Credit Agreement - Oilgear Co. and M&I Marshall & Ilsley Bank
CREDIT AGREEMENT
BY AND BETWEEN
THE OILGEAR COMPANY
AND
M&I MARSHALL & ILSLEY BANK
DATED AS OF OCTOBER 1, 1997
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CREDIT AGREEMENT
This Agreement, dated as of October 1, 1997 is entered into between
The Oilgear Company, a Wisconsin corporation (herein called the "Borrower") and
M&I Marshall & Ilsley Bank, Milwaukee, Wisconsin, a banking corporation
organized and existing under the laws of the State of Wisconsin (herein called
the "Bank").
WITNESSETH:
WHEREAS, the County of Dodge, Nebraska (the "Issuer") intends to issue
its Variable Rate Demand Development Revenue Bonds, Series 1997 (The Oilgear
Company Project) in the aggregate principal amount of $4,000,000 (the "Bonds")
pursuant to a Trust Indenture (the "Indenture") dated as of October 1, 1997,
between the Issuer and Norwest Bank Wisconsin, National Association, as Trustee
(the "Trustee"); and
WHEREAS, the proceeds derived from the issuance of the Bonds will be
applied pursuant to a Lease Agreement between the Issuer and the Borrower dated
as of October 1, 1997 (the "Bond Lease Agreement") to finance costs related to
expansion of the manufacturing facilities located in Dodge County, Nebraska
which are operated by the Borrower and the acquisition and installation of
equipment for such facilities (the "Project") and it is understood that the
Project is leased by the Issuer to the Borrower pursuant to the Bond Lease
Agreement and that the Borrower has the option to purchase the Project at the
end of the Bond Lease Agreement provided that all payments have been made on
the Bonds; and
WHEREAS, the Bonds are secured under the Indenture by an assignment
and pledge to the Trustee of the Issuer's right, title and interest in the Bond
Lease Agreement; and
WHEREAS, in order to enhance the marketability of the Bonds and
thereby achieve interest costs and other savings, the Borrower has requested
the Bank to issue its irrevocable letter of credit in an amount of $4,138,083
in favor of the Trustee; and
WHEREAS, the Bank is willing to issue its letter of credit to secure
the Bonds in accordance with the terms set forth in this Agreement;
NOW THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
Section 1. Certain Definitions. The following terms when used in
this Agreement shall have the following meanings:
"Agreement" means this Credit Agreement, together with the exhibits
attached hereto, as the same shall be amended from time to time in accordance
with the terms hereof.
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"Bank" means M&I Marshall & Ilsley Bank, Milwaukee, Wisconsin, a
banking corporation organized and existing under the laws of the State of
Wisconsin.
"Bond Lease Agreement" means the Lease Agreement dated as of
October 1, 1997, between the Issuer and the Borrower, as amended from time to
time.
"Bonds" means the County of Dodge, Nebraska Variable Rate Demand
Development Revenue Bonds, Series 1997 (The Oilgear Company Project) issued
under the Indenture in the aggregate principal amount of $4,000,000.
"Borrower" means The Oilgear Company, a Wisconsin corporation.
"Borrower Payment Date" means the last business day prior to the date
the Bank is required to honor any draft presented under the Letter of Credit.
"Borrower's Documents" means the Credit Agreement, the Security
Agreement and the Pledge Agreement.
"Building Lease" means the Building Improvement Lease Agreement dated
as of October 1, 1997 between the Issuer and the Borrower.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Documents" shall mean the Security Agreement, the Pledge
Agreement and such other guaranties, security agreements, mortgages and other
credit enhancements as may be executed from time to time by the Borrower or
others in favor of the Bank in connection with this Credit Agreement.
"Default" shall mean any event which if it continues uncured will,
with lapse of time or notice or lapse and notice, constitute an Event of
Default.
"Environmental Assessment" means a review for the purpose of
determining whether the Borrower is in compliance with all Environmental Laws
and whether there exists any condition or circumstance which requires or will
require an investigation, clean-up, removal or other remedial action under
Environmental Laws on the part of the Borrower, including, but not limited to,
some or all of the following: (a) on-site inspection, including review of site
geology, hydrogeology, demography, land use and population; (b) taking and
analyzing soil borings, installing ground water monitoring wells and analyzing
samples taken from such wells; (c) reviewing plant permits, compliance records
and regulatory correspondence and interviewing enforcement staff at regulatory
agencies; (d) reviewing the operations, procedures and documentation of the
Borrower; (e) interviewing past and present employees of the Borrower; and (f)
reviewing all records and
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information regarding the past activities of prior owners and prior or current
tenants of Borrower's Facilities.
"Environmental Laws" means all Laws, judgments, decrees, permits,
licenses, agreements and other governmental restrictions, now or at any time
hereafter in effect, relating to (a) the emission, discharge or release of
pollutants, petroleum or petroleum products, chemicals or industrial, toxic or
hazardous substances, materials or wastes into the environment, or (b) the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, petroleum or petroleum products, chemicals
or industrial, toxic or hazardous substances or wastes, or (c) the
investigation, clean-up or remediation thereof. These Environmental Laws shall
include but not be limited to the Federal Solid Waste Disposal Act, the Federal
Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation
and Recovery Act of 1976, the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Federal Superfund Amendments and
Reauthorization Act of 1986, regulations of the Environmental Protection
Agency, regulations of the Nuclear Regulatory Agency, regulations of any state
department of natural resources or state environmental protection agency now or
at any time hereafter in effect and local health department ordinances.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended and as in effect from time to time.
"Event of Default" means any of the events described in Section 8.
"Facilities" means all facilities owned or operated and all real
estate, property and other assets owned by the Borrower.
"Indebtedness" means all liabilities or obligations of the Borrower,
whether primary or secondary or absolute or contingent or secured or unsecured;
(a) for borrowed money or for the deferred purchase price of property or
services (excluding trade obligations incurred in the ordinary course of
business, which are not the result of any borrowing); (b) as lessee under
leases that have been or should be capitalized according to generally accepted
accounting principles; (c) evidenced by notes, bonds, debentures or similar
obligations; (d) under any guaranty or endorsement (other than in connection
with the deposit and collection of checks in the ordinary course of business),
and other contingent obligations to purchase, provide funds for payment, supply
funds to invest in any Person, or otherwise assure a creditor against loss; or
(e) secured by any Liens on assets of the Borrower, whether or not the
obligations secured have been assumed by the Borrower.
"Indenture" means the Trust Indenture dated as of October 1, 1997,
between the Issuer and the Trustee, pursuant to which the Issuer has issued the
Bonds, the proceeds from which constitute the source of funds which will
finance the Project.
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"Issuance Date" shall have the meaning ascribed to it in Section 2.
"Issuer" means the County of Dodge, Nebraska.
"Law" shall mean any federal, state, local or other law, rule,
regulation or governmental requirement of any kind, and the rules, regulations,
written interpretations and orders promulgated thereunder.
"Letter of Credit" shall have the meaning ascribed to it in Section 2.
"Lien" shall mean, with respect to any asset: (a) any mortgage,
pledge, lien, charge, security interest or encumbrance of any kind; and (b) the
interest of a vendor or lessor under any conditional sale agreement, financing
lease or other title retention agreement relating to such asset.
"Oilgear Loan Agreement" means the Loan Agreement between the Borrower
and the Bank dated as of September 28, 1990 as amended and restated as of June
17, 1996, and as such Loan Agreement has been or may be subsequently amended or
amended and restated from time to time and any successor loan agreement between
the Borrower and the Bank, as amended from time to time.
"Opinion of Borrower's Counsel" means the opinion of counsel for the
Borrower in the form of Exhibit C hereto.
"Outstanding Credit" means at any date the sum of (i) the aggregate
unpaid principal amount of the Bonds on such date (taking into account Bond
redemptions, but not Bond purchases) and (ii) 105 days' accrued interest on the
Bonds at the rate of 12% per annum.
"Pledge Agreement" shall mean the Pledge and Security Agreement dated
as of October 1, 1997 from the Borrower to the Bank securing the Borrower's
obligations under this Agreement, as the same may be amended and supplemented
from time to time.
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, limited liability partnership or company and a
government or any department or agency thereof.
"Prime Rate" means the rate of interest adopted by M&I Marshall &
Ilsley Bank from time to time as its base rate for interest determinations.
"Project" means the project being financed with the proceeds of the
Bonds which is the construction of an approximately 33,000 square foot addition
to the manufacturing facility in Dodge County, Nebraska which is operated by
the Borrower and the purchase of equipment for such facilities.
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"Security Agreement" means the Security Agreement dated as of
May 1, 1994 as amended and restated on July 15, 1994 and as amended and
restated as of October 1, 1997, from the Borrower to the Bank, as the same may
be amended and supplemented from time to time.
"Subsidiary" shall mean any corporation, more than fifty percent of
the outstanding stock of which (of any class or classes, however designated,
having ordinary voting power for the election of at least a majority of the
members of the board of directors of such corporation, other than stock having
such power only by reason of the happening of a contingency) shall at the time
be owned by the Borrower directly or through one or more Subsidiaries.
"Trustee" means Norwest Bank Wisconsin, National Association and any
successor Trustee under the Indenture.
Section 2. Commitment of the Bank. Subject to the terms and
conditions of this Agreement, the Bank agrees to issue, on the date of closing
of the Bonds, for the account of the Borrower an irrevocable direct pay letter
of credit in the form set forth in Exhibit A (herein called the "Letter of
Credit") in favor of the Trustee in the maximum amount of $4,138,083. The date
of issuance of the Letter of Credit shall be herein called the "Issuance Date."
The Letter of Credit has an expiration date of October 15, 2007.
Notwithstanding any other provision of this Agreement, the Letter of
Credit shall not be required to be issued hereunder if on the Issuance Date the
payments due under Section 4(a) have not been made or the conditions set forth
in Section 7 hereof have not been complied with.
Section 3. Payment of Draft Under the Letter of Credit.
(a) The Borrower agrees to pay the Bank, at its office
at 770 North Water Street, Milwaukee, Wisconsin, in immediately available funds
not later than 10:00 a.m., Milwaukee time, on each Borrower Payment Date
(except in the case of the purchase of Bonds, the Borrower shall pay at the
times provided in Section 3(g) hereof) the amount required to be paid by the
Bank pursuant to a draft presented to the Bank under the Letter of Credit.
This obligation of the Borrower shall be unconditional and the Borrower may not
dispute whether payment of any draft by the Bank is proper and, without
limiting the foregoing, this obligation of the Borrower shall apply (i) whether
or not any of the representations and warranties contained in the certificates
presented with such draft by the Trustee are false or disputed by the Borrower
or (ii) whether or not the draft is presented as a result of an event of
default under the Indenture resulting from notification to the Trustee by the
Bank that it has determined that an "Event of Default" has occurred hereunder,
notwithstanding that such determination may be disputed by the Borrower. In
the event the Borrower fails to pay the Bank on any
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Borrower Payment Date the amount of any draft to be honored by the Bank under
the Letter of Credit, then the Borrower, in addition to remaining liable for
the immediate payment of such amount, shall pay interest to the Bank on such
unpaid amount at a rate per annum equal to 2% plus the Prime Rate from time to
time in effect from the Borrower's Payment Date until the amount then due,
including accrued interest, is paid in full to the Bank by or on behalf of the
Borrower. Such rate of interest shall change as and when the Bank changes the
Prime Rate, and all such interest shall be calculated on the basis of a year
consisting of 360 days so that at any point in time during each year from the
date the Borrower fails to pay the amount owed, the interest accrued shall be
determined by multiplying the unpaid amount times the interest rate times a
fraction of which the numerator is the actual number of days elapsed and of
which the denominator is 360.
(b) All payments owed by the Borrower to the Bank under
this Agreement shall be made without any setoff or counterclaim and free and
clear of any restrictions or conditions and free and clear of and without
deduction for or on account of, any present or future taxes, levies, imposts,
duties, charges, fees, deductions or withholdings of any nature now or
hereafter imposed by any governmental or other authority. If the Borrower is
compelled by law to make any such deductions or withholdings it will pay such
additional amounts as may be necessary in order that the net amount received by
the Bank after such deductions or withholdings shall equal the amount it would
have received had no such deductions or withholdings been required to be made,
and it will provide the Bank with evidence satisfactory to the Bank that it has
paid such deductions or withholdings.
(c) If any sum becomes due for payment hereunder on a
Saturday, Sunday or other legal holiday for banks in Wisconsin, such payment
shall be made on the next succeeding business day of the Bank and interest
shall be adjusted accordingly.
(d) In addition to and not in limitation of all rights
of offset that the Bank may have under applicable law, the Bank shall, upon the
occurrence of any Event of Default, have the right to offset and apply to the
payment of the amounts owing by the Borrower to the Bank hereunder any and all
balances, credits, deposits, accounts or moneys then or thereafter held by the
Bank for the Borrower.
(e) The Borrower assumes all risks of the acts or
omissions of the Trustee and any beneficiary or transferee of the Letter of
Credit with respect to its use of the Letter of Credit. Neither the Bank nor
any of its officers or directors shall be liable or responsible for: (a) the
use which may be made of the Letter of Credit or for any acts or omissions of
the Trustee and any beneficiary or transferee in connection therewith; (b) the
validity, sufficiency or genuineness of documents, or of any endorsement(s)
thereof, even if such documents should in fact prove to be in any or all
respects invalid, insufficient, fraudu-
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lent or forged; (c) payment by the Bank in good faith made against presentation
of documents which substantially comply with the terms of the Letter of Credit;
or (d) any other circumstances whatsoever in making or failing to make payment
under the Letter of Credit; except only that the Borrower shall have a claim
against the Bank, and the Bank shall be liable to the Borrower, to the extent,
of damages suffered by the Borrower which the Borrower proves were caused by
(i) the Bank's misconduct or negligence or (ii) the Bank's wrongful failure to
pay under the Letter of Credit after the presentation to it by the Trustee or a
successor trustee under the Indenture of a sight draft and certificate strictly
complying with the terms and conditions of the Letter of Credit. In
furtherance and not in limitation of the foregoing, the Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
(f) The Borrower authorizes the Bank, without any
authorization other than that contained in this sentence, to automatically
withdraw from any account which the Borrower then has at the Bank or any
affiliate of the Bank the amounts necessary to pay any amounts due under
Sections 3 and 4 of this Agreement.
(g) In the event the Bank purchases or is deemed to have
purchased Bonds for the account of the Borrower pursuant to Sections 409 and
1201(d) of the Indenture, beneficial ownership of such Bonds (if in book-entry
form) or the certificates representing such Bonds (if in certificated form)
shall be transferred and delivered to or at the direction of the Bank. Such
Bonds are called the "Company Bonds" under the Indenture. Pursuant to Section
306 of the Indenture, the Trustee shall register all Company Bonds in the name
of the Bank as pledgee or in a manner directed by the Bank pursuant to the
provisions of the Uniform Commercial Code or cause the Bank to be registered as
the beneficial owner. Such Company Bonds shall be delivered by the Trustee to
or upon the order of the Bank as the Bank shall direct the Trustee. The
Borrower hereby pledges such Company Bonds to the Bank and grants to Bank a
security interest therein as additional collateral for the Borrower's
obligations hereunder. The Borrower also hereby grants to the Bank a security
interest in the Borrower's right, title and interest in and to the Bond
Purchase Account (as defined in the Indenture) to secure the Borrower's
obligations hereunder. Upon reimbursement of the Bank for the purchase price
paid by it for such Bonds (for the account of the Borrower) from the proceeds
of a remarketing of the Bonds in accordance with the terms of the Indenture,
then the Bank shall resell such Bonds to such purchaser and, in connection
therewith the Bank shall transfer beneficial ownership of such purchased or
remarketed Bonds (and deliver the certificates representing such purchased or
remarketed Bonds, endorsed in blank, in the case of certificated Bonds) to the
purchaser thereof; provided, however, that prior to or concurrently with any
such resale the Borrower shall pay or cause to be paid to the Bank interest on
the principal amount of such Bonds being sold,
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at the interest rates described in the following paragraph for the period from
the date of purchase of such Bonds by the Bank (for the account of the
Borrower) through and including the date of sale by the Bank.
In the event that the Letter of Credit has been drawn upon to fund the
Purchase Price (as defined in the Indenture) of Bonds pursuant to Section
1201(d) of the Indenture relating to Bonds tendered by the Bondholder which
have not been successfully remarketed, the Borrower, at its option, need not
immediately reimburse the Bank for such Letter of Credit draw; however, if the
Borrower elects not to immediately reimburse the Bank, the Borrower shall pay
the Bank interest on any such Letter of Credit draw amount which has not been
reimbursed at the Prime Rate, payable on the first day of each month following
such draw, from the date of the draw until the date on which the draw amount
has been reimbursed; provided, however, that each draw which was used to
purchase Bonds must be reimbursed by the Borrower to the Bank on or before the
earlier of (a) the date which is 30 days after the date of the draw under the
Letter of Credit which is used to purchase Bonds or (b) the date on which all
amounts due hereunder have been accelerated pursuant to Section 9(a) hereof.
In the event that any such draw is not reimbursed on the due date, such overdue
amount will bear interest at the Prime Rate plus two percent.
Section 4. Letter of Credit Fee.
(a) On or prior to the Issuance Date the Borrower
agrees to pay to the Bank (i) a nonrefundable commitment fee equal to one-half
percent of the Outstanding Credit on the Issuance Date, and (ii) an amount
equal to three-fourths percent (0.75%) of the Outstanding Credit on the
Issuance Date multiplied by a fraction of which the numerator is the number of
days from and including the Issuance Date through October 15, 1998, and the
denominator is 360.
(b) The Borrower further agrees to pay the Bank annually
in advance on each October 16, beginning October 16, 1998, a Letter of Credit
fee equal to three-fourths percent (0.75%) of the Outstanding Credit on such
October 16.
(c) In the event any change in any federal or state law,
rule, regulation or governmental requirement of any kind or in the rules,
regulations, interpretations (judicial or otherwise) and orders promulgated
thereunder shall impose, modify or make applicable any reserve, premium
payment, capital adequacy, special deposit or similar requirement against the
Letter of Credit or impose on the Bank any other condition regarding the Letter
of Credit, and the result of any such event shall be to increase the cost to
the Bank of issuing or maintaining the Letter of Credit, then the Borrower
shall pay to the Bank on demand from time to time such additional amounts as
shall, in the Bank's reasonable judgment, be sufficient to compensate the Bank
for such increased cost.
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(d) Each time the Letter of Credit is transferred or
reissued, as provided by its terms, the Borrower shall pay the Bank a transfer
fee of $500 plus all of the Bank's out-of-pocket expenses, including, but not
limited to, reasonable attorneys' fees.
(e) The Borrower also agrees to pay to the Bank on each
Borrower Payment Date or, in the event the Letter of Credit has been drawn on
to cover a purchase of Bonds then on the date on which the draw has been made,
a fee for processing the draft presented to the Bank under the Letter of
Credit. The amount of the processing fee is currently $250 per draft in the
event that the documents presented strictly conform to the requirements of the
Letter of Credit and $500 per draft in the event that the documents do not so
strictly conform.
Section 5. Warranties. To induce the Bank to issue the Letter of
Credit hereunder, the Borrower represents and warrants to the Bank that:
(a) The Borrower is a corporation duly organized and
validly existing under the laws of the State of Wisconsin and is qualified to
transact business in and exists in the States of Wisconsin and Nebraska and in
each jurisdiction in which failure to do so would have a material adverse
effect on its business or financial condition with all requisite corporate
power and authority to own, operate and lease its properties and to carry on
its business as now being conducted or as presently contemplated, and no
proceedings looking toward its liquidation, dissolution or winding-up have been
commenced or contemplated.
(b) The Borrower is duly authorized under the laws of
the State of Wisconsin and all other applicable provisions of law to execute
and deliver this Agreement and the Borrower's Documents and perform its
obligations thereunder and all action on its part necessary for the valid
execution and delivery of this Agreement and the Borrower's Documents and
performance of its obligations thereunder has been duly and effectively taken
and this Agreement and each of the Borrower's Documents are valid and binding
upon the Borrower in accordance with their terms, except as enforceability may
be limited by bankruptcy, insolvency or other laws affecting creditors' rights
generally and general principles of equity regardless of whether the proceeding
is in equity or at law.
(c) All financial statements and other documents with
respect to the financial condition of the Borrower and its Subsidiaries
presented to the Bank are accurate and complete, were prepared in accordance
with generally accepted accounting principles consistently applied throughout
all periods and fairly present the financial condition and results of operation
of the Borrower and its Subsidiaries for the periods and as of the relevant
dates thereof, and there has been no subsequent material adverse change in the
business, properties or condition, financial or otherwise, of the Borrower and
its Subsidiaries,
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taken as a whole, since the date of the latest of such financial statements.
The Borrower has no knowledge of any material liabilities of any nature not
disclosed in writing to the Bank.
(d) There are no actions, suits, investigations or
proceedings pending before any court or administrative agency or governmental
body, or to the knowledge of the Borrower, threatened against the Borrower or
any of its Subsidiaries or any of their assets which would, if adversely
determined, materially and adversely affect the financial condition of the
Borrower and its Subsidiaries, taken as a whole, or the ability of the Borrower
to perform its obligations under this Agreement or the other Borrower's
Documents.
(e) The Borrower is not in violation of any laws,
ordinances or governmental rules or regulations to which it is subject and the
Borrower has not failed to obtain any licenses, permits, franchises or other
governmental authorizations necessary for the construction, operation and
ownership of its Facilities, including the Project, or conduct of its business
which violation or failure to obtain might materially adversely affect the
financial condition, properties, prospects, profits or business of the Borrower
or its Subsidiaries, taken as a whole, or the Borrower's ability to perform its
obligations under this Agreement or the other Borrower's Documents.
(f) None of the assets or properties of the Borrower is
subject to any lien except for liens permitted under the Oilgear Loan Agreement.
(g) Neither the execution and delivery of this Agreement
or any other Borrower's Documents, nor compliance with the terms, conditions
and provisions of such documents would conflict with or result in the breach of
or constitute a default under any indenture, mortgage, lien, agreement,
contract, deed, lease, loan agreement, note, order, judgment, decree or other
instrument or restriction of any kind or character to which the Borrower is a
party or by which it is bound, or to which any of the Borrower's assets is
subject, nor is the Borrower in violation of or in default under any of the
documents described in this paragraph.
(h) The Borrower is not in default in the payment of the
principal of or interest on any of its indebtedness for borrowed money or in
default under any instrument or instruments or agreements under and subject to
which any indebtedness for borrowed money has been issued and no event has
occurred and is continuing under the provisions of any such instrument or
agreement which with the lapse of time, or with the giving of notice, or both
would constitute an event of default thereunder or an Event of Default under
this Agreement or any of the Borrower's Documents.
(i) The Borrower is not engaged and will not engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or
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"carrying" any "margin stock" within the respective meanings of each of the
quoted terms under Regulation U of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter in effect. The Borrower
will not use any part of the proceeds of the Bonds for any purpose which
violates, or which would be inconsistent with, the provisions of Regulation U
or X of such Board of Governors, as the same may be amended, supplemented or
modified from time to time.
(j) The Borrower is not an "investment company" or a
company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
(k) The Borrower has filed all federal, state, foreign
and local tax returns which are required to be filed, and has paid or made
provisions for the payment of all taxes owed by it and no material tax
deficiencies have been proposed or assessed against the Borrower.
(l) Neither the Borrower nor any Subsidiary is a party
to, nor so far as is known to the officers of the Borrower is there any threat
of, any litigation or administrative proceeding which, if adversely determined,
would cause any material adverse change in the assets and properties of, or any
material impairment of the right to carry on the business as now conducted by,
or would cause any material adverse effect on the financial condition of, the
Borrower and the Subsidiaries taken as a whole.
(m) All information, certificates or statements by the
Borrower given in, or pursuant to, this Agreement shall be accurate, true and
complete in all material respects when given.
(n) The Borrower has only the Subsidiaries described in
the Oilgear Loan Agreement.
(o) Except for the unfunded liabilities described in its
financial statements, the Borrower has no knowledge that (a)any plan is in
non-compliance in any material respect with the applicable provisions of ERISA;
or (b) the Borrower or any Subsidiary has incurred any "accumulated funding
deficiency" within the meaning of Section 302(a)(2) of ERISA in connection with
any Plan.
(p) With respect to any period during which the Borrower
occupies its Facilities and, to the Borrower's knowledge after reasonable
investigation, with respect to the time before the Borrower occupied its
Facilities, no Person has caused or permitted petroleum products or hazardous
substances or other materials to be stored, deposited, treated, recycled or
disposed of on, under or at the Facilities, which materials, if known to be
present, might require investigation, clean-up, removal or some other remedial
action under Environmental Laws, except those materials used in the Borrower's
business and stored and disposed of in compliance with Environmental Laws.
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(q) There are not now nor, to the Borrower's knowledge
after reasonable investigation, have there ever been tanks, containers or other
vessels on, under or at its Facilities that contained petroleum products or
hazardous substances or other materials which, if known to be present in soils
or ground water, might require investigation, clean-up, removal or some other
remedial action under Environmental Laws.
(r) To the Borrower's knowledge after reasonable
investigation, there are no conditions existing currently or likely to exist
during the term of this Agreement that would subject the Borrower to damages,
penalties, injunctive relief or clean-up costs under any Environmental Laws, or
that might require investigation, clean-up, removal or some other remedial
action by the Borrower under Environmental Laws.
(s) No judgment, decree, order or citation related to or
arising out of Environmental Laws is applicable to or binds the Borrower or its
Facilities or to the Borrower's knowledge, the owner of any of the
Facilities.
(t) All permits, licenses and approvals (the
"Approvals") required under Environmental Laws necessary for the Borrower to
operate its Facilities and for the Borrower to conduct its business as now
conducted or proposed to be conducted have been obtained and are in full force
and effect.
Section 6. Covenants. So long as the Letter of Credit is
outstanding, and thereafter until all obligations of the Borrower to the Bank
under this Agreement and the other Borrower's Documents shall have been paid
and performed in full, the Borrower covenants and agrees with the Bank as
follows:
(a) Oilgear Loan Agreement Covenants. From and after
the date hereof and so long as this Credit Agreement is in effect, except to
the extent compliance in any case or cases is waived in writing by the Bank,
the Borrower will, for the benefit of the Bank, comply with, abide by, and be
restricted by all the agreements, covenants, obligations and undertakings
contained in the Oilgear Loan Agreement, inclusive, regardless of whether any
indebtedness is now or hereafter remains outstanding thereunder, or the Oilgear
Loan Agreement shall have terminated, all of which provisions, together with
the related definitions, exhibits and ancillary provisions, are incorporated
herein by reference, mutatis mutandis, and made a part hereof to the same
extent and with the same form and effect as if the same had been herein set
forth in their entirety, and will be deemed to continue in effect for the
benefit of the Bank irrespective of whether the Oilgear Loan Agreement remains
in effect, after giving effect to any amendment or modification of such
provisions or any waiver of compliance therewith, each such amendment,
modification or waiver constituting an amendment, modification or waiver of the
provisions thereof as incorporated herein; provided, that said provisions for
purposes of the incorporation described herein shall be amended in the
following respects:
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<PAGE> 14
(i) the term "M&I" appearing in said provisions
shall mean and refer to the Bank;
(ii) the term "Default" and "Event of Default"
appearing in said provisions shall mean and refer to a Default and an
Event of Default, respectively, as defined in this Credit Agreement;
(ii) the term "Company" appearing in said
provisions shall mean and refer to the Borrower;
(iv) the term "Agreement" or "Loan Agreement"
appearing in said provisions shall mean and refer to this Credit
Agreement; and
(v) the term "herein" appearing in said
provision shall mean and refer to this Credit Agreement.
Other than as hereinabove amended, any terms contained in the
provisions of the Oilgear Loan Agreement incorporated herein which are defined
in the Credit Agreement shall have the same meaning as in the Credit Agreement.
(b) The Borrower shall furnish to the Bank such
information respecting the business, assets and financial condition of the
Borrower as the Bank may reasonably request.
(c) The Borrower shall maintain complete books and
records which fairly present the transactions and financial condition of the
Borrower and permit access by the Bank to such books and records and to its
books and records relating to the Project.
(d) The Borrower shall maintain or cause to be
maintained such insurance as may be required by Law, the Collateral Documents
and such other insurance to such extent and against such hazards and
liabilities as is customarily maintained by persons similarly situated. The
Borrower shall at all times maintain in effect and furnish the Bank with
insurance policies and proof of payment of premiums as follows:
(1) During the process of construction, policies of
builder's risk completed value nonreporting form of fire, extended
coverage, vandalism and malicious mischief hazard insurance covering
the Project in at least the amount of the estimated cost of completing
the Project.
(2) Public liability insurance cover its Facilities with
combined single limits for bodily injury, property damage and personal
injury of One Million Dollars ($1,000,000) per accident or occurrence,
with a $2,000,000 aggregate limit, with provision that such coverage
shall not be terminated without thirty (30) days' prior written notice
to the Bank, and such other special coverages as the Bank, in its
discretion, may require.
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<PAGE> 15
(3) Upon substantial completion of construction of the
Project, and at all times with respect to the Borrower's other
Facilities and equipment, fire, extended coverage, vandalism and
malicious mischief hazard insurance in an amount equal to the full
replacement value of the property, with loss payable endorsements in
favor of the Bank or assigns with respect to equipment with provision
that such coverage will not be terminated without thirty (30) days'
prior written notice to the Bank.
(4) Borrower shall cause appropriate workmen's
compensation coverage to be maintained in force at all times, and upon
request of the Bank, shall furnish the Bank evidence of same.
(e) The Borrower shall not permit any Liens to be placed
on the equipment financed in whole or in part with Bond proceeds except for
Liens to the Bank and the Bond Lease Agreement.
(f) The Borrower shall not sell, lease, transfer or
otherwise dispose of any of the equipment financed in whole or in part with
Bond proceeds without receiving the prior written consent of the Bank.
(g) The Borrower shall maintain its existence as a
Wisconsin corporation and continue to be duly qualified to transact business
in the States of Wisconsin and Nebraska and all other jurisdictions in which
such qualification is necessary.
(h) The Borrower shall permit representatives of the
Bank to visit any of its properties and examine any of its books and records
at any reasonable time and as often as may be reasonably desired and
facilitate such inspection and examination. The Borrower shall permit the
Bank to discuss the affairs, finances, and accounts of the Borrower and any
Subsidiary with any of their respective officers and directors and with the
Borrower's independent accountants.
(i) The Borrower shall include, or cause to be included,
a reference to this Credit Agreement in all financial statements of the
Borrower which are furnished to stockholders, financial reporting services,
creditors and prospective creditors.
(j) The Borrower shall comply with all applicable
Environmental Laws, and orders of regulatory and administrative authorities
with respect thereto, and, without limiting the generality of the foregoing,
promptly undertake and diligently pursue to completion appropriate and legally
authorized containment, investigation and clean-up action in the event of any
release of petroleum products or hazardous materials or substances on, upon or
any real property owned, operated or within the control of the Borrower.
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<PAGE> 16
(k) The Borrower shall notify the Bank as follows:
(1) As soon as possible and in any event within
ten (10) days after the occurrence of any Default or Event of Default,
notify the Bank in writing of such Default or Event of Default and set
forth the details thereof and the action which is being taken or
proposed to be taken by the Borrower with respect thereto.
(2) Unless prohibited by applicable Law, notify
the Bank, and provide copies, promptly after receipt, of any notice,
pleading, citation, indictment, complaint, order or decree from any
federal, state or local government agency or regulatory body, or any
other source, asserting or alleging a circumstance or condition that
requires or may require a financial contribution by the Borrower or an
investigation, clean-up, removal, remedial action or other response by
or on the part of the Borrower under Environmental Laws or which seeks
damages or civil, criminal or punitive penalties from or against the
Borrower for an alleged violation of Environmental Laws; and provide
the Bank with written notice of any condition or event which would
make the warranty contained in Section 5(r) of this Agreement
inaccurate, as soon as the Borrower becomes aware of such condition or
event.
(l) Immediately after the Borrower learns of the
occurrence of any event or condition described in Section 6(k)(2) of this
Agreement, the Borrower shall, at the request of the Bank, undertake and,
within a reasonable time thereafter, obtain an Environmental Assessment, at the
Borrower's expense, and provide promptly to the Bank a written report of the
results of such Environmental Assessment, which report shall recite that the
Bank is entitled to rely thereon. Except as otherwise required by applicable
Law or as may be reasonably necessary, in the opinion of the Bank, for
evaluation and analysis by the Bank, any participating financial institution,
or their attorneys, agents and consultants, any Environmental Assessment
provided to the Bank pursuant to this Section 6(l) shall be treated as
confidential and shall not be disclosed without the prior written consent of
the Borrower.
(m) The Borrower shall not enter into any amendment,
modification or supplement to the Bond Lease Agreement, the Building Lease or
consent to any amendment, modification or supplement to the Indenture without
the prior written consent of the Bank.
(n) The Borrower shall not enter into any agreement
containing any provision which would be violated or breached by the performance
of its obligations hereunder, the Bond Lease Agreement, the Building Lease or
the Borrower's Documents, or under any instrument or document delivered or to
be delivered by it hereunder or in connection herewith.
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<PAGE> 17
(o) The Borrower shall procure and maintain all
necessary licenses, franchises, permits and other governmental authorizations
necessary for the acquisition, operation and ownership of the Borrower's
Facilities, including the Project, or operation of its business.
(p) The Borrower shall expeditiously complete the
development and construction of the Project in a good and workmanlike manner
and in compliance with all applicable statutes, ordinances and regulations, and
any restrictions of record. The Borrower shall use the proceeds of the Bonds
solely in payment of costs incurred in connection with the Project (including
using up to 2% of the Bond proceeds to finance issuing expenses). The Borrower
acknowledges and agrees that the consent of the Bank is required prior to any
disbursement of monies on deposit under the construction funds established
under the Indenture. The Bank may fail to consent to any requisition of Bond
proceeds in the event that any Default or Event of Default has occurred and is
continuing.
(q) The Borrower shall pay all reasonable expenses in
connection with or arising out of the Project and the Letter of Credit,
including, but not limited to, all hazard and liability insurance premiums, and
all out-of-pocket expenses incurred by the Bank in connection with or arising
out of this financing, including recording and filing fees and taxes, and
reasonable attorneys' fees.
(r) The Borrower shall from time to time furnish the
Bank reasonably satisfactory evidence of the Borrower's ability to pay for all
costs of completing the Project, and if the estimated cost of completing the
Project (and paying all other expenses required to be paid by the Borrower)
exceeds the then-remaining Bond proceeds, the Borrower shall demonstrate to the
satisfaction of the Bank the Borrower's ability to complete the Project.
(s) The maximum amount of Bond proceeds disbursed for
construction of the addition and improvements shall not exceed $650,000. The
maximum amount of Bond proceeds disbursed which is used to finance equipment
shall not exceed $3,350,000 or 100% of the invoice amount of the equipment
being acquired.
(t) Borrower shall pay principal payments on the Bonds
in at least the following principal amounts on or before the date indicated in
the table below. In the event that the Bonds do not have scheduled annual
principal payments, the Borrower shall give to the Trustee and any other
required Persons any necessary notice of optional redemption required under the
Indenture in order to effect the required principal payments by the required
dates. The Borrower shall pay principal payments on the Bonds in at least the
following amounts on or before the dates indicated:
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<PAGE> 18
To Be Paid On Or Before: Required Principal Payment:
----------------------- --------------------------
October 1, 1998 $400,000
October 1, 1999 400,000
October 1, 2000 400,000
October 1, 2001 400,000
October 1, 2002 400,000
October 1, 2003 400,000
October 1, 2004 400,000
October 1, 2005 400,000
October 1, 2006 400,000
October 1, 2007 400,000
Section 7. Conditions to Issuance of Letter of Credit. The
obligation of the Bank to issue the Letter of Credit on the Issuance Date is
subject to the condition precedent that the Bank shall have received all of the
following, each duly executed and delivered on or before the Issuance Date, in
form and substance satisfactory to the Bank:
(a) A copy of this Agreement properly executed by the Borrower.
(b) Copies of the Security Agreement and Pledge Agreement
properly executed by the Borrower.
(c) Evidence as to due recording and filing with respect to the
Security Agreement (and/or financing statements related thereto) in all offices
necessary for the perfection of the lien and security interest of each such
document.
(d) Certified copies of all documents evidencing any necessary
corporate action, consents and governmental approvals (if any) required of the
Borrower with respect to this Agreement, the Collateral Documents, the Bond
Lease Agreement and the transactions contemplated hereby.
(e) A certificate of the Secretary or President or Vice President
of the Borrower as to (1) the incumbency and signature of the officers who have
signed this Agreement, the Borrower's Documents and other documents provided
for in connection herewith, (2) the adoption and continued effect of
resolutions of the Board of Directors of the Borrower authorizing the
execution, delivery and performance of this Agreement, the Borrower's Documents
and any other documents provided for in connection herewith together with a
copy of the resolutions, and (3) the accuracy of a copy of the By-Laws of the
Borrower attached thereto.
(f) A copy of the Articles of Incorporation of the Borrower as
amended to date, certified as true and correct by the Department of Financial
Institutions of the State of Wisconsin as of a recent date.
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<PAGE> 19
(g) Certificate of the Department of Financial Institutions of
the State of Wisconsin as to the status of the Borrower as of a recent date.
(h) The Opinion of Borrower's Counsel.
(i) Searches of the appropriate U.C.C. filing offices showing no
security interests affecting any property of the Borrower other than Permitted
Liens.
(j) Signed copies of the Bond Lease Agreement and the Indenture
and copies of all other closing documents executed and delivered in connection
with the closing of the Bonds.
(k) An Officer's Certificate, in the form of Exhibit B hereto.
(l) A construction cost breakdown schedule for the Project,
including an itemized list of estimated costs.
(m) Such additional supporting documents as the Bank may
reasonably request.
In addition, on the Issuance Date, no Event of Default or
Default shall have occurred.
Section 8. Events of Default. "Event of Default" shall mean any one
of the following:
(a) Failure by the Borrower to pay (i) on any Borrower Payment
Date the amount of any draft required to be honored by the Bank under the
Letter of Credit except drafts presented to fund purchases of Bonds under the
Indenture shall be reimbursed by the Borrower on the date on which the draft is
presented to the Bank or as otherwise provided in Section 3(g) of this Credit
Agreement with respect to reimbursement of drafts to fund Bond purchases or
(ii) any other amount due hereunder upon notification of the Borrower by the
Bank; or
(b) The Borrower shall default in the performance of any
agreement, term, provision, condition or covenant required to be performed or
observed by the Borrower under Section 6 of this Credit Agreement provided,
however, that a failure to observe any covenant incorporated herein by
reference pursuant to Section 6(a) of this Agreement shall not constitute an
Event of Default hereunder unless such failure constitutes an "Event of
Default" under the Oilgear Loan Agreement; or
(c) The Borrower shall default in the performance or observance
of any other covenant, condition or agreement in this Agreement or the
Borrower's Documents or there shall be a default in the performance of any
other Collateral Document and such default shall continue for a period of ten
(10) calendar days after written notice from the Bank to the Borrower
specifying such default and requiring it to be remedied; or
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<PAGE> 20
(d) Any final judgment shall be entered against the Borrower
which, when aggregated with other final judgments against the Borrower, exceeds
$100,000 in amount, and shall remain outstanding and unsatisfied, unbonded or
unstayed after sixty (60) days from the date of entry thereof; provided that no
final judgment shall be included in the calculation under this subsection to
the extent that the claim underlying such judgment is covered by insurance and
defense of such claim has been tendered to and accepted by the insurer without
reservation; or
(e) The Borrower or any Subsidiary defaults on any obligation for
borrowed money (other than this Agreement or any indebtedness to the Bank)
beyond any applicable grace period which, when added to other obligations for
borrowed money with respect to which the Borrower or any Subsidiary has
defaulted, exceeds the aggregate amount of $100,000; or
(f) The Company or any Subsidiary defaults on any obligation for
borrowed money owed to the Bank beyond any applicable grace period or there has
occurred any Event of Default under the Oilgear Loan Agreement; or
(g) If an event of default under the Indenture or Bond Lease
Agreement or Building Lease shall occur; or
(h) Should any representation or warranty made by the Borrower
herein or in any Borrower's Document or in any document or financial statement
delivered pursuant hereto or in connection with the Bond financing prove to
have been false in any material respect as of the time when deemed made or
given; or
(i) If the Borrower or any Subsidiary shall (i) become insolvent
or take or fail to take any action which action or failure to take action
constitutes an admission of inability to pay debts as they mature, (ii) make a
general assignment for the benefit of creditors or to an agent authorized to
liquidate any substantial amount of its assets, (iii) become the subject of an
"order for relief" within the meaning of the U.S. Bankruptcy Code, (iv) file a
petition requesting an "order for relief" within the meaning of the U.S.
Bankruptcy Code or otherwise file a petition in bankruptcy or for
reorganization with respect to itself or to effect a plan or other arrangement
with creditors, (v) file an answer to a creditor's petition, admitting the
material allegations thereof, for an adjudication of bankruptcy or for
reorganization or to effect a plan or other arrangement with creditors, (vi)
apply to a court for the appointment of a receiver or custodian for any assets
or properties, (vii) have a receiver or custodian appointed for any assets or
properties with or without consent, and such receiver shall not be discharged
within 60 days after appointment or (viii) have a petition in bankruptcy filed
(or other commencement of a bankruptcy or similar proceeding shall have
occurred) against the Borrower or any Subsidiary, under applicable bankruptcy,
insolvency or similar laws as now or hereafter in effect and such petition
shall not have been dismissed or stayed within 60 days after
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<PAGE> 21
filing or if the Borrower or any Subsidiary shall adopt a plan of complete
liquidation of its assets; or
(j) The Security Agreement or the Pledge Agreement shall not be
in full force and effect with respect to all property pledged thereunder.
Section 9. Remedies.
(a) Upon the occurrence of an Event of Default, at the option of
the Bank, the Bank, by notice to the Borrower, may (i) declare the aggregate
amount of the Outstanding Credit and all other liabilities of the Borrower to
the Bank under this Agreement immediately due and payable and demand payment of
an amount equal to the largest draft which could then or thereafter be drawn
under the Letter of Credit; provided, however, that such acceleration shall be
automatic upon the occurrence of an Event of Default described in paragraph (i)
of Section 8 above and no such declaration or demand by the Bank shall be
required and/or (ii) provide notice of such Event of Default to the Trustee and
instruct the Trustee to accelerate the Lease payments and indebtedness due
under the Bond lease Agreement and the Indenture and call the Bonds for
redemption.
(b) Upon the occurrence of an Event of Default, the Bank may
proceed to protect and enforce its rights hereunder or under the Collateral
Documents or otherwise available to it under applicable law either by suit in
equity or by action at law, or both, whether for specific performance of any
covenant or agreement contained in this Agreement, the Collateral Documents, or
in aid of the exercise of any power granted herein, or proceed to obtain
judgment or any other relief whatsoever appropriate to the action or
proceeding, or proceed to enforce any other legal or equitable right hereunder
or thereunder. All powers and remedies given by this Agreement and the
Collateral Documents are cumulative and not exclusive of any other powers or
remedies available to the Bank, and no delay or omission in exercising any
power or right shall operate as a waiver of any rights, and every power and
remedy may be exercised from time to time as often as shall be deemed
appropriate by the Bank.
(c) If the Letter of Credit has expired and if all liabilities of
the Borrower to the Bank hereunder and under the Oilgear Loan Agreement have
been paid and satisfied, any excess amounts paid by the Borrower to the Bank
hereunder and any amounts acquired by the Bank through pursuit of any remedies
to it hereunder or under the Collateral Documents or under applicable law shall
be returned by the Bank to the Borrower.
Section 10. General.
(a) No delay on the part of the Bank in the exercise of any power
or right shall operate as a waiver thereof, nor shall any single or partial
exercise of any power or right preclude other or further exercise thereof, or
the exercise of any power or
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<PAGE> 22
right. The fact that the Bank has not advised the Trustee that the amount
available to be drawn under the Letter of Credit to pay interest on the Bonds
has not been reinstated or that an Event of Default under this Credit Agreement
has occurred as it is permitted to do pursuant to Section 1001(e) of the
Indenture shall not constitute a waiver of such Event of Default by the Bank
and the Bank may nevertheless exercise all its rights and pursue all its
remedies hereunder notwithstanding the fact that the Bank has not given any
such notice to the Trustee.
(b) Any notice hereunder shall be in writing and, if mailed,
shall be deemed to be given when sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed as follows: if to the
Borrower, The Oilgear Company, 2300 South 51st Street, Milwaukee, Wisconsin
53219, Attention: Thomas Price, and if to the Bank at 770 North Water Street,
Milwaukee, Wisconsin 53202, Attention: David Braam. The Borrower and the Bank
may, by written notice, received by the other, designate a further or different
address for purposes of notice hereunder.
(c) The Borrower agrees to pay on demand all reasonable out-of-
pocket costs and expenses of the Bank (including the fees and out-of-pocket
expenses of Quarles & Brady, counsel for the Bank in connection with the
preparation, execution and delivery of this Agreement, the Letter of Credit,
the Collateral Documents and all other instruments or documents provided for
herein or delivered or to be delivered hereunder or in connection herewith
including without limitation the protection and enforcement of such rights in
any bankruptcy, reorganization or insolvency proceeding involving the Borrower
both before and after judgment. The Borrower further agrees to pay on demand
all out-of-pocket costs and expenses (including attorneys' fees and legal
expenses) and internal audit fees and accountants' fees incurred by the Bank in
connection with the maintenance and enforcement of this Agreement, the
Collateral Documents, or any other collateral security. In addition, the
Borrower agrees to pay, and to save the Bank harmless from all liability for,
any stamp or other taxes which may be payable in connection with the execution
or delivery of this Agreement, the Collateral Documents, or the issuance of the
Letter of Credit, or of any other instruments or documents provided for herein
or delivered or to be delivered hereunder or in connection herewith and the
Borrower shall pay all such taxes, assessments and charges, including interest
and penalties, and hereby indemnifies the Bank against any liability therefor.
All obligations provided for in this Section 10(c) shall survive any
termination of this Agreement.
(d) This Agreement, the Letter of Credit, and the Collateral
Documents have been, or will be, executed, delivered and issued by the Bank in
the State of Wisconsin and shall be contracts made under and governed by the
internal laws of the State of Wisconsin. If any one or more of the provisions
contained in this Agreement shall be invalid, illegal or unenforceable in any
respect under any law, the validity, legality
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<PAGE> 23
and enforceability of the remaining provisions contained herein shall not in
any way be affected or impaired thereby.
(e) This Agreement shall be binding upon the Borrower and the
Bank and their respective successors and assigns, and shall inure to the
benefit of the Borrower and the Bank and their respective successors and
assigns, except that the Borrower may not assign or transfer its rights under
this Agreement without the prior written consent of the Bank.
(f) The various headings in this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any provision thereof.
(g) Should the Trustee release the Bank from any further
obligation under the Letter of Credit and if all other amounts owed by the
Borrower to the Bank hereunder until such termination have been paid, then this
Agreement shall terminate.
(h) The Bank may, at any time and from time to time, grant to any
bank or banks a participation in any part of this Agreement and the Letter of
Credit. All of the representations, warranties and covenants of the Borrower
in this Agreement are also made to any participant with the same force and
effect as if expressly so made.
Section 11. Indemnification. The Borrower indemnifies the Bank and
its executive officers, directors and officials and each person, if any, who
controls the Bank within the meaning of the Securities Act of 1933 or the
Securities Exchange Act of 1934, as amended, against claims asserted against
them if such claims arise out of or are based on (i) the assertion that the
preliminary offering circular or the offering circular used in connection with
the offering and sale of the Bonds contained, as of the date thereof, an
alleged untrue statement of a material fact or an alleged omission to state any
material fact necessary to make the statements therein not misleading, in light
of the circumstances under which they were made, except to the extent that such
statement or omission related to the Bank or financial information related to
the Bank or (ii) the failure to register the Bonds under the Securities Act of
1933, as amended, or to qualify the Indenture under the Trust Indenture Act of
1939, as amended, or to make any other required filings or registrations in
connection with the offering or sale of the Bonds. This indemnity includes
reimbursement for expenses reasonably incurred by an indemnified party in
investigating the claim and in defending it if the Borrower declines to assume
the defense.
Within a reasonable time after the commencement of any action against
an indemnified party in respect of which indemnity is to be sought against the
Borrower, such indemnified party will notify the Borrower in writing of such
action and the Borrower may assume the defense thereof, including the
employment of counsel and the payment of all expenses. If the Borrower shall
assume the defense of any such action, it shall not be liable to
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<PAGE> 24
any indemnified party for any legal expenses incurred by such indemnified party
in such action subsequent to the assumption of the defense thereof by the
Borrower except, however, an indemnified party may retain its own counsel and
still be indemnified for the costs and expenses of such counsel despite an
assumption of the defense by the Borrower, if the Borrower's counsel is unable
to represent the indemnified party due to a conflict of interest or the
Borrower's counsel fails (by reason of delays, failure to assert defenses to
which the indemnified party is entitled or otherwise) to adequately defend the
action. The Borrower shall not be liable for any settlement of any such action
effected without its consent, but if settled with the consent of the Borrower
or if there is a final judgment for the plaintiff in any such action, the
Borrower will indemnify and hold harmless any indemnified person from and
against any loss or liability by reason of such settlement or judgment.
The Borrower hereby indemnifies, agrees to defend and holds the Bank
harmless from and against all loss, liability, damage and expense, including
costs associated with administrative and judicial proceedings and reasonable
attorneys' fees, suffered or incurred by the Bank on account of: (i) the
Borrower's failure to comply with any Environmental Law, or any order of any
regulatory or administrative authority with respect thereto; (ii) any release
of petroleum products or hazardous materials or substances on, upon or into
real property owned, operated or controlled by the Borrower; and (iii) any and
all damage to natural resources or real property or harm or injury to Persons
resulting or alleged to have resulted from any failure to comply or any release
of petroleum products or hazardous materials or substances as described in
clauses (i) and (ii) above.
The Borrower hereby grants and licenses to the Bank full and complete
access, for itself, its employees and representatives (including without
limitation independent engineering consultants retained by the Bank), to the
Facilities, and to the books and records of the Borrower relating to the
Facilities, in order to conduct an Environmental Assessment from time to time
as the Bank may deem reasonably necessary. The license granted by this
paragraph is coupled with an interest and irrevocable. The Borrower shall
reimburse the Bank for the costs and expenses associated with any Environmental
Assessment obtained by the Bank under this paragraph. The Borrower and the
Bank agree that there is no adequate remedy at law for the damage that the Bank
might sustain for failure of the Borrower to permit the Bank to exercise and
enjoy the license granted by this paragraph and, accordingly, the Bank shall be
entitled at its option to the remedy of specific performance to enforce such
license.
The indemnity agreements contained in this Section shall survive
delivery of the Bonds and the Letter of Credit and shall survive any
investigation made by or on behalf of any indemnified party.
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SECTION 12. WAIVER OF RIGHT TO JURY TRIAL. THE BANK AND BORROWER
ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS CREDIT
AGREEMENT OR ANY COLLATERAL DOCUMENTS OR WITH RESPECT TO THE TRANSACTION
CONTEMPLATED HEREBY WOULD BE BASED UPON DIFFICULT AND COMPLEX ISSUES AND,
THEREFORE, THE PARTIES AGREE THAT ANY LAWSUIT ARISING OUT OF ANY SUCH
CONTROVERSY SHALL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE
SITTING WITHOUT A JURY.
Dated at Milwaukee, Wisconsin as of the date and year first above
written.
THE OILGEAR COMPANY
By: [SIG]
-------------------------------
Its Vice President of Finance and
Secretary
M&I MARSHALL & ILSLEY BANK
By: [SIG]
-------------------------------
Its Senior Vice President
Attest: [SIG]
---------------------------
Its Vice President
This instrument was drafted by Attorney Ann M. Murphy, Quarles & Brady,
411 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
24