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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): MAY 1, 2000
PROBEX CORP.
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(Exact name of registrant as specified in its charter)
COLORADO 001-15567 33-0294243
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(State or other jurisdiction of Commission File Number) (IRS Employer
incorporation or organization) Identification No.)
1467 LEMAY, SUITE 111, CARROLLTON, TEXAS 75007
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (972) 466 - 1555.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 1, 2000, Probex Corp., a Colorado corporation (the
"Registrant"), acquired, through its newly formed, wholly-owned subsidiary,
Probex Fluids Recovery, Inc., a Delaware corporation ("PFR"), substantially all
of the assets of Petroleum Products, Inc., an Ohio corporation ("PPI" and the
"PPI Assets"), and Intercoastal Trading Company, Inc., an Ohio corporation
("ICT" and the "ICT Assets"). The acquired assets consist of those assets used
in the business of collecting, purchasing, selling, delivering and marketing
used petroleum products. The aggregate purchase price of the PPI Assets was
$3,500,000.00, which was paid as follows: (i) $1,000,000.00 in cash; (ii) a
promissory note in the amount of $1,500,000.00 for a term of five (5) years, at
an interest rate equal to eight percent (8%) per annum; and (iii) an aggregate
of $1,000,000.00 of the Registrant's common stock valued at $1.875 per share
(the fair market value on the date the parties executed a letter of intent to
acquire these assets). The purchase price of the ICT Assets was $1,100,000.00,
which was paid as follows: (i) $600,000 in cash and (ii) an aggregate of
$500,000.00 of the Registrant's common stock also valued at $1.875 per share.
The common stock issued by the Registrant in connection with the acquisition of
the PPI Assets and the ICT Assets is restricted and will vest pursuant to a
vesting schedule which provides for 25% vesting at the closing and the remaining
shares vesting ratably over the next three (3) years. In connection with
acquisition of the PPI Assets and the ICT Assets, the principals of PPI and ICT,
William Snedegar and William Keith Mills, entered into employment agreements
with PFR for a term of five years. The common stock and the promissory note, as
applicable, are subject to forfeiture upon the breach of certain covenants in
the asset purchase agreements, the employment agreements and the non-competition
agreements. All cash delivered to PPI and ICT by the Registrant was from the
Registrant's working capital.
PPI and ICT are collectors, purchasers, sellers, suppliers, and
marketers of used petroleum products and operate in the State of Ohio and its
surrounding areas. For marketing purposes, both PPI and ICT will continue to
operate under their corporate names as trade names pending the completion of
construction of the Registrant's initial plant facility in Wellsville, Ohio.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of the Businesses Acquired. The
audited financial statements of PPI and ICT required by this Item 7(a) are not
yet available. The Registrant expects that the audited financial statements of
PPI and ICT will be completed and filed by amendment to this Form 8-K Current
Report within 75 days after the date of this Form 8-K Current Report.
(b) Pro Forma Financial Information. The pro forma financial
statements of the Registrant required by this Item 7(b) are not yet available.
The Registrant expects that the pro forma financial statements will be completed
and filed by amendment to this Form 8-K Current Report not later than 75 days
after the date of this Form 8-K Current Report.
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(c) Exhibits.
Exhibit No. Description
99.1 Asset Purchase Agreement dated as of May 1, 2000, by and
among Probex Fluids Recovery, Inc., the Registrant,
Petroleum Products, Inc., and William and Phyllis L.
Snedegar.
99.2 Asset Purchase Agreement dated as of May 1, 2000, by and
among Probex Fluids Recovery, Inc., the Registrant,
Intercoastal Trading Company, Inc., William Snedegar, and
William Keith Mills.
99.3 Promissory Note dated as of May 1, 2000, by and between the
Registrant and Petroleum Products, Inc.
99.4 Employment Agreement dated as of May 1, 2000, by and between
William Snedegar and Probex Fluids Recovery, Inc.
99.5 Employment Agreement dated as of May 1, 2000, by and between
William Keith Mills and Probex Fluids Recovery, Inc.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: May 16, 2000.
PROBEX CORP.
By: /s/ Bruce A. Hall
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Bruce A. Hall
Chief Financial Officer
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
99.1 Asset Purchase Agreement dated as of May 1, 2000, by and
among Probex Fluids Recovery, Inc., the Registrant,
Petroleum Products, Inc., and William and Phyllis L.
Snedegar.
99.2 Asset Purchase Agreement dated as of May 1, 2000, by and
among Probex Fluids Recovery, Inc., the Registrant,
Intercoastal Trading Company, Inc., William Snedegar, and
William Keith Mills.
99.3 Promissory Note dated as of May 1, 2000, by and between the
Registrant and Petroleum Products, Inc.
99.4 Employment Agreement dated as of May 1, 2000, by and between
William Snedegar and Probex Fluids Recovery, Inc.
99.5 Employment Agreement dated as of May 1, 2000, by and between
William Keith Mills and Probex Fluids Recovery, Inc.
</TABLE>
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EXHIBIT 99.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of May 1, 2000 (this
"Agreement"), is made by and among PETROLEUM PRODUCTS, INC., an Ohio corporation
("Seller"), WILLIAM SNEDEGAR and PHYLLIS L. SNEDEGAR, individual residents of
the State of Ohio (the "Shareholders"), PROBEX CORP., a Colorado corporation
("Probex"), and PROBEX FLUIDS RECOVERY, INC., a Delaware corporation and
wholly-owned subsidiary of Probex ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller owns assets relating to its business of collecting,
purchasing, selling, delivering and marketing of used petroleum products (the
"Business"); and
WHEREAS, Seller desires to sell and Buyer desires to purchase,
effective as of 12:01 a.m. May 1, 2000 (the "Effective Time"), substantially all
of the tangible and intangible assets of the Business on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions contained in this Agreement, and intending to be legally bound, and
on the terms and subject to the conditions set forth in this Agreement, the
parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. When used in this Agreement, the following terms
shall have the meanings specified:
"Accounts Receivable" shall mean sums due and owing for petroleum
products in transit from Seller to customers of Seller, including but not
limited to, invoiced shipments.
"Act" shall have the meaning set forth in Section 2.8.
"Agreement" shall mean this Asset Purchase Agreement, together with
all schedules and exhibits attached hereto, as the same may be amended from time
to time in accordance with the terms of this Agreement.
"Alternative Transaction" shall have the meaning set forth in
Section 6.13.
"Assumed Obligations" shall have the meaning set forth in Section
2.6(a).
"Audited Financial Statements" shall mean (a) Seller's audited
balance sheets and statements of income, changes in shareholders' equity and
cash flow as of and for the fiscal years ended December 31, 1997, 1998 and 1999,
and (b) Seller's audited balance sheet and statements of income, changes in
shareholders' equity, and cash flow as of and for the four months and twelve
months ended April 30, 2000.
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"Backlog" shall have the meaning set forth in Section 2.1(k).
"Buyer Employees" shall have the meaning set forth in Section 10.1.
"Buyer Indemnified Party" shall have the meaning set forth in
Section 9.2(a).
"Buyer's Losses" shall have the meaning set forth in Section
9.2(a).
"Closing" shall have the meaning set forth in Section 3.1.
"Closing Amount" shall have the meaning set forth in Section 2.4.
"Closing Date" shall mean the later of (i) May 1, 2000, and (ii)
the date that is the first business day after satisfaction or waiver of the
latest to occur of the conditions set forth in Articles VII and VIII of this
Agreement, unless a different date is agreed to in writing by the parties.
"Closing Time" shall mean 12:01 a.m. on the Closing Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
"Contracts" shall have the meaning set forth in Section 2.1(g).
"Effective Time" shall mean 12:01 a.m. on May 1, 2000.
"Employee" shall have the meaning set forth in Section 4.15(a).
"Employee Agreements" shall have the meaning set forth in Section
4.16(a).
"Employee Benefit Plan" shall mean any plan, fund, program, policy,
arrangement, contract or commitment, whether or not qualified for federal income
tax purposes, whether or not funded, whether formal or informal, and whether for
the benefit of a single individual or more than one individual.
"Employee Plan" shall have the meaning set forth in Section
4.16(a).
"Employment Agreements" shall have the meaning set forth in Section
10.3.
"Environmental laws" shall have the meaning set forth in Section
4.20.
"Equipment" shall have the meaning set forth in Section 2.1(e).
"Equipment Leases" shall have the meaning set forth in Section
2.1(f).
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"Exchange Act" shall have the meaning set forth in Section 4.29(c).
"Excluded Assets" shall have the meaning set forth in Section 2.1.
"Excluded Contracts" shall have the meaning set forth in Section
2.1.
"Excluded Obligations" shall have the meaning set forth in Section
2.6(b).
"Financial Statements" shall mean the Preliminary Financial
Statements and the Audited Financial Statements, collectively.
"GAAP" shall mean those generally accepted accounting principles
which are recognized as such by the American Institute of Certified Public
Accountants acting through its Accounting Principles Board or the Financial
Accounting Standards Board or through other appropriate boards or committees
thereof and which are consistently applied.
"Intellectual Property" shall have the meaning set forth in Section
4.11(a).
"Intercoastal Agreement" shall have the meaning set forth in
Section 7.6.
"Inventory" shall mean all petroleum products held by Seller in its
storage tanks, tanker trucks, rail cars, barges and other storage vessels, other
than petroleum products that represent Accounts Receivable.
"Key Employees" shall have the meaning set forth in Section 3.2(f).
"Law" shall mean any federal, state, local or other law or
governmental requirement of any kind, whether legislatively, judicially or
administratively promulgated, and any rules, regulations and orders promulgated
thereunder.
"Legal Requirements" shall have the meaning set forth in Section
4.28.
"Licenses and Permits" shall have the meaning set forth in Section
2.1(l).
"Line of Credit" shall mean that certain indebtedness in the
maximum principal amount of $75,000 owed by Seller to Bank One, N.A.
"Material Adverse Effect" shall mean a material and adverse effect
on the financial condition, assets, liabilities, business, property or prospects
of Seller, the Purchased Assets, the Contracts, Buyer and/or Probex, as
applicable.
"Non-Assignable Contracts" shall have the meaning set forth in
Section 2.2.
"Non-Compete Agreement" shall have the meaning set forth in Section
3.2(g).
"Post Closing Adjustments" shall have the meaning set forth in
Section 2.5.
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"Preliminary Financial Statements" shall mean the draft financial
information relating to Seller as of December 31, 1999, prepared by Ernst &
Young, LLP and delivered to Buyer on or about March 31, 2000.
"Probex Share Price" shall have the meaning set forth in Section
2.4.
"Probex Stock" shall have the meaning set forth in Section 2.4.
"Promissory Note" shall have the meaning set forth in Section
2.4(d).
"Purchased Assets" shall have the meaning set forth in Section 2.1.
"Purchase Price" shall have the meaning set forth in Section 2.4.
"Real Property" shall have the meaning set forth in Section 2.1(d).
"Related Party" shall have the meaning set forth in Section 4.24.
"Records" shall have the meaning set forth in Section 2.1(j).
"SEC" shall have the meaning set forth in Section 4.29(c).
"Seller's Floor" shall have the meaning set forth in Section 9.2.
"Seller Indemnified Party" shall have the meaning set forth in
Section 9.3(a).
"Seller's Losses" shall have the meaning set forth in Section
9.3(a).
"Shareholders" shall mean William Snedegar and Phyllis L. Snedegar,
who are the sole shareholders of Seller.
"Taxes" shall have the meaning set forth in Section 4.19.
"Technology" shall have the meaning set forth in Section 4.32.
"Third Party Intellectual Property" shall have the meaning set
forth in Section 4.11(a).
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ARTICLE II
PURCHASE AND SALE
2.1 Commitment to Sell and Assign. Upon the terms and subject to the
conditions set forth in this Agreement, Seller shall sell, transfer, assign,
convey and deliver to Buyer all of the assets, properties, interests, business,
goodwill, claims and other rights of Seller (other than the Excluded Assets)
relating to the Business of every kind and nature whatsoever, tangible or
intangible, vested or unvested, contingent or otherwise, real, personal or
mixed, and wherever located, whether or not reflected on the books and records
of Seller and whether or not described in this Agreement or in any of the
schedules hereto, as such existed as of the date hereof, together with
additional assets acquired from the date hereof to the Closing Date, including,
without limitation, all right, title and interest of Seller in and to the
following specified assets, properties and rights (collectively, the "Purchased
Assets"):
(a) All Intellectual Property, including, but not limited to, that
set forth on Schedule 2.1(a) and the use of the name "Petroleum Products, Inc.,"
including the goodwill attached to such name, and the trade names and marks
descriptive and associated with such name.
(b) All of Seller's rights to use the Third Party Intellectual
Property, including, but not limited to, those set forth on Schedule 2.1(b).
(c) [Intentionally omitted]
(d) All real property and leases, including capitalized leases, for
real property owned, used or leased by Seller in connection with the Business,
including those set forth on Schedule 2.1(d) ("Real Property").
(e) All fixed assets, furniture, property, equipment, fixtures,
leasehold improvements, tools, machinery, office equipment, plant and other
tangible personal property related to or used in connection with the Business or
located at Seller's place of business, including, without limitation, those set
forth on Schedule 2.1(e) (the "Equipment").
(f) Seller's interest under those certain equipment leases
pertaining to the Business and set forth on Schedule 2.1(f) (the "Equipment
Leases").
(g) Seller's interest in all personal property leases, rental
agreements, sales and purchase orders and acknowledgments, permits, customer
license and maintenance agreements, third party product agreements, third party
supply agreements and any and all other contracts or binding agreements relating
to the Business, including, but not limited to, those set forth on Schedule
2.1(g) (the "Contracts") and all of Seller's interests (including rights to
refund and offset), privileges, claims, causes of action and options relating to
the Contracts or any portion thereof; provided, however, that each of the
Excluded Contracts shall be retained by Seller and shall not be considered a
"Contract" hereunder, but shall constitute an Excluded Asset, as defined below.
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(h) [Intentionally omitted]
(i) Prepaid expenses or advances to third parties relating to the
Business, including, but not limited to, lease deposits and maintenance
agreements as set forth on Schedule 2.1(i).
(j) Except as set forth below, all business, accounting and
financial records, property records, contract records, personnel records,
correspondence, files, books and documents of Seller relating to the Business,
including, but not limited to, sales, marketing and advertising data and
materials, customer and mailing lists of any and all types, vendor and customer
invoices, credit reports, billing records, service records, software and related
documentation, artwork, photographs, manuals and teaching aids, engineering,
maintenance and production records (the "Records").
(k) All of Seller's backlog related to the conduct of the business
or operations of the Business, as of the Closing Time, of unfilled firm orders
for products manufactured or sold or services provided by Seller related to the
business or operations of the Business, including, but not limited to, that set
forth on Schedule 2.1(k) (the "Backlog").
(l) All of Seller's licenses and permits required for the operation
of the Business and the operation of the Purchased Assets or used by Seller,
including, but not limited to, those set forth on Schedule 2.1(l) (the "Licenses
and Permits").
Notwithstanding the foregoing, however, the Purchased Assets shall
not include any cash, Accounts Receivable, and any contract or agreement
relating to the Business designated on Schedule 2.1(m) which Probex and Buyer
are unwilling to assume (the "Excluded Contracts") and general books of account
and books of original entry that comprise Seller's or the Business' permanent
accounting or tax records and books and records that Seller is required to
retain pursuant to any statute, rule or regulation; provided, however, Buyer
shall be entitled to a description of, and to the extent available, copies of,
all the foregoing (collectively referred to as the "Excluded Assets"). All
Excluded Assets are listed on Schedule 2.1(n).
2.2 Non-Assignable Contracts. In the case of any Real Property
mortgages, leases, Contracts or Equipment Leases which by their terms or by
virtue of their subject matter are not assignable without the consent of a third
party (collectively, the "Non-Assignable Contracts," all of which are listed on
Schedule 2.2), Seller will use its best efforts to obtain, prior to the Closing
Time, any written consents necessary to convey to Buyer the benefit thereof.
Buyer shall cooperate with Seller, in such manner as may be reasonably requested
and at Seller's expense, in connection therewith, provided that Buyer shall not
be obligated to agree to pay any consideration or increase the consideration
payable under any such Non-Assignable Contract or to make any other agreement
that would affect adversely in any other way the economics for Buyer under such
Non-Assignable Contract, or would make the obligations intended to be assumed by
Buyer thereunder more burdensome. Seller shall inform Buyer from time to time
prior to the Closing Time of Seller's receipt from any such third party of
confirmation of such third party's refusal to grant its consent to any such
assignment. Nothing in this Agreement shall
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be construed as an attempt or an agreement to assign or cause the assignment of
any Non-Assignable Contract included in the Purchased Assets which is in law
nonassignable without the consent of the other party or parties thereto, unless
such consent shall have been given. Notwithstanding the foregoing, in the event
that any third party to a Non-Assignable Contract has not consented to an
assignment thereof to Buyer for any reason, then Buyer shall have no liability
or obligation to Seller, such third party or any other party with respect to
such Non-Assignable Contract, and if any Non-Assignable Contract is not assigned
to Buyer for any reason and Buyer considers in its sole judgment that such
Non-Assignable Contract is material to the business to be conducted by Buyer
after the Closing Date then, at Buyer's option, Buyer shall have no obligation
to consummate its purchase hereunder. In the event that Buyer consummates its
purchase hereunder and any Non-Assignable Contract has not been assigned to
Buyer for any reason then either (i) Buyer and Seller shall negotiate in good
faith to adjust the Purchase Price (as defined herein) based on such event
and/or (ii) Buyer and Seller shall cooperate in good faith with the other party
in any reasonable arrangement necessary or desirable to provide Buyer the
benefits of such Non-Assignable Contract.
2.3 Commitment to Purchase and Accept. Upon the terms and subject to
the conditions set forth in this Agreement, Buyer shall purchase, accept and
acquire the Purchased Assets, free and clear of all liens, claims and
encumbrances whatsoever (except as set forth in Section 2.6(a)(vii) and Section
4.4), and in full payment for such purchase shall pay, or cause to be paid, to
Seller the purchase price pursuant to Section 2.4.
2.4 Purchase Price. The purchase price for the Purchased Assets (the
"Purchase Price") shall be an amount equal to the sum of: (i) $1,000,000 in
cash, which shall be paid at the Closing (the "Closing Amount"); plus (ii)
$1,000,000 of the common stock, no par value per share, of Probex (the "Probex
Stock") valued at $1.875 per share (the "Probex Share Price"); plus (iii)
$1,500,000 in the form of the Promissory Note. The Purchase Price shall be
payable to Seller as follows:
(a) At the Closing, Buyer or Probex shall pay to Seller the Closing
Amount by certified check or bank cashier's check, or by wire transfer of
immediately available funds.
(b) At the Closing, Probex shall issue an aggregate of 533,333
shares of the Probex Stock to the Shareholders, of which 133,334 shares will be
fully vested at the Closing, and the remainder of which shall vest in the amount
of 133,333 shares on each of the first, second and third anniversaries of the
Closing Date. Such shares shall be allocated to the Shareholders in the amounts
set forth on Schedule 2.4(b).
(c) Until the shares of Probex Stock have vested, such shares shall
be subject to forfeiture in the event of a breach by Seller of its obligation
(i) to pay any Post-Closing Adjustment pursuant to Section 2.5, and (ii) to pay
any indemnification obligations as set forth in Section 9.2(c). Subject to the
foregoing, the holder of the Probex Stock shall be entitled to vote its shares
of the Probex Stock and to collect and receive all dividends and distributions
paid in respect of the Probex Stock. Until the shares of Probex Stock have
vested, however, the holders of the Probex Stock shall not sell, assign,
transfer, pledge, or otherwise encumber any of their right, title or interest in
or to the Probex Stock.
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(d) At the Closing, Probex shall deliver to Seller its promissory
note (the "Promissory Note") in the aggregate principal amount of $1,500,000 in
the form of Exhibit B attached hereto.
2.5 Post-Closing Audit Adjustments. Seller acknowledges that it
historically did not prepare nor have available any audited financial
information, and, therefore, the Purchase Price was determined based upon the
Preliminary Financial Statements. Prior to August 15, 2000, Buyer's independent
accountants will prepare the Audited Financial Statements of the Seller,
conducting such procedures as they deem appropriate to confirm that such
financial statements are prepared in accordance with generally accepted
accounting principles consistently applied and present fairly the consolidated
financial condition of the Seller as of and for the periods presented To the
extent such independent accountants determine that the financial condition of
Seller as shown on the Audited Financial Statements is less than the financial
condition shown on the Preliminary Financial Statements, the Purchase Price
shall be equitably reduced by an amount determined in good faith by agreement of
the parties. Such adjustment (the "Post-Closing Adjustment") shall be due and
payable upon receipt by Seller and the Shareholders of notice of the
Post-Closing Adjustment from Buyer. If the amount of the Post-Closing Adjustment
is not paid within fifteen (15) days after receipt of such notice, Buyer and/or
Probex shall be entitled, without any further notice, to reduce the principal
balance outstanding under the Promissory Note by the amount of the Post-Closing
Adjustment. Such principal balance shall be reduced from the installments of
principal payable under the Promissory Note in the order that such payments
shall become due. To the extent that the amount of the Post-Closing Adjustment
exceeds the principal balance then outstanding under the Promissory Note, the
entire Promissory Note shall be deemed cancelled, and Buyer and/or Probex shall
be entitled to make a claim upon the unvested portion of the Probex Stock for
any remaining balance of the Post-Closing Adjustment in accordance with Sections
2.4(c) and 9.2(c).
2.6 Liabilities.
(a) Buyer shall assume the liabilities of Seller shown on the
audited balance sheet of Seller as of December 31, 1999, including, but not
limited to, the following, but in no event in an aggregate amount of in excess
of the aggregate value of such liabilities shown on such balance sheet, and
except for those items set forth in Section 2.6(b) or incurred by Seller
thereafter in the ordinary course of business consistent with past practice (the
"Assumed Obligations"):
(i) obligations under the Contracts;
(ii) liabilities arising on and after the Closing Date (except
as otherwise set forth in this Agreement) under the Contracts, Real Property,
the Equipment, the Equipment Leases and other assets included in the Purchased
Assets;
(iii) liabilities for accounts payable and accrued and unpaid
expenses of
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the Business incurred in the ordinary course of business (other than accounts
payable relating to the Accounts Receivable), including, with respect to Buyer
Employees (as defined below), employment costs relating to facts and
circumstances arising on or after the Closing Date;
(iv) insurance claims made on or after the Effective Time
relating to the Purchased Assets or Assumed Obligations;
(v) liabilities arising from the ownership of the Purchased
Assets on and after the Closing Date;
(vi) liabilities relating to all causes of action and other
claims which a third party may assert in respect of any of the Purchased Assets
(but only to the extent such causes of action or claims relate to liabilities
assumed hereunder); and
(vii) liabilities arising under the Line of Credit, except to
the extent such liabilities relate to the Accounts Receivable.
(b) Seller shall retain and Buyer shall not assume any liabilities
or obligations (other than the Assumed Obligations) of Seller with respect to
the Business, whether known or unknown, fixed or contingent, including, without
limitation, the following obligations or liabilities (the "Excluded
Obligations"):
(i) obligations and liabilities arising out of or relating to
the Excluded Assets, including any accounts payable, obligations and liabilities
relating to the Accounts Receivable;
(ii) liabilities of Seller for Taxes (as defined in Section
4.19) not shown on the Financial Statements accruing prior to the Effective Time
and Taxes relating to the conduct of the Business prior to the Effective Time;
(iii) liabilities of Seller relating to any Employee (as
defined in Section 4.15) not shown on the Financial Statements or arising under
or pursuant to any Employee Plan or Employee Agreement (as such terms are
defined in Section 4.16), including without limitation all liabilities relating
to the employment by Seller of any employee, agent, contractor or consultant, or
the termination of such employment prior to the Closing Date and all liabilities
and responsibilities for compliance with the requirements of Section 4980B of
the Code (COBRA) through the Closing Date, which includes any terminations of
employment that occur on such date as a result of this transaction;
(iv) other liabilities of the Business not expressly included
in the Assumed Obligations, including, without limitation, all liabilities of
Seller in connection with the Business arising under or pursuant to
Environmental Laws (as defined in Section 4.20) arising from events occurring
prior to the Closing Date;
(v) all overdrafts; and
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(vi) the liabilities set forth on Schedule 2.6(b).
2.7 Power of Attorney. Effective on the Closing Date, Seller hereby
constitutes and appoints Buyer and its successors, legal representatives and
assigns the true and lawful attorneys of Seller, with full power of
substitution, in the name of Seller or Buyer, but on behalf of and for the
benefit of Buyer and its successors, legal representatives and assigns: (a) to
demand and receive from time to time any and all of the Purchased Assets and to
make endorsements and give receipts and releases for and in respect of the same
and any part thereof; (b) to institute, prosecute, compromise and settle any and
all proceedings at law, in equity or otherwise that Buyer and its successors,
legal representatives or assigns may deem proper in order to collect, assert or
enforce any claim, right or title of any kind in or to the Purchased Assets; (c)
to defend any or all actions, suits or proceedings in respect of any of the
Purchased Assets; and (d) to do all such acts and things in relation to the
matters set forth in the preceding clauses (a) through (c) as Buyer and its
successors, legal representatives or assigns shall deem desirable. Seller hereby
agrees that the appointment hereby made and the powers hereby granted are
coupled with an interest and are and shall be irrevocable by it in any manner or
for any reason. After the Closing Date, Buyer shall have the right to receive
and open all mail, packages and other communications addressed to Seller and
relating to the Purchased Assets, and Seller agrees promptly to deliver to Buyer
any such mail, packages or other communications received directly or indirectly
by Seller. Buyer shall promptly deliver to Seller all mail, packages and other
communications received by it which relate to Seller but do not relate to the
Purchased Assets.
2.8 Probex Stock. The Probex Stock shall not be registered under the
Securities Act of 1933, as amended (the "Act"), and as such shall constitute
"restricted securities" within the meaning of Rule 144 under the Act and the
Probex Stock shall be available for sale in the public market only in compliance
with Rule 144. The Probex Stock shall bear a legend substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS (THE "STATE
ACTS"), HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION UNDER THE STATE
ACTS OR EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS
(INCLUDING, IN THE CASE OF THE SECURITIES ACT, THE EXEMPTION AFFORDED
BY RULE 144). UNLESS WAIVED BY PROBEX CORP., PROBEX CORP. SHALL BE
FURNISHED WITH AN OPINION OF COUNSEL OPINING AS TO THE AVAILABILITY OF
EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AS A PRECONDITION
TO ANY SUCH TRANSFER.
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In addition, so long as the shares of Probex Stock have not vested,
such shares shall bear a legend substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO
THAT CERTAIN ASSET PURCHASE AGREEMENT BY AND BETWEEN THE ISSUER AND
PETROLEUM PRODUCTS, INC. DATED AS OF MAY 1, 2000. SUCH SHARES ARE
SUBJECT TO FORFEITURE UPON THE OCCURRENCE OF CERTAIN BREACHES OR
DEFAULTS OF COVENANTS SET FORTH IN SUCH AGREEMENT AND OTHER AGREEMENTS
ENTERED INTO IN CONNECTION THEREWITH. CONSEQUENTLY, THIS CERTIFICATE
AND THE SHARES REPRESENTED BY SUCH CERTIFICATE MAY NOT BE TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE ENCUMBERED WITHOUT THE PRIOR WRITTEN
CONSENT OF THE ISSUER.
At such time that the shares of Probex Stock shall be fully vested, and
there shall be no pending claim for forfeiture thereof pursuant to Section
9.2(c), Probex shall cause such legend to be removed from the certificates
representing such shares.
ARTICLE III
CLOSING
3.1 Closing. The consummation and closing of the transactions
contemplated in this Agreement (the "Closing") shall be held at 9:00 a.m. local
time on the Closing Date at the offices of Thomas E. Baxter, 150 W. Wilson
Bridge Road, Suite 101, Worthington, Ohio unless the parties otherwise agree.
All transactions occurring at the Closing shall be deemed to have occurred
simultaneously as of the Closing Time, and no one transaction shall be complete
until all transactions have been completed.
3.2 Seller's Deliveries at Closing. Seller and the Shareholders, as
applicable, shall at the Closing execute and deliver, or cause to be executed
and delivered, to Buyer and/or Probex, as appropriate, the following:
(a) a Bill of Sale conveying in the aggregate all of the Equipment,
Intellectual Property and Records, and any other personal property included in
the Purchased Assets, substantially in the form attached as Exhibit C;
(b) a general warranty deed conveying to the Buyer fee simple title
to any Real Property included in the Purchased Assets, free and clear of any and
all liens, claims, and encumbrances other than the permitted exceptions;
(c) an owner's policy of title insurance from Chicago Title
Insurance Company with respect to the fee interest in Real Property owned by
Seller, which policy shall
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contain endorsements and be subject to exceptions, and shall otherwise be in
form and substance, acceptable to Buyer and Probex in their sole discretion;
(d) an Assignment and Assumption Agreement, substantially in the
form attached as Exhibit D, with respect to the Equipment Leases and Contracts;
(e) [Intentionally omitted]
(f) the Employment Agreements with those individuals set forth on
Schedule 3.2(f) (the "Key Employees"), substantially in the form attached hereto
as Exhibit E;
(g) the Non-Disclosure, Assignment of Developments,
Non-Solicitation and Non-Competition Agreement (the "Non-Compete Agreement")
with the Shareholders and Key Employees, substantially in the form attached
hereto as Exhibit F;
(h) an estoppel and consent certificate (dated not more than 30
days prior to the Closing Date) from each landlord under a Real Property lease
reasonably acceptable in form to Buyer;
(i) a nondisturbance agreement and an assignment of each Real
Property lease conveying title to each Real Property lease in accordance with
this Agreement in a form reasonably acceptable to Buyer;
(j) assignments, each in form satisfactory to Buyer, of all
Intellectual Property from Seller to Buyer and rights to all Third Party
Intellectual Property (together with written consents of the owners thereof to
such assignment and use) (other than the Excluded Contracts);
(k) all consents that are required from parties to the
Non-Assignable Contracts;
(l) true, correct and complete copies of Seller's Certificate of
Incorporation and all amendments thereto, duly certified as of a recent date by
the Secretary of State of Ohio;
(m) a certificate of the Secretary of State of Ohio, dated as of a
recent date, duly certifying as to the existence and good standing of Seller as
a corporation under the laws of Ohio;
(n) a certificate duly executed by an officer of Seller that
certifies (i) the due adoption by the directors and by the Shareholders of
Seller of corporate resolutions attached to such certificate authorizing the
transactions and the execution and delivery of this Agreement and the other
agreements and documents contemplated hereby and the taking of all actions
contemplated hereby and thereby; and (ii) that the copy of the Bylaws of Seller
attached to such certificate is a true and correct copy of such Bylaws and that
such Bylaws have not been amended except as reflected in such copy;
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(o) a certificate duly executed by an officer of Seller, dated as
of the Closing Date, that certifies that the representations and warranties of
Seller contained in this Agreement are true and correct as of the Closing Date
and that Seller has performed and complied with all covenants and conditions
required by this Agreement to be performed and complied with by any of them at
or prior to Closing;
(p) original copies of all Real Property mortgages, deeds of trust,
leases, Contracts and Equipment Leases and all amendments, supplements or
modifications thereto;
(q) all of Seller's books and records constituting a part of the
Purchased Assets, including, without limitation, the Records;
(r) possession or constructive possession of the Purchased Assets;
(s) such documents necessary to release the Purchased Assets from
all liens, claims and encumbrances not expressly assumed hereunder;
(t) supplements to the Schedules hereto showing any changes thereto
which have occurred between the date of this Agreement and the Closing Date;
(u) the opinion of Seller's counsel substantially in the form of
Exhibit G;
(v) fully executed articles of amendment to Seller's articles of
incorporation, in form and substance satisfactory to Buyer and Probex, changing
the name of Seller to a name that is not confusingly similar to "Petroleum
Products, Inc." or "Intercoastal Trading Company, Inc."; and
(w) such other agreements, documents and/or instruments, including
such specific releases, assignments, bills of sale and other instruments of
conveyance and transfer, in form and substance acceptable to Buyer, Probex and
their counsel, as may be necessary to transfer, convey and deliver the Purchased
Assets from Seller to Buyer and to vest in Buyer title thereto free and clear of
all liens, claims and encumbrances (except as set forth in Section 2.6(a)(vii)
and Section 4.4).
3.3 Probex and Buyer's Deliveries. Buyer and Probex, as applicable,
shall at the Closing execute and deliver to Seller the following:
(a) the Closing Cash Amount;
(b) the Promissory Note;
(c) the Probex Stock;
(d) [Intentionally omitted]
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(e) the Employment Agreements;
(f) the Non-Compete Agreements;
(g) [Intentionally omitted]
(h) certificates duly executed by the Secretary or Assistant
Secretary of both Probex and Buyer that certify to the extent necessary (i) the
due adoption of the Board of Directors of both of corporate resolutions attached
to such certificate authorizing the transactions and the execution and delivery
of this Agreement and the other agreements and documents contemplated hereby and
the taking of all actions contemplated hereby and thereby; and (ii) that the
copy of the Bylaws of both attached to such certificate is a true and correct
copy of such Bylaws and that such Bylaws have not been amended except as
reflected in such copy; and
(i) certificates duly executed by the Secretary or Assistant
Secretary of Buyer and Probex, dated as of the Closing Date, that certifies that
the representations and warranties of Buyer and Probex contained in this
Agreement are true and correct as of the Closing Date and that Buyer and Probex
have performed and complied with all covenants and conditions required by this
Agreement to be performed and complied with by it at or prior to Closing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS
Seller and the Shareholders hereby jointly and severally represent and
warrant to Buyer and Probex as follows:
4.1 Organization and Authority of Seller. Seller is a corporation
validly existing and in good standing under the laws of the State of Ohio and
has full power to enter into and perform its obligations under this Agreement
and under all other agreements, documents and/or instruments to be executed
and/or delivered by Seller pursuant to or in connection with this Agreement.
Seller has full power to own, operate and/or hold under lease the Purchased
Assets as, and in the places where, such properties and assets now are owned,
operated or held.
4.2 Authorization; Enforceability. The execution, delivery and
performance by Seller of this Agreement and of all of the agreements, documents
and/or instruments to be executed and/or delivered by Seller pursuant to or in
connection with this Agreement have been duly authorized by all necessary action
of Seller. This Agreement is, and the other agreements, documents and
instruments required hereby will be, when executed and delivered by the parties
hereto, the valid and binding obligations of Seller and the Shareholders,
enforceable against Seller and the Shareholders in accordance with their
respective terms.
4.3 No Violation or Conflict by Seller. The execution, delivery and
performance of this Agreement by Seller and the Shareholders does not and will
not violate, conflict with or
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result in the creation or imposition of any lien, charge or encumbrance under
any Law, judgment, order or decree binding on Seller or the Articles of
Incorporation or the Bylaws of Seller, or any contract or agreement to which
Seller is a party or by which Seller or any of the Purchased Assets are bound.
4.4 Title to Assets. Seller has good and marketable title to all of the
Purchased Assets owned or purported to be owned by Seller pursuant to the
Schedules hereto and a good and valid leasehold interest in all property leased
by Seller and used in connection with the Business, in each case free and clear
of all liens, claims and encumbrances (except as set forth in Section
2.6(a)(vii) and this Section 4.4). Upon delivery of the Purchased Assets at the
Closing, good and valid title to the Purchased Assets, free and clear of all
mortgages, liens, claims, pledges, security interests or other encumbrances
(except as set forth in Section 2.6(a)(vii)), will pass to Buyer.
4.5 Inventory and Accounts Receivable. The description of the Inventory
contained in Schedule 4.5 is complete and accurate as of the Effective Time.
Since December 31,1999 there have been no material changes to the Inventory,
other than changes in the ordinary course of business. The description of the
Accounts Receivable contained in Schedule 2.1(m) is complete and accurate as of
the Effective Time. The Accounts Receivable constitute all of the Accounts
Receivable of the Business related to the Purchased Assets. Such Accounts
Receivable were generated in the ordinary course of the Business. There is not
and will not be any liability of Seller for any refunds, allowances or returns
in respect of products imported, marketed, sold, distributed or shipped by or
for the account of Seller on or prior to the Closing Date.
4.6 No Litigation. Except as described on Schedule 4.6, there are no
actions at law or in equity, or arbitration proceedings, or claims or
investigations of which Seller has received notice, pending or to Seller's
knowledge threatened, or state of facts existing, which gives Seller any
reasonable basis to anticipate any such action, proceeding, claim or
investigation which could have a Material Adverse Effect. There are no
proceedings, pending or to Seller's knowledge threatened, against Seller and
related to the Business by or before any governmental board, department,
commission, bureau, instrumentality or agency (including, but not limited to,
any federal, state, or local governmental agency or body concerned with
environmental protection or pollution control, civil rights, labor or
discrimination, safety or health, zoning or land use), or state of facts
existing which gives Seller any reasonable basis to anticipate any such
proceeding; and Seller's ownership and operation of the Business is not in
violation of any order, decree or judgment of any court or arbitration tribunal
or governmental board, department, commission, bureau, instrumentality or
agency.
4.7 Financial Statements. The Financial Statements (a) were prepared in
accordance with the books of account and records of Seller, (b) are true,
correct and complete and present fairly the financial position and results of
operations of the Business as of the dates and for the periods indicated
therein, (c) make full and adequate disclosure of, and provision for, all
obligations and liabilities of the Business as of the dates thereof, and (d)
were prepared in conformity with generally accepted accounting principles
applied on a consistent basis.
4.8 Liabilities and Obligations. The Financial Statements reflect all
liabilities of
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Seller relating to the Business, 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 of such Financial Statements. All
reserves shown in the Financial Statements are appropriate, reasonable and
sufficient to provide for the losses contemplated thereby. Seller 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 which relates to or effects the Business.
4.9 Real Property. The Real Property listed on Schedule 2.1(d) is the
only property of similar type used by Seller in the Business. Seller has legal
title to the Real Property owned in fee and is capable of conveying the Real
Property owned in fee to Buyer by general warranty deed. Seller's interest in
the Real Property is subject to no liens, claims or encumbrances, except for
those set forth in Schedule 4.9. True and correct copies of all instruments
conveying Real Property or otherwise evidencing ownership thereof, including,
without limitation, mortgages, deeds of trusts, deeds, contracts in lieu of
deed, purchase contracts, or leases ("Conveyance Instruments"), have been
delivered to Buyer by Seller. Subject to the terms of the respective Real
Property, Seller has a valid and subsisting title or leasehold estate in and the
right to quiet enjoyment to the property subject thereto for the respective Real
Property (for the full term of Real Property leases). The Conveyance Instruments
are in full force and effect and are enforceable in accordance with their
respective terms, except as such enforceability may be subject to or limited by
bankruptcy, insolvency, reorganization or other similar Laws affecting the
enforcement of creditors' rights generally. Seller has not assigned, pledged,
mortgaged, hypothecated or otherwise transferred any Real Property. Seller has
not sublet all or any portion of any property subject to a Real Property lease.
Seller has not received any written notice of default under any Conveyance
Instrument, and to Seller's knowledge there is no material default under any
Conveyance Instrument, and no event has occurred or failed to occur which, with
the giving of notice or the passage of time, or both, would constitute a
material default under any Conveyance Instrument. No portion of any parcel of
real property subject to a Conveyance Instrument is located in an area
designated as a flood zone by any governmental entity. All facilities and
improvements on any Real Property or subject to any Real Property lease are
adequate and suitable for the conduct of the Business and are in good working
order and condition, ordinary wear and tear excepted, and are supplied with
utilities and other services necessary for their operation in connection with
the Business.
4.10 Personal Property; Inventories.
(a) Schedule 2.1(e) sets forth a description of all Equipment owned
by Seller and used in connection with the Business, and separately sets forth
all Equipment (other than Excluded Assets) (i) leased by Seller, (ii) which is
in the possession of Seller and owned by other persons or (iii) owned by Seller
and is in the possession of other persons. All Equipment owned, leased or used
by Seller in connection with the Business is fit for operation in the usual
course of business as currently conducted, ordinary wear and tear excepted, and
all such Equipment is located on premises owned by Seller or covered by valid
leaseholds. Seller has or will on the Closing Date have the right and authority
to transfer all Equipment to Buyer and, upon such
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transfer, Buyer will have good and valid title to such Equipment free and clear
of all liens (including, without limitation, liens for taxes), claims and
encumbrances (except as set forth in Section 2.6(a)(vii)). Except as set forth
on Schedule 2.2, each lease or agreement pursuant to which Seller leases any
Equipment for use in connection with the Business may be assigned to Buyer
without any restriction or required consent or other approval.
(b) Seller does not own material quantities of any inventories of
materials, spare parts, work-in-process or finished goods (whether located at or
in transit to Seller) used in connection with the Business.
4.11 Intellectual Property Rights.
(a) Seller owns, or is licensed or otherwise possesses legally
sufficient rights to use, all patents, trademarks, trade names, service marks,
copyrights, maskworks and any applications therefor, technology, know-how, video
and audio compression algorithms, computer software programs or applications (in
both source code and object code form) and tangible or intangible proprietary
information or material that are used or proposed to be used in the Business of
Seller as currently conducted. Schedule 2.1(a) lists all current patents, patent
applications, registered and material unregistered copyrights, maskworks, trade
names and any applications therefor owned or licensed by Seller (the
"Intellectual Property"), and specifies the jurisdictions in which each such
Intellectual Property has been issued or registered or in which an application
for such issuance and registration has been filed, including the respective
registration or application numbers and the names of all registered owners.
Schedule 2.1(b) includes and specifically identifies all material third-party
patents, trademarks, copyrights (including software) and maskworks (the "Third
Party Intellectual Property"), which are incorporated in, are, or form a part
of, any Seller product, excluding any such intellectual property rights that are
available on a commodity basis (such as "shrink wrap" licenses) and which are
non-exclusive, terminable and available at a standard fee. Schedule 2.1(a) lists
(i) all material licenses, sublicenses and other agreements as to which Seller
is a party and pursuant to which any person is authorized to use any of Seller's
Intellectual Property, or any trade secret material to Seller or any of its
subsidiaries; and (ii) all material licenses, sublicenses and other agreements
as to which Seller is a party and pursuant to which Seller is authorized to use
any Third Party Intellectual Property, or other trade secret of a third party in
or as any product, and includes the identity of all parties thereto, a
description of the nature and subject matter thereof and the term thereof.
(b) Seller is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations hereunder, in
violation of any license, sublicense or agreement described in Schedule 2.1(a)
or Schedule 2.1(b). No claims with respect to Seller's Intellectual Property,
any trade secret material to Seller, or Third Party Intellectual Property to the
extent arising out of any use, reproduction or distribution of such Third Party
Intellectual Property by or through Seller, are currently pending or to Seller's
knowledge are threatened by any person, nor does Seller know of any valid
grounds for any bona fide claims (i) to the effect that the manufacture, sale,
licensing or use of any product as now used, sold or licensed or proposed for
use, sale or license by Seller infringes on any copyright, maskwork, patent,
trademark, service mark or trade secret; (ii) against the use by Seller of any
trademarks, trade names, trade secrets, copyrights, maskworks,
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patents, technology, know-how, video and audio compression algorithms, or
computer software programs and applications used in Seller's business as
currently conducted; (iii) challenging the ownership, validity or effectiveness
of any of the Seller's Intellectual Property or other trade secret material to
the Seller; or (iv) challenging the Seller's license or legally enforceable
right to use of the Third Party Intellectual Property. All material patents,
registered trademarks, maskworks and copyrights held by the Seller are valid and
subsisting. To Seller's knowledge, there is no material unauthorized use,
infringement or misappropriation of any of the Seller's Intellectual Property by
any third party, including any employee or former employee of the Seller or any
of the its subsidiaries. Neither the Seller nor any of its subsidiaries (i) has
been sued or charged in writing as a defendant in any claim, suit, action or
proceeding which involves a claim or infringement of trade secrets, any patents,
trademarks, service marks, maskworks or copyrights and which has not been
finally terminated prior to the date hereof or been informed or notified by any
third party that the Seller may be engaged in such infringement or (ii) has
knowledge of any infringement liability with respect to, or infringement by, the
Seller or any of its subsidiaries of any trade secret, patent, trademark,
service mark, maskwork or copyright of another. Seller has not taken any action
to encourage adoption by any uniform standards board of any technology upon
which Seller's Intellectual Property is based or with respect to any Third Party
Intellectual Property which is incorporated in, are or form a part of any Seller
product.
4.12 Entire Business. Seller has the complete and unrestricted power
and the unqualified right to sell, transfer, convey, assign and deliver the
Purchased Assets to Buyer. The sale of the Purchased Assets by Seller to Buyer
pursuant to this Agreement will effectively convey to Buyer the entire Business
(other than the Excluded Assets and the Excluded Contracts). The assets,
properties and rights which will be owned or possessed by Buyer as of the
Closing will constitute all of the tangible and intangible property used by
Seller (whether owned by it or by any of its affiliates) in connection with the
conduct of the Business as heretofore conducted by Seller, except for the
Excluded Assets.
4.13 Contracts.
(a) Schedule 2.1(g) contains a complete and accurate list of all
Contracts to which Seller is a party and which in any way relate to the
operations or properties of the Business or which are or will be binding upon
the Business or the Purchased Assets. Except for the Contracts listed on
Schedule 2.1(g) (true and complete copies of which agreements have been
previously delivered to Buyer or, in the case of oral agreements, descriptions
of which are set forth on Schedule 2.1(g)), there are no other Contracts to
which Seller is party and which relate to the Business or to the Purchased
Assets.
(b) Except as set forth in Schedule 2.1(g), Seller has in all
material respects performed all obligations required to be performed by it under
all Contracts listed on Schedule 2.1(g); neither Seller nor any other party to a
Contract with Seller, is in material default under any such Contract; and no
event exists which with the giving of notice or the passage of time, or both,
would create such a default; and Seller does not know of any basis for any claim
of any such default.
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(c) Each of the Contracts listed on Schedule 2.1(g) has been
lawfully entered into and is or will be valid and in full force and effect and
is or will be enforceable in accordance with its terms for the period stated in
such Contract. Except as set forth in Schedule 2.1(m) relating to the Excluded
Contracts, there are no currently threatened cancellations of, nor are there any
outstanding disputes under, any Contracts which could have a Material Adverse
Effect.
(d) Except as set forth on Schedule 2.2, the consummation of the
transactions contemplated by this Agreement does not require any consent under
any Contract listed on Schedule 2.1(g) which will not have been obtained by the
Closing Date (and copies of such consents will be given to Buyer on or prior to
the Closing Date), and such consummation will not result in the termination of
any right or privilege under any Contract listed on Schedule 2.1(g). Seller has
not received notice that any party to any Contract listed on Schedule 2.1(g)
intends to cancel such Contract nor has any party given Seller notice of any
alleged breach of any Contract or of its intent to take any legal action in
order to enforce its rights thereunder. All liabilities and obligations of
Seller which are due and payable or which are to be performed on or before the
Closing Date under such Contracts have been, or will be on the Closing Date,
duly paid in full or performed in all material respects except as set forth on
Schedule 2.2.
(e) Except as set forth on Schedule 2.1(g), Seller does not have
any Contract with any person (or group of affiliated persons) which accounted
for more than five percent of Seller's gross revenues of the Business in any of
the last two fiscal years.
(f) Except as set forth in Schedule 2.1(g), Seller is not a party
to nor is Seller or the Business bound by, any noncompetition agreement or
arrangement or any other agreement or arrangement restricting or prohibiting the
way in which the business of the Business is operated.
(g) Schedule 2.1(g) contains a list of all noncompetition or
similar agreements or arrangements which restrict any person or persons from
competing with Seller or otherwise are for the benefit of Seller or the
Business.
4.14 Certain Transactions. Except as set forth on Schedule 4.14, since
December 31, 1999, Seller has conducted the Business only in the ordinary course
consistent with past practices and has not, in each case with respect to the
business and operations of the Business, (a) paid, or made any accrual or
arrangement for the payment of, bonuses or special compensation of any kind or
any severance or termination pay to any present or former officer or employee;
(b) made any general wage or salary increases to its employees or increased or
altered any other benefits or insurance provided to or maintained on behalf of
any employee by it or declared or paid any bonus to any employee; (c) sold,
assigned or transferred or agreed to sell, assign or transfer any of its assets,
properties or rights; (d) granted any rights or licenses under any Intellectual
Property or entered into any licensing or distributorship arrangements; (e)
canceled or agreed to cancel any debts; (f) waived or agreed to waive any
rights; (g) made or permitted any amendment or termination of any Contracts; (h)
effected any change in the
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accounting methods and principles used in connection with its books, records and
financial statements; (i) entered into any transaction other than in the
ordinary course of business, except transactions expressly permitted by the
terms of this Agreement; (j) suffered any event or condition of any character;
(k) suffered any default under, or suffered any event which with notice or lapse
of time or both would constitute a default under, any Contract, debt instrument
or other agreement to which Seller is a party or by which it or any of the
Purchased Assets is bound; (l) lost or terminated any employees; or (m)
terminated (excluding a termination in accordance with its terms) or amended, or
suffered a termination or amendment of, any Contract, agreement, lease or
license, except, in all such cases (a) through (m) individually or in the
aggregate, where such events or actions did not since such date have a Material
Adverse Effect.
4.15 Employees.
(a) Schedule 4.15 contains a list setting forth, (i) the name and
current annual salary and other compensation payable by Seller to each manager,
employee, officer, independent contractor, agent or consultant of Seller
employed or engaged in connection with the Business (an "Employee"); (ii) the
profit sharing, bonus or other form of additional compensation paid or payable
by Seller to or for the benefit of each such person for the current fiscal year;
and (iii) any and all loans outstanding from Seller to any Employee. There are
no oral or written contracts, agreements or arrangements relating to
compensation or performance awards or obligating Seller to increase the
compensation or benefits presently being paid or hereafter payable to any of its
employees or other persons. There is not due or owing, and there will not be due
and owing at the Closing, to any of Seller's Employees, any sick pay, severance
pay (whether arising out of the termination of an Employee of Seller prior to or
subsequent to the Closing), compensable time or pay, including but not limited
to, salary, commission and bonuses, personal time or pay or vacation time or
vacation pay attributable to service rendered on or prior to the Closing Date,
other than set forth on Schedule 4.15. There is not now, and there will not be
as of the Closing Date, any liability of, or claims against, Seller (including,
without limitation, workers' compensation claims and claims or suits for
contribution to, or indemnification of, third parties, occupational health and
safety, environmental, consumer protection or equal employment matters) for
injury, sickness, disease, discrimination, death or termination of employment of
any Employee or other employment matter (including, without limitation, any
Employee or former Employee or any contractor or subcontractor of Seller or any
agent or distributor of Seller), to the extent attributable to an event
occurring or a state of facts existing prior to the Closing other than as set
forth on Schedule 4.15; it being understood and agreed that Seller shall remain
liable for, and indemnify and hold harmless Buyer and Probex against, any and
all claims, liabilities, damages, losses, costs or expenses, of any nature
whatsoever, incurred by Seller, or resulting from or relating to any Employees
(whether hourly or salaried) of Seller, including, but not limited to, those set
forth on Schedule 4.15.
(b) Seller is not a party to any collective bargaining agreements,
written or oral, which cover any Employees of the Business. There have not been,
and there are no, strikes, grievances, disputes or controversies pending or
threatened between Seller and any of its Employees or any union or other
organization claiming to represent such Employees' interests.
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There is no request for union representation pending and there is no present
union organizing or election activities in progress or to Seller's knowledge
threatened with respect to any Employees of Seller. There is no unfair labor
practice complaint pending before the National Labor Relations Board or to
Seller's knowledge threatened against or relating to Seller.
(c) The purchase of the Purchased Assets by Buyer hereunder will
not subject Buyer or Probex to any absolute or contingent, direct or indirect
liability to or claim by Seller's past, present or future Employees (except for
obligations expressly assumed by Buyer hereunder with respect to the Buyer
Employees).
4.16 Employee Benefit Plans.
(a) Schedule 4.16 sets forth a true and complete list of each
plan, program, policy, practice, contract, agreement or other arrangement
providing for severance, termination pay, stock or stock-related awards, fringe
benefits or other employee benefits of any kind, whether formal or informal,
proposed or final, funded or unfunded and whether or not legally binding,
including, without limitation, each "employee benefit plan" within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") ("Employee Plan") which is now or ever has been maintained,
contributed to, or required to be contributed to, for the benefit of any current
or former Employee, and each management, employment, severance or consulting
agreement or contract between Seller and any Employee, including, without
limitation, summaries of all oral employment or consulting or similar
arrangements between Seller and any person which are not terminable without
liability on thirty (30) days' or less prior notice (each, an "Employee
Agreement"). Seller will provide to Buyer prior to the Closing true and complete
copies of all documents, if any, embodying each Employee Plan and Employee
Agreement, and all material communications, if any, to any Employee relating to
each Employee Plan. Buyer shall have no liability with respect to any Employee
Plan or Employee Agreement, except as expressly set forth herein.
(b) Except as set forth on Schedule 4.16, Seller does not maintain
or contribute to any Employee Plan which provides, or has any liability to
provide, life insurance, medical or other employee welfare benefits to any
Employee upon his retirement or termination of employment, except as may be
required by statute, and Seller has never promised, represented to, or
contracted with (orally or in writing) any Employee (individually or as a group)
that life insurance, medical or other employee welfare benefits would be
provided upon their retirement or termination of employment, except to the
extent required by statute.
(c) Except as set forth on Schedule 4.16, the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby will not (either alone or when taken together with any additional or
subsequent events) constitute an event under any Employee Plan or Employee
Agreement that will or may result in any payment, upon a change in control or
otherwise, whether of severance, accrued vacation, or otherwise, acceleration,
vesting, distribution, increase in benefits or obligations to fund benefits with
respect to any Employee.
(d) Seller (i) is in compliance with all applicable federal and
state laws, rules
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and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
Employees, except where the failure to be in compliance would not, singularly or
in the aggregate, have a Material Adverse Effect; (ii) has withheld all amounts
required by law or by agreement to be withheld from the wages, salaries and
other payments to Employees; (iii) is not liable for any arrearages of wages or
any taxes or any penalty for failure to comply with any of the foregoing; and
(iv) (other than routine payments not yet due which are to be made in the normal
course of business and consistent with past practice and applicable laws) is not
liable for any payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation benefits,
Social Security or other benefits for Employees, with the exception of back pay
claims and back taxes which will be discharged by Seller immediately following
Closing.
4.17 Licenses and Permits. Seller has all licenses or permits required
for the operation of the Business and the operation and use of the Purchased
Assets as presently operated or used by it. All licenses and permits held by
Seller and material to the Business are valid and in full force and effect and
no proceedings which could result in the termination or impairment of any such
license or permit are pending or to Seller's knowledge threatened. Schedule
2.1(l) sets forth a description of all such licenses or permits. Seller is not
in violation of, nor has Seller received any notice of any violation of, nor
does any state of facts exist which could lead to a penalty or termination of,
any license or permit which might reasonably be expected to have a Material
Adverse Effect.
4.18 Insurance. Attached hereto as Schedule 4.18 is a true, correct and
complete schedule which describes all insurance policies currently maintained by
Seller in connection with the operation of the Business and the Purchased Assets
transferred hereunder. All of said insurance policies which are now in effect
shall continue to remain in full force and effect through the Closing Date in
accordance with their respective terms.
4.19 Taxes. Except as set forth in Schedule 4.19, Seller has timely and
properly filed all federal, state, local and foreign tax returns and reports and
forms which it is or has been required to file, either on its own behalf or on
behalf of its employees or other persons or entities, including, but not limited
to, income, profits, franchise, sales, use, occupation, property, excise, ad
valorem and payroll (including employee taxes withheld) taxes ("Taxes"), all
such returns, reports and forms being true and complete in all material
respects, and has paid all taxes, including penalties and interest, if any,
which have become due pursuant to such returns or reports or forms or pursuant
to assessments received by Seller. No tax deficiencies have been determined nor
proposed tax assessments charged against Seller and there exists no basis for
any such deficiencies. No Internal Revenue Service or other governmental taxing
authority audit of Seller is pending or to Seller's knowledge threatened, and
the results of any completed audits are properly reflected in the Financial
Statements. Seller has not granted any extension to any taxing authority of the
limitation period during which any tax liability may be asserted.
4.20 Environmental Matters. Seller is currently in compliance with and
has not violated environmental laws applicable to the Business and/or the
Purchased Assets and Seller
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has obtained all permits, licenses and other authorizations needed to operate
the Purchased Assets in compliance with environmental laws and is unaware of any
present requirements of any applicable environmental law which is due to be
imposed upon it which will increase its cost of complying with environmental
laws. All past on-site generation, treatment, storage and disposal of waste, if
any (including hazardous waste), at the Business by Seller (or its predecessors
at the Business), have been done in compliance with the currently applicable
environmental laws, and all off-site treatment, storage and disposal of waste
(including hazardous waste), if any, generated by Seller have been done in
compliance with the currently applicable environmental laws. The term (a)
"environmental laws" includes, but is not limited to, any federal, state or
local law, statute, charter or ordinance, and any rule, regulation, binding
interpretation, binding policy, permit, order, court order or consent decree
issued pursuant to any of the foregoing, which pertains to, governs or otherwise
regulates any of the following activities, including, without limitation, (i)
the emission, discharge, release or spilling of any substance into the air,
surface water, groundwater, soil or substrata; and (ii) the manufacturing,
processing, sale, generation, treatment, storage, disposal, labeling or other
management of any waste, hazardous substance or hazardous waste, and (b)
"waste," "hazardous substance," and "hazardous waste" include any substance
defined as such by any applicable environmental laws.
4.21 Creditors. On or after the Closing Date, neither Buyer nor Probex
shall be subject to any claim of a creditor of Seller, or to any obligation to
pay, discharge or satisfy in any manner Seller's liabilities or other
obligations as a result of the sale and transfer of the Purchased Assets to
Buyer under this Agreement, other than liabilities assumed by Buyer pursuant to
Section 2.6.
4.22 Compliance with Laws. Seller has complied in all material respects
with all laws, statutes, rules, regulations, orders and standards of any
federal, state and local agencies and authorities applicable to the Business and
the Purchased Assets (including, but not limited to, those concerned with civil
rights, labor and discrimination, safety and health, zoning and land use and the
environment).
4.23 Third Party Options. There are no existing contracts, options,
commitments or rights with, to or in any third party to acquire the Purchased
Assets or any interest therein or the Business (other than the Excluded Assets
or Excluded Contracts).
4.24 Transactions with Certain Persons. Except as provided in this
Agreement, at and as a result of the Closing, neither Buyer nor Probex shall
have any obligation or liability to any current or former member, manager or
employee of Seller or any member of such person's immediate family or any entity
in which such person has a direct or indirect ownership interest (other than
ownership of less than five percent of the issued and outstanding stock of a
corporation whose stock is publicly traded) (each, a "Related Party"),
including, without limitation, any contract (a) providing for the furnishing of
services by, (b) providing for the rental of real or personal property from, or
(c) otherwise requiring payment to any such Related Party.
4.25 Accuracy of Information Furnished. All information furnished to
Buyer and
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Probex by Seller or the Shareholders herein or in any exhibit or schedule hereto
is true, correct and complete. Such information states all facts required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements are made, true, correct and complete.
4.26 Product Warranties. There is no agreement or obligation to which
Seller is a party, or any claim against or liability of Seller, on account of
product warranties or with respect to the manufacture, sale or rental of
defective products, and there is no basis for any such claim on account of
defective products heretofore manufactured, sold or rented which is not fully
covered by insurance. Neither Buyer nor Probex shall have any liability with
respect to any claim against or liability of Seller on account of product
warranties or with respect to the manufacture, sale or rental of defective
products except as expressly set forth on Schedule 4.26 setting forth the
specific amount of the claims or liability as to each such matter, and except as
assumed by Buyer pursuant to Section 2.6.
4.27 Questionable Payments. Neither Seller, nor any of Seller's current
or former officers, directors, Shareholders, employees, agents, or
representatives, have in connection with the business or operations of the
Business (a) used any corporate funds for any contributions, gifts,
entertainment or other expenses relating to political activity, or used any
corporate funds to reimburse any person for any such payment in contravention of
any laws, (b) used any corporate funds for any direct or indirect payments to
any foreign or domestic government officials or employees, (c) violated any
provision of the Foreign Corrupt Practices Act of 1977, (d) established or
maintained any unrecorded fund of corporate monies or other assets, (e) made any
false or fictitious entries on the books and records of Seller, (f) made any
bribe, rebate, payoff, influence payment, kickback or other payment of any
nature, or (g) made any favor or gift which is not deductible for federal income
tax purposes.
4.28 Burdensome Obligations. To Seller's knowledge, (a) Seller is not a
party to or bound by any Contract which is so unusual or burdensome as in the
foreseeable future could reasonably be expected to have a Material Adverse
Effect and (b) Seller is not in violation of any law, ordinance, statute, code,
rule, regulation, order or decree of the United States, any state, any county,
any city, or any other political subdivision in which Seller operates (the
"Legal Requirements") pertaining to occupational safety.
4.29 Probex Stock. The Shareholders are acquiring the Probex Stock
solely for the purpose of investment and not with a view to, or for offer or
sale in connection with, any distribution thereof, except as contemplated by
this Agreement. The Shareholders acknowledge that the Probex Stock has not been
registered under the Act or under the securities or "blue sky" laws of any
state. The Shareholders acknowledge receipt of those items listed in Section
5.4. The Shareholders further acknowledge the following:
(a) that the Shareholders are financially able to bear the
economic risks of acquiring the Probex Stock and have no need for liquidity in
this investment;
(b) that the Shareholders have such knowledge and experience in
financial
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and business matters in general and with respect to the business of a nature
similar to Probex so as to be capable of evaluating the merits and risks of, and
making an informed business decision with respect to, the acquisition of the
Probex Stock;
(c) that the Shareholders (i) have received all the information he
or she has deemed necessary to make an informed investment decision with respect
to the acquisition of the Probex Stock; (ii) understands that Probex is subject
to reporting requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and have had an opportunity to review all publicly
available filings made by Probex with the Securities and Exchange Commission
(the "SEC") pursuant to either the Act or the Exchange Act; (iii) have had the
unrestricted opportunity to make such investigation as he or she has desired
pertaining to Probex and the acquisition of an interest therein an to verify the
information that is, and has been, available to him or it; and (iv) have had the
opportunity to ask questions of Probex and representatives of Probex concerning
Probex;
(d) that the Shareholders have not received any public
solicitation or advertisement with respect to the Probex Stock;
(e) that the Probex Stock is subject to the provisions contained
in Section 2.8 hereof;
(f) that if the Probex Stock or any portion thereof are
subsequently transferred, the Shareholders agree to execute, deliver and file
all such papers, documents and instruments as may be required by the SEC and any
state securities commission to qualify the transfer for an exemption from
registration under the Act, or any applicable state securities laws,
respectively. The Shareholders agree to furnish Probex with a copy of all such
papers, documents and instruments, and, in addition, will furnish Probex with
any other information that Probex may reasonably require to ensure that no
subsequent transfer or disposition of the Probex Stock is in violation of the
Act or any applicable state securities laws;
(g) that he or she is aware that stop-transfer instructions shall
be given to the transfer agent of the Probex Stock to prevent any unauthorized
or illegal transfer or resale of the Probex Stock;
(h) that for purposes hereof, the term resale includes any
transfer for value including the mortgage, pledge or hypothecation of such
Probex Stock.; and
(i) that the Shareholders warrant that the information set forth
in this Section 4.29 is true and correct, with the knowledge that the Buyer and
Probex are relying on the accuracy of the information and truth of the
representations contained herein. The Shareholders further agree to indemnify
and hold harmless the Buyer and Probex from any and all liabilities, losses,
costs, and expenses arising out of or related to the resale or other
distribution by the Shareholders of all or any portion of the Shares in
violation of the Act or of any applicable state securities laws as well as any
and all liabilities, losses, costs and expenses to which the Buyer and/or Probex
may be put or that the Buyer and/or Probex may incur by reason of or in
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connection with any misrepresentation made by the Shareholders, any breach of
any of its warranties, or its failure to fulfill any of the covenants or
agreements set forth herein. The representations and warranties contained herein
shall be binding upon the heirs, legal representatives, successors and assigns
of the Shareholders.
4.30 Books of Accounts. The books of account of Seller have been kept
accurately in the ordinary course of its business, the transactions entered
therein represent bona fide transactions and the revenues, expenses, assets and
liabilities of Seller have been properly recorded in such books.
4.31 Consents. Except as set forth in Schedule 4.31, no authorization,
consent, 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 is
required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement or the agreements contemplated hereby
on the part of Seller.
4.32 Year 2000. No technology owned, developed or licensed by Seller
that has been actively used or marketed by Seller within the past two (2) years
and, except as set forth in Schedule 4.32 with respect to third party
technology, no technology used by Seller in connection with the Business
(including, but not limited to, information systems and technology, commercial
and noncommercial hardware and software, firmware, mechanical or electrical
products, embedded systems, or any other electro-mechanical or processor-based
system, whether as part of a desktop system, office system, building system or
otherwise) (collectively, the "Technology"), has experienced any malfunctions,
premature cancellation or expiration of contractual rights or deletion of data,
or any other problems in connection with (i) the year 2000 (and all subsequent
years) as distinguished from 1900 years, (ii) the date February 29, 2000, and
all subsequent leap years, and (iii) the date September 9, 1999.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND PROBEX
Buyer and Probex jointly and severally represent and warrant to Seller
and the Shareholders as follows:
5.1 Organization. Each of Buyer and Probex is a corporation duly and
validly existing and in good standing under the laws of its state of
incorporation and has full corporate power to enter into and perform its
respective obligations under this Agreement and under any other agreements,
documents and/or instruments to be executed and/or delivered by each pursuant to
or in connection with this Agreement.
5.2 Authorization; Enforceability. The execution, delivery and
performance of this Agreement and of all of the agreements, documents and/or
instruments to be executed and/or delivered by each of Buyer and Probex pursuant
to or in connection with this Agreement have been duly authorized by all
necessary corporate action of each. This Agreement is, and the other agreements,
documents and instruments required hereby will be, when executed and delivered
by
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the parties hereto, enforceable against each of Buyer and Probex in accordance
with their respective terms.
5.3 No Violation or Conflict. The execution, delivery, and performance
of this Agreement by each of Buyer and Probex does not and will not violate or
conflict with any Law, judgment, order, or decree binding on each of Buyer or
Probex, or the Certificate of Incorporation or Bylaws of either or any contract
or agreement to which either is a party or by which either is bound.
5.4 Financial Condition. Probex has delivered to Seller and the
Shareholders copies of Probex's Form 10-SB and its most recent report to the SEC
on Form 10-QSB. None of such reports contains 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 not misleading in light of the
circumstances under which they were made.
ARTICLE VI
CERTAIN MATTERS PENDING CLOSING
Seller and the Shareholders covenant to Buyer and Probex, and Buyer and
Probex covenant to Seller, that from and after the Effective Time and until the
Closing Date, without the other party's prior written consent:
6.1 Carry on in Regular Course. Seller shall carry on the business of
the Business in a reasonable and prudent manner and only in the regular course
and substantially in the same manner as heretofore carried on and use its good
faith and reasonable efforts to preserve the Business's properties and existing
business organization and retain good relationships with employees, customers,
suppliers and others with whom it maintains a business relationship. Seller
shall conduct its business in compliance with all applicable laws. Seller shall
not engage in any extraordinary transactions without Buyer's or Probex's prior
written consent, including (a) disposing of any assets of Seller, except in the
ordinary course of business and (b) causing assets of Seller to be distributed
to any of its shareholders.
6.2 Employee Compensation. Seller shall not increase the rate of pay
for any employee of the Business except pursuant to a regularly scheduled time
schedule for increases and no bonus, profit sharing, retirement, insurance,
death, fringe benefit or other extraordinary or indirect compensation shall
accrue, be set aside or be paid to, for or on behalf of any officers or
employees of the Business other than as required by presently existing pension,
profit sharing, bonus and similar benefit plans as presently constituted, and no
agreement or plan other than those now in effect shall be adopted or committed
for, except in amounts approved in writing by Buyer or Probex. Seller shall not
increase, terminate, amend or otherwise modify any plan for the benefit of any
employee without Buyer's or Probex's prior written consent.
6.3 Hiring Employees. Prior to and at the Closing, Seller will
cooperate with all reasonable requests made by Buyer for the purpose of allowing
Buyer to hire those employees of Seller, as contemplated by Article X, such
employment to be effective as of the Closing Date.
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6.4 Access. Upon reasonable notice, Buyer, Probex and their authorized
agents, officers and representatives shall have complete access to the
facilities, properties, books, records, contracts, information and documents of
Seller as they relate to the Business to conduct such examinations and
investigations of Seller as they deem necessary. Seller and its directors,
officers, shareholders, employees, accountants and other agents and
representatives shall cooperate fully with Buyer, Probex and their authorized
agents, officers and representatives in connection with Buyer's and Probex's due
diligence investigation of Seller and Seller's assets, contracts, liabilities,
operations and other aspects of its Business.
6.5 Cooperation. As soon as practical after the date hereof, if they
have not previously done so, Buyer, Probex and Seller shall promptly and
properly prepare and file all filings required by all Laws relating to the
transactions contemplated hereby, and shall cooperate in all respects in
connection with the giving of any notices to any governmental authority or
securing the permission, approval, determination, consent or waiver of any
governmental authority required by Law in connection with the consummation of
this Agreement.
6.6 Confidentiality. Each party recognizes that it will receive
confidential information regarding the other party during the course of the
negotiations contemplated by this Agreement. Accordingly, each of Probex and
Buyer, on the one hand, and Seller, on the other hand, agree to use its best
efforts to prevent the unauthorized disclosure of any confidential information
concerning the other party that has been disclosed previously or is disclosed
during the course of the negotiations and investigations contemplated by this
Agreement. The obligations of this paragraph do not apply to information that:
(a) is or becomes part of the public domain (other than through breach of this
Agreement or any other agreement between the parties relating to
confidentiality), (b) is received by the receiving party from a third party
without breach of a nondisclosure obligation of the third party, or (c) is
independently developed.
6.7 Publicity. All notices, releases, statements and communications to
employees, suppliers, distributors and customers and any person other than their
respective officers, directors, stockholders, representatives or agents of
Seller and Buyer and to the general public and the press relating to the
transactions contemplated by this Agreement shall be made only at such times and
in such manner as may be mutually agreed upon in writing by Seller and Buyer;
provided, however, that any party shall be entitled to make a public
announcement or statement or other public disclosure relating to the
transactions contemplated hereby if, in the opinion of its legal counsel, such
announcement or statement or other public disclosure is required to comply with
any Law (including, without limitation, federal securities laws) or any subpoena
or other process; provided, further, however, that such party gives prior
written notice of its intention to make such disclosure, the content of such
disclosure and the provision of Law, subpoena or process requiring such
disclosure and further, provided, Probex shall be permitted to file this
Agreement and to describe the transactions contemplated hereby in a Current
Report on Form 8-K or a Quarterly Report on Form 10-QSB filed under the Exchange
Act.
6.8 Material Adverse Effect. Prior to the Closing, Seller shall
promptly inform Buyer and Probex in writing of the occurrence of any event or
set of facts or circumstances of which it
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has or obtains knowledge that have resulted in, or with the passage of time
could be expected to result in, a Material Adverse Effect or any event that
renders the representations and warranties made in Article IV to be inaccurate,
or any failure of Seller to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by any of them under this Agreement.
Any such disclosure shall not be deemed a waiver by Buyer or Probex of any
representation, warranty, covenant or agreement of Seller contained in this
Agreement.
6.9 Approvals of Governmental Authorities and Third Parties. As soon as
practicable after the execution of this Agreement, but in any event prior to the
Closing Date, Seller, Probex and Buyer will secure all necessary approvals and
consents of all governmental authorities and other third parties required on the
part of Seller, Probex and Buyer for the consummation of the transactions
contemplated by this Agreement.
6.10 Contracts. Prior to Closing, except with Buyer's or Probex's prior
written consent, (a) other than in the ordinary course of the business and
operations of the Business and in a manner consistent with past business
practices of the Business, Seller will not assume or enter into any contract,
lease, license, obligation, indebtedness, commitment, purchase or sale relating
to the business or operations of the Business involving more than $10,000 each,
and (b) except as expressly contemplated hereby, Seller will not modify, amend
or waive any provisions of any Contract in a manner that would adversely affect
Buyer's ownership or operation of the Purchased Assets or the Business after the
Closing Date, or terminate any Contract listed on Schedule 2.1(g).
6.11 Capital Assets. Prior to Closing, except with Buyer's or Probex's
prior written consent, Seller will not acquire or dispose of any capital asset
(other than Excluded Assets) relating to or used or to be used in the business
or operations of the Business having an initial cost of $10,000 or more.
6.12 Mortgages; Liens. Prior to Closing, except with Buyer's or
Probex's prior written consent, Seller will not enter into or assume any
mortgage, pledge, conditional sale or other title retention agreement, or permit
any lien, encumbrance or claim of any kind to attach to any of its assets,
whether now owned or hereafter acquired, relating to or used or to be used in
the business or operations of the Business.
6.13 No Solicitation. From the date hereof through the later of (a) the
date specified in Section 12.1(d); or (b) the Closing Date, or the earlier
termination of this Agreement, Seller shall not and Seller will cause each of
its officers, directors and shareholders and its legal and financial advisors
and affiliates not to, directly or indirectly, make, solicit, encourage,
initiate or enter into any agreement or agreement in principle, or announce any
intention to do any of the foregoing, with respect to any offer or proposal to
acquire all or part of the business or properties of the Business or the
Purchased Assets (excluding the Excluded Assets) (whether through direct
purchase, merger, consolidation, or other business combination, an "Alternative
Transaction"). Seller shall not, and Seller will cause each of its officers,
directors and shareholders and its legal and financial advisors and affiliates
not to, directly or indirectly, participate in any negotiations or discussions
regarding, or furnish any information (including, but not limited to,
confidential or
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financial information) with respect to, or otherwise cooperate in any way in
connection with, or assist or participate in, facilitate or encourage or respond
to, any effort or attempt to effect or seek to effect an Alternative Transaction
with or involving any corporation, partnership, person or other entity or group
other than Buyer and Probex, their employees, directors, representatives and
agents concerning the sale of Seller or any merger, combination sales of assets,
or similar transactions which would involve the assets and Business of Seller.
Seller shall promptly communicate to Buyer and Probex the terms of any proposal
it may receive in respect of an Alternative Transaction and the identity of such
other party and the nature of such proposal, offer or invitation.
6.14 Information for Tax Returns. Seller shall cooperate with Buyer and
Probex after the Closing Date by providing Buyer and Probex, without any
additional consideration but at the expense of Buyer and Probex, promptly upon
request, such records and other information regarding the Purchased Assets
and/or the Business as may reasonably be requested from time to time by Buyer
and Probex in connection with the preparation or audit of its federal, state and
local income and other tax returns, and audits, disputes, refund claims or
litigation relating thereto. In such connection, Seller will afford Buyer's and
Probex's independent tax advisors, and such other persons as may be mutually
agreed upon, access to Seller's books and records or relating to the Purchased
Assets; provided, however, that Buyer and Probex shall cause its independent tax
advisors and such other persons to hold in strict confidence all such
information (except as required to be disclosed in connection with such tax
returns and audits, disputes, refund claims and litigation relating thereto).
6.15 Supplements to Disclosure Schedules. From time to time prior to
the Closing Date, Seller shall promptly provide to Buyer and Probex proposed
supplements or amendments to the schedules to this Agreement with respect to any
matter arising or changing which, if existing or occurring as of the date of
this Agreement, would have been required to be set forth or described in such
schedules; provided, however, any such proposed supplements or amendments to the
schedules to this Agreement shall not become part of this Agreement unless and
until Buyer and Probex shall execute an instrument evidencing their agreement
thereto, and such proposals shall not be deemed a waiver by Buyer or Probex of
any representation or warranty of Seller contained in this Agreement other than
as agreed upon in such instrument.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND PROBEX
Each and every obligation of Buyer and Probex to be performed on the
Closing Date shall be subject to the satisfaction prior to or at the Closing of
the following express conditions precedent:
7.1 Compliance with Agreement. Seller and the Shareholders shall have
performed and complied in all material respects with all of its obligations,
covenants and agreements under this Agreement which are to be performed or
complied with by it prior to the Closing.
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7.2 No Litigation.
(a) No third-party investigation, suit, action, or other
proceeding that questions the validity or legality of the transactions
contemplated hereby or that seeks restraint, prohibition, damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby shall be pending before any court or governmental agency or
threatened.
(b) There shall not be in effect any order, decree or injunction
(whether preliminary, final or appealable) of a federal or state court of
competent jurisdiction which (i) prohibits consummation of this Agreement or the
transactions contemplated hereby, (ii) requires Buyer or Probex to hold separate
or dispose of any of the Purchased Assets or (iii) could have a Material Adverse
Effect or materially impairs the ability of Buyer or Probex to perform their
obligations hereunder.
7.3 Representations and Warranties. The representations and warranties
made by Seller and the Shareholders in this Agreement shall be true and correct
in all material respects at and as of the date of this Agreement and as of the
Closing Date with the same force and effect as though said representations and
warranties had been made on the Closing Date.
7.4 Material Adverse Effect. Between the date hereof and the Closing
Date, no event shall have occurred or set of facts or circumstances arisen which
has resulted in, or with the passage of time could be expected to result in, a
Material Adverse Effect.
7.5 Deliveries at Closing. Seller and the Shareholders shall have
delivered to Buyer and/or Probex, as appropriate, the documents and items
specified in Section 3.2.
7.6 Intercoastal Asset Purchase Agreement. The closing of Asset
Purchase Agreement by and between Intercoastal Trading Company, Inc. and Buyer
(the "Intercoastal Agreement") shall occur simultaneously with the closing under
this Agreement.
7.7 Phase II Environmental Reports. Probex and Buyer shall have
received a Phase II Environmental Report regarding the Real Property to be
acquired by this Agreement that is acceptable to Buyer and Probex in their sole
discretion.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF SELLER AND THE SHAREHOLDERS
Each and every obligation of Seller and the Shareholders to be
performed on the Closing Date shall be subject to the satisfaction prior to or
at the Closing of the following express conditions precedent:
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8.1 Compliance with Agreement. Buyer and Probex shall have performed
and complied in all material respects with all of their obligations, covenants
and agreements under this Agreement which are to be performed or complied with
by either of them prior to or on the Closing Date.
8.2 No Litigation.
(a) No third-party investigation, suit, action, or other
proceeding that questions the validity or legality of the transactions
contemplated hereby or that seeks restraint, prohibition, damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby shall be pending before any court or governmental agency or
threatened.
(b) There shall not be in effect any order, decree or injunction
(whether preliminary, final or appealable) of a federal or state court of
competent jurisdiction which prohibits consummation of this Agreement or the
transactions contemplated hereby.
8.3 Representations and Warranties. The representations and warranties
made by Buyer and Probex in this Agreement shall be true and correct in all
material respects at and as of the date of this Agreement and as of the Closing
Date with the same force and effect as though such representations and
warranties had been made on the Closing Date.
8.4 Deliveries at Closing. Buyer and/or Probex shall have joined in and
shall have delivered to Seller and the Shareholders, as applicable, the
documents and items specified in Section 3.3.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
9.1 Survival of Representations, Warranties and Covenants. The
representations and warranties contained herein, other than the representations
and warranties contained in Section 4.19, shall survive the Closing for a period
of two (2) years. The representations and warranties contained in Section 4.19
shall survive the Closing until the expiration of the applicable statute of
limitations period specified pursuant to applicable Law. The covenants contained
in Section 10.3 and 10.4 shall survive for the respective terms of the
Employment Agreements and the Non-Compete Agreements. If written notice of a
claim has been given prior to the expiration of the applicable representations
and warranties by a party in whose favor such representations and warranties
have been made to the party that made such representations and warranties, the
relevant representations and warranties shall survive as to such claim until the
claim has been finally resolved.
9.2 Indemnification by Seller and the Shareholders.
(a) Seller and the Shareholders shall indemnify and hold harmless
Buyer and Probex and each director, officer, employee, agent and affiliate of
Buyer and Probex (each, a
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"Buyer Indemnified Party"), from and against, and agree promptly to defend each
Buyer Indemnified Party from and reimburse each Buyer Indemnified Party for, any
and all actions, suits, proceedings (including any investigations or inquiries),
losses, damages, costs, expenses, liabilities, obligations and claims of any
kind or nature whatsoever which may be incurred by or asserted against or
involve a Buyer Indemnified Party, whether or not disclosed, including, without
limitation, reasonable attorneys' fees and other legal costs and expenses
("Buyer's Losses"), arising out of or in any way relating to:
(i) any breach by Seller or the Shareholders of any
representation or warranty set forth in this Agreement or in any document
delivered hereunder;
(ii) any Excluded Obligations; or
(iii) any failure by Seller or the Shareholders to carry out,
perform, satisfy and discharge any covenants, agreements, undertakings,
liabilities or obligations to be performed by any of them pursuant to the terms
of this Agreement or any of the documents delivered by them pursuant to this
Agreement.
Notwithstanding any other provision of this Section 9.2, Seller and the
Shareholders shall not have any liability to Probex or Buyer for a breach of any
representation, warranty or covenant (other than with respect to Excluded
Obligations and the matters contained in Sections 4.16 and 4.19) unless and
until the aggregate Buyer's Losses incurred by Seller for all breaches of such
provisions total more than $50,000 (the "Seller's Floor"), and in the event that
the Buyer's Losses exceed the Seller's Floor, Seller shall be liable to Buyer
and Probex for the entirety of the amount of the Buyer's Losses.
Furthermore, Seller and the Shareholders acknowledge that the covenants
set forth in Section 10.3 and 10.4 are essential and fundamental to Buyer's
acquisition of the Purchased Assets hereunder. If Seller and the Shareholders
shall breach the covenants set forth in such sections, the parties acknowledge
that the minimum amount of Buyer's Loss shall be an amount equal to the
outstanding balance, if any, under the Promissory Note plus the Probex Stock.
Nothing herein shall be construed as limiting the amount of Buyer's Loss in the
event of such a breach, or limiting any other remedies available to the Buyer at
law or in equity.
(b) In the event a claim against a Buyer Indemnified Party
arises to which the indemnity of Section 9.2(a) of this Agreement is applicable,
notice shall be given promptly by the Buyer Indemnified Party to Seller and the
Shareholders and Seller and the Shareholders shall have the right to control all
settlements (unless the Buyer Indemnified Party agrees to assume the cost of
settlement) and to select lead counsel to defend any and all such claims at the
sole cost and expense of Seller and the Shareholders. The Buyer Indemnified
Party may select counsel to participate in any such defense at the sole cost and
expense of the Buyer Indemnified Party. In connection with any such claim,
action or proceeding, the parties shall cooperate with each other and provide
each with access to relevant books and records in their possession, as well as
necessary employees or other agents.
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(c) Except with respect to indemnification obligations of Seller and
Shareholders relating to Taxes, the obligations of Seller and the Shareholders
to indemnify Buyer and/or Probex pursuant to the terms of this Agreement shall
be recoverable solely by the set-off of amounts due to Seller and Shareholders
under the Promissory Note and from the Probex Stock. Indemnification obligations
of Seller and Shareholders relating to Taxes shall be payable first by set-off
of amounts due to Seller and Shareholders under the Promissory Note, next from
the Probex Stock, and then by Seller and the Shareholders. Indemnification
obligations of Seller and Shareholders relating to any other liability hereunder
shall be payable first by set-off of amounts due to Seller and Shareholders
under the Promissory Note and then from the Probex Stock. To the extent any
amounts due hereunder or under Section 2.5 shall be recoverable from the Probex
Stock, such amount shall be recovered as follows: the amount of the
indemnification obligation or set-off shall be determined and applied to the
then unvested shares of Probex Stock held by all Shareholders, on a pro rata
basis. The number of shares subject to any such forfeiture shall be calculated
using the Probex Share Price. The number of shares so determined shall be
cancelled (utilizing shares in the chronological order of vesting) and shall be
deemed no longer outstanding for any purpose. Shareholders shall surrender their
certificates for such Probex Stock, and Probex shall cancel such certificates.
To the extent the certificates represent a greater number of shares of Probex
Stock than the number of shares forfeited, Probex shall issue a replacement
certificate for the balance of such shares.
9.3 Indemnification by Buyer and Probex.
(a) Buyer and Probex hereby jointly and severally agree agrees to
indemnify and hold harmless Seller, the Shareholders and each officer, director,
employee, agent and affiliate of Seller (each, a "Seller Indemnified Party")
from and against, and agrees promptly to defend each Seller Indemnified Party
from and reimburse each Seller Indemnified Party for any and all actions, suits,
proceedings (including any investigation or inquiries), losses, damages, costs,
expenses, liabilities, obligations, and claims of any kind or nature whatsoever,
which may be incurred by or asserted against or involve a Seller Indemnified
Party, including, without limitation, reasonable attorneys' fees and other legal
costs and expenses ("Seller's Losses") arising out of or in any way relating to:
(i) any breach by Buyer or Probex of Buyer's and Probex's
representations or warranties set forth in this Agreement; or
(ii) any failure by Buyer or Probex to carry out, perform, satisfy and
discharge any covenants, agreements, undertakings, liabilities or obligations to
be performed by them pursuant to the terms of this Agreement or any of the
documents delivered by Buyer or Probex pursuant to this Agreement.
(b) In the event a claim against a Seller Indemnified Party arises to
which the indemnity of Section 9.3(a) of this Agreement is applicable, notice
shall be given promptly by Seller to Buyer and Probex, and Buyer and Probex
shall have the right to control all settlements (unless the Seller Indemnified
Party agrees to assume the cost of settlement) and to
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select lead counsel to defend any and all such claims at the sole cost and
expense of Buyer and Probex. The Seller Indemnified Party may select counsel to
participate in any such defense at the sole cost and expense of the Seller
Indemnified Party. In connection with any such claim, action or proceeding, the
parties shall cooperate with each other and provide each other with access to
relevant books and records in their possession.
ARTICLE X
PERSONNEL
10.1 Buyer Employees. Buyer shall make offers of employment to Seller's
employees of the Business listed on Schedule 10.1 immediately following the
Closing (the "Buyer Employees"). Immediately prior to Closing, Seller shall
terminate the employment of all of the Buyer Employees as of the Closing Date
and Seller shall pay all obligations with respect to such Buyer Employees and
fulfill all obligations and applicable employee benefit plans (including
severance, wages, commissions, accrued vacation and other benefits) in respect
of periods prior to the Closing.
10.2 Terms of Employment. Buyer's employment of Buyer Employees shall
be on terms and conditions as Buyer and Buyer Employees shall find mutually
acceptable (and may include the requirement by the Buyer Employees to complete
applications and customary nondisclosure or noncompetition agreements), and all
Buyer Employees shall be eligible to participate in the employee benefit plans
of Buyer (or Probex as applicable) to the extent similarly situated employees of
Buyer are eligible to participate in such plans. To the extent permitted by
applicable Law, the Buyer Employees shall be given credit for previous
employment with the Seller for purposes of determining eligibility (but not
compensation levels) under such plans. Notwithstanding the foregoing, Buyer and
Probex shall have no obligation to provide to Buyer Employees any term,
condition or benefit of employment that is the same as or similar to those
provided by Seller to Buyer Employees prior to the Closing, including, but not
limited, to those relating to commissions, bonus, profit sharing or other
additional compensation, sick pay, severance pay, personal time or pay or
pensions; provided, however, that Buyer shall continue in force the life
insurance policies with respect to two (2) Employees as identified on Schedule
10.1, or otherwise shall compensate such Employee for the value of such life
insurance policies. Seller shall indemnify, defend and hold harmless Buyer and
Probex from and against any liability or obligation to Buyer Employees or any
other employees of Seller, other than the obligations specifically undertaken by
Buyer as set forth above. No provision of this Agreement shall create any third
party beneficiary rights in any Buyer Employees or any beneficiary or dependent
thereof with respect to the compensation, terms and conditions of employment and
benefits that may be provided to any Buyer Employee.
10.3 Employment Agreements. On the Closing Date, Seller and the
Shareholders shall cause the Key Employees to enter into employment agreements
substantially in the form attached hereto as Exhibit E (the "Employment
Agreements"), with Buyer and/or Probex. From and after the Closing Date, Seller
and the Shareholders shall cause the Key Employees to comply in all material
respects with the terms of the Employment Agreements during the terms thereof.
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10.4 Non-Compete Agreements. On the Closing Date, Shareholders shall
enter into and shall cause the Key Employees to enter into the Non-Compete
Agreements with Buyer and/or Probex. From and after the Closing Date, Seller and
the Shareholders shall cause the Key Employees to comply in all material
respects with the terms of the Non-Compete Agreements during the terms thereof.
10.5 WARN. Seller shall comply in all respects with the notice and
other requirements of the Worker Adjustment Retraining and Notification Act, 19
U.S.C.Section.2101 et seq., and similar applicable state statutes. Neither Buyer
nor Probex shall not have any liability with respect to any employee of Seller
arising out of such statutes.
10.6 Payroll Tax. Buyer, Probex and Seller agree to follow the Standard
Procedure specified in Rev. Proc. 84-77, 1984-2 C.B. 753, whereby, among other
things, each will be responsible for the reporting duties with respect to its
own payments of wages and compensation to employees in connection with the
operation of the Purchased Assets. In addition, Seller agrees to provide to
Buyer all information reasonably requested by Buyer necessary for Buyer and
Buyer Employees to receive credit for payroll tax items already paid by Seller
or Buyer Employees for any periods prior to the Closing Date.
ARTICLE XI
ADDITIONAL COVENANTS
11.1 Taxes and Fees. Buyer shall pay all applicable sales, transfer,
documentary, use and filing fees and taxes that may become due or payable as a
result of the sale, conveyance, assignment, transfer or delivery of any of the
Purchased Assets. To the extent any Taxes are assessed or levied against Buyer
or Probex relating to the Business prior to the Effective Time, Buyer shall have
the option to pay such Taxes on Seller's behalf, provided the amount of such
Taxes shall be deemed a "Buyer's Loss" hereunder and shall reduce the amount of
the Seller's Floor on a dollar-for-dollar basis.
11.2 Brokers. Except as set forth on Schedule 11.2, Seller, the
Shareholders, Probex and Buyer represent to each other that the transactions
contemplated by this Agreement have been negotiated directly between them and
their respective counsels, without intervention of any person as a result of any
action by them in such a manner as to give rise to a valid claim against any of
them for a brokerage commission, finder's fee, counseling or advisory fee, or
like payment and each agrees to indemnify the opposite party against any such
liability arising from or through it.
[Remainder of this page left blank intentionally]
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11.3 Books and Records; Personnel. Buyer and Seller shall make
available to each other for reasonable periods of time Buyer's or Seller's
personnel to assist Seller or Buyer in locating and obtaining records and files
maintained by Buyer or Seller and any of Buyer's or Seller's personnel whose
assistance or participation is reasonably required by Seller or Buyer, in
anticipation of, preparation for, or the conduct of any existing or future
litigation, tax returns or other matters, in which Seller or Buyer is involved.
11.4 Release of Line of Credit Liability. Buyer shall use commercially
reasonable efforts to cause the lender under the Line of Credit to release
Seller and the Shareholders from any liability under the Line of Credit (other
than liabilities relating to the Excluded Assets, which liabilities shall remain
and be discharged by Seller as of the Effective Time) and the Shareholders from
any personal guarantees issued by the Shareholders. If such release of liability
is not obtained by the first anniversary of the Closing Date, Buyer and/or
Probex shall refinance or otherwise discharge the Line of Credit so as to cause
Seller and the Shareholders to be released from any continuing liability
thereunder.
11.5 Temporary Advance. Commencing at the Effective Time and for a
period of thirty (30) days thereafter, Shareholders shall loan to Buyer such
funds, up to a maximum of One Hundred Fifty Thousand Dollars ($150,000), as may
be required by Buyer to operate the Business in its ordinary course. Such funds
shall be advanced within five (5) days after a written request from an officer
of Buyer. Any funds so advanced shall bear interest at the annual rate of eight
percent (8%), shall be due and payable, together with accrued interest thereon,
on or before September 1, 2000, and be evidenced by a promissory note, in form
similar to the form attached as Exhibit B hereto.
ARTICLE XII
TERMINATION
12.1 Termination. Time is of the essence of this Agreement. This
Agreement may be terminated and the transactions contemplated hereby may be
abandoned as follows:
(a) at any time prior to the Closing by mutual written agreement
of Seller, Buyer and Probex; or
(b) by Buyer and Probex if there has been a material breach of the
representations and warranties of Seller contained herein or if Seller shall
have failed to comply in any material respect with any of its covenants or
agreements contained in this Agreement; or
(c) by Seller if there has been a material breach of the
representations and warranties of Buyer and Probex contained herein or if Buyer
or Probex shall have failed to comply in any material respects with any of their
covenants or agreements contained in this Agreement; or
(d) by Seller or by Buyer on or after the later of (i) June 15,
2000, and (ii) two
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weeks after the receipt by Buyer or Probex of audited financial statements for
the four and twelve months ended April 30, 2000, prepared by Ernst & Young LLP,
if by that date the Closing has not taken place (provided, however, no party
shall be entitled to terminate this Agreement pursuant to this clause (d) if
such party is in breach of this Agreement at such time); or
(e) by any party if any court of competent jurisdiction in the
United States or other governmental body of the United States shall have issued
an order, decree or ruling restraining, enjoining or otherwise prohibiting the
purchase and sale of the Purchased Assets contemplated by this Agreement.
12.2 Rights on Termination; Waiver. If this Agreement is terminated
pursuant to Section 12.1, all further obligations of the parties under or
pursuant to this Agreement shall terminate without further liability of either
party to the other, except for the obligations under Section 13.2; provided,
however, that termination pursuant to clauses (b) or (c) of Section 12.1 shall
not relieve any defaulting or breaching party from liability to the other party.
Upon any termination of this Agreement, each party will return all documents,
work papers and other material (including all copies) of the other party
relating to the transactions contemplated by this Agreement.
ARTICLE XIII
MISCELLANEOUS
13.1 Entire Agreement; Amendment. This Agreement and the documents
referred to herein and to be delivered pursuant hereto constitute the entire
agreement between the parties pertaining to the subject matter hereof, and
supersede all prior and contemporaneous agreements, understandings,
negotiations, and discussions of the parties, whether oral or written, and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein. This Agreement may only be amended or modified by an instrument in
writing executed by Seller, the Shareholders, Buyer and Probex. No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provision of this Agreement, whether or not similar, nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.
13.2 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, each of the parties shall pay the fees and expenses
of their respective counsel, accountants and other experts incident to the
negotiation and preparation of this Agreement, the filing of any reports or
notifications required of that party by Law and the consummation of the
transactions contemplated by this Agreement.
13.3 Governing Law. This Agreement shall be construed and interpreted
according the laws of the State of Texas, without regard to the conflicts of
laws provisions thereof.
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13.4 Submission to Jurisdiction; Service of Process. (a) Any legal
action or proceeding with respect to this Agreement or the Promissory Note or
any document related thereto may be brought in the courts of the State of Texas,
Dallas County, or of the United States of America for the Northern District of
Texas, and, by execution and delivery of this Agreement, each of the Seller and
the Shareholders hereby accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of aforesaid courts. The parties
hereto hereby irrevocably waive any objection, including, without limitation,
any objection to the laying of venue or based on the grounds of forum non
conveniens, which any of them may now or hereafter have to the bringing of any
such action or proceeding in such respective jurisdictions;
(b) the Seller and the Shareholders irrevocably consent to the
service of process of any of the aforesaid courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the Seller or the Shareholders at their addresses provided
herein; and
(c) nothing contained in this Section 13.4 shall affect the right
of Buyer and/or Probex to serve process in any other manner permitted by law or
commence legal proceedings or otherwise proceed against the Seller or the
Shareholders in any other jurisdiction.
13.5 Assignment. Neither party may assign any of its rights or delegate
any of its duties under this Agreement; provided, however, that Buyer may
transfer all of its rights and obligations hereunder to another wholly-owned
direct or indirect subsidiary of Probex.
13.6 Notices. All communications, notices and disclosures required or
permitted by this Agreement shall be in writing and shall be deemed to have been
given at the earlier of the time when actually delivered to an officer of the
party to which notice is to be given or when sent by facsimile transmission,
overnight courier service or by certified or registered first-class mail,
postage prepaid, return receipt requested, addressed as follows, unless and
until any party notifies the others in accordance with this Section 13.6 of a
change of address:
If to Buyer or Probex:
Probex Corp.
1467 LeMay, Suite 111
Carrollton, Texas 75007
Attention: Bruce A. Hall
Facsimile: (972) 466-1556
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With a copy to:
Jenkens & Gilchrist,
a Professional Corporation
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202
Attention: Robert W. Dockery
Facsimile: (214) 855-4300
If to Seller:
Petroleum Products, Inc.
4608 Central College Road
Westerville, Ohio 43081
Attention: William Snedegar
Facsimile: (614) 855-7407
With a copy to:
Thomas E. Baxter
150 W. Wilson Bridge Road
Suite 101
Worthington, Ohio 43085
Facsimile: (614) 431-8120
13.7 Counterparts; Headings. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute one and the same Agreement. The Table of Contents and
Article and Section headings in this Agreement are inserted for convenience of
reference only and shall not constitute a part of this Agreement.
13.8 Interpretation. Unless the context requires otherwise, all words
used in this Agreement in the singular number shall extend to and include the
plural, all words in the plural number shall extend to and include the singular,
and all words in any gender shall extend to and include all genders.
13.9 Severability. If any provision, clause, or part of this Agreement,
or the application thereof under certain circumstances, is held invalid, the
remainder of this Agreement, or the application of such provision, clause, or
part under other circumstances, shall not be affected thereby.
13.10 No Reliance. Neither Buyer, Probex nor Seller assume any
liability to any person not a party to this Agreement because of any reliance on
the representations, warranties, and agreements of Buyer, Probex or Seller
contained herein.
13.11 Specific Performance. Seller acknowledges that a refusal by
Seller to consummate the transactions contemplated hereby, or a breach by Seller
of the provisions of this
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Agreement, will cause irrevocable harm to Buyer and Probex, for which there may
be no adequate remedy at law and for which the ascertainment of damages would be
difficult. Therefore, Buyer and Probex shall be entitled, in addition to, and
without having to prove the inadequacy of, other remedies at law, to specific
performance of this Agreement, as well as injunctive relief (without being
required to post bond or other security).
13.12 Further Assurances. Upon and subject to the conditions contained
herein, each of the parties hereto agrees, both before and after the Closing,
(a) to use all reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement,
(b) to execute any documents, instruments or conveyances of every kind which may
be reasonably necessary or advisable to carry out any of the transactions
contemplated hereby, and (c) to cooperate with each other in connection with the
foregoing, including using their reasonable efforts (i) to obtain all consents
from other parties required to permit consummation of the transactions
contemplated hereby; provided, however, that neither Probex nor Buyer shall be
required to make any payments, commence litigation or agree to any modification
of the terms thereof in order to obtain such consents, (ii) to obtain all
necessary consents as are required to be obtained under any Law to permit
consummation of the transactions contemplated hereby, (iii) to defend all
litigation challenging this Agreement or other consummation of the transaction
contemplated hereby, (iv) to lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, (v) to effect all necessary registrations and
filings and (vi) to fulfill all conditions to this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
PROBEX FLUIDS RECOVERY, INC.,
a Delaware corporation
By: /s/ BRUCE HALL
-------------------------------------------
Name: Bruce Hall
-----------------------------------------
Title: Director
----------------------------------------
PROBEX CORP., a Colorado corporation
By: /s/ BRUCE HALL
-------------------------------------------
Name: Bruce Hall
-----------------------------------------
Title: Director
----------------------------------------
PETROLEUM PRODUCTS, INC.,
an Ohio corporation
By: /s/ WILLIAM SNEDEGAR
-------------------------------------------
Name: William Snedegar
-----------------------------------------
Title: President
----------------------------------------
SHAREHOLDERS:
/s/ WILLIAM SNEDEGAR
----------------------------------------------
William Snedegar
/s/ PHYLLIS L. SNEDEGAR
----------------------------------------------
Phyllis L. Snedegar
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EXHIBIT 99.2
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of May 1, 2000 (this
"Agreement"), is made by and among INTERCOASTAL TRADING COMPANY, INC., an Ohio
corporation ("Seller"), KEITH MILLS, a resident of the State of Kentucky, and
WILLIAM SNEDEGAR, a resident of the State of Ohio (the "Shareholders"), PROBEX
CORP., a Colorado corporation ("Probex"), and PROBEX FLUIDS RECOVERY, INC., a
Delaware corporation and wholly-owned subsidiary of Probex ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller owns assets relating to its business of collecting,
purchasing, selling, delivering and marketing of used petroleum products (the
"Business"); and
WHEREAS, Seller desires to sell and Buyer desires to purchase,
effective as of 12:01 a.m. May 1, 2000 (the "Effective Time"), substantially all
of the tangible and intangible assets of the Business on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions contained in this Agreement, and intending to be legally bound, and
on the terms and subject to the conditions set forth in this Agreement, the
parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. When used in this Agreement, the following terms
shall have the meanings specified:
"Accounts Receivable" shall mean sums due and owing for
petroleum products in transit from Seller to customers of Seller, including but
not limited to, invoiced shipments.
"Act" shall have the meaning set forth in Section 2.8.
"Agreement" shall mean this Asset Purchase Agreement, together
with all schedules and exhibits attached hereto, as the same may be amended from
time to time in accordance with the terms of this Agreement.
"Alternative Transaction" shall have the meaning set forth in
Section 6.13.
"Assumed Obligations" shall have the meaning set forth in
Section 2.6(a).
"Audited Financial Statements" shall mean (a) Seller's audited
balance sheets and statements of income, changes in shareholders' equity and
cash flow as of and for the fiscal years ended December 31, 1997, 1998 and 1999,
and (b) Seller's audited balance sheet and statements of income, changes in
shareholders' equity, and cash flow as of and for the four months and twelve
months ended April 30, 2000.
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"Backlog" shall have the meaning set forth in Section 2.1(k).
"Buyer Employees" shall have the meaning set forth in Section
10.1.
"Buyer Indemnified Party" shall have the meaning set forth in
Section 9.2(a).
"Buyer's Losses" shall have the meaning set forth in Section
9.2(a).
"Closing" shall have the meaning set forth in Section 3.1.
"Closing Amount" shall have the meaning set forth in Section
2.4.
"Closing Date" shall mean the later of (i) May 1, 2000, and
(ii) the date that is the first business day after satisfaction or waiver of the
latest to occur of the conditions set forth in Articles VII and VIII of this
Agreement, unless a different date is agreed to in writing by the parties.
"Closing Time" shall mean 12:01 a.m. on the Closing Date.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Contracts" shall have the meaning set forth in Section
2.1(g).
"Effective Time" shall mean 12:01 a.m. on May 1, 2000.
"Employee" shall have the meaning set forth in Section
4.15(a).
"Employee Agreements" shall have the meaning set forth in
Section 4.16(a).
"Employee Benefit Plan" shall mean any plan, fund, program,
policy, arrangement, contract or commitment, whether or not qualified for
federal income tax purposes, whether or not funded, whether formal or informal,
and whether for the benefit of a single individual or more than one individual.
"Employee Plan" shall have the meaning set forth in Section
4.16(a).
"Employment Agreements" shall have the meaning set forth in
Section 10.3.
"Environmental laws" shall have the meaning set forth in
Section 4.20.
"Equipment" shall have the meaning set forth in Section
2.1(e).
"Equipment Leases" shall have the meaning set forth in Section
2.1(f).
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"Exchange Act" shall have the meaning set forth in Section
4.29(c).
"Excluded Assets" shall have the meaning set forth in Section
2.1.
"Excluded Contracts" shall have the meaning set forth in
Section 2.1.
"Excluded Obligations" shall have the meaning set forth in
Section 2.6(b).
"Financial Statements" shall mean the Preliminary Financial
Statements and the Audited Financial Statements, collectively.
"GAAP" shall mean those generally accepted accounting
principles which are recognized as such by the American Institute of Certified
Public Accountants acting through its Accounting Principles Board or the
Financial Accounting Standards Board or through other appropriate boards or
committees thereof and which are consistently applied.
"Intellectual Property" shall have the meaning set forth in
Section 4.11(a).
"Inventory" shall mean all petroleum products held by Seller
in its storage tanks, tanker trucks, rail cars, barges and other storage
vessels, other than petroleum products that represent Accounts Receivable.
"Key Employees" shall have the meaning set forth in Section
3.2(f).
"Law" shall mean any federal, state, local or other law or
governmental requirement of any kind, whether legislatively, judicially or
administratively promulgated, and any rules, regulations and orders promulgated
thereunder.
"Legal Requirements" shall have the meaning set forth in
Section 4.28.
"Licenses and Permits" shall have the meaning set forth in
Section 2.1(l).
"Material Adverse Effect" shall mean a material and adverse
effect on the financial condition, assets, liabilities, business, property or
prospects of Seller, the Purchased Assets, the Contracts, Buyer and/or Probex,
as applicable.
"Non-Assignable Contracts" shall have the meaning set forth in
Section 2.2.
"Non-Compete Agreement" shall have the meaning set forth in
Section 3.2(g).
"PPI Agreement" shall have the meaning set forth in Section
7.6.
"Preliminary Financial Statements" shall mean the draft
financial information relating to Seller as of December 31, 1999, prepared by
Ernst & Young, LLP and delivered to Buyer on or about March 31, 2000.
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"Probex Share Price" shall have the meaning set forth in
Section 2.4.
"Probex Stock" shall have the meaning set forth in Section
2.4.
"Purchased Assets" shall have the meaning set forth in Section
2.1.
"Purchase Price" shall have the meaning set forth in Section
2.4.
"Real Property" shall have the meaning set forth in Section
2.1(d).
"Related Party" shall have the meaning set forth in Section
4.24.
"Records" shall have the meaning set forth in Section 2.1(j).
"SEC" shall have the meaning set forth in Section 4.29(c).
"Seller's Floor" shall have the meaning set forth in Section
9.2.
"Seller Indemnified Party" shall have the meaning set forth in
Section 9.3(a).
"Seller's Losses" shall have the meaning set forth in Section
9.3(a).
"Shareholders" shall mean William Snedegar and Keith Mills,
who are the sole shareholders of Seller.
"Taxes" shall have the meaning set forth in Section 4.19.
"Technology" shall have the meaning set forth in Section 4.32.
"Third Party Intellectual Property" shall have the meaning set
forth in Section 4.11(a).
ARTICLE II
PURCHASE AND SALE
2.1 Commitment to Sell and Assign. Upon the terms and subject to the
conditions set forth in this Agreement, Seller shall sell, transfer, assign,
convey and deliver to Buyer all of the assets, properties, interests, business,
goodwill, claims and other rights of Seller (other than the Excluded Assets)
relating to the Business of every kind and nature whatsoever, tangible or
intangible, vested or unvested, contingent or otherwise, real, personal or
mixed, and wherever located, whether or not reflected on the books and records
of Seller and whether or not described in this Agreement or in any of the
schedules hereto, as such existed as of the date hereof, together with
additional assets acquired from the date hereof to the Closing Date, including,
without limitation, all right, title and interest of Seller in and to the
following specified assets, properties and rights (collectively, the "Purchased
Assets"):
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(a) All Intellectual Property, including, but not limited to,
that set forth on Schedule 2.1(a) and the use of the name "Intercoastal Trading
Company, Inc.," including the goodwill attached to such name, and the trade
names and marks descriptive and associated with such name.
(b) All of Seller's rights to use the Third Party Intellectual
Property, including, but not limited to, those set forth on Schedule 2.1(b).
(c) [Intentionally omitted]
(d) All real property and leases, including capitalized
leases, for real property owned, used or leased by Seller in connection with the
Business, including those set forth on Schedule 2.1(d) ("Real Property").
(e) All fixed assets, furniture, property, equipment,
fixtures, leasehold improvements, tools, machinery, office equipment, plant and
other tangible personal property related to or used in connection with the
Business or located at Seller's place of business, including, without
limitation, those set forth on Schedule 2.1(e) (the "Equipment").
(f) Seller's interest under those certain equipment leases
pertaining to the Business and set forth on Schedule 2.1(f) (the "Equipment
Leases").
(g) Seller's interest in all personal property leases, rental
agreements, sales and purchase orders and acknowledgments, permits, customer
license and maintenance agreements, third party product agreements, third party
supply agreements and any and all other contracts or binding agreements relating
to the Business, including, but not limited to, those set forth on Schedule
2.1(g) (the "Contracts") and all of Seller's interests (including rights to
refund and offset), privileges, claims, causes of action and options relating to
the Contracts or any portion thereof; provided, however, that each of the
Excluded Contracts shall be retained by Seller and shall not be considered a
"Contract" hereunder, but shall constitute an Excluded Asset, as defined below.
(h) [Intentionally omitted]
(i) Prepaid expenses or advances to third parties relating to
the Business, including, but not limited to, lease deposits and maintenance
agreements as set forth on Schedule 2.1(i).
(j) Except as set forth below, all business, accounting and
financial records, property records, contract records, personnel records,
correspondence, files, books and documents of Seller relating to the Business,
including, but not limited to, sales, marketing and advertising data and
materials, customer and mailing lists of any and all types, vendor and customer
invoices, credit reports, billing records, service records, software and related
documentation, artwork, photographs, manuals and teaching aids, engineering,
maintenance and production records (the "Records").
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(k) All of Seller's backlog related to the conduct of the
business or operations of the Business, as of the Closing Time, of unfilled firm
orders for products manufactured or sold or services provided by Seller related
to the business or operations of the Business, including, but not limited to,
that set forth on Schedule 2.1(k) (the "Backlog").
(l) All of Seller's licenses and permits required for the
operation of the Business and the operation of the Purchased Assets or used by
Seller, including, but not limited to, those set forth on Schedule 2.1(l) (the
"Licenses and Permits").
Notwithstanding the foregoing, however, the Purchased Assets
shall not include any cash, Accounts Receivable, and any contract or agreement
relating to the Business designated on Schedule 2.1(m) which Probex and Buyer
are unwilling to assume (the "Excluded Contracts") and general books of account
and books of original entry that comprise Seller's or the Business' permanent
accounting or tax records and books and records that Seller is required to
retain pursuant to any statute, rule or regulation; provided, however, Buyer
shall be entitled to a description of, and to the extent available, copies of,
all the foregoing (collectively referred to as the "Excluded Assets"). All
Excluded Assets are listed on Schedule 2.1(n).
2.2 Non-Assignable Contracts. In the case of any Real Property
mortgages, leases, Contracts or Equipment Leases which by their terms or by
virtue of their subject matter are not assignable without the consent of a third
party (collectively, the "Non-Assignable Contracts," all of which are listed on
Schedule 2.2), Seller will use its best efforts to obtain, prior to the Closing
Time, any written consents necessary to convey to Buyer the benefit thereof.
Buyer shall cooperate with Seller, in such manner as may be reasonably requested
and at Seller's expense, in connection therewith, provided that Buyer shall not
be obligated to agree to pay any consideration or increase the consideration
payable under any such Non-Assignable Contract or to make any other agreement
that would affect adversely in any other way the economics for Buyer under such
Non-Assignable Contract, or would make the obligations intended to be assumed by
Buyer thereunder more burdensome. Seller shall inform Buyer from time to time
prior to the Closing Time of Seller's receipt from any such third party of
confirmation of such third party's refusal to grant its consent to any such
assignment. Nothing in this Agreement shall be construed as an attempt or an
agreement to assign or cause the assignment of any Non-Assignable Contract
included in the Purchased Assets which is in law nonassignable without the
consent of the other party or parties thereto, unless such consent shall have
been given. Notwithstanding the foregoing, in the event that any third party to
a Non-Assignable Contract has not consented to an assignment thereof to Buyer
for any reason, then Buyer shall have no liability or obligation to Seller, such
third party or any other party with respect to such Non-Assignable Contract, and
if any Non-Assignable Contract is not assigned to Buyer for any reason and Buyer
considers in its sole judgment that such Non-Assignable Contract is material to
the business to be conducted by Buyer after the Closing Date then, at Buyer's
option, Buyer shall have no obligation to consummate its purchase hereunder. In
the event that Buyer consummates its purchase hereunder and any Non-Assignable
Contract has not been assigned to Buyer for any reason then either (i) Buyer and
Seller shall negotiate in good faith to adjust the Purchase Price (as defined
herein) based on such event and/or (ii) Buyer and Seller shall cooperate in good
faith
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with the other party in any reasonable arrangement necessary or desirable to
provide Buyer the benefits of such Non-Assignable Contract.
2.3 Commitment to Purchase and Accept. Upon the terms and subject to
the conditions set forth in this Agreement, Buyer shall purchase, accept and
acquire the Purchased Assets, free and clear of all liens, claims and
encumbrances whatsoever (except as set forth in Section 4.4), and in full
payment for such purchase shall pay, or cause to be paid, to Seller the purchase
price pursuant to Section 2.4.
2.4 Purchase Price. The purchase price for the Purchased Assets (the
"Purchase Price") shall be an amount equal to the sum of: (i) $600,000 in cash,
which shall be paid at the Closing (the "Closing Amount"); plus (ii) $500,000 of
the common stock, no par value per share, of Probex (the "Probex Stock") valued
at $1.875 per share (the "Probex Share Price"). The Purchase Price shall be
payable to Seller as follows:
(a) At the Closing, Buyer or Probex shall pay to Seller the
Closing Amount by certified check or bank cashier's check, or by wire transfer
of immediately available funds.
(b) At the Closing, Probex shall issue an aggregate of 266,667
shares of Probex Stock to the Shareholders, of which 66,666 shares will be fully
vested at the Closing, and the remainder of which shall vest in the amount of
66,667 shares on each of the first, second and third anniversaries of the
Closing Date. Such shares shall be allocated to the Shareholders in the amounts
set forth on Schedule 2.4(b).
(c) Until the shares of Probex Stock have vested, such shares
shall be subject to forfeiture in the event of a breach by Seller of its
obligation to pay any indemnification obligations as set forth in Section
9.2(c). Subject to the foregoing, the holder of the Probex Stock shall be
entitled to vote its shares of the Probex Stock and to collect and receive all
dividends and distributions paid in respect of the Probex Stock. Until the
shares of Probex Stock have vested, however, the holders of the Probex Stock
shall not sell, assign, transfer, pledge, or otherwise encumber any of their
right, title or interest in or to the Probex Stock.
2.6 Liabilities.
(a) Buyer shall assume the liabilities of Seller shown on the
audited balance sheet of Seller as of December 31, 1999, including, but not
limited to, the following, but in no event in an aggregate amount in excess of
the aggregate value of such liabilities shown on such balance sheet, and except
for those items set forth in Section 2.6(b) or incurred by Seller thereafter in
the ordinary course of business consistent with past practice (the "Assumed
Obligations"):
(i) obligations under the Contracts;
(ii) liabilities arising on and after the Closing
Date (except as otherwise set forth in this Agreement) under the Contracts, Real
Property, the Equipment, the Equipment Leases and other assets included in the
Purchased Assets;
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(iii) liabilities for accounts payable and accrued
and unpaid expenses of the Business incurred in the ordinary course of
business (other than accounts payable relating to the Accounts Receivable),
including, with respect to Buyer Employees (as defined below), employment costs
relating to facts and circumstances arising on or after the Closing Date;
(iv) insurance claims made on or after the Effective
Time relating to the Purchased Assets or Assumed Obligations;
(v) liabilities arising from the ownership of the
Purchased Assets on and after the Closing Date;
(vi) liabilities relating to all causes of action and
other claims which a third party may assert in respect of any of the Purchased
Assets (but only to the extent such causes of action or claims relate to
liabilities assumed hereunder); and
(b) Seller shall retain and Buyer shall not assume any
liabilities or obligations (other than the Assumed Obligations) of Seller with
respect to the Business, whether known or unknown, fixed or contingent,
including, without limitation, the following obligations or liabilities (the
"Excluded Obligations"):
(i) obligations and liabilities arising out of or
relating to the Excluded Assets, including any accounts payable, obligations and
liabilities relating to the Accounts Receivable;
(ii) liabilities of Seller for Taxes (as defined in
Section 4.19) not shown on the Financial Statements accruing prior to the
Effective Time and Taxes relating to the conduct of the Business prior to the
Effective Time;
(iii) liabilities of Seller relating to any Employee
(as defined in Section 4.15) not shown on the Financial Statements or arising
under or pursuant to any Employee Plan or Employee Agreement (as such terms are
defined in Section 4.16), including without limitation all liabilities relating
to the employment by Seller of any employee, agent, contractor or consultant, or
the termination of such employment prior to the Closing Date and all liabilities
and responsibilities for compliance with the requirements of Section 4980B of
the Code (COBRA) through the Closing Date, which includes any terminations of
employment that occur on such date as a result of this transaction;
(iv) other liabilities of the Business not expressly
included in the Assumed Obligations, including, without limitation, all
liabilities of Seller in connection with the Business arising under or pursuant
to Environmental Laws (as defined in Section 4.20) arising from events occurring
prior to the Closing Date;
(v) all overdrafts; and
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(vi) the liabilities set forth on Schedule 2.6(b).
2.7 Power of Attorney. Effective on the Closing Date, Seller hereby
constitutes and appoints Buyer and its successors, legal representatives and
assigns the true and lawful attorneys of Seller, with full power of
substitution, in the name of Seller or Buyer, but on behalf of and for the
benefit of Buyer and its successors, legal representatives and assigns: (a) to
demand and receive from time to time any and all of the Purchased Assets and to
make endorsements and give receipts and releases for and in respect of the same
and any part thereof; (b) to institute, prosecute, compromise and settle any and
all proceedings at law, in equity or otherwise that Buyer and its successors,
legal representatives or assigns may deem proper in order to collect, assert or
enforce any claim, right or title of any kind in or to the Purchased Assets; (c)
to defend any or all actions, suits or proceedings in respect of any of the
Purchased Assets; and (d) to do all such acts and things in relation to the
matters set forth in the preceding clauses (a) through (c) as Buyer and its
successors, legal representatives or assigns shall deem desirable. Seller hereby
agrees that the appointment hereby made and the powers hereby granted are
coupled with an interest and are and shall be irrevocable by it in any manner or
for any reason. After the Closing Date, Buyer shall have the right to receive
and open all mail, packages and other communications addressed to Seller and
relating to the Purchased Assets, and Seller agrees promptly to deliver to Buyer
any such mail, packages or other communications received directly or indirectly
by Seller. Buyer shall promptly deliver to Seller all mail, packages and other
communications received by it which relate to Seller but do not relate to the
Purchased Assets.
2.8 Probex Stock. The Probex Stock shall not be registered under the
Securities Act of 1933, as amended (the "Act"), and as such shall constitute
"restricted securities" within the meaning of Rule 144 under the Act and the
Probex Stock shall be available for sale in the public market only in compliance
with Rule 144. The Probex Stock shall bear a legend substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS (THE "STATE
ACTS"), HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION UNDER THE STATE
ACTS OR EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS
(INCLUDING, IN THE CASE OF THE SECURITIES ACT, THE EXEMPTION AFFORDED
BY RULE 144). UNLESS WAIVED BY PROBEX CORP., PROBEX CORP. SHALL BE
FURNISHED WITH AN OPINION OF COUNSEL OPINING AS TO THE AVAILABILITY OF
EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AS A PRECONDITION
TO ANY SUCH TRANSFER.
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In addition, so long as the shares of Probex Stock have not vested,
such shares shall bear a legend substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO
THAT CERTAIN ASSET PURCHASE AGREEMENT BY AND BETWEEN THE ISSUER AND
PETROLEUM PRODUCTS, INC. DATED AS OF MAY 1, 2000. SUCH SHARES ARE
SUBJECT TO FORFEITURE UPON THE OCCURRENCE OF CERTAIN BREACHES OR
DEFAULTS OF COVENANTS SET FORTH IN SUCH AGREEMENT AND OTHER AGREEMENTS
ENTERED INTO IN CONNECTION THEREWITH. CONSEQUENTLY, THIS CERTIFICATE
AND THE SHARES REPRESENTED BY SUCH CERTIFICATE MAY NOT BE TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE ENCUMBERED WITHOUT THE PRIOR WRITTEN
CONSENT OF THE ISSUER.
At such time that the shares of Probex Stock shall be fully vested, and
there shall be no pending claim for forfeiture thereof pursuant to Section
9.2(c), Probex shall cause such legend to be removed from the certificates
representing such shares.
ARTICLE III
CLOSING
3.1 Closing. The consummation and closing of the transactions
contemplated in this Agreement (the "Closing") shall be held at 9:00 a.m. local
time on the Closing Date at the offices of Thomas E. Baxter, 150 W. Wilson
Bridge Road, Suite 101, Worthington, Ohio unless the parties otherwise agree.
All transactions occurring at the Closing shall be deemed to have occurred
simultaneously as of the Closing Time, and no one transaction shall be complete
until all transactions have been completed.
3.2 Seller's Deliveries at Closing. Seller and the Shareholders, as
applicable, shall at the Closing execute and deliver, or cause to be executed
and delivered, to Buyer and/or Probex, as appropriate, the following:
(a) a Bill of Sale conveying in the aggregate all of the
Equipment, Intellectual Property and Records, and any other personal property
included in the Purchased Assets, substantially in the form attached as Exhibit
C;
(b) [Intentionally omitted]
(c) [Intentionally omitted]
(d) an Assignment and Assumption Agreement, substantially in
the form attached as Exhibit D, with respect to the Equipment Leases and
Contracts;
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(e) [Intentionally omitted]
(f) the Employment Agreements with those individuals set forth
on Schedule 3.2(f) (the "Key Employees"), substantially in the form attached
hereto as Exhibit E;
(g) the Non-Disclosure, Assignment of Developments,
Non-Solicitation and Non-Competition Agreement (the "Non-Compete Agreement")
with the Shareholders and Key Employees, substantially in the form attached
hereto as Exhibit F;
(h) an estoppel and consent certificate (dated not more than
30 days prior to the Closing Date) from each landlord under a Real Property
lease reasonably acceptable in form to Buyer;
(i) a nondisturbance agreement and an assignment of each Real
Property lease conveying title to each Real Property lease in accordance with
this Agreement in a form reasonably acceptable to Buyer;
(j) assignments, each in form satisfactory to Buyer, of all
Intellectual Property from Seller to Buyer and rights to all Third Party
Intellectual Property (together with written consents of the owners thereof to
such assignment and use) (other than the Excluded Contracts);
(k) all consents that are required from parties to the
Non-Assignable Contracts;
(l) true, correct and complete copies of Seller's Certificate
of Incorporation and all amendments thereto, duly certified as of a recent date
by the Secretary of State of Ohio;
(m) a certificate of the Secretary of State of Ohio, dated as
of a recent date, duly certifying as to the existence and good standing of
Seller as a corporation under the laws of Ohio;
(n) a certificate duly executed by an officer of Seller that
certifies (i) the due adoption by the directors and by the Shareholders of
Seller of corporate resolutions attached to such certificate authorizing the
transactions and the execution and delivery of this Agreement and the other
agreements and documents contemplated hereby and the taking of all actions
contemplated hereby and thereby; and (ii) that the copy of the Bylaws of Seller
attached to such certificate is a true and correct copy of such Bylaws and that
such Bylaws have not been amended except as reflected in such copy;
(o) a certificate duly executed by an officer of Seller, dated
as of the Closing Date, that certifies that the representations and warranties
of Seller contained in this Agreement are true and correct as of the Closing
Date and that Seller has performed and complied with all covenants and
conditions required by this Agreement to be performed and complied with by any
of them at or prior to Closing;
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(p) original copies of all Real Property mortgages, deeds of
trust, leases, Contracts and Equipment Leases and all amendments, supplements or
modifications thereto;
(q) all of Seller's books and records constituting a part of
the Purchased Assets, including, without limitation, the Records;
(r) possession or constructive possession of the Purchased
Assets;
(s) such documents necessary to release the Purchased Assets
from all liens, claims and encumbrances not expressly assumed hereunder;
(t) supplements to the Schedules hereto showing any changes
thereto which have occurred between the date of this Agreement and the Closing
Date;
(u) the opinion of Seller's counsel substantially in the form
of Exhibit G;
(v) fully executed articles of amendment to Seller's articles
of incorporation, in form and substance satisfactory to Buyer and Probex,
changing the name of Seller to a name that is not confusingly similar to
"Petroleum Products, Inc." or "Intercoastal Trading Company, Inc."; and
(w) such other agreements, documents and/or instruments,
including such specific releases, assignments, bills of sale and other
instruments of conveyance and transfer, in form and substance acceptable to
Buyer, Probex and their counsel, as may be necessary to transfer, convey and
deliver the Purchased Assets from Seller to Buyer and to vest in Buyer title
thereto free and clear of all liens, claims and encumbrances (except as set
forth in Section 4.4).
3.3 Probex and Buyer's Deliveries. Buyer and Probex, as applicable,
shall at the Closing execute and deliver to Seller the following:
(a) the Closing Cash Amount;
(b) [Intentionally omitted]
(c) the Probex Stock;
(d) [Intentionally omitted]
(e) the Employment Agreements;
(f) the Non-Compete Agreements;
(g) [Intentionally omitted]
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(h) certificates duly executed by the Secretary or Assistant
Secretary of both Probex and Buyer that certify to the extent necessary (i) the
due adoption of the Board of Directors of both of corporate resolutions attached
to such certificate authorizing the transactions and the execution and delivery
of this Agreement and the other agreements and documents contemplated hereby and
the taking of all actions contemplated hereby and thereby; and (ii) that the
copy of the Bylaws of both attached to such certificate is a true and correct
copy of such Bylaws and that such Bylaws have not been amended except as
reflected in such copy; and
(i) certificates duly executed by the Secretary or Assistant
Secretary of Buyer and Probex, dated as of the Closing Date, that certifies that
the representations and warranties of Buyer and Probex contained in this
Agreement are true and correct as of the Closing Date and that Buyer and Probex
have performed and complied with all covenants and conditions required by this
Agreement to be performed and complied with by it at or prior to Closing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS
Seller and the Shareholders hereby jointly and severally represent and
warrant to Buyer and Probex as follows:
4.1 Organization and Authority of Seller. Seller is a corporation
validly existing and in good standing under the laws of the State of Ohio and
has full power to enter into and perform its obligations under this Agreement
and under all other agreements, documents and/or instruments to be executed
and/or delivered by Seller pursuant to or in connection with this Agreement.
Seller has full power to own, operate and/or hold under lease the Purchased
Assets as, and in the places where, such properties and assets now are owned,
operated or held.
4.2 Authorization; Enforceability. The execution, delivery and
performance by Seller of this Agreement and of all of the agreements, documents
and/or instruments to be executed and/or delivered by Seller pursuant to or in
connection with this Agreement have been duly authorized by all necessary action
of Seller. This Agreement is, and the other agreements, documents and
instruments required hereby will be, when executed and delivered by the parties
hereto, the valid and binding obligations of Seller and the Shareholders,
enforceable against Seller and the Shareholders in accordance with their
respective terms.
4.3 No Violation or Conflict by Seller. The execution, delivery and
performance of this Agreement by Seller and the Shareholders does not and will
not violate, conflict with or result in the creation or imposition of any lien,
charge or encumbrance under any Law, judgment, order or decree binding on Seller
or the Articles of Incorporation or the Bylaws of Seller, or any contract or
agreement to which Seller is a party or by which Seller or any of the Purchased
Assets are bound.
4.4 Title to Assets. Seller has good and marketable title to all of the
Purchased Assets owned or purported to be owned by Seller pursuant to the
Schedules hereto and a good and valid
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leasehold interest in all property leased by Seller and used in connection with
the Business, in each case free and clear of all liens, claims and encumbrances
(except as set forth in this Section 4.4). Upon delivery of the Purchased Assets
at the Closing, good and valid title to the Purchased Assets, free and clear of
all mortgages, liens, claims, pledges, security interests or other encumbrances,
will pass to Buyer.
4.5 Inventory and Accounts Receivable. The description of the Inventory
contained in Schedule 4.5 is complete and accurate as of the Effective Time.
Since December 31,1999 there have been no material changes to the Inventory,
other than changes in the ordinary course of business. The description of the
Accounts Receivable contained in Schedule 2.1(m) is complete and accurate as of
the Effective Time. The Accounts Receivable constitute all of the Accounts
Receivable of the Business related to the Purchased Assets. Such Accounts
Receivable were generated in the ordinary course of the Business. There is not
and will not be any liability of Seller for any refunds, allowances or returns
in respect of products imported, marketed, sold, distributed or shipped by or
for the account of Seller on or prior to the Closing Date.
4.6 No Litigation. Except as described on Schedule 4.6, there are no
actions at law or in equity, or arbitration proceedings, or claims or
investigations of which Seller has received notice, pending or to Seller's
knowledge threatened, or state of facts existing, which gives Seller any
reasonable basis to anticipate any such action, proceeding, claim or
investigation which could have a Material Adverse Effect. There are no
proceedings, pending or to Seller's knowledge threatened, against Seller and
related to the Business by or before any governmental board, department,
commission, bureau, instrumentality or agency (including, but not limited to,
any federal, state, or local governmental agency or body concerned with
environmental protection or pollution control, civil rights, labor or
discrimination, safety or health, zoning or land use), or state of facts
existing which gives Seller any reasonable basis to anticipate any such
proceeding; and Seller's ownership and operation of the Business is not in
violation of any order, decree or judgment of any court or arbitration tribunal
or governmental board, department, commission, bureau, instrumentality or
agency.
4.7 Financial Statements. The Financial Statements (a) were prepared in
accordance with the books of account and records of Seller, (b) are true,
correct and complete and present fairly the financial position and results of
operations of the Business as of the dates and for the periods indicated
therein, (c) make full and adequate disclosure of, and provision for, all
obligations and liabilities of the Business as of the dates thereof, and (d)
were prepared in conformity with generally accepted accounting principles
applied on a consistent basis.
4.8 Liabilities and Obligations. The Financial Statements reflect all
liabilities of Seller relating to the Business, 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 of such Financial
Statements. All reserves shown in the Financial Statements are appropriate,
reasonable and sufficient to provide for the losses contemplated thereby. Seller
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 which relates to or effects the Business.
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4.9 Real Property. The Real Property listed on Schedule 2.1(d) is the
only property of similar type used by Seller in the Business. Seller has legal
title to the Real Property owned in fee and is capable of conveying the Real
Property owned in fee to Buyer by general warranty deed. Seller's interest in
the Real Property is subject to no liens, claims or encumbrances, except for
those set forth in Schedule 4.9. True and correct copies of all instruments
conveying Real Property or otherwise evidencing ownership thereof, including,
without limitation, mortgages, deeds of trusts, deeds, contracts in lieu of
deed, purchase contracts, or leases ("Conveyance Instruments"), have been
delivered to Buyer by Seller. Subject to the terms of the respective Real
Property, Seller has a valid and subsisting title or leasehold estate in and the
right to quiet enjoyment to the property subject thereto for the respective Real
Property (for the full term of Real Property leases). The Conveyance Instruments
are in full force and effect and are enforceable in accordance with their
respective terms, except as such enforceability may be subject to or limited by
bankruptcy, insolvency, reorganization or other similar Laws affecting the
enforcement of creditors' rights generally. Seller has not assigned, pledged,
mortgaged, hypothecated or otherwise transferred any Real Property. Seller has
not sublet all or any portion of any property subject to a Real Property lease.
Seller has not received any written notice of default under any Conveyance
Instrument, and to Seller's knowledge there is no material default under any
Conveyance Instrument, and no event has occurred or failed to occur which, with
the giving of notice or the passage of time, or both, would constitute a
material default under any Conveyance Instrument. No portion of any parcel of
real property subject to a Conveyance Instrument is located in an area
designated as a flood zone by any governmental entity. All facilities and
improvements on any Real Property or subject to any Real Property lease are
adequate and suitable for the conduct of the Business and are in good working
order and condition, ordinary wear and tear excepted, and are supplied with
utilities and other services necessary for their operation in connection with
the Business.
4.10 Personal Property; Inventories.
(a) Schedule 2.1(e) sets forth a description of all Equipment
owned by Seller and used in connection with the Business, and separately sets
forth all Equipment (other than Excluded Assets) (i) leased by Seller, (ii)
which is in the possession of Seller and owned by other persons or (iii) owned
by Seller and is in the possession of other persons. All Equipment owned, leased
or used by Seller in connection with the Business is fit for operation in the
usual course of business as currently conducted, ordinary wear and tear
excepted, and all such Equipment is located on premises owned by Seller or
covered by valid leaseholds. Seller has or will on the Closing Date have the
right and authority to transfer all Equipment to Buyer and, upon such transfer,
Buyer will have good and valid title to such Equipment free and clear of all
liens (including, without limitation, liens for taxes), claims and encumbrances.
Except as set forth on Schedule 2.2, each lease or agreement pursuant to which
Seller leases any Equipment for use in connection with the Business may be
assigned to Buyer without any restriction or required consent or other approval.
(b) Seller does not own material quantities of any inventories
of materials,
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spare parts, work-in-process or finished goods (whether located at or in transit
to Seller) used in connection with the Business.
4.11 Intellectual Property Rights.
(a) Seller owns, or is licensed or otherwise possesses legally
sufficient rights to use, all patents, trademarks, trade names, service marks,
copyrights, maskworks and any applications therefor, technology, know-how, video
and audio compression algorithms, computer software programs or applications (in
both source code and object code form) and tangible or intangible proprietary
information or material that are used or proposed to be used in the Business of
Seller as currently conducted. Schedule 2.1(a) lists all current patents, patent
applications, registered and material unregistered copyrights, maskworks, trade
names and any applications therefor owned or licensed by Seller (the
"Intellectual Property"), and specifies the jurisdictions in which each such
Intellectual Property has been issued or registered or in which an application
for such issuance and registration has been filed, including the respective
registration or application numbers and the names of all registered owners.
Schedule 2.1(b) includes and specifically identifies all material third-party
patents, trademarks, copyrights (including software) and maskworks (the "Third
Party Intellectual Property"), which are incorporated in, are, or form a part
of, any Seller product, excluding any such intellectual property rights that are
available on a commodity basis (such as "shrink wrap" licenses) and which are
non-exclusive, terminable and available at a standard fee. Schedule 2.1(a) lists
(i) all material licenses, sublicenses and other agreements as to which Seller
is a party and pursuant to which any person is authorized to use any of Seller's
Intellectual Property, or any trade secret material to Seller or any of its
subsidiaries; and (ii) all material licenses, sublicenses and other agreements
as to which Seller is a party and pursuant to which Seller is authorized to use
any Third Party Intellectual Property, or other trade secret of a third party in
or as any product, and includes the identity of all parties thereto, a
description of the nature and subject matter thereof and the term thereof.
(b) Seller is not, nor will it be as a result of the execution
and delivery of this Agreement or the performance of its obligations hereunder,
in violation of any license, sublicense or agreement described in Schedule
2.1(a) or Schedule 2.1(b). No claims with respect to Seller's Intellectual
Property, any trade secret material to Seller, or Third Party Intellectual
Property to the extent arising out of any use, reproduction or distribution of
such Third Party Intellectual Property by or through Seller, are currently
pending or to Seller's knowledge are threatened by any person, nor does Seller
know of any valid grounds for any bona fide claims (i) to the effect that the
manufacture, sale, licensing or use of any product as now used, sold or licensed
or proposed for use, sale or license by Seller infringes on any copyright,
maskwork, patent, trademark, service mark or trade secret; (ii) against the use
by Seller of any trademarks, trade names, trade secrets, copyrights, maskworks,
patents, technology, know-how, video and audio compression algorithms, or
computer software programs and applications used in Seller's business as
currently conducted; (iii) challenging the ownership, validity or effectiveness
of any of the Seller's Intellectual Property or other trade secret material to
the Seller; or (iv) challenging the Seller's license or legally enforceable
right to use of the Third Party Intellectual Property. All material patents,
registered trademarks, maskworks and copyrights held by the Seller are
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valid and subsisting. To Seller's knowledge, there is no material unauthorized
use, infringement or misappropriation of any of the Seller's Intellectual
Property by any third party, including any employee or former employee of the
Seller or any of the its subsidiaries. Neither the Seller nor any of its
subsidiaries (i) has been sued or charged in writing as a defendant in any
claim, suit, action or proceeding which involves a claim or infringement of
trade secrets, any patents, trademarks, service marks, maskworks or copyrights
and which has not been finally terminated prior to the date hereof or been
informed or notified by any third party that the Seller may be engaged in such
infringement or (ii) has knowledge of any infringement liability with respect
to, or infringement by, the Seller or any of its subsidiaries of any trade
secret, patent, trademark, service mark, maskwork or copyright of another.
Seller has not taken any action to encourage adoption by any uniform standards
board of any technology upon which Seller's Intellectual Property is based or
with respect to any Third Party Intellectual Property which is incorporated in,
are or form a part of any Seller product.
4.12 Entire Business. Seller has the complete and unrestricted power
and the unqualified right to sell, transfer, convey, assign and deliver the
Purchased Assets to Buyer. The sale of the Purchased Assets by Seller to Buyer
pursuant to this Agreement will effectively convey to Buyer the entire Business
(other than the Excluded Assets and the Excluded Contracts). The assets,
properties and rights which will be owned or possessed by Buyer as of the
Closing will constitute all of the tangible and intangible property used by
Seller (whether owned by it or by any of its affiliates) in connection with the
conduct of the Business as heretofore conducted by Seller, except for the
Excluded Assets.
4.13 Contracts.
(a) Schedule 2.1(g) contains a complete and accurate list of
all Contracts to which Seller is a party and which in any way relate to the
operations or properties of the Business or which are or will be binding upon
the Business or the Purchased Assets. Except for the Contracts listed on
Schedule 2.1(g) (true and complete copies of which agreements have been
previously delivered to Buyer or, in the case of oral agreements, descriptions
of which are set forth on Schedule 2.1(g)), there are no other Contracts to
which Seller is party and which relate to the Business or to the Purchased
Assets.
(b) Except as set forth in Schedule 2.1(g), Seller has in all
material respects performed all obligations required to be performed by it under
all Contracts listed on Schedule 2.1(g); neither Seller nor any other party to a
Contract with Seller, is in material default under any such Contract; and no
event exists which with the giving of notice or the passage of time, or both,
would create such a default; and Seller does not know of any basis for any claim
of any such default.
(c) Each of the Contracts listed on Schedule 2.1(g) has been
lawfully entered into and is or will be valid and in full force and effect and
is or will be enforceable in accordance with its terms for the period stated in
such Contract. Except as set forth in Schedule 2.1(m) relating to the Excluded
Contracts, there are no currently threatened cancellations of, nor are there any
outstanding disputes under, any Contracts which could have a Material Adverse
Effect.
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(d) Except as set forth on Schedule 2.2, the consummation of
the transactions contemplated by this Agreement does not require any consent
under any Contract listed on Schedule 2.1(g) which will not have been obtained
by the Closing Date (and copies of such consents will be given to Buyer on or
prior to the Closing Date), and such consummation will not result in the
termination of any right or privilege under any Contract listed on Schedule
2.1(g). Seller has not received notice that any party to any Contract listed on
Schedule 2.1(g) intends to cancel such Contract nor has any party given Seller
notice of any alleged breach of any Contract or of its intent to take any legal
action in order to enforce its rights thereunder. All liabilities and
obligations of Seller which are due and payable or which are to be performed on
or before the Closing Date under such Contracts have been, or will be on the
Closing Date, duly paid in full or performed in all material respects except as
set forth on Schedule 2.2.
(e) Except as set forth on Schedule 2.1(g), Seller does not
have any Contract with any person (or group of affiliated persons) which
accounted for more than five percent of Seller's gross revenues of the Business
in any of the last two fiscal years.
(f) Except as set forth in Schedule 2.1(g), Seller is not a
party to nor is Seller or the Business bound by, any noncompetition agreement or
arrangement or any other agreement or arrangement restricting or prohibiting the
way in which the business of the Business is operated.
(g) Schedule 2.1(g) contains a list of all noncompetition or
similar agreements or arrangements which restrict any person or persons from
competing with Seller or otherwise are for the benefit of Seller or the
Business.
4.14 Certain Transactions. Except as set forth on Schedule 4.14, since
December 31, 1999, Seller has conducted the Business only in the ordinary course
consistent with past practices and has not, in each case with respect to the
business and operations of the Business, (a) paid, or made any accrual or
arrangement for the payment of, bonuses or special compensation of any kind or
any severance or termination pay to any present or former officer or employee;
(b) made any general wage or salary increases to its employees or increased or
altered any other benefits or insurance provided to or maintained on behalf of
any employee by it or declared or paid any bonus to any employee; (c) sold,
assigned or transferred or agreed to sell, assign or transfer any of its assets,
properties or rights; (d) granted any rights or licenses under any Intellectual
Property or entered into any licensing or distributorship arrangements; (e)
canceled or agreed to cancel any debts; (f) waived or agreed to waive any
rights; (g) made or permitted any amendment or termination of any Contracts; (h)
effected any change in the accounting methods and principles used in connection
with its books, records and financial statements; (i) entered into any
transaction other than in the ordinary course of business, except transactions
expressly permitted by the terms of this Agreement; (j) suffered any event or
condition of any character; (k) suffered any default under, or suffered any
event which with notice or lapse of time or both would constitute a default
under, any Contract, debt instrument or other agreement to which Seller is a
party or by which it or any of the Purchased Assets is bound; (l) lost or
terminated any employees; or (m) terminated (excluding a termination in
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accordance with its terms) or amended, or suffered a termination or amendment
of, any Contract, agreement, lease or license, except, in all such cases (a)
through (m) individually or in the aggregate, where such events or actions did
not since such date have a Material Adverse Effect.
4.15 Employees.
(a) Schedule 4.15 contains a list setting forth, (i) the name
and current annual salary and other compensation payable by Seller to each
manager, employee, officer, independent contractor, agent or consultant of
Seller employed or engaged in connection with the Business (an "Employee"); (ii)
the profit sharing, bonus or other form of additional compensation paid or
payable by Seller to or for the benefit of each such person for the current
fiscal year; and (iii) any and all loans outstanding from Seller to any
Employee. There are no oral or written contracts, agreements or arrangements
relating to compensation or performance awards or obligating Seller to increase
the compensation or benefits presently being paid or hereafter payable to any of
its employees or other persons. There is not due or owing, and there will not be
due and owing at the Closing, to any of Seller's Employees, any sick pay,
severance pay (whether arising out of the termination of an Employee of Seller
prior to or subsequent to the Closing), compensable time or pay, including but
not limited to, salary, commission and bonuses, personal time or pay or vacation
time or vacation pay attributable to service rendered on or prior to the Closing
Date, other than set forth on Schedule 4.15. There is not now, and there will
not be as of the Closing Date, any liability of, or claims against, Seller
(including, without limitation, workers' compensation claims and claims or suits
for contribution to, or indemnification of, third parties, occupational health
and safety, environmental, consumer protection or equal employment matters) for
injury, sickness, disease, discrimination, death or termination of employment of
any Employee or other employment matter (including, without limitation, any
Employee or former Employee or any contractor or subcontractor of Seller or any
agent or distributor of Seller), to the extent attributable to an event
occurring or a state of facts existing prior to the Closing other than as set
forth on Schedule 4.15; it being understood and agreed that Seller shall remain
liable for, and indemnify and hold harmless Buyer and Probex against, any and
all claims, liabilities, damages, losses, costs or expenses, of any nature
whatsoever, incurred by Seller, or resulting from or relating to any Employees
(whether hourly or salaried) of Seller, including, but not limited to, those set
forth on Schedule 4.15.
(b) Seller is not a party to any collective bargaining
agreements, written or oral, which cover any Employees of the Business. There
have not been, and there are no, strikes, grievances, disputes or controversies
pending or threatened between Seller and any of its Employees or any union or
other organization claiming to represent such Employees' interests. There is no
request for union representation pending and there is no present union
organizing or election activities in progress or to Seller's knowledge
threatened with respect to any Employees of Seller. There is no unfair labor
practice complaint pending before the National Labor Relations Board or to
Seller's knowledge threatened against or relating to Seller.
(c) The purchase of the Purchased Assets by Buyer hereunder
will not subject Buyer or Probex to any absolute or contingent, direct or
indirect liability to or claim by Seller's
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past, present or future Employees (except for obligations expressly assumed by
Buyer hereunder with respect to the Buyer Employees).
4.16 Employee Benefit Plans.
(a) Schedule 4.16 sets forth a true and complete list of each
plan, program, policy, practice, contract, agreement or other arrangement
providing for severance, termination pay, stock or stock-related awards, fringe
benefits or other employee benefits of any kind, whether formal or informal,
proposed or final, funded or unfunded and whether or not legally binding,
including, without limitation, each "employee benefit plan" within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") ("Employee Plan") which is now or ever has been maintained,
contributed to, or required to be contributed to, for the benefit of any current
or former Employee, and each management, employment, severance or consulting
agreement or contract between Seller and any Employee, including, without
limitation, summaries of all oral employment or consulting or similar
arrangements between Seller and any person which are not terminable without
liability on thirty (30) days' or less prior notice (each, an "Employee
Agreement"). Seller will provide to Buyer prior to the Closing true and complete
copies of all documents, if any, embodying each Employee Plan and Employee
Agreement, and all material communications, if any, to any Employee relating to
each Employee Plan. Buyer shall have no liability with respect to any Employee
Plan or Employee Agreement, except as expressly set forth herein.
(b) Except as set forth on Schedule 4.16, Seller does not
maintain or contribute to any Employee Plan which provides, or has any liability
to provide, life insurance, medical or other employee welfare benefits to any
Employee upon his retirement or termination of employment, except as may be
required by statute, and Seller has never promised, represented to, or
contracted with (orally or in writing) any Employee (individually or as a group)
that life insurance, medical or other employee welfare benefits would be
provided upon their retirement or termination of employment, except to the
extent required by statute.
(c) Except as set forth on Schedule 4.16, the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby will not (either alone or when taken together with any additional or
subsequent events) constitute an event under any Employee Plan or Employee
Agreement that will or may result in any payment, upon a change in control or
otherwise, whether of severance, accrued vacation, or otherwise, acceleration,
vesting, distribution, increase in benefits or obligations to fund benefits with
respect to any Employee.
(d) Seller (i) is in compliance with all applicable federal
and state laws, rules and regulations respecting employment, employment
practices, terms and conditions of employment and wages and hours, in each case,
with respect to Employees, except where the failure to be in compliance would
not, singularly or in the aggregate, have a Material Adverse Effect; (ii) has
withheld all amounts required by law or by agreement to be withheld from the
wages, salaries and other payments to Employees; (iii) is not liable for any
arrearages of wages or any taxes or any penalty for failure to comply with any
of the foregoing; and (iv) (other than routine payments not yet due which are to
be made in the normal course of business and
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consistent with past practice and applicable laws) is not liable for any payment
to any trust or other fund or to any governmental or administrative authority,
with respect to unemployment compensation benefits, Social Security or other
benefits for Employees, with the exception of back pay claims and back taxes
which will be discharged by Seller immediately following Closing.
4.17 Licenses and Permits. Seller has all licenses or permits required
for the operation of the Business and the operation and use of the Purchased
Assets as presently operated or used by it. All licenses and permits held by
Seller and material to the Business are valid and in full force and effect and
no proceedings which could result in the termination or impairment of any such
license or permit are pending or to Seller's knowledge threatened. Schedule
2.1(l) sets forth a description of all such licenses or permits. Seller is not
in violation of, nor has Seller received any notice of any violation of, nor
does any state of facts exist which could lead to a penalty or termination of,
any license or permit which might reasonably be expected to have a Material
Adverse Effect.
4.18 Insurance. Attached hereto as Schedule 4.18 is a true, correct and
complete schedule which describes all insurance policies currently maintained by
Seller in connection with the operation of the Business and the Purchased Assets
transferred hereunder. All of said insurance policies which are now in effect
shall continue to remain in full force and effect through the Closing Date in
accordance with their respective terms.
4.19 Taxes. Except as set forth in Schedule 4.19, Seller has timely and
properly filed all federal, state, local and foreign tax returns and reports and
forms which it is or has been required to file, either on its own behalf or on
behalf of its employees or other persons or entities, including, but not limited
to, income, profits, franchise, sales, use, occupation, property, excise, ad
valorem and payroll (including employee taxes withheld) taxes ("Taxes"), all
such returns, reports and forms being true and complete in all material
respects, and has paid all taxes, including penalties and interest, if any,
which have become due pursuant to such returns or reports or forms or pursuant
to assessments received by Seller. No tax deficiencies have been determined nor
proposed tax assessments charged against Seller and there exists no basis for
any such deficiencies. No Internal Revenue Service or other governmental taxing
authority audit of Seller is pending or to Seller's knowledge threatened, and
the results of any completed audits are properly reflected in the Financial
Statements. Seller has not granted any extension to any taxing authority of the
limitation period during which any tax liability may be asserted.
4.20 Environmental Matters. Seller is currently in compliance with and
has not violated environmental laws applicable to the Business and/or the
Purchased Assets and Seller has obtained all permits, licenses and other
authorizations needed to operate the Purchased Assets in compliance with
environmental laws and is unaware of any present requirements of any applicable
environmental law which is due to be imposed upon it which will increase its
cost of complying with environmental laws. All past on-site generation,
treatment, storage and disposal of waste, if any (including hazardous waste), at
the Business by Seller (or its predecessors at the Business), have been done in
compliance with the currently applicable environmental laws, and all off-site
treatment, storage and disposal of waste (including
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hazardous waste), if any, generated by Seller have been done in compliance with
the currently applicable environmental laws. The term (a) "environmental laws"
includes, but is not limited to, any federal, state or local law, statute,
charter or ordinance, and any rule, regulation, binding interpretation, binding
policy, permit, order, court order or consent decree issued pursuant to any of
the foregoing, which pertains to, governs or otherwise regulates any of the
following activities, including, without limitation, (i) the emission,
discharge, release or spilling of any substance into the air, surface water,
groundwater, soil or substrata; and (ii) the manufacturing, processing, sale,
generation, treatment, storage, disposal, labeling or other management of any
waste, hazardous substance or hazardous waste, and (b) "waste," "hazardous
substance," and "hazardous waste" include any substance defined as such by any
applicable environmental laws.
4.21 Creditors. On or after the Closing Date, neither Buyer nor Probex
shall be subject to any claim of a creditor of Seller, or to any obligation to
pay, discharge or satisfy in any manner Seller's liabilities or other
obligations as a result of the sale and transfer of the Purchased Assets to
Buyer under this Agreement, other than liabilities assumed by Buyer pursuant to
Section 2.6.
4.22 Compliance with Laws. Seller has complied in all material respects
with all laws, statutes, rules, regulations, orders and standards of any
federal, state and local agencies and authorities applicable to the Business and
the Purchased Assets (including, but not limited to, those concerned with civil
rights, labor and discrimination, safety and health, zoning and land use and the
environment).
4.23 Third Party Options. There are no existing contracts, options,
commitments or rights with, to or in any third party to acquire the Purchased
Assets or any interest therein or the Business (other than the Excluded Assets
or Excluded Contracts).
4.24 Transactions with Certain Persons. Except as provided in this
Agreement, at and as a result of the Closing, neither Buyer nor Probex shall
have any obligation or liability to any current or former member, manager or
employee of Seller or any member of such person's immediate family or any entity
in which such person has a direct or indirect ownership interest (other than
ownership of less than five percent of the issued and outstanding stock of a
corporation whose stock is publicly traded) (each, a "Related Party"),
including, without limitation, any contract (a) providing for the furnishing of
services by, (b) providing for the rental of real or personal property from, or
(c) otherwise requiring payment to any such Related Party.
4.25 Accuracy of Information Furnished. All information furnished to
Buyer and Probex by Seller or the Shareholders herein or in any exhibit or
schedule hereto is true, correct and complete. Such information states all facts
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements are made, true, correct
and complete.
4.26 Product Warranties. There is no agreement or obligation to which
Seller is a party, or any claim against or liability of Seller, on account of
product warranties or with respect
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to the manufacture, sale or rental of defective products, and there is no basis
for any such claim on account of defective products heretofore manufactured,
sold or rented which is not fully covered by insurance. Neither Buyer nor Probex
shall have any liability with respect to any claim against or liability of
Seller on account of product warranties or with respect to the manufacture, sale
or rental of defective products except as expressly set forth on Schedule 4.26
setting forth the specific amount of the claims or liability as to each such
matter, and except as assumed by Buyer pursuant to Section 2.6.
4.27 Questionable Payments. Neither Seller, nor any of Seller's current
or former officers, directors, Shareholders, employees, agents, or
representatives, have in connection with the business or operations of the
Business (a) used any corporate funds for any contributions, gifts,
entertainment or other expenses relating to political activity, or used any
corporate funds to reimburse any person for any such payment in contravention of
any laws, (b) used any corporate funds for any direct or indirect payments to
any foreign or domestic government officials or employees, (c) violated any
provision of the Foreign Corrupt Practices Act of 1977, (d) established or
maintained any unrecorded fund of corporate monies or other assets, (e) made any
false or fictitious entries on the books and records of Seller, (f) made any
bribe, rebate, payoff, influence payment, kickback or other payment of any
nature, or (g) made any favor or gift which is not deductible for federal income
tax purposes.
4.28 Burdensome Obligations. To Seller's knowledge, (a) Seller is not a
party to or bound by any Contract which is so unusual or burdensome as in the
foreseeable future could reasonably be expected to have a Material Adverse
Effect and (b) Seller is not in violation of any law, ordinance, statute, code,
rule, regulation, order or decree of the United States, any state, any county,
any city, or any other political subdivision in which Seller operates (the
"Legal Requirements") pertaining to occupational safety.
4.29 Probex Stock. The Shareholders are acquiring the Probex Stock
solely for the purpose of investment and not with a view to, or for offer or
sale in connection with, any distribution thereof, except as contemplated by
this Agreement. The Shareholders acknowledge that the Probex Stock has not been
registered under the Act or under the securities or "blue sky" laws of any
state. The Shareholders acknowledge receipt of those items listed in Section
5.4. The Shareholders further acknowledge the following:
(a) that the Shareholders are financially able to bear the
economic risks of acquiring the Probex Stock and have no need for liquidity in
this investment;
(b) that the Shareholders have such knowledge and experience
in financial and business matters in general and with respect to the business of
a nature similar to Probex so as to be capable of evaluating the merits and
risks of, and making an informed business decision with respect to, the
acquisition of the Probex Stock;
(c) that the Shareholders (i) have received all the
information he or she has deemed necessary to make an informed investment
decision with respect to the acquisition of the Probex Stock; (ii) understands
that Probex is subject to reporting requirements of the Securities
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Exchange Act of 1934, as amended (the "Exchange Act"), and have had an
opportunity to review all publicly available filings made by Probex with the
Securities and Exchange Commission (the "SEC") pursuant to either the Act or the
Exchange Act; (iii) have had the unrestricted opportunity to make such
investigation as he or she has desired pertaining to Probex and the acquisition
of an interest therein an to verify the information that is, and has been,
available to him or it; and (iv) have had the opportunity to ask questions of
Probex and representatives of Probex concerning Probex;
(d) that the Shareholders have not received any public
solicitation or advertisement with respect to the Probex Stock;
(e) that the Probex Stock is subject to the provisions
contained in Section 2.8 hereof;
(f) that if the Probex Stock or any portion thereof are
subsequently transferred, the Shareholders agree to execute, deliver and file
all such papers, documents and instruments as may be required by the SEC and any
state securities commission to qualify the transfer for an exemption from
registration under the Act, or any applicable state securities laws,
respectively. The Shareholders agree to furnish Probex with a copy of all such
papers, documents and instruments, and, in addition, will furnish Probex with
any other information that Probex may reasonably require to ensure that no
subsequent transfer or disposition of the Probex Stock is in violation of the
Act or any applicable state securities laws;
(g) that he or she is aware that stop-transfer instructions
shall be given to the transfer agent of the Probex Stock to prevent any
unauthorized or illegal transfer or resale of the Probex Stock;
(h) that for purposes hereof, the term resale includes any
transfer for value including the mortgage, pledge or hypothecation of such
Probex Stock.; and
(i) that the Shareholders warrant that the information set
forth in this Section 4.29 is true and correct, with the knowledge that the
Buyer and Probex are relying on the accuracy of the information and truth of the
representations contained herein. The Shareholders further agree to indemnify
and hold harmless the Buyer and Probex from any and all liabilities, losses,
costs, and expenses arising out of or related to the resale or other
distribution by the Shareholders of all or any portion of the Shares in
violation of the Act or of any applicable state securities laws as well as any
and all liabilities, losses, costs and expenses to which the Buyer and/or Probex
may be put or that the Buyer and/or Probex may incur by reason of or in
connection with any misrepresentation made by the Shareholders, any breach of
any of its warranties, or its failure to fulfill any of the covenants or
agreements set forth herein. The representations and warranties contained herein
shall be binding upon the heirs, legal representatives, successors and assigns
of the Shareholders.
4.30 Books of Accounts. The books of account of Seller have been kept
accurately in the ordinary course of its business, the transactions entered
therein represent bona fide
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transactions and the revenues, expenses, assets and liabilities of Seller have
been properly recorded in such books.
4.31 Consents. Except as set forth in Schedule 4.31, no authorization,
consent, 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 is
required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement or the agreements contemplated hereby
on the part of Seller.
4.32 Year 2000. No technology owned, developed or licensed by Seller
that has been actively used or marketed by Seller within the past two (2) years
and, except as set forth in Schedule 4.32 with respect to third party
technology, no technology used by Seller in connection with the Business
(including, but not limited to, information systems and technology, commercial
and noncommercial hardware and software, firmware, mechanical or electrical
products, embedded systems, or any other electro-mechanical or processor-based
system, whether as part of a desktop system, office system, building system or
otherwise) (collectively, the "Technology"), has experienced any malfunctions,
premature cancellation or expiration of contractual rights or deletion of data,
or any other problems in connection with (i) the year 2000 (and all subsequent
years) as distinguished from 1900 years, (ii) the date February 29, 2000, and
all subsequent leap years, and (iii) the date September 9, 1999.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND PROBEX
Buyer and Probex jointly and severally represent and warrant to Seller
and the Shareholders as follows:
5.1 Organization. Each of Buyer and Probex is a corporation duly and
validly existing and in good standing under the laws of its state of
incorporation and has full corporate power to enter into and perform its
respective obligations under this Agreement and under any other agreements,
documents and/or instruments to be executed and/or delivered by each pursuant to
or in connection with this Agreement.
5.2 Authorization; Enforceability. The execution, delivery and
performance of this Agreement and of all of the agreements, documents and/or
instruments to be executed and/or delivered by each of Buyer and Probex pursuant
to or in connection with this Agreement have been duly authorized by all
necessary corporate action of each. This Agreement is, and the other agreements,
documents and instruments required hereby will be, when executed and delivered
by the parties hereto, enforceable against each of Buyer and Probex in
accordance with their respective terms.
5.3 No Violation or Conflict. The execution, delivery, and performance
of this Agreement by each of Buyer and Probex does not and will not violate or
conflict with any Law, judgment, order, or decree binding on each of Buyer or
Probex, or the Certificate of Incorporation or Bylaws of either or any contract
or agreement to which either is a party or by which either is bound.
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5.4 Financial Condition. Probex has delivered to Seller and the
Shareholders copies of Probex's Form 10-SB and its most recent report to the SEC
on Form 10-QSB. None of such reports contains 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 not misleading in light of the
circumstances under which they were made.
ARTICLE VI
CERTAIN MATTERS PENDING CLOSING
Seller and the Shareholders covenant to Buyer and Probex, and Buyer and
Probex covenant to Seller, that from and after the Effective Time and until the
Closing Date, without the other party's prior written consent:
6.1 Carry on in Regular Course. Seller shall carry on the business of
the Business in a reasonable and prudent manner and only in the regular course
and substantially in the same manner as heretofore carried on and use its good
faith and reasonable efforts to preserve the Business's properties and existing
business organization and retain good relationships with employees, customers,
suppliers and others with whom it maintains a business relationship. Seller
shall conduct its business in compliance with all applicable laws. Seller shall
not engage in any extraordinary transactions without Buyer's or Probex's prior
written consent, including (a) disposing of any assets of Seller, except in the
ordinary course of business and (b) causing assets of Seller to be distributed
to any of its shareholders.
6.2 Employee Compensation. Seller shall not increase the rate of pay
for any employee of the Business except pursuant to a regularly scheduled time
schedule for increases and no bonus, profit sharing, retirement, insurance,
death, fringe benefit or other extraordinary or indirect compensation shall
accrue, be set aside or be paid to, for or on behalf of any officers or
employees of the Business other than as required by presently existing pension,
profit sharing, bonus and similar benefit plans as presently constituted, and no
agreement or plan other than those now in effect shall be adopted or committed
for, except in amounts approved in writing by Buyer or Probex. Seller shall not
increase, terminate, amend or otherwise modify any plan for the benefit of any
employee without Buyer's or Probex's prior written consent.
6.3 Hiring Employees. Prior to and at the Closing, Seller will
cooperate with all reasonable requests made by Buyer for the purpose of allowing
Buyer to hire those employees of Seller, as contemplated by Article X, such
employment to be effective as of the Closing Date.
6.4 Access. Upon reasonable notice, Buyer, Probex and their authorized
agents, officers and representatives shall have complete access to the
facilities, properties, books, records, contracts, information and documents of
Seller as they relate to the Business to conduct such examinations and
investigations of Seller as they deem necessary. Seller and its directors,
officers, shareholders, employees, accountants and other agents and
representatives shall cooperate fully with Buyer, Probex and their authorized
agents, officers and representatives in
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connection with Buyer's and Probex's due diligence investigation of Seller and
Seller's assets, contracts, liabilities, operations and other aspects of its
Business.
6.5 Cooperation. As soon as practical after the date hereof, if they
have not previously done so, Buyer, Probex and Seller shall promptly and
properly prepare and file all filings required by all Laws relating to the
transactions contemplated hereby, and shall cooperate in all respects in
connection with the giving of any notices to any governmental authority or
securing the permission, approval, determination, consent or waiver of any
governmental authority required by Law in connection with the consummation of
this Agreement.
6.6 Confidentiality. Each party recognizes that it will receive
confidential information regarding the other party during the course of the
negotiations contemplated by this Agreement. Accordingly, each of Probex and
Buyer, on the one hand, and Seller, on the other hand, agree to use its best
efforts to prevent the unauthorized disclosure of any confidential information
concerning the other party that has been disclosed previously or is disclosed
during the course of the negotiations and investigations contemplated by this
Agreement. The obligations of this paragraph do not apply to information that:
(a) is or becomes part of the public domain (other than through breach of this
Agreement or any other agreement between the parties relating to
confidentiality), (b) is received by the receiving party from a third party
without breach of a nondisclosure obligation of the third party, or (c) is
independently developed.
6.7 Publicity. All notices, releases, statements and communications to
employees, suppliers, distributors and customers and any person other than their
respective officers, directors, stockholders, representatives or agents of
Seller and Buyer and to the general public and the press relating to the
transactions contemplated by this Agreement shall be made only at such times and
in such manner as may be mutually agreed upon in writing by Seller and Buyer;
provided, however, that any party shall be entitled to make a public
announcement or statement or other public disclosure relating to the
transactions contemplated hereby if, in the opinion of its legal counsel, such
announcement or statement or other public disclosure is required to comply with
any Law (including, without limitation, federal securities laws) or any subpoena
or other process; provided, further, however, that such party gives prior
written notice of its intention to make such disclosure, the content of such
disclosure and the provision of Law, subpoena or process requiring such
disclosure and further, provided, Probex shall be permitted to file this
Agreement and to describe the transactions contemplated hereby in a Current
Report on Form 8-K or a Quarterly Report on Form 10-QSB filed under the Exchange
Act.
6.8 Material Adverse Effect. Prior to the Closing, Seller shall
promptly inform Buyer and Probex in writing of the occurrence of any event or
set of facts or circumstances of which it has or obtains knowledge that have
resulted in, or with the passage of time could be expected to result in, a
Material Adverse Effect or any event that renders the representations and
warranties made in Article IV to be inaccurate, or any failure of Seller to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by any of them under this Agreement. Any such disclosure shall not
be deemed a waiver by Buyer or Probex of any representation, warranty, covenant
or agreement of Seller contained in this Agreement.
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6.9 Approvals of Governmental Authorities and Third Parties. As soon as
practicable after the execution of this Agreement, but in any event prior to the
Closing Date, Seller, Probex and Buyer will secure all necessary approvals and
consents of all governmental authorities and other third parties required on the
part of Seller, Probex and Buyer for the consummation of the transactions
contemplated by this Agreement.
6.10 Contracts. Prior to Closing, except with Buyer's or Probex's prior
written consent, (a) other than in the ordinary course of the business and
operations of the Business and in a manner consistent with past business
practices of the Business, Seller will not assume or enter into any contract,
lease, license, obligation, indebtedness, commitment, purchase or sale relating
to the business or operations of the Business involving more than $10,000 each,
and (b) except as expressly contemplated hereby, Seller will not modify, amend
or waive any provisions of any Contract in a manner that would adversely affect
Buyer's ownership or operation of the Purchased Assets or the Business after the
Closing Date, or terminate any Contract listed on Schedule 2.1(g).
6.11 Capital Assets. Prior to Closing, except with Buyer's or Probex's
prior written consent, Seller will not acquire or dispose of any capital asset
(other than Excluded Assets) relating to or used or to be used in the business
or operations of the Business having an initial cost of $10,000 or more.
6.12 Mortgages; Liens. Prior to Closing, except with Buyer's or
Probex's prior written consent, Seller will not enter into or assume any
mortgage, pledge, conditional sale or other title retention agreement, or permit
any lien, encumbrance or claim of any kind to attach to any of its assets,
whether now owned or hereafter acquired, relating to or used or to be used in
the business or operations of the Business.
6.13 No Solicitation. From the date hereof through the later of (a) the
date specified in Section 12.1(d); or (b) the Closing Date, or the earlier
termination of this Agreement, Seller shall not and Seller will cause each of
its officers, directors and shareholders and its legal and financial advisors
and affiliates not to, directly or indirectly, make, solicit, encourage,
initiate or enter into any agreement or agreement in principle, or announce any
intention to do any of the foregoing, with respect to any offer or proposal to
acquire all or part of the business or properties of the Business or the
Purchased Assets (excluding the Excluded Assets) (whether through direct
purchase, merger, consolidation, or other business combination, an "Alternative
Transaction"). Seller shall not, and Seller will cause each of its officers,
directors and shareholders and its legal and financial advisors and affiliates
not to, directly or indirectly, participate in any negotiations or discussions
regarding, or furnish any information (including, but not limited to,
confidential or financial information) with respect to, or otherwise cooperate
in any way in connection with, or assist or participate in, facilitate or
encourage or respond to, any effort or attempt to effect or seek to effect an
Alternative Transaction with or involving any corporation, partnership, person
or other entity or group other than Buyer and Probex, their employees,
directors, representatives and agents concerning the sale of Seller or any
merger, combination sales of assets, or similar transactions which would involve
the assets and Business of Seller. Seller shall promptly communicate to Buyer
and Probex the terms of any proposal it may receive in respect of an
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Alternative Transaction and the identity of such other party and the nature of
such proposal, offer or invitation.
6.14 Information for Tax Returns. Seller shall cooperate with Buyer and
Probex after the Closing Date by providing Buyer and Probex, without any
additional consideration but at the expense of Buyer and Probex, promptly upon
request, such records and other information regarding the Purchased Assets
and/or the Business as may reasonably be requested from time to time by Buyer
and Probex in connection with the preparation or audit of its federal, state and
local income and other tax returns, and audits, disputes, refund claims or
litigation relating thereto. In such connection, Seller will afford Buyer's and
Probex's independent tax advisors, and such other persons as may be mutually
agreed upon, access to Seller's books and records or relating to the Purchased
Assets; provided, however, that Buyer and Probex shall cause its independent tax
advisors and such other persons to hold in strict confidence all such
information (except as required to be disclosed in connection with such tax
returns and audits, disputes, refund claims and litigation relating thereto).
6.15 Supplements to Disclosure Schedules. From time to time prior to
the Closing Date, Seller shall promptly provide to Buyer and Probex proposed
supplements or amendments to the schedules to this Agreement with respect to any
matter arising or changing which, if existing or occurring as of the date of
this Agreement, would have been required to be set forth or described in such
schedules; provided, however, any such proposed supplements or amendments to the
schedules to this Agreement shall not become part of this Agreement unless and
until Buyer and Probex shall execute an instrument evidencing their agreement
thereto, and such proposals shall not be deemed a waiver by Buyer or Probex of
any representation or warranty of Seller contained in this Agreement other than
as agreed upon in such instrument.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND PROBEX
Each and every obligation of Buyer and Probex to be performed on the
Closing Date shall be subject to the satisfaction prior to or at the Closing of
the following express conditions precedent:
7.1 Compliance with Agreement. Seller and the Shareholders shall have
performed and complied in all material respects with all of its obligations,
covenants and agreements under this Agreement which are to be performed or
complied with by it prior to the Closing.
7.2 No Litigation.
(a) No third-party investigation, suit, action, or other
proceeding that questions the validity or legality of the transactions
contemplated hereby or that seeks restraint, prohibition, damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby shall be pending before any court or governmental agency or
threatened.
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(b) There shall not be in effect any order, decree or
injunction (whether preliminary, final or appealable) of a federal or state
court of competent jurisdiction which (i) prohibits consummation of this
Agreement or the transactions contemplated hereby, (ii) requires Buyer or Probex
to hold separate or dispose of any of the Purchased Assets or (iii) could have a
Material Adverse Effect or materially impairs the ability of Buyer or Probex to
perform their obligations hereunder.
7.3 Representations and Warranties. The representations and warranties
made by Seller and the Shareholders in this Agreement shall be true and correct
in all material respects at and as of the date of this Agreement and as of the
Closing Date with the same force and effect as though said representations and
warranties had been made on the Closing Date.
7.4 Material Adverse Effect. Between the date hereof and the Closing
Date, no event shall have occurred or set of facts or circumstances arisen which
has resulted in, or with the passage of time could be expected to result in, a
Material Adverse Effect.
7.5 Deliveries at Closing. Seller and the Shareholders shall have
delivered to Buyer and/or Probex, as appropriate, the documents and items
specified in Section 3.2.
7.6 Petroleum Products, Inc. Asset Purchase Agreement. The closing of
the Asset Purchase Agreement by and between Petroleum Products, Inc. and Buyer
(the "PPI Agreement") shall occur simultaneously with the closing under this
Agreement.
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ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF SELLER AND THE SHAREHOLDERS
Each and every obligation of Seller and the Shareholders to be
performed on the Closing Date shall be subject to the satisfaction prior to or
at the Closing of the following express conditions precedent:
8.1 Compliance with Agreement. Buyer and Probex shall have performed
and complied in all material respects with all of their obligations, covenants
and agreements under this Agreement which are to be performed or complied with
by either of them prior to or on the Closing Date.
8.2 No Litigation.
(a) No third-party investigation, suit, action, or other
proceeding that questions the validity or legality of the transactions
contemplated hereby or that seeks restraint, prohibition, damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby shall be pending before any court or governmental agency or
threatened.
(b) There shall not be in effect any order, decree or
injunction (whether preliminary, final or appealable) of a federal or state
court of competent jurisdiction which prohibits consummation of this Agreement
or the transactions contemplated hereby.
8.3 Representations and Warranties. The representations and warranties
made by Buyer and Probex in this Agreement shall be true and correct in all
material respects at and as of the date of this Agreement and as of the Closing
Date with the same force and effect as though such representations and
warranties had been made on the Closing Date.
8.4 Deliveries at Closing. Buyer and/or Probex shall have joined in and
shall have delivered to Seller and the Shareholders, as applicable, the
documents and items specified in Section 3.3.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
9.1 Survival of Representations, Warranties and Covenants. The
representations and warranties contained herein, other than the representations
and warranties contained in Section 4.19, shall survive the Closing for a period
of two (2) years. The representations and warranties contained in Section 4.19
shall survive the Closing until the expiration of the applicable statute of
limitations period specified pursuant to applicable Law. The covenants contained
in Section 10.3 and 10.4 shall survive for the respective terms of the
Employment Agreements and the Non-Compete Agreements. If written notice of a
claim has been given prior to the expiration of the applicable representations
and warranties by a party in whose favor such representations and
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warranties have been made to the party that made such representations and
warranties, the relevant representations and warranties shall survive as to such
claim until the claim has been finally resolved.
9.2 Indemnification by Seller and the Shareholders.
(a) Seller and the Shareholders shall indemnify and hold
harmless Buyer and Probex and each director, officer, employee, agent and
affiliate of Buyer and Probex (each, a "Buyer Indemnified Party"), from and
against, and agree promptly to defend each Buyer Indemnified Party from and
reimburse each Buyer Indemnified Party for, any and all actions, suits,
proceedings (including any investigations or inquiries), losses, damages, costs,
expenses, liabilities, obligations and claims of any kind or nature whatsoever
which may be incurred by or asserted against or involve a Buyer Indemnified
Party, whether or not disclosed, including, without limitation, reasonable
attorneys' fees and other legal costs and expenses ("Buyer's Losses"), arising
out of or in any way relating to:
(i) any breach by Seller or the Shareholders of any
representation or warranty set forth in this Agreement or in any document
delivered hereunder;
(ii) any Excluded Obligations; or
(iii) any failure by Seller or the Shareholders to
carry out, perform, satisfy and discharge any covenants, agreements,
undertakings, liabilities or obligations to be performed by any of them pursuant
to the terms of this Agreement or any of the documents delivered by them
pursuant to this Agreement.
Notwithstanding any other provision of this Section 9.2, Seller and the
Shareholders shall not have any liability to Probex or Buyer for a breach of any
representation, warranty or covenant (other than with respect to Excluded
Obligations and the matters contained in Sections 4.16 and 4.19) unless and
until the aggregate Buyer's Losses incurred by Seller for all breaches of such
provisions total more than $15,000 (the "Seller's Floor"), and in the event that
the Buyer's Losses exceed the Seller's Floor, Seller shall be liable to Buyer
and Probex for the entirety of the amount of the Buyer's Losses.
Furthermore, Seller and the Shareholders acknowledge that the covenants
set forth in Section 10.3 and 10.4 are essential and fundamental to Buyer's
acquisition of the Purchased Assets hereunder. If Seller and the Shareholders
shall breach the covenants set forth in such sections, the parties acknowledge
that the minimum amount of Buyer's Loss shall be an amount equal to the Probex
Stock. Nothing herein shall be construed as limiting the amount of Buyer's Loss
in the event of such a breach, or limiting any other remedies available to the
Buyer at law or in equity.
(b) In the event a claim against a Buyer Indemnified Party
arises to which the indemnity of Section 9.2(a) of this Agreement is applicable,
notice shall be given promptly by the Buyer Indemnified Party to Seller and the
Shareholders and Seller and the Shareholders shall
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have the right to control all settlements (unless the Buyer Indemnified Party
agrees to assume the cost of settlement) and to select lead counsel to defend
any and all such claims at the sole cost and expense of Seller and the
Shareholders. The Buyer Indemnified Party may select counsel to participate in
any such defense at the sole cost and expense of the Buyer Indemnified Party. In
connection with any such claim, action or proceeding, the parties shall
cooperate with each other and provide each with access to relevant books and
records in their possession, as well as necessary employees or other agents.
(c) Except with respect to indemnification obligations of
Seller and Shareholders relating to Taxes, the obligations of Seller and the
Shareholders to indemnify Buyer and/or Probex pursuant to the terms of this
Agreement shall be recoverable solely by the set-off of amounts due to Seller
and Shareholders from the Probex Stock. Indemnification obligations of Seller
and Shareholders relating to Taxes shall be payable first from the Probex Stock
and then by Seller and the Shareholders. To the extent any amounts due hereunder
shall be recoverable from the Probex Stock, such amount shall be recovered as
follows: the amount of the indemnification obligation or set-off shall be
determined and applied to the then unvested shares of Probex Stock held by all
Shareholders, on a pro rata basis. The number of shares subject to any such
forfeiture shall be calculated using the Probex Share Price. The number of
shares so determined shall be cancelled (utilizing shares in the chronological
order of vesting) and shall be deemed no longer outstanding for any purpose.
Shareholders shall surrender their certificates for such Probex Stock, and
Probex shall cancel such certificates. To the extent the certificates represent
a greater number of shares of Probex Stock than the number of shares forfeited,
Probex shall issue a replacement certificate for the balance of such shares.
9.3 Indemnification by Buyer and Probex.
(a) Buyer and Probex hereby jointly and severally agree agrees
to indemnify and hold harmless Seller, the Shareholders and each officer,
director, employee, agent and affiliate of Seller (each, a "Seller Indemnified
Party") from and against, and agrees promptly to defend each Seller Indemnified
Party from and reimburse each Seller Indemnified Party for any and all actions,
suits, proceedings (including any investigation or inquiries), losses, damages,
costs, expenses, liabilities, obligations, and claims of any kind or nature
whatsoever, which may be incurred by or asserted against or involve a Seller
Indemnified Party, including, without limitation, reasonable attorneys' fees and
other legal costs and expenses ("Seller's Losses") arising out of or in any way
relating to:
(i) any breach by Buyer or Probex of Buyer's and
Probex's representations or warranties set forth in this Agreement; or
(ii) any failure by Buyer or Probex to carry out,
perform, satisfy and discharge any covenants, agreements, undertakings,
liabilities or obligations to be performed by them pursuant to the terms of this
Agreement or any of the documents delivered by Buyer or Probex pursuant to this
Agreement.
(b) In the event a claim against a Seller Indemnified Party
arises to which the
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indemnity of Section 9.3(a) of this Agreement is applicable, notice shall be
given promptly by Seller to Buyer and Probex, and Buyer and Probex shall have
the right to control all settlements (unless the Seller Indemnified Party agrees
to assume the cost of settlement) and to select lead counsel to defend any and
all such claims at the sole cost and expense of Buyer and Probex. The Seller
Indemnified Party may select counsel to participate in any such defense at the
sole cost and expense of the Seller Indemnified Party. In connection with any
such claim, action or proceeding, the parties shall cooperate with each other
and provide each other with access to relevant books and records in their
possession.
ARTICLE X
PERSONNEL
10.1 Buyer Employees. Buyer shall make offers of employment to Seller's
employees of the Business listed on Schedule 10.1 immediately following the
Closing (the "Buyer Employees"). Immediately prior to Closing, Seller shall
terminate the employment of all of the Buyer Employees as of the Closing Date
and Seller shall pay all obligations with respect to such Buyer Employees and
fulfill all obligations and applicable employee benefit plans (including
severance, wages, commissions, accrued vacation and other benefits) in respect
of periods prior to the Closing.
10.2 Terms of Employment. Buyer's employment of Buyer Employees shall
be on terms and conditions as Buyer and Buyer Employees shall find mutually
acceptable (and may include the requirement by the Buyer Employees to complete
applications and customary nondisclosure or noncompetition agreements), and all
Buyer Employees shall be eligible to participate in the employee benefit plans
of Buyer (or Probex as applicable) to the extent similarly situated employees of
Buyer are eligible to participate in such plans. To the extent permitted by
applicable Law, the Buyer Employees shall be given credit for previous
employment with the Seller for purposes of determining eligibility (but not
compensation levels) under such plans. Notwithstanding the foregoing, Buyer and
Probex shall have no obligation to provide to Buyer Employees any term,
condition or benefit of employment that is the same as or similar to those
provided by Seller to Buyer Employees prior to the Closing, including, but not
limited, to those relating to commissions, bonus, profit sharing or other
additional compensation, sick pay, severance pay, personal time or pay or
pensions; provided, however, that Buyer shall continue in force the life
insurance policies with respect to two (2) Employees as identified on Schedule
10.1, or otherwise shall compensate such Employee for the value of such life
insurance policies. Seller shall indemnify, defend and hold harmless Buyer and
Probex from and against any liability or obligation to Buyer Employees or any
other employees of Seller, other than the obligations specifically undertaken by
Buyer as set forth above. No provision of this Agreement shall create any third
party beneficiary rights in any Buyer Employees or any beneficiary or dependent
thereof with respect to the compensation, terms and conditions of employment and
benefits that may be provided to any Buyer Employee.
10.3 Employment Agreements. On the Closing Date, Seller and the
Shareholders shall
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cause the Key Employees to enter into employment agreements substantially in the
form attached hereto as Exhibit E (the "Employment Agreements"), with Buyer
and/or Probex. From and after the Closing Date, Seller and the Shareholders
shall cause the Key Employees to comply in all material respects with the terms
of the Employment Agreements during the terms thereof.
10.4 Non-Compete Agreements. On the Closing Date, Shareholders shall
enter into and shall cause the Key Employees to enter into the Non-Compete
Agreements with Buyer and/or Probex. From and after the Closing Date, Seller and
the Shareholders shall cause the Key Employees to comply in all material
respects with the terms of the Non-Compete Agreements during the terms thereof.
10.5 WARN. Seller shall comply in all respects with the notice and
other requirements of the Worker Adjustment Retraining and Notification Act, 19
U.S.C. Section 2101 et seq., and similar applicable state statutes. Neither
Buyer nor Probex shall not have any liability with respect to any employee of
Seller arising out of such statutes.
10.6 Payroll Tax. Buyer, Probex and Seller agree to follow the Standard
Procedure specified in Rev. Proc. 84-77, 1984-2 C.B. 753, whereby, among other
things, each will be responsible for the reporting duties with respect to its
own payments of wages and compensation to employees in connection with the
operation of the Purchased Assets. In addition, Seller agrees to provide to
Buyer all information reasonably requested by Buyer necessary for Buyer and
Buyer Employees to receive credit for payroll tax items already paid by Seller
or Buyer Employees for any periods prior to the Closing Date.
ARTICLE XI
ADDITIONAL COVENANTS
11.1 Taxes and Fees. Buyer shall pay all applicable sales, transfer,
documentary, use and filing fees and taxes that may become due or payable as a
result of the sale, conveyance, assignment, transfer or delivery of any of the
Purchased Assets. To the extent any Taxes are assessed or levied against Buyer
or Probex relating to the Business prior to the Effective Time, Buyer shall have
the option to pay such Taxes on Seller's behalf, provided the amount of such
Taxes shall be deemed a "Buyer's Loss" hereunder and shall reduce the amount of
the Seller's Floor on a dollar-for-dollar basis.
11.2 Brokers. Except as set forth on Schedule 11.2, Seller, the
Shareholders, Probex and Buyer represent to each other that the transactions
contemplated by this Agreement have been negotiated directly between them and
their respective counsels, without intervention of any person as a result of any
action by them in such a manner as to give rise to a valid claim against any of
them for a brokerage commission, finder's fee, counseling or advisory fee, or
like payment and each agrees to indemnify the opposite party against any such
liability arising from or through it.
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<PAGE> 36
11.3 Books and Records; Personnel. Buyer and Seller shall make
available to each other for reasonable periods of time Buyer's or Seller's
personnel to assist Seller or Buyer in locating and obtaining records and files
maintained by Buyer or Seller and any of Buyer's or Seller's personnel whose
assistance or participation is reasonably required by Seller or Buyer, in
anticipation of, preparation for, or the conduct of any existing or future
litigation, tax returns or other matters, in which Seller or Buyer is involved.
11.4 Temporary Advance. Commencing at the Effective Time and for a
period of thirty (30) days thereafter, Shareholders shall loan to Buyer such
funds, up to a maximum of One Hundred Thousand Dollars ($100,000.00), as may be
required by Buyer to operate the Business in its ordinary course. Such funds
shall be advanced within five (5) days after a written request from an officer
of Buyer. Any funds so advanced shall bear interest at the annual rate of eight
percent (8%), shall be due and payable, together with accrued interest thereon,
on or before September 1, 2000, and be evidenced by a promissory note.
ARTICLE XII
TERMINATION
12.1 Termination. Time is of the essence of this Agreement. This
Agreement may be terminated and the transactions contemplated hereby may be
abandoned as follows:
(a) at any time prior to the Closing by mutual written
agreement of Seller, Buyer and Probex; or
(b) by Buyer and Probex if there has been a material breach of
the representations and warranties of Seller contained herein or if Seller shall
have failed to comply in any material respect with any of its covenants or
agreements contained in this Agreement; or
(c) by Seller if there has been a material breach of the
representations and warranties of Buyer and Probex contained herein or if Buyer
or Probex shall have failed to comply in any material respects with any of their
covenants or agreements contained in this Agreement; or
(d) by Seller or by Buyer on or after the later of (i) June
15, 2000, and (ii) two weeks after the receipt by Buyer or Probex of audited
financial statements for the four and twelve months ended April 30, 2000,
prepared by Ernst & Young LLP, if by that date the Closing has not taken place
(provided, however, no party shall be entitled to terminate this Agreement
pursuant to this clause (d) if such party is in breach of this Agreement at such
time); or
[Remainder of this page left blank intentionally]
36
<PAGE> 37
(e) by any party if any court of competent jurisdiction in the
United States or other governmental body of the United States shall have issued
an order, decree or ruling restraining, enjoining or otherwise prohibiting the
purchase and sale of the Purchased Assets contemplated by this Agreement.
12.2 Rights on Termination; Waiver. If this Agreement is terminated
pursuant to Section 12.1, all further obligations of the parties under or
pursuant to this Agreement shall terminate without further liability of either
party to the other, except for the obligations under Section 13.2; provided,
however, that termination pursuant to clauses (b) or (c) of Section 12.1 shall
not relieve any defaulting or breaching party from liability to the other party.
Upon any termination of this Agreement, each party will return all documents,
work papers and other material (including all copies) of the other party
relating to the transactions contemplated by this Agreement.
ARTICLE XIII
MISCELLANEOUS
13.1 Entire Agreement; Amendment. This Agreement and the documents
referred to herein and to be delivered pursuant hereto constitute the entire
agreement between the parties pertaining to the subject matter hereof, and
supersede all prior and contemporaneous agreements, understandings,
negotiations, and discussions of the parties, whether oral or written, and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein. This Agreement may only be amended or modified by an instrument in
writing executed by Seller, the Shareholders, Buyer and Probex. No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provision of this Agreement, whether or not similar, nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.
13.2 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, each of the parties shall pay the fees and expenses
of their respective counsel, accountants and other experts incident to the
negotiation and preparation of this Agreement, the filing of any reports or
notifications required of that party by Law and the consummation of the
transactions contemplated by this Agreement.
13.3 Governing Law. This Agreement shall be construed and interpreted
according the laws of the State of Texas, without regard to the conflicts of
laws provisions thereof.
13.4 Submission to Jurisdiction; Service of Process. (a) Any legal
action or proceeding with respect to this Agreement or any document related
thereto may be brought in the courts of the State of Texas, Dallas County, or of
the United States of America for the Northern District of Texas, and, by
execution and delivery of this Agreement, each of the Seller and the
Shareholders hereby accepts for itself and in respect of its property, generally
and
37
<PAGE> 38
unconditionally, the jurisdiction of aforesaid courts. The parties hereto hereby
irrevocably waive any objection, including, without limitation, any objection to
the laying of venue or based on the grounds of forum non conveniens, which any
of them may now or hereafter have to the bringing of any such action or
proceeding in such respective jurisdictions;
(b) the Seller and the Shareholders irrevocably consent to the
service of process of any of the aforesaid courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the Seller or the Shareholders at their addresses provided
herein; and
(c) nothing contained in this Section 13.4 shall affect the
right of Buyer and/or Probex to serve process in any other manner permitted by
law or commence legal proceedings or otherwise proceed against the Seller or the
Shareholders in any other jurisdiction.
13.5 Assignment. Neither party may assign any of its rights or delegate
any of its duties under this Agreement; provided, however, that Buyer may
transfer all of its rights and obligations hereunder to another wholly-owned
direct or indirect subsidiary of Probex.
13.6 Notices. All communications, notices and disclosures required or
permitted by this Agreement shall be in writing and shall be deemed to have been
given at the earlier of the time when actually delivered to an officer of the
party to which notice is to be given or when sent by facsimile transmission,
overnight courier service or by certified or registered first-class mail,
postage prepaid, return receipt requested, addressed as follows, unless and
until any party notifies the others in accordance with this Section 13.6 of a
change of address:
If to Buyer or Probex:
Probex Corp.
1467 LeMay, Suite 111
Carrollton, Texas 75007
Attention: Bruce A. Hall
Facsimile: (972) 466-1556
With a copy to:
Jenkens & Gilchrist,
a Professional Corporation
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202
Attention: Robert W. Dockery
Facsimile: (214) 855-4300
38
<PAGE> 39
If to Seller:
Intercoastal Trading Company, Inc.
4608 Central College Road
Westerville, Ohio 43081
Attention: William Snedegar
Facsimile: (614) 855-7407
With a copy to:
Thomas E. Baxter
150 W. Wilson Bridge Road
Suite 101
Worthington, Ohio 43085
Facsimile: (614) 431-8120
13.7 Counterparts; Headings. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute one and the same Agreement. The Table of Contents and
Article and Section headings in this Agreement are inserted for convenience of
reference only and shall not constitute a part of this Agreement.
13.8 Interpretation. Unless the context requires otherwise, all words
used in this Agreement in the singular number shall extend to and include the
plural, all words in the plural number shall extend to and include the singular,
and all words in any gender shall extend to and include all genders.
13.9 Severability. If any provision, clause, or part of this Agreement,
or the application thereof under certain circumstances, is held invalid, the
remainder of this Agreement, or the application of such provision, clause, or
part under other circumstances, shall not be affected thereby.
13.10 No Reliance. Neither Buyer, Probex nor Seller assume any
liability to any person not a party to this Agreement because of any reliance on
the representations, warranties, and agreements of Buyer, Probex or Seller
contained herein.
13.11 Specific Performance. Seller acknowledges that a refusal by
Seller to consummate the transactions contemplated hereby, or a breach by Seller
of the provisions of this Agreement, will cause irrevocable harm to Buyer and
Probex, for which there may be no adequate remedy at law and for which the
ascertainment of damages would be difficult. Therefore, Buyer and Probex shall
be entitled, in addition to, and without having to prove the inadequacy of,
other remedies at law, to specific performance of this Agreement, as well as
injunctive relief (without being required to post bond or other security).
13.12 Further Assurances. Upon and subject to the conditions contained
herein, each of the parties hereto agrees, both before and after the Closing,
(a) to use all reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this
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<PAGE> 40
Agreement, (b) to execute any documents, instruments or conveyances of every
kind which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereby, and (c) to cooperate with each other in
connection with the foregoing, including using their reasonable efforts (i) to
obtain all consents from other parties required to permit consummation of the
transactions contemplated hereby; provided, however, that neither Probex nor
Buyer shall be required to make any payments, commence litigation or agree to
any modification of the terms thereof in order to obtain such consents, (ii) to
obtain all necessary consents as are required to be obtained under any Law to
permit consummation of the transactions contemplated hereby, (iii) to defend all
litigation challenging this Agreement or other consummation of the transaction
contemplated hereby, (iv) to lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, (v) to effect all necessary registrations and
filings and (vi) to fulfill all conditions to this Agreement.
40
<PAGE> 41
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the day and year first above written.
PROBEX FLUIDS RECOVERY, INC.,
a Delaware corporation
By: /s/ BRUCE HALL
----------------------------------------
Name: Bruce Hall
--------------------------------------
Title: Director
-------------------------------------
PROBEX CORP., a Colorado corporation
By: /s/ BRUCE HALL
----------------------------------------
Name: Bruce Hall
--------------------------------------
Title: Chief Financial Officer
-------------------------------------
INTERCOASTAL TRADING COMPANY, INC.,
an Ohio corporation
By: /s/ WILLIAM R. MILLS
----------------------------------------
Name: William R. Mills
--------------------------------------
Title: President
-------------------------------------
SHAREHOLDERS:
/s/ WILLIAM SNEDEGAR
--------------------------------------------
William Snedegar
/s/ KEITH MILLS
--------------------------------------------
Keith Mills
41
<PAGE> 1
EXHIBIT 99.3
PROMISSORY NOTE
$1,500,000 May 1, 2000
FOR VALUE RECEIVED, PROBEX CORP., a Colorado corporation ("Maker"),
promises to pay to PETROLEUM PRODUCTS INC., an Ohio corporation ("Payee"), in
lawful money of the United States of America, the principal sum of One Million
Five Hundred Thousand Dollars ($1,500,000), together with interest in arrears on
the unpaid principal balance at an annual rate equal to 8%, in the manner
provided below. Interest shall be calculated on the basis of a year of 365 or
366 days, as applicable, and charged for the actual number of days elapsed.
This Note has been executed and delivered pursuant to and in accordance
with the terms and conditions of the Asset Purchase Agreement, dated May 1,
2000, by and between Maker, Probex Fluids Recovery, Inc., a Delaware corporation
and wholly-owned subsidiary of Maker ("PFR"), Payee and William and Phyllis
Snedegar (the "Agreement"), and is subject to the terms and conditions of the
Agreement, which are, by this reference, incorporated herein and made a part
hereof. Capitalized terms used in this Note without definition shall have the
respective meanings set forth in the Agreement.
1. PAYMENTS
1.1 PRINCIPAL AND INTEREST
The principal amount of this Note shall be due and payable in five
(5) equal consecutive annual installments commencing on anniversary of
the Closing Date and upon each anniversary of the Closing Date
thereafter until paid in full. Interest on the unpaid principal balance
of this Note shall be due and payable annually, together with each
payment of principal.
1.2 MANNER OF PAYMENT
All payments of principal and interest on this Note shall be made by
certified or bank cashier's check at 4608 Central College Road,
Westerville, Ohio, 43081, or at such other place in the United States
of America as Payee shall designate to Maker in writing, or by wire
transfer of immediately available funds to an account designated by
Payee in writing. If any payment of principal or interest on this Note
is due on a day which is not a Business Day, such payment shall be due
on the next succeeding Business Day, and such extension of time shall
be taken into account in calculating the amount of interest payable
under this Note. "Business Day" means any day other than a Saturday,
Sunday or legal holiday in the State of Texas.
1.3 PREPAYMENT
Maker may, without premium or penalty, at any time and from time to
time, prepay all or any portion of the outstanding principal balance
due under this
<PAGE> 2
Note, provided that each such prepayment is accompanied by accrued
interest on the amount of principal prepaid calculated to the date of
such prepayment. Any partial prepayments shall be applied to
installments of principal in inverse order of their maturity.
1.4 RIGHT OF SET-OFF
Maker shall have the right to withhold and set-off against any
amount due hereunder (i) the amount of any Post-Closing Adjustment to
which the Maker or Buyer may be entitled in accordance with Section 2.5
of the Agreement, and (ii) the amount of any claim for indemnification
or payment of damages to which Maker or Buyer may be entitled under the
Agreement, in accordance with Section 9.2(c) thereof. In either case,
the amount of any set-off of principal hereunder shall be reduced from
the installments of principal payable in the order that such payments
shall become due.
1.5 SUBORDINATION
This Note is subordinated to all indebtedness issued by Maker and
its affiliates in connection with the design, construction and/or
operation of its used oil refineries. The holders hereof agree to
negotiate in good faith subordination agreements in favor of those
parties advancing and/or guaranteeing such indebtedness.
2. DEFAULTS
2.1 EVENTS OF DEFAULT
The occurrence of any one or more of the following events with
respect to Maker shall constitute an event of default hereunder ("Event
of Default"):
(a) If Maker shall fail to pay when due any payment of principal
or interest on this Note and such failure continues for
fifteen (15) days after Payee notifies Maker therein writing;
provided, however, that the exercise by Maker in good faith of
its right of set-off pursuant to Section 1.4 above, shall not
constitute an Event of Default.
(b) If, pursuant to or within the meaning of the United States
Bankruptcy Code or any other federal or state law relating to
insolvency or relief of debtors (a "Bankruptcy Law"), Maker
shall (i) commence a voluntary case or proceeding; (ii)
consent to the entry of an order for relief against it in an
involuntary case; (iii) consent to the appointment of a
trustee, receiver, assignee, liquidator or similar official;
(iv) make an assignment for the
<PAGE> 3
benefit of its creditors; or (v) admit in writing its
inability to pay its debts as they become due.
(c) If a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that (i) is for relief against Maker
in an involuntary case, (ii) appoints a trustee, receiver,
assignee, liquidator or similar official for Maker or
substantially all of Maker's properties, or (iii) orders the
liquidation of Maker, and in each case the order or decree is
not dismissed within 120 days.
2.2 NOTICE BY MAKER
Maker shall notify Payee in writing within five days after the
occurrence of any Event of Default of which Maker acquires knowledge.
2.3 REMEDIES
Upon the occurrence of an Event of Default hereunder (unless all
Events of Default have been cured or waived by Payee), Payee may, at
its option, (i) by written notice to Maker, declare the entire unpaid
principal balance of this Note, together with all accrued interest
thereon, immediately due and payable regardless of any prior
forbearance, and (ii) exercise any and all rights and remedies
available to it under applicable law, including, without limitation,
the right to collect from Maker all sums due under this Note. Maker
shall pay all reasonable costs and expenses incurred by or on behalf of
Payee in connection with Payee's exercise of any or all of its rights
and remedies under this Note, including, without limitation, reasonable
attorneys' fees.
3. MISCELLANEOUS
3.1 NOTICES
Any notice required or permitted to be given hereunder shall be
given in accordance with Section 13.5 of the Agreement.
3.2 SEVERABILITY
If any provision in this Note is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Note
will remain in full force and effect. Any provision of this Note held
invalid or unenforceable only in part or degree will remain in full
force and effect to the extent not held invalid or unenforceable.
<PAGE> 4
3.3 GOVERNING LAW; VENUE
This Note will be governed by the laws of the State of Texas without
regard to conflicts of laws principles. The parties agree that any
litigation relating directly or indirectly to this Note must be brought
before and determined by a court of competent jurisdiction in Dallas
County, Texas.
3.4 PARTIES IN INTEREST
This Note shall bind Maker and its successors and assigns. This Note
is non-negotiable and shall not be assigned or transferred by Payee
without the express prior written consent of Maker, except by will or,
in default thereof, by operation of law.
3.5 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Note are provided for convenience
only and will not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding
Section or Sections of this Note unless otherwise specified.
All words used in this Note will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly provided, the
words "hereof" and "hereunder" and similar references refer to this Note in its
entirety and not to any specific section or subsection hereof.
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of
the date first stated above.
PROBEX CORP., a Colorado corporation
By: /s/ BRUCE HALL
---------------------------------
Name: Bruce Hall
-------------------------------
Title: Chief Financial Officer
------------------------------
<PAGE> 1
EXHIBIT 99.4
EMPLOYMENT AGREEMENT
AGREEMENT, made as of this 1st day of May 2000, by and between Probex
Fluids Recovery, Inc., a Delaware corporation (the "Company") and a wholly-owned
subsidiary of Probex Corp., a Colorado corporation ("Probex"), and William
Snedegar ("Employee").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the business of collecting,
purchasing, selling and delivering used petroleum products;
WHEREAS, the Company desires to employ Employee as Vice President of
Supply of the Company in connection with the conduct of the business acquired
from Petroleum Products, Inc., an Ohio corporation ("PPI"), and Intercoastal
Trading Company, Inc., an Ohio corporation ("Intercoastal"), and Employee
desires to accept such employment on the terms and conditions herein set forth;
and
WHEREAS, contemporaneously with, and as a condition to, the execution
of this Agreement, the Company, PPI and Intercoastal are consummating Asset
Purchase Agreements (the "Purchase Agreements"), pursuant to which the Company
is purchasing substantially all of the assets of PPI and Intercoastal.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties hereto, intending
legally to be bound, hereby agree as follows:
1. Employment. The Company hereby employs Employee as Vice President of
Supply, and Employee hereby accepts such employment, upon the terms and
conditions hereinafter set forth.
2. Term. The term of employment of Employee under this Agreement shall
commence on the date hereof, and shall continue for a period of five years,
unless terminated in accordance with the provisions of Paragraphs 5 or 6 hereof
(the "Term"), and the Term shall not be extended or renewed except by a writing
signed by both an authorized executive officer of the Company and Employee.
3. Duties.
(a) During the Term, Employee shall perform such duties as
designated by the Company's Board of Directors and such other duties as may from
time to time be assigned to him by the Board of Directors or Chief Executive
Officer, or any designee of either, of the Company.
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<PAGE> 2
(b) During the Term, Employee shall use his best efforts to carry
out his duties and responsibilities hereunder and devote his entire working time
to the business and affairs of the Company and shall not, in any advisory or
other capacity, work for any other individual, firm or corporation without first
having obtained the written consent of an executive officer of the Company.
(c) During the Term, the principal place of employment of Employee
shall be the Company's facility in Westerville, Ohio, although it is understood
that in connection with his duties under this agreement, Employee may be
required to travel to and perform services at other locations.
(d) Employee represents and warrants to the Company that he is not
subject to, or a party to, any employment agreement, non-competition covenant,
non-disclosure agreement or other agreement, covenant, understanding or
restriction which would prohibit Employee from executing this Agreement and
performing fully his duties and responsibilities hereunder, or which would in
any manner, directly or indirectly, limit or affect the duties and
responsibilities which may now or in the future be assigned to Employee by the
Company.
4. Compensation. As compensation for the services to be rendered
hereunder by Employee, the Company agrees to pay or provide to Employee:
(a) Salary. A base salary for such services at the annual rate of
$100,000.00, payable in semi-monthly installments. This rate of compensation
shall be reviewed by the Board of Directors at least once per fiscal year in
connection with annual merit and/or cost of living adjustments, at the Board of
Directors' sole discretion.
(b) Bonus. Employee shall receive an annual bonus to be agreed upon
in good faith by the Employee and the Company within 30 days hereof.
(c) Benefits, Etc. During the Term, Employee will be entitled to
participate in all medical, hospital, major medical, life insurance and
statutory disability coverage plans, all pension, retirement, and profit-sharing
plans, option and incentive plans and all other employee benefit plans, in each
case, which the Company or Probex may from time to time make generally available
to other nonexecutive employees of the Company or Probex, on the same basis as
such plan or plans and benefits are made generally available to such individuals
(subject, however, to the provisions of such plans).
(d) Other Benefits. Nothing contained herein shall be deemed to
limit or affect the right of Employee to receive additional bonuses or other
forms of additional compensation or to participate in any retirement,
disability, profit sharing, stock option, cash or stock bonus or other plan or
arrangement, or in any other benefits now or hereafter provided by the Company
or Probex for its employees at the sole discretion of the Board of Directors.
(e) Expense. It is contemplated that, in connection with his
employment hereunder, Employee may be required to incur reasonable business,
entertainment and travel expenses. The Company agrees to reimburse Employee in
full for all such reasonable and necessary business, entertainment and travel
expenses incurred or expended by him in connection with the performance of his
duties hereunder; provided Employee submits to the Company vouchers or
2
<PAGE> 3
expense statements satisfactorily evidencing such expenses as may be reasonably
required by the Company and such expenses are in accordance with any corporate
policy with respect thereto. Such expenses shall be reimbursed 30 days after
submission of any required documentation therefor.
(f) Vacation. Employee will be entitled to paid vacation time in
accordance with the Company's vacation policy available to other employees. Such
vacation may be taken at such times as is reasonably consistent with proper
performance by Employee of his duties and responsibilities hereunder.
5. Death and Disability.
(a) The Term of employment of Employee shall terminate forthwith in
the event of the death of Employee, or, at the option of the Company, in the
event of physical or mental incapacity or disability which renders him unable,
with reasonable accommodation, to perform the services required of him under
this Agreement ("Disability") for a period of 90 consecutive days or for 180
days or more during any period of 12 consecutive months. Such Disability shall
be subject to verification by a qualified physician if requested by Employee.
During any period of Disability prior to termination, Employee shall continue to
be compensated as provided herein (less any payments due Employee under
disability benefit programs paid for by the Company including Social Security
disability, worker's compensation and disability or retirement benefits).
(b) In the event of the death of Employee during the Term or in the
event of the termination of this Agreement by the Company because of the
Disability of Employee, Employee shall be entitled to receive the compensation
specified in Paragraphs 4(a), 4(b) and 4(f) earned by Employee through the date
of death or termination, and shall be entitled to receive the remaining
restricted stock held in escrow and note payments pursuant to the Purchase
Agreements. The Company thereafter shall have no further obligations under this
Agreement.
6. Termination of Employment.
(a) The Company may terminate this Agreement "for cause" immediately
upon written notice to Employee. Termination for cause shall mean discharge by
the Company on the following grounds:
(i) Employee's conviction in a court of law of any felony,
which conviction makes him unfit for continuing
employment, prevents him from effective management of
the Company or materially adversely affects the
reputation or business activities of the Company;
(ii) Dishonesty, willful misconduct or moral turpitude, which
materially adversely affects the reputation or business
activities of the Company and which continues after
written notice thereof to Employee;
(iii) Substance abuse, including abuse of alcohol or use of
illegal narcotics, and other drugs or substances, for
which Employee fails to undertake
3
<PAGE> 4
and maintain treatment after 15 days after requested by
the Company, or a material misappropriation of funds;
(iv) Employee's continuing material failure or refusal to
perform his duties in accordance with the terms of this
Agreement or to carry out in all material respects the
lawful directives of the Board of Directors, unless
otherwise delegated; provided that discharge pursuant to
this subparagraph (iv) shall constitute discharge for
cause only if Employee has first received written notice
from the President or any other officer designated by
the Board of Directors of the Company stating with
specificity the nature of such failure or refusal and
Employee fails to cure such failure or refusal to the
reasonable satisfaction of the Company within 15 days
from the date of such notice; or
(v) Employee's (i) breach of the representations and
warranties to the Company contained in Paragraph 3(d)
hereof, (iii) breach of the Non-Disclosure, Assignment
of Developments, Non-Solicitation and Non-Competition
Agreement entered into in connection with this
Agreement; or (iii) material breach of any of the
representations and warranties contained in the Purchase
Agreements that causes the Company to incur any material
losses, damages, liabilities, obligations or costs.
Upon such termination for cause, Employee shall lose all right, title
and interest in and to all payments required to be made in accordance with the
provisions of this Agreement, and the Company shall have no further obligation
to Employee hereunder, except for compensation pursuant to Paragraphs 4(a) and
4(f) to which Employee is entitled through the date of termination, bonus
compensation to which Employee is entitled for and in respect of the preceding
fiscal year if not theretofore paid, and any benefits referred to in Paragraph 4
to which Employee has a vested right under the terms and conditions of the plan
or program pursuant to which such benefits were granted. Further, such
termination shall constitute a breach of the Purchase Agreement as set forth in
Paragraph 8.
(b) The Company may terminate the Employee other than for cause at
any time upon one month's prior written notice to Employee. Termination of the
Employee "other than for cause" shall include, without limitation, a "change in
control" of the Company, which shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended), other than a stockholder of the Company that
owns in excess of 5% of the outstanding voting securities of the Company as of
the date of this Agreement, becomes the beneficial owner (as such term is used
in Section 13(d) of the Securities Exchange Act of 1934, as amended) of more
than 50% of the outstanding voting securities of the Company, and (ii) within 30
days of the change of control the then current Chief Executive Officer of the
Company terminates employment with the Company. In the event of termination of
Employee for any reason other than for cause, Employee shall be entitled to
receive: (i) the compensation specified in Paragraphs 4(a), 4(b) and 4(f) earned
by Employee through the date of termination; (ii) any benefits
4
<PAGE> 5
referred to in Paragraph 4 in which Employee has a vested right under the terms
and conditions of the plan or program pursuant to which such benefits were
granted; and (iii) severance pay based upon Employee's then existing salary,
payable semi-monthly or, at the Employer's sole option, payable in one lump sum
within 30 days after such termination. The amount of such severance pay shall be
the amount equal to (a) six months' salary in the case of a termination other
than for cause, other than one resulting from a change in control, and (b) one
year's salary in the case of a termination other than for cause resulting from a
change in control. The Company shall withhold: (i) all applicable federal, state
and local taxes as required by relevant law and regulations then in effect,
including, without limitation FICA and other taxes, and (ii) from or offset
against its payments to the Employee any liabilities or debts of the Employee to
the Employer and its Affiliates. The Company's obligations to make such payments
and provide such benefits shall be conditioned upon Employee's continuing
fulfillment of his obligations set forth in the Non-Disclosure, Assignment of
Developments, Non-Solicitation and Non-Competition Agreement executed in
connection herewith. The Company thereafter shall have no further obligations
under this Agreement.
(c) Employee may terminate this Agreement by resignation and giving
the Company one month's notice. The Company can waive this notice and agree with
Employee to an earlier termination date. Upon termination by Employee, Employee
shall be entitled to receive the compensation specified in Paragraphs 4(a), 4(b)
and 4(f) earned by Employee through the date of termination and any benefits
referred to in Paragraph 4 in which Employee has a vested right under the terms
and conditions of the plan or program pursuant to which such benefits were
granted. Thereafter, all obligations of the Company and Employee under this
Agreement will cease as of the date of final termination, except that Employee's
obligations under Paragraph 7 will survive. Such termination, however, shall
constitute a breach of the Purchase Agreement as set forth in Paragraph 8.
7. Restrictive Covenants and Confidentiality; Injunctive Relief. As a
condition to the Company agreeing to employ Employee and to the performance by
the Company of its obligations hereunder and under the Purchase Agreements,
particularly its obligations under Paragraph 4 hereof and, in the case where
Employee is terminated by the Company other than for cause, in consideration of
the payments as set forth in Paragraph 6(b) hereof, Employee shall agree to and
shall execute a Non-Disclosure, Assignment of Developments, Non-Solicitation and
Non-Competition Agreement.
8. Consideration Under Purchase Agreement. Employee acknowledges that
his execution and performance of this Agreement is essential and fundamental to
the Company's and Probex's agreement to acquire the business of PPI and
Intercoastal pursuant to the Purchase Agreement. Employee further acknowledges
that the termination of this Agreement pursuant to Paragraph 6(a) or 6(c) hereof
shall constitute a breach by Seller and the Shareholders (as defined in the
respective Purchase Agreements) of the covenant set forth in Section 10.3 of the
Purchase Agreement, entitling the Company and Probex to all of their remedies
thereunder.
9. Survival. The provisions of Paragraphs 7 shall survive the
termination of this Agreement for any reason whatsoever.
10. Miscellaneous.
5
<PAGE> 6
(a) Any notice authorized or required to be given or made by or
pursuant to this Agreement shall be made in writing and either personally
delivered or mailed by overnight express mail to the respective address of the
party to receive such notice, which address is the one designated below the name
of such party on the signature page hereof, or to such other address as a party
may specify by notice to the other parties hereto.
(b) This Agreement, together with its exhibits, cancels and
supersedes any and all prior agreements and understandings between the parties
hereto with respect to the employment by or obligations of Employee to any
thereof. This Agreement, together with its exhibits, constitutes the entire
agreement among the parties with respect to the matters herein provided, and no
modification or waiver of any provision hereof shall be effective unless in
writing and signed by both Employee and an authorized executive officer of the
Company.
(c) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, executors, administrators, legal representatives, successors and assigns
of the parties hereto, except that the duties and responsibilities of Employee
hereunder are of a personal nature and shall not be assignable or delegable in
whole or in part by Employee.
(d) Employee agrees that the obligations of the Company hereunder
shall be limited to the Company only, and Employee agrees that he shall not
bring any claim or suit against any director or shareholder of the Company or
any other person other than the Company for any breach or default by the Company
of its obligations hereunder.
(e) If any provision of this Agreement or application thereof to
anyone or under any circumstances is adjudicated to be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect any
other provision or application of this Agreement which can be given effect
without the invalid or unenforceable provision or application and shall not
invalidate or render unenforceable such provision or application in any other
jurisdiction.
(f) No remedy conferred upon any party by this Agreement is intended
to be exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to any other remedy given hereunder or now
or hereafter existing at law or in equity. No delay or omission by any party in
exercising any right, remedy or power hereunder or existing at law or in equity
shall be construed as a waiver thereof, and any such right, remedy or power may
be exercised by the party possessing the same from time to time and as often as
may be deemed expedient or necessary by such party in its sole discretion.
(g) This Agreement may be executed in two counterparts, each of
which is an original. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any of the other
counterparts.
(h) In the event of a lawsuit by either party to enforce any
provisions of this Agreement, the prevailing party shall be entitled to recover
reasonable costs, expenses and attorney's fees from the other party.
6
<PAGE> 7
11. Controlling Law. The validity, interpretation, construction,
performance and enforcement of this Agreement shall be governed by the laws of
the State of Texas.
7
<PAGE> 8
IN WITNESS WHEREOF, Employee has hereunto set his hand and the Company
has caused this instrument to be duly executed as of the day and year first
above written.
Employee:
/s/ WILLIAM SNEDEGAR
--------------------------------------------
4608 Central College Rd.
--------------------------------------------
Westerville, Ohio 43081
--------------------------------------------
Address
Company:
Probex Fluids Recovery, Inc.
a Delaware Corporation
By: /s/ BRUCE HALL
-----------------------------------------
Name: Bruce Hall
---------------------------------------
Title: Director
---------------------------------------
1467 LeMay, Suite 111
Carrollton, Texas 75007
8
<PAGE> 1
EXHIBIT 99.5
EMPLOYMENT AGREEMENT
AGREEMENT, made as of this 1st day of May 2000, by and between Probex
Fluids Recovery, Inc., a Delaware corporation (the "Company") and a wholly-owned
subsidiary of Probex Corp., a Colorado corporation ("Probex"), and William Keith
Mills ("Employee").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the business of collecting,
purchasing, selling and delivering used petroleum products;
WHEREAS, the Company desires to employ Employee as Vice President of
Sales of the Company in connection with the conduct of the business acquired
from Petroleum Products, Inc., an Ohio corporation ("PPI"), and Intercoastal
Trading Company, Inc., an Ohio corporation ("Intercoastal"), and Employee
desires to accept such employment on the terms and conditions herein set forth;
and
WHEREAS, contemporaneously with, and as a condition to, the execution
of this Agreement, the Company, PPI and Intercoastal are consummating Asset
Purchase Agreements (the "Purchase Agreements"), pursuant to which the Company
is purchasing substantially all of the assets of PPI and Intercoastal.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties hereto, intending
legally to be bound, hereby agree as follows:
1. Employment. The Company hereby employs Employee as Vice President of
Sales, and Employee hereby accepts such employment, upon the terms and
conditions hereinafter set forth.
2. Term. The term of employment of Employee under this Agreement shall
commence on the date hereof, and shall continue for a period of five years,
unless terminated in accordance with the provisions of Paragraphs 5 or 6 hereof
(the "Term"), and the Term shall not be extended or renewed except by a writing
signed by both an authorized executive officer of the Company and Employee.
3. Duties.
(a) During the Term, Employee shall perform such duties as are
designated by the Company's Board of Directors and such other duties as may from
time to time be assigned to him by the Board of Directors or Chief Executive
Officer, or any designee of either, of the Company.
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<PAGE> 2
(b) During the Term, Employee shall use his best efforts to carry
out his duties and responsibilities hereunder and devote his entire working time
to the business and affairs of the Company and shall not, in any advisory or
other capacity, work for any other individual, firm or corporation without first
having obtained the written consent of an executive officer of the Company.
(c) During the Term, the principal place of employment of Employee
shall be the Company's facility in Westerville, Ohio, although it is understood
that in connection with his duties under this agreement, Employee may be
required to travel to and perform services at other locations.
(d) Employee represents and warrants to the Company that he is not
subject to, or a party to, any employment agreement, non-competition covenant,
non-disclosure agreement or other agreement, covenant, understanding or
restriction which would prohibit Employee from executing this Agreement and
performing fully his duties and responsibilities hereunder, or which would in
any manner, directly or indirectly, limit or affect the duties and
responsibilities which may now or in the future be assigned to Employee by the
Company.
4. Compensation. As compensation for the services to be rendered
hereunder by Employee, the Company agrees to pay or provide to Employee:
(a) Salary. A base salary for such services at the annual rate of
$100,000.00, payable in semi-monthly installments. This rate of compensation
shall be reviewed by the Board of Directors at least once per fiscal year in
connection with annual merit and/or cost of living adjustments, at the Board of
Directors' sole discretion.
(b) Bonus. Employee shall receive an annual bonus to be agreed upon
in good faith by the Employee and the Company within 30 days hereof.
(c) Benefits, Etc. During the Term, Employee will be entitled to
participate in all medical, hospital, major medical, life insurance and
statutory disability coverage plans, all pension, retirement, and profit-sharing
plans, option and incentive plans and all other employee benefit plans, in each
case, which the Company or Probex may from time to time make generally available
to other nonexecutive employees of the Company or Probex, on the same basis as
such plan or plans and benefits are made generally available to such individuals
(subject, however, to the provisions of such plans).
(d) Other Benefits. Nothing contained herein shall be deemed to
limit or affect the right of Employee to receive additional bonuses or other
forms of additional compensation or to participate in any retirement,
disability, profit sharing, stock option, cash or stock bonus or other plan or
arrangement, or in any other benefits now or hereafter provided by the Company
or Probex for its employees at the sole discretion of the Board of Directors.
(e) Expense. It is contemplated that, in connection with his
employment hereunder, Employee may be required to incur reasonable business,
entertainment and travel expenses. The Company agrees to reimburse Employee in
full for all such reasonable and necessary business, entertainment and travel
expenses incurred or expended by him in connection with the performance of his
duties hereunder; provided Employee submits to the Company vouchers or
2
<PAGE> 3
expense statements satisfactorily evidencing such expenses as may be reasonably
required by the Company and such expenses are in accordance with any corporate
policy with respect thereto. Such expenses shall be reimbursed 30 days after
submission of any required documentation therefor.
(f) Vacation. Employee will be entitled to paid vacation time in
accordance with the Company's vacation policy available to other employees. Such
vacation may be taken at such times as is reasonably consistent with proper
performance by Employee of his duties and responsibilities hereunder.
5. Death and Disability.
(a) The Term of employment of Employee shall terminate forthwith in
the event of the death of Employee, or, at the option of the Company, in the
event of physical or mental incapacity or disability which renders him unable,
with reasonable accommodation, to perform the services required of him under
this Agreement ("Disability") for a period of 90 consecutive days or for 180
days or more during any period of 12 consecutive months. Such Disability shall
be subject to verification by a qualified physician if requested by Employee.
During any period of Disability prior to termination, Employee shall continue to
be compensated as provided herein (less any payments due Employee under
disability benefit programs paid for by the Company including Social Security
disability, worker's compensation and disability or retirement benefits).
(b) In the event of the death of Employee during the Term or in the
event of the termination of this Agreement by the Company because of the
Disability of Employee, Employee shall be entitled to receive the compensation
specified in Paragraphs 4(a), 4(b) and 4(f) earned by Employee through the date
of death or termination, and shall be entitled to receive the remaining
restricted stock held in escrow and note payments pursuant to the Purchase
Agreements. The Company thereafter shall have no further obligations under this
Agreement.
6. Termination of Employment.
(a) The Company may terminate this Agreement "for cause" immediately
upon written notice to Employee. Termination for cause shall mean discharge by
the Company on the following grounds:
(i) Employee's conviction in a court of law of any felony,
which conviction makes him unfit for continuing
employment, prevents him from effective management of the
Company or materially adversely affects the reputation or
business activities of the Company;
(ii) Dishonesty, willful misconduct or moral turpitude, which
materially adversely affects the reputation or business
activities of the Company and which continues after
written notice thereof to Employee;
(iii) Substance abuse, including abuse of alcohol or use of
illegal narcotics, and other drugs or substances, for
which Employee fails to undertake
3
<PAGE> 4
and maintain treatment after 15 days after requested by
the Company, or a material misappropriation of funds;
(iv) Employee's continuing material failure or refusal to
perform his duties in accordance with the terms of this
Agreement or to carry out in all material respects the
lawful directives of the Board of Directors, unless
otherwise delegated; provided that discharge pursuant to
this subparagraph (iv) shall constitute discharge for
cause only if Employee has first received written notice
from the President or any other officer designated by the
Board of Directors of the Company stating with specificity
the nature of such failure or refusal and Employee fails
to cure such failure or refusal to the reasonable
satisfaction of the Company within 15 days from the date
of such notice; or
(v) Employee's (i) breach of the representations and
warranties to the Company contained in Paragraph 3(d)
hereof, (iii) breach of the Non-Disclosure, Assignment of
Developments, Non-Solicitation and Non-Competition
Agreement entered into in connection with this Agreement;
or (iii) material breach of any of the representations and
warranties contained in the Purchase Agreements that
causes the Company to incur any material losses, damages,
liabilities, obligations or costs.
Upon such termination for cause, Employee shall lose all right, title
and interest in and to all payments required to be made in accordance with the
provisions of this Agreement, and the Company shall have no further obligation
to Employee hereunder, except for compensation pursuant to Paragraphs 4(a) and
4(f) to which Employee is entitled through the date of termination, bonus
compensation to which Employee is entitled for and in respect of the preceding
fiscal year if not theretofore paid, and any benefits referred to in Paragraph 4
to which Employee has a vested right under the terms and conditions of the plan
or program pursuant to which such benefits were granted. Further, such
termination shall constitute a breach of the Purchase Agreement as set forth in
Paragraph 8.
(b) The Company may terminate the Employee other than for cause at
any time upon one month's prior written notice to Employee. Termination of the
Employee "other than for cause" shall include, without limitation, a "change in
control" of the Company, which shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended), other than a stockholder of the Company that
owns in excess of 5% of the outstanding voting securities of the Company as of
the date of this Agreement, becomes the beneficial owner (as such term is used
in Section 13(d) of the Securities Exchange Act of 1934, as amended) of more
than 50% of the outstanding voting securities of the Company, and (ii) within 30
days of the change of control the then current Chief Executive Officer of the
Company terminates employment with the Company. In the event of termination of
Employee for any reason other than for cause, Employee shall be entitled to
receive: (i) the compensation specified in Paragraphs 4(a), 4(b) and 4(f) earned
by Employee through the date of termination; (ii) any benefits
4
<PAGE> 5
referred to in Paragraph 4 in which Employee has a vested right under the terms
and conditions of the plan or program pursuant to which such benefits were
granted; and (iii) severance pay based upon Employee's then existing salary,
payable semi-monthly or, at the Employer's sole option, payable in one lump sum
within 30 days after such termination. The amount of such severance pay shall be
the amount equal to (a) six months' salary in the case of a termination other
than for cause, other than one resulting from a change in control, and (b) one
year's salary in the case of a termination other than for cause resulting from a
change in control. The Company shall withhold: (i) all applicable federal, state
and local taxes as required by relevant law and regulations then in effect,
including, without limitation FICA and other taxes, and (ii) from or offset
against its payments to the Employee any liabilities or debts of the Employee to
the Employer and its Affiliates. The Company's obligations to make such payments
and provide such benefits shall be conditioned upon Employee's continuing
fulfillment of his obligations set forth in the Non-Disclosure, Assignment of
Developments, Non-Solicitation and Non-Competition Agreement executed in
connection herewith. The Company thereafter shall have no further obligations
under this Agreement.
(c) Employee may terminate this Agreement by resignation and giving
the Company one month's notice. The Company can waive this notice and agree with
Employee to an earlier termination date. Upon termination by Employee, Employee
shall be entitled to receive the compensation specified in Paragraphs 4(a), 4(b)
and 4(f) earned by Employee through the date of termination and any benefits
referred to in Paragraph 4 in which Employee has a vested right under the terms
and conditions of the plan or program pursuant to which such benefits were
granted. Thereafter, all obligations of the Company and Employee under this
Agreement will cease as of the date of final termination, except that Employee's
obligations under Paragraph 7 will survive. Such termination, however, shall
constitute a breach of the Purchase Agreement as set forth in Paragraph 8.
7. Restrictive Covenants and Confidentiality; Injunctive Relief. As a
condition to the Company agreeing to employ Employee and to the performance by
the Company of its obligations hereunder and under the Purchase Agreements,
particularly its obligations under Paragraph 4 hereof and, in the case where
Employee is terminated by the Company other than for cause, in consideration of
the payments as set forth in Paragraph 6(b) hereof, Employee shall agree to and
shall execute a Non-Disclosure, Assignment of Developments, Non-Solicitation and
Non-Competition Agreement.
8. Consideration Under Purchase Agreement. Employee acknowledges that
his execution and performance of this Agreement is essential and fundamental to
the Company's and Probex's agreement to acquire the business of PPI and
Intercoastal pursuant to the Purchase Agreement. Employee further acknowledges
that the termination of this Agreement pursuant to Paragraph 6(a) or 6(c) hereof
shall constitute a breach by Seller and the Shareholders (as defined in the
respective Purchase Agreements) of the covenant set forth in Section 10.3 of the
Purchase Agreement, entitling the Company and Probex to all of their remedies
thereunder.
9. Survival. The provisions of Paragraphs 7 shall survive the
termination of this Agreement for any reason whatsoever.
10. Miscellaneous.
5
<PAGE> 6
(a) Any notice authorized or required to be given or made by or
pursuant to this Agreement shall be made in writing and either personally
delivered or mailed by overnight express mail to the respective address of the
party to receive such notice, which address is the one designated below the name
of such party on the signature page hereof, or to such other address as a party
may specify by notice to the other parties hereto.
(b) This Agreement, together with its exhibits, cancels and
supersedes any and all prior agreements and understandings between the parties
hereto with respect to the employment by or obligations of Employee to any
thereof. This Agreement, together with its exhibits, constitutes the entire
agreement among the parties with respect to the matters herein provided, and no
modification or waiver of any provision hereof shall be effective unless in
writing and signed by both Employee and an authorized executive officer of the
Company.
(c) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, executors, administrators, legal representatives, successors and assigns
of the parties hereto, except that the duties and responsibilities of Employee
hereunder are of a personal nature and shall not be assignable or delegable in
whole or in part by Employee.
(d) Employee agrees that the obligations of the Company hereunder
shall be limited to the Company only, and Employee agrees that he shall not
bring any claim or suit against any director or shareholder of the Company or
any other person other than the Company for any breach or default by the Company
of its obligations hereunder.
(e) If any provision of this Agreement or application thereof to
anyone or under any circumstances is adjudicated to be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect any
other provision or application of this Agreement which can be given effect
without the invalid or unenforceable provision or application and shall not
invalidate or render unenforceable such provision or application in any other
jurisdiction.
(f) No remedy conferred upon any party by this Agreement is intended
to be exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to any other remedy given hereunder or now
or hereafter existing at law or in equity. No delay or omission by any party in
exercising any right, remedy or power hereunder or existing at law or in equity
shall be construed as a waiver thereof, and any such right, remedy or power may
be exercised by the party possessing the same from time to time and as often as
may be deemed expedient or necessary by such party in its sole discretion.
(g) This Agreement may be executed in two counterparts, each of
which is an original. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any of the other
counterparts.
(h) In the event of a lawsuit by either party to enforce any
provisions of this Agreement, the prevailing party shall be entitled to recover
reasonable costs, expenses and attorney's fees from the other party.
6
<PAGE> 7
11. Controlling Law. The validity, interpretation, construction,
performance and enforcement of this Agreement shall be governed by the laws of
the State of Texas.
7
<PAGE> 8
IN WITNESS WHEREOF, Employee has hereunto set his hand and the Company
has caused this instrument to be duly executed as of the day and year first
above written.
Employee:
/s/ WILLIAM KEITH MILLS
--------------------------------------------
103 Belvedere Ln.
--------------------------------------------
Georgetown, KY. 40324
--------------------------------------------
Address
Company:
Probex Fluids Recovery, Inc.
a Delaware Corporation
By: /s/ BRUCE HALL
-----------------------------------------
Name: Bruce Hall
---------------------------------------
Title: Director
---------------------------------------
1467 LeMay, Suite 111
Carrollton, Texas 75007
8
