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EXHIBIT 10.15
[Letterhead of PetroChemNet Holdings, Inc.]
November 11, 1999
E.I. du Pont de Nemours and Company
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Gentlemen:
This letter will evidence our mutual understanding and agreement with
respect to the strategic alliance (the "Strategic Alliance") between
PetroChemNet Holdings, Inc., a Delaware corporation ("PCN, CheMatch, or the
Company") and E. I. du Pont de Nemours and Company, a Delaware corporation
("DuPont").
1. DuPont Purchase of PCN Preferred Stock.
(a) DuPont will purchase for cash $7 million of PCN Series C Preferred
Stock at the same price and subject to the same terms and
conditions as the other purchasers of the Series C Preferred Stock
at the closing of the Series C Preferred Stock financing ("the
Series C Preferred Stock Financing"). The target closing date for
the Series C Preferred Stock Financing is November 18, 1999.
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(a) DuPont shall, simultaneous with the closing of the Series C
Preferred Stock Financing, purchase a number of shares of PCN
Common Stock equal to $5,000,000, divided by the price per share
paid for the Series C Preferred Stock. The consideration for the
purchase of the Common Stock shall consist of $.01 per share cash,
and other good and valuable consideration including goods and
services as further described herein.
(b) DuPont will work with PCN to add those potential customers agreed
by the parties to the customers using the CheMatch platform of PCN
for trading products. For each such customer up to a maximum of 20
customers, that completes at least five (5) traces prior to
December 31, 2000, with third parties other than DuPont on the
CheMatch platform at the standard rates charged for the use of the
CheMatch platform, DuPont shall earn a commission of $100,000. In
lieu of a cash payment, DuPont will use such commission to
purchase a number of shares of Common Stock of PCN equal to such
$100,000, divided by the Fair Market Value per share of Common
Stock. For the purposes of this paragraph 2(b), "Fair Market
Value" shall mean (i) the price per share paid for the Series C
Preferred Stock until the date 120 days from 1 December 1999, or
(ii) thereafter, the per share price based on the most recent
transaction value or appraisal, if PCN has not completed its
initial public offering, or if PCN has completed its initial
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public offering, the closing price of PCN's Common Stock on the date of
the fifth trade that meets the condition set forth above.
(c) DuPont shall have the right to purchase, prior to the closing of the
initial public offering of Common Stock of PCN registered under the
Securities Act of 1933, as amended, additional shares of PCN Common
Stock, so that after such purchase DuPont would own 10% of the "fully
diluted" Common Stock of PCN. In determining "fully diluted" Common
Stock, all outstanding consultant, employee and director stock options
shall be assumed to be exercised, all warrants shall be assumed to be
exercised at a net amount using the Fair Market Value of the Common
Stock, and all Preferred Stock shall be assumed to be converted at the
conversion price in effect at that time. For the purposes of this
paragraph 2(c), "Fair Market Value" shall mean the per shares price to
public in the initial public offering of Common Stock in the event that
DuPont shall exercise its right to purchase such additional shares in
connection with the initial public offering of Common Stock of PCN, or
the per share price based on the most recent transaction value or
appraisal if such purchase is not in connection with the initial public
offering. For the purposes of this paragraph 2(c), DuPont shall be
deemed to have exercised its right hereunder in connection with the
initial public offering of Common Stock of PCN, if prior to any written
notice to PCN by DuPont that it is exercising its right to purchase
additional shares of Common Stock under this paragraph 2(c), PCN
notifies DuPont in writing that it is contemplating filing a
registration statement with the Securities and Exchange Commission for
an initial public offering of its Common Stock within the following 60
days. DuPont shall have 15 days after receipt of such notice to
exercise its right to purchase under this paragraph 2(c) by sending
written notice to PCN of such exercise. If DuPont fails to send such
notice to PCN within the time set forth above, DuPont shall be deemed
to have waived its right to purchase any additional shares of Common
Stock of PCN in the event that the contemplated initial public offering
of Common Stock of PCN is completed. If DuPont exercises its right to
purchase such additional shares of Common Stock, the closing of such
purchase shall occur at the same time as the closing of the initial
public offering. DuPont shall have the right to purchase additional
shares of Common Stock under this paragraph 2(c) only once, and after
such initial purchase, its rights under this paragraph 2(c) shall
terminate. Further provided that, in the event DuPont has exercised the
share purchase option outlined in this paragraph 2(c), the provisions
of paragraph 2(b) above shall not operate to allow DuPont to increase
its ownership in excess of the 10% of "fully diluted" Common Stock of
PCN specified above in this paragraph 2(c).
3. DuPont's Obligations and Agreements.
(a) For the purposes of this paragraph 3, "Products" shall mean bulk
chemicals, bulk polymers and refined oil products available for trade
over the CheMatch system
(b) DuPont shall: (1) for a period of one year from the closing of the
transactions contemplated by this letter agreement use the CheMatch
platform of PCN at the standard rates charged for the use of the
CheMatch platform exclusively for Products that it buys using
e-commerce; (2) use reasonable efforts to use the
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CheMatch platform of PCN at the standard rates charged for the use of
the CheMatch platform for any Products that it trades; (3) for the
four year period commencing 1 January 2001, use reasonable efforts to
trade at the standard rates charged for the use of the CheMatch
platform an increasing amount of spot purchases of Products provided
that for the relevant Product CheMatch continues to serve as the
marketplace for at least a reasonable quantity of such Product and
such purchases continue to be in DuPont's economic interest; (4)
assist PCN with the design of the CheMatch platform so that it becomes
a more commercially desirable means of transacting business; and (5)
provide PCN, at no cost to PCN, with a full time equivalent employee
with knowledge of the relevant markets for a period of one year to
work on increasing the volume of trading through the CheMatch
platform.
(c) DuPont shall not invest in enterprises competing with PCN in the
business of providing an on-line neutral marketplace with Product
offerings which significantly overlap with those available through
PCN, and specifically including without limitation ChemConnect, Inc.,
and I to I Solutions Limited. Subject to the specific exclusion of
ChemConnect, Inc., and I to I Solutions Limited, such prohibition
shall not apply to investment by DuPont in enterprises in the business
of providing an on-line neutral marketplace where DuPont's interest is
to invest in such enterprises in order to enable DuPont to sell
branded or specialty products. This provision shall remain in effect
for the period during which DuPont or its affiliates maintain an
equity interest in PCN, provided, however, that this provision shall
remain in effect for at least one year from the date of the closing of
the transactions contemplated by this letter agreement.
(d) DuPont shall provide PCN with a credit of $2 million towards the
purchase of DuPont products and/or consulting services over a three
year period from the closing of the Series C Preferred Stock
Financing. The products and/or services shall include those related
to market development, advertising, safety, health and environmental,
logistics and other products or services as mutually agreed by the
parties. Purchases of products shall be deducted from the $2 million
total credit at list price less standard discount. Consulting
services will be valued at $400 per hour. Additional services
provided by DuPont may include without limitation items such as office
space in international locations, attendance at trade conferences to
provide testimonials or demonstrations of the CheMatch system,
speaking at company or industry functions, trade shows or
presentations to securities analysts.
4. Additional Conditions.
(a) Subject to the execution of appropriate license agreements, DuPont
will make available to CheMatch, for use on its site or through access
to a DuPont Safety Resources site, certain safety, health and
environmental information as agreed by the parties for a negotiated
annual fee to be applied against the $2 million commitment pursuant to
3(d) above to purchase DuPont products and services. Provided that
the fee for any year is agreed by the parties, DuPont further agrees
not to make such information available to ChemConnect, Inc. or
E-Chemicals.
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(b) Provided that DuPont is in compliance with its obligations under
paragraph 3, DuPont shall have the right to observe at PCN Board
meetings so long as it owns 5% or more of PCN's Common Stock on a
fully diluted basis (including Common Stock issuable on conversion of
the Series C Preferred Stock warrants and options), but DuPont shall
not be entitled to be present during any discussions relating to
specific third party customers. DuPont shall give PCN notice prior to
the date of the PCN Board meeting at which DuPont desires to have an
observer. Such notice shall state the name of the observer and shall
acknowledge that such observer is bound by confidentiality obligations
to DuPont no less stringent than those set out in this letter
agreement as a condition to the observer attending the PCN Board
meeting.
(c) The securities which are the subject of this agreement have not been
registered under the Securities Act of 1933, as amended, or applicable
state securities laws. These securities have been acquired for
investment and not with a view to distribution or resale, and may not
be sold, mortgaged, pledged, hypothecated or otherwise transferred
without an effective registration statement for such securities under
the Securities Act of 1933, as amended, and applicable state
securities laws, or the availability of an exemption from the
registration provisions of the Securities Act of 1933 and applicable
state securities laws. These securities will be further subject to any
transfer restrictions imposed by the managing underwriter of the PCN
initial public offering for such period following the PCN initial
public offering as is determined by such managing underwriter.
(d) The parties agree to meet quarterly for a minimum period of two years
to share ideas and recommendations on e-commerce strategies and site
design as related to PCN's CheMatch platform and DuPont's e-commerce
activities. There will be no consulting or other fees for those
personnel participating in these quarterly sessions.
(e) DuPont and PCN shall use reasonable efforts to generate additional
revenue streams for each other, which may include, for example,
integration opportunities between PCN's CheMatch platform and DuPont's
services.
(f) For a period of five years from the Closing of the transactions
contemplated by this letter agreement, DuPont shall have the right of
first negotiation to provide logistics, product testing and safety,
health and environmental services or other services which are
identified by DuPont to PCN as potential offerings. PCN shall be free
to pursue with other parties any services which at such time are not
identified by DuPont to PCN or which DuPont is not presently or at
such time capable of delivering. Any such services provided by DuPont
shall be at competitive rates and shall be subject to negotiation of
definitive agreements.
5. Confidentiality and Privacy.
(a) Both Parties shall maintain the confidentiality of each other's
proprietary information pursuant to the confidentiality agreement
between them dated October 19, 1999.
(b) PCN shall adopt a privacy policy no less comprehensive and with terms
substantially similar to the then current terms of DuPont's privacy
policy. DuPont shall not be obligated to provide information to PCN
which is deemed
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private under any applicable law, directive, statute, or regulation
which would violate such law, directive, statue, or regulation
provided that DuPont shall provide a copy of such policy to PCN and
shall give notice of any changes in policies.
(c) Neither party may reference the other party to this agreement in
presentations to third parties, advertising, promotions or other
published information, unless such disclosure is required by law,
without the other party's prior consent. Both parties may make
disclosure of the existence of the DuPont investment in PCN in
mutually agreed press releases provided that the detailed terms and
conditions shall remain confidential unless required to be disclosed
by law. Provided that, PCN and DuPont agree that they will issue a
press release contemporaneous with the Series C Preferred Stock
closing acknowledging and giving public notice of DuPont's inclusion
as an investor in PCN, without giving specific details of the
provisions of this agreement. Such press release is subject to mutual
approval as to form and substance, which approval shall not be
unreasonably withheld.
6. Miscellaneous
(a) The Strategic Alliance, this letter agreement and all documentation
contemplated by this letter shall be governed by the internal law of
the State of Delaware, without regard to any conflict of laws
principles.
(b) Each of PCN and DuPont will bear its own costs and expenses of the
preparation of the documentation and performance of the obligations
set forth in this letter.
If this letter correctly sets forth our understanding, please indicate
your acceptance by executing this letter in the space provided below.
Very truly yours,
PETROCHEMNET HOLDINGS, INC.
By: /s/ XXXX X. XXXXXXXXXX
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Xxxx X. XxXxxxxxxx
President and Chief Executive Officer
ACCEPTED AND AGREED TO
THIS 12th day of November, 1999
X.X. xxXxxx de Nemours and Company
By: /s/ X. XXXX XXXXXXX
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X. XXXX XXXXXXX
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