Exhibit 10.19
UNCONDITIONAL GUARANTY
THIS UNCONDITIONAL GUARANTY (this "Guaranty") is made as of the _____ day
of January, 1999 by GSE SYSTEMS, INC., a Delaware corporation (the "Guarantor"),
in favor of FIRST UNION NATIONAL BANK (the "Lender," which term shall include
any subsequent holder of the Notes (as defined below)).
Recitals
A. $7,000,000 GSE Power Line of Credit
A-1. The Lender extended a line of credit in the original principal amount
of $7,000,000 (the "GSE Power Line of Credit") to GSE Power Systems, Inc. (f/k/a
Simulation, Systems & Services Technologies Company), a Delaware corporation
("GSE Power") and MSHI, INC., a Virginia corporation ("MSHI") pursuant to a
Letter of Credit, Loan and Security Agreement dated January 30, 1996, as amended
from time to time (the "GSE Power Line of Credit Agreement"). The GSE Power Line
of Credit is evidenced by a Promissory Note dated January 30, 1996 in the
original principal amount of $7,000,000, as amended from time to time (the "GSE
Power Line of Credit Note").
A-2. Pursuant to the GSE Power Line of Credit Agreement, the Lender also
agreed to issue from time to time, subject to the provisions thereof, letters of
credit. In connection therewith, GSE Power and MSHI entered into separate Master
Letter of Credit Agreements dated January 30, 1996, in favor of the Lender (the
"GSE Power Letter of Credit Agreements").
A-3. The GSE Power Line of Credit Agreement, the GSE Power Line of Credit
Note, the GSE Power Letter of Credit Agreements and all other documents
evidencing, securing, guaranteeing or otherwise related to the GSE Power Line of
Credit are collectively called the "GSE Power Loan Documents".
A-4. As of December 18, 1998, exclusive of any amounts which may become due
in connection with the GSE Power Letter of Credit Agreements, there is due under
the GSE Power Line of Credit principal of Five Million Eight Hundred Thousand
Nine Hundred and 00/100 Dollars ($5,800,900.00) and interest of Twenty-Three
Thousand Six Hundred Fifty-Five and 00/100 Dollars ($23,655.00), plus attorneys'
fees and other costs which are payable under the GSE Power Loan Documents.
A-5. Pursuant to Article III of the GSE Power Line of Credit Agreement, and
included within the maximum amount available to be borrowed by GSE Power and
MSHI under the GSE Power Line of Credit, there is outstanding Letter of Credit
No. SM406588 in the face amount of $180,243 issued by the Lender for the benefit
of Central Trust of China Procurement Department (the "GSE Power Letter of
Credit").
B. $3,000,000 GSE Process Line of Credit
B-1. The Lender extended a line of credit in the original principal amount
of $7,000,000 (subsequently reduced to $3,000,000) (the "GSE Process Line of
Credit") to GSE Process Solutions, Inc., a Delaware corporation ("GSE Process"),
pursuant to a Letter of Credit, Loan and Security Agreement dated January 31,
1995, as amended and restated by an Amended and Restated Letter of Credit, Loan
and Security Agreement dated October 13, 1995, as amended by an Amendment Number
One to Amended and Restated Letter of Credit, Loan and Security Agreement and
Promissory Note dated February 23, 1996 ("Amendment Number One") and by an
Amendment Number Two to Amended and Restated Letter of Credit, Loan and Security
Agreement and Promissory Note dated November 11, 1997 ("Amendment Number Two")
(collectively, the "GSE Process Line of Credit Agreement"). The GSE Process Line
of Credit is evidenced by a Promissory Note dated October 13, 1995 in the
original principal amount of $7,000,000 (which replaces a Promissory Note dated
January 31, 1995 in the original principal amount of $6,000,000), as amended by
Amendment Number One and by Amendment Number Two (collectively, the "GSE Process
Line of Credit Note")
B-2. Pursuant to the GSE Process Line of Credit Agreement, the Lender also
agreed to issue from time to time, subject to the provisions thereof, letters of
credit. In connection therewith, GSE Process entered into a Master Letter of
Credit Agreement dated January 31, 1995, in favor of the Lender (the "GSE
Process Letter of Credit Agreement").
B-3. The GSE Process Line of Credit Agreement, the GSE Process Line of
Credit Note, the GSE Process Letter of Credit Agreement and all other documents
evidencing, securing, guaranteeing or otherwise related to the GSE Process Line
of Credit are collectively called the "GSE Process Loan Documents."
B-4. As of December 18, 1998, exclusive of any amounts which may become due
in connection with the GSE Process Letter of Credit Agreement, there is due
under the GSE Process Line of Credit principal of Zero and 00/100 Dollars ($-0-)
and interest of One Thousand One Hundred Ten and 52/100 Dollars ($1,110.52),
plus attorneys' fees and other costs which are payable under the GSE Process
Loan Documents.
B-5. Pursuant to Article III of the GSE Process Line of Credit Agreement,
and included within the maximum amount available to be borrowed by GSE Process
under the GSE Process Line of Credit, there is outstanding Letter of Credit No.
405600 in the face amount of $630,000 issued by the Lender for the benefit of
0000 Xxxxxxxx Xxxxxxxxx, LLC (the "GSE Process Letter of Credit").
C. GSE Power, MSHI and GSE Process are called the "Borrowers." The GSE
Power Line of Credit and the GSE Process Line of Credit are called the "Lines of
Credit." The GSE Power Letter of Credit and the GSE Process Letter of Credit
(and any replacement for such Letter of Credit issued pursuant to the
Modification Agreement (as defined below)), together with any other Letters of
Credit which may be issued by the Lender pursuant to the terms of the Letter of
Credit Agreements, as amended by this Agreement, are collectively called the
"Letters of Credit." The GSE Power Line of Credit Note, the GSE Process Line of
Credit Note, the GSE Power Letter of Credit Agreements and the GSE Process
Letter of Credit Agreement are called the "Notes." The Notes and all other
documents evidencing, securing, guaranteeing or otherwise related to the Lines
of Credit or the Letters of Credit, including any modifications, restatements,
extensions, renewals and replacements thereof, are collectively called the "Loan
Documents," which term shall also include the Modification Agreement (as defined
below).
D. GSE Power, MSHI, GSE Process, the Guarantor, the Lender and others have
entered into a Modification Agreement of even date herewith (the "Modification
Agreement"), pursuant to which the Guarantor agreed to execute this Guaranty.
NOW, THEREFORE, WITNESSETH, in consideration of the agreement of the Lender
to enter into the Modification Agreement, the Guarantor hereby covenants and
agrees as follows:
The undersigned hereby guarantees to the Lender that payment of principal,
interest, late charges and any other sums payable under the Notes shall be made
according to the terms of the Notes without deduction by reason of any set-off,
defense or counterclaim, irrespective of any invalidity therein, the
unenforceability thereof or the insufficiency, invalidity or unenforceability of
any security therefor, and hereby unconditionally consent to the terms,
covenants and conditions of the Notes and the other Loan Documents; and hereby
consents, without notice to the undersigned, to the extension, in whole or in
part from time to time, whether or not for a term in excess of the original
term, of the payment of the Notes; and agrees in case the dates of payment of
the Notes shall be extended in whole or in part, that all moneys due thereunder
shall be paid when due according to such extension or extensions; and further
consents to the waiving or amendment by the Lender of any term, covenant or
condition of the Notes or the other Loan Documents or of any indulgence or
release granted thereunder; and further consents to any changes or alterations
which may be made in any term, covenant or condition of the Loan Documents; and
agrees that no change, alteration, modification, renewal, or extension of any of
the Loan Documents shall alter or affect the liability of the Guarantor
hereunder; and further consents to the release of any collateral the Lender may
have under the Loan Documents or to the subordination of the Loan or the
collateral securing the Loan to any other debt or security interest under such
terms and conditions as the Lender may agree to in its sole and absolute
discretion; and further hereby waives presentment, demand of payment from the
maker, protest and notice of nonpayment.
If the Borrowers shall fail to make any payment of any sum due under the
Notes, or if the Borrowers shall default in any term, covenant or condition of
the Loan Documents, then the undersigned hereby unconditionally guarantees to
the Lender that the undersigned shall (without first requiring the Lender to
proceed against the Borrowers, or any other security) (1) pay to the Lender the
entire unpaid balance with interest and costs, and (2) cure any default in any
term, covenant or condition of the Loan Documents. The undersigned further
agrees to indemnify and hold harmless, the Lender from any loss (including
actual attorneys' fees) resulting from any default made at any time by the
Borrowers in any terms of the Loan Documents or by the undersigned under the
terms of this Guaranty.
The undersigned hereby waives notice of acceptance of this Guaranty by the
Lender and any and all notices and demands of every kind and description which
may be required to be given by any statute or rule of law, and agree that the
liability of the undersigned hereunder shall in no way be affected, diminished
or released by any forbearance which may be granted to the Borrowers (or to any
successor to it or to any person or entity which shall have assumed the
obligations of the Borrowers under the Notes) or by any waiver of any term,
covenant or condition in the Loan Documents by the Lender or by reason of any
change or modification in any of the Loan Documents, or by the acceptance of
additional security or the release by the Lender of any security or of any
person or entity primarily or secondarily liable.
The Guarantor agrees that this Guaranty may be enforced by the Lender
without the necessity at any time of resorting to or exhausting any other
security or collateral and without the necessity at any time of having recourse
to the Notes or enforcing any rights it may have against any other person or
entity. The undersigned further agrees that nothing herein contained shall
prevent the Lender from suing on the Notes or from exercising any other right
available to it under the Notes or any of the other Loan Documents or against
any other person or entity, and the exercise of any of the aforementioned rights
shall not constitute a legal or equitable discharge of the undersigned, it being
the purpose and intent of the undersigned that his/her or its obligations under
this Guaranty shall be absolute and unconditional under any and all
circumstances and s/he or it shall be released therefrom only upon payment of
all sums due hereunder and under the Notes and the other Loan Documents.
This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment is rescinded or must otherwise be returned by
the Lender upon the insolvency, bankruptcy or reorganization of the Borrowers or
otherwise, all as though such payment had not been made.
Any indebtedness of the Borrowers to the Guarantor, now or hereafter
existing, is hereby subordinated to the indebtedness of the Borrowers to the
Lender. The Guarantor agrees that, after a default (including the expiration of
any applicable cure period) in any term, covenant, or condition of the Notes or
the other Loan Documents and until the indebtedness of the Borrowers to the
Lender has been paid in full, the Guarantor will not seek, accept, or retain for
the Guarantor's own account, any payment from the Borrowers on account of such
subordinated debt. Following a default (including the expiration of any
applicable cure period) in any term, covenant, or condition of the Notes or the
other Loan Documents, any payments to the Guarantor on account of such
subordinated debt shall be collected and received by the Guarantor in trust for
the Lender and shall be paid over to the Lender on account of the indebtedness
of the Borrowers to the Lender without impairing or releasing the obligations of
the Guarantor hereunder. Until ninety-five (95) days after the indebtedness of
the Borrowers to the Lender has been paid in full, the Guarantor hereby
unconditionally and irrevocably agrees that (1) the Guarantor will not at any
time assert against the Borrowers (or the Borrowers' estate in the event the
Borrowers becomes bankrupt or becomes the subject of any case or proceeding
under the bankruptcy laws of the United States of America) any right or claim to
indemnification, reimbursement, contribution, or payment for or with respect to
any and all amounts the Guarantor may pay or be obligated to pay the Lender,
including, without limitation, the indebtedness of the Borrowers to the Lender,
and any and all obligations which the Guarantor may perform, satisfy, or
discharge, under or with respect to this Guaranty and (2) the Guarantor waives
and releases all such rights and claims to indemnification, reimbursement,
contribution, or payment which the Guarantor may have now or at any time against
the Borrowers (or the Borrowers' estate in the event the Borrowers becomes
bankrupt or becomes the subject of any case or proceeding under the bankruptcy
laws of the United States of America).
The undersigned hereby authorizes any clerk of any court of record or any
attorney to enter in any court of competent jurisdiction in the State of
Maryland or any other State or Territory of the United States judgment by
confession against the undersigned in favor of the Lender for the entire
principal amount of the Notes then remaining unpaid with interest thereon,
together with attorneys' fees of fifteen percent (15%) and court costs, without
stay of execution or right of appeal expressly waiving the benefit of all
exemption laws and all irregularity or error in entering said judgment or the
execution thereon. No single exercise of the foregoing power to confess judgment
shall be deemed to exhaust the power, whether or not any such exercise shall be
held by any court to be invalid, voidable or void, but the power shall continue
undiminished, and it may be exercised from time to time as often as the Lender
shall elect, until such time as the Lender shall have received payment in full
of all indebtedness of the Borrowers to the Lender together with costs and
indebtedness of the undersigned under this Guaranty. Notwithstanding the
Lender's right to obtain a confessed judgment which includes an award of
attorneys' fees of 15% of the unpaid principal sum, the Lender agrees that at
such time as all indebtedness under the Notes is fully paid, the Lender shall
only be entitled to recover its actual attorneys fees and expenses incurred in
connection with the Notes.
The undersigned hereby waives all right to trial by jury of all claims,
defenses, counterclaims and suits of any kind arising from or relating to this
Guaranty. The undersigned acknowledges that s/he or it makes this waiver
voluntarily and knowingly after consultation with counsel of his/her or its
choice. The undersigned agrees that all such claims, defenses, counterclaims and
suits shall be tried before a judge of competent jurisdiction, without a jury.
All laws exempting real or personal property from execution, and
inquisition and extension upon any levy on real or personal property are hereby
waived and condemnation agreed to, and no benefit of exemption will be claimed
under or by virtue of any exemption law now in force or which hereafter may be
passed.
The undersigned hereby waives promptness, diligence, notice of acceptance
and any other notice with respect to any of the terms, covenants or conditions
of this Guaranty or any of the other Loan Documents and any requirement that the
Lender protect, secure, perfect or insure any security interest or lien or any
property subject thereto or exhaust any right or take any action against the
Borrowers or any other person or entity or any collateral.
Notwithstanding anything to the contrary herein, the Lender agrees to
notify the undersigned upon the occurrence of an Event of Default (as defined in
the Modification Agreement).
The undersigned hereby requests the Lender, if it wishes to send any notice
to the undersigned, although all notices and demands have been waived except as
set forth in the immediately preceding paragraph, to send such notice to the
undersigned at 0000 Xxx Xxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention:
Xxxxxxx X. Xxxxxxx.
The undersigned hereby acknowledges, consents and agrees (1) that the
provisions of this Guaranty and the rights of all parties mentioned herein shall
be governed by the laws of the State of Maryland and interpreted and construed
in accordance with such laws (excluding Maryland conflict of laws) and (2) that
the United States District Court for the District of Maryland and any court of
competent jurisdiction of the State of Maryland shall have jurisdiction in any
proceeding instituted to enforce this Guaranty, and any objections to venue are
hereby waived.
A default (including the expiration of any applicable cure period) in any
term, covenant, or condition of the Notes or the other Loan Documents shall
constitute and be deemed a default under this Guaranty.
Upon a default under this Guaranty, including the expiration of any
applicable grace or cure periods, the Lender may, at its option and without
notice or demand, declare an amount equal to the remainder of the Borrowers'
obligations under the Loan Documents to be immediately due and payable by the
Guarantor, whether or not the same are due and payable by the Borrowers at that
time. The books and records of the Lender showing the amount due by the
Borrowers shall be binding upon the Guarantor for the purpose of establishing
such items and shall be prima facie proof thereof. The Guarantor agrees to pay
the Lender's actual attorneys' fees and all other costs and expenses which may
be incurred by the Lender in the enforcement of this Guaranty, whether or not
suit is filed.
The rights, powers, privileges and discretions (the "rights") to which the
Lender may be entitled hereunder shall inure to the benefit of its successors
and assigns. All the rights of the Lender are cumulative and not alternative and
may be enforced successively or concurrently. Failure of the Lender to exercise
any of its rights shall not be deemed a waiver thereof and no waiver of any of
its rights shall be deemed to apply to any other rights nor shall it be
effective unless in writing and signed by the Lender. The terms, covenants and
conditions of or imposed upon the undersigned herein shall be binding upon
his/her or its personal representatives, successors and assigns.
In case any provision (or any part of any provision) contained in this
Guaranty shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision (or remaining part of the affected provision) of this
Guaranty but this Guaranty shall be construed as if such invalid, illegal or
unenforceable provision (or part thereof) had never been contained herein but
only to the extent it is invalid, illegal or unenforceable.
This Guaranty replaces and supercedes all prior guaranties made by the
undersigned.
Time is of the essence.
IN WITNESS WHEREOF, the undersigned has executed this Guaranty under seal
effective as of the date first above written.
WITNESS/ATTEST: GSE SYSTEMS, INC.
By:/S/ XXXXXXX X. XXXXXXX (SEAL)
----------------------------------- --------------------------------
Name: Xxxxxxx X. Xxxxxxx
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Title: Senior Vice President
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STATE OF ______________________
SS:
CITY/COUNTY OF _______________
I HEREBY CERTIFY that on this __________ day of ___________, 19____, before
me, the undersigned officer, personally appeared ____________________, who
acknowledged himself/herself to be the ____________________ of GSE Systems,
Inc., and that (s)he, in such capacity, being authorized to do so, executed the
foregoing instrument for the purposes therein contained, by signing the name of
GSE Systems, Inc., as ____________________ of GSE Systems, Inc.
IN WITNESS WHEREOF, I hereunto set my hand and Notarial Seal.
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Notary Public
My Commission expires:
