EXHIBIT 00.0
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WORKING CAPITAL GUARANTEE PROGRAM
BORROWER AGREEMENT
THIS BORROWER AGREEMENT (this "Agreement") is made and entered into by
the entity identified as Borrower on the signature page hereof (jointly and
severally, "Borrower") in favor of the Export-Import Bank of the United States
("Ex-Im Bank") and the institution identified as Lender on the signature page
hereof ("Lender").
RECITALS
Borrower has requested that Lender establish a Loan Facility in favor
of Borrower for the purposes of providing Borrower with pre-export working
capital to finance the manufacture, production or purchase and subsequent
export sale of Items.
It is a condition to the establishment of such Loan Facility that
Ex-Im Bank guarantee the payment of ninety percent (90%) of certain credit
accommodations subject to the terms and conditions of a Master Guarantee
Agreement, the Loan Authorization Agreement, and to the extent applicable, the
Delegated Authority Letter Agreement.
Borrower is executing this Agreement for the benefit of Lender and
Ex-Im Bank in consideration for and as a condition to Lender's establishing the
Loan Facility and Ex-Im Bank's agreement to guarantee such Loan Facility
pursuant to the Master Guarantee Agreement.
NOW, THEREFORE, Borrower hereby agrees as follows:
ARTICLE I
DEFINITIONS
1.01 Definition of Terms. As used in this Agreement, including the
Recitals to this Agreement and the Loan Authorization Agreement, the following
terms shall have the following meanings:
"Accounts Receivable" shall mean all of Borrower's now owned or
hereafter acquired (a) "accounts" (as such term is defined in the UCC), other
receivables, book debts and other forms of obligations, whether arising out of
goods sold or services rendered or from any other transaction; (b) rights in,
to and under all purchase orders or receipts for goods or services; (c) rights
to any goods represented or purported to be represented by any of the foregoing
(including unpaid sellers' rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or repossessed goods);
(d) moneys due or to become due to such Borrower under all purchase orders and
contracts for the sale of goods or the performance of services or both by
Borrower (whether or not yet earned by performance on the part of Borrower),
including the proceeds of the foregoing; (e) any notes, drafts, letters of
credit, insurance proceeds or other
instruments, documents and writings evidencing or supporting the foregoing; and
(f) all collateral security and guarantees of any kind given by any other
Person with respect to any of the foregoing.
"Advance Rate" shall mean the rate specified in Section 5(C) of the
Loan Authorization Agreement for each category of Collateral.
"Business Day" shall mean any day on which the Federal Reserve Bank of
New York is open for business.
"Buyer" shall mean a Person that has entered into one or more Export
Orders with Borrower.
"Collateral" shall mean all property and interest in property in or
upon which Lender has been granted a Lien as security for the payment of all
the Loan Facility Obligations including the Collateral identified in Section 6
of the Loan Authorization Agreement and all products and proceeds (cash and
non-cash) thereof.
"Commercial Letters of Credit" shall mean those letters of credit
subject to the UCP payable in Dollars and issued or caused to be issued by
Lender on behalf of Borrower under a Loan Facility for the benefit of a
supplier(s) of Borrower in connection with Borrower's purchase of goods or
services from the supplier in support of the export of the Items.
"Country Limitation Schedule" shall mean the schedule published from
time to time by Ex-Im Bank and provided to Borrower by Lender which sets forth
on a country by country basis whether and under what conditions Ex-Im Bank will
provide coverage for the financing of export transactions to countries listed
therein.
"Credit Accommodation Amount" shall mean, the sum of (a) the aggregate
outstanding amount of Disbursements and (b) the aggregate outstanding face
amount of Letter of Credit Obligations.
"Credit Accommodations" shall mean, collectively, Disbursements and
Letter of Credit Obligations.
"Debarment Regulations" shall mean, collectively, (a) the
Governmentwide Debarment and Suspension (Nonprocurement) regulations (Common
Rule), 53 Fed. Reg. 19204 (May 26, 1988), (b) Subpart 9.4 (Debarment,
Suspension, and Ineligibility) of the Federal Acquisition Regulations, 48
C.F.R. 9.400-9.409 and (c) the revised Governmentwide Debarment and Suspension
(Nonprocurement) regulations (Common Rule), 60 Fed. Reg. 33037 (June 26, 1995).
"Delegated Authority Letter Agreement" shall mean the Delegated
Authority Letter Agreement, if any, between Ex-Im Bank and Lender.
"Disbursement" shall mean, collectively, (a) an advance of a working
capital loan from Lender to Borrower under the Loan Facility, and (b) an
advance to fund a drawing under a Letter of Credit issued or caused to be
issued by Lender for the account of Borrower under the Loan Facility.
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"Dollars" or "$" shall mean the lawful currency of the United States.
"Effective Date" shall mean the date on which (a) the Loan Documents
are executed by Lender and Borrower or the date, if later, on which agreements
are executed by Lender and Borrower adding the Loan Facility to an existing
working capital loan arrangement between Lender and Borrower and (b) all of the
conditions to the making of the initial Credit Accommodations under the Loan
Documents or any amendments thereto have been satisfied.
"Eligible Export-Related Accounts Receivable" shall mean an
Export-Related Account Receivable which is acceptable to Lender and which is
deemed to be eligible pursuant to the Loan Documents, but in no event shall
Eligible Export-Related Accounts Receivable include any Account Receivable:
(a) that does not arise from the sale of Items in the ordinary
course of Borrower's business;
(b) that is not subject to a valid, perfected first priority Lien
in favor of Lender;
(c) as to which any covenant, representation or warranty
contained in the Loan Documents with respect to such Account Receivable has
been breached;
(d) that is not owned by Borrower or is subject to any right,
claim or interest of another Person other than the Lien in favor of Lender;
(e) with respect to which an invoice has not been sent;
(f) that arises from the sale of defense articles or defense
services;
(g) that is due and payable from a Buyer located in a country
with which Ex-Im Bank is prohibited from doing business as designated in the
Country Limitation Schedule;
(h) that does not comply with the requirements of the Country
Limitation Schedule;
(i) that is due and payable more than one hundred eighty (180)
days from the date of the invoice;
(j) that is not paid within sixty (60) calendar days from its
original due date, unless it is insured through Ex-Im Bank export credit
insurance for comprehensive commercial and political risk, or through Ex-Im
Bank approved private insurers for comparable coverage, in which case it is not
paid within ninety (90) calendar days from its due date;
(k) that arises from a sale of goods to or performance of
services for an employee of Borrower, a stockholder of Borrower, a subsidiary
of Borrower, a Person with a controlling interest in Borrower or a Person which
shares common controlling ownership with Borrower;
(l) that is backed by a letter of credit unless the Items covered
by the subject letter of credit have been shipped;
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(m) that Lender or Ex-Im Bank, in its reasonable judgment, deems
uncollectible for any reason;
(n) that is due and payable in a currency other than Dollars,
except as may be approved in writing by Ex-Im Bank;
(o) that is due and payable from a military Buyer, except as may
be approved in writing by Ex-Im Bank;
(p) that does not comply with the terms of sale set forth in
Section 7 of the Loan Authorization Agreement;
(q) that is due and payable from a Buyer who (i) applies for,
suffers, or consents to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all or a substantial
part of its property or calls a meeting of its creditors, (ii) admits in
writing its inability, or is generally unable, to pay its debts as they become
due or ceases operations of its present business, (iii) makes a general
assignment for the benefit of creditors, (iv) commences a voluntary case under
any state or federal bankruptcy laws (as now or hereafter in effect), (v) is
adjudicated as bankrupt or insolvent, (vi) files a petition seeking to take
advantage of any other law providing for the relief of debtors, (vii)
acquiesces to, or fails to have dismissed, any petition which is filed against
it in any involuntary case under such bankruptcy laws, or (viii) takes any
action for the purpose of effecting any of the foregoing;
(r) that arises from a xxxx-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase or
return basis or is evidenced by chattel paper;
(s) for which the Items giving rise to such Account Receivable
have not been shipped and delivered to and accepted by the Buyer or the
services giving rise to such Account Receivable have not been performed by
Borrower and accepted by the Buyer or the Account Receivable otherwise does not
represent a final sale;
(t) that is subject to any offset, deduction, defense, dispute,
or counterclaim or the Buyer is also a creditor or supplier of Borrower or the
Account Receivable is contingent in any respect or for any reason;
(u) for which Borrower has made any agreement with the Buyer for
any deduction therefrom, except for discounts or allowances made in the
ordinary course of business for prompt payment, all of which discounts or
allowances are reflected in the calculation of the face value of each
respective invoice related thereto; or
(v) for which any of the Items giving rise to such Account
Receivable have been returned, rejected or repossessed.
"Eligible Export-Related Inventory" shall mean Export-Related
Inventory which is acceptable to Lender and which is deemed to be eligible
pursuant to the Loan Documents, but in no event shall Eligible Export-Related
Inventory include any Inventory:
(a) that is not subject to a valid, perfected first priority Lien
in favor of Lender;
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(b) that is located at an address that has not been disclosed to
Lender in writing;
(c) that is placed by Borrower on consignment or held by Borrower
on consignment from another Person;
(d) that is in the possession of a processor or bailee, or
located on premises leased or subleased to Borrower, or on premises subject to
a mortgage in favor of a Person other than Lender, unless such processor or
bailee or mortgagee or the lessor or sublessor of such premises, as the case
may be, has executed and delivered all documentation which Lender shall require
to evidence the subordination or other limitation or extinguishment of such
Person's rights with respect to such Inventory and Lender's right to gain
access thereto;
(e) that is produced in violation of the Fair Labor Standards Act
or subject to the "hot goods" provisions contained in 29 US.C.ss.215 or any
successor statute or section;
(f) as to which any covenant, representation or warranty with
respect to such Inventory contained in the Loan Documents has been breached;
(g) that is not located in the United States;
(h) that is demonstration Inventory;
(i) that consists of proprietary software (i.e. software designed
solely for Borrower's internal use and not intended for resale);
(j) that is damaged, obsolete, returned, defective, recalled or
unfit for further processing;
(k) that has been previously exported from the United States;
(l) that constitutes defense articles or defense services;
(m) that is to be incorporated into Items destined for shipment
to a country as to which Ex-Im Bank is prohibited from doing business as
designated in the Country Limitation Schedule;
(n) that is to be incorporated into Items destined for shipment
to a Buyer located in a country in which Ex-Im Bank 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 Ex-Im Bank; or
(o) that is to be incorporated into Items whose sale would result
in an Account Receivable which would not be an Eligible Export-Related Account
Receivable.
"Eligible Person" shall mean a sole proprietorship, partnership,
limited liability partnership, corporation or limited liability company which
(a) is domiciled, organized, or formed, as the case may be, in the United
States; (b) is in good standing in the state of its formation or otherwise
authorized to conduct business in the United States; (c) is not currently
suspended or debarred from doing business with the United States government or
any
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instrumentality, division, agency or department thereof; (d) exports or plans
to export Items; (e) operates and has operated as a going concern for at least
one (1) year; (f) has a positive tangible net worth determined in accordance
with GAAP; and (g) has revenue generating operations relating to its core
business activities for at least one year.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974
and the rules and regulations promulgated thereunder.
"Export Order" shall mean a written export order or contract for the
purchase by the Buyer from Borrower of any of the Items.
"Export-Related Accounts Receivable" shall mean those Accounts
Receivable arising from the sale of Items which are due and payable to Borrower
in the United States.
"Export-Related Accounts Receivable Value" shall mean, at the date of
determination thereof, the aggregate face amount of Eligible Export-Related
Accounts Receivable less taxes, discounts, credits, allowances and Retainages,
except to the extent otherwise permitted by Ex-Im Bank in writing.
"Export-Related Borrowing Base" shall mean, at the date of
determination thereof, the sum of (a) the Export-Related Inventory Value
multiplied by the Advance Rate applicable to Export-Related Inventory set forth
in Section 5(C)(1) of the Loan Authorization Agreement, (b) the Export-Related
Accounts Receivable Value multiplied by the Advance Rate applicable to
Export-Related Accounts Receivable set forth in Section 5(C)(2) of the Loan
Authorization Agreement, (c) if permitted by Ex-Im Bank in writing, the
Retainage Value multiplied by the Retainage Advance Rate set forth in Section
5(C)(3) of the Loan Authorization Agreement and (d) the Other Assets Value
multiplied by the Advance Rate applicable to Other Assets set forth in Section
5(C)(4) of the Loan Authorization Agreement.
"Export-Related Borrowing Base Certificate" shall mean a certificate
in the form provided or approved by Lender, executed by Borrower and delivered
to Lender pursuant to the Loan Documents detailing the Export-Related Borrowing
Base supporting the Credit Accommodations which reflects, to the extent
included in the Export-Related Borrowing Base, Export-Related Accounts
Receivable, Eligible Export-Related Accounts Receivable, Export-Related
Inventory and Eligible Export-Related Inventory balances that have been
reconciled with Borrower's general ledger, Accounts Receivable aging report and
Inventory schedule.
"Export-Related General Intangibles" shall mean those General
Intangibles necessary or desirable to or for the disposition of Export-Related
Inventory.
"Export-Related Inventory" shall mean the Inventory of Borrower
located in the United States that has been purchased, manufactured or otherwise
acquired by Borrower for resale pursuant to Export Orders.
"Export-Related Inventory Value" shall mean, at the date of
determination thereof, the lower of cost or market value of Eligible
Export-Related Inventory of Borrower as determined in accordance with GAAP.
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"Final Disbursement Date" shall mean, unless subject to an extension
of such date agreed to by Ex-Im Bank, the last date on which Lender may make a
Disbursement set forth in Section 10 of the Loan Authorization Agreement or, if
such date is not a Business Day, the next succeeding Business Day; provided,
however, to the extent that Lender has not received cash collateral or an
indemnity with respect to Letter of Credit Obligations outstanding on the Final
Disbursement Date, the Final Disbursement Date with respect to an advance to
fund a drawing under a Letter of Credit shall be no later than thirty (30)
Business Days after the expiry date of the Letter of Credit related thereto.
"GAAP" shall mean the generally accepted accounting principles issued
by the American Institute of Certified Public Accountants as in effect from
time to time.
"General Intangibles" shall mean all intellectual property and other
"general intangibles" (as such term is defined in the UCC) necessary or
desirable to or for the disposition of Inventory.
"Guarantor" shall mean each Person, if any, identified in Section 3 of
the Loan Authorization Agreement who shall guarantee (jointly and severally if
more than one) the payment and performance of all or a portion of the Loan
Facility Obligations.
"Guaranty Agreement" shall mean a valid and enforceable agreement of
guaranty executed by each Guarantor in favor of Lender.
"Inventory" shall mean all "inventory" (as such term is defined in the
UCC), now or hereafter owned or acquired by Borrower, wherever located,
including all inventory, merchandise, goods and other personal property which
are held by or on behalf of Borrower for sale or lease or are furnished or are
to be furnished under a contract of service or which constitute raw materials,
work in process or materials used or consumed or to be used or consumed in
Borrower's business or in the processing, production, packaging, promotion,
delivery or shipping of the same, including other supplies.
"ISP" shall mean the International Standby Practices-ISP98,
International Chamber of Commerce Publication No. 590 and any amendments and
revisions thereof.
"Issuing Bank" shall mean the bank that issues a Letter of Credit,
which bank is Lender itself or a bank that Lender has caused to issue a Letter
of Credit by way of guarantee.
"Items" shall mean the finished goods or services which are intended
for export from the United States, as specified in Section 4(A) of the Loan
Authorization Agreement.
"Letter of Credit" shall mean a Commercial Letter of Credit or a
Standby Letter of Credit.
"Letter of Credit Obligations" shall mean all outstanding obligations
incurred by Lender, whether direct or indirect, contingent or otherwise, due or
not due, in connection with the issuance or guarantee by Lender or the Issuing
Bank of Letters of Credit.
"Lien" shall mean any mortgage, security deed or deed of trust,
pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim,
security interest, security title, easement or encumbrance, or preference,
priority or other security agreement or preferential arrangement of
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any kind or nature whatsoever (including any lease or title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of, or agreement to give, any financing
statement perfecting a security interest under the UCC or comparable law of any
jurisdiction) by which property is encumbered or otherwise charged.
"Loan Agreement" shall mean a valid and enforceable agreement between
Lender and Borrower setting forth the terms and conditions of the Loan
Facility.
"Loan Authorization Agreement" shall mean the Loan Authorization
Agreement entered into between Lender and Ex-Im Bank or the Loan Authorization
Notice setting forth certain terms and conditions of the Loan Facility, a copy
of which is attached hereto as Annex A.
"Loan Authorization Notice" shall mean the Loan Authorization Notice
executed by Lender and delivered to Ex-Im Bank in accordance with the Delegated
Authority Letter Agreement setting forth the terms and conditions of each Loan
Facility.
"Loan Documents" shall mean the Loan Authorization Agreement, the Loan
Agreement, this Agreement, each promissory note (if applicable), each Guaranty
Agreement, and all other instruments, agreements and documents now or hereafter
executed by Borrower or any Guarantor evidencing, securing, guaranteeing or
otherwise relating to the Loan Facility or any Credit Accommodations made
thereunder.
"Loan Facility" shall mean the Revolving Loan Facility, the
Transaction Specific Loan Facility or the Transaction Specific Revolving Loan
Facility established by Lender in favor of Borrower under the Loan Documents.
"Loan Facility Obligations" shall mean all loans, advances, debts,
expenses, fees, liabilities, and obligations for the performance of covenants,
tasks or duties or for payment of monetary amounts (whether or not such
performance is then required or contingent, or amounts are liquidated or
determinable) owing by Borrower to Lender, of any kind or nature, present or
future, arising in connection with the Loan Facility.
"Loan Facility Term" shall mean the number of months from the
Effective Date to the Final Disbursement Date as originally set forth in the
Loan Authorization Agreement.
"Master Guarantee Agreement" shall mean the Master Guarantee Agreement
between Ex-Im Bank and Lender, as amended, modified, supplemented and restated
from time to time.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, assets, operations, prospects or financial or other condition of
Borrower or any Guarantor, (b) Borrower's ability to pay or perform the Loan
Facility Obligations in accordance with the terms thereof, (c) the Collateral
or Lender's Liens on the Collateral or the priority of such Lien or (d)
Lender's rights and remedies under the Loan Documents.
"Maximum Amount" shall mean the maximum principal balance of Credit
Accommodations that may be outstanding at any time under the Loan Facility
specified in Section 5(A) of the Loan Authorization Agreement.
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"Other Assets" shall mean the Collateral, if any, described in Section
5(C)(4) of the Loan Authorization Agreement.
"Other Assets Value" shall mean, at the date of determination thereof,
the value of the Other Assets as determined in accordance with GAAP.
"Permitted Liens" shall mean (a) Liens for taxes, assessments or other
governmental charges or levies not delinquent, or, being contested in good
faith and by appropriate proceedings and with respect to which proper reserves
have been taken by Borrower; provided, that, the Lien shall have no effect on
the priority of the Liens in favor of Lender or the value of the assets in
which Lender has such a Lien and a stay of enforcement of any such Lien shall
be in effect; (b) deposits or pledges securing obligations under worker's
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (c) deposits or pledges securing bids, tenders,
contracts (other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds and other obligations of like nature
arising in the ordinary course of Borrower's business; (d) judgment Liens that
have been stayed or bonded; (e) mechanics', workers', materialmen's or other
like Liens arising in the ordinary course of Borrower's business with respect
to obligations which are not due; (f) Liens placed upon fixed assets hereafter
acquired to secure a portion of the purchase price thereof, provided, that, any
such Lien shall not encumber any other property of Borrower; (g) security
interests being terminated concurrently with the execution of the Loan
Documents; (h) Liens in favor of Lender securing the Loan Facility Obligations;
and (i) Liens disclosed in Section 6(D) of the Loan Authorization Agreement.
"Person" shall mean any individual, sole proprietorship, partnership,
limited liability partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability company, institution,
public benefit corporation, entity or government (whether national, federal,
provincial, state, county, city, municipal or otherwise, including any
instrumentality, division, agency, body or department thereof), and shall
include such Person's successors and assigns.
"Principals" shall mean any officer, director, owner, partner, key
employee, or other Person with primary management or supervisory
responsibilities with respect to Borrower or any other Person (whether or not
an employee) who has critical influence on or substantive control over the
transactions covered by this Agreement.
"Retainage" shall mean that portion of the purchase price of an Export
Order that a Buyer is not obligated to pay until the end of a specified period
of time following the satisfactory performance under such Export Order.
"Retainage Accounts Receivable" shall mean those portions of Eligible
Export-Related Accounts Receivable arising out of a Retainage.
"Retainage Advance Rate" shall mean the percentage rate specified in
Section 5(C)(3) of the Loan Authorization Agreement as the Advance Rate for the
Retainage Accounts Receivable of Borrower.
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"Retainage Value" shall mean, at the date of determination thereof,
the aggregate face amount of Retainage Accounts Receivable, less taxes,
discounts, credits and allowances, except to the extent otherwise permitted by
Ex-Im Bank in writing.
"Revolving Loan Facility" shall mean the credit facility or portion
thereof established by Lender in favor of Borrower for the purpose of providing
pre-export working capital in the form of loans and/or Letters of Credit to
finance the manufacture, production or purchase and subsequent export sale of
Items pursuant to Loan Documents under which Credit Accommodations may be made
and repaid on a continuous basis based solely on the Export-Related Borrowing
Base during the term of such credit facility.
"Special Conditions" shall mean those conditions, if any, set forth in
Section 13 of the Loan Authorization Agreement.
"Specific Export Orders" shall mean those Export Orders specified in
Section 5(D) of the Loan Authorization Agreement.
"Standby Letter of Credit" shall mean those letters of credit subject
to the ISP or UCP issued or caused to be issued by Lender for Borrower's
account that can be drawn upon by a Buyer only if Borrower fails to perform all
of its obligations with respect to an Export Order.
"Transaction Specific Loan Facility" shall mean a credit facility or a
portion thereof established by Lender in favor of Borrower for the purpose of
providing pre-export working capital in the form of loans and/or Letters of
Credit to finance the manufacture, production or purchase and subsequent export
sale of Items pursuant to Loan Documents under which Credit Accommodations are
made based solely on the Export-Related Borrowing Base relating to Specific
Export Orders and once such Credit Accommodations are repaid they may not be
reborrowed.
"Transaction Specific Revolving Loan Facility" shall mean a Revolving
Credit Facility established to provide financing of Specific Export Orders.
"UCC" shall mean the Uniform Commercial Code as the same may be in
effect from time to time in the jurisdiction in which Borrower or Collateral is
located.
"UCP" shall mean the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500
and any amendments and revisions thereof.
"U.S." or "United States" shall mean the United States of America and
its territorial 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.
"Warranty" shall mean Borrower's guarantee to Buyer that the Items
will function as intended during the warranty period set forth in the
applicable Export Order.
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"Warranty Letter of Credit" shall mean a Standby Letter of Credit
which is issued or caused to be issued by Lender to support the obligations of
Borrower with respect to a Warranty or a Standby Letter of Credit which by its
terms becomes a Warranty Letter of Credit.
1.02 Rules of Construction. For purposes of this Agreement, the
following additional rules of construction shall apply, unless specifically
indicated to the contrary: (a) wherever from the context it appears
appropriate, each term stated in either the singular or plural shall include
the singular and the plural, and pronouns stated in the masculine, feminine or
neuter gender shall include the masculine, the feminine and the neuter; (b) the
term "or" is not exclusive; (c) the term "including" (or any form thereof)
shall not be limiting or exclusive; (d) all references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations; (e) the words "this Agreement", "herein", "hereof", "hereunder" or
other words of similar import refer to this Agreement as a whole including the
schedules, exhibits, and annexes hereto as the same may be amended, modified or
supplemented; (f) all references in this Agreement to sections, schedules,
exhibits, and annexes shall refer to the corresponding sections, schedules,
exhibits, and annexes of or to this Agreement; and (g) all references to any
instruments or agreements, including references to any of the Loan Documents,
or the Delegated Authority Letter Agreement shall include any and all
modifications, amendments and supplements thereto and any and all extensions or
renewals thereof to the extent permitted under this Agreement.
1.03 Incorporation of Recitals. The Recitals to this Agreement are
incorporated into and shall constitute a part of this Agreement.
ARTICLE II
OBLIGATIONS OF BORROWER
Until payment in full of all Loan Facility Obligations and termination
of the Loan Documents, Borrower agrees as follows:
2.01 Use of Credit Accommodations. (a) Borrower shall use Credit
Accommodations only for the purpose of enabling Borrower to finance the cost of
manufacturing, producing, purchasing or selling the Items. Borrower may not use
any of the Credit Accommodations for the purpose of: (i) servicing or repaying
any of Borrower's pre-existing or future indebtedness unrelated to the Loan
Facility (unless approved by Ex-Im Bank in writing); (ii) acquiring fixed
assets or capital goods for use in Borrower's business; (iii) acquiring,
equipping or renting commercial space outside of the United States; (iv) paying
the salaries of non U.S. citizens or non-U.S. permanent residents who are
located in offices outside of the United States; or (v) in connection with a
Retainage or Warranty (unless approved by Ex-Im Bank in writing).
(b) In addition, no Credit Accommodation may be used to finance
the manufacture, purchase or sale of any of the following:
(i) Items to be sold or resold to a Buyer located in a
country as to which Ex-Im Bank is prohibited from doing business as designated
in the Country Limitation Schedule;
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(ii) 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;
(iii) defense articles or defense services; or
(iv) without Ex-Im Bank'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.
2.02 Loan Documents and Loan Authorization Agreement. (a) Each
Loan Document and this Agreement have been duly executed and delivered on
behalf of Borrower, and each such Loan Document and this Agreement are and will
continue to be a legal and valid obligation of Borrower, enforceable against it
in accordance with its terms.
(b) Borrower shall comply with all of the terms and conditions of
the Loan Documents, this Agreement and the Loan Authorization Agreement.
2.03 Export-Related Borrowing Base Certificates and Export Orders.
In order to receive Credit Accommodations under the Loan Facility, Borrower
shall have delivered to Lender an Export-Related Borrowing Base Certificate as
frequently as required by Lender but at least within the past thirty (30)
calendar days and a copy of the Export Order(s) (or, for Revolving Loan
Facilities, if permitted by Lender, a written summary of the Export Orders)
against which Borrower is requesting Credit Accommodations. If Lender permits
summaries of Export Orders, Borrower shall also deliver promptly to Lender
copies of any Export Orders requested by Lender. In addition, so long as there
are any Credit Accommodations outstanding under the Loan Facility, Borrower
shall deliver to Lender at least once each month no later than the twentieth
(20th) day of such month or more frequently as required by the Loan Documents,
an Export-Related Borrowing Base Certificate.
2.04 Exclusions from the Export-Related Borrowing Base. In
determining the Export-Related Borrowing Base, Borrower shall exclude therefrom
Inventory which is not Eligible Export-Related Inventory and Accounts
Receivable which are not Eligible Export-Related Accounts Receivable. Borrower
shall promptly, but in any event within five (5) Business Days, notify Lender
(a) if any then existing Export-Related Inventory no longer constitutes
Eligible Export-Related Inventory or (b) of any event or circumstance which to
Borrower's knowledge would cause Lender to consider any then existing
Export-Related Accounts Receivable as no longer constituting an Eligible
Export-Related Accounts Receivable.
2.05 Financial Statements. Borrower shall deliver to Lender the
financial statements required to be delivered by Borrower in accordance with
Section 11 of the Loan Authorization Agreement.
2.06 Schedules, Reports and Other Statements. Borrower shall
submit to 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.
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Borrower shall also furnish to Lender promptly upon request such information,
reports, contracts, invoices and other data concerning the Collateral as Lender
may from time to time specify.
2.07 Additional Security or Payment. (a) Borrower shall at all
times ensure that the Export-Related Borrowing Base equals or exceeds the
Credit Accommodation Amount. If informed by Lender or if Borrower otherwise has
actual knowledge that the Export-Related Borrowing Base is at any time less
than the Credit Accommodation Amount, Borrower shall, within five (5) Business
Days, either (i) furnish additional Collateral to Lender, in form and amount
satisfactory to Lender and Ex-Im Bank or (ii) pay to Lender an amount equal to
the difference between the Credit Accommodation Amount and the Export-Related
Borrowing Base.
(b) For purposes of this Agreement, in determining the
Export-Related Borrowing Base there shall be deducted from the Export-Related
Borrowing Base (i) an amount equal to twenty-five percent (25%) of the
outstanding face amount of Commercial Letters of Credit and Standby Letters of
Credit and (ii) one hundred percent (100%) of the face amount of Warranty
Letters of Credit less the amount of cash collateral held by Lender to secure
Warranty Letters of Credit.
(c) Unless otherwise approved in writing by Ex-Im Bank, for
Revolving Loan Facilities (other than Transaction Specific Revolving Loan
Facilities), Borrower shall at all times ensure that the outstanding principal
balance of the Credit Accommodations that is supported by Export-Related
Inventory does not exceed sixty percent (60%) of the sum of the total
outstanding principal balance of the Disbursements and the undrawn face amount
of all outstanding Commercial Letters of Credit. If informed by Lender or if
Borrower otherwise has actual knowledge that the outstanding principal balance
of the Credit Accommodations that is supported by Inventory exceeds sixty
percent (60%) of the sum of the total outstanding principal balance of the
Disbursements and the undrawn face amount of all outstanding Commercial Letters
of Credit, Borrower shall, within five (5) Business Days, either (i) furnish
additional non-Inventory Collateral to Lender, in form and amount satisfactory
to Lender and Ex-Im Bank, or (ii) pay down the applicable portion of the Credit
Accommodations so that the above described ratio is not exceeded.
2.08 Continued Security Interest. Borrower shall not change (a)
its name or identity in any manner, (b) the location of its principal place of
business, (c) the location of any of the Collateral or (d) the location of any
of the books or records related to the Collateral, in each instance without
giving thirty (30) days prior written notice thereof to Lender and taking all
actions deemed necessary or appropriate by Lender to continuously protect and
perfect Lender's Liens upon the Collateral.
2.09 Inspection of Collateral. Borrower shall permit the
representatives of Lender and Ex-Im Bank to make at any time during normal
business hours inspections of the Collateral and of Borrower's facilities,
activities, and books and records, and shall cause its officers and employees
to give full cooperation and assistance in connection therewith.
2.10 General Intangibles. Borrower represents and warrants that it
owns, or is licensed to use, all General Intangibles necessary to conduct its
business as currently conducted except where the
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failure of Borrower to own or license such General Intangibles could not
reasonably be expected to have a Material Adverse Effect.
2.11 Notice of Certain Events. Borrower shall promptly, but in any
event within five (5) Business Days, notify Lender in writing of the occurrence
of any of the following:
(a) Borrower or any Guarantor (i) applies for, consents to or
suffers the appointment of, or the taking of possession by, a receiver,
custodian, trustee, liquidator or similar fiduciary of itself or of all or a
substantial part of its property or calls a meeting of its creditors, (ii)
admits in writing its inability, or is generally unable, to pay its debts as
they become due or ceases operations of its present business, (iii) makes a
general assignment for the benefit of creditors, (iv) commences a voluntary
case under any state or federal bankruptcy laws (as now or hereafter in
effect), (v) is adjudicated as bankrupt or insolvent, (vi) files a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vii) acquiesces to, or fails to have dismissed within thirty (30) days, any
petition filed against it in any involuntary case under such bankruptcy laws,
or (vii) takes any action for the purpose of effecting any of the foregoing;
(b) any Lien in any of the Collateral, granted or intended by the
Loan Documents to be granted to Lender, ceases to be a valid, enforceable,
perfected, first priority Lien (or a lesser priority if expressly permitted
pursuant to Section 6 of the Loan Authorization Agreement) subject only to
Permitted Liens;
(c) the issuance of any levy, assessment, attachment, seizure or
Lien, other than a Permitted Lien, against any of the Collateral which is not
stayed or lifted within thirty (30) calendar days;
(d) any proceeding is commenced by or against Borrower or any
Guarantor for the liquidation of its assets or dissolution;
(e) any litigation is filed against Borrower or any Guarantor
which has had or could reasonably be expected to have a Material Adverse Effect
and such litigation is not withdrawn or dismissed within thirty (30) calendar
days of the filing thereof;
(f) any default or event of default under the Loan Documents;
(g) any failure to comply with any terms of the Loan
Authorization Agreement;
(h) any material provision of any Loan Document or this Agreement
for any reason ceases to be valid, binding and enforceable in accordance with
its terms;
(i) any event which has had or could reasonably be expected to
have a Material Adverse Effect; or
(j) the Credit Accommodation Amount exceeds the applicable
Export-Related Borrowing Base.
2.12 Insurance. Borrower will at all times carry property,
liability and other insurance, with insurers acceptable to Lender, in such form
and amounts, and with such deductibles and other
14
provisions, as Lender shall require, and Borrower will provide evidence of such
insurance to Lender, so that Lender is satisfied that such insurance is, at all
times, in full force and effect. Each property insurance policy shall name
Lender as loss payee and shall contain a lender's loss payable endorsement in
form acceptable to Lender and each liability insurance policy shall name Lender
as an additional insured. All policies of insurance shall provide that they may
not be cancelled or changed without at least ten (10) days' prior written
notice to Lender and shall otherwise be in form and substance satisfactory to
Lender. Borrower will promptly deliver to Lender copies of all reports made to
insurance companies.
2.13 Taxes. Borrower has timely filed all tax returns and reports
required by applicable law, has timely paid all applicable taxes, assessments,
deposits and contributions owing by Borrower and will timely pay all such items
in the future as they became due and payable. Borrower may, however, defer
payment of any contested taxes; provided, that Borrower (a) in good faith
contests Borrower's obligation to pay such taxes by appropriate proceedings
promptly and diligently instituted and conducted; (b) notifies Lender in
writing of the commencement of, and any material development in, the
proceedings; (c) posts bonds or takes any other steps required to keep the
contested taxes from becoming a Lien upon any of the Collateral; and (d)
maintains adequate reserves therefor in conformity with GAAP.
2.14 Compliance with Laws. Borrower represents and warrants that
it has complied in all material respects with all provisions of all applicable
laws and regulations, including those relating to Borrower's ownership of real
or personal property, the conduct and licensing of Borrower's business, the
payment and withholding of taxes, ERISA and other employee matters, safety and
environmental matters.
2.15 Negative Covenants. Without the prior written consent of
Ex-Im Bank and Lender, Borrower shall not (a) merge, consolidate or otherwise
combine with any other Person; (b) acquire all or substantially all of the
assets or capital stock of any other Person; (c) sell, lease, transfer, convey,
assign or otherwise dispose of any of its assets, except for the sale of
Inventory in the ordinary course of business and the disposition of obsolete
equipment in the ordinary course of business; (d) create any Lien on the
Collateral except for Permitted Liens; (e) make any material changes in its
organizational structure or identity; or (f) enter into any agreement to do any
of the foregoing.
2.16 Reborrowings and Repayment Terms. (a) If the Loan Facility is
a Revolving Loan Facility, provided that Borrower is not in default under any
of the Loan Documents, Borrower may borrow, repay and reborrow amounts under
the Loan Facility until the close of business on the Final Disbursement Date.
Unless the Revolving Loan Facility is renewed or extended by Lender with the
consent of Ex-Im Bank, Borrower shall pay in full the outstanding Loan Facility
Obligations and all accrued and unpaid interest thereon no later than the first
Business Day after the Final Disbursement Date.
(b) If the Loan Facility is a Transaction Specific Loan Facility,
Borrower shall, within two (2) Business Days of the receipt thereof, pay to
Lender (for application against the outstanding Loan Facility Obligations and
accrued and unpaid interest thereon) all checks, drafts, cash and
15
other remittances it may receive in payment or on account of the Export-Related
Accounts Receivable or any other Collateral, in precisely the form received
(except for the endorsement of Borrower where necessary). Pending such deposit,
Borrower shall hold such amounts in trust for Lender separate and apart and
shall not commingle any such items of payment with any of its other funds or
property.
2.17 Cross Default. Borrower shall be deemed in default under the
Loan Facility if Borrower fails to pay when due any amount payable to Lender
under any loan or other credit accommodations to Borrower whether or not
guaranteed by Ex-Im Bank.
2.18 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), Borrower shall send
a written notice promptly, but in any event within five (5) Business Days, of
Borrower learning thereof to Lender describing the Items(s) and the
corresponding invoice amount.
2.19 Suspension and Debarment, etc. On the date of this Agreement
neither Borrower nor its Principals 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 or (b)
indicted, convicted or had a civil judgment rendered against Borrower or any of
its Principals for any of the offenses listed in any of the Debarment
Regulations. Unless authorized by Ex-Im Bank, 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. Borrower will provide immediate written notice to Lender if at any
time it learns that the certification set forth in this Section 2.19 was
erroneous when made or has become erroneous by reason of changed circumstances.
ARTICLE III
RIGHTS AND REMEDIES
3.01 Indemnification. Upon Ex-Im Bank's payment of a Claim to
Lender in connection with the Loan Facility pursuant to the Master Guarantee
Agreement, Ex-Im Bank may assume all rights and remedies of Lender under the
Loan Documents and may enforce any such rights or remedies against Borrower,
the Collateral and any Guarantors. Borrower shall hold Ex-Im Bank and 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
Borrower or its agent to Ex-Im Bank or Lender in connection with the Loan
Facility, this Agreement, the Loan Authorization Agreement or any other Loan
Documents or (b) any material breach by Borrower of the terms and conditions of
this Agreement, the Loan Authorization Agreement or any of the other Loan
Documents. Borrower also acknowledges that any statement, certification or
representation made by Borrower in connection with the Loan Facility is subject
to the penalties provided in Article 18 U.S.C. Section 1001.
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3.02 Liens. Borrower agrees that any and all Liens granted by it
to Lender are also hereby granted to Ex-Im Bank to secure Borrower's
obligation, however arising, to reimburse Ex-Im Bank for any payments made by
Ex-Im Bank pursuant to the Master Guarantee Agreement. Lender is authorized to
apply the proceeds of, and recoveries from, any property subject to such Liens
to the satisfaction of Loan Facility Obligations in accordance with the terms
of any agreement between Lender and Ex-Im Bank.
ARTICLE IV
MISCELLANEOUS
4.01 Governing Law. This Agreement and the Loan Authorization
Agreement and the obligations arising under this Agreement and the Loan
Authorization Agreement shall be governed by, and construed in accordance with,
the law of the state governing the Loan Documents.
4.02 Notification. All notices required by this Agreement shall be
given in the manner and to the parties provided for in the Loan Agreement.
4.03 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.
4.04 Waiver of Jury Trial. BORROWER HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY ACTION, SUIT, PROCEEDING OR OTHER LITIGATION BROUGHT TO RESOLVE
ANY DISPUTE ARISING UNDER, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT,
THE LOAN AUTHORIZATION AGREEMENT, ANY LOAN DOCUMENT, OR ANY OTHER AGREEMENT,
DOCUMENT OR INSTRUMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR
THEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN), OR ACTIONS OR OMMISSIONS OF LENDER, EX-IM BANK, OR ANY
OTHER PERSON, RELATING TO THIS AGREEMENT, THE LOAN AUTHORIZATION AGREEMENT OR
ANY OTHER LOAN DOCUMENT.
IN WITNESS WHEREOF, Borrower has caused this Agreement to be duly
executed as of the 12th day of February, 2003.
BORROWER
VERSO TECHNOLOGIES, INC.
By: /s/ Xxxxx Xxxx
-------------------------------------
(Signature)
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Name: Xxxxxx X. Xxxx
-----------------------------------
(Print or Type)
Title: Chairman, CEO
----------------------------------
(Print or Type)
NACT TELECOMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxx
-------------------------------------
(Signature)
Name: Xxxxxx X. Xxxx
-----------------------------------
(Print or Type)
Title: Chairman, CEO
----------------------------------
(Print or Type)
XXXXXXXX.XXX SOFTWARE, INC.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
(Signature)
Name: Xxxxx X. Xxxxxxx
-----------------------------------
(Print or Type)
Title: President, COO
----------------------------------
(Print or Type)
ACKNOWLEDGED:
SILICON VALLEY BANK
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
(Signature)
Name: Xxxxx X. Xxxxxxxx
-----------------------------------
(Print or Type)
Title: Vice President
----------------------------------
(Print or Type)
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ANNEXES:
Annex A - Loan Authorization Agreement or Loan Authorization Notice
19
