Exibit (10b) Borrowing Agreement Between Web Press Corporation and
The Export-Import Bank of the United States.
ANNEX B
EXPORT-IMPORT BANK OF THE UNITED STATES WORKING
CAPITAL GUARANTEE PROGRAM
BORROWER AGREEMENT
THIS BORROWER AGREEMENT (this "Agreement") is made and
entered into by the entity identified as the Borrower on the signature page
hereof (the "Borrower") and is acknowledged by the institution identified as
the Lender on the signature page hereof (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
Annex A1 or Annex A2 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:
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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.,
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"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 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 mounts 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
XXX 000, xxxxxxx xx xxx Xxxxxx Xxxxxx 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
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possessions.
"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
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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.
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 in the 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;
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(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;
(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
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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.
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
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the Borrower fails to pay when due any amount payable to the Lender
under any loan to the Borrower not guaranteed by Eximbank.
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 still 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 Item 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 Leader 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.
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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.
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IN WITNESS WHEREOF, the Borrower has caused this Agreement
to be duly executed as of the 15th day of October, 1998.
WEB PRESS CORPORATION/WEB LEADER INTERNATIONAL, INC.
(Name of Borrower)
By \S\ XXXX XXXXXX
Title PRESIDENT & CHAIRMAN
(Print or Type)
ACKNOWLEDGED:
WASHINGTON FIRST INTERNATIONAL BANK
(Name of Lender)
By \S\ XXXXXXX X.X. XXX
Name XXXXXXX X.X. XXX
(Print or Type)
Title VICE PRESIDENT
(Print or Type)
Guaranteed Loan No. AP073281XX
ANNEXES:
A1 - Loan Authorization Agreement or
A2 - Loan Authorization Notice
(Revised April 1, 1996)
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