ARRANGEMENT AGREEMENT
BETWEEN
FIBERCHEM, INC.
AND
INTREX DATA COMMUNICATIONS CORP.
As Of December 6, 1999
TABLE OF CONTENTS
PAGE
ARTICLE 1 - THE ARRANGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 The Arrangement. . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.2 Closing Effective Time.. . . . . . . . . . . . . . . . . . . . . . . .2
1.3 Directors and Officers of FiberChem. . . . . . . . . . . . . . . . . .2
1.4 Taking of Necessary Action.. . . . . . . . . . . . . . . . . . . . . .2
1.5 The United States Securities Act of 1993.. . . . . . . . . . . . . . .2
ARTICLE 2 - CONSIDERATION; CONVERSION AND EXCHANGE OF SECURITIES. .. . . . . .3
2.1 Arrangement Consideration. . . . . . . . . . . . . . . . . . . . . . .3
2.2 Calculation of and Determination of Arrangement Consideration. . . . .3
2.3 Conversion of Shares; Delivery of Arrangement Consideration. . . . . .5
2.4 Lock-Up and Voting of FiberChem Common Shares. . . . . . . . . . . . .6
2.5 Voting Agreement.. . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.6 Registration Rights. . . . . . . . . . . . . . . . . . . . . . . . . .6
2.7 Abandoned Property Laws. . . . . . . . . . . . . . . . . . . . . . . .8
2.8 Employment & Non-Competition Agreements. . . . . . . . . . . . . . . .8
2.9 Brokers; Finders.. . . . . . . . . . . . . . . . . . . . . . . . . . .8
ARTICLE 3 - CERTAIN ACTIONS.. . . . . . . . . . . . . . . . . . . . . . . . . .9
3.1 Reasonable Efforts.. . . . . . . . . . . . . . . . . . . . . . . . . .9
3.2 Special Provision Pending the Closing. . . . . . . . . . . . . . . . .9
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF INTREX . . . . . . . . . . . . 10
4.1 Ownership of Shares. . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 Capacity; Organization; Standing.. . . . . . . . . . . . . . . . . . 10
4.3 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.4 Authorization; No Governmental Consents Required.. . . . . . . . . . 11
4.5 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.6 Trademarks.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.7 Patents, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.8 Financial Statements.. . . . . . . . . . . . . . . . . . . . . . . . 11
4.9 Absence of Certain Changes.. . . . . . . . . . . . . . . . . . . . . 12
4.10 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.11 Accounts Receivable and Inventory. . . . . . . . . . . . . . . . . . 13
4.12 Title and Condition of Properties. . . . . . . . . . . . . . . . . . 13
4.13 Description of Material Contracts. . . . . . . . . . . . . . . . . . 13
4.14 Accounts Payable.. . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.15 Default; Violations or Restrictions, Third Party Consents. . . . . . 14
4.16 Court Orders and Decrees.. . . . . . . . . . . . . . . . . . . . . . 15
4.17 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.18 Pension and Welfare Plans. . . . . . . . . . . . . . . . . . . . . . 15
4.19 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.20 Rights of Third Parties. . . . . . . . . . . . . . . . . . . . . . . 15
4.21 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.22 Relationships with Vendors and Customers.. . . . . . . . . . . . . . 16
4.23 Compensation Plans.. . . . . . . . . . . . . . . . . . . . . . . . . 16
4.24 Governmental Licenses. . . . . . . . . . . . . . . . . . . . . . . . 16
4.25 Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.26 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.27 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . 17
4.28 Guarantees.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.29 Benefits.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF FIBERCHEM. . . . . . . . .. . . 18
5.1 Organization; Capitalization.. . . . . . . . . . . . . . . . . . . . 18
5.2 Share Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.3 Capacity.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.4 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.5 Encumbrances.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.6 Trademarks.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.7 Patents, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.8 Financial Statements.. . . . . . . . . . . . . . . . . . . . . . . . 20
5.9 Absence of Certain Changes.. . . . . . . . . . . . . . . . . . . . . 20
5.10 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.11 Accounts Receivable and Inventory. . . . . . . . . . . . . . . . . . 21
5.12 Title and Condition of Properties. . . . . . . . . . . . . . . . . . 21
5.13 Description of Material Contracts. . . . . . . . . . . . . . . . . . 21
5.14 Accounts Payable.. . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.15 Default; Violations or Restrictions, Third Party Consents. . . . . . 22
5.16 Court Orders and Decrees.. . . . . . . . . . . . . . . . . . . . . . 23
5.17 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.18 Pension and Welfare Plans. . . . . . . . . . . . . . . . . . . . . . 23
5.19 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.20 Rights of Third Parties. . . . . . . . . . . . . . . . . . . . . . . 24
5.21 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.22 Relationships with Vendors and Customers . . . . . . . . . . . . . . 24
5.23 Compensation Plans.. . . . . . . . . . . . . . . . . . . . . . . . . 24
5.24 Governmental Licenses. . . . . . . . . . . . . . . . . . . . . . . . 24
5.25 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . 24
5.26 Binding Obligation.. . . . . . . . . . . . . . . . . . . . . . . . . 25
5.27 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.28 Guarantees.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.29 Benefits.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.30 SEC Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 6 - COVENANTS OF INTREX. . . . . . . . . . . . . . . . . . . . . . . 26
6.1 Further Assurances.. . . . . . . . . . . . . . . . . . . . . . . . . 26
6.2 Access.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.3 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.4 Closing Documents. . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.5 Third Party Consents.. . . . . . . . . . . . . . . . . . . . . . . . 27
6.6 Notice of Events or Changes. . . . . . . . . . . . . . . . . . . . . 27
6.7 Conduct of Business Until Closing. . . . . . . . . . . . . . . . . . 27
6.8 Update Schedules.. . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.9 No Solicitation of Competing Offers. . . . . . . . . . . . . . . . . 28
ARTICLE 7 - COVENANTS OF FIBERCHEM .. . . . . . . . . . . . . . . . . . . . . 28
7.1 Closing Documents. . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.2 Noninterference. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.3 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.4 Access.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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7.5 Third Party Consents.. . . . . . . . . . . . . . . . . . . . . . . . 29
7.6 Notice of Events or Changes. . . . . . . . . . . . . . . . . . . . . 29
7.7 Conduct of Business Until Closing. . . . . . . . . . . . . . . . . . 29
7.8 Update Schedules.. . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.9 No Solicitation of Competing Offers. . . . . . . . . . . . . . . . . 31
7.10 Membership on Board of Directors.. . . . . . . . . . . . . . . . . . 31
7.11 Subsequent Action. . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 8 - CONDITIONS PRECEDENT TO FIBERCHEM'S OBLIGATIONS . . . . . . . . . 31
8.1 No Breach of Representations, etc. . . . . . . . . . . . . . . . . . 31
8.2 Compliance with Agreement. . . . . . . . . . . . . . . . . . . . . . 31
8.3 No Material Adverse Change.. . . . . . . . . . . . . . . . . . . . . 32
8.4 Certificates.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.5 Consents and Approvals.. . . . . . . . . . . . . . . . . . . . . . . 32
8.6 Corporate Documents. . . . . . . . . . . . . . . . . . . . . . . . . 32
8.7 Opinions of Intrex's Counsel.. . . . . . . . . . . . . . . . . . . . 32
8.8 No Termination.. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.9 Employment Agreements. . . . . . . . . . . . . . . . . . . . . . . . 33
8.10 Financial Statements.. . . . . . . . . . . . . . . . . . . . . . . . 33
8.11 Regulatory Approvals.. . . . . . . . . . . . . . . . . . . . . . . . 33
8.12 Additional Financing.. . . . . . . . . . . . . . . . . . . . . . . . 33
8.13 Fairness Opinion.. . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 9 - CONDITIONS PRECEDENT TO INTREX'S OBLIGATIONS. . . . . . . . . . . 33
9.1 No Breach of Representations, etc. . . . . . . . . . . . . . . . . . 33
9.2 Compliance with Agreements.. . . . . . . . . . . . . . . . . . . . . 33
9.3 No Termination.. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.4 Certificates.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.5 Opinion of Counsel.. . . . . . . . . . . . . . . . . . . . . . . . . 34
9.6 No Material Adverse Change.. . . . . . . . . . . . . . . . . . . . . 34
9.7 Corporate Documents. . . . . . . . . . . . . . . . . . . . . . . . . 34
9.8 Directors of FiberChem.. . . . . . . . . . . . . . . . . . . . . . . 34
9.9 Employment Agreements. . . . . . . . . . . . . . . . . . . . . . . . 34
9.10 Consents and Approvals.. . . . . . . . . . . . . . . . . . . . . . . 34
9.11 Financial Statements.. . . . . . . . . . . . . . . . . . . . . . . . 35
9.12 Regulatory Approvals.. . . . . . . . . . . . . . . . . . . . . . . . 35
9.13 Additional Financing.. . . . . . . . . . . . . . . . . . . . . . . . 35
9.14 Fairness Opinion.. . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 10 - CONDITIONS PRECEDENT TO OBLIGATIONS OF FIBERCHEM AND INTREX . . 35
10.1 Due Diligence. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.2 Approvals and Consents.. . . . . . . . . . . . . . . . . . . . . . . 35
10.3 No Injunctions . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.4 Corporate Proceedings. . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 11 - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 12 - FIBERCHEM'S OBLIGATIONS AT CLOSING . . . . . . . . . . . . . . . 36
ARTICLE 13 - INTREX'S OBLIGATIONS AT CLOSING. . . . . . . . . . . . . . . . . 37
ARTICLE 14 - SUBSEQUENT EVENTS TO CLOSING . . . . . . . . . . . . . . . . . . 37
ARTICLE 15 - PARTIES IN INTEREST . . . . . . . . . . . . . . .. . . . . . . . 37
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ARTICLE 16 - ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 17 - GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 18 - CURRENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 19 - EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 20 - ARBITRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 21 - SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 22 - NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 23 - NON-WAIVERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 24 - ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 25 - DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 26 - MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 39
26.1 Further Assurances.. . . . . . . . . . . . . . . . . . . . . . 39
26.2 Headings.. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
26.3 Counterparts.. . . . . . . . . . . . . . . . . . . . . . . . . 41
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EXHIBITS
EXHIBIT A PLAN OF ARRANGEMENT
EXHIBIT 2.2(A) RIGHTS AND RESTRICTIONS FOR INTREX CLASS B SHARES.
EXHIBIT 2.2(B) RIGHTS AND RESTRICTIONS FOR FIBERCHEM SPECIAL SHARES
EXHIBIT 2.4 FORM OF LOCK-UP AGREEMENT
EXHIBIT 2.5 FORM OF VOTING AGREEMENT
EXHIBIT 2.8 FORMS OF EMPLOYMENT AND NON-COMPETITION AGREEMENT
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LIST OF SCHEDULES
Schedule 1.3 Initial Officers of FiberChem
Schedule 4.1 Capitalization of Intrex
Schedule 4.2 Subsidiaries Intrex
Schedule 4.3 Intrex Legal Proceedings
Schedule 4.5 Intrex Encumbrances
Schedule 4.6 Intrex Trademarks
Schedule 4.7 Intrex Patents
Schedule 4.8 Intrex Financials
Schedule 4.9 Intrex Material Changes
Schedule 4.10 Intrex Tax matters
Schedule 4.11 Intrex Inventory
Schedule 4.12 Intrex Real Property
Schedule 4.13 Intrex Material Contracts
Schedule 4.14 Intrex Accounts Payable
Schedule 4.15 Intrex Consents of Parties to Material Contracts
Schedule 4.16 Intrex Court Orders and Decrees
Schedule 4.18 Intrex Pension, Profit Sharing and Welfare Plans
Schedule 4.19 Intrex Insurance
Schedule 4.20 Intrex Rights of Third Parties
Schedule 4.21 Intrex Collective Bargaining Agreements
Schedule 4.22 Intrex Material Claims by Customers
Schedule 4.23 Intrex Compensation Plans
Schedule 4.27 Intrex Compliance with Laws
Schedule 4.28 Intrex Personal Guarantees by Intrex Shareholders
Schedule 4.29 Intrex Benefits
Schedule 5.3 FiberChem Subsidiaries
Schedule 5.4 FiberChem Legal Proceedings
Schedule 5.5 FiberChem Encumbrances
Schedule 5.6 FiberChem Trademarks
Schedule 5.7 FiberChem Patents
Schedule 5.8 FiberChem Financials
Schedule 5.9 FiberChem Material Changes
Schedule 5.10 FiberChem Tax Matters
Schedule 5.11 FiberChem Inventory
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Schedule 5.12 FiberChem Real Property
Schedule 5.13 FiberChem Material Contracts
Schedule 5.14 FiberChem Accounts Payable
Schedule 5.15 FiberChem Consents of Parties to Material Contracts
Schedule 5.16 FiberChem Court Orders and Decrees
Schedule 5.18 FiberChem Pension, Profit Sharing and Welfare Plans
Schedule 5.19 FiberChem Insurance
Schedule 5.20 FiberChem Rights of Third Parties
Schedule 5.21 FiberChem Collective Bargaining Agreement
Schedule 5.22 FiberChem Material Claims by Customers
Schedule 5.23 FiberChem Compensation Plans
Schedule 5.25 FiberChem Compliance with Laws
Schedule 5.28 FiberChem Guarantees
Schedule 5.29 FiberChem Benefits
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ARRANGEMENT AGREEMENT
ARRANGEMENT AGREEMENT (the "AGREEMENT"), dated as of December 6, 1999,
between FiberChem, Inc., a Delaware corporation ("FIBERCHEM") and Intrex Data
Communications Corp., a British Columbia company ("INTREX");
WHEREAS
A. Intrex will change its authorized capital to designate its existing
common shares as Class A shares (the "INTREX CLASS A SHARES") and to create a
new class of shares to be designated as Class B shares (the "INTREX CLASS B
SHARES") which will be exchangeable into shares of common stock of FiberChem
(the "FIBERCHEM COMMON SHARES") and FiberChem will change its authorized capital
to create a new class of shares to be designated as Special Shares (the
"FIBERCHEM SPECIAL SHARES");
B. 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.
C. 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") in
which each outstanding Intrex Class A Share will be exchanged at the option of
each holder thereof, for: (a) FiberChem Common Shares or (b) FiberChem Special
Shares and Intrex Class B Shares;
D. 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;
E. Following the Arrangement, shareholders of Intrex who choose to exchange
their Intrex Class A Shares for FiberChem Common Shares will own FiberChem
Common Shares and shareholders of Intrex who choose to exchange their Intrex
Class A Shares for Intrex Class B Shares and FiberChem Special Shares, will upon
the exchange of such Intrex Class B Shares hold FiberChem Common Shares;
F. 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;
G. The parties desire to make certain undertakings, conditions,
representations, warranties and covenants in connection with the Arrangement;
and
H. For U.S. Federal income tax purposes it is intended that the Arrangement
qualify as a reorganization under Sections 368(a) of the INTERNAL REVENUE CODE
OF 1986, as amended (the "CODE") and Section 86 of the INCOME TAX ACT (Canada).
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 - THE ARRANGEMENT
1.1 THE ARRANGEMENT.
Intrex and FiberChem (collectively 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.
1.2 CLOSING EFFECTIVE TIME.
Upon fulfillment or waiver of the conditions specified in Articles 8, 9
and 10 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 of the transactions contemplated by this Agreement
(the "CLOSING") shall take place at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, 2100 - ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ at 5:00 p.m. (Vancouver time)
on the date of acceptance for filing of the final order of the Supreme Court of
British Columbia (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 by FiberChem and Intrex (the date on which the Closing
takes place being referred to sometimes herein as the "CLOSING DATE").
1.3 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 ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, four persons
will be nominees of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and one person will be a nominee chosen
jointly by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, 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 1.3.
1.4 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.
1.5 THE UNITED STATES SECURITIES ACT OF 1993.
To permit FiberChem to rely on the exemption under section 3(a)(10) of
the United States Securities Act of 1933 (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.
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ARTICLE 2 - CONSIDERATION; CONVERSION AND
EXCHANGE OF SECURITIES
2.1 ARRANGEMENT CONSIDERATION
The consideration (the "ARRANGEMENT CONSIDERATION") issuable to the
shareholders of Intrex (the "INTREX SHAREHOLDERS") pursuant to the Arrangement
shall be an aggregate number of shares equal to 100% of the Capitalization (as
defined in Section 2.2(i)), which may be taken at the option of each Intrex
Shareholder in either (A) FiberChem Common Shares or (B) FiberChem Special
Shares and Intrex Class B Shares, as referred to and as adjusted for as provided
in Sections 2.2 and 2.3 below. Each Intrex Class B Share will be exchangeable
into an equal number of FiberChem Common Shares.
2.2 CALCULATION OF AND DETERMINATION OF ARRANGEMENT CONSIDERATION
(i) The present equity and convertible debt/equity capitalization of
both Intrex and FiberChem is as follows.
(A) As to FiberChem:
As at November 9, 1999 FiberChem had outstanding:
39,941,538 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 $1,621,000 of convertible notes
(convertible into 7,047,826 FiberChem Common Shares), and
$165,000 of other convertible notes (convertible into
1,325,188 FiberChem Common Shares). The foregoing
63,903,152 shares less 999,000 shares held by Continental
Capital Equity Corp. equal 62,904,152 shares and are
referred to as the "CAPITALIZATION". Subject to section
3.2, if FiberChem issues any additional FiberChem Shares or
shares convertible into or exercisable into FiberChem
Shares the Capitalization will not be increased. In
addition, FiberChem has 10,122,512 Class E Warrants;
1,895,175 Class D Warrants; 1,357,000 Unit Warrants; and
2,610,653 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 3,723,942 FiberChem Common Shares at exercise
prices ranging from $0.125 to $1.25 per share, or an
aggregate of 26,757,108 additional shares on a fully
diluted basis. On or before Closing FiberChem shall have
created the FiberChem Special Shares.
(B) As to Intrex:
Intrex has approximately 8,226,694 Intrex Common Shares
outstanding. Intrex has no warrants, options or convertible
or debt securities outstanding other than 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). On or before Closing all existing
Intrex Common Shares will be designated as Intrex Class A
Shares and Intrex shall have created the Intrex Class B
Shares.
(ii) The Arrangement Consideration shall be determined by the following
procedures:
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(A) EXCHANGE OF INTREX CLASS A SHARES. On the Closing Date,
the Intrex Shareholders shall surrender all of the
outstanding Intrex Class A Shares in exchange for, at each
Intrex Shareholders' option, either: (a) FiberChem Common
Shares; or (b) FiberChem Special Shares and Intrex Class B
Shares, such that the aggregate number of FiberChem Common
Shares issued upon the exchange of the Intrex Class A
Shares and issuable upon the exchange of all of the Intrex
Class B Shares is equal to 100% of the Capitalization. The
number of FiberChem Special Shares issuable to each Intrex
Shareholder will be equal to the number of FiberChem Common
Shares such Intrex Shareholder would be entitled to receive
if they had elected to exchange their Intrex Class A Shares
for FiberChem Common Shares.
(B) OUTSTANDING OPTIONS AND WARRANTS. As of the Closing Date,
the outstanding Entrenet Securities will be exchanged for
like instruments in FiberChem on the basis of the exchange
ratio established pursuant to subparagraph (ii)(A). For
purposes of subparagraph (ii)(A) the Intrex shares issuable
upon conversion or exercise of the Entrenet Securities
shall not be deemed outstanding shares of Intrex.
(C) TAX MATTERS. Solely to accommodate the tax objectives of
Intrex and the Intrex Shareholders, the following steps
(except as otherwise advised by Canadian tax counsel) will
be taken:
(a) On or before Closing, Intrex will change its
authorized capital to designate its existing common
shares as Intrex Class A Shares and to create the
Intrex Class B Shares. The Intrex Class A Shares
and the Intrex Class B Shares will have the rights
and restrictions set forth in EXHIBIT 2.2(A).
(b) On or before Closing, FiberChem will change its
authorized capital to create the FiberChem Special
Shares. The FiberChem Special Shares will have the
rights and restrictions set forth in EXHIBIT 2.2(B).
(c) On or before the Closing Date 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.
(D) NO FRACTIONAL FIBERCHEM SHARES. With respect to each
Intrex Shareholder, the portion of the Arrangement
Consideration to be received in the form of FiberChem
Common Shares, shall be rounded down to the nearest whole
share of FiberChem Common Share and the fractional shares
shall be paid by FiberChem in cash equal to the fractional
share multiplied by the average closing bid price of
FiberChem Common Shares for the five trading days preceding
the Closing Date.
(E) 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.
2.3 CONVERSION OF SHARES; DELIVERY OF ARRANGEMENT CONSIDERATION.
(i) At the Effective Time, by virtue of the Arrangement and without
any action on the part of any party hereto, each Intrex Class A Share issued and
outstanding immediately prior to the Effective Time shall be
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converted into and shall represent the right to receive, upon surrender of
the certificate representing such shares (as provided in subsection (iv)
below), the proportion of the Arrangement Consideration allocable to it. All
FiberChem Common Shares issued upon the surrender for exchange of Intrex
Class A Shares in accordance with the terms hereof or 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 A Shares or Intrex Class B Shares, as the
case may be.
(ii) Each FiberChem Common Share issued and outstanding immediately
prior to the Effective Time shall continue to be issued and outstanding.
(iii) Until surrendered, each outstanding certificate which prior to the
Effective Time represented one or more Intrex Class A Shares 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
Class A Share that has been lost or destroyed, FiberChem 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 of ownership of the shares represented thereby.
(iv) At least ten days prior to the Closing Date, Intrex shall cause to
be delivered or mailed to each Intrex Shareholder a form of letter of
transmittal and instructions for use in effecting the surrender of the
certificates which, immediately prior to the Closing Date, represented Intrex
Class A Shares in exchange for the Arrangement Consideration. Upon surrender at
or after the Closing Date of such certificates, together with such letter of
transmittal duly executed and completed in accordance with the instructions
thereto, and such other documents as may be reasonably requested, Intrex and
FiberChem shall direct that the Arrangement Consideration be transferred to the
persons entitled thereto as provided herein.
(v) 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 Intrex Shareholders shall be entitled to vote after the
Closing at any meeting of FiberChem stockholders the number of whole shares of
FiberChem Common Shares into which their respective Intrex Class A Shares or
Class B Shares are convertible, regardless of whether such holders have
exchanged their certificates representing Intrex Class A Shares or Class B
Shares they receive as part of the Arrangement Consideration for certificates
representing FiberChem Common Shares in accordance with the provisions of this
Agreement. 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, the declaration shall include dividends or other distributions on all
FiberChem Common Shares issuable pursuant to this Agreement which shall be
accrued by FiberChem, but after Closing no dividend or other distribution
payable to the holders of record of FiberChem Common Shares as of any time
subsequent to Closing shall be delivered to the holder of any certificate
representing Intrex Class A Shares until such holder surrenders such certificate
for exchange as provided in this Section 2.3. Upon surrender of such
certificate, both the certificate for FiberChem Common Shares and any
undelivered dividends shall be delivered and paid.
(vi) 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.
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2.4 LOCK-UP AND VOTING OF FIBERCHEM COMMON SHARES.
(i) On or before Closing, each of ▇▇▇▇▇ ▇▇▇▇▇▇▇ and/or Estero Capital
Corp., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and/or Pandel Instruments, Inc., ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, Primary Equities Capital Corp., ▇▇▇▇▇ ▇'▇▇▇▇, Pentland Resources
Limited, Boo ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ shall have entered into a Lock-Up Agreement (the "LOCK-UP AGREEMENT"),
the form of which is attached hereto as EXHIBIT 2.4, 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 Stock 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 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 2.4.
2.5 VOTING AGREEMENT.
At the Closing, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇ (the "Voting Agreement Signatories") shall collectively enter into
a Voting Agreement in the form attached as EXHIBIT 2.5 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 of ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, four persons will be nominees of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and one person will be
a nominee chosen jointly by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, 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.
2.6 REGISTRATION RIGHTS.
(i) If as a result of the Arrangement any or all of the FiberChem
Common Shares issued to the Intrex Shareholders at the Closing or issuable upon
the exchange of the Intrex Class B Shares issued at Closing
-6-
as set forth in Sections 2.1 and 2.2 above, (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
Intrex Shareholders shall have the demand registration rights provided in this
Section 2.6. 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 2.4 hereto) and ending two years thereafter, Registration Conditions
exist, FiberChem covenants and agrees with the Intrex 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, (the "REGISTRATION STATEMENTS") on a form which would be available
for the resale of the FiberChem Common Shares by the 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 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 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 Intrex
Shareholder, FiberChem shall promptly prepare and furnish to each 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 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 an Intrex Shareholder in accordance with Rule
144.
(vi) FiberChem shall furnish to each 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 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.
-7-
(viii) FiberChem shall indemnify and hold harmless the 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 to make
the statements therein not misleading, except insofar as the same are based
solely upon information furnished in writing to FiberChem by such Intrex
Shareholders expressly for use therein.
(ix) In connection with any registration in which an Intrex Shareholder
is participating personally, and not in their capacity as an employee, officer
or director of FiberChem, such 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 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 Intrex
Shareholder hereunder be greater in amount than the dollar amount of the
proceeds (net of the payment of all expenses) received by such 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 Intrex
Shareholders in connection with the Registration Statement described in Section
2.6(i) and one Demand Registration Statement described in Section 2.6(ii) above,
in each instance exclusive of any underwriting discount or commission and the
fees and expenses of Intrex Shareholders' legal counsel in connection with the
sale of shares by the Intrex Shareholders pursuant to such registration.
(xi) FiberChem acknowledges that the registration rights provided in
this SECTION 2.6 are also for the benefit of any of the Intrex Shareholders
permitted transferees.
2.7 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.
2.8 EMPLOYMENT & NON-COMPETITION AGREEMENTS.
At the Closing, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇'▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall each enter into an
Employment and Non-Competition Agreement with FiberChem in the form annexed
hereto as EXHIBIT 2.8.
2.9 BROKERS; FINDERS.
Intrex and Entrenet Group LLC ("ENTRENET") have entered into an agreement
(the "ENTRENET AGREEMENT") dated April 12, 1999 under which Entrenet will be
paid a finder's fee of 5% of the Arrangement Consideration paid to the Intrex
Shareholders (to a maximum of 3,000,000 FiberChem Shares) to be satisfied at
-8-
Closing by the issuance to Entrenet of FiberChem Common Shares. For greater
certainty, the FiberChem Shares to be issued to Entrenet are not to be included
as Intrex shares in the calculation of the Arrangement Consideration.
ARTICLE 3 - CERTAIN ACTIONS
3.1 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.
3.2 SPECIAL PROVISION PENDING THE CLOSING.
(i) From the date of this Agreement through the Closing Date, neither
Intrex nor FiberChem (each, a "party") will 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 3.2. 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 3.2, the
Capitalization will not be increased. If Intrex issues securities in accordance
with this Section 3.2, the Capitalization shall be increased by a proportional
number of shares to be agreed between Intrex and FiberChem prior to such
additional issuance.
(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.
-9-
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF INTREX
Intrex and its wholly owned subsidiary Firebird Data Communications, Inc.
(collectively referred to 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.
4.1 OWNERSHIP OF SHARES.
The authorized, issued and outstanding share capital of Intrex (the
"Intrex Shares") is set forth in SCHEDULE 4.1. The owners of record, of the
issued and outstanding shares of Intrex are set forth on Schedule 4.1. The
voting shares set forth on Schedule 4.1 are the sole issued and outstanding
voting shares of Intrex and the non-voting shares shown on Schedule 4.1 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.
4.2 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 (the "OTHER
AGREEMENTS"), and to consummate such transactions. Except as set forth on
SCHEDULE 4.2, 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 entity. Except
as set forth on Schedule 4.2 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 4.2, 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.
4.3 LEGAL PROCEEDINGS.
(i) Except as set forth in SCHEDULE 4.3 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 4.3 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.
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(iii) Except as disclosed in Schedule 4.3, 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.
4.4 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.
4.5 ENCUMBRANCES
Except as disclosed in SCHEDULE 4.5, 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.
4.6 TRADEMARKS.
Intrex owns the trademarks, the trade names, service marks, assumed
names, copyrights and registrations therefor (collectively "INTREX TRADEMARKS")
specified in SCHEDULE 4.6. The Intrex Trademarks have been duly issued and have
not been canceled, abandoned or otherwise terminated except as otherwise
indicated in Schedule 4.5. Intrex is not in default under any of the licenses
or agreements relating to the Intrex Trademarks as listed in Schedule 4.6 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 4.6, no trademark of any other person infringes the Intrex
Trademarks of Intrex.
4.7 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 4.7. The Intrex Patents have been duly issued and
have not been canceled, abandoned or otherwise terminated except as otherwise
indicated in Schedule 4.7. Intrex is not in default under any of the licenses
or agreements relating to the Intrex Patents as listed in Schedule 4.7 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.
4.8 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 4.8, (a) are in
accordance with the books of account and records of Intrex; (b) except as
disclosed on Schedule 4.8 present fairly in all material respects, and are true,
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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.
(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 4.8.
4.9 ABSENCE OF CERTAIN CHANGES.
Except as disclosed in SCHEDULE 4.9 or the 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 4.9
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).
4.10 TAX MATTERS.
Except as disclosed in SCHEDULE 4.10, Intrex has timely filed all
required ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 4.10, 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 4.10. No claim has been made by any taxing authority
relating to any such returns or any audit. For purposes of this Section
4.10, 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 een
timely paid over to the proper authorities to the extent due and payable.
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4.11 ACCOUNTS RECEIVABLE AND INVENTORY.
(i) The accounts receivable of Intrex reflected in the 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 Financials net of the reserves or allowances for
doubtful receivables reflected in the Financials or thereafter in Intrex's
books and records uniformly maintained in accordance with the 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.
(ii) The inventory of Intrex reflected in the Financials as at June
30, 1999, and the inventory acquired by Intrex since such date and as set
forth on SCHEDULE 4.11 (a) has been purchased in the ordinary course of
business, (b) has been fully paid for unless otherwise reflected in the
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.
4.12 TITLE AND CONDITION OF PROPERTIES.
(i) Intrex does not own any real property, except as disclosed on
Schedule 4.12. Except as disclosed in SCHEDULE 4.12, 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 4.12.
(ii) Schedule 4.12 contains an accurate list of all leases and other
agreements under which Intrex is lessee of any real property and/or any
personal property (the "LEASES"). 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 4.12, 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.
4.13 DESCRIPTION OF MATERIAL CONTRACTS.
(i) SCHEDULE 4.13 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,
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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 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 4.14, 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 4.13, 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 4.13, 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.
4.14 ACCOUNTS PAYABLE.
SCHEDULE 4.14 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.
4.15 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 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
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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 4.15, 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.
4.16 COURT ORDERS AND DECREES.
Except as set forth in SCHEDULE 4.16, 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.
4.17 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.
4.18 PENSION AND WELFARE PLANS.
Except as set forth in SCHEDULE 4.18, 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.
4.19 INSURANCE.
(i) SCHEDULE 4.19 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.
4.20 RIGHTS OF THIRD PARTIES.
Other than as disclosed in SCHEDULE 4.20 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.
4.21 LABOR MATTERS.
Except as set forth in SCHEDULE 4.21, 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
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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.
4.22 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 4.22, 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.
4.23 COMPENSATION PLANS.
SCHEDULE 4.23 contains a correct and complete list of all employees of
Intrex whose annual compensation for 1999 is expected to exceed $60,000.
Schedule 4.23 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.
4.24 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.
4.25 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.
4.26 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 Group, LLC, by Intrex pursuant to the Entrenet Agreement.
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4.27 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, 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 4.27, 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 4.27, 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 4.27, 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) 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.
4.28 GUARANTEES.
Except as disclosed in SCHEDULE 4.28, the Intrex Shareholders have not
personally guaranteed any of the obligations of the business of Intrex.
4.29 BENEFITS.
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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 4.29.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF FIBERCHEM
FiberChem warrants and represents to Intrex and 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):
5.1 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.
5.2 SHARE CAPITAL.
The authorized and outstanding FiberChem warrants and options are as
described in Section 2.2 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 2.2 of this Agreement. No other
warrants, options, rights, convertible securities or other arrangements or
commitments are outstanding as of the date of this Agreement.
5.3 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, 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 5.3, 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 5.3 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.
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5.4 LEGAL PROCEEDINGS.
(i) Except as set forth in SCHEDULE 5.4 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 5.4 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 5.4, 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.
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 FiberChem is
subject.
5.6 TRADEMARKS.
FiberChem owns the trademarks, the trade names, service marks, assumed
names, copyrights and registrations therefor (collectively "FIBERCHEM
TRADEMARKS") specified in SCHEDULE 5.6. The FiberChem Trademarks have been
duly issued and have not been canceled, abandoned or otherwise terminated
except as otherwise indicated in Schedule 5.6. FiberChem is not in default
under any of the licenses or agreements relating to the FiberChem Trademarks
as listed in Schedule 5.6 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.
5.7 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 5.7. The FiberChem Patents have
been duly issued and have not been canceled, abandoned or otherwise
terminated except as otherwise indicated in Schedule 5.7. FiberChem is not
in default under any of the licenses or agreements relating to the FiberChem
Patents as listed in Schedule 5.7 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.
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5.8 FINANCIAL STATEMENTS.
(i) The audited financial statements of FiberChem as of and for the
years ended September 30, 1997 and September 30, 1998, previously delivered
to Intrex, and the unaudited financial statements of FiberChem four the nine
month period ended June 30, 1999 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 5.8, (a) are in accordance with the books of
account and records of FiberChem; (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
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 June 30, 1999 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 June 30, 1999, 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 June 30, 1999, been at prices no less favorable to FiberChem than could
have been obtained from any independent third party and prior to June 30,
1999, FiberChem 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 FiberChem 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 FiberChem (in this
SECTION 5.9 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).
5.10 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, 1999.
All tax liabilities of FiberChem arising through the end of the taxable year
ended September 30, 1998, have been paid. All tax liabilities of FiberChem
arising after September 30, 1998 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 5.10. No claim has been made by any
taxing authority relating
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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 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.
5.11 ACCOUNTS RECEIVABLE AND INVENTORY.
(i) The accounts receivable of FiberChem reflected in the FiberChem
Financials as at June 30, 1999, 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 June 30, 1999, taken as a whole,
not collectible.
(ii) The inventory of FiberChem reflected in the FiberChem
Financials as at June 30, 1999, and the inventory acquired by FiberChem 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 FiberChem Financials, (c) is marketable or adequate
provision for obsolescence has been provided and (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 June 30, 1999,
taken as a whole, not marketable.
5.12 TITLE AND CONDITION OF PROPERTIES.
(i) FiberChem does not own any real property, except as disclosed
on SCHEDULE 5.12. Except as disclosed in Schedule 5.12, 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 June 30, 1999, which have not been disposed
of in the ordinary course of business since June 30, 1999, 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 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 5.12, 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.
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,
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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
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 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 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 has 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
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.
5.14 ACCOUNTS PAYABLE.
SCHEDULE 5.14 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.
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 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
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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, 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 5.15, 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.
5.16 COURT ORDERS AND DECREES.
Except as set forth in SCHEDULE 5.16, 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.
5.17 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.
5.18 PENSION AND WELFARE PLANS.
Except as set forth in SCHEDULE 5.18, 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.
5.19 INSURANCE.
(i) SCHEDULE 5.19 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 5.19 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.
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5.20 RIGHTS OF THIRD PARTIES.
Other than as disclosed in SCHEDULE 5.20 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.
5.21 LABOR MATTERS.
Except as set forth in SCHEDULE 5.21, 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.
5.22 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 5.22, 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.
5.23 COMPENSATION PLANS.
SCHEDULE 5.23 contains a correct and complete list of all employees of
FiberChem 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 FiberChem.
5.24 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.
5.25 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, 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
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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 5.25, 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 5.25, 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 5.25, 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.
5.26 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, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby has been duly and validly taken.
5.27 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 Group LLC a
fee, in shares of FiberChem common stock, equal to 5% of the Arrangement
Consideration to be issued to the Intrex Shareholders (to a maximum of
3,000,000 FiberChem Shares) pursuant to the Entrenet Agreement.
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5.28 GUARANTEES.
Except as disclosed in SCHEDULE 5.28, the FiberChem shareholders have
not personally guaranteed any of the obligations of the business of FiberChem.
5.29 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 5.29.
5.30 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 6 - COVENANTS OF INTREX
Intrex hereby covenants and agrees:
6.1 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.
6.2 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 such information to commence, at FiberChem's
expense, the audit of Intrex, using either Intrex's independent auditors or
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, 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.
6.3 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.
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6.4 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 8 hereof and take all action required to carry out the terms of
this Agreement and to consummate the transactions contemplated hereby.
6.5 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.
6.6 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.
6.7 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;
(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 4.23) 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;
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(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.
6.8 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.
6.9 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 6.9, "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 7 - COVENANTS OF FIBERCHEM
FiberChem hereby covenants and warrants as follows:
7.1 CLOSING DOCUMENTS.
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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 9 hereof and take all action required to
carry out the terms of this Agreement and to consummate the transactions
contemplated hereby.
7.2 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 5 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.
7.3 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 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.
7.4 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.
7.5 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.
7.6 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.
7.7 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;
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(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);
(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.
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7.8 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.
7.9 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 telephone, and thereafter confirm in
writing, if any Acquisition Proposal is received by FiberChem. As used in
this paragraph 7.9, "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.
7.10 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 of ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, four persons will be nominees of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and one person will
be a nominee chosen jointly by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, and if
they are unable to agree, a person chosen by the other eight directors.
7.11 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 8 - CONDITIONS PRECEDENT TO FIBERCHEM'S OBLIGATIONS
The obligations of FiberChem under this Agreement are subject to the
following conditions:
8.1 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.
8.2 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇ P.C.,
counsel for FiberChem.
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8.3 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.
8.4 CERTIFICATES.
FiberChem shall have received certificates dated the Closing Date and
signed by Intrex, certifying that the conditions specified in subSections
8.1, 8.2 and 8.3 above have been fulfilled except to the extent that any
nonfulfillment was disclosed in writing to FiberChem prior to the Closing
Date.
8.5 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.
8.6 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.
8.7 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
8.8 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.
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8.9 EMPLOYMENT AGREEMENTS.
FiberChem shall have received from ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇'▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ the
Employment and Non-Competition Agreements in the form of Exhibit 2.8 attached
hereto.
8.10 FINANCIAL STATEMENTS.
FiberChem shall have received audited and unaudited financial
statements of Intrex for the respective periods set forth in Section 4.8.
8.11 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.
8.12 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 Entrenet Group LLC (or such other 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.
8.13 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 9 - CONDITIONS PRECEDENT TO
INTREX'S OBLIGATIONS
The obligations of Intrex 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 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.
9.2 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 ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel for Intrex.
9.3 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.
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9.4 CERTIFICATES.
Intrex and the Intrex Shareholders shall have received certificates
dated the Closing Date and signed by FiberChem, certifying that the
conditions specified in Subsections 9.1, 9.2 and 9.3 above have been
fulfilled.
9.5 OPINION OF COUNSEL.
Intrex and the Intrex Shareholders shall have received a written
opinion of Snow ▇▇▇▇▇▇ ▇▇▇▇▇▇ P.C., counsel for FiberChem, dated as of the
Closing Date, in form and content acceptable to Intrex.
9.6 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.
9.7 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.
9.8 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 ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, four persons will be
nominees of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and one person will be a nominee chosen jointly by
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, and if they are unable to agree, a person
chosen by the other eight directors
9.9 EMPLOYMENT AGREEMENTS.
FiberChem shall have delivered to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇'▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ executed
Employment and Non-Competition Agreements in the form of Exhibit 2.8 attached
hereto, and the consideration in exchange for the covenants therein.
9.10 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.
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9.11 FINANCIAL STATEMENTS.
Intrex shall have received audited and unaudited financial statements of
FiberChem for the respective periods set forth in Section 5.8.
9.12 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.
9.13 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
Entrenet Group LLC (or such other 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 Intrex, which proceeds shall be
releasable to FiberChem immediately following the Effective Time.
9.14 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 10 - 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:
10.1 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.
10.2 APPROVALS AND CONSENTS.
(i) The Arrangement, with or without amendment, will have been
approved at an extraordinary meeting (the "Meeting") of the Intrex 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
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(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.
10.3 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.
10.4 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 11 - 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 March 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 11, this Agreement shall become void and have no effect, except that (i)
the provisions hereof relating to confidentiality and expenses set forth in
SECTION 6.3, 7.3 and ARTICLE 19, respectively, shall survive any such
termination and (ii) a termination pursuant to SECTION 11(iii) shall not relieve
the party at fault from liability for an uncured breach or inaccuracy giving
rise to such termination.
ARTICLE 12 - 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 Intrex
Shareholders the Arrangement Consideration as more specifically described in
ARTICLE 2 hereof, together with all other documents and agreements required to
be delivered by them hereunder.
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ARTICLE 13 - 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.
ARTICLE 14 - 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
in Section 4.8 above ("INTREX AUDITED FINANCIAL STATEMENTS") for all periods
required of FiberChem under the rules and regulations of the Securities and
Exchange Commission (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
the Intrex Audited Financial Statements may be prepared on a timely basis.
ARTICLE 15 - 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 16 - 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 17 - 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 18 - CURRENCY
All sums of money expressed in this Agreement are expressed in the lawful
money of the United States.
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ARTICLE 19 - 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.
ARTICLE 20 - 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 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 21 - 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 22 - 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:
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Executive Officer
Intrex Data Communications Corp.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
2100 - ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇
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Telecopier No.(▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to FiberChem to:
▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President & Chief Executive Officer
FiberChem, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
Snow ▇▇▇▇▇▇ ▇▇▇▇▇▇ P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(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 23 - 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 24 - ASSIGNMENT
This Agreement may not be assigned by any party without the prior consent
of the other parties
ARTICLE 25 - 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 26 - MISCELLANEOUS
26.1 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 done,
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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 8, 9 and 10 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
Intrex Shareholders and Intrex.
26.2 HEADINGS.
The headings contained herein are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
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26.3 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: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
INTREX DATA COMMUNICATIONS CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
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