Exhibit 99.2
AMENDMENT NO. 2
TO
LOAN AGREEMENT
DATED OCTOBER 25, 1996
BY AND BETWEEN NDE ENVIRONMENTAL CORPORATION,
TANKNOLOGY/NDE CORPORATION, USTMAN INDUSTRIES, INC.,
PROECO, INC. AND TANKNOLOGY CANADA (1988) INC.
AND
BANK ONE, TEXAS, N.A.
This Amendment No. 2 to Loan Agreement dated as of the 25th day of October,
1996, (this "Second Amendment") by and among NDE ENVIRONMENTAL CORPORATION, a
Delaware corporation, TANKNOLOGY/ NDE CORPORATION, a Delaware corporation,
USTMAN INDUSTRIES, INC., a Delaware corporation, PROECO, INC., a Delaware
corporation, and TANKNOLOGY CANADA (1988) INC., a Canadian federal corporation
(collectively, "Borrower") and BANK ONE, TEXAS, N.A., a national banking
association (the "Bank") is entered into this 20th day of May, 1997.
W I T N E S S E T H:
Borrower has requested that Bank (i) release certain Collateral required in
connection with the sale of intellectual property rights associated with the
Canadian operations of Borrower pursuant to that certain Asset Purchase
Agreement dated as of February 19, 1997, by and between Precision Tank Testing
Limited, Tanknology Canada (1988) Inc., NDE Environmental Corporation and
Tanknology/NDE Corporation; (ii) release Collateral owned by USTMAN Industries,
Inc.; (iii) release all of the issued and outstanding shares of the common
capital stock of USTMAN Industries, Inc. owned by NDE Environmental Corporation
(being 1,000 shares of common stock, par value $0.01 per share, evidenced by
Certificate No. 1, which was reissued as Certificate No. 3); and (iv) waive
Borrower's non-compliance with certain covenants therein; and Bank is willing to
do so in accordance with, and subject to, the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the promises herein contained, and each
intending to be legally bound hereby, the parties agree as follows:
I. Amendments to Loan Agreement.
Release of USTMAN Industries, Inc. USTMAN Industries, Inc. is hereby
released from liability and its Obligations under the Loan Agreement, the
Notes and the Collateral Documents and shall no longer have any right under
any of the foregoing.
Article I, DEFINITIONS, is amended by adding the following
definitions:
"Assignment of Note" shall mean that certain Assignment of Note
of even date herewith made by and between Borrower and Bank pledging
the Xxxxxx Note in favor of Bank.
"Canadian Sale" shall mean the sale of intellectual and other
property rights associated with the Canadian operations of Borrower to
Precision Tank Testing Limited pursuant to that certain Asset Purchase
Agreement dated as of February 19, 1997, by and between Precision Tank
Testing Limited, Tanknology Canada (1988) Inc., NDE Environmental
Corporation and Tanknology/NDE Corporation.
"Certificate of Deposit" shall mean Certificate of Deposit No.
1698004221 maintained with Bank in the amount of $3,000,000 and being
more particularly described in the Pledge of Certificate of Deposit.
"Consent and Agreement" shall mean that certain Consent and
Agreement of even date herewith made by and between Xxxxxx General
Corporation and Bank whereby Xxxxxx General Corporation, a California
corporation, consents to the assignment of the Xxxxxx Note to Bank.
"Excess Sales Proceeds" shall mean that portion of the sales
proceeds from the USTMAN Sale in excess of (i) the $3,000,000 utilized
for the purchase of the Certificate of Deposit and (ii) the expenses
paid in connection with the USTMAN Sale.
"Pledge of Certificate of Deposit" shall mean that certain Pledge
of Certificate of Deposit of even date herewith made by and between
Borrower and Bank pledging Certificate of Deposit No. 1698004221 in
the amount of $3,000,000 and being maintained with Bank.
"Second Amendment" means Amendment No. 2 to this Loan Agreement,
executed by Borrower and Bank on May 20, 1997.
"Term Loan Repayment Reserve" shall have the meaning attributed
to that term in Section 2.01(C).
"USTMAN Sale" means the sale of all of the outstanding shares of
common stock of USTMAN, Inc., a wholly owned subsidiary of NDE
Environmental Corporation, to Xxxxxx General Corporation pursuant to
that certain Stock Purchase Agreement dated as of May 20, 1997, by and
between Xxxxxx General Corporation as Buyer and NDE Environmental
Corporation as Seller.
"Xxxxxx Note" shall mean that certain promissory note in the
original amount of $500,000 of even date herewith and payable to the
order of NDE Environmental Corporation (together with all extensions,
renewals and modifications thereof and/or substitutions therefor).
Article I, DEFINITIONS, is further amended by deleting "USTMAN" from
the definition of "Pledged Stock".
Section 2.01, Revolving Loan, is amended by adding the following
paragraph at the end of such Section:
(C) Notwithstanding anything contained herein to the contrary,
effective as of the date of the Second Amendment, $500,000 of the
Revolving Commitment shall be reserved for the funding of the Term
Loan Repayment Reserve and will be otherwise unavailable for advances
to Borrower. The Term Loan Repayment Reserve shall remain in force
through and until April 30, 1998, being thirty (30) days after
Borrower is obligated to deliver to Bank annual audited Financial
Statements of Borrower for fiscal year 1997 pursuant to Section 5.04,
below, and the accompanying Compliance Certificate (the "Fiscal Year
1997 Compliance Certificate") delivered pursuant to Section 5.05,
below. In the event that Borrower is in default of the Loan Agreement
based on the Fiscal Year 1997 Compliance Certificate, Bank shall have
the right to fund the Term Loan Repayment Reserve by advancing
$500,000 under the Revolving Note and using to reduce the Term Loan by
a like amount. In the event that Borrower is in compliance with the
Loan Agreement based on the Fiscal Year 1997 Compliance Certificate,
the Term Loan Repayment Reserve shall expire and Borrower shall have
full access to the Revolving Commitment in accordance with the Loan
Agreement.
Schedule 1.01(a), Collateral, is hereby amended by deleting "USTMAN
Industries, Inc." from line (a) under NDE Environmental Corporation and by
adding to the end of line (b) the following: "and Pledged Certificates of
Deposit".
Schedule 1.01(a), Collateral, is hereby further amended by deleting
the parenthetical in line (g) under Tanknology/NDE Corporation so that it
reads as follows: "(g) Patents".
Schedule 1.01(a), Collateral, is hereby further amended by deleting
the following from Schedule 1.01(a):
USTMAN Industries, Inc.
(a) Accounts Receivable
(b) Bank Accounts
(c) Inventory
(d) Furniture and Office Equipment
(e) Proprietary Software
(f) Licensing Agreements
II. Certain Waivers. Bank hereby waives non-compliance by the Borrower with
the covenants set forth in Sections 6.03, 6.04 and 8.13 of the Loan Agreement,
but only to the extent that such non-compliance was the result of the Borrower's
performance of its contractual obligations in the Canadian Sale and/or the
USTMAN Sale. Bank further waives non-compliance by the Borrower with the
covenants set forth in Sections 6.02 of the Loan Agreement, insofar and only
insofar as such covenants would apply to the set-off provisions of the Xxxxxx
Note. Notwithstanding anything that may be contained herein to the contrary, no
waiver or any other provision contained herein shall serve to subordinate any of
Borrower's Obligations to Bank to any of Borrower's Obligations to any third
party.
III. Release of Collateral Pursuant to the Second Amendment. As a condition
to the release of Collateral made by Bank pursuant to this Second Amendment,
that at or before closing of the USTMAN Sale Borrower has satisfied the
following conditions:
(a) That the Canadian Sale was completed on or before February
28, 1997.
(b) That a minimum of $500,000 of the sales proceeds from the
Canadian Sale be applied against the outstanding balance of the
Revolving Loan to the extent that such outstanding balance is equal to
or exceeds $500,000.
(c) That $3,000,000 of the sales proceeds from the sale of USTMAN
is wired directly to Bank for the purchase of the Certificate of
Deposit.
(d) That the lesser of the Excess Sales Proceeds or the
outstanding balance of the Revolving Note is wired directly to Bank
for the payment against the balance of the Revolving Note. Any Excess
Sales Proceeds in excess of the balance of the Revolving Note shall be
paid to NDE Environmental Corporation.
(e) That NDE Environmental Corporation endorse the Xxxxxx Note:
"PAY TO THE ORDER OF BANK ONE, TEXAS, N.A." and deliver the Xxxxxx
Note to Bank.
(f) That NDE Environmental Corporation deliver the executed
Assignment of Promissory Note to Bank.
(g) That Xxxxxx General Corporation has executed and delivered to
Bank the Consent and Agreement.
(h) That evidence satisfactory to Bank of all requisite corporate
authorizations of the transactions contemplated hereby have been
delivered by Borrower or Xxxxxx General Corporation, as applicable.
(i) That Borrower has paid both (x) all outstanding fees and
expenses previously billed by Bank's legal counsel and (y) the
$3,000.00 advance against fees and expenses anticipated to be incurred
in the preparation of this Second Amendment (and other Loan Documents)
requested by Bank's legal counsel.
IV. Reaffirmation of Representations and Warranties. To induce Bank to
enter into this Second Amendment, Borrower hereby reaffirms, as of the date
hereof, its representations and warranties contained in Article IV of the Loan
Agreement and in all other documents executed pursuant thereto, and additionally
represents and warrants as follows:
A. The execution and delivery of this Second Amendment and the
performance by Borrower of its obligations under this Second Amendment
are within the Borrower's power, have received all necessary
governmental approval (if any shall be required), and do not and will
not contravene or conflict with any provision of law or of any
agreement binding upon the Borrower.
B. The Loan Agreement as amended by this Second Amendment
represents the legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms
subject as to enforcement only to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally.
C. No Event of Default or Unmatured Event of Default has occurred
and is continuing as of the date hereof.
V. Defined Terms. Except as amended hereby, terms used herein that are
defined in the Loan Agreement shall have the same meanings herein.
VI. Reaffirmation of Loan Agreement. This Second Amendment shall be deemed
to be an amendment to the Loan Agreement, and the Loan Agreement, as amended
hereby, is hereby ratified, approved and confirmed in each and every respect.
All references to the Loan Agreement herein and in any other document,
instrument, agreement or writing shall hereafter be deemed to refer to the Loan
Agreement as amended hereby.
VII. Entire Agreement. The Loan Agreement, as hereby amended, embodies the
entire agreement between Borrower and Bank, and supersedes all prior proposals,
agreements and understandings relating to the subject matter hereof. Borrower
certifies that it is relying on no representation, warranty, covenant or
agreement except for those set forth in the Loan Agreement as hereby amended and
the other documents previously executed or executed of even date herewith.
VIII. Governing Law. THIS SECOND AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. This Second Amendment has been entered
into in Xxxxxx County, Texas, and it shall be performable for all purposes in
Xxxxxx County, Texas. Courts within the State of Texas shall have jurisdiction
over any and all disputes between Borrower and Bank, whether in law or equity,
including, but not limited to, any and all disputes arising out of or relating
to this Second Amendment or any other Loan Document; and venue in any such
dispute whether in federal or state court shall be laid in Xxxxxx County, Texas.
IX. Severability. Whenever possible each provision of this Second Amendment
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Second Amendment shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Second Amendment.
X. Execution in Counterparts. This Second Amendment may be executed in any
number of counterparts and by the different parties on separate counterparts,
and each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same agreement.
XI. Section Captions. Section captions used in this Second Amendment are
for convenience of reference only, and shall not affect the construction of this
Second Amendment.
XII. Successors and Assigns. This Second Amendment shall be binding upon
the Borrower and Bank and their respective successors and assigns, and shall
inure to the benefit of the Borrower and Bank, and the respective successors and
assigns of Bank.
XIII. Non-Application of Chapter 15 of Texas Credit Codes. The provisions
of Chapter 15 of the Texas Credit Code (Vernon's Texas Civil Statutes, Article
5069-15) are specifically declared by the parties hereto not to be applicable to
the Loan Agreement as hereby amended or any of the other Loan Documents or to
the transactions contemplated hereby.
XIV. Notice. THIS SECOND AMENDMENT TOGETHER WITH THE LOAN AGREEMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
be duly executed as of the day and year first above written.
BORROWER:
NDE ENVIRONMENTAL CORPORATION
By: /S/ XXX XXXXX XXXXXXX
________________________________
Xxx Xxxxx Xxxxxxx
Chairman of the Board
TANKNOLOGY/NDE CORPORATION
By: /S/ XXX XXXXX XXXXXXX
________________________________
Xxx Xxxxx Xxxxxxx
Chairman of the Board
USTMAN INDUSTRIES, INC.
By: /S/ XXX XXXXX XXXXXXX
________________________________
Xxx Xxxxx Xxxxxxx
Chairman of the Board
PROECO, INC.
By: /S/ XXX XXXXX XXXXXXX
________________________________
Xxx Xxxxx Xxxxxxx
Chairman of the Board
TANKNOLOGY CANADA (1988) INC.
By: /S/ XXX XXXXX XXXXXXX
________________________________
Xxx Xxxxx Xxxxxxx
President
BANK:
BANK ONE, TEXAS, N.A.
By: /S/ XXXXXXX XXXXXXXXX-XXXXX
________________________________
Xxxxxxx Xxxxxxxxx-Xxxxx
Vice President
