EXHIBIT 10.5
INVESTMENT AGREEMENT
This Investment Agreement is made as of March 30, 2000, by and among
Amerada ▇▇▇▇ Corporation, a Delaware corporation ("Hess"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Inc., a Massachusetts corporation ("ADL" and, together with Hess, the
"Stockholders"), and Epyx Corporation, a Delaware corporation ("Epyx").
W I T N E S S E T H:
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WHEREAS, ADL desires to sell, and Hess desires to purchase, shares of
common stock of Epyx, on the terms and conditions set forth in this Agreement;
and
WHEREAS, the Stockholders desire to provide for certain matters with
respect to their ownership of common stock of Epyx and other securities of
Epyx.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS
The following capitalized terms, as used in this Agreement, shall have the
meanings set forth below.
An "Affiliate" of any Person means a Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by or is under
common control with the first mentioned Person. A Person shall be deemed to
control another Person if such first Person possesses directly or indirectly
the power to direct, or cause the direction of, the management and policies of
the second Person, whether through the ownership of voting securities, by
contract or otherwise.
"Board" means the Board of Directors of Epyx.
"Business" means the development by Epyx of fuel cells, fuel processors
and reformer technology pertaining to the conversion of hydrocarbon fuels into
hydrogen for fuel cells or other purposes and other development activities
directly related to fuel cells and integration of fuel processing technology to
fuel cell development, including the development by Epyx of commercial
distributed power and transportation products related thereto and components
thereof.
"Closing" and "Closing Date" have the meanings set forth in Section
3.1.
"Common Stock" means the Common Stock, par value $.01 per share, of Epyx,
issued in accordance with and subject to the terms of the Certificate of
Incorporation of Epyx substantially in the form attached hereto as Exhibit A,
and any other common equity securities now or hereafter issued by Epyx,
together with any other shares of stock issued or issuable with respect thereto
(whether by way of a stock dividend, stock split or in exchange for or upon
conversion of such shares or otherwise in connection with a combination of
shares, recapitalization, merger, consolidation or other corporate
reorganization).
"▇▇▇▇▇▇" means ▇▇▇▇▇▇ Fuel Cells, S.p.A.
"▇▇▇▇▇▇ ▇▇▇" means the Letter of Intent between ▇▇▇▇▇▇ and Epyx dated
February 18, 2000.
"▇▇▇▇▇▇ New Energy" means ▇▇▇▇▇▇ New Energy Investments B.V.
"▇▇▇▇▇▇ Transaction" means the transaction contemplated by the ▇▇▇▇▇▇ ▇▇▇.
"Hess Shares" means the shares of Common Stock owned by Hess as of the
Closing, together with any other shares of Common Stock or other securities of
Epyx from time to time held by Hess after the Closing.
"Intellectual Property" means the United States and foreign patents and
patent applications, invention disclosures (whether patentable or not),
copyrights, trademarks (including, in the case of trademarks, all goodwill
pertaining thereto) and licenses under any third party intellectual property
rights (including but not limited to patents, patent applications, copyrights,
trademarks, trade secrets and know-how) currently used in the Business,
together with all associated trade secrets and know-how related to the
Business.
"Liabilities" means, with respect to any party, obligations or liabilities
of any nature, whether known or unknown, accrued, absolute, contingent or
otherwise, and whether due or to become due of such party.
"Liquidity Event" has the meaning set forth in Section 9.1(f).
"Merger Event" means the closing of a consolidation or merger of Epyx with
or into another entity, whether or not Epyx is the surviving entity, or the
sale (but not a pledge or similar hypothecation) of all or substantially all of
the assets of Epyx, in each case where (1) the consideration received by the
Stockholders is stock or securities of the surviving or purchasing entity, as
the case may be, and (2) such stock or securities (or any stock or securities
into which such stock or
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securities are convertible or exchangeable) are not listed for trading on a
national securities exchange or on NASDAQ. Any transaction pursuant to which
Epyx forms a joint venture or other entity with ▇▇▇▇▇▇ or an affiliate, as
contemplated by the ▇▇▇▇▇▇ ▇▇▇, whether or not structured as a merger, shall
not constitute a Merger Event for purposes of this Agreement.
"Operating Plan" means the operating plan of Epyx, as prepared by Epyx and
▇▇▇▇▇▇ and approved by the Board from time to time.
"Person" means an individual, a corporation, an association, a
partnership, a limited liability company, an estate, a trust, and any other
entity or organization, governmental or otherwise.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and the rules and regulations promulgated thereunder.
"Transfer" means any direct or indirect offer, transfer, donation, sale,
assignment, pledge, hypothecation, grant of a security interest in, conveyance
of a beneficial ownership or other right in, or other disposal or attempted
disposal of all or any portion of a security or of any rights. "Transferred"
means the accomplishment of a Transfer, and "Transferee" means the recipient of
a Transfer.
ARTICLE II. PURCHASE OF SECURITIES
2.1 Purchase of Common Stock by Hess. On the terms and subject to the
conditions herein set forth, Hess agrees to purchase from ADL, and ADL hereby
agrees to sell to Hess, at the Closing, 50,000 shares of Common Stock at a
price of $200 per share of Common Stock, representing an aggregate purchase
price of $10,000,000, payable in cash or by wire transfer (to such account as
shall have been indicated to Hess by ADL no later than three days prior to the
Closing) of immediately available funds. The 50,000 shares of Common Stock
represent 5% of the outstanding Common Stock of Epyx upon consummation of the
▇▇▇▇▇▇ Transaction.
ARTICLE III. THE CLOSING
3.1 Closing. The sale and delivery and the purchase and acceptance of the
Common Stock hereunder (the "Closing") shall take place at the offices of ADL,
Acorn Park, Cambridge, Massachusetts, on April 4, 2000, or at such other place
or on such date as the parties may mutually agree. Such date is referred to
herein as the "Closing Date." At the Closing: (i) Hess shall pay ADL
$10,000,000; and (iii) ADL shall deliver a certificate or certificates
representing 50,000 shares of Common Stock.
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ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF EPYX
Epyx and ADL hereby represent and warrant to Hess as follows:
4.1 Corporate Organization; No Subsidiaries or Investments. Epyx is duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Epyx has the requisite corporate power and authority to conduct
its business as it is currently being conducted. The Company is duly qualified
as a foreign corporation in the Commonwealth of Massachusetts. Epyx has no
subsidiaries and does not own of record or beneficially any capital stock or
other equity interest in any other Person.
4.2 Corporate Power and Authority; Non-Contravention. Epyx has all
requisite corporate power and authority to execute and deliver this Agreement
and each agreement, document and instrument to be executed and delivered by
Epyx pursuant to or as contemplated by this Agreement (collectively, the "Epyx
Agreements") and to carry out the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Epyx Agreements by Epyx
and the consummation by Epyx of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the part
of Epyx, including the approval of the Board and of Epyx's stockholders, and no
other corporate action or proceeding on the part of Epyx is necessary to
authorize the execution and delivery by Epyx of this Agreement and the Epyx
Agreements or the consummation by Epyx of the transactions contemplated hereby
and thereby. This Agreement and each of the Epyx Agreements constitutes the
valid and binding obligation of Epyx, enforceable against Epyx in accordance
with their respective terms. The execution, delivery and performance by Epyx of
this Agreement and each of the Epyx Agreements:
(i) do not and will not conflict with or violate any provision of the
Certificate of Incorporation or By-Laws of Epyx;
(ii) do not and will not violate any laws, rules or regulations of the
United States or any state or other jurisdiction applicable to Epyx, or require
Epyx to obtain any approval, consent or waiver of, or to make any filing with,
any Person that has not been obtained or made; and
(iii) do not and will not result in a breach of, constitute a default
under, accelerate any obligation under or give rise to a right of termination
of any indenture or loan or credit agreement or any other agreement, contract,
instrument, mortgage, lien, lease, permit, license, authorization, order, writ,
judgment, injunction or decree to which Epyx is a party or by which Epyx or its
property is bound, or result in the creation or imposition of any mortgage,
pledge, lien,
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security interest or other charge or encumbrance on any of the assets or
properties of Epyx.
4.3 No Consents or Approvals Required. Except as set forth in Schedule
4.3, no notice, declaration, report or other filing or registration with, and
no consent, waiver, approval or authorization of, any governmental or
regulatory authority or instrumentality or any other person is required to be
submitted, made or obtained by Epyx in connection with the execution, delivery
or performance of this Agreement or the Epyx Agreements, or the consummation of
the transactions contemplated hereby or thereby, except for those the failure
of which to submit, make or obtain would not have a material adverse effect
upon the assets or business of Epyx.
4.4 Capitalization. The authorized capital stock of Epyx consists of
2,000,000 shares of Common Stock. Immediately prior to the Closing, 1,000,000
shares of Common Stock were issued and outstanding. All such shares have been
duly authorized and validly issued, are fully paid and nonassessable, and are
owned of record by ADL and ▇▇▇▇▇▇ New Energy Investments. Upon consummation of
the Closing, the authorized capital stock of Epyx will consist of 2,000,000
shares of Common Stock and there will be 1,000,000 shares of Common Stock
outstanding. There are no outstanding options, warrants, rights, commitments,
preemptive rights or agreements of any kind for the issuance or sale of, or
outstanding securities convertible into, any additional shares of Common Stock.
There are no other securities of Epyx entitled, in the ordinary course, to vote
in the election of the Board. There are no outstanding obligations of Epyx to
repurchase, redeem or otherwise acquire any securities of Epyx.
4.5 Material Contracts. Schedule 4.5 hereto contains a complete and
correct list of all agreements, contracts and commitments (collectively, the
"Material Contracts") of the following types, written or oral to which Epyx or
ADL is a party or by which it is bound and which, in each case, relate
primarily to the Business, including (i) leases of real or personal property,
(ii) employment, consulting and agency agreements; (iii) research and
development contracts; (iv) agreements, orders or commitments for the sale or
purchase of raw materials, supplies or finished products; (v) joint ventures,
partnerships or similar arrangements; (vi) agreements for the acquisition or
disposition of all or substantially all of the Business; and (vii) licenses to
or from others relating to the Intellectual Property. Each of the Material
Contracts is in full force and effect and there does not exist thereunder any
material default by Epyx or ADL, or to the best knowledge of Epyx and ADL, of
any other party thereto, or event or condition which, after notice or lapse of
time or both, would constitute a material default thereunder by Epyx or ADL or,
to the best knowledge of Epyx and ADL, by any other party thereto. Neither Epyx
nor ADL has received any notice that any
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party to any of the Material Contracts intends to cancel or terminate any such
Material Contract.
4.6 Intellectual Property. The Intellectual Property includes all rights
necessary to conduct the Business as currently conducted, with no known
infringement of the proprietary rights of any third party. Except as set forth
on Schedule 4.6 and except with respect to standard rights reserved to the U.S.
government pursuant to contracts between Epyx or ADL and the U.S. government,
(i) to the best knowledge of Epyx and ADL, Epyx is the sole and exclusive owner
of all rights to the Intellectual Property and has the right to use the same
without the payment of any license, fee, royalty or similar charge; (ii) there
is no material claim of any other person, firm or corporation or any proceeding
pending or, to the best knowledge of Epyx and ADL, threatened which relates to
any of the Intellectual Property or the validity or enforceability thereof or
Epyx's rights thereto; and (iii) to the best knowledge of Epyx and ADL, there
are no inventions within the scope of the Intellectual Property for which the
inventor(s) thereof is or are not contractually obligated to assign all of
their rights therein to Epyx or ADL.
4.7 Litigation; Disputes. There are no claims, actions, suits, proceedings
or investigations by any third party or by governmental, regulatory or
administrative authorities of any nature, civil, criminal or regulatory, at law
or in equity, by or before any court, arbitrator or governmental or other
regulatory or administrative agency, instrumentality or authority which are
pending or, to the best knowledge of Epyx and ADL, threatened, by or against or
affecting Epyx or the Business.
4.8 Compliance with Applicable Law. Epyx is currently in compliance, in
all material respects, with all applicable statutes, laws, rules, regulations,
orders, ordinances, judgments or decrees of all governmental authorities
(federal, state, local or otherwise) applicable to the Business, Epyx has all
governmental licenses, authorizations, permits, consents and approvals
necessary to conduct its business as it is currently being conducted.
4.9 Taxes. Epyx (or ADL on behalf of Epyx) has filed or will file within
the time prescribed by law (including extensions of time approved by the
appropriate taxing authority) all tax returns and reports required to be filed
with the United States Internal Revenue Service, the Commonwealth of
Massachusetts, and any other jurisdictions where such filing is required by
law. All taxes which are due and payable by Epyx or ADL related to the
Business, and any interest and penalties thereon, whether disputed or not, have
been paid in full. Neither ADL nor Epyx is delinquent in the payment of any tax
related to the Business, and there
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is no tax deficiency or claim outstanding, proposed or assessed against either
of them related to the Business.
4.10 Sufficiency of Assets. Upon consummation of the transactions
contemplated hereby (including, but not limited to, the execution and
performance of the Transition Services Agreement and the Sublease), Epyx will
have the assets that are necessary and adequate for it to conduct the Business
as currently conducted.
4.11 Financial Statements. Attached hereto as Schedule 4.11 is the
unaudited balance sheet of Epyx as of December 31, 1999 (the "Balance Sheet").
The Balance Sheet is true and correct in all material respects, has been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis, and fairly presents the financial condition of Epyx as of
the date thereof (subject to the absence of footnotes and to year-end audit
adjustments).
4.12 No Undisclosed Liabilities. Since the date of the Balance Sheet, Epyx
has not incurred any Liabilities relating to the Business except Liabilities
(a) that were incurred in the usual and ordinary course of business consistent
with past practice and (b) that, individually and in the aggregate, would not
have a materially adverse effect upon the Business.
4.13 Absence of Certain Changes. Since December 31, 1999, Epyx has
conducted the Business only in the ordinary course. Without limiting the
generality of the foregoing, other than the ▇▇▇▇▇▇ Transaction, Epyx has not
since such date:
(a) experienced any material adverse change in its financial
condition, assets, liabilities, prospective contracts or its relationship with
its principal clients;
(b) sold, assigned, transferred, pledged, leased or otherwise disposed
of any asset except in the ordinary course of business consistent with past
practices, but not in any event exceeding $200,000;
(c) incurred any obligation, liability or indebtedness except in the
ordinary course of business consistent with past practices, but not in any
event exceeding $200,000, or incurred any extraordinary losses;
(d) amended, waived, released, disposed of or permitted to lapse any
right relating to the Business;
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(e) transferred or granted any rights under any concessions, leases,
licenses, agreements, patents, inventions, trademarks, service marks, trade
names, trade dress, brand names, trade secrets or copyrights or with respect to
the Intellectual Property;
(f) experienced any material damage, destruction or loss (whether or
not covered by insurance) relating to the assets of the Business; or
(g) agreed, whether or not in writing, to do any of the foregoing.
4.14 Insurance. ADL currently maintains policies of fire, liability,
worker's compensation, life, and property and casualty in respect to the
Business. All such policies (i) are in full force and effect and (ii) are
sufficient for compliance in all material respects by Epyx with all
requirements of law and all agreements to which Epyx is a party.
4.15 Employee Benefit Plans. Except for the arrangements set forth in
Schedule 4.15, neither Epyx nor ADL currently maintains, contributes to, or
participates in, any pension, profit-sharing, deferred compensation, bonus,
stock option, share appreciation right, severance, group or individual health,
dental, medical, life insurance, survivor benefit, car allowance, or similar
plan, policy or arrangement, whether formal or informal, for the benefit of any
employee of Epyx. Such arrangements are referred to in this Agreement as the
"Employee Benefit Plans." Epyx has heretofore delivered or made available to
Hess true and correct descriptions of each Employee Benefit Plan.
4.16 Environmental Matters.
(a) Seller is in compliance with all Environmental Laws applicable to
the Business. Seller has all permits necessary under any Environmental Law to
conduct the Business as presently conducted. There is no suit, action, claim,
arbitration, administrative, governmental investigation (including, but not
limited to, requests for information) or other legal proceeding pending or, to
the best of Seller's knowledge, threatened, which relates to the ownership,
conduct or operation of the Business and which arises under Environmental Law
or which is reasonably likely to give rise to an Environmental Liability.
(b) For purposes of this Section 4.16, the following terms shall have
the meanings set forth below:
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(i) "Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations, ordinances,
rules, judgments, orders, decrees, codes, plans, injunctions, permits,
licenses, agreements and governmental restrictions, relating to human
health, safety, the environment or to emissions, discharges or releases of
pollutants, contaminants or other hazardous substances or wastes into the
environment, including without limitation ambient air, surface water,
ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants or other hazardous substances or
wastes or the clean-up or other remediation thereof.
(ii) "Environmental Liabilities" means any and all liabilities of
or relating to the Business which arise under or relate to matters covered
by Environmental Laws.
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF ADL
ADL hereby represents and warrants to Hess as follows:
5.1 Corporate Organization. ADL is duly incorporated, validly existing and
in good standing under the laws of the Commonwealth of Massachusetts. ADL has
the requisite corporate power and authority to conduct its business as it is
currently being conducted.
5.2 Corporate Power and Authority; Non-Contravention. ADL has all
requisite corporate power and authority to execute and deliver this Agreement
and each agreement, document and instrument to be executed and delivered by ADL
pursuant to or as contemplated by this Agreement (collectively, the "ADL
Agreements") and to carry out the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the ADL Agreements by ADL and
the consummation by ADL of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of ADL,
including the approval of ADL's Board of Directors, and no other corporate
action or proceeding on the part of ADL is necessary to authorize the execution
and delivery by ADL of this Agreement and the ADL Agreements or the
consummation by ADL of the transactions contemplated hereby and thereby. This
Agreement and each of the ADL Agreements constitute the valid and binding
obligation of ADL, enforceable in accordance with their respective terms. The
execution, delivery and performance by ADL of this Agreement and each of the
ADL Agreements:
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(i) do not and will not conflict with or violate any provision of
the Articles of Organization or By-Laws of ADL;
(ii) do not and will not violate any laws, rules or regulations
of the United States or any state or other jurisdiction applicable to ADL,
or require ADL to obtain any approval, consent or waiver of, or to make any
filing with, any Person that has not been obtained or made; and
(iii) do not and will not result in a breach of, constitute a
default under, accelerate any obligation under or give rise to a right of
termination of any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit, license,
authorization, order, writ, judgment, injunction or decree to which ADL is
a party or by which ADL or its property is bound, or result in the
creation or imposition of any mortgage, pledge, lien, security interest or
other charge or encumbrance on any of the assets or properties of ADL.
5.3 Transfer of Assets. ADL has transferred to Epyx all of ADL's right,
title and interest to the assets of ADL used primarily in the Business, other
than the two government contracts listed on Schedule 5.3 hereto, including
without limitation, the Intellectual Property. ADL has transferred to Epyx all
of ADL's rights and obligations under the contracts and agreements listed on
Schedule 4.5 (other than the two government contracts listed on Schedule 5.3)
or, to the extent that such rights and obligations are not transferable, ADL
has entered into arrangements with Epyx to provide that Epyx shall receive the
benefits and burdens of such contracts and agreements.
5.4 Ownership of Shares. ADL is the record and beneficial owner of the
Hess Shares. Such shares have been duly authorized and validly issued, and are
fully paid, non-assessable and free and clear of any and all liens,
encumbrances, charges or claims.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF HESS
Hess hereby represents and warrants to ADL and Epyx as follows:
6.1 Corporate Organization. Hess is duly incorporated, validly existing
and in good standing under the laws of the State of Delaware. Hess has the
requisite corporate power and authority to conduct its business as it is
currently being conducted.
6.2 Corporate Power and Authority; Non-Contravention. Hess has all
requisite corporate power and authority to execute and deliver this Agreement
and
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each agreement, document and instrument to be executed and delivered by Hess
pursuant to or as contemplated by this Agreement (collectively, the "Hess
Agreements") and to carry out the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Hess Agreements by Hess
and the consummation by Hess of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the part
of Hess, including the approval of Hess' Board of Directors, and no other
corporate action or proceeding on the part of Hess is necessary to authorize
the execution and delivery by Hess of this Agreement and the Hess Agreements or
the consummation by Hess of the transactions contemplated hereby and thereby.
This Agreement and each of the Hess Agreements constitutes the valid and
binding obligation of Hess, enforceable in accordance with their respective
terms. The execution, delivery and performance by Hess of this Agreement and
each of the Hess Agreements:
(i) do not and will not conflict with or violate any provision of
the Certificate of Incorporation or By-Laws of Hess;
(ii) do not and will not violate any laws, rules or regulations
of the United States or any state or other jurisdiction applicable to Hess,
or require Hess to obtain any approval, consent or waiver of, or to make
any filing with, any Person that has not been obtained or made; and
(iii) do not and will not result in a breach of, constitute a
default under, accelerate any obligation under or give rise to a right of
termination of any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit, license,
authorization, order, writ, judgment, injunction or decree to which Hess
is a party or by which Hess or its property is bound, or result in the
creation or imposition of any mortgage, pledge, lien, security interest or
other charge or encumbrance on any of the assets or properties of Hess.
6.3 Investment Representations.
(a) Hess, by reason of its business and financial experience, has such
knowledge, sophistication and experience in business and financial matters as
to be capable of evaluating the merits and risks of its investment in the Hess
Shares, and is purchasing the Hess Shares hereunder for its own account, for
investment only and not with a view to, or any present intention of, effecting
a distribution of such securities or any part thereof. Hess acknowledges that
the Hess Shares to be purchased hereunder have not been registered under the
Securities Act or the securities laws of any state or other jurisdiction and
cannot
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be disposed of unless they are subsequently registered under the Securities Act
and any applicable state laws or exemption from such registration is available.
(b) Hess is an "accredited investor" as that term is defined in Rule
501 promulgated under the Securities Act. .
(c) Hess has had the opportunity to ask questions and to receive
answers concerning the financial condition, operations and prospects of Epyx and
the terms and conditions of Hess' investment.
ARTICLE VII. CONDITIONS PRECEDENT TO CLOSING
7.1 Conditions Precedent to Obligations of Hess. The obligations of Hess
to consummate the transactions contemplated by this Agreement are subject to
the satisfaction of the following conditions, at or prior to the Closing:
(a) All covenants, agreements, obligations and conditions contained in
this Agreement to be performed or complied with by Epyx and ADL on or prior to
the Closing Date shall have been performed or complied with in all respects.
(b) At the Closing Date, the purchase of the Hess Shares by Hess shall
be legally permitted by all laws and regulations to which the parties hereto are
subject.
(c) Hess shall have received from Epyx and ADL such documents with
respect to the legal existence and authority of Epyx and ADL as Hess shall
reasonably request.
(d) ADL and ▇▇▇▇▇▇ New Energy shall have consummated the ▇▇▇▇▇▇
Transaction.
(e) Hess shall have been made a party to the Stockholders' Agreement
between ADL and ▇▇▇▇▇▇ New Energy.
7.2 Conditions Precedent to Obligations of Epyx. The obligations of Epyx
to consummate the transactions contemplated by this Agreement are subject to
the satisfaction of the following conditions, at or prior to the Closing:
(a) All covenants, agreements and conditions contained in this
Agreement to be performed or complied with by Hess on or prior to the Closing
Date shall have been performed or complied with in all respects.
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7.3 Conditions Precedent to Obligations of ADL. The obligations of ADL to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction of the following conditions, at or prior to the Closing:
(a) All covenants, agreements and conditions contained in this
Agreement to be performed or complied with by Hess on or prior to the Closing
Date shall have been performed or complied, with in all respects.
(b) ADL and ▇▇▇▇▇▇ New Energy shall have consummated the ▇▇▇▇▇▇
Transaction.
(c) ADL shall have received from Hess such documents with respect to
the legal existence and authority of Hess as ADL shall reasonably request.
ARTICLE VIII. INDEMNIFICATION
8.1 Agreement to Indemnify.
(a) From and after the Closing, ADL agrees to indemnify, defend and
hold harmless Hess from and against any and all demands, claims, losses,
damages, costs and expenses, including without limitation interest, costs,
liabilities, fines, penalties and reasonable fees of attorneys and consultants
(collectively, "Damages"), asserted against, imposed upon or incurred or
suffered by Hess as a result of or arising from any breach of any
representation, warranty, covenant or agreement of ADL contained in this
Agreement.
(b) The aggregate liability of ADL with respect to claims for
indemnification pursuant to Section 8.1(a) above shall not exceed ten million
dollars ($10,000,000). ADL shall have no liability in respect of claims for
indemnification pursuant to Section 8.1 (a) above (i) unless and until the
total Damages suffered by Hess with respect to such claims exceeds $100,000,
and then only to the extent of such excess, and (ii) unless written notice of
such claim, in accordance with the provisions of Section 8.2, shall have been
given to ADL on or before the date which is fifteen (15) months after the
Closing Date.
(c) From and after the Closing, Hess agrees to indemnify, defend and
hold harmless ADL and Epyx from and against any and all Damages, asserted
against, imposed upon or incurred or suffered by ADL or Epyx as a result of or
arising from any breach of any representation, warranty, covenant or agreement
of Hess contained in this Agreement.
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(d) The aggregate liability of Hess with respect to claims for
indemnification pursuant to Section 8.1(c) above shall not exceed ten million
dollars ($10,000,000). Hess shall have no liability in respect of claims for
indemnification pursuant to Section 8.1 (c) above (i) unless and until the
total Damages suffered by ADL and/or Epyx with respect to such claims exceeds
$100,000, and then only to the extent of such excess, and (ii) unless written
notice of such claim, in accordance with the provisions of Section 8.2, shall
have been given to Hess on or before the date which is fifteen (15) months
after the Closing Date.
8.2 Procedure for Indemnification.
(a) In the event that any indemnified party receives written notice
of the commencement of any action or proceeding, the assertion of any claim by
a third party or the imposition of any penalty or assessment for which
indemnity may be sought pursuant to this Article VIII (a "Third Party Claim"),
and such indemnified party intends to seek indemnity pursuant to this Article
VIII, such indemnified party shall promptly provide the indemnifying party with
notice of such action, proceeding, claim, penalty or assessment, and such
indemnifying party shall, upon receipt of such notice, be entitled to
participate in or, at the indemnifying party's option, assume the defense,
appeal or settlement of such action, proceeding, claim, penalty or assessment
with respect to which such indemnity has been invoked with counsel selected by
it and approved by the indemnified party (such approval not to be unreasonably
withheld), and such indemnified party will fully cooperate with the
indemnifying party in connection therewith; provided that such indemnified
party shall be entitled to employ its own counsel to represent it if, in such
indemnified party's reasonable judgment, a conflict of interest between the
indemnifying party and the indemnified party exists in respect of such claim,
or if the defendants in, or targets of, any such action or proceeding include
both an indemnified party and an indemnifying party and such indemnified party
shall have reasonably concluded that there may be legal defenses available to
it that are different from or additional to those available to the indemnifying
party, and in any such event the reasonable fees and expenses of such separate
counsel shall be paid by the indemnifying party. In the event that the
indemnifying party fails to assume the defense, appeal or settlement of such
action, proceeding, claim, penalty or assessment within 20 days after receipt
of notice thereof from such indemnified party, such indemnified party shall
have the right to undertake the defense or appeal of or settle or compromise
such action, proceeding, claim, penalty or assessment on behalf of and for the
account and risk of the indemnifying party. The indemnifying party shall not
settle or compromise any such action, proceeding, claim, penalty or assessment
without the indemnified party's prior written consent, unless such settlement
or compromise provides solely for the payment of money and provides a complete
release of, or dismissal
14
with prejudice of claims against, the indemnified party. If written notice of a
Third Party Claim is not provided promptly as required by this Section 8.2(a),
the indemnified party shall nonetheless be entitled to indemnification by the
indemnifying party except to the extent that the indemnifying party is
prejudiced by such late receipt of such written notice.
(b) Any indemnifiable claim that is not a Third Party Claim shall be
asserted by written notice to the indemnifying party from the indemnified
party, which notice shall be provided promptly after the indemnifying party
becomes aware of the claim. If the indemnifying party does not respond to such
notice within 60 days, it shall have no further right to contest the validity
of such claim.
ARTICLE 1X. ADDITIONAL RIGHTS OF HESS AND ADL
9.1 Right to Purchase.
(a) ADL hereby grants to Hess the right (the "Additional Purchase
Right"), in accordance with this Section 9.1, to purchase from ADL up to 50,000
shares of Common Stock held by ADL.
(b) Hess may exercise the Additional Purchase Right at any time on or
after a Liquidity Event, provided that the Additional Purchase Right shall
expire if Hess has not exercised such right (x) within three years after the
date of hereof or (y) in connection with a Liquidity Event, whichever is later,
and provided further that if the Liquidity Event is an IPO (as defined below),
the Additional Purchase Right shall expire if Hess has not exercised such right
within thirty (30) days after the closing thereof.
(c) If Hess shall decide to exercise the Additional Purchase Right in
connection with a Liquidity Event, Hess shall give ADL written notice of such
decision at least five (5) business days prior to the scheduled occurrence of
the Liquidity Event, which notice shall include the number of shares of Common
Stock which Hess desires to purchase from ADL (the "Additional Purchase
Shares"). The purchase price for each of the Additional Purchase Shares shall
be the midpoint between (x) $200 per share and (y) the price per share of
Common Stock determined for purposes of the Liquidity Event, provided that in
no event shall the purchase price for the Additional Purchase Shares be less
than $200 per share. Notwithstanding the foregoing, if Hess shall decide to
exercise the Additional Purchase Right in connection with a Liquidity Event
(the "Exercise Liquidity Event") and there has been a preceding Liquidity
Event, the purchase price for each of the Additional Purchase Shares shall be
the midpoint between (x) the price per share established in the Liquidity Event
next preceding the Exercise
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Liquidity Event and (y) the price per share of Common Stock determined for
purposes of the Exercise Liquidity Event, provided that in no event shall the
purchase price for the Additional Purchase Shares be less than the greater of
(1) $200 per share or (2) the price per share established in the Liquidity
Event next preceding the Exercise Liquidity Event. If a value for the Common
Stock is not established in a Liquidity Event for any reason, then Hess and ADL
shall establish the Fair Market Value (as defined in Section 9.1 (d) below) of
a share of Common Stock in accordance with the procedure described in Section
9.1 (d) below as of the date of such Liquidity Event, provided that Hess and
ADL shall share the cost of any independent appraiser retained upon mutual
agreement of ADL and Hess, as well as the cost of any third appraiser required
by the provisions of such section. Hess' purchase of the Additional Purchase
Shares shall happen on or before the Liquidity Event, provided that if it is
necessary to establish a Fair Market Value in accordance with the procedure
described in Section 9.1 (d) below, Hess' purchase of the Additional Purchase
Shares shall happen within five (5) business days after the determination of
Fair Market Value. Hess shall pay the purchase price for the Additional
Purchase Shares in cash.
(d) If Hess shall decide to exercise the Additional Purchase Right at
any time other than in connection with a Liquidity Event, Hess shall give ADL
written notice of such decision at least sixty (60) days prior to the date on
which Hess desires to purchase the Additional Purchase Shares, which notice
shall include the number of Additional Purchase Shares. The purchase price for
each of the Additional Purchase Shares shall be the midpoint between (x) the
price per share established in the Liquidity Event next preceding the date on
which Hess provides ADL with the foregoing notice and (y) the Fair Market Value
of a share of Common Stock, determined as set forth below, provided that in no
event shall the purchase price for the Additional Purchase Shares be less than
the greater of (1) $200 per share or (2) the price per share established in the
Liquidity Event next preceding the date on which Hess provides ADL with the
foregoing notice. For purposes of this Section 9.1(d), "Fair Market Value"
shall mean the fair market value of a share of Common Stock established by an
independent appraiser selected and retained upon mutual agreement of Hess and
ADL (whose fee shall be paid in full by Hess); provided, however, that if Hess
and ADL cannot agree upon an independent appraiser, the Fair Market Value of a
share of Common Stock will be established as follows: Each of Hess and ADL will
select an appraiser. The Fair Market Value shall be the fair market value
arrived at by those appraisers within 60 days following the appointment of the
last appraiser to be appointed. In the event that the two appraisers cannot
agree on such fair market value within such period of time, (i) if the
appraisers' valuations are within ten percent of each other (based on the lower
of the two valuations), the Fair Market Value shall be the mean of the two
valuations, and (ii) if the differences in the valuations are greater than ten
percent, the appraisers shall select a third appraiser
16
who will calculate the fair market value independently, and, except as provided
in the next sentence, the Fair Market Value of the Common Stock shall in each
case be the average of the two fair market values arrived at by the appraisers
who are closest in amount. If one appraiser's valuation is the mean of the
other two valuations, the mean valuation shall be the Fair Market Value. In the
event that the two original appraisers cannot agree upon a third appraiser
within 30 days following the end of the 60 day period referred to above, then
the third appraiser shall be appointed by the American Arbitration Association.
Hess shall pay the fees and expenses of the appraiser selected by Hess, ADL
shall pay the fees and expenses of the appraiser selected by ADL, and Hess
shall pay the fees and expenses of any third appraiser appointed pursuant to
this provision. The Fair Market Value shall be determined without taking into
account any discount or other reduction in value caused by or related to the
lack of marketability of any of the Common Stock. Hess' purchase of the
Additional Purchase Shares shall happen within five (5) business days after the
determination of Fair Market Value. If Hess elects not to purchase the
Additional Purchase Shares after the determination of Fair Market Value, Hess
shall notify ADL in writing and Hess' rights and obligations to purchase such
shares shall terminate. Hess shall pay the purchase price for the Additional
Purchase Shares in cash.
(e) Hess may exercise the Additional Purchase Right only once. In the
event Hess for any reason (including without limitation, Hess' voluntary
decision not to purchase the Additional Purchase Shares for any reason) fails
to consummate the purchase of the Additional Purchase Shares by the dates set
forth in Section 9.1(b), Hess shall no longer have the right to purchase
additional shares of Common Stock from ADL pursuant to Section 9.1(a).
(f) For purposes of this Agreement, the term "Liquidity Event" means
(i) the closing of a consolidation or merger of Epyx with or into another
entity, whether or not Epyx is the surviving entity, or the sale (but not a
pledge or similar hypothecation) of all or substantially all of the assets of
Epyx, in each case where (1) the consideration received by the Stockholders is
cash or stock or securities of the purchasing entity and (2) such stock or
securities (or any stock or securities into which such stock or securities are
convertible or exchangeable) are listed for trading on a national securities
exchange or on NASDAQ; or (ii) the closing of an underwritten initial public
offering of Epyx pursuant to an effective registration statement under the
Securities Act covering the offer and sale to the public of a number of shares
equal to at least ten percent (10%) of the shares of Common Stock outstanding
prior to such offering (an "IPO"). Unless otherwise agreed in writing by the
Stockholders, in no event shall a Merger Event be deemed to be a Liquidity
Event. In no event shall the ▇▇▇▇▇▇ Transaction constitute a "Liquidity Event".
17
9.2 Funding of Epyx Operations.
(a) Prior to December 31, 2000, ADL anticipates that ADL and ▇▇▇▇▇▇
will contribute an aggregate of $22,000,000 in funding to Epyx in order to fund
Epyx's operations in accordance with the then current Operating Plan. Such
funds shall be treated as additional paid in capital. In the event that at
October 15, 2000, the Board determines that an IPO will not be completed by
December 31, 2000 for any reason or that funding in excess of the initial
$22,000,000 to be provided to Epyx by ADL and ▇▇▇▇▇▇ is required, the Board
will meet to determine the amount of additional funding necessary and the
mechanism for providing such funds to Epyx.
(b) In the event that Epyx requires funding beyond the initial
$22,000,000 to be provided by ADL and ▇▇▇▇▇▇ New Energy, and ADL does not
intend to provide its pro rata portion of such funding, ADL shall notify Hess
of such intent and shall offer Hess in writing the right to purchase additional
shares of Common Stock from ADL for an aggregate purchase price equal to ADL's
pro rata portion of such funding. ADL shall determine the number of shares (the
"Offered Shares") and the purchase price therefor (which information shall be
set forth in ADL's notice), provided that Hess may accept or reject such
proposed purchase price, by written notice to ADL, in its sole discretion. If
Hess accepts ADL's proposed purchase price, ADL and Hess shall consummate such
sale as promptly as practicable, but in any event at least five (5) days prior
to the date on which ADL is required to contribute additional funds to Epyx. If
Hess rejects ADL's proposed purchase price, ADL shall have the right to fund
its pro rata portion of such funding or to offer the Offered Shares to a third
party for an aggregate purchase price equal to ADL's pro rata portion of such
funding. If the purchase price agreed to by ADL and any third party is equal to
or greater than the purchase price proposed by ADL to Hess, ADL may consummate
the sale of the Offered Shares to such third party. If the purchase price
agreed to by ADL and any third party is less than the purchase price proposed
by ADL to Hess, then prior to the consummation of any such transaction between
ADL and such third party, ADL shall offer to Hess the right to purchase the
Offered Shares at such lower purchase price. If Hess accepts such lower
purchase price, ADL and Hess shall consummate such sale as promptly as
practicable, but in any event at least five (5) days prior to the date on which
ADL is required to contribute additional funds to Epyx. If Hess rejects ADL's
lower purchase price, ADL shall have the right to consummate the sale of the
Offered Shares to the third party at such lower purchase price.
18
ARTICLE X. MISCELLANEOUS PROVISIONS
10.1 Expenses. Each party shall bear its own costs and expenses, including
the reasonable fees and disbursements of legal counsel and other professionals,
incurred in connection with the transactions contemplated by this Agreement.
10.2 Legend on Securities. The Stockholders acknowledge and agree that the
following legend shall be typed on each certificate evidencing any of the
securities issued hereunder held at any time by the Stockholders:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT PURSUANT TO (1) A REGISTRATION
STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT OR
(2) AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SUCH ACT RELATING TO THE
DISPOSITION OF SECURITIES. THESE SECURITIES ARE ALSO SUBJECT TO THE PROVISIONS
OF A CERTAIN STOCKHOLDERS' AGREEMENT, DATED AS OF APRIL 4, 2000, INCLUDING
CERTAIN RESTRICTIONS ON TRANSFER SET FORTH THEREIN. A COMPLETE AND CORRECT COPY
OF SUCH AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE
COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE.
10.3 Amendment and Waiver. Any party may waive any provision hereof
intended solely for its benefit in writing. No failure or delay on the part of
any party hereto in exercising any right, power or remedy hereunder shall
operate as a waiver thereof. Except as otherwise expressly provided herein, the
remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to any party hereto at law or in equity or
otherwise. This Agreement may not be amended without the prior written consent
of each of the parties hereto.
10.4 Notices. All notices and other communications shall be in writing and
shall be deemed given if delivered by hand, sent via facsimile, sent via a
reputable nationwide courier service or mailed by registered mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice) and shall be deemed
given on the date on which so hand-delivered, the date on which receipt of the
facsimile is acknowledged, the next business day following the date on which so
sent or on the third business day following the date on which so mailed, as the
case may be:
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If to ADL:
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Hess:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Epyx:
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Operating Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
10.5 Headings. The Article and Section headings used or contained in this
Agreement are for convenience of reference only and shall not affect the
construction of this Agreement.
10.6 Counterparts. This Agreement may be executed in one or more
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which together
shall be deemed to constitute one and the same agreement.
10.7 Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.
10.8 Entire Agreement. This Agreement and the other agreements
contemplated hereby are intended by the parties as a final expression of their
agreement and intended to be complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein and therein. This Agreement and the other agreements
contemplated hereby (including the exhibits hereto) supersede all prior
agreements and understandings between the parties with respect to such subject
matter.
20
10.9 Adjustments. All references to share prices and amounts herein shall
be equitably adjusted to reflect stock splits, stock dividends,
recapitalizations and similar changes affecting the capital stock of Epyx.
10.10 Law Governing. This Agreement shall be construed and enforced in
accordance with and governed by the laws of The Commonwealth of Massachusetts
(without giving effect to principles of conflicts of law). Each party hereby
waives trial by jury in any action relating to this Agreement and consents to
the jurisdiction of any Massachusetts court (federal or state).
10.11 Continuation of Rights. Except as expressly provided herein, the
rights and obligations of Hess and ADL under this Agreement shall survive the
occurrence of any Liquidity Event, any Merger Event and the consummation of the
▇▇▇▇▇▇ Transaction.
10.12 Cooperation. Each of Epyx, Hess and ADL shall cooperate with all
reasonable requests of the others not inconsistent with the terms of this
Agreement or any other agreement entered into in connection herewith to more
effectively consummate the transactions contemplated hereby and the
transactions referred to herein and therein.
10.13 Public Statements. No party shall issue any press release or
otherwise make any public statements with respect to this Agreement or the
transactions contemplated hereby without the prior written consent of the other
parties hereto. This provision shall not restrict a party from making an
announcement internally to its employees.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EPYX CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
AMERADA ▇▇▇▇ CORPORATION
By: /s/J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Executive Vice President
and General Counsel
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, INC.
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President and Chief Executive Officer
22