STOCK PURCHASE AGREEMENT
dated as of January 15, 2002
by and among
PROBEX CORP.
and
PURCHASERS LISTED ON
EXHIBIT A
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of January 15,
2002, by and among Probex Corp., a Delaware corporation, with headquarters
located at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), and
the purchasers set forth in Exhibit A attached hereto (collectively,
"Investor").
WHEREAS, the Company and Investor are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 under Regulation D ("Regulation D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act").
WHEREAS, the Company has authorized the issuance and sale of the shares
of common stock, par value $0.001 per share (the "Common Stock"), of the
Company, upon the terms and conditions set forth herein.
WHEREAS, Investor wishes to purchase, and the Company wishes to sell,
shares of Common Stock upon the terms and conditions stated in this Agreement.
NOW THEREFORE, the Company and Investor hereby agree as follows:
1. PURCHASE AND SALE OF COMMON STOCK.
(a) Purchase of Common Stock. The Company shall issue and sell to Investor
and Investor shall purchase from the Company that full number of shares of
Common Stock (the "Common Shares"), that may be purchased for the aggregate
purchase price (the "Purchase Price") of Two Hundred Fifty-two Thousand Five
Hundred Seventy-six Dollars ($252,576.00) with a purchase price per Common Share
(the "Price Per Share") equal to the average of the closing prices of the Common
Stock, as reported on the American Stock Exchange, for the ten (10) consecutive
trading days immediately preceding the Closing Date (as defined below).
(b) Form of Payment. On the Closing Date (as defined below), (i) Investor
shall pay the Purchase Price by wire transfer of immediately available funds to
the Company, in accordance with the Company's written wiring instructions,
against delivery of duly executed certificates representing the number of Common
Shares which Investor is purchasing and (ii) the Company shall deliver such
certificates duly executed on behalf of the Company, to Investor or, if so
designated by Investor, in the name of a nominee designated by Investor, against
delivery of the Purchase Price.
(c) Adjustment. If within twenty-four (24) months following the Closing
Date, the Company shall issue shares of Common Stock, or securities convertible
into or exercisable for shares of Common Stock, pursuant to a public offering or
a private placement in an aggregate amount of $500,000 or more, and the
issuance, conversion or exercise price (the "Issuance Price") of such Common
Stock is less than the Price Per Share, then the number of Common Shares issued
to Investor hereunder shall be adjusted (and the Company shall after the
occurrence of any event requiring such adjustment notify Investor of the
adjustment) and additional Common Shares (the "Additional Common Shares") shall
be issued to Investor so the aggregate number of shares of Common Stock issued
to Investor is equal to the amount of the Purchase Price divided by the Issuance
Price (rounded up or down, as applicable, to the nearest whole Common Share).
(d) Closing Date. The completion of the purchase and sale of the Common
Shares shall occur as soon as practicable after the satisfaction or waiver of
all conditions or obligations of Investor and the Company and the conditions set
forth in Section 5 and 6 hereof, including the Financing Condition (as defined
in Section 6 hereof), on a date (the "Closing Date") determined by Investor upon
prior notice to the Company, provided that in any event, without prior notice,
the Closing Date shall be the third business day following receipt by Investor
of notice from the Company of the satisfaction of the Financing Condition.
Notwithstanding the foregoing, Investor may elect, at its option, to accelerate
the Closing Date to a date prior to the satisfaction of the Financing Condition
in accordance with the procedures, and for the consideration, set forth in
Section 7 hereof.
2. INVESTOR'S REPRESENTATIONS AND WARRANTIES. Investor, and each Investor,
if more than one, represents and warrants to the Company that:
(a) Investment Purpose. As of the date hereof, Investor is purchasing the
Common Shares set forth herein for its own account for investment only and not
with a present view towards the public sale or distribution thereof, except
pursuant to sales registered or exempted from registration under the Securities
Act.
(b) Accredited Investor Status. Investor is an "accredited investor" as
that term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act.
(c) Reliance on Exemptions. Investor understands that the Common Shares are
being offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and Investor's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of Investor set forth herein in order to determine the
availability of such exemptions and the eligibility of Investor to acquire the
Common Shares.
(d) Information. Investor and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Common Stock which
have been requested by Investor or its advisors. Investor and its advisors, if
any, have been afforded the opportunity to ask questions of the Company. Neither
such inquiries nor any other due diligence investigation conducted by Investor
or any of its advisors or representatives shall modify, amend or affect
Investor's right to rely on the Company's representations and warranties
contained in Section 3. Investor understands that its investment in the Common
Shares involves a significant degree of risk.
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(e) Governmental Review. Investor understands that no United States federal
or state agency or any other government or governmental agency has passed upon
or made any recommendation or endorsement of the Common Shares.
(f) Transfer or Resale. Investor understands that (i) except as provided in
Section 4(g) hereof, the Common Shares have not been and are not being
registered under the Securities Act or any applicable state securities laws, and
may not be transferred unless (a) subsequently included in an effective
registration statement thereunder, (b) Investor shall have delivered to the
Company an opinion of counsel (which opinion shall be reasonably acceptable to
the Company) to the effect that the Common Shares to be sold or transferred may
be sold or transferred pursuant to an exemption from such registration, (c) sold
or transferred to an "affiliate" (as defined in Rule 144 promulgated under the
Securities Act (or a successor rule) ("Rule 144")) or (d) sold pursuant to Rule
144; (ii) any sale of such Common Shares made in reliance on Rule 144 may be
made only in accordance with the terms of said Rule and further, if said Rule is
not applicable, any resale of such Common Shares under circumstances in which
the seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such Common Shares under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder (in each case, other than pursuant to the
Section 4(g) hereof). Notwithstanding the foregoing or anything else contained
herein to the contrary, the Common Shares may be pledged as collateral in
connection with a bona fide margin account or other lending arrangement.
(g) Legends. Investor understands that until such time as the Common Shares
have been registered under the Securities Act, the Common Shares shall bear a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such Common
Shares):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
securities have been acquired for investment and may not be
sold, hypothecated, transferred or assigned in the absence of
an effective registration statement for the securities under
said Act, or an opinion of counsel, in form, substance and
scope reasonably acceptable to the Company, that registration
is not required under said Act or unless sold pursuant to Rule
144 under said Act. Notwithstanding the foregoing, this
security may be pledged in connection with a bona fide margin
account."
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The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of any Common Shares upon which
it is stamped, if, unless otherwise required by applicable state securities
laws, (a) such Common Shares are registered for sale under an effective
registration statement filed under the Securities Act and disposed of in a bona
fide sale, or (b) such holder provides the Company with an opinion of counsel,
in form, substance and scope reasonably acceptable to the Company, to the effect
that a public sale or transfer of such Common Shares may be made without
registration under the Securities Act and such sale or transfer is effected or
(c) such holder provides the Company with reasonable assurances that such Common
Shares can be sold pursuant to Rule 144 under the Securities Act (or a successor
rule thereto) without any restriction as to the number of Common Shares acquired
as of a particular date that can then be immediately sold. Investor agrees to
sell all Common Shares, including those represented by a certificate(s) from
which the legend has been removed, in compliance with applicable prospectus
delivery requirements, if any (including any amendment or supplement to any of
the foregoing).
(h) Authorization; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of Investor and is a valid and
binding agreement of Investor enforceable in accordance with its terms.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as (1) otherwise
described in the Company's Schedule 14A, Form 10-SB, current reports on Form 8-K
and regular reports on Form 10-QSB and 10-KSB, as filed (including any
amendment(s) to any of the foregoing) by the Company with the SEC in 2000 and
2001 (the "SEC Documents"), (2) otherwise described in the Company's press
releases since December 31, 2000 (including the documents incorporated by
reference therein, the "Company Information"), and (3) disclosed in the
disclosure schedule to this Agreement (the "Disclosure Schedule"), which
qualifies the following representations and warranties in their entirety, the
Company hereby represents and warrants to and covenants with Investor, as
follows:
(a) Organization and Qualification. The Company and each of its
Subsidiaries (as defined below), if any, is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
formed, with full power and authority (corporate and other) to own, lease, use
and operate its properties and to carry on its business as described in the SEC
Documents as and where now owned, leased, used, operated and conducted. The
Company does not have an equity investment in any other person other than the
Subsidiaries (as defined below) listed in Schedule 3(a). The Company and each of
its Subsidiaries is duly qualified as a foreign corporation or entity to do
business and is in good standing in every jurisdiction in which its ownership or
use of property or the nature of the business conducted by it makes such
qualification necessary except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect. "Material Adverse Effect"
means any material adverse effect on the business, operations, assets, financial
condition or prospects of the Company or any of its Subsidiaries, if any, taken
as a whole, or on the transactions contemplated hereby or by the agreements or
instruments to be entered into in connection herewith. "Subsidiaries" means any
corporation or other organization, whether incorporated or unincorporated, in
which the Company owns, directly or indirectly, any equity or other ownership
interest.
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(b) Authorization; Enforcement. (i) The Company has all requisite corporate
power to enter into and perform this Agreement and to consummate the
transactions contemplated hereby and to issue the Common Shares, in accordance
with the terms hereof, (ii) the execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated hereby have
been duly authorized by the Company's Board of Directors and no further consent
or authorization of the Company, its Board of Directors, or its stockholders is
required, (iii) this Agreement has been duly executed and delivered, and (iv)
this Agreement constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
(c) Capitalization. As of December 7, 2001, the authorized capital stock of
the Company consists of (a) One Hundred Million (100,000,000) shares of Common
Stock, of which 31,704,784 shares were outstanding, all of which are duly
authorized, validly issued, fully paid and nonassessable; and (b) Ten Million
(10,000,000) shares of Preferred Stock, $0.001 par value (the "Preferred
Stock"), of which 550,000 shares have been designated as Series A 10% Cumulative
Convertible Preferred, 532,500 of which are outstanding and are duly authorized,
validly issued, fully paid and nonassessable. The Company has furnished to
Investor true and correct copies of the Company's Certificate of Incorporation
as in effect on the date hereof ("Certificate of Incorporation"), and the
Company's By-laws, as in effect on the date hereof (the "By-laws").
(d) Issuance of Shares. Subject to the delivery of the Purchase Price, on
the Closing Date the Common Shares will be duly authorized, validly issued,
fully paid and non-assessable, free and clear of all liens and encumbrances, and
will not subject the holder thereof to personal liability by reason of being
such holder. There are no preemptive or similar rights of any stockholder of the
Company or any other person to acquire any of the Common Shares. The Common
Stock is listed for trading on the American Stock Exchange ("AMEX").
(e) No Conflicts. Except as set forth in Schedule 3(e), the execution,
delivery and performance of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby will not (i) conflict
with or result in a violation of any provision of the Certificate of
Incorporation or By-laws or (ii) violate or conflict with, or result in a breach
of any provision of, or constitute a default (or an event which with notice or
lapse of time or both could become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any Subsidiary is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations) applicable
to the Company or any Subsidiary or by which any property or asset of the
Company or any Subsidiary is bound or affected, except for such conflicts,
defaults, terminations, amendments, accelerations, cancellations and violations
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as would not, individually or in the aggregate, have a Material Adverse Effect.
Except as set forth in Schedule 3(e), neither the Company nor any Subsidiary is
in violation of its Certificate of Incorporation, By-laws or other
organizational documents and neither the Company nor any Subsidiary is in
default, and no event has occurred which with notice or lapse of time or both
could put the Company or any Subsidiary in default, under, and neither the
Company nor any Subsidiary has taken any action or failed to take an action that
would give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any Subsidiary is a party or by which any property or assets of the Company or
any Subsidiary is bound or affected, except for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect. Except as
specifically contemplated by this Agreement and as required under the Securities
Act and any applicable state securities laws, the Company is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency or any regulatory or
regulatory agency in order for it to execute, deliver or perform any of its
obligations under this Agreement in accordance with the terms hereof. All
consents, authorizations, orders, filings and registrations which the Company is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof. The Company and its Subsidiaries are
unaware of any facts or circumstances which might give rise to any of the
foregoing.
(f) SEC Documents; Financial Statements.
(i) The Company has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC
pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and any other material reports or
documents required to be filed with the SEC. The Company has delivered to
Investor true and complete copies of the SEC Documents. As of their
respective dates, the SEC Documents complied in all material respects with
the requirements of the Exchange Act and the rules and regulations of the
SEC promulgated thereunder applicable to the SEC Documents, and none of the
SEC Documents, at the time they were filed with the SEC, contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein, or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(ii) As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto. Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles ("GAAP"), consistently applied, during the periods
involved (except (1) as may be otherwise indicated in such financial
statements or the notes thereto, or (2) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be
condensed or summary statements) and fairly present in all material
respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). The unaudited pro forma combined financial statements filed
with the SEC comply in all material respects with the requirements of
Article 11 of Regulation S-X under the Securities Act.
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(g) Absence of Litigation. Except as disclosed in the SEC Documents, there
is no action, suit, proceeding, inquiry or investigation before or by any court,
public board or body or governmental agency pending or threatened against the
Company or any Subsidiary, in any such case wherein an unfavorable decision,
ruling or finding is reasonably likely and would reasonably be expected to have
a Material Adverse Effect. There is not pending or contemplated, and there has
been no, investigation by the SEC involving the Company or any current or former
director or officer of the Company. The Company and its Subsidiaries are unaware
of any facts or circumstances which might give rise to any of the foregoing.
(h) Suppliers and Customers.
(i) Each of the Company and each Subsidiary has adequate sources of
supply for its business as currently conducted and as proposed to be
conducted. Each has good relationships with all of its material sources of
supply of goods and services and each does not anticipate any material
problem with any such material sources of supply.
(ii) Neither the Company nor any Subsidiary has any knowledge that the
customer base of the Company and/or any Subsidiary might materially
decrease.
(i) Intellectual Property.
(i) Except as set forth on Schedule 3(i), the Company and each of its
Subsidiaries has ownership or license or legal right to use all patent,
copyright, trade secret, trademark, customer lists, designs, manufacturing or
other processes, computer software, systems, data compilation, research results
or other proprietary rights used in the business of the Company and each of its
Subsidiaries and material to the Company and each of its Subsidiaries
(collectively, "Intellectual Property") other than Intellectual Property
generally available on commercial terms from other sources. Except as set forth
on Schedule 3(i), all of such patents, trademarks and registered copyrights have
been duly registered in, filed in or issued by the United States Patent and
Trademark Office, the United States Register of Copyrights or the corresponding
offices of other jurisdictions and have been maintained and renewed in
accordance with all applicable provisions of law and administrative regulations
in the United States and all such jurisdictions.
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(ii) All material licenses or other material agreements under which
(i) the Company and each of its Subsidiaries is granted rights in
Intellectual Property, other than Intellectual Property generally available
on commercial terms from other sources, and (ii) the Company has granted
rights to others in Intellectual Property owned or licensed by the Company,
are in full force and effect and there is no material default by the
Company and each of its Subsidiaries thereto.
(iii) The Company and each of its Subsidiaries believes it has taken
all steps required in accordance with sound business practice and business
judgment to establish and preserve its ownership of all material copyright,
trade secret and other proprietary rights with respect to its products and
technology.
(iv) The present business, activities and products of the Company and
each of its Subsidiaries do not infringe any intellectual property of any
other person, except where such infringement would not have a Material
Adverse Effect on the Company and each of its Subsidiaries. Except as
described in the Company's SEC Documents, no proceeding charging the
Company or any Subsidiary with infringement of any adversely held
Intellectual Property has been filed. There exists no unexpired patent or
patent application which includes claims that would be infringed by or
otherwise have a Material Adverse Effect on the Company or any Subsidiary.
Neither the Company nor any Subsidiary is making unauthorized use of any
confidential information or trade secrets of any person. Neither the
Company nor any of its employees have any agreements or arrangements with
any persons other than the Company related to confidential information or
trade secrets of such persons or restricting any such employee's engagement
in business activities of any nature. The activities of the Company or any
of its employees on behalf of the Company do not violate any such
agreements or arrangements known to the Company which any such employees
have with other persons, if any.
(v) No proceedings have been instituted or are pending which challenge
the rights of the Company in respect to the Company's right to the use of
the Intellectual Property. The Company has the right to use, free and clear
of material claims or rights of other persons, all of its customer lists,
designs, computer software, systems, data compilations, and other
information that are required for its products or its business as presently
conducted.
(j) No Materially Adverse Contracts, Etc. To the knowledge of the Company,
neither the Company nor any Subsidiary is subject to any charter, corporate or
other legal restriction, or any judgment, decree, order, rule or regulation
which in the judgment of the Company's officers has or is expected in the future
to have a Material Adverse Effect. Neither the Company nor any Subsidiary is a
party to any contract or agreement which, in the judgment of the Company's
officers, has or is expected to have a Material Adverse Effect.
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(k) Tax Status. The Company and each of its Subsidiaries has made or filed
all federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject (unless and only to the
extent that the Company and each of its Subsidiaries has set aside on its books
provisions reasonably adequate for the payment of all unpaid and unreported
taxes) and has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and has set
aside on its books provisions reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the
Company or any Subsidiary know of no basis for any such claim.
(l) Certain Transactions. Except as set forth in the SEC Documents and
except for arm's length transactions pursuant to which the Company or any
Subsidiary makes payments in the ordinary course of business upon terms no less
favorable than the Company or any Subsidiary could obtain from third parties and
other than the grant of stock options disclosed in the SEC Documents, none of
the officers, directors, or employees of the Company is presently a party to any
transaction with the Company or any Subsidiary (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
(m) No Brokers. The Company has taken no action which would give rise to
any claim by any person for brokerage commissions, finder's fees or similar
payments relating to this Agreement or the transactions contemplated hereby,
except for dealings with whose commissions and fees will be paid for by the
Company.
(n) Permits; Compliance. The Company and each of its Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the "Company Permits"), and there is
no action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits. Neither the Company
nor any Subsidiary is in conflict with, or in default or violation of, any of
the Company Permits, except for any such conflicts, defaults or violations
which, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect. Since September 30, 2001, neither the Company
nor any Subsidiary has received any notification with respect to possible
conflicts, defaults or violations of applicable laws, except for notices
relating to possible conflicts, defaults or violations, which conflicts,
defaults or violations would not have a Material Adverse Effect.
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(o) Environmental Matters.
(i) Except as set forth in the SEC Documents and Schedule 3(o), there
are, with respect to the Company or any Subsidiary or any predecessor of
the Company, no past or present violations of Environmental Laws (as
defined below), releases of any material into the environment, actions,
activities, circumstances, conditions, events, incidents, or contractual
obligations which may give rise to any common law environmental liability
or any liability under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 or similar federal, state, local or
foreign laws and neither the Company nor any Subsidiary has received any
notice with respect to any of the foregoing, nor is any action pending or,
to the Company's knowledge, threatened in connection with any of the
foregoing. The term "Environmental Laws" means all federal, state, local or
foreign laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without
limitation, laws relating to emissions, discharges, releases or threatened
releases of chemicals, pollutants, contaminants, or toxic or hazardous
substances or wastes (collectively, "Hazardous Materials") into the
environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands
or demand letters, injunctions judgments, licenses, notices or notice
letters, orders, permits, plans or regulations issued, entered, promulgated
or approved thereunder.
(ii) Other than those that are or were stored, used or disposed of in
compliance with applicable law, no Hazardous Materials are contained on or
about any real property currently owned, leased or used by the Company or
any Subsidiary, and no Hazardous Materials were released on or about any
real property previously owned, leased or used by the Company or any
Subsidiary during the period the property was owned, leased or used by the
Company or any Subsidiary, except in the normal course of the Company's or
any Subsidiary's business.
(iii) Except as set forth in the SEC Documents and Schedule 3(o),
there are no underground storage tanks on or under any real property owned,
leased or used by the Company or any Subsidiary that are not in compliance
with applicable law.
(p) Title to Property. Except as set forth in Schedule 3(p), the Company
and its Subsidiaries have good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by them
which is material to the business of the Company and its Subsidiaries, in each
case free and clear of all liens, encumbrances and defects such as would not
have a Material Adverse Effect. Any real property and facilities held under
lease by the Company and its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as would not have a
Material Adverse Effect. Neither the Company nor any Subsidiary has received
notice of any material violation of any applicable law, ordinance, regulation,
order or requirement relating to its owned or leased properties.
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(q) Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect.
4. COVENANTS.
(a) Commercially Reasonable Efforts. The parties shall use their
commercially reasonable efforts to satisfy timely each of the conditions
described in Section 5 and 6 of this Agreement.
(b) Form D; Blue Sky Laws. The Company agrees to file a Form D with respect
to the Common Shares as required under Regulation D and to provide a copy
thereof to Investor promptly after such filing. The Company shall, on or before
the Closing Date, take such action as the Company shall reasonably determine is
necessary to qualify the Common Shares for sale to Investor at the Closing
pursuant to this Agreement under applicable securities or "blue sky" laws of the
states of the United States (or to obtain an exemption from such qualification).
(c) Reporting Status. The Company's Common Stock is registered under
Section 12(b) of the Exchange Act. Until such time as Investor may sell their
shares under Rule 144, so long as Investor beneficially owns any of the Common
Shares, the Company shall timely file all reports required to be filed with the
SEC pursuant to the Exchange Act, and the Company shall not terminate its status
as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would permit such
termination.
(d) Use of Proceeds. The Company will use the proceeds realized from the
sale of the Common Shares for working capital purposes. None of such proceeds
will be used, directly or indirectly to make any loan to or investment in any
other person.
(e) Financial Information. The Company agrees to send the following reports
to Investor: (i) within ten (10) days after the filing with the SEC, a copy of
its Annual Report on Form 10-KSB, its Quarterly Reports on Form 10-QSB and any
Current Reports on Form 8-K; (ii) within one (1) day after release, copies of
all press releases issued by the Company or any Subsidiary; and (iii)
contemporaneously with the making available or giving to the stockholders of the
Company, copies of any notices or other information the Company makes available
or gives to such stockholders.
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(f) Listing. The Company shall promptly secure the listing of the Common
Shares upon each national securities exchange or automated quotation system, if
any, upon which shares of Common Stock are then listed (subject to official
notice of issuance) and shall maintain, so long as any other shares of Common
Stock shall be so listed, such listing of all Common Shares. The Company will
obtain and maintain the listing and trading of its Common Stock on the AMEX and
will comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the NASD and such exchanges, as
applicable. The Company shall promptly provide to Investor copies of any notices
it receives from the AMEX or NASD and any other exchanges or quotation systems
on which the Common Stock is then listed or quoted regarding the continued
eligibility of the Common Stock for listing or quotation on such exchanges and
quotation systems.
(g) Registration Rights. Within thirty (30) days after the completion of
the Financing Condition, the Company shall file with the SEC and thereafter use
commercially reasonable efforts to become effective, a registration statement
under Rule 415 of the Securities Act of 1933, as amended, or any similar rule
that may be adopted by the SEC, covering the resale of the shares of Common
Stock issued pursuant to this Agreement (the "Registration Statement"). The
Company may include in such Registration Statement other securities of the
Company to be resold by holders other than Investor. Except as set forth above,
the rights and obligations of Investor with respect to the registration of
shares of Common Stock issued to it shall be as set forth in that certain
Registration Rights Agreement dated as of dated as of September 7, 2001, by and
among the Company and the holders listed therein (the "Registration Rights
Agreement"), the terms of which are hereby incorporated by reference herein. To
the extent any of the terms of the Registration Rights Agreement shall be in
conflict with the terms of this Agreement, the terms of this Agreement shall
control.
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of the
Company hereunder to issue and sell the Common Shares to Investor at the Closing
is subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the Company's sole
benefit and may be waived by the Company at any time in its sole discretion:
(a) Delivery of Agreements. Investor shall have executed this Agreement and
delivered the same to the Company.
(b) Payment of Purchase Price. Investor shall have delivered the Purchase
Price in accordance with Section 1(a) above.
(c) No Litigation. No litigation, statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
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6. CONDITIONS TO INVESTOR'S OBLIGATION TO PURCHASE. The obligation of
Investor to purchase the Common Shares at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for Investor's sole benefit and
may be waived by Investor at any time in their sole discretion:
(a) Delivery of Agreements. The Company shall have executed this Agreement
and delivered the same to Investor.
(b) Delivery of Common Stock Certificates. The Company shall have delivered
to Investor duly executed certificate(s) (in such denominations as Investor
shall request) representing the Common Shares in accordance with Section 1(a)
above.
(c) No Litigation. No litigation, statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
(d) Common Stock Trading. Trading in the Common Stock on the AMEX shall not
have been suspended by the SEC or the AMEX.
(e) Blue Sky Law Filings. The Company shall have delivered evidence of the
qualification of the Common Shares under applicable state securities or "blue
sky" laws of the United States.
(f) Financing. A senior loan or other credit facility for the purpose of
funding the construction of the Company's initial plant to be located in
Wellsville, Ohio shall have been consummated (the "Financing Condition").
(g) Opinion. An opinion of counsel of the Company, dated as of the Closing,
in the form of Exhibit B attached hereto
(h) Other Documents. Investor shall have received such other documents and
certificates, in form and substance reasonably satisfactory to Investor and
their counsel, relating to matters incident to the transactions contemplated
hereby as Investor may reasonably request.
7. ACCELERATION OF CLOSING. Investor may elect, at its option, to
accelerate the Closing Date to a date prior to the satisfaction of the Financing
Condition. If Investor so elects, Investor shall deliver notice to the Company,
stating its election to complete the Closing prior to the satisfaction of the
Financing Condition and specifying the Closing Date, which shall become the
Closing Date for all purposes hereunder. If such Closing Date as specified by
Investor is on or before January 15, 2002, the Company shall issue to Investor,
for no additional cash consideration but as consideration for the additional
13
risks assumed by Investor for such accelerated Closing, 126,290 additional
shares of Common Stock (the "Conditional Common Shares"). The Conditional Common
Shares shall be deemed issued at the same price per share as the Common Shares
being purchased by Investor hereunder, and shall be issued to Investor at the
Closing upon the same terms and conditions as the Common Shares; provided,
however, that the Conditional Common Shares shall not be subject to further
adjustment pursuant to Section 1(c) hereof.
8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION.
(a) Survival of Representations, Warranties and Covenants. The
representations, warranties, covenants and agreements of the Company and
Investor contained in this Agreement, or in any document or certificate
delivered pursuant hereto or in connection herewith shall survive the Closing
Date, and shall continue in effect until the Company's Form 10-K (or Form
10-KSB, if applicable) for the fiscal year ended September 30, 2002 is filed
with the SEC. All statements contained in any certificate or other document
delivered by or on behalf of the Company pursuant hereto shall constitute
representations and warranties by the Company hereunder.
(b) Indemnification. The Company agrees to indemnify and hold Investor
harmless from and against, and will pay to Investor (including its affiliates
and its respective officers, directors, agents, attorneys, employees and
representatives) the full amount of any loss, damage, liability, penalties or
expense (including amounts paid in settlement and reasonable attorneys' fees and
expenses) to Investor resulting either directly or indirectly from any breach of
the representations, warranties, covenants or agreements of the Company
contained in this Agreement or any other document or certificate delivered
pursuant hereto or thereto or in connection herewith or therewith.
(c) Claims for Indemnification; Defense of Indemnified Claims.
(i) For purposes of this Section, the party entitled to
indemnification shall be known as the "Indemnified Party" and the party
required to indemnify shall be known as the "Indemnifying Party." In the
event that the Indemnifying Party shall be obligated to the Indemnified
Party pursuant to this Section 8 or in the event that a suit, action,
investigation, claim or proceeding is begun, made or instituted as a result
of which the Indemnifying Party may become obligated to the Indemnified
Party hereunder, the Indemnified Party shall give prompt written notice to
the Indemnifying Party of the occurrence of such event, specifying the
basis for such claim or demand, and the amount or estimated amount thereof
to the extent then determinable (which estimate shall not be conclusive of
the final amount of such claim or demand); provided, however, that the
failure to give such notice shall not constitute a waiver of the right to
indemnification hereunder unless the Indemnifying Party is actually
prejudiced in a material respect thereby. The Indemnifying Party agrees to
defend, contest or otherwise protect against any such suit, action,
investigation, claim or proceeding at the Indemnifying Party's own cost and
expense with counsel of its own choice, who shall be, however, reasonably
acceptable to the Indemnified Party. The Indemnifying Party may not make
any compromise or settlement without the prior written consent of the
Indemnified Party (which will not be unreasonably withheld or delayed) and
the Indemnified Party shall receive a full and unconditional release
14
reasonably satisfactory to it pursuant to such compromise or settlement.
The Indemnified Party shall have the right but not the obligation to
participate at its own expense in the defense thereof by counsel of its own
choice. If requested by the Indemnifying Party, the Indemnified Party shall
(at the Indemnifying Party's expense) (i) cooperate with the Indemnifying
Party and its counsel in contesting any claim or demand which the
Indemnifying Party defends, (ii) provide the Indemnifying Party with
reasonable access during normal business hours to its books and records to
the extent they relate to the condition or operation of the business and
are requested by the Indemnifying Party to perform its indemnification
obligations hereunder, and to make copies of such books and records, and
(iii) make personnel available to assist in locating any books and records
relating to the business or whose assistance, participation or testimony is
reasonably required in anticipation of, preparation for or the prosecution
and defense of, any claim subject to this Section 8. In the event that the
Indemnifying Party fails timely to defend, contest or otherwise protect the
Indemnified Party against any such suit, action, investigation, claim or
proceeding, the Indemnified Party shall have the right to defend, contest
or otherwise protect the Indemnified Party against the same and may make
any reasonable compromise or settlement thereof and recover the entire cost
thereof from the Indemnifying Party including without limitation,
reasonable attorneys' fees, disbursements and all amounts paid as a result
of such suit, action, investigation, claim or proceeding or compromise or
settlement thereof.
9. GOVERNING LAW; MISCELLANEOUS.
(a) Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Texas without regard to the principles
of conflict of laws. The parties hereto hereby submit to the exclusive
jurisdiction of the United States federal courts located in Dallas, Texas with
respect to any dispute arising under this Agreement, the agreements entered into
in connection herewith or the transactions contemplated hereby or thereby.
(b) Counterparts; Signatures by Facsimile. This Agreement may be executed
in two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. This Agreement, once executed by a
party, may be delivered to the other party hereto by facsimile transmission of a
copy of this Agreement bearing the signature of the party so delivering this
Agreement.
(c) Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
15
(d) Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
(e) Specific Performance. The parties agree that irreparable damage will
result in the event that this Agreement is not specifically enforced, and the
parties agree that any damages available at law for a breach of this Agreement
would not be an adequate remedy. Therefore, the provisions hereof and the
obligations of the parties hereunder shall be enforceable in a court of equity,
or other tribunal with jurisdiction, by a decree of specific performance, and
appropriate injunctive relief may be applied for and granted in connection
therewith. Such remedies and all other remedies provided for in this Agreement
shall, however, be cumulative and not exclusive and shall be in addition to any
other remedies which a party may have under this Agreement or otherwise.
(f) Entire Agreement; Amendments. This Agreement and the agreements,
instruments, exhibits and schedules referenced herein, contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor Investor makes any representation, warranty, covenant or undertaking
with respect to such matters. No provision of this Agreement may be waived or
amended other than by an instrument in writing signed by the party to be charged
with enforcement.
(g) Notices. Any notices required or permitted to be given under the terms
of this Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and shall be effective five (5) days
after being placed in the mail, if mailed by regular United States mail, or upon
receipt, if delivered personally or by courier (including a recognized overnight
delivery service) or by facsimile, in each case addressed to a party. The
addresses for such communications shall be:
If to the Company:
Probex Corp.
One Galleria Tower
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
16
With a copy to:
Jenkens & ▇▇▇▇▇▇▇▇▇
a professional corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Investor:
▇▇▇▇▇▇▇ Capital Group, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Each party shall provide notice to the other party of any change in
address.
(h) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and assigns. Neither the
Company nor Investor shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other. Notwithstanding the
foregoing, subject to Section 2(f), Investor may assign its rights hereunder to
any person that purchases Common Shares in a private transaction from Investor
or to any of its "affiliates," as that term is defined under the Exchange Act,
without the consent of the Company.
(i) Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
(j) Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(k) Limited Recourse. Notwithstanding anything in this Agreement or any
other document, agreement or instrument contemplated hereby or thereby to the
contrary, the obligations of Investor hereunder shall be without recourse to any
partner, affiliate of Investor or their respective partners, or any other
respective officers, directors, employees or agents and shall be limited to the
assets of Investor.
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(l) Waiver. Any term or condition of this Agreement may be waived at any
time by the party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed by or
on behalf of the party waiving such term or condition. No waiver by any party of
any term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or condition
of this Agreement on any future occasion. All remedies, either under this
Agreement or by law or otherwise afforded, will be cumulative and not
alternative.
(m) No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.
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IN WITNESS WHEREOF, Investor and the Company have caused this
Agreement to be duly executed as of the date first above written.
PROBEX CORP.
By:____________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President
PURCHASERS LISTED ON EXHIBIT A
By: ▇▇▇▇▇▇▇ Capital Group, LLC,
as attorney-in-fact
By: _______________________
Name: _____________________
Title: _____________________
EXHIBITS AND SCHEDULES INTENTIONALLY OMITTED
S-1