SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

 

 

 

                                                                     EXHIBIT 4.1

 

 

 

 

 

 

 

 

                          SEVENTH AMENDED AND RESTATED

 

                                CREDIT AGREEMENT

 

 

                 ENTERED INTO AND EFFECTIVE AS OF MARCH 22, 2004

 

 

                                 BY AND BETWEEN

 

                               THE OILGEAR COMPANY

 

                                 AS THE COMPANY

 

 

                                       AND

 

 

                          M&I MARSHALL AND ILSLEY BANK

 

                                   AS THE BANK

 

 

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                  SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

 

         THIS SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT is made and entered

into and effective as of this 22nd day of March, 2004, by and between THE

OILGEAR COMPANY, a Wisconsin corporation (the "Company"), and M&I MARSHALL &

ILSLEY BANK, a Wisconsin banking corporation (the "Bank").

 

                                    RECITALS

 

         WHEREAS, the Bank and the Company entered into that certain Loan

Agreement dated as of September 28, 1990, which was amended and restated by a

First Amendatory Loan Agreement dated March 1, 1994, which was amended and

restated by a Second Amendatory Loan Agreement dated as of July 15, 1994, which

was amended and restated by that certain Amended and Restated Loan Agreement

dated as of June 17, 1996, as amended which was amended and restated by that

certain Fourth Amended and Restated Credit Agreement dated as of February 11,

2003, as amended, which was amended and restated by that certain Fifth Amended

and Restated Credit Agreement dated as of March 31, 2003, as amended, which was

amended and restated by that certain Sixth Amended and Restated Credit Agreement

dated as of August 14, 2003 (the "Amended Loan Agreement").

 

         WHEREAS, the Bank has agreed to amend and restate the Amended Loan

Agreement in its entirety and extend credit to the Company upon all of the terms

and conditions of this Agreement. This Agreement shall in all respects supercede

the Amended Loan Agreement, but shall not constitute a novation of the

indebtedness evidenced by the Amended Loan Agreement.

 

         NOW, THEREFORE, in consideration of the foregoing premises and the

mutual agreements contained herein, the receipt and sufficiency of all such

consideration being hereby acknowledged, the parties agree as follows:

 

                                    AGREEMENT

 

         SECTION 1   DEFINITIONS AND TERMS

 

         1.1 Definitions. As used in this Agreement, the following terms have

the following meanings:

 

         "Accounts" shall mean and include all "accounts" (as such term is

defined in the UCC) now owned or hereafter acquired by the Company, and, in any

event, including (a) all accounts receivable, other receivables, book debts and

other forms of obligations (other than forms of obligations evidenced by chattel

paper, documents or instruments) now owned or hereafter received or acquired by,

or belonging or owing to, the Company, whether arising out of goods sold or

services rendered by it or from any other transaction (including any such

obligations which may be characterized as an account or contract right under the

UCC), (b) all of the Company's rights in, to and under all purchase orders or

receipts now owned or hereafter acquired by it for goods or services, (c) all of

the Company's rights to any goods represented by any of the foregoing (including

unpaid sellers' rights of rescission, replevin, reclamation and stoppage in

transit and rights to

 

 

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returned, reclaimed or repossessed goods), (d) all monies due or to become due

to the Company under all purchase orders and contracts for the sale of goods or

the performance of services or both by the Company, or in connection with any

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

Company, as appropriate) now or hereafter in existence, including the right to

receive the proceeds of said purchase orders and contracts, (e) any and all

other rights to the payment of money or other forms of consideration of any kind

now or hereafter owing or to be owing to Company (whether classified under the

UCC as accounts, chattel paper, General Intangibles, or otherwise) and all other

debts, obligations and liabilities in whatever form now or hereafter owing to

Company, (f) all collateral security, liens and guarantees of any kind, now or

hereafter in existence, given by any Person with respect to any of the foregoing

and (g) all proceeds of any of the foregoing.

 

         "Adjusted Interbank Rate" shall have the meaning ascribed to such term

in each Note.

 

         "Affiliate" shall mean any (a) director, officer or employee of the

Person, or (b) Person directly or indirectly controlling or controlled by, or

under direct or indirect common control with, another Person. A Person shall be

deemed to control another Person if the controlling Person directly or

indirectly, either individually or together with (in the case of an individual)

his spouse, lineal descendants and ascendants and brothers or sisters by blood

or adoption or spouses of such descendants, ascendants, brothers and sisters,

owns five percent or more of any class of voting securities of the controlled

Person or possesses, directly or indirectly, the power to direct, or cause the

direction of, the management or policies of the controlled Person, whether

through the ownership of voting securities, through common directors, trustees

or officers, by contract or otherwise.

 

         "Agreement" shall mean this Seventh Amended and Restated Credit

Agreement, as amended, supplemented, modified or extended from time to time.

 

         "Applicable Margin" shall be defined and calculated as follows: The

Applicable Margin to be added to any interest rate provided or calculated by

this Agreement and the Related Documents shall be determined by the ratio of

Funded Debt to EBITDA as set forth in the chart below.

 

             Funded Debt/EBITDA                                 Applicable Margin

             ------------------                                 -----------------

Less than 1.50                                                         1.25%

greater than or equal to 1.50 to less than 2.00                        1.50%

greater than or equal to 2.00 to less than 2.50                        2.00%

greater than or equal to 2.50 to less than 3.00                        2.50%

greater than or equal to 2.00 to less than 3.50                        3.00%

greater than or equal to 3.50 to less than 4.00                        3.50%

4.00 or Greater                                                        4.00%

 

All rates subject to a rate floor of 6.00% with respect to Term Loan A and 5.00%

with respect to the Revolving Loans. The ratio of Funded Debt to EBITDA shall be

calculated by the Company as of the end of each of its Fiscal Quarters

commencing December 31, 2003 and shall

 

 

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be reported to the Bank pursuant to a certificate delivered in accordance with

Section 5.3(i) hereof. The Applicable Margin shall be adjusted, if necessary, as

of the third Business Day following the date on which the Company is required to

deliver such certificate. Notwithstanding anything to the contrary contained

herein, until the delivery of the certificate required under Section 5.3(i)

hereof with respect to the Fiscal Quarter ended September 30, 2003, the

Applicable Margin shall be equal to 4.00%, regardless of the actual ratio of

Funded Debt to EBITDA. If at any given time EBITDA is negative or impossible to

calculate, the Applicable Margin to be added to the specified interest rate

shall be 4.00%.

 

         "Bond Letter of Credit" shall mean the letter of credit issued by the

Bank in the face amount of $4,138,083.00 pursuant to the Reimbursement

Agreement.

 

         "Borrowing Base" shall mean, as of any date, the sum of (a) 80% of

Qualified Accounts, plus (b) 50% of Qualified Inventory (up to a maximum of

Qualified Inventory of $7,250,000).

 

         "Borrowing Base Certificate" shall mean a schedule of the Bank's

collateral in the form attached hereto as Exhibit A, separately setting forth

Accounts, Qualified Accounts, inventory and Qualified Inventory.

 

         "Borrowing Date" shall have the meaning assigned in Section 2.1(c).

 

         "Business Day" shall mean a day other than a Saturday, Sunday, public

holiday or other day when commercial banks in Wisconsin are authorized or

required by law to close; provided, however, that for purposes of determining

the interest rate on a Loan for which the base rate of interest is the Adjusted

Interbank Rate (as such term is defined in each Note), the term "Business Day"

shall mean only those days on which dealings in U.S. dollar deposits are carried

out by U.S. financial institutions in the London Interbank Eurodollar Market.

 

         "Code" shall mean the Internal Revenue Code of 1986, as amended, and

any successor statute, together with the regulations and published

interpretations thereunder, in each case as in effect from time to time.

 

         "Collateral" shall mean all of the Company's Property granted to the

Bank as collateral under the Related Documents.

 

         "Consolidated Net Income" shall mean the consolidated pre-tax and

pre-minority interest income or loss (excluding the effect of any extraordinary

gains not in the ordinary course of business) of the Company and its

Subsidiaries for the relevant time period calculated in accordance with GAAP

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

 

 

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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.

 

         "Default" shall mean an Event of Default or an event which with the

giving of notice or the passage of time or both would constitute an Event of

Default.

 

         "EBITDA" shall mean, with respect to the Company for any period, the

Consolidated Net Income from the Company's operations before interest, taxes,

depreciation and amortization, all determined in accordance with GAAP and

applied in a manner consistent with the financial statements for such period and

prior periods.

 

         "Employee Plan" shall mean any savings, profit sharing, or retirement

plan or any deferred compensation contract or other plan maintained for

employees of the Company or its Subsidiaries and covered by Title IV of ERISA,

including, without limitation, any "multiemployer plan" as defined in ERISA.

 

         "Environmental Law" shall mean any local, state or federal law or other

statute, law, ordinance, rule, code, regulation, decree or order, presently in

effect or hereafter enacted, promulgated or implemented governing, regulating or

imposing liability or standards of conduct concerning the use, treatment,

generation, storage, disposal, discharge or other handling or release of any

Hazardous Substance.

 

         "Environmental Liability" shall mean all liability arising under,

resulting from or imposed by any Environmental Law and all liability imposed

under common law with respect to the use, treatment, generation, storage,

disposal, discharge or other handling or release of any Hazardous Substance.

 

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,

as amended, and any successor statute, together with the regulations and

published interpretations thereunder, in each case as in effect from time to

time.

 

         "Event of Default" shall have the meaning assigned in Section 7.1.

 

         "Existing Defaults" shall mean all events of default under the Amended

Loan Agreement which are outstanding and known by the Bank on the date hereof.

 

         "Fiscal Quarter" shall mean any of the quarterly accounting periods of

the Company, ending on the last day of March, June, September and December of

each calendar year.

 

         "Fiscal Year" shall mean any of the annual accounting periods of the

Company ending on December 31 of each calendar year.

 

         "Funded Debt" shall mean all liabilities or obligations of Company or

any Subsidiary, whether primary or secondary or absolute or contingent: (a) for

borrowed money or for the deferred purchase price of property or services

(excluding trade obligations incurred in the

 

 

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ordinary course of business, which are not the result of any borrowing); (b) as

lessee under any leases that have been or should be capitalized according to

GAAP; (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 Company or any Subsidiary, whether or not the obligations

secured have been assumed by Company or any Subsidiary.

 

         "GAAP" shall mean those generally accepted accounting principles and

practices which are recognized as such by the American Institute of Certified

Public Accountants acting through appropriate boards or committees thereof and

which are consistently applied for all periods so as to properly reflect the

financial condition, results of operations and cash flows of the Company and its

Subsidiaries.

 

         "Government Authority" shall mean any nation or government, any state

or other political subdivision thereof, and any entity exercising executive,

legislative, judicial, regulatory or administrative functions of or pertaining

to government, and any corporation or other entity owned or controlled through

stock or capital ownership or otherwise, by any of the foregoing.

 

         "Hazardous Substance" shall mean any pollutant, contaminant, waste or

toxic or hazardous chemicals, wastes or substances, including, without

limitation, asbestos, urea formaldehyde insulation, petroleum, PCB's, air

pollutants, water pollutants, and other substances defined as hazardous or toxic

in the Comprehensive Environmental Response, Compensation and Liability Act of

1980, as amended, 42 U.S.C. ss. 9061 et seq., Hazardous Materials Transportation

Act, 49 U.S.C. ss. 1801, et seq., the Resource Conservation and Recovery Act, 42

U.S.C. ss. 6901 et seq., the Toxic Substance Control Act of 1976, as amended, 15

U.S.C. ss. 2601 et seq., the Solid Waste Disposal Act, 42 U.S.C. ss. 3251 et

seq., the Clean Air Act, 42 U.S.C. ss. 1857 et seq., the Clean Water Act, 33

U.S.C. ss. 1251 et seq., Emergency Planning and Community Right to Know Act, 42

U.S.C. ss. 11001, et seq., Chapters 254, 281, 283, 285, 287, 289, 291, 292, 293,

295, and 299 of the Wisconsin Statutes, and similar statutes of any state where

Property of the Company is located, or any other statute, rule, regulation or

order of any Government Authority having jurisdiction over the control of such

wastes or substances, including without limitation the United States

Environmental Protection Agency, the United States Nuclear Regulatory Agency,

the State of Wisconsin, the Wisconsin Department of Natural Resources and the

Milwaukee County Department of Health.

 

         "Indebtedness" shall mean all (a) indebtedness for borrowed money; (b)

indebtedness for the deferred purchase price of property or services for which

the Company or a Subsidiary is liable, contingently or otherwise, as obligor,

guarantor or otherwise; (c) commitments by which the Company or a Subsidiary

assures a creditor against loss, including, without limitation, contingent

reimbursement obligations with respect to letters of credit; (d) obligations

which are evidenced by notes, acceptances or other instruments; (e) indebtedness

guaranteed in any manner by the Company or a Subsidiary, including, without

limitation, guaranties in the form of an agreement to repurchase or reimburse;

(f) obligations under leases which are or should be, in accordance with GAAP,

recorded as capital leases for which obligations the Company or a Subsidiary is

liable,

 

 

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contingently or otherwise, as obligor, guarantor or otherwise, or in respect of

which obligations the Company assures a creditor against loss; (g) unfunded

obligations of the Company or a Subsidiary to any Employee Plan; (h) liabilities

secured by any Lien on any Property owned by the Company or any Subsidiary even

though it has not assumed or otherwise become liable for the payment thereof;

and (i) other liabilities or obligations of the Company and its Subsidiaries

which would, in accordance with GAAP, be included on the liability portion of a

balance sheet.

 

         "Lien" shall mean any mortgage, pledge, hypothecation, assignment,

collateral deposit arrangement, encumbrance, lien (statutory or other), deed of

trust, charge, preference, priority, security interest or other security

agreement or preferential arrangement of any kind or nature whatsoever

including, without limitation, any conditional sale or other title retention

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

any of the foregoing, and the filing of any financing statement under the UCC or

comparable law of any jurisdiction.

 

         "Loan" or "Loans" shall mean the Revolving Loans, the Term Loan A and

any other loan(s) or obligation(s) made by the Bank from time to time pursuant

to this Agreement.

 

         "Loan Account" shall mean an account on the books of the Bank in which

the Bank will record, pursuant to Section 2.4, Obligations of the Company to the

Bank, payments made upon such Obligations and other advances, debits and credits

pertaining to the Obligations or the Collateral.

 

         "Material Adverse Effect" shall mean (a) a Default, (b) a material

adverse change in the business, Property, operations, prospects or condition

(financial or otherwise) of the Company or any of its Subsidiaries, (c) the

termination of any material agreement to which the Company or any Subsidiary is

a party, (d) any material impairment of the right to carry on the business as

now or proposed to be conducted by the Company or any Subsidiary, or (e) any

material impairment of the ability of the Company or its Subsidiaries, taken as

a whole, to perform the obligations under this Agreement or the Related

Documents. A Material Adverse Effect shall be deemed to have occurred if the

cumulative effect of an individual event and all other then existing events

would result in a Material Adverse Effect.

 

         "Maximum Available Commitment" shall mean an amount equal to the excess

(if any) of (a) the Revolving Loan Commitment or the Borrowing Base (whichever

is less), minus (b) the outstanding principal amount of all Revolving Loans made

by the Bank.

 

         "Mortgage" or "Mortgages" shall mean the mortgage(s) in form and

substance satisfactory to the Bank granted by the Company to the Bank, as

amended, supplemented, modified or extended, from time to time, encumbering

certain real estate located in Milwaukee, Wisconsin, Longview, Texas and

Fremont, Nebraska.

 

         "Note or Notes" shall mean the Revolving Credit Note, the Term Note A

and any note(s) or obligation(s) issued in substitution, replacement or renewal

thereof.

 

 

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         "Obligations" shall mean the Revolving Loans, the Term Loan A, the Bond

Letter of Credit, all mandatory prepayments, all costs and expenses, all

liabilities and obligations of the Company to the Bank under this Agreement, the

Reimbursement Agreement and the Related Documents, and all other Indebtedness of

the Company to the Bank or any of its Affiliates, whether or not evidenced by

this Agreement or the Related Documents, and including all debts, obligations

and liabilities under interest rate swap, cap, collar, floor, option or other

derivative agreements (including, as applicable, any ISDA Master Agreement and

each schedule, transaction and confirmation relating to or entered into under

the ISDA Master Agreement or under any other such agreement), and all other

agreements designed to protect against fluctuations in interest rates or

currency exchange rates.

 

         "Patent and Trademark Security Agreements" shall mean that certain

Patent Security Agreement and that certain Trademark Security Agreement each

dated as of February 11, 2003 by the Company in favor of the Bank.

 

         "PBGC" shall mean the Pension Benefit Guaranty Corporation established

pursuant to Subtitle A of Title IV of ERISA.

 

         "Permitted Liens" shall mean: (a) Liens for taxes, assessments, or

governmental charges, carriers', warehousemen's, repairmen's, mechanics',

materialmen's and other like Liens, 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 cash reserves have been

provided; (b) easements, restrictions, minor title irregularities and similar

matters which have no material adverse effect upon the ownership and use of the

affected Property; (c) Liens or deposits in connection with worker's

compensation, unemployment insurance, social security 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 transaction of business or other Liens or deposits of a like

nature made in the ordinary course of business; (d) Liens in favor of the Bank

pursuant to the Related Documents; (e) Liens evidenced by conditional sales,

purchase money mortgages or other title retention agreements on machinery and

equipment (acquired in the ordinary course of business and otherwise permitted

to be acquired hereunder) which are created at the time of the acquisition of

such property solely for the purposes of securing the Indebtedness incurred to

finance the cost of such property, provided no such Lien shall extend to any

property other than the property so acquired and identifiable proceeds; (f)

Liens described in SCHEDULE 1, provided that the Indebtedness secured thereby

shall not be renewed, extended or increased; and (g) Liens against a Subsidiary

in connection with letters of credit and foreign bank guarantees issued on

behalf of such Subsidiary.

 

         "Person" shall mean an individual, partnership, corporation, limited

liability company or partnership, firm, enterprise, business trust, joint stock

company, trust, unincorporated association, joint venture, Government Authority

or other entity of whatever nature.

 

         "Pledge Agreement" shall mean the Collateral Pledge Agreement pledging

the stock of the Subsidiaries of the Company to the Bank, in form and substance

satisfactory to the Bank, as amended, supplemented, modified or extended, from

time to time.

 

 

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         "Property" shall mean any interest of the Company and its Subsidiaries

of any type or nature in property or assets, whether real, personal, mixed,

tangible or intangible, wherever located, and whether now owned or subsequently

acquired or arising and in the products, proceeds, additions and accessions

thereof or thereto.

 

         "Qualified Account" shall mean an Account owing solely to the Company

which meets the following requirements at the time it comes into existence and

continues to meet the same until collected in full: (a) it arose from the

performance of services by the Company, or from a bona fide sale or lease of

goods, which have been delivered or shipped to an Account debtor in the United

States, to Volvo, or a foreign debtor which has issued a transferable letter of

credit acceptable to the Bank to secure payment, and for which the Company has

genuine invoices, shipping documents or receipts; (b) it is not more than 60

days past due; (c) it is not owed by an Account debtor which has 50% or more of

its aggregate dollar amount of Accounts owed to the Company unpaid more than 90

days past the earlier of performance of the services, delivery of goods or

date(s) of invoice; (d) it is owned by the Company and not subject to any

assignment, claim, lien, encumbrance or security interest whatsoever other than

those securing the Company's obligations to the Bank; (e) it is a valid and

legally enforceable obligation of an Account debtor which is (i) satisfactory to

the Bank, (ii) not an Affiliate of the Company and (iii) not the United States

of America or any department, agency or instrumentality thereof unless the

Company has complied with the Assignment of Claims Act of 1940, to the

satisfaction of the Bank; (f) it is not subject to setoff, counterclaim, credit

allowance, or adjustment by the Account debtor thereunder, except for discount

for prompt payment, or to any claim by such Account debtor denying liability

thereunder in whole or in part, and such Account debtor has not refused to

accept and has not returned or offered to return any of the goods which are

subject to such Account; (g) it arose in the ordinary course of the Company's

business and in compliance with all Requirements of Law; (h) the Company has no

notice or knowledge of the bankruptcy, insolvency, or similar proceeding of the

Account debtor thereunder, or of the inability of the Account debtor thereunder

to pay its debts as they become due, or of anything which might impair the

credit standing of the Account debtor; (i) it is assignable to the Bank and it

does not arise out of a contract or order which by its terms forbids or makes

void or unenforceable the assignment by the Company to the Bank of the Account

arising with respect thereto; (j) it is not evidenced by instruments or chattel

paper unless the same has been endorsed and delivered to the Bank; (k) it does

not arise from a sale on consignment, sale on return, bill and hold sale or any

other type of conditional sale except as permitted in writing by the Bank; and

(l) it is certified by the Company within fifteen days after the end of each

month (or at such more frequent intervals as the Bank shall request) as to the

amount thereof and all other matters set forth herein or reasonably required by

the Bank. A Qualified Account which subsequently fails to meet any of the

foregoing requirements, shall forthwith cease to be a Qualified Account.

 

         "Qualified Inventory" shall mean inventory (as that term is defined in

the UCC) solely owned by the Company located in the United States which meets

the following requirements and continues to meet the same until sold or

otherwise disposed of as permitted by this Agreement: (a) it is subject to the

first priority Lien of the Bank and it is not subject to any other assignment,

claim, lien, or security interest whatsoever; (b) it is located at one of the

Company's facilities set forth on SCHEDULE 2, none of which is a public

warehouse or leased facility except as permitted in writing by the Bank (and

then only if consented to in writing by each such public warehouse and lessor,

in form acceptable to Agent); (c) it is not obsolete, is in good condition and

is either

 

 

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currently usable or saleable; (d) it is raw materials, work-in-process, costs

and estimated earnings in excess of billings on uncompleted contracts as

reported on the Company's financial statements, or finished goods satisfactory

to the Bank; (e) it is valued at the lower of cost (on a FIFO basis) or

wholesale market value (exclusive of any transportation, processing or handling

charges); and (f) its existence, location, amount, and lower of cost (on a FIFO

basis) or wholesale market value (exclusive of any transportation, processing or

handling charges) have been certified by the Company within fifteen days after

the end of each month (or at such more frequent intervals as the Bank shall

request) as to the amount thereof and all other matters set forth herein or

reasonably required by the Bank. Qualified Inventory which subsequently fails to

meet any of the foregoing requirements, shall forthwith cease to be Qualified

Inventory.

 

         "Regulatory Change" shall mean the adoption or amendment, after the

date of this Agreement, of any national, federal or state law, regulation,

interpretation, direction, policy, guideline or court decision applicable to the

Bank or the London Interbank Eurodollar Market which makes it unlawful for any

Bank to make, maintain or fund the Obligations based on the Adjusted Interbank

Rate, increases the cost to the Bank of making or maintaining the Obligations or

reduces the rate of return to the Bank (by reduction of principal, interest or

otherwise) on the Obligations by subjecting the Bank to any tax, duty or other

imposition or charge with respect to the Obligations, imposing any reserve

requirement (except any reserve requirement reflected in the Adjusted Interbank

Rate), affecting the treatment of any Obligation for purposes of calculating the

appropriate amount of capital to be maintained by the Bank or any Person

controlling the Bank, or imposing on the Bank any other condition affecting the

Obligations.

 

         "Reimbursement Agreement" shall mean that certain Credit Agreement by

and between the Company and the Bank dated October 1, 1997 as amended,

supplemented, modified or extended from time to time, whereby the Bank issued

the Bond Letter of Credit.

 

         "Related Documents" shall mean the Revolving Credit Note, the

Reimbursement Agreement, the Term Note A, the Security Agreement, the Patent and

Trademark Security Agreements, the Mortgages, the Pledge Agreement and all other

instruments, agreements, certificates, and other documents executed by or on

behalf of the Company, any Subsidiary or any guarantor in connection with any of

the Obligations or the transactions contemplated under this Agreement, all as

amended, supplemented, modified or extended from time to time.

 

         "Requirements of Law" shall mean as to any matter or Person, the

Certificate or Articles of Incorporation and Bylaws or other organizational or

governing documents of such Person, and any law (including, without limitation,

any Environmental Law), ordinance, treaty, rule, regulation, order, decree,

judicial decision, determination or other requirement having the force of law

relating to such matter or Person and, where applicable, any interpretation

thereof by any Government Authority.

 

         "Restricted Payments" shall mean (a) dividends or other distributions

by the Company or any Subsidiary based upon the stock of the Company or any

Subsidiary (except dividends payable to the Company and dividends payable solely

in stock of the Company), (b) purchases, redemptions or other acquisitions,

direct or indirect, by the Company or any Subsidiary, of stock of the Company or

any Subsidiary, whether now or hereafter outstanding, (c) any other

 

 

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distribution by the Company or any Subsidiary in respect of stock of the Company

or any Subsidiary, whether now or hereafter outstanding, either directly or

indirectly, whether in cash or property or otherwise, and (d) payment of

management fees by the Company or any Subsidiary to any Affiliate, either

directly or indirectly, whether in cash or property or otherwise.

 

         "Revolving Credit Note" shall mean the promissory note from the Company

to the Bank dated as of February 11, 2003 evidencing the Revolving Loans, as

amended, supplemented, modified or extended from time to time.

 

         "Revolving Loan Commitment" shall mean the lesser of $12,000,000 or the

Borrowing Base minus any permanent reductions in the Bank's commitment to make

Revolving Loans.

 

         "Revolving Loans" shall mean the loans to the Company pursuant to

Section 2.1 evidenced by the Revolving Credit Note.

 

         "Security Agreement" shall mean the Amended and Restated Security

Agreement of the Company in favor of the Bank dated as of February 11, 2003, as

amended on the date hereof and as amended, supplemented, modified or extended

from time to time.

 

         "Subsidiary" shall mean as to any Person, a corporation, limited

liability company, partnership, association, joint venture or other entity of

which shares of stock, membership interests or other voting interests having

voting power (other than stock having such power only by reason of the happening

of a contingency that has not occurred) sufficient to elect a majority of the

board of directors or other managers of such entity are at the time owned, or

the management of which is otherwise controlled, directly, or indirectly through

one or more intermediaries, or both, by such Person.

 

         "Term Loan A" shall mean the loan to the Company pursuant to Section

2.2 evidenced by the Term Note A.

 

         "Term Note A" shall mean the First Amended and Restated Term Note A

from the Company to the Bank dated as of the date hereof evidencing the Term

Loan A, as amended, supplemented, modified or extended from time to time.

 

         "Termination Date" shall mean, (a) as to the Revolving Loans, April 1,

2005, (b) as to the Term Loan A, April 1, 2005, or such earlier date on which

the Obligations shall terminate as provided in Section 7.2.

 

         "UCC" shall mean the Uniform Commercial Code as the same may, from time

to time, be in effect and codified in the State of Wisconsin; provided, however,

in the event that, by reason of mandatory provisions of law, any or all of the

attachment, perfection or priority of Bank's security interest in any Collateral

is governed by the Uniform Commercial Code as in effect in a jurisdiction other

than the State of Wisconsin, the term "UCC" shall mean the Uniform Commercial

Code as in effect in such other jurisdiction solely for purposes of the

provisions hereof relating to such attachment, perfection or priority and for

purposes of definitions related to such provisions.

 

 

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         1.2 Accounting and Financial Determinations. Where the character or

amount of any asset or liability or item of income or expense is required to be

determined, or any accounting computation is required to be made, for the

purpose of this Agreement, such determination or calculation shall be made on a

consolidated basis so as to include the Company and its Subsidiaries, if any, in

each such calculation and, to the extent applicable and except as otherwise

specified in this Agreement, shall be made in accordance with GAAP; provided,

however, that if any change in GAAP from those applied in the preparation of the

financial statements referred to in Section 5.3 is occasioned by the

promulgation of rules, regulations, pronouncements and opinions by or required

by the American Institute of Certified Public Accountants (or its boards or

committees or successors thereto or agencies with similar functions), the

initial announcement of which change is made after the date hereof, results in a

change in the method of calculation of financial covenants, standards or terms

found in Section 6, the parties hereto agree to enter into good faith

negotiations in order to amend such provisions so as to reflect such changes

with the desired result that the criteria for evaluating the Company's financial

condition shall be the same after such changes as if such changes had not been

made; and provided, further, that until such time as the parties hereto agree

upon such amendments, such financial covenants, standards and terms shall be

construed and calculated as though no change had taken place. When used herein,

the term "financial statement" shall include balance sheets, statements of

earnings, statements of stockholders' equity, statements of cash flows and the

notes and schedules thereto, and each reference herein to a balance sheet or

other financial statement of the Company shall be to a statement prepared on a

consolidated and consolidating basis, unless otherwise specified.

 

         1.3 Interpretation. The words "hereof," "herein" and "hereunder" and

words of a similar import when used in this Agreement shall refer to this

Agreement as a whole and not to any particular provision of this Agreement.

Section, Schedule and Exhibit references contained in this Agreement are

references to sections, schedules and exhibits in or to this Agreement unless

otherwise specified. Any reference in any Section or definition to any clause

is, unless otherwise specified, to such clause of such Section or definition.

 

         1.4 Other Terms. Except as otherwise specifically provided, each

accounting term used herein shall have the meaning given to it under GAAP, and

all other terms contained in this Agreement (and which are not otherwise

specifically defined herein) shall have the meanings provided in the UCC to the

extent the same are used or defined therein unless the context otherwise

requires. Terms defined in other Sections of this Agreement shall have the

meanings set forth therein.

 

         1.5 Incorporation of Recitals. The Recitals to this Agreement are true,

correct and incorporated herein by reference.

 

 

 

 

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         SECTION 2 AMOUNTS AND TERMS OF OBLIGATIONS

 

 

         2.1 Revolving Loans.

 

                  (a) Prior to the Termination Date and so long as no Default

has occurred, the Bank agrees on the terms and conditions set forth in this

Agreement to extend to the Company Revolving Loans from time to time in amounts

not to exceed the Revolving Loan Commitment. Subject to the terms of this

Agreement, the Company may borrow, repay (in whole or in part) and reborrow the

Revolving Loans prior to the Termination Date. The Revolving Loans made by the

Bank shall be evidenced by the Revolving Credit Note.

 

                  (b) From the date of the first Revolving Loan and until all

Revolving Loans are paid in full, the Company shall pay all accrued and unpaid

interest on the Revolving Loans on the first day of each month. Prior to an

Event of Default, interest shall accrue and be computed on the aggregate unpaid

principal amount from time to time outstanding under the Revolving Credit Note

as determined in the Revolving Credit Note. All outstanding unpaid principal and

accrued interest on the Revolving Loans shall be due and payable on the

Termination Date for the Revolving Loans. The Company shall pay to the Bank such

other charges, costs, expenses or premiums as the Bank may incur pursuant to the

Revolving Credit Note.

 

                  (c) The Company may obtain Revolving Loans by making a request

therefor to the Bank, orally or in writing. Such request shall specify a

Business Day prior to the Termination Date on which such Revolving Loans are to

be made (the "Borrowing Date"), shall be received by the Bank by 12:00 Noon

(Milwaukee time) one Business Day before the Borrowing Date and shall specify

the amount of the Revolving Loans requested and the requested Loan Period;

provided, however, that within three days after any oral request for a Revolving

Loan, the Bank shall receive from the Company a written confirmation in form

acceptable to the Bank confirming the Company's Revolving Loan request, and the

Bank's obligation to make further Revolving Loans hereunder shall be suspended

until such confirmation has been received by the Bank. In the event of any

inconsistency between the telephonic notice and the written confirmation

thereof, the telephonic notice shall control. The Company shall be obligated to

repay all Revolving Loans notwithstanding the failure of the Bank to receive

written confirmation, and notwithstanding the fact that the person requesting

the Revolving Loan was not in fact authorized to do so. No Revolving Loan

request shall be modified, altered or amended without the prior written consent

of the Bank. Each Revolving Loan shall be in a minimum aggregate amount of

$100,000 or an integral multiple thereof. Upon fulfillment of the conditions

specified in Section 4.2, the Bank shall promptly deposit the amount of such

Revolving Loan in the general deposit account of the Company maintained at the

Bank.

 

                  (d) The Company may, upon one Business Day's prior written

notice to the Bank, permanently reduce the aggregate amount of the Revolving

Loan Commitment; provided that no such reduction shall reduce the aggregate

amount of the Revolving Loan Commitment to an amount less than the aggregate

unpaid principal balance of the Revolving Credit Note on the effective date of

such reduction. Each reduction in the Revolving Loan Commitment shall be in a

minimum amount of $500,000 or an integral multiple thereof.

 

 

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         2.2 Term Loan A. On February 11, 2003, the Bank extended to the Company

the Term Loan A in an aggregate principal amount of $10,000,000 and on the date

hereof, the aggregate outstanding principal amount on such term loan is

$7,608,330.00. The Term Loan A is and shall be subject to all of the terms and

conditions set forth in this Agreement. The Term Loan A made by the Bank

pursuant hereto is evidenced by the Term Note A. Prior to an Event of Default,

interest shall accrue and be computed on the aggregate unpaid principal amount

from time to time outstanding under the Term Note A as determined in the Term

Note A. All outstanding unpaid principal and accrued interest on the Term Loan A

shall be due and payable on the Termination Date for Term Loan A. The Company

shall pay to the Bank such other charges, costs, expenses or premiums as the

Bank may incur pursuant to the terms of the Term Note A.

 

         2.3 Interest After Default. After an Event of Default, each of the

Notes shall bear interest at the rate of 3% per annum in excess of the interest

rate specified in such Notes. In no event shall the interest rate under the

Notes exceed the highest rate permitted by law.

 

         2.4 Loan Account. The Bank will enter as a debit to the Loan Account

the aggregate principal amount of each Obligation as disbursed or issued from

time to time by the Bank. The Bank shall also record in the Loan Account, in

accordance with the Bank's customary accounting practices: accrued interest and

all other charges, expenses and other items properly chargeable to the Company

hereunder or under the Related Documents; all payments made by the Company with

respect to the Obligations, if any; and all other appropriate debits and

credits. The debit balance of the Loan Account shall reflect the amount of the

Obligations and other appropriate charges hereunder. Not more frequently than

once each month, the Bank shall render a statement of account of the Loan

Account including, with respect to Revolving Loans, a statement of the

outstanding principal balance and the applicable interest rate, which statement

shall be considered correct and accepted by the Company and conclusively binding

upon the Company unless it notifies the Bank to the contrary within 30 days of

the mailing of such statement by the Bank to the Company; provided, however,

that the failure of the Bank to record any of the foregoing items in the Loan

Account shall not limit or otherwise affect the Company's obligation to repay

the Obligations.

 

         2.5 Lockbox.

 

                  (a) The Company agrees that, upon the request of the Bank, it

shall immediately direct each of its Account debtors and other obligors to make

payments due under their Accounts, instruments and/or chattel paper directly to

a special lockbox to be under the exclusive control of the Bank. If the Company

does not issue such notice within one day after being requested to do so by the

Bank, the Bank is authorized to do so on behalf, and in the name, of the

Company.

 

                  (b) Upon the establishment of the special lockbox referred to

in Section 2.5(a), the Company authorizes and directs the Bank to deposit into a

special collateral account to be established and maintained by the Bank all

drafts, checks and cash payments received in said lockbox or otherwise received

by the Bank. All deposits in said collateral account shall constitute proceeds

of Collateral. The Bank shall apply finally collected funds on deposit in said

collateral account immediately to the Loan Account as payment of the

Obligations, in such order of application as the Bank may determine. The Company

agrees that it shall promptly deliver to the

 

 

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Bank for deposit in said c