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FORM 10-Q 6/30/01
EXHIBIT 4.2
AMENDMENT NO. 10 TO LOAN AGREEMENT
This Amendment No. 10 to an Amended and Restated Loan Agreement dated
as of June 17, 1996, subsequently amended (the "Loan Agreement"), between The
Oilgear Company ("Company") and M&I ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Bank ("M&I").
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 expressly acknowledged, it is hereby agreed
that:
ARTICLE I - DEFINITIONS
When used herein, the following terms shall have the meanings
specified:
1. Amendment. "Amendment shall mean this Amendment No. 10 to Loan
Agreement.
2. Loan Agreement. "Loan Agreement" shall mean the Loan Agreement between
M&I and the Company, dated as of September 28, 1990, as Amended and
Restated on June 17, 1996, and subsequently amended.
3. Other Terms. The other capitalized terms used in this Amendment shall
have the definitions specified in the Loan Agreement.
ARTICLE II - AMENDMENTS
The Loan Agreement is deemed amended as of the date hereof as follows:
4. Article I - Definitions. "Commitment" The definition of "Commitment" is
hereby amended and restated in its entirety to read as follows:
Commitment. "Commitment" shall mean (i) the commitment of M&I to make
Revolving Credit Loans to the Company under the Loan Agreement up to
the maximum principal amount of Fourteen Million and 00/100 Dollars
($14,000,000.00) 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; and, (ii) the commitment of M&I to make Revolving Credit
Loans to the Company under the Loan Agreement up to the maximum
principal amount of the Six Million and 00/100 Dollars ($6,000,000.00)
through the earlier of April 30, 2002.
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5. Article I - Definitions. "Commitment Termination Date." The definition
of "Commitment Termination Date" is hereby amended and restated in its
entirety to read as follows:
"Commitment Termination Date". "Commitment Termination Date" shall mean
the earlier of (a) April 30, 2004, or the date on which the Commitment
is terminated pursuant to Section 2.13, 2.18 or 7.1 of this Loan
Agreement for Commitment in the amount of $14,000,000.00, and (b) April
30, 2002, or the date on which the Commitment is terminated pursuant to
Section 2.13, 2.18 or 7.1 of this Loan Agreement for Commitment in the
amount of $6,000,000.00.
6. Article I - Definitions. "Consolidated Current Ratio." This section of
the Loan Agreement is hereby deleted in its entirety.
7. Article I - Definitions. "Pound Sterling Commitment Termination Date".
The date contained in line two of this Section of the Loan Agreement is
amended by deleting "April 30, 2003" and inserting in its place "April
30, 2004".
8. Article - Definitions. "Revolving Credit Note". The definition of
"Revolving Credit Note" is hereby amended and restated in its entirety
to read as follows:
"Revolving Credit Notes." "Revolving Credit Notes" shall mean the
following promissory notes (a) promissory note dated July 31, 1992, as
amended and restated on July 15, 1994, on April 30, 1995, on June 17,
1996, on April 30, 1999, on June 4, 1999, on June 20, 2000, and May 1,
2001 from the Company to M&I, together with all extensions, renewals,
amendments, modifications and refinancings thereof and, (b) promissory
note dated June 20, 2000, as amended and restated on April 30, 2001,
from the Company to M&I, together will all extensions, renewals,
amendments, modifications and refinancings thereof.
9. Article II - Section 2.1 Revolving Credit Loans. Subsection (c). This
section of the Agreement is deleted and restated in its entirety as
follows:
(c) Interest Rate shall be determined based on the Company's
Funded Debt to EBITDA Ratio as follows:
Funded Debt/ Spread over
EBITDA LIBOR
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less than or equal to 1.50:1.0 100 b.p.
less than or equal to 2:00:1.0 but greater than 1.5 to 1.0 125 b.p.
less than or equal to 2.50:1.0 but greater than 2.0 to 1.0 150 b.p.
less than or equal to 3.00:1.0 but greater than 2.5 to 1.0 175 b.p.
less than or equal to 3.50:1.0 but greater than 3.0 to 1.0 200 b.p.
greater than 3.50:1.0 235 b.p.
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In the event that the Funded Debt to EBITDA Ratio of the
Company at the end of any fiscal quarter shall change so as to result
in a different spread over LIBOR, as defined in the Agreement, the new
spread for purposes of determining the applicable interest rate for any
Revolving Credit Loans shall change effective as of the first business
day of the calendar month following M&I's receipt of the Company's
quarterly financial statements for the preceding fiscal quarter showing
a Funded Debt to EBITDA Ratio resulting in a change in the spread. The
applicable interest spread will be increased or decreased, as the case
may be, as demonstrated by such financial statements, effective as of
such first business day of the calendar month.
"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 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.
"EBITDA" shall mean, for the four most recently completed
fiscal quarters, net income for such period plus all amounts deducted
in arriving at such net income in respect of (i) all charges for
depreciation of fixed assets, (ii) charges for amortization of
intangibles, (iii) all interest expense with respect to all
indebtedness, and (iv) all taxes imposed on or measured by income or
excess profits (whether deferred or paid).
10. Article VI - Section 6.5 Consolidated Current Ratio. This section of
the Loan Agreement is hereby deleted in its entirety.
11. Article VI - Section 6.6 Consolidated Debt to Worth Ratio. This section
of the Loan Agreement is amended and restated in its entirety as
follows:
6.6 Consolidated Debt to Worth Ratio. Maintain at all times a
Consolidated Debt to Worth Ratio of not more than 2.00:1.00.
12. Article VI - Section 6.7 Consolidated Tangible Net Worth. This section
of the Loan Agreement is restated in its entirety as follows:
6.7 Consolidated Tangible Net Worth. Maintain at all times a
Consolidated Tangible Net Worth of at least $27,000,000.00 at April 30,
2001 through
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December 30, 2001 which Consolidated Tangible Net Worth requirement
shall increase annually on December 31 of each year, commencing
December 31, 2001 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.
13. Article VI - Section 6.12 Funded Debt to EBITDA. This section is hereby
added to the Loan Agreement as follows:
6.12 Funded Debt to EBITDA. Maintain at all times a Funded Debt to
EBITDA Ratio of not greater than 4.25, to be tested quarterly on a
combined basis.
ARTICLE III - REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to M&I that:
14. Loan Agreement. All of the representations and warranties made by the
Company in the Loan Agreement are true and correct on the date of this
Agreement. No Default or Event of Default under the Loan Agreement has
occurred and is continuing as of the date of this Amendment.
15. Authorization; Enforceability. The making, execution and delivery of
this Amendment, the Revolving Credit Note and the Pound Sterling Note
and performance of and compliance with the terms of the Loan Agreement
as amended, have been duly authorized by all necessary corporate action
by the Company. This Amendment the Revolving Credit Note and the Pound
Sterling Note are valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms.
16. Absence of Conflicting Obligations. The making, execution and delivery
of this Amendment, and performance and compliance with the terms of the
Loan Agreement as amended, do not violate any presently existing
provision of law or the Articles of Incorporation or Bylaws of the
Company or any agreement to which the Company is a party or by which it
is bound.
ARTICLE IV - MISCELLANEOUS
17. Continuance of Loan Agreement, the Notes and the Security Agreement.
Except as specifically amended by this Amendment, the Loan Agreement,
the Notes and the Security Agreement shall remain in full force and
effect.
18. Survival. All agreements, representations and warranties made in this
Amendment or in any documents delivered pursuant to this Amendment
shall survive the execution of this Amendment and the delivery of any
such document.
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19. Governing Law. This Amendment and the other documents issued pursuant
to this Amendment shall be governed by, and construed and interpreted
in accordance with, the laws of the State of Wisconsin applicable to
contracts made and wholly performed within such state.
20. Counterparts; Headings. This Amendment 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.
Article and Section headings in the Amendment are inserted for
convenience of reference only and shall not constitute a part hereof.
21. Severability. Any provision of this Amendment 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 of this Amendment or
affecting the validity or enforceability of such provision in any other
jurisdiction.
In witness whereof, the parties hereto have executed this Amendment No.
10 to Loan Agreement as of this 1st day of May, 2001.
M&I ▇▇▇▇▇▇▇▇ & Ilsley Bank (SEAL) The Oilgear Company (SEAL)
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇.▇. ▇▇▇▇▇
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Title: Vice President Title: Vice President, CFO and
Secretary
By: /s/ ▇▇▇▇ ▇▇▇▇▇
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Title: Senior Vice President
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