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EXHIBIT 10
LOAN AGREEMENT
BANK: FIRST UNION XXXXXXXX XXXX XX XXXXXXX ("Xxxx")
XX0000
000 XXXXX XXXXX XXXXXX
XXXXXXXXXXXX, XX 00000
BORROWER(S): METRETEK INCORPORATED ("Borrower")
000 XXXXX XXXXX
XXXXXXXXX, XX 00000
This Loan Agreement ("Agreement") is entered into this 30th day of May, 1997,
by and between Bank and METRETEK INCORPORATED, a corporation organized under
the laws of the State of Florida.
Borrower has applied to Bank for a loan or loans (individually and
collectively, the "loan") evidenced by one or more promissory notes (whether
one or more, the "Note") as follows:
o Revolver with termout - in the principal amount of
$200,000.00, or such sum as may be advanced from time to time,
as evidenced by the Promissory Note dated May 30, 1997.
o Working Capital Line of Credit - in the principal amount of
$400,000.00 as evidenced by the Promissory Note dated August
5, 1996, under which Borrower may borrow, repay, and reborrow,
from time to time, so long as the total indebtedness
outstanding at any one time does not exceed the principal
amount. Bank's obligation to advance and readvance under the
Line of Credit Note shall terminate if Borrower is in Default
under the Line of Credit Note or in any event, on April 30,
1998, which constitutes an extension from original Promissory
Note, unless renewed or extended by Bank in writing upon such
terms then satisfactory to Bank.
o Term Loan - in the original principal amount of $421,607.00,
as evidenced by a Promissory Note dated August 5, 1996, with a
balance outstanding of $210,803.51 as of the date of this Loan
Agreement.
This Agreement applies to the loan and all Loan Documents. The terms "Loan
Documents" and "Obligations", as used in this Agreement, are defined in the
Note.
Relying upon the covenants, agreements, representations and warranties
contained in this Agreement, Bank is willing to extend credit to Borrower upon
the terms and subject to the conditions set forth herein, and the Bank and
Borrower agree as follows:
REPRESENTATIONS. Borrower represents that from the date of this Agreement and
until final
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payment in full of the Obligations: ACCURATE INFORMATION. All written
information now and hereafter furnished to Bank by Borrower is and will be
true, correct and complete. Any such information relating to Borrower's
financial condition will accurately reflect Borrower's financial condition as
of the date(s) thereof, including all contingent liabilities of every type, and
Borrower further represents that its financial condition has not changed
materially or adversely since the date(s) of such documents. AUTHORIZATION;
NON-CONTRAVENTION. The execution, delivery and performance by Borrower and any
guarantor, as applicable, of this Agreement and other Loan Documents to which
it is a party are (i) within its power, have been duly authorized by all
necessary action taken by the duly authorized officers of Borrower and any
guarantors and if necessary, by making appropriate filings with any
governmental agency or unit and are the legal, binding, valid and enforceable
obligations of Borrower and any guarantors; and (ii) do not (A) contravene, or
constitute (with or without the giving of notice or lapse of time or both) a
violation of any provision of applicable law, a violation of the organizational
documents of Borrower or any guarantor, or a default under any agreement,
judgment, injunction, order, decree or other instrument binding upon or
affecting Borrower or any guarantor, (B) result in the creation or imposition
of any lien (other than the lien(s) created by the Loan Documents) on any of
Borrower's or guarantor's assets, or (C) give cause for the acceleration of any
obligations of Borrower or any guarantor to any other creditor. ASSET
OWNERSHIP. Borrower has good and marketable title to all of the properties and
assets reflected on the balance sheets and financial statements supplied Bank
by Borrower, and that all such properties and assets are free and clear of
mortgages, security deeds, pledges, liens charges, and all other encumbrances,
except for those granted to Bank or as otherwise disclosed to Bank by Borrower
in writing ("Permitted Liens"). To Borrower's knowledge, no default has
occurred under any Permitted Liens and no claims or interests adverse to
Borrower's present rights in its properties and assets have arisen. DISCHARGE
OF LIENS AND TAXES. Borrower has duly filed, paid and/or discharged all taxes
or other claims which may become a lien on any of its property or assets,
except to the extent that such items are being appropriately contested in good
faith and an adequate reserve for the payment thereof is being maintained.
SUFFICIENCY OF CAPITAL. Borrower is not, and after consummation of this
Agreement and after giving effect to all indebtedness incurred and liens
created by Borrower in connection with the loan will not be insolvent within
the meaning of 11 U.S.C. Section 101. COMPLIANCE WITH LAWS. Borrower is in
compliance in all respects with all federal, state and local laws, rules and
regulations applicable to its properties, operations, business, and finances,
including, without limitation, any federal or state laws relating to liquor
(including 18 U.S.C. Section 3617 et seq.) or narcotics (including 21 U.S.C.
Section 801 et seq.) and/or any commercial crimes; all applicable federal,
state and local laws and regulations intended to protect the environment; and
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), if
applicable. NO LITIGATION. There are no pending or threatened suits, claims
or demands against Borrower or any guarantor that has not been disclosed to
Bank by Borrower in writing. ORGANIZATION AND AUTHORITY. Each Borrower and
any guarantor, as applicable, is duly created, validly existing and in good
standing under the laws of the state of its organization, and has all powers,
governmental licenses, authorization, consents and approvals required to
operate its business as now conducted. Each Borrower and any guarantor is duly
qualified, licensed and in good standing in each jurisdiction where
qualification or licensing is required by the nature of its business or the
character and location of its property, business or customers, and in which the
failure to so qualify or be licensed, as the case may be, in the aggregate,
could have a material adverse effect on the business, financial position,
results of operations, properties or prospects of Borrower or any such
guarantor. ERISA. Each employee pension benefit plan, as defined in ERISA,
maintained by Borrower meets, as of the date hereof, the minimum funding
standards of ERISA and all applicable regulations thereto and requirements
thereof, and of the Internal Revenue Code of 1954, as amended. No "Prohibited
Transaction" or "Reportable Event" (as both terms are defined by ERISA) has
occurred with respect to any such plan.
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AFFIRMATIVE COVENANTS. Borrower agrees that from the date of this Agreement
and until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing: BUSINESS CONTINUITY. Borrower shall conduct its business
in substantially the same manner and locations as such business is now and has
previously been conducted. MAINTAIN PROPERTIES. Borrower shall maintain,
preserve and keep its property in good repair, working order and condition,
making all needed replacements, additions and improvements thereto, to the
extent allowed by this Agreement. ACCESS TO BOOKS & RECORDS. Borrower shall
allow Bank, or its agents, during normal business hours, access to the books,
records and such other documents of Borrower as Bank shall reasonably require,
and allow Bank to make copies thereof at Bank's expense. INSURANCE. Borrower
shall maintain adequate insurance coverage with respect to its properties and
business against loss or damage of the kinds and in the amounts customarily
insured against by companies of established reputation engaged in the same or
similar businesses, including, without limitation, commercial general liability
insurance, workmen's compensation insurance, and business interruption
insurance, and upon all Collateral (as defined in the Loan Documents) securing
the Obligations, such insurance as specified in the Loan Documents; all
acquired in such amounts and from such companies as the Bank may reasonably
require. NOTICE OF DEFAULT AND OTHER NOTICES. I. NOTICE OF DEFAULT.
Borrower shall furnish to Bank immediately upon becoming aware of the existence
of any condition or event which constitutes a Default (as defined in the Note
and Loan Documents) or any event which, upon the giving of notice or lapse of
time or both, may become a Default, written notice specifying the nature and
period of existence thereof and the action which Borrower is taking or proposes
to take with respect thereto. II. OTHER NOTICES. Borrower shall promptly
notify Bank in writing of (A) any material adverse change in its financial
condition or its business; (B) any default under any material agreement,
contract or other instrument to which it is a party or by which any of its
properties are bound, or any acceleration of the maturity of any indebtedness
owed by Borrower; (C) any material adverse claim against or affecting Borrower;
or any part of its properties; (D) the commencement of, and any material
determination in, any litigation with any third party or any proceeding before
any governmental agency or unit affecting Borrower; and (E) at least thirty
(30) days prior thereto, any change in Borrower's name or address as shown
above, and/or any change in Borrower's corporate or entity structure.
COMPLIANCE WITH OTHER AGREEMENTS. Borrower shall comply with all terms and
conditions contained in this Agreement, and any other Loan Documents, and swap
agreements, if applicable, as defined in the Note. PAYMENTS OF DEBTS.
Borrower shall pay and discharge when due, and before subject to penalty or
further charge, and otherwise satisfy before maturity or delinquency, all
obligations, debts, taxes, and liabilities of whatever nature or amount, except
those which Borrower in good faith disputes. ESTOPPEL CERTIFICATE. Borrower,
within fifteen (15) days of request by Bank, will furnish a written statement
duly acknowledged of the amount due under the loan and whether offsets or
defenses exist against the Obligations. DEPOSIT RELATIONSHIP. Borrower will
maintain its primary depository relationship with Bank.
NEGATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing: GOVERNMENT INTERVENTION. Borrower shall not permit the
assertion or making of any seizure, vesting or intervention by or under
authority of any government by which the management of Borrower or any
guarantor is displaced of its authority in the conduct of its respective
business or such business is curtailed or materially impaired. PREPAYMENT OF
OTHER DEBT. Borrower shall not retire any long-term debt entered into prior to
the date of this Agreement at a date in advance of its legal obligation to do
so. RETIRE OR REPURCHASE CAPITAL STOCK. Borrower shall not retire or
otherwise acquire any of its capital stock. DEFAULT ON OTHER CONTRACTS OR
OBLIGATIONS. Borrower shall not default on any material contract with or
obligations when due to a third party or default in the performance of any
obligation to a third party incurred for money borrowed. JUDGMENT ENTERED.
Borrower shall not
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permit the entry of any monetary judgment or the assessment against, the filing
of any tax lien against, or the issuance of any writ of garnishment or
attachment against any property of or debts due Borrower. CHANGE OF CONTROL.
Borrower shall not make a material change of ownership that effectively changes
control of Borrower. CROSS COLLATERAL. All loans with the Borrower shall be
cross- collateralized. CROSS DEFAULT. No default shall occur in payment or
performance of any obligation under any other loans, contracts, or agreements
of Borrower, any subsidiary, or parent company, XXXXXX NATURAL GAS SERVICES,
INC., any general partner of or the holder(s) of the majority ownership
interest of Borrower, with First Union or its affiliates. AGGREGATE
INDEBTEDNESS. The aggregate of all loans is subject to total Bank debt not
greater than the lesser of required monthly borrowing base certificate
availability or balance of $400,000 line of credit plus the balance under both
term loans. LOANS AND ADVANCES. Except for existing balances set forth in
Schedule A attached, Borrower shall not during any fiscal year, make loans or
advances, excepting ordinary course of business travel and expense advances, to
Parent or any other Related Entity, which total more than thirty thousand
dollars ($30,000) in the aggregate, except for loans and advances to the
Guarantor of up to a maximum of $300,000 at any point during the fiscal year
1997, and all years thereafter, as long as such activity would not otherwise
cause an event of default.
FINANCIAL COVENANTS. Borrower agrees to the following provisions from the date
of this Agreement and until final payment in full of the Obligations, unless
Bank shall otherwise consent in writing: CURRENT RATIO. Borrower shall, at
all times, maintain a Current Ratio of not less than 2.00 to 1.00. "Current
Ratio" shall mean the ratio of current assets adjusted for accounts receivable
from affiliates divided by current liabilities adjusted for accounts payable to
affiliates. TOTAL LIABILITIES TO TANGIBLE NET WORTH RATIO. Borrower shall, at
all times, maintain a ratio of Total Liabilities, reduced by debt fully
subordinated to the loan, divided by Tangible Net Worth of not more than .75 to
1.00. For purposes of this computation, "Total Liabilities" shall mean all
liabilities, including capitalized leases and all reserves for deferred taxes
and other deferred sums appearing on the liabilities side of a balance sheet,
in accordance with generally accepted accounting principles applied on a
consistent basis. "Tangible Net Worth" shall mean total assets minus total
liabilities. For purposes of this computation, the aggregate amount of any
intangible asset of Borrower including without limitation, goodwill,
franchises, licenses, patents, trademarks, trade names, copyrights, service
marks, and brand names, shall be subtracted from total assets. WORKING
CAPITAL. Borrower shall, at all times, maintain Working Capital of at least
One Million Eight Hundred Thousand dollars ($1,800,000). "Working Capital"
shall mean current assets minus current liabilities. For purposes of this
computation, current assets shall mean all assets computed in accordance with
GAAP, adjusted for accounts receivable from affiliates, and current liabilities
shall mean all liabilities computed in accordance with GAAP, adjusted for
accounts payable to affiliates. DIVIDENDS. Borrower shall not, during any
fiscal year, declare or pay dividends.
FINANCIAL REPORTS. Borrower agrees to the following provision(s) from the date
of this Agreement and until final payment in full of the Obligations, unless
Bank shall otherwise consent in writing: ANNUAL FINANCIAL STATEMENTS.
Borrower shall deliver to Bank, within 90 days after the close of each fiscal
year, unaudited management-prepared consolidated financial statements
reflecting its operations during such fiscal year, including, without
limitation, a balance sheet, profit and loss statement and statement of cash
flows, with supporting schedules. Such statements shall be certified by the
Chief Financial Officer or President of the Borrower, or the Controller of the
Guarantor as being true and accurate. ACCOUNTS RECEIVABLE AGING. Borrower
shall, from time to time hereafter but not less than monthly deliver to Bank
within 30 days of the end of each such period, a detailed aging of accounts by
total, a summary aging of accounts by customer, and a reconciliation statement.
Said aging should also include the original date of each invoice. OTHER
FINANCIAL INFORMATION.
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Borrower shall deliver promptly such other information regarding the operation,
business affairs, and financial condition of Borrower which Bank may reasonably
request.
CONDITIONS PRECEDENT. (I) PRIOR TO INITIAL AND SUBSEQUENT ADVANCES. The
obligations of Bank to make the initial advance and any subsequent advances for
the loan pursuant to this Agreement are subject to the following conditions
precedent: COMPLIANCE WITH LOAN DOCUMENTS. Borrower's full compliance with
the Loan Documents. ADDITIONAL DOCUMENTS. Receipt by Bank of such additional
supporting documents as Bank reasonably requests. (II) PRIOR TO INITIAL
ADVANCE. The obligations of Bank to make the initial advance for the loan
pursuant to this Agreement are subject to the following conditions precedent:
RESOLUTIONS. Bank shall have received from Borrower, as applicable, certified
copies of resolutions of the Board of Directors of Borrower authorizing the
execution, delivery and performance of this Agreement and all other Loan
Documents.
BORROWING BASE. As to the Line of Credit Note in the principal amount of
$400,000.00, the following provision shall apply:
BORROWING LIMITATION. The maximum principal amount that Borrower may borrow
shall be the lessor of the principal amount stated in the line of credit Note
or the maximum principal amount allowed under the addendum (the "Maximum
Principal Amount"). The Maximum Principal Amount shall be an amount equal to
75% of the net amount of Eligible Domestic Accounts, 55% of the net amount of
Eligible Foreign Accounts, plus 50% of an amount equal to its value of Eligible
Inventory, less the amount of any reserve required by the Bank. The inventory
advance shall be limited to no greater than $400,000.
"Eligible Domestic Accounts" refers to an account receivable not more than
sixty (60) days after the due date of the invoice that arises in the ordinary
course of Borrower's business and meets the following eligibility requirements:
(a) the sale of goods or services reflected in such account is final and such
goods and services have been delivered or provided and accepted by the account
debtor and payment for such is owing; except for accounts arising from software
maintenance agreements or contracts, or which do not represent a final sale;
(b) the invoices comprising an account are not subject to any claims, returns
or disputes of any kind; (c) the account debtor is not insolvent; (d) the
account debtor has its principal place of business in the United States; (e)
the account debtor is not a subsidiary or affiliate of Borrower and is not a
supplier to Borrower and the account is not otherwise exposed to risk of
set-off; (f) not more than fifty percent of the original invoices owing the
Borrower by the account debtor are more than 60 days from the date of the
original invoice.
"Eligible Foreign Accounts" refers to an account receivable owed by an account
debtor including, without limitation, Metretek Europe, with an invoice address
outside the United States which otherwise meet the criteria of the Eligible
Domestic Account.
"Eligible Inventory" means the inventory of raw materials in Borrower's
possession that is held for use or sale in the ordinary course of the
Borrower's business and is merchantable and is not obsolete, and is subject to
a first priority security interest in favor of Bank. The value of the
Inventory will be determined by Bank and will be valued at the lower of cost or
market on a first- in, first-out basis.
"Reserves" may be required at any time and from time to time by the Bank
without prior notice to Borrower in amounts deemed by to be adequate to reserve
against outstanding letter of credit, outstanding bankers acceptances,
Borrower's obligations to Bank or its affiliates or any guaranties or other
contingent debt of Borrower.
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REQUIRED REPORTS. Within 30 days of the end of each month, the Borrower shall
certify to Bank, the amount of Eligible Accounts and the value of Eligible
Inventory, on forms required by Bank together with all detail and supporting
documents requested by Bank. Bank may at any time and from time to time,
during Bank's normal business hours, enter upon any business premises of
Borrower and audit Borrower's accounts and inventory. Bank's determination of
the amount of Eligible Accounts and the value of Eligible Inventory shall at
all times be indisputable and deemed correct. The Borrower, at all times,
shall cooperate with Bank without limitation by providing Bank information and
access to Borrower's premises and business records and shall be courteous to
Bank's agents.
CONTINUING REPRESENTATIONS. Borrower warrants and represents as a continuing
warranty, that so long as principal is outstanding under the Line of Credit
Note, the outstanding principal balance shall not exceed the lesser of the
Maximum Principal Amount or the principal amount stated in the Line of Credit
Note (the "Borrowing Limit"). Borrower agrees to pay any advances in excess of
the Borrowing Limit within ten (10) business days upon receipt by Borrower of
written notice that the Borrowing Limit has been exceeded.
IN WITNESS WHEREOF, Borrower, on the day and year first written above, has
caused this Agreement to be executed under seal.
METRETEK INCORPORATED
Corporate By: /s/ Xxxxxx X. XxXxx
Seal ------------------------------------
Xxxxxx X. XxXxx
President
TAXPAYER IDENTIFICATION NUMBER(S):
METRETEK INCORPORATED 00-0000000
FIRST UNION NATIONAL BANK OF FLORIDA
By: /s/ Xxxxx Xxxxxxxxxx
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Xxxxx Xxxxxxxxxx
Asst Vice President
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