Loan Agreement - M&I Marshall & Ilsley Bank and the Oilgear Co.
LOAN AGREEMENT
BY AND BETWEEN
M&I MARSHALL & ILSLEY BANK
AND
THE OILGEAR COMPANY
DATED AS OF SEPTEMBER 28, 1990
AS AMENDED AND RESTATED
AS OF JUNE 17, 1996
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS ........................................... 2
ARTICLE II COMMITMENTS; THE LOANS ................................ 9
2.1 Revolving Credit Loans ................................ 9
2.2 Term Loan ............................................. 10
2.3 Second Term Loan ...................................... 10
2.4 Pound Sterling Loans .................................. 11
2.5 Setting and Notice of Rates ........................... 12
2.6 Computation of Interest and Fees ...................... 12
2.7 Default Interest on the Loans ......................... 12
2.8 Payments .............................................. 12
2.9 Application of Certain Payments ....................... 13
2.10 Prepayments ........................................... 13
2.11 Recordkeeping ......................................... 13
2.12 Commitment Fees ....................................... 14
2.13 Reduction or Termination of Commitments ............... 14
2.14 Warranty .............................................. 14
2.15 Use of Proceeds ....................................... 15
2.16 Indemnity ............................................. 15
2.17 Increased Costs ....................................... 15
2.18 Change of Control ..................................... 15
2.19 Deposits Unavailable or Interest Rate Unascertainable.. 16
2.20 Change in Law Rendering Loans Unlawful ................ 17
2.21 Taxes ................................................. 17
2.22 Discretion of M&I as to Manner of Funding ............. 17
ARTICLE III CONDITIONS ........................................... 18
3.1 All Loans ............................................ 18
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ARTICLE IV REPRESENTATIONS AND WARRANTIES ........................ 18
4.1 Organization and Qualification ........................ 18
4.2 Financial Statements .................................. 18
4.3. Authorization; Enforceability ......................... 18
4.4 Absence of Conflicting Obligations .................... 19
4.5 Taxes ................................................. 19
4.6 Absence of Litigation ................................. 19
4.7 Undisclosed Liabilities ............................... 19
4.8 Accuracy of Information ............................... 19
4.9 Title to Property ..................................... 19
4.10 ERISA ................................................. 19
4.11 Subsidiaries .......................................... 20
4.12 Federal Reserve Regulations ........................... 20
4.13 Offering of Notes ..................................... 20
ARTICLE V NEGATIVE COVENANTS ..................................... 20
5.1 Liens .................................................. 20
5.2 Sale of Assets, Consolidation, Merger .................. 20
5.3 Dividends .............................................. 21
5.4 Indebtedness ........................................... 21
5.5 Pound Sterling and Revolving Credit Loans .............. 21
5.6 Capital Expenditures ................................... 21
5.7 Loans and Advances ..................................... 21
5.8 Transactions with Affiliates ........................... 21
5.9 Investments ............................................ 22
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ARTICLE VI AFFIRMATIVE COVENANTS ................................. 22
6.1 Corporate Existence; Properties ........................ 22
6.2 Reporting Requirements ................................. 22
6.3 Taxes .................................................. 23
6.4 Inspection of Properties and Records ................... 24
6.5 Consolidated Current Ratio ............................. 24
6.6 Consolidated Debt to Worth Ratio ....................... 24
6.7 Consolidated Tangible Net Worth ........................ 24
6.8 Compliance with Laws ................................... 24
6.9 ERISA .................................................. 24
6.10 Notices ............................................... 24
6.11 Consolidated Debt Service Coverage Ratio .............. 25
ARTICLE VII REMEDIES ............................................. 25
7.1 Acceleration .......................................... 25
7.2 Remedies Not Exclusive ................................ 25
7.3 Setoff ................................................ 25
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ARTICLE VIII MISCELLANEOUS ....................................... 25
8.1 Acquisition of Notes ................................... 25
8.2 Indemnification ........................................ 26
8.3 Expenses and Attorney's Fees ........................... 26
8.4 Assignability; Successors .............................. 26
8.5 Survival ............................................... 26
8.6 Governing Law .......................................... 26
8.7 Counterparts; Headings ................................. 26
8.8 Entire Agreement ....................................... 26
8.9 Notices ................................................ 27
8.10 Amendment ............................................. 27
8.11 Taxes ................................................. 27
8.12 Participation ......................................... 27
8.13 Severability .......................................... 27
8.14 No Reliance ........................................... 27
8.15 Confirmations ......................................... 28
8.16 Computations .......................................... 28
8.17 Accounting Terms; Definitions ......................... 28
EXHIBIT 1 ................................................... 1
EXHIBIT 2 ................................................... 1
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LOAN AGREEMENT
THIS LOAN AGREEMENT is made as of this 28th day of September, 1990 as
amended and restated as of June 17, 1996 by and between THE OILGEAR COMPANY and
M&I MARSHALL & ILSLEY BANK.
WHEREAS, M&I and the Company are parties to a Loan Agreement dated as of
September 28, 1990 as amended and restated by a Second Amendatory Loan
Agreement dated as of July 15, 1994, and as further amended by Amendment No. 1
to Second Amendatory Loan Agreement dated as of April 30, 1995 and by Amendment
No. 2 to Second Amendatory Loan Agreement dated as of November 20, 1995 (the
"Original Loan Agreement");
WHEREAS, M&I and the Company wish to amend and restate in its entirety the
Original Loan Agreement as set forth in this Loan Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants, conditions and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it is hereby agreed
that:
THE ORIGINAL LOAN AGREEMENT IS HEREBY AMENDED BY DELETING ALL OF THE TERMS
AND PROVISIONS THEREIN AND PLACING IN LIEU THEREOF THE TERMS AND PROVISIONS
CONTAINED IN THIS LOAN AGREEMENT, IT BEING EXPRESSLY UNDERSTOOD THAT ALL
REFERENCES TO THE "LOAN AGREEMENT" IN THE NOTES, THE SECURITY AGREEMENT AND ALL
OTHER DOCUMENTS, INSTRUMENTS AND AGREEMENTS DELIVERED IN CONNECTION WITH THE
ORIGINAL LOAN AGREEMENT SHALL HEREAFTER REFER TO THIS LOAN AGREEMENT. THE
NOTES AND THE SECURITY AGREEMENT SHALL BE DEEMED TO BE AMENDED TO CONFORM TO
THE CHANGES MADE BY THIS LOAN AGREEMENT, IT BEING EXPRESSLY UNDERSTOOD THAT ALL
REFERENCES TO SUCH INSTRUMENTS AND AGREEMENTS SHALL HEREAFTER REFER TO SUCH
INSTRUMENTS AND DOCUMENTS AS AMENDED BY OR PURSUANT TO THIS LOAN AGREEMENT.
WITHOUT IN ANY WAY LIMITING THE FOREGOING, ANY REFERENCES IN THE SECURITY
AGREEMENT TO THE NOTES SHALL REFER TO THE REVOLVING CREDIT NOTE IN THE ORIGINAL
PRINCIPAL AMOUNT OF $16,000,000 DATED JULY 31, 1992, AS AMENDED AND RESTATED ON
JUNE 17, 1996 AND THE POUND STERLING NOTE IN THE ORIGINAL PRINCIPAL AMOUNT OF
L.1,000,000 DATED NOVEMBER 20, 1995, AS AMENDED AND RESTATED ON JUNE 17, 1996,
AS EACH OF SUCH NOTES MAY BE AMENDED, MODIFIED, EXTENDED OR RENEWED FROM TIME
TO TIME. IT IS EXPRESSLY UNDERSTOOD THAT THE OBLIGATIONS OF THE COMPANY, AND
THE SECURITY INTEREST GRANTED IN FAVOR OF M&I, PURSUANT TO THE ORIGINAL LOAN
AGREEMENT, THE NOTES, THE SECURITY AGREEMENT AND ALL OTHER DOCUMENTS,
INSTRUMENTS AND AGREEMENTS DELIVERED IN CONNECTION WITH THE ORIGINAL LOAN
AGREEMENT ARE NOT TO BE DEEMED TO BE IN ANY WAY PAID, RELEASED, SATISFIED OR
IMPAIRED AND ARE ONLY TO BE EXTENDED BY THIS LOAN AGREEMENT.
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ARTICLE I
DEFINITIONS
When used in this Loan Agreement, the following terms shall have the
meanings specified:
Banking Day. "Banking Day" shall mean: (a) with respect to Loans other
than Pound Sterling Loans, any day of the year on which banks are open for
business in Milwaukee; and (b) with respect to Pound Sterling Loans, any
Banking Day on which commercial banks are open for international business.
Commitment. "Commitment" shall mean the commitment of M&I to make
Revolving Credit Loans to the Company under the Loan Agreement up to the
maximum principal amount of Sixteen Million and 00/100 Dollars ($16,000,000.00)
through the Commitment Termination Date, or such lesser amount resulting from a
termination or reduction of the Commitment pursuant to Section 2.13, 2.18 or
7.1 of this Loan Agreement.
Commitment Fee. "Commitment Fee" shall mean the fee payable by the
Company in respect of the Commitment pursuant to Section 2.12(a) of this Loan
Agreement.
Commitments. "Commitments" shall mean the Commitment and the Pound
Sterling Commitment.
Commitment Termination Date. "Commitment Termination Date" shall mean the
earlier of (a) April 30, 1999 or (b) the date on which the Commitment is
terminated pursuant to Section 2.13, 2.18 or 7.1 of this Loan Agreement.
Company. "Company" shall mean The Oilgear Company, a Wisconsin
corporation.
Consolidated Current Assets. "Consolidated Current Assets" shall mean all
consolidated assets of the Company and all Subsidiaries which would, in
accordance with generally accepted accounting principles, be classified as
current assets at such date, but shall not include goodwill, patents,
trademarks, trade names, copyrights and other assets properly classified as
intangible assets.
Consolidated Current Liabilities. "Consolidated Current Liabilities"
shall mean all consolidated liabilities of the Company and all Subsidiaries
which would, in accordance with generally accepted accounting principles, be
classified as current liabilities at such date, including tax and all other
proper accruals and any indebtedness payable upon demand or maturing within 12
months from such date.
Consolidated Current Ratio. "Consolidated Current Ratio" shall mean the
relationship, expressed as a numerical ratio, which Consolidated Current Assets
bears to Consolidated Current Liabilities.
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Consolidated Debt Service Coverage Ratio. "Debt Service Coverage Ratio"
shall mean the relationship, expressed as a numerical ratio, which (a) the sum
of Consolidated Net Income of the Company and its Subsidiaries, plus (to the
extent deducted from the revenues of the Company and its Subsidiaries in the
calculation of Consolidated Net Income) (i) interest expenses incurred, (ii)
deferred income taxes accrued, (iii) depreciation, and (iv) amortization and
other non-cash charges; bears to (b) the sum of payments made or required to be
made by the Company and its Subsidiaries during such period for (i) total
principal and interest due on the Loans or Indebtedness described in Section
5.4(c) or (e) of this Loan Agreement, and (ii) dividends on or repurchases of
capital stock of the Company.
Consolidated Debt to Worth Ratio. "Consolidated Debt to Worth Ratio"
shall mean the relationship, expressed as a numerical ratio, which Consolidated
Total Debt bears to Consolidated Tangible Net Worth.
Consolidated Net Income. "Consolidated Net Income" shall mean the
consolidated after tax net income or net loss (excluding the effect of any
extraordinary gains or losses not in the ordinary course of business) of the
Company and its Subsidiaries for the relevant time period calculated in
accordance with generally accepted accounting principles consistently applied,
and further excluding the after-tax effect of the sum of (a) any net earnings
of any Subsidiary which are unavailable for the payment of dividends, (b)
interest in any net earnings of Persons in which the Company or its
Subsidiaries has an ownership interest (other than Subsidiaries) not actually
received, (c) gains arising from a write-up of assets, (d) gains arising from
the acquisition of any securities of the Company or any Subsidiary, (e) gains
resulting from the sale of any investments or capital assets, (f) amortization
of any deferred credit arising from the acquisition of any Person or in the
property or assets of any Person, (g) earnings of any Subsidiary prior to the
date it became a Subsidiary, (h) earnings acquired by the Company or any
Subsidiary through purchase, merger or consolidation or otherwise for any
period prior to the date of such acquisition, (i) other non-operating and
extraordinary gains and losses, and (j) proceeds of any life insurance policies
payable to the Company or any Subsidiary.
Consolidated Tangible Net Worth. "Consolidated Tangible Net Worth" shall
mean the excess, if any, of all consolidated assets of the Company and all
Subsidiaries (excluding goodwill, patents, trademarks, trade names, copyrights
and other assets properly classified as intangible assets) over all
consolidated liabilities of the Company and all Subsidiaries determined in
accordance with generally accepted accounting principles minus, to the extent
not already deducted from the foregoing, (a) the net book value of drawings,
patterns and patents and (b) adjustments from foreign currency translation.
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Consolidated Total Debt. "Consolidated Total Debt" shall mean the total
of all consolidated liabilities of the Company and all Subsidiaries which would
appear as liabilities on a consolidated balance sheet of the Company and all
Subsidiaries in accordance with generally accepted accounting principles,
including capitalized leases.
Continue. "Continue", "Continuation" and "Continued" shall mean a
continuation of a Loan pursuant to Sections 2.1(c), 2.3(b) or 2.4(c) of this
Loan Agreement.
Controlled Group. "Controlled Group" shall mean a controlled group of
corporations as defined in Section 1563 of the Internal Revenue Code of 1986,
as amended, of which the Company is a part.
Convert. "Convert", "Conversion" and "Converted" shall mean a voluntary
conversion by the Company of an interest rate for a Loan pursuant to Sections
2.1(c) or 2.3(c) of this Loan Agreement.
ERISA. "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may be in effect from time to time.
Event of Default. "Event of Default" shall mean any one of the following:
(a) the Company shall fail to pay when due any installment of the
principal of any Note;
(b) the Company shall fail to pay when due any interest upon any Note or
any amount due under this Loan Agreement or the Security Agreement and such
default shall have continued for a period of five (5) calendar days after
written notice from M&I to the Company specifying such default and requiring
it to be remedied;
(c) the Company shall default in the performance or observance of any of
the covenants and agreements contained in Sections 5.1, 5.2, 5.3, 5.4, 5.5,
5.6, 5.7, 5.8, 5.9, 6.1(a), 6.3, 6.5, 6.6, 6.7 and 6.11 of this Loan Agreement;
(d) the Company shall default in the performance or observance of any of
the other covenants, agreements or conditions contained in this Loan Agreement,
the Notes, the Security Agreement or in other instruments delivered by it to
M&I and such default shall have continued for a period of ten (10) calendar
days after written notice from M&I to the Company specifying such default and
requiring it to be remedied;
(e) any representation or warranty made by the Company in this Loan
Agreement or in any document or financial statement delivered pursuant hereto
shall prove to have been false in any material respect as of the time when made
or given;
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(f) final judgments shall be entered against the Company which, when added
to other final judgments against the Company and all Subsidiaries, exceeds the
aggregate amount of $100,000 and shall remain outstanding and unsatisfied,
unbonded or unstayed after sixty (60) days from the date of entry thereof;
(g) the Company or any Subsidiary shall: (i) become insolvent or take or
fail to take any action which constitutes an admission of inability to pay its
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 United States Bankruptcy Code, (iv) file a petition in bankruptcy, or for
reorganization, 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 of its assets or properties, or
(vii) have a receiver or custodian appointed for any of its assets or
properties, with or without consent, and such receiver shall not be discharged
within sixty days after his appointment;
(h) the Company or any Subsidiary adopts a plan of liquidation of its
assets;
(i) the Company or any Subsidiary defaults on any obligation for borrowed
money, other than the Loans, beyond any applicable grace period which, when
added to other obligations for borrowed money with respect to which the Company
or any Subsidiary has defaulted, exceeds the aggregate amount of $100,000; or
(j) there shall be a default in the performance or observance of any
provision contained in the Security Agreement, and such default shall have
continued for a period of ten (10) calendar days after written notice from M&I
to the Company specifying such default and requiring it to be remedied.
Existing Subsidiaries. "Existing Subsidiaries" shall mean the
Subsidiaries set forth on Exhibit 1 hereto.
Fixed Rate. "Fixed Rate" shall have the meaning set forth in Section
2.3(c) of this Loan Agreement.
Indebtedness. "Indebtedness" shall mean all liabilities or obligations of
the relevant Person, whether primary or secondary or absolute or contingent:
(a) for borrowed money; (b) evidenced by notes, bonds, debentures, guarantees,
reimbursement agreements or similar instruments; or (c) secured by any Lien.
Investment. "Investment" shall mean: (a) any transfer or delivery of
cash, stock or other property or value by such
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Person in exchange for Indebtedness, stock or any other security of another
Person; (b) any loan, advance or capital contribution to or in any other
Person; (c) any guaranty, creation or assumption of any liability or obligation
of any other Person; and (d) any investment in any fixed property or fixed
assets other than fixed properties and fixed assets acquired and used in the
ordinary course of the business of that Person.
Interest Period. An "Interest Period": (a) for any Loan bearing interest
at LIBOR, shall commence on the first day of any calendar month and shall end
on the last day of such calendar month; and (b) for any Loan bearing interest
at the Pound Sterling Rate, shall commence on any day of a calendar month and
shall end on the same day of the calendar month which is three (3) months
later. Each Interest Period which would otherwise end on a day which is not a
Banking Day shall end on the next succeeding Banking Day.
LIBOR. "LIBOR" shall mean an annual rate of interest equal to the
Adjusted Interbank Rate (defined immediately below), which rate shall change on
the first day of each calendar month. Each change in any rate of interest
computed by reference to LIBOR shall take effect on the first day of each
calendar month.
"Adjusted Interbank Rate" means an annual rate with respect to any
Interest Period for any calendar month (rounded upwards, if necessary, to
the nearest 1/100 of 1%), determined pursuant to the following formula:
Adjusted Interbank Rate = Interbank Rate
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1 - Interbank Reserve
Requirement
"Interbank Rate" means with respect to any Loan for any Interest Period,
the rate per annum equal to the rate (rounded upwards, if necessary, to
the nearest 1/16 of 1%) quoted as the rate at which dollar deposits in
immediately available funds are offered on the first day each calendar
month in the interbank Eurodollar market on or about 9:00 A.M. Milwaukee
time for a period of one (1) calendar month and in an amount equal to or
comparable to the amount of such Loan. If the first day of any calendar
month is not a Banking Day, the Interbank Rate shall be established on
the preceding Banking Day. Each such determination shall be conclusive
and binding upon the parties hereto in the absence of demonstrable error.
M&I currently uses the Knight Ridder Information Service to provide
information with respect to the interbank Eurodollar market, but M&I may
change the service providing such information at any time.
"Interbank Reserve Requirement" means a percentage (expressed as a
decimal) equal to the aggregate reserve requirements in effect on the
first day of each calendar month (including all basic, supplemental,
marginal and other reserves and taking into account any transitional
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adjustments or other scheduled changes in reserve requirements during
each calendar month) specified for "Eurocurrency Liabilities" under
Regulation D of the Board of Governors of the Federal Reserve System, or
any other regulation of the Board of Governors which prescribes reserve
requirements applicable to "Eurocurrency Liabilities" as presently
defined in Regulation D, as then in effect, as applicable to the class or
classes of banks of which the Agent is a member. As of the date of this
Loan Agreement, the Interbank Reserve Requirement is 0%.
Lien. "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.
Loan Agreement. "Loan Agreement" shall mean this Loan Agreement dated as
of September 28, 1990, as amended and restated as of June 17, 1996, together
with the Exhibits attached hereto, and as the same shall be further amended
from time to time in accordance with the terms hereof.
Loan or Loans. "Loan" or "Loans" shall mean the Revolving Credit Loans,
the Term Loan, the Second Term Loan, the Pound Sterling Loans and/or any other
loans made by M&I from time to time pursuant to this Loan Agreement.
M&I. "M&I" shall mean M&I Marshall & Ilsley Bank, a Wisconsin banking
corporation.
Note or Notes. "Note" or "Notes" shall mean the Revolving Credit Note,
the Term Note, the Second Term Note, the Pound Sterling Note and/or any other
promissory note issued from time to time by the Company evidencing a loan made
by M&I pursuant to this Loan Agreement, and any renewal, refinancing, increase,
extension, amendment or modification of such Notes.
Officer's Certificate. "Officer's Certificate" shall mean a certificate
in the form of Exhibit 2 attached to this Loan Agreement signed in the name of
the Company by its President, any Vice President or the Treasurer.
Permitted Liens. "Permitted Liens" shall mean:
(a) Liens for taxes, assessments, or governmental charges, and Liens
incident to construction, which are either not delinquent or are being
contested in good faith by appropriate proceedings which will prevent
foreclosure of such Liens, and against which adequate reserves have been
provided;
(b) easements, restrictions, minor title irregularities and similar
matters which have no adverse effect as a practical matter upon the ownership
and use of the affected property;
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(c) Liens or deposits in connection with workmen's compensation or other
insurance or to secure customs' duties, public or statutory obligations in lieu
of surety, stay or appeal bonds, or to secure performance of contracts or bids,
other than contracts for the payment of money borrowed, or deposits required by
law as a condition to the transactions of business or other Liens or deposits
of a like nature made in the ordinary course of business;
(d) Liens in favor of M&I;
(e) Liens securing purchase money indebtedness incurred in connection with
the acquisition of property in the ordinary course of business, provided that:
(i) such Liens do not extend to or cover assets or properties other than those
purchased in connection with the purchase in which such indebtedness was
incurred; and (ii) the obligation secured by any such Lien so created shall not
be less than eighty percent (80%) of the cost of the property covered thereby
at the date of acquisition;
(f) Liens on assets of Subsidiaries located outside the United States;
(g) Liens securing customer advance payments; and
(h) Liens in favor of Norwest Bank Wisconsin, N.A. and the City of Fremont
with respect to the building addition and equipment purchased by the Company
with the proceeds of loans from Norwest Bank and the City of Fremont as
referenced in the Intercreditor Agreement between M&I and such lenders dated
January 27, 1995.
Person. "Person" shall mean and include an individual, partnership,
corporation, trust, unincorporated organization and a government or any
department or agency thereof.
Plan. "Plan" shall mean any employee pension benefit plan subject to
Title IV of ERISA maintained by the Company, any of the Subsidiaries or any
member of the Controlled Group, or any such plan to which the Company, any of
the Subsidiaries or any member of the Controlled Group is required to
contribute on behalf of any of its employees.
Pound Sterling Commitment. "Pound Sterling Commitment" shall mean the
commitment of M&I to make Pound Sterling Loans to the Company under the Loan
Agreement up to the maximum principal amount of One Million Pounds Sterling
(L.1,000,000) through the Pound Sterling Commitment Termination Date, or such
lesser amount resulting from a termination or reduction of the Pound Sterling
Commitment pursuant to Section 2.13, 2.18 or 7.1 of this Loan Agreement.
Pound Sterling Commitment Fee. "Pound Sterling Commitment Fee" shall mean
the fee payable by the Company in
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respect of the Pound Sterling Commitment pursuant to Section 2.12(b) of this
Loan Agreement.
Pound Sterling Commitment Termination Date. "Pound Sterling Commitment
Termination Date" shall mean the earlier of (a) April 30, 1998 or (b) the date
on which the Commitment is terminated pursuant to Section 2.13, 2.18 or 7.1 of
this Loan Agreement.
Pound Sterling Loans. "Pound Sterling Loans" shall mean the loans made
from time to time to the Company by M&I pursuant to Section 2.4 of this Loan
Agreement.
Pound Sterling Note. "Pound Sterling Note" shall mean the promissory note
dated November 20, 1995, as amended and restated on June 17, 1996, from the
Company to M&I, evidencing the Pound Sterling Loans, together with all
extensions, renewals, amendments, modifications and refinancings thereof.
Pound Sterling Rate. "Pound Sterling Rate" shall mean with respect to any
Pound Sterling Loan for any Interest Period, the rate per annum denominated in
Pounds Sterling quoted to the Company by M&I for such Interest Period. The
Company agrees that the interest rate quoted by M&I for any Interest Period for
a Pound Sterling Loan is the rate at which M&I in its sole and exclusive
discretion is willing to make such Pound Sterling Loan to the Company for the
specified amount and that each determination of the applicable Pound Sterling
Rate by M&I shall be conclusive and binding upon the parties hereto in the
absence of demonstrable error.
Prime Rate. "Prime Rate" shall mean the prime rate of interest announced
by M&I from time to time as the base rate of interest for interest rate
determinations. Each change in any rate of interest computed with respect to
the Prime Rate shall take effect on the effective date of the change in the
Prime Rate.
Reportable Event. "Reportable Event" shall mean a reportable event as
that term is defined in Title IV of ERISA.
Revolving Credit Loans. "Revolving Credit Loans" shall mean the revolving
credit loans made from time to time to the Company by M&I pursuant to Section
2.1 of this Loan Agreement.
Revolving Credit Note. "Revolving Credit Note" shall mean the promissory
note dated July 31, 1992, as amended and restated on July 15, 1994, on April
30, 1995 and on June 17, 1996, from the Company to M&I evidencing the Revolving
Credit Loans, together with all extensions, renewals, amendments, modifications
and refinancings thereof.
Security Agreement. "Security Agreement" shall mean the Security
Agreement dated March 1, 1994 as amended and
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restated on July 15, 1994, from the Company to M&I, as such Security Agreement
may be amended from time to time.
Second Term Loan. "Second Term Loan" shall mean the term loan made by M&I
to the Company on July 15, 1994 pursuant to Section 2.3 of this Loan Agreement.
Second Term Note. "Second Term Note" shall mean the promissory note dated
July 15, 1994 from the Company to M&I evidencing the Second Term Loan in the
original principal amount of Three Million and 00/100 Dollars ($3,000,000.00),
together with all extensions, renewals, amendments, modifications and
refinancings thereof.
Subsidiary. "Subsidiary" shall mean any corporation more than 50% 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 Company directly or through one or more Subsidiaries.
Term Loan. "Term Loan" shall mean the term loan made by M&I to the
Company on March 1, 1994 pursuant to Section 2.2 of this Loan Agreement.
Term Note. "Term Note" shall mean the promissory note dated March 1,
1994, as amended and restated on July 15, 1994, from the Company to M&I
evidencing the Term Loan in the original principal amount of Two Million Nine
Hundred Forty Thousand and 00/100 Dollars ($2,940,000.00), together with all
extensions, renewals, amendments, modifications and refinancings thereof.
ARTICLE II
COMMITMENTS; THE LOANS
2.1 Revolving Credit Loans. (a) From time to time prior to the Commitment
Termination Date and subject to the terms and conditions set forth in this Loan
Agreement, M&I agrees to make Revolving Credit Loans to the Company. The
aggregate amount of Revolving Credit Loans outstanding at any one time shall
never exceed the Commitment. All Revolving Credit Loans shall be evidenced by
the Revolving Credit Note, the Company being obligated, however, to pay the
amount of Revolving Credit Loans actually made, together with interest on the
amount which remains outstanding from time to time. The Company may borrow,
repay and reborrow under this Section subject to the terms and conditions of
this Loan Agreement. The Revolving Credit Note shall mature on the Commitment
Termination Date.
(b) Each Revolving Credit Loan shall be in a minimum aggregate amount of
$100,000 or an integral multiple thereof. Each Revolving Credit Loan shall be
made on written or telephonic notice. Each notice shall specify the date and
amount of such
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Revolving Credit Loan. Each such notice shall be effective upon receipt by
M&I, and must be received by 12:30 P.M., Milwaukee time, on the day of the
borrowing, which must be a Banking Day.
(c) The unpaid principal of all Revolving Credit Loans shall bear interest
at either: (i) LIBOR quoted for each Interest Period plus 2.25% or (ii) the
Prime Rate, as selected by the Company upon written or telephonic notice at
least one (1) Banking Day prior to the end of any calendar month. Each such
notice of interest rate Conversion shall be effective upon receipt by M&I, and
must be received by 12:30 P.M., Milwaukee time, to be considered as received on
the day given. Any interest rate Conversion for all Revolving Credit Loans
shall be effected only on the first day of any calendar month. Absent receipt
by M&I of such notice of interest rate Conversion, all Revolving Credit Loans
shall Continue to bear interest at the interest rate option previously selected
by the Company. If the Revolving Credit Loans bear interest at the Prime Rate,
such rate shall automatically change on the effective date of each change in
the Prime Rate, and if the Revolving Credit Loans bear interest at LIBOR plus
2.25%, such rate shall automatically change on the first day of each Interest
Period in accordance with the terms hereof.
2.2 Term Loan. On March 1, 1994, M&I made the Term Loan to the Company in
the original principal amount of $2,940,000, which Term Loan is evidenced by
the Term Note. The Term Loan shall mature on September 1, 1997 and shall bear
interest as set forth in the Term Note.
2.3 Second Term Loan. (a) On July 15, 1994, M&I made the Second Term Loan
to the Company in the original principal amount of $3,000,000, which Second
Term Loan is evidenced by the Second Term Note. The Second Term Loan shall
mature on September 1, 1997.
(b) Unless the Company has requested that the Second Term Loan bear
interest at the fixed rate provided in Section 2.3(c), the unpaid principal of
the Second Term Loan shall bear interest at LIBOR quoted for each Interest
Period plus 2.25%. Absent any notice of Conversion pursuant to Section 2.3(c),
the Second Term Loan shall automatically Continue to bear interest at LIBOR
plus 2.25% for each subsequent Interest Period.
(c) At least one (1) Banking Day prior to the end of an Interest Period,
the Company may request that the Second Term Loan bear interest at an annual
fixed rate (the "Fixed Rate") equal to the "ask yield" for United States
Treasury Notes for a term equivalent to the remaining balance of the term of
the Second Term Loan at the time the Company makes such request, as listed in
the Wall Street Journal one (1) Banking Day prior to the date of Conversion,
plus 2.0%. Such notice of Conversion of the interest rate shall be received by
M&I by 12:30 P.M. Milwaukee time and shall be in writing or by telephone
promptly confirmed in writing. Once the interest rate for the Second Term
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Loan has been Converted to the Fixed Rate, the Second Term Loan shall bear
interest at such Fixed Rate until maturity.
2.4 Pound Sterling Loans. (a) From time to time prior to the Pound
Sterling Commitment Termination Date and subject to the terms and conditions
set forth in this Loan Agreement, M&I agrees to make Pound Sterling Loans to
the Company. The aggregate amount of Pound Sterling Loans outstanding at any
one time shall never exceed the Pound Sterling Commitment. All Pound Sterling
Loans shall be evidenced by the Pound Sterling Note, the Company being
obligated, however, to pay the amount of Pound Sterling Loans actually made,
together with interest on the amount which remains outstanding from time to
time. The Company may borrow, repay and reborrow under this Section subject to
the terms and conditions of this Loan Agreement; provided, however, payments on
any Pound Sterling Loan for a particular Interest Period may only be made at
the end of such Interest Period. The Pound Sterling Note shall mature on the
Pound Sterling Termination Date.
(b) Each Pound Sterling Loan shall be made on written or telephonic notice
at least two (2) Banking Days prior to the day of a borrowing. Each day of a
borrowing shall be a Banking Day. Each notice shall specify the date and
amount of such Pound Sterling Loan. Each such notice shall be effective upon
receipt by M&I, and must be received by 12:30 P.M., Milwaukee time, to be
considered as received on the day given.
(c) The unpaid principal of each Pound Sterling Loan shall bear interest
at the Pound Sterling Rate quoted by M&I for the applicable Interest Period in
accordance with the terms of this Loan Agreement. At the end of any Interest
Period for any Pound Sterling Loan, the Company shall either: (i) pay such
Pound Sterling Loan or (ii) provide M&I with written or telephonic notice of
the Company's desire to Continue such Pound Sterling Loan into a subsequent
Interest Period. Each such notice of Continuation shall be effective upon
receipt by M&I, and must be received by 12:30 P.M., Milwaukee time, at least
two (2) Banking Days prior to the end of the applicable Interest Period. If
the Company fails to either pay a Pound Sterling Loan at the end of an Interest
Period or provide M&I with a timely notice of Continuation as set forth above,
then, at M&I's option: (i) such Pound Sterling Loan shall Continue to bear
interest at the Pound Sterling Rate quoted by M&I pursuant to the terms hereof
for the subsequent Interest Period; or (ii) the outstanding principal of and
accrued interest on such Pound Sterling Loan shall be converted to US Dollars
at the exchange rate in effect at the time M&I chooses to convert, and the US
Dollar value of such Pound Sterling Loan shall bear interest at 2% in excess of
the Prime Rate. After such a conversion by M&I, all payments of principal of
and interest and fees on such Pound Sterling Loan shall be made in US Dollars.
(d) All payments of principal of and interest on the Pound Sterling Note
shall be made in Pounds Sterling, except as otherwise provided herein.
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(e) In the event of the occurrence of an Event of Default specified
subsection (a) or (b) of the definition of Event of Default hereunder, or an
acceleration pursuant to Section 7.1 of this Loan Agreement, M&I may at any
time in its sole and exclusive discretion, convert the outstanding principal of
and accrued interest on the Pound Sterling Loans to US Dollars at the exchange
rate in effect at the time M&I chooses to convert, and the US Dollar value of
all Pound Sterling Loans shall bear interest at 2% in excess of the Prime Rate.
After such a conversion, all payments of principal of and interest and fees on
the Pound Sterling Note shall be made in US Dollars.
2.5 Setting and Notice of Rates. Prior to the date of any proposed
borrowing, Conversion or Continuation of any Loan, the Company may request that
M&I provide the Company with a quote of the then-current Fixed Rate, Prime
Rate, Pound Sterling Rate or Adjusted Interbank Rate. The applicable interest
rate for any Loan shall be determined by M&I in accordance with this Loan
Agreement. Each determination of the applicable interest rate by M&I shall be
conclusive and binding upon the parties hereto, in the absence of demonstrable
error.
2.6 Computation of Interest and Fees. All interest and fees under this
Loan Agreement or the Notes shall be computed for the actual number of days
elapsed on the basis of a 360-day year.
2.7 Default Interest on the Loans. In the event that any amount of the
principal of, or interest on, any Note is not paid on the date when due
(whether at stated maturity, by acceleration or otherwise), the entire
principal amount outstanding under such Note shall bear interest from the day
following the due date until all such overdue amounts have been paid in full at
the rate per annum which is equal to the greater of: (a) 2% in excess of the
rate applicable to the unpaid amount immediately before such Note became due,
or (b) 2% in excess of the Prime Rate.
2.8 Payments. (a) Interest accrued on the Revolving Credit Loans shall be
paid: (i) at the end of each Interest Period when the Revolving Credit Loans
bear interest at LIBOR; and (ii) on the first day of each month when the
Revolving Credit Loans bear interest at the Prime Rate. The outstanding unpaid
principal balance of and accrued interest on the Revolving Credit Loans shall
be paid in full on the Commitment Termination Date. In the event that the
outstanding principal balance of the Revolving Credit Loans at any time exceeds
the Commitment, the Company shall make a mandatory payment of principal in the
amount necessary to reduce such balance to be less than or equal to the
Commitment.
(b) Interest accrued on the Pound Sterling Loans shall be paid at the end
of each Interest Period. The outstanding unpaid principal balance of and
accrued interest on the Pound Sterling Loans shall be paid in full on the Pound
Sterling Commitment Termination Date. In the event that the outstanding
principal balance of the Pound Sterling Loans at any times
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exceeds the Pound Sterling Commitment, the Company shall make a mandatory
payment of principal in the amount necessary to reduce such balance to be less
than or equal to the Pound Sterling Commitment.
(c) The principal of and accrued interest on the Term Loan shall be
payable in accordance with the terms of the Term Note.
(d) The principal of and accrued interest on the Second Term Loan shall be
payable in accordance with the terms of the Second Term Note.
(e) All payments of principal of or interest on the Notes (including
prepayments with respect to the Notes) shall be made in immediately available
funds by the Company to M&I, to be effected by a direct charge of M&I against
the account of the Company maintained at M&I (account number 507). Whenever
any payment to be made under this Loan Agreement or under the Notes shall be
stated to be due on a date other than a Banking Day such payment may be made on
the next succeeding Banking Day, and such extension of time shall be included
in the computation of payment of interest or any fees.
2.9 Application of Certain Payments. Each payment of principal shall be
applied to such Loans as the Company shall direct by notice to be received by
M&I on or before the date of such payment, or in the absence of such notice, as
M&I shall determine in its discretion.
2.10 Prepayments. The Company may from time to time prepay the Loans in
whole or in part, provided, that: (a) Pound Sterling Loans shall be prepaid
only on the last day of the Interest Period applicable thereto in accordance
with the terms of this Loan Agreement; (b) each partial prepayment shall be in
a minimum aggregate principal amount of $100,000 in respect of all Loans other
than Pound Sterling Loans and in a minimum aggregate principal amount of
L.100,000 in respect of Pound Sterling Loans; and (c) any prepayment of the
entire principal amount of all Loans shall include accrued interest, fees and
other liabilities of the Company in respect of such Loans to the date of
prepayment. Any prepayments of the Term Loan or the Second Term Loan shall be
applied in inverse order of the principal installments due thereon and the
Company shall pay accrued interest to the date of prepayment on the principal
amount of the Term Loan or the Second Term Loan being prepaid, as the case may
be.
2.11 Recordkeeping. M&I shall record in its records the date and amount
of each Loan and each repayment of Loans. The aggregate amounts so recorded
shall be rebuttable presumptive evidence of the principal and interest owing
and unpaid on the Notes. The failure to so record any such amount or any error
in so recording any such amount shall not, however, limit or otherwise affect
the obligations of the Company under this Loan
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Agreement or under the Notes to repay the principal amount of the Loans
together will all interest accruing thereon.
2.12 Commitment Fees. (a) On the first day of April, July, October and
January of each year and continuing until the Commitment Termination Date, the
Company agrees to pay to M&I a Commitment Fee, computed at the rate of
three-eighths of one percent (3/8%) per annum, on the daily average amount by
which the Commitment exceeds the aggregate amount of Revolving Credit Loans
outstanding during the previous calendar quarter. A pro rata portion of the
Commitment Fee shall be due on the Commitment Termination Date.
(b) On the first day of April, July, October and January of each year and
continuing until the Pound Sterling Commitment Termination Date, the Company
agrees to pay to M&I a Pound Sterling Commitment Fee, computed at the rate of
three-eighths of one percent (3/8%) per annum, on the daily average amount by
which the Pound Sterling Commitment exceeds the aggregate amount of Pound
Sterling Loans outstanding during the previous calendar quarter. A pro rata
portion of the Pound Sterling Commitment Fee shall be due on the Pound Sterling
Commitment Termination Date. Except as otherwise provided herein, the Pound
Sterling Commitment Fee shall be calculated and paid in Pounds Sterling.
2.13 Reduction or Termination of Commitments. (a) The Company may from
time to time before the Commitment Termination Date or the Pound Sterling
Commitment Termination Date, as the case may be, upon at least one Banking
Day's prior notice to M&I, permanently reduce the amount of the Commitment or
the Pound Sterling Commitment but only upon payment of the outstanding
principal of the Revolving Credit Loans which is in excess of the then reduced
amount of the Commitment or payment of the outstanding principal of the Pound
Sterling Loans which is in excess of the then reduced amount of the Pound
Sterling Commitment, as the case may be. Any reduction of the Commitment which
would require payment of a Revolving Credit Loan bearing interest at LIBOR may
be made only at the end of an Interest Period. Any reduction in the Commitment
shall be in an amount of $500,000 or an integral multiple thereof. Any
reduction of the Pound Sterling Commitment which would require payment of a
Pound Sterling Loan may be made only at the end of an Interest Period.
(b) The Company may at any time on like one-day notice as described in
this Section and subject to all other restrictions in this Loan Agreement,
terminate the Commitment or the Pound Sterling Commitment upon payment in full
of all outstanding Revolving Credit Loans or Pound Sterling Loans, as the case
may be, together with all accrued interest, fees and other liabilities of the
Company in respect of such Loans under this Loan Agreement.
2.14 Warranty. Each notice of borrowing or Continuation or Conversion
shall automatically constitute a warranty by the
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Company to M&I that, on the requested date of such Loan or Continuation or
Conversion, as the case may be: (a) all of the representations and warranties
of the Company contained in this Loan Agreement shall be true and correct on
such date as though made on such date; and (b) no Event of Default shall exist
on such date and no event shall have occurred and be continuing which would
constitute an Event of Default but for the requirement that notice be given or
time elapse, or both.
2.15 Use of Proceeds. The Company shall use the proceeds of Loans, to the
extent required, to repay existing loans made by M&I to the Company and for
working capital and other purposes of the Company and the Existing
Subsidiaries.
2.16 Indemnity. The Company will indemnify M&I against any loss or
expense which M&I may sustain or incur (including, without limitation, any loss
or expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by M&I to fund or maintain Loans, as reasonably determined
by M&I: (a) in employing deposits to effect, fund or maintain a Loan based on
the Interbank Rate or the Pound Sterling Rate, the Term Loan or the Second Term
Loan, as a consequence of any failure by the Company to make any payment when
due of any amount due hereunder in connection with any such Loan; (b) due to
any failure of the Company to borrow or Continue or Convert a Loan on a date
specified therefor in a notice thereof pursuant to this Loan Agreement; or (c)
due to any payment, prepayment or Conversion of any Loan on a date other than
the last day of the Interest Period for such Loan.
2.17 Increased Costs. If any law or any governmental rule, regulation,
policy, guideline or directive (whether or not having the force of law), or any
interpretation thereof, or compliance of M&I with such, affects the amount of
capital required or expected to be maintained by M&I or any corporation
controlling M&I and M&I determines the amount of capital required is increased
or the profitability of this Loan Agreement to M&I is decreased by or based
upon the existence of this Loan Agreement, the Loans, the Commitments
hereunder, then, within 15 days of demand by the M&I, the Company shall pay M&I
that portion of such increased expense incurred or the amount of reduction in
an amount received which M&I determines is attributable to making, funding and
maintaining its Loans and its Commitments.
2.18 Change of Control. In the event following a Change of Control (as
defined hereafter) M&I determines that such Change of Control gives it reason
to believe that there has been, or may be, a change in the direction, methods
of operation, financial condition or prospects of the Company, M&I may, by
notice to the Company, and notwithstanding any request made by the Company for
Loans hereunder prior to or simultaneously with the giving of such notice: (a)
reduce the amount of the Commitments to an amount equal to the aggregate
principal amount of the Revolving Credit Loans and Pound Sterling Loans then
outstanding (whereupon the Commitments shall be so reduced) and/or (b)
terminate the
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Commitments (whereupon the Commitments shall terminate) and/or (c) require that
the Company pay or prepay all of the Loans hereunder (or such lesser portion
thereof as M&I may specify in such notice) on the date seven Banking Days
thereafter (or on the later date with respect to any or all of such Loans as
specified in such notice), together with interest on the principal so prepaid
accrued to the date of such payment or prepayment and all other amounts owing
hereunder (whereupon the Company shall be required to so pay or prepay the
Loans together with such interest and such other amounts).
"Change of Control" shall mean an event or series of events by which (A)
any "person" or "group" (as such terms are used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended, (the "Exchange Act")) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act, except that a person shall be deemed to be the "beneficial owner" of all
shares that any such person has the right to acquire pursuant to any agreement
or arrangement or upon exercise of conversion rights, warrants, options or
otherwise, without regard to the sixty day period referred to in such Rule),
directly or indirectly, of securities representing 30% or more of the combined
voting power of the then outstanding voting securities of the Company; or (B)
during any period of two consecutive years (not including any period prior to
the effective date of the Agreement), individuals who at the beginning of such
period constituted the board of directors of the Company and any new directors,
whose election by the Company's directors or nomination for election by
Company's stockholders was approved by a vote of at least two-thirds (2/3) of
the Company's directors then still in office who either were Company directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitutes a majority thereof.
Notwithstanding the foregoing, acquisition or ownership of shares of the
Company by an employee benefit plan shall not be deemed a Change of Control.
2.19 Deposits Unavailable or Interest Rate Unascertainable. (a) If M&I
is advised that deposits in Pounds Sterling or in dollars, as the case may be,
(in the applicable amount) are not being offered to banks in the relevant
market for an Interest Period, or M&I otherwise determines (which determination
shall be binding and conclusive on all parties) that by reason of circumstances
affecting the currency market or the interbank Eurodollar market adequate and
reasonable means do not exist for ascertaining the applicable Interbank Rate or
Pound Sterling Rate; or
(b) If lenders similar to M&I have determined that the Interbank Rate
will not adequately and fairly reflect the cost to such lenders of maintaining
or funding loans based on such rate for an Interest Period, or that the making
or funding of such Loans has become impracticable as a result of an event
occurring after the date of this Loan Agreement which in the opinion of M&I
materially affects such Loans;
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then so long as such circumstances shall continue, M&I shall not be under any
obligation to make or Continue Loans based on such rate, and on the last day of
the then-current Interest Period: (i) such Loans bearing interest by reference
to the Interbank Rate shall bear interest at the Prime Rate and (ii) such Loans
bearing interest by reference to the Pound Sterling Rate shall be converted to
US Dollars at the exchange rate in effect at the time of such conversion as
determined by M&I and shall bear interest at the Prime Rate.
2.20 Change in Law Rendering Loans Unlawful. In the event that any change
in (including the adoption of any new) applicable laws or regulations, or any
change in the interpretation of applicable laws or regulations by any
governmental or other regulatory body charged with the administration thereof,
should make it unlawful for any M&I to make, maintain or fund Loans based on
the Pound Sterling Rate or LIBOR, then: (a) M&I shall promptly notify the
Company; (b) the obligation of M&I to make or Continue Loans based on such rate
shall be suspended for the duration of such unlawfulness; (c) such Loans based
on the Pounds Sterling Rate shall be converted to US Dollars at the exchange
rate in effect at the time of such conversion as determined by M&I; and (d) on
the last day of the then-current Interest Period, such Loans shall bear
interest at the Prime Rate.
2.21 Taxes. (a) Any and all payments by the Company hereunder shall be
made without deduction or withholding for any and all present or future taxes,
levies, imposts, deductions or charges and all liabilities with respect thereto
(collectively, "Taxes"). If the Company shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder: (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions M&I receives an amount equal to the sum it would have received had
no such deductions been made; and (ii) the Company shall pay, or cause to be
paid, the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) If the Company makes, or causes to be made, any payment hereunder in
respect of which the Company, or any Subsidiary, is required by law to make any
deduction or withholding of any Taxes, it shall pay the full amount to be
deducted or withheld to the relevant taxation or other authority within the
time allowed for such payment under applicable law and shall deliver to M&I, as
soon as practicable after it has made such payment to the applicable authority,
a receipt issued by such authority or, if no such receipt is available, a
statement of the Company confirming the payment to such authority of all
amounts so required to be deducted or withheld from such payment.
2.22 Discretion of M&I as to Manner of Funding. Notwithstanding any
provision of this Loan Agreement to the contrary, M&I shall be entitled to fund
and maintain its funding of all or any part of the Loans in any manner it sees
fit.
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ARTICLE III
CONDITIONS
3.1 All Loans. The obligation or option, as the case may be, of M&I to
make each Loan is subject to the satisfaction, on the date of making each Loan,
of the following conditions: (a) the representations and warranties of the
Company contained in this Loan Agreement shall be true and accurate on and as
of such date, except to the extent of changes permitted by, or caused by the
transactions contemplated by, this Loan Agreement; (b) there shall not exist on
such date an Event of Default and no event shall have occurred and be
continuing which would constitute an Event of Default but for the requirement
that notice be given or time elapse, or both; (c) such Loan shall not be
prohibited by any applicable law or governmental regulation; and (d) all
proceedings to be taken in connection with such Loan and all documents incident
thereto shall be reasonably satisfactory in form and substance to M&I and its
counsel.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to M&I as follows:
4.1 Organization and Qualification. The Company and each Subsidiary is a
corporation duly and validly organized and existing and in good standing under
the laws of the jurisdiction of its respective incorporation and has the
corporate power and all material licenses, permits and franchises necessary to
own its assets and properties and to carry on its business. The Company and
each Subsidiary is duly licensed or qualified to do business in all
jurisdictions in which failure to do so would have a material adverse effect on
its business or financial condition.
4.2 Financial Statements. All of the financial statements heretofore
furnished to M&I 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 the results of operation
of the relevant Person for the periods and as of the relevant dates thereof,
subject to audit and normal year-end adjustments. There has been no material
adverse change in the business, properties or condition, financial or
otherwise, of the Company and the Subsidiaries, taken as a whole, since the
date of the latest of such financial statements.
4.3. Authorization; Enforceability. The making, execution, delivery and
performance of this Loan Agreement and compliance with its terms and the
making, execution, delivery and issuance of the Notes by the Company have been
duly authorized by all necessary corporate action. This Loan Agreement is the
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms. The Notes, when executed,
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issued and delivered by the Company, will be the valid and binding obligations
of the Company, enforceable against the Company in accordance with their terms.
4.4 Absence of Conflicting Obligations. The making, execution, delivery
and performance of this Loan Agreement and the Notes and compliance with their
respective terms, do not violate any presently existing provision of law or the
Articles of Incorporation or By-laws of the Company or any Subsidiary or any
agreement to which the Company or any Subsidiary is a party or by which it is
bound.
4.5 Taxes. The Company and each Subsidiary have filed all federal, state,
foreign and local tax returns which were required to be filed, and have paid or
made provision for the payment of all taxes owed by them, and no material tax
deficiencies have been proposed or assessed against the Company and the
Subsidiaries, taken as a whole.
4.6 Absence of Litigation. Neither the Company nor any Subsidiary is a
party to, nor so far as is known to the Company or any Subsidiary is there any
threat of, any litigation or administrative proceeding which would, if
adversely determined, 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 Company and the Subsidiaries, taken as a whole.
4.7 Undisclosed Liabilities. Neither the Company nor any Subsidiary has
any material liabilities of any nature not disclosed in writing to M&I.
4.8 Accuracy of Information. All information, certificates or statements
by the Company or any Subsidiary given in, or pursuant to, this Loan Agreement
have been, are and shall be accurate, true and complete in all material
respects when given.
4.9 Title to Property. The Company and each Subsidiary have good and
marketable title to, or a valid leasehold interest in, their respective assets
and properties and there are no mortgages, deeds of trust, pledges, Liens,
security interests or other charges or encumbrances of any nature on any of the
assets or properties of the Company or any Subsidiary, except Permitted Liens.
4.10 ERISA. Except for the unfunded liabilities described in the
financial statements referenced in Section 4.2 above, the Company has no
knowledge that (a) any Plan is in non-compliance in any material respect with
the applicable provisions of ERISA; or (b) the Company or any Subsidiary has
incurred any "accumulated funding deficiency" within the meaning of Section
302(a)(2) of ERISA in connection with any Plan.
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4.11 Subsidiaries. The only Subsidiaries of the Company are the Existing
Subsidiaries. The Company owns at least 95% of the issued and outstanding
capital stock of each of the Existing Subsidiaries.
4.12 Federal Reserve Regulations. The Company and each Subsidiary will
not, directly or indirectly, use any of the Loans for the purpose of purchasing
or carrying any "margin stock" within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System (12 C.F.R. 221, as amended).
Neither the Company nor any Subsidiary will take or permit any action which
would involve a violation of any regulation of the Board of Governors of the
Federal Reserve System.
4.13 Offering of Notes. Neither the Company nor any Subsidiary nor any
agent acting for them has offered the Notes or any similar obligation of the
Company or any Subsidiary for sale to or solicited any offers to buy the Notes
or any similar obligation of the Company or any Subsidiary from any Person
other than M&I, and neither the Company nor any Subsidiary nor any agent acting
for them will take any action which would subject the sale of the Notes to the
registration provisions of the Securities Act of 1933, as amended.
ARTICLE V
NEGATIVE COVENANTS
From and after the date of this Loan Agreement, and while any part of the
Commitments or any of the Loans remains outstanding and until the entire amount
of fees due under this Loan Agreement and principal and interest due under the
Notes is paid in full, the Company will not, nor will it permit any Subsidiary,
without the prior written consent of M&I:
5.1 Liens. Incur, create, assume or permit to be created or allow to
exist any mortgage, pledge, encumbrance or other Lien upon or security interest
in any of its assets or properties, except Permitted Liens.
5.2 Sale of Assets, Consolidation, Merger. (a) Sell, lease or otherwise
dispose of all or a substantial part of its assets or properties to any Person,
whether in one or a series of transactions, except for sales of inventory in
the ordinary course of business (b) consolidate with or merge into any other
corporation, or permit another corporation to merge into it, or acquire all or
substantially all of the properties or assets of any other Person, whether in
one or a series of transactions, unless the Company is the surviving entity and
remains principally engaged in the development, manufacture, marketing and
distribution of components for industrial machinery and for industrial
processes of the type manufactured and distributed by the Company as of the day
immediately before the effective date of such consolidation or merger.
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5.3 Dividends. Declare or pay any dividends on its capital stock (other
than dividends payable in its own capital stock) or redeem, repurchase or
otherwise acquire or retire any of its capital stock at any time outstanding,
except that (a) dividends may be declared and paid so long as, after giving
effect thereto, there is no Event of Default hereunder or event which, with the
passage of time or giving of notice, would constitute an Event of Default, (b)
the Company may repurchase up to $200,000 of its capital stock in each fiscal
year so long as, after each repurchase, there is no Event of Default hereunder
or event which, with the passage of time or giving of notice, would constitute
an Event of Default and (c) any Subsidiary may declare and pay dividends to the
Company or to a wholly-owned Subsidiary.
5.4 Indebtedness. Incur, create, assume or otherwise become primarily or
secondarily liable or absolutely or contingently liable, or permit to exist,
any Indebtedness other than (a) Indebtedness of the Company to M&I, (b)
Indebtedness represented by capitalized leases, (c) Indebtedness secured by any
Permitted Lien, (d) unsecured accounts payable and other unsecured obligations
of the Company incurred in the ordinary course of business of the Company and
not as a result of any borrowing, (e) Indebtedness of the Subsidiaries to
nondomestic lenders who are located outside of the United States, and (f)
customer deposits and performance guaranties.
5.5 Pound Sterling and Revolving Credit Loans. Permit: (a) the amount of
outstanding Revolving Credit Loans to ever exceed the Commitment; or (b) or the
amount of outstanding Pound Sterling Loans to ever exceed the Pound Sterling
Commitment.
5.6 Capital Expenditures. Make, or enter into any binding agreement to
make, expenditures for fixed or capital assets in any fiscal year in excess, in
the aggregate on a noncumulative basis, of: (a) the amount of the depreciation
taken for such fiscal year, plus (b) an amount equal to the Consolidated Net
Income of the Company and its Subsidiaries for the same such fiscal year;
provided, however, that the limitation for the 1996 fiscal year shall be
$5,125,000 on a noncumulative basis.
5.7 Loans and Advances. Make any loan or advance to any Person, except:
(a) extensions of credit in the ordinary course of business by the Company; (b)
advances to officers and employees of the Company for travel and other expenses
in the ordinary course of business and (c) extensions of credit in Pounds
Sterling by the Company to Oilgear Towler Ltd. not to exceed L.1,500,000 in the
aggregate.
5.8 Transactions with Affiliates. Engage in any transaction with an
Affiliate on terms materially less favorable to the Company than would be
available at the time from a Person who is not an Affiliate. "Affiliate" shall
mean any Person: (a) that directly or indirectly controls, or is controlled
by, or is under common control with, the Company or any Subsidiary; (b) that
directly or indirectly beneficially owns or holds five
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percent (5%) or more of any class of voting stock of the Company or any
Subsidiary; (c) five percent (5%) or more of the voting stock of which Person
is directly or indirectly beneficially owned or held by Borrower or any
Subsidiary; (d) that is an officer or director of the Company or any
Subsidiary; (e) of which an Affiliate is an officer or director; or (f) who is
related by blood adoption or marriage to an Affiliate. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
5.9 Investments. Make any Investments in or to other Persons, except:
(a) Investments in insured savings accounts and certificates of deposit; (b)
Investments in prime commercial paper, rated at least either P-1 by Moody's
Investors Service or A-1 by Standard & Poor's Corporation, maturing within one
year of the date of acquisition; (c) purchases of insurance on lives of
officers or employees of the Company; (d) Investments in money market
instruments or funds; and (e) Investments in obligations of a governmental
body, rated "A" or better, maturing within one year of the date of acquisition.
ARTICLE VI
AFFIRMATIVE COVENANTS
From and after the date of this Loan Agreement, and while any part of the
Commitments or the any of the Loans remains outstanding and until the entire
amount of fees due under this Loan Agreement and principal and interest due
under the Notes is paid in full, the Company shall, and shall cause its
Subsidiaries to:
6.1 Corporate Existence; Properties. (a) Maintain its corporate
existence; (b) comply with all material applicable laws; (c) conduct its
business substantially as now conducted; (d) maintain all tangible assets in
good repair, working order and condition; (e) maintain insurance of such nature
and in such amounts as is customarily maintained by companies engaged in the
same or similar business; and (f) maintain a standard and modern system of
accounting in accordance with generally accepted principles of accounting
consistently applied in all material respects throughout all accounting
periods.
6.2 Reporting Requirements. Furnish to M&I such information respecting
the business, assets and financial condition of the Company and any Subsidiary
as M&I may reasonably request and without request furnish to M&I:
(a) within 45 days after the end of each fiscal quarter in each fiscal
year, a consolidated and consolidating balance sheet of the Company and all
Subsidiaries as of the end of each such fiscal quarter and of the comparable
fiscal quarter in the preceding fiscal year and consolidated and consolidating
statements of income and surplus of the Company and all
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Subsidiaries for each such fiscal quarter and for that part of the fiscal year
ending with each fiscal quarter and for the corresponding periods of the
preceding fiscal year, all in reasonable detail and certified as true and
correct, subject to audit and normal year-end adjustments, by the chief
financial officer of the Company; and
(b) as soon as available, and in any event within 90 days after the close
of each fiscal year, a copy of the detailed annual audit report for such year
and accompanying consolidated and consolidating financial statements of the
Company and all Subsidiaries prepared in reasonable detail and in accordance
with generally accepted accounting principles by independent certified public
accountants of recognized standing selected by the Company, and reasonably
satisfactory to M&I, which audit report shall be accompanied by: (i) an
opinion of such accountants, in form and substance reasonably satisfactory to
M&I, to the effect that the same fairly presents the consolidated and
consolidating financial condition and the consolidated and consolidating
results of operations of the Company and all Subsidiaries for the periods and
as of the relevant dates thereof, and (ii) a certificate of such accountants
setting forth their computations as to the Company's compliance with Sections
6.5, 6.6, 6.7 and 6.11 of this Loan Agreement stating that in the ordinary
course of their audit, conducted in accordance with generally accepted auditing
practices, they did not become aware of any Event of Default or, if their audit
disclosed an Event of Default, a specification of the Event of Default and the
actions taken or proposed to be taken by the Company with respect thereto; and
(c) promptly after the same are available, copies of all such proxy
statements, reports and financial statements as the Company shall send to its
stockholders;
(d) together with each delivery required by Sections 6.2(a) and (b) of
this Loan Agreement, an Officer's Certificate; and
(e) promptly after the same are available, copies of all reports submitted
to the Company or any Subsidiary by independent certified public accountants in
connection with any annual or special audit made of the books and records of
the Company or any Subsidiary or relating to the management, operation,
accounting procedures or internal controls of the Company or any Subsidiary.
6.3 Taxes. Pay all taxes and assessments prior to the date on which
penalties attach thereto, except for any tax or assessment which is either not
delinquent or which is being contested in good faith and by proper proceedings
and against which adequate reserves have been provided.
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6.4 Inspection of Properties and Records. Permit representatives of M&I,
upon reasonable notice by M&I, to visit any of its properties and examine any
of its books and records at any reasonable time during normal business hours
and as often as may be reasonably desired and facilitate such inspection and
examination.
6.5 Consolidated Current Ratio. Maintain at all times a Consolidated
Current Ratio which is not less than 2.0 to 1.0.
6.6 Consolidated Debt to Worth Ratio. Maintain at all times a
Consolidated Debt to Worth Ratio of not more than (a) 3.00:1.0 on December 31,
1995 through and including December 30, 1996; and (b) 2.75:1.0 on December 31,
1996 and at all times thereafter.
6.7 Consolidated Tangible Net Worth. Maintain at all times a
Consolidated Tangible Net Worth of at least $17,785,000 at January 1, 1996
through December 30, 1996 which Consolidated Tangible Net Worth requirement
shall increase annually on December 31 of each year, commencing December 31,
1996 by (a) an amount equal to 60% of the consolidated net income, as shown on
the audited financial statements of the Company and its Subsidiaries for the
fiscal year ending on such December 31 (but not less than zero) plus (b) an
amount equal to 75% of any other increase in equity for such fiscal year.
6.8 Compliance with Laws. (a) Comply with the requirements of all
applicable environmental, health, safety and sanitation laws and orders of
regulatory and administrative authorities with respect thereto which are
reasonably known to the Company, and without limiting the generality of the
foregoing, promptly undertake and diligently pursue to completion appropriate
and lawful (as reasonably determined by the Company) remedial containment and
clean-up action in the event of any release of oil or hazardous material or
substance on, upon or into any real property owned, operated or in the control
of the Company; and (b) comply in all material respects with all other laws
applicable to the Company, its Subsidiaries, its assets or operations.
6.9 ERISA. Comply in all material respects with the applicable
provisions of ERISA, the Internal Revenue Code of 1986 (as amended) and any
other federal law applicable to a Plan and the regulations and published
interpretations thereunder.
6.10 Notices. The Company shall forthwith provide M&I with written
notice upon the occurrence of any of the following events: (a) the uninsured
employee benefit obligations assumed by the Company at any time exceeds
$150,000 per individual; (b) the Company requests reimbursement under the
Company's employee benefit insurance policy; or (c) an Event of Default. Any
notice of the occurrence of an Event of Default shall set forth the details
thereof and the action which is being taken or proposed to be taken by the
Company with respect thereto.
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6.11 Consolidated Debt Service Coverage Ratio. Maintain at all times a
Consolidated Debt Service Coverage Ratio of at least 1.15:1.0.
ARTICLE VII
REMEDIES
7.1 Acceleration. (a) Upon the occurrence of any Event of Default
specified in subsection (g) or (h) of the definition of Event of Default
hereunder, then, without notice, demand or action of any kind by M&I: (i) the
Commitments and M&I's obligation to make any Loans shall automatically and
immediately terminate, and (ii) the entire amount of unpaid fees under this
Loan Agreement and the entire amount of unpaid principal and accrued and unpaid
interest under the Notes shall be automatically and immediately due and
payable.
(b) Upon the occurrence of any Event of Default specified in subsection
(a), (b), (c), (d), (e), (f), (i) or (j) of the definition of Event of Default
hereunder, M&I may, without notice or demand: (i) immediately terminate the
Commitments and M&I's obligation to make any Loans, and (ii) declare the entire
amount of unpaid fees under this Loan Agreement and unpaid principal and
accrued and unpaid interest under the Notes immediately due and payable.
7.2 Remedies Not Exclusive. No remedy herein conferred upon M&I is
intended to be exclusive of any other remedy and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise. No failure or delay on the part of M&I in exercising any right or
remedy hereunder shall operate as a waiver thereof nor shall any single or
partial exercise of any right hereunder preclude other or further exercise
thereof or the exercise of any other right or remedy.
7.3 Setoff. The Company agrees that M&I shall have all rights of setoff
and bankers' Lien provided by applicable law, and in addition thereto, the
Company agrees that if at any time any payment or other amount owing by the
Company under the Notes or this Loan Agreement is then due to M&I, M&I may
apply to the payment of such payment or other amount any and all balances,
credits, deposits, accounts or moneys of the Company then or thereafter with
M&I.
ARTICLE VIII
MISCELLANEOUS
8.1 Acquisition of Notes. M&I represents that it is acquiring the Notes
for its own investment and not with a view to or for sale in connection with
any distribution of the Notes, or with any present intention of selling the
Notes, subject to M&I granting participations pursuant to Section 8.12 of this
Loan
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Agreement and the fact that the disposition of M&I property shall at all
times be within their control.
8.2 Indemnification. The Company hereby indemnifies, agrees to defend
and holds M&I from and against all loss, liability, damage and expense,
including costs associated with administrative and judicial proceedings and
attorneys' fees, ever suffered or incurred by M&I on account of: (a) the
Company's failure to comply with any environmental, health, safety or
sanitation law or any order of any regulatory or administrative authority with
respect thereto; (b) any release of oil or hazardous materials or substances
on, upon or into real property owned, operated or controlled by the Company;
and (c) any and all damage to natural resources or real property or harm or
injury to Persons resulting or alleged to have resulted from such failure to
comply or release of oil or hazardous materials or substances.
8.3 Expenses and Attorney's Fees. The Company shall pay all fees and
expenses incurred by M&I, including the fees of counsel, in connection with the
negotiation, preparation and any amendment of this Loan Agreement and the
consummation of the transactions contemplated herein, and the protection or
enforcement of M&I's rights under this Loan Agreement or the Notes, including
without limitation the protection and enforcement of such rights in any
bankruptcy, reorganization or insolvency proceeding involving the Company.
8.4 Assignability; Successors. The Company's rights and liabilities
under this Loan Agreement are not assignable or delegable, in whole or in part,
without the prior written consent of M&I. The provisions of this Loan
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the parties.
8.5 Survival. All agreements, representations and warranties made in
this Loan Agreement or in any document delivered pursuant hereto shall survive
the execution of this Loan Agreement, the making of the Loans and the delivery
of any such document.
8.6 Governing Law. This Loan Agreement, the Notes and the other
documents issued pursuant hereto shall be governed by the laws of the State of
Wisconsin.
8.7 Counterparts; Headings. This Loan Agreement may be executed in
several counterparts, each of which shall be deemed an original, but such
counterparts shall together constitute but one and the same agreement. The
Table of Contents and Article and Section headings in this Loan Agreement are
inserted for convenience of reference only and shall not constitute a part
hereof.
8.8 Entire Agreement. This Loan Agreement, the Notes and the other
documents referred to herein and therein contain the entire understanding of
the parties with respect to the subject
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matter hereof. There are no restrictions, promises, warranties, covenants or
undertakings other than those expressly set forth herein. This Loan
Agreement supersedes all prior negotiations, agreements and undertakings
between the parties with respect to such subject matter.
8.9 Notices. All communications or notices required or permitted by this
Loan Agreement shall be in writing and shall be deemed to have been given at
the earlier of the date when actually delivered to an officer of the other
parties or when deposited in the United States mail, certified or registered
mail, postage prepaid, and addressed as follows, unless and until any of such
parties notifies the others in accordance with this Section of a change of
address:
if to the Company: The Oilgear Company
Attn: Mr. Thomas Price
Vice President of
Finance/Secretary
2300 South 51st Street
Milwaukee WI 53219
if to M&I: M&I Marshall & Ilsley Bank
Attn: Brad D. Chapin
Vice President
770 North Water St.
Milwaukee WI 53201
8.10 Amendment. No amendment of this Loan Agreement shall be effective
unless in writing and signed by the Company and M&I.
8.11 Taxes. If any taxes shall be payable solely in respect of the
execution or delivery of this Loan Agreement or the execution, delivery or
issuance of the Notes, the Company will pay all such taxes, including interest
and penalties, and hereby indemnifies M&I against any such liability.
8.12 Participation. M&I may, at any time and from time to time, grant to
any bank or banks a participation in any part of the Loans, provided that M&I
shall retain the right to amend, modify, waive or enforce the provisions of
this Loan Agreement. All of the representations, warranties and covenants of
the Company in this Loan Agreement are also made to any participant with the
same force and effect as if expressly so made.
8.13 Severability. Any provision of this Loan Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
8.14 No Reliance. No third party is entitled to rely on any of the
agreements of the parties contained in this Loan Agreement and the parties
assume no liability to any third party
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because of any reliance on the agreements of the parties contained in this
Loan Agreement.
8.15 Confirmations. The Company and M&I agree, from time to time and
upon receipt of a written request therefor, to confirm to the other parties to
this Loan Agreement the aggregate unpaid principal amount of the Loans then
outstanding under this Loan Agreement. M&I agrees, from time to time and upon
receipt of a written request therefor, to make the Notes available for
reasonable inspection by the Company at the principal office of M&I during
M&I's normal business hours.
8.16 Computations. Where the character or amount of any asset or
liability or item of income or expense is required to be determined, or any
consolidated or other accounting computation is required to be made for
purposes of this Loan Agreement, such determination and calculation shall, to
the extent applicable and except as otherwise specified in this Loan Agreement,
be made in accordance with generally accepted accounting principles applied on
a basis consistent with those in effect at the time of such determination or
calculation.
8.17 Accounting Terms; Definitions. Except as otherwise specifically
defined in this Loan Agreement, all accounting terms shall be construed in
accordance with generally accepted accounting principles as in effect on the
date of this Loan Agreement and financial data submitted pursuant to this Loan
Agreement shall be prepared in accordance with such principles.
IN WITNESS WHEREOF, the parties hereto have executed this Loan Agreement
on the day and year first above written.
THE OILGEAR COMPANY
By: /s/ Thomas J. Price
------------------------------------
Thomas J. Price, Vice President
of Finance/Secretary
M&I MARSHALL & ILSLEY BANK
By: /s/ Brad D. Chapin
------------------------------------
Brad D. Chapin, Vice President
Attest:
/s/ Mark R. Hogan
---------------------------------------
Mark R. Hogan, Sr. Vice President
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EXHIBIT 1
LIST OF SUBSIDIARIES
Jurisdiction
in which
Name of Subsidiary Incorporated
------------------ ------------
Oilgear GmbH Republic of Germany
Oilgear International Corporation Wisconsin
Oilgear F.S.C., Inc. Virgin Islands
Oilgear Ltd. England
Oilgear Towler Ltd. England
Oilgear Towler S.A. France
Oilgear Towler S.A. Spain
Oilgear SLR Italy
Oilgear Towler Australia Pty. Ltd. Australia
Oilgear Mexicana Mexico
Oilgear Asia PTE Ltd. Singapore
Oilgear Towler Polyhydron Pvt. Ltd. India
<PAGE> 36
EXHIBIT 2
FORM OF OFFICER'S CERTIFICATE
M&I Marshall & Ilsley Bank
770 North Water Street
Milwaukee, Wisconsin 53202-3593
Attention: Mr. Brad D. Chapin
Gentlemen:
This certificate is delivered to you pursuant to a Loan Agreement dated as
of September 28, 1990, as amended and restated as of June 17, 1996, by and
between The Oilgear Company (the "Borrower") and M&I Marshall & Ilsley Bank
("M&I"). The defined terms in the Loan Agreement are used herein with the same
meaning as specified in the Loan Agreement. The undersigned hereby certify
that:
1. To the best of our knowledge, all of the representations and warranties
of the Borrower in the Loan Agreement are true and correct on the date hereof
as if made on the date hereof.
2. To the best of our knowledge, no Event of Default (as such term is
defined in the Loan Agreement) or event which, with the passage of time or
giving of notice, or both, would become such an Event of Default, exists on the
date hereof.
3. Enclosed herewith are the financial statements described in Section
6.2(a) [6.2(b)] of the Loan Agreement, respectively, for the month and period
ended on __________, 19__ (the "Financials"). To the best of our knowledge,
the Financials are accurate and complete, were prepared in accordance with
generally accepted accounting principles consistently applied and fairly
present the financial conditions and results of operations of the Borrower and
all Subsidiaries as of the dates hereof and for the periods covered thereby,
subject to audit and normal year-end adjustments.
4. As of __________, ____, the Consolidated Debt to Worth Ratio, the
Consolidated Tangible Net Worth, the Consolidated Debt Service Coverage Ratio
and the Consolidated Current Ratio are as set forth in Schedule 1 hereto.
Dated: __________, 19__.
THE OILGEAR COMPANY
By: __________________________
______________________________
If an Event of Default (as defined in the Loan Agreement), or event exists
which, with the passage of time or giving of notice, or both, would become such
an Event of Default, specify: (1) the facts and circumstances of such event;
and (2) the actions which the Borrower has taken, is taking or proposes to take
to remedy such situation.