EXHIBIT 10.32
SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMENT
AND WAIVER OF DEFAULTS
This Amendment, dated as of March 26, 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 the First Amendment to
Credit and Security Agreement dated as of November 19, 2002 (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.
2. Section 6.2(a). Section 6.2(a) of the Credit Agreement is
amended and restated in its entirety to read as follows:
"(a) MINIMUM TANGIBLE BOOK NET WORTH. The Borrower will
maintain, during each period described below, its Tangible Book Net
Worth, determined as at the end of each month, at an amount not less
than the amount set forth opposite such period below. "Tangible Book
Net Worth" means the aggregate of the common and preferred
stockholders' equity in the Borrower less intangibles and less total
intercompany indebtedness owing from Corporate Guarantors to Borrower,
all determined in accordance with GAAP.
PERIOD MINIMUM TANGIBLE BOOK NET WORTH
------ -------------------------------
3/31/03 through 5/31/03 $1,400,000
6/1/03 through 8/31/03 $1,400,000
9/1/03 through 11/30/03 $1,400,000
12/1/03 and thereafter $1,400,000"
3. Section 6.2(b). Section 6.2(b) of the Credit Agreement is
amended and restated in its entirety to read as follows:
"(b) MINIMUM PROFITABILITY. The Borrower will achieve,
during each period described below, Net Income, determined at the end
of the quarter, greater than the amount set forth opposite such period:
PERIOD MINIMUM NET INCOME
------ ------------------
Three months ending 3/31/03 $ 273,000
Six months ending 6/30/03 $ 583,000
Nine months ending 9/30/03 $ 851,000
Twelve months ending 12/31/03 $ 1,159,000"
4. Section 6.2(c). Section 6.2(c) of the Credit Agreement is
amended and restated in its entirety to read as follows:
"(c) CAPITAL EXPENDITURES. The Borrower will not incur
or contract to incur Capital Expenditures of more than $250,000 in the
aggregate during the fiscal year ending December 31, 2003."
5. Section 6.26. Section 6.26 of the Credit Agreement is amended
and restated in its entirety to read as follows:
"Section 6.26 Advances to Corporate Guarantors. Total
intercompany indebtedness owing from all Corporate Guarantors to
Borrower determined at the end of each month may not (a) exceed the
cumulative Net Income from January 1, 2001 until such date or (b)
reduce Tangible Book Net Worth below $1,400,000."
6. Exhibit B. Exhibit B of the Credit Agreement is amended and
restated in its entirety and replaced with Exhibit B attached hereto.
7. 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.
8. Waiver of Defaults. The Borrower is in default under
Section 7.1(p) of the Credit Agreement as of December 31, 2002 (the "Existing
Defaults"). Upon the terms and subject to the conditions set forth in this
Amendment, the Lender hereby waives the Existing Defaults. This waiver shall be
effective only in this specific instance and for the specific purpose for which
it is given, and this waiver shall not entitle the Borrower to any other or
further waiver in any similar or other circumstances.
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9. Conditions Precedent. This Amendment, and the waiver set forth
in Paragraph 8 hereof, 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 Acknowledgment and Agreement of Guarantors set forth
at the end of this Amendment, duly executed by each Guarantor.
(b) Such other matters as the Lender may require.
10. 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 to perform all of its obligations
thereunder, and this Amendment has 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 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) violany 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.
11. 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.
12. No Other Waiver. Except as set forth in Paragraph 8 hereof,
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.
13. Release. The Borrower and each Guarantor by signing the
Acknowledgment and Agreement of Guarantors set forth below, each hereby
absolutely and unconditionally releases
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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.
14. 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.
15. 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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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 release set forth
in Paragraph 13 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
Exhibit B to Credit and Security Agreement
COMPLIANCE CERTIFICATE
To: Xxxxx Fargo Business Credit, Inc.
Date: __________________, 200__
Subject: Financial Statements
In accordance with our Credit and Security Agreement dated as of
September 24, 2001, as amended by a First Amendment to Credit and Security
Agreement dated as of November 19, 2002 and by a Second Amendment to Credit and
Security Agreement and Waiver of Defaults dated as of March 26, 2003 (as so
amended, the "Credit Agreement"), attached are the financial statements of
Southern Flow Companies, Inc. (the "Borrower") as of and for ________________,
200___ (the "Reporting Date") and the year-to-date period then ended (the
"Current Financials"). All terms used in this certificate have the meanings
given in the Credit Agreement.
I certify that the Current Financials have been prepared in accordance
with GAAP, subject to year-end audit adjustments, and fairly present the
Borrower's financial condition as of the date thereof.
Events of Default. (Check one):
[ ] The undersigned does not have knowledge of the occurrence of a
Default or Event of Default under the Credit Agreement except
as previously reported in writing to the Lender.
[ ] The undersigned has knowledge of the occurrence of a Default
or Event of Default under the Credit Agreement not previously
reported in writing to the Lender and attached hereto is a
statement of the facts with respect to thereto. The Borrower
acknowledges that pursuant to Section 2.4(g) of the Credit
Agreement, the Lender may impose the Default Rate at any time
during the resulting Default Period.
Financial Covenants. I further hereby certify as follows:
1. Minimum Tangible Book Net Worth. Pursuant to Section 6.2(a) of the Credit
Agreement, as of the Reporting Date, the Borrower's Tangible Book Net Worth was
$________________, which [_] satisfies [_] does not satisfy the requirement that
such amount be not less than $1,400,000 at the end of each month.
2. Minimum Profitability. Pursuant to Section 6.2(b) of the Credit Agreement, as
of the Reporting Date the Borrower's Net Income for the period set forth below
ending on such Reporting Date was $_________________, which [_] satisfies [_]
does not satisfy the requirement
that such amount be not less than $_________________ during such period as set
forth in table below:
Period Minimum Net Income
------ ------------------
Three months ended 3/31/03 $ 273,000
Six months ended 6/30/03 $ 583,000
Nine months ended 9/30/03 $ 851,000
Twelve months ended 12/31/03 $1,159,000
3. Advances to Corporate Guarantors. Pursuant to Section 6.26 of the Credit
Agreement, as of the Reporting Date, the amount of all outstanding loans from
Borrower to all Corporate Guarantors equals $______________, which [_] satisfies
[_] does not satisfy the requirements set forth in such Section 6.26.
4. Capital Expenditures. Pursuant to Section 6.2(c) of the Credit Agreement, for
the year-to-date period ending on the Reporting Date, the Borrower has expended
or contracted to expend during the fiscal year ending December 31, 2003, for
Capital Expenditures, $__________________ in the aggregate, which |_| satisfies
|_| does not satisfy the requirement that such expenditures not exceed $250,000
in the aggregate during the fiscal year ending December 31, 2003.
Attached hereto are all relevant facts in reasonable detail to
evidence, and the computations of the financial covenants referred to above.
These computations were made in accordance with GAAP.
SOUTHERN FLOW COMPANIES, INC.
By ____________________________
A. Xxxxxxx Xxxxxxx
Its Chief Financial Officer
