<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant: [X]
Filed by a Party other than the Registrant: [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
PROBEX CORP.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
[PROBEX LOGO]
PROBEX CORP.
One Galleria Tower
13355 Noel Road, Suite 1200
Dallas, Texas 75240
Telephone (972) 788-4772
Fax (972) 980-8545
August 1, 2000
Dear Probex Corp. Stockholder:
As the newly - elected President and Chief Executive Officer of Probex,
I am pleased to invite you to Probex's (the "Company") Special Meeting of
Stockholders. The meeting will be at 9:00 a.m., local time, on Thursday, August
31, 2000, at the Company's new offices located at One Galleria Tower, 13355 Noel
Road, Suite 1200, Dallas, Texas 75240.
At the meeting, you and the other stockholders will vote on the
proposal to increase the authorized shares of common stock of the Company from
50,000,000 shares to 100,000,000 shares, the proposal to change the state of
incorporation of the Company from Colorado to Delaware and the proposal to
authorize the Company to offer and sell up to ten million shares of the
Company's common stock.
We hope you can join us on August 31st. Whether or not you can attend,
please read the enclosed Proxy Statement. When you have done so, please mark
your votes on the enclosed proxy, sign and date the proxy, and return it to us.
Your vote is important, so please return your proxy promptly.
Sincerely,
/s/ CHARLES M. RAMPACEK
Charles M. Rampacek
President and Chief
Executive Officer
<PAGE> 3
----------
NOTICE AND PROXY STATEMENT
----------
[PROBEX LOGO]
PROBEX CORP.
One Galleria Tower
13355 Noel Road, Suite 1200
Dallas, Texas 75240
August 1, 2000
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held August 31, 2000
Probex Corp. will hold a Special Meeting of Stockholders at the offices
of the Company, One Galleria Tower, 13355 Noel Road, Suite 1200, Dallas, Texas
75240, on Thursday, August 31, 2000, at 9:00 a.m., local time.
We are holding this meeting:
o To approve an amendment to the Company's Articles of Incorporation
that increases the number of authorized shares of common stock from
50,000,000 shares to 100,000,000 shares;
o To approve the change in the state of incorporation of the Company
from Colorado to Delaware;
o To approve the offer and sale of up to ten million shares of the
Company's common stock in one or more private placement
transactions, subject to the terms outlined in this Proxy Statement;
and
o To transact any other business that properly comes before the
meeting.
Your Board of Directors has selected July 31, 2000 as the record date for
determining stockholders entitled to vote at the meeting. A list of stockholders
on that date will be available for inspection at the offices of the Company, One
Galleria Tower, 13355 Noel Road, Suite 1200, Dallas, Texas 75240, for ten days
before the meeting.
This Notice and Proxy Statement are being distributed to stockholders
on or about August 1, 2000.
By Order of the Board of Directors
/s/ CHARLES M. RAMPACEK
Charles M. Rampacek
President and Chief
Executive Officer
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
GENERAL INFORMATION ...............................................................................1
RECENT DEVELOPMENTS ...............................................................................3
PRINCIPAL STOCKHOLDERS ............................................................................4
Security Ownership of Certain Beneficial Owners ..........................................4
Security Ownership of Management .........................................................5
PROPOSALS .........................................................................................6
Proposal 1 - Amendment to the Articles of Incorporation to Increase
Authorized Shares ...................................................................6
Proposal 2 - Reincorporation in the State of Delaware ....................................8
Proposal 3 - Approval of the Offer and Sale of up to
Ten Million Shares of the Company's Common Stock ....................................17
OTHER BUSINESS ....................................................................................19
SUBMISSION OF STOCKHOLDER PROPOSALS ...............................................................19
EXHIBIT A - Amendment to Articles of Incorporation
EXHIBIT B - Agreement and Plan of Merger
EXHIBIT C - Delaware Certificate of Incorporation
</TABLE>
<PAGE> 5
GENERAL INFORMATION
Q: Who is soliciting my proxy?
A: We--the Board of Directors of Probex Corp.--are sending you this Proxy
Statement in connection with our solicitation of proxies for use at
Probex's August 31, 2000 Special Meeting of Stockholders. Certain
directors, officers and employees of Probex also may solicit proxies on
our behalf by mail, phone, fax or in person.
Q: Who is paying for this solicitation?
A: Probex will pay for the solicitation of proxies, including
out-of-pocket expenses estimated to be $15,000. Probex also will
reimburse banks, brokers, custodians, nominees and fiduciaries for
their reasonable charges and expenses to forward our proxy materials to
the beneficial owners of Probex common stock.
Q: What am I voting on?
A: You are voting on the proposal to amend the Company's articles of
incorporation to increase the number of authorized shares of common
stock from 50,000,000 shares to 100,000,000 shares, the proposal to
change the state of incorporation of the Company from Colorado to
Delaware and the proposal to approve the offer and sale of up to ten
million shares of the Company's common stock.
Q: Who can vote?
A: Stockholders of record of Probex's common stock at the close of
business on July 31, 2000, are entitled to vote at the meeting. Each
stockholder is entitled to cast one vote for each share of common stock
owned.
Q. How do I vote?
A. You may vote in person at the meeting or by proxy. We recommend you
vote by proxy even if you plan to attend the meeting. You can always
change your vote at the meeting. If you have shares held by a broker or
other nominee, you may instruct your broker or nominee to vote your
shares by following the instructions that the broker or nominee
provides you. Most brokers offer voting by mail, telephone and
Internet.
Q. How do proxies work?
A. The Board of Directors of Probex Corp. is asking for your proxy. Giving
your proxy to the persons named by us means you authorize them to vote
your shares at the meeting in the manner you direct.
If you sign and return the enclosed proxy card but do not specify how
your shares are to be voted, your shares will be voted FOR the proposal
to amend the Company's articles of incorporation to increase the number
of authorized shares of common stock from 50,000,000 shares to
100,000,000 shares, FOR the proposal to change the state of
incorporation of the Company from Colorado to Delaware, and FOR the
proposal to approve the offer and sale of up to ten million shares of
the Company's common stock.
1
<PAGE> 6
Q: What constitutes a quorum?
A: As of July 27, 2000, Probex had 25,461,716 shares of common stock, no
par value, outstanding. Voting can take place at the Special Meeting
only if stockholders owning a majority of the voting power of the
common stock (that is, a majority of the total number of votes entitled
to be cast) are present, either in person or by proxy. If you do not
vote, or if a broker holding your shares in "street" or "nominee" name
indicates to us on a proxy that you have not voted and it lacks
discretionary authority to vote your shares, we will not consider your
shares as present or entitled to vote for any purpose.
You may receive more than one proxy or voting card depending on how you
hold your shares. Shares registered in your name are covered by one
card. If you also hold shares through a broker or other nominee, you
may also get material from them asking how you want to vote. To be sure
that all of your shares are voted, we encourage you to respond to each
request you receive.
Q. How do I revoke a proxy?
A. You may revoke your proxy before it is voted by submitting a new proxy
with a later date; by voting in person at the meeting; or by notifying
Probex's Secretary in writing at the address listed on the cover
letter.
Q. Will my shares be voted if I don't sign a proxy?
A. If you hold your shares directly in your own name, they will not be
voted unless you provide a signed proxy. Under certain circumstances,
shares which you own that are held by a broker may be voted even if you
do not provide voting instructions to the broker. Brokerage firms have
the authority under the American Stock Exchange rules to vote
customers' unvoted shares on certain "routine" matters. The proposal to
amend the Company's articles of incorporation to increase the number of
authorized shares of common stock from 50,000,000 shares to 100,000,000
shares, the proposal to approve the change in the state of
incorporation of the Company from Colorado to Delaware and the proposal
to approve the offer and sale of up to ten million shares of the
Company's common stock, are not "routine" matters, and therefore, your
shares will not be voted on these matters if your proxy is not signed.
Q. How many votes are needed for approval?
A. Approval of the amendment to the Company's articles of incorporation to
increase the number of authorized shares of common stock from
50,000,000 shares to 100,000,000 shares and the change in the state of
incorporation of the Company from Colorado to Delaware, each requires
the affirmative vote of a majority of the shares outstanding. For this
purpose, an abstention and a broker non-vote will have the same effect
as a vote against the proposal.
Approval of the offer and sale of up to ten million shares of the
Company's common stock requires the affirmative vote of a majority of
the shares present in person or by proxy and entitled to vote at the
meeting. For this purpose, an abstention will have the same effect as a
vote against the proposal to approve the offer and sale of the
Company's common stock. Broker non-votes will not be counted as a vote
either for or against the proposal to approve the offer and sale of
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<PAGE> 7
Company's common stock and will not be counted in determining the
number of shares entitled to vote on the offer and sale of the
Company's common stock proposal.
A "broker non-vote" occurs when a broker submits a proxy but does not
vote for or against a matter. This will occur when the beneficial owner
has not instructed the broker how to vote and the broker does not have
discretionary authority to vote in the absence of instructions.
RECENT DEVELOPMENTS
Effective August 1, Charles M. Rampacek, 57, has been named as the
Company's new President and Chief Executive Officer. Mr. Rampacek, who has been
a Director of the Company since April 2000, succeeds Thomas G. Plaskett, who
has served as Probex's interim President and Chief Executive Officer since
October 1999. Mr. Plaskett will remain as the Company's Chairman of the Board.
For the past four years, Mr. Rampacek has served as President and Chief
Executive Officer of Lyondell-Citgo Refining, LP, a joint venture of Citgo
Petroleum Corporation and Lyondell Chemical Company. From 1982 to 1995, he held
various executive positions with Tenneco Inc.'s energy-related subsidiaries,
including President of Gas Pipeline Transportation, Executive Vice President of
Gas Pipeline Operations and Senior Vice President of Refining & Marketing
Operations. Prior to joining Tenneco Inc., Mr. Rampacek spent 16 years with
Exxon Company USA.
The Company also recently announced the move of its corporate headquarters
from Carrollton, Texas, to new offices in the Galleria Tower in Dallas, Texas,
also effective August 1. All corporate, sales, and engineering staff have
relocated to the new location, while the Company's lab personnel will remain at
the Carrollton location. This Special Meeting of Stockholders will be held at
the new location.
The Company's new address is One Galleria Tower, 13355 Noel Road, Suite
1200, Dallas, Texas 75240. The Company's new telephone and facsimile numbers
are 972-788-4772 (or 972-788-4PRB)(phone) and 972-980-8545(fax).
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<PAGE> 8
PRINCIPAL STOCKHOLDERS
Security Ownership of Certain Beneficial Owners
The following table sets forth the number of shares of the Company's
common stock owned by each person who, as of July 27, 2000, was known by the
Company to own beneficially more than five percent (5%) of its common stock.
In general, a person is deemed to be a "beneficial owner" of a security
if that person has or shares the power to vote or direct the voting of such
security, or the power to dispose of or to direct the disposition of such
security. A person is also deemed to be a beneficial owner of any securities to
which the person has the right to acquire beneficial ownership within sixty (60)
days.
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Owner of Class*
------------------- ------------------- ---------
<S> <C> <C>
HSB Engineering Finance Corp 2,796,114 11.0%
One State Street
Hartford, CT 06102
Thomas G. Murray 1,551,957(1) 6.1%
Director
3523 Cooper Creek
Denton, Texas 76208
Alex D. Daspit 1,620,195(2) 6.3%
3707 Princeton Ave.
Dallas, Texas 75205
General Conference of 1,598,571(3) 6.0%
Seventh-day Adventists
12501 Old Columbia Pike
Silver Spring, MD 20904
---------------------------------------------------------------------------------------------
</TABLE>
Notes:
* Based on 25,461,716 shares of common stock outstanding as of July 27,
2000.
1. Includes 85,410 shares that may be acquired pursuant to the exercise of
warrants. Excludes 490,000 shares that may be acquired pursuant to the
exercise of stock options that have not vested.
2. Includes 85,000 shares that may be acquired pursuant to the exercise of
warrants and 100,000 shares that may be acquired pursuant to the
exercise of fully vested stock options. Excludes 300,000 shares that
may be acquired pursuant to the exercise of stock options that have not
vested.
3. Includes 240,750 shares that have been subscribed for but have not yet
been issued, and 1,021,333 shares that may be acquired upon the
exercise of conversion rights relating to 191,500 shares of 10%
Cumulative Convertible Preferred Stock, Series A.
4
<PAGE> 9
Security Ownership of Management
The following sets forth the number of shares of the Company's common
stock beneficially owned by (1) the individual directors (including advisory
directors) of the Company, and (2) all executive officers and
directors of the Company as a group, as of July 27, 2000.
No executive officers or directors own shares of the Series A Preferred
Stock.
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Owner of Class*
------------------- ------------------- ---------
<S> <C> <C>
K. Bruce Jones 935,621(1) 3.7%
Director
88 S. Bishop Road
Santa Rosa Beach, FL 32459
Anthony J. Maselli 20,000(2) **
Director
109 North Road
Harwinton, CT 06791
Thomas G. Murray 1,551,957(3) 6.1%
Director
3523 Cooper Creek
Denton, TX 76208
Thomas G. Plaskett 478,750(4) 1.9%
Chairman
One Galleria Tower
13355 Noel Road, Suite 1200
Dallas, TX 75240
Charles M. Rampacek 10,000(5) **
Director, CEO & President
One Galleria Tower
13355 Noel Road, Suite 1200
Dallas, TX 75240
Nicholas W. Hollingshad 832,400(6) 3.3%
Advisory Director
3204 Long Prairie Road, Suite C
Flower Mound, TX 75022
William A. Searles 251,325(7) 1.0%
Advisory Director
179 Hartshorne Rd.
Locust, NJ 07760
All Executive Officers and Directors as a Group 5,364,946(8) 20.0%
---------------------------------------------------------------------------------------------
</TABLE>
Notes:
* Based on 25,461,716 shares of common stock outstanding as of July
27, 2000.
** Represents less than 1% of the outstanding common stock.
5
<PAGE> 10
1. Includes 445,207 shares owned by CPM Partners, L.L.C. for which Mr.
Jones exercises voting control. Mr. Jones disclaims beneficial
ownership of these shares. Also includes 154,469 shares that may be
acquired pursuant to the exercise of warrants. Excludes 40,000 shares
that may be acquired pursuant to the exercise of warrants that have not
vested.
2. All of these shares may be acquired pursuant to exercise of warrants.
Excludes 40,000 shares that may be acquired pursuant to the exercise of
warrants that have not vested.
3. Includes 85,410 shares that may be acquired pursuant to the exercise of
warrants. Excludes 490,000 shares that may be acquired pursuant to the
exercise of stock options that have not vested.
4. Includes 310,000 shares that may be acquired pursuant to the exercise
of warrants. Excludes 40,000 shares that may be acquired pursuant to
the exercise of warrants that have not vested.
5. All of these shares may be acquired upon the exercise of stock options.
6. All of these shares are owned by Probex Southwest Partnership LP, for
which Mr. Hollingshad exercises voting control. Mr. Hollingshad
disclaims beneficial ownership of these shares, except to the extent of
his aggregate pecuniary interest (approximately 16.5%) in the
partnership.
7. All of these shares may be acquired pursuant to the exercise of
warrants held by American Physicians Service Group, for which Mr.
Searles exercises voting control. Mr. Searles disclaims beneficial
ownership of these shares.
8. Represents 9 persons and includes 270,000 shares that may be acquired
pursuant to the exercise of options, 1,047,086 shares that may be
acquired pursuant to the exercise of warrants, and 1,528,932 shares for
which the officer or director exercises voting rights but disclaims
beneficial ownership.
PROPOSAL ONE
AMENDMENT OF ARTICLES OF INCORPORATION TO
INCREASE AUTHORIZED SHARES
General
The Company's Articles of Incorporation (the "Articles") currently
provide, in Article IV thereof, that 50,000,000 shares of common stock are
authorized to be issued. The Board of Directors has unanimously approved and
adopted, subject to stockholder approval, an amendment (the "Amendment") to the
Articles that increases the number of authorized shares of common stock from
50,000,000 shares to 100,000,000 shares. The text of the proposed Amendment to
Article IV of the Articles is attached to this Proxy Statement as Exhibit A.
As of July 27, 2000, there were 25,461,716 outstanding shares of common
stock and 9,695,358 shares of common stock that were reserved for issuance upon
conversion of outstanding preferred stock, under outstanding warrants, options
and pursuant to previously adopted stock option plans. On a fully diluted basis,
35,157,074 shares of common stock would be outstanding. As a result, the
Company has available only 14,842,926 additional shares for issuance under the
Articles.
If Proposal Three is approved by the stockholders, up to ten million of
these shares will be approved to be offered and sold in one or more private
placements to address the Company's short term financing needs.
6
<PAGE> 11
THE AUTHORIZATION OF AN ADDITIONAL 50,000,000 SHARES OF COMMON STOCK AS
CONTEMPLATED BY THE PROPOSED AMENDMENT WOULD GIVE THE BOARD OF DIRECTORS THE
EXPRESS AUTHORITY, WITHOUT FURTHER ACTION OF THE COMPANY'S STOCKHOLDERS, TO
ISSUE SUCH SHARES OF COMMON STOCK FROM TIME TO TIME AS THE BOARD OF DIRECTORS
DEEMS NECESSARY OR ADVISABLE. THE COMPANY HAS BEEN ADVISED BY ITS FINANCIAL
ADVISOR THAT HAVING AVAILABLE ADDITIONAL AUTHORIZED, BUT UNISSUED, SHARES OF
COMMON STOCK WILL ALLOW THE COMPANY GREATER FLEXIBILITY IN CONSIDERING POTENTIAL
FUTURE ACTIONS INVOLVING THE ISSUANCE OF CAPITAL STOCK FOR BUSINESS AND
FINANCIAL PURPOSES. THE COMPANY CURRENTLY HAS NO SPECIFIC PLANS TO ISSUE THE
ADDITIONAL SHARES OF COMMON STOCK THAT WOULD BE AUTHORIZED BY THIS PROPOSAL. THE
ADDITIONAL SHARES MAY BE USED, WITHOUT FURTHER STOCKHOLDER APPROVAL, EXCEPT AS
MAY BE REQUIRED, FOR VARIOUS PURPOSES INCLUDING, BUT NOT LIMITED TO, RAISING
CAPITAL, FUNDING ACQUISITIONS, PROVIDING EQUITY INCENTIVES TO EMPLOYEES,
OFFICERS OR DIRECTORS, AND PERMITTING STOCK SPLITS IN THE FORM OF STOCK
DIVIDENDS.
Although the proposed increase in the authorized capital stock of the
Company could be construed as having anti-takeover effects, neither the Board of
Directors nor the Company's management views this proposal in that perspective.
Nevertheless, the Company could use the additional shares to frustrate persons
seeking to effect a takeover or otherwise gain control of the Company by, for
example, privately placing shares to purchasers who might side with the Board of
Directors in opposing a hostile takeover bid. The Company is not aware of such
hostile takeover bid at this time. Shares of common stock could also be issued
to a holder that would thereafter have sufficient voting power to assure that
any proposal to amend or repeal the Articles would not receive the requisite
vote required. Such uses of the common stock could render it more difficult or
discourage an attempt to acquire control of the Company, if such transactions
were opposed by the Board of Directors.
The additional shares of common stock will have rights identical to the
currently outstanding common stock. The shares of common stock have no
preemptive rights or other rights to subscribe for additional shares. Adoption
of the proposed Amendment and any issuance of the common stock would not affect
the rights of the holders of currently outstanding common stock, except for
effects incidental to increasing the outstanding number of shares of common
stock, such as dilution of earnings per share and voting rights of current
holders of common stock.
If this proposal to increase the number of authorized shares of common
stock and the proposal to reincorporate in Delaware (Proposal Two discussed
below) are both approved by the stockholders, this proposal will become
effective when the Company merges into its to-be-formed wholly-owned Delaware
subsidiary, as the certificate of incorporation of the Delaware subsidiary will
contain the authorization for the larger number of shares. The Company
anticipates that it will merge with its wholly-owned Delaware subsidiary shortly
after the Special Meeting of Stockholders.
If only the Amendment proposal is approved by the stockholders, the
Amendment proposal will become effective when the Company files the Amendment to
the Articles of Incorporation (the "Amended Articles") in the form of Exhibit A
to this Proxy Statement, which contains the authorization for the larger number
of shares. The Company anticipates that it will file the Amended Articles
shortly after the Special Meeting of Stockholders.
Vote Necessary to Approve the Proposal
The affirmative vote of the holders of a majority of the outstanding
shares of common stock is necessary for approval of the Amendment. Therefore,
abstentions and broker non-votes effectively count as votes against the
Amendment.
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<PAGE> 12
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE
PROPOSED AMENDMENT TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK OF THE COMPANY.
PROPOSAL TWO
REINCORPORATION IN THE STATE OF DELAWARE
Proposal
The Board of Directors has unanimously approved and adopted the form of
Agreement and Plan of Merger (the "Merger Agreement"), a copy which is included
as Exhibit B to this Proxy Statement, pursuant to which the Company is to be
merged with and into Probex Corp., a Delaware corporation ("Probex Delaware") to
be organized by the Company as a wholly-owned subsidiary solely for the purpose
of effecting the change in the state of incorporation of the Company from
Colorado to Delaware (the "Reincorporation"). On the effective date of the
Reincorporation (the "Effective Date"), the Company will be merged into Probex
Delaware and Probex Delaware will be the surviving corporation of the merger.
The surviving corporation will be named Probex Corp., and its state of
incorporation and legal domicile will be Delaware. The existing Board of
Directors and officers of the Company will also serve as the Board of Directors
and the officers of the surviving corporation, serving identical terms of
office.
Each outstanding share of common stock of the Company will be converted
automatically into one share of common stock, $0.001 par value per share, of the
surviving corporation (the "New Common Stock"). Each stock certificate currently
representing issued and outstanding shares of common stock of the Company will
continue after the Reincorporation to represent the same number of shares of the
New Common Stock of the surviving corporation. Each outstanding share of 10%
Cumulative Convertible Preferred Stock, Series A, of the Company (the "Series A
Preferred Stock") will be converted automatically into one share of 10%
Cumulative Convertible Preferred Stock, Series A, par value $0.01 per share, of
the surviving corporation (the "New Series A Preferred Stock"), with the same
rights and preferences as applicable to the Series A Preferred Stock. There is
not currently issued or outstanding any preferred stock of the Company, other
than the Series A Preferred Stock.
STOCKHOLDERS OF THE COMPANY NEED NOT EXCHANGE THEIR EXISTING STOCK
CERTIFICATES FOR STOCK CERTIFICATES OF THE SURVIVING CORPORATION. HOWEVER, ANY
STOCKHOLDERS DESIRING NEW STOCK CERTIFICATES REPRESENTING NEW COMMON STOCK OR
NEW PREFERRED STOCK OF THE SURVIVING CORPORATION MAY SUBMIT THEIR EXISTING STOCK
CERTIFICATES REPRESENTING SHARES OF THE COMPANY TO TRANSFER ONLINE, INC., THE
TRANSFER AGENT FOR THE COMPANY AND THE SURVIVING CORPORATION, TO OBTAIN NEW
CERTIFICATES.
Each stock option granted by the Company under the 1999 Omnibus Stock
and Incentive Plan, as amended and restated (the "1999 Plan"), and each option
and warrant issued by the Company and outstanding immediately prior to the
Effective Date, shall be converted automatically into and become a stock option,
option or warrant, to purchase, upon the same terms and conditions, the same
number of Probex Delaware's common stock (subject to further adjustment as may
be provided by the 1999 Plan, or the applicable options or warrants) which is
equal to the number of shares of the Company's common stock which the holder
thereof would have received had such holder exercised the option or warrant in
8
<PAGE> 13
full immediately prior to the Effective Date (whether such option or warrant was
then exercisable). The price per share payable upon the exercise under each of
said options and warrants shall (subject to further adjustments as may be
provided in the 1999 Plan, or the applicable options and warrants) be equal to
the exercise price per share thereunder immediately prior to the Effective Date.
A number of shares of Probex Delaware's common stock shall be reserved for
issuance upon the exercise of options and warrants equal to the number of the
shares of the Company's common stock so reserved immediately prior to the
Effective Date.
The Reincorporation will not result in any change in the name,
business, management, benefit plans, locations (including the address and
telephone number of the Company's principal executive offices), assets,
liabilities or net worth of the Company. All of the assets, liabilities,
subsidiaries and other properties of the Company will, pursuant to the Merger
Agreement, become the assets, liabilities, subsidiaries and other properties of
the surviving corporation to the fullest extent permitted by law. At the
Effective Date, Probex Delaware will have no liabilities and only nominal
assets.
Assuming the requisite stockholder authorization and approval of the
Reincorporation is obtained at the Special Meeting, it is presently anticipated
that the Reincorporation will be consummated by September 5, 2000, or as soon
thereafter as is practicable at the discretion of the Board of Directors. Other
than the approval of the stockholders, the filing of the certificate of
incorporation of Probex Delaware with the Secretary of State of Delaware, and
the filing of the articles of merger with the offices of the Secretary of State
of Colorado and the Secretary of State of Delaware, there are no federal or
state regulatory requirements that must be complied with or approvals that must
be obtained in connection with the Reincorporation. The Board of Directors of
the Company has, however, reserved the right to abandon the Reincorporation
prior to the Effective Date. See "Amendment of the Merger Agreement or
Abandonment of Reincorporation."
Principal Reasons for Changing the State of Incorporation
The Board of Directors believes that the best interest of the Company
and its stockholders will be served by changing its place of incorporation from
Colorado to Delaware. The Board of Directors believes that Delaware General
Corporation Law (the "DGCL") will be better suited to the present and future
legal and business needs of the Company.
The Reincorporation in the State of Delaware has many distinct
advantages. For many years, Delaware has followed a policy of encouraging
incorporation under its jurisdiction. In furtherance of that policy, Delaware
has long been the leading state in adopting, construing and implementing
comprehensive and flexible corporate laws in response to the legal and business
needs of corporations. As a result, the DGCL has become widely regarded as the
most extensive and well-defined body of corporate law in the United States.
Because of Delaware's prominence as the state of incorporation for many major
corporations, both the legislature and courts in Delaware have demonstrated an
ability and a willingness to act quickly and effectively to meet changing
business needs. Moreover, the Delaware courts have rendered a substantial number
of decisions interpreting and explaining Delaware law. The Reincorporation
accordingly will be beneficial to the Company in that it will give the Company a
greater degree of predictability and certainty regarding how the Company's
affairs should be conducted in order to comply with applicable laws and the
comfort and security resulting from the Company's awareness of the
responsiveness of Delaware's Secretary of State and its legislature and courts
to the needs of corporations organized under Delaware's jurisdiction. For these
reasons, many American corporations that have initially chosen their home state
for their state of incorporation have subsequently changed their corporate
domicile to Delaware.
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The Board of Directors believes that the proposed Reincorporation would
result in numerous advantages to both management and the Company's stockholders.
Paramount among those is the sophistication of the Delaware corporate law and
predictability that this sophistication lends to the Company's legal affairs.
Despite the unanimous belief of the Board of Directors that the Reincorporation
is in the best interest of the Company and its stockholders, stockholders should
be aware that Delaware law has been publicly criticized by some commentators on
the grounds that it does not afford minority stockholders the same substantive
rights and protections as are available in a number of other states.
Stockholders should note that the statutory appraisal rights of stockholders of
a Delaware corporation are more limited than those under Colorado law. See
"Comparison of Colorado and Delaware Law."
Previously in July 1997, the stockholders approved the reincorporation
of the Company in the State of Delaware. The Board of Directors, however,
determined it was in the best interest of the Company to abandon the
reincorporation at that time. In light of the Company's current status as a
reporting public company whose common stock is listed on the American Stock
Exchange, the Board of Directors believes that it is now in the best interest of
the Company to reincorporate in Delaware. Further, the historical basis for
being a Colorado corporation is no longer applicable. The Company has no current
or anticipated business activities in Colorado.
Colorado Articles of Incorporation and Bylaws and Delaware Certificate of
Incorporation and Bylaws
Although the Reincorporation is not expected to change the business and
operations of the Company, the Reincorporation will change the legal domicile of
the Company and will change the law applicable to the Company's corporate
affairs from Colorado to Delaware and will result in the Company's corporate
affairs being governed by the Certificate of Incorporation of Probex Delaware
(the "Delaware Certificate"), and the Bylaws of Probex Delaware ("Delaware
Bylaws"). The Delaware Certificate and the Delaware Bylaws will be substantially
the same as the current Articles and Bylaws of the Company ("Colorado Articles"
and "Colorado Bylaws," respectively). The Delaware Certificate, however,
contains a larger number of authorized shares than the Colorado Articles, which
is subject to approval by the stockholders pursuant to the Amendment proposal.
If the Amendment proposal is not approved, but the Reincorporation proposal is
approved, such vote will be deemed to be a vote in favor of an amendment to the
Delaware Certificate to reduce the number of authorized shares to 50,000,000,
the same number in effect under the current Colorado Articles prior to the
proposed Amendment. In addition, the Delaware Certificate alters the par value
of the common stock and preferred stock to $0.001 par value per authorized
share, while the Colorado Articles provide for no par value per share of common
stock and preferred stock. The par value of the Series A Preferred Stock will
remain the same in the Delaware Certificate as prescribed in the Colorado
Articles at $0.01 par value per share. Any stockholders desiring copies of the
Delaware Certificate and Delaware Bylaws, and the Colorado Articles and Colorado
Bylaws, may obtain such copies from the Company, without charge, upon written
request therefor sent to the Company at One Galleria Tower, 13355 Noel Road,
Suite 1200, Dallas, Texas 75240, attention Bruce A. Hall, Chief Financial
Officer.
Comparison of Colorado and Delaware Law
Certain relevant similarities and differences exist between the
Colorado Business Corporation Act (the "CBCA"), as the law currently applicable
to the Company, and the DGCL, as the law that would be applicable to the Company
after the Reincorporation. Although it is impractical to note all of the
similarities and differences between the corporation laws of Colorado and
Delaware, the following is a summary of what the Company believes are the
material similarities and differences between Colorado law and Delaware law, as
applicable to the Company:
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Indemnification and Limitation of Liability
Colorado and Delaware have similar laws respecting indemnification by a
corporation of its officers and directors, employees and other agents. Under
both Colorado and Delaware law, corporations may limit the liability of
directors, except in connection with the following instances: (a) breaches of
the director's duty of loyalty to the corporation or its stockholders; (b) acts
or omissions not in good faith, or involving intentional misconduct or knowing
violation of law; (c) the payment of unlawful dividends or unlawful stock
repurchases or redemptions; or (d) transactions in which the director received
an improper personal benefit. Such limitation of liability provision does not
limit the liability of a director for violation of or otherwise relieve the
Company or its directors from the necessity of complying with, federal or state
securities laws or affect the availability of non-monetary remedies such as
injunctive relief or rescission.
The Colorado Articles eliminate the liability of directors of the
Company to the fullest extent permissible under Colorado law. Similarly, the
Delaware Certificate also will eliminate the liability of directors to the
fullest extent permissible under Delaware law, as such law currently exists or
as it may be amended in the future. A provision of Delaware law states that the
indemnification provided by statute shall not be deemed exclusive of any other
rights under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise. Whereas the CBCA does not permit extended
indemnification of directors. Although the provisions of the CBCA and the DGCL
are similar with respect to the ability of directors, officers, employees and
agents of the corporation to seek indemnification from the corporation, the
provisions of the DGCL contain fewer limitations on the ability of such parties
to seek indemnification from a corporation and accordingly permit broader
indemnification than the Colorado statute.
Interested Director Transactions
Under both the CBCA and the DGCL, certain contracts or transactions in
which one or more of a corporation's directors has an interest are not void or
voidable because of such interest provided that certain conditions, such as
obtaining the required approval and fulfilling the requirements of good faith
and full disclosure, are met. With certain exceptions, the conditions are
similar under the CBCA and the DGCL. The most significant difference between the
DGCL and the CBCA is that under the CBCA, a corporation cannot rely on
ratification or authorization of a disinterested board of directors regarding a
loan or guarantee benefiting a director unless the stockholders have been given
at least ten (10) days written notice. The Company is not aware of any plans of
the Board of Directors to propose, authorize, or ratify any such transaction for
which notice would be required under the CBCA, but not under the DGCL.
Removal of Directors; Classified Board of Directors
Under the CBCA, unless the articles of incorporation of a corporation
provide otherwise, any director or the entire board of directors may be removed,
with or without cause, with the approval of a majority of outstanding shares
entitled to vote. However, if cumulative voting is in effect, no individual
director may be removed if the number of votes cast against such removal would
be sufficient to elect the director under cumulative voting, and any director
elected by a group can only be removed by that voting group.
Under the DGCL, a director of a corporation that does not have a
classified board of directors or cumulative voting may be removed, with or
without cause, with the approval of a majority of the outstanding shares
entitled to vote at an election of directors. In the case of a Delaware
corporation
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having cumulative voting, if less than the entire board is to be
removed, a director may not be removed without cause if the number of shares
voted against such removal would be sufficient to elect the director under
cumulative voting. A director of a corporation with a classified board of
directors may be removed only for cause, unless the corporation's certificate of
incorporation otherwise provides. The Delaware Certificate does not provide for
a classified board or for cumulative voting.
Voting by Stockholders.
Under the DGCL and pursuant to the Colorado Articles, as permitted by
the CBCA, a majority of the stockholders of both acquiring and target
corporations must approve any statutory merger, except in certain circumstances
substantially similar under both the CBCA and the DGCL. Also, under the DGCL and
pursuant to the Colorado Articles, as permitted by the CBCA, a sale of
substantially all of the assets of a corporation must be approved by a majority
of the outstanding voting shares of the corporation transferring such assets.
With certain exceptions, the CBCA also requires that mergers, share exchanges,
certain sales of assets and similar transactions be approved by a majority vote
of each voting group of shares outstanding. In contrast, the DGCL generally does
not require class voting, except in certain transactions involving an amendment
to a corporation's certificate of incorporation that adversely affects a
specific class of shares. As a result, stockholder approval of such transactions
may be easier to obtain under the DGCL for companies which have more than one
class of shares outstanding.
Special Meetings.
A special meeting of the stockholders of a Colorado corporation may be
called by the holders of shares entitled to vote not less than 10% of the votes
at the meeting. Stockholders of Delaware corporations do not have a right to
call a special meeting unless it is conferred in the corporation's certificate
of incorporation or bylaws. The Delaware Certificate and the Delaware Bylaws do
not permit stockholders to call special meetings.
Stockholder Action by Consent.
Under the CBCA, unless the articles of incorporation require that a
particular action be taken at a meeting of stockholders, any action to be taken
by stockholders may be taken instead by the unanimous written consent of all
stockholders entitled to vote thereon.
Under the DGCL, action in lieu of a meeting is also allowed. However,
under the DGCL, action may be taken by the written consent of only those
stockholders required to vote in favor of the action. Those stockholders not
executing written consents (and who would otherwise be entitled to notice of a
meeting at which such action would have otherwise taken place) must receive
prompt notice of the action taken.
Quorum.
Pursuant to the Colorado Articles, a majority of the shares entitled to
vote, represented in person or by proxy, shall constitute a quorum at a meeting
of stockholders. Similarly under the DGCL and the Delaware Certificate, a
majority of the shares entitled to vote, present in person or represented by
proxy, shall constitute a quorum at any meeting.
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<PAGE> 17
Cumulative Voting Rights.
A Colorado corporation has cumulative voting for directors unless
expressly prohibited by the articles of incorporation. The Company has expressly
prohibited cumulative voting in its Articles. Cumulative voting must be
expressly provided for in the certificate of incorporation of a Delaware
corporation. The Delaware Certificate does not provide for cumulative voting.
Stockholder Derivative Suits.
The CBCA provides that a corporation or the defendant in a derivative
suit may require the plaintiff stockholder to furnish a security bond if the
stockholder holds less than five percent (5%) of the outstanding shares of any
class and such shares have a market value less than $25,000. The DGCL does not
have a similar bonding requirement.
Appraisal Rights
Stockholders, under both the CBCA and the DGCL, of a corporation
participating in certain major corporate transactions may, under varying
circumstances, be entitled to appraisal rights pursuant which such stockholders
may receive cash in the amount of the fair market value of his or her shares in
lieu of consideration he or she would otherwise receive in the transaction.
Appraisal rights are available in response to similar transactions under both
the CBCA and the DGCL, except that pursuant to the CBCA, appraisal rights are
also available to a stockholder in the event of (i) a share exchange to which
the corporation is a party as the corporation whose shares will be acquired (a
transaction not specifically authorized by the DGCL), (ii) a sale, lease,
exchange or any other disposition of all or substantially all of the assets of a
corporation or an entity which the corporation controls if a vote of the
stockholders is otherwise required, and (iii) a reverse stock split if the split
reduces the number of shares owned by the stockholders to a fraction of a share
or to scrip and such fraction or scrip is to be acquired for cash or voided
pursuant to the statutory procedure available under the CBCA. Although a
Delaware corporation, pursuant to the DGCL, may, but is not required to,
provide in its certificate of incorporation that appraisal rights shall be
available to stockholders in the event of an amendment to the certificate of
incorporation, the sale of all or substantially all of the assets of the
corporation or the occurrence of any merger or consolidation in which the
Delaware corporation is a constituent corporation, the Delaware Certificate does
not grant such appraisal rights in addition to those granted by Delaware law.
Under both the CBCA and the DGCL, stockholders: (i) receive prior
notice of their rights to dissent, (ii) must deliver their notice of dissent
prior to the corporate action giving rise to dissenter's rights, and (iii) will
receive notice from the corporation of the effectiveness of the corporate action
within ten days. There are differences, however, in the timing of payments made
to dissenting stockholders, the ability of a court to award attorney's fees, and
the manner of determining "fair value" which may make the CBCA more favorable
from a stockholder's point of view. Other procedural rule differences between
the CBCA and the DGCL also may be viewed as more favorable to a dissenting
stockholder of a Colorado corporation.
The Company does not presently intend to take any action which would
give rise to dissenter's rights. However, should such transaction occur, the
provisions of the CBCA may be viewed as more favorable to a stockholder than the
provisions of the DGCL.
Pursuant to both the CBCA and the DGCL, a stockholder, however, is not
entitled to dissent and obtain payment of the fair value of the shares of any
class or series of shares which are either listed on a
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<PAGE> 18
national securities exchange registered under the Securities Exchange Act of
1934, as amended (the "1934 Act"), or on the National Association of Securities
Dealers Automated Quotation System, or were held of record by more than two
thousand (2,000) stockholders, at the time of the record date. As the Company
is listed on the American Stock Exchange, stockholders will not be entitled to
appraisal rights so long as the Company maintains such listing.
Business Combinations With Interested Stockholders.
The DGCL contains a prohibition, subject to certain exceptions, on
business combinations by a Delaware corporation with interested stockholders for
a period of three years following the date that such holder became an interested
stockholder. Interested stockholders are generally defined under the statute as
stockholders owning 15% or more of the outstanding voting stock of the
corporation. This general prohibition was designed to discourage hostile
take-over attempts of Delaware corporations by third parties. Under the Delaware
statute, this prohibition is inapplicable to corporations which do not have a
class of voting stock that is (1) listed on a national securities exchange, (2)
authorized for quotation on an inter-dealer quotation system of a registered
national securities association or (3) held of record by more than 2,000
stockholders. Following the Reincorporation, Probex Delaware's stock will be
listed on the American Stock Exchange. Accordingly, this prohibition will be
applicable to Probex Delaware. The CBCA contains no corresponding prohibition on
business combinations with interested stockholders.
Reduction of Capital.
The DGCL provides that a corporation may reduce its capital in a
variety of specified methods, including: (i) by reducing or eliminating the
capital represented by shares of capital stock which had been retired; (ii) by
applying to an otherwise authorized purchase or redemption of outstanding shares
of its capital stock, some or all of the capital represented by the shares being
purchased or redeemed or any capital that has not been allocated to any
particular class of its capital stock; (iii) by applying to an otherwise
authorized conversion or exchange of outstanding shares of its capital stock,
some or all of capital represented by the shares being converted or exchanged,
or some or all of any that has not been allocated to any particular class of its
capital stock, or both, to the extent that such capital in the aggregate exceeds
the total aggregate par value or the stated capital of any previously unissued
shares upon such conversion or exchange; or (iv) by transferring to surplus (a)
some or all of the capital not represented by any particular class of its
capital stock, (b) some or all of the capital represented by issued shares of
its par value capital stock, which capital is in excess of the aggregate par
value of such shares, or (c) some of the capital represented by the issued
shares of its capital stock without par value.
The foregoing may be conducted without the approval of the Company's
stockholders, provided that the assets remaining after the reduction are
sufficient to pay any debts not otherwise provided for. The CBCA contains no
directly corresponding provision. The statutory scheme for capitalization of
Colorado corporations differs from the DGCL statute in that concepts such as
"capital" and "surplus" are not addressed under the CBCA statute. The Board of
Directors of the Company believes that the effect of this difference is not
material to rights of stockholders of the Company.
Dividends and Repurchases.
The CBCA dispenses with the concepts of par value of shares as well as
statutory definitions of capital, surplus and the like. The concepts of par
value, capital and surplus are retained under the DGCL. Under the CBCA, a
corporation may not make any distribution (including dividends, or repurchases
and redemptions of shares) if, after giving effect to the distribution, (i) the
corporation would not be able to pay its debts as they become due in the usual
course of business, or (ii) the corporation's total assets
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<PAGE> 19
would be less than the sum of its total liabilities plus (unless the articles of
incorporation permit otherwise) the amount that would be needed, if the
corporation were to be dissolved at the time of the distribution, to satisfy the
preferential liquidation rights of stockholders not receiving the distribution.
The DGCL permits a corporation to declare and pay dividends out surplus
or, if there is no surplus, out of net profits for the fiscal year in which the
dividend is declared and/or for the preceding fiscal year as long as the amount
of capital of the corporation following the declaration and payment of the
dividend is not less than the aggregate amount of capital represented by the
issued and outstanding stock of all classes having a preference upon the
distribution of assets. In addition, the DGCL generally provides that a
corporation may redeem or repurchase its shares only if the capital of the
corporation is not impaired and such redemption or repurchase would not impair
the capital of the corporation.
Dissolution.
Under the CBCA, dissolution may be authorized by the adoption of a plan
of dissolution by the board of directors, followed by the recommendation of the
proposal to the stockholders (unless because of a conflict of interest or other
circumstances the board determines it cannot make any recommendation), then
followed by the approval of stockholders entitled to vote thereon. The CBCA
provides for the approval by a majority or each voting group entitled to vote
thereon. The CBCA also provides for judicial dissolution of a corporation in an
action by a stockholder upon a showing that (i) the directors are deadlocked in
management, the stockholders are unable to break the deadlock, and irreparable
injury to the corporation is threatened or being suffered, or the business and
affairs of the corporation can no longer be conducted to the advantage of the
stockholders generally, because of the deadlock, (ii) the directors or those in
control of the corporation are acting or will act in a manner which is illegal,
oppressive or fraudulent, (iii) the stockholders have been deadlocked over two
annual meetings in the election of directors, or (iv) the corporate assets are
being misapplied or wasted. A Colorado corporation can also be dissolved
judicially upon other grounds in a proceeding by the attorney general, or in a
proceeding by creditors, as well as by the secretary of state.
Under the DGCL, unless the board of directors approves the proposal to
dissolve, the dissolution must be approved by all the stockholders entitled to
vote thereon. Only if the dissolution is initially approved by the board of
directors may it be approved by a simple majority of the outstanding shares of
the corporation's stock entitled to vote. In the event of such board-initiated
dissolution, the DGCL allows a Delaware corporation to include in its
certificate of incorporation a supermajority (greater than simple majority)
voting requirement in connection with dissolutions. The Delaware Certificate
contains no such supermajority voting requirement; however, a majority of the
outstanding shares entitled to vote, voting at a meeting at which a quorum is
present, would be sufficient to approve a dissolution of Probex Delaware that
had previously been approved by its Board of Directors. The DGCL provides for
dissolution by operation of law for abuse, misuse or non-use of its corporate
powers, privileges or franchises.
Other.
The foregoing is an attempt to summarize the more important differences
in the corporation laws of the two states and does not purport to be a complete
list of the differences in the rights and remedies of holders of shares of
Colorado, as opposed to Delaware, corporations. Such differences can be
determined in full by reference to the Colorado Business Corporation Act and
Delaware General Corporation Law. In addition, both Colorado and Delaware law
provide that some of the statutory provisions as they affect various rights of
holders of shares may be modified by provisions in the articles or certificate
of incorporation or bylaws of a corporation.
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Tax Consequences of Reincorporation
The Reincorporation will constitute a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
Accordingly for federal income tax purposes, no gain or loss will be recognized
by stockholders upon the conversion of the Company's common stock and preferred
stock into New Common Stock and New Preferred Stock of the surviving corporation
as a result of the Reincorporation. Each stockholder whose shares are converted
from the Company's common stock or preferred stock into the New Common Stock or
New Preferred Stock of the surviving corporation will have the same basis in the
New Common Stock or New Preferred Stock of the surviving corporation that he or
she had in his or her common stock or preferred stock of the Company immediately
prior to the Effective Date and his or her holding period with respect to the
New Common Stock or New Preferred Stock of the surviving corporation will
include the period during which he or she held the corresponding shares of the
Company's common stock or preferred stock, provided such corresponding shares of
the Company's common stock or preferred stock were held by him or her as a
capital asset on the Effective Date. No gain or loss will be recognized by the
Company or the surviving corporation as a result of the Reincorporation.
NO INFORMATION IS PROVIDED HEREIN WITH RESPECT TO THE TAX CONSEQUENCES, IF ANY,
UNDER APPLICABLE STATE, LOCAL OR FOREIGN LAWS, AND EACH STOCKHOLDER IS ADVISED
TO CONSULT HIS OR HER PERS0NAL ATTORNEY OR TAX ADVISOR AS TO THE FEDERAL, STATE,
OR LOCAL TAX CONSEQUENCES OF THE PROPOSED REINCORPORATION IN VIEW OF THE
STOCKHOLDER'S INDIVIDUAL CIRCUMSTANCES.
Amendment of the Merger Agreement or Abandonment of the Reincorporation
The Board of Directors of the Company may amend, modify and supplement
the Merger Agreement, before or after stockholder approval; provided, however,
that no such amendment, modification or supplement may be made or become
effective after stockholder approval which, in the judgment of the Board of
Directors, would have a material adverse effect upon the rights of the Company's
stockholders. The Merger Agreement may be terminated and the Reincorporation may
be abandoned, notwithstanding stockholder approval, by the Board of Directors of
the Company at any time before the Effective Date of the Reincorporation if the
Board of Directors should determine that in its judgment the Reincorporation
does not appear to be in the best interest of the Company or its stockholders.
Vote Necessary to Approve the Proposal
The affirmative vote of a majority of the shares outstanding is
necessary for approval of the Reincorporation. Therefore, abstentions and broker
non-votes effectively count as votes against the Reincorporation.
DISSENTER'S RIGHTS OF APPRAISAL WILL NOT BE AVAILABLE TO STOCKHOLDERS
IN CONNECTION WITH THE PROPOSED REINCORPORATION UNDER APPLICABLE COLORADO LAW.
The text of the proposed Delaware Certificate is attached to this Proxy
Statement as Exhibit C. The Delaware Certificate provides for an increase in the
number of authorized shares of common stock as contemplated by the Amendment
proposal. If the Amendment is not approved, but the Reincorporation is approved,
such vote will be deemed to be in favor of an amendment to the Delaware
Certificate to reduce
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the number of authorized shares to 50,000,000, the same number in effect under
the current Articles prior to the proposed Amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
PROPOSAL TO REINCORPORATE THE COMPANY
IN THE STATE OF DELAWARE.
PROPOSAL THREE
APPROVAL OF THE OFFER AND SALE OF UP TO TEN MILLION
SHARES OF THE COMPANY'S COMMON STOCK
Proposal
In July 2000, the Company engaged a non-exclusive financial advisor
(the "Advisor") to assist the Company in implementing its business plan. In
relying on the recommendations of the Advisor, the Company is seeking to raise
additional capital through a private placement of the Company's common stock
(the "Private Placement"). Although the Board of Directors generally has the
authority to issue common stock from time to time, under the rules of the
American Stock Exchange, on which the Company's common stock is currently
listed, stockholder approval is required for certain private issuances of the
Company's common stock in an amount that exceeds twenty percent (20%) of the
outstanding common stock.
Based on (i) the aggregate amount of the Company's required
expenditures for plant development, (ii) the aggregate amount of the Company's
required capital for financing potential acquisitions that the Company has and
may identify, (ii) the anticipated amount of the Company's working capital
requirements, (iii) the current market value of the Company's common stock, and
(iv) the fact that the Company may offer and sell its securities at a discount
to the then prevailing market price, the Company is seeking to offer and sell in
the Private Placement a number of shares of common stock that constitutes more
than twenty percent (20%) of the Company's common stock issued and outstanding
prior to such offer and sale. The Board of Directors believes that the Private
Placement of the Company's common stock will provide the Company with the
appropriate additional capital in a timely manner for the above described
purposes.
The specific terms of the Private Placement have not been determined,
and the Company will consumate any such Private Placement only after due
consideration by, and approval of, its Board of Directors, of such specific
terms. There can be no assurance that the Company will be successful in raising
capital pursuant to the Private Placement or otherwise.
THIS PROXY STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR
SOLICITATION OF AN OFFER TO PURCHASE SECURITIES OF THE COMPANY. ANY OFFER OF
SECURITIES MADE BY THE COMPANY OR OTHER PERSON ON BEHALF OF THE COMPANY MAY BE
MADE ONLY PURSUANT TO MATERIALS AND OTHER OFFERING DOCUMENTS PREPARED BY THE
COMPANY AND DELIVERED TO QUALIFIED PURCHASERS EXPRESSLY FOR USE IN CONNECTION
WITH THE PRIVATE PLACEMENTS, AND ANY SUCH OFFER SHALL BE MADE IN COMPLIANCE
WITH, OR PURSUANT TO AN EXEMPTION FROM, SECTION 5 OF THE SECURITIES ACT OF 1933,
AS AMENDED.
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Financial Advisor
The Company's agreement with the Advisor (the "Advisory Agreement")
provides that the Advisor will assist the Company in implementing its business
plan, including advising the Company of various financing alternatives. The
Advisor's current recommendation to the Company is the Private Placement. This
recommendation is subject to certain conditions, including that there be no
material adverse change in the business of the Company or in general market
conditions.
In addition to the financial advisory services rendered to the Company,
the Company has engaged the Advisor to act as the placement agent with respect
to the Private Placement. As compensation for the Private Placement, the Advisor
will be entitled to the following: (i) cash fees equal to 4% of the gross
proceeds of the Private Placement, and (ii) warrants to purchase shares of
common stock in an amount equal to 3% of the fully-diluted shares of common
stock issuable to the investors in the Private Placement at an exercise price
equal to $0.01 per share.
The Private Placement
The Private Placement will consist of the offer and sale of up to ten
million shares of the Company's common stock or such lesser number as may be
necessary to generate approximately $20 - $24 million in proceeds for the
Company. The common stock offered and sold in the Private Placement will not
possess preemptive rights. Further, the common stock offered and sold in the
Private Placement will not be registered under the Securities Act of 1933, as
amended (the "Securities Act"), and accordingly such shares cannot be offered
and sold in the United States absent registration or an applicable exemption
from the registration requirements under the Securities Act. As a result of the
restrictions on transfer under the Securities Act on shares to be issued in the
Private Placement, it is expected that shares may be offered at some discount to
the then prevailing market price for common stock customary for private
placements of this nature. The actual offering price for the Private Placement
will be based on market conditions and will be approved by the Company's Board
of Directors. In order to minimize any discount to market price necessary in the
Private Placement, the Company has agreed to file a registration statement under
the Securities Act with respect to the resale of the shares of common stock sold
in the Private Placement, and to use reasonable efforts to have such
registration statement declared effective as soon thereafter as possible.
The Company's management will have broad discretion in applying the net
proceeds generated from the Private Placement. The Company expects, however, to
use the net proceeds for financing potential acquisitions that the Company has
and may identify and for general corporate purposes, including working capital,
capital expenditures and offering expenses. Although a portion of the net
proceeds are anticipated to be used to fund one or more acquisitions, the
Company has not entered into any definitive agreements with respect to any
potential acquisitions at this time. Therefore, there can be no assurance that
the Company will successfully complete any acquisitions. If the Company is
unable to complete one or more potential acquisitions, a substantial portion of
the proceeds will be available for use in the discretion of management.
Stockholder Approval Requirement
Although the Board of Directors of the Company possesses the authority
under the Company's Articles of Incorporation to approve the issuance of common
stock, Section 713 of the American Stock Exchange Company Guide generally
requires stockholder approval in connection with the offer and sale of common
stock (or securities convertible into common stock) which equals twenty percent
(20%) or
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more of the shares of common stock outstanding before the offer and sale at a
price less than market value. The offer and sale of common stock pursuant to the
Private Placement will likely exceed twenty percent (20%) of the common stock
outstanding prior to any such offer and sale and could be at prices that
constitute a discount to the then prevailing market price of the Company's
common stock. Accordingly, the Board of Directors of the Company is seeking
stockholder approval of the offer and sale of up to ten million shares of common
stock in order to complete the Private Placement, if and when the Board of
Directors approves the specific terms of the Private Placement. Such terms will
be determined by the Board of Directors in a manner that it believes to be in
the best interest of the Company and its stockholders.
General Effect of Issuance of Common Stock on Existing Stockholders
Adoption of this proposal and any issuance of the common stock would
not affect the rights of the holders of currently outstanding common stock,
except for effects incidental to increasing the outstanding number of shares of
common stock, such as dilution of earnings per share and voting rights of
current holders of common stock.
Vote Necessary to Approve the Proposal
Under the American Stock Exchange Rules, the affirmative vote of a
majority of the shares present in person or by proxy and entitled to vote at the
meeting is necessary for the approval of the offer and sale of up to ten million
shares of the Company's common stock. For this purpose, an abstention will have
the same effect as a vote against the proposal to offer and sell the Company's
common stock. Broker non-votes will not be counted as a vote either for or
against the proposal and will not be counted in determining the number of shares
entitled to vote on the proposal. If stockholders approve this proposal, no
further approval will be sought with respect to the Private Placement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
APPROVE THE OFFER AND SALE OF UP TO TEN
MILLION SHARES OF THE COMPANY'S COMMON STOCK.
OTHER BUSINESS
The Company is not aware of any business to be acted upon at the
Special Meeting other than that which is explained in this Proxy Statement. In
the event that any other business calling for a vote of the stockholders is
properly presented at the meeting, the holders of the proxies will vote your
shares in accordance with their best judgment.
SUBMISSION OF STOCKHOLDER PROPOSALS
The Company did not hold an annual meeting for the year ended September
30, 1999. The Company, however, anticipates that it will hold its next annual
meeting for the year ending September 30, 2000, in February 2001. Any
stockholder who wishes to present a proposal for action at the 2001 annual
meeting of stockholders and who wishes to have it set forth in the proxy
statement and identified in the form of proxy prepared by the Company, must
deliver such proposal to the Company at its principal executive offices, no
later than September 30, 2000, in such form as is required under regulations
promulgated by the Securities and Exchange Commission.
19
<PAGE> 24
EXHIBIT A
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
PROBEX CORP.
Pursuant to the provisions of the Colorado Business Corporation Act,
the undersigned Corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the Corporation is Probex Corp.
SECOND: The following amendments were adopted by the Board of Directors
on July 19, 2000 and by the shareholders of the Corporation in the manner
prescribed by the Colorado Business Corporation Act on August 31, 2000:
ARTICLE IV - CAPITAL STOCK, A. AUTHORIZED SHARES shall be amended to
increase the number of authorized shares of common stock and to read as follows:
"A. Authorized Shares. The aggregate number of shares which
this Corporation shall have authority to issue is One Hundred Million
(100,000,000) shares of no par value each, which shares shall be
designated "Common Stock"; and Ten Million (10,000,000) shares of no
par value each, which shares shall be designated "Preferred Stock" and
which may be issued in one or more series at the discretion of the
Board of Directors. In establishing a series the Board of Directors
shall give to it a distinctive designation so as to distinguish it from
the shares of all other series and classes, shall fix the number of
shares in such series, and the preferences, rights and restrictions
thereof. All shares of any one series shall be alike in every
particular except as otherwise provided by these Articles of
Incorporation or the Colorado Corporation Code."
This amendment shall not change any other provisions of Article IV,
which shall continue to read as currently stated and on file with the Colorado
Secretary of State.
THIRD: The number of shares voted for the amendment was sufficient for
approval.
FOURTH: The manner, if not set forth in such amendment, in which any
exchange, reclassification, or cancellation of issued shares provided for in the
amendment shall be effected, is as follows: Not applicable.
<PAGE> 25
DATED: September , 2000
----------
PROBEX CORP.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
ATTEST:
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
A-2
<PAGE> 26
EXHIBIT B
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of this
___ day of September, 2000, by and between Probex Corp., a Delaware corporation
(the "Surviving Corporation"), and Probex Corp., a Colorado corporation (the
"Merging Corporation"). The Merging Corporation and the Surviving Corporation
are sometimes collectively referred to herein as the "Constituent Corporations."
RECITALS
The Merging Corporation is a Colorado corporation having authorized
capital consisting of 50,000,000 shares of Common Stock, no par value per
share, of which _______________ shares are issued and outstanding, and
10,000,000 of Preferred Stock, no par value per share, of which 1,000,000 shares
are designated as 10% Cumulative Convertible Preferred Stock, Series A, $0.01
par value per share, of which _______ shares are issued and outstanding.
The Surviving Corporation is a Delaware corporation having authorized
capital consisting of [100,000,000] shares of Common Stock, $0.001 par value per
share, of which 1,000 shares are issued and outstanding, all of which are owned
by the Merging Corporation, and 10,000,000 shares of Preferred Stock, par value
$0.001 per share, none of which are issued and outstanding, of which 1,000,000
shares are designated as 10% Cumulative Convertible Preferred Stock, Series A,
$0.01 par value per share, none of which are issued and outstanding.
The Merging Corporation and the Surviving Corporation have determined
it to be advisable for the Merging Corporation to merge with and into the
Surviving Corporation (the "Merger") pursuant to applicable provisions of the
Delaware General Corporate Law and the Colorado Business Corporation Act on the
terms hereinafter set forth, and the Boards of Directors of the Merging
Corporation and the Surviving Corporation have each approved and adopted this
Agreement and Plan of Merger and authorized the execution hereof.
PLAN OF MERGER
In consideration of the premises, the parties hereto do hereby adopt
and make this Agreement and Plan of Merger and prescribe the terms and
conditions of such Merger and the manner of carrying the same into effect, which
shall be as follows:
1. Effective upon the later of (a) 5:00 P.M., Dallas, Texas time, on
September ____, 2000, (b) the filing of the Articles of Merger with the
Office of the Delaware Secretary of State and (c) the filing of the
Articles of Merger with the Office of the Colorado Secretary of State
(such time and date, or filing as the case may be, being referred to
herein as the "Effective Date"), the Merging Corporation shall be
merged with and into the Surviving Corporation, and the separate
existence of the Merging Corporation shall cease.
2. The manner and basis of converting the issued and outstanding shares of
the Merging Corporation's outstanding Common Stock , the outstanding
stock options granted under the
B-1
<PAGE> 27
Merging Corporation's 1999 Omnibus Stock and Incentive Plan, as amended
and restated (the "1999 Plan"), and the other outstanding options and
warrants issued by the Corporation (collectively, the "Options and
Warrants"), into shares of the Common Stock, stock options and Options
and Warrants of the Surviving Corporation shall be as follows:
2.01 At the Effective Date, each of the shares of Common Stock of the
Merging Corporation issued and outstanding or held as treasury
shares on the Effective Date shall, without any action on the part
of either of the Constituent Corporations or any holder of such
stock, be changed and converted into an equal number of fully paid
and nonassessable shares of the Common Stock of the Surviving
Corporation.
2.02 Each stock certificate which, prior to the Effective Date,
represented issued shares of the Common Stock of the Merging
Corporation shall be and become on the Effective Date, a
certificate representing an identical number of shares of Common
Stock of the Surviving Corporation, automatically by virtue of the
Merger and without any action on the part of the holder hereof.
2.03 Each stock option granted by the Merging Corporation (under or
subject to the 1999 Plan of the Merging Corporation) and each
Option and Warrant issued by the Merging Corporation and
outstanding immediately prior to the Effective Date shall, by
virtue of the Merger and without any action on the part of the
holder thereof, be converted into and become a stock option,
Option or Warrant, to purchase, upon the same terms and
conditions, the number of shares of the Surviving Corporation's
Common Stock (subject to further adjustment as may be provided in
the 1999 Plan, or the applicable Options or Warrants) which is
equal to the number of shares of the Merging Corporation's Common
Stock which the holder thereof would have received had such holder
exercised the option in full immediately prior to the Effective
Date (whether or not such option was then exercisable). The price
per share payable upon exercise under each of said options shall
(subject to future adjustments as may be provided in the 1999
Plan, or the applicable Options or Warrants) be equal to the
exercise price per share thereunder immediately prior to the
Effective Date. A number of shares of the Surviving Corporation's
Common Stock shall be reserved for issuance upon the exercise of
options equal to the number of shares of the Merging Corporation's
Common Stock so reserved immediately prior to the Effective Date.
2.04 The 1999 Plan and all outstanding stock options, thereunder, and
each outstanding Option and Warrant, shall immediately prior to
the Effective Date of the Merger be amended to the extent
necessary to permit continuance of the 1999 Plan, and continuance
of said stock options, and such Options and Warrants, into those
of the Surviving Corporation following the Merger, notwithstanding
any provisions heretofore contained in such 1999 Plan, or such
Options and Warrants.
3. The manner and basis of converting the issued and outstanding shares of
the Merging Corporation's outstanding Preferred Stock into shares of
Preferred Stock of the Surviving Corporation shall be as follows:
3.01 At the Effective Date, each of the shares of Preferred Stock of
the Merging Corporation issued and outstanding or held as treasury
shares on the Effective Date shall, without any action on the part
of either of the Constituent Corporations or any holder of such
stock, be changed and converted into an equal number of fully paid
and nonassessable shares of the Preferred Stock of the Surviving
Corporation.
B-2
<PAGE> 28
3.02 Each stock certificate which, prior to the Effective Date,
represented issued shares of Preferred Stock of the Merging
Corporation shall be and become on the Effective Date, a
certificate representing an identical number of shares of
Preferred Stock of the Surviving Corporation, automatically by
virtue of the Merger and without any action on the part of the
holder thereof.
4. On the Effective Date, all of the shares of stock of the Surviving
Corporation issued and outstanding on the Effective Date of the Merger
shall be canceled and returned to the status of authorized but unissued
shares.
5. On the Effective Date, each employee benefit plan and incentive
compensation plan to which the Merging Corporation is then a party
shall be assumed by, and continue to be the plan of, the Surviving
Corporation. To the extent any employee benefit plan or incentive
compensation plan of the Merging Corporation or any of its subsidiaries
provides for the issuance or purchase of, or otherwise relates to, the
Merging Corporation's Common Stock, after the Effective Date such plan
shall be deemed to provide for the issuance or purchase of, or
otherwise relate to, the Surviving Corporation's Common Stock upon the
same terms and conditions.
6. The Officers and Directors of the Surviving Corporation on the
Effective Date shall be and continue to be the Officers and Directors
of the Surviving Corporation thereafter, until their successors are
duly appointed or elected.
7. The Articles of Incorporation and Bylaws of the Surviving Corporation,
as they exist immediately prior to the Effective Date, shall remain in
effect as the Articles of Incorporation and Bylaws of the Surviving
Corporation thereafter, unaffected by the Merger, except any amendments
authorized by the Merger.
8. On the Effective Date, the Merging Corporation shall be merged with and
into the Surviving Corporation, which shall continue its corporate
existence under the laws of the State of Delaware. The separate
existence and corporate organization of the Merging Corporation shall
cease upon the Effective Date, and the Surviving Corporation shall
possess all of the rights, privileges, immunities and franchises, as
well as those of a public or of a private nature, of each of the
Constituent Corporations; and all property, real, personal and mixed,
and all debts due on whatever account, including subscriptions to
shares, and all other choices in action, and all and every other
interest, of or belonging to or due to each of the Constituent
Corporations, shall be taken and deemed to be transferred to and vested
in the Surviving Corporation without further act or deed; and the title
to any real estate or any interest therein, vested in either of the
Constituent Corporations shall not revert or be in any way impaired by
reason of such Merger. The Surviving Corporation shall thenceforth be
responsible and liable for all the liabilities and obligations of each
of the Constituent Corporations, and any claims existing or action or
proceeding pending by or against a Constituent Corporation may be
prosecuted to judgment as if such Merger had not taken place. Neither
the rights of creditors nor any liens upon the property of either
Constituent Corporation shall be impaired by the Merger.
9. This Agreement and Plan of Merger shall be submitted to the
stockholders of each of the Constituent Corporations hereto in
accordance with the applicable provisions of law, and the consummation
of the Merger herein provided for is conditioned upon the approval and
adoption hereof by the stockholders of the respective parties as
provided by law.
B-3
<PAGE> 29
10. This Agreement and Plan of Merger and the Merger herein contemplated
may be abandoned by the Board of Directors of either of the Constituent
Corporations at any time prior to the Effective Date. This Agreement
may be amended, modified or supplemented at any time (before or after
stockholder approval) prior to the Effective Date with the mutual
consent of the Board of Directors of the Merging Corporation and the
Surviving Corporation; provided, however, that this Agreement may not
be amended, modified or supplemented after it has been approved by the
Merging Corporation's stockholders in any manner which, in the judgment
of the Board of Directors of the Merging Corporation, would have a
material adverse effect on the rights of the Merging Corporation's
stockholders or in any manner not permitted under applicable law.
* * *
B-4
<PAGE> 30
IN WITNESS WHEREOF, the parties have caused this Agreement and Plan of
Merger to be executed by their duly authorized officers, all as of the day and
year first above written.
PROBEX CORP., PROBEX CORP.,
a Colorado Corporation a Delaware Corporation
By: By:
------------------------------- -------------------------------
Charles M. Rampacek Chairman of the Board
President and Chief
Executive Officer
Attest: Attest:
--------------------------- ---------------------------
Bruce A. Hall, Secretary Secretary
B-5
<PAGE> 31
EXHIBIT C
CERTIFICATE OF INCORPORATION
OF
PROBEX CORP.
----------
Pursuant to the provisions of Section 102
of the General Corporation Law of
the State of Delaware
----------
I, the undersigned, for the purpose of creating and organizing a
corporation under the provisions of and subject to the requirements of the
General Corporation Law of the State of Delaware, do HEREBY CERTIFY as follows:
1. The name of the Corporation is Probex Corp. (the "Corporation").
2. The address of the registered office of the Corporation in the State
of Delaware is 1013 Centre Road in the City of Wilmington 19805, County of New
Castle. The name of the registered agent of the Corporation at such address is
Corporation Service Company.
3. (a) The nature of the business or purposes to be conducted or
promoted by the Corporation is to engage in any lawful business, act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware.
(b) The private property of the stockholders shall not be
subject to the payment of corporate debts to any extent whatsoever.
4. (a) Authorized Shares. The aggregate number of shares which
this Corporation shall have authority to issue is One Hundred Million
(100,000,000) shares of $0.001 par value each, which shares shall be designated
"Common Stock"; and Ten Million (10,000,000) shares of $0.001 par value each,
which shares shall be designated "Preferred Stock" and which may be issued in
one or more series at the discretion of the Board of Directors. In establishing
a series the Board of Directors shall give to it a distinctive designation so as
to distinguish it from the shares of all other series and classes, shall fix the
number of shares in such series, and the preferences, rights and restrictions
thereof. All shares of any one series shall be alike in every particular except
as otherwise provided by this Certificate of Incorporation or the Delaware
General Corporation Law.
(b) Common Stock. The following is a description of Common
Stock that the Corporation shall have authority to issue, including the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption thereof to the extent applicable thereto:
C-1
<PAGE> 32
(1) Dividend Rights. Dividends in cash, property or
shares of the Corporation may be paid upon the Common Stock, as and when
declared by the Board of Directors, to the extent and in the manner permitted by
law, except that no Common Stock dividend shall be paid for any year unless the
holders of Preferred Stock, if any, shall receive the maximum allowable
Preferred Stock dividend for such year.
(2) Voting Rights. Each outstanding share of Common
Stock shall be entitled to one vote on each matter submitted to a vote of
shareholders.
(3) Rights Upon Liquidation. Subject to the rights of
any series of Preferred Stock created pursuant to the further provisions of this
Section (b) of this Section 4 and subject to the terms of Section 4 hereto, in
the event of any voluntary or involuntary liquidation, dissolution or winding up
of, or any distribution of the assets of, the Corporation, each holder of shares
of Common Stock shall be entitled to receive, ratably with each other holder of
shares of Common Stock, that portion of the assets of the Corporation available
for distribution to the holders of its Common Stock. Liquidation, dissolution or
winding up, or distribution of the assets of the Corporation, as such terms are
used in this Subparagraph (3), shall not be deemed to be occasioned by or to
include any merger, consolidation or other business combination of the
Corporation with or into one more corporations or other entities, any
acquisition or exchange of the outstanding shares of one or more classes or
series of the Corporation or any sale, lease, exchange or other disposition of
all or a part of the assets of the Corporation.
(c) Preferred Stock. The following is a description of the
Preferred Stock that the Corporation shall have authority to issue, including
the preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption thereof to the extent applicable thereto:
Subject to the provisions of this Section 4, the Board of
Directors of the Corporation is hereby authorized and empowered to classify or
reclassify, in one or more series, any of the unissued shares of the Preferred
Stock of the Corporation by establishing the number of shares of such series and
by setting, changing or eliminating any of the preferences, conversion or other
rights, voting powers, restrictions, limitations as to the dividends,
qualifications, or terms and condition of redemption of such shares, all of
which shall be set forth in a certificate of designation executed, acknowledged,
filed and recorded in the manner required by the Delaware General Corporation
Law ("Certificate of Designation"), and as may be permitted by the Delaware
General Corporation Law.
(1) Designation and Amount; No Fractional Shares.
There shall be a series of Preferred Stock designated as "10% Cumulative
Convertible Preferred Stock, Series A", $0.01 par
C-2
<PAGE> 33
value per share (the "Series A Preferred Stock"), and the authorized number of
shares constituting such series shall be Five Hundred Fifty Thousand (550,000).
The Series A Preferred Stock shall be issuable in whole shares only.
(2) Dividends.
(i) Holders of shares of Series A Preferred
Stock shall be entitled to receive, when, as and if declared by the Board of
Directors, or a duly authorized committee thereof, out of funds of the
Corporation legally available for payment of dividends, cumulative cash
dividends at the rate of 10.0% per annum per share on the initial liquidation
preference of $10.00 per share (equivalent to $1.00 per annum per share of
Series A Preferred Stock). Dividends on the Series A Preferred Stock shall be
payable semi-annually in arrears to holders of record as they appear in the
records of the Corporation at the close of business on March 31 and September 30
of each year, and shall be paid on May 1 and November 1 of each year thereafter
(each a "Dividend Payment Date"), commencing on May 1, 2000. If any date on
which dividends would otherwise be payable is a Saturday, Sunday or a day on
which banking institutions in the States of Delaware or Texas are authorized or
obligated by law or executive order to close, then the dividends otherwise
payable on such date shall instead be payable on the next succeeding business
day.
(ii) Dividends on shares of the Series A
Preferred Stock shall be fully cumulative and shall accumulate (whether or not
earned or declared and whether or not the Corporation has funds legally
available for the payment of dividends), on a daily basis, without interest,
from the previous Dividend Payment Date. Accumulated and unpaid dividends shall
not bear interest.
(iii) Any dividend payments made with
respect to the Series A Preferred Stock shall be made in cash; provided,
however, that the Corporation may, at the election of the Board of Directors,
subject to and in accordance with the provisions herein, duly authorize and
issue fully paid and nonassessable shares of its Common Stock, $0.001 par value
per share ("Dividend Shares") at the deemed value of $1.50 per Dividend Share,
in lieu of the payment in cash of all or any portion of the dividend otherwise
payable on any Dividend Payment Date. If the Corporation elects to issue
Dividend Shares in lieu of the payment in cash of all or any portion of the
dividend otherwise payable on any Dividend Payment Date, (1) the Corporation
shall give notice of such election to the holders of shares of Series A
Preferred Stock not less than 7 nor more than 60 days prior to such Dividend
Payment Date; (2) the Corporation shall execute, issue and deliver on such
Dividend Payment Date to each holder of record on the related record date, a
stock certificate dated such Dividend Payment Date representing such number of
Dividend Shares as equals the quotient of such portion of the dividend payable
to such holder and $1.50; and (3) the due issuance of such Dividend Shares shall
constitute full payment of such portion of dividend; provided, however, that, in
lieu of the issuance of any fractional Dividend Shares, the Corporation shall,
in its sole discretion, either (x) pay, on such Dividend Payment Date, to each
holder of shares of Series A Preferred Stock who would otherwise be entitled to
a fractional Dividend Share as a dividend on the aggregate number of
C-3
<PAGE> 34
shares of Series A Preferred Stock held by such holder on the related record
date, an amount in cash equal to the product of such fraction and $1.50 or (y)
round up such fractional Dividend and issue one additional full Dividend Share
to such holder.
(iv) No dividends may be declared or paid or
set apart for payment on any stock of the Corporation ranking on a parity with
the Series A Preferred Stock with respect to the payment of dividends unless
there shall also be or have been declared and paid or set apart for payment on
the Series A Preferred Stock dividends for all dividend payment periods of the
Series A Preferred Stock ending on or before the dividend payment date of such
parity stock, ratably in proportion to the respective amounts of dividends (x)
accumulated and unpaid or payable on such parity stock, on the one hand, and (y)
accumulated and unpaid through the dividend payment period or periods of the
Series A Preferred Stock next preceding such dividend payment date, on the other
hand.
(v) Except as set forth in the preceding
paragraph, unless full cumulative dividends on the Series A Preferred Stock have
been paid through the most recently completed semi-annual dividend period for
the Series A Preferred Stock, no dividends (other than in Common Stock of the
Corporation) may be paid or declared and set apart for payment or other
distribution made upon the Common Stock or on any other stock of the Corporation
ranking junior to or on a parity with the Series A Preferred Stock as to
dividends, nor may any Common Stock or any other stock of the Corporation
ranking junior to or on a parity with the Series A Preferred Stock as to
dividends be redeemed, purchased or otherwise acquired for any consideration (or
any payment be made to or available for a sinking fund for the redemption of any
shares of such stock; provided, however, that any moneys previously deposited in
any sinking fund with respect to any such stock in compliance with the
provisions of such sinking fund may thereafter be applied to the purchase or
redemption of such stock in accordance with the terms of such sinking fund,
regardless of whether at the time of such application full cumulative dividends
upon shares of the Series A Preferred Stock outstanding to the most recent
Dividend Payment Date shall have been paid or declared and set apart for
payment) by the Corporation; provided that any such junior or parity stock or
Common Stock may be converted into or exchanged for stock of the Corporation
ranking junior to the Series A Preferred Stock as to dividends.
(3) Liquidation.
(i) On any liquidation, dissolution or
winding up of the Corporation, the shares of Series A Preferred Stock shall be
entitled to receive payment of $10.00 per share, and shall be entitled to
receive payment of all dividends (whether or not earned or declared) accrued and
accumulated and unpaid on the shares of Series A Preferred Stock to the date of
payment, and no more. Such payment shall be made before any distribution of
assets is made to holders of shares of Common Stock or any other class or series
of stock of the Corporation that ranks junior to the Series A Preferred Stock as
to rights to distributions upon liquidation, dissolution or winding up. The
holders of the Series A Preferred Stock shall not be entitled to receive the
preferential amounts until the liquidation preference of any other stock of the
Corporation ranking senior to the Series A Preferred Stock as to rights to
distributions upon liquidation, dissolution or winding up shall have been paid
(or a sum set aside therefor sufficient to provide for payment) in full.
C-4
<PAGE> 35
(ii) On any liquidation, dissolution or
winding up of the Corporation, no amounts may be paid or set apart for payment
on any stock of the Corporation ranking on a parity with the Series A Preferred
Stock as to rights to distributions upon liquidation, dissolution or winding up
unless there shall also be or have been set aside for payment on the Series A
Preferred Stock an amount equal to all dividends (whether or not earned or
declared) accrued and accumulated and unpaid on the shares of Series A Preferred
Stock to the date of payment, ratably in proportion to the respective amounts
(x) to be paid or set apart for payment on such parity stock, on the one hand,
and (y) to be paid or set apart for payment on the Series A Preferred Stock, on
the other hand.
(iii) If, upon any liquidation, dissolution
or winding up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of shares of Series A Preferred Stock
and any stock ranking on a parity with the Series A Preferred Stock as to rights
to distributions on liquidation, dissolution or winding up of the Corporation
are insufficient to pay in full the payments to which such stock would be
entitled, then such assets, or the proceeds thereof, shall be distributable
among such holders ratably in accordance with the respective amounts that would
be payable on such shares if all amounts payable thereon were paid in full.
(iv) For the purposes hereof, neither a
consolidation nor a merger of the Corporation with or into any other entity, nor
a merger of any one or more other entities with or into the Corporation, nor a
sale, lease, exchange or transfer of all or substantially all of the
Corporation's assets shall be considered a liquidation, dissolution or winding
up of the Corporation.
(4) Conversion.
(i) The shares of Series A Preferred Stock
shall be convertible into shares of Common Stock at a conversion ratio of
5.33333 shares of Common Stock for each share of Series A Preferred Stock.
Fractional shares of Common Stock will not be issued and in lieu thereof, the
Corporation will pay to each holder of Series A Preferred Stock who would
otherwise be entitled to a fractional share of Common Stock upon such
conversion, an amount in cash equal to the product of such fraction and $1.875.
(ii) The Series A Preferred Stock shall
automatically be converted after any thirty (30) day period in which the average
Current Market Price of the Common Stock exceeds $5.625 per share. For purposes
hereof, the "Current Market Price" shall mean for each trading day, if the
Common Stock is traded on a securities exchange or the Nasdaq National Market,
the closing price of the Common Stock on such exchange or market, or if not
traded on a securities exchange, or if a closing price otherwise is not
available, then the average of the bid and ask prices. Fractional shares of
Common Stock will not be issued and in lieu thereof, the Corporation will pay to
each holder of Series A Preferred Stock who would otherwise be entitled to a
fractional share of Common Stock upon such conversion, an amount in cash equal
to the product of such fraction and $1.875.
(iii) In the event of a conversion, the
outstanding shares of Series A Preferred Stock shall be converted automatically
without any further action by the holders of such shares and whether or not the
certificates representing such shares are surrendered to the Corporation
C-5
<PAGE> 36
or its transfer agent; and provided that the Corporation shall not be obligated
to issue certificates evidencing the shares of Common Stock issuable upon such
automatic conversion unless and until the certificates evidencing such shares of
Series A Preferred Stock are either delivered to the Corporation or its transfer
agent as provided above, or the holder notifies the Corporation or its transfer
agent that such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation from any
loss incurred by it in connection with such certificates. The Corporation shall
as soon as practicable after such delivery, or after such agreement and
indemnification, issue and deliver at such office to such holder of Series A
Preferred Stock, a certificate or certificates for the number of shares of
Common Stock to which it, he or she shall be entitled as aforesaid. Such
conversion shall be deemed to have been made simultaneously upon the occurrence
of the event leading to such automatic conversion, and the person or persons
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such shares
of Common Stock on such date.
(iv) In case any shares of Series A
Preferred Stock shall be converted, the shares so converted shall (upon
compliance with any applicable provisions of the laws of the State of Delaware)
have the status of authorized and unissued shares of the class of Preferred
Stock undesignated as to series and may be redesignated and reissued as part of
any series of Preferred Stock.
(v) The Corporation will not avoid or seek
to avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section (4) and in the
taking of all action as may be necessary or appropriate in order to protect the
conversion rights of the holders of Series A Preferred Stock against impairment.
(vi) The Corporation shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of the shares of
Series A Preferred Stock, such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all outstanding
shares of Series A Preferred Stock. If at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of Series A Preferred Stock, the Corporation will
take such corporate action as may, in the opinion of its counsel, be necessary
to increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
(5) Voting Rights.
(i) The Series A Preferred Stock generally
will not have voting rights, except as set forth below and to the extent
required by law.
(ii) So long as any share of Series A
Preferred Stock are outstanding, the approval of a majority of the outstanding
shares of Series A Preferred Stock and any parity stock similarly affected,
voting together as a single class, is required in order to (i) amend the
Certificate of Incorporation to affect materially and adversely the rights,
preferences or voting power
C-6
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of the holders of the Series A Preferred Stock and such parity stock or (ii)
amend the Certificate of Incorporation to authorize, reclassify, create or
increase the authorized amount of any class of stock having rights senior to the
Series A Preferred Stock and such parity stock with respect to the payment of
dividends or amounts upon the liquidation, dissolution or winding up or
conversion rights of the Corporation. Notwithstanding the foregoing, the
Corporation may increase the authorized number of shares of Preferred Stock and
may create additional classes of parity stock and junior stock, increase the
authorized number of shares of parity stock and junior stock and issue
additional series of parity stock and junior stock, all without the consent of
any holder of Series A Preferred Stock.
(6) Redemption.
(i) The shares of Series A Preferred Stock
shall not be redeemable prior to September 30, 2004. On or after such date the
Corporation, at its option, may redeem the shares of Series A Preferred Stock,
in whole or in part, out of funds legally available therefor, at any time or
from time to time, subject to the notice provisions and provisions for partial
redemption described below, beginning on September 30, 2004 at $10.00 per share
plus, in each case, an amount equal to all dividends (whether or not earned or
declared) accrued and accumulated and unpaid to the date fixed for redemption,
without interest (the "Redemption Price").
(ii) If full cumulative dividends on the
Series A Preferred Stock have not been paid or set apart for payment with
respect to all prior dividend periods, the Series A Preferred Stock may not be
redeemed in part and the Corporation may not purchase or acquire any shares of
the Series A Preferred Stock otherwise than pursuant to a purchase or exchange
offer made on the same terms to all holders of the Series A Preferred Stock. If
fewer than all the outstanding shares of Series A Preferred Stock are to be
redeemed, the number of shares to be redeemed shall be determined by the Board
of Directors and the shares to be redeemed shall be selected by lot or pro rata
or by any other means determined by the Board of Directors in its sole
discretion to be equitable.
(iii) If the Corporation redeems shares of
Series A Preferred Stock, written notice of the redemption shall be given by
first class mail, postage prepaid, mailed not less than 30 days nor more than 60
days prior to the redemption date, to each holder of record of the shares to be
redeemed at the holder's address as the same appears on the stock books of the
Corporation and notice shall also be given by publication during the same period
prior to the redemption date in a newspaper of national circulation; provided,
however, that no failure to give such notice nor any defect therein shall affect
the validity of the proceedings for the redemption of any shares of Series A
Preferred Stock to be redeemed except as to a holder to whom the Corporation has
failed to mail the notice or except as to a holder whose notice was defective.
Each notice shall state: (i) the redemption date; (ii) the number of shares of
Series A Preferred Stock to be redeemed and, if less than all the shares held by
such holder are to be redeemed from the holder, the number of shares to be
redeemed from the holder; (iii) the Redemption Price; (iv) the place or places
where certificates for shares are to be surrendered for payment of the
Redemption Price; and (v) that dividends on the shares to be redeemed will cease
to accrue on such redemption date (unless the Corporation shall default in
providing funds for the payment of the Redemption Price of the shares called for
redemption at the time and place specified in such notice).
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(iv) If a notice of redemption has been
given and if, on or before the date fixed for redemption, the funds necessary
for redemption have been set aside by the Corporation, separate and apart from
its other funds, in trust for the pro rata benefit of the holders of the shares
of Series A Preferred Stock called for redemption, then, notwithstanding that
any certificates for such shares have not been surrendered for cancellation, on
the redemption date dividends shall cease to accrue on the shares to be
redeemed, and at the close of business on the redemption date the holders of
those shares shall cease to be stockholders with respect to those shares and
shall have no interest in or claims against the Corporation by virtue thereof
and shall have no voting or other rights with respect to those shares, except
the right to receive the moneys payable upon surrender (and endorsement, if
required by the Corporation) of their certificates, and the shares evidenced
thereby shall no longer be outstanding. The Corporation's obligation to provide
funds for the payment of the Redemption Price (including any accumulated and
unpaid dividends to the redemption date) of the shares called for redemption
shall be deemed fulfilled if, on or before a redemption date, the Corporation
shall deposit, with a bank or trust company, or an affiliate of a bank or trust
company, having a capital and surplus of at least $50,000,000, such funds
sufficient to pay the Redemption Price (including any accumulated and unpaid
dividends to the redemption date) of the shares called for redemption, in trust
for the account of the holders of the shares to be redeemed (and so as to be and
continue to be available therefor), with irrevocable instructions and authority
to such bank or trust company that such funds be delivered upon redemption of
the shares of Series A Preferred Stock called for redemption.
(v) Subject to applicable escheat laws, any
moneys so set aside by the Corporation and unclaimed at the end of two years
from the redemption date shall revert to the general funds of the Corporation,
after which the holders of the shares called for redemption shall look only to
the general funds of the Corporation for the payment of the amounts payable upon
redemption. Any interest accrued on funds deposited shall be paid to the
Corporation from time to time.
(vi) Shares of Series A Preferred Stock that
have been issued and reacquired in any manner, including shares purchased or
redeemed, shall (upon compliance with any applicable provisions of the laws of
the State of Delaware) have the status of authorized and unissued shares of the
class of Preferred Stock undesignated as to series and may be redesignated and
reissued as part of any series of the Preferred Stock.
(7) Rank. Any stock of any class or classes or series
of the Corporation shall be deemed to rank:
(i) prior to shares of the Series A
Preferred Stock, either as to dividends or upon liquidation, dissolution or
winding up, or both, if the holders of stock of the class or classes or series
are entitled by the terms thereof to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in preference or priority to the holders of shares of the Series A Preferred
Stock;
(ii) on a parity with shares of the Series A
Preferred Stock, either as to dividends or upon liquidation, dissolution or
winding up, or both, whether or not the dividend rates, dividend payment dates,
or redemption or liquidation prices per share thereof are different from
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those of the Series A Preferred Stock, if the holders of stock of the class or
classes or series are entitled by the terms thereof to the receipt of dividends
or of amounts distributed upon liquidation, dissolution or winding up, as the
case may be, in proportion to their respective dividend rates or liquidation
prices, without preference or priority of one over the other as between the
holders of the stock and the holders of shares of Series A Preferred Stock; and
(iii) junior to shares of the Series A
Preferred Stock, either as to dividends or upon liquidation, dissolution or
winding up, or both, if the class or classes or series is Common Stock or if the
holders of the Series A Preferred Stock are entitled to the receipt of dividends
or of amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders of stock of such class or
classes or series.
(8) Headings. The headings of the various
subdivisions hereof are for convenience of reference only and shall not affect
the interpretation of any of the provisions hereof.
(9) Severability of Provisions. If any powers,
preferences and relative, participating, optional and other special rights of
the Series A Preferred Stock and qualifications, limitations and restrictions
thereof set forth in this certificate are invalid, unlawful or incapable of
being enforced by reason of any rule of law or public policy, all other powers,
preferences and relative, participating, optional and other special rights of
Series A Preferred Stock and qualifications, limitations and restrictions
thereof set forth herein which can be given effect without the invalid, unlawful
or unenforceable powers, preferences and relative, participating, optional and
other special rights of Series A Preferred Stock and qualifications, limitations
and restrictions thereof shall, nevertheless, remain in full force and effect,
and no powers, preferences and relative, participating, optional or other
special rights of the Series A Preferred Stock and qualifications, limitations
and restrictions thereof set forth herein shall be deemed dependent upon any
other such powers, preferences and relative, participating, optional or other
special rights of Series A Preferred Stock and qualifications, limitations and
restrictions thereof unless so expressed herein.
(d) The Board of Directors is hereby authorized and empowered
to authorize the issuance by the Corporation from time to time of shares of any
class of capital stock of the Corporation, whether now or hereafter authorized,
or securities convertible into shares of capital stock of any class or classes,
whether now or hereafter authorized, for such consideration and on such terms
and conditions as may be deemed advisable by the Board of Directors and without
any action by the stockholders.
5. (a) The number of directors of the Corporation shall be fixed
from time to time in the manner provided by the Bylaws of the Corporation;
provided, that at any time there is only one stockholder of the Corporation, the
number of directors may be not less than one (1).
(b) The number of directors constituting the initial Board of
Directors of the Corporation is five (5), and the names and addresses of the
persons who are to serve as directors
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<PAGE> 40
until the first annual meeting of the stockholders or until their successors are
elected and qualified are:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
K. Bruce Jones 88 S. Bishop Road
Santa Rosa Beach, FL 32459
Anthony J. Maselli 109 North Road
Harwinton, CT 06791
Thomas G. Murray 3523 Cooper Creek
Denton, TX 76208
Thomas G. Plaskett 13355 Noel Road, Suite 1200
Dallas, TX 75240
Charles M. Rampacek 13355 Noel Road, Suite 1200
Dallas, TX 75240
</TABLE>
(c) Election of directors need not be by written ballot unless
the Bylaws shall so provide. No holders of Common Stock of the Corporation shall
have any rights to cumulate votes in the election of directors.
6. In furtherance of, and not in limitation of, the powers
conferred by statute, the Board of Directors is expressly authorized to adopt,
amend or repeal the Bylaws of the Corporation or adopt new Bylaws by a majority
vote of the directors then in office, without any action on the part of the
stockholders; provided, however, that no such adoption, amendment, or repeal
shall be valid with respect to Bylaw provisions that have been adopted, amended,
or repealed by the stockholders; and further provided, that Bylaws adopted or
amended by the Board of Directors and any powers thereby conferred may be
amended, altered, or repealed by the stockholders.
7. The Corporation is to have perpetual existence.
8. (a) A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for such liability as is expressly not
subject to limitation under the Delaware General Corporation Law, as the same
exists or may hereafter be amended to further limit or eliminate such liability.
(b) The Corporation shall, to the fullest extent permitted by
law, indemnify any and all officers and directors of the Corporation, and may,
to the fullest extent permitted by law or to such lesser extent as is determined
in the discretion of the Board of Directors, indemnify and advance expenses to
any and all other persons whom it shall have power to indemnify, from and
against all expenses, liabilities or other matters arising out of their status
as such or their acts, omissions or services rendered in such capacities.
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<PAGE> 41
(c) The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability.
9. The Corporation shall have the right, subject to any express
provisions or restrictions contained in the Certificate of Incorporation or
Bylaws of the Corporation, from time to time, to amend this Certificate of
Incorporation or any provision thereof in any manner now or hereafter provided
by law, and all rights and powers of any kind conferred upon a director or
stockholder of the Corporation by the Certificate of Incorporation or any
amendment thereof are conferred subject to such right.
10. The name and mailing address of the incorporator of the
Corporation is Bruce A. Hall, Probex Corp., 13355 Noel Road, Suite 1200, Dallas,
Texas 75240.
THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, does make this Certificate, hereby acknowledging and
declaring and certifying that the foregoing Certificate of Incorporation is his
act and deed and the facts herein stated are true, and accordingly has hereunto
set his hand this ___ day of September, 2000.
-----------------------------------------
Bruce A. Hall, Authorized Person
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<PAGE> 42
[PROBEX LOGO]
PROBEX CORP.
<PAGE> 43
--------------------------------------------------------------------------------
PROBEX CORP.
PROXY 13355 NOEL ROAD, SUITE 1200, DALLAS, TEXAS 75240
SPECIAL MEETING OF STOCKHOLDERS
AUGUST 31, 2000
--------------------------------------------------------------------------------
The undersigned hereby appoints Charles M. Rampacek and Bruce A. Hall, or
either of them, with full power of substitution in each, proxies (and if the
undersigned is a proxy, substitute proxies) to vote all common stock of the
undersigned in Probex Corp. at the Special Meeting of Stockholders to be held at
13355 Noel Road, Suite 1200, Dallas, Texas 75240, at 9:00 a.m., local time, on
August 31, 2000, and at any adjournments or postponements thereof, as specified
below:
1. PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 50,000,000 SHARES
TO 100,000,000 SHARES.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. PROPOSAL TO APPROVE THE CHANGE IN THE STATE OF INCORPORATION OF THE
COMPANY FROM COLORADO TO DELAWARE.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO AUTHORIZE THE COMPANY TO OFFER AND SELL UP TO TEN MILLION
SHARES OF THE COMPANY'S COMMON STOCK.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the proxies (and if the undersigned is a proxy,
any substitute proxies) are authorized to vote upon such other business
as may properly come before the Special Meeting.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR the proposal to amend the Company's Articles of Incorporation to
increase the number of authorized shares of common stock from 50,000,000 shares
to 100,000,000 shares, FOR the proposal to approve the change in the state of
incorporation of the Company from Colorado to Delaware, and FOR the proposal to
authorize the Company to offer and sell up to ten million shares of the
Company's common stock.
Please sign name exactly as it appears on stock certificate. When shares held by
joint tenants all should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
---------------------------------- --------------------------------------
Printed Name Signature
Dated: , 2000 --------------------------------------
--------------------- Title
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. IF NO SPECIFICATION IS MADE,
THIS PROXY WILL BE VOTED FOR THE PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM
50,000,000 SHARES TO 100,000,000 SHARES, FOR THE PROPOSAL TO APPROVE THE CHANGE
IN THE STATE OF INCORPORATION OF THE COMPANY FROM COLORADO TO DELAWARE AND FOR
THE PROPOSAL TO AUTHORIZE THE COMPANY TO OFFER AND SELL UP TO TEN MILLION SHARES
OF THE COMPANY'S COMMON STOCK.
