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Exhibit 10.1
Bank of America
to
GSE Systems, Inc.
and
GSE Power Systems, Inc.
$3,500,000 Ex-Im Bank-Guaranteed
Transaction Specific
Revolving Line of Credit
March 28, 2008
TABLE OF CONTENTS
i
ii
iii
Table of
Exhibits to Loan Agreement
A - Economic
Impact Certification
B - Items
C - Permitted
Liens
D - Controlling
Affiliate List
E - Inventory
Locations
F - Export-Related
Borrowing Base Certificate
G - Terms
of Sale
iv
LOAN
AGREEMENT
(Ex-Im Bank-Guaranteed Transaction Specific Revolving Line of
Credit)
This
Loan Agreement (this “ Agreement ”)
dated as of March 28, 2008, is by and between Bank of America,
N.A., a national banking association (the “ Bank ”), and
GSE Systems, Inc., a Delaware corporation (“ GSE ”), and
GSE Power Systems, Inc. a Delaware corporation (“
Power
”), as co-borrowers (GSE and Power are sometimes
referred to collectively as the “ Borrowers ”
and individually as the “ Borrower
”).
1.1
Defined Terms .
In
addition to the terms which are defined elsewhere in this
Agreement, the following terms have the meanings indicated for
the purposes of this Agreement:
“
Accounts
Receivable ” shall mean all of Borrower’s
now owned or hereafter acquired (a) “accounts” (as
such term is defined in the UCC), other receivables, book
debts and other forms of obligations, whether arising out of
goods sold or services rendered or from any other transaction;
(b) rights in, to and under all purchase orders or receipts
for goods or services; (c) rights to any goods represented or
purported to be represented by any of the foregoing (including
unpaid sellers’ rights of rescission, replevin,
reclaimation and stoppage in transit and rights to returned,
reclaimed or repossessed goods); (d) moneys due or to become
due to such Borrower under all purchase orders and contracts
(which includes Export Orders) for the sale of goods or the
performance of services or both by Borrower (whether or not
yet earned by performance on the part of Borrower), including
the proceeds of the foregoing; (e) any notes, drafts, letters
of credit, insurance proceeds or other instruments, documents
and writings evidencing or supporting the foregoing; and (f)
all collateral security and guarantees of any kind given by
any other Person with respect to any of the
foregoing.
“
Accounts
Receivable Aging Report ” means a
report detailing all Export-Related Accounts Receivable, and
the applicable terms for the relevant time
period.
“
Bailee
” means a third party to whom is delivered
Export-Related Inventory of the Borrower for some particular
use, on mere deposit or upon a contract, express or implied,
that after the purpose has been fulfilled such inventory shall
be redelivered to the person who delivered it, or otherwise
dealt with according to instructions or kept until reclaimed
by the person who delivered it, as the case may be, including,
but not limited to, a carrier, common carrier, warehouseman or
processor.
“
Borrower
Agreement ” means that certain Borrower Agreement
entered into by the Borrower in favor of the Bank and Ex-Im
Bank with reference to this credit transaction under the
Export-Import Bank of the United States Working Capital
Guarantee Program as modified by any waiver or side letters
from Ex-Im Bank to the Bank that are applicable to this Ex-Im
Bank-guaranteed transaction specific revolving line of
credit.
"
Buyer
" means
a Person that has entered into one or more Export Orders with
the Borrower or who is an obligor on Export-Related Accounts
Receivable.
“
Controlling
Affiliate ” means each person, company or other
entity owning or otherwise controlling more than 20% of the
voting share capital (or equivalent right of ownership) of the
Borrower, or having the power to direct the Borrower's
policies or management whether by contract or
otherwise.
“
Disbursement
” means, collectively, (a) an advance of a working
capital loan from the Bank to the Borrower under the Ex-Im
Line, and (b) an advance to fund a drawing under a Letter of
Credit issued or caused to be issued by the Bank for the
account of the Borrower under the Ex-Im Line.
“
Domestic
Line ” means that certain Domestic Revolving Line
of Credit under that certain Loan Agreement (Domestic
Revolving Line of Credit) entered into as of even date
herewith, between the Borrower and the Bank, as now in
effect or as hereafter renewed, amended or
restated.
1
“
Economic
Impact Certification ” means a certificate in the
form of Exhibit A
attached hereto.
“
Eligible
Person ” means a sole proprietorship,
partnership, limited liability partnership, corporation or
limited liability company which (a) is domiciled, organized or
formed, as the case may be, in the United States, whether or
not such entity is owned by a foreign national or foreign
entity; (b) is in good standing in the state of its formation
or otherwise authorized to conduct business in the United
States; (c) is not currently suspended or debarred from doing
business with the United States government or any
instrumentality, division, agency or department thereof; (d)
exports or plans to export Items; (e) operates and has
operated as a going concern for at least one year; (f) has a
positive tangible net worth determined in accordance with
GAAP; and (g) has revenue generating operations relating to
its core business activities for at least one
year.
“
Eligible
Export-Related Accounts
Receivable ” means all Export-Related Accounts
Receivable permitted to be included in the Export-Related
Borrowing Base pursuant to the Borrower Agreement; provided
that “Eligible Export-Related Accounts Receivable”
shall not include any Account Receivable that (i) is not
covered by the Ex-Im Bank Guarantee, (ii) is due from any
guarantor or company affiliated with the Borrower or any
guarantor, or (iii) the Bank may from time to time deem to be
ineligible.
“
Eligible
Export-Related
Inventory ” means all Export-Related Inventory,
including Unbilled Export-Related Costs, that is permitted to
be included in the Export-Related Borrowing Base pursuant to
the Borrower Agreement; provided that “Eligible
Export-Related Inventory” shall not include any
Export-Related Inventory that: (i) is not covered
by the Ex-Im Bank Guarantee; (ii) is not located in the United
States; (iii) is located at or in the possession of a
processor or Bailee, or located on premises leased or
subleased to the Borrower, or on premises subject to a
mortgage in favor of a person other than the Bank, unless such
processor or Bailee or mortgagee or the lessor or sublessor of
such premises, as the case may be, has executed and delivered
all documentation which the Bank shall require, if any, in its
sole discretion to evidence the subordination or other
limitation or extinguishment of such person’s rights
with respect to such Inventory and the Bank’s right to
gain access thereto; (iv) is covered by a negotiable document
of title (such as a warehouse receipt, bill of lading or
mate’s receipt) unless such document has been delivered
to the Bank; (v) is owned by any guarantor or a company
affiliated with the Borrower or any guarantor; or (vi) the
Bank may from time to time deem to be ineligible; provided
further that “Eligible Export-Related Inventory”
shall not include any Unbilled Export-Related Costs that, if
billed pursuant to the terms and conditions of the applicable
Specific Export Order, would not qualify as Eligible
Export-Related Accounts Receivable.
“
Ex-Im
Bank ” means the Export-Import Bank of the United
States.
“
Ex-Im Bank
Guarantee ” means the Guarantee issued by Ex-Im
Bank in favor of the Bank under Ex-Im Bank's United States
Working Capital Guarantee Program.
“
Export
Order ” means a documented purchase order or
contract evidencing a Buyer’s agreement to purchase the
Items from Borrower for export from the United States, which
documentation shall include written information that is
necessary to confirm such purchase order or contract,
including identification of the Items, the name of the Buyer,
the country of destination, terms of sale, contact information
for the Buyer and the total amount of the purchase order or
contract.
“
Export-Related Accounts
Receivable ” means those Accounts
Receivable arising from the sale of Items which are due and
payable to Borrower in the United States.
“
Export-Related Accounts
Receivable Value ” means at the date
of determination thereof, the aggregate face amount of
Eligible Export-Related Accounts Receivable less taxes,
discounts, credits, allowances and Retainages, except to the
extent otherwise permitted in writing by the
Bank.
2
“
Export-Related Borrowing
Base ” means at the date of determination
thereof, the sum of (a) 75% of the Export-Related Inventory
Value, plus (b)
90% of the Export-Related Accounts Receivable Value and
plus (c)
100% of the cash collateral pledged to the Bank in connection
with the issuance of Warranty Letters of
Credit. After calculating the Export-Related
Borrowing Base as provided above, the Bank may deduct such
reserves as the Bank may establish from time to time in its
reasonable credit judgment, including, without limitation,
reserves for Letters of Credit, rent at leased locations
subject to statutory or contractual landlord’s liens,
inventory shrinkage, dilution, customs charges,
warehousemen’s or Bailees’ charges, and the amount
of estimated maximum exposure, as determined by the Bank from
time to time, under any interest rate contracts which the
Borrower enters into with the Bank (including interest rate
swaps, caps, floors, options thereon, combinations thereof, or
similar contracts). The Export-Related Borrowing
Base is also subject to certain specific reserves and
limitations set forth in Section 2.1 of this Agreement.
“
Export-Related
Inventory ” means the Inventory of the
Borrower located in the United States that has been purchased,
manufactured or otherwise acquired by Borrower for sale or
resale as Items, or to be incorporated into Items to be sold
or resold pursuant to Specific Export Orders; and Unbilled
Export-Related Costs.
“
Export-Related Inventory
Value ” means, at the date of
determination thereof, the lowest of (i) the cost of Eligible
Exported-Related Inventory as determined in accordance with
GAAP, or (ii) the market value of Eligible Export-Related
Inventory as determined in accordance with GAAP or (iii) the
lower of the appraised market value or orderly liquidation
value of the Eligible Export-Related Inventory, if the Bank
has other loans and financial accommodations to a Borrower for
which it conducts (or contracts for the performance of) such
an appraised or orderly liquidation value.
“
Final
Disbursement Date ” means March 28, 2010, or, if
such date is not a Business Day, the next succeeding banking
day; provided
, however ,
with respect to Letter of Credit Obligations outstanding on
the Final Disbursement Date, the Final Disbursement Date with
respect to an advance to fund a drawing under such Letter of
Credit shall be the date of the advance, which in no event
shall be later than the expiry date of such Letter of
Credit.
“
GAAP
” means the generally accepted accounting principles
issued in the United States.
“
Guarantor ”
means each Controlling Affiliate and any other person, company
or other entity that executes a Guaranty.
“
Guaranty ”
means a guaranty in favor of the Bank, in form and substance
satisfactory to the Bank.
“
Items
” means those finished goods or services
identified on Exhibit B
attached hereto, which are intended for export from the United
States, and meet the U.S. Content requirements in accordance
with Section 2.01(b)(ii) of the Borrower Agreement and for
which the Borrower has duly executed and delivered to the Bank
an Economic Impact Certification.
“ Letter of Credit
Obligations ” means all undrawn amounts of outstanding
obligations incurred by the Bank, whether direct or indirect,
contingent or otherwise, due or not due, in connection with the
issuance or guarantee by the Bank or Issuing Bank of Letters of
Credit under the Ex-Im Line.
“
Loan
Documents ” means this Agreement, each promissory
note (if any) executed in connection herewith, the Security
Agreement, each stock pledge agreement, each Guaranty and all
other documents or instruments executed and delivered by the
parties hereto or thereto, as the case may be.
“
Maximum
Amount ” means the amount of Three Million
Five Hundred Thousand U.S. Dollars
($3,500,000.00).
“
Permitted
Liens ” means (a) Liens for taxes, assessments or
other governmental charges or levies not delinquent, or, being
contested in good faith by appropriate proceedings and with
respect to which proper reserves have been taken by Borrower;
provided
, that ,
the Lien shall have no effect on the priority of the Liens in
favor of the Bank or the value of the assets in which the Bank
has such a Lien and a stay of enforcement of any such Lien
shall be in effect; (b) deposits or pledges securing
obligations under worker’s compensation, unemployment
insurance, social security or public liability laws or similar
legislation; (c) deposits or pledges securing bids, tenders,
contracts (other than contracts for the payment of money),
leases, statutory obligations, surety and appeal bonds and
other obligation of like nature arising in the ordinary course
of the Borrower’s business; (d) judgment Liens that have
been stayed or bonded; (e) mechanics’, workers’,
materialmen’s or other like Liens arising in the
ordinary course of Borrower’s business with respect to
obligations which are not due; (f) Liens placed upon fixed
assets hereafter acquired to secure a portion of the purchase
price thereof, provided, that, any such Lien shall not
encumber any other property of Borrower; (g) security
interests being terminated concurrently with the execution of
the Loan Documents; and (h) such other Liens set forth on
Exhibit C
attached hereto.
3
“
Specific
Export
Orders ” means those Export Orders disclosed in
writing to the Bank for a Transaction Specific Revolving Loan
Facility.
"
Unbilled
Export-Related Costs " means, at the time of
determination thereof, the amount of costs incurred by the
Borrower in connection with a Specific Export Order which
costs are in excess of costs billed by the Borrower to the
Buyer pursuant to such Specific Export Order. For
purposes of calculating the amount of costs billed by the
Borrower to the Buyer pursuant to a Specific Export Order,
where the amount billed by the Borrower to the Buyer includes
both a cost and a profit component, the amount of costs billed
shall not include the profit component.
“
U.S.
Content ” means with respect to any Item, all the
costs, including labor, materials, services and overhead, but
not markup or profit margin, which are of U.S. origin or
manufacture, and which are incorporated into an Item in the
United States.
“
Warranty
Letter of Credit ” means a Standby
Letter of Credit which is issued or cased to be issued by the
Bank to support the obligations of Borrower with respect to a
Warranty or a Standby Letter of Credit which by its terms
becomes a Warranty Letter of Credit.
1.2
Terms Defined in the Borrower Agreement .
Capitalized
terms not otherwise defined herein shall have the meanings
given to them in the Borrower Agreement.
2.1
Line of Credit Amount .
(a) During
the availability period described below, the Bank will provide
an Ex-Im Bank-Guaranteed revolving line of credit to the
Borrower (the “ Ex-Im Line
”). The Ex-Im Line is a transaction specific
revolving line of credit providing for cash advances
and Standby and Warranty Letters of Credit in connection with
Specific Export Orders as they arise from time to time,
subject to the terms and conditions of this
Agreement. During the availability period, the
Borrower may repay principal amounts and reborrow
them.
(b) The
amount of the Ex-Im Line (the “ Ex-Im Line
Commitment ”) is equal to the lesser of (i) the
Maximum Amount or (ii) the Export-Related Borrowing
Base. The Borrower agrees not to permit the
principal balance outstanding to exceed the Ex-Im Line
Commitment. If the Borrower exceeds this limit, the
Borrower will immediately pay the excess to the Bank upon the
Bank's demand.
(c) In
addition to the limitation set forth in Section 2.1 (b), the following limitations will
also apply to the Ex-Im Line:
(i) The
aggregate amount of outstanding Disbursements under the Ex-Im
Line plus the
aggregate amount of Letter of Credit Obligations may not
exceed at any one time the Maximum Amount.
4
(ii) The
aggregate amount of outstanding Disbursements under the Ex-Im
Line plus
twenty-five percent (25%) of the aggregate amount of Letter of
Credit Obligations may not exceed at any one time the
Export-Related Borrowing Base.
(iii) Twenty-five
percent (25%) of the aggregate amount of Letter of Credit
Obligations for Warranty Letters of Credit may not exceed the
amount of cash collateral pledged to the Bank to secure such
Warranty Letters of Credit.
(iv) Any
reserve for Warranty Letters of Credit established by the Bank
from the Export-Related Borrowing Base plus
the cash collateral pledged to the Bank to secure Warranty
Letters of Credit may not be less than one hundred percent
(100%) of the aggregate amount of Letter of Credit Obligations
for Warranty Letters of Credit.
2.2
Availability Period .
The
Ex-Im Line is available between the date of this Agreement and
the Final Disbursement Date, or such earlier date as the
availability may terminate as provided in this Agreement (the
“ Ex-Im
Line Expiration Date ”); provided
, however ,
if an Eligible Export-Related Account Receivable arising from
a Specific Export Order remains outstanding as of the Final
Disbursement Date and is due and payable after such date, the
Ex-Im Line Expiration Date with respect to such Eligible
Export-Related Accounts Receivable may be extended by written
notice from the Bank until on or before the first banking day
after such Export-Related Account Receivable is due and
payable; further
provided , however ,
in the event that the Final Disbursement Date is extended with
respect to a Letter of Credit outstanding as of the Final
Disbursement Date (as provided in the definition of “
Final
Disbursement Date ” above), the Ex-Im Line
Expiration Date with respect to such Letter of Credit may be
extended by written notice from the Bank until on or before
the first banking day after such extended Final Disbursement
Date.
2.3
Repayment Terms .
(a) The
Borrower will pay interest on April 28, 2008, and then on the
same day of each month thereafter until payment in full of any
principal outstanding under the Ex-Im Line.
(b) Within
two (2)
days of the receipt thereof, the Borrower shall pay to the
Bank (for application to the Ex-Im Line) all checks, drafts,
cash and other remittances the Borrower may receive in payment
or on account of the Export-Related Accounts Receivable or any
other Collateral, in precisely the form received (except for
the endorsement of the Borrower where
necessary). The Borrower will repay in full any
remaining principal, interest or other charges outstanding
under this facility no later than the Ex-Im Line Expiration
Date.
(c) The
Borrower may prepay the loan in full or in part at any
time. The prepayment will be applied to the most
remote payment of principal due under this
Agreement.
(d) If
at any time and for any reason the Export-Related Borrowing
Base is less than the aggregate outstanding amount of
Disbursements, the Borrower shall, upon the Bank's election
and demand, (i) furnish additional Collateral to the Bank of a
type and in an amount satisfactory to the Bank and Ex-Im Bank
or (ii) pay to the Bank an amount equal to the difference
between the aggregate outstanding amount of Disbursements and
the Export-Related Borrowing Base.
(e) Payments
under this Section 2.3 may be
applied to the obligations of the Borrower to the Bank in the
order and manner as the Bank in its discretion may
determine. Payments to be applied to outstanding
Letters of Credit and drafts accepted under Letters of Credit
may, at the Bank's option, be used to prepay, or held as cash
collateral to secure, the Borrower's obligations to the Bank
with respect thereto.
5
2.4
Interest Rate .
(a) The
interest rate is a rate per year equal to the BBA LIBOR Daily
Floating Rate plus one and one-half (1.50) percentage
point(s).
(b) The
BBA LIBOR Daily Floating Rate is a fluctuating rate of
interest equal to the rate per annum equal to the British
Bankers Association LIBOR Rate (“ BBA LIBOR
”), as published by Reuters (or other commercially
available source providing quotations of BBA LIBOR as selected
by the Bank from time to time) as determined for each banking
day at approximately 11:00 a.m. London time two (2) London
Banking Days prior to the date in question, for U.S. Dollar
deposits (for delivery on the first day of such interest
period) with a one month term, as adjusted from time to time
in the Bank’s sole discretion for reserve requirements,
deposit insurance assessment rates and other regulatory
costs. If such rate is not available at such time
for any reason, then the rate for that interest period will be
determined by such alternate method as reasonably selected by
the Bank. A “London Banking Day” is a
day on which banks in London are open for business and dealing
in offshore dollars.
2.5
Letters of Credit.
(a) During
the availability period, at the request of the Borrower, the
Bank will issue:
(i) Subject
to Ex-Im Bank's written consent, Standby Letters of Credit
with a maximum maturity not to extend more than 24 months
(24) beyond the date of issuance of such Letter of
Credit.
(ii) Subject
to Ex-Im Bank's written consent, Warranty Letters of Credit,
which shall have a maximum maturity not to extend more than
three hundred sixty-five (365) days beyond the date of
issuance of such Letter of Credit.
(b) Notwithstanding
anything to the contrary in this Section 2.5 , any Letter of Credit issued within
the final sixty (60) days of the Ex-Im Line Expiration Date
shall expire no later than the Ex-Im Line Expiration Date
unless otherwise agreed by the Bank and Ex-Im
Bank.
(c) The
aggregate amount of Letter of Credit Obligations supporting,
and Disbursements to fund drawings under, Warranty Letters of
Credit outstanding at any one time may not exceed the lesser
of (i) twenty percent (20%) of the Maximum Amount or (ii) Five
Hundred Thousand U.S. Dollars ($500,000).
(d) In
calculating the principal amount outstanding under the Ex-Im
Line Commitment, the calculation shall include the amount of
any Letters of Credit outstanding, including amounts drawn on
any Letters of Credit and not yet reimbursed. For
the avoidance of doubt, the amount of Letter of
Credit Obligations shall not bear interest until such amounts
are drawn upon.
(e) The
following Letters of Credit are outstanding from the Bank for
the account of the Borrower:
Letter of
Credit Number
Amount
3082184 $157,055.00
3082285 $2,110,831.00
3084035 $23,026.80
3089063 $43,760.00
3090338 $410,000.00
6
3091318 $178,580.00
3091664 $73,819.90
As
of the date of this Agreement, these Letters of Credit shall
be deemed to be outstanding under this Agreement, and shall be
subject to all the terms and conditions stated in this
Agreement.
(f) The
Borrower agrees:
(i) Any
sum drawn under a Letter of Credit may, at the
option of the Bank, be added to the principal amount
outstanding under this Agreement. The amount will
bear interest and be due as described elsewhere in this
Agreement.
(ii) If
there is a default under this Agreement, to immediately prepay
and make the Bank whole for any outstanding Letters of
Credit.
(iii) The
issuance of any Letter of Credit and any amendment to a Letter
of Credit is subject to the Bank's written approval and must
be in form and content satisfactory to the Bank and in favor
of a beneficiary acceptable to the Bank.
(iv) To
sign the Bank's form Application and Agreement for Standby
Letter of Credit, as applicable.
(v) To
pay any issuance and/or other fees that the Bank notifies the
Borrower will be charged for issuing and processing Letters of
Credit for the Borrower.
(vi) To
allow the Bank to automatically charge its checking account
for applicable fees, discounts, and other
charges.
(vii) To
pay the Bank a non-refundable fee equal to the greater of
Three Hundred U.S. Dollars ($300) or one and one-half percent
(1.5%) per annum of the outstanding undrawn amount of each
Standby Letter of Credit, payable quarterly in arrears,
calculated on the basis of the face amount outstanding on the
day the fee is calculated.
2.6
Unconditional Promise to Pay .
For
value received, the Borrower hereby unconditionally promises
to pay to the order of the Bank, in lawful money of the United
States, the principal sum of Three Million Five Hundred
Thousand U.S. Dollars ($3,500,000.00), or so much thereof, if
any, as may be disbursed pursuant to this Agreement, with
interest thereon from the date hereof (or the date of
disbursement if different from such date) at the interest rate
or rates stated herein, interest and principal to be paid as
set forth herein and all other sums payable pursuant to this
Agreement, including, but not limited to, any late
charges. The Borrower hereby waives presentment,
demand for payment, protest and notice of protest, notice of
dishonor, notice of acceleration, notice of intent to
accelerate and all other notices and formalities in connection
with this Section 2.6 of this Agreement.
4.1
Fees .
(a)
Ex-Im Bank
Fee . The Borrower agrees to pay the Bank
(i) an annual fee equal to one and one-half percent (1.5%) of
the Maximum Amount and (ii) the Ex-Im Bank application fee in
the amount of One Hundred U.S. Dollars
($100.00). These fees are due on or before the date
of this Agreement, and the annual fee is also due on the same
day of each year thereafter until the Ex-Im Line Expiration
Date.
7
(b)
Waiver
Fee . If the Bank, at its discretion, agrees
to waive or amend any terms of this Agreement, the Borrower
will, at the Bank's option, pay the Bank a fee for each waiver
or amendment in an amount advised by the Bank at the time the
Borrower requests the waiver or amendment. Nothing
in this paragraph shall imply that the Bank is obligated to
agree to any waiver or amendment requested by the
Borrower. The Bank may impose additional
requirements as a condition to any waiver or
amendment.
(c)
Late
Fee . To the extent permitted by law, the
Borrower agrees to pay a late fee in an amount not to exceed
four percent (4%) of any payment that is more than fifteen
(15) days late. The imposition and payment of a
late fee shall not constitute a waiver of the Bank’s
rights with respect to the default.
4.2
Expenses .
The
Borrower agrees to immediately repay the Bank for expenses
that include, but are not limited to, filing, recording and
search fees, appraisal fees, title report fees, and
documentation fees.
4.3
Reimbursement Costs .
(a) The
Borrower agrees to reimburse the Bank for any expenses it
incurs in the preparation of this Agreement and any agreement
or instrument required by this Agreement. Expenses
include, but are not limited to, reasonable attorneys' fees,
including any allocated costs of the Bank's in-house counsel
to the extent permitted by applicable law.
(b) The
Borrower agrees to reimburse the Bank for the cost of periodic
field examinations of the Borrower’s books, records and
collateral, and appraisals of the collateral, at such
intervals as the Bank may reasonably require. The
actions described in this paragraph may be performed by
employees of the Bank or by independent
appraisers.
5.1
Personal Property .
The
personal property listed below now owned or owned in the
future by the parties listed below will secure the
Borrower’s obligations to the Bank under this
Agreement. The collateral is further defined in
security agreement(s) executed by the owners of the
collateral. In addition, any other personal property
collateral (the “ Additional
Collateral ”) securing any other present or
future obligations of the Borrower to the Bank that are not
guaranteed under the Ex-Im Bank Guarantee (the “
Non-Ex-Im
Bank Indebtedness ”) shall also secure the
Borrower’s obligations under this Agreement; provided
, however ,
that the Additional Collateral shall be applied first to the
satisfaction of the Non-Ex-Im Bank Indebtedness and the
balance, if any, to the Borrower's obligations under the Ex-Im
Line.
(a) Equipment
and fixtures owned by the Borrower.
(b) Inventory
owned by the Borrower.
(c) Accounts
Receivables owned by the Borrower.
(d) Patents,
trademarks and other general intangibles owned by the
Borrower.
(e) Securities
and other investment property owned by GSE and by Power as
described in a pledge agreement required by the
Bank.
8
6.1
Disbursements and Payments .
(a) Each
payment by the Borrower will be made in U.S. Dollars and
immediately available funds by direct debit to a deposit
account as described in this Agreement or otherwise authorized
by the Borrower. For payments not made by direct
debit, payments will be made by mail to the address shown on
the Borrower’s statement or at one of the Bank’s
banking centers in the United States, or by such other method
as may be permitted by the Bank.
(b) The
Bank may honor instructions for advances or repayments given
by any one of the individuals authorized to sign loan
agreements on behalf of the Borrower, or any other individual
designated by any one of such authorized signers (each an
“ Authorized
Individual ”).
(c) For
any payment under this Agreement made by debit to a deposit
account, the Borrower will maintain sufficient immediately
available funds in the deposit account to cover each
debit. If there are insufficient immediately
available funds in the deposit account on the date the Bank
enters any such debit authorized by this Agreement, the Bank
may reverse the debit.
(d) Each
disbursement by the Bank and each payment by the Borrower will
be evidenced by records kept by the Bank. In
addition, the Bank may, at its discretion, require the
Borrower to sign one or more promissory notes.
(e) Prior
to the date each payment of principal and interest and any
fees from the Borrower becomes due (the “ Due Date ”),
the Bank will mail to the Borrower a statement of the amounts
that will be due on that Due Date (the “ Billed Amount
”). The calculations in the bill will be made
on the assumption that no new extensions of credit or payments
will be made between the date of the billing statement and the
Due Date, and that there will be no changes in the applicable
interest rate. If the Billed Amount differs from
the actual amount due on the Due Date (the “ Accrued Amount
”), the discrepancy will be treated as
follows:
(i) If
the Billed Amount is less than the Accrued Amount, the Billed
Amount for the following Due Date will be increased by the
amount of the discrepancy. The Borrower will not be
in default by reason of any such discrepancy.
(ii) If
the Billed Amount is more than the Accrued Amount, the Billed
Amount for the following Due Date will be decreased by the
amount of the discrepancy.
Regardless
of any such discrepancy, interest will continue to accrue
based on the actual amount of principal outstanding without
compounding. The Bank will not pay the Borrower
interest on any overpayment.
6.2
Requests for Credit; Equal Access by all Borrowers
.
Any
Borrower (or a person or persons authorized by any one of the
Borrowers), acting alone, can borrow up to the full amount of
credit provided under this Agreement. Each Borrower
will be liable for all extensions of credit made under this
Agreement to any other Borrower.
6.3
Telephone and Telefax Authorization .
(a) The
Bank may honor telephone or telefax instructions for advances
or repayments and telefax requests for the issuance of letters
of credit given, or purported to be given, by any one of the
Authorized Individuals.
9
(b) Advances
will be deposited in and repayments will be withdrawn from
account number 003927991969 owned by the Borrower,
or such other of the Borrower’s accounts with the Bank
as designated in writing by the Borrower.
(c) The
Borrower will indemnify and hold the Bank harmless from all
liability, loss, and costs in connection with any act
resulting from telephone or telefax instructions the Bank
reasonably believes are made by any Authorized
Individual. This paragraph will survive this
Agreement's termination, and will benefit the Bank and its
officers, employees, and agents.
6.4
Direct Debit.
The
Borrower agrees that on the Due Date the Bank will debit the
Billed Amount from deposit account number 003927991969 owned
by the Borrower, or such other of the Borrower’s
accounts with the Bank as designated in writing by the
Borrower (the “ Designated Account
”).
6.5
Banking Days .
Unless
otherwise provided in this Agreement, a banking day is a day
other than a Saturday, Sunday or other day on which commercial
banks are authorized to close, or are in fact closed, in the
state where the Bank's lending office is located, and, if such
day relates to amounts bearing interest at an offshore rate
(if any), means any such day on which dealings in dollar
deposits are conducted among banks in the offshore dollar
interbank market. All payments and disbursements
which would be due on a day which is not a banking day will be
due on the next banking day. All payments received
on a day which is not a banking day will be applied to the
credit on the next banking day.
6.6
Interest Calculation .
Except
as otherwise stated in this Agreement, all interest and fees,
if any, will be computed on the basis of a 360-day year and
the actual number of days elapsed. This results in
more interest or a higher fee than if a 365-day year is
used. Installments of principal which are not paid
when due under this Agreement shall continue to bear interest
until paid. As used in this paragraph,
“principal” shall not include undrawn amounts
under a Letter of Credit.
6.7
Default Rate .
Upon
the occurrence of any default or after maturity or after
judgment has been rendered on any obligation under this
Agreement, all amounts outstanding under this Agreement,
including any interest, fees, or costs which are not paid when
due, will at the option of the Bank bear interest at a rate
which is 4.0 percentage point(s) higher than the rate of
interest otherwise provided under this
Agreement. This may result in compounding of
interest. This will not constitute a waiver of any
default.
6.8
Taxes .
(a) If
any payments to the Bank under this Agreement are made from
outside the United States, the Borrower will not deduct any
foreign taxes from any payments it makes to the Bank unless
required to do so by applicable law. If any such
taxes are imposed on any payments made by the Borrower
(including payments under this paragraph), the Borrower will
pay the taxes and will also pay to the Bank, at the time
interest is paid, any additional amount which the Bank
specifies as necessary to preserve the after-tax yield the
Bank would have received if such taxes had not been
imposed. The Borrower will confirm that it has paid
the taxes by giving the Bank official tax receipts (or
notarized copies) within thirty (30) days after the due
date.
(b) Payments
made by the Borrower to the Bank will be made without
deduction of United States withholding or similar
taxes. If the Borrower is required to pay U.S.
withholding taxes, the Borrower will pay such taxes in
addition to the amounts due to the Bank under this
Agreement. If the Borrower fails to make such tax
payments when due, the Borrower indemnifies the Bank against
any liability for such taxes, as well as for any related
interest, expenses, additions to tax, or penalties asserted
against or suffered by the Bank with respect to such
taxes.
10
6.9
Payments in Kind .
If
the Bank requires delivery in kind of the proceeds of
collection of the Borrower's accounts receivable, such
proceeds shall be credited to interest, principal, and other
sums owed to the Bank under this Agreement in the order and
proportion determined by the Bank in its sole
discretion. All such credits will be conditioned
upon collection and any returned items may, at the Bank's
option, be charged to the Borrower.
Before
the Bank is required to extend any credit to the Borrower
under this Agreement, it must receive any documents and other
items it may reasonably require, in form and content
acceptable to the Bank, including any items specifically
listed below.
7.1
Authorizations .
Evidence
that the execution, delivery and performance by the Borrower
of this Agreement and any instrument or agreement required
under this Agreement have been duly authorized.
7.2
Governing Documents .
A
copy of the Borrower's organizational documents.
7.3
Security Agreements .
Signed
original security agreements covering the personal property
collateral which the Bank requires.
7.4
Guaranties .
Guaranties
signed by each Guarantor.
7.5
Perfection and Evidence of Priority .
Evidence
that the security interests and liens in favor of the Bank are
valid, enforceable, properly perfected in a manner acceptable
to the Bank and prior to all others' rights and interests,
except those the Bank consents to in writing.
7.6
Payment of Fees .
Payment
of all fees and other amounts due and owing to the Bank,
including without limitation the Ex-Im Bank Guarantee fee, the
Ex-Im Bank Application fee as required by the paragraph
entitled “ Fees ” and
payment of all accrued and unpaid expenses incurred by the
Bank as required by the paragraph entitled “ Reimbursement
Costs .”
7.7
Repayment of Other Credit Agreement .
Evidence
that the existing Five Million U.S. Dollar ($5,000,000)
revolving line of credit with Laurus Master Fund Ltd. has been
or will be repaid and cancelled on or before the first
extension of credit under this Agreement.
11
7.8
Good Standing .
Certificates
of good standing for the Borrower from its state of formation
and from any other state in which the Borrower is required to
qualify to conduct its business.
7.9
[Intentionally Omitted] .
7.10
Landlord Agreement .
For
any personal property collateral located on real property
which is subject to a mortgage or deed of tru
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