EXHIBIT 10.4


 


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 entities
identified as Borrower on the signature page hereof (collectively, “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:


 


1                                         DEFINITIONS


 


1.1                               Definition
of Terms.  As used in this Agreement,
including the Recitals to this Agreement and the Loan Authorization Agreement,
the following terms shall have the following meanings:


 


 “Accounts Receivable” shall mean all of
Borrower’s now owned or hereafter acquired (a) ”accounts” (as such term is
defined in the UCC), other receivables, book debts and other forms of
obligations, whether arising out of goods sold or services rendered or from any
other transaction; (b) rights in, to and under all purchase orders or
receipts for goods or services; (c) rights to any goods represented or
purported to be represented by any of the foregoing (including unpaid sellers’
rights of rescission, replevin, reclamation and stoppage in transit and
rights to returned, reclaimed or repossessed goods); (d) moneys due or to
become due to such Borrower under all purchase orders and contracts for the
sale of goods or the performance of services or both by Borrower (whether or
not yet earned by performance on the part of Borrower), including


 


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the proceeds
of the foregoing; (e) any notes, drafts, letters of credit, insurance
proceeds or other instruments, documents and writings evidencing or supporting
the foregoing; and (f) all collateral security and guarantees of any kind
given by any other Person with respect to any of the foregoing.


 


 “Advance Rate” shall mean the rate specified
in Section 5(C) of the Loan Authorization Agreement for each category
of Collateral.


 


 “Business Day” shall mean any day on which the
Federal Reserve Bank of New York is open for business.


 


 “Buyer” shall mean a Person that has entered
into one or more Export Orders with Borrower.


 


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


 


 “Commercial Letters of Credit” shall mean
those letters of credit subject to the UCP payable in Dollars and issued or
caused to be issued by Lender on behalf of Borrower under a Loan Facility for
the benefit of a supplier(s) of Borrower in connection with Borrower’s purchase
of goods or services from the supplier in support of the export of the Items.


 


 “Country Limitation Schedule” shall mean the schedule published
from time to time by Ex-Im Bank and provided to Borrower by Lender which sets
forth on a country by country basis whether and under what conditions Ex-Im
Bank will provide coverage for the financing of export transactions to
countries listed therein.


 


 “Credit Accommodation Amount” shall mean, the
sum of (a) the aggregate outstanding amount of Disbursements and (b) the
aggregate outstanding face amount of Letter of Credit Obligations.


 


 “Credit Accommodations” shall mean,
collectively, Disbursements and Letter of Credit Obligations.


 


 “Debarment Regulations” shall mean,
collectively, (a) the Governmentwide Debarment and Suspension
(Nonprocurement) regulations (Common Rule), 53 Fed. Reg. 19204 (May 26,
1988), (b) Subpart 9.4 (Debarment, Suspension, and Ineligibility) of the
Federal Acquisition Regulations, 48 C.F.R. 9.400-9.409 and (c) the
revised Governmentwide Debarment and Suspension (Nonprocurement) regulations
(Common Rule), 60 Fed. Reg. 33037 (June 26, 1995).


 


 “Delegated Authority Letter Agreement” shall
mean the Delegated Authority Letter Agreement, if any, between Ex-Im Bank and
Lender.


 


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 “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;


 


(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


 


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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;


 


(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;


 


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(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 right to gain access thereto;


 


(e)                                  that
is produced in violation of the Fair Labor Standards Act or subject to the “hot
goods” provisions contained in 29 US.C.§215 or any successor statute or
section;


 


(f)                                    as
to which any covenant, representation or warranty with respect to such
Inventory contained in the Loan Documents has been breached;


 


(g)                                 that
is not located in the United States;


 


(h)                                 that
is demonstration Inventory;


 


(i)                                     that
consists of proprietary software (i.e. software designed solely for Borrower’s
internal use and not intended for resale);


 


(j)                                     that
is damaged, obsolete, returned, defective, recalled or unfit for further
processing;


 


(k)                                  that
has been previously exported from the United States;


 


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(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.


 


 “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


 


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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 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.


 


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 “Inventory” shall mean all “inventory” (as
such term is defined in the UCC), now or hereafter owned or acquired by
Borrower, wherever located, including all inventory, merchandise, goods and
other personal property which are held by or on behalf of Borrower for sale or
lease or are furnished or are to be furnished under a contract of service or
which constitute raw materials, work in process or materials used or consumed
or to be used or consumed in Borrower’s business or in the processing,
production, packaging, promotion, delivery or shipping of the same, including
other supplies.


 


 “ISP” shall mean the International Standby
Practices-ISP98, International Chamber of Commerce Publication No. 590 and
any amendments and revisions thereof.


 


 “Issuing Bank” shall mean the bank that issues
a Letter of Credit, which bank is Lender itself or a bank that Lender has
caused to issue a Letter of Credit by way of guarantee.


 


 “Items” shall mean the finished goods or
services which are intended for export from the United States, as specified in Section 4(A) of
the Loan Authorization Agreement.


 


 “Letter of Credit” shall mean a Commercial
Letter of Credit or a Standby Letter of Credit.


 


 “Letter of Credit Obligations” shall mean all
outstanding obligations incurred by Lender, whether direct or indirect,
contingent or otherwise, due or not due, in connection with the issuance or
guarantee by Lender or the Issuing Bank of Letters of Credit.


 


 “Lien” shall mean any mortgage, security deed
or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien,
charge, claim, security interest, security title, easement or encumbrance, or
preference, priority or other security agreement or preferential arrangement of
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


 


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instruments,
agreements and documents now or hereafter executed by Borrower or any Guarantor
evidencing, securing, guaranteeing or otherwise relating to the Loan Facility
or any Credit Accommodations made thereunder.


 


 “Loan Facility” shall mean the Revolving Loan
Facility, the Transaction Specific Loan Facility or the Transaction Specific
Revolving Loan Facility established by Lender in favor of Borrower under the
Loan Documents.


 


 “Loan Facility Obligations” shall mean all
loans, advances, debts, expenses, fees, liabilities, and obligations for the
performance of covenants, tasks or duties or for payment of monetary amounts
(whether or not such performance is then required or contingent, or amounts are
liquidated or determinable) owing by Borrower to Lender, of any kind or nature,
present or future, arising in connection with the Loan Facility.


 


 “Loan Facility Term” shall mean the number of
months from the Effective Date to the Final Disbursement Date as originally set
forth in the Loan Authorization Agreement.


 


 “Master Guarantee Agreement” shall mean the
Master Guarantee Agreement between Ex-Im Bank and Lender, as amended, modified,
supplemented and restated from time to time.


 


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


 


 “Maximum Amount” shall mean the maximum
principal balance of Credit Accommodations that may be outstanding at any time
under the Loan Facility specified in Section 5(A) of the Loan Authorization
Agreement.


 


 “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


 


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Borrower’s business; (d) judgment
Liens that have been stayed or bonded; (e) mechanics’, workers’,
materialmen’s or other like Liens arising in the ordinary course of Borrower’s
business with respect to obligations which are not due; (f) Liens placed
upon fixed assets hereafter acquired to secure a portion of the purchase price
thereof, provided, that, any such Lien shall not encumber any other property of
Borrower; (g) security interests being terminated concurrently with the
execution of the Loan Documents; (h) Liens in favor of Lender securing the
Loan Facility Obligations; and (i) Liens disclosed in Section 6(D) of
the Loan Authorization Agreement.


 


 “Person” shall mean any individual, sole
proprietorship, partnership, limited liability partnership, joint venture,
trust, unincorporated organization, association, corporation, limited liability
company, institution, public benefit corporation, entity or government (whether
national, federal, provincial, state, county, city, municipal or otherwise,
including any instrumentality, division, agency, body or department thereof),
and shall include such Person’s successors and assigns.


 


 “Principals” shall mean any officer, director,
owner, partner, key employee, or other Person with primary management or
supervisory responsibilities with respect to Borrower or any other Person
(whether or not an employee) who has critical influence on or substantive
control over the transactions covered by this Agreement.


 


 “Retainage” shall mean that portion of the
purchase price of an Export Order that a Buyer is not obligated to pay until
the end of a specified period of time following the satisfactory performance
under such Export Order.


 


 “Retainage Accounts Receivable” shall mean
those portions of Eligible Export-Related Accounts Receivable arising out of a
Retainage.


 


 “Retainage Advance Rate” shall mean the
percentage rate specified in Section 5(C)(3) of the Loan
Authorization Agreement as the Advance Rate for the Retainage Accounts
Receivable of Borrower.


 


 “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.


 


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 “Specific Export Orders” shall mean those
Export Orders specified in Section 5(D) of the Loan Authorization
Agreement.


 


 “Standby Letter of Credit” shall mean those
letters of credit subject to the ISP or UCP issued or caused to be issued by
Lender for Borrower’s account that can be drawn upon by a Buyer only if
Borrower fails to perform all of its obligations with respect to an Export
Order.


 


 “Transaction Specific Loan Facility” shall
mean a credit facility or a portion thereof established by Lender in favor of
Borrower for the purpose of providing pre-export working capital in the form of
loans and/or Letters of Credit to finance the manufacture, production or
purchase and subsequent export sale of Items pursuant to Loan Documents under
which Credit Accommodations are made based solely on the Export-Related
Borrowing Base relating to Specific Export Orders and once such Credit
Accommodations are repaid they may not be reborrowed.


 


 “Transaction Specific Revolving Loan Facility”
shall mean a Revolving Credit Facility established to provide financing of
Specific Export Orders.


 


 “UCC” shall mean the Uniform Commercial Code
as the same may be in effect from time to time in the jurisdiction in which
Borrower or Collateral is located.


 


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


 


 “U.S.” or “United States” shall mean the
United States of America and its territorial possessions.


 


 “U.S. Content” shall mean with respect to any
Item all the labor, materials and services which are of U.S. origin or
manufacture, and which are incorporated into an Item in the United States.


 


 “Warranty” shall mean Borrower’s guarantee to
Buyer that the Items will function as intended during the warranty period set
forth in the applicable Export Order.


 


 “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.


 


1.2                               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


 


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statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations; (e) the words “this Agreement”, “herein”, “hereof”, “hereunder”
or other words of similar import refer to this Agreement as a whole including
the schedules, exhibits, and annexes hereto as the same may be amended,
modified or supplemented; (f) all references in this Agreement to
sections, schedules, exhibits, and annexes shall refer to the corresponding
sections, schedules, exhibits, and annexes of or to this Agreement; and (g) all
references to any instruments or agreements, including references to any of the
Loan Documents, or the Delegated Authority Letter Agreement shall include any
and all modifications, amendments and supplements thereto and any and all
extensions or renewals thereof to the extent permitted under this Agreement.


 


1.3                               Incorporation
of Recitals.  The Recitals to this
Agreement are incorporated into and shall constitute a part of this Agreement.


 


2                                         OBLIGATIONS
OF BORROWER


 


Until payment
in full of all Loan Facility Obligations and termination of the Loan Documents,
Borrower agrees as follows:


 


2.1                               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


 


12





















 


(iv)                              without Ex-Im Bank’s
prior written consent, any Items to be used in the construction, alteration,
operation or maintenance of nuclear power, enrichment, reprocessing, research
or heavy water production facilities.


 


2.2                               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.


 


2.3                               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.


 


2.4                               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.


 


2.5                               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.


 


2.6                               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.


 


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2.7                               Additional
Security or Payment.


 


(a)                                  Borrower
shall at all times ensure that the Export-Related Borrowing Base equals or
exceeds the Credit Accommodation Amount. 
If informed by Lender or if Borrower otherwise has actual knowledge that
the Export-Related Borrowing Base is at any time less than the Credit
Accommodation Amount, Borrower shall, within five (5) Business Days,
either (i) furnish additional Collateral to Lender, in form and amount
satisfactory to Lender and Ex-Im Bank or (ii) pay to Lender an amount
equal to the difference between the Credit Accommodation Amount and the
Export-Related Borrowing Base.


 


(b)                                 For
purposes of this Agreement, in determining the Export-Related Borrowing Base
there shall be deducted from the Export-Related Borrowing Base (i) an
amount equal to twenty-five percent (25%) of the outstanding face amount of
Commercial Letters of Credit and Standby Letters of Credit and (ii) one
hundred percent (100%) of the face amount of Warranty Letters of Credit less
the amount of cash collateral held by Lender to secure Warranty Letters of
Credit.


 


(c)                                  Unless
otherwise approved in writing by Ex-Im Bank, for Revolving Loan Facilities
(other than Transaction Specific Revolving Loan Facilities), Borrower shall at
all times ensure that the outstanding principal balance of the Credit
Accommodations that is supported by Export-Related Inventory does not exceed
sixty percent (60%) of the sum of the total outstanding principal balance of
the Disbursements and the undrawn face amount of all outstanding Commercial
Letters of Credit.  If informed by Lender
or if Borrower otherwise has actual knowledge that the outstanding principal
balance of the Credit Accommodations that is supported by Inventory exceeds
sixty percent (60%) of the sum of the total outstanding principal balance of
the Disbursements and the undrawn face amount of all outstanding Commercial
Letters of Credit, Borrower shall, within five (5) Business Days, either (i) furnish
additional non-Inventory Collateral to Lender, in form and amount satisfactory
to Lender and Ex-Im Bank, or (ii) pay down the applicable portion of the
Credit Accommodations so that the above described ratio is not exceeded.


 


2.8                               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.


 


2.9                               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


 


14





















 


where the failure of Borrower
to own or license such General Intangibles could not reasonably be expected to
have a Material Adverse Effect.


 


2.11                        Notice
of Certain Events.  Borrower shall
promptly, but in any event within five (5) Business Days, notify Lender in
writing of the occurrence of any of the following:


 


(a)                                  Borrower
or any Guarantor (i) applies for, consents to or suffers the appointment
of, or the taking of possession by, a receiver, custodian, trustee, liquidator
or similar fiduciary of itself or of all or a substantial part of its property
or calls a meeting of its creditors, (ii) admits in writing its inability,
or is generally unable, to pay its debts as they become due or ceases
operations of its present business, (iii) makes a general assignment for
the benefit of creditors, (iv) commences a voluntary case under any state
or federal bankruptcy laws (as now or hereafter in effect), (v) is
adjudicated as bankrupt or insolvent, (vi) files a petition seeking to
take advantage of any other law providing for the relief of debtors, (vii) acquiesces
to, or fails to have dismissed within thirty (30) days, any petition filed
against it in any involuntary case under such bankruptcy laws, or (vii) takes
any action for the purpose of effecting any of the foregoing;


 


(b)                                 any
Lien in any of the Collateral, granted or intended by the Loan Documents to be
granted to Lender, ceases to be a valid, enforceable, perfected, first priority
Lien (or a lesser priority if expressly permitted pursuant to Section 6 of
the Loan Authorization Agreement) subject only to Permitted Liens;


 


(c)                                  the
issuance of any levy, assessment, attachment, seizure or Lien, other than a
Permitted Lien, against any of the Collateral which is not stayed or lifted
within thirty (30) calendar days;


 


(d)                                 any
proceeding is commenced by or against Borrower or any Guarantor for the
liquidation of its assets or dissolution;


 


(e)                                  any
litigation is filed against Borrower or any Guarantor which has had or could
reasonably be expected to have a Material Adverse Effect and such litigation is
not withdrawn or dismissed within thirty (30) calendar days of the filing
thereof;


 


(f)                                    any
default or event of default under the Loan Documents;


 


(g)                                 any
failure to comply with any terms of the Loan Authorization Agreement;


 


(h)                                 any
material provision of any Loan Document or this Agreement for any reason ceases
to be valid, binding and enforceable in accordance with its terms;


 


(i)                                     any
event which has had or could reasonably be expected to have a Material Adverse
Effect; or


 


15





















 


(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


 


16





















 


Bank, Borrower shall pay in
full the outstanding Loan Facility Obligations and all accrued and unpaid
interest thereon no later than the first Business Day after the Final
Disbursement Date.


 


(b)                                 If
the Loan Facility is a Transaction Specific Loan Facility, Borrower shall,
within two (2) Business Days of the receipt thereof, pay to Lender (for
application against the outstanding Loan Facility Obligations and accrued and
unpaid interest thereon) all checks, drafts, cash and 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.


 


3                                         RIGHTS
AND REMEDIES


 


3.1                               Indemnification.  Upon Ex-Im Bank’s payment of a Claim to
Lender in connection with the Loan Facility pursuant to the Master Guarantee
Agreement, Ex-Im Bank may assume all rights and remedies of Lender under the
Loan Documents and may enforce any such rights or remedies against Borrower,
the Collateral and any Guarantors. 
Borrower shall hold Ex-Im Bank and Lender harmless from and indemnify
them against any and all liabilities, damages, claims, costs and losses
incurred or suffered by either of them resulting from (a) any


 


17





















 


materially incorrect
certification or statement knowingly made by Borrower or its agent to Ex-Im
Bank or Lender in connection with the Loan Facility, this Agreement, the Loan
Authorization Agreement or any other Loan Documents or (b) any material
breach by Borrower of the terms and conditions of this Agreement, the Loan
Authorization Agreement or any of the other Loan Documents.  Borrower also acknowledges that any
statement, certification or representation made by Borrower in connection with
the Loan Facility is subject to the penalties provided in Article 18
U.S.C. Section 1001.


 


3.2                               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.


 


4                                         MISCELLANEOUS


 


4.1                               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.


 


4.2                               Notification.  All notices required by this Agreement shall
be given in the manner and to the parties provided for in the Loan Agreement.


 


4.3                               Partial
Invalidity.  If at any time any of
the provisions of this Agreement becomes illegal, invalid or unenforceable in
any respect under the law of any jurisdiction, neither the legality, the
validity nor the enforceability of the remaining provisions hereof shall in any
way be affected or impaired.


 


4.4                               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, RELATING TO
THIS AGREEMENT, THE LOAN AUTHORIZATION AGREEMENT OR ANY OTHER LOAN DOCUMENT.


 


18





















 


IN WITNESS
WHEREOF, Borrower has caused this Agreement to be duly executed as of the        
day of March, 2005.


 


	
   

  	
  ASPEN TECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Leo S. Vannoni

  	
   

  
	
   

  	
  (Signature)

  	
   

  
	
   

  	
  Name:

  	
  Leo S. Vannoni

  	
   

  
	
   

  	
  (Print or
  Type)

  	
   

  
	
   

  	
  Title:

  	
  VP & Treasurer

  	
   

  
	
   

  	
  (Print or
  Type)

  	
   

  
	
   

  	
   

  
	
   

  	
  ASPENTECH, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles F. Kane

  	
   

  
	
   

  	
  (Signature)

  	
   

  
	
   

  	
  Name:

  	
  Charles F. Kane

  	
   

  
	
   

  	
  (Print or
  Type)

  	
   

  
	
   

  	
  Title:

  	
  Treasurer

  	
   

  
	
   

  	
  (Print or
  Type)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ACKNOWLEDGED:

  
	
   

  	
   

  
	
   

  	
  SILICON VALLEY BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Atanasoff

  	
   

  	 

	
   

  	
  (Signature)

  	
   

  	 

	
   

  	
  Name:

  	
  John Atanasoff

  	
   

  	 

	
   

  	
  (Print or
  Type)

  	
   

  	 

	
   

  	
  Title:

  	
  Senior Relationship Manager

  	
   

  	 

	
   

  	
  (Print or
  Type)

  	
   

  	 

												



 


19





















 


ANNEXES:


 


	
  Annex A 

  	
  -

  	
  Loan Authorization Agreement or Loan Authorization Notice

  



 


20





















 


CONSENT OF GUARANTOR


 


Each of the undersigned as a Guarantor of the
obligations of Borrower to the Lender executing the foregoing Agreement hereby
agrees that the foregoing Agreement, each of their respective Guaranty
Agreements and each other Loan Documents may be assigned to the Export-Import
Bank of the United States.


 


	
   

  	
  ASPENTECH SECURITIES CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles F. Kane

  	
   

  
	
   

  	
   

  
	
   

  	
  Name: Charles F. Kane

  
	
   

  	
  Title: Treasurer

  



 


21