Export-Import Bank of the United States

Working Capital Guarantee Program

Borrower Agreement

THIS BORROWER AGREEMENT (this "Agreement") is made and entered intoby 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 thesignature page hereof ("Lender").

RECITALS

Borrower has requested that Lender establish an Export-Import Bank factoringfacility (the "Loan Facility") in favor of Borrower for the purposesof providing Borrower with pre-export working capital to finance themanufacture, production or purchase and subsequent export sale of Items.

It is a condition to the establishment of such Loan Facility that Ex-Im Bankguarantee the payment of ninety percent (90%) of certain credit accommodationssubject to the terms and conditions of a Master Guarantee Agreement, the LoanAuthorization Agreement, and to the extent applicable, the Delegated AuthorityLetter Agreement.

Borrower is executing this Agreement for the benefit of Lender and Ex-Im Bankin consideration for and as a condition to Lender's establishing the LoanFacility and Ex-Im Bank's agreement to guarantee such Loan Facility pursuant tothe Master Guarantee Agreement.

NOW, THEREFORE, Borrower hereby agrees as follows:

**DEFINITIONS
.
Definition of Terms
.  As used in this Agreement, including theRecitals to this Agreement and the Loan Authorization Agreement, the followingterms shall have the following meanings: 

"Accounts Receivable" shall mean all of Borrower's now owned orhereafter acquired (a) "accounts" (as such term is defined in theUCC), other receivables, book debts and other forms of obligations, whetherarising 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 orservices; (c) rights to any goods represented or purported to berepresented by any of the foregoing (including unpaid sellers' rights ofrescission, replevin, reclamation and stoppage in transit and rights toreturned, reclaimed or repossessed goods); (d) moneys due or to become dueto such Borrower under all purchase orders and contracts for the sale of goodsor the performance of services or both by Borrower (whether or not yet earned byperformance on the part of Borrower), including the proceeds of the foregoing;(e) any notes, drafts, letters of credit, insurance proceeds or otherinstruments, documents and writings evidencing or supporting the foregoing; and(f) all collateral security and guarantees of any kind given by any otherPerson with respect to any of the foregoing.

"Advance Rate" shall mean the rate specified in Section5(c) of the Loan Authorization Agreement for each category ofCollateral.

"Business Day" shall mean any day on which the Federal Reserve Bankof New York is open for business.

"Buyer" shall mean a Person that has entered into one or moreExport Orders with Borrower.

"Collateral" shall mean all property and interest in property in orupon which Lender has been granted a Lien as security for the payment of all theLoan Facility Obligations including the Collateral identified in Section 6 ofthe Loan Authorization Agreement and all products and proceeds (cash and non-cash) thereof.

"Country Limitation Schedule" shall mean the schedule publishedfrom time to time by Ex-Im Bank and provided to Borrower by Lender which setsforth on a country by country basis whether and under what conditions Ex-Im Bankwill provide coverage for the financing of export transactions to countrieslisted therein.

"Credit Accommodation Amount" shall mean the aggregate outstandingamount of Disbursements.

"Credit Accommodations" shall mean Disbursements.

"Debarment Regulations" shall mean, collectively, (a) theGovernmentwide Debarment and Suspension (Nonprocurement) regulations (CommonRule), 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 DelegatedAuthority Letter Agreement, if any, between Ex-Im Bank and Lender.

"Disbursement" shall mean an advance of a working capital loan fromLender to Borrower under the Loan Facility. 

"Dollars" or "$" shall mean the lawful currency of theUnited States.

"Effective Date" shall mean the date on which (a) the LoanDocuments are executed by Lender and Borrower or the date, if later, on whichagreements are executed by Lender and Borrower adding the Loan Facility to anexisting working capital loan arrangement between Lender and Borrower and(b) all of the conditions to the making of the initial CreditAccommodations under the Loan Documents or any amendments thereto have beensatisfied.

"Eligible Export-Related Accounts Receivable" shall mean an Export-Related Account Receivable which is acceptable to Lender and which is deemed tobe eligible pursuant to the Loan Documents, but in no event shall EligibleExport-Related Accounts Receivable include any Account Receivable:
- that does not arise from the sale of Items in the ordinary course ofBorrower's business;
- that is not subject to a valid, perfected first priority Lien in favor ofLender;
- as to which any covenant, representation or warranty contained in the LoanDocuments with respect to such Account Receivable has been breached;
- that is not owned by Borrower or is subject to any right, claim or interestof another Person other than the Lien in favor of Lender or liens otherwisepermitted by Lender;
- with respect to which an invoice has not been sent;
- that arises from the sale of defense articles or defense services;
- that is due and payable from a Buyer located in a country with which Ex-ImBank is prohibited from doing business as designated in the Country LimitationSchedule;
- that does not comply with the requirements of the Country LimitationSchedule;
- that is due and payable more than one hundred eighty (180) days from thedate of the invoice;	
- 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 forcomprehensive commercial and political risk, or through Ex-Im Bank approvedprivate insurers for comparable coverage, in which case it is not paid withinninety (90) calendar days from its due date;
- that arises from a sale of goods to or performance of services for anemployee of Borrower, a subsidiary of Borrower, a Person with a controllinginterest in Borrower or a Person which shares common controlling ownership withBorrower;
- that is backed by a letter of credit unless the Items covered by the subjectletter of credit have been shipped;
- that Lender or Ex-Im Bank, in its reasonable judgment, deems uncollectiblefor any reason;
- that is due and payable in a currency other than Dollars, except as may beapproved in writing by Ex-Im Bank;
- that is due and payable from a military Buyer, except as may be approved inwriting by Ex-Im Bank;
- that does not comply with the terms of sale set forth in Section 7 of theLoan Authorization Agreement; 
- that is due and payable from a Buyer who (i) applies for, suffers, orconsents 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 ofits property or calls a meeting of its creditors, (ii) admits in writing itsinability, or is generally unable, to pay its debts as they become due or ceasesoperations of its present business, (iii) makes a general assignment for thebenefit of creditors, (iv) commences a voluntary case under any state or federalbankruptcy laws (as now or hereafter in effect), (v) is adjudicated as bankruptor insolvent, (vi) files a petition seeking to take advantage of any other lawproviding for the relief of debtors, (vii) acquiesces to, or fails to havedismissed within sixty (60) days, any petition which is filed against it in anyinvoluntary case under such bankruptcy laws, or (viii) takes any action for thepurpose of effecting any of the foregoing; 
- that arises from a bill-and-hold, guaranteed sale, sale-and-return, sale onapproval, consignment or any other repurchase or return basis or is evidenced bychattel paper;
- for which the Items giving rise to such Account Receivable have not beenshipped and delivered to and accepted by the Buyer or the services giving riseto such Account Receivable have not been performed by Borrower and accepted bythe Buyer or the Account Receivable otherwise does not represent a finalsale;
- that is subject to any offset, deduction, defense, dispute, or counterclaimor the Buyer is also a creditor or supplier of Borrower or the AccountReceivable is contingent in any respect or for any reason;
- for which Borrower has made any agreement with the Buyer for any deductiontherefrom, except for discounts or allowances made in the ordinary course ofbusiness for prompt payment, all of which discounts or allowances are reflectedin the calculation of the face value of each respective invoice related thereto;or
- for which any of the Items giving rise to such Account Receivable have beenreturned, rejected or repossessed.

 "ERISA" shall mean the Employee Retirement Income Security Act of1974 and the rules and regulations promulgated thereunder.

"Export-Import Bank Factoring Agreement" shall mean a valid andenforceable agreement between Lender and Borrower setting forth the terms andconditions of the Loan Facility.

"Export Order" shall mean a written export order or contract forthe purchase by the Buyer from Borrower of any of the Items.

"Export-Related Accounts Receivable" shall mean those AccountsReceivable arising from the sale of Items which are due and payable to Borrowerin the United States.

"Export-Related Accounts Receivable Value" shall mean, at the dateof determination thereof, the aggregate face amount of Eligible Export-RelatedAccounts 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 ofdetermination thereof, the sum of (a)  the Export-Related AccountsReceivable Value multiplied by the Advance Rate applicable to Export-RelatedAccounts Receivable set forth in Section 5(C)(2) of the Loan AuthorizationAgreement, and (b) if permitted by Ex-Im Bank in writing, the RetainageValue multiplied by the Retainage Advance Rate set forth in Section 5(C)(3) ofthe Loan Authorization Agreement.

"Export-Related Borrowing Base Certificate" shall mean acertificate in the form provided or approved by Lender, executed by Borrower anddelivered to Lender pursuant to the Loan Documents detailing the Export-RelatedBorrowing Base supporting the Credit Accommodations which reflects, to theextent included in the Export-Related Borrowing Base, Export-Related AccountsReceivable, Eligible Export-Related Accounts Receivable balances that have beenreconciled with Borrower's general ledger and  Accounts Receivable agingreport.

"Final Disbursement Date" shall mean, unless subject to anextension of such date agreed to by Ex-Im Bank, the last date on which Lendermay make a Disbursement set forth in Section 10 of the Loan AuthorizationAgreement or, if such date is not a Business Day, the next succeeding BusinessDay.

"GAAP" shall mean the generally accepted accounting principlesissued by the American Institute of Certified Public Accountants as in effectfrom time to time.

"General Intangibles" shall mean all intellectual property andother "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 3of the Loan Authorization Agreement who shall guarantee (jointly and severallyif more than one) the payment and performance of all or a portion of the LoanFacility Obligations.

"Guaranty Agreement" shall mean a valid and enforceable agreementof guaranty executed by each Guarantor in favor of Lender.

"Inventory" shall mean all "inventory" (as such term isdefined in the UCC), now or hereafter owned or acquired by Borrower, whereverlocated, including all inventory, merchandise, goods and other personal propertywhich are held by or on behalf of Borrower for sale or lease or are furnished orare to be furnished under a contract of service or which constitute rawmaterials, work in process or materials used or consumed or to be used orconsumed 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 andrevisions thereof.

"Items" shall mean the finished goods or services which areintended for export from the United States, as specified in Section 4(a) ofthe Loan Authorization Agreement.

"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 ornature whatsoever (including any lease or title retention agreement, anyfinancing lease having substantially the same economic effect as any of theforegoing, and the filing of, or agreement to give, any financing statementperfecting a security interest under the UCC or comparable law of anyjurisdiction) by which property is encumbered or otherwise charged.

"Loan Authorization Agreement" shall mean the Loan AuthorizationAgreement entered into between Lender and Ex-Im Bank or the Loan AuthorizationNotice setting forth certain terms and conditions of the Loan Facility, a copyof which is attached hereto as Annex A.

"Loan Authorization Notice" shall mean the Loan AuthorizationNotice executed by Lender and delivered to Ex-Im Bank in accordance with theDelegated Authority Letter Agreement setting forth the terms and conditions ofeach Loan Facility.

"Loan Documents" shall mean the Loan Authorization Agreement, theExport-Import Bank Factoring Agreement, this Agreement, each promissory note (ifapplicable), each Guaranty Agreement, and all other instruments, agreements anddocuments now or hereafter executed by Borrower or any Guarantor evidencing,securing, guaranteeing or otherwise relating to the Loan Facility or any CreditAccommodations made thereunder.

"Loan Facility" shall mean the Revolving Loan Facility, theTransaction Specific Loan Facility or the Transaction Specific Revolving LoanFacility established by Lender in favor of Borrower under the LoanDocuments.

"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 suchperformance is then required or contingent, or amounts are liquidated ordeterminable) owing by Borrower to Lender, of any kind or nature, present orfuture, arising in connection with the Loan Facility.

"Loan Facility Term" shall mean the number of months from theEffective Date to the Final Disbursement Date as originally set forth in theLoan Authorization Agreement.

"Master Guarantee Agreement" shall mean the Master GuaranteeAgreement between Ex-Im Bank and Lender, as amended, modified, supplemented andrestated from time to time.

"Material Adverse Effect" shall mean a material adverse effect on(a) the business, assets, operations, prospects or financial or othercondition of Borrower or any Guarantor, (b) Borrower's ability to pay orperform the Loan Facility Obligations in accordance with the terms thereof,(c) the Collateral or Lender's Liens on the Collateral or the priority ofsuch Lien or (d) Lender's rights and remedies under the Loan Documents.

"Maximum Amount" shall mean the maximum principal balance of CreditAccommodations that may be outstanding at any time under the Loan Facilityspecified in Section 5(a) of the Loan Authorization Agreement.

"Other Assets" shall mean the Collateral, if any, described inSection 5(C)(4) of the Loan Authorization Agreement.

"Other Assets Value" shall mean, at the date of determinationthereof, the value of the Other Assets as determined in accordance withGAAP.

"Permitted Liens" shall mean (a) Liens for taxes, assessmentsor other governmental charges or levies not delinquent, or, being contested ingood faith and by appropriate proceedings and with respect to which properreserves have been taken by Borrower; provided, that, the Lien shall have noeffect on the priority of the Liens in favor of Lender or the value of theassets in which Lender has such a Lien and a stay of enforcement of any suchLien shall be in effect; (b) deposits or pledges securing obligations underworker's compensation, unemployment insurance, social security or publicliability laws or similar legislation; (c) deposits or pledges securingbids, tenders, contracts (other than contracts for the payment of money),leases, statutory obligations, surety and appeal bonds and other obligations oflike 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 ofBorrower's business with respect to obligations which are not due;(f) Liens placed upon fixed assets hereafter acquired to secure a portionof the purchase price thereof, provided, that, any such Lien shall not encumberany other property of Borrower; (g) security interests being terminatedconcurrently with the execution of the Loan Documents; (h) Liens in favorof Lender securing the Loan Facility Obligations; and (i) Liens disclosedin Section 6(d) of the Loan Authorization Agreement and the Schedule ofLiens as defined in the Export-Import Bank Factoring Agreement.

"Person" shall mean any individual, sole proprietorship,partnership, limited liability partnership, joint venture, trust, unincorporatedorganization, association, corporation, limited liability company, institution,public benefit corporation, entity or government (whether national, federal,provincial, state, county, city, municipal or otherwise, including anyinstrumentality, division, agency, body or department thereof), and shallinclude such Person's successors and assigns.

"Principals" shall mean any officer, director, owner, partner, keyemployee, or other Person with primary management or supervisoryresponsibilities with respect to Borrower or any other Person (whether or not anemployee) who has critical influence on or substantive control over thetransactions covered by this Agreement.

"Retainage" shall mean that portion of the purchase price of anExport Order that a Buyer is not obligated to pay until the end of a specifiedperiod of time following the satisfactory performance under such ExportOrder.

"Retainage Accounts Receivable" shall mean those portions ofEligible Export-Related Accounts Receivable arising out of a Retainage.

"Retainage Advance Rate" shall mean the percentage rate specifiedin Section 5(C)(3) of the Loan Authorization Agreement as the Advance Rate forthe 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 byEx-Im Bank in writing.

"Revolving Loan Facility" shall mean the credit facility or portionthereof established by Lender in favor of  Borrower for the purpose of providingpre-export working capital in the form of loans and/or Letters of Credit tofinance the manufacture, production or purchase and subsequent export sale ofItems pursuant to Loan Documents under which Credit Accommodations may be madeand repaid on a continuous basis based solely on the Export-Related BorrowingBase during the term of such credit facility.

"Special Conditions" shall mean those conditions, if any, set forthin Section 13 of the Loan Authorization Agreement.

"Specific Export Orders" shall mean those Export Orders specifiedin Section 5(d) of the Loan Authorization Agreement.

"Transaction Specific Loan Facility" shall mean a credit facilityor a portion thereof established by Lender in favor of Borrower for the purposeof providing pre-export working capital in the form of loans and/or Letters ofCredit to finance the manufacture, production or purchase and subsequent exportsale of Items pursuant to Loan Documents under which Credit Accommodations aremade based solely on the Export-Related Borrowing Base relating to SpecificExport Orders and once such Credit Accommodations are repaid they may not bereborrowed.

"Transaction Specific Revolving Loan Facility" shall mean aRevolving Credit Facility established to provide financing of Specific ExportOrders.

"UCC" shall mean the Uniform Commercial Code as the same may be ineffect from time to time in the jurisdiction in which Borrower or Collateral islocated.

"UCP" shall mean the Uniform Customs and Practice for DocumentaryCredits (1993 Revision), International Chamber of Commerce Publication No. 500and any amendments and revisions thereof.

"U.S." or "United States" shall mean the United States ofAmerica 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 areincorporated into an Item in the United States.

"Warranty" shall mean Borrower's guarantee to Buyer that the Itemswill function as intended during the warranty period set forth in the applicableExport Order.
Rules of Construction
.  For purposes of this Agreement, the followingadditional rules of construction shall apply, unless specifically indicated tothe contrary: (a) wherever from the context it appears appropriate, eachterm stated in either the singular or plural shall include the singular and theplural, and pronouns stated in the masculine, feminine or neuter gender shallinclude the masculine, the feminine and the neuter; (b) the term"or" is not exclusive; (c) the term "including" (or anyform thereof) shall not be limiting or exclusive; (d) all references tostatutes and related regulations shall include any amendments of same and anysuccessor statutes and regulations; (e) the words "thisAgreement", "herein", "hereof", "hereunder"or other words of similar import refer to this Agreement as a whole includingthe schedules, exhibits, and annexes hereto as the same may be amended, modifiedor 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) allreferences to any instruments or agreements, including references to any of theLoan Documents, or the Delegated Authority Letter Agreement shall include anyand all modifications, amendments and supplements thereto and any and allextensions or renewals thereof to the extent permitted under this Agreement.
Incorporation of Recitals
.  The Recitals to this Agreement areincorporated into and shall constitute a part of this Agreement. 
**OBLIGATIONS OF BORROWER
.  Until payment in full of all Loan FacilityObligations and termination of the Loan Documents, Borrower agrees asfollows:
Use of Credit Accommodations
.
- Borrower shall use Credit Accommodations only for the purpose of enablingBorrower to finance the cost of manufacturing, producing, purchasing or sellingthe Items.  Borrower may not use any of the Credit Accommodations for thepurpose of:   (i) servicing or repaying any of Borrower's pre-existing orfuture indebtedness unrelated to the Loan Facility (unless approved by Ex-ImBank in writing); (ii) acquiring fixed assets or capital goods for use inBorrower's business; (iii) acquiring, equipping or renting commercial spaceoutside of the United States; (iv) paying the salaries of non U.S. citizens ornon-U.S. permanent residents who are located in offices outside of the UnitedStates; or (v) in connection with a Retainage or Warranty (unless approved byEx-Im Bank in writing).   
- In addition, no Credit Accommodation may be used to finance the manufacture,purchase or sale of any of the following:
Items to be sold or resold to a Buyer located in a country as to which Ex-ImBank is prohibited from doing business as designated in the Country LimitationSchedule; 
that part of the cost of the Items which is not U.S. Content unless suchpart is not greater than fifty percent (50%) of the cost of the Items and isincorporated into the Items in the United States;
defense articles or defense services; or
without Ex-Im Bank's prior written consent, any Items to be used in theconstruction, alteration, operation or maintenance of nuclear power, enrichment,reprocessing, research or heavy water production facilities.

Loan Documents and Loan Authorization Agreement
.
- Each Loan Document and this Agreement has been duly executed and deliveredon behalf of Borrower, and each such Loan Document and this Agreement is a legaland valid obligation of Borrower, enforceable against it in accordance with itsterms.  
- Borrower shall comply with all of the terms and conditions of the LoanDocuments, this Agreement and the Loan Authorization Agreement.
Export-Related Borrowing Base Certificates and Export Orders
.  Inorder to receive Credit Accommodations under the Loan Facility, Borrower shallhave delivered to Lender an Export-Related Borrowing Base Certificate asfrequently 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 LoanFacilities, if permitted by Lender, a written summary of the Export Orders)against which Borrower is requesting Credit Accommodations.  If Lender permitssummaries of Export Orders, Borrower shall also deliver promptly to Lendercopies of any Export Orders requested by Lender.  In addition, so long as thereare any Credit Accommodations outstanding under the Loan Facility, Borrowershall deliver to Lender at least once each month no later than the twentieth(20
th
) day of such month or more frequently as required by the LoanDocuments, an Export-Related Borrowing Base Certificate. 
Exclusions from the Export-Related Borrowing Base
.  In determiningthe Export-Related Borrowing Base, Borrower shall exclude therefrom AccountsReceivable which are not Eligible Export-Related Accounts Receivable.  Borrowershall promptly, but in any event within five (5) Business Days, notify Lender ofany event or circumstance which to Borrower's knowledge would cause Lender toreasonably consider any then existing Export-Related Accounts Receivable as nolonger constituting an Eligible Export-Related Accounts Receivable. 
Financial Statements
.  Borrower shall deliver to Lender the financialstatements required to be delivered by Borrower in accordance with Section 11 ofthe Loan Authorization Agreement. 
Schedules, Reports and Other Statements
.  Borrower shall submit toLender in writing each month an Accounts Receivable aging report for thepreceding 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 Lendermay from time to time specify. 
Additional Security or Payment
.  Borrower shall at all times ensurethat the Export-Related Borrowing Base equals or exceeds the CreditAccommodation Amount.  If informed by Lender or if Borrower otherwise has actualknowledge that the Export-Related Borrowing Base is at any time less than theCredit Accommodation Amount, Borrower shall, within five (5) Business Days,either (i) furnish additional Collateral to Lender, in form and amountsatisfactory to Lender and Ex-Im Bank or (ii) pay to Lender an amount equal tothe difference between the Credit Accommodation Amount and the Export-RelatedBorrowing Base. 
Continued Security Interest
.  Borrower shall not change (a) itsname or identity in any manner, (b) the location of its principal place ofbusiness, (c) the location of any of the Collateral (other than transfersto customers in the ordinary course of business) or (d) the location of anyof the books or records related to the Collateral, in each instance withoutgiving thirty (30) days prior written notice thereof to Lender and taking allactions deemed necessary or appropriate by Lender to continuously protect andperfect Lender's Liens upon the Collateral. 
Inspection of Collateral
.  Borrower shall permit the representativesof Lender and Ex-Im Bank to make at any time upon reasonable notice and duringnormal business hours inspections of the Collateral and of Borrower'sfacilities, activities, and books and records, and shall cause its officers andemployees to give full cooperation and assistance in connection therewith. 
General Intangibles
.  Borrower represents and warrants that it owns,or is licensed to use, all General Intangibles necessary to conduct its businessas currently conducted except where the failure of Borrower to own or licensesuch General Intangibles could not reasonably be expected to have a MaterialAdverse Effect. 
Notice of Certain Events
.  Borrower shall promptly, but in any eventwithin five (5) Business Days, notify Lender in writing of the occurrence of anyof the following: 
- Borrower or any Guarantor (i) applies for, consents to or suffers theappointment 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 itsproperty or calls a meeting of its creditors, (ii) admits in writing itsinability, or is generally unable, to pay its debts as they become due or ceasesoperations of its present business, (iii) makes a general assignment for thebenefit of creditors, (iv) commences a voluntary case under any state or federalbankruptcy laws (as now or hereafter in effect), (v) is adjudicated as bankruptor insolvent, (vi) files a petition seeking to take advantage of any other lawproviding for the relief of debtors, (vii) acquiesces to, or fails to havedismissed within sixty (60) days, any petition filed against it in anyinvoluntary case under such bankruptcy laws, or (vii) takes any action for thepurpose of effecting any of the foregoing;
- any Lien in any of the Collateral, granted or intended by the Loan Documentsto be granted to Lender, ceases to be a valid, enforceable, perfected, firstpriority Lien (or a lesser priority if expressly permitted pursuant to Section 6of the Loan Authorization Agreement) subject only to Permitted Liens;
- the issuance of any levy, assessment, attachment, seizure or Lien, otherthan a Permitted Lien, against any of the Collateral which is not stayed orlifted within thirty (30) calendar days;
- any proceeding is commenced by or against Borrower or any Guarantor for theliquidation of its assets or dissolution;
- any litigation is filed against Borrower or any Guarantor which has had orcould reasonably be expected to have a Material Adverse Effect and suchlitigation is not withdrawn or dismissed within sixy (60) calendar days of thefiling thereof;
- any default or event of default under the Loan Documents;
- any failure to comply with any material terms of the Loan AuthorizationAgreement;
- any material provision of any Loan Document or this Agreement for any reasonceases to be valid, binding and enforceable in accordance with its terms;
- any event which has had or could reasonably be expected to have a MaterialAdverse Effect; or 
- the Credit Accommodation Amount exceeds the applicable Export-RelatedBorrowing Base.
Insurance
.  Borrower will at all times carry property, liability andother insurance, with insurers acceptable to Lender, in such form and amounts,and with such deductibles and other provisions, as Lender shall require, andBorrower will provide evidence of such insurance to Lender, so that Lender issatisfied that such insurance is, at all times, in full force and effectprovided that Lender agrees that the insurance evidenced by the certificateattached to the Export-Import Bank Factoring Agreement is acceptable.  Eachproperty insurance policy shall name Lender as loss payee and shall contain alender's loss payable endorsement in form acceptable to Lender and eachliability insurance policy shall name Lender as an additional insured.  Allpolicies of insurance shall provide that they may not be cancelled or changedwithout at least ten (10) days' prior written notice to Lender (or such shorternotice as shall be required by the insurer) and shall otherwise be in form andsubstance satisfactory to Lender.  Borrower will promptly deliver to Lendercopies of all reports made to insurance companies. 
Taxes
.  Borrower has timely filed all tax returns and reportsrequired by applicable law, has timely paid all applicable taxes, assessments,deposits and contributions owing by Borrower and will timely pay all such itemsin the future as they became due and payable.  Borrower may, however, deferpayment of any contested taxes; provided, that Borrower (a) in good faithcontests Borrower's obligation to pay such taxes by appropriate proceedingspromptly and diligently instituted and conducted; (b) notifies Lender inwriting of the commencement of, and any material development in, theproceedings; (c) posts bonds or takes any other steps required to keep thecontested taxes from becoming a Lien upon any of the Collateral; and(d) maintains adequate reserves therefor in conformity with GAAP.
Compliance with Laws
.  Borrower represents and warrants that it hascomplied in all material respects with all provisions of all applicable laws andregulations, including those relating to Borrower's ownership of real orpersonal property, the conduct and licensing of Borrower's business, the paymentand withholding of taxes, ERISA and other employee matters, safety andenvironmental matters except where non-compliance would not have a MaterialAdverse Effect on Borrower. 
Negative Covenants
.  Without the prior written consent of Ex-Im Bankand Lender, Borrower shall not (a) merge, consolidate or otherwise combinewith any other Person; (b) acquire all or substantially all of the assetsor capital stock of any other Person; (c) sell, lease, transfer, convey,assign or otherwise dispose of any of the Collateral, except for the sale ofInventory in the ordinary course of business and the disposition of obsoleteequipment in the ordinary course of business; (d) create any Lien on theCollateral except for Permitted Liens (including purchase money liens onequipment financed by third parties and the refinancing of such equipment);(e) make any material changes in its organizational structure or identity;or (f) enter into any agreement to do any of the foregoing. 
Reborrowings and Repayment Terms
.
- If the Loan Facility is a Revolving Loan Facility, provided that Borrower isnot in default under any of the Loan Documents, Borrower may borrow, repay andreborrow amounts under the Loan Facility until the close of business on theFinal Disbursement Date.  Unless the Revolving Loan Facility is renewed orextended by Lender with the consent of Ex-Im Bank, Borrower shall pay in fullthe outstanding Loan Facility Obligations and all accrued and unpaid interestthereon no later than the first Business Day after the Final Disbursement Date.
- If the Loan Facility is a Transaction Specific Loan Facility, Borrowershall, within two (2) Business Days of the receipt thereof, pay to Lender (forapplication against the outstanding Loan Facility Obligations and accrued andunpaid interest thereon) all checks, drafts, cash and other remittances it mayreceive in payment or on account of the Export-Related Accounts Receivable or(following the occurrence of and during the continuance of an event of defaultunder any of the Loan Documents) any other Collateral, in precisely the formreceived (except for the endorsement of Borrower where necessary).  Pending suchdeposit, Borrower shall hold such amounts in trust for Lender separate and apartand shall not commingle any such items of payment with any of its other funds orproperty.
Cross Default
.  Borrower shall be deemed in default under the LoanFacility if Borrower fails to pay when due any amount payable to Lender underany loan or other credit accommodations to Borrower whether or not guaranteed byEx-Im Bank. 
Munitions List
.  If any of the Items are articles, services, orrelated technical data that are listed on the United States Munitions List (part121 of title 22 of the Code of Federal Regulations), Borrower shall send awritten notice promptly, but in any event within five (5) Business Days, ofBorrower learning thereof to Lender describing the Items(s) and thecorresponding invoice amount. 
Suspension and Debarment, etc
.  On the date of this Agreement neitherBorrower nor its Principals are (a) debarred, suspended, proposed fordebarment with a final determination still pending, declared ineligible orvoluntarily excluded (as such terms are defined under any of the DebarmentRegulations referred to below) from participating in procurement ornonprocurement transactions with any United States federal government departmentor agency pursuant to any of the Debarment Regulations or (b) indicted,convicted or had a civil judgment rendered against Borrower or any of itsPrincipals for any of the offenses listed in any of the Debarment Regulations.Unless authorized by Ex-Im Bank, Borrower will not knowingly enter into anytransactions in connection with the Items with any person who is debarred,suspended, declared ineligible or voluntarily excluded from participation inprocurement or nonprocurement transactions with any United States federalgovernment department or agency pursuant to any of the Debarment Regulations.Borrower will provide immediate written notice to Lender if at any time itlearns that the certification set forth in this Section 2.19 was erroneous whenmade or has become erroneous by reason of changed circumstances. 
**RIGHTS AND REMEDIES
.
Indemnification
.  Upon Ex-Im Bank's payment of a Claim to Lender inconnection with the Loan Facility pursuant to the Master Guarantee Agreement,Ex-Im Bank may assume all rights and remedies of Lender under the Loan Documentsand may enforce any such rights or remedies against Borrower, the Collateral andany Guarantors.  Borrower shall hold Ex-Im Bank and Lender harmless from andindemnify them against any and all liabilities, damages, claims, costs andlosses incurred or suffered by either of them resulting from (a) anymaterially incorrect certification or statement knowingly made by Borrower orits agent to Ex-Im Bank or Lender in connection with the Loan Facility, thisAgreement, the Loan Authorization Agreement or any other Loan Documents or(b) any material breach by Borrower of the terms and conditions of thisAgreement, the Loan Authorization Agreement or any of the other Loan Documentsexcept for liabilities, damages, claims, costs and losses caused by Ex-Im Bank'sor Lender's gross negligence or willful misconduct.  Borrower also acknowledgesthat any statement, certification or representation made by Borrower inconnection with the Loan Facility is subject to the penalties provided inArticle 18 U.S.C. Section 1001. 
Liens
.  Borrower agrees that any and all Liens granted by it toLender 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 Bankpursuant to the Master Guarantee Agreement.  Lender is authorized to apply theproceeds of, and recoveries from, any property subject to such Liens to thesatisfaction of Loan Facility Obligations in accordance with the terms of anyagreement between Lender and Ex-Im Bank. 
**MISCELLANEOUS
.
Governing Law
.  This Agreement and the Loan Authorization Agreementand the obligations arising under this Agreement and the Loan AuthorizationAgreement shall be governed by, and construed in accordance with, the law of thestate governing the Loan Documents. 
Notification
.  All notices required by this Agreement shall be givenin the manner and to the parties provided for in the Export-Import BankFactoring Agreement. 
Partial Invalidity
.  If at any time any of the provisions of thisAgreement becomes illegal, invalid or unenforceable in any respect under the lawof any jurisdiction, neither the legality, the validity nor the enforceabilityof the remaining provisions hereof shall in any way be affected orimpaired.
Waiver of Jury Trial
.  BORROWER HEREBY KNOWINGLY, VOLUNTARILY ANDINTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY INRESPECT OF ANY ACTION, SUIT, PROCEEDING OR OTHER LITIGATION BROUGHT TO RESOLVEANY 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 THEREWITHOR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL ORWRITTEN), OR ACTIONS OR OMISSIONS OF LENDER, EX-IM BANK, OR ANY OTHER PERSON,RELATING TO THIS AGREEMENT, THE LOAN AUTHORIZATION AGREEMENT OR ANY OTHER LOANDOCUMENT.

IN WITNESS WHEREOF, Borrower has caused this Agreement to be duly executed asof the 16th day of May, 2003.
   **BORROWER 
SOUTHWALL TECHNOLOGIES INC.     
By: /s/ Michael E. Seifert                  
(Signature)   
Name: Michael E. Seifert                   
(Print or Type)   
Title: Sr. Vice President & CFO         
(Print or Type)     
ACKNOWLEDGED:   **LENDER
'

PACIFIC BUSINESS FUNDING, a division of Cupertino NationalBank     
By: /s/ Melvin L. Robbins                    
(Signature)   
Name: Melvin L. Robbins                     
(Print or Type)   
Title: Sr. Vice President 
(Print or Type)
							/s/ Kevin O'Hare 

							Kevin O'Hare 

							EVP

ANNEXES:

Annex A	-	Loan Authorization Agreement or Loan Authorization Notice

 

 
**CONSENT OF GUARANTORS**
Each of the undersigned as a Guarantor of the obligations of Borrower to theLender executing the foregoing Agreement hereby agrees that the foregoingAgreement, each of their respective Guaranty Agreements and each other LoanDocuments may be assigned to the Export-Import Bank of the UnitedStates.
     
	 
[INDIVIDUAL GUARANTOR]     
[CORPORATE GUARANTOR]     
By:	 
Name:	 
Title:	************