EXHIBIT 10.16
AMENDMENT TWO TO
REVOLVING CREDIT LOAN AGREEMENT
THIS AMENDMENT TWO TO REVOLVING CREDIT LOAN AGREEMENT ("Amendment"), is
made and entered into effective as of July 2, 1998, by and between NATIONAL
ENVIRONMENTAL SERVICE CO., an Oklahoma corporation ("Borrower") and BANK OF
OKLAHOMA, NATIONAL ASSOCIATION, a national banking association ("Bank").
RECITALS
A. Reference is made to the Revolving Credit Loan Agreement dated
effective July 14, 1997, and Amendment One to Revolving Credit Loan Agreement
dated December __, 1997, between Borrower and Bank (as amended, the "Credit
Agreement"), pursuant to which currently exists a (I) $3,000,000 Revolving Line
and (ii) $500,000 Term Loan.
B. Borrower has requested Bank to: (I) increase the principal amount of
the $3,000,000 Revolving Line to $4,500,000 and extend its maturity, and (ii)
amend the Borrower's Borrowing Base calculation. Bank has agreed to accommodate
Borrower's request, subject to the terms and conditions set forth below. All
terms used herein shall have the meanings given in the Credit Agreement, unless
otherwise expressly defined.
For valuable consideration received, the parties agree to the following:
AGREEMENT
1. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is amended as
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follows:
a. Section 1.5 is hereby deleted and amended to read and mean as follows:
"1.5 "Borrowing Base" means, at any date of determination
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thereof, the sum of seventy-five percent (75%) of Borrower's
Qualified Receivables at such date, plus fifty percent (50%) of
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Borrower's Qualified Inventory at such date, as determined by Bank
based upon the most recent information relating thereto provided
to Bank pursuant to Section 2.2."
The Borrowing Base Certificate shall be in form and content as set forth on
Schedule "1.1" attached hereto.
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b. Sections 1.25 and 1.26 are hereby deleted, and Bank hereby releases the
Guarantors, Xxxxxx X. XxXxxxxxx and Xxxx Xxxxxxxxx, from their
respective Guaranty Agreements executed July 14, 1997.
c. Section 1.49 is hereby amended to additionally include the following
new section:
"1.49.12 As reported in accordance with GAAP, all receivables
reported as "Costs in Excess of Xxxxxxxx", not to exceed $2,500,000 in
aggregate."
d. Section 1.52 is hereby amended to additionally include Lab One, Inc. as
a subsidiary of Borrower.
e. Section 1.53 is hereby amended to delete all references to the
$3,000,000 Revolving Credit Note and replace with the "$4,500,000
Revolving Credit Note". The form of the $4,500,000 Revolving Credit
Note is attached as Schedule "1.4" hereto. All references in the
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Credit Agreement to "$3,000,000" are hereby deleted and replaced with
"$4,500,000".
f. Section 6.4 is hereby deleted.
g. Section 8.5 is hereby amended to delete the reference to "$500,000" and
replace it with "$1,000,000" as the limitation on capital expenditures.
h. Section 9.1(6) is amended to delete the reference to "$50,000" and
replace it with "$100,000".
2. CONDITIONS PRECEDENT. The making of any loan provided for herein, shall be
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conditioned upon the Borrower executing and/or delivering the following:
2.1. This Amendment, with all schedules attached.
2.2. $4,500,000 Revolving Credit Note.
2.3. Amendment One to Real Estate Deed of Trust and Security
Agreement, in the form and content of Schedule "2.3" attached
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hereto.
2.4. Any other instruments, documents and/or agreements reasonably
required by Bank in connection herewith.
3. RATIFICATION. Borrower hereby ratifies and confirms all Loan Documents to
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which it is a party, and represents and warrants that: (I) the Loan
Documents remain in full
force and effect and unchanged except as expressly amended hereby, (ii) all
representations and warranties made thereunder are true and correct as of
the date hereof and (iii) no Event of Default exists as of the execution of
this Amendment. Borrower further represents and warrants that the Security
Agreement and Deed of Trust delivered to Bank in connection with the Credit
Agreement remain in full force and effect, and that each shall additionally
secure payment of the $4,500,000 Revolving Credit Note, together with
extensions, renewals and changes in form thereof.
4. GOVERNING LAW AND BINDING EFFECT. This instrument shall be governed by and
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construed in accordance with and governed by the laws of the State of
Oklahoma, and shall be binding upon and inure to the benefit of the parties
hereto, their respective heirs, executors, administrators, trustees,
successors and assigns.
5. COSTS, EXPENSES AND FEES. Borrower agrees to pay all costs, expenses and
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fees incurred in connection herewith.
"Borrower"
NATIONAL ENVIRONMENTAL SERVICE
CO., an Oklahoma corporation
By
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Xxxx Xxxxxxxxx, CEO and Chairman of the Board
"Bank"
BANK OF OKLAHOMA, NATIONAL
ASSOCIATION
By
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Xxxxx X. Xxxxxxx, Vice President
PROMISSORY NOTE
$4,500,000 July ___, 1998
Tulsa, Oklahoma
FOR VALUE RECEIVED, the undersigned, NATIONAL ENVIRONMENTAL SERVICE COMPANY
("Maker"), promises to pay to the order of BANK OF OKLAHOMA, N.A. ("Lender"), at
its offices in Tulsa, Oklahoma, the principal sum of FOUR MILLION FIVE HUNDRED
THOUSAND AND NO\100THS DOLLARS ($4,500,000) or, if less, the aggregate sum of
advances made by Lender to Maker under the Revolving Credit and Term Loan
Agreement between Maker and Lender dated July 14, 1997, as amended, payable as
follows:
a. Principal. Principal shall be payable on July 31, 1999.
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b. Interest. Interest shall be payable on the first day of each month,
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commencing the first day of August, 1998, and at maturity. Interest
shall accrue on the principal balance outstanding hereunder and on any
past due interest hereunder at a rate at all times equal to the Prime
Rate (defined below), plus three-quarters of one percent (3/4%) per
annum.
If any payment shall be due on a Saturday or Sunday or upon any other day on
which state or national banks in the State of Oklahoma are closed for business
by virtue of a legal holiday for such banks, such payment shall be due and
payable on the next succeeding banking day and interest shall accrue to such
day. All interest due hereon shall be computed on the actual number of days
elapsed (365 or 366) based upon a 360-day year.
Such installment payments are to be applied first to the payment of interest
on the principal balance from time to time remaining unpaid at the aforesaid
rate, and any balance shall be used to reduce the principal balance; except that
if any advances made by the holder hereof under the terms of any instrument,
document or agreement executed by Maker in connection herewith have not been
repaid, any monies received may, at the option of holder, be applied first to
repay such advances and interest thereon, and the balance, if any, applied to
any installment then due. Any prepayments shall be applied to installments in
the inverse order of occurrence.
"Prime Rate" shall mean a fluctuating interest rate per annum as in effect
from time to time, which interest rate per annum shall at all times be equal to
the rate of interest announced publicly from time to time (whether or not
charged in each instance), by The Chase Manhattan Bank, N.A. at New York, New
York ("Rate Bank"), as its base rate or general reference rate. Each change in
the Prime Rate (or any component thereof) shall become effective hereunder
without notice to Maker (which notice is hereby expressly waived by Maker), on
the effective date of each such change. Should the Rate Bank abolish or abandon
the practice of announcing or publishing a Prime Rate, then the Prime Rate used
during the remaining term of this Note shall be that interest rate or other
general reference rate then in effect at the Rate Bank which, from time to time,
in the
reasonable judgment of Bank, most effectively approximates the initial
definition of the "Prime Rate." Maker acknowledges that Lender may, from time to
time, extend credit to other borrowers at rates of interest varying from, and
having no relationship to, the Prime Rate. The rate of interest payable upon the
indebtedness evidenced by this Note shall not, however, at any time exceed the
maximum rate of interest permitted under the laws of the State of Oklahoma for
loans of the type and character evidenced by this Note.
All payments under this Note shall be made in legal tender of the United
States of America or in other immediately available funds at Lender's office
described above, and no credit shall be given for any payment received by check,
draft or other instrument or item until such time as the holder hereof shall
have received credit therefor from the holder's collecting agent or, in the
event no collecting agent is used, from the bank or other financial institution
upon which said check, draft or other instrument or item is drawn.
From time to time the maturity date of this Note may be extended or this
Note may be renewed, in whole or in part, or a new note of different form may be
substituted for this Note and/or the rate of interest may be changed, or changes
may be made in consideration of loan extensions, and the holder, from time to
time, may waive or surrender, either in whole or in part, any rights,
guarantees, security interests or liens given for the benefit of the holder in
connection herewith; but no such occurrences shall in any manner affect, limit,
modify or otherwise impair any rights, guarantees or security of the holder not
specifically waived, released or surrendered in writing, nor shall any maker,
guarantor, endorser or any person who is or might be liable hereon, either
primarily or contingently, be released from such liability by reason of the
occurrence of any such event. The holder hereof, from time to time, shall have
the unlimited right to release any person who might be liable hereon; and such
release shall not affect or discharge the liability of any other person who is
or might be liable hereon.
If any payment required by this Note to be made is not made when due, or if
any default occurs under any loan agreement or under the provisions of any
mortgage, security agreement, assignment, pledge or other document or agreement
which provides security for the indebtedness evidenced by this Note, the holder
hereof may, at its option, without notice or demand, declare this Note in
default and all indebtedness due and owing hereunder immediately due and
payable. Interest from the date of default on such principal balance and on any
past due interest hereunder shall accrue at the rate of five percent (5%) per
annum above the non-default interest rate accruing hereunder. The Maker and any
endorsers, guarantors and sureties hereby severally waive protest, presentment,
demand, and notice of protest and nonpayment in case this Note or any payment
due hereunder is not paid when due; and they agree to any renewal, extension,
acceleration, postponement of the time of payment, substitution, exchange or
release of collateral and to the release of any party or person primarily or
contingently liable without prejudice to the holder and without notice to the
Maker or any endorser, guarantor or surety. Maker and any guarantor, endorser,
surety or any other person who is or may become liable hereon will, on demand,
pay all costs of collection, including reasonable attorney fees of the holder
hereof in attempting to enforce payment of this Note and reasonable attorney
fees for defending the validity of any document securing this Note as a valid
first and prior lien.
Upon the occurrence of any default hereunder, Lender shall have the right,
immediately and without further action by it, to set off against this Note all
money owed by Lender in any capacity to the Maker or any guarantor, endorser or
other person who is or might be liable for payment hereof, whether or not due,
and also to set off against all other liabilities of Maker to Lender all money
owed by Lender in any capacity to Maker; and Lender shall be deemed to have
exercised such right of set off and to have made a charge against such money
immediately upon the occurrence of such default even though such charge is made
or entered into the books of Lender subsequently thereto.
The holder of this Note may collect a late charge not to exceed an amount
equal to five percent (5%) of the amount of any payment which is not paid within
ten (10) days from the due date thereof, for the purposes of covering the extra
expenses involved in handling delinquent payments. This late charge provision
shall not be applicable in the event the holder hereof, at its option, elects to
receive interest at the increased rate as provided hereunder in the event of
default.
This Note is given for an actual loan of money for business purposes and not
for personal, agricultural or residential purposes, and is executed and
delivered in the State of Oklahoma and shall be governed by and construed in
accordance with the laws of the State of Oklahoma.
This Note is an amendment and increase to the $3,000,000 Promissory Note
dated December ___, 1997, between Maker and Lender.
NATIONAL ENVIRONMENTAL SERVICE
COMPANY
By
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Xxxx Xxxxxxxxx, CEO and Chairman of the Board