TERM NOTE
$5,550,000 Dated: September 29, 2000
ARTICLE I
Repayment Terms
FOR VALUE RECEIVED, the undersigned, PROBEX CORP., a Delaware
corporation (the "Borrower") HEREBY PROMISES TO PAY to the order of
PENNZOIL-QUAKER STATE COMPANY (the "Lender") on November 28, 2000 the principal
sum of FIVE MILLION FIVE HUNDRED FIFTY THOUSAND AND NO/ONE-HUNDREDTHS DOLLARS
($5,550,000), (less the amount of any principal payment made prior to such date)
with interest (computed on the basis of a 360-day year - 30-day month) on the
unpaid principal balance of this Note (i) from the date hereof to, but not
including, October 27, 2000, at a rate of 13% per annum and (ii) from and
thereafter, at a rate of 18% per annum. Notwithstanding the foregoing, if any
principal or interest hereunder is not paid when due, whether at stated
maturity, upon acceleration or otherwise, such overdue amount shall bear
interest, after as well as before judgment, at the Maximum Rate, and shall be
payable upon demand, calculated from the date each overdue payment was due until
paid in full.
On or before October 13, 2000, Borrower shall make a mandatory
payment hereunder of $1,000,000, together with all unpaid accrued interest
thereon. An additional $1,000,000 shall be mandatorily prepaid, together with
unpaid accrued interest thereon, upon the earlier of (i) the execution of the
Engineering, Procurement and Construction Contract with Bechtel and (ii)
November 3, 2000. Borrower may at any time, and from time to time, prepay this
Note in whole or in part, without penalty or premium.
Accrued and unpaid interest on the unpaid principal balance of
this Note shall be due and payable on the first day of each month, commencing
November 1, 2000, and at maturity.
Both principal and interest are payable in lawful money of the
United States of America in immediately available funds, on or before 11:00 a.m.
(Houston time) on the date when due, by wire transfer to account no. 323-021158,
Acct. Name: Pennzoil-Quaker State Co.; Ref: Sale of SES at The Chase Manhattan
Bank, N.A., New York, NY (ABA No. 000000000), or such other location as Lender
may designate.
All payments shall be made without deduction, withholding,
counterclaim, off-set or defense and shall be applied first to accrued interest,
the balance to principal.
This is the Note referred to in, and secured by (i) that
certain Pledge Agreement of even date herewith executed and delivered by
Borrower in favor of Xxxxxx (as the same may be amended from time to time, the
"Pledge Agreement") and (ii) that certain Security Agreement of even date
herewith executed and delivered by Probex Fluids Recovery, Inc. ("PFR") in favor
of Xxxxxx (as the same may be amended from time to time, the "Security
Agreement"). Capitalized terms used herein and not otherwise defined herein
shall have the meaning set forth in the Pledge Agreement and the Security
Agreement.
ARTICLE II
Events of Default
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If any of the following events ("Events of Default") shall
occur:
(a) PFR shall fail to pay any amount payable under the
Security Agreement or the Purchase Agreement, when and as the same
shall become due and payable;
(b) Borrower shall fail to pay any principal of, or any
interest on, this Note or any other amount payable under this Note or
any other Loan Document or the Purchase Agreement, when and as the same
shall become due and payable;
(c) any representation or warranty made or deemed made by or
on behalf of Borrower or PFR in or in connection with any Loan
Document, the Purchase Agreement, or any amendment or modification
thereof or waiver thereunder, or in any report, certificate, financial
statement or other document furnished pursuant to or in connection with
any Loan Document, the Purchase Agreement, or any amendment or
modification thereof or waiver thereunder, shall prove to have been
incorrect when made or deemed made;
(d) Borrower or PFR shall fail to observe or perform any
covenant, condition or agreement contained in any Loan Document or the
Purchase Agreement;
(e) Borrower or PFR shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any
Indebtedness individually or in the aggregate in excess of $100,000
("Material Indebtedness"), when and as the same shall become due and
payable;
(f) any event or condition occurs that results in any Material
Indebtedness of Borrower or PFR becoming due prior to its scheduled
maturity or that enables or permits (with or without the giving of
notice, the lapse of time or both) the holder or holders of any
Material Indebtedness of Borrower or PFR or any trustee or agent on its
or their behalf to cause any Material Indebtedness of Borrower or PFR
to become due, or to require the prepayment, repurchase, redemption or
defeasance thereof, prior to its scheduled maturity;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of Borrower or PFR or its
debts, or of a substantial part of its assets, under any Federal, state
or foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for Borrower
or PFR or for a substantial part of its assets, and, in any such case,
such proceeding or petition shall continue undismissed for 60 days or
an order or decree approving or ordering any of the foregoing shall be
entered;
(h) Borrower or PFR shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or
other relief under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to contest in a timely and
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appropriate manner, any proceeding or petition described in clause (g)
of this Article, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar
official for Borrower or PFR or for a substantial part of its assets,
(iv) file an answer admit-ting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment
for the benefit of creditors or (vi) take any action for the purpose of
effecting any of the foregoing;
(i) Borrower or PFR shall become unable, admit in writing its
inability or fail generally to pay its debts as they become due;
(j) one or more judgments for the payment of money in an
aggregate amount in excess of $100,000 shall be rendered against
Borrower or PFR and the same shall remain undischarged for a period of
30 days during which execution shall not be effectively stayed, or any
action shall be legally taken by a judgment creditor to attach or levy
upon any assets of Borrower or PFR to enforce any such judgment;
(k) any Lien purported to be created under any Security
Document shall cease to be, or shall be asserted by Borrower, PFR or
any Affiliate thereof not to be, a valid and perfected Lien on any
Collateral or Pledge Collateral, with the priority required by the
applicable Security Document, except (i) as a result of the sale or
other disposition of the applicable Collateral in a transaction
permitted under the Loan Documents or (ii) as a result of Lender's
failure to maintain possession of any stock certificates, promissory
notes or other instruments delivered to it under the applicable
Security Document;
(l) there shall occur, in the judgment of Xxxxxx, a material
adverse change in the business, assets or prospects of Borrower or PFR
after the date hereof;
(m) there shall occur any material loss, theft, damage or
destruction of any of PFR's property or assets not fully covered by
insurance; or
(n) there shall occur a cessation of a substantial part of the
business of Borrower or PFR for a period which significantly effects
its respective capacity to continue its business on a profitable basis;
or Borrower or PFR shall suffer the loss or revocation of any license
or permit now held or hereafter acquired by it which is necessary to
the continued or lawful operation of its respective business (provided
that Borrower and PER shall have a reasonable period of time after the
date hereof to obtain all required permits and licenses in connection
with the consummation of the transactions contemplated by the Purchase
Agreement); or Borrower or PFR shall be enjoined, restrained or in any
way prevented by court, governmental or administration order from
conducting all or any material part of its respective business affairs;
or any material part of Borrower or PFR's property shall be taken
through condemnation or the value of such property shall be materially
impaired through condemnation;
then, and in every such event (other than an event described in clause (g) or
(h) of this Article), and at any time thereafter during the continuance of such
event, the Lender may declare the then outstanding amounts hereunder to be due
and payable in whole (or in part, in which case any principal not so declared to
be due and payable may thereafter be declared to be due and payable), and
thereupon the principal of the amounts hereunder so declared to be due and
payable, together with accrued interest thereon and all other obligations of the
Borrower accrued hereunder, shall become due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
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hereby waived by the Borrower; and in case of any event with respect to the
Borrower described in clause (g) or (h) of this Article, the principal amounts
hereunder then outstanding, together with accrued interest thereon and all other
obligations of the Borrower accrued hereunder, shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower.
ARTICLE III
Miscellaneous
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THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.
The Borrower and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default or intent to accelerate, protest and notice of protest and diligence in
collecting and bringing of suit against any party hereto, and agree to all
renewals, extensions or partial payments hereon and to any release of
substitution of security herefor, in whole or in part, with or without notice,
before or after maturity.
The Borrower may not assign or transfer its right or obligations
hereunder without the Lender's prior written consent.
Notwithstanding anything herein or on any other Loan Document to
the contrary, if at any time the interest applicable to the Loan, together with
all fees, charges and other amounts which are treated as interest on such Loan
or other Secured Obligations under applicable law (collectively, the "Charges"),
shall exceed the maximum which may be contracted for, charged, taken, received
or reserved by the Lender in accordance with applicable law (the "Maximum
Rate"), the rate of interest payable in respect of the Loan or other Secured
Obligations hereunder, together with all Charges payable in respect thereof,
shall be limited to the Maximum Rate and, to the extent lawful, the interest and
charges that would have been payable in respect of such Loan or other Secured
Obligations but were not payable as a result of the operation of this Section
shall be cumulated and the interest and Charges payable to Lender in respect of
other Secured Obligations or periods shall be increased (but not above the
Maximum Rate therefor) until such cumulated amount, together with interest
thereon at the Maximum Rate to the date of repayment, shall have been received
by Lender. If, for any reason whatever, the Charges paid or received on the Loan
produces a rate which exceeds the Maximum Rate, Lender shall credit against the
principal of the Loan (or, if such indebtedness shall have been paid in full,
shall refund to the payer of such Charges) such portion of said Charges as shall
be necessary to cause the interest paid on the Loan to produce a rate equal to
the Maximum Rate. All sums paid or agreed to be paid to the holders of the Loan
for the use, forbearance or detention of the Loan shall, to the extent permitted
by applicable law, be amortized, prorated, allocated and spread throughout the
full term of this Note so that the interest rate does not exceed the Maximum
Rate. The provisions of this Section shall control all agreements, whether now
or hereafter existing and whether written or oral, between the Lender and the
Borrower. On each day, if any, that Texas law establishes the Maximum Rate, the
Maximum Rate shall be the "weekly ceiling" (as defined in Chapter 303 of the
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Texas Finance Code (the "Texas Finance Code") for that day. The Lender may from
time to time, as to current and future balances, implement any other ceiling
under the Texas Finance Code by notice to the Borrower, if and to the extent
permitted by the Texas Finance Code. Without notice to the Borrower or any other
person or entity, the Maximum Rate shall automatically fluctuate upward and
downward as and in the amount by which such maximum nonusrious rate of interest
permitted by applicable law fluctuates.
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THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE A "LOAN
AGREEMENT" AS DEFINED IN SECTION 26.02(A) OF THE TEXAS BUSINESS AND COMMERCE
CODE, AND REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO WRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
PROBEX CORP.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
ACKNOWLEDGED FOR PURPOSES
OF ss.26.02(a) TBCC:
PENNZOIL-QUAKER STATE COMPANY
By:___________________________
Name:_________________________
Title:________________________
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