Exhibit 3.1
AMENDED ARRANGEMENT AGREEMENT
BETWEEN
FIBERCHEM, INC.
AND
INTREX DATA COMMUNICATIONS CORP.
As Of May 26, 2000
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 - DEFINITIONS......................................................................2
1.1 Definitions.........................................................................2
ARTICLE 2 - THE ARRANGEMENT..................................................................5
2.1 The Arrangement.....................................................................5
2.2 Closing Effective Time..............................................................5
2.3 Directors and Officers of FiberChem.................................................6
2.4 Taking of Necessary Action..........................................................6
2.5 The United States Securities Act of 1993............................................6
2.6 New Agreement.......................................................................6
2.7 Pandel Merger.......................................................................6
ARTICLE 3 - CONSIDERATION; CONVERSION AND EXCHANGE OF SECURITIES............................7
3.1 Calculation of and Determination of Arrangement Consideration.......................7
3.2 Arrangement Consideration...........................................................7
3.3 Conversion of Shares; Delivery of Arrangement Consideration.........................8
3.4 Lock-Up and Voting of FiberChem Common Shares.......................................9
3.5 Voting Agreement...................................................................10
3.6 Registration Rights................................................................10
3.7 Abandoned Property Laws............................................................12
3.8 Pooling Agreement..................................................................12
3.9 Employment & Non-Competition Agreements............................................13
3.10 Compensation Agreement.............................................................13
3.11 Brokers; Finders...................................................................13
ARTICLE 4 - CERTAIN ACTIONS.................................................................13
4.1 Reasonable Efforts.................................................................13
4.2 Special Provision Pending the Closing..............................................13
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF INTREX........................................14
5.1 Ownership of Shares................................................................14
5.2 Capacity; Organization; Standing...................................................14
5.3 Legal Proceedings..................................................................15
5.4 Authorization; No Governmental Consents Required...................................15
5.5 Encumbrances.......................................................................15
5.6 Trademarks.........................................................................16
5.7 Patents, etc.......................................................................16
5.8 Financial Statements...............................................................16
5.9 Absence of Certain Changes.........................................................17
5.10 Tax Matters........................................................................17
5.11 Accounts Receivable and Inventory..................................................17
5.12 Title and Condition of Properties..................................................18
5.13 Description of Material Contracts..................................................18
5.14 Accounts Payable...................................................................19
5.15 Default; Violations or Restrictions, Third Party Consents..........................19
5.16 Court Orders and Decrees...........................................................20
5.17 Books and Records..................................................................20
5.18 Pension and Welfare Plans..........................................................20
5.19 Insurance..........................................................................20
5.20 Rights of Third Parties............................................................20
5.21 Labor Matters......................................................................21
5.22 Relationships with Vendors and Customers...........................................21
5.23 Compensation Plans.................................................................21
5.24 Governmental Licenses..............................................................21
5.25 Binding Obligation.................................................................21
5.26 Brokers............................................................................22
5.27 Compliance With Laws...............................................................22
5.28 Guarantees.........................................................................23
5.29 Benefits...........................................................................23
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF FIBERCHEM.....................................23
6.1 Organization; Capitalization.......................................................23
6.2 Share Capital......................................................................23
6.3 Capacity...........................................................................23
6.4 Legal Proceedings..................................................................24
6.5 Encumbrances.......................................................................24
6.6 Trademarks.........................................................................24
6.7 Patents, etc.......................................................................25
6.8 Financial Statements...............................................................25
6.9 Absence of Certain Changes.........................................................26
6.10 Tax Matters........................................................................26
6.11 Accounts Receivable and Inventory..................................................26
6.12 Title and Condition of Properties..................................................27
6.13 Description of Material Contracts..................................................27
6.14 Accounts Payable...................................................................28
6.15 Default; Violations or Restrictions, Third Party Consents..........................28
6.16 Court Orders and Decrees...........................................................29
6.17 Books and Records..................................................................29
6.18 Pension and Welfare Plans..........................................................29
6.19 Insurance..........................................................................29
6.20 Rights of Third Parties............................................................30
6.21 Labor Matters......................................................................30
6.22 Relationships with Vendors and Customers...........................................30
6.23 Compensation Plans.................................................................30
6.24 Governmental Licenses..............................................................30
6.25 Compliance With Laws...............................................................31
6.26 Binding Obligation.................................................................31
6.27 Brokers............................................................................32
6.28 Guarantees.........................................................................32
6.29 Benefits...........................................................................32
6.30 SEC Filings........................................................................32
ARTICLE 7 - COVENANTS OF INTREX.............................................................32
7.1 Further Assurances.................................................................32
7.2 Access.............................................................................32
-ii-
7.3 Confidentiality....................................................................33
7.4 Closing Documents..................................................................33
7.5 Third Party Consents...............................................................33
7.6 Notice of Events or Changes........................................................33
7.7 Conduct of Business Until Closing..................................................33
7.8 Update Schedules...................................................................35
7.9 No Solicitation of Competing Offers................................................35
ARTICLE 8 - COVENANTS OF FIBERCHEM..........................................................35
8.1 Closing Documents..................................................................35
8.2 Noninterference....................................................................35
8.3 Confidentiality....................................................................35
8.4 Access.............................................................................36
8.5 Third Party Consents...............................................................36
8.6 Notice of Events or Changes........................................................36
8.7 Conduct of Business Until Closing..................................................36
8.8 Update Schedules...................................................................37
8.9 No Solicitation of Competing Offers................................................37
8.10 Membership on Board of Directors...................................................38
8.11 Increase to Authorized Share Capital...............................................38
8.12 Subsequent Action..................................................................38
ARTICLE 9 - CONDITIONS PRECEDENT TO FIBERCHEM'S OBLIGATIONS.................................38
9.1 No Breach of Representations, etc..................................................38
9.2 Compliance with Agreement..........................................................38
9.3 No Material Adverse Change.........................................................39
9.4 Certificates.......................................................................39
9.5 Consents and Approvals.............................................................39
9.6 Corporate Documents................................................................39
9.7 Opinions of Intrex's Counsel.......................................................39
9.8 No Termination.....................................................................39
9.9 Pandel Merger......................................................................40
9.10 Pooling Agreement..................................................................40
9.11 Employment Agreements..............................................................40
9.12 Financial Statements...............................................................40
9.13 Regulatory Approvals...............................................................40
9.14 Additional Financing...............................................................40
9.15 Fairness Opinion...................................................................40
ARTICLE 10 - CONDITIONS PRECEDENT TO INTREX'S OBLIGATIONS.................................40
10.1 No Breach of Representations, etc..................................................40
10.2 Compliance with Agreements.........................................................41
10.3 No Termination.....................................................................41
10.4 Certificates.......................................................................41
10.5 Opinion of Counsel.................................................................41
10.6 No Material Adverse Change.........................................................41
10.7 Corporate Documents................................................................41
10.8 Directors of FiberChem.............................................................42
10.9 Pandel Merger......................................................................42
10.10 Pooling Agreement..................................................................42
-iii-
10.11 Employment Agreements..............................................................42
10.12 Compensation Agreement.............................................................42
10.13 FiberChem Special Shares...........................................................42
10.14 Consents and Approvals.............................................................42
10.15 Financial Statements...............................................................42
10.16 Regulatory Approvals...............................................................42
10.17 Additional Financing...............................................................42
10.18 Fairness Opinion...................................................................43
ARTICLE 11 - CONDITIONS PRECEDENT TO OBLIGATIONS OF FIBERCHEM AND INTREX....................43
11.1 Due Diligence......................................................................43
11.2 Approvals and Consents.............................................................43
11.3 No Injunctions.....................................................................43
11.4 Corporate Proceedings..............................................................44
ARTICLE 12 - TERMINATION....................................................................44
ARTICLE 13 - FIBERCHEM'S OBLIGATIONS AT CLOSING.............................................44
ARTICLE 14 - INTREX'S OBLIGATIONS AT CLOSING................................................44
ARTICLE 15 - SUBSEQUENT EVENTS TO CLOSING...................................................45
ARTICLE 16 - PARTIES IN INTEREST............................................................45
ARTICLE 17 - ENTIRE AGREEMENT...............................................................45
ARTICLE 18 - GOVERNING LAW..................................................................45
ARTICLE 19 - CURRENCY.......................................................................45
ARTICLE 20 - EXPENSES.......................................................................45
ARTICLE 21 - ARBITRATION....................................................................46
ARTICLE 22 - SEVERABILITY...................................................................46
ARTICLE 23 - NOTICES........................................................................46
ARTICLE 24 - NON-WAIVERS....................................................................47
ARTICLE 25 - ASSIGNMENT.....................................................................47
ARTICLE 26 - DISCLOSURE.....................................................................47
ARTICLE 27 - MISCELLANEOUS..................................................................47
27.1 Further Assurances.................................................................47
27.2 Headings...........................................................................48
27.3 Counterparts.......................................................................48
-iv-
EXHIBITS
----------
Exhibit A Plan of Arrangement
Exhibit 2.7 Pandel Merger Agreement
Exhibit 3.2(A) Rights and Restrictions for Intrex Class B Shares.
Exhibit 3.2(B) Rights and Restrictions for FiberChem Special Shares
Exhibit 3.4 Form of Lock-Up Agreement
Exhibit 3.5 Form of Voting Agreement
Exhibit 3.9 Forms of Employment and Non-Competition Agreement
-v-
LIST OF SCHEDULES
Schedule 2.3 Initial Officers of FiberChem
Schedule 5.1 Capitalization of Intrex
Schedule 5.2 Subsidiaries Intrex
Schedule 5.3 Intrex Legal Proceedings
Schedule 5.5 Intrex Encumbrances
Schedule 5.6 Intrex Trademarks
Schedule 5.7 Intrex Patents
Schedule 5.8 Intrex Financials
Schedule 5.9 Intrex Material Changes
Schedule 5.10 Intrex Tax matters
Schedule 5.11 Intrex Inventory
Schedule 5.12 Intrex Real Property
Schedule 5.13 Intrex Material Contracts
Schedule 5.14 Intrex Accounts Payable
Schedule 5.15 Intrex Consents of Parties to Material Contracts
Schedule 5.16 Intrex Court Orders and Decrees
Schedule 5.18 Intrex Pension, Profit Sharing and Welfare Plans
Schedule 5.19 Intrex Insurance
Schedule 5.20 Intrex Rights of Third Parties
Schedule 5.21 Intrex Collective Bargaining Agreements
Schedule 5.22 Intrex Material Claims by Customers
Schedule 5.23 Intrex Compensation Plans
Schedule 5.27 Intrex Compliance with Laws
Schedule 5.28 Intrex Personal Guarantees by Participating Intrex
Shareholders
Schedule 5.29 Intrex Benefits
Schedule 6.3 FiberChem Subsidiaries
Schedule 6.4 FiberChem Legal Proceedings
Schedule 6.5 FiberChem Encumbrances
Schedule 6.6 FiberChem Trademarks
Schedule 6.7 FiberChem Patents
Schedule 6.8 FiberChem Financials
Schedule 6.9 FiberChem Material Changes
-vi-
Schedule 6.10 FiberChem Tax Matters
Schedule 6.11 FiberChem Inventory
Schedule 6.12 FiberChem Real Property
Schedule 6.13 FiberChem Material Contracts
Schedule 6.14 FiberChem Accounts Payable
Schedule 6.15 FiberChem Consents of Parties to Material Contracts
Schedule 6.16 FiberChem Court Orders and Decrees
Schedule 6.18 FiberChem Pension, Profit Sharing and Welfare Plans
Schedule 6.19 FiberChem Insurance
Schedule 6.20 FiberChem Rights of Third Parties
Schedule 6.21 FiberChem Collective Bargaining Agreement
Schedule 6.22 FiberChem Material Claims by Customers
Schedule 6.23 FiberChem Compensation Plans
Schedule 6.25 FiberChem Compliance with Laws
Schedule 6.28 FiberChem Guarantees
Schedule 6.29 FiberChem Benefits
-vii-
AMENDED ARRANGEMENT AGREEMENT
This AMENDED ARRANGEMENT AGREEMENT (the "AGREEMENT"), dated as of May 26, 2000
BETWEEN:
FIBERCHEM, INC., a corporation incorporated under the laws of
Delaware, having a place of business at 0000 Xxxxx Xxxxx,
Xxxxxxxx X, Xxx Xxxxx, Xxxxxx 00000
("FIBERCHEM")
AND:
INTREX DATA COMMUNICATIONS CORP., a company incorporated under
the laws of British Columbia having a place of business at
Suite 1400 - 0000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx
Xxxxxxxx, X0X 0X0
("INTREX")
WHEREAS
A. This Agreement amends and supercedes the Arrangement Agreement dated
as of December 6, 1999 among the parties hereto;
B. FiberChem will enter into a merger agreement with Pandel Instruments
Inc. ("PANDEL") under which Pandel will merge with a subsidiary of FiberChem.
Upon the completion of the merger the FiberChem subsidiary will acquire the
shares of Intrex owned by Pandel prior to the merger.
C. Intrex will amend its Articles to create a new class of shares to be
designated as Class B Exchangeable shares (the "INTREX CLASS B SHARES") which
will be exchangeable into shares of common stock of FiberChem (the "FIBERCHEM
COMMON SHARES"). Each Intrex common shareholder, other than FiberChem, will
exchange their Intrex common shares for Intrex Class B Shares.
D. FiberChem will designate a series of its authorized preferred shares
as Special Shares (the "FIBERCHEM SPECIAL SHARES"). The FiberChem Special Shares
will permit the holders of the Intrex Class B Shares to exercise voting rights
in the same manner as if they held an equivalent number of FiberChem Common
Shares until such time as the Intrex Class B Shares are exchanged for FiberChem
Common Shares.
E. The respective Boards of Directors of FiberChem and Intrex have
approved and deem it in the best interests of their respective shareholders to
consummate the business combination transaction provided for herein (the
"ARRANGEMENT") under which each outstanding common share of Intrex (the "Intrex
Common Shares") (other than the Intrex Common Shares held by FiberChem as a
result of the merger with Pandel) will be exchanged into 27.801925 Intrex Class
B Shares and 0.27801925 FiberChem Special Shares;
F. The Arrangement shall take place pursuant to a plan of arrangement
(the "PLAN OF ARRANGEMENT") under section 252 of the COMPANY ACT (British
Columbia) (the "BC COMPANY ACT") in the form set forth in Plan of Arrangement
attached hereto as EXHIBIT A;
G. Following the Arrangement, shareholders of Intrex who choose to
exchange their Intrex Class B Shares will upon such exchange, receive FiberChem
Common Shares and the FiberChem Special Shares held by them will be cancelled;
H. The laws of the State of Delaware, The Dominion of Canada and the
Province of British Columbia permit such Arrangement, and both FiberChem and
Intrex each desire to carry out this business combination under and pursuant to
the provisions of such laws; and
I. The parties desire to make certain undertakings, conditions,
representations, warranties and covenants in connection with the Arrangement.
NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 DEFINITIONS
In this Agreement, including the recitals and schedules, the
following words and expressions have the following meanings unless the context
otherwise requires:
(i) "AGREEMENT" means this Amended Arrangement Agreement
dated as of May 26, 2000 between Intrex Data Communications Corp. and FiberChem,
Inc.;
(ii) "ARRANGEMENT" means the business combination transaction
provided for in this Agreement and the Plan of Arrangement under which each
outstanding Intrex Common Share will be exchanged into 27.801925 Intrex Class B
Shares and 0.27801925 FiberChem Special Shares;
(iii) "ARRANGEMENT CONSIDERATION" has the meaning attributed
thereto in Section 3.2 of the Agreement;
(iv) "B.C. COMPANY ACT" means the COMPANY ACT (British
Columbia)
(v) "CLOSING" means the closing of transactions contemplated
by this Agreement;
(vi) "CLOSING DATE" the date on which the Closing takes
place, which date shall be the Effective Date unless another date or time is
agreed to by the Companies;
(vii) "COMPANIES" means Intrex Data Communications Corp. and
FiberChem, Inc.;
(viii) "COMPENSATION AGREEMENT" means the compensation
agreement to be entered into between Intrex, FiberChem and Xxxxx Xxxxxxx under
which Intrex and FiberChem will agree to issue 9,450,000 Intrex Class B Shares
and 94,500 FiberChem Special Shares to Xxxxx Xxxxxxx on terms acceptable to the
parties thereto;
-2-
(ix) "COURT" means the Supreme Court of British Columbia;
(x) "DEMAND REGISTRATION STATEMENT" has the meaning
attributed thereto in Section 3.6(ii) of this Agreement;
(xi) "EFFECTIVE TIME" means 5:00 pm (Vancouver time) on the
date of acceptance for filing of the final order of the Court giving effect to
the Arrangement by the British Columbia Registrar of Companies;
(xii) "EMPLOYMENT AND NON-COMPETITION AGREEMENTS" means the
employment and non-competition agreement in the form attached as Exhibit 9.11 to
this Agreement;
(xiii) "ENTRENET" means Entrenet Group LLC;
(xiv) "ENTRENET AGREEMENTS" means the agreements between
Entrenet and Intrex dated April 12, 1999 and April 12, 2000 and any replacements
or amendments thereto;
(xv) "ENTRENET SECURITIES" has the meaning attributed thereto
in Section 3.1(ii) of the Agreement;
(xvi) "EXCHANGE ACT" means the UNITED STATES SECURITIES
EXCHANGE ACT OF 1934, as amended;
(xvii) "FIBERCHEM" means FiberChem, Inc.;
(xviii) "FIBERCHEM CAPITALIZATION" has the meaning attributed
thereto in Section 3.1(i) of this Agreement;
(xix) "FIBERCHEM COMMON SHARES" means the shares of the common
stock of FiberChem, Inc.;
(xx) "FIBERCHEM FINANCIALS" has the meaning attributed
thereto in Section 6.8(i) of this Agreement;
(xxi) "FIBERCHEM LEASES" has the meaning attributed thereto in
Section 6.12(ii) of this Agreement;
(xxii) "FIBERCHEM PATENTS" has the meaning attributed thereto
in Section 6.7 of this Agreement;
(xxiii) "FIBERCHEM SPECIAL SHARES" means the series of
authorized preferred shares designated by FiberChem as Special Shares which will
permit the holders of the Intrex Class B Shares to exercise voting rights in the
same manner as if they held an equivalent number of FiberChem Common Shares
until such time as the Intrex Class B Shares are exchanged for FiberChem Common
Shares;
(xxiv) "FIBERCHEM SUB" means Pandel Mergerco, Inc., a
wholly-owned subsidiary of FiberChem which will merge with Pandel under the
Pandel Merger Agreement;
-3-
(xxv) "FIBERCHEM TRADE CREDITORS" has the meaning attributed
thereto in Section 6.14 of this Agreement;
(xxvi) "FIBERCHEM TRADEMARKS" has the meaning attributed
thereto in Section 6.6 of this Agreement;
(xxvii) "INTREX" means Intrex Data Communications Corp.;
(xxviii) "INTREX CAPITALIZATION" has the meaning attributed
thereto in Section 3.1(ii) of this Agreement;
(xxix) "INTREX CLASS B SHARES" means the Class B Exchangeable
Shares of Intrex to be created pursuant to this Agreement and the Plan of
Arrangement which will be exchangeable into FiberChem Common Shares;
(xxx) "INTREX FINANCIALS" has the meaning attributed thereto
in Section 5.8(i) of this Agreement;
(xxxi) "INTREX PATENTS" has the meaning attributed thereto in
Section 5.7 of this Agreement;
(xxxii) "INTREX SHARES" means the authorized, issued and
outstanding share capital of Intrex;
(xxxiii) "INTREX TRADEMARKS" has the meaning attributed thereto
in Section 5.6 of this Agreement;
(xxxiv) "LOCK-UP AGREEMENT" means the agreement in the form of
which is attached as Exhibit 3.4 to this Agreement;
(xxxv) "PANDEL" means Pandel Instruments Inc.;
(xxxvi) "PANDEL MERGER" means the merger of Pandel and FiberChem
Sub pursuant to the Pandel Merger Agreement;
(xxxvii) "PANDEL MERGER AGREEMENT" means the merger agreement to
be entered into by FiberChem, FiberChem Sub, Pandel and Xxxxx Xxxxxxxxx the form
of which is attached as Exhibit 2.7 to this Agreement;
(xxxviii) "PARTICIPATING INTREX SHAREHOLDERS" means the
shareholders of Intrex, other than Pandel, and following the Pandel Merger,
FiberChem Sub, and "Participating Intrex Shareholder" means any one of them;
(xxxix) "PLAN OF ARRANGEMENT" means the plan of arrangement in
the form attached hereto as Exhibit A to this Agreement;
(xl) "POOLING AGREEMENT" has the meaning given to that term
in Section 3.8 of this Agreement;
-4-
(xli) "REGISTERED SHARES" has the meaning attributed thereto
in Section 3.6(i) of this Agreement;
(xlii) "REGISTRATION CONDITIONS" has the meaning attributed
thereto in Section 3.6(ii) of this Agreement;
(xliii) "REGISTRATION STATEMENT" has the meaning attributed
thereto in Section 3.6(i) of this Agreement;
(xliv) "REGISTRATION STATEMENTS" means the Registration
Statement together with the Demand Registration Statement;
(xlv) "RULES" means the rules and regulations of the United
States Securities and Exchange Commission;
(xlvi) "SEC DOCUMENTS" has the meaning attributed thereto in
Section 6.3 of this Agreement;
(xlvii) "SECURITIES ACT" means the UNITED STATES SECURITIES ACT
OF 1933, as amended;
(xlviii) "SUPPORT AGREEMENT" has the meaning attributed thereto
in Section 3.2(iii)(D) of this Agreement;
(xlix) "TRADE CREDITORS" has the meaning attributed thereto in
Section 5.14 of this Agreement;
(l) "VOTING AGREEMENT" means the voting agreement to be
entered into by the Voting Agreement Signatories in the form attached as Exhibit
3.5 hereto; and
(li) "VOTING AGREEMENT SIGNATORIES" means Xxxxx X. Xxxxxxx,
Xxxxx Xxxxxxxxx, Xxxxxxxx X. Xxxxxx and Xxxxxx Xxxxxx.
ARTICLE 2 - THE ARRANGEMENT
2.1 THE ARRANGEMENT.
The Companies agree to effect the Arrangement pursuant to section
252 of the BC Company Act on the terms and subject to the conditions contained
in this Agreement and the Plan of Arrangement.
2.2 CLOSING EFFECTIVE TIME.
Upon fulfillment or waiver of the conditions specified in Articles
9, 10 and 11 and provided that this Agreement has not been terminated pursuant
to Article 11, and subject to the remaining terms and provisions of this
Agreement, all steps necessary to make the Arrangement effective shall be
completed as soon as practicable. The Closing shall take place at the offices of
Xxxxxxx & Xxxxxx, 2100 - 0000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx
at 5:00 p.m. (Vancouver time) on the date of acceptance for filing of the final
order of the Court giving effect to the Arrangement by the British Columbia
Registrar of Companies (the "EFFECTIVE TIME"), unless another place, date or
time is agreed to
-5-
by FiberChem and Intrex (the date on which the Closing takes place being
referred to sometimes herein as the "CLOSING DATE").
2.3 DIRECTORS AND OFFICERS OF FIBERCHEM.
At and from the Closing the directors of FiberChem shall consist of
nine persons of whom four persons will be nominees of Xxxxx X. Xxxxxxx, four
persons will be nominees of Xxxxxxxx Xxxxxx and one person will be a nominee
chosen jointly by Xxxxx X. Xxxxxxx and Xxxxxxxx Xxxxxx, and if they are unable
to agree, a person chosen by the other eight directors, and all such directors
and officers will continue to hold office from Closing until their successors
are duly appointed under applicable law. At the Closing the officers of
FiberChem shall be the persons set forth in Schedule 2.3.
2.4 TAKING OF NECESSARY ACTION.
Each of Intrex and FiberChem will take all such reasonable and
lawful action as may be necessary or appropriate in order to effectuate the
Arrangement in accordance with this Agreement and the Plan of Arrangement as
promptly as possible.
2.5 THE UNITED STATES SECURITIES ACT OF 1933.
To permit FiberChem to rely on the exemption under section 3(a)(10)
of the Securities Act, the Companies confirm and declare that:
(i) the Court will hold a hearing on the fairness of the
terms and conditions of the Arrangement;
(ii) all persons to whom it is proposed to issue securities
will receive notification of and have an opportunity to be heard at the hearing;
(iii) the Arrangement will not be effective unless the Court
approves the fairness of the terms and conditions of the Arrangement; and
(iv) the Court will be advised prior to the hearing that if
the terms and conditions of the Arrangement are approved, any FiberChem Common
Shares or FiberChem Special Shares to be issued in connection with the
Arrangement or any FiberChem Common Shares issued upon the exchange of the
Intrex Class B Shares will not require registration under the Securities Act by
virtue of the Court's approval.
2.6 NEW AGREEMENT
This Agreement supercedes and replaces in its entirety the
Arrangement Agreement dated as of December 6, 1999 among the parties hereto.
2.7 PANDEL MERGER
Pandel and FiberChem shall enter into the Pandel Merger Agreement in
the form set forth in Exhibit 2.7 under which Pandel will merge with FiberChem
Sub. Under the Pandel Merger Agreement,
-6-
the shareholders of Pandel will exchange their shares of Pandel for FiberChem
Common Shares. Following the Pandel Merger, FiberChem will hold 2,089,000 Intrex
Common Shares.
ARTICLE 3 - CONSIDERATION; CONVERSION AND
EXCHANGE OF SECURITIES
3.1 CALCULATION OF AND DETERMINATION OF ARRANGEMENT CONSIDERATION
The present equity and convertible debt/equity capitalization of
both Intrex and FiberChem is as follows.
(i) AS TO FIBERCHEM. As at May 9, 2000 FiberChem had
outstanding: 51,585,695 FiberChem Common Shares; 207,848 shares of Preferred
Stock (convertible currently into 2,078,480 FiberChem Common Shares, but to be
amended with the approval of the shareholders of FiberChem to convert (on a one
for 75 basis) into approximately 15,588,600 FiberChem Common Shares) and
$247,000 of convertible notes (convertible into 1,073,913 FiberChem Common
Shares), and $165,000 of other convertible notes (convertible into 1,325,188
FiberChem Common Shares). The "FIBERCHEM CAPITALIZATION" as at May 9, 2000 was
63,219,262 shares. Subject to section 4.2, if FiberChem issues any additional
FiberChem Shares or shares convertible into or exercisable into FiberChem Shares
the FiberChem Capitalization will not be increased. In addition, FiberChem had
at May 9, 2000, 7,503,961 Class E Warrants; 1,895,175 Class D Warrants;
1,637,000 Unit Warrants; and 437,000 Placement Agent and Other Warrants, and
7,047,826 Warrants to purchase an additional 7,047,826 FiberChem Common Shares,
all exercisable (at prices ranging from $0.23 to $1.25 per share) into an equal
number of FiberChem Common Shares; and employee Stock Options to purchase
approximately 3,620,942 FiberChem Common Shares at exercise prices ranging from
$0.125 to $1.25 per share, or an aggregate of 22,141,904 additional shares on a
fully diluted basis. On or before Closing FiberChem shall have created the
FiberChem Special Shares.
(ii) AS TO INTREX. As at May 26, 2000 Intrex has 8,392,194
Intrex Common Shares outstanding (the "INTREX CAPITALIZATION"). Intrex has no
warrants, options or convertible or debt securities outstanding other than the
agreement to issue 9,450,000 Intrex Class B Shares contemplated by the
Compensation Agreement and the following securities owned by Entrenet Group, LLC
(the "ENTRENET SECURITIES") (i) outstanding warrants to purchase 240,000 Intrex
Common Shares at a purchase price of $0.50 per share (ii) $60,000 of convertible
notes (convertible into 120,000 Intrex Common Shares).
3.2 ARRANGEMENT CONSIDERATION
The consideration (the "ARRANGEMENT CONSIDERATION") payable to the
Participating Intrex Shareholders pursuant to the Arrangement shall be as
follows:
(i) EXCHANGE OF INTREX COMMON SHARES. On the Closing Date,
the Participating Intrex Shareholders shall surrender all of the outstanding
Intrex Common Shares held by them in exchange for an aggregate of 175,240,930
Intrex Class B Shares and 1,752,409 FiberChem Special Shares. Such Arrangement
Consideration will be satisfied by the exchange of each Intrex Common Share
into:
(A) 27.801925 Intrex Class B Shares; and
(B) 0.27801925 FiberChem Special Shares.
-7-
(ii) ENTRENET. As of the Closing Date, the Entrenet
Securities will be cancelled under the terms of the Entrenet Agreements.
(iii) TAX MATTERS. Solely to accommodate the tax objectives of
Intrex and the Participating Intrex Shareholders, the following steps (except as
otherwise advised by Canadian tax counsel) will be taken:
(A) On or before Closing, Intrex will create the
Intrex Class B Shares with the special
rights and restrictions set forth in EXHIBIT
3.2(A) which provide, among other things,
that each Intrex Class B Share will have a
par value of $0.00001, be non-voting,
redeemable and exchangeable into one
FiberChem Common Share.
(B) On or before Closing, FiberChem will change
its authorized capital designating a series
of its Preferred Shares as the FiberChem
Special Shares. The FiberChem Special Shares
will have the rights and restrictions set
forth in EXHIBIT 3.2(B).
(C) On or before Closing, the Pandel Merger
shall have been completed.
(D) On or before Closing, FiberChem will enter
into a support agreement (the "SUPPORT
AGREEMENT") with Intrex, in form and content
satisfactory to Intrex, under which, among
other things, FiberChem will agree to meet
its obligation to pay dividends or deliver
FiberChem Common Shares on a retraction or
redemption call in accordance with the
rights of the Intrex Class B Shares.
(E) With respect to each Participating Intrex
Shareholder, the number of Intrex Class B
Shares and FiberChem Special Shares to be
received in connection with the Arrangement
shall be rounded down to the nearest whole
number of shares if such holder holds less
than a whole Intrex Common Share.
(iv) FAIRNESS OPINIONS. The Board of Directors of each of
FiberChem and Intrex shall be entitled to obtain prior to the Closing Date from
one or more independent third parties, an opinion that the Arrangement
Consideration, taken as a whole, is fair to FiberChem's and Intrex's
shareholders.
3.3 CONVERSION OF SHARES; DELIVERY OF ARRANGEMENT CONSIDERATION.
At the Effective Time, by virtue of the Arrangement and without
any action on the part of any party hereto, each Intrex Common Share issued
and outstanding immediately prior to the Effective Time held by a
Participating Intrex Shareholder shall be converted into and shall represent
the right to receive from Intrex, 27.801925 Intrex Class B Shares and
0.27801925 FiberChem Special Shares. FiberChem will on the Effective Time
deliver to Intrex the requisite number of FiberChem Special Shares required
to be delivered by Intrex to the Participating Intrex Shareholders. All
FiberChem Common Shares issued upon the exchange of the Intrex Class B Shares
in accordance with the terms thereof shall be deemed to have been issued and
paid in full satisfaction of all rights pertaining to such Intrex Class B
Shares.
(i) Each Intrex Common Share held by FiberChem immediately
prior to the Effective Time shall continue to be issued and outstanding.
(ii) Each FiberChem Common Share issued and outstanding
immediately prior to the Effective Time shall continue to be issued and
outstanding.
-8-
(iii) Until surrendered, each outstanding certificate which
prior to the Effective Time represented one or more Intrex Common Shares held by
a Participating Intrex Shareholder shall be deemed upon the Effective Time for
all purposes to represent only the right to receive the Arrangement
Consideration. With respect to any certificate for an Intrex Common Share held
by a Participating Intrex Shareholder that has been lost or destroyed, Intrex
shall direct distribution of the Arrangement Consideration attributable to such
certificate upon receipt of a surety bond or other adequate indemnity as
required in accordance with FiberChem's standard policy, and evidence reasonably
satisfactory to FiberChem and Intrex of ownership of the shares represented
thereby.
(iv) FiberChem shall pay any dividends or other distributions
with a record date prior to the Closing Date which have been declared or made by
FiberChem in respect of FiberChem Common Shares in accordance with the terms of
this Agreement and which remain unpaid at the Closing Date. To the extent
permitted by law, all Participating Intrex Shareholders shall be entitled to
vote after the Closing at any meeting of FiberChem stockholders the FiberChem
Special Shares substantially equivalent to the number of whole shares of
FiberChem Common Shares into which their Intrex Class B Shares are convertible,
regardless of whether such holders have exchanged their certificates
representing Intrex Class B Shares they receive as part of the Arrangement
Consideration for certificates representing FiberChem Common Shares in
accordance with the special rights and restrictions of the Intrex Class B
Shares. Whenever a dividend or other distribution is declared by FiberChem on
the FiberChem Common Shares the record date for which is at or after the
Closing, FiberChem shall cause Intrex to declare and pay a dividend in the same
kind and manner and amount on the Intrex Class B Shares as any such dividends or
other distributions paid on the FiberChem Common Shares unless FiberChem
declares and pays an equivalent dividend or distribution on the FiberChem
Special Shares.
(v) In the event FiberChem changes the number of FiberChem
Common Shares issued and outstanding prior to the Effective Time as a result of
a stock split, stock dividend or other similar recapitalization, and the record
date thereof (in the case of a stock dividend) or the effective date thereof (in
the case of a stock split or similar recapitalization for which a record date is
not established) shall be prior to the Effective Time, the amount of the
Arrangement Consideration represented by FiberChem Common Shares shall be
proportionately adjusted. FiberChem will not undertake any such change prior to
Closing without the prior written consent of Intrex.
3.4 LOCK-UP AND VOTING OF FIBERCHEM COMMON SHARES.
(i) On or before Closing, each of Xxxxx Xxxxxxx and/or
Estero Capital Corp., Xxxxx Xxxxxxxxx and/or Pandel Instruments, Inc., Xxx
Xxxxxxx, Xxxxxx Xxxxxx, Primary Equities Capital Corp., Xxxxx X'Xxxx, Pentland
Resources Limited, Boo Xxxx Xxxxx, Xxxxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxxx
Xxxxxxx, Xxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxxxx, Xxxxxx X. Xxxxx, Xxxxxx Xxxx and
Xxxxx X. Xxxxxxxxx shall have entered into a Lock-Up Agreement (the "LOCK-UP
AGREEMENT"), the form of which is attached hereto as EXHIBIT 3.4, and which
shall provide as follows: the number of shares being sold, together with all
other sales of FiberChem Common Shares for the account of the seller within the
three preceding months, shall not exceed the greater of (1) one percent of the
shares of FiberChem Common Shares outstanding as shown by FiberChem's most
recently published report or statement, (2) the average weekly reported volume
of trading in FiberChem Common Shares on all national securities exchanges or
reported through the automated quotation system of a registered securities
association during the four weeks preceding the filing of any required notice of
sale pursuant to Rule 144 or, if no such notice is required, the date of receipt
of the order to execute the transaction by the broker or the date of execution
of the transaction directly with a market maker, or (3) the average weekly
volume of trading in FiberChem Common Shares reported through the consolidated
transaction reporting system contemplated
-9-
by Rule 11Aa3-1 under the Securities Exchange Act of 1934 during the four week
period specified in the preceding clause (2). In addition, unless a registration
statement is in effect as to the sale, the seller shall file all notices of sale
and shall comply with all other requirements of Rule 144 under the Securities
Act in effecting any sale. After the expiration of 12 months from the Effective
Time, the restrictions of the Lock-Up Agreement shall terminate.
(ii) FiberChem reserves the right to waive the Lock-Up
Limitations and/or resale limitations set forth in the Lock-Up Agreement, in
whole or in part.
(iii) The Lock-up Agreement will permit privately negotiated
sales, transfers to family members and/or to trusts for the benefit of
shareholders and family members of the parties thereto only if the transferee of
such shares executes a Lock-Up Agreement substantially in the form of the
Lock-Up Agreement attached as Exhibit 3.4.
3.5 VOTING AGREEMENT.
At the Closing, the Voting Agreement Signatories shall collectively
enter into the Voting Agreement in the form attached as EXHIBIT 3.5 with
FiberChem under which each Voting Agreement Signatory shall agree that all
FiberChem Common Shares or FiberChem Special Shares held by the Voting Agreement
Signatory, directly or over which the Voting Agreement Signatory has voting
authority shall, for a period of two years from Closing (provided the Voting
Agreement Signatory is either a Director or Senior Officer of FiberChem at the
time of voting) be voted:
(i) in a manner such that the Board of Directors of FiberChem
shall consist of nine persons of whom four persons will be nominees jointly
of Xxxxx X. Xxxxxxx and Xxxxx Xxxxxxxxx, four persons will be nominees of
Xxxxxxxx Xxxxxx and one person will be a nominee chosen jointly by Xxxxx X.
Xxxxxxx and Xxxxxxxx Xxxxxx, and if they are unable to agree, a person chosen
by the other eight directors.
(ii) in favor of all other matters to be voted on by FiberChem
shareholders in accordance with the proposals put forward and recommended to
the Shareholders by the Board of Directors of FiberChem. Where no
recommendation is made by the Board of Directors of FiberChem then each
Voting Agreement Signatory shall be free to vote his shares as he sees fit.
3.6 REGISTRATION RIGHTS.
(i) If as a result of the Arrangement any or all of the
FiberChem Common Shares issued to the Participating Intrex Shareholders upon the
exchange of the Intrex Class B Shares (collectively the "REGISTERED SHARES") are
not eligible for sale in accordance with the volume and manner of sale
requirements of Rule 144 without registration, FiberChem shall file a
registration statement (the "REGISTRATION STATEMENT"), on Form S-4 or such other
appropriate form not later than 90 days after the Effective Time to register the
Registered Shares.
(ii) In the event that any of the Registered Shares cannot be
sold pursuant to the Registration Statement or are not eligible for sale
pursuant to Rule 144, subject to the volume and manner of sale requirements of
Rule 144, commencing one year from the Closing Date (the "REGISTRATION
CONDITIONS"), the Participating Intrex Shareholders shall have the demand
registration rights provided in this Section 3.6. If at any time during the
period commencing upon the expiration of the No-Sale Period (as such term is
defined in the Lock-Up Agreement attached as Exhibit 3.4 hereto) and ending two
years thereafter, Registration Conditions exist, FiberChem covenants and agrees
with the Participating Intrex
-10-
Shareholders that, upon written request of the then holder(s) of at least 25% of
the remaining shares of FiberChem Common Shares, the Company will file with the
SEC as promptly as practicable and, in any event, within 45 days after receipt
of such written request, on one occasion at FiberChem's sole expense, a
registration statement (the "DEMAND REGISTRATION STATEMENT") and, together with
the Registration Statement, on a form which would be available for the resale of
the FiberChem Common Shares by the Participating Intrex Shareholders under the
Securities Act, registering or qualifying the FiberChem Common Shares requested
to be so registered for sale. Such request shall specify the shares of FiberChem
Common Shares intended to be sold and the intended method of disposition.
FiberChem shall not, without the consent of the Participating Intrex
Shareholders, grant to any person registration rights, that would entitle such
holders to include any securities of FiberChem in the Demand Registration
Statement.
(iii) FiberChem will use its best efforts, through its
officers, directors, auditors and counsel in all matters necessary or advisable,
to file and cause to become effective the Registration Statements as promptly as
practicable and to maintain the effectiveness of the Registration Statements for
a period of two years thereafter, subject to subparagraph (v) below.
(iv) FiberChem shall notify each Participating Intrex
Shareholder upon discovery that, or upon the happening of any event as a result
of which, the prospectus included in any of the Registration Statements includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made; and, at
the request of any Participating Intrex Shareholder, FiberChem shall promptly
prepare and furnish to each Participating Intrex Shareholder a reasonable number
of copies of a supplement or an amendment to such prospectus as may be
necessary.
(v) FiberChem shall prepare and file with the SEC such
amendments and supplements to the Registration Statements and the prospectuses
contained therein as may be necessary to keep the Registration Statements
effective and to comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by the Registration Statements
until such time as all FiberChem Common Shares have been disposed of in
accordance with the intended methods of disposition by the Participating Intrex
Shareholders set forth in such Registration Statements; provided, that FiberChem
shall not be required to maintain the effectiveness of any Registration
Statement as to any shares of FiberChem Common Shares that may then be sold by a
Participating Intrex Shareholder in accordance with Rule 144.
(vi) FiberChem shall furnish to each Participating Intrex
Shareholder such number of preliminary and final prospectuses included in any of
the Registration Statements and of each such amendment and supplement thereto as
such Participating Intrex Shareholder may reasonably request.
(vii) FiberChem shall use its best efforts to file in a timely
manner all reports required to be filed with the SEC pursuant to Section 13 of
the SECURITIES EXCHANGE ACT OF 1934, as amended, and shall otherwise maintain
its eligibility to use Form S-3 and comply with the public information
requirements of paragraph (c) of Rule 144.
(viii) FiberChem shall indemnify and hold harmless the
Participating Intrex Shareholders against any losses, claims, damages,
liabilities, costs (including, without limitation, the reasonable cost of
preparation and attorney's fees) and reasonable expenses (collectively,
"Losses") arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any of the Registration Statements or
any prospectus or preliminary prospectus included therein or arising out of or
based upon any omission or alleged omission of a material fact required to be
stated therein or necessary
-11-
to make the statements therein not misleading, except insofar as the same are
based solely upon information furnished in writing to FiberChem by such
Participating Intrex Shareholders expressly for use therein.
(ix) In connection with any registration in which a
Participating Intrex Shareholder is participating personally, and not in their
capacity as an employee, officer or director of FiberChem, such Participating
Intrex Shareholder shall furnish to FiberChem in writing such information as
FiberChem reasonably requests for use in connection therewith and agrees to
indemnify and hold harmless FiberChem, its directors, officers, agents and
employees and each person who controls FiberChem (within the meaning of Section
15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934)
from and against all losses arising out of or based upon any untrue statement of
a material fact contained in any of the Registration Statements or any
prospectus or preliminary prospectus included therein or arising out of or based
upon any omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, to the extent, but only to the
extent, that such untrue statement or omission is contained in any information
so furnished in writing by such Participating Intrex Shareholder to FiberChem
expressly for use in such Registration Statement, prospectus or preliminary
prospectus and that such information was solely relied upon by FiberChem in
preparation of such Registration Statement, prospectus or preliminary
prospectus. In no event shall the liability of any Participating Intrex
Shareholder hereunder be greater in amount than the dollar amount of the
proceeds (net of the payment of all expenses) received by such Participating
Intrex Shareholder upon the sale of shares of FiberChem Common Shares giving
rise to such indemnification obligation.
(x) FiberChem will pay all expenses of FiberChem and the
Participating Intrex Shareholders in connection with the Registration Statement
described in Section 3.6(i) and one Demand Registration Statement described in
Section 3.6(ii) above, in each instance exclusive of any underwriting discount
or commission and the fees and expenses of Participating Intrex Shareholders'
legal counsel in connection with the sale of shares by the Participating Intrex
Shareholders pursuant to such registration.
(xi) FiberChem acknowledges that the registration rights
provided in this SECTION 3.6 are also for the benefit of any of the
Participating Intrex Shareholders permitted transferees.
3.7 ABANDONED PROPERTY LAWS.
Payment or delivery of any FiberChem Common Shares, and any
dividends or distributions with respect to FiberChem Common Shares shall be
subject to applicable abandoned property, escheat and similar laws and FiberChem
shall not be liable to any holder of Intrex shares for any such shares, for any
dividends or distributions with respect thereto or for any cash in lieu of
fractional shares which may be delivered to any public official pursuant to any
abandoned property, escheat or similar laws.
3.8 POOLING AGREEMENT.
On or before Closing, the Participating Intrex Shareholders, Intrex,
FiberChem and Montreal Trust Company of Canada shall have entered into a pooling
agreement (the "Pooling Agreement") in form and content acceptable to the
parties thereto, under which the Participating Intrex Shareholders shall each
deposit 72.90% of the Intrex Class B Shares and FiberChem Special Shares
received by them in connection with the Arrangement in escrow to be redeemed
upon the happening of certain triggering events as described in the Pooling
Agreement. The aggregate number of shares deposited by the Participating Intrex
Shareholders under the Pooling Agreement shall equal 127,758,403 Intrex Class B
Shares and 1,277,840 FiberChem Special Shares.
-12-
3.9 EMPLOYMENT & NON-COMPETITION AGREEMENTS.
At the Closing, Xxxxx X. Xxxxxxx, Xxxxx Xxxxxxxxx, Xxxxxxxx Xxxxxx,
Xxxxxx Xxxxxx, Xxxxx X'Xxxx and Xxxxxx Xxxxxxx shall each enter into an
Employment and Non-Competition Agreement with FiberChem in the form annexed
hereto as EXHIBIT 3.9.
3.10 COMPENSATION AGREEMENT.
Prior to Closing Intrex and FiberChem shall have entered into the
Compensation Agreement with Xxxxx X. Xxxxxxx.
3.11 BROKERS; FINDERS.
Under the Entrenet Agreements Entrenet will be paid a finder's fee
in respect of the transaction. The Entrenet Agreements provide that at the
Effective Time the Entrenet Securities will be cancelled and FiberChem will
issue to Entrenet certain additional securities. For greater certainty, the
FiberChem Securities to be issued to Entrenet have not been included as
outstanding Intrex shares in the calculation of the Arrangement Consideration.
ARTICLE 4 - CERTAIN ACTIONS
4.1 REASONABLE EFFORTS.
Subject to the terms and conditions of this Agreement and applicable
law, each of the parties hereto shall use its reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
reasonably necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement as soon as reasonably practicable,
including such actions or things as any other party hereto may reasonably
request in order to cause any of the conditions to such other party's obligation
to consummate such transactions to be fully satisfied. Without limiting the
generality of the foregoing, the parties shall (and shall cause their respective
subsidiaries, and use their reasonable efforts to cause their respective
affiliates, directors, officers, employees, agents, attorneys, accountants and
representatives, to) consult and fully cooperate with and provide reasonable
assistance to each other in:
(i) obtaining all necessary consents, approvals, waivers,
licenses, permits, authorizations, registrations, qualifications or other
permission or action by, and giving all necessary notices to and making all
necessary filings with and applications and submissions to, any Governmental
Entity or other person or entity;
(ii) providing all such information about such party, its
subsidiaries and its officers, directors, partners and affiliates and making all
applications and filings as may be necessary or reasonably requested in
connection with FiberChem securities filings (which obligation shall survive the
consummation of the Arrangement); and
(iii) in general, consummating and making effective the
transactions contemplated hereby.
4.2 SPECIAL PROVISION PENDING THE CLOSING.
(i) From the date of this Agreement through the Closing
Date, except as contemplated under this Agreement and the Schedules attached
hereto, neither Intrex nor FiberChem (each, a "party") will
-13-
issue any debt or equity securities nor grant any additional options, or issue
any other convertible securities, without the prior written consent of the other
party. To the extent that additional securities are issued by one of the parties
with the consent of the other, the party issuing the securities will immediately
lend to the other party one-half of the consideration received by it for the
issuance of such securities on the terms and conditions provided in this Section
4.2. Such borrowing shall be evidenced by a convertible promissory note or
notes, convertible into shares of stock of the borrower at the option of either
the borrower or the lender at a conversion price and upon such other terms and
conditions as the borrower and the lender shall agree on or prior to the date of
borrowing. If FiberChem issues additional securities in accordance with this
Section 4.2, the FiberChem Capitalization will not be increased with the result
that no additional Arrangement Consideration will be payable to the
Participating Intrex Shareholders. If Intrex issues securities in accordance
with this Section 4.2, the Intrex Capitalization will be increased. If the
Intrex Capitalization changes, the number of Intrex Class B Shares and FiberChem
Special Shares issuable to each Participating Intrex Shareholder pursuant to
Section 3.2 will be adjusted accordingly.
(ii) If the lending party elects not to proceed with the
consummation of the Arrangement (other than because of default of the other
party) then any convertible promissory note or notes evidencing its loan shall
be canceled and the borrower shall have no obligation to repay, or issue stock
upon conversion of, such convertible promissory note or notes.
(iii) If the borrowing party elects not to proceed with the
consummation of the transaction (other than because of default of the other
party), any convertible promissory note or notes of the borrower evidencing its
borrowing from the lending party shall become immediately due and payable,
subject to the borrower's option to convert such convertible promissory note or
notes into shares of its common stock.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF INTREX
Intrex and its wholly owned subsidiary Firebird Data Communications,
Inc. (collectively referred to in this Article as "INTREX") warrants and
represents to FiberChem as follows (as used herein, "to the best of Intrex's
knowledge" or "to the best knowledge of Intrex" shall mean information actually
known by executive management of Intrex without due inquiry.
5.1 OWNERSHIP OF SHARES.
The authorized, issued and outstanding share capital of Intrex (the
"Intrex Shares") is set forth in SCHEDULE 5.1. The owners of record, of the
issued and outstanding shares of Intrex are set forth on Schedule 5.1. The
voting shares set forth on Schedule 5.1 are the sole issued and outstanding
voting shares of Intrex and the non-voting shares shown on Schedule 5.1 are the
sole issued and outstanding non-voting shares of Intrex. All of the outstanding
shares of Intrex are duly authorized, validly issued, fully paid and
non-assessable.
5.2 CAPACITY; ORGANIZATION; STANDING.
Intrex has or will have prior to Closing full capacity to enter into
and perform under this Agreement and all other agreements and instruments to be
entered into in connection with the transactions contemplated hereby, and to
consummate such transactions. Except as set forth on SCHEDULE 5.2, Intrex: (a)
does not own any subsidiaries; and (b) does not own, directly or indirectly,
shares or other securities in any other corporation, or any interest in any
partnership, joint venture or other business
-14-
entity. Except as set forth on Schedule 5.2 of this Agreement, Intrex does not
own, directly or indirectly, shares or other securities in any corporation, or
any interest in any partnership, joint venture or other business entity which is
engaged, directly or indirectly, in businesses competitive with that of
FiberChem. This Agreement has been, and each of the Other Agreements and
instruments executed hereunder will, at the Closing, be duly executed and
delivered by Intrex. This Agreement constitutes, and each of the Other
Agreements will constitute, the legal, valid and binding obligations of Intrex
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights generally or by general
equitable principles. No proceedings for the bankruptcy or insolvency of Intrex
is pending or, to the best of Intrex's knowledge, are contemplated. Intrex has
been duly organized and is validly existing under the laws of British Columbia,
has full corporate power and authority to conduct its business as it is now
being conducted and, except as set forth in Schedule 5.2, is duly qualified to
do business in each jurisdiction where the nature of the property owned or
leased, or the nature of the business conducted by Intrex requires such
qualification. Intrex has all necessary licenses and authority to operate its
business as now being conducted and as will be conducted after the Closing
assuming such business is conducted as now operated.
5.3 LEGAL PROCEEDINGS.
(i) Except as set forth in SCHEDULE 5.3 of this Agreement,
Intrex is not a party to any pending litigation, arbitration or administrative
proceeding or, to the best of Intrex's knowledge: (a) to any investigation, and
(b) no such litigation, arbitration or administrative proceeding or
investigation that might result in any material adverse change in the financial
condition, business or properties of Intrex is threatened.
(ii) Except as disclosed in Schedule 5.3 to this Agreement,
Intrex has no knowledge of and has not received notice of any complaints, claims
or threats, plans or intentions to discontinue commercial relations or
transactions from any customer of Intrex, any purchaser of goods or services
from Intrex, or any employee or independent contractor in each such case
material or significant to the conduct or operation of Intrex or their
businesses or any party to any agreement to which Intrex is a party.
(iii) Except as disclosed in Schedule 5.3, to the best of
Intrex's knowledge, there is no claim (whether based on statute, negligence,
breach of warranty, strict liability or any other theory) relating directly or
indirectly to any product manufactured or sold, or any services performed, by
Intrex.
(iv) To the best of Intrex's knowledge, Intrex is under no
obligation with respect to the return of goods in the possession of customers.
5.4 AUTHORIZATION; NO GOVERNMENTAL CONSENTS REQUIRED.
The execution and delivery by Intrex of this Agreement, the
Certificate of Arrangement and the consummation of the transactions contemplated
by this Agreement, as well as the performance of its obligations under this
Agreement, have been duly and validly authorized by Intrex's Board of Directors.
5.5 ENCUMBRANCES
Except as disclosed in SCHEDULE 5.5, there are no liens, mortgages,
deeds of trust, claims, charges, security interests or other encumbrances or
liabilities of any type whatsoever to which any of the assets of Intrex is
subject.
-15-
5.6 TRADEMARKS.
Intrex owns the trademarks, the trade names, service marks, assumed
names, copyrights and registrations therefor (collectively "INTREX TRADEMARKS")
specified in SCHEDULE 5.6. The Intrex Trademarks have been duly issued and have
not been canceled, abandoned or otherwise terminated except as otherwise
indicated in Schedule 5.6. Intrex is not in default under any of the licenses or
agreements relating to the Intrex Trademarks as listed in Schedule 5.6 and all
of such licenses and agreements are in effect. Intrex has not granted, and will
not grant prior to the Closing, licenses or other rights to use such Intrex
Trademarks. No other trademarks are either owned or used by Intrex. To the best
of Intrex's knowledge, the operation of Intrex's business does not infringe on
the trademarks of any third party. No claim has been made that there is any such
infringement. To the best of Intrex's knowledge, except as disclosed in Schedule
5.6, no trademark of any other person infringes the Intrex Trademarks of Intrex.
5.7 PATENTS, ETC.
Intrex owns the inventions, letters patent, applications for letters
patent and patent license rights, inventions, processes, designs, formulas,
trade secrets, know-how and other industrial property rights (collectively
"INTREX PATENTS") necessary for the conduct of its business, specified as
belonging to it in SCHEDULE 5.7. The Intrex Patents have been duly issued and
have not been canceled, abandoned or otherwise terminated except as otherwise
indicated in Schedule 5.7. Intrex is not in default under any of the licenses or
agreements relating to the Intrex Patents as listed in Schedule 5.7 and all of
such licenses and agreements are in effect. Intrex has not granted, and will not
grant prior to the Closing, licenses or other rights to third parties to use
such Intrex Patents. No other patents are owned or used by Intrex. To the best
of Intrex's knowledge, the operation of Intrex's business does not infringe on
the patent rights of any third party. No claim has been made that there is any
such infringement. To the best of Intrex's knowledge, no patent of any person
infringes the Intrex Patents of Intrex.
5.8 FINANCIAL STATEMENTS.
(i) The audited financial statements of Intrex as of and for
the years ended December 31, 1997 and December 31 1998, and the unaudited
financial statements of Intrex as of June 30, 1999 (collectively, the "INTREX
FINANCIALS") together with the related notes and schedules, when required, true,
correct and complete copies of which are attached hereto as SCHEDULE 5.8, (a)
are in accordance with the books of account and records of Intrex; (b) except as
disclosed on Schedule 5.8 present fairly in all material respects, and are true,
correct and complete statements of the financial condition and the results of
operations of Intrex as at and for the periods therein specified; and (c) do not
include or omit to state any material fact which renders the Intrex Financials
misleading.
(ii) Except as and to the extent shown or provided for in the
Intrex Financials or the notes and schedules thereto or as disclosed in any of
the Schedules to this Agreement or such current liabilities as may have been
incurred since December 31, 1998 in the ordinary course of business, Intrex has
no material claims, liabilities or obligations (whether accrued, absolute,
contingent or otherwise) which might be or become a charge against the assets or
liabilities of Intrex; as of June 30, 1999, there was no material asset used by
Intrex in its operations that has not been reflected in the Intrex Financials,
and, except as set forth in the Intrex Financials, no assets have been acquired
by Intrex since such date except in the ordinary course of business; and (b) all
reserves (if any) established by Intrex and set forth in the Intrex Financials
are adequate, appropriate and reasonable.
-16-
(iii) The Intrex Financials do not include any assets,
liabilities, income or expenses of any entity other than Intrex. All
transactions between Intrex and any other entity in which any of its
shareholders is an officer, director or owns 5% or more of the equity have,
since December 31, 1998, been at prices no less favorable to Intrex than could
have been obtained from any independent third party and prior to December 31,
1998, Intrex is not aware of any such material transaction except as set forth
on Schedule 5.8.
5.9 ABSENCE OF CERTAIN CHANGES.
Except as disclosed in SCHEDULE 5.9 or the Intrex Financials, since
June 30, 1999, there has not been any material adverse change in the condition
(financial or otherwise), operations, assets, liabilities, earnings, business,
prospects or results of operations of Intrex (in this Section 5.9 customary or
seasonal fluctuations in the Financials as a result of ordinary and normal
operation of the business of Intrex shall not constitute a material adverse
change).
5.10 TAX MATTERS.
Except as disclosed in SCHEDULE 5.10, Intrex has timely filed all
required Xxxxxx Xxxxxx, Xxxxx, Xxxxxxxx, Xxxxxxx Xxxxxxxx and local income tax
returns and has timely filed with all other appropriate governmental agencies
all sales, ad valorem, franchise and other tax, license, gross receipts and
other similar returns and reports required to be filed by Intrex. Intrex has
reported all taxable income and losses on those returns on which such
information is required to be reported, and paid or provided for the payment of
all taxes due and payable by Intrex on said returns or taxes due pursuant to any
assessment received by it, including without limitation, any taxes required by
law to be withheld and/or paid in connection with any officers or employees
compensation or due pursuant to any assessment received by it. There are no
agreements for the extension of time for the assessment or payment of any
amounts of tax. Intrex shall bear all expenses and responsibilities for the
filing of federal and applicable state, local or other income tax returns and
reports of Intrex for the taxable year ended December 31, 1999. Except as
disclosed in Schedule 5.10, all tax liabilities of Intrex arising through the
end of the taxable year ended December 31, 1998, have been paid and all tax
liabilities of Intrex arising after December 31, 1998 have been paid or
adequately disclosed and properly reserved for on the books and records and
financial statements of Intrex. No Canadian, United States, local or other tax
return of Intrex for any period is currently under audit by Revenue Canada or
other tax authorities except as set forth on Schedule 5.10. No claim has been
made by any taxing authority relating to any such returns or any audit. For
purposes of this Section 5.10, the word "timely" shall mean that such returns
were filed within the time prescribed by law for the filing thereof, including
the time permitted under any applicable extensions. All taxes which Intrex is
required by law to withhold and collect have been duly withheld and collected,
and have been timely paid over to the proper authorities to the extent due and
payable.
5.11 ACCOUNTS RECEIVABLE AND INVENTORY.
(i) The accounts receivable of Intrex reflected in the Intrex
Financials as at June 30, 1999, and the accounts receivable acquired by Intrex
since such date are valid, bona fide, subsisting claims for the aggregate
amounts thereof reflected in the Intrex Financials net of the reserves or
allowances for doubtful receivables reflected in the Intrex Financials or
thereafter in Intrex's books and records uniformly maintained in accordance with
the Intrex Financials, accounted for in accordance with generally accepted
accounting principles; and Intrex knows of no reason that would make such
accounts receivable, net of such amounts as Intrex has reserved on their books
as of December 31, 1998, taken as a whole, not collectible.
-17-
(ii) The inventory of Intrex reflected in the Intrex
Financials as at June 30, 1999, and the inventory acquired by Intrex since such
date and as set forth on SCHEDULE 5.11 (a) has been purchased in the ordinary
course of business, (b) has been fully paid for unless otherwise reflected in
the Intrex Financials, (c) is marketable or adequate provision for obsolescence
has been provided and (d) to the best of Intrex's knowledge, there is no reason
that would make such inventory, net of such amounts as Intrex has reserved on
their books as June 30, 1999, taken as a whole, not marketable.
5.12 TITLE AND CONDITION OF PROPERTIES.
(i) Intrex does not own any real property, except as
disclosed on SCHEDULE 5.12. Except as disclosed in Schedule 5.12, Intrex has
good and marketable title to all properties and assets, real and personal,
tangible and intangible, reflected in the Financials and all properties acquired
subsequent to December 31, 1998, which have not been disposed of in the ordinary
course of business since December 31, 1998, which property is subject to no
mortgage, lien, deed of trust, claim, security interest, liability, conditional
sales agreement, easement, right-of-way or any other encumbrance except as
disclosed in Schedule 5.12.
(ii) Schedule 5.12 contains an accurate list of the Leases
under which Intrex is lessee of any real property and/or any personal property.
Intrex enjoys peaceful and undisturbed possession under all of the Leases. True
and correct copies of the Leases have been made available to FiberChem for
inspection. No notice of default or claim under any of the Leases, or to the
best of Intrex's knowledge, no indication of any default or claim has occurred
or desire not to renew any of the Leases, has been received by Intrex, and
Intrex has performed in all material respects, all obligations required to be
performed by them to date under the Leases.
(iii) All personal property, machinery and equipment which is
material to the business, operations or condition (financial or otherwise) of
Intrex is in operating condition and, subject to routine maintenance and
ordinary wear and tear, have been maintained in accordance with reasonable
industry standards and are suitable for the purpose for which they are used.
Except as disclosed in Schedule 5.12, Intrex is not aware of nor has it received
notice of, the violation of any applicable zoning regulation, ordinance or other
law, order, regulation or requirement in force on the date hereof relating to
Intrex's businesses or its owned or leased real or personal properties.
5.13 DESCRIPTION OF MATERIAL CONTRACTS.
(i) SCHEDULE 5.13 contains a complete and correct list as of
the date hereof of all agreements, contracts, instruments and commitments,
obligations and understandings of the following types, written or oral, to which
Intrex is a party, under which Intrex has any rights or by which Intrex or any
of its properties is bound, as of the date hereof: (a) mortgages, indentures,
security agreements and other agreements and instruments relating to the
borrowing of money or extension of credit; (b) employment and consulting
agreements with annual compensation in excess of $60,000; (c) collective
bargaining agreements; (d) bonus, profit-sharing, compensation, stock option,
pension, retirement, deferred compensation or other plans, agreements, trusts,
funds or arrangements for the benefit of sales and management personnel (whether
or not legally binding); (e) sales agency, manufacturer's representative or
distributorship agreements; (f) agreements, orders or commitments for the
purchase by Intrex of materials, supplies or finished products exceeding $25,000
in the aggregate from any one person; (g) agreements, orders or commitments for
the sale by Intrex of their products or services exceeding $200,000; (h)
agreements or commitments for capital expenditures in excess of $25,000 for any
single project (it being warranted that the commitment for all undisclosed
contracts for such agreements or commitments does not exceed $50,000 in the
aggregate); (i) agreements relating to
-18-
research; (j) agreements relating to the payment of royalties; (k) brokerage or
finder's agreements; (l) joint venture agreements; and (m) other agreements,
contracts and commitments which individually or in the aggregate for any one
party involve any expenditure by Intrex of more than $25,000.
(ii) Intrex has made available to FiberChem complete and
correct copies of all written agreements, contracts, commitments, obligations
and undertakings, together with all amendments thereto, listed on the Schedules
hereto, and such Schedules contain accurate descriptions of all oral agreements
listed on such Schedules. To the best of Intrex's knowledge, all such
agreements, contracts, commitments, obligations and undertakings are in full
force and effect and, except as disclosed in Schedule 5.13, all parties to, or
otherwise bound by, such agreements, contracts, commitments, obligations and
undertakings have performed all obligations required to be performed by them to
date and Intrex is not in default and no event, occurrence, condition or act
exists which gives rise to (or which with notice or the lapse of time, or both,
could result in) a default or right of cancellation, acceleration or loss of
contractual benefits under, any such contract, agreement, commitment, obligation
or undertaking. There have been no threatened cancellations thereof, and there
are no outstanding disputes under any such contract, agreement, commitment,
obligation or undertaking. Except as set forth in Schedule 5.13, or in the
express terms of any written contract, agreement, commitment, obligation or
undertaking, no consent of any party is required under any such contract,
agreement, commitment, obligation or undertaking which would make such
agreements not binding and in full force and effect as of the Closing Date.
(iii) Except as otherwise set forth in Schedule 5.13, to the
best of Intrex's knowledge, each contract, lease, instrument and commitment
required to be described in the Schedules hereto is, on the date hereof, and
will be at the Closing, except to the extent it terminates or is terminable by
its terms, in full force and effect and there is not, under any such contract,
lease, instrument or commitment, any existing default by Intrex or such other
parties or any event that, with notice, lapse of time or both, would constitute
a default by Intrex or such other parties in respect of which adequate steps
have not been taken to cure such default or to prevent a default from occurring
or continuing.
5.14 ACCOUNTS PAYABLE.
SCHEDULE 5.14 to this Agreement sets forth a true, correct and
complete list of all accounts payable of Intrex at June 30, 1999, including
amounts payable to trade creditors (the "TRADE CREDITORS") and other short-term
liabilities commonly identified as accounts payable, which are, to the best of
their knowledge, bona fide, valid and binding obligations of Intrex incurred in
the ordinary course of business on an arms-length basis.
5.15 DEFAULT; VIOLATIONS OR RESTRICTIONS, THIRD PARTY CONSENTS.
The execution, delivery and performance of this Agreement and of any
agreement to be executed and delivered by Intrex in connection with the
transactions contemplated hereby and the fulfillment of the terms and conditions
herein set forth and the consummation of any of the transactions contemplated
hereby or thereby will not (or with the giving of notice or the lapse of time or
both would not) (i) result in the breach of any term or provision of the
Certificate of Incorporation or By-laws of Intrex or (ii) violate any provision
of or result in the breach of, modification of, acceleration of the maturity of
obligations under, or constitute a default, or give rise to any right of
termination, cancellation, acceleration or otherwise be in conflict with or
result in a loss of contractual benefits to Intrex, under any of the terms,
conditions or provisions of any contract, lease, note, bond, mortgage, deed of
trust, indenture, license, security agreement, agreement or other instrument or
obligation to which Intrex is a party or by which it is bound, or require any
consent, approval or notice under any law, rule or decree or any such document
-19-
or instrument; or result in the creation or imposition of any lien, claim,
Intrex's restriction, charge or encumbrance upon any of Intrex's assets or
interfere with or otherwise adversely affect the ability to carry on the
business of Intrex after the Closing Date on substantially the same basis as it
is now conducted by Intrex. Except as set forth in SCHEDULE 5.15, no consent of
any party to any material agreement, contract, instrument, lease, license, note,
bond, mortgage, indenture or other obligation to which Intrex is a party, or by
which they or any of their assets is subject, is required for the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby and the continuation thereof after the
Arrangement without Intrex becoming obligated to make payments greater than
would have been required in the event the Arrangement was not consummated.
5.16 COURT ORDERS AND DECREES.
Except as set forth in SCHEDULE 5.16, Intrex has not received
written or oral notice that there is outstanding, pending, or threatened any
order, writ, injunction or decree of any court, governmental agency or
arbitration tribunal against or affecting Intrex, the Stock or any of Intrex's
assets. To Intrex's best knowledge Intrex is in compliance in all material
respects with all applicable Federal, provincial, county, municipal (or of any
subdivision thereof) laws, regulations and administrative orders in force at any
applicable time to which Intrex may be subject.
5.17 BOOKS AND RECORDS.
The books and records of Intrex are in all material respects,
complete and correct and have been maintained in accordance with good business
practice. True and complete copies of the Memorandum and Articles of Intrex and
all amendments thereto and true and complete copies of all minutes, resolutions,
stock certificates and stock transfer records of Intrex are contained in the
minute books and stock transfer books of Intrex and will be delivered to
FiberChem at the Closing.
5.18 PENSION AND WELFARE PLANS.
Except as set forth in SCHEDULE 5.18, Intrex does not have in effect
any pension, profit sharing or other employee benefit plan. All benefits payable
under any terminated employee pension benefit plan previously maintained by
Intrex or to which it has previously contributed have been paid in full, and
Intrex does not have any material unfunded liability in respect of any such plan
or to the participants in such plan or to the beneficiaries of such
participants. Each such terminated plan was terminated substantially in
accordance with the applicable provisions of law or any agreement or contract
relating to any such plan and has been terminated without liability to Intrex.
5.19 INSURANCE.
SCHEDULE 5.19 contains a correct and complete description of all
current policies of insurance by or on behalf of Intrex in which Intrex is named
as an insured party, beneficiary or loss payable payee.
5.20 RIGHTS OF THIRD PARTIES.
Other than as disclosed in SCHEDULE 5.20 attached hereto, or
specifically provided for in this Agreement, Intrex has not entered into any
leases, licenses, easements or other agreements, recorded or unrecorded,
granting rights to third parties in any real or personal property of Intrex, and
no person or other entity has any right to possession, use or occupancy of any
of the property of Intrex.
-20-
5.21 LABOR MATTERS.
Except as set forth in SCHEDULE 5.21, Intrex is not a party to any
collective bargaining agreement with any labor union or association. There are
no discussions, negotiations, demands or proposals that are pending or have been
conducted or made with or by any labor union or association, and there are not
pending or threatened any labor disputes, strikes or work stoppages that may
have a material adverse effect upon the continued business or operation of
Intrex. To the best of Intrex's knowledge, Intrex (i) is in compliance with all
provincial laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and (ii) is not engaged in any
unfair labor practices.
5.22 RELATIONSHIPS WITH VENDORS AND CUSTOMERS.
To the best knowledge of Intrex there are no present or future
conditions or state of facts or circumstances that would materially adversely
affect the financial or business condition of Intrex after the Closing Date.
Intrex's relationships with its customers, clients and vendors are satisfactory,
and Intrex has no knowledge of any facts or circumstances which might materially
alter, negate, impair or in any way materially adversely affect the continuity
of any such relationships. Except as set forth in SCHEDULE 5.22, Intrex has no
knowledge of any material outstanding claims of any of its customers or clients
presently outstanding, pending or threatened against Intrex. Intrex has no
knowledge of any present or future condition or state of facts or circumstances
which would prevent the business of Intrex from being carried on after the
Closing Date in essentially the same manner as it is presently being carried on.
5.23 COMPENSATION PLANS.
SCHEDULE 5.23 contains a correct and complete list of all employees
of Intrex whose annual compensation for 1999 is expected to exceed $60,000.
Schedule 5.23 contains a correct and complete description of all compensation
plans and arrangements; bonus and incentive plans and arrangements; deferred
compensation plans and arrangements; stock purchase and stock option plans and
arrangements; hospitalization and other life, health or disability insurance or
reimbursement programs; holiday, sick leave, severance, vacation, tuition
reimbursement, personal loan and product purchase discount policies and
arrangements, policy manuals and any other plans or arrangements providing for
benefits for employees of Intrex.
5.24 GOVERNMENTAL LICENSES.
Intrex has or will have prior to Closing all material governmental
and administrative consents, permits, appointments, approvals, licenses,
certificates and franchises which are (i) necessary for the operation of Intrex,
and (ii) required in connection with Intrex's execution, delivery or performance
of this Agreement, all of which have been obtained by Intrex and are in full
force and effect.
5.25 BINDING OBLIGATION
This Agreement has been duly executed and delivered by Intrex and
constitutes legal, valid and binding obligations of Intrex, enforceable against
Intrex in accordance with its terms, except to the extent that such
enforceability may be limited by general principles of equity or bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors' rights
generally. All action of the Boards of Directors of Intrex and all other
corporate action necessary to authorize the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
has been duly and validly taken.
-21-
5.26 BROKERS.
No agent, broker, investment banker, person, or firm acting on
behalf of Intrex or any firm or corporation affiliated with any of them, or
under its authority, is or will be entitled to a financial advisory fee,
brokerage commission, finder's fee or other like payment in connection with the
transactions contemplated hereby except the consideration payable to Entrenet
pursuant to the Entrenet Agreements.
5.27 COMPLIANCE WITH LAWS.
(i) The operations and activities of Intrex have previously
complied and continue to comply in all material respects with all applicable
Canadian and British Columbia laws, statutes, codes, ordinances, rules,
regulations, permits, judgments, orders, writs, awards, decrees or injunctions
(collectively referred to in this Article as the "LAWS") as in effect on or
before the date of this Agreement. To the best of Intrex's knowledge, neither
the ownership of Intrex nor the conduct of the business of Intrex as presently
conducted conflicts with the rights of any other person, firm or company or
violates, with or without the giving of notice or the passage of time, or both,
will violate, conflict with or result in a default, right to accelerate or loss
of rights under, any terms or provisions of their Certificates of Incorporation
or By-laws as presently in effect, or any lien, encumbrance, mortgage, deed of
trust, lease, license, agreement, understanding, or Laws to which Intrex is a
party or by which it may be bound or affected. Except as set forth in SCHEDULE
5.27, Intrex has received no notice or communication from any third party
asserting a failure to comply with any Laws, nor has Intrex received any notice
that any authority or third party intends to seek enforcement against Intrex to
compel compliance with any such Laws.
(ii) Except as set forth in Schedule 5.27, there are no
existing claims or to the best of Intrex's knowledge, potential claims which may
exist against Intrex, for, with respect to, or as direct or indirect result of,
the presence on or under, or the escape, seepage, leakage, spillage, discharge,
or emission discharging, from the real property of Intrex of any Hazardous
Material, including, without limitation, any losses, liabilities, damages,
injuries, costs, expenses, reasonable fees of counsel or claims asserted or
arising under any applicable federal, Canadian, state or local statute, law,
ordinance, code, rule, regulation, order or decree now or at any time hereafter
in effect, regulating, relating to or imposing liability or standards of conduct
concerning any Hazardous Material.
(iii) Except as set forth in Schedule 5.27, since the date
first acquired or leased by Intrex, Intrex has not placed any "Hazardous
Material" on or under the real property owned or leased by Intrex and, to the
best of Intrex's knowledge, there has been no "Hazardous Material" on or under
the real property owned or leased by Intrex. In this Agreement "Hazardous
Material" means any hazardous substances, hazardous materials, toxic substances
or solid waste as defined in the CLEAR AIR ACT (United States), the
COMPREHENSIVE ENVIRONMENTAL RESPONSE COMPENSATION AND LIABILITY ACT (United
States), as amended, the RESOURCE CONSERVATION AND RECOVERY ACT (United States),
as amended, and the HAZARDOUS MATERIALS TRANSPORTATION ACT (United States), any
substances or materials listed as hazardous or toxic in the United States
Department of Transportation Table, by the United States Environmental
Protection Agency or any successor agency or under any federal, state or local
laws or regulations, or any asbestos, polychlorinated bi-phenyls, urea
formaldehyde foam, explosives or radioactive materials.
(iv) Neither Intrex nor to the best knowledge and belief of
Intrex, any officer, employee or agent of Intrex acting on its behalf, nor any
other person acting on its behalf, has, directly or indirectly, within the past
three years given, agreed to give or received or agreed to receive any gift or
similar benefit to any customer, supplier, governmental employee or other person
who is or may be in a position to help or hinder Intrex (or assist Intrex in
connection with any actual or proposed transaction) which (i)
-22-
might subject Intrex to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (ii) if not given in the past might have
had an adverse effect on the assets, business or operation of Intrex, or (iii)
if not continued in the future, might adversely affect the assets, the business
or the operations or prospects of Intrex, or which might subject Intrex to suit
or penalty in any private or governmental litigation or proceeding.
5.28 GUARANTEES.
Except as disclosed in SCHEDULE 5.28, the Participating Intrex
Shareholders have not personally guaranteed any of the obligations of the
business of Intrex.
5.29 BENEFITS.
All accrued holiday, vacation, sick or other compensation or
benefits to which employees of Intrex are entitled to receive from Intrex are
set forth on SCHEDULE 5.29.
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF FIBERCHEM
FiberChem warrants and represents to Intrex as follows (as used
herein, "FiberChem's best knowledge" or "to the best knowledge of FiberChem"
shall mean information actually known by senior officers of FiberChem without
due inquiry):
6.1 ORGANIZATION; CAPITALIZATION.
FiberChem is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, has corporate power and
authority to carry on its business as now conducted and to own, lease or operate
the properties and assets now used by it in connection therewith and to
consummate the transactions contemplated by this Agreement. FiberChem is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties make such
qualification necessary.
6.2 SHARE CAPITAL.
The authorized and outstanding FiberChem warrants and options are as
described in Section 3.1 of this Agreement. All outstanding shares of Common
Stock have been duly authorized and are validly issued, fully paid and
non-assessable. The FiberChem Common Shares reserved for issuance pursuant to
this Agreement are free of any rights in others and have not been reserved for
any other purpose, and such shares are available for issuance as provided
pursuant to the Plan of Arrangement. Holders of FiberChem Common Shares do not
have preemptive rights. FiberChem has issued warrants, options, rights and
securities convertible into FiberChem Common Shares and other arrangements or
commitments which obligate FiberChem to issue FiberChem Common Shares as
described in Section 3.1 of this Agreement. No other warrants, options, rights,
convertible securities or other arrangements or commitments are outstanding as
of the date of this Agreement.
6.3 CAPACITY.
FiberChem has full right, power and capacity to execute, deliver and
perform its obligations under this Agreement and the Other Agreements required
to be executed by the FiberChem in connection herewith and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated by this
Agreement will not,
-23-
conflict with or constitute a breach of any term or provision of the
Certificates of Incorporation or By-laws of FiberChem constitute a default under
any material law, rule, regulation, indenture, instrument, mortgage, deed of
trust, or other agreement or instrument to which FiberChem is a party or by
which it is bound. Except as set forth on SCHEDULE 6.3, FiberChem: (a) does not
own any subsidiaries; and (b) does not own, directly or indirectly, shares or
other securities in any other corporation, or any interest in any partnership,
joint venture or other business entity. Except as set forth on Schedule 6.3 of
this Agreement, FiberChem has no interest in any entity engaged, directly or
indirectly, in businesses competitive with that of Intrex. This Agreement has
been, and each of the Other Agreements and instruments executed hereunder will,
at the Closing, be duly executed and delivered by FiberChem. This Agreement
constitutes, and each of the Other Agreements will constitute legal, valid and
binding obligations of FiberChem enforceable in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights
generally or by general equitable principles. No proceedings for the bankruptcy
or insolvency of FiberChem is pending or, to the best of FiberChem's knowledge,
are contemplated.
6.4 LEGAL PROCEEDINGS.
(i) Except as set forth in SCHEDULE 6.4 of this Agreement,
FiberChem is not a party to any pending litigation, arbitration or
administrative proceeding or, to the best of FiberChem's knowledge: (a) to any
investigation, and (b) no such litigation, arbitration or administrative
proceeding or investigation that might result in any material adverse change in
the financial condition, business or properties of FiberChem is threatened.
(ii) Except as disclosed in Schedule 6.4 to this Agreement,
FiberChem has no knowledge of and has not received notice of any complaints,
claims or threats, plans or intentions to discontinue commercial relations or
transactions from any customer of FiberChem, any purchaser of goods or services
from FiberChem, or any employee or independent contractor in each such case
material or significant to the conduct or operation of FiberChem or its
businesses or any party to any agreement to which FiberChem is a party.
(iii) Except as disclosed in Schedule 6.4, to the best of
FiberChem's knowledge, there is no claim (whether based on statute, negligence,
breach of warranty, strict liability or any other theory) relating directly or
indirectly to any product manufactured or sold, or any services performed, by
FiberChem.
(iv) To the best of FiberChem's knowledge, FiberChem is under
no obligation with respect to the return of goods in the possession of
customers.
6.5 ENCUMBRANCES.
Except as disclosed in SCHEDULE 6.5, there are no liens, mortgages,
deeds of trust, claims, charges, security interests or other encumbrances or
liabilities of any type whatsoever to which any of the assets of FiberChem is
subject.
6.6 TRADEMARKS.
FiberChem owns the trademarks, the trade names, service marks,
assumed names, copyrights and registrations therefor (collectively "FIBERCHEM
TRADEMARKS") specified in SCHEDULE 6.6. The FiberChem Trademarks have been duly
issued and have not been canceled, abandoned or otherwise terminated except as
otherwise indicated in Schedule 6.6. FiberChem is not in default under any of
the
-24-
licenses or agreements relating to the FiberChem Trademarks as listed in
Schedule 6.6 and all of such licenses and agreements are in effect. FiberChem
has not granted, and will not grant prior to the Closing, licenses or other
rights to use such FiberChem Trademarks. No other FiberChem Trademarks are
either owned or used by FiberChem. To the best of FiberChem's knowledge, the
operation of FiberChem's business does not infringe on the trademarks of any
third party. No claim has been made that there is any such infringement. To the
best of FiberChem's knowledge, no trademark of any other person infringes the
FiberChem Trademarks.
6.7 PATENTS, ETC.
FiberChem owns the inventions, letters patent, applications for
letters patent and patent license rights, inventions, processes, designs,
formulas, trade secrets, know-how and other industrial property rights
(collectively "FIBERCHEM PATENTS") necessary for the conduct of its business,
specified as belonging to it in SCHEDULE 6.7. The FiberChem Patents have been
duly issued and have not been canceled, abandoned or otherwise terminated except
as otherwise indicated in Schedule 6.7. FiberChem is not in default under any of
the licenses or agreements relating to the FiberChem Patents as listed in
Schedule 6.7 and all of such licenses and agreements are in effect. FiberChem
has not granted, and will not grant prior to the Closing, licenses or other
rights to third parties to use such FiberChem Patents. No other FiberChem
Patents are owned or used by FiberChem. To the best of FiberChem's knowledge,
the operation of FiberChem's business does not infringe on the patent rights of
any third party. No claim has been made that there is any such infringement. To
the best of FiberChem's knowledge, no patent of any person infringes the
FiberChem Patents.
6.8 FINANCIAL STATEMENTS.
(i) The audited financial statements of FiberChem as of and
for the years ended September 30, 1998 and September 30, 1999, previously
delivered to Intrex, and the unaudited financial statements of FiberChem for the
six month period ended March 31, 2000 which shall be delivered to Intrex
(collectively, the "FIBERCHEM FINANCIALS") together with the related notes and
schedules, when required, true, correct and complete copies of which are
attached hereto as SCHEDULE 6.8, (a) are in accordance with the books of account
and records of FiberChem; (b) except as disclosed on Schedule 6.8 present fairly
in all material respects, and are true, correct and complete statements of the
financial condition and the results of operations of FiberChem as at and for the
periods therein specified; and (c) do not include or omit to state any material
fact which renders the FiberChem Financials misleading.
(ii) Except as and to the extent shown or provided for in the
FiberChem Financials or the notes and schedules thereto or as disclosed in any
of the Schedules to this Agreement or such current liabilities as may have been
incurred since March 31, 2000 in the ordinary course of business, FiberChem has
no material claims, liabilities or obligations (whether accrued, absolute,
contingent or otherwise) which might be or become a charge against the assets or
liabilities of FiberChem; as of March 31, 2000, there was no material asset used
by FiberChem in its operations that has not been reflected in the FiberChem
Financials, and, except as set forth in the FiberChem Financials, no assets have
been acquired by FiberChem since such date except in the ordinary course of
business; and (b) all reserves (if any) established by FiberChem and set forth
in the FiberChem Financials are adequate, appropriate and reasonable.
(iii) The FiberChem Financials do not include any assets,
liabilities, income or expenses of any entity other than FiberChem. All
transactions between FiberChem and any other entity in which any of its
shareholders is an officer, director or owns 5% or more of the equity have,
since March 31, 2000, been at prices no less favorable to FiberChem than could
have been obtained from any independent third
-25-
party and prior to March 31, 2000, FiberChem is not aware of any such material
transaction except as set forth on Schedule 6.8.
6.9 ABSENCE OF CERTAIN CHANGES.
Except as disclosed in SCHEDULE 6.9 or the FiberChem Financials,
since March 31, 2000, there has not been any material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, earnings,
business, prospects or results of operations of FiberChem (in this SECTION 6.9
customary or seasonal fluctuations in the FiberChem Financials as a result of
ordinary and normal operation of the business of FiberChem shall not constitute
a material adverse change).
6.10 TAX MATTERS.
FiberChem has timely filed all required United States, State and
local income tax returns and has timely filed with all other appropriate
governmental agencies all sales, ad valorem, franchise and other tax, license,
gross receipts and other similar returns and reports required to be filed by
FiberChem. FiberChem has reported all taxable income and losses on those returns
on which such information is required to be reported, and paid or provided for
the payment of all taxes due and payable by FiberChem on said returns or taxes
due pursuant to any assessment received by it, including without limitation, any
taxes required by law to be withheld and/or paid in connection with any officers
or employees compensation or due pursuant to any assessment received by it.
There are no agreements for the extension of time for the assessment or payment
of any amounts of tax. FiberChem shall bear all expenses and responsibilities
for the filing of federal and applicable state, local or other income tax
returns and reports of FiberChem for the taxable year ended September 30, 2000.
All tax liabilities of FiberChem arising through the end of the taxable year
ended September 30, 1999, have been paid. All tax liabilities of FiberChem
arising after September 30, 1999 have been paid or adequately disclosed and
properly reserved for on the books and records and financial statements of
FiberChem. No United States, State, local or other tax return of FiberChem for
any period is currently under audit by the Internal Revenue Service or other tax
authorities except as set forth on SCHEDULE 6.10. No claim has been made by any
taxing authority relating to any such returns or any audit. For purposes of this
Section 6.10, the word "timely" shall mean that such returns were filed within
the time prescribed by law for the filing thereof, including the time permitted
under any applicable extensions. All taxes which FiberChem is required by law to
withhold and collect have been duly withheld and collected, and have been timely
paid over to the proper authorities to the extent due and payable.
6.11 ACCOUNTS RECEIVABLE AND INVENTORY.
(i) The accounts receivable of FiberChem reflected in the
FiberChem Financials as at March 31, 2000, and the accounts receivable acquired
by FiberChem since such date are valid, bona fide, subsisting claims for the
aggregate amounts thereof reflected in the FiberChem Financials net of the
reserves or allowances for doubtful receivables reflected in the FiberChem
Financials or thereafter in FiberChem's books and records uniformly maintained
in accordance with the FiberChem Financials, accounted for in accordance with
generally accepted accounting principles; and FiberChem knows of no reason that
would make such accounts receivable, net of such amounts as FiberChem has
reserved on their books as of March 31, 2000, taken as a whole, not collectible.
(ii) The inventory of FiberChem reflected in the FiberChem
Financials as at March 31, 2000, and the inventory acquired by FiberChem since
such date and as set forth on SCHEDULE 6.11 (a) has been purchased in the
ordinary course of business, (b) has been fully paid for unless otherwise
reflected in the FiberChem Financials, (c) is marketable or adequate provision
for obsolescence has been provided and
-26-
(d) to the best of FiberChem's knowledge, there is no reason that would make
such inventory, net of such amounts as FiberChem has reserved on its books as
March 31, 2000, taken as a whole, not marketable.
6.12 TITLE AND CONDITION OF PROPERTIES.
(i) FiberChem does not own any real property, except as disclosed on
SCHEDULE 6.12. Except as disclosed in Schedule 6.12, FiberChem has good and
marketable title to all properties and assets, real and personal, tangible and
intangible, reflected in the FiberChem Financials and all properties acquired
subsequent to March 31, 2000, which have not been disposed of in the ordinary
course of business since March 31, 2000, which property is subject to no
mortgage, lien, deed of trust, claim, security interest, liability, conditional
sales agreement, easement, right-of-way or any other encumbrance except as
disclosed in Schedule 6.12.
(ii) Schedule 6.12 contains an accurate list of all leases
and other agreements under which FiberChem is lessee of any real property and/or
any personal property (the "FIBERCHEM LEASES"). FiberChem enjoys peaceful and
undisturbed possession under all of the Leases. True and correct copies of the
FiberChem Leases have been made available to Intrex for inspection. No notice of
default or claim under any of the FiberChem Leases, or to the best of
FiberChem's knowledge, no indication of any default or claim has occurred or
desire not to renew any of the FiberChem Leases, has been received by FiberChem,
and FiberChem has performed in all material respects, all obligations required
to be performed by it to date under the FiberChem Leases.
(iii) All personal property, machinery and equipment which is
material to the business, operations or condition (financial or otherwise) of
FiberChem is in operating condition and, subject to routine maintenance and
ordinary wear and tear, have been maintained in accordance with reasonable
industry standards and are suitable for the purpose for which they are used.
Except as disclosed in Schedule 6.12, FiberChem is not aware of nor has it
received notice of, the violation of any applicable zoning regulation, ordinance
or other law, order, regulation or requirement in force on the date hereof
relating to FiberChem's businesses or its owned or leased real or personal
properties.
6.13 DESCRIPTION OF MATERIAL CONTRACTS.
(i) SCHEDULE 6.13 contains a complete and correct list as of
December 6, 1999 of all agreements, contracts, instruments and commitments,
obligations and understandings of the following types, written or oral, to which
FiberChem is a party, under which FiberChem has any rights or by which Intrex or
any of its properties is bound, as of the date hereof: (a) mortgages,
indentures, security agreements and other agreements and instruments relating to
the borrowing of money or extension of credit; (b) employment and consulting
agreements with annual compensation in excess of $60,000; (c) collective
bargaining agreements; (d) bonus, profit-sharing, compensation, stock option,
pension, retirement, deferred compensation or other plans, agreements, trusts,
funds or arrangements for the benefit of sales and management personnel (whether
or not legally binding); (e) sales agency, manufacturer's representative or
distributorship agreements; (f) agreements, orders or commitments for the
purchase by FiberChem of materials, supplies or finished products exceeding
$25,000 in the aggregate from any one person; (g) agreements, orders or
commitments for the sale by FiberChem of their products or services exceeding
$200,000 (h) agreements or commitments for capital expenditures in excess of
$25,000 for any single project (it being warranted that the commitment for all
undisclosed contracts for such agreements or commitments does not exceed $50,000
in the aggregate); (i) agreements relating to research; (j) agreements relating
to the payment of royalties; (k) brokerage or finder's agreements; (l) joint
venture agreements; and (m) other agreements, contracts and commitments which
-27-
individually or in the aggregate for any one party involve any expenditure by
FiberChem of more than $25,000.
(ii) FiberChem has made available to Intrex complete and
correct copies of all written agreements, contracts, commitments, obligations
and undertakings, together with all amendments thereto, listed on the Schedules
hereto, and such Schedules contain accurate descriptions of all oral agreements
listed on such Schedules. To the best of FiberChem's knowledge, all such
agreements, contracts, commitments, obligations and undertakings are in full
force and effect and, except as disclosed in Schedule 6.13, all parties to, or
otherwise bound by, such agreements, contracts, commitments, obligations and
undertakings have performed all obligations required to be performed by them to
date and FiberChem is not in default and no event, occurrence, condition or act
exists which gives rise to (or which with notice or the lapse of time, or both,
could result in) a default or right of cancellation, acceleration or loss of
contractual benefits under, any such contract, agreement, commitment, obligation
or undertaking. There have been no threatened cancellations thereof, and there
are no outstanding disputes under any such contract, agreement, commitment,
obligation or undertaking. Except as set forth in Schedule 6.13, or in the
express terms of any written contract, agreement, commitment, obligation or
undertaking, no consent of any party is required under any such contract,
agreement, commitment, obligation or undertaking which would make such
agreements not binding and in full force and effect as of the Closing Date.
(iii) Except as otherwise set forth in Schedule 6.13, to the
best of FiberChem's knowledge, each contract, lease, instrument and commitment
required to be described in the Schedules hereto is, on the date hereof, and
will be at the Closing, except to the extent it terminates or is terminable by
its terms in full force and effect and there is not, under any such contract,
lease, instrument or commitment, any existing default by FiberChem or such other
parties or any event that, with notice, lapse of time or both, would constitute
a default by FiberChem or such other parties in respect of which adequate steps
have not been taken to cure such default or to prevent a default from occurring
or continuing.
6.14 ACCOUNTS PAYABLE.
SCHEDULE 6.14 to this Agreement sets forth a true, correct and
complete list of all accounts payable of FiberChem at June 30, 1999, including
amounts payable to trade creditors (the "FIBERCHEM TRADE CREDITORS") and other
short-term liabilities commonly identified as accounts payable, which are, to
the best of FiberChem's knowledge, bona fide, valid and binding obligations of
FiberChem incurred in the ordinary course of business on an arms-length basis.
6.15 DEFAULT; VIOLATIONS OR RESTRICTIONS, THIRD PARTY CONSENTS.
The execution, delivery and performance of this Agreement and of any
agreement to be executed and delivered by FiberChem in connection with the
transactions contemplated hereby and the fulfillment of the terms and conditions
herein set forth and the consummation of any of the transactions contemplated
hereby or thereby will not (or with the giving of notice or the lapse of time or
both would not) (i) result in the breach of any term or provision of the
Certificate of Incorporation or By-laws of FiberChem or (ii) violate any
provision of or result in the breach of, modification of, acceleration of the
maturity of obligations under, or constitute a default, or give rise to any
right of termination, cancellation, acceleration or otherwise be in conflict
with or result in a loss of contractual benefits to Intrex, under any of the
terms, conditions or provisions of any contract, lease, note, bond, mortgage,
deed of trust, indenture, license, security agreement, agreement or other
instrument or obligation by which FiberChem is party or by which it may be
bound, or require any consent, approval or notice under any law, rule or decree
or any such document or instrument; or result in the creation or imposition of
any lien, claim,
-28-
Intrex's restriction, charge or encumbrance upon any of FiberChem's assets or
interfere with or otherwise adversely affect the ability to carry on the
business of FiberChem after the Closing Date on substantially the same basis as
it is now conducted by FiberChem. Except as set forth in SCHEDULE 6.15, no
consent of any party to any material agreement, contract, instrument, lease,
license, note, bond, mortgage, indenture or other obligation to which FiberChem
is a party, or by which them or any of their assets is subject, is required for
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby and the continuation thereof after the
Arrangement without FiberChem becoming obligated to make payments greater than
would have been required in the event the Arrangement was not consummated.
6.16 COURT ORDERS AND DECREES.
Except as set forth in SCHEDULE 6.16, FiberChem has not received
written or oral notice that there is outstanding, pending, or threatened any
order, writ, injunction or decree of any court, governmental agency or
arbitration tribunal against or affecting FiberChem, FiberChem's capital stock
or any of FiberChem's assets. To FiberChem's best knowledge FiberChem is in
compliance in all material respects with all applicable Federal, state, county,
municipal (or of any subdivision thereof) laws, regulations and administrative
orders in force at any applicable time to which FiberChem may be subject.
6.17 BOOKS AND RECORDS.
The books and records of FiberChem are in all material respects,
complete and correct and have been maintained in accordance with good business
practice. True and complete copies of the Articles and By-Laws of FiberChem and
all amendments thereto and true and complete copies of all minutes, resolutions,
stock certificates and stock transfer records of FiberChem are contained in the
minute books and stock transfer books of FiberChem.
6.18 PENSION AND WELFARE PLANS.
Except as set forth in SCHEDULE 6.18, FiberChem does not have in
effect any pension, profit sharing or other employee benefit plan. All benefits
payable under any terminated employee pension benefit plan previously maintained
by FiberChem or to which it has previously contributed have been paid in full,
and FiberChem does not have any material unfunded liability in respect of any
such plan or to the participants in such plan or to the beneficiaries of such
participants. Each such terminated plan was terminated substantially in
accordance with the applicable provisions of law or any agreement or contract
relating to any such plan and has been terminated without liability to
FiberChem.
6.19 INSURANCE.
(i) SCHEDULE 6.19 contains a correct and complete
description of all current policies of insurance by or on behalf of FiberChem in
which FiberChem is named as an insured party, beneficiary or loss payable payee.
FiberChem has at all times since June 30, 1999 maintained and will at all times
prior to the Closing Date maintain insurance coverage with respect to their
properties, in respect of liabilities and risks prudently insured against. The
policies described in Schedule 6.19 (or renewals or replacements thereof) are
outstanding and in force as of the date hereof, cover risks normally insured
against and are in amounts normally carried and there is no default notice of
cancellation or non-renewal with respect to any material provision contained in
any such policy.
-29-
6.20 RIGHTS OF THIRD PARTIES.
Other than as disclosed in SCHEDULE 6.20 attached hereto, or
specifically provided for in this Agreement, FiberChem has not entered into any
leases, licenses, easements or other agreements, recorded or unrecorded,
granting rights to third parties in any real or personal property of FiberChem,
and no person or other entity has any right to possession, use or occupancy of
any of the property of FiberChem.
6.21 LABOR MATTERS.
Except as set forth in SCHEDULE 6.21, FiberChem is not a party to
any collective bargaining agreement with any labor union or association. There
are no discussions, negotiations, demands or proposals that are pending or have
been conducted or made with or by any labor union or association, and there are
not pending or threatened any labor disputes, strikes or work stoppages that may
have a material adverse effect upon the continued business or operation of
FiberChem. To the best of FiberChem's knowledge, FiberChem (i) are in compliance
with all state laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and (ii) are not engaged in any
unfair labor practices.
6.22 RELATIONSHIPS WITH VENDORS AND CUSTOMERS.
To the best knowledge of FiberChem there are no present or future
conditions or state of facts or circumstances that would materially adversely
affect the financial or business condition of FiberChem after the Closing Date.
FiberChem's relationships with its customers, clients and vendors are
satisfactory, and FiberChem has no knowledge of any facts or circumstances which
might materially alter, negate, impair or in any way materially adversely affect
the continuity of any such relationships. Except as set forth in SCHEDULE 6.22,
FiberChem has no knowledge of any material outstanding claims of any of its
customers or clients presently outstanding, pending or threatened against
FiberChem. FiberChem has no knowledge of any present or future condition or
state of facts or circumstances which would prevent the business of FiberChem
from being carried on after the Closing Date in essentially the same manner as
it is presently being carried on.
6.23 COMPENSATION PLANS.
SCHEDULE 6.23 contains a correct and complete list of all employees
of FiberChem whose annual compensation for 2000 is expected to exceed $60,000.
Schedule 6.23 contains a correct and complete description of all compensation
plans and arrangements; bonus and incentive plans and arrangements; deferred
compensation plans and arrangements; stock purchase and stock option plans and
arrangements; hospitalization and other life, health or disability insurance or
reimbursement programs; holiday, sick leave, severance, vacation, tuition
reimbursement, personal loan and product purchase discount policies and
arrangements, policy manuals and any other plans or arrangements providing for
benefits for employees of FiberChem.
6.24 GOVERNMENTAL LICENSES.
FiberChem has or will have prior to Closing all material
governmental and administrative consents, permits, appointments, approvals,
licenses, certificates and franchises which are (i) necessary for the operation
of FiberChem, and (ii) required in connection with FiberChem's execution,
delivery or performance of this Agreement, all of which have been obtained by
FiberChem and are in full force and effect.
-30-
6.25 COMPLIANCE WITH LAWS.
(i) The operations and activities of FiberChem have
previously and continue to comply in all material respects with all applicable
State and Federal laws, statutes, codes, ordinances, rules, regulations,
permits, judgments, orders, writs, awards, decrees or injunctions (collectively
referred to in this Article as the "LAWS"), as in effect on or before the date
of this Agreement. To the best of FiberChem's knowledge, neither the ownership
of FiberChem nor the conduct of the business of FiberChem as presently conducted
conflicts with the rights of any other person, firm or company or violates, with
or without the giving of notice or the passage of time, or both, will violate,
conflict with or result in a default, right to accelerate or loss of rights
under, any terms or provisions of their Certificates of Incorporation or By-laws
as presently in effect, or any lien, encumbrance, mortgage, deed of trust,
lease, license, agreement, understanding, or Laws to which FiberChem is a party
or by which it may be bound or affected. Except as set forth in SCHEDULE 6.25,
FiberChem has received no notice of communication from any third party asserting
a failure to comply with any Laws, nor have FiberChem received any notice that
any authority or third party intends to seek enforcement against FiberChem to
compel compliance with any such Laws.
(ii) Except as set forth in Schedule 6.25, there are no
existing claims or to the best of FiberChem's knowledge, potential claims which
may exist against FiberChem, for, with respect to, or as direct or indirect
result of, the presence on or under, or the escape, seepage, leakage, spillage,
discharge, or emission discharging, from the real property of FiberChem of any
Hazardous Material, including, without limitation, any losses, liabilities,
damages, injuries, costs, expenses, reasonable fees of counsel or claims
asserted or arising under any applicable federal, Canadian, state or local
statute, law, ordinance, code, rule, regulation, order or decree now or at any
time hereafter in effect, regulating, relating to or imposing liability or
standards of conduct concerning any Hazardous Material.
(iii) Except as set forth in Schedule 6.25, since the date
first acquired or leased by FiberChem, FiberChem has not placed any Hazardous
Material on or under the real property owned or leased by FiberChem and, to the
best of FiberChem's knowledge, there has been no "Hazardous Material" on or
under the real property owned or leased by FiberChem.
(iv) Neither FiberChem nor to the best knowledge and belief
of FiberChem, any officer, employee or agent of FiberChem acting on its behalf,
nor any other person acting on its behalf, has, directly or indirectly, within
the past three years given, agreed to give or received or agreed to receive any
gift or similar benefit to any customer, supplier, governmental employee or
other person who is or may be in a position to help or hinder FiberChem (or
assist FiberChem in connection with any actual or proposed transaction) which
(i) might subject FiberChem to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (ii) if not given in the past might have
had an adverse effect on the assets, business or operation of FiberChem, or
(iii) if not continued in the future, might adversely affect the assets, the
business or the operations or prospects of FiberChem, or which might subject
FiberChem to suit or penalty in any private or governmental litigation or
proceeding.
6.26 BINDING OBLIGATION.
This Agreement has been duly executed and delivered by FiberChem and
constitutes legal, valid and binding obligations of FiberChem, enforceable
against FiberChem in accordance with its terms, except to the extent that such
enforceability may be limited by general principles of equity or bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors' rights
generally. All action of the Boards of Directors of FiberChem and all other
corporate action necessary to authorize the execution,
-31-
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby has been duly and validly taken.
6.27 BROKERS.
No agent, broker, investment banker, person or firm acting on behalf
of FiberChem or any firm or corporation affiliated with FiberChem or under its
authority is or will be entitled to any brokers or finders fee or any other
commission or similar fee in connection with any of the transactions
contemplated hereby, except that, upon and subject to the successful
consummation of the Arrangement, FiberChem shall pay to Entrenet the fee
provided for under the Entrenet Agreements.
6.28 GUARANTEES.
Except as disclosed in SCHEDULE 6.28, the FiberChem shareholders
have not personally guaranteed any of the obligations of the business of
FiberChem.
6.29 BENEFITS.
All accrued holiday, vacation, sick or other compensation or
benefits to which employees of FiberChem are entitled to receive from FiberChem
are set forth on SCHEDULE 6.29.
6.30 SEC FILINGS.
FiberChem has made available to Intrex for inspection a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by FiberChem with the SEC since October 1, 1997, and prior
to the date of this Agreement (the "SEC DOCUMENTS"), which are all the documents
(other than preliminary material) that FiberChem was required to file with the
SEC since such date. As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), as the case
may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such SEC Documents, and none of the SEC Documents contained as of
the date of its filing any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statement therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE 7 - COVENANTS OF INTREX
Intrex hereby covenants and agrees:
7.1 FURTHER ASSURANCES.
From time to time at the reasonable request of FiberChem, and
without further consideration, Intrex shall execute and deliver such additional
instruments and take such other action as FiberChem may reasonably require to
carry out the terms of this Agreement.
7.2 ACCESS.
Subsequent to the date hereof and prior to the Closing Date, Intrex
will continue to give to FiberChem and its counsel, accountants, and other
representatives, reasonable access during normal business hours to all of their
properties, books, contracts, commitments and records so that FiberChem may have
full opportunity to make such investigation as it shall reasonably desire.
FiberChem may use
-32-
such information to commence, at FiberChem's expense, the audit of Intrex, using
either Intrex's independent auditors or Xxxxxxxxx Xxxxx Xxxxxxx, LLP. Intrex
shall provide copies of all prior audits and shall assist FiberChem in gaining
previous auditors' consent to use said audits in connection with any SEC filings
required of FiberChem.
7.3 CONFIDENTIALITY.
From and after the date of this Agreement until the Closing or the
termination of this Agreement, Intrex and its representatives will maintain the
confidentiality of all documents and information of a confidential nature
disclosed to them in the course of negotiations and their due diligence review
and will in no event use any confidential information for any purpose other than
for the evaluation of the transactions contemplated herein, and in the event of
termination of this Agreement will destroy all copies of documentation which
each party may have delivered to them and will not use any confidential
information from FiberChem for its own benefit.
7.4 CLOSING DOCUMENTS.
Provided that FiberChem has fully performed its obligations and
Intrex's conditions have been satisfied, Intrex shall execute and deliver all
instruments and documents required as a condition precedent to the Closing under
Article 9 hereof and take all action required to carry out the terms of this
Agreement and to consummate the transactions contemplated hereby.
7.5 THIRD PARTY CONSENTS.
Intrex will obtain and deliver to FiberChem all written consents of
third parties to any material contracts as specified on the Schedules in
connection with the Arrangement and to enable FiberChem to obtain the benefits
intended to be conferred by this Agreement.
7.6 NOTICE OF EVENTS OR CHANGES.
Intrex shall promptly notify FiberChem of any event, occurrence or
transaction which would have been required to have been disclosed on any
Schedule to this Agreement, had such event, occurrence or transaction existed on
the Effective Date, including, without limitation, any actions, claims, or
legal, administrative or arbitration proceedings, or investigations, threatened
or commenced, which, if pending on the Effective Date, would have been required
to be described in any Schedule hereto, or which otherwise relate to or affect
its business or assets in any material respect. Intrex shall use its best
efforts to defend against any such actions, claims, proceedings or
investigations.
7.7 CONDUCT OF BUSINESS UNTIL CLOSING.
Intrex agrees that until the Closing Date, unless it has received
the prior written consent of FiberChem, it will:
(i) operate its business only in the usual, regular and
ordinary course consistent with reasonable business practice;
(ii) use all reasonable efforts as to events within Intrex's
control to prevent the occurrence of any change or event which would prevent any
of its representations and warranties of Intrex contained herein from being true
at and as of the Closing Date with the same effect as though such
representations and warranties had been made at and as of the Closing Date;
-33-
(iii) use its best efforts to preserve its present
relationship with suppliers, customers and others having business dealings with
it;
(iv) pay and discharge all costs and expenses of carrying on
its business consistent with past business practices;
(v) except as contemplated by the Employment and
Non-Competition Agreements, not increase the compensation (including wages and
benefits described in Schedule 5.23) of any Employee or make any representation
or commitment to do so;
(vi) not create or suffer any Liens upon any of its assets
(other than Liens set forth in the Schedules);
(vii) not acquire or dispose of any assets or enter into any
transaction, except in the ordinary course of business consistent with past
practice;
(viii) maintain books, accounts and records in the usual,
regular, true and ordinary manner;
(ix) not incur any obligation or liability (fixed or
contingent), except in the ordinary course of business consistent with past
practice;
(x) not make any dividend or bonus disbursements without
FiberChem's prior approval (other than dividends reasonably estimated to pay
taxes on corporate earnings and bonuses payable pursuant to existing plans or
agreements);
(xi) not cancel or compromise any material debt or claim,
other than in the ordinary course of business consistent with past practice;
(xii) not waive or release any rights of material value with
respect to its assets, except in the ordinary course of business consistent with
past practice;
(xiii) not modify or change in any material respect or
terminate any existing license, lease, contract or other document required to be
listed on the Schedules to this Agreement other than in the ordinary course of
business consistent with past practice, except that Intrex shall be permitted to
modify or change existing licenses, leases, Contracts and other documents to
obtain the consents referred in any Schedule hereto if FiberChem consents to
such modification or change, which consent shall not be unreasonably withheld;
(xiv) not make any loans or extensions of credit, except to
trade purchasers in the ordinary course of business consistent with past
practice.
(xv) maintain its properties, machinery and equipment in
their present condition and repair, normal wear and tear excepted; and
(xvi) continue all policies of insurance in full force and
effect up to and including the Closing Date.
-34-
7.8 UPDATE SCHEDULES.
At the Closing, Intrex will update by amendments or supplements each
of the Schedules delivered pursuant to this Agreement and any other written
disclosure in writing from Intrex to reflect any change in the information set
forth in said Schedules or other disclosure. Intrex hereby represents and
warrants that such Schedules and such written disclosures, as so amended or
supplemented, shall be true, correct and complete in all material respects as of
the Closing Date.
7.9 NO SOLICITATION OF COMPETING OFFERS.
Prior to the Closing Date, Intrex will not, directly or indirectly,
seek, solicit, initiate or encourage (including by way of furnishing any
non-public information concerning the business, properties or assets of Intrex)
or enter into any discussions or negotiations with any person or group regarding
any Acquisition Proposal (as defined below). Intrex agrees to notify FiberChem
promptly by telephone, and thereafter confirm in writing, if any Acquisition
Proposal is received by Intrex. As used in this paragraph 7.9, "ACQUISITION
PROPOSAL" shall mean any proposal received by Intrex prior to the Closing Date
for a merger or other business combination involving Intrex or relating to the
acquisition of the shares of Intrex or the disposition of any of the assets of
Intrex except for dispositions of assets for not less than fair market value
which are made in the ordinary course of business and are consistent with past
practice and with this Agreement.
ARTICLE 8 - COVENANTS OF FIBERCHEM
FiberChem hereby covenants and warrants as follows:
8.1 CLOSING DOCUMENTS.
Provided that Intrex has fully performed its respective obligations
and FiberChem's conditions hereof have been satisfied, FiberChem shall execute
and deliver all instruments and documents required as a condition precedent to
Closing under Article 10 hereof and take all action required to carry out the
terms of this Agreement and to consummate the transactions contemplated hereby.
8.2 NONINTERFERENCE.
FiberChem shall not take or omit to take any action that (i) if
taken or omitted on or before the date of this Agreement, would make untrue any
of the representations and warranties contained in Article 6 of this Agreement,
or (ii) would interfere with FiberChem's ability to perform or would prevent
performance of any of its obligations under this Agreement or any of the Other
Agreements or instruments provided for herein.
8.3 CONFIDENTIALITY.
From and after the date of this Agreement until the Closing or the
termination of this Agreement, FiberChem and its representatives will maintain
the confidentiality of all documents and information of a confidential nature
disclosed by Intrex or the Participating Intrex Shareholders in the course of
their negotiations and FiberChem's due diligence review and will in no event use
any confidential information for any purpose other than for the evaluation of
the transactions contemplated herein and the financing of this transaction. In
the event this Agreement is terminated, FiberChem will destroy all copies of
documentation which it received from or on behalf of Intrex and will not use any
confidential information for its own benefit.
-35-
8.4 ACCESS.
Subsequent to the date hereof, and prior to the Closing Date,
FiberChem will give to Intrex, their counsel, accountants and other
representatives, reasonable access to all of its properties, books, contracts,
commitments and records, so that the Intrex may have full opportunity to make
such investigation as it shall reasonably desire.
8.5 THIRD PARTY CONSENTS.
FiberChem will obtain and deliver to Intrex all written consents of
third parties to any material contracts as specified on the Schedules in
connection with the Arrangement and to enable Intrex to obtain the benefits
intended to be conferred by this Agreement.
8.6 NOTICE OF EVENTS OR CHANGES.
FiberChem shall promptly notify Intrex of any event, occurrence or
transaction which would have been required to have been disclosed on any
Schedule to this Agreement, had such event, occurrence or transaction existed on
the Effective Date, including, without limitation, any actions, claims, or
legal, administrative or arbitration proceedings, or investigations, threatened
or commenced, which, if pending on the Effective Date, would have been required
to be described in any Schedule hereto, or which otherwise relate to or affect
its business or assets in any material respect. FiberChem shall use its best
efforts to defend against any such actions, claims, proceedings or
investigations.
8.7 CONDUCT OF BUSINESS UNTIL CLOSING.
FiberChem agrees that until the Closing Date, unless it has received
the prior written consent of Intrex, it will:
(i) operate its business only in the usual, regular and
ordinary course consistent with reasonable business practice;
(ii) use all reasonable efforts as to events within
FiberChem's control to prevent the occurrence of any change or event which would
prevent any of its representations and warranties of FiberChem contained herein
from being true at and as of the Closing Date with the same effect as though
such representations and warranties had been made at and as of the Closing Date;
(iii) use its best efforts to preserve its present
relationship with suppliers, customers and others having business dealings with
it;
(iv) pay and discharge all costs and expenses of carrying on
its business consistent with past business practices;
(v) not increase the compensation of any Employee or make
any representation or commitment to do so except as contemplated by the
Employment and Non-Competition Agreements;
(vi) not create or suffer any Liens upon any of its assets
(other than Liens set forth in the Schedules);
-36-
(vii) not acquire or dispose of any assets or enter into any
transaction, except in the ordinary course of business consistent with past
practice;
(viii) maintain books, accounts and records in the usual,
regular, true and ordinary manner;
(ix) not incur any obligation or liability (fixed or
contingent), except in the ordinary course of business consistent with past
practice;
(x) not make any dividend or bonus disbursements without
Intrex's prior approval (other than dividends to pay any taxes on corporate
earnings and bonuses payable pursuant to existing plans or arrangements);
(xi) not cancel or compromise any material debt or claim,
other than in the ordinary course of business consistent with past practice;
(xii) not waive or release any rights of material value with
respect to its assets, except in the ordinary course of business consistent with
past practice;
(xiii) not modify or change in any material respect or
terminate any existing license, lease, contract or other document required to be
listed on the Schedules to this Agreement other than in the ordinary course of
business consistent with past practice, except that FiberChem shall be permitted
to modify or change existing licenses, leases, Contracts and other documents to
obtain the consents referred in any Schedule hereto if Intrex consents to such
modification or change, which consent shall not be unreasonably withheld;
(xiv) not make any loans or extensions of credit, except to
trade purchasers in the ordinary course of business consistent with past
practice.
(xv) maintain its properties, machinery and equipment in
their present condition and repair, normal wear and tear excepted; and
(xvi) continue all policies of insurance in full force and
effect up to and including the Closing Date.
8.8 UPDATE SCHEDULES.
At the Closing, FiberChem will update by amendments or supplements
each of the Schedules delivered pursuant to this Agreement and any other written
disclosure in writing from FiberChem to reflect any change in the information
set forth in said Schedules or other disclosure. FiberChem hereby represents and
warrants that such Schedules and such written disclosures, as so amended or
supplemented, shall be true, correct and complete in all material respects as of
the Closing Date.
8.9 NO SOLICITATION OF COMPETING OFFERS.
Prior to the Closing Date, FiberChem will not, directly or
indirectly, seek, solicit, initiate or encourage (including by way of furnishing
any non-public information concerning the business, properties or assets of
FiberChem) or enter into any discussions or negotiations with any person or
group regarding any Acquisition Proposal (as defined below). FiberChem agrees to
notify Intrex promptly by
-37-
telephone, and thereafter confirm in writing, if any Acquisition Proposal is
received by FiberChem. As used in this Section 8.9, "ACQUISITION PROPOSAL" shall
mean any proposal received by FiberChem prior to the Closing Date for a merger
or other business combination involving FiberChem or relating to the acquisition
of the shares of FiberChem or the disposition of any of the assets of FiberChem
except for dispositions of assets for not less than fair market value which are
made in the ordinary course of business and are consistent with past practice
and with this Agreement.
8.10 MEMBERSHIP ON BOARD OF DIRECTORS.
As of the Effective Time, the Board of Directors of FiberChem shall
consist of nine persons of whom four persons will be nominees jointly of Xxxxx
X. Xxxxxxx and Xxxxx Xxxxxxxxx, four persons will be nominees of Xxxxxxxx Xxxxxx
and one person will be a nominee chosen jointly by Xxxxx X. Xxxxxxx and Xxxxxxxx
Xxxxxx, and if they are unable to agree, a person chosen by the other eight
directors.
8.11 INCREASE TO AUTHORIZED SHARE CAPITAL.
FiberChem will within 90 days after the Effective Date call and hold
a shareholder meeting at which the shareholders of FiberChem will be asked to
approve a resolution to increase the authorized capital stock of FiberChem
common shares to 500,000,000 FiberChem Common Shares. FiberChem will use its
best efforts to solicit proxies or otherwise cause its shareholders to vote in
favour of such resolution.
8.12 SUBSEQUENT ACTION.
Subsequent to the consummation of the Arrangement, when and if
deemed appropriate by the Board of Directors FiberChem shall use its best
efforts to (a) cause the shares of FiberChem to be listed on NASDAQ, (b) raise
additional working capital, and (c) cause a reverse split of FiberChem's Common
Shares of up to 1 for 50 shares in order to effect a listing on NASDAQ or
otherwise.
ARTICLE 9 - CONDITIONS PRECEDENT TO FIBERCHEM'S OBLIGATIONS
The obligations of FiberChem under this Agreement are subject to the
following conditions:
9.1 NO BREACH OF REPRESENTATIONS, ETC.
There shall not have been any breach of the representations,
warranties, covenants and agreements of Intrex contained in this Agreement, and
all such representations and warranties shall be true at all times on and before
the Closing as if given at such times, except to the extent that any such
representation or warranty is expressly stated to be true as of some other time.
9.2 COMPLIANCE WITH AGREEMENT.
Intrex shall have performed and complied in all material respects
with all agreements and covenants required by this Agreement to be performed or
complied with by them prior to or at the Closing Date. All documents and
instruments required in connection with this Agreement shall be reasonably
satisfactory in form and substance to FiberChem and Snow Xxxxxx Xxxxxx P.C.,
counsel for FiberChem.
-38-
9.3 NO MATERIAL ADVERSE CHANGE.
There shall have been no material adverse change in the condition
(financial or otherwise), business, assets, liabilities or earnings of Intrex on
a consolidated basis (including subsidiaries). For this purpose, customary or
seasonal fluctuations in Intrex's financial statements as a result of ordinary
and normal operation of their respective businesses shall not constitute a
material adverse change.
9.4 CERTIFICATES.
FiberChem shall have received certificates dated the Closing Date
and signed by Intrex, certifying that the conditions specified in subsections
9.1, 9.2 and 9.3 above have been fulfilled except to the extent that any
nonfulfillment was disclosed in writing to FiberChem prior to the Closing Date.
9.5 CONSENTS AND APPROVALS.
Intrex shall have obtained and delivered to FiberChem any required
consents or approvals of any third parties whose consent is required to the
transactions contemplated hereunder.
9.6 CORPORATE DOCUMENTS.
FiberChem shall have received originals or certified copies,
reasonably satisfactory in form and substance to FiberChem, of all such
corporate documents of Intrex as FiberChem shall reasonably require, including
without limitation the following:
(i) the Memorandum and Articles of Intrex and all amendments
thereto and restatements thereof certified as of a recent date by the British
Columbia Registrar of Companies;
(ii) Certificate of Good Standing issued by the British
Columbia Registrar of Companies;
(iii) copies of the minutes and resolutions of the Board of
Directors and shareholders of Intrex showing the authorization and approval by
such Board and of such shareholders of the execution and delivery by Intrex to
FiberChem of this Agreement and of the agreements and instruments provided for
herein and of the performance of the obligations of Intrex under this Agreement
and such other instruments and agreements, certified as of a recent date by the
Secretaries or other officers of Intrex; and
(iv) a Certificate of Incumbency identifying the officers and
directors of Intrex immediately before Closing; and
(v) a Certificate of Officers of Intrex, in form and content
acceptable to FiberChem as to certain factual matters.
9.7 OPINIONS OF INTREX'S COUNSEL.
FiberChem shall have received written opinions of counsel for Intrex
dated as of the Closing Date in form and content acceptable to FiberChem
9.8 NO TERMINATION.
This Agreement shall not have been terminated prior to the Effective
Time by mutual consent or by FiberChem, as permitted in Article 12.
-39-
9.9 PANDEL MERGER.
The Pandel Merger shall have completed.
9.10 POOLING AGREEMENT.
The Pooling Agreement shall have been executed by all parties.
9.11 EMPLOYMENT AGREEMENTS.
FiberChem shall receive from Xxxxx X. Xxxxxxx, Xxxxx Xxxxxxxxx,
Xxxxx X'Xxxx, Xxxxxxxx Xxxxxx, Xxxxxx Xxxxxx and Xxxxxx Xxxxxxx the Employment
and Non-Competition Agreements in the form of Exhibit 3.9 attached hereto.
9.12 FINANCIAL STATEMENTS.
FiberChem shall have received audited and unaudited financial
statements of Intrex for the respective periods set forth in Section 5.8.
9.13 REGULATORY APPROVALS.
The parties shall have received all regulatory approvals required in
connection with the transactions contemplated by this Agreement, all notice
periods and waiting periods required after the granting of any such approvals
shall have passed, and all such approvals shall be in effect.
9.14 ADDITIONAL FINANCING.
At Closing, Intrex shall have received and hold in trust not less
than $5,000,000 (or such other amount as agreed to by both FiberChem and Intrex)
from such parties as agreed to by both FiberChem and Intrex representing the
subscription proceeds for securities of FiberChem issuable at prices and on
terms acceptable to FiberChem, which proceeds shall be releasable to FiberChem
immediately following the Effective Time.
9.15 FAIRNESS OPINION.
FiberChem shall have received from an independent third party an
opinion that the Arrangement Consideration, taken as a whole, is fair to
FiberChem's public shareholders.
ARTICLE 10 - CONDITIONS PRECEDENT TO
INTREX'S OBLIGATIONS
The obligations of Intrex under this Agreement are subject to the
following conditions:
10.1 NO BREACH OF REPRESENTATIONS, ETC.
There shall not have been any breach of the representations,
warranties, covenants and agreements of FiberChem contained in this Agreement,
and all such representations and warranties shall be true at all times at and
before the Closing, except to the extent that any such representation or
warranty is expressly stated to be true as of some other time.
-40-
10.2 COMPLIANCE WITH AGREEMENTS.
FiberChem shall have performed and complied in all material respects
with all agreements and covenants required by this Agreement to be performed or
complied with by it prior to Closing. All documents and instruments required in
connection with this Agreement shall be reasonably satisfactory in form and
substance to Intrex and Xxxxxxx & Xxxxxx, counsel for Intrex.
10.3 NO TERMINATION.
This Agreement shall not be terminated prior to the Effective Time
by mutual consent or by Intrex, as permitted in Article 12 hereof.
10.4 CERTIFICATES.
Intrex and the Participating Intrex Shareholders shall have received
certificates dated the Closing Date and signed by FiberChem, certifying that the
conditions specified in Subsections 10.1, 10.2 and 10.3 above have been
fulfilled.
10.5 OPINION OF COUNSEL.
Intrex and the Participating Intrex Shareholders shall have received
a written opinion of Snow Xxxxxx Xxxxxx P.C., counsel for FiberChem, dated as of
the Closing Date, in form and content acceptable to Intrex.
10.6 NO MATERIAL ADVERSE CHANGE.
There shall have been no material adverse change in the condition
(financial or otherwise), business, assets, liabilities or earnings of
FiberChem.
10.7 CORPORATE DOCUMENTS.
Intrex shall have received originals or certified copies, reasonably
satisfactory in form and substance to it, of the following corporate documents
of FiberChem:
(i) a certificate of existence certifying as of a recent
date that FiberChem is a corporation in good standing under the laws of the
jurisdiction of its incorporation;
(ii) copies of the minutes and resolutions of the Board of
Directors of FiberChem showing the authorization and approval by such Boards of
the execution and delivery by FiberChem to Intrex of this Agreement and the
agreements and instruments provided for herein and of the performance of the
obligations of FiberChem under this Agreement and such other instruments and
agreements, certified as of a recent date by the Secretary or another officer of
FiberChem; and
(iii) a certificate of incumbency identifying the officers and
directors of FiberChem immediately before Closing; and
(iv) a Certificate of the Officers of FiberChem in form and
content acceptable to Intrex as to certain factual matters.
-41-
10.8 DIRECTORS OF FIBERCHEM.
One FiberChem director shall have tendered his resignation as a
director of FiberChem and the directors of FiberChem shall consist of nine
persons of whom four persons will be nominees of Xxxxx X. Xxxxxxx, four persons
will be nominees of Xxxxxxxx Xxxxxx and one person will be a nominee chosen
jointly by Xxxxx X. Xxxxxxx and Xxxxxxxx Xxxxxx, and if they are unable to
agree, a person chosen by the other eight directors
10.9 PANDEL MERGER.
The Pandel Merger shall have completed.
10.10 POOLING AGREEMENT.
The Pooling Agreement shall have been executed by all parties.
10.11 EMPLOYMENT AGREEMENTS.
FiberChem shall have delivered to Xxxxx X. Xxxxxxx, Xxxxx Xxxxxxxxx,
Xxxxx X'Xxxx, Xxxxxxxx Xxxxxx, Xxxxxx Xxxxxx and Xxxxxx Xxxxxxx executed
Employment and Non-Competition Agreements in the form of Exhibit 3.9 attached
hereto, and the consideration in exchange for the covenants therein.
10.12 COMPENSATION AGREEMENT.
FiberChem and Intrex shall have entered a Compensation Agreement
with Xxxxx X. Xxxxxxx.
10.13 FIBERCHEM SPECIAL SHARES.
The FiberChem Special Shares shall have been designated with the
rights and restrictions attached as Exhibit 3.2 (B).
10.14 CONSENTS AND APPROVALS.
FiberChem shall have obtained and delivered to Intrex any required
consents or approvals of any third parties whose consent is required to the
transactions contemplated hereunder.
10.15 FINANCIAL STATEMENTS.
Intrex shall have received audited and unaudited financial
statements of FiberChem for the respective periods set forth in Section 6.8.
10.16 REGULATORY APPROVALS.
The parties shall have received all regulatory approvals required in
connection with the transactions contemplated by this Agreement, all notice
periods and waiting periods required after the granting of any such approvals
shall have passed, and all such approvals shall be in effect.
10.17 ADDITIONAL FINANCING.
At Closing, Intrex shall have received and hold in trust not less
than $5,000,000 (or such other amount as agreed to by both FiberChem and Intrex)
from such parties as agreed to by both FiberChem
-42-
and Intrex representing the subscription proceeds for securities of FiberChem
issuable at prices and on terms acceptable to Intrex, which proceeds shall be
releasable to FiberChem immediately following the Effective Time.
10.18 FAIRNESS OPINION.
Intrex shall have received from an independent third party an
opinion that the Arrangement Consideration, taken as a whole, is fair to
Intrex's Shareholders.
ARTICLE 11 - CONDITIONS PRECEDENT TO OBLIGATIONS
OF FIBERCHEM AND INTREX
The obligations of FiberChem and Intrex to complete the Arrangement
shall be subject to the fulfillment at or prior to the Closing Date of the
following conditions:
11.1 DUE DILIGENCE.
Intrex and FiberChem shall each have been afforded the opportunity
to complete their due diligence and conduct a review of the business and
prospects of the other.
11.2 APPROVALS AND CONSENTS.
(i) The Arrangement, with or without amendment, will have
been approved at an extraordinary meeting (the "Meeting") of the shareholders of
Intrex to be held to consider and, if deemed advisable, to approve the
Arrangement in accordance with an interim order of the Court concerning the
Arrangement and the Arrangement will have otherwise been approved by the
required majority of the shares entitled or required to vote as determined by
the Court and in accordance with any applicable policy of any securities
regulatory authority.
(ii) The final order of the Court approving the Arrangement
will have been obtained in form and substance satisfactory to each of the
Companies.
(iii) All consents, orders, regulations and approvals,
including regulatory and judicial approvals and orders required or necessary or
desirable for the completion of the transactions provided for in this Agreement
and the Arrangement will have been obtained or received from the persons,
authorities or bodies having jurisdiction in the circumstances.
(iv) FiberChem's Common shares shall be quoted on the
NASD-OTC Bulletin Board; and
(v) None of the consents, orders, regulations or approvals
contemplated in this Agreement will contain terms or conditions or require
undertakings or security deemed unsatisfactory or unacceptable by any of the
Companies.
11.3 NO INJUNCTIONS.
No action or proceeding shall have been instituted or threatened by
any public authority or private person prior to the Closing before any court or
administrative body to restrain, enjoin or otherwise prevent the consummation of
this transaction or to recover any damages or obtain other relief as a result of
this transaction.
-43-
11.4 CORPORATE PROCEEDINGS.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement, and all documents and instruments
incident thereto, shall be reasonably satisfactory in substance and form to the
parties hereto and their counsel, and the parties hereto and their counsel shall
have received all certificates, documents and instruments, or copies thereof,
certified if requested, as may be reasonably requested.
ARTICLE 12 - TERMINATION
This Agreement may be terminated at any time (except where noted)
prior to the Closing Date:
(i) By mutual written consent of Intrex and FiberChem
properly authorized by their respective Boards of Directors.
(ii) By either FiberChem or Intrex if this transaction is not
completed by August 31, 2000, unless extended by mutual consent.
(iii) At any time prior to the Closing Date, by either Intrex
on the one hand, or FiberChem on the other hand: (a) in the event of a material
breach by the other party of any covenant or agreement contained in this
Agreement, (b) in the event of an inaccuracy of any representation or warranty
of the other party contained in this Agreement which inaccuracy would have a
material adverse effect on the condition (financial or otherwise), business,
assets, liabilities or earnings of the other; and, in the case of (a), if such
breach or inaccuracy has not been cured by the earlier of the Closing Date or
thirty days following written notice thereof to the party committing such breach
or permitting such inaccuracy.
(iv) In the event this Agreement is terminated pursuant to
this ARTICLE 12, this Agreement shall become void and have no effect, except
that (i) the provisions hereof relating to confidentiality and expenses set
forth in SECTION 7.3, 8.3 and ARTICLE 20, respectively, shall survive any such
termination and (ii) a termination pursuant to Section 12(iii) shall not relieve
the party at fault from liability for an uncured breach or inaccuracy giving
rise to such termination.
ARTICLE 13 - FIBERCHEM'S OBLIGATIONS AT CLOSING
At the Closing, in addition to fulfilling the conditions to closing
appearing in this Agreement, FiberChem shall deliver to the Participating Intrex
Shareholders the Arrangement Consideration as more specifically described in
ARTICLE 3 hereof, together with all other documents and agreements required to
be delivered by them hereunder.
ARTICLE 14 - INTREX'S OBLIGATIONS AT CLOSING
At the Closing, in addition to fulfilling the conditions to Closing
appearing herein, Intrex shall, to the extent permitted by applicable laws,
deliver to FiberChem all original minute books, stock books, stock transfer
ledger, canceled stock certificates, corporate seals and financial records and
statements of Intrex together with all other documents and agreements required
to be delivered by them hereunder.
-44-
ARTICLE 15 - SUBSEQUENT EVENTS TO CLOSING
FiberChem has received the audited financial statements of Intrex
for the two-year period ended December 31, 1998 certified by KPMG LLP, Chartered
Accountants and the unaudited financial statements of Intrex for the six month
period ended June 30, 1999 and may also receive, at its own expense, additional
audited financial statements, of Intrex in addition to the financial statements
referred to in Section 5.8 above for all periods required of FiberChem under the
Rules. Intrex hereby agrees to provide FiberChem and their accountants with full
and free access to the books and records of Intrex and to cooperate fully with
all such representatives of FiberChem so that such audited financial statements
may be prepared on a timely basis.
ARTICLE 16 - PARTIES IN INTEREST
This Agreement shall be binding upon and shall inure to the benefit
of the parties and their successors and assigns and nothing herein expressed or
implied is intended or shall be construed to confer upon or to give any person
or firm, other than the parties hereto any rights or remedies under or by reason
hereof.
ARTICLE 17 - ENTIRE AGREEMENT
This Agreement, including the Schedules and Exhibits hereto,
contains the entire agreement and understanding among the parties hereto and
supersedes any prior agreements and understandings, with respect to the subject
matter hereof and shall not be modified or affected by any offer, proposal,
statement or representation, oral or written, made by or for any party in
connection with the negotiation of the terms hereof. All references herein to
this Agreement shall specifically include, incorporate and refer to the
Schedules and Exhibits attached hereto which are hereby made a part hereof.
There are no representations, promises, warranties, covenants, undertakings or
assurances (express or implied) other than those expressly set forth or provided
for herein and in the other documents referred to herein. This Agreement may not
be modified or amended orally, but only by a writing signed by all the parties
hereto.
ARTICLE 18 - GOVERNING LAW
This Agreement and all rights and obligations hereunder shall be
governed by, and construed in accordance with, the laws of the Province of
British Columbia, applicable to agreements made and to be performed wholly
within said jurisdictions, without regard to the conflicts of laws principles of
such jurisdictions.
ARTICLE 19 - CURRENCY
All sums of money expressed in this Agreement are expressed in the
lawful money of the United States.
ARTICLE 20 - EXPENSES
FiberChem and Intrex shall each pay their own expenses incident to
the preparation of this Agreement, the carrying out of the provisions of this
Agreement and the consummation of the transactions contemplated hereby.
-45-
ARTICLE 21 - ARBITRATION
All disputes between the parties shall be settled by binding
arbitration or by either party initiating an action in a court of competent
jurisdiction. Arbitration of any dispute may be initiated by one party by
sending a written demand for arbitration to the other party. This demand will
specify the matter in dispute and request the appointment of an arbitration
panel. The arbitration panel will consist of one arbitrator named by FiberChem,
one arbitrator named by the Participating Intrex Shareholders and a third
arbitrator named by the two arbitrators so chosen. The arbitration hearing will
be conducted by the American Arbitration Association or Center for Public
Resources, in accordance with the rules and procedures of the American
Arbitration Association. The sites of the arbitration will be Las Vegas, Nevada.
The arbitrators shall not be empowered to award punitive or exemplary damages to
either party.
ARTICLE 22 - SEVERABILITY
If any part of this Agreement is held to be unenforceable or invalid
under, or in conflict with, the applicable law of any jurisdiction, the
unenforceable, invalid or conflicting part shall, to the extent permitted by
applicable law, be narrowed or replaced, to the extent possible, with a judicial
construction in such jurisdiction that effectuates to the maximum extent
possible the intent of the parties regarding this Agreement and such
unenforceable, invalid or conflicting part. To the extent permitted by
applicable law, notwithstanding the unenforceability, invalidity or conflict
with applicable law of any part of this Agreement, the remaining parts shall be
valid, enforceable and binding on the parties.
ARTICLE 23 - NOTICES
All notices, requests, consents and demands by the parties hereunder
shall be delivered by hand, or telecopier at the applicable telecopier numbers
designated below (with confirmation received) by recognized national overnight
courier or by deposit in the United States mail, postage prepaid, by registered
or certified mail, return receipt requested, addressed to the party to be
notified at the addresses set forth below:
(i) if to Intrex to:
Xx. Xxxxx X. Xxxxxxx
Chief Executive Officer
Intrex Data Communications Corp.
Suite 1400, 0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, X.X. Xxxxxx X0X 0X0
with a copy to:
Xxxxxxx & Xxxxxx
2100 - 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X., Xxxxxx X0X 0X0
Attention: Xxxx Xxxx
Telecopier No.(000) 000-0000
-46-
(ii) if to FiberChem to:
Xx. Xxxxxxxx X. Xxxxxx
President & Chief Executive Officer
FiberChem, Inc.
0000 Xxxxx Xxxxx, Xxxxxxxx X
Xxx Xxxxx, XX 00000
with a copy to:
Snow Xxxxxx Xxxxxx P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
(iii) Notices given by mail shall be deemed effective on the
earlier of the date shown on the proof of receipt of such mail or, unless the
recipient proves that the notice was received later or not received, three (3)
days after the date of mailing thereof. Other notices shall be deemed given on
the date of receipt. Any party hereto may change the address specified herein by
written notice to the other parties hereto.
ARTICLE 24 - NON-WAIVERS
Neither any failure nor any delay on the part of any party to this
Agreement in exercising any right, power or privilege hereunder shall operate as
a waiver of any rights of such party, unless such waiver is made by a writing
executed by the party and delivered to the other parties hereto; nor shall a
single or partial exercise of any right preclude any other or further exercise
of any other right, power or privilege accorded to any party hereto.
ARTICLE 25 - ASSIGNMENT
This Agreement may not be assigned by any party without the prior
consent of the other parties
ARTICLE 26 - DISCLOSURE
From and after the date of this Agreement until the Closing or the
termination of this Agreement, neither Intrex or FiberChem will (i) solicit or
encourage inquiries or proposals with respect to, or furnish any information
relating to, or participate in any negotiations or discussions concerning the
sale of their respective Shares or the sale of all or a substantial portion of
the their respective assets with anyone other than the other; or (ii) discuss
the contents of this Agreement with anyone other than the other and their
respective officers, directors, shareholders and advisors and (iii) unless
otherwise required by law or the requirements of any applicable stock exchange,
make any public announcement without prior approval of the language of such
announcement by the other.
ARTICLE 27 - MISCELLANEOUS
27.1 FURTHER ASSURANCES.
Each of the parties hereto shall use its best efforts to take or
cause to be taken, and to cooperate with the other party hereto to the extent
necessary with respect to all actions, and to do, or cause to be
-47-
done, consistent with applicable law, all things necessary, proper or advisable
to consummate and make effective the transactions contemplated by this Agreement
and to comply with the conditions set forth in Articles 9, 10 and 11 hereof.
Without limiting the generality of the foregoing, all parties shall cooperate
with and provide assistance to the other in connection with the preparation and
filing of all federal, state, local and foreign income tax returns which relate
to Intrex and relate to pre-Closing periods but which are not required to be
filed until after the Closing, and shall also cooperate with and provide
assistance to the other or Intrex with respect to any audit of any tax returns
filed prior to the Closing; provided, however, that FiberChem and Intrex hereby
covenant and agree that Intrex will not file amended income tax returns for any
period prior to December 31, 1998 without first notifying the Participating
Intrex Shareholders and Intrex.
27.2 HEADINGS.
The headings contained herein are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
27.3 COUNTERPARTS.
This Agreement may be executed and delivered in multiple counterpart
copies, each of which shall be an original and all of which shall constitute one
and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the date first above written.
FIBERCHEM, INC.
By:
---------------------------------
INTREX DATA COMMUNICATIONS CORP.
By:
---------------------------------
-48-
