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EXHIBIT 10.3
_______________________________________________________________________________
NDE ENVIRONMENTAL CORPORATION, TANKNOLOGY/NDE CORPORATION,
USTMAN INDUSTRIES, INC., PROECO, INC., AND TANKNOLOGY CANADA (1988), INC.
SECURITY AGREEMENT - PERSONAL PROPERTY
_______________________________________________________________________________
DATED AS OF OCTOBER 25, 1996
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TABLE OF CONTENTS
SECTION 1. PURCHASE AGREEMENT DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 GRANT OF SECURITY INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 DEFINITION - SECURED OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 DEFINITION - COLLATERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 DEFINITION - PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2. ENFORCEMENT, REMEDIES AND APPLICATION OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 DISCONTINUANCE OF REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 CUMULATIVE REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 POWER OF ATTORNEY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3. COVENANTS, WARRANTIES AND AGREEMENTS OF DEBTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 ACCOUNTING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 COOPERATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 DISCHARGE TAXES, ASSESSMENTS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.6 LIMITATIONS ON DISPOSITIONS OF ACCOUNTS AND CONTRACTS. . . . . . . . . . . . . . . . . . . . 7
3.7 NEGATIVE PLEDGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.8 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.9 PRESERVATION OF COLLATERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.10 CHIEF EXECUTIVE OFFICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.1 INDEMNIFICATION OF SECURED PARTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 COSTS AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 5. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 6. RECORDATION AND FILING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 7. WAIVERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 8. SECURITY INTEREST ABSOLUTE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 9. RELEASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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SECTION 10. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
10.1 RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
10.2 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
10.3 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
10.4 AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
10.5 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10.6 FURTHER ACTS AND DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10.7 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10.8 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10.9 WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10.10 CONSENT TO JURISDICTION, VENUE AND SERVICE OF PROCESS. . . . . . . . . . . . . . . . . . . 11
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SECURITY AGREEMENT - PERSONAL PROPERTY
This is the SECURITY AGREEMENT dated as of October 25, 1996
("Agreement") by and between NDE ENVIRONMENTAL CORPORATION ("NDE"), a Delaware
corporation, TANKNOLOGY/NDE CORPORATION ("TCI"), a Delaware corporation, USTMAN
INDUSTRIES, INC. ("USTMAN"), a Delaware corporation, PROECO, INC. ("Proeco"), a
Delaware corporation, and TANKNOLOGY CANADA (1988), INC. ("Canada"), a
Canadian Federal corporation, and BANC ONE CAPITAL PARTNERS, L.P. ("BOCP"), an
Ohio limited partnership, provided for in and entered into pursuant to the NOTE
AND WARRANT PURCHASE AGREEMENT, as amended, restated, supplemented or
otherwise modified from time to time ("Purchase Agreement") by and among BOCP,
as purchaser, and NDE, TCI, USTMAN, PROECO and CANADA, as sellers.
NDE, TANKNOLOGY, TCI, USTMAN, PROECO and CANADA, together with their
respective successors and assigns, are referred to collectively as the
"Debtors," and individually as a "Debtor." BOCP, together with its successors
and assigns, is referred to as the "Secured Party." The Debtors and the
Secured Party are referred to collectively as the "Parties" and individually as
a "Party."
THIS SECURITY AGREEMENT IS ONE OF THE RELATED DOCUMENTS REFERRED TO IN
THE PURCHASE AGREEMENT.
In consideration of their mutual promises set forth in this Agreement
and the Purchase Agreement, the Parties hereby agree as follows.
SECTION 1. PURCHASE AGREEMENT DEFINITIONS.
All capitalized terms not otherwise defined in this Agreement shall
have the definitions set forth in the Purchase Agreement. The terms defined in
the Purchase Agreement that are used with such definitions in this Agreement
include:
"Acceleration"
"Applicable Law"
"Event of Default"
"Intercreditor Agreement"
"Lien"
"Note"
"Permitted Liens"
"Person"
"Pledge Agreement"
"Related Documents"
"Senior Lender"
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SECURITY INTEREST.
1.1 GRANT OF SECURITY INTEREST. As security for the timely
payment of the Secured Obligations (as defined below), the Debtors hereby
jointly and severally grant to the Secured Party a security interest in all of
the Collateral (as defined below) whether now or hereafter owned, acquired,
arising or existing by each of them, whether acquired by contract or operation
of law and wherever located.
1.2 DEFINITION - SECURED OBLIGATIONS. The term "Secured
Obligations" means (i) all obligations of the Debtors evidenced by the Senior
Subordinated Note due December 31, 2001, and dated October 25, 1996, made
payable by the Debtors to the Secured Party in the principal amount of
$8,000,000, which note was purchased by the Secured Party for $8,000,000
pursuant to the Purchase Agreement, together with all extensions, renewals,
amendments, modifications and novations thereof, and (ii) all obligations of
the Debtors to make payments or reimburse costs and expenses under this
Agreement or the Purchase Agreement.
1.3 DEFINITION - COLLATERAL. The term "Collateral" means all
tangible and intangible personal property now or hereafter owned, acquired,
arising or existing by or of each of the Debtors, whether acquired by contract
or operation of law and wherever located, including all of the following types
of personal property:
(i) all Accounts, Chattel Paper, Deposit Accounts,
Documents, Equipment, Fixtures, Goods, Instruments
and Securities (all as defined in the Code);
(ii) all accessions to, substitutions for, replacements
and products of the foregoing;
(iii) all books and records (including customer lists,
credit files, tapes, ledger cards, computer software
and hardware, electronic data processing software,
computer programs, print-outs and other computer
materials and records) of the Debtors evidencing or
containing information regarding or otherwise
pertaining to any of the foregoing; and
(iv) all Proceeds (as defined below) of or from the
foregoing.
1.4 DEFINITION - PROCEEDS. The term "Proceeds" means any
"proceeds" as such term is defined in the Code, including the following at any
time whatsoever arising or receivable: (i) whatever is received upon any
collection, exchange, sale or other disposition, of any of the Collateral, and
any property into which any of the Collateral is converted, whether cash or
non-cash proceeds, (ii) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to any Debtor from time to time with respect to
any of the Collateral, including claims paid and premium
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refunds, (iii) any and all payments (in any form whatsoever) made or due and
payable to any Debtor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority, and (iv) any and all other amounts
from time to time paid or payable under or in connection with any of the
Collateral.
SECTION 2. ENFORCEMENT, REMEDIES AND APPLICATION OF PROCEEDS.
2.1 REMEDIES. The Debtors agree that when an Event of Default has
occurred and is continuing, the Secured Party shall have the rights, options,
duties and remedies of a secured party, and the Debtors shall have the rights
and duties of a debtor, under the Code (regardless of whether such Code or a
law similar thereto has been enacted in a jurisdiction wherein the rights or
remedies are asserted) as applicable, and the Secured Party shall have the
following rights and remedies.
(a) The Secured Party shall have all of the rights and
remedies provided for under the Note and the Purchase Agreement, including the
Acceleration of payment of the Note.
(b) The Secured Party shall have all the rights of a
secured party under the Code or by other provisions of applicable law to
enforce the security interests contained herein, including without limitation,
the right to sell or otherwise dispose of any or all of the Collateral.
(c) The Secured Party personally or by agents or
attorneys, shall have the right (subject to compliance with any applicable
mandatory legal requirements) to take immediate possession of the Collateral,
or any portion thereof, and for that purpose may pursue the same wherever it
may be found, and may enter any of the premises of the Debtors, with or without
notice, demand, process of law or legal procedure, if this can be done without
breach of the peace, and search for, take possession of, remove, keep and store
the Collateral, or use and operate or lease the Collateral until sold.
(d) Any Collateral repossessed by the Secured Party under
or pursuant to this Section 2.1 may be sold, leased or otherwise disposed of
under one or more contracts or as an entirety, and without the necessity of
gathering at the place of sale the property to be sold, and in general in such
manner, at such time or times, at such place or places and on such terms as the
Secured Party may, in compliance with any mandatory requirements of applicable
law, determine to be commercially reasonable. Any of the Collateral may be
sold, leased or otherwise disposed of, in the condition in which the same
existed when taken by the Secured Party or after any repair which the Secured
Party shall determine to be commercially reasonable. Any such disposition
which shall be a public or private sale or other private proceedings permitted
by such requirements shall be made upon not less than 10 business days written
notice to Debtors specifying the times at which such disposition is to be made
and the intended sale price or other consideration therefor. To the extent
permitted by any such requirement of law, the Secured Party may itself bid for
and become the purchaser of the Collateral or any part thereof without
accountability to Debtors. In the payment of the purchase price therefor, the
Secured Party shall be entitled to have credit on account of the purchase price
thereof of amounts owing to the Secured Party on account of the indebtedness
hereby
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secured and the Secured Party may deliver the claims for interest on or
principal of the Note or other indebtedness hereby secured in lieu of cash up
to the amount which would, upon distribution of the net proceeds of such sale,
be payable thereon. If, under mandatory requirements of applicable law, the
Secured Party shall be required to make disposition of the Collateral within a
period of time which does not permit the giving of notice to Debtors as
hereinabove specified, the Secured Party need give Debtors only such notice of
disposition as shall be reasonably practicable in view of such mandatory
requirements of applicable law.
(e) The Secured Party may proceed to protect and enforce
this Agreement by suit or suits or proceedings in equity, at law or in
bankruptcy, and whether for the specific performance of any covenant or
agreement herein contained or in execution or aid of any power herein granted,
or for foreclosure hereunder, or for the appointment of a receiver or receivers
for the Collateral or any part thereof, for the recovery of judgment for the
indebtedness hereby secured or for the enforcement of any other legal or
equitable remedy available under applicable law.
(f) Any sale, whether under any power of sale hereby
given or by virtue of judicial proceedings, shall operate to divest all right,
title, interest, claim and demand whatsoever, either at law or in equity, of
the Debtors in and to the property sold and shall be a perpetual bar, both at
law and in equity, against the Debtors, their successors and assigns, and
against any and all persons claiming the property sold, or any part thereof
under, by or through the Debtors, their successors or assigns.
(g) Nothing hereby contained is intended, nor should it
be construed, to preclude the Secured Party from pursuing any other remedy
provided by law for the collection of the Secured Obligations or any portion
thereof, or for the recovery of any other sums to which the Secured Party may
be or become entitled for the breach of this Agreement by the Debtors.
(h) Until termination of this Agreement, the Secured
Party shall have and may exercise any and all of its rights and remedies given
by this Agreement or under any applicable law. This Agreement and all such
rights and remedies shall inure to the benefit of the Secured Party's
successors and permitted assigns and to any other holder who derives from the
Secured Party title to or an interest in the Note, the Secured Obligations or
any portion thereof or participation therein, and shall bind the Debtors and
the successors and assigns of the Debtors.
(i) Upon the occurrence and during the continuance of an
Event of Default, in the case of any sale or disposition of the Collateral, or
the realization of funds therefrom, the Proceeds thereof shall be applied:
first, to the payment of the reasonable expenses of such sale, reasonable
commissions, reasonable attorneys' fees and all reasonable charges paid or
incurred by the Secured Party pertaining to said sale, including any taxes or
other charges imposed by law upon the Collateral and/or the owning, holding or
transferring thereof; second, to pay, satisfy and discharge the Secured
Obligations; and, third, to pay the surplus, if any, to the Debtors. To the
extent such Proceeds do not satisfy the foregoing items, the Debtors hereby
promise and agree to pay any deficiency.
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2.2 DISCONTINUANCE OF REMEDIES. In case the Secured Party shall
have proceeded to enforce any right under this Agreement by foreclosure, sale,
entry or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely, then, and in
every such case, the Debtors and the Secured Party shall be restored to their
former respective positions and rights hereunder with respect to the property
subject to the security interest created under this Agreement.
2.3 CUMULATIVE REMEDIES. No delay or omission of the Secured
Party to exercise any right or power arising from an Event of Default shall
exhaust or impair any such right or power or prevent its exercise during the
continuance of such Event of Default. No waiver by the Secured Party of any
such Event of Default, whether such waiver be full or partial, shall extend to
or be taken to affect any subsequent Event of Default, or to impair the rights
resulting therefrom except as may be otherwise provided herein. The Secured
Party may exercise any one or more or all of the remedies hereunder and no
remedy is intended to be exclusive of any other remedy but each and every
remedy shall be cumulative and in addition to any and every other remedy given
hereunder or otherwise existing now or hereafter at law or in equity; nor shall
the giving, taking or enforcement of any other or additional security,
collateral or guaranty for the payment of the indebtedness secured under this
Agreement operate to prejudice, waive or affect the security of this Agreement
or any rights, powers or remedies hereunder, nor shall the Secured Party be
required to first look to, enforce or exhaust such other additional security,
collateral or guaranties.
2.4 POWER OF ATTORNEY.
(a) The Debtors do hereby irrevocably constitute and
appoint the Secured Party and its successors and assigns and agents, upon the
occurrence and during the continuance of an Event of Default, their true and
lawful attorney with full power of substitution for them and in their name,
place and xxxxx, to ask, demand, collect, receive, receive for and xxx for any
and all Proceeds with full power to settle, adjust or compromise any claim
thereunder as fully as the Debtors could themselves do, and to endorse the name
of the Debtors on all instruments or commercial paper given in payment or in
part payment thereof, and in its reasonable discretion to file any claim or
take any other action or proceedings, either in its own name or in the name of
the Debtors or otherwise, which the Secured Party may deem necessary in its
reasonable discretion to perfect, protect and preserve the right, title and
interest of the Secured Party in and to such Proceeds and the security intended
to be afforded hereby. Without limiting the generality of the foregoing,
Secured Party or its agents shall specifically be authorized to do all acts and
things necessary to fulfill Debtor's obligations under the Purchase Agreement.
(b) The Parties acknowledge that the powers conferred on
the Secured Party hereunder are solely to protect its interest in the
Collateral and that anything herein contained to the contrary notwithstanding,
neither the Secured Party nor its successors or assigns or agents shall have
any duty, obligation or liability by reason of or arising out of this Agreement
to make any inquiry as to the nature or sufficiency of, to present or file any
claim with respect to, or to take any action
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to collect or enforce the payment of, any amounts to which it may be entitled
at any time by virtue of this Agreement.
SECTION 3. COVENANTS, WARRANTIES AND AGREEMENTS OF DEBTORS.
Each Debtor covenants, warrants and agrees with Secured Party
that until the Secured Obligations are paid in full:
3.1 RECORDS. Such Debtor shall keep accurate and complete books
and records of the Collateral in a manner consistent with the reasonable
requirements of the Secured Party and the requirements of any governmental
agency and allow the Secured Party, during regular business hours and upon
reasonable notice, reasonable access to examine, inspect and make abstracts
from, or copy any of such books and records.
3.2 ACCOUNTING. Such Debtor shall at the reasonable request of
the Secured Party, which request shall be made no more frequently than monthly,
deliver to it copies of all accounting and other records pertaining to the
Collateral or any portion thereof.
3.3 COOPERATION. The Debtors will faithfully preserve and protect
the Secured Party's security interest in the Collateral and will, at their own
cost and expense, cause such security interest to be perfected and continued
perfected so long as the Secured Obligations or any portion thereof are
outstanding and unpaid, and for such purpose the Debtors will from time to time
at the reasonable request of the Secured Party file or record, or cause to be
filed or recorded, such instruments, documents and notices, including without
limitation, financing statements and continuation statements, as the Secured
Party may deem reasonably necessary or advisable from time to time in order to
perfect and continue perfected said security interests. The Debtors will do
all such other acts and things and will execute and deliver all such other
instruments and documents, including without limitation further security
agreements, pledges, endorsements, assignments and notices, as the Secured
Party may deem reasonably necessary or advisable from time to time in order to
perfect and preserve the priority of said security interest.
3.4 DISCHARGE TAXES, ASSESSMENTS, ETC. Such Debtor will pay
promptly and within the time that they can be paid without interest or penalty,
all taxes, assessments and similar imposts and charges which are now, or
hereafter during the effective period of this Agreement may become, a Lien,
charge or encumbrance upon any of the Collateral except to the extent contested
in good faith. If such Debtor fails to pay any such taxes, assessments or
other charges as they become due the Secured Party shall have the option to do
so and such Debtor agrees to repay, with interest, at the rate publicly
established by Bank One, Columbus, NA or any successor thereto from time to
time as its prime rate, all amounts so expended by the Secured Party.
3.5 EXPENSES. Such Debtor will reimburse the Secured Party in
accordance with the provisions of the Code for all reasonable expenses,
including reasonable attorney fees and legal
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expenses incurred by the Secured Party in seeking to collect the Secured
Obligations or any part thereof, or in pursuing any of its rights or remedies
hereunder.
3.6 LIMITATIONS ON DISPOSITIONS OF ACCOUNTS AND CONTRACTS. Such
Debtor will not sell, assign, transfer or otherwise dispose of any material
portion of the Accounts or Contracts, which constitute a part of the
Collateral, or attempt, offer or contract to do so except, so long as no Event
of Default has occurred and is continuing, for the disposition of such Accounts
and Contracts in the ordinary course of business to third party purchasers
without recourse to the Debtor.
3.7 NEGATIVE PLEDGE. Such Debtor will not create or permit to be
created any Lien, encumbrance or security interest of any kind (other than the
Permitted Liens and the Lien in favor of the Senior Lender as provided for in
the Intercreditor Agreement) on any of the Collateral other than for the
benefit of the Secured Party unless authorized by the Secured Party in writing.
3.8 NOTICES.
The Debtors will provide the Secured Party promptly, in reasonable
detail, written notice of:
(i) any material change in the composition of the
Collateral;
(ii) the occurrence of any other event which is
likely to have a materially adverse effect on
the aggregate value of the Collateral or on
the security interests created hereunder; and
(iii) any other notices specifically required to
be given by Debtors under this Agreement.
3.9 PRESERVATION OF COLLATERAL.
(a) The Debtors will warrant and defend the title to the
Collateral against all claims and demands of all Persons except Persons
claiming, by, through or under the Secured Party. Except as otherwise
permitted herein, the Debtors will not assign, sell, lease, or permit any of
the same to occur with respect to the Collateral. The Debtors will not create,
assume or suffer to exist any Lien on the Collateral other than Permitted Liens
(as hereinafter defined) and the Debtors shall pay or discharge, at their own
cost and expense, any and all claims, Liens or charges other than Permitted
Liens and the Lien in favor of the Senior Lender as provided for in the
Intercreditor Agreement. As used herein, "Lien" shall mean any mortgage,
pledge, security interest, encumbrance, lien, assignment or charge of any kind.
(b) Secured Party may, in its sole discretion, discharge
or obtain the release of any security interest, Lien, claim or encumbrance
against the Collateral, other than a Permitted Lien. All sums so paid by the
Secured Party shall be payable, on demand, by Debtors to Secured Party and
shall constitute a part of the Secured Obligations.
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(c) The Debtors shall advise the Secured Party promptly,
in reasonable detail, of any Lien or claim, other than Permitted Liens, made or
asserted against any of the Collateral and of any event affecting the Secured
Party's security interest in the Collateral.
3.10 CHIEF EXECUTIVE OFFICE. The chief executive office of each
Debtor is located at the locations specified in Exhibit A and all its records
related to its Collateral are, and will continue to be, kept in such office.
The Debtors shall give the Secured Party and any collateral agent thirty (30)
days advance written notice of any change of such office address or of any
change in the location of the records concerning the Collateral, and, with
respect to such change, shall take all action as may be necessary to maintain
the security interest granted hereunder at all times fully perfected and in
full force and effect.
SECTION 4. INDEMNIFICATION.
4.1 INDEMNIFICATION OF SECURED PARTY. The Debtors agree to
indemnify, protect and hold harmless the Secured Party and its assigns,
directors, officers, employees, agents or representatives (each an "Indemnified
Party") from and against all losses, damages, injuries, liabilities, claims,
suits, obligations, penalties, actions, judgments, costs, interest and demands
of any kind or nature whatsoever (all the foregoing losses, damages, etc. are
the "Indemnified Liabilities"), and expenses in connection therewith
(including, without limitation, the reasonable fees and disbursements of
counsel for such Indemnified Party in connection with any investigative,
administrative or judicial proceeding, whether or not such Indemnified Party
shall be designated a party thereto) arising out of, in connection with, or as
the result of any claim for injury or damage arising from the operation, use,
condition, possession, storage or repossession of any of the Collateral, or any
claim relating to any laws, rules or regulations, or the entering into or
performance of this Agreement and the Note, the enforcement of any rights
hereunder or thereunder, the retention by the Secured Party of a security
interest in the Collateral, provided, however, that the Debtors shall have no
obligation to so indemnify any Indemnified Party for any indemnified
liabilities arising from its willful misconduct or gross negligence. The
foregoing indemnity shall survive the termination of this Agreement and payment
in full of the Secured Obligations.
4.2 COSTS AND EXPENSES. Subject to Section 12(c) of the Purchase
Agreement, any and all reasonable fees, costs and expenses, of whatever kind or
nature, including the reasonable attorneys' fees and legal expenses incurred by
the Secured Party, in connection with the preparation of this Agreement and all
other documents relating hereto and the consummation of this transaction, the
filing or recording of financing statements and other documents (including all
taxes in connection with the filing and recording of such documents) in public
offices, the payment or discharge of any taxes relating to the Collateral or
imposed upon the Debtors, insurance premiums, encumbrances or otherwise
protecting, maintaining or preserving the Collateral, or the enforcing,
foreclosing, retaking, holding, storing, processing, selling or otherwise
realizing upon the Collateral and the security interest therein, whether
through judicial proceedings or otherwise, or in defending or prosecuting any
actions or proceedings arising out of or related to the transaction to which
this
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Security Agreement relates, shall be borne and paid by the Debtors on demand by
the Secured Party and until so paid shall be added to the principal amount of
the Secured Obligations and shall bear interest commencing five days from the
date Debtors receive demand therefor, at the default rate prescribed in the
Purchase Agreement.
SECTION 5. TERMINATION.
The security interest of Secured Party in the Collateral shall be
deemed to be terminated when the Secured Obligations have been paid in full as
provided for in the Purchase Agreement at which time the Secured Party shall,
at the Debtors' expense, execute and deliver to the Debtors at their expense
all Code termination statements and such similar documents or proper instrument
or instruments which the Debtors shall reasonably request to evidence such
termination and release of Collateral.
SECTION 6. RECORDATION AND FILING.
(a) Each Debtor agrees to execute, deliver and pay the
reasonable costs of filing any financing statement or other notices appropriate
under applicable law in respect of the security interest created pursuant to
this Security Agreement which may at any time be required or be deemed by the
Secured Party to be necessary or desirable and to execute such other documents
as the Secured Party shall reasonably request with respect to the security
interest created hereunder. In the event that any re-recording or refiling
thereof (or the filing of any statements of continuation or assignment of any
financing statement) is required to protect and preserve such Lien or security
interest, each Debtor shall, at its reasonable cost and expense, cause the same
to be re-recorded and/or refiled at the time and in the manner requested by the
Secured Party.
(b) A carbon, photostatic or other reproduction of this
Agreement shall be sufficient as a financing statement even though only the
original hereof contains an original signature.
SECTION 7. WAIVERS.
Each Debtor waives demand, presentment and protest. No delay or
omission or forbearance by the Secured Party in exercising any rights under
this Agreement, the Note or the Purchase Agreement shall operate as a waiver of
the rights of the Secured Party under this Agreement, the Note or the Purchase
Agreement or of any other rights and shall not affect, discharge, diminish or
impair any Debtor's obligations hereunder or the Secured Obligations. Waiver
on any one occasion shall not be construed as a bar to or waiver of any rights
or remedies on any future occasion. All the Secured Party's rights and
remedies, whether evidenced hereby or by any other agreement or note, shall be
cumulative and may be exercised singularly or concurrently.
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SECTION 8. SECURITY INTEREST ABSOLUTE.
All rights of the Secured Party and all obligations of the
Debtors hereunder shall be absolute and unconditional irrespective of:
8.1 any lack of validity or enforceability of the Note or any
other agreement or instrument governing or evidencing any Secured Obligations;
8.2 any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to departure
from any guaranty, for all or any of the Secured Obligations; or
8.3 any other circumstance which might otherwise constitute a
defense available to, or a discharge of, any of the Debtors.
SECTION 9. RELEASE.
The Debtors consent and agree that the Secured Party may at any time,
or from time to time, release and/or surrender all or any of the Collateral, or
any part thereof, by whomsoever deposited, which is now or may hereafter be
held by the Secured Party or its agent in connection with all or any of the
Secured Obligations, all in such manner and upon such terms as the Secured
Party may deem proper, and without notice to or further assent from the
Debtors; it being hereby agreed that the Debtors shall be and remain bound upon
this Agreement, irrespective of the existence, value or condition of any of the
Collateral, and notwithstanding any such exchange, surrender or release. The
Debtors hereby waive notice of acceptance of this Agreement, and promptness in
commencing suit against any Party hereto or liable hereon, and in giving any
notice to or of making any claim or demand hereunder upon the Debtors.
SECTION 10. MISCELLANEOUS.
10.1 RULES OF CONSTRUCTION. The rules of construction set forth in
Section 12(i) of the Purchase Agreement are applicable to this Agreement.
10.2 NOTICES. The notice provisions set forth in Section 2(j) of
the Purchase Agreement are applicable to this Agreement.
10.3 SEVERABILITY. In the event one or more of the provisions of
this Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
10.4 AMENDMENTS. Any amendment or modification of this Agreement
shall be effective only if evidenced by a written instrument executed by duly
authorized representatives of the Parties hereto. Any waiver by a Party of its
rights hereunder shall be effective only if evidenced by a written
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instrument executed by a duly authorized representative of such Party. In no
event shall such waiver of any rights hereunder constitute the waiver of such
rights in any future instance unless the waiver so specifies in writing.
10.5 SUCCESSORS AND ASSIGNS. Whenever any of the Parties hereto is
referred to, such reference shall be deemed to include the successors and
assigns of such Party; and all the covenants, promises and agreements in this
Security Agreement contained by or on behalf of the Debtors shall bind and
inure to the benefit of the successors and assigns of such Parties.
10.6 FURTHER ACTS AND DOCUMENTS. Each of the Parties hereby agrees
to execute and deliver such further instruments and to do such further acts and
things as may be necessary or desirable to carry out the purposes of this
Agreement.
10.7 COUNTERPARTS. This Agreement may be executed, acknowledged
and delivered in any number of counterparts, each of such counterparts
constituting an original but all together constituting only one Agreement.
10.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF OHIO.
10.9 WAIVER OF JURY TRIAL. THE SECURED PARTY AND THE DEBTORS,
AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE
TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, THE PURCHASE AGREEMENT OR THE NOTE OR ANY RELATED INSTRUMENT OR
AGREEMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE
PURCHASE AGREEMENT OR THE NOTE, OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY OF THEM ("LITIGATION"). NEITHER
THE SECURED PARTY NOR THE DEBTORS SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR
OTHERWISE, ANY ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS
SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY
EITHER THE SECURED PARTY OR THE DEBTORS EXCEPT BY WRITTEN INSTRUMENT EXECUTED
BY ALL OF THEM.
10.10 CONSENT TO JURISDICTION, VENUE AND SERVICE OF PROCESS.
THE SECURED PARTY AND THE DEBTORS, EACH AFTER HAVING CONSULTED OR HAVING HAD
THE OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL, HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY: (I) CONSENTS TO THE JURISDICTION OF THE COMMON PLEAS COURT
OF FRANKLIN COUNTY, OHIO AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF OHIO, EASTERN DIVISION WITH RESPECT TO ANY LITIGATION; (II) WAIVES
ANY OBJECTIONS TO THE VENUE OF ANY LITIGATION IN EITHER SUCH COURT; (III)
AGREES NOT TO COMMENCE ANY LITIGATION EXCEPT IN ONE OR THE OTHER OF SUCH
COURTS AND AGREES NOT TO CONTEST THE REMOVAL OF ANY LITIGATION COMMENCED IN ANY
OTHER COURT TO ONE OR THE OTHER OF SUCH COURTS; (IV) AGREES NOT TO SEEK TO
REMOVE, BY CONSOLIDATION OR OTHERWISE, ANY LITIGATION COMMENCED IN EITHER OF
SUCH COURTS TO ANY OTHER COURT; AND (V) WAIVES PERSONAL SERVICE OF PROCESS IN
CONNECTION WITH ANY LITIGATION AND CONSENTS TO SERVICE OF PROCESS BY REGISTERED
OR CERTIFIED MAIL IN ACCORDANCE WITH
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APPLICABLE LAW. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN
ANY RESPECT OR RELINQUISHED BY EITHER THE SECURED PARTY OR THE DEBTORS EXCEPT
BY WRITTEN INSTRUMENT EXECUTED BY ALL OF THEM.
The parties have executed and delivered this Agreement effective as of
the day and year first above written.
DEBTORS: SECURED PARTY:
NDE ENVIRONMENTAL BANC ONE CAPITAL PARTNERS, L.P.
CORPORATION
By: BOCP Corporation,General Partner
By: /s/ XXX XXXXX XXXXXXX
--------------------------------
Its: Chairman of the Board By: /s/ XXXXX X. XXXXX
------------------------------- ------------------------------
Name: Xxxxx X. Xxxxx
--------------------------------
TANKNOLOGY/NDE CORPORATION Its: Authorized Signer
-------------------------------
By: /s/ XXX XXXXX XXXXXXX
--------------------------------
Its: Chairman of the Board
-------------------------------
USTMAN INDUSTRIES, INC.
By: /s/ XXX XXXXX XXXXXXX
--------------------------------
Its: Chairman of the Board
-------------------------------
PROECO, INC.
By: /s/ XXX XXXXX XXXXXXX
--------------------------------
Its: Chairman of the Board
-------------------------------
TANKNOLOGY CANADA (1988), INC.
By: /s/ XXX XXXXX XXXXXXX
--------------------------------
Its: President
-------------------------------
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