LETTER OF AGREEMENT - AMENDMENT & RESTATEMENT
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
December 21st 2018
Greenpower Motor Company Inc. 000-000 Xxxxxxx Xxxxxx Xxxxxxxxx, X.X. X0X 0X0
Attention: Fraser Xxxxxxxx, Xxxxx Xxxxxxxxxx and Xxxxxxx Xxxxxxxx
LETTER OF AGREEMENT - AMENDMENT & RESTATEMENT
Bank of Montreal ("BMO") is pleased to provide this amended and restated Letter of Agreement with respect to the credit Facilities (each a "Facility" and collectively, the "Facilities") described herein. The letter (the "Letter of Agreement") amends and restates the existing Letter of Agreement dated May 15th 2018 and Amendment and Restatement Agreement dated November 8th 2018 (the "Prior Letter"). The Facilities are offered (or continue to be offered, as applicable) on the terms and conditions set out in this Letter of Agreement. The Schedules listed below and attached form part of this Letter of Agreement.
Notwithstanding any other provision of this Letter of Agreement or in any applicable agreements, any Advance under any Facility hereunder will be made at BMO's sole discretion. Any unutilized portion of any Facility hereunder may be cancelled by BMO at any time without prior notice.
| Borrower(s): | Greenpower Motor Company Inc. (the "Borrower") |
| Guarantor(s): | Xxxxx Xxxxxxxxxx, Fraser Xxxxxxxx, Greenpower Motor Company, Inc. (Registered in the United States) (the "Guarantor(s)") |
| Total Facility Limit: | The total approved amount of all facilities shall not exceed USD $5,020,000.00 at any time. |
Facility # 1
Facility Authorization: $5,000,000.00 USD (Previously $3,000,000.00)
Type of Loan: Operating Demand Loan
Purpose: Operating Financing
Interest Rate: US Base Rate plus 1.50%. Interest is calculated monthly in arrears, and payable monthly on the last day of each month. The US Base Rate in effect as of December 21st 2018 is 6.00%.
Repayments: Repayable on demand
Facility Fee(s): $945.00 per month. This is the fee for the loan and does not include other account fees. Refer to our Better Banking Guide for other applicable fees.
Other Costs: BMO is not obliged to permit the Advances under this Facility to exceed the Facility Authorization.
In the event the Advances under this Facility exceeds the Facility Authorization, the excess will bear interest at the Overdraft Rate, which is currently 21% per annum. BMO shall also be entitled to charge the Borrower a fee of 1% calculated on the amount of excess over the Facility Authorization or $100, whichever is greater and a $5 overdraft handling charge per item that creates or increases the excess.
Facility # 2
Facility Authorization: $20,000.00 USD
Type of Loan: Corporate MasterCard®*
Purpose: Operating Financing
Interest Rate: As determined by Corporate MasterCard Agreement.
Repayments: As determined by Corporate MasterCard Agreement.
Facility Fee: As determined by Corporate MasterCard Agreement.
®* MasterCard is a registered trademark of MasterCard International Incorporated. Used under license.
Conditions Precedent to Advances:
BMO will have no obligation to make any advance to the Borrower unless and until each of the conditions set out below and in Schedule C has been completed to BMO's satisfaction
1. Completion of all loan and account documents and all Security as outlined below.
2. Compliance with all covenants, representations and warranties in all loan documents and Security.
Covenants
As long as any Advance remains outstanding under or in connection with this Letter of Agreement, or so long as any commitment under this Letter of Agreement remains in effect, the Borrower and any Guarantor will perform and comply with the covenants set out in Schedule A.
Financial Covenants:
In addition, the Borrower and each Guarantor, as applicable, will perform and comply with the following financial covenants, based on financial statements of the Borrower or applicable Guarantor:
1. Maintain a Current ratio greater than or equal to 1.2:1 (To be tested quarterly starting March 31st 2019) Current Ratio Definition = Current Assets / Current Liabilities
Security To Be Obtained:
Each of the following documents, instruments, agreements and other assurances (collectively, the "Security") shall be delivered to BMO prior to any advance of funds, in form and substance acceptable to BMO and its solicitors, acting reasonably:
1. Supplemental Corporate Guarantee from the Corporate Guarantor in the amount of CAD $2,650,600.00. Total corporate guarantee on file to be in the amount of CAD $6,425,600.00.
2. Personal guarantee executed by Mr. Xxxxx Xxxxxxxxxx in the amount of USD $2,510,000.00.
3. Personal guarantee executed by Xx. Xxxxxx Xxxxxxxx in the amount of USD $2,510,000.00.
4. Letter of Acknowledgement re: UCC Security Agreement with respect to loan amount referenced in Section 1(a) therein.
5. Solicitor Enforceability Opinion with respect to security delivered by Borrower to be provided by BMO's solicitors (To be provided within 60 days of the New Advance).
6. US Solicitor Enforceability Opinion with respect to security delivered by the Corporate Guarantor (to be provided within 15 business days of funding the New Advance).
Security Held:
1. Personal guarantee executed jointly and severally by Mr. Xxxxx Xxxxxxxxxx & Xx. Xxxxxx Xxxxxxxx in the amount of CAD $2,525,000.00. (To be released)
2. Corporate Guarantee from the Corporate Guarantor in the amount of CAD $2,525,000.00.
3. Supplemental Corporate Guarantee from the Corporate Guarantor in the amount of CAD $1,250,000.00.
4. Registered General Security Agreement ("GSA") under PPSA providing BMO with a security interest over all present and after-acquired personal property of the Borrower with a First ranking.
5. Registered Uniform Commercial Code ("UCC") Filing with the District of Columbia with respect to the Borrower.
6. General Security Agreement executed by the Corporate Guarantor.
7. UCC Security Agreement executed by the Corporate Guarantor.
8. Registered Uniform Commercial Code ("UCC") Filing with the State of Delaware providing BMO with a security interest over all present and after-acquired personal property of the Corporate Guarantor - GreenPower Motor Company, Inc. (Registered in the United States) with a First ranking.
9. Registered Uniform Commercial Code ("UCC") Filing with the State of California providing BMO with a security interest over all present and after-acquired personal property of the Corporate Guarantor - GreenPower Motor Company, Inc. (Registered in the United States) with a First ranking.
10. Enforceability Opinion regarding Uniform Commercial Code ("UCC") Filings & Corporate Guarantee from GreenPower Motor Company, Inc. (Registered in the United States).
Any other documents, instruments or agreements as may be required by BMO, acting reasonably
Reporting Requirements:
|
Annual |
- Audited Year-end finanacial statements of GreenPower Motor Company Inc., within 120 days of fiscal year-end. - Personal Tax Returns (T1) with Notice of Assessment of personal guarantors (Mr. Xxxxx Xxxxxxxxxx and Xx. Xxxxxx Xxxxxxxx), within 120 days of fiscal year-end. - Such other information as Lender may reasonably request from time to time (such as updated personal financial statements). |
|
Quarterly |
- Company prepared quarterly financial statements of GreenPower Motor Company Inc., within 60 days of respective quarter-end. - Updated order backlog from borrower within 60 days of respective quarter-end. |
A $50 per month fee will be applied for non compliance with reporting requirements. The application of this fee does not waive the default condition.
Prompt notification of management letters, default notices, litigation, and any other material events
Satisfactory evidence that all taxes (including, without limitation, GST, HST, sales tax, withholdings, etc.) have been paid to date
Representations and Warranties:
The Borrower and each Guarantor, as applicable, makes the representations and warranties set out in Schedule B. All representations and warranties of the Borrower and any Guarantor, in addition to any representation or warranty provided in any document executed in connection with a Facility or any Security, shall be true and correct on the date of this Letter of Agreement and on the date of any Advance under a Facility.
Noteless Advances:
The Borrower acknowledges that the actual recording of the amount of any advance or repayment thereof under the Facilities, and interest, fees and other amounts due in connection with the Facilities, in an account of the Borrower maintained by BMO, shall constitute prima facie evidence of the Borrower's indebtedness and liability from time to time under the Facilities; provided that the obligation of the Borrower to pay or repay any indebtedness and liability in accordance with the terms and conditions of the Facilities set out in this Letter of Agreement shall not be affected by the failure of BMO to make such recording. The Borrower also hereby acknowledges being indebted to BMO for principal amounts shown as outstanding from time to time in BMO's account records, and all accrued and unpaid interest in respect thereto, which principal and interest the Borrower hereby undertakes to pay to BMO in accordance with the terms and conditions applicable to the Facilities as set out in this Letter of Agreement.
Fees:
All costs and expense incurred by BMO in connection with this Letter of Agreement and the Facilities (including without limitation all legal, appraisal and consulting fees),and the enforcement of the Security are for the account of the Borrower.
A one-time fee ("Fee") of $10,000.00 USD is payable by the Borrower to BMO upon acceptance of this Letter of Agreement. This fee is deemed to be earned by BMO upon acceptance of this Letter of Agreement, to compensate for time, effort and expense incurred by BMO in authorizing these Facilities.
Credit renewal fees will be payable as advised by BMO annually; at the date of this letter such fees are estimated to be $2,500.00 CAD.
All fees payable under this Letter of Agreement shall be paid to BMO on the dates due, in immediately available funds. Fees paid shall not be refundable except in the case of manifest error in the calculation of any fee payment.
Banking Services:
The Borrower shall maintain its Bank Accounts, solely with the BMO. Borrower acknowledges that the pricing (including interest, fees and charges) contained in this Letter of Agreement is contingent on the Borrower maintaining all of its operating accounts with BMO. In the event the Borrower does not do so, BMO may, at any time, in its sole discretion and without any requirement to obtain the agreement of, or provide prior notice to the Borrower, increase such pricing.
Treasury & Payment Solutions:
BMO will provide Non-Credit and treasury & payment solutions to the Borrower. A Treasury & Payment Specialist will contact the Borrower to implement BMO's On-Line Banking for Business platform (OLBB) and discuss additional treasury & payment features such as Electronic Funds Transfer (EFT), Wire Payments, BMO DepositEdge® and Moneris® Payment Processing Solutions. BMO's objective is to provide a package of services that are tailored to meet both the current and future needs of the Borrower in a cost efficient operating environment.
Commercial Loan Insurance Plan:
You understand that unless you submit an Application for Commercial Loan Insurance Plan ("Application"), and it has been approved by Canada Life as the insurer, you will not be covered under the Commercial Loan Insurance Plan for any facilities under this Letter of Agreement and would be ineligible to submit a claim should you undergo an insurable event.
Counterparts; Electronic Transmissions:
This agreement may be executed in any number of counterparts with the same effect as if all parties hereto had all signed the same document. Any counterpart of this Agreement may be executed and circulated by facsimile, PDF or other electronic means and any counterpart executed and circulated in such a manner shall be deemed to be an original counterpart of this Agreement. All counterparts shall be construed together and shall constitute one and the same original agreement.
Governing Law:
British Columbia and the federal laws of Canada applicable therein.
Schedules:
The following Schedules are attached to and form part of this letter of agreement:
Schedule A - Covenants
Schedule B - Representations and Warranties
Schedule C - Conditions Precedent to Advances
BMO's Legal Counsel: Xxxxx Xxxxxxx at Guild Yule LLP Suite 2100 - 0000 Xxxx Xxxxxxx Xxxxxx Xxxxxxxxx, XX X0X 0X0
This Letter of Agreement amends and restates, without novation, the Prior Letter, as of December 21st 2018], without prejudice to the effect of the terms of the Prior Letter or to any actions taken under or pursuant to the Prior Letter prior to such date. The entry into effect of this Letter of Agreement shall not be deemed to waive or limit any of BMO's rights in respect of any Event of Default then existing under the Prior Letter or any Event of Default under this Letter of Agreement which exists because of matters occurring prior to such effective date, whether or not known to BMO.
In accepting this agreement you acknowledge that if, in the opinion of BMO, a material adverse change in risk occurs including, without limitation, any material adverse change in the financial condition, business, property or prospects of the Borrower or any Guarantor, the rights and remedies of BMO, or the ability of the Borrower or any Guarantor to perform its obligations to BMO, any obligation to advance some or all of the above Facilities may be withdrawn or cancelled.
Please indicate your acceptance of the terms and conditions hereof by signing and returning one copy of this Letter of Agreement (and making payment of the above noted fee, if applicable) to BMO no later than December 24th 2018. If your acceptance of this Letter of Agreement is not received by BMO by that date, BMO shall have no obligation to proceed with any of the Facilities.
|
Yours truly, By: /s/ Xxxxx Xxxxx By: /s/ Xxxxxx Xxxxxxxx |
Accepted and agreed to this 22nd day of December , 20 18
BORROWER
GREENPOWER MOTOR COMPANY INC.
Signature: /s/ Xxxxxxx Xxxxxxxx Signature: /s/ Fraser Xxxxxxxx
Name: Xxxxxxx Xxxxxxxx Name: Fraser Xxxxxxxx _
Title: Chief Financial Officer_ Title: Chairman
GUARANTORS XXXXX XXXXXXXXXX
Witness: _ Signature: _
Name: Name: _
FRASER XXXXXXXX
Witness: _ Signature: _
Name: Name: _
GREENPOWER MOTOR COMPANY, INC. (Registered in United States)
Signature: /s/ Xxxxxxx Xxxxxxxx Signature: /s/ Fraser Xxxxxxxx
Name: Xxxxxxx Xxxxxxxx Name: Fraser Xxxxxxxx _
Title: Chief Financial Officer_ Title: Chairman
SCHEDULE A
COVENANTS
1. Payment of all indebtedness due to BMO in connection with this Letter of Agreement or any Facility
2. Maintenance of corporate existence and status, if applicable
3. Payment of all taxes when due (including, without limitation, corporate, GST, HST, sales tax and withholdings)
4. Compliance with all material laws, regulations and applicable permits or approvals (including health, safety and employment standards, labour codes and environmental laws)
5. Compliance with all material agreements
6. Use of proceeds to be consistent with the approved purpose
7. Notices of death of Borrower or Guarantor, default, material litigation, and regulatory proceedings to be provided to BMO on a timely basis
8. Access by BMO to books and records; BMO to have right to inspect property to which its security applies
9. No assumption of additional indebtedness or guarantee obligations by Borrower without prior written consent of BMO
10. No liens or encumbrances on any assets except with the prior written consent of BMO
11. No change of control or ownership of the Borrower without the prior written consent of BMO
12. No disposition of property or assets (except in the ordinary course of business) without the prior written consent of BMO
13. No material acquisitions, hostile takeovers, mergers or amalgamations without BMO's prior written approval
14. [For multiple currencies]:
If, for the purposes of obtaining judgment in any court in any jurisdiction with respect to this Letter of Agreement, it becomes necessary to convert into a particular currency (the "Judgment Currency") any amount due under this Letter of Agreement in any currency other than the Judgment Currency (the "Currency Due"), then conversion shall be made at the rate of exchange prevailing on the Business Day before the day on which judgment is given. For this purpose "rate of exchange" means the rate at which BMO is able, on the relevant date, to purchase the Currency Due with the Judgment Currency in accordance with its normal practice at its principal office in Xxxxxxx, Xxxxxxx. In the event that there is a change in the rate of exchange prevailing between the Business Day before the day on which the judgment is given and the date of receipt by BMO of the amount due, the Borrower will, on the date of receipt by BMO, pay such additional amounts, if any, or be entitled to receive reimbursement of such amount, if any, as may be necessary to ensure that the amount received by BMO on such date is the amount in the Judgment Currency which when converted at the rate of exchange prevailing on the date of receipt by BMO is the amount then due under this Letter of Agreement in the Currency Due. If the amount of the Currency Due which BMO is so able to purchase is less than the amount of the Currency Due originally due to it, the Borrower and each Guarantor jointly and severally (solidarily) agree to indemnify BMO from and against any and all loss or damage arising as a result of such deficiency. This indemnity shall constitute an obligation separate and independent from the other obligations contained in this Letter of Agreement, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by BMO from time to time and shall continue in full force and effect notwithstanding any judgment or order in respect of an amount due under this Letter of Agreement or under any judgment or order.
SCHEDULE B
REPRESENTATIONS AND WARRANTIES
1. It has the corporate status, power and authority to enter into this Letter of Agreement and any agreement executed in connection with a Facility or any Security to which it is a party, and to performs its obligations hereunder and thereunder
2. It is in compliance with all applicable laws (including environmental laws) and its existing agreements
3. Except as otherwise disclosed to BMO in writing, no consent or approval of, registration or filing with, or any other action by, any governmental authority is required in connection with the execution, delivery and performance by it of this Letter of Agreement and any agreement executed in connection with a Facility or any Security to which it is a party
4. All factual information that has been provided to BMO for purposes of or in connection with this Letter of Agreement or any transaction contemplated herein is true and complete in all material respects on the date as of which such information is dated or certified
5. No event, development or circumstance has occurred that has had or could reasonably be expected to have a material adverse effect on the business, assets, operations or condition, financial or otherwise, of the Borrower or any Guarantor
6. There is no material litigation pending against it or, to its knowledge, threatened against or affecting it
7. It has timely filed or caused to be filed all required tax returns and reports and has paid or caused to be paid all required taxes
8. It has good and marketable title to its properties and assets including ownership of and/or sufficient rights in any material intellectual property.
9. It has complied with all obligations in connection with any pension plan which it has sponsored, administered or contributed to, or is required to contribute to including, without limitation, registration in accordance with applicable laws, timely payment of all required contributions or premiums, and performance of all fiduciary and administration obligations
10. It maintains insurance policies and coverage that provides sufficient insurance coverage in at least such amounts and against at least such risks as are usually insured against in the same general area by persons in the same or a similar business
11. It is not in default nor has any event or circumstance occurred which, but for the passage of time or the giving of notice, or both, would constitute a default under any loan, credit or security agreement, or under any material instrument or agreement, to which it is a party.
SCHEDULE C
CONDITIONS PRECEDENT TO ADVANCES
1. Evidence of corporate (or other) status and authority
2. Completion and registration (as applicable) of all Security (defined herein) and other supporting documents
3. Completion of all facility documentation and account agreements and authorities, as applicable
4. Compliance with all representations and warranties contained herein
5. Compliance with all covenants (financial and non-financial) contained herein
6. No Event of Default (defined herein) shall have occurred and be continuing
7. Compliance with all laws (including environmental)
8. Payment of all fees and expenses
9. Receipt of all necessary material governmental, regulatory and other third party approvals including environmental approvals and certificates
10. Satisfactory due diligence (including, without limitation, anti-money laundering, proceeds of crime and "know your customer" requirements and procedures, environmental and insurance due diligence)
11. Repayment of all existing indebtedness (excluding permitted indebtedness), as applicable.
12. Satisfactory review of material contracts, as applicable
13. Satisfactory review by BMO (or, at BMO's option and the Borrower's expense, an insurance consultant) of insurance policies issued to the Borrower(s) and/or the Guarantor(s) and compliance with any changes required to satisfy BMO's insurance requirements
14. Disclosure of all material contingent obligations
15. Confirmation that no shares of the Borrower held by the principal shareholders have been pledged as security for any financial or other indebtedness
16. Corporate taxes of the Borrower and corporate/personal taxes of the Guarantor(s) are to be confirmed current and up-to-date
17. Satisfactory evidence that all other taxes payable by the Borrower and Guarantor(s) (including, without limitation, GST, HST, sales tax, and withholdings) have been paid to date
18. No material judgments or material legal action initiated against the Borrower and/or any Guarantor(s)
19. Any other document or action which BMO may reasonably require
