemNet. None of the Material Contracts of PetroChemNet requires notice to,
or the consent or approval of, any governmental agency or other third party to
any of the transactions contemplated hereby to remain in full force and effect
or give rise to any right to termination, cancellation or acceleration or loss
of any right or benefit.
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A.2.10 ABSENCE OF CHANGES. Since the PetroChemNet Balance Sheet Date,
except as contemplated herein, in the Battery Documents, or as set forth on
SCHEDULE A.2.10 there has not been:
(a) any damage, destruction or loss (whether or not covered by
insurance) that would have a PetroChemNet Material Adverse Effect;
(b) any change in the authorized capital of PetroChemNet or in
its outstanding securities or any change in its ownership interest or
any grant of any options, warrants, calls, conversion rights or
commitments;
(c) any declaration or payment of any dividend or distribution
in respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of
PetroChemNet;
(d) any sale or transfer, or any agreement to sell or
transfer, any material assets, property or rights of PetroChemNet to
any person, including without limitation its officers, directors,
stockholders and their respective Affiliates;
(e) any cancellation, or agreement to cancel, any indebtedness
or other obligation owing to PetroChemNet, including without limitation
any indebtedness or obligation of any of its officers, directors,
stockholders or their respective Affiliates, not including, however,
the negotiation and adjustment of bills in the course of good faith
disputes with customers and suppliers in a manner consistent with past
practice;
(f) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of the
assets, property or rights of PetroChemNet or requiring consent of any
party to the transfer and assignment of any such assets, property or
rights;
(g) any waiver of any material rights or claims of
PetroChemNet;
(h) any other change that by itself or together with other
changes, has had a PetroChemNet Material Adverse Effect; or
(i) any other action by PetroChemNet outside the ordinary
course of businesses.
A.2.11 DISCLOSURE. No representation or warranty by PetroChemNet
contained in this Agreement, and no representation, warranty or statement
contained in any list, certificate, Schedule or other instrument, document,
agreement or writing furnished or to be furnished to, or made with, the
Stockholders, ▇▇▇▇, Holdings or CheMatch pursuant hereto or in connection with
the negotiation, execution or performance hereof, contains or will contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary to make any statement herein or therein not misleading.
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A.2.12 ABSENCE OF CLAIMS AGAINST COMPANY. None of the stockholders of
PetroChemNet has any Claims against PetroChemNet except for (a) items
specifically identified on SCHEDULE A.2.8 as being Claims of or obligations to
the stockholders and (b) continuing obligations to the stockholders as employees
of PetroChemNet relating to his or her employment thereby.
A.2.13 COMPLETE COPIES OF MATERIALS. PetroChemNet has delivered or made
available in writing to the Stockholders and ▇▇▇▇ true and complete copies of
each agreement, contract, commitment or other document (or summaries of same)
that is referred to in the Schedules attached as part of this Appendix A or that
has been requested by the Stockholders or ▇▇▇▇ or their counsel.
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