EXHIBIT 10.68
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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 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:
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.
"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 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 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 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
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;
(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.
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.
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 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.
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 California, 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.
IN WITNESS WHEREOF, the Borrower has caused this
Agreement to be duly executed as of the 24th day of
March, 1999.
Datron/Transco Inc.
(Name of Borrower)
By:/s/ XXXXXXX X. XXXXXXX
(Signature)
Name Xxxxxxx X. Xxxxxxx
(Print or Type)
Title Secretary and Treasurer
(Print or Type)
ACKNOWLEDGED:
Comerica Bank-California
(Name of Lender)
By:/s/ XXXXXXX X. XXXXXXXXX
(Signature)
Name Xxxxxxx X. Xxxxxxxxx
(Print or Type)
Title Vice President
(Print or Type)
Guaranteed Loan No.__________________
ANNEXES:
A1 - Loan Authorization Agreement or
A2 - Loan Authorization Notice
(Revised April 1, 1996)
