Item 1.01. Entry Into a Material Definitive Agreement.
On December 23, 2016, Plug Power Inc., a Delaware corporation (the Company), and its subsidiaries Emerging Power Inc., a Delaware corporation (Emerging), and Emergent Power Inc., a Delaware corporation (Emergent), entered into a loan and security agreement (the Loan Agreement) with NY Green Bank, a Division of the New York State Energy Research & Development Authority (Lender), pursuant to which Lender agreed to make available to the Company a secured term loan facility in the amount of $25 million (the Term Loan Facility), subject to certain terms and conditions. The Company borrowed $25 million under the Loan Agreement on the date of closing.
Advances under the Term Loan Facility bear interest at a rate equal to the sum of (i) the LIBOR rate for the applicable interest period, plus (ii) the credit default swap index coupon for the applicable interest period, plus (iii) 6.00% per annum. The Loan Agreement includes covenants, limitations, and events of default customary for similar facilities. The term of the Loan Agreement is three years, with a maturity date of December 23, 2019 (the Maturity Date).
Interest and a portion of the principal amount is payable on a quarterly basis and the entire then outstanding principal balance of the Term Loan Facility, together with all accrued and unpaid interest, is due and payable on the Maturity Date. On the Maturity Date, the Company may also be required to pay the Lender additional fees of up to $1.0 million if the Company is unable to meet certain goals related to the deployment of fuel cell systems in the State of New York and increasing the Companys number of full-time employees in the State of New York.
All obligations under the Loan Agreement are unconditionally guaranteed by Emerging and Emergent. The Term Loan Facility is secured by substantially all of the Companys and the guarantors assets, including, among other assets, all intellectual property, all securities in domestic subsidiaries and 65% of the securities in foreign subsidiaries, subject to certain exceptions and exclusions.
The Loan Agreement contains customary covenants for transactions of this type and other covenants agreed to by the parties, including, among others, (i) the provision of annual and quarterly financial statements, management rights and insurance policies and (ii) restrictions on incurring debt, granting liens, making acquisitions, making loans, paying dividends, dissolving, and entering into leases and asset sales. The Loan Agreement also provides for customary events of default, including, among others, payment, bankruptcy, covenant, representation and warranty, change of control, judgment and material adverse effect defaults.
The Loan Agreement provides that if there is an event of default due to the Companys insolvency or if the Company fails to perform in any material respect the servicing requirements for fuel cell systems under certain customer agreements, which failure would entitle the customer to terminate such customer agreement, replace the Company or withhold the payment of any material amount to the Company under such customer agreement, then the Lender has the right to cause Proton Services Inc., a wholly owned subsidiary of the Company, to replace the Company in performing the maintenance services under such customer agreement.
2