Item 1.01. Entry Into a Material Definitive Agreement.
On March 29, 2019, 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 Generate Lending, LLC, a Delaware limited liability company (Lender), pursuant to which Lender agreed to make available to the Company a secured term loan facility in the amount of $100 million (the Term Loan Facility), subject to certain terms and conditions. The Company borrowed $85 million under the Loan Agreement on the date of closing. Pursuant to the Loan Agreement Amendment (as defined below) the Lender advanced an additional $10 million on April 2, 2019. In addition, pursuant to the Loan Agreement Amendment the Lender will advance an additional $5 million on or before April 12, 2019 subject to no default or event of default. The initial proceeds of the loan were used to (i) pay in full the Companys obligations of $17.6 million under the loan and security agreement, dated as of July 21, 2017, by and among the Company, Emerging, Emergent and NY Green Bank, a Division of the New York State Energy Research & Development Authority (the GreenBank Loan Agreement) and (ii) terminate $50.3 million of certain equipment leases with Generate Plug Power SLB II, LLC and repurchase the associated leased equipment. The collective balance of $32.1 million in loan proceeds will be used to fund working capital for ongoing deployments and other general corporate purposes of the Company.
Advances under the Term Loan Facility bear interest at a rate of 12.00% per annum. The Loan Agreement includes covenants, limitations, and events of default customary for similar facilities. The Term Loan Facility has a maturity date of December 13, 2022 (the Maturity Date). The principal and interest of the loan will be largely serviced with the release of the Companys restricted cash.
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. The Company may also be required to pay the Lender additional fees of up to $1,500,000 if the Company is unable to meet certain goals related to the entering into structured project financing arrangements with the Lender prior to December 31, 2021.
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, (ii) restrictions on incurring debt, granting liens, making acquisitions, making loans, paying dividends, dissolving, and entering into leases and asset sales and (iii) compliance with a collateral coverage covenant based on third party valuation. The Loan Agreement also provides for customary events of default, including, among others, payment, bankruptcy, covenant, representation and warranty, change of control and judgment 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.
The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the Loan Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
On March 29, 2019, the Company and its subsidiaries, Emerging and Emergent, entered into an amendment to the Loan Agreement (the Loan Agreement Amendment) with Lender, pursuant to which the additional $15 million to
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