CREDIT AND SECURITY AGREEMENT
(Eximbank Guaranteed Loan No. _____________)
Dated as of May 28, 1997
NICOLLET PROCESS ENGINEERING, INC., a Minnesota corporation (the
"Borrower"), and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national
banking association (the "Lender"), hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires:
"Accounts" means the aggregate unpaid obligations of customers and
other account debtors to the Borrower arising out of the sale, lease or
license of goods or rendition of services by the Borrower on an open
account or deferred payment basis, whether now existing or hereafter
arising.
"Advance" means a Revolving Advance.
"Affiliate" or "Affiliates" means any Person controlled by,
controlling or under common control with the Borrower, including (without
limitation) any subsidiary of the Borrower. For purposes of this
definition, "control," when used with respect to any specified Person,
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" means this Credit and Security Agreement, as amended,
supplemented and restated from time to time.
"Availability" means the Borrowing Base less the outstanding
principal balance of the Revolving Advances.
"Base Rate" means the rate of interest publicly announced from time
to time by the Lender as its "base rate" or, if such bank ceases to
announce a rate so designated, any similar successor rate designated by
the Lender.
"Borrower Agreement" means the Borrower Agreement of even date
herewith by and between the Borrower and the Lender in the form attached
hereto as Exhibit B.
"Borrowing Base" means, at any time and subject to change from time
to time in the Lender's sole discretion, the least of:
(a) the Maximum Line; or
(b) the difference of $800,000 and the NBCI Revolving Advances; or
(c) the sum of:
(i) 90% of Eligible Foreign Accounts; and
(ii) 75% of Eligible Export Inventory.
"Borrowing Base Certificate" means a certificate, substantially in
the form attached hereto as Exhibit D, executed by the Borrower and
accepted by the Lender.
"Business Day" means any day on which the Federal Reserve Bank of New
York is open for business.
"Closing Date" means the date of this Agreement.
"Collateral" has the meaning given in Section 3.1.
"Collateral Account" has the meaning given in the Collateral Account
Agreement.
"Collateral Account Agreement" means the Collateral Account Agreement
by and among the Borrower, Norwest Bank International New York Branch and
the Lender of even date herewith, as the same may hereafter be amended,
supplemented or restated from time to time.
"Country Limitation Schedule" shall mean the most recent schedule
published by Eximbank and provided to the Borrower by the Lender which
sets forth on a country by country basis whether and under what conditions
Eximbank will provide coverage for the financing of export transactions to
countries listed therein.
"Credit Facility" means the credit facility made available to the
Borrower pursuant to Article II.
"Debt" of any Person means all items of indebtedness or liability
which in accordance with GAAP would be included in determining total
liabilities as shown on the liabilities side of a balance sheet of that
Person as at the date as of which Debt is to be determined. For purposes
of determining a Person's aggregate Debt at any time, "Debt" shall also
include the aggregate payments required to be made by such Person at any
time under any lease that is considered a capitalized lease under GAAP.
"Default" means an event that, with giving of notice or passage of
time or both, would constitute an Event of Default.
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"Default Period" means any period of time beginning on the first day
of any month during which a Default or Event of Default has occurred and
ending on the date that such Default or Event of Default has been cured,
if possible, or waived by the Lender.
"Default Rate" means an annual rate equal to three percent (3%) over
the Floating Rate, which rate shall change when and as the Floating Rate
changes.
"Eligible Export Inventory" means all Inventory consisting of Items,
raw materials and components to be used to manufacture or assemble Items,
and work-in-process relating to Items, and raw materials and components
the Borrower must purchase to manufacture or assemble Items, at the lower
of cost or market value as determined in accordance with GAAP; provided,
however, that the following shall not in any event be deemed Eligible
Export Inventory:
(i) Inventory that is: in-transit; located at any warehouse
or other premises not approved by the Lender in writing; located
outside of the states, or localities, as applicable, in which the
Lender has filed financing statements to perfect a first priority
security interest in such Inventory; covered by any negotiable or
non-negotiable warehouse receipt, xxxx of lading or other document of
title; on consignment from any Person; on consignment to any Person
or subject to any bailment;
(ii) Inventory consisting of proprietary software;
(iii) Inventory that is damaged, slow moving, obsolete,
returned, defective, recalled or unfit for further processing or not
currently saleable in the normal course of the Borrower's operations;
(iv) Inventory that is perishable or live;
(v) Inventory that the Borrower has returned, has attempted
to return, is in the process of returning or intends to return to the
vendor thereof;
(vi) Inventory that is subject to a security interest in favor
of any Person other than the Lender or NBCI;
(vii) Sample or demonstration Inventory;
(viii) Inventory which has been previously exported from the
US;
(ix) Inventory which constitutes defense articles or defense
services;
(x) Inventory consisting of or to be incorporated into Items
destined for shipment to a Prohibited Country;
(xi) The Foreign Content portion of Items containing less than
fifty percent (50%) US Content;
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(xii) For Items containing at least fifty percent (50%) US
Content, any Foreign Content not incorporated into such Items in the
US;
(xiii) That portion of Inventory consisting of or to be
incorporated into Items whose sale would result in an Account deemed
ineligible under clauses (ii), (viii), (x), or (xi) of the definition
of "Eligible Foreign Accounts";
(xiv) Inventory which is subject to the license agreement
set forth in that certain Settlement Agreement by and between the
Borrower and Xxxx X. Xxxxxxxxx dated as of October 1, 1995; and
(xv) Inventory otherwise deemed ineligible by the Lender in
its discretion.
"Eligible Foreign Accounts" means all Accounts owed by Account
debtors located outside the US for the sale or provision of Items, except
the following shall not in any event be deemed Eligible Foreign Accounts:
(i) That portion of Accounts not yet earned by the final
delivery of goods or rendition of services, as applicable, by the
Borrower to the customer;
(ii) That portion of Accounts not providing for payment in
full within 180 days of shipment date;
(iii) That portion of Accounts over 60 days past the
original due date or 90 days past the original due date if insured
through Eximbank export credit insurance for comprehensive commercial
and political risk, or through an Eximbank approved private insurer
for comparable coverage or that portion of Accounts which is over 180
days past invoice date;
(iv) Accounts owed by a shareholder, Affiliate, officer or
employee of the Borrower;
(v) Accounts owed by an account debtor that is insolvent, the
subject of bankruptcy proceedings or has gone out of business;
(vi) Accounts not subject to a duly perfected security
interest in favor of the Lender or which are subject to any lien,
security interest or claim in favor of any Person other than the
Lender or NBCI;
(vii) That portion of Accounts that constitutes finance
charges, service charges or sales or excise taxes;
(viii) That portion of Accounts that are payable in a
currency other than US Dollars unless prior written approval has been
received from Eximbank;
(ix) That portion of Accounts owed by military buyers or for
defense articles or services, except as may be approved in writing by
the Lender and Eximbank;
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(x) That portion of Accounts due and collectible outside the
US;
(xi) That portion of Accounts owed by Account debtors located
in, or arising from sales of Items delivered to, a Prohibited
Country;
(xii) That portion of Accounts, or portions thereof,
otherwise deemed uncollectible for any reason by the Lender or
Eximbank in its discretion.
"Event of Default" has the meaning specified in Section 7.1.
"Eximbank" means the Export-Import Bank of the United States.
"Export Order" means a bona fide written export order or contract to
purchase Items from the Borrower from a customer outside the US.
"Floating Rate" means an annual rate equal to the sum of the Base
Rate plus three percent (3%), which annual rate shall change when and as
the Base Rate changes.
"Foreign Content" means that portion of the cost of an Item arising
from materials which are not of US origin or from labor and services not
performed in the US.
"Funding Date" has the meaning given in Section 2.1.
"GAAP" means generally accepted accounting principles, applied on a
basis consistent with the accounting practices applied in the financial
statements described in Section 5.2.
"Inventory" means all of the Borrower's inventory, as such term is
defined in the UCC, whether now owned or hereafter acquired.
"Items" means the goods and services to be sold or licensed by the
Borrower to customers located outside the US pursuant to Export Orders.
"Life Insurance Assignment" means the Assignment of Life Insurance
Policy as Collateral to be executed by the owner and beneficiary thereof,
in form and substance satisfactory to the Lender, granting the Lender and
NBCI a lien on the Life Insurance Policy to secure payment of the
Obligations.
"Life Insurance Policy" has the meaning given in Section 6.8.
"Loan Documents" means this Agreement, the Note, the Borrower
Agreement, the Security Documents and the Disclosure by the Borrower in
favor of the Lender of even date herewith.
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"Master Guaranty" means that certain Master Guaranty Agreement
No. MN-MGA-96-001, dated as of November 13, 1996, by and between the
Lender and Eximbank.
"Maturity Date" means May 27, 1998.
"Maximum Line" means $400,000.
"NBCI" means Norwest Business Credit, Inc., a Minnesota corporation.
"NBCI Credit Agreement" means that certain Credit and Security
Agreement by and between NBCI and the Borrower of even date herewith.
"NBCI Credit Facility" means the credit facility extended to the
Borrower pursuant to the NBCI Credit Agreement.
"NBCI Revolving Advances" means the outstanding principal balance of
the revolving advances as of a given date made by NBCI to the Borrower
pursuant to the NBCI Credit Agreement.
"Note" means the Revolving Note.
"Obligations" means each and every Debt, liability and obligation of
every type and description which the Borrower may now or at any time
hereafter owe to the Lender, including all indebtedness arising under
this Agreement, the Note or any other loan or credit agreement or guaranty
between the Borrower and the Lender, whether now in effect or hereafter
entered into.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company,
trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Premises" means all premises where the Borrower conducts its
business and has any rights of possession.
"Prohibited Country" means any country in which Eximbank coverage is
not available for commercial reasons or in which Eximbank is legally
prohibited from doing business, as designated in the Country Limitation
Schedule.
"Revolving Advance" has the meaning given in Section 2.1.
"Revolving Note" means the Borrower's revolving promissory note,
payable to the order of the Lender in substantially the form of Exhibit A
hereto.
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"Security Documents" means this Agreement, the Collateral Account
Agreement, the Life Insurance Assignment and the Support Agreement, each
of even date herewith.
"Security Interest" means the security interests granted under the
Security Documents.
"Servicer" means NBCI.
"Support Agreement" means the Management Support Agreement by Xxxxxx
Xxxxxx, of even date herewith.
"Tangible Net Worth" means the difference between (i) the tangible
assets of the Borrower, which, in accordance with GAAP are tangible
assets, after deducting adequate reserves in each case where, in
accordance with GAAP, a reserve is proper and (ii) all Debt of the
Borrower. Notwithstanding the foregoing, in no event shall the tangible
assets referred to in (i) above include patents, trademarks, trade names,
copyrights, licenses, goodwill, receivables from Affiliates, directors,
officers or employees, prepaid expenses, deposits, deferred charges or
treasury stock or any securities or Debt of the Borrower or any other
securities unless the same are readily marketable in the US or entitled to
be used as a credit against federal income tax liabilities, and any other
assets designated from time to time by the Lender, in its sole discretion.
"Termination Date" means the earliest of (i) the Maturity Date, (ii)
the date the Borrower terminates the Credit Facility, or (iii) the date
the Lender demands payment of the Obligations.
"UCC" means the Uniform Commercial Code as in effect from time to
time in the State of Minnesota.
"US" means the United States of America.
"US Content" means that portion of the cost of an Item arising from
materials which are of US origin or from labor and services performed in
the US.
ARTICLE II
AMOUNT AND TERMS OF THE CREDIT FACILITY
Section 2.1 REVOLVING ADVANCES. The Lender may, in its sole
discretion, make advances (each a "Revolving Advance") to the Borrower from
time to time from the date all of the conditions set forth in Section 4.1 are
satisfied (the "Funding Date") to the Termination Date, on the terms and
subject to the conditions herein set forth, to provide the Borrower with
working capital to fulfill Export Orders. The Lender will not consider any
request for a Revolving Advance if, after giving effect to such requested
Revolving Advance
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exceeds Availability. The Borrower's obligation to pay the
Revolving Advances shall be evidenced by the Revolving Note and shall be
secured by the Collateral. Within the limits set forth in this Section 2.1, the
Borrower may request Revolving Advances, prepay, and request additional
Revolving Advances.
Section 2.2 REQUESTS FOR ADVANCES. The Borrower shall make each
request for a Revolving Advance to the Lender before 11:00 a.m. (Minneapolis
time) of the day of the requested Revolving Advance. Requests may be made in
writing or by telephone. The Lender will not consider any request for a
Revolving Advance unless the Lender has received from the Borrower, among other
things, a Borrowing Base Certificate as of a date not more than five (5)
Business Days before the date of the requested Advance and copies of the Export
Orders (or a summary thereof) against which the Borrower is requesting such
Advance. Whenever the Borrower makes a request for an Advance based on Eligible
Export Inventory, it shall also indicate in its books and records that such
Inventory has been designated to fulfill an Export Order and shall no longer be
considered Eligible Inventory under the NBCI Credit Facility. Any request for
an Advance shall be deemed to be a representation by the Borrower that the
conditions set forth in Section 4.2 have been satisfied as of the date of the
request.
Section 2.3 INTEREST; DEFAULT INTEREST. All interest shall be
payable monthly in arrears on the first day of the month and on demand.
(a) REVOLVING NOTE. Except as set forth in subsection (b) and (c),
the outstanding principal balance of the Advances shall bear interest at
the Floating Rate.
(b) DEFAULT INTEREST RATE. At any time during any Default Period, in
the Lender's sole discretion and without waiving any of its other rights
and remedies, the principal of the Advances outstanding from time to time
shall bear interest at the Default Rate, effective for any periods
designated by the Lender from time to time during that Default Period.
(c) USURY. In any event no rate change shall be put into effect
which would result in a rate greater than the highest rate permitted by
law.
Section 2.4 DISCRETIONARY NATURE OF FACILITY. THE LENDER MAY AT ANY
TIME AND FOR ANY REASON REFUSE TO MAKE AN ADVANCE AND/OR DEMAND PAYMENT OF THE
ADVANCES AND TERMINATE THIS AGREEMENT WHETHER BORROWER IS OR IS NOT IN
COMPLIANCE WITH THIS AGREEMENT. The Lender need not show that an adverse change
has occurred in the Borrower's condition, financial or otherwise, in order to
refuse to make any requested Advance or to demand payment of the Advances.
Unless terminated by the Lender at any time or by the Borrower pursuant to
Section 2.6, this Agreement shall remain in effect until the Maturity Date.
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Section 2.5 AUDIT FEES. The Borrower hereby agrees to pay the Lender,
on demand, audit fees in connection with any audits or inspections conducted by
the Lender of any Collateral or the Borrower's operations or business at the
rates established from time to time by the Lender as its audit fees (at the
rate established from time to time by the Lender or the Servicer as its audit
fees, which fees are currently $62.50 per hour per auditor), together with all
actual out-of-pocket costs and expenses incurred in conducting any such audit
or inspection.
Section 2.6 TERMINATION BY BORROWER. The Borrower may terminate this
Agreement at any time and, subject to payment and performance of all
Obligations, may obtain any release or termination of the Security Interest to
which the Borrower is otherwise entitled by law by: (i) giving at least 30
days' prior written notice to the Lender of the Borrower's intention to
terminate this Agreement, and (ii) terminating the NBCI Credit Agreement
pursuant to the terms thereof (including, without limitation, payment to NBCI
of the prepayment fee required thereunder).
Section 2.7 MANDATORY PREPAYMENT. Without notice or demand, if the
outstanding principal balance of the Revolving Advances shall at any time
exceed the Borrowing Base, the Borrower shall immediately prepay the Revolving
Advances to the extent necessary to eliminate such excess.
Section 2.8 ADVANCES WITHOUT REQUEST. The Borrower hereby authorizes
the Lender, in its discretion, at any time or from time to time without the
Borrower's request, to make Revolving Advances to pay accrued interest, fees,
uncollected items that have been applied to the Obligations, and other
Obligations due and payable from time to time.
Section 2.9 USE OF PROCEEDS. The Borrower shall use the proceeds of
Advances for working capital to finance the manufacture, assembly, production
or purchase and subsequent sale of Items only. Without limiting the generality
of the foregoing, the Borrower shall not use any proceeds of Advances for any
purpose prohibited by the Borrower Agreement or (i) to acquire fixed assets or
capital goods for use in the Borrower's business; (ii) to acquire, equip or
rent commercial space overseas; (iii) to employ non-US residents in offices
outside the US; (iv) to serve as a retainage or warranty bond; or (v) to repay
pre-existing Debt or future indebtedness of the Borrower unrelated to the
Advances.
Section 2.10 FACILITY SUBJECT TO EXIMBANK RULES. The Borrower
acknowledges that the Lender is willing to make the Credit Facility available
to the Borrower because the Eximbank is willing to guaranty payment of a
significant portion of the Obligations pursuant to the Master Guaranty.
Accordingly, in the event of any inconsistency among the Loan Documents and the
Master Guaranty or related documents, the provision that is the more stringent
on the Borrower shall control.
Section 2.11 SUSPENSION OF LINE USE, LINE MAINTENANCE.
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(a) SUSPENSION OF LINE USE. So long as no Default Period exists,
the Borrower may elect to suspend its right to request Advances and NBCI
Revolving Advances pursuant to the terms of this Section 2.11. If the
Borrower elects not to request any Advances and NBCI Advances during an
upcoming month or months and suspend use of this Credit Facility and the
NBCI Credit Facility (each a "Non-Use Period"), the Borrower must deliver
written notice to the Lender at least ten (10) days prior to the first day
of any such Non-Use Period, which notice must state (i) that an election
hereunder has been made, and (ii) the beginning date of the Non-Use
Period. A Non-Use Period may only begin on the first day of a calendar
month.
(b) NOTICE PRIOR TO USE OF LINE. After a Non-Use Period has been
initiated, the Lender shall not consider making any Advance hereunder
until thirty (30) days after it has received written notice from the
Borrower requesting that the Non-Use Period be terminated and this Credit
Facility and the NBCI Credit Facility be reactivated.
ARTICLE III
SECURITY INTEREST
Section 3.1 GRANT OF SECURITY INTEREST. The Borrower hereby grants
to the Lender a security interest (the "Security Interest") in the following
collateral (the "Collateral"), as security for the payment and performance of
the Obligations:
INVENTORY: All inventory of Borrower, as such term is defined in the UCC,
whether now owned or hereafter acquired, whether consisting of whole
goods, spare parts or components, supplies or materials, whether acquired,
held or furnished for sale, for lease or under service contracts or for
manufacture or processing, and wherever located;
ACCOUNTS AND OTHER RIGHTS TO PAYMENT: Each and every right of Borrower to
the payment of money, whether such right to payment now exists or
hereafter arises, whether such right to payment arises out of a sale,
lease, license or other disposition of goods or other property, out of a
rendering of services, out of a loan, out of the overpayment of taxes or
other liabilities, or otherwise arises under any contract or agreement,
whether such right to payment is created, generated or earned by Borrower
or by some other Person who subsequently transfers such Person's interest
to Borrower, whether such right to payment is or is not already earned by
performance, and howsoever such right to payment may be evidenced,
together with all other rights and interests (including all liens and
security interests) which Borrower may at any time have by law or
agreement against any account debtor or other obligor obligated to make
any such payment or against any property of such account debtor or other
obligor; all including all of Borrower's rights to payment in the form of
all present and future accounts, contract rights, loans and obligations
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receivable, chattel papers, bonds, notes and other debt instruments, tax
refunds and rights to payment in the nature of general intangibles;
EQUIPMENT: All of the Borrower's equipment, as such term is defined in
the UCC whether now or hereafter owned, including all present and future
machinery, vehicles, furniture, fixtures, manufacturing equipment, shop
equipment, office and recordkeeping equipment, parts, tools, supplies, and
including specifically the goods described in any equipment schedule or
list herewith or hereafter furnished to the Lender by Borrower;
GENERAL INTANGIBLES: All of Borrower's general intangibles, as such term
is defined in the UCC, whether now owned or hereafter acquired, including
all present and future contract rights, patents, patent applications,
copyrights, trademarks, trade names, trade secrets, customer or supplier
lists and contracts, manuals, operating instructions, permits, franchises,
the right to use Borrower's name, and the goodwill of Borrower's business;
and
INVESTMENT PROPERTY: All of Borrower's investment property, as such term
is defined in the UCC, whether now owned or hereafter acquired, including
but not limited to all securities, security entitlements, securities
accounts, commodity contracts, commodity accounts, stocks, bonds, mutual
fund shares, money market shares and U.S. Government securities;
together with all substitutions and replacements for and products of any
of the foregoing property and together with proceeds of any and all of the
foregoing property and, in the case of all tangible property, together
with all accessions and together with (i) all accessories, attachments,
parts, equipment and repairs now or hereafter attached or affixed to or
used in connection with any such goods, and (ii) all warehouse receipts,
bills of lading and other documents of title now or hereafter covering
such goods.
Section 3.2 NOTIFICATION OF ACCOUNT DEBTORS AND OTHER OBLIGORS. The
Lender may at any time (either before or after the occurrence of an Event of
Default) notify any account debtor or other Person obligated to pay the amount
due that such right to payment has been assigned or transferred to the Lender
for security and shall be paid directly to the Lender. The Borrower will join
in giving such notice if the Lender so requests. At any time after the Borrower
or the Lender gives such notice to an account debtor or other obligor, the
Lender may, but need not, as the Borrower's agent and attorney-in-fact, notify
the United States Postal Service to change the address for delivery of the
Borrower's mail to any address designated by the Lender, otherwise intercept
the Borrower's mail, and receive, open and dispose of the Borrower's mail,
applying all Collateral as permitted under this Agreement and holding all other
mail for the Borrower's account or forwarding such mail to the Borrower's last
known address.
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Section 3.3 OCCUPANCY.
(a) The Borrower hereby irrevocably grants to the Lender the right
to take possession of each premises where Borrower conducts its business
and has any rights of possession (the "Premises") at any time during any
Default Period.
(b) The Lender may use the Premises only to hold, process,
manufacture, sell, use, store, liquidate, realize upon or otherwise
dispose of goods that are Collateral and for other purposes that the
Lender in good faith considers related.
(c) The Lender's right to hold the Premises shall terminate upon the
earlier of payment in full of all Obligations, or final sale or
disposition of all goods constituting Collateral and delivery of all such
goods to purchasers.
(d) The Lender shall not be obligated to pay or account for any rent
or other compensation for the possession or use of any of the Premises;
provided, however, that if the Lender does pay or account for any rent or
other compensation for the possession or use of any of the Premises, the
Borrower shall reimburse the Lender promptly for the full amount thereof.
Section 3.4 LICENSE. The Borrower hereby grants to the Lender a non-
exclusive, worldwide and royalty-free license to use, sub-license or otherwise
exploit all trademarks, franchises, trade names, copyrights and patents of the
Borrower for the purpose of selling, leasing or otherwise disposing of any or
all Collateral following an Event of Default. The foregoing license includes
the right to reproduce, distribute, publicly perform, display and create
derivative works from any and all of the Borrower's copyrights.
Section 3.5 FILING A COPY. A carbon, photographic, or other
reproduction of this Agreement or of a financing statement signed by Borrower
is sufficient as a financing statement.
ARTICLE IV
CONDITIONS OF LENDING
Section 4.1 CONDITIONS PRECEDENT TO THE LENDER'S WILLINGNESS TO
CONSIDER MAKING THE INITIAL REVOLVING ADVANCE. The Lender's willingness to
consider making an initial Advance hereunder shall be subject to the condition
precedent that the Lender shall have received all of the following, each in
form and substance satisfactory to the Lender:
(a) This Agreement, properly executed by the Borrower.
(b) The Note, properly executed by the Borrower.
(c) The SBA/Eximbank Joint Application, properly completed and
executed by the Borrower.
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(d) The Borrower Agreement, properly executed by the Borrower.
(e) A properly completed and executed Borrowing Base Certificate as
of a date not more than five (5) Business Days before the date of this
Agreement.
(f) A participation and servicing agreement, properly signed by the
Servicer.
(g) Copies of the Borrower's audited financial statements with full
disclosure for the last three (3) fiscal years.
(h) Copies of the Borrower's federal tax returns for the last year
together with all schedules thereto.
(i) The Life Insurance Assignment, properly executed by the
beneficiary and owner thereof, and the Life Insurance Policy, each in form
and substance satisfactory to the Lender, together with such evidence as
the Lender may request that the Life Insurance Policy is subject to no
assignments or encumbrances other than the Life Insurance Assignment.
(j) The Collateral Account Agreement, properly executed by the
Borrower.
(k) Current searches of appropriate filing offices showing that
(i) no state or federal tax liens have been filed and remain in effect
against the Borrower, (ii) no financing statements have been filed and
remain in effect against the Borrower except those financing statements
relating to those security interests or liens set forth in Exhibit E
hereto (the "Permitted Liens") or to liens held by Persons who have agreed
in writing that upon receipt of proceeds of the Advances, they will
deliver UCC releases and/or terminations satisfactory to the Lender, and
(iii) the Lender has duly filed all financing statements necessary to
perfect the Security Interest, to the extent the Security Interest is
capable of being perfected by filing.
(l) A certificate of the Borrower's Secretary or Assistant Secretary
certifying as to (i) the resolutions of the Borrower's directors and, if
required, shareholders, authorizing the execution, delivery and
performance of the Loan Documents, (ii) the Borrower's articles of
incorporation and bylaws, and (iii) the signatures of the Borrower's
agents authorized to execute and deliver the Loan Documents and other
instruments, agreements and certificates, including Advance requests, on
the Borrower's behalf.
(m) A current certificate issued by the Secretary of State of
Minnesota, certifying that the Borrower is in compliance with all
applicable organizational requirements of the State of Minnesota.
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(n) Evidence that the Borrower is duly licensed or qualified to
transact business in all jurisdictions where the character of the property
owned or leased or the nature of the business transacted by it makes such
licensing or qualification necessary.
(o) An Officer's certificate from an officer of the Borrower
confirming, in his personal capacity, the representations and warranties
set forth in Article V and the Disclosure.
(p) The Support Agreement in favor of the Lender, properly executed
by Xxxxxx Xxxxxx in his personal capacity.
(q) An opinion of counsel to the Borrower, addressed to the Lender.
(r) Certificates of the insurance required hereunder, with all
hazard insurance containing a lender's loss payable endorsement in the
Lender's favor and with all liability insurance naming the Lender as an
additional insured.
(s) An Intercreditor Agreement by and between the Lender and NBCI.
(t) Such other loan documents as the Lender may reasonably require,
and such financial records and information as the Lender may require in
its sole discretion.
Section 4.2 CONDITIONS PRECEDENT TO ALL ADVANCES. Advance on such
date:
(a) the representations and warranties contained in Article V are
correct on and as of the date of such Advance as though made on and as of
such date, except to the extent that such representations and warranties
relate solely to an earlier date; and
(b) no event has occurred and is continuing, or would result from
such Advance which constitutes a Default or an Event of Default.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender as follows:
Section 5.1 NAME; LOCATIONS; TAX ID NO.; SUBSIDIARIES. During its
existence, the Borrower has done business solely under its corporate name as
set forth herein and under such trade names and such other corporate names as
disclosed to Lender in writing before this Agreement is signed and delivered.
The address of Borrower's chief executive office and principal place of
business and its federal tax identification number are set forth below its
signature to this Agreement. All Inventory is located at that location or at
one of the other locations disclosed to Lender in writing before this Agreement
is signed and delivered. The
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Borrower has no subsidiaries except as disclosed to Lender in writing before
this Agreement is signed and delivered.
Section 5.2 FINANCIAL CONDITION; NO ADVERSE CHANGE. Before this
Agreement was signed and delivered, the Borrower furnished the Lender its
audited financial statements for its fiscal year ended August 31, 1996 and its
unaudited financial statements for the fiscal year to date ending April 30,
1997, each certified by the Borrower. Those statements fairly present the
Borrower's financial condition as of the dates indicated therein and the
results of its operations for the periods then ended and were prepared in
accordance with GAAP. Since the date of the most recent financial statements,
there has been no material adverse change in the business, properties or
condition (financial or otherwise) of the Borrower.
Section 5.3. SUSPENSION AND DEBARMENT, ETC. On the date of this
Agreement neither the Borrower nor any of its Principals (as defined below) are
(A) debarred, suspended, proposed for debarment with a final determination
skill pending, declared ineligible or voluntarily excluded (as such terms are
defined under any of the Debarment Regulations referred to below) from
participating in procurement or nonprocurement transactions with any US federal
government department or agency pursuant to any of the Debarment Regulations
(as defined below) or (B) indicted, convicted or had a civil judgment rendered
against the Borrower or any of its Principals for any of the offenses listed in
any of the Debarment Regulations. Unless authorized by Eximbank, the Borrower
will not knowingly enter into any transactions in connection with the Items
with any person who is debarred, suspended, declared ineligible or voluntarily
excluded from participation in procurement or nonprocurement transactions with
any US federal government department or agency pursuant to any of the Debarment
Regulations. The Borrower will provide immediate written notice to the Lender
if at any time it learns that the certification set forth in this Section 5.3
was erroneous when made or has become erroneous by reason of changed
circumstances. For the purposes hereof, (1) "Principals" shall mean any
officer, director, owner, partner, key employee, or other person with primary
management or supervisory responsibilities with respect to the Borrower; or any
other person (whether or not an employee) who has critical influence on or
substantive control over the transaction covered by this Agreement and (2) the
Debarment Regulations shall mean (x) the Government wide Debarment and
Suspension (Nonprocurement) regulations (Common Rule), 53 Fed. Reg. 19204 (May
26, 1988), (y) Subpart 9.4 (Debarment, Suspension and Ineligibility) of the
Federal Acquisition Regulations, 48 C.F.R. 9.400-9.409 and (z) the revised
Government wide Debarment and Suspension (Nonprocurement) regulations (Common
Rule), 60 Fed. Reg. 33037 (June 26, 1995). The Borrower acknowledges that any
statement, certification or representation made by it in connection with the
Credit Facility is subject to the penalties provided in Article 18 U.S.C.
Section 1001.
ARTICLE VI
COVENANTS OF THE BORROWER
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So long as the Advances or any amount owing to Lender hereunder shall
remain unpaid, the Borrower will comply with the requirements in this Article,
unless the Lender shall otherwise consent in writing.
Section 6.1 REPORTING REQUIREMENTS. The Borrower will deliver to the
Lender each of the following in form and detail acceptable to the Lender:
(a) as soon as available, and in any event within 90 days after the
end of each fiscal year of the Borrower, the Borrower's audited financial
statements prepared in accordance with GAAP; together with (i) copies of
all management letters prepared by such accountants; (ii) a report signed
by such accountants stating that in making the investigations necessary
for said opinion they obtained no knowledge, except as specifically
stated, of any Default or Event of Default hereunder and all relevant
facts in reasonable detail to evidence, and the computations as to,
whether or not the Borrower is in compliance with the requirements set
forth in Section 6.9 and (iii) a certificate of the Borrower's chief
financial officer, substantially in the form of Exhibit C hereto, stating
that such financial statements have been prepared in accordance with GAAP,
that they fairly present the Borrower's financial condition and the
results of its operations, and whether or not such officer has knowledge
of the occurrence of any Default or Event of Default hereunder and, if so,
stating in reasonable detail the facts with respect thereto;
(b) as soon as available and in any event within 20 days after the
end of each month, an unaudited/internal balance sheet and statement of
income and retained earnings of the Borrower as at the end of and for such
month and for the year to date period then ended, prepared in accordance
with GAAP, subject to year-end audit adjustments, PROVIDED, HOWEVER, that
during any month which is the end of a fiscal quarter of the Borrower, the
financial statements submitted within 20 days after the end of the month
shall be considered preliminary and the Borrower shall deliver its final,
completed financial statements, as filed in the Borrower's 10-QSB, within
45 days after the end of such month; and accompanied by a certificate of
the Borrower's chief financial officer, substantially in the form of
Exhibit C hereto stating (i) that such financial statements have been
prepared in accordance with GAAP, subject to year-end audit adjustments
and fairly represent the Borrower's financial condition and the results of
its operations, (ii) whether or not such officer has knowledge of the
occurrence of any Default or Event of Default hereunder not theretofore
reported and remedied and, if so, stating in reasonable detail the facts
with respect thereto, and (iii) all relevant facts in reasonable detail to
evidence, and the computations as to, whether or not the Borrower is in
compliance with the requirements set forth in Section 6.9;
(c) as soon as available and in any event within five (5) Business
Days after the end of each month, a properly completed Borrowing Base
Certificate as at the end of such month, signed by the Borrower's chief
financial officer;
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(d) within five (5) Business Days after the end of each month,
agings of the Borrower's accounts receivable and accounts payable and an
accounts receivable certification as of the end of such month;
(e) as soon as available and in any event prior to the end of each
fiscal year of the Borrower, the projected balance sheets and income
statements for each quarter of the next fiscal year, each in reasonable
detail, representing the Borrower's good faith projections and certified
by the Borrower's chief financial officer as being the most accurate
projections available and identical to the projections used by the
Borrower for internal planning purposes, together with such supporting
schedules and information as the Lender may in its discretion require;
(f) as soon as available and in any event within three (3) days
after they are due, copies of tax payments due and paid and written notice
of any and all taxes due but not paid;
(g) from time to time, with reasonable promptness, any and all
receivables schedules, collection reports, deposit records, equipment
schedules, copies of invoices to account debtors, shipment documents and
delivery receipts for goods sold, and such other material, reports,
records or information as the Lender may request;
(h) promptly upon knowledge thereof, notice of any Items (and the
corresponding invoice amount) which are articles, services, or related
technical data that are listed on the United States Munitions List (part
121 of title 22 of the Code of Federal Regulations);
(i) immediately after a proceeding in bankruptcy or an action for
debtor's relief is filed by, against, or on behalf of the Borrower;
(j) immediately after the Borrower fails to obtain the dismissal or
termination within thirty (30) calendar days of the commencement of any
proceeding or action referred to in (i) above; and
(k) immediately after the Borrower begins any procedure for its
dissolution or liquidation, or a procedure therefor has been commenced
against it.
So long as the Servicer is actively servicing the Loan Documents on
behalf of the Lender as described in Section 8.2, the Borrower shall provide to
the Servicer all reports required under this Section 6.1.
Section 6.2 INSPECTION. Upon the Lender's request, the Borrower will
permit any officer, employee, attorney, agent or accountant for the Lender to
audit, review, make extracts from or copy any and all records of the Borrower
and to inspect the Collateral at all times during ordinary business hours.
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Section 6.3 ACCOUNT VERIFICATION. The Lender may at any time and
from time to time send, or request the Borrower to send, requests for
verification of Accounts or notices of assignment to account debtors and other
obligors. The Borrower authorizes the Lender to verify Accounts as frequently
as daily and the Borrower understands the Lender intends to do so by telephone
and/or in writing.
Section 6.4 ACCOUNT DEBTORS TO PAY TO DESIGNATED ACCOUNT; PLEDGE OF
ACCOUNT. The Borrower shall instruct all of its Account debtors located
outside the US to make all payments for Items directly to the Collateral
Account.
Section 6.5 NO OTHER LIENS. The Borrower will keep all Collateral
free and clear of all security interests, liens and encumbrances except the
Security Interest, purchase money security interests in equipment, the
Permitted Liens, and other security interests approved by the Lender in
writing.
Section 6.6 INSURANCE. The Borrower will at all times keep all
tangible Collateral insured against risks of fire (including so-called extended
coverage), theft, collision (for Collateral consisting of motor vehicles) and
such other risks and in such amounts as the Lender may reasonably request, with
a lender's loss payable clause in favor of Lender to the extent of its
interest.
Section 6.7 COLLATERAL ACCOUNT. The Borrower has provided the Lender
with an agreement regarding a Collateral Account in connection with the
collection of Accounts. The Lender hereby agrees to waive any Event of Default
which arises solely as a result of the Lender's failure to apply readily
available funds in the Borrower's Collateral Account to the Obligations
pursuant to the terms of this Agreement or the Collateral Account Agreement.
Section 6.8 KEY PERSON LIFE INSURANCE. The Borrower shall maintain
insurance upon the life of Xxxxxx Xxxxxx, its chief executive officer, with the
death benefit thereunder in an amount not less than $100,000 (the "Life
Insurance Policy"). The right to receive the proceeds of the Life Insurance
Policy shall be assigned to the Lender by the Life Insurance Assignment.
Section 6.9 MINIMUM TANGIBLE NET WORTH. The Borrower will maintain,
at all times, its Tangible Net Worth, determined as at the end of each month,
at an amount not less than $250,000.
Section 6.10 NO SALE OR TRANSFER OF COLLATERAL AND OTHER ASSETS. The
Borrower will not sell, lease, assign, transfer or otherwise dispose of (i) the
stock of any subsidiary, (ii) all or a substantial part of its assets, or
(iii) any Collateral or any interest therein (whether in one transaction or in
a series of transactions) to anyone other than the sale or license of Inventory
in the ordinary course of business.
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Section 6.11 CONSOLIDATION AND MERGER; ASSET ACQUISITIONS. The
Borrower will not consolidate with or merge into any Person, or permit any
other Person to merge into it, or acquire (in a transaction analogous in
purpose or effect to a consolidation or merger) all or substantially all the
assets of any other Person.
Section 6.12 PLACE OF BUSINESS; NAME. The Borrower will not change
the location of its chief executive office or principal place of business from
that disclosed pursuant to Section 5.1. The Borrower will not permit any
tangible Collateral to be located in any state or area in which, in the event
of such location, a financing statement covering such Collateral would be
required to be, but has not in fact been, filed in order to perfect the
Security Interest. The Borrower will not change its name.
Section 6.13 AUTHORIZED SIGNERS. The secretary or assistant
secretary of the Borrower shall from time to time, upon a change in the persons
duly elected, qualified and acting as the officers or agents of the Borrower,
immediately certify to the Lender the names and signatures of the persons
authorized to sign or to act. The Lender shall be fully protected in relying on
such certificates and on the obligation of the secretary or assistant secretary
immediately to certify to the Lender any change in any facts so certified. The
Lender shall be indemnified and saved harmless by the Borrower from any claims,
demands, expenses, loss or damage resulting from or growing out of honoring or
relying on the signature or other authority (whether or not properly used) of
any officer or person whose name and signature was so certified, or refusing to
honor any signature or authority not so certified.
Section 6.14 REGISTRATION OF PATENTS, COPYRIGHTS, TRADEMARKS, ETC.
At least five (5) days prior to registering, filing or otherwise recording any
of the Borrower's trademarks, tradenames, copyrights or patents in the United
States Patent and Trademark Office, the United States Copyright Office or any
similar federal or state office, the Borrower shall deliver written notice to
the Lender stating the actions being taken and describing the intellectual
property being so registered, filed or recorded. The Borrower hereby agrees
that it shall promptly execute all security agreements and financing statements
as the Lender may require with respect to any such trademark, tradename,
copyright or patent being so registered, filed or recorded.
ARTICLE VII
EVENTS OF DEFAULT, RIGHTS AND REMEDIES
Section 7.1 EVENTS OF DEFAULT. "Event of Default", wherever used
herein, means any one of the following events:
(a) Default in the payment of the Obligations when they become due
and payable;
(b) Any payment default shall occur under any agreement (other than
this Agreement) between the Borrower and the Lender, or the Lender shall
accelerate or
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demand payment of any obligations (other than arising under this Agreement)
owed to it by the Borrower, or the Lender shall begin exercising its
remedies against the Borrower;
(c) Any payment default shall occur under any agreement between the
Borrower and the Servicer, or the Servicer shall accelerate or demand
payment of any obligations owed to it by the Borrower, or the Servicer
shall begin exercising its remedies against the Borrower;
(d) Eximbank shall repudiate, purport to revoke or fail to perform
its obligations under the Master Guaranty;
(e) Any material litigation is commenced against the Borrower and is
not withdrawn within thirty (30) calendar days of filing;
(f) A petition shall be filed by or against the Borrower under the
United States Bankruptcy Code naming the Borrower as debtor;
(g) The Life Insurance Policy shall be terminated, by the Borrower
or otherwise; or the Life Insurance Policy shall be scheduled to terminate
within 30 days and the Borrower shall not have delivered a satisfactory
renewal thereof to the Lender; or the Borrower shall fail to pay any
premium on the Life Insurance Policy when due; or the Borrower shall take
any other action that impairs the value of the Life Insurance Policy;
(h) The Borrower begins any procedure for its liquidation or
dissolution or any such procedure is commenced against it; or
(i) Default in the performance, or breach, of any covenant or
agreement of the Borrower contained in any Loan Document not specifically
addressed in this Section 7.1, which shall remain uncured for 30 days
after notice from the Lender.
Section 7.2 RIGHTS AND REMEDIES. As provided in Section 2.4, the
Lender may, at any time and for any reason, refuse to make any requested
Advance or demand payment of the Obligations. In addition, during any Default
Period, the Lender may exercise any or all of the following rights and
remedies:
(a) The Lender may exercise and enforce any and all rights and
remedies available upon default to a secured party under the UCC,
including the right to take possession of Collateral, or any evidence
thereof, proceeding without judicial process or by judicial process
(without a prior hearing or notice thereof, which the Borrower hereby
expressly waives) and the right to sell, lease or otherwise dispose of any
or all of the Collateral, and in connection therewith, the Borrower will
on demand assemble the Collateral and make it available to the Lender at a
place to be designated by the Lender which is reasonably convenient to
both parties.
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(b) The Lender may require the Borrower to, and the Borrower hereby
agrees that it shall register, file or otherwise record any and all of the
Borrower's trademarks, tradenames, copyrights and patents in the United
States Patent and Trademark Office, the United States Copyright Office or
any similar state office as the Lender may require. The Lender may also
require the Borrower to, and the Borrower hereby agrees that it shall,
promptly execute all security agreements and financing statements as the
Lender may require with respect to any such trademark, tradename,
copyright or patent being so registered, filed or recorded.
(c) The Lender may exercise any other rights and remedies available
to it by law or agreement.
The remedies provided hereunder are cumulative.
Section 7.3 CERTAIN NOTICES. If notice to the Borrower of any
intended disposition of Collateral or any other intended action is required by
law in a particular instance, such notice shall be deemed commercially
reasonable if given (in the manner specified in Section 8.1) at least 10
calendar days before the date of intended disposition or other action.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 ADDRESSES FOR NOTICES, ETC. Except as otherwise
expressly provided herein, all notices, requests, demands and other
communications provided for hereunder shall be in writing and shall be
(i) personally delivered, (ii) sent by first class US mail, (iii) sent by
overnight courier of national reputation, or (iv) transmitted by telecopy, in
each case addressed or telecopied to the party to whom notice is being given at
its address or telecopy number as set forth below its signature to this
Agreement.
Section 8.2 SERVICING OF CREDIT FACILITY.
(a) The Lender has requested that the Servicer service and enforce
the Loan Documents, make all Advances and collect all Obligations on the
Lender's behalf and the Servicer has agreed to do so. The Borrower
acknowledges and accepts the Servicer's appointment as such.
(b) The Servicer shall have no duties or responsibilities to the
Borrower hereunder, but only to the Lender. Neither the Servicer nor any
of its officers, directors, employees or agents shall be liable for any
action taken or omitted by them hereunder or in connection herewith,
unless caused by its or their gross negligence or willful misconduct. The
Servicer's duties shall be mechanical and administrative in nature;
nothing in this Agreement, express or implied, is intended to or shall be
so construed as to impose upon the Servicer any obligations with respect
to the Loan
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Documents except as expressly set forth herein. The Borrower shall not in
any way be construed to be a third party beneficiary of any relationship
between the Servicer and the Lender.
(c) The Servicer shall be entitled to rely, and shall be fully
protected in relying, upon any communication whether written or oral
believed by it to be genuine and correct and to have been signed, sent or
made by the proper Person, and, with respect to all legal matters
pertaining to this Agreement and its duties hereunder, upon advice of
counsel selected by it.
(d) The Borrower shall be entitled to rely upon any communication
whether written or oral sent or made by the Servicer for and on behalf of
the Lender with respect to all matters pertaining to the Loan Documents
and the Borrower's duties and obligations hereunder, unless and until the
Borrower receives written notice from the Lender that the Servicer is no
longer servicing this credit facility.
(e) The Servicer shall hold and be the custodian of the Loan
Documents on the Lender's behalf for so long as the Servicer is servicing
the Credit Facility.
Section 8.3 COSTS AND EXPENSES. The Borrower agrees to pay on demand
all reasonable costs and expenses (including reasonable legal fees) incurred by
the Lender in connection with the Loan Documents and any other document or
agreement related thereto, and the transactions contemplated hereby, including
wire transfer and ACH charges, the cost of credit reports, overadvance fees,
the expense of any auditors and fees and expenses in enforcing this Agreement.
Section 8.4 INDEMNITY. In addition to the payment of expenses
pursuant to Section 8.3, the Borrower agrees to indemnify, defend and hold
harmless the Lender, and any of its participants, parent corporations,
subsidiary corporations, affiliated corporations, successor corporations, and
all present and future officers, directors, employees, attorneys and agents of
the foregoing (the "Indemnitees") from and against any of the following
(collectively, "Indemnified Liabilities"):
(i) any and all transfer taxes, documentary taxes,
assessments or charges made by any governmental authority by reason
of the execution and delivery of this Agreement and the other Loan
Documents or the making of the Advances;
(ii) any and all liabilities, losses, damages, penalties,
judgments, suits, claims, costs and expenses of any kind or nature
whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel) in connection with any investigative,
administrative or judicial proceedings, whether or not such
Indemnitee shall be designated a party thereto, which may be imposed
on, incurred by or asserted against any such Indemnitee, in any
manner related to or arising out of or in connection with the making
of the
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Advances, this Agreement and the other Loan Documents or the
use or intended use of the proceeds of the Advances; and
(iii) any claim, loss or damage to which any Indemnitee may
be subjected as a result of any violation of any federal, state,
local or other governmental statute, regulation, law, or ordinance
dealing with the protection of human health and the environment.
If any investigative, judicial or administrative proceeding arising from
any of the foregoing is brought against any Indemnitee, then the Borrower or
counsel designated by the Borrower and satisfactory to the Indemnitee, will
resist and defend such action, suit or proceeding to the extent and in the
manner directed by the Indemnitee. Each Indemnitee will use its best efforts to
cooperate in the defense of any such action, suit or proceeding. If the
foregoing undertaking to indemnify, defend and hold harmless may be held to be
unenforceable because it violates any law or public policy, the Borrower shall
nevertheless make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities which is permissible under applicable law.
The Borrower's obligation under this Section 8.4 shall survive the termination
of this Agreement and the discharge of the Borrower's other obligations
hereunder. If Eximbank makes payment of a claim to the Lender under the Master
Guaranty in connection with the Credit Facility, Eximbank shall be assigned all
the Lender's rights and remedies under the Loan Documents and may enforce any
such rights or remedies against the Borrower and the Collateral. Additionally,
the Borrower shall hold Eximbank harmless from agrees to indemnify it against
any and all liabilities, damages, claims, costs and losses incurred or suffered
by it resulting from (a) any materially incorrect certification or statement
knowingly made by or on behalf of the Borrower to Eximbank or the Lender in
connection with an Advance , this Agreement or any of the other Loan Documents
or (b) any breach by the Borrower of the terms and conditions of this Agreement
or any of the other Loan Documents.
Section 8.5 BINDING EFFECT; ASSIGNMENT; COUNTERPARTS; EXCHANGING
INFORMATION. The Loan Documents shall be binding upon and inure to the benefit
of the Borrower and the Lender and their respective successors and assigns,
except that the Borrower shall not have the right to assign its rights
thereunder or any interest therein without the prior written consent of the
Lender. This Agreement and other Loan Documents may be executed in any number
of counterparts, each of which when so executed and delivered shall be deemed
to be an original and all of which counterparts, taken together, shall
constitute but one and the same instrument. Without limiting the Lender's right
to share information regarding the Borrower and its Affiliates with the
Lender's participants, accountants, lawyers and other advisors, the Lender,
Norwest Corporation, and all direct and indirect subsidiaries of Norwest
Corporation, may exchange any and all information they may have in their
possession regarding the Borrower and its Affiliates, and the Borrower waives
any right of confidentiality it may have with respect to such exchange of such
information.
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Section 8.6 GOVERNING LAW; JURISDICTION, VENUE; WAIVER OF JURY TRIAL.
This Agreement and the Note shall be governed by and construed in accordance
with the laws (other than conflict laws) of the State of Minnesota. Each party
consents to the personal jurisdiction of the state and federal courts located
in the State of Minnesota in connection with any controversy related to this
Agreement, waives any argument that venue in any such forum is not convenient
and agrees that any litigation initiated by any of them in connection with this
Agreement shall be venued in either the District Court of Hennepin County,
Minnesota located in Minneapolis, Minnesota, or the United States District
Court, District of Minnesota, Fourth Division. THE PARTIES WAIVE ANY RIGHT TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED ON OR PERTAINING TO THIS
AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as
of the date first above written.
NORWEST BANK MINNESOTA, NATIONAL NICOLLET PROCESS ENGINEERING, INC.
ASSOCIATION
By /s/ Xxxxxxxxxxx X. Xxxxx By /s/ Xxxxxx X. Xxxxxx
------------------------ --------------------
Xxxxxxxxxxx X. Xxxxx Xxxxxx X. Xxxxxx
Its Vice President Its President and Chief Executive
Officer
Address: Address:
Norwest Center 420 North 0xx Xxxxxx
Xxxxx Xxxxxx and Marquette Avenue Suite 1040 Ford Centre
Minneapolis, Minnesota 55479-0085 Xxxxxxxxxxx, Xxxxxxxxx 00000
Telecopy No. 612/667-2269 Telecopy No. 612/339-6027
Federal Tax ID No. 00-0000000 Federal Tax I.D. No. 00-0000000
-24-
Exhibit A to Credit and Security
Agreement
REVOLVING NOTE
$400,000 Minneapolis, Minnesota
May 28, 1997
For value received, the undersigned, NICOLLET PROCESS ENGINEERING, INC., a
Minnesota corporation (the "Borrower"), hereby promises to pay on the
Termination Date under the Credit Agreement (defined below) to the order of
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking association
(the "Lender"), at its main office in Minneapolis, Minnesota, or at any other
place designated at any time by the holder hereof, in lawful money of the
United States of America and in immediately available funds, the principal sum
of Four Hundred Thousand Dollars ($400,000) or, if less, the aggregate unpaid
principal amount of all Advances made by the Lender to the Borrower under the
Credit and Security Agreement of even date herewith by and between the Lender
and the Borrower (as the same may hereafter be amended, supplemented or
restated from time to time, the "Credit Agreement") together with interest on
the principal amount hereunder remaining unpaid from time to time (computed on
the basis of actual days elapsed in a 360-day year) from the date of the
initial Advance until this Note is fully paid at the rate from time to time in
effect under the Credit Agreement.
This Note is the Revolving Note as defined in the Credit Agreement and is
subject to the Credit Agreement.
NICOLLET PROCESS ENGINEERING, INC.
By /s/ Xxxxxx X. Xxxxxx
--------------------
Xxxxxx X. Xxxxxx
Its President and Chief Executive
Officer
A-1
Exhibit B to Credit and Security
Agreement
EXPORT-IMPORT BANK OF THE UNITED STATES
WORKING CAPITAL GUARANTEE PROGRAM
BORROWER AGREEMENT
THIS BORROWER AGREEMENT (this "Agreement") is made and entered into by
NICOLLET PROCESS ENGINEERING, INC., a Minnesota corporation (the "Borrower"),
and is acknowledged by NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national
banking association (the "Lender").
RECITALS
A. The Lender shall make a loan (the "Loan") to the Borrower for the
purpose of providing the Borrower with pre-export working capital to finance
the manufacture, production or purchase and subsequent export sale of the Items
(as hereinafter defined).
B. The Loan shall be in a principal amount (the "Loan Amount") not to
exceed at any time outstanding the amount specified in Section (5)(A) of the
Loan Authorization Agreement between the Lender and the Export-Import Bank of
the United States ("Eximbank") which is attached hereto as Exhibit A and
incorporated herein as a part of this Agreement. If the Loan is being made
pursuant to the Lender's Delegated Authority from Eximbank, all references
herein to the Loan Authorization Agreement shall be deemed to be to the Loan
Authorization Notice provided to Eximbank and the Borrower by the Lender.
C. The Loan shall be evidenced by a valid and enforceable promissory
note payable by the Borrower to the order of the Lender (the "Note") and shall
be made pursuant to a written agreement related solely thereto between the
Borrower and the Lender (the "Loan Agreement").
D. A condition precedent to the making of the Loan by the Lender is that
Eximbank guarantee the payment of ninety percent (90%) of the Loan Amount and
all interest accrued thereon, subject to the terms and conditions of a master
guarantee agreement (the "Master Guarantee Agreement") between Eximbank and the
Lender.
E. In consideration for and as a condition precedent to the Lender's
making the Loan and Eximbank's entering into the Master Guarantee Agreement,
the Borrower shall execute this Agreement for the benefit of the Lender and
Eximbank.
NOW, THEREFORE, the Borrower hereby agrees as follows:
B-1
ARTICLE I
DEFINITIONS
"Accounts Receivable" shall mean those trade accounts from the sale of the
Items due and payable to the Borrower in the United States and any notes,
drafts, letters of credit or insurance proceeds supporting payment thereof.
"Availability Date" shall mean the last date on which the Lender may make
a Disbursement as set forth in Section (10) of the Loan Authorization Agreement
or, if such date is not a Business Day, the next Business Day thereafter.
"Borrowing Base" shall mean the Collateral Value as discounted by the
applicable Disbursement Rate(s).
"Borrowing Base Certificate" shall mean the certificate in form provided
by the Lender and executed by the Borrower setting forth the Borrowing Base
supporting one or more Disbursements.
"Business Day" shall mean any day on which the Federal Reserve Bank of New
York is open for business.
"Buyer" shall mean an entity which has entered into one or more Export
Orders with the Borrower.
"Closing Date" shall mean the date on which the Loan Documents are
executed by the Borrower.
"Collateral" shall mean the property of the Borrower in which the Borrower
has granted to the Lender a valid and enforceable security interest as security
for the payment of all principal and interest due under the Loan, and which is
identified in Section (6) of the Loan Authorization Agreement, including all
proceeds (cash and non-cash) thereof.
"Collateral Value" shall mean at any given time the value of all
Collateral against which Disbursements may be made as set forth in Section
(5)(C) of the Loan Authorization Agreement, valued according to GAAP.
"Country Limitation Schedule" shall mean the most recent schedule
published by Eximbank and provided to the Borrower by the Lender which sets
forth on a country by country basis whether and under what conditions Eximbank
will provide coverage for the financing of export transactions to countries
listed therein.
"Debarment Regulations" shall have the meaning set forth in Section 2.16.
-2-
"Disbursed Amount" shall mean the aggregate outstanding amount of the
Disbursements.
"Disbursement" shall mean an advance of the Loan from the Lender to the
Borrower under the Loan Agreement.
"Disbursement Rate" shall mean the rate specified in Section (5)(C) of the
Loan Authorization Agreement for each category of Collateral.
"Dollars" or "$" shall mean the lawful money of the United States of
America.
"Export Order" shall mean a written export order or contract for the
purchase by the Buyer from the Borrower of any of the Items.
"GAAP" shall mean the generally accepted accounting principles issued by
the American Institute of Certified Public Accountants.
"Guarantor" shall mean each person or entity, if any, identified in
Section (3) of the Loan Authorization Agreement who shall guarantee (jointly
and severally if more than one) the Borrower's obligation to repay all amounts
outstanding under the Note.
"Inventory" shall mean the raw materials, work-in-process and finished
goods purchased or manufactured by the Borrower for resale and located in the
United States.
"Items" shall mean the finished goods or services which are intended for
export, as specified in Section (4)(A) of the Loan Authorization Agreement.
"Letter of Credit" shall mean an irrevocable letter of credit subject to
[UCP 500], payable in the United States or at the issuing bank and issued for
the benefit of the Borrower on behalf of a Buyer in connection with the
purchase of the Items.
"Loan Documents" shall mean the Note, the Loan Agreement, this Agreement
and any other instrument, agreement or document previously, simultaneously or
hereafter executed by the Borrower or any Guarantors evidencing, securing,
guaranteeing or in connection with the Loan.
"Principals" shall have the meaning set forth in Section 2.16.
"Revolving Loan" shall mean a Loan under which amounts disbursed and
repaid may be disbursed on a continuous basis during the term of the Loan.
"Transaction Specific Loan" shall mean a Loan under which amounts
disbursed and repaid may not be disbursed again.
"U.S." or "United States" shall mean the United States of America and its
territorial possessions.
-3-
"U.S. Content" shall mean with respect to any Item all the labor,
materials and services which are of U.S. origin or manufacture, and which are
incorporated into an Item in the United States
ARTICLE II
OBLIGATIONS OF THE BORROWER
Until payment in full of the Loan, the Borrower agrees to the following:
Section 2.1 USE OF DISBURSEMENTS. The Borrower shall use Disbursements
only for the purpose of enabling the Borrower to finance the cost of
manufacturing, producing, purchasing or selling the Items. The Borrower may not
use Disbursements for the purpose of: (a) servicing any of the Borrower's
pre-existing or future indebtedness unrelated to the Loan; (b) acquiring fixed
assets or capital goods for use in the Borrower's business; (c) acquiring,
equipping or renting commercial space outside of the United States; (d) paying
the salaries of non-U.S. citizens or non-U.S. permanent residents who are
located in offices outside the United States; or (e) serving as a retainage or
warranty bond.
In addition, Disbursements may not be used to finance the manufacture,
purchase or sale of any of the following:
(a) Items to be sold to a Buyer located in a country in which Eximbank is
legally prohibited from doing business as designated in the Country Limitation
Schedule;
(b) that part of the cost of the Items which is not U.S. Content unless
such part is not greater than fifty percent (50%) of the cost of the Items and
is incorporated into the Items in the United States;
(c) defense articles or defense services; or
(d) without Eximbank's prior written consent, any Items to be used in the
construction, alteration, operation or maintenance of nuclear power,
enrichment, reprocessing, research or heavy water Production facilities.
Section 2.2 BORROWING BASE CERTIFICATES AND EXPORT ORDERS. In order to
receive a Disbursement under the Loan, the Borrower shall deliver to the Lender
a Borrowing Base Certificate current within the past five (5) Business Days and
a copy of the Export Order(s) (or, for Revolving Loans, if permitted by the
Lender, a written summary of the Export Orders) against which the Borrower is
requesting a Disbursement. If the Lender permits summaries of Export Orders,
the Borrower shall also deliver promptly to the Lender copies of any Export
Orders requested by the Lender. Additionally, the Borrower shall deliver to the
Lender at least once every thirty (30) calendar days a Borrowing Base
Certificate current within the past five (5) Business Days, which requirement
may be satisfied by submission of a Borrowing Base Certificate when requesting
a Disbursement.
-4-
Section 2.3 EXCLUSIONS FROM THE BORROWING BASE. In determining the
amount of a requested Disbursement, the Borrower shall exclude from the
Borrowing Base the following:
(a) any Inventory which is not located in the United States;
(b) any demonstration Inventory or Inventory sold on consignment;
(c) any Inventory consisting of proprietary software;
(d) any Inventory which is damaged, obsolete, returned, defective,
recalled or unfit for further processing;
(e) any Inventory which has been previously exported from the United
States;
(f) any Inventory which constitutes defense articles or defense services
or any Accounts Receivable generated by sales of such Inventory;
(g) any Inventory which is to be incorporated into Items destined for
shipment to, and any Account Receivable in the name of a Buyer located in, a
country in which Eximbank is legally prohibited from doing business as
designated in the Country Limitation Schedule;
(h) any Inventory which is to be incorporated into Items destined for
shipment to, and any Account Receivable in the name of a Buyer located in, a
country in which Eximbank coverage is not available for commercial reasons as
designated in the Country Limitation Schedule, unless and only to the extent
that such Items are to be sold to such country on terms of a Letter of Credit
confirmed by a bank acceptable to Eximbank:
(i) any Inventory which is to be incorporated into Items whose sale would
result in an ineligible Account Receivable;
(j) any Account Receivable with a term in excess of net one hundred
eighty (180) days;
(k) any Account Receivable which is more than sixty (60) calendar days
past the original due date, unless it is insured through Eximbank export credit
insurance for comprehensive commercial and political risk, or through Eximbank
approved private insurers for comparable coverage, in which case ninety (90)
calendar days shall apply;
(l) any intra-company Account Receivable or any Account Receivable from a
subsidiary of the Borrower, from a person or entity with a controlling interest
in the Borrower or from an entity which shares common controlling ownership
with the Borrower;
(m) any Account Receivable evidenced by a Letter of Credit, until the
date of shipment of the Items covered by the subject Letter of Credit;
-5-
(n) any Account Receivable which the Lender or Eximbank, in its
reasonable judgment, deems uncollectible for any reason;
(o) any Account Receivable payable in a currency other than Dollars,
except as may be approved in writing by Eximbank;
(p) any Account Receivable from a military Buyer, except as may be
approved in writing by Eximbank; and
(q) any Account Receivable due and collectible outside the United States,
except as may be approved in writing by Eximbank.
Section 2.4 SCHEDULES, REPORTS AND OTHER STATEMENTS. The Borrower shall
submit to the Lender in writing each month (a) an Inventory schedule for the
preceding month and (b) an Accounts Receivable aging report for the preceding
month detailing, the terms of the amounts due from each Buyer. The Borrower
shall also furnish to the Lender promptly upon request such information,
reports, contracts, invoices and other data concerning the Collateral as the
Lender may from time to time specify.
Section 2.5 ADDITIONAL SECURITY OR PAYMENT. The Borrower shall at all
times ensure that the Borrowing Base exceeds the Disbursed Amount. If informed
by the Lender or if the Borrower otherwise has actual knowledge that the
Borrowing Base is at any time less than the Disbursed Amount, the Borrower
shall, within five (5) Business Days, either (a) furnish additional security to
the Lender, in form and amount satisfactory to the Lender and Eximbank, or (b)
pay to the Lender an amount equal to the difference between the Disbursed
Amount and the Borrowing Base.
Section 2.6 CONTINUED SECURITY INTEREST. The Borrower shall notify the
Lender in writing within five (5) Business Days if (a) the Borrower changes its
name or identity in any manner, (b) the Borrower changes the location of its
principal place of business, (c) the nature of any of the Collateral is changed
or any of the Collateral is transferred to another location or (d) any of the
books or records related to the Collateral are transferred to another location.
The Borrower shall execute such additional financing statements or other
documents as the Lender may reasonably request in order to maintain its
perfected security interest in the Collateral.
Section 2.7 INSPECTION OF COLLATERAL. The Borrower shall permit the
representatives of the Lender and Eximbank to make at any time during normal
business hours reasonable inspections of the Collateral and of the Borrower's
facilities, activities, and books and records, and shall cause its officers and
employees to give full cooperation and assistance in connection therewith.
-6-
Section 2.8 NOTICE OF DEBTOR'S RELIEF, DISSOLUTION AND LITIGATION. The
Borrower shall notify the Lender in writing within five (5) Business Days of
the occurrence of any of the following:
(a) a proceeding in bankruptcy or an action for debtor's relief is filed
by, against, or on behalf of the Borrower;
(b) the Borrower fails to obtain the dismissal or termination within
thirty (30) calendar days of the commencement of any proceeding or action
referred to in (a) above;
(c) the Borrower begins any procedure for its dissolution or liquidation,
or a procedure therefore has been commenced against it; or
(d) any material litigation is filed against the Borrower.
Section 2.9 INSURANCE. The Borrower shall maintain insurance coverage
in the manner and to the extent customary in businesses of similar character.
Section 2.10 MERGER OR CONSOLIDATION. Without the prior written consent
of Eximbank and the Lender, the Borrower shall not (a) merge or consolidate
with any other entity, (b) sell, lease, transfer or otherwise dispose of any
substantial part of its assets, or any part of its assets which are essential
to the conduct of its business or operations, (c) make any material change in
its organizational structure or identity, or (d) enter into any agreement to do
any of the foregoing.
Section 2.11 REBORROWINGS AND REPAYMENT TERMS. (a) If the Loan is a
Revolving Loan, provided that the Borrower is not in default under any of the
Loan Documents, the Borrower may borrow, repay and reborrow amounts under the
Loan until the close of business on the Availability Date. Unless the Revolving
Loan is renewed or extended by the Lender, the Borrower shall pay in full the
outstanding Loan Amount and all accrued and unpaid interest thereon no later
than the first Business Day after the Availability Date.
(b) If the Loan is a Transaction Specific Loan, the Borrower shall,
within two (2) Business Days of the receipt thereof, pay to the Lender (for
application against the outstanding Loan Amount and accrued and unpaid interest
thereon) all checks, drafts, cash and other remittances it may receive in
payment or on account of the Accounts Receivable or any other Collateral, in
precisely the form received (except for the endorsement of the Borrower where
necessary). Pending such deposit, the Borrower shall not commingle any such
items of payment with any of its other funds or property, but will hold them
separate and apart.
Section 2.12 CROSS DEFAULT. The Borrower shall be deemed in default under
the Loan if the Borrower fails to pay when due any amount payable to the Lender
under any loan to the Borrower not guaranteed by Eximbank.
-7-
Section 2.13 FINANCIAL STATEMENTS. The Borrower shall provide quarterly
financial statements to the Lender no later than forty-five (45) days after the
end of each quarter. This is in addition to any other financial statements that
may be required by the Lender under the Loan Agreement.
Section 2.14 TAXES, JUDGMENTS AND LIENS. The Borrower shall remain
current on all of its federal, state and local tax obligations. In addition, the
Borrower shall notify the Lender in the event (i) any judgment is rendered
against the Borrower, or (ii) any lien is filed against any of the assets of the
Borrower.
Section 2.15 MUNITIONS LIST. If any of the Items are articles, services,
or related technical data that are listed on the United States Munitions List
(part 121 of title 22 of the Code of Federal Regulations), the Borrower shall
send a written notice promptly to the Lender describing the Item(s) and the
corresponding invoice amount.
Section 2.16 SUSPENSION AND DEBARMENT, ETC. On the date of this Agreement
neither the Borrower nor its Principals (as defined below) are (A) debarred,
suspended, proposed for debarment with a final determination skill pending,
declared ineligible or voluntarily excluded (as such terms are defined under any
of the Debarment Regulations referred to below) from participating in
procurement or nonprocurement transactions with any United States federal
government department or agency pursuant to any of the Debarment Regulations (as
defined below) or (B) indicted, convicted or had a civil judgment rendered
against the Borrower or any of its Principals for any of the offenses listed in
any of the Debarment Regulations. Unless authorized by Eximbank, the Borrower
will not knowingly enter into any transactions in connection with the Items with
any person who is debarred, suspended, declared ineligible or voluntarily
excluded from participation in procurement or nonprocurement transactions with
any United States federal government department or agency pursuant to any of the
Debarment Regulations. The Borrower will provide immediate written notice to the
Lender if at any time it learns that the certification set forth in this Section
2.16 was erroneous when made or has become erroneous by reason of changed
circumstances. For the purposes hereof, (1) "Principals" shall mean any officer,
director, owner, partner, key employee, or other person with primary management
or supervisory responsibilities with respect to the Borrower; or any other
person (whether or not an employee) who has critical influence on or substantive
control over the transaction covered by this Agreement and (2) the Debarment
Regulations shall mean (x) the Governmentwide Debarment and Suspension
(Nonprocurement) regulations (Common Rule), 53 Fed. Reg. 19204 (May 26, 1988),
(y) Subpart 9.4 (Debarment, Suspension and Ineligibility) of the Federal
Acquisition Regulations, 48 C.F.R. 9.400-9.409 and (z) the revised
Governmentwide Debarment and Suspension (Nonprocurement) regulations (Common
Rule), 60 Fed. Reg. 33037 (June 26, 1995).
Section 2.17 SPECIAL CONDITIONS. The Borrower shall comply with all
Special Conditions, if any, referenced in Section (11) of the Loan Authorization
Agreement or the Loan Authorization Notice.
-8-
ARTICLE III
RIGHTS AND REMEDIES
Section 3.1 INDEMNIFICATION. Upon Eximbank's payment of a claim to the
Lender in connection with the Loan pursuant to the Master Guarantee Agreement,
Eximbank shall assume all rights and remedies of the Lender under the Loan
Documents and may enforce any such rights or remedies against the Borrower, the
Collateral and any Guarantors. Additionally, the Borrower shall hold Eximbank
and the Lender harmless from and indemnify them against any and all liabilities,
damages, claims, costs and losses incurred or suffered by either of them
resulting from (a) any materially incorrect certification or statement knowingly
made by the Borrower or its agent to Eximbank or the Lender in connection with
the Loan, this Agreement or any of the other Loan Documents or (b) any material
breach by the Borrower of the terms and conditions of this Agreement or any of
the other Loan Documents. The Borrower also acknowledges that any statement,
certification or representation made by the Borrower in connection with the Loan
is subject to the penalties provided in Article 18 U.S.C. Section 1001.
ARTICLE IV
MISCELLANEOUS
Section 4.1 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York, United States of
America.
Section 4.2 NOTIFICATION. All notifications required by this Agreement
shall be given in the manner provided in the Loan Agreement.
Section 4.3 PARTIAL INVALIDITY. If at any time any of the provisions of
this Agreement becomes illegal, invalid or unenforceable in any respect under
the law of any jurisdiction, neither the legality, the validity nor the
enforceability of the remaining provisions hereof shall in any way be affected
or impaired.
-9-
IN WITNESS WHEREOF, the Borrower has caused this Agreement to be duly
executed as of the 28th day of May, 1997.
NICOLLET PROCESS ENGINEERING, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx
Its President and Chief Executive Officer
ACKNOWLEDGED:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
By: /s/ Xxxxxxxxxxx X. Xxxxx
---------------------------------
Xxxxxxxxxxx X. Xxxxx
Its Vice President
Guaranteed Loan No.
--------------------
-10-
Exhibit A
Loan Authorization Agreement
[Two originals to be provided to Eximbank]
To: Export-Import Bank of the United States
000 Xxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Vice President - United States Division
LOAN AUTHORIZATION NOTICE
We hereby notify the Export-Import Bank of the United States ("Eximbank")
that, pursuant to the delegated authority granted by Eximbank to the
undersigned institution (the "Lender") under the Delegated Authority Letter
Agreement referred to below between the Leader and Eximbank, we have issued an
Eximbank Guarantee under the Master Guarantee Agreement between Eximbank and
the Lender, of the loan identified below from the Lender to the Borrower (the
"Loans"). The Loan is subject to the specific terms and conditions set forth
below. Unless otherwise defined, the capitalized terms used herein shall have
the meanings set forth in the Master Guarantee Agreement.
(1) DOCUMENTATION AND LOCATION OF LOAN DOCUMENTS:
Name of Lender: Norwest Bank Minnesota, National Association
----------------------------------------------------------
Delegated Authority Letter Agreement Number: MN -DA- 96-A-001
------ ---------------
Master Guarantee Agreement Number: MN -MGA- 96 -001
----- ------------------------
Borrower Agreement Date: May 28, 1997
--------------------------------------------------
Location of Loan Documents: NORWEST BUSINESS CREDIT, INC., NORWEST CENTER,
XXXXX XXXXXX XXX XXXXXXXXX XXXXXX, XXXXXXXXXXX, XXXXXXXXX 00000-0000
If the Borrower was assisted by a city/state export agency, please provide
the name of the agency, contact person, and telephone number.
No
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(2) BORROWER'S NAME AND ADDRESS: The full name, address, contact person,
telephone and telefax numbers of the Borrower are as follows:
Nicollet Process Engineering, Inc. Tel: (000) 000-0000
000 Xxxxx 0xx Xxxxxx, Xxxxx 0000 Xxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000 Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
IS THE BORROWER A SMALL BUSINESS AS STIPULATED BY SBA GUIDELINES ?
X YES NO
------- -------
-2
(3) GUARANTOR'S NAME AND ADDRESS: The full name, address, telephone and
telefax numbers of each Guarantor are as follows:
NONE
[If there are no guarantors, the word "None" must be inserted above in
order for this Notice to be considered complete.]
(4) THE ITEMS TO BE FINANCED:
A. The Items: (Complete description of goods and services to be
exported, e.g. machine tools, electronic components, logs, etc.)
Process Monitoring and Control Systems
Client/Server Software at the Host Level
Machine Diagnostic Tools for the Die Casting and Plastic Injection
Molding Industries
SIC Code(s) 3823
--------
B. Are Performance Guarantees (e.g. bid bonds, performance bonds,
advance payment guarantees in the form of stand-by letters of credit)
to be issued under this Loan?
/ / Yes If yes, approximately what percentage of the Loan
will be utilized for performance guarantees? _______
-3
/X/ No
(5) LOAN AMOUNT, DISBURSEMENT TERMS AND CONDITIONS AND DISBURSEMENT RATES:
A. Loan Amount: $400,000
B. Disbursement Terms and Conditions:
/X/ Disbursements will be made against multiple Export Orders.
/ / Disbursements will be made against a specific contract.
C. Disbursement Rates by Categories of Collateral:
1. Inventory: The Disbursement Rate for Collateral categorized as
Inventory shall be as follows:
75% percent
------
2. Accounts Receivable: The Disbursement Rate for Collateral
categorized as Accounts Receivable shall be as follows:
90% percent
------
3. Other (specify) None
---------
-4
_____ percent
D. Type of Loan:
/X/ The Loan is a Revolving Loan.
For Revolving Loans identify the top three countries of export:
England (UK) (100%)
-----------------------------------
-----------------------------------
-----------------------------------
Estimated Total Export Sales to be supported by this Loan: $1,000,000
----------
/ / The Loan is a Transaction Specific Loan.
For Transaction Specific Loans identify contract or purchase order:
Country of Export:
----------------------------
Contract Price: $
---------------------------
Contract Number:
----------------------------
-5
Contract Date:
----------------------------
Parties:
----------------------------
----------------------------
(6) SECURITY INTERESTS IN THE LOAD COLLATERAL:
Valid and enforceable, perfected security interests in the following
Collateral, and the proceeds thereof:
A. FIRST PRIORITY IN THE FOLLOWING;
/ / All Inventory.
/X/ All Export-related Inventory.
/ / Contract-related Inventory.
/ / All Accounts Receivable.
/X/ All Export-related Accounts Receivable.
/ / Contract-related Accounts Receivable.
-6
/X/ Other collateral, please specify.
JUNIOR SECURITY INTEREST IN ALL EQUIPMENT, ALL GENERAL
INTANGIBLES, ALL DOMESTIC ACCOUNTS RECEIVABLE AND ALL DOMESTIC
INVENTORY
B. ADDITIONAL COLLATERAL:
/ / Other, please specify.
---------------------------------------
----------------------------------------------------------------------
To the extent applicable, "Export-related Inventory" shall mean all
of the Borrower's Inventory which is intended to be sold pursuant to
Export Orders. Unless the Export-related Inventory can be
effectively segregated, for purposes of claim recoveries under the
Master Guarantee Agreement, the Export-related Inventory will be
determined on a PRO-RATA basis comparing as of the date of default
the amount outstanding under the Loan with the aggregate amount
outstanding under all other short term inventory financing of the
Borrower. IF THE LENDER ELECTS TO SEPARATELY COLLATERALIZE THE TEN
PERCENT (10%) PORTION OF THE LOAN NOT GUARANTEED BY EXIMBANK, THE
LENDER SHALL FULLY DESCRIBE SUCH SEPARATE COLLATERAL IN SECTION 8 OF
THIS NOTICE IN ORDER FOR THIS NOTICE TO BE CONSIDERED COMPLETE.
(7) TERMS OF SALE (not to exceed 180 days; check all that apply; at least one
must be checked in order for this Notice to be considered complete):
/X/ Confirmed irrevocable letters of credit.
/X/ Irrevocable letters of credit.
-7
/ / Open account insured through Eximbank export credit insurance for
comprehensive and political risk.
/ / Open account insured through non-Eximbank export credit insurance
for comprehensive commercial and political risk.
/X/ Cash payment received prior to shipment.
/X/ Open account UNinsured.
/X/ Sight drafts documents against payment (also known as "documentary
collections").
/ / Other terms. [If checked, any such terms of sale must be fully
described on an attached addendum in order for this Notice to be
considered complete.]
(8) LENDER'S INTEREST RATE: Norwest Base Rate + 3%
----------------------------
Other Fees: NONE
Are you separately collateralizing the 10% portion of this Loan? No x
---
_____ Yes If yes, please specify separate collateral.
--------------------
---------------------------------------------------------------------------
Note: The Lender cannot collateralize its retained 10% risk with cash,
cash equivalents or marketable securities from either the Borrower, any
Guarantor, or any
-8
of the Exporter's Affiliates (as defined in Section 7(b)
of the Delegated Authority Letter Agreement) or any third party
guarantors.
(9) FACILITY FEE:
/X/ Loan Amount is less than or equal to $2,000,000: In connection with
the commitment of the Guarantee, the Lender shall charge the
Borrower a Facility Fee equal to 75 basis points of the total Loan
Amount for a term of up to six (6) months or less, or 150 basis
points of the total Loan Amount for a term of greater than six (6)
and up to twelve (12) months. In all cases, the Lender shall remit
25 basis points of the total Loan Amount to Eximbank within
five (5) Business Days after the Closing Date.
Facility Fee remitted: $1,000.00
---------
/ / Loan amount is for more than $2,000,000: In connection with the
commitment of the Guarantee, the Lender shall charge the Borrower a
Facility Fee as shown in the chart below:
--------------------------------------------------------------------------------
EXIMBANK
TERM OF LOAN LOAN AMOUNT: FACILITY FEE = RECEIVES + LENDER RETAINS
Up to six months
First $2,000,000 75 b.p. 25 b.p. 50 b.p.
Portion over $2,000,000 75 b.p. 37.5 b.p. 37.5 b.p.
Greater than 6
months, up to 12
months
First
Portion over $2,000,000 150 b.p. 25 b.p. 125 b.p.
--------------------------------------------------------------------------------
-9
--------------------------------------------------------------------------------
$2,000,000 150 b.p. 75 b.p. 75 b.p.
b.p. = basis point
For a Guarantee with a term exceeding 12 months, the Facility Fee will be pro-
rated accordingly.
--------------------------------------------------------------------------------
Facility Fee on first $2,000,000 $
----------------------
Facility Fee on portion over $2,000,000 +
----------------------
Total Facility Fee remitted: $
----------------------
(10) AVAILABILITY DATE: May 27, 1998 .
---------------------
(11) COUNTRY LIMITATION SCHEDULE: [From time to time, Eximbank will provide
updated Country Limitation Schedules to all Lenders active in the Working
Capital Guarantee Program, and to all Delegated Authority Lenders. It is
the Lender's responsibility to provide a copy to the Exporter within seven
(7) Business Days of receipt. The updated Country Limitation Schedule
will supersede the previous Country Limitation Schedule.]
-10
IN WITNESS WHEREOF, the Lender has caused this instrument to be sealed
this 28th day of May, 1997.
Name of Lender: NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
By:
------------------------
(Signature)
Name: Xxxxxxxxxxx X. Xxxxx
------------------------
(Print or Type)
Title: Vice President
------------------------
(Print or Type)
Address: Telephone: (000) 000-0000
-----------------------
Norwest Center, Xxxxx Xx. & Xxxxxxxxx Xxx.
------------------------------------------
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000 Telefax: (000) 000-0000
------------------------------------------ -------------------------
Receipt acknowledged by:
EXPORT-IMPORT BANK OF THE UNITED STATES
-11
By:
-----------------------------
(Signature)
Name:
---------------------------
(Print or Type)
Title:
--------------------------
(Print or Type)
Date:
---------------------------
Eximbank hereby designates the Loan referred to in this Loan Authorization
Notice as Guaranteed Loan No. ____________________.
(Revised April 1, 1996)
Reminders:
1) Did you include the completed application, signed by Exporter and
Lender?
2) Did you include the $100 Application Fee?
3) Did you include the appropriate Facility Fee?
4) Have you completed the Loan Authorization Notice and submitted TWO
originals?
-12
If you need assistance in completing this document, please do not hesitate to
contact the U.S. Division directly at 202/565-3780.
-13
Exhibit C to Credit and
Security Agreement
COMPLIANCE CERTIFICATE
To: Xxxxxxxxxxx X. Xxxxx
Norwest Bank Minnesota, National Association
c/o Xxxxxx Xxxxxxx
Norwest Business Credit, Inc., as Servicer
Date: __________________, 199___
Subject: Nicollet Process Engineering, Inc.
Financial Statements
In accordance with our Credit and Security Agreement dated as of
May 28, 1997 (the "Credit Agreement"), attached are the financial statements of
Nicollet Process Engineering, Inc. (the "Borrower") as of and for
________________, 19___ (the "Reporting Date") and the year-to-date period then
ended (the "Current Financials"). All terms used in this certificate have the
meanings given in the Credit Agreement.
I certify that the Current Financials have been prepared in
accordance with GAAP, subject to year-end audit adjustments, and fairly present
the Borrower's financial condition as of the date thereof.
EVENTS OF DEFAULT. (Check one):
/ / The undersigned does not have knowledge of the occurrence of a
Default or Event of Default under the Credit Agreement.
/ / The undersigned has knowledge of the occurrence of a Default or
Event of Default under the Credit Agreement and attached hereto is a
statement of the facts with respect to thereto.
FINANCIAL COVENANTS. I further hereby certify as follows:
1. MINIMUM TANGIBLE NET WORTH. Pursuant to Section 6.9 of the
Credit Agreement, as of the Reporting Date the Borrower's Tangible Net
Worth was $____________ which / / satisfies / / does not satisfy the
requirement that such amount be not less than $250,000 on the Reporting
Date.
C-1
Attached hereto are all relevant facts in reasonable detail to
evidence, and the computations of the financial covenants referred to above.
These computations were made in accordance with GAAP.
NICOLLET PROCESS ENGINEERING, INC.
By
---------------------------
Its Chief Financial Officer
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Exhibit D to Credit and Security
Agreement
FORM OF BORROWING BASE CERTIFICATE
TO: Xxxxxxxxxxx X. Xxxxx
Norwest Bank Minnesota, National Association
Xxxxxx Xxxxxxx
Norwest Business Credit, Inc.
DATE: ____________________, 199__
SUBJECT: Nicollet Process Engineering, Inc. (the "Borrower")
Borrowing Base Certificate
In accordance with our Credit and Security Agreement dated as of
May 28, 1997 (the "Credit Agreement"), set forth below is the calculation of
the Borrowing Base and Availability as of ______________, 199__ (the "Reporting
Date"). All terms used in this certificate have the meanings given to them in
the Credit Agreement. Unless otherwise indicated, all amounts are as of the
Reporting Date.
A. ELIGIBLE FOREIGN ACCOUNTS.
1. Total Accounts (net of any and all rights of
offset or counterclaim) $
-----------------
2. Ineligible Foreign Accounts
(a) That portion of Accounts not yet earned
by the final delivery of goods or rendition of
services $
-----------------
(b) Eligible Accounts not providing for
payment in full within 180 days of shipment
date $
-----------------
(c) Eligible Accounts over 60 days past
the original due date (90 days past due if
properly insured) or 180 days past original
invoice date $
-----------------
(d) Accounts owed by a shareholder,
subsidiary, Affiliate, officer or employee
of the Borrower $
-----------------
(e) Accounts owed by an account debtor that
is insolvent, the subject of bankruptcy
proceedings or has gone out of business $
-----------------
D-1
(f) Accounts not subject to a duly perfected
security interest in favor of the Lender or
which are subject to any lien, security
interest or claim in favor of any Person other
than the Lender or NBCI $
-----------------
(g) That portion of Accounts that constitutes
finance charges, service charges or sales or
excise taxes $
-----------------
(h) That portion of Accounts payable in a
currency other than US Dollars unless prior
written approval has been received from
Eximbank $
-----------------
(i) That portion of Accounts owed by
military buyers or for defense articles or
services, except as may be approved in
writing by the Lender and Eximbank $
-----------------
(j) That portion of Accounts due and
collectible outside the US $
-----------------
(k) That portion of Accounts owed by
Account debtors located in, or arising from
sales of Items delivered to a Prohibited
Country $
-----------------
(l) That portion of Accounts, or portions
thereof, otherwise deemed uncollectible for
any reason by the Lender or Eximbank in its
discretion $
-----------------
(m) Total ineligibles $
-----------------
3. Total Eligible Foreign Accounts (line 1
less line 2(m)) $
-----------------
B. ELIGIBLE EXPORT INVENTORY
4. Total export Inventory (all Inventory
consisting of Items, raw materials and components to be
used to manufacture Items, and work-in-process relating
to Items, and raw materials and components the Borrower
must purchase to manufacture Items at the lower of cost
or market value as determined in accordance with GAAP) $
-----------------
5. Ineligible Export Inventory.
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(a) in-transit; not at an approved site;
not in Minnesota; covered by any document
of title; on consignment or subject to any
bailment $
-----------------
(b) proprietary software $
-----------------
(c) damaged, slow moving, obsolete,
returned, defective, recalled or unfit for
further processing or not currently saleable
in the normal course of the Borrower's
operations $
-----------------
(d) perishable or live $
-----------------
(e) returned, has attempted to return, is
in the process of returning or intends to
return to the vendor thereof $
-----------------
(f) subject to a security interest in
favor of any Person other than the Lender
or NBCI $
-----------------
(g) Sample or demonstration Inventory $
-----------------
(h) previously exported from the US $
-----------------
(i) defense articles or defense services $
-----------------
(j) to be incorporated into Items
destined for shipment to a Prohibited Country $
-----------------
(k) Foreign Content portion of Items
containing less than fifty percent
(50%) US Content $
-----------------
(l) For Items containing at least fifty
percent (50%) US Content, any Foreign Content
not incorporated into such Items in the US $
-----------------
(m) consisting of or to be incorporated
into Items whose sale would result in an
Account deemed ineligible under
clauses 2(b), (h), (j), or (k) $
-----------------
(n) subject to the license agreement
set forth in that certain Settlement Agreement
by and between the Borrower and Xxxx X.
Xxxxxxxxx dated as of October 1, 1995 $
-----------------
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(o) otherwise deemed ineligible by the
Lender in its discretion $
-----------------
(p) Total ineligibles $
-----------------
6. Total Eligible Export Inventory
(line 4 less line 5(o)) $
-----------------
C. BORROWING BASE
7. The sum of:
(a) 90% of Eligible Foreign Accounts
(from line 3) $
-----------------
(b) 75% of Eligible Export Inventory
(from line 6) $
-----------------
Total $
-----------------
$
-----------------
8. BORROWING BASE: the least of:
(a) $400,000; or
(b) the difference of $800,000 and the
outstanding principal balance of the NBCI
Revolving Advances $
-----------------
(c) line 7 $
-----------------
D. AVAILABILITY.
9. The outstanding principal balance of the
Revolving Note $
-----------------
10. AVAILABILITY. The Borrowing Base (line 8)
less the outstanding principal balance of the
Revolving Note (line 9) $
-----------------
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The Borrower represents and warrants that this Borrowing Base
Certificate is a true and correct statement regarding the status of the matters
set forth herein. The Borrower further represents and warrants that no Default
or Event of Default has occurred and is continuing. The Borrower acknowledges
that any Advances made to the Borrower and Letters of Credit issued for its
account under the Credit Agreement will be based upon the Lender's reliance on
the information contained herein.
NICOLLET PROCESS ENGINEERING, INC.
By
---------------------------------
Xxxxxx X. Xxxxxx
Its President and Chief Executive
Officer
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Exhibit E to Credit and Security
Agreement
PERMITTED LIENS
CREDITOR COLLATERAL JURISDICTION FILING DATE FILING NO.
-------- ---------- ------------ ----------- ----------
Xxxxx X. Windows based die Hennepin 01/26/96 1115197
Xxxxxxxxxx, dba casting process County
LDG Software monitoring Software,
Solution commonly called Process
Vision.
Xxxxx X. Windows based die State of 01/25/96 1820120
Xxxxxxxxxx, dba casting process Minnesota
LDG Software monitoring Software,
Solution commonly called Process
Vision.
M&I First National Telrad Digital KeyBX Hennepin 07/11/94 1102543
Leasing Corp. 128 Telephone System County
more particularly
described on Schedule A
[of the UCC-1] and made
a part [t]hereof.
M&I First National Telrad Digital KeyBX State of 07/11/94 1687425
Leasing Corp. 128 Telephone System Minnesota
more particularly
described on Schedule A
[of the UCC-1] and made
a part [t]hereof.
E-1
