EXHIBIT 10.4
FOURTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT
This Amendment, dated as of September 24, 2003, is made by and between
SOUTHERN FLOW COMPANIES, INC., a Delaware corporation (the "Borrower"), and
XXXXX FARGO BUSINESS CREDIT, INC., a Minnesota corporation (the "Lender").
RECITALS
The Borrower and the Lender are parties to a Credit and Security
Agreement dated as of September 24, 2001, as amended by (i) the First Amendment
to Credit and Security Agreement dated as of November 19, 2002, (ii) the Second
Amendment to Credit and Security Agreement and Waiver of Defaults dated as of
March 26, 2003 and (iii) the Third Amendment to Credit and Security Agreement
dated as of April 4, 2003 (as so amended, the "Credit Agreement"). Capitalized
terms used in these recitals have the meanings given to them in the Credit
Agreement unless otherwise specified.
The Borrower has requested that certain amendments be made to the
Credit Agreement, which the Lender is willing to make pursuant to the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, it is agreed as follows:
1. Defined Terms. Capitalized terms used in this Amendment which
are defined in the Credit Agreement shall have the same meanings as defined
therein, unless otherwise defined herein. In addition, Section 1.1 of the Credit
Agreement is amended by adding or amending, as the case may be, the following
definitions:
"Availability" means the lessor of (I) the difference of (i) the
Borrowing Base and (ii) the outstanding principal balance of the Revolving Note
and (II) the Maximum Line less the sum of (A) the outstanding principal balance
of the Revolving Note, (B) the outstanding principal balance of the Metretek
Revolving Note, (C) the Metretek L/C Amount, (D) the outstanding principal
balance of the PowerSecure Revolving Note and (E) the PowerSecure L/C Amount.
"Borrowing Base" means at any time the lesser of:
(a) the Maximum Line; or
(b) subject to change from time to time in the Lender's sole
discretion, the sum of:
(i) 85% of Eligible Accounts,
(ii) the lesser of (A) 20% of Eligible Inventory or (B)
$200,000,
(iii) 65% of Unbilled Charts,
(iv) 65% of Unbilled Fieldwork, plus
(v) 65% of Unbilled Lab Work.
"Maturity Date" means September 30, 2006.
"Maximum Line" means $3,000,000 unless said amount is reduced pursuant
to Section 2.9, in which event it means such lower amount.
"Metretek Credit and Security Agreement" means the Credit and Security
Agreement dated as of September 6, 2002, by and between Metretek, Incorporated,
a Florida corporation and the Lender, as amended by a First Amendment to Credit
and Security Agreement and Waiver of Defaults dated as of March 26, 2003 and by
a Second Amendment to Credit and Security Agreement dated as of September 24,
2003, and as may be further amended from time to time.
"Metretek L/C Amount" means the L/C Amount as defined in the Metretek
Credit and Security Agreement.
"Metretek Revolving Advances" means Revolving Advances as defined in
the Metretek Credit and Security Agreement.
"Metretek Revolving Note" means the Revolving Note as defined in the
Metretek Credit and Security Agreement.
"PowerSecure Credit and Security Agreement" means the Credit and
Security Agreement dated as of September 24, 2003, by and between PowerSecure,
Inc., a Delaware corporation and the Lender, as may be further amended from time
to time.
"PowerSecure L/C Amount" means the L/C Amount as defined in the
PowerSecure Credit and Security Agreement.
"PowerSecure Revolving Advances" means Revolving Advances as defined in
the PowerSecure Credit and Security Agreement.
"PowerSecure Revolving Note" means the Revolving Note as defined in the
PowerSecure Credit and Security Agreement.
"Southern Flow Guaranty" means the guaranty by the Borrower in favor of
the Lender in connection with the Metretek Credit and Security Agreement.
"Southern Flow Security Agreement" means the security agreement by and
between the Borrower and the Lender in connection with the Metretek Credit and
Security Agreement.
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"Unbilled Charts" means the six month average of prior monthly chart
xxxxxxxx, reported on a weekly basis to the Lender, representing charts that
have been submitted to the Borrower for their review and integration of the
measurements from each project, which would not otherwise be Eligible Accounts.
"Unbilled Fieldwork" means the six month average of prior monthly
fieldwork xxxxxxxx, reported on a weekly basis to the Lender, representing
fieldwork that has been performed by the Borrower's representatives in various
locations and submitted to the Borrower for processing, which would not
otherwise be Eligible Accounts.
"Unbilled Lab Work" means the six month average of prior monthly
xxxxxxxx for lab work, reported on a weekly basis to the Lender, representing
lab work that has been performed by the Borrower, which would not otherwise be
Eligible Accounts.
2. Section 2.5(b). Section 2.5(b) of the Credit Agreement is
amended and restated in its entirety to read as follows:
"(b) MINIMUM INTEREST CHARGE. Notwithstanding the interest
payable pursuant to Subsection (a), the Borrower shall pay to the Lender
interest of not less than $37,500 per quarter (the "Minimum Interest Charge")
during the term of this Agreement, and the Borrower shall pay any deficiency
between (i) the Minimum Interest Charge and (ii) the sum of the amount of
interest otherwise calculated under Section 2.5(a) of this Agreement, Section
2.8(a) of the Metretek Credit and Security Agreement and Section 2.8(a) of the
PowerSecure Credit and Security Agreement; on the first day of each quarter and
on the Termination Date. The Borrower will be given full credit on a dollar for
dollar basis against the Minimum Interest Charge payable hereunder to the extent
such amount is paid to the Lender pursuant to the Metretek Credit and Security
Agreement or the PowerSecure Credit and Security Agreement."
3. Sections 2.6(c), 2.6(e) and 2.6(f). Sections 2.6(c), 2.6(e)
and 2.6(f) of the Credit Agreement are amended and restated in their entirety to
read as follows:
"(c) TERMINATION AND LINE REDUCTION FEES. If the Credit
Facility is terminated (i) by the Lender during a Default Period that begins
before a Maturity Date, (ii) by the Borrower (A) as of a date other than a
Maturity Date or (B) as of a Maturity Date but without the Lender having
received written notice of such termination at least 90 days before such
Maturity Date, or if the Borrower reduces the Maximum Line, the Borrower shall
pay to the Lender a fee in an amount equal to a percentage of the Maximum Line
(or the reduction of the Maximum Line, as the case may be) as follows: (A) two
percent (2.0%) if the termination or reduction occurs on or before September 30,
2004; and (B) one percent (1.0%) if the termination or reduction occurs after
September 30, 2004. The Borrower will be given full credit on a dollar for
dollar basis against the fee payable hereunder to the extent such amount is paid
to the Lender pursuant to the Metretek Credit and Security Agreement or the
PowerSecure Credit and Security Agreement."
"(e) UNUSED LINE FEE. For the purposes of this Section
2.6, "Unused Amount" means the Maximum Line reduced by (A) outstanding Revolving
Advances, (B)
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outstanding Metretek Revolving Advances, ( C) the Metretek L/C Amount, (D)
outstanding PowerSecure Revolving Advances and (E) the PowerSecure L/C Amount.
The Borrower agrees to pay to the Lender an unused line fee at the rate of one
quarter of one percent (.25%) per annum on the average daily Unused Amount from
the date of this Agreement to and including the Termination Date, due and
payable monthly in arrears on the first day of the month and on the Termination
Date. The Borrower will be given full credit on a dollar for dollar basis
against the unused line fee payable hereunder to the extent such amount is paid
to the Lender pursuant to the Metretek Credit and Security Agreement or the
PowerSecure Credit and Security Agreement."
"(f) FACILITY FEE. The Borrower agrees to pay to the
Lender an annual facility fee at the rate of one half of one percent (.50%) of
the Maximum Line, which facility fee shall be due and payable annually on
September 1st. The Borrower will be given full credit on a dollar for dollar
basis against the facility fee payable hereunder to the extent such amount is
paid to the Lender pursuant to the Metretek Credit and Security Agreement or the
PowerSecure Credit and Security Agreement."
4. Section 2.14. Section 2.14 of the Credit Agreement is amended
and restated in its entirety to read as follows:
"Section 2.14 "Reserved"."
5. Section 7.1. Section 7.1 of the Credit Agreement is amended by
deleting the following phrase at the end thereof:
"provided, however, that an Event of Default under Section
7.1(u) of the Credit and Security Agreement dated September 6, 2002 by and
between Metretek, Incorporated and Xxxxx Fargo Business Credit, Inc. shall not
be considered an Event of Default hereunder."
and inserting the following phrase in its place:
"Provided, however, notwithstanding anything to the contrary
herein or in the Southern Flow Guaranty or the Southern Flow Security Agreement,
a default under Section 6.2(a) or Section 6.2(b) of the Metretek Credit and
Security Agreement ( a "Metretek Default") shall not constitute an Event of
Default under this Agreement, the Southern Flow Guaranty or the Southern Flow
Security Agreement if within 20 days of the occurrence of the Metretek Default:
(1) the Metretek Default is waived by the Lender in writing, or
(2) each of the following conditions precedent have been
satisfied, each in form and substance satisfactory to the Lender:
A. The Metretek Revolving Note and the Metretek L/C Amount are
paid in full, and all fees and expenses of the Lender payable under the Metretek
Credit and Security Agreement are paid in full.
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B. The Metretek Credit and Security Agreement is terminated by
Metretek, Incorporated.
C. The Term Note is paid in full.
D. Neither the Borrower nor PowerSecure, Inc. are in default
under this Agreement or the PowerSecure Credit and Security Agreement, or any
guarantees by the Borrower or PowerSecure, Inc. in favor of the Lender or any
security agreements by and between the Lender and the Borrower or PowerSecure,
Inc.
provided, further, however, that Metretek, Incorporated will remain as a
Guarantor under this Agreement and under the PowerSecure Credit and Security
Agreement."
6. Schedule 6.4. Schedule 6.4 of the Credit Agreement is amended
by adding the following new guaranties at the end thereof:
"Guaranty of the PowerSecure Credit and Security Agreement."
"Guaranty of Metretek Technologies, Inc. Non-Negotiable
Promissory Note to be issued in the amount of $3,000,000 to the Xxxxx Settlement
Fund."
7. Exhibit A. Exhibit A of the Credit Agreement is amended and
restated in its entirety and replaced with Exhibit A attached hereto.
8. No Other Changes. Except as explicitly amended by this
Amendment, all of the terms and conditions of the Credit Agreement shall remain
in full force and effect and shall apply to any advance or letter of credit
thereunder.
9. Restructure Fee. The Borrower shall pay the Lender as of the
date hereof a fully earned, non-refundable restructure fee in the amount of
$7,500 in consideration of the Lender's execution and delivery of this
Amendment. The Borrower will be given full credit on a dollar for dollar basis
against the restructure fee payable hereunder to the extent such amount is paid
to the Lender pursuant to the Metretek Credit and Security Agreement or the
PowerSecure Credit and Security Agreement.
10. Conditions Precedent. This Amendment shall be effective when
the Lender shall have received an executed original hereof, together with each
of the following, each in substance and form acceptable to the Lender in its
sole discretion:
(a) The Revolving Note, properly executed by the
Borrower.
(b) A guaranty, properly executed by Metretek Contract
Manufacturing Company, Inc., pursuant to which Metretek Contract Manufacturing
Company, Inc. unconditionally guarantees the full and prompt payment of all
Obligations.
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(c) A security agreement from Metretek Contract
Manufacturing Company, Inc., pursuant to which Metretek Contract Manufacturing
Company, Inc. grants a security interest on all of its assets to Lender as
security for the Obligations.
(d) The Acknowledgment and Agreement of Guarantors set
forth at the end of this Amendment, duly executed by each Guarantor.
(e) Payment of the fee described in Paragraph 9.
(f) Such other matters as the Lender may require.
11. Representations and Warranties. The Borrower hereby represents
and warrants to the Lender as follows:
(a) The Borrower has all requisite power and authority to
execute this Amendment and the Revolving Note and to perform all of its
obligations thereunder, and this Amendment and the Revolving Note have been duly
executed and delivered by the Borrower and constitute the legal, valid and
binding obligations of the Borrower, enforceable in accordance with their terms.
(b) The execution, delivery and performance by the
Borrower of this Amendment and the Revolving Note has been duly authorized by
all necessary corporate action and does not (i) require any authorization,
consent or approval by any governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, (ii) violate any provision of
any law, rule or regulation or of any order, writ, injunction or decree
presently in effect, having applicability to the Borrower, or the articles of
incorporation or by-laws of the Borrower, or (iii) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which the Borrower is a party or by
which it or its properties may be bound or affected.
(c) All of the representations and warranties contained
in Article V of the Credit Agreement are correct on and as of the date hereof as
though made on and as of such date, except to the extent that such
representations and warranties relate solely to an earlier date.
12. References. All references in the Credit Agreement to "this
Agreement" shall be deemed to refer to the Credit Agreement as amended hereby;
and any and all references in the Security Documents to the Credit Agreement
shall be deemed to refer to the Credit Agreement as amended hereby.
13. No Other Waiver. The execution of this Amendment and any
documents related hereto shall not be deemed to be a waiver of any Default or
Event of Default under the Credit Agreement or breach, default or event of
default under any Security Document or other document held by the Lender,
whether or not known to the Lender and whether or not existing on the date of
this Amendment.
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14. Release. The Borrower and each Guarantor by signing the
Acknowledgment and Agreement of Guarantors set forth below, each hereby
absolutely and unconditionally releases and forever discharges the Lender, and
any and all participants, parent corporations, subsidiary corporations,
affiliated corporations, insurers, indemnitors, successors and assigns thereof,
together with all of the present and former directors, officers, agents and
employees of any of the foregoing, from any and all claims, demands or causes of
action of any kind, nature or description, whether arising in law or equity or
upon contract or tort or under any state or federal law or otherwise, which the
Borrower or such Guarantor has had, now has or has made claim to have against
any such person for or by reason of any act, omission, matter, cause or thing
whatsoever arising from the beginning of time to and including the date of this
Amendment, whether such claims, demands and causes of action are matured or
unmatured or known or unknown.
15. Costs and Expenses. The Borrower hereby reaffirms its
agreement under the Credit Agreement to pay or reimburse the Lender on demand
for all costs and expenses incurred by the Lender in connection with the Loan
Documents, including without limitation all reasonable fees and disbursements of
legal counsel. Without limiting the generality of the foregoing, the Borrower
specifically agrees to pay all fees and disbursements of counsel to the Lender
for the services performed by such counsel in connection with the preparation of
this Amendment and the documents and instruments incidental hereto. The Borrower
hereby agrees that the Lender may, at any time or from time to time in its sole
discretion and without further authorization by the Borrower, make a loan to the
Borrower under the Credit Agreement, or apply the proceeds of any loan, for the
purpose of paying any such fees, disbursements, costs and expenses and the fee
required under Paragraph 9 hereof.
16. Miscellaneous. This Amendment and the Acknowledgment and
Agreement of Guarantors may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original and all of
which counterparts, taken together, shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first written above.
XXXXX FARGO BUSINESS CREDIT, INC. SOUTHERN FLOW COMPANIES, INC.
By: /s/ Xxxxx Xxxxxxx By: /s/ A. Xxxxxxx Xxxxxxx
------------------------------ --------------------------------
Name: Xxxxx Xxxxxxx Name: A. Xxxxxxx Xxxxxxx
Its: Commercial Banking Officer Its: Chief Financial Officer
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EXHIBIT A TO CREDIT AND SECURITY AGREEMENT
AMENDED AND RESTATED REVOLVING NOTE
$3,000,000 Denver, Colorado
September 24, 2003
For value received, the undersigned, SOUTHERN FLOW COMPANIES, INC., a
Delaware corporation (the "Borrower"), hereby promises to pay on the Termination
Date under the Credit Agreement (defined below), to the order of XXXXX FARGO
BUSINESS CREDIT, INC., a Minnesota corporation (the "Lender"), at its main
office in Denver, Colorado, or at any other place designated at any time by the
holder hereof, in lawful money of the United States of America and in
immediately available funds, the principal sum of Three Million Dollars
($3,000,000) or, if less, the aggregate unpaid principal amount of all Revolving
Advances made by the Lender to the Borrower under the Credit Agreement (defined
below) together with interest on the principal amount hereunder remaining unpaid
from time to time, computed on the basis of the actual number of days elapsed
and a 360-day year, from the date hereof until this Note is fully paid at the
rate from time to time in effect under the Credit and Security Agreement dated
as of September 24, 2001 (as amended, supplemented or restated from time to
time, the "Credit Agreement") by and between the Lender and the Borrower. The
principal hereof and interest accruing thereon shall be due and payable as
provided in the Credit Agreement. This Note may be prepaid only in accordance
with the Credit Agreement.
This Note has been executed and delivered in substitution for and not
in repayment of the Note of the Borrower dated September 24, 2001, and is issued
pursuant, and is subject, to the Credit Agreement, which provides, among other
things, for acceleration hereof. This Note is the Revolving Note referred to in
the Credit Agreement. This Note is secured, among other things, pursuant to the
Credit Agreement and the Security Documents as therein defined, and may now or
hereafter be secured by one or more other security agreements, mortgages, deeds
of trust, assignments or other instruments or agreements.
The Borrower shall pay all costs of collection, including reasonable
attorneys' fees and legal expenses if this Note is not paid when due, whether or
not legal proceedings are commenced.
Presentment or other demand for payment, notice of dishonor and protest
are expressly waived.
SOUTHERN FLOW COMPANIES, INC.
By: ________________________________
A. Xxxxxxx Xxxxxxx
Chief Financial Officer
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ACKNOWLEDGMENT AND AGREEMENT OF GUARANTORS
The undersigned, each a guarantor of the indebtedness of Southern Flow
Companies, Inc. (the "Borrower") to Xxxxx Fargo Business Credit, Inc. (the
"Lender") pursuant to a separate Guaranty dated as of September 24, 2001 (the
"Guaranty"), each hereby (i) acknowledges receipt of the foregoing Amendment;
(ii) consents to the terms (including without limitation the amendment of
Section 2.14 Termination of Corporate Guarantor Documents and the release set
forth in Paragraph 14 of the Amendment) and execution thereof; (iii) reaffirms
its obligations to the Lender pursuant to the terms of its Guaranty; and (iv)
acknowledges that the Lender may amend, restate, extend, renew or otherwise
modify the Credit Agreement and any indebtedness or agreement of the Borrower,
or enter into any agreement or extend additional or other credit accommodations,
without notifying or obtaining the consent of the undersigned and without
impairing the liability of the undersigned under its Guaranty for all of the
Borrower's present and future indebtedness to the Lender.
METRETEK, INCORPORATED
By: /s/ A. Xxxxxxx Xxxxxxx
-----------------------------------
Name: A. Xxxxxxx Xxxxxxx
Its: Chief Financial Officer
METRETEK TECHNOLOGIES, INC.
By: /s/ A. Xxxxxxx Xxxxxxx
-----------------------------------
Name: A. Xxxxxxx Xxxxxxx
Its: Executive Vice President
POWERSECURE, INC.
By: /s/ A. Xxxxxxx Xxxxxxx
-----------------------------------
Name: A. Xxxxxxx Xxxxxxx
Its: Chief Financial Officer
