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EXHIBIT 10.1
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
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AND LOAN DOCUMENTS
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THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT AND LOAN DOCUMENTS
(this "Amendment"), dated as of September 13, 1999, is between NATIONAL BANK OF
CANADA, a Canadian chartered bank ("Lender"), METRETEK TECHNOLOGIES, INC. (f/k/a
Xxxxxx Natural Gas Services, Inc.), a Delaware corporation ("Metretek
Technologies"), METRETEK, INCORPORATED, a Florida corporation ("Metretek Inc."),
and SOUTHERN FLOW COMPANIES, INC., a Delaware corporation (each, a "Borrower",
and collectively, "Borrower" or "Borrowers"), and SIGMA VI, INC., a Florida
corporation ("Pledgor").
Recitals
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A. Lender, Borrowers and Pledgor entered into a Loan and Security
Agreement dated April 14, 1998, as amended by an Amendment to Loan and
Security Agreement and Loan Documents dated as of June 8, 1999 (as
amended, the "Loan Agreement"), providing for the Metretek Loans and
the Southern Flow Loans, as more fully set forth in the Loan Agreement.
Defined terms used herein and not defined herein shall have the meaning
set forth in the Loan Agreement. On June 8, 1999, Metretek Technologies
changed its name from Xxxxxx Natural Gas Services, Inc. to Metretek
Technologies, Inc.
B. The Loans are secured by the Collateral.
C. The Borrower has requested that Lender permit Borrower to incur certain
expenditures in connection with the Web Project (as defined herein) and
that Lender revise certain financial covenants to reflect Borrower's
expenditures in connection with the Web Project, and Lender has agreed
to the above subject to the terms and conditions set forth in this
Amendment.
Agreement
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IN CONSIDERATION of the foregoing and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Lender, Borrowers and
Pledgor agree as follows:
1. Revision to Loan Agreement. The Loan Agreement is hereby amended as follows:
1. Web Project. The Loan Agreement is amended by adding a new Article
13A immediately after Article 13 and prior to Article 14 which shall read as
follows:
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ARTICLE 13A
EXPENDITURES IN CONNECTION WITH WEB PROJECT.
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(a) As used in this Agreement, the following terms shall have the
following meanings:
i. "Web Project" means any and all activities of any nature
whatsoever related directly or indirectly to the development
or implementation of a web-based delivery system for energy
acquisition services, including without limitation all
activities undertaken pursuant to the Agreement, executed July
27, 1999, between Metretek Technologies and Scient Corporation
or any other agreement between any Metretek Technologies and
Scient.
ii. "Web Project Expenditures" means any and all expenditures
related directly or indirectly to the Web Project.
(b) Borrower shall be entitled to incur Web Project Expenditures in an
amount of up to $700,000 in the aggregate after the date hereof;
provided that on the date Borrower incurs any such Web Project
Expenditure (i) no Event Default shall have occurred and no event that
with notice or the passage of time would constitute an Event of Default
shall have occurred, (ii) the Loan Availability shall exceed the
aggregate unpaid principal amount of all Loans by at least $300,000 and
there shall be no accounts payable of Borrower which are more than 60
days past due, other than those which are the subject of a bonafide
dispute and which are paid promptly after the dispute is resolved.
(c) In addition to the amount set forth in (b) above, Borrower may
incur Web Project Expenditures in an amount equal to the sum of (i) new
equity contributed to the Borrower after the date hereof, which equity
contribution must be on terms and conditions reasonably acceptable to
the Lender; (ii) indebtedness incurred after the date hereof for the
purpose of financing Web Project Expenditures, which indebtedness must
be unsecured, fully subordinate to the Loans, not repaid until the
Loans have been repaid in full and otherwise be on terms and conditions
and in form and substance acceptable to Lender in its sole discretion;
and (iii) the net income of Metretek Technologies after June 30, 1999;
provided that at the time of such Web Project Expenditures, the
conditions in (b)(i) and (b)(ii) above are complied with.
2. Covenants. The Loan Agreement is hereby further amended by amending
subsections (ii), (iv) and (v) of section 12(q) in their entirety, (Financial
Covenants) to read as follows:
(ii) Xxxxxx'x consolidated combined minimum tangible net worth (as such
term is defined in accordance with GAAP and including any and all
subordinate debt which has been approved by Lender in this Agreement or
otherwise in its sole discretion) shall not be less than the amounts
set forth below for the period set forth below:
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Financial Period Minimum Tangible Net Worth
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from the date hereof up to and $7,050,000
including 12/30/99
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12/31/99 $7,400,000
1/1/00 up to and including $7,400,000 plus 90% of Xxxxxx'x net
12/31/00 income for the fiscal year ended
12/31/99
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1/1/01 up to and including $7,400,000 plus 90% of Xxxxxx'x net
12/31/01 income for the fiscal year ended
12/31/99 plus 90% of Xxxxxx'x net
income for the fiscal year ended
12/31/00
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(iv) Xxxxxx, on a consolidated basis, shall maintain net profit before taxes and
before extraordinary gains (as such terms are defined in accordance with GAAP)
determined on a combined basis of at least the amount set forth below for the
period set forth below:
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Financial Period Net Profit Before Taxes and
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Extraordinary Gains
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Fiscal year ended 12/31/99 ($650,000)
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Fiscal year ended 12/31/00 $400,000
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Fiscal year ended 12/31/01 $400,000
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Borrower's compliance with this subsection (iv) shall be determined without
regard to Web Project Expenditures permitted pursuant to Article 13A and such
permitted Web Project Expenditures shall be disregarded in such calculation.
(v) The ratio of Xxxxxx'x consolidated earnings before interest, taxes,
depreciation, amortization and extraordinary gains to interest expense (as such
terms are defined in accordance with GAAP) and determined on a combined basis
shall not be less than 2.0 to 1.0 for each fiscal year. Borrower's compliance
with this subsection (v) shall be determined without regard to Web Project
Expenditures permitted pursuant to Article 13A and such permitted Web Project
Expenditures shall be disregarded in such calculation.
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2. Warrants. In consideration for Lender entering into this Amendment, Borrower
agrees within 30 days after the date hereof (a) to deliver to Lender warrants to
purchase 20,000 shares of Metretek Technologies common stock at a price of $5.00
per share, exercisable at any time within three years after the date hereof and
substantially in the form of Exhibit A attached hereto, and (b) file, obtain
effectiveness as soon thereafter as reasonably practicable and maintain
effective at all times a Form S-3 registration statement covering the shares to
be issued pursuant to the warrants which will allow such stock to be freely sold
without any securities law restrictions. Failure to deliver such warrants or
effect and maintain such registration shall, at Lender's option, constitute an
event of default.
3. Loan Documents.
1. Lender, Borrowers and Pledgor agree that any and all notes or
other documents executed in connection with the Loans
(collectively, the "Loan Documents") are hereby amended to
reflect the amendments set forth herein and that no further
amendments to any Loan Documents are required to reflect the
foregoing.
2. All references in any document to the Loan Agreement or any
other Loan Document shall refer to the Loan Agreement or such
Loan Document as amended pursuant to this Amendment.
4. Fees and Expenses. (a) In consideration for Lender entering into this
Amendment, Borrower shall pay to Lender an amendment fee equal to $10,000
payable upon the execution of this Agreement.
(b) In addition to the amendment fee described in subsection
(a) above, Borrower shall pay or cause to be paid all of the expenses incurred
by the Lender in connection with the transactions contemplated by this
Amendment, including, without limitation, the reasonable fees and disbursements
of Lender's attorneys and their staff, and any recording and filing fees,
charges and expenses. If Borrower fails to pay such fees within 15 days after
written request by Lender, such failure shall constitute an Event of Default.
5. Representations and Warranties. Each Borrower and Pledgor hereby certifies to
the Lender that as of the date of this Amendment (taking into consideration the
transactions contemplated by this Amendment), all of such Borrower's or
Pledgor's representations and warranties contained in the Loan Agreement and all
Loan Documents are true, accurate and complete in all material respects, and no
Event of Default or event that with notice or the passage of time or both would
constitute an Event of Default has occurred under the Loan Agreement or any Loan
Document. Without limiting the generality of the foregoing, each Borrower and
Pledgor represents and warrants that the execution and delivery of this
Amendment has been authorized by all necessary action on the part of such
Borrower or Pledgor, that the person executing this Amendment on behalf of such
Borrower is duly authorized to do so and that this Amendment constitutes the
legal, valid, binding and enforceable obligation of such Borrower or Pledgor.
6. Additional Documents. Each Borrower and Pledgor shall execute and deliver to
Lender at any time and from time to time such additional amendments to the Loan
Agreement and the Loan Documents as the Lender may request to confirm and carry
out the transactions contemplated hereby or to confirm, correct and clarify the
security for the Loan.
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7. Continuation of the Loan Agreement, Etc. Except as specified in this
Amendment, the provisions of the Loan Agreement and the Loan Documents shall
remain in full force and effect, and if there is a conflict between the terms of
this Amendment and those of the Loan Agreement or the Loan Documents, the terms
of this Amendment shall control.
8. Miscellaneous.
a. This Amendment shall be governed by and construed under the
laws of the State of Colorado and shall be binding upon and
inure to the benefit of the parties hereto and their
successors and permissible assigns.
b. This Amendment may be executed in two or more counterparts,
each of which shall be deemed an original and all of which
together shall constitute one instrument.
3. This Amendment and all documents to be executed and delivered
hereunder may be delivered in the form of a facsimile copy,
subsequently confirmed by delivery of the originally executed
document.
4. This Amendment constitutes the entire agreement between
Borrowers, Pledgor and the Lender concerning the subject
matter of this Amendment. This Amendment may not be amended or
modified orally, but only by a written agreement executed by
each Borrower and Pledgor and the Lender and designated as an
amendment or modification of the Loan Agreement as amended by
this Amendment.
5. Execution of this Amendment is not intended to and shall not
constitute a waiver by the Lender of any Event of Default or
event that with notice or the passage of time, or both, would
constitute an Event of Default.
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EXECUTED as of the date first set forth above.
BORROWERS:
METRETEK TECHNOLOGIES, INC., a Delaware
corporation (f/k/a Xxxxxx Natural Gas
Services, Inc.)
By: /s/ W. Xxxxxxx Xxxxxx
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W. Xxxxxxx Xxxxxx
President and Chief Executive Officer
METRETEK, INCORPORATED, a Florida
corporation
By: /s/ W. Xxxxxxx Xxxxxx
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W. Xxxxxxx Xxxxxx
Chairman and Chief Executive Officer
SOUTHERN FLOW COMPANIES, INC., a Delaware
corporation
By: /s/ W. Xxxxxxx Xxxxxx
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W. Xxxxxxx Xxxxxx
Chairman and Chief Executive Officer
PLEDGOR:
SIGMA VI, INC., a Florida corporation
By: /s/ W. Xxxxxxx Xxxxxx
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W. Xxxxxxx Xxxxxx
Vice President
LENDER:
NATIONAL BANK OF CANADA, a Canadian
chartered bank
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
Vice President
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