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EXHIBIT 10.1
LOAN AGREEMENT
REVOLVING LINE OF CREDIT
OF UP TO $5,000,000.00
AND
TERM LOAN
OF $6,000,000.00
FROM
BANK ONE, TEXAS, N.A.
TO
NDE ENVIRONMENTAL CORPORATION
TANKNOLOGY/NDE CORPORATION
USTMAN INDUSTRIES, INC.
PROECO, INC.
and
TANKNOLOGY CANADA (1988) INC.
October 25, 1996
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TABLE OF CONTENTS
ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. THE LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.01 Revolving Loan. . . . . . . . . . . . . . . . . . . . . . . . 16
2.02 Advances and Payments Under the Revolving Note . . . . . . . 17
2.03 Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.04 The Term Note . . . . . . . . . . . . . . . . . . . . . . . 17
2.05 Payments of Term Loan Principal . . . . . . . . . . . . . . 17
2.06 Borrowing Base Determination . . . . . . . . . . . . . . . . 17
2.07 Provisions Relating to Interest . . . . . . . . . . . . . . 18
2.08 Mandatory Prepayment of the Revolving Note or the Term
Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.09 Voluntary Prepayment of the Note . . . . . . . . . . . . . . 20
2.10 Advances to Satisfy Obligations of the Borrower . . . . . . 20
2.11 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . 21
2.13 Facility Fee . . . . . . . . . . . . . . . . . . . . . . . . 21
2.14 Letters of Credit . . . . . . . . . . . . . . . . . . . . . 21
2.15 Repayment of Letters of Credit . . . . . . . . . . . . . . . 22
2.16 Letter of Credit Fee . . . . . . . . . . . . . . . . . . . . 22
ARTICLE III. CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.01 Receipt of Notes, Agreement and Certificate of Compliance . 22
3.02 Receipt of Articles of Incorporation and Bylaws . . . . . . 23
3.03 Receipt of Certified Copy of Corporate Proceedings and
Certificate of Incumbency . . . . . . . . . . . . . . . . . 23
3.04 Receipt of Opinions of Counsel . . . . . . . . . . . . . . . 23
3.05 Accuracy of Representations and Warranties and No Event of
Default . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.06 Legal Matters Satisfactory to Special Counsel to the Bank . 24
3.07 No Material Adverse Change . . . . . . . . . . . . . . . . . 24
3.08 Receipt of Certificates of Authority and Certificates of
Good Standing . . . . . . . . . . . . . . . . . . . . . . . 24
3.09 Receipt of Borrowing Base Certificate . . . . . . . . . . . 24
3.10 Collateral Documents . . . . . . . . . . . . . . . . . . . . 24
3.11 UCC Search . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.12 Bank Fees . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.13 Legal Fees . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.14 Contribution of Subordinated Indebtedness . . . . . . . . . 25
3.15 Cash Liquidity . . . . . . . . . . . . . . . . . . . . . . . 25
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ARTICLE IV. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . 25
4.01 Existence and Good Standing . . . . . . . . . . . . . . . . 25
4.02 Due Authorization . . . . . . . . . . . . . . . . . . . . . 26
4.03 Valid and Binding Obligations . . . . . . . . . . . . . . . 26
4.04 Scope and Accuracy of Financial Statements . . . . . . . . . 27
4.05 Authorizations and Consents . . . . . . . . . . . . . . . . 27
4.06 Environmental Laws . . . . . . . . . . . . . . . . . . . . . 27
4.07 Compliance with Laws, Rules, Regulations and Orders . . . . 28
4.08 Liabilities, Litigation and Restrictions . . . . . . . . . . 29
4.09 Existing Indebtedness . . . . . . . . . . . . . . . . . . . 29
4.10 Material Commitments . . . . . . . . . . . . . . . . . . . . 29
4.11 Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . 30
4.12 Proper Filing of Tax Returns and Payment of Taxes Due . . . 30
4.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.14 Investment Company Act Compliance . . . . . . . . . . . . . 31
4.15 Public Utility Holding Company Act Compliance . . . . . . . 31
4.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.17 Material Misstatements and Omissions . . . . . . . . . . . . 31
5.01 Use of Funds . . . . . . . . . . . . . . . . . . . . . . . . 32
5.02 Maintenance and Access to Records . . . . . . . . . . . . . 32
5.03 Quarterly Unaudited Financial Statements . . . . . . . . . . 32
5.04 Annual Audited Financial Statements . . . . . . . . . . . . 32
5.05 Compliance Certificate . . . . . . . . . . . . . . . . . . . 32
5.06 Monthly Reports . . . . . . . . . . . . . . . . . . . . . . 33
5.07 Statement of Material Adverse Change in Condition and
Notice of Events of Default . . . . . . . . . . . . . . . . 33
5.08 Additional Information . . . . . . . . . . . . . . . . . . . 33
5.09 Compliance with Laws and Payment of Assessments and
Charges . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.10 Maintenance of Corporate Existence and Good Standing . . . . 34
5.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . 34
5.12 Initial Expenses of the Bank . . . . . . . . . . . . . . . . 34
5.13 Subsequent Expenses of the Bank . . . . . . . . . . . . . . 34
5.14 Maintenance of Tangible Property . . . . . . . . . . . . . . 35
5.15 Maintenance of Insurance . . . . . . . . . . . . . . . . . . 35
5.16 Inspection of Tangible Assets/Right of Audit . . . . . . . . 36
5.17 Payment of Revolving Note and Term Note and Performance of
Obligations . . . . . . . . . . . . . . . . . . . . . . . . 36
5.18 Subordinated Indebtedness Reduction Certificate . . . . . . 36
5.19 Adjusted Liabilities to Adjusted Net Worth . . . . . . . . . 36
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5.20 Net Worth Requirement . . . . . . . . . . . . . . . . . . . 36
5.21 Debt Service Coverage Ratio . . . . . . . . . . . . . . . . 36
5.22 General and Administrative Expenses . . . . . . . . . . . . 36
5.23 Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . 37
5.24 Compliance with Environmental Laws . . . . . . . . . . . . . 37
5.25 Hazardous Substances Indemnification . . . . . . . . . . . . 37
5.26 Transactions with Affiliates . . . . . . . . . . . . . . . . 38
5.27 Payment of Taxes, Etc . . . . . . . . . . . . . . . . . . . 38
5.28 Notice of Litigation . . . . . . . . . . . . . . . . . . . . 39
5.29 Notices Regarding Account Debtors . . . . . . . . . . . . . 39
5.30 Notice of Change of Principal Offices . . . . . . . . . . . 39
5.31 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . 39
5.32 Landlord Waivers . . . . . . . . . . . . . . . . . . . . . . 40
5.33 Annual Collateral Review . . . . . . . . . . . . . . . . . . 40
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ARTICLE VI. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 40
6.01 Other Indebtedness . . . . . . . . . . . . . . . . . . . . . 40
6.02 Mortgages or Pledges of Assets . . . . . . . . . . . . . . . 41
6.03 Sales of Assets . . . . . . . . . . . . . . . . . . . . . . 41
6.04 Nature of Business . . . . . . . . . . . . . . . . . . . . . 41
6.05 Payment of Accounts Payable . . . . . . . . . . . . . . . . 41
6.06 Cancellation of Insurance . . . . . . . . . . . . . . . . . 42
6.07 Investments . . . . . . . . . . . . . . . . . . . . . . . . 42
6.08 Changes in Structure or Business . . . . . . . . . . . . . . 42
6.09 Changes in Management . . . . . . . . . . . . . . . . . . . 42
6.10 Limitation on Leases . . . . . . . . . . . . . . . . . . . . 42
6.11 Restricted Payments . . . . . . . . . . . . . . . . . . . . 42
6.12 Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . 43
6.13 Payment of Subordinated Indebtedness . . . . . . . . . . . . 43
6.14 Capital Expenditures Limitation . . . . . . . . . . . . . . 43
ARTICLE VII. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . 43
7.01 Enumeration of Events of Default . . . . . . . . . . . . . . 43
7.02 Rights Upon Unmatured Event of Default . . . . . . . . . . . 45
7.03 Rights Upon Default . . . . . . . . . . . . . . . . . . . . 46
7.04 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.05 Right of Set-off . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VIII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 49
8.01 Security Interests in Deposits and Right of Offset or the
Banker's Lien . . . . . . . . . . . . . . . . . . . . . . . 49
8.02 Survival of Representations, Warranties and Covenants . . . 49
8.03 Waiver of Rights . . . . . . . . . . . . . . . . . . . . . . 49
8.04 Notices and Other Communications . . . . . . . . . . . . . . 50
8.05 Parties in Interest . . . . . . . . . . . . . . . . . . . . 50
8.06 Renewals and Extensions . . . . . . . . . . . . . . . . . . 50
8.07 No Waiver by the Bank . . . . . . . . . . . . . . . . . . . 52
8.08 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . 52
8.09 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 52
8.10 Incorporation of Exhibits and Schedules . . . . . . . . . . 53
8.11 Survival Upon Unenforceability . . . . . . . . . . . . . . . 53
8.12 Rights of Third Parties . . . . . . . . . . . . . . . . . . 53
8.13 Amendments or Modifications . . . . . . . . . . . . . . . . 53
8.14 Agreement Construed as an Entirety . . . . . . . . . . . . . 53
8.15 Number and Gender . . . . . . . . . . . . . . . . . . . . . 53
8.16 Agreement Supersedes All Prior Agreements . . . . . . . . . 54
8.17 Controlling Provision Upon Conflict . . . . . . . . . . . . 54
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8.18 Time, Place and Method of Payments . . . . . . . . . . . . . 54
8.19 Non-Application of Chapter 15 of Texas Credit Code . . . . . 54
8.20 Counterpart Execution . . . . . . . . . . . . . . . . . . . 54
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EXHIBITS
--------
EXHIBIT "A-1" Revolving Note
EXHIBIT "A-2" Term Note
EXHIBIT "B" Compliance Certificate
EXHIBIT "C" Borrowing Base Certificate
EXHIBIT "D-1" Substance of Opinion of Counsel
Xxxxx & Xxxxx, L.L.P.
EXHIBIT "D-2" Substance of Opinion of Counsel
Banc One Capital Corporation Legal Department
EXHIBIT "E" Monthly Report
EXHIBIT "F" Form of Landlord's Waiver
SCHEDULES
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Schedule 1.01(a) Collateral
Schedule 1.01(b) Existing Permitted Liens
Schedule 3.10 Collateral Documents
Schedule 3.11 UCC Search Jurisdictions
Schedule 4.01 Information Regarding Jurisdictions in which each Borrower
and its Subsidiaries are Incorporated and in which Each
Does Business and is Qualified as a Foreign Corporation
Schedule 4.09 Existing Indebtedness
Schedule 4.10 Material Commitments
Schedule 4.16 Insurance Certificate
Schedule 5.01 Use of Funds
Schedule 5.26 Transactions with Affiliates
Schedule 6.07 Investments
Schedule 6.11 Restricted Payments
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of the 25th day of October, 1996, made and
entered into by and among NDE ENVIRONMENTAL CORPORATION ("NDE"), a Delaware
corporation, TANKNOLOGY/NDE CORPORATION ("T/NDE"), a Delaware corporation,
USTMAN INDUSTRIES, INC. ("USTMAN"), a Delaware corporation, PROECO, INC.
("PROECO"), a Delaware corporation, and TANKNOLOGY CANADA (1988) INC.
("TANKNOLOGY CANADA"), a Canadian federal corporation (collectively,
"Borrower") and BANK ONE, TEXAS, N.A., a national banking association (the
"Bank"), evidences the arrangements concerning certain loans to the Borrower by
the Bank.
W I T N E S S E T H
WHEREAS, the Borrower desires to obtain a loan from the Bank in
order to: (i) enable NDE to acquire T/NDE, USTMAN, and TANKNOLOGY CANADA from
Tanknology Environmental Inc., (ii) satisfy ongoing working capital and general
corporate requirements of Borrower, including the issuance of letters of
credit, (iii) pay down certain existing outstanding indebtedness of the
Borrower, and (iv) pay certain fees and expenses related to the acquisition and
this financing; and
WHEREAS, the Bank is willing to loan such funds to the Borrower
in accordance with the terms of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the Bank and the Borrower agree as follows:
ARTICLE I.
DEFINITIONS
As used in this Agreement, the following terms shall have the
meanings indicated:
"Accounts," "Chattel Paper," "Contracts," "Documents,"
"Equipment," "Fixtures," "General Intangibles," "Goods," "Instruments," and
"Inventory" shall have the same respective meanings as
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are given to those terms in the Uniform Commercial Code as presently adopted
and in effect in the State of Texas.
"Adjusted EBITDA" means EBITDA less (i) cash taxes and (ii) the
lesser of (x) $750,000 or (y) actual Capital Expenditures.
"Adjusted Liabilities" means Total Liabilities less Subordinated
Indebtedness.
"Adjusted Net Worth" means Consolidated Net Worth plus
Subordinated Indebtedness.
"Affiliate" means, as applied to any Person, any other Person,
directly or indirectly, controlling, controlled by, or under common control
with, that Person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by", and "under
common control with"), as applied to any Person, means either: (a) the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities, by contract, or otherwise, or (b) the legal or
beneficial ownership of or voting rights with respect to twenty percent (20%)
or more of the equity interest in such Person.
"Agreement" means this Loan Agreement, as the same may be amended
or supplemented from time to time.
"BANK ONE Base Rate" means, at any time, the rate of interest per
annum then most recently established and published by the Bank as its BANK ONE
Base Rate, which is eight and one-half percent (8.25%) as of the date of this
Agreement.
"Borrowing Base" means, at any time, the lesser of: (a)
$5,000,000.00; or (b) the amount accurately computed on the Borrowing Base
Certificate most recently delivered to, and accepted by, the Bank in accordance
with Section 2.06 and other relevant provisions of this Agreement, and equal to
seventy-five per cent (75%) of Eligible Accounts of the Borrower.
"Borrowing Base Certificate" means a fully completed certificate
in the form of Exhibit "C" to this Agreement, certified by the Chairman of the
Board, President or Chief Financial Officer
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of the Borrower to be correct and delivered to, and accepted by, the Bank
pursuant to Section 2.06.
"Business Day" means a day other than a Saturday, Sunday or legal
holiday for commercial banks under the laws of the State of Texas.
"Capital Expenditures" means expenditures for business assets
used by Borrower with a useful life in excess of one (1) year, the acquisition
cost of which, in accordance with GAAP, is depreciated over the useful life of
such asset.
"Closing" means the date of the Initial Advance made by the Bank
pursuant to Section 2.01 or 2.03.
"Collateral" means all material assets of Borrower, including,
but not limited to, those described on Schedule 1.01(a) attached hereto and the
Pledged Stock.
"Collateral Documents" means: (a) the instruments described or
referred to in Section 3.10 of this Agreement, and (b) any and all other
instruments or documents hereafter executed in connection with or as security
for the payment of the Revolving Note or the Term Note.
"Compliance Certificate" means the certificate of the Chairman of
the Board, the President or the Chief Financial Officer of the Borrower,
submitted to the Bank from time to time pursuant to this Agreement and
attesting to the financial covenants and stating, to such officer's knowledge,
whether or not an Event of Default or an Unmatured Event of Default has
occurred and is continuing and, if such an event has occurred, the actions
being taken by the Borrower, to remedy such situation and that GAAP has been
used in the preparation of the Financial Statements, which certificate shall be
in the form attached hereto as Exhibit "B."
"Consolidated Liabilities" means all Indebtedness that, in
accordance with GAAP, should be classified as liabilities on a consolidated
balance sheet of the Borrower and its Subsidiaries.
"Consolidated Net Worth" shall mean, at a particular date, the
sum of preferred stock (if any), par value of common stock, capital in excess
of par value of common stock, and retained
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earnings less treasury stock (if any) determined on a consolidated basis and in
accordance with GAAP.
"Current Assets" and "Current Liabilities" means at any time, all
assets or liabilities, respectively, that should in accordance with GAAP, be
classified as current assets or current liabilities, respectively, on a balance
sheet of the Borrower.
"Debt Service Coverage Ratio" means the ratio of Adjusted EBITDA
to the sum of: (i) all interest (including interest on Subordinated
Indebtedness); (ii) preferred dividends; (iii) actual scheduled principal
amortization of the Term Loan for the upcoming twelve-month period; AND (iv)
actual scheduled principal amortization of the Subordinated Indebtedness for
the upcoming twelve-month period.
"Default Rate" means a per annum interest rate equal to the
Floating Rate in effect from time to time, plus three percent (3%).
"Deposit" means a demand, time, savings, passbook or like
account, or a certificate of deposit maintained with a bank, savings and loan
association, credit union or like organization.
"EBITDA" means after-tax profit plus interest expense, taxes,
depreciation and amortization.
"Eligible Account" means, at any time, an Account that conforms
and continues to conform to the following conditions:
(A) The Account arose from a bona fide outright sale of Goods by the
Borrower or from bona fide services performed by the Borrower, and such
Goods have been shipped to the appropriate account debtors or their
designees (or the sale has otherwise been consummated), or the services
have been performed for the appropriate account debtors;
(B) The Account is based upon an enforceable order or contract,
written or oral, for Goods shipped or held or for services performed,
and the same were shipped, held, or performed in accordance with such
order or contract;
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(C) The title of the Borrower to the Account and, except as to the
account debtor, to any Goods is absolute and is not subject to any prior
assignment, claim, lien, or security interest, except Permitted Liens;
(D) The amount shown on the books of the Borrower and on any invoice
or statement delivered to the Bank is owing to the Borrower, less any
partial payment that has been made thereon by anyone;
(E) The Account shall be eligible only to the extent that it is not
subject to any claim of reduction, counterclaim, set-off, recoupment, or
any claim for credits, allowances, or adjustments by the account debtor
because of returned, inferior, or damaged Goods or unsatisfactory
services, or for any other reason;
(F) The account debtor has not returned or refused to retain, or
otherwise notified the Borrower of any dispute concerning, or claimed
nonconformity of, any of the Goods or services from the sale of which
the Account arose;
(G) The Account is due and payable not more than thirty (30) days
from the date of the invoice therefor;
(H) The Account is not more than ninety (90) days past due nor
outstanding more than one hundred twenty (120) days from the date of the
invoice therefor;
(I) The Account does not arise out of a contract with, or order from,
an account debtor that, by its terms, forbids or makes void or
unenforceable the assignment by the Borrower to the Bank of the Account
arising with respect thereto;
(J) The Borrower has not received any note, trade acceptance, draft,
or other Instrument with respect to, or in payment of, the Account, nor
any Chattel Paper with respect to the Goods giving rise to the Account,
unless, if any such Instrument or Chattel Paper has been received, the
Borrower promptly notifies the Bank and, at the latter's request,
endorses or assigns and delivers the same to the Bank;
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(K) The Borrower has not received any notice of the death of the
account debtor or a partner thereof; nor of the dissolution, termination
of existence, insolvency, business failure, appointment of a receiver
for any part of the property of, assignment for the benefit of creditors
by, or the filing of a petition in bankruptcy or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against, the
account debtor;
(L) The account debtor is not a Subsidiary or other Affiliate of the
Borrower;
(M) The account debtor is not a Person whose principal place of
business is outside of the United States of America, its territories and
possessions;
(N) No more than 15% of account debtor's aggregate account total
fails to satisfy clause (H) of this definition;
(O) The Account shall be eligible only to the extent that it does not
constitute more than twenty-five percent (25%) of the aggregate total of
Accounts otherwise deemed Eligible Accounts hereunder; and
(P) The Bank has not deemed such account ineligible (i) because of a
reasonable uncertainty about the creditworthiness of the account debtor;
or (ii) because the Bank otherwise reasonably considers the collateral
value thereof to the Bank to be impaired or its ability to realize such
value to be insecure.
In the event of any dispute, under the foregoing criteria, about
whether an Account is or has ceased to be an Eligible Account, the decision of
the Bank shall control.
"Environmental Laws" means (a) the following federal laws as they
may be cited, referenced and amended from time to time: the Clean Air Act, the
Clean Water Act, the Safe Drinking Water Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Endangered Species Act, the
Resource Conservation and Recovery Act, the Occupational Safety and Health Act,
the Hazardous Materials Transportation Act, the Superfund Amendments and
Reauthorization Act, the Toxic Substances Control
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Act, and the Oil Pollution Act of 1990; (b) any and all environmental statutes
of any state in which property of the Borrower is situated, as they may be
cited, referenced and amended from time to time; (c) any rules or regulations
promulgated under or adopted pursuant to the above federal and state laws; and
(d) any other federal, state or local statute relating to regulation of the
environment or any requirement, rule, regulation, code, ordinance or order
adopted pursuant thereto, including, without limitation, those relating to the
generation, transportation, treatment, storage, recycling, disposal, handling
or release of Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations and published
interpretations thereof.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which together with the Borrower would be treated as a single
employer under Section 4001 of ERISA.
"Event of Default" means any of the events specified in Section
7.01 of this Agreement.
"Excess Sales Proceeds" shall have the meaning attributed to that
term in Section 2.08(B).
"Existing Indebtedness" means all Indebtedness of the Borrower
and any Subsidiary existing as of the Closing, such Indebtedness being
described in Schedule 4.09.
"Financial Statements" means the statements of the financial
condition of the indicated Person, on a consolidated basis, as at the point in
time and for the period indicated and consisting of at least a balance sheet,
income statement and statement of cash flows, and, when the foregoing are
audited, accompanied by the certification of such Person's independent
certified public accountants and footnotes to any of the foregoing, all of
which shall be prepared in accordance with GAAP applied on a basis consistent
with that of the preceding year.
"Floating Rate" means a per annum interest rate equal to the
Revolving Note Rate with respect to the Indebtedness evidenced
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by the Revolving Note, and equal to the Term Note Rate with respect to the
Indebtedness evidenced by the Term Note.
"GAAP" means generally accepted accounting principles, applied on
a consistent basis, as set forth in Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants and/or in statements
of the Financial Accounting Standards Board and/or their respective successors
and which are applicable in the circumstances as of the date in question.
Accounting principles are applied on a "consistent basis" when the accounting
principles observed in a current period are comparable in all material respects
to those accounting principles applied in a preceding period.
"Good Title" means good and indefeasible ownership, properly
evidenced by appropriate public records or certificates of title with respect
to property to which such public records or certificates of title are
applicable, free and clear of all mortgages, liens and encumbrances, except for
Permitted Liens.
"Hazardous Substances" means flammables, explosives, radioactive
materials, hazardous wastes, asbestos or any material containing asbestos,
polychlorinated biphenyls (PCBs), toxic substances or related materials,
petroleum and petroleum products and associated oil or natural gas exploration,
production and development wastes or any substances defined as "hazardous
substances", "hazardous materials", "hazardous wastes" or "toxic substances"
under the Comprehensive Environmental Response, Compensation and Liability Act,
as amended, the Superfund Amendments and Reauthorization Act, as amended, the
Hazardous Materials Transportation Act, as amended, the Resource Conservation
and Recovery Act, as amended, the Toxic Substances Control Act, as amended, or
any other Environmental Laws now or hereafter enacted or promulgated by any
regulatory authority or governmental body, but only to the extent any such law
is or becomes applicable to the Borrower or any of its property.
"Letter of Credit" means a standby letter of credit issued for
the account of the Borrower on terms and conditions customarily established by
the Bank, in its discretion, from time to time.
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"Indebtedness" means, as to any Person, (a) all items of
indebtedness or liability (other than capital, surplus, deferred credits and
reserves, as such) which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a balance sheet
as at the date as of which Indebtedness is to be determined, (b) indebtedness
secured by (or for which the holder of such indebtedness has a right,
contingent or otherwise, to be secured by) any mortgage, deed of trust, pledge,
lien, security interest, or other charge or encumbrance existing on or
encumbering property owned by the Person whose Indebtedness is being
determined, whether or not the indebtedness secured thereby shall have been
assumed, (c) all indebtedness of others which such Person has directly or
indirectly guaranteed, endorsed (otherwise than for collection or deposit in
the ordinary course of business), discounted with recourse, agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire, or
in respect of which such Person has agreed to supply or advance funds (whether
by way of loan, purchase of securities or capital contribution, through a
commitment to pay for property or services regardless of the nondelivery of
such property or the nonfurnishing of such services or otherwise), or in
respect of which such Person has otherwise become directly or indirectly
liable, contingently or otherwise, whether now existing or hereafter arising,
and (d) all leases that, in accordance with GAAP, should not be reflected on
the Borrower's balance sheet.
"Initial Advance" means the first advance hereunder.
"Interest Expense" means, for any period, total cash interest
expense of the Borrower for such period in connection with the Borrower's
Indebtedness.
"Investment" in any Person means any stock, bond, note or other
evidence of Indebtedness or any other security (other than current trade and
customer accounts) of, or loan to, such Person.
"Laws" means all ordinances, statutes, rules, regulations,
orders, injunctions, writs, or decrees of any government or political
subdivision or agency thereof, or any court or similar entity established by
any thereof.
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"Liabilities" means all Indebtedness that, in accordance with
GAAP, should be classified as liabilities on a balance sheet of the Borrower.
"Limitation Period" means any period while any amount remains
owing on the Revolving Note or the Term Note when interest on such amount,
calculated at the applicable rate prescribed in such Revolving Note or Term
Note, plus any fees payable hereunder and deemed to be interest under
applicable Law, would exceed the Maximum Rate.
"Loan" means, singly, any advance by the Bank to the Borrower
pursuant to this Agreement, and "Loans" means, cumulatively, the aggregate sum
of all money advanced by the Bank to the Borrower pursuant to this Agreement.
"Loan Documents" means this Agreement and all promissory notes,
security agreements, mortgages, deeds of trust, releases, guaranties, and other
instruments, documents, and agreements executed and delivered pursuant to or in
connection with this Agreement, as such instruments, documents, and agreements
may be amended, modified, renewed, extended, or supplemented from time to time.
"Loan Excess" means, at any point in time, the amount, if any, by
which the outstanding balance on the Loans evidenced by the Revolving Note
exceeds the Revolving Commitment then in effect.
"Maximum Commitment Amount" means $5,000,000.00 on the date
hereof.
"Maximum Rate" means the maximum non-usurious interest rate
permissible under applicable Laws of the State of Texas or those of the United
States of America applicable to the Bank.
"Multi-Employer Plan" shall mean a plan described in Section
4001(a)(3) of ERISA which covers employees of the Borrower or any ERISA
Affiliate.
"Notes" means the Revolving Note and the Term Note.
"Net Income" shall mean, for any period, the net income (or loss)
of the Borrower after allowances for taxes for such
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period, determined in accordance with GAAP; provided that there shall be
excluded from such net income (to the extent otherwise included therein) the
following: (i) the net income of any Person in which the Borrower has an
interest (which interest does not cause the net income of such other Person to
be consolidated with the net income of the Borrower in accordance with GAAP),
except to the extent of the amount of dividends or distributions actually paid
in such period by such other Person to the Borrower; (ii) the net income (or
loss) of any Person acquired in a pooling-of-interests transaction for any
period prior to the date of such transaction, (iii) any extraordinary gains or
losses, including gains or losses attributable to property sales not in the
ordinary course of business, (iv) the cumulative effect of a change in
accounting principles, and (v) any gains or losses attributable to writeups or
writedowns of assets.
"Obligations" means all obligations, indebtedness, and
liabilities of the Borrower to the Bank, now existing or hereafter arising,
whether direct, indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, including, without
limitation, the obligations, indebtedness, and liabilities of the Borrower
under this Agreement and the other Loan Documents, and all interest and fees
accruing thereon and all attorneys' fees and other expenses incurred in the
administration, enforcement or collection thereof.
"Operational Letter of Credit" means a Letter of Credit issued
for the account of the Borrower to satisfy bonding and other regulatory
requirements, or for general working capital purposes, relating to the
Borrower's business operations.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Liens" means:
(A) Liens for taxes, assessments, or similar charges, incurred in the
ordinary course of business, that are not yet due and payable;
(B) Pledges or deposits made in the ordinary course of business to
secure payment of workers' compensation or to
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participate in any fund in connection with worker's compensation,
unemployment insurance, old-age pensions, or other social security
programs;
(C) Liens of mechanics, materialmen, warehousemen, carriers, or other
like liens, securing obligations incurred in the ordinary course of
business that are not yet due and payable;
(D) Good faith pledges or deposits made in the ordinary course of
business to secure performance of bids, tenders, contracts (other than
for the repayment of borrowed money) or leases, not in excess of ten per
cent (10%) of the aggregate amount due thereunder, or to secure
statutory obligations, or surety, appeal, indemnity, performance, or
other similar bonds required in the ordinary course of business;
(E) Encumbrances consisting of zoning restrictions, easements, or
other restrictions on the use of real property, none of which materially
impairs the use of such property by the Borrower in the operation of its
business, and none of which is violated in any material respect by
existing or proposed structures or land use;
(F) Liens in favor of the Bank;
(G) Existing Liens set forth or described on Schedule 1.01(b),
attached hereto and made a part hereof;
(H) Liens securing the Subordinated Indebtedness, but only to the
extent that such liens have been expressly subordinated to the liens in
favor of the Bank under terms and conditions satisfactory to the Bank in
its sole discretion;
(I) Purchase money security interests granted to secure not more than
seventy-five per cent (75%) of the purchase price of assets, the
purchase of which does not violate this Agreement or any instrument
required hereunder; and
(J) The following, if the validity or amount thereof is being
contested in good faith by appropriate and lawful proceedings, so long
as levy and execution thereon have been stayed and continue to be stayed
and they do not, in the aggregate, materially detract from the value of
the property of the
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Borrower or any Subsidiary, or materially impair the use thereof in the
operation of its business:
(1) Claims or liens for taxes, assessments, or charges due and
payable and subject to interest or penalty;
(2) Claims, liens, and encumbrances upon, and defects of title
to, real or personal property, including any attachment of
personal or real property or other legal process prior to
adjudication of a dispute on the merits;
(3) Claims or liens of mechanics, materialmen, warehousemen,
carriers, or other like liens; and
(4) Adverse judgments on appeal.
"Person" means an individual, company, corporation, partnership,
joint venture, limited liability company, trust, association, unincorporated
organization or a government or any agency or political subdivision thereof.
"Plan" means, at any time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or any ERISA Affiliate is
(or, if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Prohibited Transaction" shall mean any transaction set forth in
Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as
amended from time to time.
"Pledged Stock" means all of the issued and outstanding shares of
capital stock of T/NDE, USTMAN, PROECO and TANKNOLOGY CANADA, which constitute
part of the Collateral to be covered by the Collateral Documents to be
delivered pursuant to Section 3.10.
"Reportable Event" shall mean any of the events set forth in
Section 4043 of ERISA, excluding, however, such events as to which PBGC has by
regulation waived the requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event.
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"Request for Advance" means the written or verbal (confirmed in
writing within one (1) Business Day) request by the Borrower for a Loan by the
Bank pursuant to this Agreement, which Request for Advance shall include a
statement of the amount requested to be advanced, the date of the requested
advance and such other information as the Bank in its reasonable discretion
deems necessary.
"Revolving Commitment" means the obligation of the Bank, subject
to the provisions of this Agreement and existing only through the Revolving
Commitment Termination Date, to advance to the Borrower funds in an amount not
to exceed at any one time outstanding the lesser of: (a) the Borrowing Base
then in effect, or (b) the Maximum Commitment Amount.
"Revolving Commitment Termination Date" means December 31, 1999.
"Revolving Loan" means the loan made pursuant to Section 2.01.
"Revolving Note" means that certain promissory note in the
original face amount of $5,000,000.00 dated of even date herewith made by the
Borrower payable to the order of the Bank in the form attached hereto as
Exhibit "A-1," together with all deferrals, renewals, extensions, amendments,
modifications or rearrangements thereof, which promissory note shall evidence
certain advances to the Borrower by the Bank pursuant to Section 2.01 hereof.
"Revolving Note Rate" means a per annum interest rate equal to
the BANK ONE Base Rate in effect from time to time plus three quarters of one
percent (.75%).
"Subordinated Commitment Indebtedness" means the Indebtedness
incurred by Borrower in accordance with that certain Standby Commitment dated
October 25, 1996, by and among Proactive Partners, L.P., NDE Environmental
Corporation, Banc One Capital Partners, L.P., and Bank One, Texas, N.A., the
repayment of which is subordinated to the Loan in a form and manner
satisfactory to the Bank, together with other Indebtedness on similar terms and
of a similar nature, which is subsequently incurred by Borrower with the
consent of the Bank.
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"Subordinated Indebtedness Reduction Certificate" means a fully
completed certificate certified by the Chairman of the Board, President or
Chief Financial Officer of the Borrower to be correct and delivered to the Bank
affirming that Borrower is in compliance with Section 6.13 prior to making any
principal payment of Subordinated Indebtedness.
"Subordinated Indebtedness" means the Indebtedness incurred by
Borrower in accordance with Section 3.14, being the Senior Subordinated Note
due September 30, 2001, between NDE Environmental Corporation, Tanknology/NDE
Corporation, USTMAN Industries, Inc., ProEco, Inc., and Tanknology Canada
(1988) Inc. in the initial principal amount of $8,000,000.00 (which under GAAP
will be treated as an approximately $6,000,000 subordinated note together with
an approximately $2,000,000 allocation for warrants acquired thereby).
"Subsidiary" means, as to any Person, any corporation in which
such Person, directly or indirectly through its Subsidiaries, owns more than
fifty percent (50%) of the stock of any class or classes having by the terms
thereof the ordinary voting power to elect a majority of the directors of such
corporation, and any partnership, association, joint venture, or other entity
in which such Person, directly or indirectly through its Subsidiaries, has more
than a fifty percent (50%) equity interest at the time.
"Term Loan" means the Loan to be made pursuant to Section 2.03.
"Term Loan Maturity Date" means December 31, 2001.
"Term Note" means the promissory note in an original principal
amount of $6,000,000.00, of even date with this Agreement, made by Borrower
payable to the order of Bank in the form attached hereto as Exhibit "A-2,"
together with all deferrals, renewals, extensions, amendments, modifications or
rearrangements thereof, which promissory note shall evidence the advance to the
Borrower by the Bank pursuant to Section 2.03 hereof.
"Term Note Rate" means a per annum interest rate equal to the
BANK ONE Base Rate in effect from time to time plus one and one-half percent
(1.5%).
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"Total Liabilities" means all liabilities that, in accordance
with GAAP, would be included in determining total liabilities as shown on the
liability side of a consolidated balance sheet of the Borrower and its
Subsidiaries.
"Unmatured Event of Default" means any event or occurrence which
solely with the lapse of time or the giving of notice or both will ripen into
an Event of Default.
Undefined Terms. Undefined financial accounting terms used in
this Agreement shall be defined according to GAAP.
ARTICLE II.
THE LOAN
2.01 Revolving Loan.
(A) Upon the terms and conditions (including, without
limitation, the right of the Bank to terminate the Revolving Commitment
hereunder upon an Event of Default or an Unmatured Event of Default) and
relying on the representations and warranties contained in this Agreement, the
Bank agrees, for a period from and after the date hereof through the Revolving
Commitment Termination Date, to make advances to the Borrower from time to time
following receipt of a Request for Advance, in such amounts as the Borrower may
request; provided, however, each such Loan shall be in an amount of not less
than $200,000.00 and in an integral multiple of $100,000.00 (unless the excess
of the Revolving Commitment over the aggregate outstanding principal amount of
all Loans and Operational Letters of Credit is less than $200,000, then such
amount shall be equal to such excess), and the aggregate principal amount of
all Loans made pursuant to this Section 2.01 and at any one time outstanding
shall not exceed the Revolving Commitment.
(B) Through the Revolving Commitment Termination Date, the
Borrower may use this revolving credit by borrowing, prepaying and reborrowing,
all in accordance with the terms and conditions of this Agreement. The
borrowings made by the Borrower pursuant to the Revolving Commitment shall be
made at the principal office of the Bank and shall be evidenced by the
Revolving Note.
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2.02 Advances and Payments Under the Revolving Note. Each time
an advance is made against or payment is made on the Revolving Note, the Bank
is hereby irrevocably authorized by the Borrower to make appropriate entries of
such in its records in accordance with the usual and customary practices of
accounting for advances and payments on notes; provided, however, the failure
of the Bank to do so shall not relieve the Borrower of its correct liability
hereunder or under the Revolving Note.
The aggregate unpaid amount of advances reflected by the
notations by the Bank on its records or the ledger sheets affixed to the
Revolving Note shall be deemed rebuttably presumptive evidence of the principal
amount owing on the Revolving Note. The liability for payment of principal and
interest evidenced by the Revolving Note shall be limited to principal amounts
actually advanced to the Borrower and outstanding under this Agreement and
interest on such amounts calculated in accordance with this Agreement.
Interest provided for in the Revolving Note and herein shall be calculated on
unpaid sums actually advanced and outstanding under the Revolving Note pursuant
to the terms of this Agreement and only for the period from the date or dates
of such advances until repayment.
2.03 Term Loan. Subject to the terms and conditions and
relying on the representations and warranties contained in this Agreement, the
Bank agrees to make the Term Loan to the Borrower in a single advance on or
after October 25, 1996.
2.04 The Term Note. The obligation of the Borrower to repay
the Term Loan shall be evidenced by the Term Note.
2.05 Payments of Term Loan Principal. The principal of the
Loan evidenced by the Term Note will be repaid in sixty (60) equal, consecutive
monthly installments in the amount of $100,000.00 each, beginning on January 1,
1997, and continuing on the first day of each calendar month thereafter until
the Term Loan Maturity Date, when the entire unpaid principal amount of the
Term Note shall be due and payable.
2.06 Borrowing Base Determination. The initial Borrowing Base
shall be established by the calculations submitted at Closing in conformance
with Exhibit "B". Within twenty (20) days after the end of each calendar month
following the date of the Initial
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Advance, Borrower shall deliver to Bank a Borrowing Base Certificate setting
out the calculations necessary to determine the Borrowing Base as of close of
business on the last Business Day of the preceding calendar month. Upon
receipt of such Borrowing Base Certificate, the Bank, acting in the ordinary
course of its business, shall review the calculations thereon to determine
whether it concurs with the Borrowing Base so calculated, and it shall then
notify Borrower of such concurrence or any disagreement with such calculations.
To the extent that the Bank requests reasonable supporting information from the
Borrower relating to the Borrowing Base calculations provided on the Borrowing
Base Certificate, the Borrower shall promptly provide the requested information
to the Bank. The redetermination of the Borrowing Base shall become effective
five (5) days after the Bank's receipt of the Borrowing Base Certificate,
unless the Bank sends written notification to the Borrower that the Bank has
calculated a lower Borrowing Base, whereupon the Borrowing Base so recalculated
by the Bank shall be the Borrowing Base until the effective date of the next
redetermination of the Borrowing Base, as provided herein.
2.07 Provisions Relating to Interest.
(A) Subject to the terms and provisions of this Agreement, the
Loans shall bear interest at a daily rate equal to the applicable Floating Rate
per annum, each change in the rate of interest to become effective without
notice to the Borrower, on the effective date of each change in the BANK ONE
Base Rate.
(B) Subject to the terms and provisions of this Agreement,
interest on the Loans shall be calculated on the basis of a year of three
hundred sixty-five (365) days, or three hundred sixty-six (366) days as the
case may be, from the date of advance to the date of repayment, and shall be
due and payable monthly as it accrues beginning December 1, 1996, and
continuing thereafter on the first day of each succeeding calendar month while
any amount remains owing on the Notes, the interest payment in each instance to
be that which has been earned and remains unpaid.
(C) It is the intention of the parties hereto to comply
strictly with the usury laws of the State of Texas and the United States of
America and, in this connection, there shall never be collected, charged or
received on any sums advanced hereunder interest in excess of the Maximum Rate.
For purposes of Article
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5069-1.04, Vernon's Texas Civil Statutes, as amended, the Borrower agrees that
the maximum rate to be charged shall be the "indicated (weekly) rate ceiling"
as defined in said Article, provided that the Bank may also rely to the extent
permitted by applicable laws of the State of Texas or the United States of
America, on alternative maximum rates of interest under other applicable laws
of the State of Texas or the United States of America applicable to the Bank,
if greater. Interest on past due interest and principal shall be at a daily
rate equal to the lesser of (i) the Maximum Rate per annum or (ii) the Default
Rate; and if no Maximum Rate exists, all past due interest and principal shall
bear interest at a daily rate equal to the Default Rate. Notwithstanding
anything herein or in the Notes to the contrary, during any Limitation Period,
the interest rate to be charged on amounts evidenced by the Revolving Note
shall be the Maximum Rate and the obligation of the Borrower for any fees
payable hereunder and deemed to be interest under applicable law shall be
suspended. During any period or periods of time following a Limitation Period,
to the extent permitted by applicable laws of the State of Texas or the United
States of America, the interest rate to be charged hereunder shall remain at
the Maximum Rate until such time as there has been paid to the Bank (i) the
amount of interest in excess of the Maximum Rate that the Bank would have
received during the Limitation Period had the interest rate remained at the
relevant Floating Rate and (ii) all interest and fees otherwise due to the Bank
but for the effect of such Limitation Period.
If under any circumstances the aggregate amounts paid on the
Revolving Note or the Term Note, as applicable, or under this Agreement include
amounts which by law are deemed interest and which would exceed the amount
permitted if the Maximum Rate were in effect, the Borrower stipulates that such
payment and collection will have been and will be deemed to have been, to the
extent permitted by applicable laws of the State of Texas or the United States
of America, the result of mathematical error on the part of both the Borrower
and the Bank, and the Bank shall promptly refund the amount of such excess (to
the extent only of such interest payments above the Maximum Rate which could
not lawfully have been collected and retained) upon discovery of such error by
the Bank or notice thereof from the Borrower.
2.08 Mandatory Prepayment of the Revolving Note or the Term
Note.
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(A) In the event that the Bank determines that a Loan Excess
exists, the Borrower shall immediately, but in no event later than fifteen (15)
days following any such determination, prepay the principal of the Revolving
Note, in an aggregate amount at least equal to such Loan Excess.
(B) To the extent that Borrower receives aggregate proceeds from
the sale of assets in excess of $250,000.00 ("Excess Sales Proceeds") during
the twelve month period ending on each anniversary of the date of this
Agreement, net of all third party costs, expenses, and fees paid by Borrower
directly in connection with such sale (other than inventory sold in the
ordinary course of business, or any condemnation or casualty proceeds not
reinvested within six (6) months in the maximum amount of $500,000.00 in assets
that may be productively used in Borrower's business), Borrower shall pay such
Excess Sales Proceeds to the Bank within ten Business Days after each
anniversary date of this Agreement to prepay the remaining installments of the
Term Loan, in inverse order of maturity.
2.09 Voluntary Prepayment of the Notes. The Borrower shall
have the right and the option to prepay, at any time upon two (2) Business Days
advance notice with respect to the Revolving Note or five (5) Business Days
advance notice with respect to the Term Note, all or any part of the balance
outstanding on the Revolving Note or the Term Note, as applicable, subject to
the terms and provisions contained in this Section 2.09. All prepayments on
the Revolving Note or the Term Note, as applicable, shall be in the minimum
amount of $500,000.00 or any $100,000.00 increment in addition thereto. Any
such prepayment received by the Bank shall be applied first to the payment of
accrued and unpaid interest and then to the reduction of principal. All
prepayments of principal on the Term Note shall irrevocably reduce the
outstanding principal balance thereof, and Borrower shall not be permitted to
reborrow under the Term Note any amount of principal prepaid thereunder.
2.10 Advances to Satisfy Obligations of the Borrower. The Bank
may, but shall not be obligated to, make advances hereunder and apply same to
the satisfaction of any condition, warranty, representation or covenant of the
Borrower contained in this Agreement, and the funds so advanced and applied
shall be part of the Loan proceeds advanced under this Agreement and evidenced
by
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the Revolving Note or, if subsequent to the Revolving Commitment Termination
Date, the Term Note.
2.11 Commitment Fee. As consideration for the commitment of
the Bank to make Loans to the Borrower through the Revolving Commitment
Termination Date pursuant to this Agreement, the Borrower agrees to pay to the
Bank within five (5) Business Days of receipt of the Bank's statement as to
quarterly periods ending March 31, June 30, September 30 and December 31 of
each year (except the first period shall be for a period of time from the
Closing to December 31, 1996) during the period commencing on the date of this
Agreement to and including the Revolving Commitment Termination Date and at the
Revolving Commitment Termination Date, a fee equal to 1/2 of 1% per annum
(computed on the basis of 365 or 366 days, as the case may be) multiplied by an
amount equal to the daily average excess, if any, of the Revolving Commitment
over the aggregate principal amount outstanding on the Revolving Note plus the
aggregate face amount of all outstanding Operational Letters of Credit, during
the period from the date of this Agreement or previous calculation date
provided above, whichever is later, to the relevant calculation date or the
Revolving Commitment Termination Date, as the case may be.
2.13 Facility Fee. As consideration for the commitment of the
Bank to make Loans to the Borrower pursuant to this Agreement, the Borrower
shall pay to the Bank a facility fee in the amount of $165,000.00
simultaneously with the Initial Advance.
2.14 Letters of Credit. Subject to the terms and conditions of
this Agreement, the Bank agrees to issue one or more Operational Letters of
Credit for the account of Borrower from time to time following receipt of an
application for an Operational Letter of Credit executed by the Borrower on the
Bank's then-current form of application three (3) Business Days prior to the
requested date of the issuance of the requested Operational Letter of Credit in
such amount as the Borrower may request in an aggregate amount not to exceed
(unless otherwise agreed by the Bank) at any time the lesser of (i) the excess
of the Revolving Commitment over the aggregate outstanding principal amount of
all Loans and Operational Letters of Credit and (ii) Two Million Dollars
($2,000,000.00). No Operational Letter of Credit shall expire beyond the
Revolving Commitment Termination Date. The amount of such Operational Letters
of Credit issued under the
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Revolving Commitment, so long as they are outstanding, shall be deemed to
reduce the amount available for Loans, and/or additional Operational Letters of
Credit under the Revolving Commitment. If there is any conflict between the
terms of an Operational Letter of Credit application and the terms of this
Agreement, the terms of this Agreement shall control.
2.15 Repayment of Letters of Credit. If drawn upon by the
beneficiary of an Operational Letter of Credit, all amounts so drawn shall be
due and payable by the Borrower immediately upon receipt of Bank's statement.
2.16 Letter of Credit Fee. As consideration for the issuance
by the Bank of Operational Letters of Credit for the account of the Borrower,
the Borrower agrees to pay to the Bank a fee equal to the greater of: (a)
$500.00, or (b) one percent (1.0%) per annum, pro rata, based on the number of
days outstanding, of the amount of each such Operational Letter of Credit, the
first such per annum fee for each Operational Letter of Credit to be payable in
advance of the issuance of such Operational Letter of Credit, with successive
per annum fees to be paid in advance of the anniversary date of the issuance of
such Operational Letter of Credit if it is to remain in effect beyond such
anniversary date.
ARTICLE III.
CONDITIONS
The obligation of the Bank to make the Advances pursuant to
Sections 2.01 and 2.03 of this Agreement is subject to the prior or
contemporaneous satisfaction of all of the conditions precedent stated in this
Article III. The obligation of the Bank to make subsequent advances pursuant
to this Agreement is subject to the prior or contemporaneous satisfaction of
the conditions precedent stated in Sections 3.05 through 3.07.
3.01 Receipt of Notes, Agreement and Certificate of Compliance.
The Bank shall have received the Notes, multiple counterparts of this
Agreement, as requested by the Bank, and the Compliance Certificate duly
executed by an authorized officer for each Borrower.
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3.02 Receipt of Articles of Incorporation and Bylaws. The Bank
shall have received from each Borrower its Articles of Incorporation certified
by the Secretary of State of the jurisdiction of its incorporation and bylaws
certified by the Secretary or an Assistant Secretary of such entity.
3.03 Receipt of Certified Copy of Corporate Proceedings and
Certificate of Incumbency. The Bank shall have received from each Borrower
copies of all resolutions of its board of directors with respect to the
transactions set forth in this Agreement and the execution of this Agreement,
the Notes, and the Collateral Documents, such copy or copies to be certified by
the Secretary or an Assistant Secretary as being true and correct and in full
force and effect as of the date hereof. In addition, the Bank shall have
received from each Borrower a certificate of incumbency signed by the Secretary
or an Assistant Secretary setting forth (a) the names of the officers executing
this Agreement, the Notes, and the Collateral Documents, (b) the office(s) to
which such Persons have been elected and in which they presently serve and (c)
an original specimen signature of each such person.
3.04 Receipt of Opinions of Counsel. The Bank shall have
received a written opinion of the law firm of Xxxxx & Xxxxx, L.L.P., legal
counsel for each Borrower, dated the date of the Closing and addressed to the
Bank, in form satisfactory to the Bank, regarding the matters set forth on
Exhibit "D-1" attached hereto, and a written opinion of the legal department of
Banc One Capital Corporation, dated the date of the Closing and addressed to
the Bank, in form satisfactory to the Bank, regarding the matters set forth on
Exhibit "D-2" attached hereto, which opinions shall be accompanied by such
supporting documentation as the Bank or its special counsel shall reasonably
require.
3.05 Accuracy of Representations and Warranties and No Event of
Default. The representations and warranties contained in Article IV of this
Agreement shall be true and correct in all material respects on the date of the
making of such Loans or advances with the same effect as though such
representations and warranties had been made on such date; and no Event of
Default shall have occurred and be continuing or will have occurred at the
completion of the making of such Loans or advances, and the Bank shall have
received satisfactory certificates signed by the Chairman of the Board or
President or other authorized officer of
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each Borrower as to all questions of fact involved in this condition,
including, without limitation, a Compliance Certificate.
3.06 Legal Matters Satisfactory to Special Counsel to the Bank.
All legal matters incident to the consummation of the transactions hereby
contemplated shall be satisfactory to the firm of Xxxxxxxxx & Xxxxxx, L.L.P.,
special counsel for the Bank.
3.07 No Material Adverse Change. No material adverse change
shall have occurred since the date of this Agreement in the condition,
financial or otherwise, of the Borrower.
3.08 Receipt of Certificates of Authority and Certificates of
Good Standing. The Bank shall have a received certificates, as of the most
recent dates practicable, of the Secretary of State of each jurisdiction in
which the Borrower is qualified as a foreign corporation, and the department of
revenue or taxation of each of the foregoing jurisdictions, as to the good
standing of the Borrower;
3.09 Receipt of Borrowing Base Certificate. The Bank shall
have received a duly executed Borrowing Base Certificate as of a date not more
than one (1) day prior to the Initial Advance, acceptable to the Bank and
certifying a Borrowing Base of not less than $3,500,000.00.
3.10 Collateral Documents. As security for the payment of the
Notes and the performance of the obligations of the Borrower under this
Agreement, the Bank shall have received the duly executed and acknowledged
Collateral Documents described on Schedule 3.10 attached hereto.
3.11 UCC Search. The results of a Uniform Commercial Code
search showing all financing statements and other documents or instruments on
file against Borrower in the offices of the Secretary of State or other central
UCC Financing Statement filing office of each jurisdiction listed on Schedule
3.11 attached hereto and in the respective counties in which Collateral is
located, such searches to be as of a date no more than ten (10) days prior to
the date of the advance of the initial Loan.
3.12 Bank Fees. The Bank shall have received the Facility Fee
specified in Section 2.13 hereof.
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3.13 Legal Fees. All legal fees and disbursements owed to the
Bank's special counsel who provided representation to this Bank in connection
with this Agreement shall have been paid.
3.14 Contribution of Subordinated Indebtedness. The Bank shall
have received evidence satisfactory to the Bank, in its sole discretion, that
Borrower has received advances of at least Eight Million Dollars ($8,000,000)
of Indebtedness on terms and conditions satisfactory to the Bank, in its sole
discretion, and the Bank, Borrower, and third-party lender of such Indebtedness
shall have entered into an Intercreditor and Subordination Agreement (the
"Subordination Agreement") on terms and conditions that are satisfactory to the
Bank, in its sole discretion, such terms and conditions to include, among other
things, provisions prohibiting (i) payments of principal or interest due on the
Subordinated Indebtedness after the occurrence and during the continuation of
an Event of Default or Unmatured Event Default and (ii) payments of
Subordinated Indebtedness principal unless Borrower is in compliance with the
covenants set forth in Section 5.18 (Subordinated Indebtedness Reduction
Certificate) and Section 6.13 (Payment of Subordinated Indebtedness).
3.15 Cash Liquidity. Borrower's available cash Deposits plus
unfunded availability under the Revolving Loan, minus current liabilities that
are not recurring, normal course of business obligations and minus payables
which are more than forty-five (45) days overdue shall total at least
$1,500,000.00 after taking into account the Initial Advance made under Sections
2.01 and 2.03.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Agreement and to make the
Loans hereunder, each Borrower represents and warrants to the Bank that:
4.01 Existence and Good Standing. The Borrower is a
corporation, duly organized, legally existing, and in good standing under the
Laws of its jurisdiction of incorporation; each Subsidiary is a corporation
duly organized, validly existing, and in good standing under the Laws of its
jurisdiction of incorporation; the Borrower and its Subsidiaries have the
lawful
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power to own their properties and to engage in the businesses they conduct, and
each is duly qualified and in good standing as a foreign corporation in the
jurisdictions wherein the nature of the business transacted by it or property
owned by it makes such qualification necessary; the jurisdictions in which the
Borrower and each Subsidiary are incorporated and qualified to do business are
set forth in Schedule 4.01; the addresses of all places of business of the
Borrower and its Subsidiaries are as set forth in Schedule 4.01; neither the
Borrower nor any Subsidiary has changed its name, been the surviving
corporation in a merger, acquired any business, or changed its principal
executive office within five (5) years and one (1) month prior to the date
hereof, except as disclosed on Schedule 4.01; the Borrower has no Subsidiaries
other than the Subsidiaries named in Schedule 4.01; and all of the authorized,
issued and outstanding shares of capital stock of each Subsidiary is owned by
the Borrower.
4.02 Due Authorization. The execution and delivery by the
Borrower of this Agreement and the borrowings hereunder; the execution and
delivery by the Borrower of the Notes and the Collateral Documents; the
acknowledgment by Borrower of the Subordination Agreement; and the repayment by
the Borrower of the Indebtedness evidenced by the Notes and interest and fees
provided in the Notes and this Agreement are (a) within the corporate power of
the Borrower; (b) have been duly authorized by all necessary corporate action,
and (c) do not and will not (i) require the consent of any regulatory authority
or governmental body, (ii) contravene or conflict with any provision of Law or
of the articles or bylaws of the Borrower, (iii) contravene or conflict with
any indenture, instrument or other agreement to which the Borrower is a party
or by which its property may be presently bound or encumbered, or (iv) result
in or require the creation or imposition of any mortgage, lien, pledge,
security interest, charge or other encumbrance in, upon or of any of the
properties or assets of the Borrower under any such indenture, instrument or
other agreement, other than under any of the Collateral Documents.
4.03 Valid and Binding Obligations. This Agreement, the Notes,
and the Collateral Documents, when duly executed and delivered, will be legal,
valid and binding obligations of and enforceable against the Borrower, in
accordance with their respective terms (subject to any applicable bankruptcy,
insolvency or other Laws of general application affecting creditors' rights,
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general equitable principles, whether considered in a proceeding in equity or
at law, and judicial decisions interpreting any of the foregoing).
4.04 Scope and Accuracy of Financial Statements. All Financial
Statements submitted and to be submitted to the Bank hereunder are and will be
complete and correct in all material respects, are and will be prepared in
accordance with GAAP consistently applied, and do and will fairly reflect the
financial condition and the results of the operations of the Borrower in all
material respects as of the dates and for the period stated therein (subject
only to normal year-end audit adjustments with respect to such unaudited
interim statements of the Borrower) and no material adverse change has since
occurred in the condition, financial or otherwise, of the Borrower.
4.05 Authorizations and Consents. Except as has been duly
obtained, no authorization, consent, approval, exemption, franchise, permit or
license of, or filing with, any governmental or public authority or any third
party is required to authorize, or is otherwise required in connection with the
valid execution and delivery by the Borrower of this Agreement, the Notes, the
Collateral Documents, and any other instrument contemplated hereby, the
repayment by the Borrower of advances against the Notes and interest and fees
provided in the Notes and this Agreement, or the performance by the Borrower of
its obligations under any of the foregoing.
4.06 Environmental Laws. The Borrower (A) is and has in the
past been in compliance with all Environmental Laws and all permits, requests
and notifications relating to health, safety or the environment applicable to
the Borrower or any of its properties, assets, operations and businesses; (B)
has obtained and adhered to and currently possesses all necessary permits and
other approvals, including interim status under the federal Resource
Conservation and Recovery Act, necessary to store, dispose of and otherwise
handle Hazardous Substances and to operate its properties, assets and
businesses; (C) has reported, to the extent required by all federal, state and
local statutes, Laws, ordinances, regulations, rules, permits, judgments,
orders and decrees, all past and present sites owned and/or operated by the
Borrower where any Hazardous Substance has been Released, treated, stored or
disposed of and (D) has not used, stored, or Released any
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Hazardous Substance in excess of amounts allowed by Environmental Law. There
is (x) no location on any property currently or previously owned or operated by
the Borrower where Hazardous Substances are known to have entered or are likely
to enter into the soil or groundwater of such property, other than Releases of
Hazardous Substances none of which Releases (i) either individually, or in the
aggregate, has had or may be expected to have material adverse effect on the
Borrower's business or (ii) has violated or may be expected to violate any
Environmental Laws or (iii) be subjected to remedial requirements thereunder,
and (y) no on-site or off-site location to which the Borrower has Released or
transported Hazardous Substances or arranged for the transportation or disposal
of Hazardous Substances, which is or is likely to be the subject of any
federal, state, local or foreign enforcement action or any investigation which
could lead to any material claims against any such entity for any clean-up
cost, remedial work, damage to natural resources, common Law or legal
liability, including, but not limited to, claims under Comprehensive
Environmental Response, Compensation, and Liability Act. For the purposes of
this Section, references to "the Borrower" shall include all predecessors,
successors-in-interest of Affiliates of the Borrower; provided, that the
representations and warranties set forth in this Section shall not be deemed to
have been breached with respect to any matter that would otherwise constitute a
breach of this Section if such matter would not reasonably be expected to
result in liabilities or expenditures by the Borrower in any single year in
excess of: (1) $100,000 as to any one matter; or (2) $200,000 in the aggregate
as to all such matters.
4.07 Compliance with Laws, Rules, Regulations and Orders.
Except to the extent that the failure to comply would not materially interfere
with the conduct of the business of the Borrower or any Subsidiary, each
Borrower and its Subsidiaries have complied with all applicable Laws with
respect to: (1) the conduct of its business; and (2) the use, maintenance, and
operation of the Collateral and personal properties owned or leased by it in
the conduct of its business; the Borrower and its Subsidiaries possess all
licenses, approvals, registrations, permits and other authorizations necessary
to enable it to carry on its business in all material respects as now
conducted, and all such licenses, approvals, registrations, permits and other
authorizations are in full force and effect; and the Borrower has no reason to
believe that the Borrower or any of its Subsidiaries will be unable to
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obtain the renewal of any such licenses, approvals, registrations, permits and
other authorizations.
4.08 Liabilities, Litigation and Restrictions. Except as
disclosed in the June 30, 1996 10-Q Report filed with the Securities and
Exchange Commission or as otherwise described on Schedule 4.09, the Borrower
and its Subsidiaries do not have any liabilities, direct or contingent, which
may materially and adversely affect it, its business or assets. There is no
litigation or other action of any nature pending before any court, governmental
instrumentality, regulatory authority or arbitral body or, to the knowledge of
the Borrower threatened against or affecting the Borrower or its Subsidiaries
which might reasonably be expected to result in any material, adverse change in
the Borrower or its Subsidiaries, or the business or assets of either. To the
knowledge of the Borrower no unusual or unduly burdensome restriction,
restraint or hazard exists by contract, Law, governmental regulation or
otherwise relative to the business or material properties of the Borrower other
than such as relate generally to Persons engaged in the business activities
conducted by the Borrower.
4.09 Existing Indebtedness. All Indebtedness of the Borrower
and any Subsidiary existing as of the Closing is described in Schedule 4.09;
and neither the Borrower nor any Subsidiary is in default with respect to any
of its Existing Indebtedness.
4.10 Material Commitments. Except as described in Schedule
4.10 hereto, (A) neither the Borrower nor any Subsidiary has any material
leases, contracts or commitments of any kind (including, without limitation,
employment agreements; collective bargaining agreements; powers of attorney;
distribution arrangements; patent license agreements; contracts for future
purchase or delivery of goods or rendering of services; bonuses, pension and
retirement plans; or accrued vacation pay, insurance and welfare agreements)
requiring aggregate expenditure by the Borrower in excess of $100,000 per year;
(B) to the best of the Borrower's knowledge, all parties to all such material
leases, contracts, and other commitments to which the Borrower or any
Subsidiary is a party have materially complied with the provisions of such
leases, contracts, and other commitments; and (C) to the best of the Borrower's
knowledge, no party is in material default under any thereof and no event has
occurred that but for the giving
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of notice or the passage of time, or both, would constitute a material default;
4.11 Margin Stock. The Borrower is not engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulations G, T, U, or X of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of any extension of credit under this
Agreement will be used to purchase or carry any such margin stock or to extend
credit to others for the purpose of purchasing or carrying margin stock.
Neither the Borrower nor any Person acting on its behalf has taken any action
that might cause the transactions contemplated by this Agreement or the Notes
to violate Regulations G, T, U, or X or to violate the Securities Exchange Act
of 1934, as amended.
4.12 Proper Filing of Tax Returns and Payment of Taxes Due.
Except as otherwise permitted herein, the Borrower has filed all federal,
state, and local tax returns and other reports required by any applicable Laws
to have been filed prior to the date hereof, has paid or caused to be paid all
taxes, assessments, and other governmental charges that are due and payable
prior to the date hereof, and has made adequate provision for the payment of
such taxes, assessments, or other charges accruing but not yet payable; the
Borrower has no knowledge of any material deficiency or additional assessment
in connection with any taxes, assessments, or charges not provided for on its
books.
4.13 ERISA. The Borrower is in compliance in all material
respects with all applicable provisions of ERISA. Neither a Reportable Event
nor a Prohibited Transaction has occurred and is continuing with respect to any
plan; no notice of intent to terminate a plan has been filed, nor has any plan
been terminated; no circumstances exist which constitute grounds under Section
4042 of ERISA entitling the PBGC to institute proceedings to terminate, or
appoint a trustee to administrate a plan, nor has the PBGC instituted any such
proceedings; neither the Borrower nor any ERISA Affiliate has completely or
partially withdrawn under Sections 4201 or 4204 of ERISA from a Multi-Employer
Plan; the Borrower and each ERISA Affiliate has met its minimum funding
requirements under ERISA with respect to all of its plans and the present value
of all vested benefits under each plan exceeds the fair market value of
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all plan assets allocable to such benefits, as determined on the most recent
valuation date of the plan and in accordance with the provisions of ERISA and
the regulations thereunder for calculating the potential liability of the
Borrower or any ERISA Affiliate to the PBGC or the plan under Title IV of
ERISA; and neither the Borrower nor any ERISA Affiliate has incurred any
liability to the PBGC under ERISA.
4.14 Investment Company Act Compliance. Neither the Borrower
nor any Subsidiary is directly or indirectly controlled by, or acting on behalf
of, any, Person which is an "Investment Company," within the meaning of the
Investment Company Act of 1940, as amended.
4.15 Public Utility Holding Company Act Compliance. The
Borrower is not a "holding company", or an "affiliate" of a "holding company"
or of a "subsidiary company" of a "holding company", within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
4.16 Insurance. The Borrower maintains insurance with respect
to the properties and business of the Borrower providing coverage for such
liabilities, casualties, risks and contingencies and in such amounts as is
customary in the industry. As of the date hereof, the insurance coverage
reflected on the Certificate(s) of Insurance attached hereto as Schedule 4.16
is in full force and effect, and, except as disclosed on Schedule 4.16, all
premiums due thereon have been paid.
4.17 Material Misstatements and Omissions. No express
representation or warranty by or with respect to the Borrower or any Subsidiary
contained herein or in any certificate or other document required by this
Agreement and furnished by the Borrower or any Subsidiary contains any untrue
statement of a material fact or omits to state a material fact necessary to
make such representation or warranty not misleading in light of the
circumstances under which it was made.
ARTICLE V.
AFFIRMATIVE COVENANTS
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Borrower covenants that so long as any Indebtedness of the
Borrower to the Bank remains unpaid under this Agreement, or any Obligations of
the Borrower to the Bank remain unsatisfied, or the Bank remains obligated to
make advances hereunder, to:
5.01 Use of Funds. Use the proceeds of the Initial Advance
under the Loan and Subordinated Indebtedness referred to in Section 3.14 for
the purposes set forth on Schedule 5.01.
5.02 Maintenance and Access to Records. Keep adequate records
in accordance with good accounting practices, of all of the transactions of the
Borrower so that at any time, and from time to time, the true and complete
financial condition of the Borrower may be readily determined and, at the
Bank's reasonable request, make all financial records and records relating to
the Collateral available for the Bank's inspection during normal business hours
and permit the Bank to make and take away copies thereof.
5.03 Quarterly Unaudited Financial Statements. Deliver to the
Bank, on or before the forty-fifth (45th) day after the end of each of the
first three fiscal quarters of the Borrower, unaudited Financial Statements of
the Borrower, as at the end of such period and from the beginning of such
fiscal year to the end of the respective period, as applicable, which Financial
Statements shall be certified by the president or chief financial officer of
the Borrower, as being true and correct, subject to changes resulting from
year-end audit adjustments.
5.04 Annual Audited Financial Statements. Deliver to the Bank,
on or before the ninetieth (90th) day after the close of each fiscal year of
the Borrower a copy of annual audited Financial Statements of the Borrower,
together with the report and opinion thereon of Ernst & Young, L.L.P., or other
firm of independent certified public accountants acceptable to the Bank at its
reasonable discretion.
5.05 Compliance Certificate. At the time of delivery of the
certified but unaudited Financial Statements pursuant to Section 5.03 above,
and the delivery of the annual audited Financial Statements pursuant to Section
5.04 above, deliver to the Bank a Compliance Certificate.
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5.06 Monthly Reports. Deliver to the Bank, on or before the
thirtieth (30th) day after the end of each calendar month a report in,
substantially the form set forth in Exhibit "E," certified by the Chairman of
the Board, President or Chief Financial Officer of NDE.
5.07 Statement of Material Adverse Change in Condition and
Notice of Events of Default. Deliver to the Bank, promptly upon any officer of
any Borrower having knowledge of any material adverse change in the condition,
financial or otherwise, of the Borrower (or any event or circumstance that
would result in any such material adverse change in condition including, but
not limited to, litigation and changes in business), a statement of the
Chairman of the Board, President or Chief Financial Officer of NDE, setting
forth the change in condition or event or circumstance likely to result in any
such change and the steps being taken by the Borrower with respect to such
change in condition or event or circumstance. In addition to this statement of
material adverse change, the Borrower and its Subsidiaries will each notify the
Bank immediately if it becomes aware of the occurrence of any Event of Default
or of any fact, condition, or event that only with the giving of notice or
passage of time or both, would become an Event of Default or if it becomes
aware of any material adverse change in the business prospects, financial
condition (including, without limitation, proceedings in bankruptcy,
insolvency, reorganization, or the appointment of a receiver or trustee), or
results of operations of the Borrower or any Subsidiary, or of the failure of
the Borrower to observe any of its undertakings hereunder or under the
Collateral Documents.
5.08 Additional Information. Furnish to the Bank all
information, if any, filed with the SEC by the Borrower and all information
routinely provided by the Borrower to its shareholders, generally. Furnish to
the Bank, promptly upon the Bank's reasonable request, such additional
financial or other information concerning the assets, liabilities, operations,
and transactions of the Borrower, including, without limitation, information
concerning title to any of the Collateral.
5.09 Compliance with Laws and Payment of Assessments and
Charges. Comply with all applicable statutes and government regulations,
including, without limitation, ERISA, and pay claims for labor, supplies, rent
and other obligations which, if unpaid,
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might become a lien against its property, except (a) any of the foregoing being
contested in good faith and as to which accruals satisfactory to the Bank, in
its reasonable discretion, have been provided and (b) where failure to do so
would not have a material adverse effect on the Borrower's business.
5.10 Maintenance of Corporate Existence and Good Standing.
Maintain each Borrower's corporate existence and good standing in the
jurisdiction of organization of each, and maintain the Borrower's qualification
and good standing in all other jurisdictions wherein the property now owned or
hereafter acquired or business now or hereafter conducted by each necessitates
same, other than those jurisdictions wherein the failure to so qualify will not
have a material adverse effect on the Borrower.
5.11 Further Assurances. Promptly cure any defects in the
execution and delivery of this Agreement, the Notes, the Collateral Documents,
the Subordination Agreement, or any other instrument referred to herein or
executed in connection with the Notes, and upon the reasonable request of the
Bank, promptly execute and deliver to the Bank all such other and further
instruments and additional documents, and provide such further information as
may be reasonably required or desired by the Bank from time to time to carry
out the terms of this Agreement or to maintain or reinstate compliance with the
covenants and agreements made in this Agreement.
5.12 Initial Expenses of the Bank. Pay all reasonable fees and
expenses of Xxxxxxxxx & Xxxxxx, L.L.P., the special legal counsel for the Bank
incurred in connection with the preparation of this Agreement, the Notes, the
Collateral Documents, the Subordination Agreement, and any other instrument
referred to herein or executed in connection with the Notes, the satisfaction
of the conditions precedent set forth in Article III of this Agreement and the
consummation of the transactions contemplated in this Agreement.
5.13 Subsequent Expenses of the Bank. Upon request, promptly
reimburse the Bank for all amounts reasonably expended, advanced or incurred by
the Bank to collect the Notes or to enforce the rights of the Bank under this
Agreement, the Notes, the Collateral Documents, or any other instrument
referred to herein or executed in connection with the Notes, which amounts
shall be
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deemed compensatory in nature and liquidated as to amount upon notice to the
Borrower by the Bank and which amounts will include, but not be limited to, (A)
all court costs, (B) reasonable attorneys' fees, (C) fees of auditors and
accountants, (D) investigation expenses, (E) internal fees of the Bank's
in-house legal counsel, (F) fees and expenses incurred in connection with the
Bank's participation as a member of the creditors committee in a case commenced
under Title 11 of the United States Code or other similar Law of the United
States, the State of Texas or any other jurisdiction, (G) fees and expenses
incurred in connection with lifting the automatic stay prescribed in Section
362 Title 11 of the United States Code, and (H) fees and expenses incurred in
connection with any action pursuant to Section 1129 Title 11 of the United
States Code, reasonably incurred by the Bank in connection with the collection
of any sums due under this Agreement, together with interest at the Floating
Rate per annum, calculated on a basis of a year of three hundred sixty-five
(365) days or three hundred sixty-six (366) days, as the case may be, on each
such amount from the date of notification to the Borrower that the same was
expended, advanced or incurred by the Bank until, but not including, the date
it is repaid to the Bank, with the obligations under this Section 5.13,
surviving the non-assumption of this Agreement in a case commenced under Title
11 of the United States Code or other similar Law of the United States, the
State of Texas or any other jurisdiction and being binding upon the Borrower or
a trustee, receiver or liquidator of any such party appointed in any such case.
5.14 Maintenance of Tangible Property. Maintain all of its
tangible property relating to the Collateral in good repair and condition and
make all necessary replacements thereof and operate such property in a good and
workmanlike manner in accordance with standard industry practices, unless the
failure to do so would not have a material adverse effect on the Borrower or
the value of any Collateral.
5.15 Maintenance of Insurance. Continue to maintain, or cause
to be maintained, insurance with respect to the properties and business of the
Borrower against such liabilities, casualties, risks and contingencies and in
such amounts with such maximum deductibles and minimum limits of liability as
are reasonably acceptable to the Bank and furnish to the Bank annually after
the execution of this Agreement certificates evidencing such insurance.
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5.16 Inspection of Tangible Assets/Right of Audit. Permit any
authorized representative of the Bank to visit and inspect (at the risk of the
Bank and/or such representative) any tangible asset of the Borrower, and/or to
audit the books and records of the Borrower, at the expense of the Bank and
during normal business hours following reasonable advance notice.
5.17 Payment of Revolving Note and Term Note and Performance of
Obligations. Pay the Notes according to the reading, tenor and effect thereof,
as modified hereby, and do and perform in all material respects every act and
discharge in all material respects all of the Obligations provided in this
Agreement to be performed and discharged hereunder.
5.18 Subordinated Indebtedness Reduction Certificate. Borrower
shall deliver a Subordinated Indebtedness Reduction Certificate prior to making
any payments of Subordinated Indebtedness principal.
5.19 Adjusted Liabilities to Adjusted Net Worth. Maintain a
ratio of Adjusted Liabilities to Adjusted Net Worth of not more than 2.25 to
1.0 through December 31, 1996; thereafter 1.75 to 1.0 through December 31,
1997, thereafter 1.25 to 1.0 through December 31, 1998; and thereafter 1.0 to
1.0.
5.20 Net Worth Requirement. Maintain a total Consolidated Net
Worth of not less than 90% of Consolidated Net Worth at the time of the Initial
Advance, plus: (a) 70% of Borrower's Net Income (if positive) subsequent to
Closing, calculated cumulatively as of the end of each fiscal quarter of
Borrower beginning with the quarter ending December 31, 1996, and (b) 100% of
any equity issued.
5.21 Debt Service Coverage Ratio. Maintain a Debt Service
Coverage Ratio (tested quarterly, beginning with the quarter that ends on
December 31, 1997) of not less than 1.5 to 1.0. The initial Debt Service
Coverage Ratio shall be calculated for the twelve-month period ending December
31, 1997, and all subsequent quarterly calculations of the Debt Service
Coverage Ratio shall be calculated on a rolling twelve-month basis.
5.22 General and Administrative Expenses. Maintain general and
administrative expenses at a level that (A) does not
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exceed $3,000,000 for each quarter ending March 31, 1997, through September 30,
1997, and not exceeding 30% of revenues for each twelve month period on a
rolling four quarter basis, beginning with the quarter ending December 31,
1997.
5.23 Borrowing Base. Maintain a Borrowing Base such that the
amount of the Borrower's outstanding Revolving Loan will not, at any time,
exceed the Revolving Commitment.
5.24 Compliance with Environmental Laws. Comply in all
material respects with any and all requirements of Law, including, without
limitation, Environmental Laws, (A) applicable to any natural or environmental
resource or media located on, above, within, in the vicinity of, related to or
affected by any Collateral or any other property of the Borrower, or (B)
applicable to the performance or conduct of is operations, including, without
limitation, all permits, licenses, registrations, approvals and authorizations,
and, in this regard, comply fully and in a timely manner with, and cause all
employees, crew members, agents, contractors, subcontractors and future lessees
(pursuant to appropriate lease provisions) of the Borrower while such Persons
are acting within the scope of their relationship with the Borrower, to so
comply with, all applicable requirements of Law, including, without limitation,
applicable Environmental Laws, and other applicable requirements with respect
to the property of the Borrower, as applicable, and the operation thereof
necessary or appropriate to enable the Borrower, as applicable, to fulfill its
obligations under all applicable requirements of Law, including, without
limitation, Environmental Laws, applicable to the use, generation, handling,
storage, treatment, transport and disposal of any Hazardous Substances now or
hereafter located or present on or under any such property.
5.25 Hazardous Substances Indemnification. Indemnify and hold
the Bank harmless from and against any and all claims, losses, damages,
liabilities, fines, penalties, charges, administrative and judicial proceedings
and orders, judgments, remedial actions, requirements and enforcement actions
of any kind, and all costs and expenses incurred in connection therewith
(including, without limitation, attorneys' fees and expenses), arising directly
or indirectly, in whole or in part, out of (A) the presence of any Hazardous
Substances on, under or from its property, whether prior to or during the term
hereof, or (B) any activity carried on or
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undertaken on or off its property, whether prior to or during the term hereof,
and whether by the Borrower, or any predecessor in title or any employees,
agents, contractors or subcontractors of the Borrower, or any predecessor in
title, or any third Persons at any time occupying or present on such property,
in connection with the handling, treatment, removal, storage, decontamination,
cleanup, transportation or disposal of any Hazardous Substances at any time
located or present on or under such property; with the foregoing indemnity
further applying to any residual contamination on or under the property of the
Borrower, or any property of any other Person, or affecting any natural
resources, and to any contamination of any property or natural resources
arising in connection with the generation, use, handling, storage,
transportation or disposal of any Hazardous Substances, irrespective of whether
any of such activities were or will be undertaken in accordance with applicable
requirements of Law, including, without limitation, Environmental Laws, and
surviving satisfaction of all Indebtedness of the Borrower to the Bank and the
termination of this Agreement, unless all such Indebtedness has been satisfied
wholly in cash from the Borrower and not by way of realization against any
property or the conveyance of any property of the Borrower in lieu thereof,
provided that the claims and other actions of any kind against the Bank which
give rise to such indemnity are not barred by the applicable statute of
limitations at the time such claims or actions are instituted and such
indemnity shall not extend to any act or omission by the Bank with respect to
the relevant property subsequent to the Bank becoming the owner of, taking
possession of to the exclusion of the Borrower or assuming operations of any
property previously owned by the Borrower and with respect to which property
such claim, loss, damage, liability, fine, penalty, charge, proceeding, order,
judgment, action or requirement arises subsequent to the acquisition of title
thereto, taking possession thereof or assumption of operations thereon by the
Bank.
5.26 Transactions with Affiliates. Except as otherwise set
forth in Schedule 5.26, conduct all transactions with any Affiliate of the
Borrower on an arm's-length basis (provided that such transactions are
otherwise permitted by the terms of this Agreement).
5.27 Payment of Taxes, Etc. The Borrower and its Subsidiaries
will each pay or cause to be paid when due, all taxes,
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assessments, and charges or levies imposed upon it or on any of its property or
which it is required to withhold and pay, except where contested in good faith
by appropriate proceedings with adequate reserves therefor having been set
aside on its books, provided, however, that the Borrower and its Subsidiaries
shall each pay or cause to be paid all such taxes, assessments, charges, or
levies forthwith whenever foreclosure on any lien that may have attached (or
security therefor) appears imminent.
5.28 Notice of Litigation. The Borrower and its Subsidiaries
will each give notice to the Bank within ten (10) working days of the
occurrence of: (A) any litigation or proceeding in which it is a party if an
adverse decision therein might require it to pay more than $250,000.00 or
deliver (or lose title to) assets the value of which exceeds such sum (whether
or not the claim is considered to be covered by insurance); and (B) the
institution of any other suit or proceeding involving the Borrower that would
reasonably be expected to materially and adversely affect its operations,
financial condition, property, or business prospects.
5.29 Notices Regarding Account Debtors. Upon the receipt by
the Borrower of any notice of the death of an account debtor or a partner
thereof, or of the dissolution, termination of existence, insolvency, business
failure, appointment of a receiver for any part of the property of, assignment
for the benefit of creditors by, or the filing of a petition in bankruptcy or
the commencement of any proceeding under any bankruptcy or insolvency laws by
or against, an account debtor, Borrower will immediately give the Bank written
advice thereof.
5.30 Notice of Change of Principal Offices. The Borrower and
its Subsidiaries will each notify the Bank thirty (30) days in advance of any
change in the location of their principal offices.
5.31 Employee Benefit Plans. Fund its Plan(s) in accordance
with no less than the minimum funding standards of 29 U.S.C.A. Section 1082
(Section 302 of ERISA); furnish the Bank, promptly after the filing or
receiving of the same, with copies of any reports or other statements filed
with, or notices or other communications received from, the United States
Department of Labor, the PBGC, or the Internal Revenue Service with respect to
any such Plan; promptly advise the Bank of the occurrence of any
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Reportable Event or Prohibited Transaction with respect to any such Plan and
the action the Borrower proposes to take with respect thereto; and promptly
advise the Bank when the Borrower knows or has reason to believe that the PBGC
or the Borrower has instituted or will institute proceedings under Title IV of
ERISA to terminate any such Plan and the action the Borrower proposes to take
with respect thereto.
5.32 Landlord Waivers. Within ninety (90) days of Closing,
Borrower shall deliver to Bank a schedule of all leased buildings or premises
where any Collateral located at or stored which indicates whether the
respective landlord has executed a waiver in the form attached hereto as
Exhibit "F" wherein the respective landlord of such leased building or premise
waives all liens it may have by contract, statute or otherwise, in favor of
Bank, together with all such executed waivers received by Borrower or its
agent. Borrower agrees to use commercially reasonable efforts to secure such
waivers during such ninety (90) day period.
5.33 Annual Collateral Review. Annually, within fifteen (15)
days after the anniversary of Closing, Borrower will deliver to the Bank a list
of (i) patents; (ii) trademarks; and (iii) licensing agreements; together with
an inventory of personal property having an acquisition cost in excess of
$5,000.00; acquired by Borrower during the twelve (12) month period prior to
such anniversary. Borrower covenants and agrees to promptly execute and
deliver to the Bank all such assignments, certificates, supplemental writings
and financing statements, and do all other acts or things, as the Bank may
reasonably request in order to fully evidence and perfect a security interest
in all of such personal property in favor of the Bank.
ARTICLE VI.
NEGATIVE COVENANTS
Without the prior written consent of the Bank and so long as any
part of the principal or interest on the Notes shall remain unpaid or the Bank
remains obligated to make advances hereunder, Borrower covenants, that it will
not:
6.01 Other Indebtedness. Incur, create, assume or suffer to
exist any Indebtedness, whether by way of loan or the issuance
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or sale of securities except (A) Loans hereunder, (B) loans and other
Indebtedness by the Bank under other credit arrangements, (C) accounts payable
incurred in the ordinary course of business which are in compliance with
Section 6.05, (D) loans, advances or extensions of credit from suppliers,
contractors or other nonaffiliated Persons under applicable contracts or
agreements in connection with Borrowers' customary business operations, which
are not overdue or are being contested in good faith, (E) Existing Indebtedness
described on Schedule 4.09, (F) Subordinated Indebtedness, (G) Subordinated
Commitment Indebtedness and (H) other Indebtedness not to exceed the total
aggregate amount of $750,000.00 at any time outstanding, excluding (i) the
$517,000 of Existing Indebtedness as item 2 in Schedule 4.09 and (ii) the
$300,000 Gilbarco Patent Note identified in Schedule 4.09.
6.02 Mortgages or Pledges of Assets. Create, incur, assume or
permit to exist, any mortgage, pledge, security interest, lien or encumbrance
on any of its properties or assets (now owned or hereafter acquired), except
that the foregoing restrictions shall not apply to Permitted Liens.
6.03 Sales of Assets. Without prior written consent of the
Bank, sell, lease, assign, transfer or otherwise dispose of, in one or any
series of related transactions, all or any portion of its material assets in
excess of $1,000,000 per annum, whether now owned or hereafter acquired,
including transfers to Subsidiaries, nor enter into any arrangement, directly
or indirectly, with any Person to sell and rent or lease back as lessee such
property or any part thereof which is intended to be used for substantially the
same purpose or purposes as the property sold or transferred.
6.04 Nature of Business. Permit any material change to be made
in the character of its business as conducted as of the date hereof, or permit
any Subsidiary to permit any material change to be made in the character of
such Subsidiary's business as conducted as of the date hereof.
6.05 Payment of Accounts Payable. Allow any account payable to
remain unpaid more than ninety (90) days after due date, except such as are
being contested in good faith and as to which adequate provision or accrual has
been made.
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6.06 Cancellation of Insurance. Allow any insurance policy
required to be carried hereunder to be terminated or lapse or expire without
provision for adequate renewal or replacement thereof.
6.07 Investments. Except as otherwise set forth on Schedule
6.07, make or permit to remain outstanding any loans or advances to or
Investments in any Person, except that the foregoing restriction shall not
apply to investments in direct obligations of the United States of America or
any agency thereof or certificates of deposit issued by the Bank.
6.08 Changes in Structure or Business. Consolidate or merge
with or purchase (for cash or securities) all or a substantial part of the
assets or capital stock of any corporation, firm, association or enterprise, or
allow any such entity to be merged into the Borrower, or change the basic
business operations of the Borrower.
6.09 Changes in Management. Unless otherwise agreed to in
writing by the Bank, Xxx Xxxxxxx shall remain as Chairman of NDE during the
term of this Agreement.
6.10 Limitation on Leases. Incur or otherwise become obligated
to make payments on operating and capital leases not incurred in the ordinary
course of business.
6.11 Restricted Payments. Except as provided on Schedule 6.11,
(A) declare or pay any dividend, (B) issue, purchase, redeem or otherwise
acquire for value any of its outstanding stock, or make any payment on account
of, or set apart assets for a sinking or other analogous fund for the purchase,
redemption, defeasance, retirement or other acquisition of any shares of any
class of capital stock of Borrower, (C) return any capital to its stockholders,
or (D) make any distribution of its assets to its stockholders as such
provided, however, if no Event of Default or Unmatured Event of Default has
occurred, Borrower may permit the accrual of obligations to pay dividends or
other similar distributions to its stockholders, provided such obligations are
fully subordinated to all of Borrower's obligations to the Bank or on terms
acceptable to the Bank.
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6.12 Margin Stock. Neither the Borrower nor any Subsidiary
will directly or indirectly apply any part of the proceeds of the Loans to the
purchasing or carrying of any "margin stock" within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System, or any regulations,
interpretations or rulings thereunder.
6.13 Payment of Subordinated Indebtedness. Make any payment of
Subordinated Indebtedness principal unless Borrower's Consolidated Net Worth
has increased during the period from December 31, 1996 to the end of the fiscal
quarter immediately preceding the quarter in which such payment of Subordinated
Indebtedness is proposed by an amount at least equal to 1.5 times the aggregate
amount of all prior principal payments of Subordinated Indebtedness plus the
amount of the proposed principal payment of Subordinated Indebtedness.
6.14 Capital Expenditures Limitation. Beginning with the
twelve-month period ending December 31, 1997, make Capital Expenditures in
excess of $2,000,000 per calendar year.
ARTICLE VII.
EVENTS OF DEFAULT
7.01 Enumeration of Events of Default. Any of the following
events shall be considered an Event of Default as that term is used herein:
(a) Default shall be made by the Borrower in the payment of
any installment of principal or interest (including, without limitation, any
mandatory prepayment payable pursuant to Section 2.08 of this Agreement) on the
Revolving Note, or Term Note, as applicable, or any other monetary obligation
payable hereunder when due, and such default continues for more than five (5)
days after the date that notice of such default is sent from the Bank to the
Borrower;
(b) Default shall be made by the Borrower in the due
observance or performance of any affirmative covenant required in this
Agreement, the Revolving Note, or Term Note, as applicable, or the Collateral
Documents, or the Subordination Agreement, and such
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default is continuing thirty (30) days after the date that notice of such
default is sent from the Bank to the Borrower;
(c) Default shall be made by the Borrower in the due
observance or performance of any negative covenant required in this Agreement,
the Notes, the Collateral Documents or the Subordination Agreement;
(d) Any representation or warranty herein made by the Borrower
proves to have been untrue when made or deemed made in any respect material to
the Borrower, or any representation, written statement (including Financial
Statements), or certificate furnished or made by the Borrower to the Bank in
connection herewith proves to have been untrue in any respect material to the
Borrower as of the date the facts therein set forth were stated or certified;
(e) Default shall be made by the Borrower (as principal or
other surety) in payment or performance of any other evidence of Indebtedness
for borrowed money owed to the Bank, or under any credit agreement, loan
agreement or indenture, with or benefitting the Bank;
(f) The Borrower (i) discontinues its usual business or
applies for or consents to the appointment of a receiver, trustee or liquidator
of it or all or a substantial part of its assets, or (ii) files a voluntary
petition commencing a case under Title 11 of the United States Code, seeking
liquidation, reorganization or rearrangement or taking advantage of any
bankruptcy, insolvency, debtor's relief or other similar Law of the United
States the State of Texas or any other jurisdiction, or (iii) makes a general
assignment for the benefit of creditors, or (iv) is unable, or admits in
writing its inability to pay its debts generally as they become due, or (v)
files an answer admitting the material allegations of a petition filed against
it in any case commenced under Title 11 of the United States Code or any
reorganization, insolvency, conservatorship or similar proceeding under any
bankruptcy, insolvency, debtor's relief or other similar Law of the United
States, the State of Texas or any other jurisdiction;
(g) An order, judgment or decree shall be entered against the
Borrower by any court of competent jurisdiction or by any other duly authorized
authority, on the petition of a creditor
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or otherwise, granting relief under Title 11 of the United States Code or under
any bankruptcy, insolvency, debtor's relief or other similar Law of the United
States, the Dominion of Canada, the State of Texas, or any other jurisdiction,
approving a petition seeking reorganization or an arrangement of its debts or
appointing a receiver, trustee, conservator, custodian or liquidator of it or
all or any substantial part of its assets, and the failure to have such order,
judgment or decree dismissed within thirty (30) days of its entry;
(h) The Borrower has concealed, removed, or permitted to be
concealed or removed, any part of its property, with intent to hinder, delay or
defraud its creditors or any of them; or has made or suffered a transfer of any
of its property which may be fraudulent under any the Bankruptcy, fraudulent
conveyance or similar Law; or has made any transfer of its property to or for
the benefit of a creditor at a time when other creditors similarly situated
have not been paid; or has suffered or permitted, while insolvent, any creditor
to obtain a lien upon any of its property through legal proceedings or
distraint which is not vacated within thirty (30) days from the date thereof;
(i) The Borrower has failed to provide a certificate affirming
the covenant under Section 6.13 at least five (5) Business Days prior to making
such payment of Subordinated Indebtedness principal and/or has violated the
covenant under Section 6.13;
(j) The Borrower shall default in the payment of any
Indebtedness in excess of $100,000; or
(k) A final judgment shall be entered against Borrower in the
amount of $100,000 or greater, which shall not have been vacated, discharged,
stayed or bonded pending appeal within sixty (60) days of the entry thereof.
7.02 Rights Upon Unmatured Event of Default. At any time that
there exists an Unmatured Event of Default, any obligation of the Bank
hereunder to make advances to or for the benefit of the Borrower shall be
suspended unless and until the Bank shall reinstate the same in writing, the
Unmatured Event of Default shall have been waived by the Bank or the relevant
Unmatured Event of
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Default shall have been remedied prior to ripening into an Event of Default.
7.03 Rights Upon Default. Upon the happening of an Event of
Default specified in Subsections 7.01 (f) or (g), the entire aggregate
principal amount of all Indebtedness then outstanding hereunder and the
interest accrued thereon shall automatically become immediately due and
payable, and upon the happening of any other Event of Default, the Bank may
declare the entire aggregate principal amount of all Indebtedness then
outstanding hereunder and the interest accrued thereon immediately due and
payable. In either case, the entire principal and interest shall thereupon
become immediately due and payable, without notice (including, without
limitation, notice of intent to accelerate maturity or notice of acceleration
of maturity) and without presentment, demand, protest, notice of protest or
other notice of default or dishonor of any kind, except as provided to the
contrary elsewhere herein, all of which are hereby expressly waived by the
Borrower.
Upon the happening of any Event of Default, all obligations (if
any) of the Bank hereunder, including specifically, but without limitation, any
obligation to make Loans hereunder, shall immediately cease and terminate
unless and until the Bank shall reinstate the same in writing.
7.04 Remedies. After any acceleration, as provided for in
Section 7.03, the Bank shall have, in addition to the rights and remedies given
them by this Agreement and the Collateral Documents, all those allowed by all
applicable Laws, including, but without limitation, the Uniform Commercial Code
as enacted in any jurisdiction in which any Collateral may be located. Without
limiting the generality of the foregoing, the Bank may immediately, without
demand of performance and without other notice (except as specifically required
by this Agreement or the Collateral Documents) or demand whatsoever to the
Borrower, all of which are hereby expressly waived, and without advertisement,
sell at public or private sale or otherwise realize upon, in Xxxxxx County,
Texas, or in any other place where the Collateral may be located, or in such
other place or places as the Bank may designate, the whole or, from time to
time, any part of the Collateral, or any interest which the Borrower may have
therein. After deducting from the proceeds of sale or other disposition of the
Collateral, all expenses (including all reasonable expenses for legal
services),
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the Bank shall apply such proceeds toward the satisfaction of the Obligations.
Any remainder of the proceeds after satisfaction in full of the Obligations
shall be distributed as required by applicable Laws. Notice of any sale or
other disposition shall be given to the Borrower at least ten (10) Business
Days before the time of any public sale or of the time after which any intended
private sale or other disposition of the Collateral is to be made, which the
Borrower hereby agrees shall be reasonable notice of such sale or other
disposition. The Borrower agrees to assemble, or to cause to be assembled, at
its own expense, the Collateral at such place or places as the Bank shall
designate. At any such sale or other disposition, the Bank may, to the extent
permissible under applicable Laws, purchase the whole or any part of the
Collateral, free from any right of redemption on the part of the Borrower,
which right is hereby waived and released. Without limiting the generality of
any of the rights and remedies conferred upon the Bank under this paragraph,
after any such acceleration the Bank may, to the full extent permitted by the
applicable Laws:
(A) Enter upon the premises of the Borrower (and, to the
extent necessary in the judgment of the Bank, exclude therefrom the Borrower or
any Affiliate thereof) and take immediate possession of the Collateral, either
personally or by means of a receiver appointed by a court of competent
jurisdiction, using all necessary force to do so;
(B) At the Bank's option, use, operate, manage, and control
the Collateral in any lawful manner;
(C) Collect and receive all rents, income, revenue, earnings,
issues, and profits therefrom; and
(D) Maintain, repair, renovate, alter, or remove the
Collateral as the Bank may determine in their discretion.
7.05 Right of Set-off. Upon the occurrence of any Event of
Default, the Bank may, and is hereby authorized by the Borrower, at any time
and from time to time, to the fullest extent permitted by applicable Laws,
without advance notice to the Borrower (any such notice being expressly waived
by the Borrower), set-off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and any other
indebtedness at any time owing by the Bank to or for the credit or the account
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of the Borrower against any or all of the Obligations of the Borrower now or
hereafter existing, whether or not such Obligations have matured and
irrespective of whether the Bank may have exercised any other rights that they
have or may have with respect to such Obligations, including, without
limitation, any acceleration rights. The Bank agrees promptly to notify the
Borrower after any such set-off and application, provided that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of the Bank under this Section 7.05 are in addition to the other
rights and remedies (including, without limitation, other rights of set-off)
which the Bank may have.
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ARTICLE VIII.
MISCELLANEOUS
8.01 Security Interests in Deposits and Right of Offset or the
Banker's Lien. The Borrower hereby transfers, assigns and pledges to the Bank
and/or grants to the Bank a security interest (as security for the payment
and/or performance of the Obligations of the Borrower, with such interest of
the Bank to be retransferred, reassigned and/or released by the Bank at the
expense of the Borrower upon payment in full and/or complete performance by the
Borrower of all such Obligations) and the right, exercisable at such time as
any Obligations hereunder shall mature, whether by acceleration of maturity or
otherwise, of offset or banker's lien against all funds or other property of
the Borrower now or hereafter or from time to time on deposit with or in the
possession of the Bank, including, without limitation, all certificates of
deposit and other depository accounts.
8.02 Survival of Representations, Warranties and Covenants.
All representations and warranties of the Borrower and all covenants and
agreements herein made shall survive the execution and delivery of the Notes
and this Agreement and shall remain in force and effect so long as any debt is
outstanding under the Notes, or any renewal or extension of this Agreement or
the Notes, or the Bank remains obligated to make advances hereunder.
8.03 Waiver of Rights. Borrower hereby expressly waives any
and all rights or privileges of marshalling of assets, sale in inverse order of
alienation, notices, appraisements, redemption and any prerequisite to the full
extent permitted by applicable law, in the event of foreclosure of the lien or
liens and/or security interests created by the Collateral Documents. Bank at
all times shall have the right to release any part of the Collateral now or
hereafter subject to the lien or security interest of any of the Collateral
Documents, any part the proceeds of production or other income assigned or
pledged, or any other security it now has or may hereafter have securing the
Obligations, without releasing any other part of the Collateral, proceeds or
income, and without affecting the liens or security interests described in the
Collateral Documents as to the part or parts thereof not so released, or the
right to receive future proceeds and income.
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8.04 Notices and Other Communications. Notices, requests and
communications hereunder shall be in writing and shall be sufficient in all
respects if delivered to the relevant address indicated below (including
delivery by registered or certified United States mail, telex, telegram or
hand):
If to the Borrower: NDE ENVIRONMENTAL CORPORATION
0000 Xxxxx Xxxxx Xxxx. 000
Xxxxxx, Xxxxx 00000
Attention: President
Facsimile: (000) 000-0000
With a copy to: NDE ENVIRONMENTAL CORPORATION
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxx Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
If to the Bank: BANK ONE, TEXAS, N.A.
000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx-Xxxxx
Facsimile: (000) 000-0000
With a copy to: XXXXXXXXX & GRUNDY, L.L.P.
0000 Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
Any party may, by proper written notice hereunder to the other,
change the individuals or addresses to which such notices to it shall
thereafter be sent.
8.05 Parties in Interest. All covenants and agreements herein
contained by or on behalf of the Borrower shall be binding upon the Borrower
and its successors and assigns and inure to the benefit of the Bank and its
successors and assigns.
8.06 Renewals and Extensions. All provisions of this Agreement
relating to the Notes shall apply with equal force and effect to each and all
promissory notes hereafter executed which in whole or in part represent a
renewal, extension, amendment,
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modification or rearrangement of any part of the Indebtedness originally
represented by the Notes.
8.07 No Waiver by the Bank. No course of dealing on the part
of the Bank, its officers or employees, nor any failure or delay by the Bank
with respect to exercising any of its rights, powers or privileges under this
Agreement, the Notes, the Collateral Documents, or any other instrument
referred to herein or executed in connection with the Notes shall operate as a
waiver thereof. The rights and remedies of the Bank under this Agreement, the
Notes, the Collateral Documents, or any other instrument referred to herein or
executed in connection with the Notes shall be cumulative and the exercise or
partial exercise of any such right or remedy shall not preclude the exercise of
any other right or remedy.
No advance of Loan proceeds hereunder shall constitute a waiver
of any of the covenants or warranties of the Borrower contained herein or of
any of the conditions to the Bank's obligation to make further advances
hereunder. In the event that the Borrower is unable to satisfy any such
covenant, warranty or condition, no such advance of Loan proceeds shall have
the effect of precluding the Bank from thereafter declaring such inability to
be an Event of Default as hereinabove provided.
8.08 INDEMNIFICATION. THE BORROWER HEREBY RELEASES AND AGREES
TO INDEMNIFY AND HOLD BANK AND ITS OFFICERS, EMPLOYEES, DIRECTORS AND AGENTS
(COLLECTIVELY THE "BANK PARTIES") HARMLESS, FROM AND AGAINST ALL CLAIMS,
DAMAGES, LIABILITIES AND EXPENSES, KNOWN OR UNKNOWN, ACCRUED AND UNACCRUED,
INCLUDING LIABILITY RELATING TO THE BANK PARTIES' OWN NEGLIGENCE OR STRICT
LIABILITY, UNLESS ATTRIBUTABLE TO THE BANK PARTIES' GROSS NEGLIGENCE OR WILFUL
MISCONDUCT, THAT MAY NOW OR HEREAFTER BE ASSERTED AGAINST ANY OF THE BANK
PARTIES IN CONNECTION WITH OR ARISING OUT OF ANY INVESTIGATION, LITIGATION OR
PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO OR ARISING OUT OF ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
8.09 GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL BE
DEEMED TO BE CONTRACTS MADE UNDER AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
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8.10 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules attached to this Agreement are incorporated herein for all purposes
and shall be considered a part of this Agreement.
8.11 Survival Upon Unenforceability. In the event any one or
more of the provisions contained in this Agreement, the Notes, the Collateral
Documents, or in any other instrument referred to herein or executed in
connection with the Notes shall, for any reason, be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof or of any other
instrument referred to herein or executed in connection herewith.
8.12 Rights of Third Parties. All provisions herein are
imposed solely and exclusively for the benefit of the Bank, the Borrower and no
other Person shall have standing to require satisfaction of such provisions in
accordance with their terms or be entitled to assume that the Bank will refuse
to make advances in the absence of strict compliance with any or all thereof
and any or all of such provisions may be freely waived in whole or in part by
the Bank at any time if in its sole discretion it deems it advisable to do so.
8.13 Amendments or Modifications. Neither this Agreement nor
any provision hereof may be changed, waived, discharged or terminated orally,
but only by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought.
8.14 Agreement Construed as an Entirety. This Agreement, for
convenience only, has been divided into Articles and Sections and it is
understood that the rights, powers, privileges, duties and other legal
relations of the parties hereto shall be determined from this Agreement as an
entirety and without regard to the aforesaid division into Articles and
Sections and without regard to headings prefixed to said Articles or Sections.
8.15 Number and Gender. Whenever the context requires,
reference herein made to the single number shall be understood to include the
plural and likewise the plural shall be understood to include the singular.
Words denoting sex shall be construed to include the masculine, feminine, and
neuter, when such construction
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is appropriate, and specific enumeration shall not exclude the general, but
shall be construed as cumulative.
8.16 AGREEMENT SUPERSEDES ALL PRIOR AGREEMENTS. THIS
AGREEMENT, TOGETHER WITH THE NOTES, THE COLLATERAL DOCUMENTS, AND ANY OTHER
WRITTEN INSTRUMENTS EXECUTED PURSUANT TO THIS AGREEMENT REPRESENT,
COLLECTIVELY, THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO
THE SUBJECT HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES AND SHALL
SUPERSEDE ANY PRIOR AGREEMENT BETWEEN THE PARTIES HERETO, WHETHER WRITTEN OR
ORAL, RELATING TO THE SUBJECT HEREOF. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
8.17 Controlling Provision Upon Conflict. In the event of a
conflict between the provisions of this Agreement and those of the Notes, the
Collateral Documents or any other instrument referred to herein or executed in
connection with the Notes, the provisions of this Agreement shall control;
provided if any of the Collateral Documents contain any representations,
warranties, or covenants of the Borrower that are in addition to or are more
restrictive on the Borrower than those set forth in this Agreement, such
additional or more restrictive representations, warranties, and covenants shall
control.
8.18 Time, Place and Method of Payments. All payments required
pursuant to this Agreement or the Notes shall be made in immediately available
funds; shall be deemed received by the Bank on the next Business Day following
receipt if such receipt is after 2:00 p.m., on any Business Day, and shall be
made at the principal banking quarters of the Bank.
8.19 Non-Application of Chapter 15 of Texas Credit Code. 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 this Agreement or any of the other Collateral Documents or
to the transactions contemplated hereby.
8.20 Counterpart Execution. This Agreement may be executed as
one instrument signed by all parties or in separate counterparts hereof, each
of which counterparts shall be considered an original and all of which shall be
deemed to be one instrument,
53
61
and any signed counterpart shall be deemed delivered by the party signing it if
sent to any other party hereto by electronic facsimile transmission.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
54
62
IN WITNESS WHEREOF, this Agreement is executed as of the date
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
55
63
BANK:
BANK ONE, TEXAS, N.A.
By: /s/ XXXXXXX XXXXXXXXX-XXXXX
--------------------------------
Xxxxxxx Xxxxxxxxx-Xxxxx
Vice President
56
64
EXHIBIT "A-1"
REVOLVING NOTE
$5,000,000.00 October 25, 1996
FOR VALUE RECEIVED, NDE ENVIRONMENTAL CORPORATION, a Delaware
corporation, TANKNOLOGY/NDE CORPORATION, a Delaware corporation, PROECO, INC.,
a Delaware corporation, and TANKNOLOGY CANADA (1988) INC., a Canadian federal
corporation, all of the foregoing having an address at 0000 Xxxxx Xxxxx Xxxx.
000, Xxxxxx, Xxxxx 00000, and USTMAN INDUSTRIES, INC., a Delaware corporation,
having an address at 00000 Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000
(collectively, "Borrower") unconditionally promise to pay to the order of BANK
ONE, TEXAS, NATIONAL ASSOCIATION, (herein called "Bank"), at its offices at 000
Xxxxxx, Xxxxxxx, Xxxxx 00000, the principal sum of FIVE MILLION DOLLARS
($5,000,000.00) or, if less, the aggregate unpaid principal amount of all Loans
(as defined in the Loan Agreement) made by the Bank to the Borrower pursuant to
the Loan Agreement, as shown in the records of the Bank, outstanding on such
date.
The undersigned also promise to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Loan Agreement; provided,
however, that in no event shall such interest exceed the Maximum Rate (as
hereinafter defined).
"Maximum Rate" means the Maximum Rate of non-usurious interest permitted
from day to day by Applicable Law.
"Applicable Law" means that law in effect from time to time and
applicable to this Note which lawfully permits the charging and collection of
the highest permissible lawful, non-usurious rate of interest on this Note,
including laws of the State of Texas and laws of the United States of America.
It is intended that Article 1.04, Title 79, Revised Civil Statutes of Texas,
1927, as amended (Article 5069-1.04, as amended, Vernon's Texas Civil Statutes)
shall be included in the laws of the State of Texas in determining Applicable
Law; and for the purpose of applying said Article 1.04 to this Note, the
interest ceiling applicable to this Note under
___________________
Borrower's Initials
-1-
65
said Article 1.04 shall be the indicated weekly rate ceiling from time to time
in effect. The Borrower and the Bank hereby agree that Chapter 15 of Subtitle
3, Title 79, Revised Civil Statutes of Texas, 1925, as amended, shall not apply
to this Note or the loan transaction evidenced by, and referenced in, the Loan
Agreement (hereinafter defined) in any manner, including without limitation, to
any account or arrangement evidenced or created by, or provided for in, this
Note.
In no event shall the aggregate of the interest on this Note, plus any
other amounts paid in connection with the loan evidenced by this Note which
would under Applicable Law be deemed "interest," ever exceed the maximum amount
of interest which, under Applicable Law, could be lawfully charged on this
Note. The Bank and the Borrower specifically intend and agree to limit
contractually the interest payable on this Note to not more than an amount
determined at the Maximum Rate. Therefore, none of the terms of this Note or
any other instruments pertaining to or securing this Note shall ever be
construed to create a contract to pay interest at a rate in excess of the
Maximum Rate, and neither the Borrower nor any other party liable herefor shall
ever be liable for interest in excess of that determined at the Maximum Rate,
and the provisions of this paragraph shall control over all provisions of this
Note or of any other instruments pertaining to or securing this Note. If any
amount of interest taken or received by the Bank shall be in excess of the
maximum amount of interest which, under Applicable Law, could lawfully have
been collected on this Note, then the excess shall be deemed to have been the
result of a mathematical error by the parties hereto and shall be refunded
promptly to the Borrower. All amounts paid or agreed to be paid in connection
with the indebtedness evidenced by this Note which would under Applicable Law
be deemed "interest" shall, to the extent permitted by Applicable Law, be
amortized, prorated, allocated and spread throughout the full term of this
Note.
This Note is the Revolving Note referred to in and is entitled to the
benefits of a certain Loan Agreement, dated as of October 25, 1996 (as the same
may be amended, modified, supplemented, extended, rearranged and/or restated
from time to time, the "Loan Agreement"), entered into by and among NDE
Environmental Corporation, et al., as Borrower, and Bank One, Texas, National
Association and secured by the Collateral Documents (as such term is defined in
the Loan Agreement). Reference is hereby made to the
___________________
Borrower's Initials
-2-
66
Loan Agreement for a statement of the prepayment rights and penalties and
obligations of the Borrower, a description of the properties and assets
mortgaged, encumbered and assigned, the nature and extent of the security and
the rights of the parties to the Collateral Documents in respect of such
security, and for a statement of the terms and conditions under which the due
date of this Note may be accelerated. Upon the occurrence of any Event of
Default as specified in the Loan Agreement, the principal balance hereof and
the interest accrued hereon may be declared to be forthwith due and payable in
accordance with the Loan Agreement, and any indebtedness of the holder hereof
to the Borrower may be appropriated and applied hereon.
In addition to and not in limitation of the foregoing, the undersigned
further agrees, subject only to any limitation imposed by applicable law, to
pay all reasonable expenses, including reasonable attorneys' fees and legal
expenses, incurred by the holder of this Note in endeavoring to collect any
amounts payable hereunder which are not paid when due, whether by acceleration
or otherwise.
All parties hereto, whether as makers, endorsees, or otherwise,
severally waive presentment for payment, demand, protest, notice of intent to
accelerate, notice of acceleration and notice of dishonor.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF TEXAS AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
EXECUTED this 25th day of October, 1996.
NDE ENVIRONMENTAL CORPORATION TANKNOLOGY/NDE CORPORATION
By: By:
------------------------------ ----------------------------------
Xxx Xxxxx Xxxxxxx Xxx Xxxxx Xxxxxxx
Chairman of the Board Chairman of the Board
___________________
Borrower's Initials
-3-
67
USTMAN INDUSTRIES, INC.
By:
----------------------------------
Xxx Xxxxx Xxxxxxx
Chairman of the Board
PROECO, INC.
By:
----------------------------------
Xxx Xxxxx Xxxxxxx
Chairman of the Board
TANKNOLOGY CANADA (1988) INC.
By:
----------------------------------
Xxx Xxxxx Xxxxxxx
President
-4-
68
EXHIBIT "A-2"
TERM NOTE
$6,000,000.00 October 25, 1996
FOR VALUE RECEIVED, NDE ENVIRONMENTAL CORPORATION, a Delaware
corporation, TANKNOLOGY/NDE CORPORATION, a Delaware corporation, PROECO, INC.,
a Delaware corporation, and TANKNOLOGY CANADA (1988) INC., a Canadian federal
corporation, all of the foregoing having an address at 0000 Xxxxx Xxxxx Xxxx.
000, Xxxxxx, Xxxxx 00000, and USTMAN INDUSTRIES, INC., a Delaware corporation,
having an address at 00000 Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000
(collectively, "Borrower") unconditionally promise to pay to the order of BANK
ONE, TEXAS, NATIONAL ASSOCIATION, (herein called "Bank"), at its offices at 000
Xxxxxx, Xxxxxxx, Xxxxx 00000, the principal sum of SIX MILLION DOLLARS
($6,000,000.00).
The undersigned also promise to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Loan Agreement; provided,
however, that in no event shall such interest exceed the Maximum Rate (as
hereinafter defined).
"Maximum Rate" means the Maximum Rate of non-usurious interest permitted
from day to day by Applicable Law.
"Applicable Law" means that law in effect from time to time and
applicable to this Term Note which lawfully permits the charging and collection
of the highest permissible lawful, non-usurious rate of interest on this Term
Note, including laws of the State of Texas and laws of the United States of
America. It is intended that Article 1.04, Title 79, Revised Civil Statutes of
Texas, 1927, as amended (Article 5069-1.04, as amended, Vernon's Texas Civil
Statutes) shall be included in the laws of the State of Texas in determining
Applicable Law; and for the purpose of applying said Article 1.04 to this Note,
the interest ceiling applicable to this Note under said Article 1.04 shall be
the indicated weekly rate ceiling from time to time in effect. The Borrower
and the Bank hereby agree that Chapter 15 of Subtitle 3, Title 79, Revised
Civil Statutes of Texas, 1925, as amended, shall
___________________
Borrower's Initials
-1-
69
not apply to this Term Note or the loan transaction evidenced by, and
referenced in, the Loan Agreement (herein defined) in any manner, including
without limitation, to any account or arrangement evidenced or created by, or
provided for in, this Term Note.
In no event shall the aggregate of the interest on this Term Note, plus
any other amounts paid in connection with the loan evidenced by this Term Note
which would under Applicable Law be deemed "interest," ever exceed the maximum
amount of interest which, under Applicable Law, could be lawfully charged on
this Term Note. The Bank and the Borrower specifically intend and agree to
limit contractually the interest payable on this Term Note to not more than an
amount determined at the Maximum Rate. Therefore, none of the terms of this
Term Note or any other instruments pertaining to or securing this Note shall
ever be construed to create a contract to pay interest at a rate in excess of
the Maximum Rate, and neither the Borrower nor any other party liable herefor
shall ever be liable for interest in excess of that determined at the Maximum
Rate, and the provisions of this paragraph shall control over all provisions of
this Term Note or of any other instruments pertaining to or securing this Term
Note. If any amount of interest taken or received by the Bank shall be in
excess of the maximum amount of interest which, under Applicable Law, could
lawfully have been collected on this Note, then the excess shall be deemed to
have been the result of a mathematical error by the parties hereto and shall be
refunded promptly to the Borrower. All amounts paid or agreed to be paid in
connection with the indebtedness evidenced by this Note which would under
Applicable Law be deemed "interest" shall, to the extent permitted by
Applicable Law, be amortized, prorated, allocated and spread throughout the
full term of this Term Note.
This Note is the Term Note referred to in and is entitled to the
benefits of a certain Loan Agreement, dated as of October 25, 1996 (as the same
may be amended, modified, supplemented, extended, rearranged and/or restated
from time to time, the "Loan Agreement"), entered into by and among NDE
Environmental Corporation, et al., as Borrower, and Bank One, Texas, National
Association and secured by the Collateral Documents (as such term is defined in
the Loan Agreement). Reference is hereby made to the Loan Agreement for a
statement of the prepayment rights and penalties and obligations of the
Borrower, a description of the properties and assets mortgaged, encumbered and
assigned, the
___________________
Borrower's Initials
-2-
70
nature and extent of the security and the rights of the parties to the
Collateral Documents in respect of such security, and for a statement of the
terms and conditions under which the due date of this Term Note may be
accelerated. Upon the occurrence of any Event of Default as specified in the
Loan Agreement, the principal balance hereof and the interest accrued hereon
may be declared to be forthwith due and payable in accordance with the Loan
Agreement, and any indebtedness of the holder hereof to the Borrower may be
appropriated and applied hereon.
In addition to and not in limitation of the foregoing, the undersigned
further agrees, subject only to any limitation imposed by applicable law, to
pay all reasonable expenses, including reasonable attorneys' fees and legal
expenses, incurred by the holder of this Term Note in endeavoring to collect
any amounts payable hereunder which are not paid when due, whether by
acceleration or otherwise.
All parties hereto, whether as makers, endorsees, or otherwise,
severally waive presentment for payment, demand, protest, notice of intent to
accelerate, notice of acceleration and notice of dishonor.
THIS TERM NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF
THE STATE OF TEXAS AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
EXECUTED this 25th day of October, 1996.
NDE ENVIRONMENTAL CORPORATION TANKNOLOGY/NDE CORPORATION
By: By:
------------------------------ ----------------------------------
Xxx Xxxxx Xxxxxxx Xxx Xxxxx Xxxxxxx
Chairman of the Board Chairman of the Board
USTMAN INDUSTRIES, INC.
By:
----------------------------------
Xxx Xxxxx Xxxxxxx
Chairman of the Board
___________________
Borrower's Initials
-3-
71
PROECO, INC.
By:
----------------------------------
Xxx Xxxxx Xxxxxxx
Chairman of the Board
TANKNOLOGY CANADA (1988) INC.
By:
----------------------------------
Xxx Xxxxx Xxxxxxx
President
-4-
72
EXHIBIT "B"
Compliance Certificate
I, the _____________________________ of NDE ENVIRONMENTAL
CORPORATION (the "Company"), pursuant to Section 5.05 of the Loan Agreement
dated as of October 25, 1996, by and among BANK ONE, TEXAS, N.A. ("Bank") and
the Company (the "Agreement") do hereby certify, as of the date hereof, that to
my knowledge:
1. No Event of Default (as defined in the Agreement) has occurred
and is continuing, and no Unmatured Event of Default (as defined
in the Agreement) has occurred and is continuing except for the
following events (include actions taken to cure such situations):
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
;
------------------------------------------------------
2. No material adverse change has occurred in the condition,
financial or otherwise, of the Company since ________________;
3. Except as otherwise stated in the Schedule, if any, attached
hereto, each of the representations and warranties of the Company
contained in Article IV of the Agreement is true and correct in
all respects; and
73
4. The Company's financial condition for the month ending __________
is as follows:
=====================================================================================================================
Financial Covenant Time Period Required Ratio Actual Ratio
=====================================================================================================================
(a) Net Worth Term of Loan Not less than 90% of
Consolidated Net Worth
at the time of the
Initial Advance plus 70%
of Borrower's Net Income
(if positive) 100% of
any equity issued
---------------------------------------------------------------------------------------------------------------------
(b) Capital Expenditures Term of Loan Not more than $2,000,000
for the current calendar
year
---------------------------------------------------------------------------------------------------------------------
(c) Debt Service Coverage Ratio Term of Loan Not less than 1.5 to 1.0
---------------------------------------------------------------------------------------------------------------------
(d) Adjusted Liabilities to Term of Loan Through 12/31/96:
Adjusted Net Worth not more than 2.25 to
1.0
1/1/97 - 12/31/97:
not more than 1.75 to
1.0
1/1/98 - 12/31/98:
not more than 1.25 to
1.0
After 12/31/98:
not more than 1.0 to 1.0
=====================================================================================================================
This certificate is executed this ___ day of ___________ 199__.
NDE ENVIRONMENTAL CORPORATION
---------------------------------------
By:
-----------------------------------
Its:
----------------------------------
-2-
74
EXHIBIT "C"
BORROWING BASE CERTIFICATE
I, the _____________________________ of NDE ENVIRONMENTAL
CORPORATION (the "Company"), pursuant to Section 2.06 of the Loan Agreement
dated as of October 25, 1996, by and among BANK ONE, TEXAS, N.A. ("Bank"), the
Company (the "Agreement") do hereby certify, as of the date hereof, that to my
knowledge:
1. The Borrowing Base calculated pursuant to the Agreement
effective as of ____________, 199__, is $___________.
2. The Borrowing Base stated in paragraph 1 hereof is the
lesser of (a) $5,000,000.00, or (b) seventy-five per cent (75%) of Eligible
Accounts of the Company.
3. The Eligible Accounts of the Company total $_________,
which is comprised of the following components:
a. Total of Accounts meeting the following criteria:
$___________
(1) The Account arose from a bona fide outright sale of
Goods by the Company or from bona fide services performed by the
Company, and such Goods have been shipped to the appropriate
account debtors or their designees (or the sale has otherwise
been consummated), or the services have been performed for the
appropriate account debtors;
(2) The Account is based upon an enforceable order or
contract, written or oral, for Goods shipped or held or for
services performed, and the same were shipped, held, or performed
in accordance with such order or contract;
(3) The title of the Company to the Account and, except
as to the account debtor, to any Goods is absolute and is not
subject to any prior assignment, claim, lien, or security
interest, except Permitted Liens;
75
(4) The amount shown on the books of the Company and on
any invoice or statement delivered to the Bank is owing to the
Company; and
(5) The account debtor has not returned or refused to
retain, or otherwise notified the Company of any dispute
concerning, or claimed nonconformity of, any of the Goods or
services from the sale of which the Account arose;
b. Minus the sum of:
(1) $____________ for any claim of reduction,
counterclaim, set-off, recoupment, or any claim for credits,
allowances, or adjustments by the account debtor of any of the
foregoing Accounts, because of returned, inferior, or damaged
Goods or unsatisfactory services, or for any other reason;
(2) $____________ for any partial payment that has been
made on any of the foregoing Accounts by anyone;
(3) $____________ for any part of any of the foregoing
Accounts that is due and payable more than thirty (30) days from
the date of the invoice therefor;
(4) $____________ for any part of any of the foregoing
Accounts is more than ninety (90) days past due or is outstanding
more than one hundred twenty (120) days from the date of the
invoice therefore;
(5) $____________ for any of the foregoing Accounts
that arise out of a contract with, or order from, an account
debtor that, by its terms, forbids or makes void or unenforceable
the assignment by the Company to the Bank of the Account arising
with respect thereto;
(6) $____________ for the amount or value of any note,
trade acceptance, draft, or other Instrument with respect to, or
in payment of, any of the foregoing Accounts, or any Chattel
Paper with respect to the Goods giving rise to any such Account,
unless, if any such Instrument or Chattel Paper has been
received, the
-2-
76
Company has notified the Bank and, at the Banks's request, has
endorsed or assigned and delivered the same to the Bank;
(7) $____________ for any Account payable by an account
debtor as to which the Company has received any notice of the
death of the account debtor or a partner thereof; or of the
dissolution, termination of existence, insolvency, business
failure, appointment of a receiver for any part of the property
of, assignment for the benefit of creditors by, or the filing of
a petition in bankruptcy or the commencement of any proceeding
under any bankruptcy or insolvency laws by or against, the
account debtor;
(8) $____________ for any Account payable by an account
debtor that is a Subsidiary or other Affiliate of the Company;
(9) $____________ for any Account payable by an account
debtor whose principal place of business is outside of the United
States of America, its territories and possessions;
(10) $____________ for the aggregate amount of all
Accounts owed by any account debtor as to which more than 15% of
such account debtor's aggregate Account total is more than ninety
(90) days past due or is outstanding more than one hundred twenty
(120) days from the date of the invoice therefore;
(11) $____________ for any Account insofar as such
Account constitutes more than twenty-five percent (25%) of the
aggregate total of Eligible Accounts in (a) hereinabove; and
(12) $____________ for any Account that Bank has given
notice to Company that the Bank has deemed such Account
ineligible (i) because of a reasonable uncertainty about the
creditworthiness of the account debtor; or (ii) because the Bank
otherwise reasonably considers the collateral value thereof to
the Bank to be
-3-
77
impaired or its ability to realize such value to be insecure.
4. The worksheet used to calculate the Borrowing Base is
attached as Exhibit "A".
This certificate is executed this ___ day of ____________ 199__.
NDE ENVIRONMENTAL CORPORATION
By:
----------------------------------
Its:
---------------------------------
-4-
78
EXHIBIT "D-1"
SUBSTANCE OF OPINION OF COUNSEL
Xxxxx & Xxxxx, L.L.P.
(1) The Borrower and the Subsidiaries are corporations duly
organized, existing, and in good standing under the Laws of their respective
states of incorporation [naming such states] and are qualified to transact
business and are in good standing in those states where the nature of business
or property owned by them requires qualification, as set forth in Schedule
4.01, attached hereto and made a part hereof, and, to the knowledge of such
counsel, are not required to be qualified as a foreign corporation in any other
jurisdiction;
(2) The Borrower has the power to execute and deliver this Agreement,
to borrow money hereunder, to grant the Collateral required hereunder, to
execute and deliver the Note, and Collateral Documents, and to perform its
obligations hereunder and thereunder;
(3) All corporate actions by the Borrower and all consents and
approvals of any Persons necessary to the validity of this Agreement, the Note,
the Collateral Documents, and each other document to be delivered hereunder
have been duly taken or obtained, and this Agreement, Note, and Collateral
Documents, and such other documents do not conflict with any provision of the
charter or by-laws of the Borrower, or of any applicable Laws, or any other
agreement binding the Borrower or its property of which, after reasonable
inquiry, such counsel has knowledge;
(4) This Agreement, the Note, and Collateral Documents to be
delivered hereunder have been duly executed by, and each is a valid and binding
obligation of, the Borrower; each of the foregoing documents is in all respects
sufficient to achieve its purported function and is enforceable in accordance
with its terms, except as limited by bankruptcy, insolvency, reorganization,
moratorium, or other similar laws affecting creditors' rights generally or by
general equitable principles; and
(5) The Pledged Stock constitutes all of the issued and outstanding
capital stock of the respective issuers thereof, and all of the Pledged Stock
has been duly issued and is fully paid and nonassessable.
79
EXHIBIT "D-2"
SUBSTANCE OF OPINION OF COUNSEL
Banc One Capital Corporation Legal Department
(1) The Subordinated Lender (as identified in the Subordination
Agreement) has the power to execute and deliver the Subordination Agreement,
and to perform its obligations thereunder;
(2) All corporate actions by the Subordinated Lender and all consents
and approvals of any Persons necessary to the validity of the Subordination
Agreement and any document to be delivered thereunder have been duly taken or
obtained, and the Subordination Agreement, and such other documents, do not
conflict with any provision of the charter or by-laws of the Subordinated
Lender, or of any applicable Laws, or any other agreement binding the
Subordinated Lender or its property of which, after reasonable inquiry, such
counsel has knowledge;
(3) The Subordination Agreement to be delivered hereunder has been
duly executed by, and is a valid and binding obligation of, the Subordinated
Lender (as defined therein); is in all respects sufficient to achieve its
purported function; and is enforceable in accordance with its terms, except as
limited by bankruptcy, insolvency, reorganization, moratorium, or other similar
laws affecting creditors' rights generally or by general equitable principles.
80
EXHIBIT "E"
MONTHLY REPORT
81
EXHIBIT "F"
FORM OF LANDLORD'S WAIVER
LANDLORD'S WAIVER
STATE OF ______________ )
)
COUNTY OF _____________ )
WHEREAS, ____________________________, a _____________________
("Landlord"), whose address is ___________________________________,
____________________________, is the owner of real property located at
________________________________________________________________ which is more
particularly described on Annex "A" attached hereto (the "Premises").
WHEREAS, Landlord has leased the Premises to _______________, a
_____________________ ("Tenant"), whose address is ______________
__________________________________________________________________.
WHEREAS, Tenant has granted BANK ONE, TEXAS, N.A., ("Lender") a first
priority security interest in certain property that may from time to time be
located in and on the Premises as security for any and all loans and other
extensions of credit that Lender may make to Tenant from time to time.
WHEREAS, Lender is willing to make such loans and extensions of credit
if Landlord waives any and all claims, demands, and rights that Landlord may
have or hereafter acquire with respect to such property.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Landlord agrees as follows:
1. Landlord hereby waives and releases in favor of Lender any and
all liens, security interests, claims, demands, causes of action, actions, and
other rights, however arising, including, without limitation, the right to
levy, distrain, xxx, execute, or sell for unpaid rent or other indebtedness of
Tenant to Landlord,
82
which Landlord now has or may hereafter acquire with respect to property of
Tenant now or hereafter located in or on the Premises (regardless of whether
such property is now owned or hereafter acquired by Tenant), including without
limitation, all of Tenant's machinery, equipment, furniture, fixtures,
inventory, goods, and merchandise and all additions, replacements, and
substitutions therefor, and all proceeds thereof located in or on the Premises
(collectively, the "Property").
2. Landlord agrees that Lender, through its authorized
representatives or agents, may enter upon the Premises at any time and from
time to time for the purpose of inspecting, repairing, removing, or conducting
a sale or sales of any or all of the Property. Landlord further agrees that
Lender shall have no obligation or liability to Landlord except for gross
negligence or willful misconduct on the part of Lender.
3. Landlord represents and warrants to Lender that Tenant has
complied with all obligations owed to Landlord by Tenant, including, without
limitation, the payment of rent. Landlord agrees to give Lender prompt written
notice of the occurrence of any condition or event which, with the giving of
notice or passage of time or both, would permit Landlord to terminate any lease
by Tenant of all or any part of the Premises or accelerate any rent due
thereunder.
4. This Landlord's Waiver shall be governed by and construed in
accordance with the laws of the State of Texas. This Landlord's Waiver shall
be binding upon Landlord and its successors and assigns.
IN WITNESS WHEREOF, Landlord has executed this Landlord's Waiver as of
the ____ day of _________________________, 199_.
LANDLORD
--------
-------------------------------------
By:
---------------------------------
Its:
--------------------------------
83
AFTER RECORDATION, RETURN TO:
Xxxxx Xxxxx Xxxxxx, III
Xxxxxxxxx & Xxxxxx, L.L.P.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
84
INDIVIDUAL ACKNOWLEDGMENT
STATE OF ______________ )
)
COUNTY OF ______________ )
This instrument was acknowledged before me on the ____ day of
_____________________, 199__, by _________________________________.
-------------------------------------
Printed Name:
-----------------------
Notary Public, State of
-------------
My Commission Expires:
--------------
CORPORATE ACKNOWLEDGMENT
STATE OF ______________ )
)
COUNTY OF ______________ )
This instrument was acknowledged before me on the ____ day of
_____________________, 199__, by _________________________________, the
__________________ of ______________________, on behalf of said corporation.
-------------------------------------
Printed Name:
-----------------------
Notary Public, State of
-------------
My Commission Expires:
--------------
PARTNERSHIP ACKNOWLEDGMENT
STATE OF ______________ )
)
COUNTY OF ______________ )
This instrument was acknowledged before me on the ____ day of
_____________________, 199__, by _________________________________, the
__________________ of ______________________, on behalf of said partnership.
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Printed Name:
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Notary Public, State of
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My Commission Expires:
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