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EXHIBIT 10.7
_______________________________________________________________________________
NDE ENVIRONMENTAL CORPORATION
PREEMPTIVE RIGHTS AGREEMENT
_______________________________________________________________________________
DATED AS OF OCTOBER 25, 1996
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. RIGHTS OFFERING . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3. PREEMPTIVE RIGHTS . . . . . . . . . . . . . . . . . . . . 3
3.1 TERMINATION OF PREEMPTIVE RIGHTS. . . . . . . . . 4
SECTION 4. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . 5
4.1 RULES OF CONSTRUCTION . . . . . . . . . . . . . . 5
4.2 NOTICES. . . . . . . . . . . . . . . . . . . . 5
4.3 SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . 5
4.4 SEVERABILITY. . . . . . . . . . . . . . . . . . . 5
4.5 AMENDMENTS. . . . . . . . . . . . . . . . . . . . 5
4.6 GOVERNING LAW . . . . . . . . . . . . . . . . . . 5
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PREEMPTIVE RIGHTS AGREEMENT
This is the PREEMPTIVE RIGHTS AGREEMENT dated as of October 25, 1996
("Agreement") by and between NDE ENVIRONMENTAL CORPORATION ("NDE"), a Delaware
corporation and BANC ONE CAPITAL PARTNERS, L.P. ("BOCP"), an Ohio limited
partnership, provided for in and entered into pursuant to the NOTE AND WARRANT
PURCHASE AGREEMENT , as amended, restated, supplemented or otherwise modified
from time to time ("Agreement") by and among BOCP, as purchaser, and NDE,
TANKNOLOGY/NDE CORPORATION, USTMAN INDUSTRIES, INC., PROECO, INC., and
TANKNOLOGY CANADA (1988), INC.
NDE, together with its successors and assigns, is referred to as the
"Company" and BOCP, together with its successors and assigns, is referred to as
the "Holder." The Company and the Holder are referred to collectively as the
"Parties" and individually as a "Party."
THIS AGREEMENT IS ONE OF THE "RELATED DOCUMENTS" REFERRED TO IN THE
PURCHASE AGREEMENT.
In consideration of their mutual promises set forth in this Agreement
and the Purchase Agreement, the Parties hereby agree as follows.
SECTION 1. DEFINITIONS
All capitalized terms not otherwise defined in this Agreement shall
have the definitions set forth in the Purchase Agreement. The terms defined in
the Purchase Agreement that are used with such definitions in this Agreement
include:
"Board of Directors"
"Convertible Securities"
"Exercise Price"
"Involuntary Insolvency Default"
"Notice"
"Person"
"Qualified Public Offering"
"Voluntary Insolvency Default"
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SECTION 2. RIGHTS OFFERING
During the term of this Agreement and prior to the exercise of the
Warrants, the Holder shall have the right to participate in any Rights Offering
(as defined herein) upon the terms and subject to the conditions set forth in
this section.
(a) Definitions. As used in this Agreement:
(i) the term "Rights Offering" means any offering of Common
Shares, Convertible Securities or other shares of Capital Stock of the
Company or any distribution of rights to purchase Common Shares or
Convertible Securities by or on behalf of the Company that is made
substantially on a prorata basis among the holders of Common Shares;
(ii) the term "Holder's Shares" means as of any date of
determination the sum of (A) all Common Shares then owned of record by
the Holder, which were acquired pursuant to any Related Document, (B)
the maximum number of Common Shares then issuable to the Holder upon
the full exercise of the Warrant, assuming the full exercisablity of
the Warrant as of that date, and (C) the maximum number of Common
Shares then issuable to the Holder upon the full conversion or
exercise of all Convertible Securities then owned by the Holder or
issuable to the Holder upon the full exercise of the Warrants, which
were acquired pursuant to any Related Document, assuming the full
convertibility or exercisablity of the Convertible Securities and
Warrants as of that date;
(iii) the term "Outstanding Shares" means as of any date of
determination the sum of (A) all Common Shares (other than Common
Share then owned by the Holder) outstanding as of such date, and (B)
all Holder's Shares deemed to be outstanding as of such date; and
(iv) the term "Holder's Prorata Share" means as of any date of
determination the quotient of (A) the Holder's Shares as of such date,
divided by (B) the Outstanding Shares as of such date.
(b) Notice of Rights Offering. The Company shall give the Holder
at least 30 days' prior Notice of each Rights Offering. Such Notice shall set
forth: (i) the proposed commencement date for such Rights Offering; (ii) the
number and description of the securities to be offered pursuant to the Rights
Offering; and (iii) the purchase price for such securities and other material
terms of the Rights Offering.
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(c) Manner of Exercise. The Holder may, in the sole exercise of
its discretion, elect to participate in any such Rights Offering by giving
Notice of its irrevocable election to participate to the Company at least five
days prior to the proposed commencement date of such Rights Offering.
(d) Participation by Holder. If it elects to participate in such
Rights Offering, the Holder shall, to the exclusion of any other right to
participate that it might have as a holder of Common Shares or otherwise, have
the right to purchase, pursuant to such Rights Offering, securities of each
type issued in such Rights Offering in a maximum number or amount equal to the
Holder's Prorata Share of the total number or amount of each such type of
security offered pursuant to such Rights Offering.
SECTION 3. PREEMPTIVE RIGHTS
During the term of this Agreement and prior to any Qualified Public
Offering (regardless of whether or not the Warrants have been exercised), the
Holder shall have the right to participate in any Preemption Offering (as
defined herein) upon the terms and subject to the conditions set forth in this
section.
(a) Definitions. As used in this Agreement, the term "Preemption
Offering" means any offering of Common Shares, Convertible Securities or other
shares of Capital Stock of the Company by or on behalf of the Company other
than:
(i) the issuance of Warrant Shares pursuant to the exercise of the
Warrants;
(ii) any Rights Offering;
(iii) the issuance or sale of Common Shares pursuant to any employee
or director stock option plan of the Company approved by the
Compensation Committee of the Board of Directors of NDE; provided,
that (A) options are granted only with respect to Common Shares, (B)
the maximum number of Common Shares subject to such options is
1,000,000 shares, (C) the minimum exercise price per Common Share is
not less than the Exercise Price, (D) no options are granted to
Persons other than officers, directors and employees of the Company or
its subsidiaries, (E) no options are granted to any Person who was an
employee of the Company prior to the Closing Date, and (F) the
Compensation Committee consists of three members, at least one of whom
has been designated by BOCP and at least two of whom are not officers
or employees of the Company;
(iv) the sale and issuance of Common Shares or Convertible
Securities pursuant to any Qualified Public Offering; and
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(v) the sale and issuance of Common Shares of Convertible
Securities in connection with any merger or acquisition transaction
permitted or consented to pursuant to the Purchase Agreement.
(b) Notice of Preemption Offering. The Company shall
give the Holder at least 30 days' prior Notice of each Preemption Offering.
Such Notice shall set forth: (i) the proposed commencement date for such
Preemption Offering; (ii) the number and description of the securities to be
offered pursuant to the Preemption Offering; and (iii) the purchase price for
such securities and other material terms of the Preemption Offering.
(c) Manner of Exercise. The Holder may, in the sole
exercise of its discretion, elect to participate in any such Preemption
Offering by giving Notice of its election to participate to the Company at
least 5 days prior to the proposed commencement date of such Preemption
Offering.
(d) Participation by Holder. If it elects to participate
in such Preemption Offering, the Holder shall have the right to purchase, upon
the same terms and condition as those provided for in such Preemption Offering,
securities of each type issued in such Preemption Offering in a maximum number
or amount equal to the Holder's Prorata Share of the total number or amount of
each such type of security offered pursuant to such Preemption Offering.
(e) Unsold Securities. The Company may for a period of
not more that 60 days after the commencement date for any Preemption Offering
offer and sell the securities subject to such Preemption Offering, which were
not sold to the Holder pursuant to this Agreement to any Person or Persons upon
the terms and subject to the conditions of such Preemption Offering.
3.1 TERMINATION OF PREEMPTIVE RIGHTS. The rights of the
Holder under this Agreement and the obligations of the Company hereunder shall
terminate upon the earliest to occur of the following events:
(i) a Voluntary Insolvency Default or Involuntary Insolvency
Default with respect to the Company;
(ii) consummation of a Qualified Public Offering;
(iii) the Holder's Prorata Share equals less than 5.0%; and
(iv) December 31, 2005.
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SECTION 4. MISCELLANEOUS.
4.1 RULES OF CONSTRUCTION. The rules of construction set
forth in Section 12(i) of the Purchase Agreement are applicable to this
Agreement.
4.2 NOTICES. The notice provisions set forth in Section
12(j)of the Purchase Agreement are applicable to this Agreement.
4.3 SUCCESSORS AND ASSIGNS. This Agreement and the
rights and obligations of the Parties hereunder shall inure to the benefit of,
and be binding upon, their respective successors, assigns and legal
representatives. The rights of the Holder hereunder may not be assigned or
otherwise transferred, except (i) in connection with the assignment of all of
the unexercised Warrants as provided for in the Warrant Certificate, (ii) in
connection with the sale of all, but not less that all, of the Holder's Shares
and Warrants, or (iii) with the express written consent of the Company.
4.4 SEVERABILITY. In the event one or more of the
provisions of this Agreement should, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
4.5 AMENDMENTS. Any amendment or modification of this
Agreement shall be effective only if evidenced by a written instrument executed
by duly authorized representatives of the Parties hereto. Any waiver by a
Party of its rights hereunder shall be effective only if evidenced by a written
instrument executed by a duly authorized representative of such Party. In no
event shall such waiver of any rights hereunder constitute the waiver of such
rights in any future instance unless the waiver so specifies in writing.
4.6 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of Ohio.
The parties have executed and delivered this Agreement effective as of
the day and year first above written.
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COMPANY: HOLDER:
NDE ENVIRONMENTAL BANC ONE CAPITAL PARTNERS, L.P.
CORPORATION
By: BOCP Corporation, General Partner
By: /s/ XXX XXXXX XXXXXXX
----------------------- By: /s/ XXXXX X. XXXXX
Xxx Xxxxx Xxxxxxx, -----------------------------------
Chairman of the Board
Its: Xxxxx X. Xxxxx, Authorized Signer
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