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EXHIBIT 10.1
SECURITY AGREEMENT AND PROMISSORY NOTE
This Agreement made and entered into on April 22, 2005 by and between:
DEBTOR: POWERSECURE, INC. COMPANY: Caterpillar Financial Services Corporation
230 CAPCOM DRIVE 2120 West End Avenue
SUITE 107 Nashville, Tennessee 37203-0001
WAKE FOREST NC 27587
1. Grant of Security Interest. Debtor hereby grants to Company a first
priority, continuing security interest in the property described below, and all
substitutions, replacements, additions and accessions thereto:
(1) Used 3516 Caterpillar Engine 1 plus switchgear and installation 7RN00779
(herein called the "Equipment"), and all accounts, chattel paper, deposit
accounts, security agreements, instruments, contract rights, policies and
certificates of insurance, documents and general intangibles (including all
monies and credits now due or to become due to Debtor from, and all claims
against, manufacturers, purchasers or other parties) with respect to the
equipment, and, whether or not installed thereon, all exchanges, parts, returns
and attachments therefor, whether any of the foregoing is now owned or hereafter
acquired, and all proceeds and products of any of the foregoing including, but
not limited to, proceeds in the form of chattel paper. All of the above shall
hereinafter be called the "Collateral" and are defined pursuant to the
provisions of the Uniform Commercial Code.
Debtor agrees not to remove any Equipment from 11251 NC Hwy 903 HALIFAX, NC
27839, HALIFAX without the prior written consent of Company. Debtor shall
immediately notify Company of any condition or event that may change the proper
location for the filing of any financing statements or other public notices or
recordings for the purposes of perfecting security interests in the Collateral,
including any change in Debtors name or business organization or the location of
Debtor's place of business.
2. Obligations. The security interest hereby granted is to secure the
prompt and unconditional payment and performance when due of all of the
following (herein called the "Indebtedness'): (a) any and all indebtedness owing
by Debtor to Company pursuant hereto and any and all amendments, modifications,
restructures, restatements, renewals and extensions of said indebtedness and (b)
all duties, obligations and liabilities of Debtor to Company hereunder and under
all related agreements. Debtor agrees that the security interest herein granted
to Company shall extend to all of the Collateral for so long as any portion of
the Indebtedness secured hereby remains unpaid or undischarged, whether such
property comprising a part of the Collateral is acquired by Debtor prior to,
contemporaneously with, or subsequent to the date of this Agreement.
3. (A) Promise to Pay. For Value Received, Debtor (jointly and severally,
if more than one) promises to pay to the order of Company, in immediately
available funds at the address of Company set forth above or at such other place
as Company or the holder hereof shall designate in writing, the principal amount
of $335,247.00 with interest on the outstanding principal from and including the
date hereof at the per annum rate equal to that set forth below, until paid in
full.
(B) Payment Schedule. Monthly payments of principal and interest in
ARREARS, each in an amount equal to $6,773.56 shall be made commencing 5-22-05
and continuing on the like day of each month thereafter through and including
4-22-10 for a total of 60 payments. All payments received shall be applied first
to accrued interest and other nonprincipal amounts then owing under this
Agreement and then to the principal balance outstanding. The acceptance of any
payment which is less than payment in full of all amounts due and owing at such
time shall not constitute waiver of Company's or the holder's right to receive
payment in full of all amounts due and owing at such time or any prior or
subsequent time.
(C) Interest. Interest shall be computed at the per annum rate equal to
7.85%. All interest payable hereunder shall be calculated on the basis of the
actual number of days elapsed in a year of three hundred sixty (360) days.
(D) Time. Time is of the essence hereof. If any payment or portion of a
payment or other sum due hereunder is not paid within 10 days from the date such
payment is due, there shall be immediately due and payable from Debtor to
Company a late fee equal to the lesser of 5% of the amount of the overdue
payment or portion of a payment or other sum or the highest amount allowed by
law.
(F) Savings. If at any time implementation of any provision of this
Agreement shall raise or be deemed to raise the interest rate per annum
contracted for, charged in or collectible under this Agreement above the lawful
maximum interest rate per annum in effect from time to time in the applicable
jurisdiction, then such interest rate per annum shall be limited to such lawful
maximum interest rate; provided, however, that if the applicable state law is
amended or the law of the United States of America pre-empts the applicable
state law, so that it becomes lawful for the Company to receive a greater
interest rate per annum than is presently allowed, Debtor agrees that, on the
effective date of such amendment or pre-emption, as the case may be, the lawful
maximum hereunder shall be increased to the maximum interest rate per annum
allowed by the higher of the amended state law or the law of the United States
of America. If from any circumstance, Company shall ever receive as interest or
otherwise an amount which will exceed the applicable lawful maximum rate, such
amount which would be excessive shall be deemed a mistake and shall be either
refunded or applied to the reduction of any principal owing under this
Agreement, as Company may elect.
(G) Waivers. Debtor hereby waives presentment for payment, demand for
payment, protest, notice of protest, notice of nonpayment, notice of dishonor,
notice of acceleration and notice of intent to accelerate hereunder, and all
other notices in connection with this Agreement, filing of suit and diligence in
collecting any sums due hereunder or otherwise under the Indebtedness or in
enforcing this Agreement.
4. Representations and Warranties. Debtor represents and warrants to
Company as follows: (a) the execution, delivery and performance of this
Agreement and other agreements and documents evidencing the Indebtedness secured
hereby are duly authorized by Debtor, and are not in conflict with any provision
of law, the articles of incorporation or the by-laws of Debtor, or any other
indenture, agreement or undertaking by which Debtor is bound; (b) this Agreement
and other agreements or documents evidencing the Indebtedness secured hereby
constitute valid obligations of Debtor, legally binding upon it and enforceable
in accordance with their terms; (c) all property forming part of the Collateral
is now or, at the time it becomes part of the Collateral shall be, owned by
Debtor by good and marketable title, and shall at all times be and remain free
from all liens, claims, security interests and encumbrances, except for the
security interest granted hereby and any other security interest(s) agreed to in
writing by Company, and Debtor shall defend the Collateral against all claims
and demands of all persons claiming an interest therein; (d) all financial
statements and data and any other information or documentation related to the
business or financial condition of Debtor which have been or may hereafter be
furnished to Company to induce it to advance funds or extend credit to Debtor
shall fairly represent the operations and financial condition of Debtor, as of
the date stated therein, and shall be accurate and correct in all material
respects; (e) Debtor is and shall remain a Corporation registered in the state
of NC ("Business Location"); (f) Debtor will not change its form of business
organization or Business Location without prior written notice to Company; and
(g) no representation, warranty, or statement by Debtor contained herein or any
other agreement or document evidencing the Indebtedness secured hereby, or any
certificate or other document furnished or to be furnished by Debtor in
connection with the transaction contemplated hereby, contains or at the time of
delivery shall contain any untrue statement of material fact, or omits, or shall
omit at the time of delivery, to state a material fact required to make such
certificate or other document not misleading. The representations and warranties
specified above are in addition to and not in lieu of any representations and
warranties set forth in any other agreement or document evidencing the
Indebtedness secured hereby.
5. Financing Statements. etc. Debtor shall take any and all steps Company
may from time to time require to establish and maintain Company's valid,
perfected security interest in the Collateral, including to execute or obtain
the execution of, in form and substance satisfactory to Company, such notices,
subordinations, releases or waivers, UCC assignments, UCC financing statements,
and other documents that Company may deem necessary to perfect, extend, or
clarify Company's right in the Collateral securing or intended to secure
Debtor's obligations to Company hereunder. Debtor hereby irrevocably appoints
Company as Debtor's Attorney-in-Fact for the signing and filing of such
documents and authorizes Company to delegate these limited powers. Debtor agrees
to pay all costs, including attorney's fees, incurred in connection with such
filings and otherwise preserving and protecting Company's interest in the
Collateral.
6. Use and Disposition of Collateral; First and Prior Lien. The Collateral
shall remain in Debtor's control and possession at all times. Debtor agrees that
it will not in any way misuse, conceal, pledge, mortgage, encumber or sell,
lease, assign, transfer
or otherwise dispose of the Collateral. Debtor further agrees that it will keep
the Collateral free of, and shall defend the Collateral from and against, all
liens, claims, security interests and encumbrances, except for the security
interest granted hereunder and any other security interest(s) agreed to in
writing by Company. Debtor, at its sole expense, shall maintain the Equipment in
good repair and operating condition. The Equipment is and shall remain personal
property at all times notwithstanding the manner in which it is attached or
affixed to realty. All proceeds including, but not limited to, proceeds in the
form of chattel paper received by Debtor forming part of the Collateral shall be
received under an express trust for the benefit of Company, shall not be
commingled with other monies, assets or accounts of Debtor, and shall be
immediately paid to Company (unless otherwise permitted in writing by Company).
7. Inspection of Collateral; Taxes and Charges. Company may inspect the
Collateral, and inspect and copy all records pertaining to same, at any time and
wherever located, and Debtor shall fully cooperate with Company to identify and
provide evidence of the location, possession, and condition of, and the
ownership of, and any other interest in, the Collateral, as requested by
Company. Debtor shall also complete and return audit forms submitted by Company
from time to time within five (5) days of receipt thereof. Debtor shall be
solely responsible for and shall promptly pay when due all taxes and other
charges of every nature which may be levied or assessed against the Collateral,
its use or operation, or which arise out of or are connected with this Agreement
or any other agreement or document evidencing the Indebtedness secured hereby,
by any governmental agency.
8. Insurance. Debtor shall bear the risk of loss, damage or destruction to
the Collateral. Debtor shall, at its expense, insure the Equipment against all
risks for its full insurable value. All such insurance shall be with such
insurance companies and under such policies and in such form as are satisfactory
to Company. Such insurance shall be primary, without right of contribution from
any insurance carried by Company and shall provide that it may not be canceled
or altered so as to affect the interest of Company without at least thirty (30)
days prior written notice to Company. All insurance covering loss or damage to
Equipment shall name Company (or its designee) as sole loss payee. At the
request of Company, Debtor shall furnish Company with satisfactory evidence of
such insurance. Debtor shall promptly notify Company of any loss or damage to
the Equipment and of any claim relating thereto. Debtor shall not make
adjustments relating to the Equipment with insurers without Company's prior
written consent. Debtor hereby irrevocably appoints Company Debtors
attorney-in-fact to endorse all drafts or checks payable to Debtor, and to file
claims and to take all other actions necessary to collect any proceeds of such
insurance. Any amounts collected from insurance shall, if received by Debtor, be
immediately paid to Company and shall be applied by Company to the Indebtedness
secured hereby.
9. Substitute Performance. If Debtor shall fail to maintain the required
insurance, pay taxes or other charges, properly maintain or repair the
Equipment, or perform any other duty or obligation required hereunder, Company
may at any time thereafter (but shall not be required to) perform any such duty
or obligation to the extent determined by Company and make expenditures for any
or all such purposes in order to maintain and preserve the Equipment. The amount
so expended, together with interest thereon at the lessor of eighteen percent
(18%) per annum or the highest lawful contract rate of interest, shall be
immediately due and payable by Debtor to Company and shall be secured by the
security interest herein granted.
10. Default. Debtor shall be in default hereunder and all other agreements
and documents evidencing the Indebtedness secured hereby upon the occurrence of
any of the following events: (a) Debtor fails to pay any sum when due under any
of the Indebtedness secured hereby or to timely when required perform any duty
or obligation under any of the Indebtedness secured hereby and such default
shall continue unremedied for 10 days after notice by Company to Debtor at the
address first set forth above; (b) Debtor fails to observe or perform any of the
provisions of this Agreement or any other agreement or document relating to all
or any part of the Collateral or the Indebtedness; (c) any representation,
warranty, financial statement or other information made or furnished by Debtor
to Company is untrue in any material respect as of the date made or furnished;
(d) any default shall occur under any other agreement between Debtor and Company
or Debtor and any subsidiary or affiliate of Company; (e) the making of any
levy, seizure or attachment upon the Collateral; (f) should Debtor or any
guarantor default under any other security agreement directly or indirectly
securing repayment of the Indebtedness or under any material promissory note,
loan, extension of credit, security agreement, purchase or sales agreement, or
any other agreement, in favor of any other creditor or person; (g) should any
guarantor, surety, or other party liable on whatever basis for the Indebtedness
default under the agreement of guaranty, surety, or other agreement evidencing
the liability, as the case may be; (h) the Collateral or any part thereof
becomes lost, stolen or materially damaged; (i) Debtor becomes unable, or admits
in writing its inability to pay its debts as they mature, or becomes the subject
of proceedings in bankruptcy or insolvency, or makes a general assignment for
the benefit of creditors; or enters into an arrangement with a group of
creditors, or enters into any action for the purposes of accomplishing any of
the preceding; (j) Debtor, or any partner of Debtor, winds up, liquidates,
ceases to do
business, dissolves, reorganizes, merges, consolidates or sells, assigns,
transfers, leases or otherwise disposes of all or substantially all of its
assets, or becomes the subject of any proceeding for any of the foregoing
purposes, if Debtor or the partner of Debtor is other than an individual; (k)
the death or judicial determination of incompetency of a Debtor who is a natural
person or of any partner of Debtor which is a partnership; or (1) should Debtor
have a material adverse change with respect to its financial condition which
results, in Company's opinion, in an impairment of the prospect of repayment of
any of the Indebtedness or of Debtor's performance of its obligations hereunder.
11. Rights and Remedies. Upon the occurrence of any default hereunder and
at any time thereafter, Company may, at its option, do any one or more of the
following: (a) declare any or all of the Indebtedness secured hereby (including
additional interest accrued on past due payments and any prepayment premium)
immediately due and payable without notice or demand; (b) recover any additional
damages and expenses sustained by Company by reason of the breach of any
provision of this Agreement by Debtor; (c) enforce the security interest granted
hereunder; (d) accelerate the maturity and insist upon immediate payment in full
of each and every other loan, extension of credit, debt, liability and/or
obligation of every nature and kind that Debtor may then owe to Company, whether
direct or indirect or by way of assignment, and whether absolute or contingent,
liquidated or unliquidated, voluntary or involuntary, determined or
undetermined, secured or unsecured, whether Debtor is obligated alone or with
others on a joint, several or solidary basis, as a principal obligor or
otherwise, all without further notice, demand or putting in default, unless
Company shall otherwise elect; (e) without notice, liability or legal process,
enter upon the premises where any of the Collateral may be and take possession
thereof; and (f) require Debtor to assemble the Collateral and make it available
to Company at a place designated by Company which is reasonably convenient to
Company and Debtor. Company shall have all rights given to a secured party by
law and all of Company's rights and remedies shall be cumulative and
nonexclusive, to the extent permitted by applicable law. Company may, at its
option, undertake commercially reasonable efforts to sell or dispose of all or
any part of the Collateral, and the proceeds of any such sale or disposition
shall be applied as follows: first, to reimburse Company for all reasonable
expenses of retaking, holding, preparing for sale or disposition, and selling or
disposing of the Collateral, including all taxes and reasonable attorney's fees;
and, second, to the extent not previously paid by Debtor, to pay all
Indebtedness secured hereby. Company shall have the right, in its sole
discretion, to determine the order in which its rights in or remedies against
any Collateral or other property now or hereafter securing the Indebtedness are
to be exercised, which part of Collateral or such other property is to be
proceeded against, and the order of application of proceeds of Collateral or
such other property as against any particular portion of the Indebtedness. Any
surplus shall be paid to the person entitled thereto. Debtor shall remain liable
for and promptly pay any deficiency to Company. Company shall have the right to
enter and remain upon the premises of Debtor or any other place or places where
any part of the Collateral may be kept, for such time as Company may deem
necessary, and (a) remove, maintain, sell, collect, and/or liquidate the
Collateral; (b) use the premises of Debtor, together with materials and supplies
located thereon, to maintain the condition of the Collateral and to prepare the
Collateral for sale or liquidation, and (c) require Debtor to assemble the
Collateral and make it available to Company or the agents or designees of
Company at Debtor's premises or such other place as Company may reasonably
designate.
Debtor hereby acknowledges that sales for cash or on credit to a wholesaler,
retailer or user, and with or without the Collateral being present, are all
commercially reasonable dispositions of the Collateral. Debtor agrees to pay all
reasonable attorney's fees and all costs and expenses incurred by Company in
enforcing this Agreement or other Indebtedness secured hereby upon the
occurrence of any default hereunder or thereunder or in connection with any
bankruptcy or other insolvency proceeding commenced by or against Debtor.
Company shall have the right, immediately and without further action by it, to
set off against the Indebtedness secured hereby all money owed by Company or any
affiliate or subsidiary of Company in any capacity (including, without
limitation, Caterpillar Inc.) to Debtor, whether or not due, and Company shall
be deemed to have exercised such right of setoff and to have a charge against
any such money immediately upon the occurrence of a default hereunder or under
the Indebtedness secured hereby even though such charge is made or entered on
the books of Company or an affiliate or subsidiary of Company, as the case may
be, subsequent thereto. To the extent permitted by law, Debtor hereby releases
any claim it may have against Company which may result from or arise out of the
possession or repossession of the Collateral by Company, and further waives the
benefit of all valuation and appraisal laws with respect to the Collateral. If
Company shall seek to take possession of, or repossess, the Collateral or any
part thereof by judicial action, Debtor hereby waives any requirement of notice
or for Company to provide bond, surety or other security in relation thereto,
whether required by statute, court rule or otherwise, to the extent permitted by
law. The remedies specified in this Section 11 are in addition to and not in
lieu of any remedies specified in any other agreements or documents evidencing
the Indebtedness secured hereby.
12. Waiver and Indemnity. Debtor understands and agrees that its
obligations hereunder and under the Indebtedness secured hereby shall not be
affected by any defect in, damage to or loss of possession or use of any of the
Collateral, however
caused, by the attachment of any lien or other claim to any of the Collateral,
by any interference with Debtor's use of any of the Collateral, or for any other
cause, whether similar or dissimilar to the foregoing, any present or future law
to the contrary notwithstanding. DEBTOR HEREBY AGREES TO RELEASE, DEFEND,
INDEMNIFY AND HOLD HARMLESS COMPANY, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS
AND ASSIGNS FROM AND AGAINST ANY CLAIMS OF DEBTOR OR THIRD PARTIES, INCLUDING
CLAIMS BASED UPON BREACH OF CONTRACT, BREACH OF WARRANTY, PERSONAL INJURY,
PROPERTY DAMAGE, STRICT LIABILITY OR NEGLIGENCE, FOR ANY LOSS, DAMAGE OR INJURY
CAUSED BY OR RELATING TO THE DESIGN, MANUFACTURE, SELECTION, DELIVERY,
CONDITION, OPERATION, USE, OWNERSHIP, MAINTENANCE OR REPAIR OF ANY COLLATERAL.
FURTHER, DEBTOR AGREES TO BE RESPONSIBLE FOR ALL COSTS AND EXPENSES, INCLUDING
REASONABLE ATTORNEYS' FEES, INCURRED BY COMPANY OR ITS DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS AND ASSIGNS IN DEFENDING SUCH CLAIMS OR IN ENFORCING THIS
PROVISION. UNDER NO CONDITION OR CAUSE OF ACTION SHALL COMPANY BE LIABLE FOR ANY
LOSS OF ACTUAL OR ANTICIPATED BUSINESS OR PROFITS OR ANY SPECIAL, INDIRECT OR
CONSEQUENTIAL DAMAGES.
13. Integration; Amendment: Waiver. This Agreement constitutes the entire
agreement between the parties concerning Company's security interest in the
Collateral and the portion of the Indebtedness evidenced hereby and may not be
altered or amended except by a writing signed by all parties hereto. Waiver of
any default hereunder shall not constitute waiver of any subsequent default. Any
waiver or consent by Company of or to any default by Debtor hereunder must be in
writing specifically set forth. In addition, any failure or delay on the part of
Company to exercise any of the rights and remedies granted to Company shall not
have the effect of waiving any of Company's rights and remedies. Any partial
exercise of any rights and/or remedies granted to Company shall furthermore not
be construed as a waiver of any other rights and remedies, it being Debtor's
intent and agreement that Company's rights and remedies shall be cumulative in
nature. To the extent permitted by law, Debtor waives all rights to plead any
statute of limitations as a defense to any action on this Agreement. DEBTOR
WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT, AND
ACKNOWLEDGES THAT THE FOREGOING WAIVER IS A MATERIAL INDUCEMENT TO COMPANY IN
ENTERING INTO THIS AGREEMENT AND CREATING IN FAVOR OF DEBTOR THE INDEBTEDNESS
SECURED HEREBY AND THAT COMPANY IS RELYING UPON THE FOREGOING WAIVER. DEBTOR
WARRANTS THAT IT HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS. IN
THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
14. Assignment. Any or all of the rights of Company under this Agreement
and in the Collateral may be assigned by Company at any time. No assignment of
this Agreement or of any right or obligation hereunder may be made by Debtor
without the prior written consent of Company. This Agreement shall be binding
upon the heirs, personal representatives, successors and assigns of Debtor and
inure to the benefit of Company, its successors and assigns.
15. Construction; Severability. This Agreement shall be construed no more
strictly against one party than the other, regardless of which party drafted the
Agreement. Any provision found to be invalid under any applicable law shall be
inapplicable and deemed omitted, but the remaining provisions hereof shall be
given effect in accordance with the manifest intent hereof. Notwithstanding any
termination of this Agreement, all terms and conditions hereof shall continue to
apply after such termination until all Indebtedness secured hereby has been
finally performed and paid in full. If the Agreement is signed by more than one
Debtor, the singular "Debtor' as used herein shall include the plural and the
obligations of all those signing as Debtor shall be joint and several.
16. Headings. The headings appearing in each section hereof are for
convenience or reference only and are not to be considered or construed as a
substantive part of this Agreement.
17. Counterparts. This Agreement may be separately executed by Debtor and
Company in any number of counterparts, each of which, when so executed and
delivered, shall be deemed to be an original and all of which, when so executed
and delivered, shall be deemed to be an original and all of which, taken
together, shall constitute but one and the same instrument.
18. Applicable Law. This agreement shall be governed by and construed under
the laws of the State of Tennessee, without giving effect to the
conflict-of-laws principles thereof, and Debtor hereby consents to the
jurisdiction of any state or federal court located within the State of
Tennessee.
IN WITNESS WHEREOF, Debtor and Company have duly executed this Agreement as of
the day and year first above written.
("Debtor") ("Company")
POWERSECURE, INC. CATERPILLAR FINANCIAL SERVICES CORPORATION
Signature: /s/ Sidney Hinton Signature: /s/ Roger Scott Freistat
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Name (PRINT): Sidney Hinton Name (PRINT): Roger Scott Freistat
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Title: CEO Title: Credit Manager
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Address: 230 Capcom Avenue
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Wake Forest, NC 27587
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