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EXHIBIT 10.22.1
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PROBEX FLUIDS RECOVERY, INC.
$12,500,000 of 7% Senior Secured Convertible Notes, Due November 28, 2004
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NOTE PURCHASE AGREEMENT
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Dated as of November 29, 2000
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TABLE OF CONTENTS
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1 AUTHORIZATION OF NOTES.........................................................1
1.1 Authorization of Notes....................................................1
1.2 Authorization of Probex Common Stock......................................1
1.3 Guarantees................................................................1
2 SALE AND PURCHASE OF NOTES.....................................................1
3 CLOSING........................................................................2
4 CONDITIONS TO CLOSING; CLOSING DELIVERIES......................................2
4.1 Purchasers' Conditions to Closing.........................................2
4.2 Closing Deliveries of the Company and Probex..............................4
4.3 Closing Deliveries of the Collateral Agent................................5
4.4 Closing Deliveries of the Purchasers......................................6
5 REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND PROBEX......................................................6
5.1 Organization; Power and Authority.........................................6
5.2 Authorization, etc........................................................6
5.3 Ownership of Company Stock................................................7
5.4 Capitalization............................................................7
5.5 Corporate Records.........................................................7
5.6 Disclosure................................................................7
5.7 Organization and Ownership of Shares of Subsidiaries; Affiliates..........8
5.8 Consents..................................................................8
5.9 Financial Statements......................................................8
5.10 Liabilities and Obligations...............................................8
5.11 Compliance with Laws and Instruments......................................8
5.12 [Intentionally omitted....................................................9
5.13 Litigation; Observance of Agreements, Statutes and Orders.................9
5.14 Taxes.....................................................................9
5.15 Title to Property; Leases.................................................9
5.16 Commitments..............................................................10
5.17 Licenses, Permits, etc...................................................12
5.18 Insurance................................................................12
5.19 Compliance with ERISA....................................................13
5.20 Private Offering by the Company..........................................13
5.21 Use of Proceeds; Margin Regulations......................................14
5.22 Existing Debt; Future Liens..............................................14
5.23 Environmental Matters....................................................14
5.24 Collateral Matters.......................................................15
5.25 Parity of Obligations....................................................15
5.26 Solvency.................................................................15
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5.27 No Burdensome Restrictions...........................................16
6 REPRESENTATIONS OF THE PURCHASERS.........................................16
6.1 Purchase for Investment..............................................16
7 INFORMATION AS TO COMPANY.................................................16
7.1 Financial and Business Information...................................16
7.2 Officer's Certificate................................................18
7.3 Inspection...........................................................18
8 AFFIRMATIVE COVENANTS.....................................................19
8.1 Compliance with Law..................................................19
8.2 Insurance............................................................19
8.3 Maintenance of Properties............................................19
8.4 Payment of Taxes and Claims..........................................20
8.5 Corporate Existence, etc.............................................20
8.6 Notes and Guaranty to Rank Pari Passu................................20
8.7 Further Assurances...................................................20
8.8 Holder Representative................................................21
8.9 Future Subsidiary Guarantors.........................................21
8.10 Stockholder Approval.................................................21
9 NEGATIVE COVENANTS........................................................21
9.1 Transactions with Affiliates.........................................21
9.2 Merger, Consolidation, etc...........................................21
9.3 Liens................................................................22
9.4 Limitations on Debt and Preferred Stock..............................23
9.5 Limitation on Restricted Payments....................................24
9.6 Limitation on Investment.............................................24
9.7 Sale of Assets.......................................................25
9.8 Limitation on Restrictive Agreements.................................25
9.9 Ownership of the Company.............................................25
9.10 Line of Business.....................................................25
9.11 Future Contract......................................................25
10 EVENTS OF DEFAULT.........................................................25
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TABLE OF CONTENTS
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11 REMEDIES ON DEFAULT, ETC..................................................28
11.1 Acceleration; Conversion.............................................28
11.2 Other Remedies.......................................................29
11.3 Rescission...........................................................29
12 REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.............................29
12.1 Registration of Notes................................................29
12.2 Transfer and Exchange of Notes.......................................30
12.3 Replacement of Notes.................................................30
13 PAYMENT OF NOTES..........................................................30
13.1 Place of Payment.....................................................30
13.2 Home Office Payment..................................................31
14 EXPENSES, ETC.............................................................31
14.1 Transaction Expenses.................................................31
14.2 Survival.............................................................31
15 SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
ENTIRE AGREEMENT..........................................................31
16 AMENDMENT AND WAIVER......................................................32
16.1 Requirements.........................................................32
16.2 Solicitation of Holders of Notes.....................................32
16.3 Binding Effect, etc..................................................33
16.4 Notes Held by Company, etc...........................................33
17 NOTICES...................................................................33
18 REPRODUCTION OF DOCUMENTS.................................................34
19 SUBSTITUTION OF PURCHASER.................................................34
20 REGISTRATION RIGHTS.......................................................34
20.1 Filing and Effectiveness of Registration Statement...................34
20.2 Obligations Of Probex................................................35
20.3 Obligations Of The Holder............................................37
20.4 Expenses Of Registration.............................................38
20.5 Indemnification And Contribution.....................................38
20.6 Rule 144.............................................................41
21 HOLDER REPRESENTATIVE.....................................................41
21.1 Election of Holder Representative....................................41
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22 MISCELLANEOUS.............................................................42
22.1 Successors and Assigns...............................................42
22.2 Payments Due on Non-Business Days....................................42
22.3 Severability.........................................................42
22.4 Construction.........................................................42
22.5 Counterparts.........................................................42
22.6 Governing Law; Jurisdiction and Service of Process...................42
22.7 Agent for Service of Process.........................................43
22.8 Waiver of Jury Trial.................................................43
SCHEDULES
Schedule A Information Relating to Purchasers
Schedule B Defined Terms
Schedule 4.2(q) Certificate of Title
Schedule 4.1(h) Changes in Corporate Structure
Schedule 4.4(a) Company Wiring Instructions
Schedule 4.4(b) Pennzoil Wiring Instructions
Schedule 4.4(c) Escrow Agent Wiring Instructions
Schedule 5.3 Ownership of Company Stock
Schedule 5.4 Subsidiaries
Schedule 5.6 Disclosure
Schedule 5.8 Consents
Schedule 5.9 Financial Statements
Schedule 5.10 Liabilities
Schedule 5.11 Compliance with laws
Schedule 5.1 Litigation
Schedule 5.15 Title to Property; Leases
(a) Real Property
(b) Personal Property
(c) Leases
(d) Right to Use Assets
Schedule 5.16 Commitments
Schedule 5.17 Licenses, Permits, etc.
Schedule 5.18 Insurance
Schedule 5.21 Use of Proceeds
Schedule 5.22 Existing Debt
Schedule 5.23 Environmental Matters
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EXHIBITS
Exhibit 1 Form of Note
Exhibit 2 Form of Collateral Agency Agreement
Exhibit 4.1(c) Form of Opinion of Counsel for the Company
Exhibit 4.2(k) Form of Security Agreement
Exhibit 4.2(l) Form of Pledge Agreement
Exhibit 4.2(m) Form of Guaranty Agreement
Exhibit 4.2(n Form of Lock Up
Exhibit 4.2(o) Form of Escrow Agreement
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PROBEX FLUIDS RECOVERY, INC.
00000 XXXX XXXX, XXXXX 0000
XXXXXX, XXXXX 00000
NOTE PURCHASE AGREEMENT
$12,500,000 of 7% Senior Secured Convertible Notes, Due November 28, 2004
Dated as of
November 29, 2000
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
PROBEX FLUIDS RECOVERY, INC., a Delaware corporation (the "Company")
and Probex Corp., a Delaware corporation ("Probex"), agree with each of the
purchasers named in Schedule A to this Agreement (the "Purchasers") and the
Collateral Agent as set forth below. Certain capitalized terms used in this
Agreement are defined in Schedule B; references to a "Schedule" or an "Exhibit"
are, unless otherwise specified, to a Schedule or an Exhibit attached to this
Agreement.
1. AUTHORIZATION OF NOTES
1.1. Authorization of Notes. The Company will authorize the issue and
sale of $12,500,000 of 7% Senior Secured Convertible Notes, Due November 28,
2004 (the "Notes") such term to include any such notes issued in substitution
therefore pursuant to Section 12 of this Agreement. The Notes shall be
substantially in the form set out in Exhibit 1 with such changes therefrom, if
any, as may be approved by you and the Company.
1.2. Authorization of Probex Common Stock. Probex will authorize and
will reserve for issuance as necessary at all times that number of shares of
Probex Common Stock necessary for the conversion of Notes as provided in Section
2 of the Notes.
1.3. Guarantees. The payment and performance obligations of the Company
under and pursuant to this Agreement and the Notes are to be fully and
unconditionally guaranteed by Probex pursuant to the Guaranty Agreement.
2. SALE AND PURCHASE OF NOTES. Subject to the terms and conditions of this
Agreement, the Company will issue and sell to each Purchaser and each Purchaser
will purchase from the Company, at the Closing provided for in Section 3, Notes
in the principal amount specified opposite each Purchaser's name in Schedule A
at the purchase price of 100% of the principal amount thereof (the "Purchase
Price"). The obligation of each Purchaser shall be several and not joint and no
Purchaser shall have any obligation or any liability to any Person for the
performance or non-performance by any other Purchaser hereunder.
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3. CLOSING. The sale and purchase of the Notes shall occur at the offices of
Xxxxxxx Xxxxxx L.L.P., 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, at
10:00 a.m., Central time, at a closing (the "Closing") on November 29, 2000 or
on such other Business Day thereafter as may be agreed upon by the Company and
the Purchasers (the "Closing Date").
4. CONDITIONS TO CLOSING; CLOSING DELIVERIES. The obligations of each of the
parties hereto to make the closing deliveries set forth in Sections 4.2, 4.3 or
4.4, respectively, shall be conditioned upon the simultaneous delivery of the
closing deliveries required to be made by the other parties hereto pursuant to
Sections 4.2, 4.3 or 4.4, respectively.
4.1. Purchasers' Conditions to Closing. Each Purchaser's obligation to
purchase and pay for the Notes to be sold to such Purchaser at the Closing is
subject to the fulfillment to such Purchaser's satisfaction, prior to or at the
Closing, of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company and Probex in this Agreement shall be true and correct
when made and at the time of the Closing; and Purchasers shall have received a
certificate of an officer of each of the Company and Probex, dated as of the
Closing Date, to the foregoing effect.
(b) Performance; No Default. The Company and Probex shall have
performed and complied with all agreements and conditions contained in this
Agreement and the Guaranty Agreement required to be performed or complied with
by it prior to or at the Closing and after giving effect to the issue and sale
of the Notes (and the application of the proceeds thereof as contemplated by
Schedule 5.21) no Default or Event of Default shall have occurred and be
continuing. Neither the Company nor Probex shall have entered into any
transaction since September 30, 2000 (the "Set Date") that would have been
prohibited by Section 9 hereof had such Section applied since such date.
Purchasers shall have received a certificate of the President of each of the
Company and Probex, dated as of the Closing Date, to the foregoing effect.
(c) Opinions of Counsel. You shall have received an opinion in
form and substance satisfactory to you, dated the date of the Closing from
Jenkens & Xxxxxxxxx, counsel for the Company and Probex, covering the matters
set forth in Exhibit 4.1(c) and covering such other matters incident to the
transactions contemplated hereby as you or your counsel may reasonably request
(and the Company hereby instructs its counsel to deliver such opinion to you).
(d) Collateral Agency Agreement. The Company and Probex shall
have acknowledged the execution and delivery of the Collateral Agency Agreement.
(e) Purchase Permitted By Applicable Law, etc. On the Closing
Date each Purchaser's purchase of Notes shall (a) not violate any applicable law
or regulation (including, without limitation, Regulation U, T or X of the Board
of Governors of the
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Federal Reserve System) and (b) not subject any Purchaser to any tax, penalty or
liability under or pursuant to any applicable law or regulation, which law or
regulation was not in effect on the date hereof. If requested by any Purchaser,
such Purchaser shall have received an Officer's Certificate certifying as to
such matters of fact as such Purchaser may reasonably specify to enable such
Purchaser to determine whether such purchase is so permitted.
(f) Sale of Other Notes. Contemporaneously with the Closing
the Company shall sell to the Purchasers and the Purchasers shall purchase the
Notes to be purchased by them at the Closing as specified in Schedule A.
(g) Payment of Special Counsel Fees. Without limiting the
provisions of Section 14.1, the Company shall have paid on or before the Closing
the reasonable fees, charges and disbursements of the Purchasers' special
counsel.
(h) Changes in Corporate Structure. Except as specified in
Schedule 4.1(h), neither the Company nor Probex shall have changed its
jurisdiction of incorporation or been a party to any merger or consolidation nor
shall it have succeeded to all or any substantial part of the liabilities of any
other entity, at any time following the date of the most recent financial
statements referred to in Schedule 5.9.
(i) Collateral Due Diligence. You shall have received all due
diligence you may reasonably request with respect to the Collateral, including,
without limitation, all surveys, appraisals, environmental reports, mailed and
issued title insurance commitments, UCC filing reports, etc., which is the
subject of the Security Documents. Original copies of all such third party
reports and other due diligence shall be delivered to the Collateral Agent for
safekeeping on your behalf.
(j) Consent of Other Lenders. Any consents or approvals
required to be obtained from any lender or holder of any outstanding debt of the
Company or Probex and any amendments of agreements pursuant to which any debt
may have been incurred by the Company and any other consents set forth on
Schedule 5.8, which shall be necessary to permit the consummation of the
transactions contemplated hereby shall have been obtained and all such consents,
approvals or amendments shall be reasonably satisfactory in form and substance
to each Purchaser and special counsel to the Purchasers.
(k) Closing Deliveries. Purchasers shall have received all
documents, duly executed in form satisfactory to Purchasers and their counsel,
referred to in Section 4.2.
(l) Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
reasonably satisfactory to each Purchaser and the Purchasers' special counsel,
and each Purchaser and the Purchasers' special counsel shall have received all
such counterpart originals or certified or other
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copies of such documents as each Purchaser or special counsel to the Purchasers'
may reasonably request.
4.2. Closing Deliveries of the Company and Probex. At the Closing, the
Company and Probex shall deliver to the Purchasers the following, all of which
shall be in form and content satisfactory to Purchasers and their counsel:
(a) Officer's Certificates. Each of the Company and Probex
shall have delivered to you an Officer's Certificate, dated the date of the
Closing, certifying that the conditions specified in Sections 4.1(a) and (b)
have been fulfilled.
(b) Secretary's Certificates. Each of the Company and Probex
shall have delivered to you a Secretary's Certificate certifying as to the
resolutions attached thereto and other corporate proceedings relating to the
authorization, execution and delivery of the Notes and this Agreement, which
resolutions shall be in full force and effect.
(c) Existence and Good Standing. Certificates dated within ten
days of the Closing, of the Secretary of State of Delaware establishing that the
Company and Probex are in existence, have paid all franchise taxes and otherwise
are in good standing to transact business in the State of Delaware.
(d) Foreign Existence and Good Standing. Certificates dated
within ten days of the Closing, of the Secretaries of State of the states in
which the Company is qualified to do business, to the effect that the Company is
qualified to do business and is in good standing as a foreign corporation in
each of such states.
(e) Opinion. An opinion of counsel of Jenkens & Xxxxxxxxx,
counsel to the Company and Probex, dated as of the Closing, pursuant to Exhibit
4.1(c).
(f) Consents. All authorizations, consents, approvals, permits
and licenses referenced in Schedule 5.8.
(g) Pennzoil Cross-Receipt. A cross-receipt executed by
Pennzoil-Quaker State Company ("Pennzoil") acknowledging receipt as of November
29, 2000, of all amounts, including all outstanding principal and accrued but
unpaid interest, due under the Note made by Probex and payable to Pennzoil dated
September 29, 2000 (the "Pennzoil Debt").
(h) Pennzoil UCC-3's. UCC-3 Termination Statements executed by
Pennzoil terminating all financing statements filed by Pennzoil with respect to
the Pennzoil Debt.
(i) Notes. Each Note made payable to the persons and in the
amounts set forth in Schedule A.
(j) [Intentionally omitted.]
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(k) Security Agreement. The Security Agreement, duly executed
and delivered by the Company, in substantially the form set forth in Exhibit
4.2(k), together with such other documents as to the Company reasonably
requested by the Purchasers in connection with the execution and delivery of the
Security Agreement.
(l) Pledge Agreement. The Pledge Agreement, duly executed and
delivered by Probex, in substantially the form set forth in Exhibit 4.2(l),
together with such other documents as to Probex reasonably requested by the
Purchasers in connection with the execution and delivery of the Pledge
Agreement.
(m) Guaranty Agreement. The Guaranty Agreement, duly executed
and delivered by Probex, in substantially the form set forth in Exhibit 4.2(m)
(as amended, restated, supplemented or otherwise modified from time to time, the
"Guaranty Agreement"), together with such other documents as to Probex
reasonably requested by the Purchasers in connection with the execution and
delivery of the Guaranty Agreement
(n) Lock Up Letters. Lock up letters in the form set forth in
Exhibit 4.2(n) covering sales of Probex Common Stock for not less than one year
from the officers and directors of Probex specified by the Holders.
(o) Escrow Agreement. The Escrow Agreement in substantially
the form set forth in Exhibit 4.2(o) (the "Escrow Agreement") and simultaneously
with the Closing the Company shall have deposited $500,000 in accordance
therewith.
(p) Evidence of Insurance. A certificate dated within 10 days
of the Closing executed by the independent insurance broker of the Company
certifying to the existence of the insurance required by the Security Documents
and the payment of all premiums thereon. The original of the policies or
certificates thereof evidencing such insurance issued by the insurers shall be
delivered to the Collateral Agent for safekeeping on your behalf immediately
upon receipt thereof by the Company.
(q) Original Certificates of Title. Original Certificates of
Title to all titled personal property, each of which are listed on Schedule 4.2
(q).
4.3. Closing Deliveries of the Collateral Agent. At the Closing, the
Collateral Agent shall deliver to the Purchasers the following, all of which
shall be in form and content satisfactory to Purchasers and their counsel:
(a) Officer's Certificate of the Collateral Agent. An
Officer's Certificate, dated the date of the Closing, certifying that (i) the
representations and warranties of the Collateral Agent set forth in Section
2.1(b) of the Intercreditor and Collateral Agency Agreement dated on or about
the date hereof (the "Collateral Agency Agreement") in the form of Exhibit 2
hereto shall be correct when made and at the time of the Closing, and (ii) the
Collateral Agent shall have performed and complied with all agreements and
conditions contained in the Collateral Agency Agreement required to be performed
or complied with by it prior to or at the Closing.
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(b) Officer's Certificate of the Collateral Agent. A
certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Collateral Agency Agreement, which resolutions shall be in full force and
effect.
(c) Collateral Agency Agreement. The Collateral Agency
Agreement executed by the Collateral Agent.
4.4. Closing Deliveries of the Purchasers. At the Closing, the
Purchasers shall deliver the following:
(a) The Purchase Price minus the Pennzoil Debt to the Company
in immediately available funds wired in accordance with the instructions set
forth on Schedule 4.4(a).
(b) An amount equal to the Pennzoil Debt to Pennzoil in
immediately available funds wired in accordance with the instructions set forth
on Schedule 4.4(b).
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND PROBEX.
The Company and Probex jointly and severally represent and warrant to
the Purchasers that the following will be true and correct as of the date hereof
and will be true and correct through the Closing as if made on that date:
5.1. Organization; Power and Authority. The Company and Probex are
corporations duly organized, validly existing and in good standing under the
laws of their jurisdiction of organization, and are duly qualified as a foreign
corporation or other legal entity and are in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company and Probex have the corporate or other legal entity
power and authority to own or hold under lease the properties each purports to
own or hold under lease, to transact the business it transacts and proposes to
transact, to execute and deliver this Agreement, the Security Documents and the
Notes and to perform the provisions hereof and thereof.
5.2. Authorization, etc. This Agreement, the Security Documents and the
Notes have been duly authorized by all necessary corporate or other legal entity
action on the part of the Company and Probex, and this Agreement and the
Security Documents constitute the legal, valid and binding obligations of the
Company and Probex enforceable against the Company and Probex, as appropriate,
in accordance with their respective terms, except as such enforceability may be
limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
(b) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Upon execution and delivery
thereof, each Note will constitute a legal, valid and binding obligation of the
Company and Probex enforceable against the Company and Probex in
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accordance with its terms, except as such enforceability may be limited by (a)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and (b) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or in law).
5.3. Ownership of Company Stock. Except as set forth on Schedule 5.3,
Probex owns, beneficially and of record, good and marketable title to all of the
issued and outstanding Capital Stock of the Company, free and clear of all
security interests, liens, adverse claims, encumbrances, equities, proxies,
options or shareholders' agreements.
5.4. Capitalization. The authorized Capital Stock of the Company
consists of 1,000 shares of common stock, par value $.01 per share, of which 100
shares are issued and outstanding, and no shares of such Capital Stock are held
in the treasury of the Company. All issued and outstanding shares of Capital
Stock of the Company are duly authorized, validly issued, fully paid and
nonassessable. There exist no options, warrants, subscriptions or other rights
to purchase, or securities convertible into or exchangeable for, the Capital
Stock of the Company. Neither Probex nor the Company are parties to or bound by,
nor do they have any knowledge of, any agreement, instrument, arrangement,
contract, obligation, commitment or understanding of any character, whether
written or oral, express or implied, relating to the sale, assignment,
encumbrance, conveyance, transfer or delivery of any Capital Stock of the
Company. No shares of Capital Stock of the Company have been issued or disposed
of in violation of the preemptive rights of any of the Company's shareholders.
All accrued dividends on the Capital Stock of the Company, whether or not
declared, have been paid in full.
5.5. Corporate Records. The copies of the Articles of Incorporation and
all amendments thereto and the Bylaws of the Company that have been delivered to
the Purchasers are true, correct and complete copies thereof, as in effect on
the date hereof. The minute books of the Company, copies of which have been
delivered to the Purchasers, contain accurate minutes of all meetings of, and
accurate consents to all actions taken without meetings by, the Board of
Directors (and any committees thereof) and the stockholders of the Company since
the formation of the Company.
5.6. Disclosure. This Agreement, the documents, certificates or other
writings delivered to each Purchaser by or on behalf of the Company and Probex
in connection with the transactions contemplated hereby and the financial
statements listed in Schedule 5.9 do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading in light of the circumstances under which they
were made. Since the Set Date, there has been no change in the financial
condition, operations, business or properties of the Company, Probex or any
Subsidiary except changes that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect. There is no fact known
to the Company or Probex that could reasonably be expected to have a Material
Adverse Effect that has not been set forth herein or in the other documents,
certificates and other writings delivered to you by or on behalf of the Company
or Probex specifically for use in connection with the transactions contemplated
hereby.
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5.7. Organization and Ownership of Shares of Subsidiaries; Affiliates.
The Company does not own, directly or indirectly, any of the Capital Stock of
any other corporation or any equity, profit sharing, participation or other
interest in any corporation, partnership, joint venture or other entity.
5.8. Consents. Except as set forth in Schedule 5.8, no consent,
authorization, approval, permit or license of, or filing with, any governmental
or public body or authority, any lender or lessor or any other person or entity
("Consent") is required to authorize, or is required in connection with, the
execution, delivery and performance of this Agreement, the Security Documents,
the Notes or the Guaranty Agreement on the part of the Company or Probex, and no
such Consent would be required upon an Event of Default that results in the
foreclosure of the common stock of the Company or a sale of all or substantially
all of the assets of the Company.
5.9. Financial Statements. The Company or Probex has delivered to each
Purchaser copies of the financial statements of the Company, Probex and their
Subsidiaries listed on Schedule 5.9 (the "Financial Statements"). All of such
financial statements (including in each case the related schedules and notes)
fairly present in all Material respects the consolidated financial position of
Probex and its Subsidiaries as of the respective dates specified in such
financial statements and the consolidated results of their operations and cash
flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).
5.10. Liabilities and Obligations. Except as set forth in Schedule
5.10, the Financial Statements reflect all liabilities of the Company, accrued,
contingent or otherwise (known or unknown and asserted or unasserted), arising
out of transactions effected or events occurring on or prior to the date hereof.
All reserves shown in the Financial Statements are appropriate, reasonable and
sufficient to provide for losses thereby contemplated. Except as set forth in
the Financial Statements, the Company is not liable upon or with respect to, or
obligated in any other way to provide funds in respect of or to guarantee or
assume in any manner, any debt, obligation or dividend of any person,
corporation, association, partnership, joint venture, trust or other entity, and
neither the Company nor Probex knows of any basis for the assertion of any other
claims or liabilities of any nature or in any amount.
5.11. Compliance with Laws and Instruments. Except as set forth on
Schedule 5.11, the execution, delivery and performance by the Company and Probex
of this Agreement, the Security Documents, the Notes and the Guaranty Agreement,
as appropriate, and any change in control of the Company resulting upon an Event
of Default that results in the foreclosure of the common stock of the Company
owned by Probex or the sale of all or substantially all of the assets of the
Company will not, (a) contravene, result in any breach of, or constitute a
default under, or, unless permitted hereunder, result in the creation of any
Lien in respect of any property of the Company, Probex or any Subsidiary under,
any indenture, mortgage, deed of trust, loan, purchase or credit agreement,
lease, corporate charter or by-laws, or any other agreement or
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instrument to which the Company, Probex or any Subsidiary is bound or by which
the Company, Probex or any Subsidiary or any of their respective properties may
be bound or affected, (b) conflict with or result in a breach of any of the
terms, conditions or provisions of any order, judgment, decree, or ruling of any
court, arbitrator or Governmental Authority applicable to the Company, Probex or
any Subsidiary, or (c) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company, Probex or
any Subsidiary.
5.12. [Intentionally omitted.]
5.13. Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed in Schedule 5.13 there are no actions,
suits or proceedings pending or, to the knowledge of the Company or Probex,
threatened against or affecting the Company, Probex or any Subsidiary or any
property of the Company, Probex or any Subsidiary in any court or before any
arbitrator of any kind or before or by any Governmental Authority that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(b) Neither the Company, Probex nor any Subsidiary is in
default under any term of any agreement or instrument to which it is a party or
by which it is bound, or any order, judgment, decree or ruling of any court,
arbitrator or Governmental Authority or is in violation of any applicable law,
ordinance, rule or regulation (including without limitation Environmental Laws)
of any Governmental Authority, which default or violation, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.
5.14. Taxes. The Company, Probex and their Subsidiaries have filed all
tax returns that are required to have been filed in any jurisdiction, and have
paid all taxes shown to be due and payable on such returns and all other taxes
and assessments levied upon them or their properties, assets, income or
franchises, to the extent such taxes and assessments have become due and payable
and before they have become delinquent, except for any taxes and assessments (a)
the amount of which is not individually or in the aggregate Material, or (b) the
amount, applicability or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which the Company, Probex
or a Subsidiary has established adequate reserves in accordance with GAAP.
Neither the Company nor Probex knows of no basis for any other tax or assessment
that could reasonably be expected to have a Material Adverse Effect. The
charges, accruals and reserves on the books of the Company, Probex and its
Subsidiaries in respect of federal, state or other taxes for all fiscal periods
are adequate. The Federal income tax liabilities of the Company, Probex and
their Subsidiaries have been paid for all fiscal years up to and including the
fiscal year ending on September 30, 1999.
5.15. Title to Property; Leases.
(a) Real Property. A description of all interests in real
property owned by the Company (collectively, the "Real Property") is set forth
in Schedule 5.15(a).
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Except as set forth in Schedule 5.15(a), the Company has good, valid and
marketable title to all the Real Property. The Real Property and the leased real
property referred to in Section 5.15(c) constitute the only real property used
in the conduct of the business of the Company.
(b) Personal Property. Except as set forth in Schedule
5.15(b), the Company has good, valid and marketable title to all tangible and
intangible personal property owned by it (collectively, the "Personal
Property"). The Personal Property and the leased personal property referred to
in Section 5.15(c) constitute the only personal property used in the conduct of
the business of the Company. Schedule 4.2(q) sets forth a description of all
titled personal property owned by the Company.
(c) Leases. A list and brief description of all leases of real
and Material personal property to which the Company is a party, either as lessor
or lessee, are set forth in Schedule 5.15(c). All such leases are valid and
enforceable in accordance with their respective terms except as may be limited
by applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies.
(d) Right to Use Assets. Except for those assets acquired
since September 30, 2000, which are listed in Schedule 5.15(d), all tangible and
intangible assets used in the conduct of the business of the Company are
reflected in the Financial Statements in a manner that is in conformity with
GAAP applied on a consistent basis with prior periods. The Company owns, leases
or otherwise possesses a right to use all assets used in the conduct of the
business of the Company, which will not be impaired by the consummation of the
transactions contemplated hereby or upon an Event of Default that results in the
foreclosure of the common stock of the Company owned by Probex or the sale of
all or substantially all of the assets of the Company.
5.16. Commitments.
(a) Commitments; Defaults. Except as set forth in Schedule
5.16, the Company has not entered into, nor is the Capital Stock, the assets or
the business of the Company bound by, whether or not in writing, any
(i) partnership or joint venture agreement;
(ii) deed of trust or other security agreement;
(iii) guaranty or suretyship, indemnification or contribution
agreement or performance bond;
(iv) employment, consulting or compensation agreement or
arrangement, including the election or retention in office of any
director or officer;
(v) labor or collective bargaining agreement;
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(vi) debt instrument, loan agreement or other obligation
relating to indebtedness for borrowed money or money lent or to be lent
to another;
(vii) deed or other document evidencing an interest in or
contract to purchase or sell real property;
(viii) lease of real or personal property, whether as lessor,
lessee, sublessor or sublessee;
(ix) agreement between the Company and any affiliate of the
Company;
(x) agreement relating to any material matter or transaction
in which an interest is held by a person or entity that is an affiliate
of the Company;
(xi) any agreement for the acquisition of services, supplies,
equipment or other personal property and involving more than $50,000 in
the aggregate;
(xii) any other contract or arrangement that involves either
an unperformed commitment in excess of $50,000 or that terminates more
than 30 days after the date hereof;
(xiii) agreement providing for the purchase from a supplier of
all or substantially all of the requirements of the Company of a
particular product or service; or
(xiv) any other agreement or commitment not made in the
ordinary course of business or that is Material to the business or
financial condition of the Company.
All of the foregoing are hereinafter collectively referred to as the
"Commitments." True, correct and complete copies of the written Commitments, and
true, correct and complete written descriptions of the oral Commitments, have
heretofore been delivered or made available to the Purchasers. There are no
existing defaults, events of default or events, occurrences, acts or omissions
that, with the giving of notice or lapse of time or both, would constitute
defaults by the Company, and no penalties have been incurred nor are amendments
pending, with respect to the Commitments, except as described in Schedule 5.16.
The Commitments are in full force and effect and are valid and enforceable
obligations of the parties thereto in accordance with their respective terms and
will continue in full force and effect and be valid and enforceable obligations
of the Company after an Event of Default that results in the foreclosure of the
common stock of the Company owned by Probex or the sale of all or substantially
all of the assets of the Company, and no defenses, off-sets or counterclaims
have been asserted or, to the best knowledge of the Company and Probex, may be
made by any party thereto, nor has the Company waived any rights thereunder,
except as described in Schedule 5.16. The Company has not received notice of any
default with respect to any Commitment. Except as set forth in Schedule 5.16,
none of the Commitments contains any change of control, assignment or other
provision that would be triggered upon an Event of Default
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and subsequent foreclosure of the common stock of the Company owned by Probex or
the sale of all or substantially all of the assets of the Company;
(b) No Cancellation or Termination of Commitment. Neither the
Company nor Probex has received notice of any plan or intention of any other
party to any Commitment to exercise any right to cancel or terminate any
Commitment or agreement, and neither the Company nor Probex knows of any fact
that would justify the exercise of such a right. Neither the Company nor Probex
currently contemplates, or has reason to believe any other person or entity
currently contemplates, any amendment or change to any Commitment. Except as
listed in Schedule 5.16, none of the customers or suppliers of the Company has
refused, or communicated that it will or may refuse, to purchase or supply goods
or services, as the case may be, or has communicated that it will or may
substantially reduce the amounts of goods or services that it is willing to
purchase from, or sell to, the Company.
5.17. Licenses, Permits, etc. Except as disclosed in Schedule 5.17,
(a) the Company, Probex and their Subsidiaries own or possess
or have filed applications for all licenses, permits, franchises,
authorizations, patents, copyrights, service marks, trademarks, technology,
know-how, processes and trade names, or rights thereto (collectively
"Intellectual Property"), that individually or in the aggregate are Material,
without known conflict with the rights of others;
(b) to the best knowledge of the Company and Probex, no
product of the Company, Probex or any Subsidiary infringes in any material
respect any license, permit, franchise, authorization, patent, copyright,
service xxxx, trademark, trade name or other right owned by any other Person;
(c) to the best knowledge of the Company and Probex, there is
no Material violation by any Person of any right of the Company, Probex or any
of its Subsidiaries with respect to any Intellectual Property or other right
owned or used by the Company, Probex or any of their Subsidiaries; and
(d) the Company, Probex and each Subsidiary owns, or has the
legal right to use (subject to the common law rights of another user), all
Intellectual Property necessary for each of them to conduct its business as
currently conducted except for those which the failure to own or have such legal
right to use could not have a Material Adverse Effect.
5.18. Insurance. The Company carries property, liability, workers'
compensation and such other types of insurance as is customary in the industry
of the insured. A list and brief description of all insurance policies of the
Company are set forth in Schedule 5.18. All of such policies are valid and
enforceable policies, issued by insurers of recognized responsibility in amounts
and against such risks and losses as is customary in the industry of the
insured. Such insurance shall be outstanding and duly in force without
interruption up to and including the Closing Date. True, complete and
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correct copies of all such policies have been provided to Purchaser on or prior
to the date hereof.
5.19. Compliance with ERISA. The Company, Probex and each ERISA
Affiliate have operated and administered each Plan in compliance with all
applicable laws except for such instances of noncompliance as have not resulted
in and could not reasonably be expected to result in a Material Adverse Effect.
Neither the Company, Probex nor any ERISA Affiliate has incurred any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans (as defined in Section 3 of ERISA),
and no event, transaction or condition has occurred or exists that could
reasonably be expected to result in the incurrence of any such liability by the
Company, Probex or any ERISA Affiliate, or in the imposition of any Lien on any
of the rights, properties or assets of the Company, Probex or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other than
such liabilities or Liens as would not be, individually or in the aggregate,
Material.
(a) The present value of the aggregate benefit liabilities
under each of the Plans (other than Multiemployer Plans), determined as of the
end of such Plan's most recently ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan's most recent actuarial
valuation report, did not exceed the aggregate current value of the assets of
such Plan allocable to such benefit liabilities by more than $50,000 in the case
of any single Plan and by more than $50,000 in the aggregate for all Plans. The
term "benefit liabilities" has the meaning specified in section 4001 of ERISA
and the terms "current value" and "present value" have the meaning specified in
section 3 of ERISA.
(b) The Company, Probex and their ERISA Affiliates have not
incurred withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that, individually or in the aggregate, are Material.
(c) The expected postretirement benefit obligation (determined
as of the last day of the Company's and Probex's most recently ended fiscal year
in accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage mandated by
section 4980B of the Code) of the Company, Probex and its Subsidiaries is not
Material.
(d) The execution and delivery of this Agreement and the
issuance and sale of the Notes hereunder will not involve any transaction that
is subject to the prohibitions of section 406 of ERISA or in connection with
which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code.
5.20. Private Offering by the Company. Neither the Company nor, to the
best of its knowledge, anyone acting on its behalf has taken, or will take, any
action that would subject the issuance or sale of the Notes to the registration
requirements of Section 5 of the Securities Act.
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5.21. Use of Proceeds; Margin Regulations. The Company will apply the
proceeds of the sale of the Notes as set forth in Schedule 5.21 (the "Use of
Proceeds"). No part of the proceeds from the sale of the Notes hereunder will be
used, directly or indirectly, for the purpose of buying or carrying any margin
stock within the meaning of Regulation U of the Board of Governors (the "Board")
of the Federal Reserve System (12 CFR 221), or for the purpose of buying or
carrying or trading in any securities under such circumstances as to involve the
Company in a violation of Regulation X of said Board (12 CFR 224) or to involve
any broker or dealer in a violation of Regulation T of said Board (12 CFR 220).
Margin stock does not constitute more than 5% of the value of the consolidated
assets of the Company and its Subsidiaries and the Company does not have any
present intention that margin stock will constitute more than 5% of the value of
such assets. As used in this Section, the terms "margin stock" and "purpose of
buying or carrying" shall have the meanings assigned to them in said Regulation
U.
5.22. Existing Debt; Future Liens.
(a) Except as described therein, Schedule 5.22 sets forth a
complete and correct list of all outstanding Debt of the Company, Probex and
their Subsidiaries as of the date of this Agreement, since which date there has
been no Material change in the amounts, interest rates, sinking funds,
installment payments or maturities of the Debt of the Company, Probex or its
Subsidiaries. Neither the Company, Probex nor any Subsidiary is in default and
no waiver of default is currently in effect, in the payment of any principal or
interest on any Debt of the Company, Probex or any such Subsidiary and no event
or condition exists with respect to any Debt of the Company or any Subsidiary
that would permit (or that with notice or the lapse of time, or both, would
permit) one or more Persons to cause such Debt to become due and payable before
its stated maturity or before its regularly scheduled dates of payment.
(b) Except as described in Schedule 5.22, neither the Company,
Probex nor any Subsidiary has agreed or consented to cause or permit in the
future (upon the happening of a contingency or otherwise) any of its property,
whether now owned or hereafter acquired, to be subject to a Lien not permitted
by Section 9.3.
(c) Probex will derive a commercial benefit by their execution
and delivery of the Guaranty Agreement generally and, in certain other respects,
as more specifically described in Schedule 5.22 hereto.
5.23. Environmental Matters. Except as set forth on Schedule 5.23, as
of the Closing Date, neither the Company, Probex nor any Subsidiary has
knowledge of any claim or has received any notice of any claim, and no
proceeding has been instituted raising any claim against the Company, Probex or
any of their Subsidiaries or any of their respective real properties now or
formerly owned, leased or operated by any of them or other assets, alleging any
damage to the environment or violation of any Environmental Laws. As of the
Closing Date, except as otherwise disclosed to the Purchasers in writing,
(a) neither the Company, Probex nor any Subsidiary has
knowledge of any facts which would give rise to any claim, public or private, of
violation of
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Environmental Laws or damage to the environment emanating from, occurring on or
in any way related to real properties now or formerly owned, leased or operated
by any of them or to other assets or their use;
(b) neither the Company, Probex nor any Subsidiary has stored
or has knowledge of any storage of any Hazardous Materials on real properties
now or formerly owned, leased or operated by any of them and has not disposed,
nor has any knowledge of any disposal, of any Hazardous Materials in a manner
contrary to any Environmental Laws; and
(c) neither the Company, Probex nor any of their Subsidiaries
has knowledge that any buildings on any real properties now owned, leased or
operated by the Company, Probex or any of their Subsidiaries are not in
compliance with applicable Environmental Laws.
5.24. Collateral Matters.
(a) The provisions of each of the Security Documents are
effective to create in favor of the Collateral Agent for the benefit of the
Purchasers, a legal, valid and (subject to the qualifications to enforceability
in Section 5.2) enforceable security interest (with the priorities provided for
therein and limited to the extent the Collateral described therein is within the
scope of the UCC) in all right, title and interest of the Company, Probex and
its Subsidiaries in the collateral described therein; and executed financing
statements have been, or on or before the Closing will be, filed (or appropriate
arrangements for the filing thereof have been made) in all public offices
wherein such filing is necessary to perfect the security interests in the
Collateral therein described as against creditors of and purchasers from the
Company and Probex.
(b) All representations and warranties of the Company, Probex
and any of their Subsidiaries party thereto contained in the Security Documents
are true and correct.
(c) All fees, charges and taxes in connection with the
recordation or filing and re-recordation or re-filing of the Security Documents
and any other agreement or instrument, financing statement or any publication of
notice required to be filed or recorded, to protect the validity of the liens
securing the obligations of the Notes shall have been paid in full or an amount
sufficient to pay such fees, charges and taxes have been deposited by the
Company with the title insurer.
5.25. Parity of Obligations. All obligations hereunder and under the
Notes are direct and secured obligations of the Company ranking senior as
against the assets of the Company with respect to all other present and future
secured Debt (actual or contingent) of the Company.
5.26. Solvency. Each of the Company and Probex is, and upon giving
effect to the issuance of the Notes, the execution of this Agreement and the
Guaranty Agreement and the Use of Proceeds will be, Solvent. Each of the Company
and Probex has capital not unreasonably small in relation to its respective
business or any contemplated or
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undertaken transaction and has assets having a value both at fair valuation and
at present fair salable value greater than the amount required to pay its debts
as they become due and greater than the amount that will be required to pay its
respective probable liability on its existing debts as they become absolute and
matured. Neither the Company nor Probex intends to incur, or believes or should
have believed that it will incur, debts beyond its ability to pay such debts as
they become due. The Company will not be rendered insolvent by the execution and
delivery of, and performance of its respective obligations under, this
Agreement, the Security Documents, the Notes or the Guaranty Agreement.
5.27. No Burdensome Restrictions. Neither the Company nor Probex is a
party to any agreement or instrument or subject to any other obligation or any
charter or corporate restriction or any provision of any applicable law, rule or
regulation which, individually or in the aggregate, could have a Material
Adverse Effect.
6. REPRESENTATIONS OF THE PURCHASERS.
6.1. Purchase for Investment. Each Purchaser represents that it is
purchasing the Notes for its own account or for one or more separate accounts
maintained by it for the account of one or more pension or trust funds and not
with a view to the distribution thereof, provided that the disposition of such
Purchaser's property shall at all times be within its control. Each Purchaser
understands that the Notes have not been registered under the Securities Act and
may be resold only if registered pursuant to the provisions of the Securities
Act or if an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption is required
by law, and that the Company is not required to register the Notes. Each
Purchaser represents that it is an "accredited investor" as that term is defined
in Rule 501 promulgated under the Securities Act.
7. INFORMATION AS TO COMPANY.
7.1. Financial and Business Information. The Company shall deliver to
each Holder:
(a) Quarterly Statements -- within 45 days after the end of
each quarterly fiscal period in each fiscal year of the Company (other than the
last quarterly fiscal period of each such fiscal year), duplicate copies of,
(i) an unaudited balance sheet of the Company as at the end of
such quarter, and
(ii) unaudited statements of income, changes in shareholders'
equity and cash flows of the Company, for such quarter and (in the case
of the second and third quarters) for the portion of the fiscal year
ending with such quarter,
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial
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Officer as fairly presenting, in all material respects, the financial position
of the companies being reported on and their results of operations and cash
flows, subject to changes resulting from year-end adjustments;
(b) Annual Statements -- within 90 days after the end of each
fiscal year of the Company, duplicate copies of,
(i) an unaudited balance sheet of the Company, as at the end
of such year, and
(ii) unaudited statements of income, changes in shareholders'
equity and cash flows of the Company, for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP
applicable to annual financial statements generally, and certified by a Senior
Financial Officer as fairly presenting, in all material respects, the financial
position of the companies being reported on and their results of operations and
cash flows;
(c) SEC and Other Reports -- promptly upon their becoming
available, one copy of (i) each financial statement, report, notice or proxy
statement sent by Probex to public securities holders generally, and (ii) each
regular or periodic report, each registration statement (without exhibits except
as expressly requested by such Holder), and each prospectus and all amendments
thereto filed by Probex with the Securities and Exchange Commission (the "SEC")
and of all press releases and other statements made available generally by
Probex to the public concerning developments that are Material;
(d) Notice of Default or Event of Default -- promptly, and in
any event within five days after a Responsible Officer becoming aware of the
existence of any Default or Event of Default or that any Person has given any
notice or taken any action with respect to a claimed default hereunder or that
any Person has given any notice or taken any action with respect to a claimed
default of the type referred to in Section 10(h), a written notice specifying
the nature and period of existence thereof and what action the Company is taking
or proposes to take with respect thereto;
(e) Notice of ERISA Matters -- promptly, and in any event
within five days after a Responsible Officer becoming aware of any of the
following, a written notice setting forth the nature thereof and the action, if
any, that the Company or an ERISA Affiliate proposes to take with respect
thereto:
(i) with respect to any Plan, any reportable event, as defined
in section 4043(b) of ERISA and the regulations thereunder, for which
notice thereof has not been waived pursuant to such regulations as in
effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer
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Plan that such action has been taken by the PBGC with respect to such
Multiemployer Plan; or
(iii) any event, transaction or condition that could result in
the incurrence of any liability by the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights, properties or assets of
the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA
or such penalty or excise tax provisions, if such liability or Lien,
taken together with any other such liabilities or Liens then existing,
could reasonably be expected to have a Material Adverse Effect;
(f) Notices from Governmental Authority -- promptly, and in
any event within 30 days of receipt thereof, copies of any notice to the Company
or any Subsidiary from any federal or state Governmental Authority relating to
any order, ruling, statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect;
(g) Requested Information -- with reasonable promptness, such
other data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of its
Subsidiaries or relating to the ability of the Company to perform its
obligations hereunder and under the Notes as from time to time may be reasonably
requested by any such Holder.
7.2. Officer's Certificate. Each set of financial statements delivered
to a Holder pursuant to Section 7.1 shall be accompanied by a certificate of a
Senior Financial Officer of the Company and a certificate of a Senior Financial
Officer of Probex, as applicable, each setting forth a statement that such
officer has reviewed the relevant terms of this Agreement and has made, or
caused to be made, under his or her supervision, a review of the transactions
and conditions of the Company, or Probex, as the case may be, from the beginning
of the quarterly or annual period covered by the statements then being furnished
to the date of the certificate and that such review shall not have disclosed the
existence during such period of any condition or event that constitutes a
Default or an Event of Default or, if any such condition or event existed or
exists (including, without limitation, any such event or condition resulting
from the failure of the Company or any Subsidiary to comply with any
Environmental Law), specifying the nature and period of existence thereof and
what action the Company or Probex shall have taken or proposes to take with
respect thereto.
7.3. Inspection. The Company shall permit a representative of the
Holders:
(a) No Default -- if no Default or Event of Default then
exists, at the expense of such Holder and upon reasonable prior notice to the
Company during normal business hours, to visit the principal executive office of
the Company to discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company's officers, and (with the consent of the Company,
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which consent will not be unreasonably withheld) its independent public
accountants, and (with the consent of the Company, which consent will not be
unreasonably withheld) to visit the other offices and properties of the Company
and each Subsidiary, all at such reasonable times and as often as may be
reasonably requested in writing; and
(b) Default -- if a Default or Event of Default then exists,
at the expense of the Company, to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their respective
books of account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective officers and independent public accountants (and by this
provision the Company authorizes said accountants to discuss the affairs,
finances and accounts of the Company and its Subsidiaries), all at such times
and as often as may be requested.
8. AFFIRMATIVE COVENANTS.
The Company and Probex covenant that so long as any of the Notes are
outstanding:
8.1. Compliance with Law. Probex will cause the Company to, and the
Company will, and will cause each of its Subsidiaries to, comply with all laws,
ordinances or governmental rules or regulations to which each of them is
subject, including, without limitation, Environmental Laws, and will obtain and
maintain in effect all licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of their respective
properties or to the conduct of their respective businesses, in each case to the
extent necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
8.2. Insurance. Probex will cause the Company to, and the Company will,
and will cause each of its Subsidiaries to, maintain, with financially sound and
reputable insurers, insurance with respect to their respective properties and
businesses against such casualties and contingencies, of such types, on such
terms and in such amounts (including deductibles, co-insurance and
self-insurance, if adequate reserves are maintained with respect thereto) as is
customary in the case of entities of established reputations engaged in the same
or a similar business and similarly situated.
8.3. Maintenance of Properties. Probex will cause the Company to, and
the Company will, and will cause each of its Subsidiaries to, maintain and keep,
or cause to be maintained and kept, their respective properties in good repair,
working order and condition (other than ordinary wear and tear), so that the
business carried on in connection therewith may be properly conducted at all
times, provided that this Section shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of any of its
properties if such discontinuance is desirable in the conduct of its business
and the Company has concluded that such discontinuance could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
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8.4. Payment of Taxes and Claims. Probex will cause the Company to, and
the Company will, and will cause each of its Subsidiaries to, file all tax
returns required to be filed in any jurisdiction and to pay and discharge all
taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company or any Subsidiary, provided
that neither the Company nor any Subsidiary need pay any such tax or assessment
or claims the amount, applicability or validity thereof is contested by the
Company or such Subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Company has established adequate reserves therefore in
accordance with GAAP on the books of the Company.
8.5. Corporate Existence, etc. Probex will cause the Company to, and
the Company will, and will cause each Subsidiary to, at all times preserve and
keep in full force and effect its corporate existence. The Company will at all
times preserve and keep in full force and effect the corporate existence of each
of its Subsidiaries and all rights and franchises of the Company and its
Subsidiaries unless, in the good faith judgment of the Company, the termination
of or failure to preserve and keep in full force and effect such corporate
existence, right or franchise could not, individually or in the aggregate, have
a Material Adverse Effect.
8.6. Notes and Guaranty to Rank Pari Passu. The Notes, the Guaranty
Agreement and all obligations of the Company and Probex thereunder and hereunder
are and at all times shall remain direct obligations of the Company and Probex,
as the case may be, ranking pari passu as against the assets of the Company with
all other Notes from time to time issued and outstanding hereunder without any
preference among themselves and senior to all other present and future secured
Debt (actual or contingent), of the Company.
8.7. Further Assurances. Promptly upon request by the Collateral Agent,
the Company shall (and shall cause its Subsidiaries including all entities which
become Subsidiaries after the date hereof to), and Probex shall, execute,
acknowledge, deliver, record, re-record, file, re-file, register and
re-register, any and all such further conveyances, security agreements, charges,
debentures, guaranties, mortgages, assignments, estoppel certificates, financing
statements and continuations thereof, termination statements, notices of
assignment, transfers, certificates, assurances and other instruments the
Collateral Agent may reasonably require from time to time in order (a) to carry
out more effectively the purposes of this Agreement or any Security Document,
(b) to subject to the Liens created by any of the Security Documents any of the
properties, rights or interests covered by any of the Security Documents, (c) to
perfect and maintain the validity, effectiveness and priority of any of the
Security Documents and the Liens intended to be created thereby, and (d) to
better assure, convey, grant, assign, transfer,
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preserve, protect and confirm to the Collateral Agent the rights granted or now
or hereafter intended to be granted to the Purchasers under any Security
Document or under any other document executed in connection therewith (including
the granting of a mortgage on any now or hereafter acquired owned real
property). In connection with the execution of the foregoing, the Company and
Probex shall cause to be delivered to the Collateral Agent such opinions of
counsel and other supporting documents as the Collateral Agent shall reasonably
require.
8.8. Holder Representative. The Holder Representative shall have the
right, but not the obligation, to attend all Probex and Company board of
directors' meetings, including committee meetings.
8.9. Future Subsidiary Guarantors. The Company shall cause each
Subsidiary of the Company formed after the Closing to become an Additional
Subsidiary Guarantor and to execute and deliver, the Guaranty Agreement pursuant
to with each such Subsidiary shall Guaranty the payment of all amounts payable
by the Company hereunder and the Notes and the performance of all obligations of
the Company hereunder and under the Notes. The Company will at all times own,
directly or indirectly, not less than 100% of the issued and outstanding Capital
Stock (and any Securities convertible at any time and from time to time into
Capital Stock) of the Additional Subsidiary Guarantors free and clear of all
Liens other than Liens evidenced by the Security Documents.
8.10. Stockholder Approval. Probex hereby agrees that it shall prepare
and file with the SEC within three weeks from the date of this Agreement, a
preliminary proxy statement in connection with requesting that the stockholders
of Probex approve for issuance at least 20,000,000 shares of Probex Common Stock
to be used for future financing purposes and shall use all commercially
reasonable efforts to file its definitive proxy statement as soon thereafter as
possible.
9. NEGATIVE COVENANTS.
The Company and Probex covenant that so long as any of the Notes are
outstanding:
9.1. Transactions with Affiliates. Probex will not permit the Company
to, and the Company will not and will not permit any Subsidiary to enter into
directly or indirectly any transaction or Material group of related transactions
(including without limitation the purchase, lease, sale or exchange of
properties of any kind or the rendering of any service) with any Affiliate
(other than the Company or another Subsidiary), except in the ordinary course
and pursuant to the reasonable requirements of the Company's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than would be obtainable in a comparable
arm's-length transaction with a Person not an Affiliate.
9.2. Merger, Consolidation, etc. The Company and each Subsidiary shall
not consolidate with or merge with any other corporation or convey, transfer or
lease all or substantially all of its assets in a single transaction or series
of transactions to any Person.
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9.3. Liens. Probex will not permit the Company to, and the Company and
its Subsidiaries will not, directly or indirectly, create or incur, or suffer to
be incurred or to exist (upon the happening of a contingency or otherwise), any
Lien on or with respect to any of the Company's or its Subsidiaries' property or
assets (including, without limitation, any document or instrument in respect of
goods or accounts receivable), whether now owned or hereafter acquired or upon
any income or profits therefrom, or transfer any property for the purpose of
subjecting the same to the payment of obligations in priority to the payment of
its or their general creditors, or acquire or agree to acquire, any property or
assets upon conditional sales agreements or other title retention devices,
except:
(a) Liens for property taxes, assessments or governmental
charges or levies which are not yet due and payable or the payment of which is
not at the time required by Section 9.4;
(b) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Liens, in each case,
incurred in the ordinary course of business for sums not yet due and payable or
the payment of which is not at the time required by Section 9.4;
(c) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business (i) in connection with workers'
compensation, unemployment insurance and other types of social security or
retirement benefits, or (ii) to secure (or to obtain letters of credit that
secure) the performance of tenders, statutory obligations, surety bonds, appeal
bonds, bids, leases (other than Capital Leases), performance bonds, purchase,
construction or sales contracts and other similar obligations, in each case not
incurred or made in connection with the borrowing of money, the obtaining of
advances or credit or the payment of the deferred purchase price of property;
(d) any attachment or judgment Lien, unless the judgment it
secures shall not, within 30 days after the entry thereof, have been discharged
or execution thereof stayed pending appeal, or shall not have been discharged
within 30 days after the expiration of any such stay;
(e) any Lien created after the date hereof to secure all or
any part of the purchase price, or to secure Debt incurred or assumed to pay all
or any part of the purchase price or cost of construction, in the aggregate not
to exceed $50,000, of tangible property (or any improvement thereon) acquired or
constructed by the Company or any Subsidiary after the Closing Date, provided
that
(i) any such Lien shall extend solely to the item or items of
such property (or improvement thereon) so acquired or constructed and,
if required by the terms of the instrument originally creating such
Lien, other property (or improvement thereon) which is an improvement
to or is acquired for specific use in connection with such acquired or
constructed property (or improvement
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thereon) or which is real property being improved by such acquired or
constructed property (or improvement thereon),
(ii) the principal amount of the Debt secured by any such Lien
shall at no time exceed an amount equal to the lesser of (A) the cost
to the Company or such Subsidiary of the property (or improvement
thereon) so acquired or constructed and (B) the fair market value (as
determined in good faith by the board of directors of the Company) of
such property (or improvement thereon) at the time of such acquisition
or construction,
(iii) any such Lien shall be created contemporaneously with,
or within 180 days after, the acquisition or construction of such
property, and
(iv) after giving effect to the incurrence of such Lien, no
Default or Event of Default shall have occurred and be continuing;
(f) any extension, renewal or refunding of any Lien permitted
by the preceding clause (e) of this Section 9.3 in respect of the same property
theretofore subject to such Lien in connection with the extension, renewal or
refunding of the Debt secured thereby; provided that (1) such extension, renewal
or refunding of Debt shall be without increase in the principal amount remaining
unpaid as of the date of such extension, renewal or refunding, (2) the time
remaining until the maturity of such Debt shall not be reduced, (3) such Lien
shall attach solely to the same such property, and (4) immediately after the
consummation of the extension, renewal or refunding and after giving effect
thereto, no Default or Event of Default would exist.
If, notwithstanding the prohibition contained herein, the Company
shall, or shall permit any of its Subsidiaries to, directly or indirectly,
create, incur, assume or permit to exist any Lien, other than those Liens
permitted by the provisions of paragraphs (a) through (e) of this Section 9.3,
it will make or cause to be made effective provision whereby the Notes will be
secured equally and ratably with any and all other obligations thereby secured,
such security to be pursuant to agreements reasonably satisfactory to the
Required Holders and, in any such case, the Notes shall have the benefit, to the
fullest extent that, and with such priority as, the Holders of the Notes may be
entitled under applicable law, of an equitable Lien on such property. Such
violation of this Section 9.3 will constitute an Event of Default, whether or
not provision is made for an equal and ratable Lien pursuant to this Section
9.3.
9.4. Limitations on Debt and Preferred Stock.
(a) Probex will not permit the Company to, and the Company
will not, and will not permit any Subsidiary of the Company to, create, issue,
assume, Guaranty or to otherwise incur or in any manner be or become liable in
respect of any Debt or Preferred Stock except Debt owed by a Subsidiary to the
Company or a Wholly-owned Subsidiary of the Company or Preferred Stock owned by
the Company or a Wholly-owned Subsidiary of the Company.
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(b) Any Person which becomes a Subsidiary after the date
hereof shall for all purposes of this Section 9.4 be deemed to have created,
assumed or incurred at the time it becomes a Subsidiary all Debt and Preferred
Stock of such Person existing immediately after it becomes a Subsidiary.
9.5. Limitation on Restricted Payments. Probex will not permit the
Company to, and the Company will not, and will not permit any Subsidiary to,
except as hereinafter provided:
(a) declare or pay any dividends, either in cash or property,
on any share of its Capital Stock or other equity interests (except dividends or
other distributions (i) payable solely in shares of Capital Stock or other
equity interests of the Company and (ii) payable by a Wholly-owned Subsidiary to
the Company or to another Wholly-owned Subsidiary);
(b) directly or indirectly, or through any Subsidiary or
through any Affiliate of the Company, purchase, redeem or retire any shares of
its Capital Stock of any class or other equity interests or any warrants, rights
or options to purchase or acquire any shares of its Capital Stock or other
equity interests (other than in exchange for or out of the net cash proceeds to
the company from the substantially concurrent issue or sale of shares of Capital
Stock or other equity interest of the Company or warrants, rights or options to
purchase or acquire any shares of its Capital Stock or other equity interests);
or
(c) make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its Capital Stock or other
equity interest, warrant, right or option;
(such declarations or payments of dividends, purchases, redemptions or
retirements of Capital Stock or other equity interests and warrants, rights or
options and all such other payments or distributions being herein collectively
called "Restricted Payments").
Notwithstanding anything to the contrary in this Section 9.5, as long
as the Company pays its liabilities as they come due, meets its budgeted capital
expenditures, maintains a minimum of $500,000 of working capital, of which
$200,000 must be in cash, and no Event of Default has occurred and is
continuing, the Company may make payments or distributions in respect of its
Capital Stock to Probex.
9.6. Limitation on Investment. Probex will not permit the Company to,
and the Company will not, and will not permit any Subsidiary to, make any
Investments, other than:
(a) Investments in and to Wholly-owned Subsidiaries;
(b) Investments representing loans or advances to officers,
directors and employees for expenses (including moving expenses related to a
transfer) incidental to carrying on the business of the Company or any
Wholly-owned Subsidiary in an aggregate outstanding amount not to exceed
$50,000;
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For purposes of this Section 9.6, at any time when a corporation
becomes a Subsidiary, all Investments of such corporation at such time shall be
deemed to have been made by such corporation, as a Subsidiary, at such time.
9.7. Sale of Assets. Probex shall not permit the Company to, and the
Company shall not, and shall not permit any Subsidiary to, sell, lease, transfer
or otherwise dispose of assets (except assets sold in the ordinary course of
business for fair market value).
9.8. Limitation on Restrictive Agreements. Probex will not permit the
Company to, and the Company will not, and will not permit any Subsidiary to,
enter into any agreement with any Person which, directly or indirectly,
prohibits or limits the ability of any Subsidiary to (a) pay dividends or make
other distributions to the Company or prepay any Debt owed to the Company, (b)
make loans or advances to the Company, or (c) transfer any of its properties or
assets to the Company (other than with respect to assets subject to Liens
permitted by Section 9.3).
9.9. Ownership of the Company. Probex will at all times own, directly,
or indirectly, not less than 100% of all the issued and outstanding Capital
Stock (and any Securities convertible at any time and form time to time into
Capital Stock) of the Company free and clear of all liens other than liens
evidenced by the Security Documents.
9.10. Line of Business. Probex will not permit the Company to, and the
Company will not, and will not permit any of the Subsidiaries to, engage in any
business if, as a result, the general nature of the business in which the
Company and the Subsidiaries, taken as a whole, would then be engaged would be
substantially changed from the general nature of the business in which the
Company and the Subsidiaries, taken as a whole, are engaged on the Set Date.
9.11. Future Contract. Probex will not allow the Company to, and the
Company agrees that it will not, enter into any contractual relationship unless
such contract will continue to be in full force and effect after an Event of
Default that results in the foreclosure of the common stock of the Company owned
by Probex or the sale of all or substantially all of the assets of the Company.
10. EVENTS OF DEFAULT. An "Event of Default" shall exist and the Company shall
provide the Holders with immediate written notice if any of the following
conditions or events shall occur:
(a) the Company defaults in the payment of any principal on
any Note when the same becomes due and payable, whether at maturity or at a date
fixed for prepayment or by declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any
Note for more than five days after the same becomes due and payable; or
(c) the Company defaults in the performance of or compliance
with any term contained in Section 9.2; or
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(d) Probex or the Company defaults in the performance of or
compliance with any term contained herein (other than those referred to in
paragraphs (a), (b) and (c) of this Section 10) and such default is not remedied
within 30 days after the occurrence thereof; or
(e) Probex has not, on or before September 30, 2001, secured
commitments for financing for its working capital and debt and equity financing
or other arrangement for the construction of an initial facility using Probex
proprietary technology; or
(f) the Probex Common Stock is at any time not listed on a
United States national securities exchange or reported by the Nasdaq National
Market System or Small Cap Market System; or
(g) any representation or warranty made in writing by or on
behalf of the Company, any Additional Subsidiary Guarantor or by any officer of
Probex, the Company or any Additional Subsidiary Guarantor in this Agreement or
in any writing furnished in connection with the transactions contemplated hereby
proves to have been false or incorrect in any material respect on the date as of
which made; or
(h) (i) the Company or any Additional Subsidiary Guarantor is
in default (as principal or as guarantor or other surety) in the payment of any
principal of or premium or make-whole amount or interest on any Debt that is
outstanding in an aggregate principal amount exceeding $250,000 beyond any
period of grace provided with respect thereto, or (ii) the Company or any
Additional Subsidiary Guarantor is in default in the performance of or
compliance with any term of any evidence of any Debt in an aggregate outstanding
principal amount exceeding $250,000 or of any mortgage, indenture or other
agreement relating thereto or any other condition exists, and as a consequence
of such default or condition such Debt has become, or has been declared (or one
or more Persons are entitled to declare such Debt to be), due and payable before
its stated maturity or before its regularly scheduled dates of payment, or (iii)
as a consequence of the occurrence or continuation of any event or condition
(other than the passage of time or the right of the holder of Debt to convert
such Debt into equity interests), (x) the Company or any Additional Subsidiary
Guarantor has become obligated to purchase or repay Debt before its regular
maturity or before its regularly scheduled dates of payment in an aggregate
outstanding principal amount exceeding $250,000 or (y) one or more Persons have
the right to require the Company or any Additional Subsidiary Guarantor so to
purchase or repay such Debt; or
(i) Probex, the Company or any Subsidiary (i) is generally not
paying, or admits in writing its inability to pay, its debts as they become due,
(ii) files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v)
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is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action
for the purpose of any of the foregoing; or
(j) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by Probex, the Company
or any of its Subsidiaries, a custodian, receiver, trustee or other officer with
similar powers with respect to any of them or with respect to any substantial
part of any of their property, or constituting an order for relief or approving
a petition for relief or reorganization or any other petition in bankruptcy or
for liquidation or to take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or liquidation of the
Company or any of its Subsidiaries, or any such petition shall be filed against
the Company or any of its Subsidiaries and such petition shall not be dismissed
within 60 days; or
(k) Probex receives a "going concern" opinion from its
auditors; or
(l) a final judgment or judgments for the payment of money
aggregating in excess of $50,000 is or are outstanding against one or more of
the Company and its Subsidiaries and which judgments are not, within 30 days
after entry thereof, bonded, discharged or stayed pending appeal, or are not
discharged within 30 days after the expiration of such stay; or
(m) (i) default shall occur in the observance or performance
of any covenant or agreement contained in the Guaranty Agreement which is not
remedied within 30 days after the occurrence thereof, (ii) the Guaranty
Agreement shall cease to be in full force and effect for any reason whatsoever,
including, without limitation, a determination by any governmental body or court
that such agreement is invalid, void or unenforceable or (iii) Probex, the
Company or an Additional Subsidiary Guarantor, as the case may be, shall contest
or deny in writing the validity or enforceability of any of its obligations
under the Guaranty Agreement; or
(n) (i) any Security Document shall for any reason (other than
pursuant to the terms thereof) cease to create a valid security interest in the
Collateral purported to be covered thereby or such security interest shall for
any reason cease to be a perfected security interest (having the priority
provided for therein) subject only to Liens permitted pursuant to Section 9.3,
or (ii) any material provision of any Security Document shall for any reason
cease to be valid and binding on or enforceable against Probex, the Company or
any Subsidiary party thereto or Probex, the Company or any Subsidiary shall so
state in writing or bring an action to limit its obligations or liabilities
thereunder; or
(o) (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the code for any plan year or part thereof or a waiver of
such standards or extension of any amortization period is sought or granted
under Section 412 of the Code, (ii) a notice of intent to terminate any Plan
shall have been or is reasonably expected to be filed with the PBGC or the PBGC
shall have instituted proceedings under ERISA Section 4042 to terminate or
appoint a trustee to administer any Plan or the PBGC shall have notified the
Company or any ERISA Affiliate that a Plan may become a subject of any
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such proceedings, (iii) the aggregate "amount of unfunded benefit liabilities"
(within the meaning of Section 4001(a)(18) of ERISA) under all Plans, determined
in accordance with Title IV of ERISA, shall exceed $50,000, (iv) the Company or
any ERISA Affiliate shall have incurred or is reasonably expected to incur any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefits plans, (v) the Company or
any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the Company
or any Subsidiary establishes or amends any employee welfare benefit plan that
provides post-employment welfare benefits in a manner that would increase the
liability of the Company or any Subsidiary thereunder; and any such event or
events described in clauses (i) through (iv) above, either individually or
together with any other such event or events, could reasonably be expected to
have a Material Adverse Effect.
As used in Section 10(o), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
11. REMEDIES ON DEFAULT, ETC.
11.1. Acceleration; Conversion.
(a) If an Event of Default described in paragraph (i) and (j)
of Section 10 has occurred, all the Notes then outstanding shall automatically
become immediately due and payable.
(b) If any Event of Default described in paragraph (a) or (b)
of Section 10 has occurred and is continuing, any Holder or Holders of Notes at
the time outstanding affected by such Event of Default may at any time, at its
or their option, by notice or notices to the Company, declare all the Notes held
by it or them to be immediately due and payable.
(c) If any Event of Default described in paragraph (e), (f),
or (k) of Section 10 has occurred and is continuing: during the first thirty
days after such an Event of Default, the Holders and the Company shall attempt
to reach agreement on a plan of action for Probex and the Company. During that
period, the Required Holders shall have the right, but not the obligation, to
appoint the Holder Representative to represent the Holders in trying to reach
such an agreement. If an agreement is not reached during that thirty day period,
then during the ten day period thereafter, the Required Holders shall have the
right, but not the obligation, to vote to cause all of the then outstanding
Notes to become immediately due and payable.
(d) If any other Event of Default has occurred and is
continuing, the Required Holders may at any time at their option, by notice or
notices to the Company, declare all the Notes then outstanding to be immediately
due and payable.
Upon any Notes becoming due and payable under this Section 11.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus all accrued and unpaid
interest thereon shall all be
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immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for).
11.2. Other Remedies. If any Default or Event of Default has occurred
and is continuing, and irrespective of whether any Notes have become or have
been declared immediately due and payable under Section 11.1, the Holder of any
Note at the time outstanding may proceed to protect and enforce the rights of
such Holder by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in any
Note, or for an injunction against a violation of any of the terms hereof or
thereof, or in aid of the exercise of any power granted hereby or thereby or by
law or otherwise.
11.3. Rescission. At any time after any Notes have been declared due
and payable pursuant to clause (b) or (c) of Section 11.1, the Required Holders
by written notice to the Company, may rescind and annul any such declaration and
its consequences if (a) the Company has paid all overdue interest on the Notes,
all principal of the Notes that are due and payable and are unpaid other than by
reason of such declaration, and all interest on such overdue principal, and (to
the extent permitted by applicable law) any overdue interest in respect of the
Notes, at the Default Rate, (b) all Events of Default and Defaults, other than
non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 16, and (c)
no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes. No rescission and annulment under this Section
11.3 will extend to or affect any subsequent Event of Default or Default or
impair any right consequent thereon.
(a) No Waivers or Election of Remedies, Expenses, etc. No
course of dealing and no delay on the part of any Holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such Holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any Holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under Section 14, the Company
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such Holder incurred in any
enforcement or collection under this Section 11.4, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
12. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
12.1. Registration of Notes. The Company shall keep at its principal
executive office a register for the registration and registration of transfers
of Notes. The name and address of each Holder and the name and address of each
transferee of one or more Notes shall be registered in such register. Prior to
due presentment for registration of transfer, the Person in whose name any Note
shall be registered shall be deemed and treated as the
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owner and Holder thereof for all purposes hereof, and the Company shall not be
affected by any notice or knowledge to the contrary. The Company shall give to
any Holder promptly upon request therefore, a complete and correct copy of the
names and addresses of all registered Holders.
12.2. Transfer and Exchange of Notes. Upon surrender of any Note at the
principal executive office of the Company for registration of transfer or
exchange (and in the case of a surrender for registration of transfer, duly
endorsed or accompanied by a written instrument of transfer duly executed by the
registered Holder or his attorney duly authorized in writing, accompanied by the
address for notices of each transferee of such Note or part thereof and upon
delivery by the Holder of an opinion of counsel satisfactory to the Company
confirming an exemption from registration under the Securities Act and any
available state securities law; provided that if the beneficial ownership of the
Note remains the same no such opinion of counsel shall be required), the Company
shall execute and deliver, at the Company's expense (except as provided below),
one or more new Notes (as requested by the Holder thereof) in such series in
exchange therefore, in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Note. Each such new Note shall be payable to
such Person as such Holder may request and shall be substantially in the form of
Exhibit 1. Each such new Note shall be dated and bear interest from the date to
which interest shall have been paid on the surrendered Note or dated the date of
the surrendered Note if no interest shall have been paid thereon. The Company
may require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes.
12.3. Replacement of Notes. Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be notice from the
Holder of such ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, receipt of an
unsecured indemnity reasonably satisfactory to it, or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note of such series, dated and bearing interest from the date to which interest
shall have been paid on such lost, stolen, destroyed or mutilated Note or dated
the date of such lost, stolen, destroyed or mutilated Note if no interest shall
have been paid thereon.
13. PAYMENT OF NOTES.
13.1. Place of Payment. Subject to Section 13.2, payments of principal
and interest becoming due and payable on the Notes shall be made in Dallas,
Texas. The Company may at any time, by notice to each Holder, change the place
of payment of the Notes so long as such place of payment shall be either the
principal office of the Company in such jurisdiction or the principal office of
a bank or trust company in such jurisdiction.
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13.2. Home Office Payment. So long as any Purchaser or its nominee
shall be a Holder, and notwithstanding anything contained in Section 13.1 or in
such Note to the contrary, the Company will pay all sums becoming due on such
Note for principal and interest by the method and at the address specified for
such purpose below such Purchaser's name in Schedule A, or by such other method
or at such other address as such Purchaser or nominee shall have from time to
time specified to the Company in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation thereon,
except that upon written request of the Company made concurrently with or
reasonably promptly after payment or prepayment in full of any Note, such
Purchaser or nominee shall surrender such Note for cancellation, reasonably
promptly after any such request, to the Company at its principal executive
office or at the place of payment most recently designated by the Company
pursuant to Section 13.1. Prior to any sale or other disposition of any Note,
any Purchaser or its nominee will, at its election, either endorse thereon the
amount of principal paid thereon and the last date to which interest has been
paid thereon or surrender such Note to the Company in exchange for a new Note or
Notes pursuant to Section 12.2.
14. EXPENSES, ETC.
14.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Company will pay all costs and expenses
(including reasonable attorneys' fees of a special counsel and, if reasonably
required, local or other counsel, provided that any such expenses incurred in
excess of $50,000 on or before the Closing shall be borne by the Purchasers)
incurred by each Purchaser or Holder in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of this
Agreement or the Notes (whether or not such amendment, waiver or consent becomes
effective), including, without limitation: (a) the costs and expenses incurred
in enforcing or defending (or determining whether or how to enforce or defend)
any rights under this Agreement or the Notes or in responding to any subpoena or
other legal process or informal investigative demand issued in connection with
this Agreement or the Notes, or by reason of being a Holder, and (b) the costs
and expenses, including financial advisors' fees, incurred in connection with
the insolvency or bankruptcy of the Company or any Subsidiary in connection with
any work-out or restructuring of the transactions contemplated hereby and by the
Notes. The Company will pay, and will save each Purchaser or other Holder
harmless from, all claims in respect of any fees, costs or expenses if any, of
brokers and finders (other than those retained by such Purchaser or other
Holder).
14.2. Survival. The obligations of the Company under this Section 14
will survive the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement or the Notes, and the termination of
this Agreement.
15. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by any Purchaser
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of any Note or portion thereof or interest therein and the payment of any Note,
and may be relied upon by any subsequent Holder, regardless of any investigation
made at any time by or on behalf of any Purchaser or any other Holder. All
statements contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant to this Agreement shall be deemed representations
and warranties of the Company under this Agreement. Subject to the preceding
sentence, this Agreement and the Notes embody the entire agreement and
understanding between the Purchasers, Probex and the Company and supersede all
prior agreements and understandings relating to the subject matter hereof.
16. AMENDMENT AND WAIVER.
16.1. Requirements. This Agreement and the Notes may be amended, and
the observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written consent of the
Company and the Required Holders, and the Notes may be amended and the
observance of any term of the Notes may be waived (either retroactively or
prospectively), with and only with the written consent of the Company and the
Required Holders, except that (a) no amendment or waiver of any of the
provisions of Section 1, 2, 3, 4, 6 or 20 hereof, or any defined term (as it is
used therein), will be effective as to each Purchaser unless consented to by
each Purchaser in writing, and (b) no such amendment or waiver may, without the
written consent of the Holder of each Note at the time outstanding affected
thereby, (i) subject to the provisions of Section 11 relating to acceleration or
rescission, change the amount or time of any prepayment or payment of principal
of, or reduce the rate or change the time of payment or method of computation of
interest on, the Notes, (ii) change the percentage of the principal amount of
the Notes, the Holders of which are required to consent to any such amendment or
waiver or (iii) amend any of Sections 10, 11, 16 or 19.
16.2. Solicitation of Holders of Notes.
(a) Solicitation -- the Company will provide each Holder of
the Notes (irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such Holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 16 to each Holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite Holders of Notes.
(b) Payment -- the Company will not directly or indirectly pay
or cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any Holder of
Notes as consideration for or as an inducement to the entering into by any
Holder of Notes of any waiver or amendment of any of the terms and provisions
hereof or of the Notes unless such remuneration is concurrently paid, or
security is concurrently granted, on the same terms,
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ratably to each Holder of Notes then outstanding whether or not such Holder
consented to such waiver or amendment.
16.3. Binding Effect, etc. Any amendment or waiver consented to as
provided in this Section 16 applies equally to all Holders of Notes and is
binding upon them and upon each future Holder of Notes and upon the Company
without regard to whether such Note has been marked to indicate such amendment
or waiver. No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the Company
and any Holder nor any delay in exercising any rights hereunder or under any
Note shall operate as a waiver of any rights of any Holder. As used herein, the
term "this Agreement" and references thereto shall mean this Agreement as it may
from time to time be amended or supplemented.
16.4. Notes Held by Company, etc. Solely for the purpose of determining
whether the Holders of the requisite percentage of the aggregate principal
amount of Notes then outstanding approved or consented to any amendment, waiver
or consent to be given under this Agreement or the Notes, or have directed the
taking of any action provided herein or in the Notes to be taken upon the
direction of the Holders of a specified percentage of the aggregate principal
amount of Notes then outstanding, Notes directly or indirectly owned by the
Company or any of its Affiliates shall be deemed not to be outstanding.
17. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to a Purchaser or its nominee, to such Purchaser or its
nominee at the address specified for such communications in Schedule A,
or at such other address as such Purchaser or its nominee shall have
specified to the Company in writing,
(ii) if to any other Holder, to such Holder at such address as
such other Holder shall have specified to the Company in writing, or
(iii) if to the Company, to the Company at its address set
forth at the beginning hereof to the attention of Xxxxx Xxxx, or at
such other address as the Company shall have specified to the Holder of
each Note in writing.
(iv) If to Probex, to Probex at 00000 Xxxx Xxxx, Xxxxx 0000,
Xxxxxx, Xxxxx 00000 to the attention of Xxxxx Xxxx, or at such other
address as Probex shall have specified to the Holder of each Note in
writing.
Notices under this Section 17 will be deemed given only when actually received.
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18. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by each Holder at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to any Holder, may be reproduced by such
Holder by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and such Holder may destroy any original
document so reproduced. The Company agrees and stipulates that, to the extent
permitted by applicable law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by such Holder in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Section 18 shall not prohibit the
Company or any Holder from contesting any such reproduction to the same extent
that it could contest the original, or from introducing evidence to demonstrate
the inaccuracy of any such reproduction.
19. SUBSTITUTION OF PURCHASER.
Each Purchaser shall have the right to substitute any one of its
Affiliates as the purchaser of the Notes that such Purchaser has agreed to
purchase hereunder, by written notice to the Company, which notice shall be
signed by both such Purchaser and such Affiliate, shall contain such Affiliate's
agreement to be bound by this Agreement and shall contain a confirmation by such
Affiliate of the accuracy with respect to it of the representations set forth in
Section 6. Upon receipt of such notice, wherever the word "Purchaser" is used in
this Agreement (other than in this Section 19), such word shall be deemed to
refer to such Affiliate in lieu of the previous Purchaser. In the event that
such Affiliate is so substituted as a purchaser hereunder and such Affiliate
thereafter transfers to any Purchaser all of the Notes then held by such
Affiliate, upon receipt by the Company of notice of such transfer, wherever the
word "Purchaser" is used in this Agreement (other than in this Section 19), such
word shall no longer be deemed to refer to such Affiliate, but shall refer to
the Purchaser, and the Purchaser shall have all the rights of an original Holder
under this Agreement.
20. REGISTRATION RIGHTS
20.1. Filing and Effectiveness of Registration Statement. Probex shall
prepare and file with the SEC as soon as practicable after the Closing of this
Agreement, a Registration Statement relating to the offer and sale of the
Registrable Securities and shall use all commercially reasonable efforts to
cause the SEC to declare such Registration Statement effective under the
Securities Act as promptly as practicable but not later than 120 days after the
Closing. Probex shall notify the Holder by written notice that such Registration
Statement has been declared effective by the SEC within three (3) business days
of such declaration by the SEC.
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20.2. Obligations Of Probex. In connection with the registration of the
Registrable Securities, Probex shall use all commercially reasonably efforts to:
(a) Promptly (i) prepare and file with the Commission such
amendments (including post-effective amendments) to the Registration Statement
and supplements to the Prospectus as may be necessary to keep the Registration
Statement continuously effective and in compliance with the provisions of the
Securities Act applicable thereto so as to permit the Prospectus forming part
thereof to be current and useable by Holder for resales of the Registrable
Securities for a period of two years from the date on which the Registration
Statement is first declared effective by the Commission or such shorter period
that will terminate when all the Registrable Securities covered by the
Registration Statement have been sold pursuant thereto in accordance with the
plan of distribution provided in the Prospectus, transferred pursuant to Rule
144 under the Securities Act or otherwise transferred in a manner that results
in the delivery of new securities not subject to transfer restrictions under the
Securities Act (the "Registration Period") and (ii) take all lawful action such
that each of (A) the Registration Statement and any amendment thereto does not,
when it becomes effective, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, not misleading and (B) the Prospectus forming part of
the Registration Statement, and any amendment or supplement thereto, does not at
any time during the Registration Period include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(b) During the Registration Period, comply with the provisions
of the Securities Act with respect to the Registrable Securities of Probex
covered by the Registration Statement until such time as all of such Registrable
Securities have been disposed of in accordance with the intended methods of
disposition by the Holder as set forth in the Prospectus forming part of the
Registration Statement;
(c) (i) Prior to the filing with the SEC of any Registration
Statement (including any amendments thereto) and the distribution or delivery of
any Prospectus (including any supplements thereto), provide draft copies thereof
(including a copy of the accountant's consent letter to be included in the
filing) to Stonegate Securities, Inc. ("Stonegate") and reflect in such
documents all such comments as Stonegate reasonably may propose; and (ii)
furnish to Stonegate for delivery to each Holder whose Registrable Securities
are included in the Registration Statement, (A) promptly after the same is
prepared and publicly distributed, filed with the Commission, or received by
Probex, one copy of the Registration Statement, each Prospectus, and each
amendment or supplement thereto, and (B) such number of copies of the Prospectus
and all amendments and supplements thereto and such other documents, as such
Holder may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Holder;
(d) (i) Register or qualify the Registrable Securities covered
by the Registration Statement under such securities or "blue sky" laws of all
jurisdictions requiring blue sky registration or qualification, (ii) prepare and
file in such jurisdictions
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such amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof at all times during the Registration Period, (iii) take
all such other lawful actions as may be necessary to maintain such registrations
and qualifications in effect at all times during the Registration Period, and
(iv) take all such other lawful actions reasonably necessary or advisable to
qualify the Registrable Securities for sale in such jurisdictions; provided,
however, that Probex shall not be required in connection therewith or as a
condition thereto to (A) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 20.2(d), (B)
subject itself to general taxation in any such jurisdiction or (C) file a
general consent to service of process in any such jurisdiction;
(e) As promptly as practicable after becoming aware of such
event, notify each Holder in writing of the occurrence of any event, as a result
of which the Prospectus included in the Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and promptly prepare an amendment to the Registration Statement and
supplement to the Prospectus to correct such untrue statement or omission, and
deliver a number of copies of such supplement and amendment to each Holder as
such Holder may reasonably request provided, however, that any such delay in the
Holders' ability to sell under an effective Prospectus caused by this subsection
(e) or subsection (f) below shall be limited during any consecutive 365 day
period to two (2) thirty-day periods which thirty-day periods cannot be
consecutive;
(f) As promptly as practicable after becoming aware of such
event, notify each Holder in writing who holds Registrable Securities being sold
(or, in the event of an underwritten offering, the managing underwriters) of the
issuance by the SEC of any stop order or other suspension of the effectiveness
of the Registration Statement at the earliest possible time and take all lawful
action to effect the withdrawal, recession or removal of such stop order or
other suspension provided, however, that any such delay in the Holders' ability
to sell under an effective Prospectus caused by this subsection (f) or
subsection (e) above shall be limited during any consecutive 365 day period to
two (2) thirty-day periods which thirty-day periods cannot be consecutive;
(g) Cause all the Registrable Securities covered by the
Registration Statement to be listed on the principal national securities
exchange, or included in an inter-dealer quotation system of a registered
national securities association, on or in which securities of the same class or
series issued by Probex are then listed or included;
(h) Maintain a transfer agent and registrar, which may be a
single entity, for the Registrable Securities not later than the effective date
of the Registration Statement;
(i) Cooperate with the Holder who hold Registrable Securities
being offered to facilitate the timely preparation and delivery of certificates
for the Registrable Securities to be offered pursuant to the registration
statement and enable such certificates
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for the Registrable Securities to be in such denominations or amounts, as the
case may be, as the Holder reasonably may request and registered in such names
as the Holder may request; and, within three business days after a registration
statement which includes Registrable Securities is declared effective by the
Commission, deliver and cause legal counsel selected by Probex to deliver to the
transfer agent for the Registrable Securities (with copies to the Holder whose
Registrable Securities are included in such registration statement) an
appropriate instruction and, to the extent necessary, an opinion of such
counsel;
(j) Take all such other lawful actions reasonably necessary to
expedite and facilitate the disposition by the Holder of their Registrable
Securities in accordance with the intended methods therefore provided in the
Prospectus which are customary under the circumstances;
(k) Make generally available to its security holders as soon
as practicable, but in any event not later than three (3) months after (i) the
effective date (as defined in Rule 158(c) under the Securities Act) of the
Registration Statement, and (ii) the effective date of each post-effective
amendment to the Registration Statement, as the case may be, an earnings
statement of Probex and its subsidiaries complying with Section 11(a) of the
Securities Act and the rules and regulations of the SEC thereunder (including,
at the option of Probex, Rule 158);
20.3. Obligations Of The Holder. In connection with the registration of
the Registrable Securities, the Holder shall have the following obligations:
(a) It shall be a condition precedent to the obligations of
Probex to complete the registration pursuant to this Section 20 with respect to
the Registrable Securities of a particular Holder that such Holder shall furnish
to Probex such information regarding itself, the Registrable Securities held by
it and the intended method of disposition of the Registrable Securities held by
it as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such
registration as Probex may reasonably request. As least ten business days prior
to the first anticipated filing date of the Registration Statement, Probex shall
notify each Holder and its counsel, whether in-house or otherwise of the
information Probex requires from each such Holder (the "Requested Information")
if such Holder elects to have any of its Registrable Securities included in the
Registration Statement. If at least four business days prior to the anticipated
filing date Probex has not received the Requested Information from an Holder (a
"Non-Responsive Holder") or its counsel, then Probex shall send such
Non-Responsive Holder and its counsel a reminder of such information request. If
at least two business days prior to the anticipated filing date Probex still has
not received the Requested Information from such Non-Responsive Holder or its
counsel, then Probex may file the Registration Statement without including
Registrable Securities of such Non-Responsive Holder and have no further
registration obligations to the Non-Responsive Holder;
(b) Each Holder by its acceptance of the Registrable
Securities agrees to cooperate with Probex in connection with the preparation
and filing of the Registration
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Statement hereunder, unless such Holder has notified Probex in writing of its
election to exclude all of its Registrable Securities from the Registration
Statement; Probex shall, on its part, ensure that Item 507 of Regulation S-K of
the Securities Act (regarding information on the selling security holders) be
complied with in connection with its preparation and filing of the Registration
Statement hereunder;
(c) As promptly as practicable after becoming aware of such
event, notify Probex of the occurrence of any event, as a result of which the
Prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; and
(d) Each Holder agrees that, upon receipt of any written
notice from Probex of the occurrence of any event of the kind described in
Section 20.2(e) or 20.2(f), it shall immediately discontinue its disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 20.2(e) and, if so
directed by Probex, such Holder shall deliver to Probex (at the expense of
Probex) or destroy (and deliver to Probex a certificate of destruction) all
copies in such Holder's possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice.
20.4. Expenses Of Registration. All expenses, other than underwriting
discounts and commissions, incurred in connection with registrations, filings or
qualifications pursuant to Section 20.2, but including, without limitation, all
registration, listing, and qualifications fees, printing and engraving fees,
accounting fees, and the fees and disbursements of counsel for Probex, and the
reasonable fees, not to exceed $5,000.00, of one firm of counsel to the Holders
of a majority in interest of the Registrable Securities shall be borne by
Probex.
20.5. Indemnification And Contribution.
(a) Probex shall indemnify and hold harmless each Holder and
each underwriter, if any, which facilitates the disposition of Registrable
Securities, and each of their respective officers and directors and each person
who controls such Holder or underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (each such person being
sometimes hereinafter referred to as an "Indemnified Person") from and against
any losses, claims, damages or liabilities, joint or several, to which such
Indemnified Person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or an
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, not misleading, or
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Prospectus or an omission or alleged
omission to state therein a material fact required to be stated therein
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or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and Probex hereby agrees to
reimburse such Indemnified Person for all reasonable legal and other expenses
incurred by them in connection with investigating or defending any such action
or claim as and when such expenses are incurred; provided, however, that Probex
shall not be liable to any such Indemnified Person in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon (i) an untrue statement or alleged untrue statement made in, or an omission
or alleged omission from, such Registration Statement or Prospectus in reliance
upon and in conformity with written information furnished to Probex by such
Indemnified Person expressly for use therein or (ii) in the case of the
occurrence of an event of the type specified in Section 22.2(e), the use by the
Indemnified Person of an outdated or defective Prospectus after Probex has
provided to such Indemnified Person written notice that such Prospectus is
outdated or defective.
(b) Indemnification by the Holder and Underwriters. Each
Holder agrees, as a consequence of the inclusion of any of its Registrable
Securities in a Registration Statement, and each underwriter, if any, which
facilitates the disposition of Registrable Securities shall agree, as a
consequence of facilitating such disposition of Registrable Securities,
severally and not jointly, to (i) indemnify and hold harmless Probex, its
directors (including any person who, with his or her consent, is named in the
Registration Statement as a director nominee of Probex), its officers and each
person, if any, who controls Probex within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act, against any losses,
claims, damages or liabilities to which Probex or such other persons may become
subject, under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in such Registration Statement or Prospectus or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein (in
light of the circumstances under which they were made, in the case of the
Prospectus), not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to Probex by such holder or underwriter expressly for use therein;
provided, however, that no Holder or underwriter shall be liable under this
Section 20.5(b) for any amount in excess of the gross proceeds paid to such
Holder or underwriter in respect of shares sold by it, and (ii) reimburse Probex
for any legal or other expenses incurred by Probex in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Notice of Claims, etc. Promptly after receipt by a party
seeking indemnification pursuant to this Section 20.5 (an "Indemnified Party")
of written notice of any investigation, claim, proceeding or other action in
respect of which indemnification is being sought (each, a "Claim"), the
Indemnified Party promptly shall notify the party against whom indemnification
pursuant to this Section 20.5 is being sought (the "Indemnifying Party") of the
commencement thereof; but the omission to so notify the Indemnifying Party shall
not relieve it from any liability that it otherwise may have to the Indemnified
Party, except to the extent that the Indemnifying Party is
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materially prejudiced and forfeits substantive rights and defenses by reason of
such failure. In connection with any Claim as to which both the Indemnifying
Party and the Indemnified Party are parties, the Indemnifying Party shall be
entitled to assume the defense thereof. Notwithstanding the assumption of the
defense of any Claim by the Indemnifying Party, the Indemnified Party shall have
the right to employ separate legal counsel and to participate in the defense of
such Claim, and the Indemnifying Party shall bear the reasonable fees,
out-of-pocket costs and expenses of such separate legal counsel to the
Indemnified Party if (and only if): (x) the Indemnifying Party shall have agreed
to pay such fees, costs and expenses, (y) the Indemnified Party and the
Indemnifying Party shall reasonably have concluded that representation of the
Indemnified Party by the Indemnifying Party by the same legal counsel would not
be appropriate due to actual or, as reasonably determined by legal counsel to
the Indemnified Party, potentially differing interests between such parties in
the conduct of the defense of such Claim, or if there may be legal defenses
available to the Indemnified Party that are in addition to or disparate from
those available to the Indemnifying Party, or (z) the Indemnifying Party shall
have failed to employ legal counsel reasonably satisfactory to the Indemnified
Party within a reasonable period of time after notice of the commencement of
such Claim. If the Indemnified Party employs separate legal counsel in
circumstances other than as described in clauses (x), (y) or (z) above, the
fees, costs and expenses of such legal counsel shall be borne exclusively by the
Indemnified Party. Except as provided above, the Indemnifying Party shall not,
in connection with any Claim in the same jurisdiction, be liable for the fees
and expenses of more than one firm of counsel for the Indemnified Party
(together with appropriate local counsel). The Indemnified Party shall not,
without the prior written consent of the Indemnifying Party (which consent shall
not unreasonably be withheld), settle or compromise any Claim or consent to the
entry of any judgment that does not include an unconditional release of the
Indemnifying Party from all liabilities with respect to such Claim or judgment.
(d) Contribution. If the indemnification provided for in this
Section 20.5 is unavailable to or insufficient to hold harmless an Indemnified
Person under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to therein, then
each Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and the Indemnified Party in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such Indemnifying Party or by such Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 20.5(d) were determined
by pro rata allocation (even if the Holder or any underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in this Section
20.5(d). The
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amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such Indemnified Party in connection with investigating or defending
any such action or claim. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Holder and any underwriters in this
Section 20.5(d) to contribute shall be several in proportion to the percentage
of Registrable Securities registered or underwritten, as the case may be, by
them and not joint.
(e) Notwithstanding any other provision of this Section 20.5,
in no event shall any (i) Holder be required to undertake liability to any
person under this Section 20.5 for any amounts in excess of the dollar amount of
the gross proceeds to be received by such Holder from the sale of such Holder's
Registrable Securities pursuant to any Registration Statement under which such
Registrable Securities are to be registered under the Securities Act.
(f) The obligations of Probex under this Section 20.5 shall be
in addition to any liability which Probex may otherwise have to any Indemnified
Person and the obligations of any Indemnified Person under this Section 20.5
shall be in addition to any liability which such Indemnified Person may
otherwise have to Probex. The remedies provided in this Section 20.5 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to an Indemnified Party at law or in equity.
20.6. Rule 144. With a view to making available to the Holders the
benefits of Rule 144 under the Securities Act or any other similar rule or
regulation of the SEC that may at any time permit the Holders to sell securities
of Probex to the public without registration ("Rule 144"), Probex agrees to:
(a) comply with the provisions of paragraph (c) (1) of Rule
144; and
(b) file with the SEC in a timely manner all reports and other
documents required to be filed by Probex pursuant to Section 13 or 15(d) under
the Exchange Act; and, if at any time it is not required to file such reports
but in the past had been required to or did file such reports, it will, upon the
request of any Holder, make available other information as required by, and so
long as necessary to permit sales of, its Registrable Securities pursuant to
Rule 144.
21. HOLDER REPRESENTATIVE.
21.1. Election of Holder Representative. At any time, the Holder or
Holders owning at least 50% of the Notes may by written notice to the other
Holders elect a representative of the Holders with respect to certain matters
set forth in this agreement (the "Holder Representative"). Additionally, the
Holder Representative may resign at any time as the Holder Representative by
giving the Holders written notice of the resignation.
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22. MISCELLANEOUS.
22.1. Successors and Assigns. All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent Holder) whether so expressed or not.
22.2. Payments Due on Non-Business Days. Anything in this Agreement or
the Notes to the contrary notwithstanding, any payment of principal of or
interest on any Note that is due on a date other than a Business Day shall be
made on the next succeeding Business Day without including the additional days
elapsed in the computation of the interest payable on such next succeeding
Business Day.
22.3. Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
22.4. Construction. Each covenant contained herein shall be construed
(absent express provision to the contrary) as being independent of each other
covenant contained herein, so that compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse compliance with
any other covenant. Where any provision herein refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such
Person.
22.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the parties
hereto.
22.6. Governing Law; Jurisdiction and Service of Process. This
Agreement shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the law of the State of Texas, excluding
choice-of-law principles of the law of such State that would require the
application of the laws of a jurisdiction other than such State. The Company
hereby irrevocably and unconditionally agree that any suit, action or proceeding
with respect to this Agreement, or any proceeding to execute or otherwise
enforce any judgment in respect of any breach thereof, brought by any registered
Holder of a Note against the Company or any of its property, may be brought by
such Holder of a Note in the United States District Court for the Northern
District of Texas or any Texas State Court sitting in the County of Dallas as
such Holder of a Note may in its sole discretion elect, and by the execution and
delivery of this Agreement, the Company irrevocably submits to the jurisdiction
of each such court; and agrees that process served either personally or by
registered mail shall constitute, to the extent permitted by law, adequate
service of process in any such suit. In addition, the Company
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hereby irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of venue in any suit, action or
proceeding arising out of or relating to this Agreement or any Note, brought in
the said courts, and hereby irrevocably waives any claim that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum. Nothing herein shall in any way be deemed to limit the
ability of any registered Holder of a Note to serve any such writs, process or
summonses, in any manner permitted by applicable law or to obtain jurisdiction
over the Company in such other jurisdiction, and in such manner, as may be
permitted by applicable law. Notwithstanding anything to the contrary in this
Section, the rights, duties, immunities, indemnities and standard of care of
Wilmington Trust Company shall be governed by and construed in accordance with
the laws of the State of Delaware.
22.7. Agent for Service of Process. WITHOUT LIMITING THE FOREGOING,
EACH OF PROBEX AND THE COMPANY HEREBY APPOINTS, IN THE CASE OF ANY SUCH ACTION
OR PROCEEDING BROUGHT IN THE COURTS OF OR IN THE STATE OF TEXAS, CSC SERVICE
COMPANY TO RECEIVE, FOR IT AND ON ITS BEHALF, SERVICE OF PROCESS IN THE STATE OF
TEXAS WITH RESPECT THERETO, PROVIDED PROBEX AND THE COMPANY MAY, AND IN THE
EVENT THAT CSC SERVICE COMPANY IS AT ANY TIME NO LONGER DOMICILED IN THE STATE
OF TEXAS, THE COMPANY SHALL, APPOINT CT CORPORATION OR ANY OTHER PERSON,
REASONABLY ACCEPTABLE TO THE REQUIRED HOLDERS, WITH OFFICES IN THE STATE OF
TEXAS TO REPLACE SUCH AGENT FOR SERVICE OF PROCESS UPON DELIVERY TO THE HOLDERS
OF A REASONABLY ACCEPTABLE AGREEMENT OF SUCH NEW AGENT AGREEING SO TO ACT. IF
SERVICE OF PROCESS IS MADE BY ANY HOLDER OF A NOTE UPON SUCH APPOINTEE, A COPY
THEREOF SHALL ALSO BE PROVIDED TO THE COMPANY, BY REGISTERED OR CERTIFIED MAIL,
OR BY INTERNATIONALLY-RECOGNIZED EXPEDITED DELIVERY SERVICE; PROVIDED THAT THE
FAILURE OF SUCH HOLDER TO PROVIDE SUCH COPY TO THE COMPANY SHALL NOT IMPAIR OR
AFFECT IN ANY WAY THE VALIDITY OF SUCH SERVICE OF PROCESS OR ANY JUDGMENT
RENDERED IN ANY SUCH SUIT, ACTION, OR PROCEEDING. NOTHING HEREIN SHALL IN ANY
WAY BE DEEMED TO LIMIT THE ABILITY OF ANY HOLDER OF A NOTE TO SERVE ANY SUCH
WRITS, PROCESS OR SUMMONSES IN ANY MANNER PERMITTED BY APPLICABLE LAW, OR TO
OBTAIN JURISDICTION OVER THE COMPANY, IN SUCH OTHER JURISDICTION, AND IN SUCH
MANNER, AS MAY BE PERMITTED BY APPLICABLE LAW.
22.8. Waiver of Jury Trial. THE COMPANY, PROBEX AND THE HOLDERS OF THE
NOTES AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE NOTES OR ANY
OTHER SENIOR NOTE AGREEMENT DOCUMENT OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY. THE
SCOPE OF THIS WAIVER IS
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INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT AND THAT RELATE TO THE SUBJECT MATTER OF SUCH TRANSACTIONS, INCLUDING
WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. THE HOLDERS OF THE NOTES, PROBEX AND THE
COMPANY EACH ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO
THIS BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN
ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER
IN THEIR RELATED FUTURE DEALINGS. THE HOLDERS OF THE NOTES, PROBEX AND THE
COMPANY FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH
ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
--------------------------------------------------------------------------------
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If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
PROBEX FLUIDS RECOVERY, INC.
By: /s/ XXXXX X. XXXX
----------------------------
Its: Vice President
---------------------------
PROBEX CORP.
By: /s/ XXXXX X. XXXX
----------------------------
Its: Senior Vice President
and Chief Financial Officer
---------------------------
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The foregoing is hereby agreed to as of the date hereof:
THE NOTEHOLDERS:
[Signatures of Noteholders Intentionally Omitted]
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COLLATERAL AGENT:
WILMINGTON TRUST COMPANY
By: /s/ XXXXXX X. XXXX
-----------------------------------------------
Name: Xxxxxx X. Xxxx
Title: Senior Financial Services Officer
Address: Wilmington Trust Company
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust Administration - Probex
54
EXHIBIT A
INFORMATION RELATING TO PURCHASERS
Principal Amount
Name and Address of Purchaser of Notes to be Purchased
------------------------------- --------------------------
$
Payments
All payments on or in respect of the Notes to be by bank wire transfer
of Federal or other immediately available funds at the opening of business on
the due date thereof (identifying each payment as "Probex Fluids Recovery, Inc.
7% Senior Secured Convertible Notes, Due November __, 2004, principal, premium
or interest") to:
ABA No.
Account of:
Account Number:
On order of:
Contemporaneous with the above wire transfer, advice setting forth:
(1) the full name, interest rate and maturity date of the
Notes or other obligations;
(2) allocation of payment between principal and interest and
any special payment; and
(3) name and address of Bank or Trustee from which wire
transfer was sent, shall be delivered or faxed AND mailed to:
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
All securities are to be sent for receipt the day after the closing to the
attention of _______, at the address first listed above.
NOTICES
All notices with respect to prepayments, both scheduled and unscheduled, whether
partial or in full, and notice of maturity shall be delivered or faxed AND
mailed to:
All other notices and communications to be addressed as first provided above.
Name of Nominee in which Notes are to be issued:
Taxpayer I.D. Number:
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EXHIBIT B
DEFINED TERMS
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"Additional Subsidiary Guarantor" means each Subsidiary of the Company
that, subsequent to the Closing, from time to time Guarantees the Debt of the
Company hereunder.
"Affiliate" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Company.
"Agreement" is defined in Section 16.3.
"Board" is defined in Section 5.21.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which commercial banks in New York or Texas, are required or authorized to be
closed.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Capital Lease Obligations" means the amount of the obligations of a
Person as lessee under all Capital Leases which would be required to be
reflected as a liability on a balance sheet in accordance with GAAP.
"Capital Stock" means (a) in the case of a corporation, capital stock,
(b) in the case of an association or business entity, any and all shares,
interests, participation, rights or other equivalents (however designated) of
capital stock, (c) in the case of a partnership, partnership interests (whether
general or limited), (d) in the case of a limited liability company, membership
interests and (e) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Claim" is defined in Section 20.5(c).
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"Closing" is defined in Section 3.
"Closing Date" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Collateral" shall have the meaning set forth in the Security
Agreement.
"Collateral Agent" means Wilmington Trust Company, in its capacity as
Collateral Agent under and pursuant to the Collateral Agency Agreement.
"Collateral Agency Agreement" is defined in Section 4.3(a).
"Commitments" is defined in Section 5.16.
"Company" means Probex Fluids Recovery, Inc., a Delaware corporation.
"Consent" is defined in Section 5.8.
"Current Market Price" shall mean (i) if the principal trading market
for the Probex Common Stock is a United States national or regional securities
exchange, the average closing price on such exchange for the thirty trading days
prior to the day in question; or (ii) if sales prices for shares of Probex
Common Stock are reported by the Nasdaq National Market System or Small Cap
Market System (or a similar system then in use), the average last reported sales
price so reported for the thirty trading days prior to the day in question; or
(iii) if neither (i) nor (ii) above are applicable, and if bid and ask prices
for shares of Probex Common Stock are reported in the over-the-counter market by
Nasdaq (or, if not so reported, by the National Quotation Bureau), the average
of the high bid and low ask prices so reported for the thirty trading days prior
to the day in question. Notwithstanding the foregoing, if there is no reported
closing price, last reported sales price, or bid and ask prices, as the case may
be, for the thirty days prior to the day in question, then the current market
price shall be determined as of the latest thirty consecutive trading days for
which such closing price, last reported sales price, or bid and ask prices, as
the case may be, are available, unless such securities have not been traded on
an exchange or in the over-the-counter market for thirty (30) or more days
immediately prior to the day in question, in which case the current market price
shall be determined in good faith by, and reflected in a formal resolution of,
the Board of Directors of Probex, but if such determination is challenged in
good faith by the holder, then as determined by an independent appraiser
mutually satisfactory to the Probex and the Holder, which determination shall be
binding upon the parties.
"Debt" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred
Stock;
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(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in
the ordinary course of business but including all liabilities
created or arising under any conditional sale or other title
retention agreement with respect to any such property);
(c) all Capital Lease Obligations;
(d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not
it has assumed or otherwise become liable for such
liabilities);
(e) all its liabilities in respect of drawn letters of credit or
instruments serving a similar function issued or accepted for
its account by banks and other financial institutions (whether
or not representing obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (f) hereof.
Debt of any Person shall include all obligations of such Person of the character
described in clauses (a) through (f) to the extent such Person remains legally
liable in respect thereof notwithstanding that any such obligation is deemed to
be extinguished under GAAP.
"Default" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"Default Rate" means that rate of interest stated in clause (a) of the
first paragraph of the Notes.
"Dollars" means lawful currency of the United States of America.
"Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"Equity Interest" means shares of Capital Stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person and any option, warrant or
other right relating thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
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"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.
"Escrow Agreement" is defined in Section 4.2(o).
"Event of Default" is defined in Section 10.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Financial Statements" is defined in Section 5.9.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or
other political subdivision thereof, or
(ii) any jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to,
any such government.
"Guaranty" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person Guarantying or in effect Guarantying any
Debt, dividend or other obligation of any other Person in any manner, whether
directly or indirectly, including (without limitation) obligations incurred
through an agreement, contingent or otherwise, by such Person:
(a) to purchase such Debt or obligation or any property constituting
security therefore;
(b) to advance or supply funds (i) for the purchase or payment of such
Debt or obligation, or (ii) to maintain any working capital or other balance
sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment of such
Debt or obligation;
(c) to lease properties or to purchase properties or services primarily
for the purpose of assuring the owner of such Debt or obligation of the ability
of any other Person to make payment of the Debt or obligation; or
(d) otherwise to assure the owner of such Debt or obligation against
loss in respect thereof.
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In any computation of the Debt or other liabilities of the obligor
under any Guaranty, the Debt or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"Guaranty Agreement" is defined in Section 4.2(m).
"Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances that pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
restricted, prohibited or penalized by any applicable law (including, without
limitation, asbestos, urea formaldehyde foam insulation and polychlorinated
biphenyls).
"Holder" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
12.1.
"Holder Representative" is defined in Section 21.1.
"Indemnified Party" is defined in Section 20.5(c).
"Indemnified Person" is defined in Section 20.5(a).
"Indemnifying Party" is defined in Section 20.5(a).
"Intellectual Property" is defined in Section 5.17(a).
"Investment" means any investment, made in cash or by delivery of
property, by the Company or any of its Subsidiaries in (a) any Person, whether
by acquisition of Capital Stock, Debt or other obligations or security, or by
loan, guaranty, advance, capital contribution or otherwise, or (b) any property.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
Capital Stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Liquid Assets" means, as of any date, the aggregate amount of the
Company's (a) cash and obligations issued or guaranteed by the United States of
America, (b) obligations issued or guaranteed by any Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America pursuant to authority granted by the Congress of the United States, (c)
certificates of deposit issued, or banker's acceptances drawn on and accepted
by, or money market accounts or time deposits in, commercial banks which are
members of the Federal Deposit Insurance Corporation and which have a combined
capital, surplus and undistributed profits of at least $1,000,000,000, (d) other
money market instruments and mutual funds, substantially all
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of the assets of which are invested in any or all of the investments described
in clauses (a) through (c) above, and (e) commercial paper rated P-1 by Xxxxx'x
Investors Service, Inc. or A-1 by Standard & Poor's Corporation on the date of
acquisition (the value of which shall be determined in accordance with GAAP).
"Material" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Company
and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries, or (b) the ability of the Company to perform its
obligations under this Agreement and the Notes, or (c) the validity or
enforceability of this Agreement or the Notes or (d) the validity or perfection
of the security interests granted under and pursuant to the Security Documents.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"Non-Responsive Holder" is defined in Section 20.3(a).
"Notes" is defined in Section 1.1.
"Officer's Certificate" means a certificate of a Senior Financial
Officer or of any other officer of the Company or a Subsidiary as the context
shall require, whose responsibilities extend to the subject matter of such
certificate.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Pennzoil" is defined in Section 4.2(g).
"Pennzoil Debt" is defined in Section 4.2(g).
"Person" means any individual, partnership, Company, limited liability
company, joint stock company, association, trust, unincorporated organization,
or a government or agency or political subdivision thereof.
"Personal Property" is defined in Section 5.15(b).
"Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"Pledge Agreement" shall mean that certain Pledge Agreement executed by
Probex in favor of Collateral Agent for the benefit of the Holders pursuant to
which
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Probex pledges to the Holders all of the issued and outstanding shares in the
Company as collateral security for the Notes and the Guaranty Agreement.
"Preferred Stock" means any class of Capital Stock of a corporation
that is preferred over any other class of Capital Stock of such corporation as
to the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"Probex" shall mean Probex Corp., a Delaware corporation.
"Probex Common Stock" shall mean the common stock, par value $.001 per
share of Probex.
"property" or "properties" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, xxxxxx
or inchoate.
"Prospectus" means the prospectus (including any preliminary prospectus
and/or any final prospectus filed pursuant to Rule 424(b) under the Securities
Act and any prospectus that discloses information previously omitted from a
prospectus filed as part of an effective registration statement in reliance on
Rule 430A under the Securities Act) included in the Registration Statement, as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement and by all other amendments and supplements to such
prospectus, including all material incorporated by reference in such prospectus
and all documents filed after the date of such prospectus by the Company under
the Exchange Act and incorporated by reference therein.
"Public Offering" means an offer registered with the Commission and the
appropriate state securities commissions by Probex of Probex Common Stock and
made pursuant to the Securities Act.
"Purchase Price" is defined in Section 2.
"Purchasers" means those persons or entities set forth on Schedule A.
"Real Property" is defined in Section 5.15(a).
"Registrable Securities" means the shares of Probex Common Stock
issuable upon the conversion of the Notes.
"Registration Period" is defined in Section 20.2(a).
"Registration Statement" means a registration statement of the Company
filed on an appropriate form under the Securities Act providing for the
registration of, and the sale on a continuous or delayed basis by the holders
of, all of the Registrable Securities pursuant to Rule 415 under the Securities
Act, including the Prospectus contained therein and forming a part thereof, any
amendments to such registration statement and
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supplements to such Prospectus, and all exhibits and other material incorporated
by reference in such registration statement and Prospectus.
"Required Holders" means, at any time, the holders of at least 66 2/3%
of the principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by the Company or any of its Affiliates including officers or
directors of the Company).
"Responsible Officer" means any Senior Financial Officer and any other
officer of the Company or Probex with responsibility for the administration of
the relevant portion of this Agreement.
"Restricted Payments" is defined in Section 9.5(c).
"Restricted Security" means any share of Common Stock except any that
(i) have been registered pursuant to an effective registration statement under
the Securities Act and sold in a manner contemplated by the prospectus included
in such registration statement, (ii) have been transferred in compliance with
the resale provisions of Rule 144 under the Securities Act (or any successor
provision thereto) or is transferable pursuant to paragraph (k) of Rule 144
under the Securities Act (or any successor provision thereto), or (iii)
otherwise has been transferred and a new share of Common Stock not subject to
transfer restrictions under the Securities Act has been delivered by or on
behalf of the Company.
"Requested Information" is defined in Section 20.3(a).
"Rule 144" is defined in Section 20.6.
"SEC" is defined in Section 7.1(c).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder, or any similar successor
statute.
"Security" has the meaning set forth in section 2(a)(1) of the
Securities Act.
"Security Agreement" shall mean that certain Security Agreement
executed by the Company and its Subsidiaries in favor of Collateral Agent for
the benefit of the Holders pursuant to which they grant a security interest in
all of their assets to Collateral Agent as collateral security for the Notes.
"Security Documents" means the Mortgages, the Security Agreement, the
Pledge Agreement, the Collateral Agency Agreement, and the Guaranty Agreement.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company or Probex, as the
case may be.
"Senior Note Agreement Document" means this Agreement, the Security
Documents, the Guaranty Agreement and each other document, agreement or
certificate delivered in connection with issuance of the Notes.
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"Set Date" is defined in Section 4.1(b).
"Stonegate" shall mean Stonegate Securities, Inc.
"Solvent" means, with respect to any Person, that (i) the fair salable
value of such Person's assets (including goodwill minus disposition costs)
exceeds the fair value of its liabilities; (ii) such Person is not left with
unreasonably small capital after the consummation of the transactions
contemplated by this Agreement (including the Use of Proceeds) and (iii) such
Person is able to pay its debts (including trade debts) as they mature.
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"Termination Statements" is defined in Section 4.2(h).
"UCC" has the meaning set forth in the Security Agreement.
"Use of Proceeds" is defined in Section 5.21.
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary one
hundred percent (100%) of all of the equity interests (except directors'
qualifying shares) and voting interests of which are owned by any one or more of
the Company and the Company's other Wholly-Owned Subsidiaries at such time.
[Schedules Intentionally Omitted]
9
