Exhibit 99.2
BONDING SUPPORT AGREEMENT
This Bonding Support Agreement (the "Agreement") is entered into as of
May 22, 2003 by and between Northern Power Systems, Inc., a corporation
organized under the laws of Delaware (the "Company") and Proton Energy Systems,
Inc., a corporation organized under the laws of Delaware (the "Guarantor").
WHEREAS, in the transaction of its activities (including but not limited
to engineering, procurement and construction activities), the Company is
required from time to time to provide its customers or suppliers with bonds or
letters of credit (together, the "Bonds") issued by third parties (the
"Sureties"), to secure the Company's contractual and/or payment performance;
WHEREAS, in connection with the issuance of such Bonds, the Company is
required to enter into reimbursement or general indemnity agreements, examples
of which are attached as Exhibit A-1 and A-2 hereto (the "Reimbursement
Agreements"), with such Sureties, whereby the Company agrees to pay the Surety
amounts sufficient to reimburse such Surety for claims made upon any Bonds
issued by such Surety, as well as other obligations of the type set forth in
Exhibit A-1 and A-2 hereto, and may be required to post cash or other collateral
to secure its obligations under such Reimbursement Agreements; and
WHEREAS, the Company and the Guarantor have entered into a Letter of
Intent in respect of a possible transaction between the parties, and, in
connection with such Letter of Intent, the Guarantor has agreed to provide
credit support through December 31, 2003 in an amount not to exceed $2 million
to the Company in respect of such Reimbursement Agreements to induce Sureties to
issue from time to time Bonds on behalf of the Company (each a "Guaranty" and
together the "Guaranties").
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor and the Company hereby agree as follows:
1. Guaranties. Subject to the terms and conditions contained herein,
from time to time after the date hereof but prior to December 31, 2003, upon
written request of the Company, the Guarantor will promptly execute and deliver
one or more Guaranties in favor of one or more Sureties which may be of varying
amounts (not to exceed $2 million in the aggregate) as specified by the Company,
in substantially the form attached as Exhibit B hereto. Guarantor shall only be
obligated to post cash in support of the guaranteed obligations if the same is
demanded by any Surety, provided Company shall only be entitled to disclose this
Agreement to any Sureties pursuant to Section 10(f) hereof. The aggregate amount
of Guaranties outstanding at any time shall not exceed $2 million and the
commitment of the Guarantor under such Guaranties shall not extend beyond
December 31, 2003.
2. Requests for Guaranties. The Company may from time to time
request a Guaranty to be issued by providing the Guarantor a notice, not less
than five (5) business days
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prior to the requested issuance date for such Guaranty, specifying (i) the
amount of the requested Guaranty, (ii) the Surety to which such Guaranty is to
be issued, (iii) the requested execution and delivery date of the Guaranty, and
(iv) a copy of the applicable unexecuted Reimbursement Agreement and the
applicable unexecuted Bond which shall both be substantially in their final
form. Each Guaranty will be issued by the Guarantor by executing and delivery
such Guaranty in substantially the form attached as Exhibit B hereto and as
directed in writing by the Company.
3. Term of Guaranties. The obligations of the Guarantor hereunder to
execute and deliver Guaranties and, unless otherwise agreed to in writing by the
Guarantor, the term of any obligation of the Guarantor under any such Guaranty,
shall expire no later than the close of business on December 31, 2003.
4. Payment of Obligations. The Company agrees to pay to the Sureties,
when due and payable, in accordance with the terms set forth in the respective
Reimbursement Agreement between the Company and the Sureties, the amount of any
and all of the obligations or amounts guaranteed pursuant to the respective
Reimbursement Agreement. The Company agrees that the terms of any Reimbursement
Agreement for which Guarantor is obligated to deliver a Guaranty shall have
terms substantially consistent with the express provisions of this Agreement.
5. Repayment Obligations. The Company acknowledges that from and
after the time that the Guarantor makes any payment to any Surety under a
Guaranty, the Company shall be obligated to immediately repay the Guarantor for
the amount of such payments (the "Repayment Obligations"). The Repayment
Obligations payable to the Guarantor shall be paid by wire transfer to the
account specified by the Guarantor when payments are due.
6. Default Interest. Interest shall accrue daily on the Repayment
Obligations until paid at a rate equal to 6% per annum, based upon a 360-day
year and actual days elapsed.
7. Payment of Expenses. The Company shall pay: (i) the Guarantor's
reasonable attorneys' fees and expenses and other reasonable out-of-pocket
expenses and costs incurred in connection with the negotiation, documentation
and administration of the Guaranties, including without limitation any fees
charged by banks or other institutions and (ii) reasonable costs and expenses
(including, without limitation, out-of-pocket attorneys' fees and expenses) of
collection of the Repayment Obligations.
8. General Indemnity. The Company hereby agrees to indemnify the
Guarantor and hold it harmless from and against any and all claims, damages,
liabilities and reasonable expenses (including fees and disbursements of counsel
with whom it may consult in connection therewith and all reasonable expenses of
litigation or preparation therefor) which the Guarantor may incur or which may
be asserted against the Guarantor in connection with this Agreement, any
Guaranty or any transaction contemplated hereby or thereby; provided, however,
that the foregoing indemnity shall not apply to any and all claims, damages,
liabilities and expenses resulting from any claims commenced (i) by the Company
against the Guarantor and arising out of or resulting from any breach by the
Guarantor of the obligations under this Agreement or (ii) by any Surety under
any Guaranty arising out of or resulting from any breach by the Guarantor of its
obligations under any Guaranty.
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9. No Legal Obstacle to Agreements.
(a) The Company. Neither the execution and delivery of this
Agreement or any Guaranty, nor the consummation of any transaction
referred to in or contemplated by this Agreement, nor the fulfillment of
the terms hereof or of any other agreement or instrument contemplated by
this Agreement, has constituted or resulted in or will constitute or
result in the violation of any law, statute, judgment, decree or
governmental order, rule or regulation applicable to the Company. No
approval, authorization or other action by, or declaration to or filing
with, any governmental or administrative authority or any other person or
entity is required to be obtained or made by the Company in connection
with the execution, delivery and performance of this Agreement, the
transactions contemplated hereby, or execution and delivery of Guaranties
in connection hereto.
(b) The Guarantor. Neither the execution and delivery of this
Agreement or any Guaranty, nor the consummation of any transaction
referred to in or contemplated by this Agreement, nor the fulfillment of
the terms hereof or of any other agreement or instrument contemplated by
this Agreement, has constituted or resulted in or will constitute or
result in the violation of any law, statute, judgment, decree or
governmental order, rule or regulation applicable to the Guarantor. No
approval, authorization or other action by, or declaration to or filing
with, any governmental or administrative authority or any other person or
entity is required to be obtained or made by the Guarantor in connection
with the execution, delivery and performance of this Agreement, the
transactions contemplated hereby, or execution and delivery of Guaranties
in connection hereto.
10. Miscellaneous.
(a) Notices. All notices, requests, demands, claims and other
communications required or permitted to be delivered, given or otherwise
provided under this Agreement must be in writing and must be delivered,
given or otherwise provided:
(i) by hand (in which case, it will be effective upon
delivery);
(ii) by facsimile (in which case, it will be effective
upon receipt of confirmation of good transmission);
or
(iii) by overnight delivery by a nationally recognized
courier service (in which case, it will be effective
on the business day after being deposited with such
courier service);
in each case, to the address (or facsimile number) listed below:
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The Company: Northern Power Systems, Inc.
X.X. Xxx 000
Xxxxxxxxxx, XX 00000
Attention: President
Facsimile: (000) 000-0000
The Guarantor: Proton Energy Systems, Inc.
00 Xxxxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: President
Facsimile: (000) 000-0000
(b) Entire Agreement. This Agreement (including without
limitation Exhibit X-0, X-0 and B hereto) sets forth the entire agreement
and understanding among the parties and supersedes any prior written
agreement or understanding and any prior or contemporaneous oral
agreement or understanding relating to the subject matter hereof.
(c) Further Assurances. Each of the Company and the Guarantor
shall take such action, as they shall each from time to time reasonably
request of the other, to effect the purposes of this Agreement, including
without limitation the execution and delivery of the Guaranties, as
requested in accordance with the terms herein.
(d) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective successors and permitted
assigns of the parties hereto, provided that this Agreement may not be
assigned by any party without the prior written consent of the other
party.
11. Severability. If any portion or provision of this Agreement shall
to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the application of such portion or provision in circumstances
other than those as to which it is so declared illegal or unenforceable shall
not be affected thereby, and each portion and provision of this Agreement shall
be construed by modifying or limiting it so as to be valid and enforceable to
the maximum extent compatible with, and possible under, applicable law. The
provisions hereof are severable, and in the event any provision hereof should be
held invalid or unenforceable in any respect, it shall not invalidate, render
unenforceable or otherwise affect any other provision hereof.
(a) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
giving effect to any choice or conflict of law provisions or rule that
would cause the application of the law of any other jurisdiction.
(b) No Third-Party Beneficiaries. Nothing in this Agreement is
intended or shall be construed to give any Surety or any other person or
entity, other than the parties hereto, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision
contained herein.
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(c) Amendment. No amendment, modification, termination or waiver of
this Agreement shall be effective unless in writing signed by all of the
parties hereto.
(d) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original for all purposes
and all of which together shall constitute one and the same instrument.
(e) Headings. The headings contained in this Agreement are inserted
only as a matter of convenience and for reference and in no way define,
limit, or describe the scope or intent of this Agreement.
(f) Confidentiality. This Agreement may be disclosed by Company to any
Sureties only with the consent of Guarantor which consent shall not be
unreasonably withheld in the event that any Surety shall request that the
Company provide a copy hereof, provided that Company shall, of course, be
entitled to provide the form of Guaranty to any potential Sureties without
such consent.
[Balance of page intentionally blank; Signature page follows.]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
Very truly yours,
[SEAL] NORTHERN POWER SYSTEMS, INC.
By: /S/ Xxxxxxx Xxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxx
Title: Chief Financial Officer
[SEAL] PROTON ENERGY SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President and Chief
Executive Officer
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EXHIBIT A-1
[INSERT FORM OF REIMBURSEMENT AGREEMENT
RELATING TO A BOND]
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EXHIBIT A-2
[INSERT FORM OF REIMBURSEMENT AGREEMENT
RELATING TO A LETTER OF CREDIT]
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EXHIBIT B
[Insert Form of Guaranty]
