Borrower Agreement - RSI Systems Inc., Export-Import Bank of the United States and Wells Fargo Bank Minnesota NA
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 Borrower on the signature page hereof ("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
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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).
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"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.
"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;
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(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;
(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 bill-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase
or return basis or is evidenced by chattel paper;
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(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;
(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 fight 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 U.S.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;
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(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 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.
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"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.
"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
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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
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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 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.
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"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.
"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.
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"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.
"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
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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.
"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
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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;
(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.
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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. 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,
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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 failure of Borrower
to own or license such General Intangibles could not reasonably be expected to
have a Material Adverse Effect.
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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
(viii) 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
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(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 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
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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 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
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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 19 U.S.C. Section 1001.
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 OMISSIONS OF LENDER, EX-IM BANK, OR ANY OTHER
PERSON,
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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 ___th day of August, 2000.
RSI SYSTEMS, INC.
By _________________________________________
Donald C. Lies
Its President and Chief Executive Officer
ACKNOWLEDGED:
Wells Fargo Bank Minnesota, National
Association
___________________________________________
(Name of Lender)
By: ______________________________________
(Signature)
Name: Brett Beugen
_____________________________________
(Print or Type)
Title: Assistant Vice President
_____________________________________
(Print or Type)
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ANNEX B
ANNEXES:
Annex A - Loan Authorization Agreement or Loan Authorization Notice