Exhibit 10.64
AMENDMENT NO. 4 TO LOAN AGREEMENT
DATED OCTOBER 25, 1996
BY AND BETWEEN TANKNOLOGY-NDE INTERNATIONAL, INC.,
TANKNOLOGY/NDE CORPORATION,
TANKNOLOGY-NDE CONSTRUCTION SERVICES, INC.,
PROECO, INC. AND 2368692 CANADA, INC.
AND
BANK ONE, TEXAS, N.A.
This Amendment No. 4 ("Fourth Amendment") to the Loan Agreement dated as of
the 25th day of October, 1996, as amended (the "Loan Agreement"), by and among
TANKNOLOGY-NDE INTERNATIONAL, INC. (formerly known as NDE ENVIRONMENTAL
CORPORATION) ("NDE"), a Delaware corporation, TANKNOLOGY/NDE CORPORATION, a
Delaware corporation, PROECO, INC., a Delaware corporation, 2368692 CANADA, INC.
(formerly known as TANKNOLOGY CANADA (1988) INC.), a Canadian federal
corporation, and TANKNOLOGY-NDE CONSTRUCTION SERVICES, INC., a Delaware
corporation (collectively, "Borrower") and BANK ONE, TEXAS, N.A., a national
banking association (the "Bank") is entered into this 26th day of June 1998.
W I T N E S S E T H:
WHEREAS, Borrower and Bank entered into the Loan Agreement on October 25,
1996, as amended by the First Amendment dated April 10, 1997, the Second
Amendment dated May 20, 1997, and the Third Amendment dated December 23, 1997;
WHEREAS, Borrower desires to increase the Revolving Commitment under the
Loan Agreement;
WHEREAS, Borrower desires to increase the advance rate on the Revolving
Commitment under the Loan Agreement;
WHEREAS, Borrower desires to include Borrower's Inventory in the Borrowing
Base calculation;
WHEREAS, Borrower desires to extend the Revolving Commitment Termination
Date of the Revolving Note;
WHEREAS, Bank is willing to agree to the foregoing in accordance with, and
subject to, the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the promises herein contained, and each
intending to be legally bound hereby, the parties agree as follows:
-1-
I. Amendments to Loan Agreement.
Any and all references to "NDE ENVIRONMENTAL CORPORATION" as an existing
Borrower is hereby replaced with "TANKNOLOGY-NDE INTERNATIONAL, INC." and any
and all references to "TANKNOLOGY CANADA (1988) INC." as an existing Borrower is
hereby replaced with "2368692 CANADA, INC."
Article I, DEFINITIONS, is amended by revising the following defined terms
(or their designated subparts) in their entirety to read as follows:
"Accounts," "Chattel Paper," "Contracts," "Documents," "Equipment,"
"Fixtures," "General Intangibles," "Goods," "Instruments," and
"Inventory", except as may be expressly provided otherwise in the Loan
Agreement, shall have the same respective meanings as are given to
those terms in the Uniform Commercial Code as presently adopted and in
effect in the State of Texas.
"Borrowing Base" means, at any time, the lesser of: (a) $9,000,000.00;
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 eighty percent (80%) of Eligible Accounts of
the Borrower, plus the lesser of (i) fifty percent (50%) of the
then-current market value of Borrower's Inventory, or (ii)
$500,000.00.
"Eligible Account" . . . (N) No more than 25% of account debtor's
aggregate account total fails to satisfy clause (H) of this
definition;
"Maximum Commitment Amount" means $9,000,000.00 as of the date of the
Fourth Amendment.
"Permitted Liens" . . . (I) Purchase money security interests granted
to secure not more than eighty percent (80%) of the purchase price of
assets, except as permitted by Sections 6.14 and 6.15, the purchase of
which does not violate this Agreement or any instrument required
hereunder;
"Revolving Commitment Termination Date" means December 31, 2000.
"Revolving Note" means that certain promissory note in the original
face amount of $9,000,000.00 dated of even date with the Fourth
Amendment made by the Borrower payable to the order of the Bank in the
form attached as Exhibit "A" to the Fourth Amendment, 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 of the
Loan Agreement.
"Term Note Rate" means a per annum interest rate equal to the BANK ONE
Base Rate in effect from time to time plus one percent (1.0%).
-2-
Article I, DEFINITIONS, is further amended by adding the following
definition:
"Fourth Amendment" means Amendment No. 4 to this Loan Agreement,
executed by Borrower and Bank on June 26, 1998.
Article II, THE LOAN, of the Loan Agreement is hereby amended by revising
the following section in its entirety to read as follows:
2.05 Payments of Term Loan Principal. For the period beginning on July 1,
1998 until December 1, 1998 principal payments of the Loan evidenced by the
Term Note shall not be due, except as provided in Section 2.08. The
principal of the Loan evidenced by the Term Note will be repaid in
thirty-six (36) equal consecutive monthly installments in the amount of
$100,000.00 each, beginning on January 1, 1999, and continuing on the first
day of each calendar month thereafter until the Term Loan Maturity Date,
when the entire unpaid principal amount then outstanding of the Term Note
shall be due and payable.
Section 5.21 of the Loan Agreement, as amended by the Third Amendment, is
hereby amended by revising that section in its entirety to read as follows:
5.21 Debt Service Coverage Ratio. Maintain a Debt Service Coverage Ratio of
not less than 1.20 to 1.0: (a) for the six (6) months ending June 30, 1998,
it shall be calculated on a six- month basis; (b) for the nine (9) months
ending September 30, 1998, it shall be calculated on a nine-month basis;
and (c) for the twelve (12) months ending December 31, 1998 and thereafter,
it shall be calculated on a rolling four-quarter basis.
Section 5.22 General and Administrative Expenses is hereby amended by
replacing the reference therein to "30%" with "25%" and is further amended by
replacing the reference therein to "December 31, 1997" with "June 30, 1998".
Section 6.01 Other Indebtedness, as amended by the Third Amendment, is
hereby further amended by replacing the reference in Subsection (I) to
"$750,000.00" with "$1,000,000.00".
Section 6.11 Restricted Payments, as amended by the Third Amendment, is
hereby amended by moving the word "or" from immediately preceding Subsection (D)
of that section to immediately preceding the period at the end of that section
and is further amended by adding the following subsection thereto:
"(E) use cash consideration for the purpose of any stock or asset
acquisition of or from any Person in an amount that exceeds in the
aggregate $2,000,000.00"
Section 6.14 Capital Expenditures Limitation, as amended by the Third
Amendment, is hereby further amended by replacing the clause therein which reads
"$2,500,000.00 in the 1998 fiscal year" with "$3,000,000.00 in the 1998 fiscal
year" and by replacing the clause therein which reads "not more than
$750,000.00" with "not more than $1,000,000.00".
-3-
"Exhibit A-1," the form of Revolving Note attached to the Loan Agreement,
as amended by the Third Amendment and therein referred to as "Exhibit A", is
hereby replaced with Exhibit "A" attached to the Fourth Amendment.
"Exhibit B," the form of Compliance Certificate attached to the Loan
Agreement, as amended by the Third Amendment, is hereby replaced with Exhibit
"B" attached to the Fourth Amendment.
"Exhibit C," the form of Borrowing Base Certificate attached to the Loan
Agreement, as amended by the Third Amendment, is hereby replaced with Exhibit
"C" attached to the Fourth Amendment.
"Exhibit D-1" the form of Opinion of Counsel for Borrower attached to the
Loan Agreement, as amended by the Third Amendment and therein referred to as
"Exhibit G-1", is hereby replaced with Exhibit "D" attached to the Fourth
Amendment.
"Schedule 1.01(a), Collateral" attached to the Loan Agreement, as amended
by the Second and Third Amendments, is hereby replaced with Schedule 1.01(a),
Collateral attached to this Fourth Amendment.
"Schedule 3.10, Collateral Documents" attached to the Loan Agreement is
hereby replaced with Schedule 3.10, Collateral Documents attached to this Fourth
Amendment.
II. Conditions to the Effectiveness of the Fourth Amendment. As a condition
to the effectiveness of the Fourth Amendment by Bank, Borrower has satisfied the
following conditions:
A. Receipt of Amended and Restated Revolving Note, Fourth Amendment
and Certificate of Compliance. The Bank shall have received the Amended and
Restated Revolving Note (the form of which is attached hereto as Exhibit
"A"), multiple counterparts of this Fourth Amendment, as requested by the
Bank and the Compliance Certificate duly executed by an authorized officer
for each Borrower (the form of which is attached hereto as Exhibit "B");
B. 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 Fourth Amendment and the execution of this Fourth
Amendment and the Amended and Restated Revolving Note, 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 Fourth Amendment and the
Amended and Restated Revolving Note, (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.
C. Receipt of the Certified Copy of Corporate Proceedings and
Certificate of Incumbency. Bank shall have received from DH Holdings Corp.
("DHH"), copies of all resolutions of their boards of directors with
-4-
respect to the transactions contemplated by the this Fourth Amendment and
the First Amendment to the Intercreditor and Subordination Agreement, 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 DHH a certificate of
incumbency signed by the Secretary or an Assistant Secretary setting forth
(a) the names of the officers executing First Amendment to the
Intercreditor and Subordination Agreement, (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.
D. Receipt of the First Amendment to Intercreditor and Subordination
Agreement. Borrower, DHH and Bank shall have entered into a First Amendment
to Intercreditor and Subordination Agreement in the form attached as
Exhibit "E".
E. Receipt of the Second Amended and Restated Standby Commitment.
Bank, Borrower and Proactive Partners, L.P. ("Proactive") shall have
entered into a Second Amended and Restated Standby Commitment in the form
attached as Exhibit "F".
F. Facility Fee. As partial consideration for its agreement to the
terms of the Fourth Amendment, Bank shall have received $40,000 prior to or
contemporaneous with the execution of the Fourth Amendment.
G. Borrower's Opinion of Counsel. Bank shall have received from
counsel for Borrower written opinions in the form set forth on Exhibit "D"
attached to the Fourth Amendment.
H. Satisfaction of Conditions to Fourth Amendment. Upon the
satisfaction of the conditions to the effectiveness of this Fourth
Amendment, as set forth in this Article II hereof, Borrower shall execute
and deliver to Bank a Certificate of Compliance, and if Bank has been
reasonably satisfied that such conditions have been fulfilled, Bank shall
contemporaneously provide a letter to Borrower and DHH stating "Bank One,
Texas, N.A. is satisfied that the conditions set forth in Article II of the
Fourth Amendment to that certain Loan Agreement dated October 25, 1996,
among the Bank and Tanknology-NDE International, Inc. et al. have been
fulfilled," whereupon this Fourth Amendment shall become effective.
III. Reaffirmation of Representations and Warranties. To induce Bank to
enter into this Fourth Amendment, Borrower hereby reaffirms, as of the date
hereof, its representations and warranties contained in Article IV of the Loan
Agreement and in all other documents executed pursuant thereto, and additionally
represents and warrants as follows:
A. The execution and delivery of this Fourth Amendment and the
performance by Borrower of its obligations under this Fourth Amendment are
within the Borrower's corporate power, have received all necessary
governmental approval (if any shall be required), and do not and will not
contravene or conflict with any provision of law or of any agreement
binding upon the Borrower.
-5-
B. The Loan Agreement as amended by this Fourth Amendment represents
the legal, valid and binding obligations of Borrower, enforceable against
Borrower in accordance with its terms subject as to enforcement only to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and general
principles of equity.
C. No Event of Default or Unmatured Event of Default has occurred and
is continuing as of the date hereof.
IV. Defined Terms. Except as amended hereby, terms used herein that are
defined in the Loan Agreement shall have the same meanings herein.
V. Reaffirmation of Loan Agreement. This Fourth Amendment shall be deemed
to be an amendment to the Loan Agreement, and the Loan Agreement, as amended
hereby, is hereby ratified, approved and confirmed in each and every respect.
All references to the Loan Agreement herein and in any other document,
instrument, agreement or writing shall hereafter be deemed to refer to the Loan
Agreement as amended hereby.
VI. Entire Agreement. The Loan Agreement, as hereby amended, embodies the
entire agreement between Borrower and Bank, and supersedes all prior proposals,
agreements and understandings relating to the subject matter hereof. Borrower
certifies that it is relying on no representation, warranty, covenant or
agreement except for those set forth in the Loan Agreement as hereby amended and
the other documents previously executed or executed of even date herewith.
VII. Governing Law. THIS FOURTH AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. This Fourth Amendment has been entered
into in Xxxxxx County, Texas, and it shall be performable for all purposes in
Xxxxxx County, Texas. Courts within the State of Texas shall have jurisdiction
over any and all disputes between Borrower and Bank, whether in law or equity,
including, but not limited to, any and all disputes arising out of or relating
to this Fourth Amendment or any other Loan Document; and venue in any such
dispute whether in federal or state court shall be laid in Xxxxxx County, Texas.
VIII. Severability. Whenever possible each provision of this Fourth
Amendment shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Fourth Amendment shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Fourth Amendment.
IX. Execution in Counterparts. This Fourth Amendment may be executed in any
number of counterparts and by the different parties on separate counterparts,
and each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same agreement.
X. Section Captions. Section captions used in this Fourth Amendment are for
convenience of reference only, and shall not affect the construction of this
Fourth Amendment.
-6-
XI. Successors and Assigns. This Fourth Amendment shall be binding upon the
Borrower and Bank and their respective successors and assigns, and shall inure
to the benefit of the Borrower and Bank, and the respective successors and
assigns of Bank.
XII. Non-Application of Chapter 15 of Texas Credit Codes. The provisions of
Chapter 15 of the Texas Credit Code (Vernon's Texas Civil Statutes, Article
5069-15) are specifically declared by the parties hereto not to be applicable to
the Loan Agreement as hereby amended or any of the other Loan Documents or to
the transactions contemplated hereby.
XIII. Notice. THIS FOURTH AMENDMENT TOGETHER WITH THE LOAN AGREEMENT AND
THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
-7-
IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to
be duly executed as of the day and year first above written.
BORROWER:
TANKNOLOGY-NDE INTERNATIONAL, INC.
(formerly known as 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
TANKNOLOGY-NDE CONSTRUCTION
SERVICES, 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
2368692 CANADA, INC.(formerly known as
TANKNOLOGY CANADA (1988) INC.)
By: //s// XXX XXXXX XXXXXXX
-------------------------------
Xxx Xxxxx Xxxxxxx
President
-8-
BANK:
BANK ONE, TEXAS, N.A.
By: //s// Xxxxxxx Xxxxxxxxx-Xxxxx
-------------------------------
Xxxxxxx Xxxxxxxxx-Xxxxx
Senior Vice President
-9-
SCHEDULE 1.01(a)
COLLATERAL
Tanknology-NDE International, Inc.
(a) Pledged Stock of Tanknology/NDE Corporation, a Delaware
corporation, Tanknology-NDE Construction Services, Inc., a
Delaware corporation, ProEco, Inc., a Delaware corporation,
and 2368692 Canada, Inc., a Canadian federal corporation
(b) Bank Accounts and Pledged Certificates of Deposit
(c) Inventory
Tanknology/NDE Corporation
(a) Bank Accounts
(b) Accounts Receivable
(c) Vehicles
(d) Diagnostic Equipment (including equipment on Vehicles)
(e) Inventory
(f) Furniture and Office Equipment
(g) Patents
(h) Trademarks
(i) Proprietary Software
(j) Licensing Agreements
ProEco, Inc.
(a) Accounts Receivable
(b) Bank Accounts
(c) Furniture and Office Equipment
(d) Licensing Agreements
(e) Inventory
Tanknology-NDE Construction Services, Inc.
(a) Accounts Receivable
(b) Bank Accounts
(c) Patents
(d) Furniture and Office Equipment
(e) Licensing Agreements
(f) Inventory
1.01(a)-1
SCHEDULE 3.10
COLLATERAL DOCUMENTS
1. Stock Powers executed by Tanknology-NDE International, Inc.
a. Tanknology/NDE Corporation dated October 25, 1996
b. ProEco, Inc. dated October 25, 1996
c. 2368692 Canada, Inc. dated October 25, 1996
d. Tanknology-NDE Construction Services, Inc. dated December
23, 1997
2. Security Agreements
a. Tanknology-NDE International, Inc. and Bank One, Texas dated
October 25, 1996
b. Tanknology/NDE Corporation and Bank One, Texas dated October
25, 1996
c. ProEco, Inc. and Bank One, Texas dated October 25, 1996
d. Tanknology-NDE Construction Services, Inc. dated December
23, 1997
3. Financing Statements
Tanknology-NDE International, Inc.
CALIFORNIA: Secretary of State
DELAWARE: Secretary of State
TEXAS: Secretary of State & Xxxxxx County
ProEco, Inc.
DELAWARE: Secretary of State
TEXAS: Secretary of State & Xxxxxx County
Tanknology/NDE Corporation
CALIFORNIA: Secretary of State
DELAWARE: Secretary of State
GEORGIA: Gwinnett County
ILLINOIS: Secretary of State
MASSACHUSETTS: Secretary of Commonwealth & Agawam Township
MISSOURI: Secretary of State
NEW JERSEY: Secretary of State
OHIO: Secretary of State & Fairfield/Franklin Counties
TEXAS: Secretary of State & Xxxxxx County
Tanknology-NDE Construction Services, Inc.
DELAWARE: Secretary of State
TEXAS: Secretary of State
4. Certificate of Title Liens
Tanknology/NDE Corporation
3.10-1
5. Assignments of Patents
ProEco, Inc.
Tanknology/NDE Corporation
6. Assignments of Trademarks
Tanknology/NDE Corporation
3.10-2
EXHIBIT "A"
AMENDED AND RESTATED REVOLVING NOTE
$9,000,000.00 June 26, 1998
FOR VALUE RECEIVED, TANKNOLOGY-NDE INTERNATIONAL, INC., a Delaware
corporation, TANKNOLOGY/NDE CORPORATION, a Delaware corporation, PROECO, INC., a
Delaware corporation, TANKNOLOGY-NDE CONSTRUCTION SERVICES, INC., a Delaware
corporation, and 2368692 CANADA, INC., a Canadian federal corporation, all of
the foregoing having an address at 0000 Xxxxx Xxxxx, Xxxx. 000, Xxxxxx, Xxxxx
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 NINE MILLION DOLLARS
($9,000,000.00) or, if less, the aggregate unpaid principal amount of all
Revolving 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 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.
------------
Initial for
Identification
A-1
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 amended
by that First Amendment dated April 10, 1997, that Second Amendment dated May
20, 1997, that Third Amendment dated December 23, 1997 and that Fourth Amendment
dated of even date herewith (as the same may be further amended, modified,
supplemented, extended, rearranged and/or restated from time to time, the "Loan
Agreement"), entered into by and among Tanknology-NDE International, Inc.,
(f/k/a 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 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 is issued in substitution for, and in replacement, modification,
rearrangement, renewal and extension of, but not in extinguishment of, the
outstanding principal indebtedness evidenced by that certain note of
------------
Initial for
Identification
A-2
Tanknology-NDE International, Inc. (f/k/a NDE Environmental Corporation),
Tanknology/NDE Corporation, ProEco, Inc., 2368692 Canada, Inc. (f/k/a/
Tanknology Canada (1988) Inc.) and Tanknology-NDE Construction Services, Inc.,
dated December 23, 1997, payable to the order of Bank One, Texas, N.A. in the
original principal sum of $5,000,000.00, (the "Prior Note"); it being
acknowledged and agreed by Borrower that the indebtedness evidenced by this Note
constitutes an extension and renewal of the outstanding principal indebtedness
evidenced by the Prior Note, and that all security interests and other liens
which secure the repayment of the Prior Note shall continue to secure the
indebtedness evidenced by this Note.
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 26th day of June, 1998.
TANKNOLOGY-NDE INTERNATIONAL,
INC.
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
TANKNOLOGY-NDE CONSTRUCTION
SERVICES, 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
2368692 CANADA, INC.
By: //s// XXX XXXXX XXXXXXX
-------------------------------
Xxx Xxxxx Xxxxxxx
President
A-3
EXHIBIT "B"
Compliance Certificate
I, the ____________________________ of TANKNOLOGY-NDE INTERNATIONAL, INC.
(the "Company"), pursuant to Section 5.05 of the Loan Agreement dated as of
October 25, 1996, as amended by the First Amendment dated April 10, 1997, the
Second Amendment dated May 20, 1997, the Third Amendment dated December 23,
1997, and the Fourth Amendment dated June 26, 1998, by and among BANK ONE,
TEXAS, N.A. ("Bank") and the Company et al. (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
B-1
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 the Consolidated Net Worth as of 12/31/97,
with allowable cumulative interim losses during fiscal year
1998 of not more than $1,000,000.00 (tested as of the end of
each calendar quarter), and as of 12/31/98, and thereafter,
maintain at least the Consolidated Net Worth in effect
12/31/97 plus 70% of Borrower's Net Income (if positive)
after 12/31/98.
(b) Capital Expenditures Term of Loan Not more than $3,000,000 for fiscal 1998 and $2,000,000 for
each year thereafter.
(c) Debt Service Coverage Ratio Term of Loan Not less than 1.2 to 1.0
(d) Adjusted Liabilities to Term of Loan 12/23/97 - 6/30/98 not more than 2.25 to 1.0; 7/1/98 -
Adjusted Net Worth 9/30/98 not more than 2.00 to 1.0; 10/1/98 - 6/30/99 not
more than 1.75 to 1.0; 7/1/99 - 12/31/99 not more than 1.25
to 1.0; and after 12/31/99 not more than 1.0 to 1.0.
================================= ============== ============================================================= ==============
This certificate is executed this ___ day of ___________ 199__.
TANKNOLOGY-NDE INTERNATIONAL, INC.
-----------------------------------
By: ______________________________
Its: ______________________________
B-2
EXHIBIT "C"
BORROWING BASE CERTIFICATE
I, the ___________________________ of TANKNOLOGY-NDE INTERNATIONAL, INC.
(the "Company"), pursuant to Section 2.06 of the Loan Agreement dated as of
October 25, 1996, as amended by the First Amendment dated April 10, 1997, the
Second Amendment dated May 20, 1997, the Third Amendment dated December 23,
1997, and the Fourth Amendment dated as of June 26, 1998, by and among BANK ONE,
TEXAS, N.A. ("Bank") and the Company et al. (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)
$9,000,000.00, or (b) eighty percent (80%) of Eligible Accounts of the Borrower,
plus the lesser of (i) fifty percent (50%) of the then-current market value of
Borrower's Inventory, or (ii) $500,000.00.
3. The Eligible Accounts of the Borrower 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 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;
(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 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;
(4) The amount shown on the books of the Borrower and on any
invoice or statement delivered to the Bank is owing to the Borrower;
and
(5) 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;
C-1
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
Borrower 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 Borrower 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 Borrower 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 25% of such account
debtor's aggregate
C-2
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 impaired or its ability to realize
such value to be insecure.
4. Borrower's Inventory totals $______________.
5. The worksheet used to calculate the Borrowing Base is attached as
Exhibit "A".
Capitalized terms used herein shall have the meanings assigned in the
Agreement unless otherwise defined herein.
This certificate is executed this ___ day of ____________ 199__.
TANKNOLOGY-NDE INTERNATIONAL, INC.
By: _____________________________
Its: _____________________________
C-3
Exhibit "A"
to Borrowing Base Certificate
Worksheet
C-4
EXHIBIT "D"
Form of Opinion of Counsel for Borrower
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 Fourth
Amendment, to borrow money hereunder, to grant the Collateral required
hereunder, to execute and deliver the Amended and Restated Revolving 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 Fourth Amendment, the Amended and
Restated Revolving Note, the Collateral Documents, and each other document to be
delivered hereunder have been duly taken or obtained, and this Fourth Amendment,
Amended and Restated Revolving Note, and the 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; and
(4) This Fourth Amendment, the Amended and Restated Revolving 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.
D-1
EXHIBIT "E"
First Amendment to Intercreditor and Subordination Agreement
E-1
EXHIBIT "F"
Second Amended and Restated Standby Commitment
F-1
