WORKING CAPITAL GUARANTEE PROGRAM









Exhibit

10.27.1




ANNEX B




Export-Import Bank of the United

States




Working

Capital Guarantee Program




Borrower Agreement




THIS BORROWER AGREEMENT (this “Agreement”) is made and

entered into by the entity identified as Borrower on the signature page hereof

(“Borrower”) in favor of the Export-Import Bank of the United States (“Ex-Im

Bank”) and the institution identified as Lender on the signature page hereof

(“Lender”).




RECITALS




Borrower has requested that Lender establish a Loan

Facility in favor of Borrower for the purposes of providing Borrower with

pre-export working capital to finance the manufacture, production or purchase

and subsequent export sale of Items.




It is a condition to the establishment of such Loan

Facility that Ex-Im Bank guarantee the payment of ninety percent (90%) of

certain credit accommodations subject to the terms and conditions of a Master

Guarantee Agreement, the Loan Authorization Agreement, and to the extent

applicable, the Delegated Authority Letter Agreement.




Borrower is executing this Agreement for the benefit

of Lender and Ex-Im Bank in consideration for and as a condition to Lender’s

establishing the Loan Facility and Ex-Im Bank’s agreement to guarantee such

Loan Facility pursuant to the Master Guarantee Agreement.




NOW, THEREFORE, Borrower hereby agrees as follows:




ARTICLE I


DEFINITIONS




1.01 Definition of Terms.  As used in this Agreement, including the

Recitals to this Agreement and the Loan Authorization Agreement, the following

terms shall have the following meanings:




“Accounts Receivable” shall mean all of Borrower’s now

owned or hereafter acquired (a) “accounts” (as such term is defined in the

UCC), other receivables, book debts and other forms of obligations, whether

arising out of goods sold or services rendered or from any other transaction;

(b) rights in, to and under all purchase orders or receipts for goods or

services; (c) rights to any goods represented or purported to be represented by

any of the foregoing (including unpaid sellers’ rights of rescission, replevin,

reclamation and stoppage in transit and rights to returned, reclaimed or

repossessed goods); (d) moneys due or to become due to such Borrower under all

purchase orders and contracts for the sale of goods or the performance of

services or both by 




 




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Borrower (whether or not yet earned by performance on the part of

Borrower), including the proceeds of the foregoing; (e) any notes, drafts,

letters of credit, insurance proceeds or other instruments, documents and writings

evidencing or supporting the foregoing; and (f) all collateral security

and guarantees of any kind given by any other Person with respect to any of the

foregoing.




“Advance Rate” shall mean the rate specified in

Section 5(C) of the Loan Authorization Agreement for each category of

Collateral.




“Business Day” shall mean any day on which the Federal

Reserve Bank of New York is open for business.




“Buyer” shall mean a Person that has entered into one

or more Export Orders with Borrower.




“Collateral” shall mean all property and interest in

property in or upon which Lender has been granted a Lien as security for the

payment of all the Loan Facility Obligations including the Collateral

identified in Section 6 of the Loan Authorization Agreement and all products and

proceeds (cash and non–cash) thereof.




“Commercial Letters of Credit” shall mean those

letters of credit subject to the UCP payable in Dollars and issued or caused to

be issued by Lender on behalf of Borrower under a Loan Facility for the benefit

of a supplier(s) of Borrower in connection with Borrower’s purchase of goods or

services from the supplier in support of the export of the Items.




“Country Limitation Schedule” shall mean the schedule

published from time to time by Ex-Im Bank and provided to Borrower by Lender

which sets forth on a country by country basis whether and under what

conditions Ex-Im Bank will provide coverage for the financing of export

transactions to countries listed therein.




“Credit Accommodation Amount” shall mean, the sum of

(a) the aggregate outstanding amount of Disbursements and (b) the aggregate

outstanding face amount of Letter of Credit Obligations.




“Credit Accommodations” shall mean, collectively,

Disbursements and Letter of Credit Obligations.




“Debarment Regulations” shall mean, collectively, (a)

the Governmentwide Debarment and Suspension (Nonprocurement) regulations

(Common Rule), 53 Fed. Reg. 19204 (May 26, 1988), (b) Subpart 9.4 (Debarment,

Suspension, and Ineligibility) of the Federal Acquisition Regulations, 48 C.F.R.

9.400-9.409 and (c) the revised Governmentwide Debarment and Suspension

(Nonprocurement) regulations (Common Rule), 60 Fed. Reg. 33037 (June 26, 1995).




“Delegated Authority Letter Agreement” shall mean the

Delegated Authority Letter Agreement, if any, between Ex-Im Bank and Lender.




“Disbursement” shall mean, collectively, (a) an

advance of a working capital loan from Lender to Borrower under the Loan

Facility, and (b) an advance to fund a drawing under a Letter 




 




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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 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;




 




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(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;




(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.




 




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“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;




(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.




 




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“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 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.




 




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“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.




“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.




 




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“Lien” shall mean any mortgage, security deed or deed

of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge,

claim, security interest, security title, easement or encumbrance, or

preference, priority or other security agreement or preferential arrangement of

any kind or nature whatsoever (including any lease or title retention

agreement, any financing lease having substantially the same economic effect as

any of the foregoing, and the filing of, or agreement to give, any financing

statement perfecting a security interest under the UCC or comparable law of any

jurisdiction) by which property is encumbered or otherwise charged.




“Loan Agreement” shall mean a valid and enforceable

agreement between Lender and Borrower setting forth the terms and conditions of

the Loan Facility.




“Loan Authorization Agreement” shall mean the Loan

Authorization Agreement entered into between Lender and Ex-Im Bank or the Loan

Authorization Notice setting forth certain terms and conditions of the Loan

Facility, a copy of which is attached hereto as Annex A.




“Loan Authorization Notice” shall mean the Loan

Authorization Notice executed by Lender and delivered to Ex-Im Bank in

accordance with the Delegated Authority Letter Agreement setting forth the

terms and conditions of each Loan Facility.




“Loan Documents” shall mean the Loan Authorization

Agreement, the Loan Agreement, this Agreement, each promissory note (if

applicable), each Guaranty Agreement, and all other instruments, agreements and

documents now or hereafter executed by Borrower or any Guarantor evidencing,

securing, guaranteeing or otherwise relating to the Loan Facility or any Credit

Accommodations made thereunder.




“Loan Facility” shall mean the Revolving Loan

Facility, the Transaction Specific Loan Facility or the Transaction Specific

Revolving Loan Facility established by Lender in favor of Borrower under the

Loan Documents.




“Loan Facility Obligations” shall mean all loans,

advances, debts, expenses, fees, liabilities, and obligations for the

performance of covenants, tasks or duties or for payment of monetary amounts

(whether or not such performance is then required or contingent, or amounts are

liquidated or determinable) owing by Borrower to Lender, of any kind or nature,

present or future, arising in connection with the Loan Facility.




“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.




 




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“Maximum Amount” shall mean the maximum principal

balance of Credit Accommodations that may be outstanding at any time under the

Loan Facility specified in Section 5(A) of the Loan Authorization Agreement.




“Other Assets” shall mean the Collateral, if any,

described in Section 5(C)(4) of the Loan Authorization Agreement.




“Other Assets Value” shall mean, at the date of

determination thereof, the value of the Other Assets as determined in

accordance with GAAP.




“Permitted Liens” shall mean (a) Liens for taxes,

assessments or other governmental charges or levies not delinquent, or, being

contested in good faith and by appropriate proceedings and with respect to

which proper reserves have been taken by Borrower; provided, that,

the Lien shall have no effect on the priority of the Liens in favor of Lender

or the value of the assets in which Lender has such a Lien and a stay of

enforcement of any such Lien shall be in effect; (b) deposits or pledges

securing obligations under worker’s compensation, unemployment insurance,

social security or public liability laws or similar legislation; (c) deposits

or pledges securing bids, tenders, contracts (other than contracts for the

payment of money), leases, statutory obligations, surety and appeal bonds and

other obligations of like nature arising in the ordinary course of Borrower’s

business; (d) judgment Liens that have been stayed or bonded; (e) mechanics’,

workers’, materialmen’s or other like Liens arising in the ordinary course of

Borrower’s business with respect to obligations which are not due; (f) Liens

placed upon fixed assets hereafter acquired to secure a portion of the purchase

price thereof, provided, that, any such Lien shall not encumber any other

property of Borrower; (g) security interests being terminated concurrently with

the execution of the Loan Documents; (h) Liens in favor of Lender securing the

Loan Facility Obligations; and (i) Liens disclosed in Section 6(D) of the Loan

Authorization Agreement.




“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.




 




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“Retainage Advance Rate” shall mean the percentage

rate specified in Section 5(C)(3) of the Loan Authorization Agreement as the

Advance Rate for the Retainage Accounts Receivable of Borrower.




“Retainage Value” shall mean, at the date of

determination thereof, the aggregate face amount of Retainage Accounts

Receivable, less taxes, discounts, credits and allowances, except to the extent

otherwise permitted by Ex-Im Bank in writing.




“Revolving Loan Facility” shall mean the credit

facility or portion thereof established by Lender in favor of  Borrower for the purpose of providing

pre-export working capital in the form of loans and/or Letters of Credit to

finance the manufacture, production or purchase and subsequent export sale of

Items pursuant to Loan Documents under which Credit Accommodations may be made

and repaid on a continuous basis based solely on the Export-Related Borrowing

Base during the term of such credit facility.




“Special Conditions” shall mean those conditions, if

any, set forth in Section 13 of the Loan Authorization Agreement.




“Specific Export Orders” shall mean those Export

Orders specified in Section 5(D) of the Loan Authorization Agreement.




“Standby Letter of Credit” shall mean those letters of

credit subject to the ISP or UCP issued or caused to be issued by Lender for

Borrower’s account that can be 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.




 




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“U.S. Content” shall mean with respect to any Item all

the labor, materials and services which are of U.S. origin or manufacture, and

which are incorporated into an Item in the United States.




“Warranty” shall mean Borrower’s guarantee to Buyer

that the Items will function as intended during the warranty period set forth

in the applicable Export Order.




“Warranty Letter of Credit” shall mean a Standby

Letter of Credit which is issued or caused to be issued by Lender to support

the obligations of Borrower with respect to a Warranty or a Standby Letter of

Credit which by its terms becomes a Warranty Letter of Credit.




1.02  Rules of

Construction.  For purposes of this

Agreement, the following additional rules of construction shall apply, unless

specifically indicated to the contrary: (a) wherever from the context it

appears appropriate, each term stated in either the singular or plural shall

include the singular and the plural, and pronouns stated in the masculine,

feminine or neuter gender shall include the masculine, the feminine and the

neuter; (b) the term “or” is not exclusive; (c) the term “including” (or any

form thereof) shall not be limiting or exclusive; (d) all references to

statutes and related regulations shall include any amendments of same and any

successor statutes and regulations; (e) the words “this Agreement”, “herein”,

“hereof”, “hereunder” or other words of similar import refer to this Agreement

as a whole including the schedules, exhibits, and annexes hereto as the same

may be amended, modified or supplemented; (f) all references in this Agreement

to sections, schedules, exhibits, and annexes shall refer to the corresponding

sections, schedules, exhibits, and annexes of or to this Agreement; and (g) all

references to any instruments or agreements, including references to any of the

Loan Documents, or the Delegated Authority Letter Agreement shall include any

and all modifications, amendments and supplements thereto and any and all

extensions or renewals thereof to the extent permitted under this Agreement.




1.03  Incorporation

of Recitals.  The Recitals to this

Agreement are incorporated into and shall constitute a part of this Agreement.




ARTICLE II          


OBLIGATIONS OF BORROWER




Until payment in full of all Loan Facility Obligations

and termination of the Loan Documents, Borrower agrees as follows:




2.01  Use of

Credit Accommodations.  (a) Borrower

shall use Credit Accommodations only for the purpose of enabling Borrower to

finance the cost of manufacturing, producing, purchasing or selling the

Items.  Borrower may not use any of the

Credit Accommodations for the purpose of: (i) servicing or repaying any of

Borrower’s pre-existing or future indebtedness unrelated to the Loan Facility

(unless approved by Ex-Im Bank in writing); (ii) acquiring fixed assets or

capital goods for use in Borrower’s business; (iii) acquiring, equipping or

renting commercial space outside of the United States; (iv) paying the salaries

of non U.S. citizens or non-U.S. permanent residents who are located in offices

outside of the United States; or (v) in connection with a Retainage or Warranty

(unless approved by Ex-Im Bank in writing).




 




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(b)           In addition, no Credit Accommodation

may be used to finance the manufacture, purchase or sale of any of the

following:




                (i)            Items to be sold or resold to a

Buyer located in a country as to which Ex-Im Bank is prohibited from doing

business as designated in the Country Limitation Schedule;




                (ii)           that part of the cost of the Items

which is not U.S. Content unless such part is not greater than fifty percent

(50%) of the cost of the Items and is incorporated into the Items in the United

States;




                (iii)          defense articles or defense services;

or




                (iv)          without Ex-Im Bank’s prior written

consent, any Items to be used in the construction, alteration, operation or

maintenance of nuclear power, enrichment, reprocessing, research or heavy water

production facilities.




2.02  Loan

Documents and Loan Authorization Agreement.  (a)  Each Loan Document

and this Agreement have been duly executed and delivered on behalf of Borrower,

and each such Loan Document and this Agreement are and will continue to be a

legal and valid obligation of Borrower, enforceable against it in accordance

with its terms.




(b)           Borrower shall comply with all of the

terms and conditions of the Loan Documents, this Agreement and the Loan Authorization

Agreement.




2.03  Export-Related

Borrowing Base Certificates and Export Orders.  In order to receive Credit Accommodations under the Loan

Facility, Borrower shall have delivered to Lender an Export-Related Borrowing

Base Certificate as frequently as required by Lender but at least within the

past thirty (30) calendar days and a copy of the Export Order(s) (or, for

Revolving Loan Facilities, if permitted by Lender, a written summary of the

Export Orders) against which Borrower is requesting Credit Accommodations.  If Lender permits summaries of Export

Orders, Borrower shall also deliver promptly to Lender copies of any Export

Orders requested by Lender.  In

addition, so long as there are any Credit Accommodations outstanding under the

Loan Facility, Borrower shall deliver to Lender at least once each month no

later than the twentieth (20th) day of such month or more frequently as required by

the Loan Documents, an Export-Related Borrowing Base Certificate.




2.04  Exclusions

from the Export-Related Borrowing Base. 

In determining the Export-Related Borrowing Base, Borrower shall exclude

therefrom Inventory which is not Eligible Export-Related Inventory and Accounts

Receivable which are not Eligible Export-Related Accounts Receivable.  Borrower shall promptly, but in any event

within five (5) Business Days, notify Lender (a) if any then existing

Export-Related Inventory no longer constitutes Eligible Export-Related

Inventory or (b) of any event or circumstance which to Borrower’s knowledge

would cause Lender to consider any then existing Export-Related Accounts

Receivable as no longer constituting an Eligible Export-Related Accounts

Receivable.




2.05  Financial

Statements.  Borrower shall deliver

to Lender the financial statements required to be delivered by Borrower in

accordance with Section 11 of the Loan Authorization Agreement.




 




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2.06  Schedules,

Reports and Other Statements. 

Borrower shall submit to Lender in writing each month (a) an Inventory

schedule for the preceding month and (b) an Accounts Receivable aging report

for the preceding month detailing the terms of the amounts due from each

Buyer.  Borrower shall also furnish to

Lender promptly upon request such information, reports, contracts, invoices and

other data concerning the Collateral as Lender may from time to time specify.




2.07  Additional

Security or Payment.  (a)  Borrower shall at all times ensure that the

Export-Related Borrowing Base equals or exceeds the Credit Accommodation

Amount.  If informed by Lender or if

Borrower otherwise has actual knowledge that the Export-Related Borrowing Base

is at any time less than the Credit Accommodation Amount, Borrower shall,

within five (5) Business Days, either (i) furnish additional Collateral to Lender,

in form and amount satisfactory to Lender and Ex-Im Bank or (ii) pay to Lender

an amount equal to the difference between the Credit Accommodation Amount and

the Export-Related Borrowing Base.




(b)    For purposes of this Agreement, in

determining the Export-Related Borrowing Base there shall be deducted from the

Export-Related Borrowing Base (i) an amount equal to twenty-five percent (25%)

of the outstanding face amount of Commercial Letters of Credit and Standby

Letters of Credit and (ii) one hundred percent (100%) of the face amount of

Warranty Letters of Credit less the amount of cash collateral held by Lender to

secure Warranty Letters of Credit.




(c)    Unless otherwise approved in writing by

Ex-Im Bank, for Revolving Loan Facilities (other than Transaction Specific

Revolving Loan Facilities), Borrower shall at all times ensure that the

outstanding principal balance of the Credit Accommodations that is supported by

Export-Related Inventory does not exceed sixty percent (60%) of the sum of the

total outstanding principal balance of the Disbursements and the undrawn face

amount of all outstanding Commercial Letters of Credit.  If informed by Lender or if Borrower

otherwise has actual knowledge that the outstanding principal balance of the

Credit Accommodations that is supported by Inventory exceeds sixty percent

(60%) of the sum of the total outstanding principal balance of the

Disbursements and the undrawn face amount of all outstanding Commercial Letters

of Credit, Borrower shall, within five (5) Business Days, either (i) furnish

additional non-Inventory Collateral to Lender, in form and amount satisfactory

to Lender and Ex-Im Bank, or (ii) pay down the applicable portion of the Credit

Accommodations so that the above described ratio is not exceeded.




2.08  Continued

Security Interest.  Borrower shall

not change (a) its name or identity in any manner, (b) the location of its

principal place of business, (c) the location of any of the Collateral or (d)

the location of any of the books or records related to the Collateral, in each

instance without giving thirty (30) days prior written notice thereof to Lender

and taking all actions deemed necessary or appropriate by Lender to

continuously protect and perfect Lender’s Liens upon the Collateral.




2.09  Inspection

of Collateral.  Borrower shall

permit the representatives of Lender and Ex-Im Bank to make at any time during

normal business hours inspections of the Collateral and of Borrower’s

facilities, activities, and books and records, and shall cause its officers and

employees to give full cooperation and assistance in connection therewith.




 




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2.10  General

Intangibles.  Borrower represents

and warrants that it owns, or is licensed to use, all General Intangibles

necessary to conduct its business as currently conducted except where the

failure of Borrower to own or license such General Intangibles could not

reasonably be expected to have a Material Adverse Effect.




2.11  Notice

of Certain Events.  Borrower shall

promptly, but in any event within five (5) Business Days, notify Lender in

writing of the occurrence of any of the following:




(a)           Borrower or any Guarantor (i) applies

for, consents to or suffers the appointment of, or the taking of possession by,

a receiver, custodian, trustee, liquidator or similar fiduciary of itself or of

all or a substantial part of its property or calls a meeting of its creditors,

(ii) admits in writing its inability, or is generally unable, to pay its debts

as they become due or ceases operations of its present business, (iii) makes a

general assignment for the benefit of creditors, (iv) commences a voluntary

case under any state or federal bankruptcy laws (as now or hereafter in

effect), (v) is adjudicated as bankrupt or insolvent, (vi) files a petition

seeking to take advantage of any other law providing for the relief of debtors,

(vii) acquiesces to, or fails to have dismissed within thirty (30) days, any

petition filed against it in any involuntary case under such bankruptcy laws,

or (vii) takes any action for the purpose of effecting any of the foregoing;




(b)           any Lien in any of the Collateral,

granted or intended by the Loan Documents to be granted to Lender, ceases to be

a valid, enforceable, perfected, first priority Lien (or a lesser priority if

expressly permitted pursuant to Section 6 of the Loan Authorization Agreement)

subject only to Permitted Liens;




(c)           the issuance of any levy, assessment,

attachment, seizure or Lien, other than a Permitted Lien, against any of the

Collateral which is not stayed or lifted within thirty (30) calendar days;




(d)           any proceeding is commenced by or

against Borrower or any Guarantor for the liquidation of its assets or

dissolution;




(e)           any litigation is filed against

Borrower or any Guarantor which has had or could reasonably be expected to have

a Material Adverse Effect and such litigation is not withdrawn or dismissed

within thirty (30) calendar days of the filing thereof;




(f)            any default or event of default

under the Loan Documents;




(g)           any failure to comply with any terms

of the Loan Authorization Agreement;




(h)           any material provision of any Loan

Document or this Agreement for any reason ceases to be valid, binding and

enforceable in accordance with its terms;




(i)            any event which has had or could

reasonably be expected to have a Material Adverse Effect; or




(j)            the Credit Accommodation Amount

exceeds the applicable Export-Related Borrowing Base.




 




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2.12  Insurance.

Borrower will at all times carry property, liability and other insurance, with

insurers acceptable to Lender, in such form and amounts, and with such

deductibles and other provisions, as Lender shall require, and Borrower will

provide evidence of such insurance to Lender, so that Lender is satisfied that

such insurance is, at all times, in full force and effect.  Each property insurance policy shall name

Lender as loss payee and shall contain a lender’s loss payable endorsement in

form acceptable to Lender and each liability insurance policy shall name Lender

as an additional insured.  All policies

of insurance shall provide that they may not be cancelled or changed without at

least ten (10) days’ prior written notice to Lender and shall otherwise be in

form and substance satisfactory to Lender. 

Borrower will promptly deliver to Lender copies of all reports made to

insurance companies.




2.13  Taxes.

Borrower has timely filed all tax returns and reports required by applicable

law, has timely paid all applicable taxes, assessments, deposits and

contributions owing by Borrower and will timely pay all such items in the

future as they became due and payable. 

Borrower may, however, defer payment of any contested taxes; provided,

that Borrower (a) in good faith contests Borrower’s obligation to pay such

taxes by appropriate proceedings promptly and diligently instituted and

conducted; (b) notifies Lender in writing of the commencement of, and any

material development in, the proceedings; (c) posts bonds or takes any

other steps required to keep the contested taxes from becoming a Lien upon any

of the Collateral; and (d) maintains adequate reserves therefor in

conformity with GAAP.




2.14  Compliance

with Laws. Borrower represents and warrants that it has complied in all

material respects with all provisions of all applicable laws and regulations,

including those relating to Borrower’s ownership of real or personal property,

the conduct and licensing of Borrower’s business, the payment and withholding

of taxes, ERISA and other employee matters, safety and environmental matters.




2.15  Negative

Covenants.  Without the prior

written consent of Ex-Im Bank and Lender, Borrower shall not (a) merge,

consolidate or otherwise combine with any other Person; (b) acquire all or

substantially all of the assets or capital stock of any other Person; (c) sell,

lease, transfer, convey, assign or otherwise dispose of any of its assets,

except for the sale of Inventory in the ordinary course of business and the

disposition of obsolete equipment in the ordinary course of business; (d)

create any Lien on the Collateral except for Permitted Liens; (e) make any

material changes in its organizational structure or identity; or (f) enter into

any agreement to do any of the foregoing.




2.16  Reborrowings

and Repayment Terms.  (a)  If the Loan Facility is a Revolving Loan

Facility, provided that Borrower is not in default under any of the Loan

Documents, Borrower may borrow, repay and reborrow amounts under the Loan

Facility until the close of business on the Final Disbursement Date.  Unless the Revolving Loan Facility is

renewed or extended by Lender with the consent of Ex-Im Bank, Borrower shall

pay in full the outstanding Loan Facility Obligations and all accrued and

unpaid interest thereon no later than the first Business Day after the Final

Disbursement Date.




(b)           If the Loan Facility is a Transaction

Specific Loan Facility, Borrower shall, within two (2) Business Days of the

receipt thereof, pay to Lender (for application against the outstanding Loan

Facility Obligations and accrued and unpaid interest thereon) all checks,

drafts, cash and 




 




15





























 




other remittances it may

receive in payment or on account of the Export-Related Accounts Receivable or

any other Collateral, in precisely the form received (except for the

endorsement of Borrower where necessary). 

Pending such deposit, Borrower shall hold such amounts in trust for

Lender separate and apart and shall not commingle any such items of payment

with any of its other funds or property.




2.17  Cross

Default.  Borrower shall be deemed

in default under the Loan Facility if Borrower fails to pay when due any amount

payable to Lender under any loan or other credit accommodations to Borrower

whether or not guaranteed by Ex-Im Bank.




2.18  Munitions

List.  If any of the Items are

articles, services, or related technical data that are listed on the United

States Munitions List (part 121 of title 22 of the Code of Federal

Regulations), Borrower shall send a written notice promptly, but in any event

within five (5) Business Days, of Borrower learning thereof to Lender

describing the Items(s) and the corresponding invoice amount.




2.19  Suspension

and Debarment, etc.  On the date of

this Agreement neither Borrower nor its Principals are (a) debarred, suspended,

proposed for debarment with a final determination still pending, declared

ineligible or voluntarily excluded (as such terms are defined under any of the

Debarment Regulations referred to below) from participating in procurement or

nonprocurement transactions with any United States federal government

department or agency pursuant to any of the Debarment Regulations or (b)

indicted, convicted or had a civil judgment rendered against Borrower or any of

its Principals for any of the offenses listed in any of the Debarment Regulations.  Unless authorized by Ex-Im Bank, Borrower

will not knowingly enter into any transactions in connection with the Items

with any person who is debarred, suspended, declared ineligible or voluntarily

excluded from participation in procurement or nonprocurement transactions with

any United States federal government department or agency pursuant to any of

the Debarment Regulations.  Borrower

will provide immediate written notice to Lender if at any time it learns that

the certification set forth in this Section 2.19 was erroneous when made or has

become erroneous by reason of changed circumstances.




ARTICLE III         


RIGHTS AND REMEDIES




3.01  Indemnification.  Upon Ex-Im Bank’s payment of a Claim to

Lender in connection with the Loan Facility pursuant to the Master Guarantee

Agreement, Ex-Im Bank may assume all rights and remedies of Lender under the

Loan Documents and may enforce any such rights or remedies against Borrower,

the Collateral and any Guarantors. 

Borrower shall hold Ex-Im Bank and Lender harmless from and indemnify

them against any and all liabilities, damages, claims, costs and losses

incurred or suffered by either of them resulting from (a) any materially

incorrect certification or statement knowingly made by Borrower or its agent to

Ex-Im Bank or Lender in connection with the Loan Facility, this Agreement, the

Loan Authorization Agreement or any other Loan Documents or (b) any material

breach by Borrower of the terms and conditions of this Agreement, the Loan

Authorization Agreement or any of the other Loan Documents.  Borrower also acknowledges that any

statement, certification or representation made by Borrower in connection with

the Loan Facility is subject to the penalties provided in Article 18 U.S.C.

Section 1001.




 




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3.02  Liens.  Borrower agrees that any and all Liens

granted by it to Lender are also hereby granted to Ex-Im Bank to secure

Borrower’s obligation, however arising, to reimburse Ex-Im Bank for any

payments made by Ex-Im Bank pursuant to the Master Guarantee Agreement.  Lender is authorized to apply the proceeds

of, and recoveries from, any property subject to such Liens to the satisfaction

of Loan Facility Obligations in accordance with the terms of any agreement

between Lender and Ex-Im Bank.




ARTICLE IV


MISCELLANEOUS




4.01  Governing

Law.  This Agreement and the Loan

Authorization Agreement and the obligations arising under this Agreement and

the Loan Authorization Agreement shall be governed by, and construed in

accordance with, the law of the state governing the Loan Documents.




4.02  Notification.  All notices required by this Agreement shall

be given in the manner and to the parties provided for in the Loan Agreement.




4.03  Partial

Invalidity.  If at any time any of

the provisions of this Agreement becomes illegal, invalid or unenforceable in

any respect under the law of any jurisdiction, neither the legality, the

validity nor the enforceability of the remaining provisions hereof shall in any

way be affected or impaired.




4.04  Waiver

of Jury Trial. BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY

WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY

ACTION, SUIT, PROCEEDING OR OTHER LITIGATION BROUGHT TO RESOLVE ANY DISPUTE

ARISING UNDER, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, THE LOAN

AUTHORIZATION AGREEMENT, ANY LOAN DOCUMENT, OR ANY OTHER AGREEMENT, DOCUMENT OR

INSTRUMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ANY

COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN),

OR ACTIONS OR OMMISSIONS OF LENDER, EX-IM BANK, OR ANY OTHER PERSON, RELATING

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




 




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IN WITNESS WHEREOF,

Borrower has caused this Agreement to be duly executed as of the 18th day

of  June, 2002.




PHARSIGHT, INC.






	

  By:


  	

  /s/ Robin A. Kehoe


  
	

   


  	

  (Signature)


  
	

   


  	

   


  
	

  Name:


  	

  Robin A. Kehoe


  
	

   


  	

  (Print or Type)


  
	

   


  	

   


  
	

  Title:


  	

  CFO


  
	

   


  	

  (Print or Type)


  
	

   


  	

   


  
	

  ACKNOWLEDGED:


  
	

   


  
	

  SILICON VALLEY

  BANK


  
	

   


  
	

   


  	

   


  
	

  By:


  	

  /s/ Sam Thompson


  
	

   


  	

  (Signature)


  
	

   


  	

   


  
	

  Name:


  	

  Sam Thompson


  
	

   


  	

  (Print or Type)


  
	

   


  	

   


  
	

  Title:


  	

  Vice President


  
	

   


  	

  (Print or Type)


  





 




 




18





























 




ANNEXES:




Annex A            -   Loan

Authorization Agreement or Loan Authorization Notice




 




19





























 




CONSENT OF

GUARANTORS




 




                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.




 




 




	

   


  	

   


  
	

   


  	

  [INDIVIDUAL

  GUARANTOR]


  
	

   


  	

   


  
	

   


  	

   


  
	

   


  	

  [CORPORATE

  GUARANTOR]


  
	

   


  	

   


  
	

   


  	

  By:


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

  Name:


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

  Title:


  	

   


  





 




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