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Exhibit-10.1
REPLACEMENT
PROMISSORY NOTE
US $2,100,000 30 March 2001
Columbia, MD
THIS INSTRUMENT AND ALL RIGHTS OF THE PARTIES HEREUNDER ARE
SUBJECT TO AND GOVERNED BY THE TERMS AND CONDITIONS OF A
SUBORDINATION AND INTERCREDITOR AGREEMENT DATED MARCH 30,
2001, BY AND BETWEEN MANTECH INTERNATIONAL CORPORATION AND
NATIONAL BANK OF CANADA. WITHOUT LIMITATION OF THE FOREGOING,
ALL RIGHTS OF PAYMENT, LIEN RIGHTS, AND ENFORCEMENT RIGHTS OF
THE HOLDER OF THIS INSTRUMENT, ARE EXPRESSLY SUBORDINATED AND
SUBJECT TO THE RIGHTS OF NATIONAL BANK OF CANADA, AS PROVIDED
IN THE SUBORDINATION AND INTERCREDITOR AGREEMENT.
R E C I T A L S:
- - - - - - - -
A. Reference is made to that certain Secured Promissory Note dated October
2, 2000 in the original principal amount of One Million Eight Hundred Thousand
Dollars (US $1,800,000), made by GSE Systems, Inc., a Delaware corporation, (the
"Borrower") payable to the order of ManTech International Corporation, a New
Jersey corporation, and its successors and assigns (the "Lender"), as amended
and modified pursuant to that certain Allonge and First Modification to Secured
Promissory Note dated as of January 25, 2001, increasing the principal amount of
the Secured Promissory Note to Two Million One Hundred Thousand Dollars (US
$2,100,000). The Secured Promissory Note, as so amended and modified, is
referred to herein as the "Original Note". The aggregate Two Million One Hundred
Thousand Dollars (US $2,100,000) of loans evidenced by the Original Note is
referred to herein as the "Loan."
B. Pursuant to the Original Note, the Loan was secured by the Borrower's
equity interest in Avantium International B.V. (formerly known as Avantium
B.V.), a private company with limited liability formed under the laws of The
Netherlands ("Avantium") (the "Collateral"), which security interest is
subordinate to the security interest held by National Bank of Canada, the
Borrower's principal lender ("NBOC"), in the Collateral.
C. In connection with various proposed new credit accommodations from NBOC
to the Borrower, NBOC has prohibited any security for the Loan and the Original
Note.
D. The Lender has agreed to release its security interest in any collateral
securing the Loan or the Note (including, but not limited to, the Collateral),
in order to comply with NBOC's requirement.
NOW, THEREFORE, for Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Borrower and the Lender agree that this Note is hereby substituted for and
replaces the Original Note.
* * * * *
FOR VALUE RECEIVED the undersigned Borrower unconditionally promises to pay
to the order of the Lender, at the account specified in writing, or at such
place in the United States of America as a holder hereof may from time to time
direct in writing, in lawful money of the United States of America and in
immediately available funds, the principal amount of TWO MILLION ONE HUNDRED
THOUSAND DOLLARS (US $2,100,000), together with all accrued but unpaid interest
thereon (the "Note"). The interest rate shall be computed on the actual number
of days elapsed (based on a 360-day year of twelve equal months) on the unpaid
balance of such principal amount at the rate described below.
Interest shall be at the fluctuating prime rate of interest established and
declared by Mellon Bank, N.A. (the "Prime Rate") plus one (1) percentage point
per annum, to be paid in lawful money of the United States and in immediately
available funds. Interest shall be compounded monthly, based on the Prime Rate
in effect on the last day of such month.
The Borrower may borrow under this Note subject to the principal amount of
the Note. The Borrower may prepay this Note in whole or in part at any time or
from time to time without penalty or premium. Any such prepayment shall first be
applied to accrued and unpaid interest, if any, and thereafter to the principal
outstanding under this Note.
The Borrower shall repay this Note as follows:
1. Payments of accrued interest only shall be due and payable on the
first day of each month, commencing on July 1, 2001, and continuing
through the Maturity Date (as defined below).
2. Twenty-four (24) equal installments of principal shall be due and
payable on the first day of each month, commencing on April 1, 2004,
and continuing through the Maturity Date.
3. The entire principal balance of this Note, together with all accrued
and unpaid interest thereon and other sums payable hereunder, unless
sooner accelerated pursuant to the terms of this Note, shall be due
and payable in full on April 1, 2006 (the "Maturity Date").
This Note may be convertible, at the Lender's option, in whole or in part,
into shares of convertible preferred stock of the Borrower at the rate of One
Hundred Dollars ($100) per share. Such preferred stock is to be convertible into
common stock of the Borrower. The other rights and preferences of the preferred
stock shall be mutually agreed upon by the Borrower and the Lender. The
authorization and/or issuance of such preferred stock, and the common stock
issuable upon exercise of the conversion right of such preferred stock, may be
subject to the approval of the Borrower's stockholders, if it is determined that
such stockholder approval is required.
The Lender hereby releases, discharges and terminates its security interest
in any and all collateral security securing the Loan or the Note (including, but
not limited to, the Collateral), and releases to the Borrower any and all right,
title and interest which the Lender may have acquired in and to such collateral
(including, but not limited to, the Collateral), pursuant to the Original Note
or otherwise. The Lender agrees to execute such documents, and to take all other
actions reasonably requested by the Borrower, to evidence the Lender's release
of its security interest in all of such collateral, including, but not limited
to, the Collateral.
Upon execution of this Note by the Borrower, the Lender shall return the
Original Note to the Borrower, marked "Cancelled."
The Borrower represents and warrants to the Lender (which representations
and warranties will be deemed to be repeated by the Borrower on each day on
which the Note or other obligation of the Borrower remains outstanding) that:
(A) It is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware;
(B) It is duly qualified, in good standing and authorized to do business in
each jurisdiction where because of the nature of its activities or
properties such qualification is required by applicable laws or the failure
to be so qualified could have a material adverse effect on the Borrower;
(C) It has the power to enter into the Note, to deliver this Note and to
perform its obligations under this Note and has taken all necessary action
to authorize such execution, delivery and performance;
(D) The execution, delivery and performance of this Note by the Borrower does
not and will not violate or conflict with any law applicable to it, any
provision of its organizational documents, any order or judgment of any
court or other agency of government applicable to it or any of its assets
or any contractual restriction binding on or affecting it or any of its
assets;
(E) All governmental and other consents, authorizations, approvals, licenses
and orders that are required to have been obtained by it with respect to
this Note and the transactions contemplated herein have been obtained and
are in full force and effect and all conditions of any such consents,
authorizations, approvals, licenses and orders have been complied with;
(F) Its obligations under this Note constitute its legal, valid and binding
obligations, enforceable in accordance with their respective terms (subject
to applicable bankruptcy, reorganization, insolvency, moratorium or similar
laws affecting creditors' rights generally and subject, as to
enforceability, to equitable principles of general application (regardless
of whether enforcement is sought in a proceeding in equity or at law)); and
(G) There is not pending or threatened against it any action, suit or
proceeding at law or in equity or before any court, tribunal, governmental
body, agency or official or any arbitrator that is likely to (1) affect the
legality, validity or enforceability against it of this Note or its ability
to perform its obligations hereunder, or (2) materially affect its
operations, business, property or assets or financial or other condition.
The Borrower covenants to the Lender that, so long as the Borrower has or
may have any obligation under this Note:
(a) Except as expressly set forth herein, this Note shall constitute an
unsecured direct, general and unconditional obligation of the Borrower.
Notwithstanding anything to the contrary stated herein, this Note is
subordinate in payment, priority and collection to the Borrower's
obligations to NBOC, the terms of which subordination are set forth in that
certain Subordination and Intercreditor Agreement dated as of the date
hereof by and between the Lender and NBOC.
(b) It will maintain in full force and effect and comply with all consents,
authorizations, approvals, licenses and orders of any governmental or other
authority that are required to be obtained by it with respect to this Note
or the transactions contemplated hereby and will use all reasonable efforts
to obtain any such consents, authorizations, approvals, licenses and orders
that may become necessary in the future;
(c) It will comply in all material respects with all applicable laws and orders
to which it may be subject, if failure so to comply would materially impair
its ability to perform its obligations under this Note; and
(d) It will notify the Lender upon the occurrence of an Event of Default (as
defined below).
The occurrence of any of the following events or conditions shall
constitute an event of default (each, an "Event of Default") with respect to the
Borrower under this Note:
(I) Any amounts due under this Note are not paid (i) with respect to principal
and/or interest within Ten (10) calendar days after the date when due, or
(ii) with respect to other amounts within Twenty (20) calendar days after
the due date thereof;
(II) Except as otherwise provided in subsection (I) above, the failure or
refusal of the Borrower to properly perform, observe or comply with any
condition, obligation, or covenant or agreement to be performed, observed
or complied with by the Borrower in this Note, and such failure or refusal
continues for a period of Ten (10) calendar days, or for such lesser period
as stipulated in this Note after written notice thereof from the Lender;
(III)A representation made or repeated or deemed to have been made or repeated
by the Borrower in this Note proves to have been incorrect or misleading
when made or repeated or deemed to have been made or repeated; provided
that in the case of a repeated representation, the Borrower shall have a
period of Ten (10) calendar days after notice from the Lender to cure such
incorrect or misleading representation; or
(IV) Borrower (1) is dissolved (other than pursuant to a consolidation or
merger); (2) becomes insolvent or is unable to pay its debts or fails or
admits in writing its inability generally to pay its debts as they become
due; (3) makes a general assignment, arrangement or composition with or for
the benefit of its creditors; (4) institutes or has instituted against it a
proceeding seeking a judgment of insolvency or bankruptcy or any other
relief under any bankruptcy or insolvency law or other similar law
affecting creditors' rights, or a petition is presented for its winding-up
or liquidation which is not dismissed, discharged, stayed or restrained
within Thirty (30) calendar days of the institution or presentation
thereof; (5) has a resolution passed for its winding-up or liquidation
(other than pursuant to a consolidation or merger); (6) seeks or becomes
subject to the appointment of an administrator, provisional liquidator,
conservator, receiver, trustee, custodian or other similar official for it
or for all or substantially all its assets; (7) has a distress, execution,
attachment, sequestration or other legal process levied, enforced or sued
on or against all or substantially all its assets and such process is not
dismissed, discharged, stayed or restrained, in each case within Thirty
(30) calendar days thereafter; (8) causes or is subject to any event with
respect to it which, under the applicable laws of any jurisdiction, has an
analogous effect to any of the events specified in clauses (1) to (7)
(inclusive); or (9) takes any corporate action in furtherance of, or
otherwise indicates its written consent to, written approval of, or written
acquiescence in, any of the foregoing acts.
(V) The Borrower is a party to any merger or consolidation or transfers all or
substantially all its assets to another person or entity without the prior
written consent of the Lender and, pursuant to such merger, consolidation
or transfer the creditworthiness of the resulting, surviving or transferee
entity is weaker than that of the Borrower immediately prior to such
action.
Upon the occurrence and during the continuance of an Event of Default, the
Lender will have the option, upon notice to the Borrower, of declaring any or
all unpaid amounts under the Note, together with unpaid accrued interest thereon
to be immediately due and payable.
All payments and repayments shall be made on a day that banks are open for
business in the Commonwealth of Virginia (a "Business Day"). If any payment in
respect of this Note becomes due on a day that is not a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension of
the time shall be included in computing interest in connection with such
payment.
All payments to the Lender hereunder shall be made by wire transfer to the
account specified by the Lender in writing from time to time, in lawful money of
the United States of America.
All payments made by the Borrower in respect of principal of, and interest
on the Note and all other amounts payable in respect of this Note or otherwise,
will be made without set-off, counterclaim or other defense and will be made
free and clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein and all interest, penalties
or similar liabilities with respect thereto (collectively, the "Taxes"). The
Borrower shall pay on demand all stamp, documentary and other similar duties and
taxes, if any, to which this Note from time to time may be subject to or give
rise. If the Borrower is required by applicable law to make any deduction or
withholding on any payment as described above in respect of Taxes or otherwise,
the Borrower shall: (i) promptly notify the Lender of such occurrence; (ii) pay
to the relevant taxation or other authorities the full amount of the deduction
or withholding within the time allowed; (iii) furnish to the Lender within
Thirty (30) calendar days of such payment, an official receipt from such
authorities for all amounts so deducted or withheld; and (iv) pay to the Lender
an additional amount so that the Lender receives on the due date of such payment
the full amount the Lender would have received had no such deduction or
withholding taken place.
The Borrower agrees to pay on demand all of the Lender's costs and
expenses, including, without limitation, reasonable attorneys' fees and
expenses, in connection with any judgment relating to the collection of any sums
due to the Lender and the enforcement or protection of its rights or interests
hereunder, whether suit be brought or not.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE COMMONWEALTH OR VIRGINIA, WITHOUT REGARD TO ITS CONFLICTS OF LAW RULES.
Nothing contained herein shall limit or impair the right of the Lender to
institute any suit, action, motion or proceeding in any other court of competent
jurisdiction, nor shall the taking of any suit, action or proceeding in one or
more jurisdictions preclude the taking of proceedings in any other jurisdiction,
whether concurrently or not.
The Borrower may not assign any of its rights or delegate any of its
obligations under this Note (or any part thereof) without the prior written
consent of the Lender, which consent shall not be unreasonably withheld;
provided, however, nothing contained herein shall limit the right of the Lender
to assign any of its rights or obligations hereunder.
The Borrower hereby waives diligence, presentment, protest, demand, and
notice of every kind and, to the full extent permitted by law, the right to
plead any statute of limitations as a defense to any demand hereunder and
further agrees to be bound hereby, notwithstanding any extension, modification
or waiver by any holder of this Note or upon the discharge or release of any
obligor hereunder.
If any clause, provision or section of this Note shall be held illegal or
invalid by any court, the illegality or invalidity of such clause, provision or
section shall not affect the remainder of this Note, which shall be construed
and enforced as if such illegal or invalid clause, provision or section had not
been contained in this Note. If any agreement or obligation contained in this
Note is held to be in violation of applicable law, then such agreement or
obligation shall be deemed to be the agreement or obligation of the Borrower
only to the extent permitted by applicable law.
IN WITNESS WHEREOF, the undersigned have caused this Note to be
executed as of the date first above written.
BORROWER:
GSE Systems, Inc.
By: ______________________
Name: Jeffery G. Hough
Title: Senior Vice President
LENDER:
ManTech International Corporation
By: ______________________
Name:
Title: