FIRST MODIFICATION TO LOAN DOCUMENTS
EXHIBIT 10.1
FIRST MODIFICATION TO LOAN DOCUMENTS
THIS FIRST MODIFICATION TO THE LOAN DOCUMENTS (“First Modification”) is given to be effective
as of June 30, 2006, and is entered into by and among FIRST NATIONAL BANK OF COLORADO, a national
bank association, as lender (“Lender”), METRETEK TECHNOLOGIES, INC., a Delaware corporation, as
guarantor (the “Guarantor”), SOUTHERN FLOW COMPANIES, INC., a Delaware corporation, as borrower and
debtor (“Southern Flow”), POWERSECURE, INC., a Delaware corporation, as borrower and debtor
(“PowerSecure”), METRETEK INCORPORATED, a Florida corporation (“Metretek”). Southern Flow and
PowerSecure are hereinafter sometimes referred to collectively herein as “Borrower” or “Borrowers”.
RECITALS
This First Modification is entered into upon the basis of the following facts and
circumstances:
A. Lender, Borrowers, Guarantor and Metretek have entered into that certain Credit Agreement
dated as of September 2, 2005 (the “Agreement”), pursuant to which Lender has agreed to extend a
revolving line of credit to PowerSecure in the maximum aggregate amount of Two Million Five Hundred
Thousand and 00/100 Dollars ($2,500,000.00) (the “Credit Facility A”), and a revolving line of
credit to Southern Flow in the maximum aggregate amount of Two Million and 00/100 Dollars
($2,000,000.00) (the “Credit Facility B”).
B. Credit Facility A and Credit Facility B are further evidenced by PowerSecure’s Facility A
Note and Southern Flow’s Facility B Note dated September 2, 2005 (the “Notes”).
C. Payment of the Notes is guaranteed by that certain Commercial Guaranty executed by
Guarantor for the benefit of Lender (the “Guaranty”).
D. The parties have agreed to modify the Loan Documents on the terms and conditions set forth
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals and the promises and agreements
contained herein, the undersigned parties hereby agree to amend and modify the Loan Documents, as
follows:
1. Modification of Credit Agreement. The Credit Agreement is hereby amended as
follows:
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(a) Annual Facility Fee Definition. The definition of “Annual Facility Fee” is hereby
deleted.
(b) Promise to Pay Fees. Section 3.2 is hereby deleted and replaced in its entirety as
follows:
3.2 Promise to Pay Fees. Each Borrower shall pay an Annual Unused
Fee on the average daily unused amount of the Credit Facility A and Credit
Facility B during the preceding quarter and payable, in arrears, on the last
day of each quarter, and continuing on the last day of each quarter until
the Maturity Date. The initial payment of the Annual Unused Fee
will be prorated based on the number of days from the Closing Date through
the date the fee is paid, divided by the number of days in the quarter
ending as of such date payable or the last Business Day of such quarter. If
Borrower fails to make, when due, any payment of fees or expenses specified
or referred to in this Agreement due to Lender, including, without
limitation, Annual Unused Fee referred to in this Section or fees referred
to elsewhere in this Agreement or in any separate agreement between Borrower
and Lender relating to this Agreement or the transactions contemplated
hereby, the amount due shall bear interest until paid at the Default Rate.
Furthermore, such amount shall constitute part of the Facilities, secured by
all of the Collateral.
(c) Annual Unused Fee Definition. The definition of “Annual Unused Fee” is hereby
deleted and replaced in its entirety as follows:
“Annual Unused Fee” means 0.125% of the average unused amount of the
Facility A Total Draw Commitment or the Facility B Total Draw Commitment, as
applicable.
(d) Eligible A/R Definition. The definition of “Eligible A/R” is hereby deleted and
replaced in its entirety as follows:
“Eligible A/R” shall mean Accounts of PowerSecure or Southern Flow,
as applicable, arising in the ordinary course of such applicable Borrower’s
business from arms-length transactions, provided, however, that unless
otherwise approved by Lender in writing, a Account shall not constitute an
Eligible A/R if:
(i) any account receivable or part thereof which is disputed or against
which any defense or counter-claim or right of setoff has been asserted;
(ii) accounts where debtor has filed bankruptcy;
(iii) any account of the United States government or any department or
agency thereof arising under a contract with any such account debtor,
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unless
such account is assignable and has been duly assigned to Lender and
acknowledged in accordance with federal law;
(iv) any account of an account debtor whose chief executive officer or
principal place of business is located outside of the United States of
America;
(v) any account which is unpaid more than ninety (90) days past the date
when payment is due on the invoice therefore;
(vi) any account of a person or entity which is controlled by or controls or
is under common control with the account creditor or any account of an
employee of the account creditor;
(vii) all accounts of an account debtor if ten percent (10%) or more of the
total amount owed by the account debtor to the account creditor is ninety
(90) days or more past due;
(viii) any account in which the Lender does not have a perfected, first
priority security interest;
(ix) any account which the Lender reasonably determines to be ineligible
for, among any number of reasons, includes that the account is of doubtful
collection value.
(e) Eligible Inventory Definition. The definition of “Eligible Inventory” is hereby
deleted and replaced in its entirety as follows:
“Eligible Inventory” means all Inventory of PowerSecure or Southern
Flow, as applicable, provided, however, that unless otherwise approved by
Lender, no Inventory shall constitute Eligible Inventory if:
(i) such Inventory is owned in whole or in part by any Person other
than PowerSecure or Southern Flow, as applicable;
(ii) PowerSecure or Southern Flow, as applicable, does not have a good,
valid and marketable title to such Inventory;
(iii) any Inventory that is obsolete, damaged, defective or otherwise unable
to be sold or used;
(iv) any Inventory not located in the United States of America;
(v) any Inventory in which the Lender does not have a valid, perfected first
priority security interest, including all Inventory in which another
creditor asserts a purchase money security interest, unless the purchase
money security interest has been subordinated to the security interests of
Lender in a form acceptable to Lender;
(vi) such Inventory does not conform in all respects to the warranties
contained in this Agreement and the other Loan Documents; or
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(vii) the Lender, in its reasonable discretion, designates such Inventory to
be ineligible.
(f) Facility B Borrowing Base Definition. The definition of “Facility B Borrowing
Base” is hereby deleted and replaced in its entirety as follows:
“Facility B Borrowing Base” means (a) 80% of Eligible A/R of
Southern Flow, plus (b) 20% of Eligible Inventory of Southern Flow, all as
calculated on the most recent monthly Borrowing Base Report.
(g) Interest; Interest Payments. Section 3.1(a) is hereby deleted and replaced in
its entirety as follows:
3.1(a) Interest; Interest Payments. The Borrowers agree to pay
interest on the Facility A Draw Outstandings or the Facility B Draw
Outstandings, as applicable, from time to time as provided herein. Interest
on the Credit Facility A and on the Credit Facility B shall be due and
payable monthly in arrears on the first (1st) of each month,
commencing August 1, 2006. With respect to both Borrowers, the unpaid
principal balance of each Advance will bear interest at an annual rate equal
to the Prime Rate. The applicable rate shall change on each day on which
the Prime Rate changes.
(h) Closing Deliveries. Section 6.2(c) is hereby deleted.
(i) Monthly Financial Statements; Accounts Receivable Aging; Borrowing Base Report.
Section 7.1(c) is hereby deleted and replaced in its entirety as follows:
7.1(c) Accounts Receivable Aging; Borrowing Base Report. Along with
Borrower’s next request for an Advance and submission of a Borrowing Notice
and within thirty (30) days after the end of each calendar month during the
Fiscal Year thereafter, (i) Borrowing Base Report of Borrower; and (ii)
accounts receivable aging; each covering the periods from the end of the
immediately preceding Fiscal Year of the Borrower, to the end of such month,
and for such month alone (if applicable), all in such detail as Lender may
request and signed and certified to be correct by the president or chief
financial officer of each Borrower and Guarantor, as applicable or other
financial officer satisfactory to Lender.
(j) Investments and Advances. Section 8.7 is hereby deleted and replaced in its
entirety as follows:
8.7 Investments and Advances.
Make any investment in, or advances to, any other Person, firm, or
corporation, except (a) advance payments or deposits against purchases made
in the ordinary course of Borrower’s
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regular business; (b) direct
obligations of the United States of America; (c) money market mutual funds
that invest in direct obligations of the United States of America; (d)
advances to other Obligors or their Affiliates (subject to the restrictions
thereon provided in this Agreement and provided no Default or Event of
Default has occurred and is continuing), (e) investments in commercial paper
and variable or fixed rate notes issued or guaranteed by U.S. corporations
rated “A-1” or “A-2” by Standard & Poor’s Corporation or “P-1” or “P-2” by
Xxxxx’x Investors Service or certificates of deposit or bankers’ acceptances
having a maturity of one year or less issued by members of the Federal
Reserve System having deposits in excess of $200,000,000 (which certificates
of deposit or bankers’ acceptances are fully insured by the Federal Deposit
Insurance Corporation); and (f) investments, classified in accordance with
GAAP as current assets, in money market investment programs registered under
the Investment Company Act of 1940, as amended, which are administered by
reputable financial institutions having capital of at least $500,000,000 and
the portfolios of which are limited to investments of the character
described in foregoing clauses (b), (c), (e) and (f). In addition to the
foregoing, an Obligor shall be permitted to make any other investment
permitted under the Company’s Investment Policy as currently in effect, or
as amended from time to time with the consent of the Lender.
(k) Inter-Company Liability – PowerSecure. Section 8.9 is hereby deleted in its
entirety.
(l) PowerSecure Financial Covenants. Section 8.11(a)(i) is hereby deleted in its
entirety.
(m) PowerSecure Financial Covenants. Section 8.11(a)(ii) is hereby deleted in its
entirety.
(n) PowerSecure Financial Covenants. Section 8.11(a)(iii) is hereby deleted in its
entirety and replaced as follows:
8.11(a)(iii) Current Assets to Current Liabilities Ratio.
PowerSecure shall maintain a ratio of Current Assets of PowerSecure to
Current Liabilities of PowerSecure of no less than 1.10:1, as of the end of
any fiscal quarter. For purposes of this paragraph, (A) neither Facility
shall be considered a Current Liability and (b) the Current Assets and
Current Liabilities calculation shall exclude all receivables, loans or
other advances owed to PowerSecure by any affiliate or made by PowerSecure
to any Affiliate.
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(o) Southern Flow Financial Covenants. Section 8.11(b)(i) is hereby deleted in its
entirety.
(p) Southern Flow Financial Covenants. Section 8.11(b)(ii) is hereby deleted in its
entirety and replaced as follows:
8.11(b)(ii) Tangible Net Worth. Southern Flow shall maintain a Tangible
Net Worth of Southern Flow of no less than $1,500,000, as of the end of
any fiscal quarter.
(q) Guarantor Financial Covenants. Section 8.11(c)(i) is hereby deleted in its
entirety and replaced as follows:
8.11(c)(i) Debt to Tangible Net Worth Ratio. Guarantor, on a
consolidated basis as of the end of any fiscal quarter, shall not permit the
ratio of Debt to Tangible Net Worth to exceed 2.00:1 during the time period
beginning on the date hereof and at all times thereafter.
(r) Guarantor Financial Covenants. Section 8.11(c)(ii) is hereby deleted in its
entirety.
2. Modification of Facility A Note. The interest rate on the outstanding principal
balance of Facility A Note is reduced to the Prime Rate. Borrower shall pay interest on the
outstanding principal balance of Facility A Note at the rate per annum equal to the Prime Rate.
3. Modification of Facility B Note. The interest rate on the outstanding principal
balance of Facility B Note is reduced to the Prime Rate. Borrower shall pay interest on the
outstanding principal balance of Facility B Note at the rate per annum equal to the Prime Rate.
4. Modification of Loan Documents. Any references in the Loan Documents to the Credit
Agreement, the Notes, or the Commercial Guaranty shall mean the Credit Agreement, the Notes and the
Commercial Guaranty as modified by this First Modification.
5. Definitions. All capitalized terms used in this First Modification which are not
otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement. The
defined terms set forth in this First Modification are hereby incorporated into the Credit
Agreement.
6. No Other Modifications. Except as expressly amended and modified by the terms of
this First Modification, the terms and conditions of the Loan Documents shall remain
unchanged and in full force and effect and are hereby ratified and confirmed by Borrowers and
Guarantor.
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7. Ratification. The parties hereby ratify and confirm the continued force and effect
of the Loan Documents, as modified by this First Modification, without change except as
specifically amended by this First Modification. It is expressly understood and agreed that this
First Modification shall in no manner alter or affect (except as expressly provided therein),
extinguish or impair the Indebtedness evidenced by the Loan Documents, and shall not extinguish or
impair any rights and remedies of the Lender thereunder or the priority of the Loan Documents.
8. Ratification of Guarantor. Guarantor hereby (a) consents to the amendment of the
Loan Documents as set forth in this First Modification, (b) ratifies and confirms the continued
force and effect of the Loan Documents, as modified by this First Modification, without change
except as specifically amended by this First Modification, (c) ratifies and confirms the continued
force and effect of the Commercial Guaranty to which Guarantor is signatory, and (d) covenants and
agrees with the Lender to perform in a full and timely manner all of its obligations under the Loan
Documents to which she is signatory, in accordance with such Loan Documents.
9. No Release. Borrowers and Guarantor specifically acknowledge and agree that
nothing contained in this First Modification shall be understood or construed to be a satisfaction
or release in whole or in part of any Indebtedness evidenced by the Loan Documents, or to be an
amendment or waiver of any of the provisions of the Loan Documents, except as specifically set
forth in this First Modification, or as reasonably necessary to effect the amendments contained
herein. Except as otherwise necessary to effect the intent hereof, the terms and conditions of the
Loan Documents shall continue in full force and effect without change. Borrowers and Guarantor
hereby affirm their respective agreements to be bound by all of the obligations, covenants,
liabilities and warranties set forth in the Loan Documents in accordance with their respective
terms, as amended by this First Modification, and acknowledge that no defenses exist to the
enforcement of the Loan Documents in accordance with their respective terms and no basis exists for
asserting any offset or other claim against the Lender.
10. Representations and Warranties. Borrowers and Guarantor represents and warrants
to the Lender:
(a) To its knowledge after due inquiry regarding Credit Facility A or Credit Facility B, no
Default or Event of Default under any of the Loan Documents, nor any event, that, with the giving
of notice or the passage of time or both, would be a Default or an Event of Default under the Loan
Documents herein has occurred and is continuing.
(b) There has been no material adverse occurrence regarding the Obligors.
(c) Except as disclosed in writing by the Borrowers and Guarantor to Lender as of the date
hereof, each and all representations and warranties of Borrowers and Guarantor in
the Loan Documents are restated and reaffirmed and are accurate on the date hereof to the same
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extent as though made as of the date of this First Modification, except to the extent such
representations and warranties specifically relate to an earlier date.
(d) The Borrowers and Guarantor have no claims, counterclaims, defenses, or set-offs against
Lender with respect to Credit Facility A or Credit Facility B or the Loan Documents.
(e) The Loan Documents, as modified herein, to which Borrowers and Guarantor are signatory are
the legal, valid, and binding obligation of Borrowers and Guarantor, enforceable against such
Borrowers and Guarantor in accordance with their terms.
(f) Each of the Borrowers and Guarantor which is a legal entity is validly existing under the
laws of the state of its formation or organization and has the requisite power and authority to
execute and deliver this First Modification and to perform the Loan Documents to which such
Borrowers and Guarantor is signatory. The execution and delivery of this First Modification and the
performance of the Loan Documents as modified herein have been duly authorized by all requisite
action by or on behalf of each Borrowers and Guarantor. This First Modification has been duly
executed and delivered on behalf of each Borrowers and Guarantor.
11. Savings Clause. If any provision in this First Modification is invalid, illegal,
or unenforceable, the remaining provisions shall not be affected or impaired thereby, and there
shall be substituted for the invalid, illegal, or unenforceable provision the most similar
provision that is valid, legal and enforceable.
12. Counterparts. This First Modification may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which taken together shall
constitute one and the same First Modification.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
| BORROWERS: | ||||||||||
| POWERSECURE, INC. | SOUTHERN FLOW COMPANIES, INC. | |||||||||
By:
|
/s/ A. Xxxxxxx Xxxxxxx, August 7, 2006 | By: | /s/ A. Xxxxxxx Xxxxxxx, August 7, 2006 | |||||||
| A. Xxxxxxx Xxxxxxx, | A. Xxxxxxx Xxxxxxx, | |||||||||
| Executive Vice President and CFO | Executive Vice President and CFO | |||||||||
Address:
|
000 Xxxxxx Xxxxxx, Xxxxx 000 | Address: | 000 Xxxxxxxx Xxxx. | |||||||
| Xxxx Xxxxxx, Xxxxx Xxxxxxxx 00000 | Xxxxxxxxx, XX 00000 | |||||||||
Facsimile:
|
(000) 000-0000 | Facsimile: | 000-000-0000 |
| GUARANTOR: | METRETEK: | |||||||||
| METRETEK TECHNOLOGIES, INC. | METRETEK INCORPORATED | |||||||||
By:
|
/s/ A. Xxxxxxx Xxxxxxx, August 7, 2006 | By: | /s/ A. Xxxxxxx Xxxxxxx, August 7, 2006 | |||||||
| A. Xxxxxxx Xxxxxxx, | A. Xxxxxxx Xxxxxxx, | |||||||||
| Executive Vice President and CFO | Executive Vice President and CFO | |||||||||
Address:
|
000 Xxxx 00xx Xxxxxx, Xxxxx 000 | Address: | 000-X Xxxx Xxxxx | |||||||
| Xxxxxx, XX 00000 | Xxxxxxxxx, XX 00000 | |||||||||
Facsimile:
|
000-000-0000 | Facsimile: | 000-000-0000 |
LENDER:
| FIRST NATIONAL BANK OF COLORADO | ||||||
By:
|
/s/ Xxxx X. Xxxxxxxx
|
|||||
| Vice President | ||||||
| Address: 0000 Xxxx Xxxxxx | ||||||
| Xxxxxxx, XX 00000-0000 | ||||||
| Facsimile: 000-000-0000 | ||||||
