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EXHIBIT 10.1
AGREEMENT TO DEFER DIVIDENDS AND AMEND LOAN AND SECURITY AGREEMENT
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Agreement dated this 1st day of March 2001 (the "Amendment") to:
(i) amend that certain Loan and Security Agreement dated as of December
17, 1997 (the "Loan and Security Agreement"), by and between Cahill, Warnock
Strategic Partners Fund L.P., a limited partnership organized under the laws of
the State of Delaware ("Cahill Warnock"), Strategic Associates L.P., a limited
partnership organized under the laws of the State of Delaware ("Strategic
Associates"), Newpark Resources, Inc., a Delaware corporation ("Newpark"), James
H. Stone, an individual whose address is c/o Stone Energy, 909 Poydras Street,
Suite 2650, New Orleans, LA 70112 ("Stone"), Environmental Safeguards, Inc., a
Nevada corporation ("EVSF" or the "Company"), National Fuel & Energy, Inc., a
Wyoming corporation and wholly-owned subsidiary of EVSF ("NFE"), and OnSite
Technology, L.L.C., a limited liability company organized under the laws of the
State of Oklahoma ("OnSite"); and
(ii) defer payment of dividends on the Company's Series D Convertible
Preferred Stock which were received by Cahill Warnock, Strategic Associates,
Newpark and Stone in exchange for the Company's Series C Preferred Shares; and
(iii) agree to the conversion price of the Company's Series D
Convertible Preferred Stock at the default rate as set forth in the Agreement to
Exchange Shares and Amend Loan and Security Agreement dated September 1, 2000
("Exchange Agreement") and agree to the default rate.
RECITALS
WHEREAS, pursuant to the Loan and Security Agreement, and on the terms
and conditions set forth therein, Cahill Warnock, Strategic Associates, Newpark,
and Stone (each a "Lender" and collectively the "Lenders") agreed to make
certain loans to EVSF, NFE, and OnSite (each a "Borrower" and collectively the
"Borrowers");
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WHEREAS, pursuant to the Series B Convertible Preferred and Series C
Preferred Stock Purchase Agreement dated as of December 17, 1997 (the "Stock
Purchase Agreement"), and on the terms and conditions set forth therein, Cahill
Warnock, Strategic Associates, Newpark, and Stone (each a "Purchaser" and
collectively the "Purchasers") agreed to purchase shares of the Company's Series
B Convertible Preferred and Series C Preferred Stock;
WHEREAS, pursuant to the Exchange Agreement the Purchasers exchanged
their shares of the Company's Series C Preferred Stock for the Company's Series
D Convertible Preferred Shares;
WHEREAS, the Lenders and the Borrowers wish to defer certain payments
due to the Lenders under the Loan and Security Agreement;
WHEREAS, the Purchasers and the Company wish to defer certain dividends
due on the Series D Convertible Preferred Shares;
WHEREAS in consideration of the deferral of payments by the Purchasers
and the Lenders, the Purchasers and the Company desire to set the conversion
price of the Series D Convertible Preferred Shares;
WHEREAS, the Lenders and the Borrowers desire to amend the Loan and
Security Agreement, as more fully set forth herein;
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. All capitalized terms used herein shall have the meanings assigned
to them in the Loan and Security Agreement unless expressly defined otherwise in
this Amendment.
2. Except as otherwise specifically provided herein, all terms and
conditions of the Loan and Security Agreement shall apply to the interpretation
and enforcement of this Amendment as if explicitly set forth herein.
3. Amendments to the Loan and Security Agreement
3.1 The Deferrals. Section 2.2(b) of the Loan and Security Agreement,
as amended in the Exchange Agreement, is hereby further amended by deleting
Section 2.2(b) and replacing it in its entirety with the following:
"(b) If not earlier paid, or if not accelerated for payment, each loan
shall be payable to each Lender (for its Pro Rata Share), with notice of such
payment to the Agent, quarterly in arrears in substantially equal periodic
installments consisting of principal plus interest accrued at the rate set forth
in the Note, on the fifth (5th) day of each March, June, September and December
(each an "Interest Payment Date"), commencing on March 5, 1998, with the entire
remaining principal balance of the Loan and all interest accrued thereon due and
payable on the Maturity Date, subject, however, to the following deferrals (each
a "Deferral" and collectively the "Deferrals"): (i) the payment of principal and
interest due on March 5, 2001, including all amounts previously deferred
pursuant to the Exchange Agreement shall instead become due on June 8, 2001 and
(ii) the payment of principal and interest due on June 5, 2001, including all
amounts previously deferred pursuant to the Exchange Agreement shall instead
become due on June 8, 2001. Notwithstanding the foregoing in the event that on
June 8, 2001, EVSF is engaged in good faith negotiations for the sale of EVSF,
or a subsidiary, or substantially all of its assets, or substantially all of the
assets of its subsidiaries ("Financing Transaction"), then all of the Deferrals
shall be extended to July 8, 2001 and from month to month thereafter until the
consummation of the Financing Transaction or the termination of the good faith
negotiations. The payments subject to these Deferrals shall bear interest at the
rate set forth in Section 2.2(a) above and not at the Default Rate. No late
charges, as described in Section 2.4, shall accrue with respect to either of the
Deferrals"
4 Deferral of Series D Convertible Preferred Dividends and Conversion
Price
4.1 Deferral of Series D Convertible Preferred Dividends. The parties
agree to defer payment of the following Dividends on the Series D Convertible
Preferred Stock until June 8, 2001: (i) the Special Dividend that is referenced
in Section 3.4 of the Exchange Agreement; and (ii) the dividend that is due five
(5) days after the close of the quarter ending March 31, 2001 (collectively
"Dividend Deferrals"). Notwithstanding the foregoing in the event that on June
8, 2001, EVSF is engaged in good faith negotiations for a Financing Transaction,
then all of the Dividend Deferrals and an additional deferral of the dividend
that is due five (5) days after the close of the quarter ending June 30, 2001
shall be extended to July 8, 2001 and from month to month thereafter until the
consummation of the Financing Transaction or the termination of the good faith
negotiations.
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4.2 Conversion Price of Series D Convertible Preferred Shares. The
parties agree that in exchange for the Deferrals referenced above, the
conversion price shall be set at the default rate as referenced in Section 3.2
of the Exchange Agreement. The parties further agree that the default rate shall
be $.37 per share.
5. Closing.
5.1 Date and Place of Closing. Subject to the conditions stated in this
Amendment, the consummation of the transactions contemplated hereby (the
"Closing") shall be held on or before March 2, 2001, or such other date as is
mutually satisfactory to the parties hereto (the "Closing Date"). The Closing
shall be held at such time and place as the parties hereto may agree in writing.
5.2 Conditions to the Borrowers's Closing. The obligations of Borrowers
hereunder are subject to the following conditions, each of which must be
satisfied or waived by Borrowers prior to Closing:
(a) Representations and Warranties True. Borrowers shall be
satisfied that all representations and warranties of the Lenders contained in
this Amendment are true in all material respects at and as of the Closing as if
such representations and warranties were made at and as of the Closing, and that
the Lenders shall have performed and satisfied all material agreements in all
material respects as required by this Amendment to be performed and satisfied by
the Lenders at or prior to the Closing.
5.3 Conditions to Lender's Closing. The obligations of the Lenders
hereunder are subject to the following conditions, each of which must be
satisfied or waived by the Lenders prior to closing:
(a) Resolutions. Prior to or at Closing, the Lenders shall have
received resolutions of the Board of Directors of the Company authorizing and
approving the transactions contemplated by this Amendment, certified by the
respective Secretary or Assistant Secretary of the Company.
(b) Representations and Warranties True. Lenders shall be satisfied
that all representations and warranties of the Borrowers contained in this
Amendment shall be true in all material respects as at and as of the Closing as
if such representations and warranties were made at and as of the Closing, and
that the Borrowers have performed and satisfied all material agreements in all
material respects as required by this Amendment to be performed and satisfied by
the Borrowers at or prior to the Closing.
6. Representations and Warranties
6.1 Representations and Warranties of the Borrowers. The Borrowers
represent and warrant as of the date hereof and as of the Closing Date as
follows:
(a) Accuracy of Representations and Warranties. Each of the
representations and warranties regarding the Borrowers set forth in Section 5 of
the Loan and Security Agreement was true, complete and accurate in all material
respects when made. Except as set forth on Schedule 6.1 to the Exchange
Agreement and on Schedule A to this Amendment, since the dates on which such
representations and warranties were made, no event has occurred that has had a
material adverse effect on the business, assets, financial condition or
operations of the Borrowers and that would cause any such representations or
warranty, if made as of the date of this Amendment, to be materially false.
(b) No Conflict. The Borrowers have all requisite power and
authority to carry on their business as presently conducted, to enter into this
Amendment and to perform their obligations hereunder. The consummation of the
transactions contemplated by this Amendment will not violate, or be in conflict
with, any material provision of the certificates of incorporation of any of the
Borrowers or any material provision of any agreement or instrument to which any
of the Borrowers are a party or by which either of them are bound (except for
any provision in any agreement relating to required consents to transfer)
noncompliance with which would have a materially adverse effect upon the Lenders
or upon any of the transactions contemplated by this Amendment, or, to the
knowledge of the Borrowers, any judgment, decree, order, statute, rule or
regulation applicable to the Borrowers (subject to required approvals of
Federal, state, or other governmental agencies).
(c) Authorization. The execution, delivery and performance of this
Amendment and the transactions contemplated hereby and have been duly and
validly authorized by all requisite action on the part of the Borrowers.
(d) Enforceability. This Amendment has been duly executed and
delivered on behalf of the Borrowers. This Amendment constitutes legal, valid
and binding obligations of the Borrowers enforceable in accordance with their
respective terms, except that such enforcement may be subject to bankruptcy,
insolvency, moratorium or similar laws affecting creditors' rights.
6.2 Representations and Warranties of the Lenders. The Lenders
represent and warrant as of the date hereof and as of the Closing Date as
follows:
(a) No Conflict. The Lenders have all requisite power and authority
to carry on their business as presently conducted, to enter into this Amendment
and to perform their obligations hereunder. The consummation of the transactions
contemplated by this Amendment will not violate, or be in conflict with, any
material provision of the certificates of incorporation of any of the Lenders or
any material provision of any agreement or instrument to which any of the
Lenders are a party or by which either of them are bound (except for any
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provision in any agreement relating to required consents to transfer)
noncompliance with which would have a materially adverse effect upon the
Borrowers or upon any of the transactions contemplated by this Amendment, or, to
the knowledge of the Lenders, any judgment, decree, order, statute, rule or
regulation applicable to the Lenders (subject to required approvals of Federal,
state, or other governmental agencies).
(b) Authorization. The execution, delivery and performance of this
Amendment and the transactions contemplated hereby have been duly and validly
authorized by all requisite action on the part of the Lenders.
(c) Enforceability. This Amendment has been duly executed and
delivered on behalf of the Lenders. This Amendment constitutes a legal, valid
and binding obligation of the Lenders, enforceable in accordance with its terms,
except that such enforcement may be subject to bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights.
7. THIS AMENDMENT IS TO BE CONSTRUED UNDER THE LAWS OF THE STATE OF
MARYLAND.
9. This Amendment shall be of no force and effect until receipt and
execution of this Amendment by the Borrowers. This Amendment may be executed in
counterparts, each of which shall be deemed an original, but all of which shall
be deemed one instrument, by facsimile signature of any of the parties, each of
which shall be deemed an original for all purposes.
10. Except as expressly amended hereby, the Loan and Security Agreement
remains in full force and effect. Any references to the Loan and Security
Agreement shall refer to the Agreement as amended hereby.
IN WITNESS WHEREOF, the undersigned have executed this Amendment under
seal as of the date first set forth above.
BORROWERS:
ENVIRONMENTAL SAFEGUARDS, INC. (EVSF)
By: /s/ James S. Percell
Name: James S. Percell
Title: President
NATIONAL FUEL & ENERGY, INC.
By: /s/ James S. Percell
Name: James S. Percell
Title: President
ONSITE TECHNOLOGY LLC
By: /s/ James S. Percell
Name: James S. Percell
Title: President
LENDERS/PURCHASERS:
CAHILL, WARNOCK STRATEGIC PARTNERS FUND LLP
By: /s/ David L. Warnock
Name: David L. Warnock
Title: ___________________
STRATEGIC ASSOCIATES L.P.
By: /s/ David L. Warnock
Name: David L. Warnock
Title: ___________________
NEWPARK RESOURCES, INC.
By: /s/ Mathew W. Hardey
Name: Mathew W. Hardey
Title: Vice President
/s/ James H. Stone
JAMES H. STONE