Dated: As of August 15, 2008
Exhibit 99.1
Dated:
As
of August 15, 2008
SMF
Energy Corporation
SMF
Services, Inc.
H
&
W
Petroleum Company, Inc.
000
Xxxx
Xxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Re: Consent
to Issuance of Additional Shares of Preferred Stock
Ladies
and Gentlemen:
Reference
is hereby made to that certain Loan and Security Agreement dated
September 26, 2002 (as at any time amended, modified or supplemented, the
“Loan Agreement”) among SMF Energy Corporation, a Delaware corporation and
successor-by-merger to Xxxxxxxxx Mobile Fueling, Inc., a Florida corporation
(“SMF”), SMF Services, Inc., a Delaware corporation (“SSI”), H & W
Petroleum Company, Inc., a Texas corporation (“H & W” and,
collectively with SMF and SSI, “Borrower”), and Wachovia Bank, National
Association, a national banking association and successor-by-merger to Congress
Financial Corporation (Florida) (“Lender”), which is guaranteed by Xxxxxxxxx
Realty, Inc., a Florida corporation (“Guarantor”). Each capitalized term used
herein, unless otherwise defined herein, shall have the meaning ascribed to
such
term in the Loan Agreement.
Borrowers
have informed Lender that, (1) in connection with the Subsequent Issuance under
(and as defined in) the February 2008 Consent Letter, SMF raised at least
$1,000,000 less than it was permitted under the February 2008 Consent Letter,
and (2) not more than $1,750,000 in principal amount of August 2007 Indebtedness
was exchanged for March 2008 Preferred Stock as contemplated in the March 2008
Consent Letter. Borrowers have further informed Lender that SMF desires, on
or
after the date hereof, (a) to create one or more series of convertible preferred
stock (the “New Preferred Stock”) pursuant to respective certificates of
designation of convertible preferred stock of SMF (“New Designation
Certificates”) setting forth terms with respect to each such series that are
substantially identical (except in regard to the purchase price) to those set
forth in the Certificate of Designation and the March 2008 Designation
Certificates (collectively, the “Existing Designation Certificates”) governing,
respectively, the Series A Preferred Stock and the March 2008 Preferred Stock
(collectively, the “Existing Preferred Stock”), (b) to issue shares of New
Preferred Stock subject to such New Designation Certificate(s) for a cash
purchase price of up to $1,000,000, and (c) to issue additional shares of New
Preferred Stock subject to such New Designation Certificate(s) in exchange
for
August 2007 Indebtedness in the aggregate principal amount of not more than
$250,000, together with some or all of the accrued but unpaid interest thereon,
as may be surrendered
by the holders of the August 2007 Indebtedness. The transactions described
in
this paragraph are referred to collectively herein as the “New Preferred Stock
Issuance.”
Borrowers
have requested that Lender consent to the New Preferred Stock Issuance
notwithstanding the provisions of Section
9.7(b)
of the
Loan Agreement, which prohibit Borrowers from selling any Capital Stock of
Borrowers unless, among other things, Borrowers provide written notice to Lender
not less than 10 Business Days prior to the issuance and sale of such stock,
and
all of the proceeds of the issuance and sale of such Capital Stock are remitted
to Lender for application to the Obligations.
Lender
hereby consents to the New Preferred Stock Issuance on the terms set forth
herein and subject to the satisfaction by Borrowers of the following conditions
precedent, in form and substance satisfactory to Lender:
(1) The
New
Preferred Stock Issuance shall be on the terms set forth in the New Designation
Certificates, which shall be substantially identical in all respects to the
Existing Designation Certificates except for the purchase price;
(2) The
net
cash proceeds received by SMF from the sale of the New Preferred Stock shall
be
remitted to Lender for application to the Revolving Loans then outstanding
(which proceeds, for the avoidance of doubt, shall be subject to re-borrowing
on
the terms and subject to the conditions set forth in the Loan Agreement);
and
(3) Borrowers
exchange no more than an aggregate of $250,000 in principal amount of the August
2007 Indebtedness, together with some or all of the accrued but unpaid interest
thereon, for shares of New Preferred Stock, in the New Preferred Stock
Issuance.
Lender’s
consent as provided herein shall not be deemed a waiver of any provision of
the
Loan Agreement or any of the other Financing Agreements (including, without
limitation, any provisions of the Financing Agreements relating to Change of
Control), a consent to the issuance of any other Capital Stock by any Borrower
other than as set forth in the Financing Agreements, the February 2008 Consent
Letter, the March 2008 Consent Letter, or this letter agreement, a consent
to
the declaration or payment of any dividends or distributions with respect to
any
Capital Stock of any Borrower other than as set forth in the Loan Agreement
(including, without limitation, dividends or distributions with respect to
the
Existing Preferred Stock or the New Preferred Stock), or a consent to the
redemption of any Capital Stock of any Borrower other than as set forth in
the
Loan Agreement (including, without limitation, any Existing Preferred Stock
or
New Preferred Stock), except that Lender agrees that (a) SMF may declare
and pay dividends on Existing Preferred Stock and New Preferred Stock as and
to
the extent set forth in the Existing Designation Certificates and New
Designation Certificates, respectively, so long as no Event of Default exists
either before or immediately after the declaration or payment of any such
dividend, no Event of Default would result therefrom, and Borrowers deliver
to
Lender written notice
of
any such dividend not less than 10 Business Days prior to payment thereof,
and (b) SMF shall be permitted to redeem all or any portion of the Existing
Preferred Stock or the New Preferred Stock with proceeds of any issuance or
sale
by SMF of Capital Stock consisting of shares of SMF’s common stock, so long as
no Event of Default exists either before or immediately after such issuance,
sale or redemption, no Event of Default would result therefrom, and Borrowers
deliver to Lender written notice of any such redemption not less than 10
Business Days prior to the consummation thereof. Lender’s consent as provided
herein shall only be valid for issuances, sales or exchanges of New Preferred
Stock that are made on or before December 31, 2008.
Except
as
otherwise expressly provided herein, nothing in this letter agreement shall
be
deemed to be a waiver of any provision of the Loan Agreement or any of the
other
Financing. Agreements, each of which shall remain in full force and effect.
This
letter agreement is not intended to be, nor shall it be construed to create,
a
novation or accord and satisfaction, and the Loan Agreement remains in full
force and effect.
Very
truly yours,
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WACHOVIA
BANK, NATIONAL ASSOCIATION
|
(“Lender”)
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By:
/s/ Xxx Xxxxxxxxx
|
Name:
Xxx Xxxxxxxxx
|
Title:
Director
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