<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No.______)*
NATIONAL ENVIRONMENTAL SERVICE CO.
---------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
--------------------------------------
(Title of Class of Securities)
6358380-0-5
(CUSIP Number)
Lynnwood R. Moore, Jr.
Conner & Winters, A Professional Corporation
3700 First Place Tower, 15 East 5th Street
Tulsa, OK 74103
(918) 586-5711
--------------
(Name, Address, and Telephone Number of Person Authorized to Receive
Notices and Communications)
September 8, 1999
-----------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of (S)240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box ( ).
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits, should be filed with the
Commission. See (S)240.13d-7(b) for other parties to whom copies are to be
sent.
*The remainder of this cover page should be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
Page 2 of 5 Pages
CUSIP No. 635838-01-5
-----------
SCHEDULE 13D
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
Eddy L. Patterson
###-##-####
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
a. ( )
b. ( )
3. SEC USE ONLY
4. SOURCE OF FUNDS*
BK
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRE PURSUANT TO ITEMS
2(d) or (e) ( )
6. CITIZENSHIP OR PLACE OF ORGANIZATION: United States
7. SOLE VOTING POWER: 3,056,758
8. SHARED VOTING POWER: 0
9. SOLE DISPOSITIVE POWER: 3,056,758
10. SHARED DISPOSITIVE POWER: 0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 3,056,758
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: ( )
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 40.1%
14. TYPE OF REPORTING PERSON: IN
<PAGE>
Page 3 of 5 Pages
CUSIP No. 635838-01-5
------------
Item 1. Security and Issuer
---------------------------
This Schedule 13D relates to the Common Stock, par value $.01 per share, of
National Environmental Service Co. (the "Company"), whose principal executive
offices are located at 12331 East 60th Street, Tulsa, OK 74146.
Item 2. Identity and Background
-------------------------------
(a) Name: Eddy L. Patterson
(b) Business Address: 12331 East 60th Street
Tulsa, OK 74l46
(c) Present Principal Occupation: Mr. Patterson is Chairman and Chief
Executive Officer of National Environmental Service Co.
(d) Mr. Patterson has not, during the last five years, been convicted in a
criminal proceeding.
(e) Mr. Patterson has not, during the last five years, been a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
(f) Citizenship: U.S.A.
Item 3. Source and Amount of Funds or other Consideration
---------------------------------------------------------
This Schedule 13D covers 750,000 shares of National Environmental
Service Co. stock acquired from Albert A. McCutchan and 750,000 shares of Common
Stock acquired from Beverly McCutchan. The shares of Common Stock previously
held by Albert A. McCutchan and Beverly McCutchan were previously reported on
Schedule 13G, dated January 18, 1995, submitted by Albert A. McCutchan. The
1,500,000 shares were acquired for $3,000,000, and the funds were obtained
through a bank loan from Citizens Bank of Tulsa.
<PAGE>
Page 4 of 5 Pages
CUSIP No. 635838-01-5
-----------
Item 4. Purpose of the Transaction
----------------------------------
The shares of Common Stock reported to be owned by Mr. Patterson have
all been acquired for investment purposes. With respect to the investment in
the Common Stock, Mr. Patterson does not have any present intentions or plans
which relate to or would result in:
(a) The acquisition of additional securities of the Company or the
disposition of securities of the Company, other than (1) additional
shares which may be purchased from time to time on the open market or
through private purchases solely for investment purposes, and (2)
sales of these securities Mr. Patterson may make to certain key
employees of the Company at the same price that he paid for the
securities.
(b) An extraordinary corporate transaction, such as a merger,
reorganization of liquidation, involving the Company or any of its
subsidiaries.
(c) A sale or transfer of a material amount of assets of the Company or
any of its subsidiaries;
(d) Any change in the present Board of Directors or management of the
Company, including any plans or proposals to change the number or term
of directors or to fill any existing vacancies on the Board;
(e) Any material change in the present capitalization or dividend policy
of the Company;
(f) Any other material change in the Company's business or corporate
structure;
(g) Changes in the Company's charter, bylaws, or instruments corresponding
thereto or other actions which may impede the acquisition of control
of the Company by any person;
(h) Causing a class of securities of the Company to be delisted from a
national securities exchange or to cease to be authorized to be quoted
on an inter-dealer quotation system of a registered national
securities association;
(i) A class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); or
(j) Any action similar to those enumerated above.
<PAGE>
Page 5 of 5 Pages
CUSIP No. 635838-01-5
-----------
Item 5. Interest in Securities of the Issuer
--------------------------------------------
(a) Mr. Paterson beneficially owns an aggregate of 3,056,758 shares of the
Company's common stock which represents 40.1% of the total number of
the Company's outstanding common stock at September 15, 1999.
(b) Mr. Patterson has sole voting power and sole dispositive power of all
3,056,758 shares of the Company's common stock beneficially owned by
him.
(c) None
(d) N/A
(e) N/A
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer
------------------------------------------------------
The Shares acquired from Albert McCutchan were pledged to Citizen's Bank
of Tulsa to secure the loan.
Item 7. Material to be Filed as Exhibits
----------------------------------------
Citizens Bank of Tulsa Loan Agreement and Pledge Agreement.
SIGNATURE
---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
/s/ EDDY L PATTERSON
-------------------------
Eddy L. Patterson
Date: September 14, 1999
Eddy L. Patterson
-------------------------
Name/Title
<PAGE>
EXHIBIT 99.1
<TABLE>
<CAPTION>
DATE OF AGREEMENT
------------------------------------------------
LOAN AGREEMENT 9/8/99
- -----------------------------------------------------------------------------------------------------------------------
BORROWER Name and Address LENDER Name and Address
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
EDDY L. PATTERSON CITIZENS BANK OF TULSA
11245 S. 67TH E. CT. PO BOX 27127
BIXBY, OK 74008 TULSA, OK 74149
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
The undersigned Borrower with principal office, place of record keeping and
mailing address as shown above, hereby acknowledges receipt of proceeds, or some
part thereof, or renewal thereof, of the following described loan and/or
extension of credit from Lender named in this Agreement:
PROMISSORY NOTE #1840 79551 DATED 9/8/99 IN THE PRINCIPAL AMOUNT OF
$3,000,059.46.
IN CONSIDERATION of Lender making such loan and/or extension of credit, or any
part thereof, Borrower agrees as follows:
A. Financial Information. To deliver to Lender within the stated time limits
the following financial information and income tax returns as of the dates
and for the period indicated.
1) PERSONAL FINANCIAL STATEMENT TO BE PROVIDED ON AN ANNUAL BASIS AS OF 12/31
OF EACH YEAR WITHIN 45 DAYS OF YEAR END, OR AT THE REQUEST OF LENDER.
2) PERSONAL TAX RETURN TO BE PROVIDED ANNUALLY UPON COMPLETION AND FILING.
B. Litigation. To inform, Lender promptly of any litigation, or of any claim or
controversy which might become the subject of litigation, against Borrower
or affecting any of borrower's property, if such litigation or potential
litigation, in the event of an unfavorable outcome, would have a material
adverse effect on Borrower's financial condition;
C. Taxes. To pay promptly when due any and all taxes, assessments and
governmental charges against Borrower or against any of Borrower's property,
unless the same is being contested in good faith by appropriate proceedings
and reserves deemed adequate by Lender have been established therefor;
D. Labor and Material. To pay promptly all lawful claims whether for labor,
materials or otherwise, which might or could, if unpaid, become a lien or
charge on any property or assets of Borrower, unless and to the extent only
that the same are being contested in good faith by appropriate proceedings
and reserves deemed adequate by Lender have been established therefor;
E. Insurance. To maintain with financially sound and reputable insurance
organizations approved by Lender, insurance of the kinds and covering the
risks and in the amounts usually carried by companies engaged in businesses
similar to that of Borrower, which insurance in all events shall be risks
and in the amounts usually carried by companies engaged in businesses
similar to that of Borrower, which insurance in all events shall be
satisfactory to Lender and provide suitable loss payable clauses in favor of
Lender, and, at Lender's request deliver to Lender evidence of the
maintenance of such insurance; and
F. Accounting Records. To maintain adequate records in accordance with
generally accepted accounting principles of all transactions so that at any
time and from time to time the true and complete financial condition of
Borrower may be readily determined.
**SEE ATTACHED FOR ADDITIONAL COVENANTS
SIGNATURES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
CONFIRMED BORROWER
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
-------------------------------------------------
-------------------------------------------------
EDDY L. PATTERSON
-------------------------------------------------
CITIZENS BANK OF TULSA
-------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
BY: CORPORATION OR FIRM NAME
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
OFFICER TITLE OFFICER TITLE
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
COMMERCIAL PLEDGE AND SECURITY AGREEMENT
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
$3,000,059.46 09-08-1999 06-08-2000 79551 220 14 1840 EMB
- ------------------------------------------------------------------------------------------------------
</TABLE>
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Borrower: EDDY L. PATTERSON (SSN: ###-##-####) Lender: CITIZENS BANK OF TULSA
11245 S 67TH E CT PO BOX 27127
BIXBY, OK 74008 TULSA, OK 74149
</TABLE>
THIS COMMERCIAL PLEDGE AND SECURITY AGREEMENT is entered into between EDDY L.
PATTERSON (referred to below as "Grantor"); and CITIZENS BANK OF TULSA (referred
to below as "Lender").
GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to
Lender a security interest in the Collateral to secure the indebtedness and
agrees that lender shall have the rights stated in this Agreement with respect
to the Collateral, in addition to all other rights which Lender may have by law.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement:
Agreement. The word "Agreement" means this Commercial Pledge and Security
Agreement, as this Commercial Pledge and Security Agreement may be amended or
modified from time to time, together with all exhibits and schedules attached
to this Commercial Pledge and Security Agreement from time to time.
Collateral. The word "Collateral" means the following specifically described
property, which Grantor has delivered or agrees to deliver (or cause to be
delivered or appropriate book--entries made) immediately to Lender, together
with all Income and Proceeds as described below:
1398791.000 shares of NATIONAL ENVIRONMENTAL SERVICE COMPANY STOCK
EVIDENCED BY CERTIFICATE #NC1152
101209.000 shares of NATIONAL ENVIRONMENTAL SERVICE COMPANY STOCK EVIDENCED
BY CERTIFICATE #NC1151
112500.000 shares of NATIONAL ENVIRONMENTAL SERVICE COMPANY STOCK EVIDENCED
BY CERTIFICATE #NC928
3500.000 shares of NATIONAL ENVIRONMENTAL SERVICE COMPANY STOCK EVIDENCED
BY CERTIFICATE #NC1063
25000.000 shares of NATIONAL ENVIRONMENTAL SERVICE COMPANY STOCK EVIDENCED
BY CERTIFICATE #NC964
50000.000 shares of NATIONAL ENVIRONMENTAL SERVICE COMPANY STOCK EVIDENCED
BY CERTIFICATE #NC577
50000.000 shares of NATIONAL ENVIRONMENTAL SERVICE COMPANY STOCK EVIDENCED
BY CERTIFICATE #NC576
In addition, the word "Collateral" includes all property of Grantor, in the
possession of Lender (or in the possession of a third party subject to the
control of Lender), whether now or hereafter existing and whether tangible or
intangible in character, including without limitation each of the following:
(a) All property to which Lender acquires title or documents of title.
(b) All property assigned to Lender
(c) All promissory notes, bills of exchange, stock certificates, bonds, savings
passbooks, time certificates of deposit, insurance policies, and all other
instruments and evidences of an obligation.
(d) All records relating to any of the property described in this Collateral
section, whether in the form of a writing, microfilm, microfiche, or
electronic media.
Event of Default. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section titled
"Events of Default".
Grantor. The word "Grantor" means EDDY L PATTERSON.
Guarantor. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in connection
with the indebtedness.
Income and Proceeds. The words "Income and Proceeds" mean all present and
future income, proceeds, earnings, increases, and substitutions from or for
the Collateral of every kind and nature, including without limitation all
payments, interest, profits, distributions, benefits, rights, options
warrants, dividends, stock dividends, stock splits, stock rights, regulatory
dividends, distributions, subscriptions, monies, claims for money due and to
become due, proceeds of any insurance on the Collateral, shares of stock of
different par value or no par value issued in substitution or exchange for
shares included in the Collateral, and all other property Grantor is entitled
to receive on account of such Collateral, including accounts, documents,
instruments, chattel paper, and general intangibles.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced by
the Note, including all principal and interest, together with all other
indebtedness and costs and expenses for which Grantor is responsible under
this Agreement or under any of the Related Documents. In addition, the word
"indebtedness" includes all other obligations, debts and liabilities, plus
interest thereon, of Grantor, or any one or more of them, to Lender, as well
as all claims by Lender against Grantor, or any one or more of them, whether
existing now or later; whether they are voluntary or involuntary, due or not
due, direct or indirect, absolute or contingent, liquidated or unliquidated;
whether Grantor may be liable individually or jointly with others; whether
Grantor may be obligated as guarantor, surety, accommodation party or
otherwise; whether recovery upon such indebtedness may be or hereafter may
become barred by any statute of limitations; and whether such indebtedness
may be or hereafter may become otherwise unenforceable.
Lender. The word "Lender" means CITIZENS BANK OF TULSA, its successors and
assigns.
Note. The word "Note" means the note or credit agreement dated September 8,
1999, in the principal amount of $3,000,059.46 from EDDY L PATTERSON to
Lender, together with all renewals of, extensions of, modifications of,
refinancings of, consolidations of and substitutions for the note or credit
agreement.
Obligor. The word "Obligor" means and includes without limitation any and
all persons or entities obligated to pay money or to perform some other act
under the Collateral.
Related Documents. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the indebtedness.
RIGHT OF SETOFF. Grantor hereby grants Lender a contractual security interest
in and hereby assigns, conveys, delivers, pledges, and transfers all of
Grantor's right, title and interest in and to Grantor's accounts with Lender
(whether checking, savings, or some other account), including all accounts held
jointly with someone else and all accounts Grantor may open in the future,
excluding, however, all IRA and Keogh accounts, and all trust accounts for which
the grant of a security interest would be prohibited by law. Grantor authorizes
Lender, to extent permitted by applicable law, to charge or setoff all
indebtedness against any and all such accounts.
GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL.
Grantor represents and warrants to Lender that:
Ownership. Grantor is the lawful owner of the collateral free and clear of
all security interests, liens, encumbrances and claims of others except as
disclosed to and accepted by Lender in writing prior to execution of this
Agreement.
Right to Pledge. Grantor has the full right, power and authority to enter
into this Agreement and to pledge the Collateral.
Binding Effect. This Agreement is binding upon Grantor, as well as Grantor's
heirs, successors, representatives and assigns, and is legal enforceable in
accordance with its terms.
No Further Assignment. Grantor has not, and will not, sell assign, transfer,
encumber or otherwise dispose of any of Grantor's rights in the Collateral
except as provided in this Agreement.
No Defaults. There are no defaults existing under the collateral, and there
are no offsets or counterclaims to the same. Grantor will strictly and
promptly perform each of the terms, conditions, and agreements contained in
the Collateral, which are to be performed by Grantor, if any.
No Violation. The execution and deliver of this Agreement will not violate
any law or agreement governing Grantor or to which Grantor is a party.
LENDER'S RIGHTS AND OBLIGATIONS WITH REPECT TO COLLATERAL. Lender may hold the
Collateral until all the Indebtedness has been paid and satisfied and thereafter
may deliver the Collateral to any Grantor. Lender shall have the following
rights in addition to all other rights it may have by law:
<PAGE>
09-08-1999 COMMERCIAL PLEDGE AND SECURITY AGREEMENT Page 2
Loan No 79551 (Continued)
Maintenance and Protection of Collateral. Lender may, but shall not be
obligated to, take such steps as it deems necessary or desirable to protect,
maintain, insure, store, or care for the Collateral, including payment of any
liens or claims against the Collateral. Lender may charge any cost incurred
in so doing to Grantor.
Income and Proceeds from the Collateral. Lender may receive all Income and
Proceeds and add it to the collateral. Grantor agrees to deliver to Lender
immediately upon receipt, in the exact form received and without commingling
with other property, all Income and Proceeds from the Collateral which may be
received by, paid, or delivered to Grantor or for Grantor's account, whether
as an addition to, in discharge of, in substitution of, or in exchange for
any of the Collateral.
Application of Cash. At Lender's option, Lender may apply any cash, whether
included in the Collateral or received as Income and Proceeds or through
liquidation, sale, or retirement, of the Collateral, to the satisfaction of
the Indebtedness or such portion thereof as Lender shall choose, whether or
not matured.
Transactions with Others. Lender may (a) extend time for payment or other
performance, (b) grant a renewal or change in terms or conditions, or (c)
compromise, compound or release any obligation, with any one or more
Obligors, endorsers, or Guarantors of the Indebtedness as Lender deems
advisable, without obtaining the prior written consent of Grantor, and no
such act or failure to act shall affect Lender's rights against Grantor or
the Collateral.
All Collateral Secures Indebtedness. All collateral shall be security for
the Indebtedness, whether the Collateral is located at one or more offices or
branches of Lender and whether or not the office or branch where the
Indebtedness is created is aware of or relies upon the collateral. In the
event Grantor comes into possession of any Collateral, Grantor will deliver
it immediately to Lender.
Collection of Collateral. Lender, at Lender's option may, but need not,
collect directly from the Obligors on any of the Collateral all income and
Proceeds or other sums of money and other property due and to become due
under the Collateral, and Grantor authorizes and directs the Obligors, if
Lender exercises such option, to pay and deliver to Lender all Income and
Proceeds and other sums of money and other property payable by the terms of
the Collateral and to accept Lender's receipt for the payments.
Power of Attorney. Grantor irrevocably appoints Lender as Grantor's
attorney-in-fact, with full power of substitution, (a) to demand, collect,
receive, receipt for, sue and recover all Income and Proceeds and other sums
of money and other property which may now or hereafter become due, owing or
payable from Obligors in accordance with the terms of the Collateral; (b) to
execute, sigh and endorse any and all instruments, receipts, checks, drafts
and warrants issued in payment for the Collateral; (c) to settle or
compromise any and all claims arising under the Collateral, and in the place
and stead of Grantor, execute and deliver Grantor's release and acquittance
for Grantor; (d) to file any claim or claims or to take any action or
institute or take part in any proceedings, either in Lender's own name or in
the name of Grantor, or otherwise, which in the discretion of Lender may seem
to be necessary or advisable; and (e) to execute in Grantor's name and to
deliver to the Obligors on Grantor's behalf, at the time and in the manner
specified by the Collateral, any necessary instruments or documents.
Perfection of Security Interest. Upon request of Lender, Grantor will
deliver to Lender any and all of the documents evidencing or constituting the
Collateral. When applicable law provides more than one method of perfection
of Lender's security interest, Lender may choose the method(s) to be used.
Upon request of Lender, Grantor will sign and deliver any writings necessary
to perfect Lender's security interest. If the Collateral consists of
securities for which no certificate has been issued, Grantor agrees, at
Lender's option, either to request issuance of an appropriate certificate or
to execute appropriate instructions on Lender's forms instructing the issuer,
transfer agent, mutual fund company, or broker, as the case may be, to record
on its books or records, by book-entry or otherwise, Lender's security
interest in the Collateral. Grantor hereby appoints Lender as Grantor's
irrevocable attorney-in-fact for the purpose of executing any documents
necessary to perfect or to continue the security interest granted in this
Agreement. This is a continuing Security Agreement and will continue in
effect even though all or any part of the Indebtedness is paid in full even
though for a period of time Grantor may not be indebted to Lender.
Inspection Rights. Grantor assigns to Lender all of Grantor's statutory and
common law rights to inspect the books and records of the issuer of any
Collateral.
EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Grantor. All such
expenses shall become a part of the indebtedness and, at Lender's option, will
(a) be payable on demand, (b) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due
during either (i) the term of any applicable insurance policy or (ii) the
remaining term of the Note, or (c) be treated as a balloon payment which will be
due and payable at the Note's maturity. This Agreement also will secure payment
of these amounts. Such right shall be in addition to all other rights and
remedies to which Lender may be entitled upon the occurrence of an Event of
Default.
LIMITATION ON OBLIGATIONS OF LENDER. Lender shall use ordinary reasonable care
in the physical preservation and custody of the collateral in Lender's
possession, but shall have no other obligation to protect the Collateral or its
value. In particular, but without limitation, Lender shall have no
responsibility for (a) any depreciation in value of the Collateral or for the
collection or protection of any Income and Proceeds from the Collateral, (b)
preservation of rights against parties to the Collateral or against third
persons, (c) ascertaining any maturities, calls, conversions, exchanges, offers,
tenders, or similar matters relating to any of the Collateral, or (d) informing
Grantor about any of the above, whether or not Lender has or is deemed to have
knowledge of such matters. Except as provided above, Lender shall have no
liability for depreciation or deterioration of the Collateral.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
Default of Indebtedness. Failure of Grantor to make any payment when due on
the Indebtedness.
Other Defaults. Failure of Grantor to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or in any
of the Related Documents or in any other agreement between Lender and
Grantor.
False Statements. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Grantor under this Agreement, the Note
or the Related Documents is false or misleading in any material respect,
either now or at the time made or furnished.
Defective Collateralization. This Agreement or any of the Related documents
ceases to be in full force and effect (including failure of any collateral
documents to create a valid and perfected security interest or lien) at any
time and for any reason.
Death of Insolvency. The death of Grantor or the dissolution or termination
of Grantor's existence as a going business, the insolvency of Grantor, the
appointment of a receiver for any part of Grantor's property, any assignment
for the benefit of creditors, any type of creditor workout, or the
commencement of any proceeding under any bankruptcy or insolvency laws by or
against Grantor.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Grantor or by any
governmental agency against the Collateral or any other collateral securing
the indebtedness. This includes a garnishment of any of Grantor's deposit
accounts with Lender. However, this Event of Default shall not apply if
there is a good faith dispute by Grantor as to the validity or reasonableness
of the claim which is the basis of the creditor or forfeiture proceeding and
if Grantor gives Lender written notice of the creditor or forfeiture
proceeding and deposits with Lender monies or a surety bond for the creditor
or forfeiture proceeding, in an amount determined by Lender, in its sole
discretion, as being an adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect
to any Guarantor of any of the Indebtedness or such Guarantor dies or becomes
incompetent. Lender, at its option, may, but shall not be required to,
permit the Guarantor's estate to assume unconditionally the obligations
arising under the guaranty in a manner satisfactory to Lender, and, in doing
so, cure the Event of Default.
Adverse Change. A material adverse change occurs in Grantor's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.
Right to Cure. If any default, other than a Default on Indebtedness, is
curable and if Grantor has not been given a prior notice of a breach of the
same provision of this Agreement, it may be cured (and no Event of Default
will have occurred) if Grantor, after Lender sends written notice demanding
cure of such default, (a) cures the default within fifteen (15) days; or (b)
if the cure requires more than fifteen (15) days, immediately initiates steps
which Lender deems in Lender's sole discretion to be sufficient to cure the
default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender may exercise any one or more of the
following rights and remedies:
Accelerate Indebtedness. Declare all Indebtedness, including any prepayment
penalty which Grantor would be required to pay, immediately due and payable,
without notice of any to Grantor.
Collect the Collateral. Collect any of the Collateral and, at Lender's
option and to the extent permitted by applicable law, retain possession of
the Collateral while suing on the Indebtedness.
Sell the Collateral. Sell the Collateral, at Lender's discretion, as a unit
or in parcels, at one or more public or private sales. Unless the collateral
is perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Lender shall give or mail to
Grantor, or any of them, notice at least ten (10) days in advance of the time
and place of any public sale, or of the date after which any private sale may
be made.
<PAGE>
09-08-1999 COMMERCIAL PLEDGE AND SECURITY AGREEMENT Page 3
Loan No 79551 (Continued)
Grantor agrees that any requirement of reasonable notice is satisfied if
Lender mails notice by ordinary mail addressed to Grantor, or any of them, at
the last address Grantor has given Lender in writing. If a public sale is
held, there shall be sufficient compliance with all requirements of notice to
the public by a single publication in any newspaper of general circulation in
the county where the Collateral is located, setting forth the time and place
of sale and a brief description of the property to be sold. Lender may be a
purchaser at any public sale.
Register Securities. Register any securities included in the Collateral in
Lender's name and exercise any rights normally incident to the ownership of
securities.
Sell Securities. Sell any securities included in the Collateral in a manner
consistent with applicable federal and state securities laws, notwithstanding
any other provision of this or any other agreement. If, because of
restrictions under such laws, Lender is or believes it is unable to sell the
securities in an open market transaction, Grantor agrees that Lender shall
have no obligation to delay sale until the securities can be registered, and
may make a private sale to one or more persons or to a restricted group of
persons, even though such sale may result in a price that is less favorable
than might be obtained in an open market transaction, and such a sale shall
be considered commercially reasonable. If any securities held as Collateral
are "restricted securities" as defined in the rules of the Securities and
Exchange Commission (such as Regulation D or Rule 144) or state securities
departments under state "Blue Sky" laws, or if Grantor is an affiliate of the
issuer of the securities, Grantor agrees that neither Borrower nor any member
of Borrower's family and neither Grantor nor any member of Grantor's family
will sell or dispose of any securities of such issuer without obtaining
Lender's prior written consent.
Foreclosure. Maintain a judicial suit for foreclosure and sale of the
Collateral.
Transfer Title. Effect transfer of title upon sale of all or part of the
Collateral. For this purpose, Grantor irrevocably appoints Lender, as its
attorney-in-fact to execute endorsements, assignments and instruments in the
name of Grantor and each of them (if more than one) as shall be necessary or
reasonable.
Other Rights and Remedies. Have and exercise any or all of the rights and
remedies of a secured creditor under the provisions of the Uniform Commercial
Code, at law, in equity, or otherwise.
Application of Proceeds. Apply any cash which is part of the Collateral, or
which is received from the collection or sale of the collateral, to
reimbursement of any expenses, including any costs for registration of
securities, commissions incurred any fees on appeal, incurred by Lender in
connection with the collection and sale of such Collateral and to the payment
of the Indebtedness of Grantor to Lender, with any excess funds to be paid to
Grantor as the interests of Grantor may appear. Grantor agrees, to the
extent permitted by law, to pay any deficiency after application of the
proceeds of the Collateral to the Indebtedness.
Cumulative Remedies. All of Lender's rights and remedies, whether evidenced
by this Agreement or by any other writing, shall be cumulative and may be
exercised singularly or concurrently. Election by Lender to pursue any
remedy shall not exclude pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation of Grantor under this
Agreement, after Grantor's failure to perform, shall not affect Lender's
right to declare a default and to exercise its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters set
forth in this Agreement. No alteration of or amendment to this Agreement
shall be effective unless given in writing and signed by the party or parties
sought to be charged or bound by the alteration or amendment.
Applicable Law. This Agreement has been delivered to Lender and accepted by
Lender in the State of Oklahoma. If there is a lawsuit, Grantor agrees upon
Lender's request to submit to the jurisdiction of the courts of TULSA County,
the State of Oklahoma. This Agreement shall be governed by and construed in
accordance with the laws of the State of Oklahoma.
Attorneys' Fees; Expenses. Grantor agrees to pay upon demand all of Lender's
costs and expenses, including attorneys' fees and Lender's legal expenses,
incurred in connection with the enforcement of this Agreement. Lender may
pay someone else to help enforce this Agreement, and Grantor shall pay the
costs and expenses of such enforcement. Costs and expenses include Lender's
attorneys' fees and legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy proceedings (and
including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. Grantor also
shall pay all court costs and such additional fees as may be directed by the
court.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions of
this Agreement.
Notices. All notices required to be given under this Agreement shall be
given in writing, may be sent by telefacsimile (unless otherwise required by
law), and shall be effective when actually delivered or when deposited with a
nationally recognized overnight courier or deposited in the United States
mail, first class, postage prepaid, addressed to the party to whom the notice
is to be given at the address shown above. Any party may change its address
for notices under this Agreement by giving formal written notice to the other
parties, specifying that the purpose of the notice is to change the party's
address. To the extend permitted by applicable law, if there is more than
one Grantor, notice to any Grantor will constitute notice to all Grantors.
For notice purposes, Grantor will keep Lender informed at all times of
Grantor's current address(es).
Severability. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of this
Agreement in all other respects shall remain valid and enforceable.
Successor Interests. Subject to limitations set forth above on transfer of
the Collateral, this Agreement shall be binding upon and inure to the benefit
of the parties, their successors and assigns.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall operate
as a waiver of such right or any other right. A waiver by Lender of a
provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or
any other provision of this Agreement. No prior waiver by Lender, nor any
course of dealing between Lender and Grantor, shall constitute a waiver of
any of Lender's rights or of any of Grantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances where such consent is
required and in all cases such consent may be granted or withheld in the sole
discretion of Lender.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS PLEDGE AND SECURITY
AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED SEPTEMBER
8, 1999.
GRANTOR:
X___________________________________________
EDDY L. PATTERSON
