LOAN AGREEMENT BETWEEN BANK ONE, NA AND THE BADGER METER EMPLOYEE SAVINGS AND
STOCK OWNERSHIP PLAN AND TRUST
Bank One, NA, with its main office in Chicago, Illinois (the "Bank")
and the Badger Meter Employee Savings and Stock Ownership Plan and Trust (the
"ESSOP") as established under that certain Trust Agreement effective January 1,
1991, between Badger Meter, Inc. and Xxxxxxxx & Xxxxxx Trust Company, as Trustee
(the "Trustee"), agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have the
following meanings, whether or not they are hereinafter capitalized.
1.2 "Closing Date" means the date of the closing of this agreement by and
between the Bank and the ESSOP.
1.3 "ERISA" means the Employee Retirement Income Security Act of 1974, as
1.4 "Eurodollar Loans" shall mean loans under this Agreement in the minimum
amount of $100,000, the interest rates on which are determined on the
basis of the 30, 60, 90 or 180 day LIBOR Rate. The term "LIBOR Rate"
shall mean the per annum offered rate for deposits in United States
dollars for one, two, three and six month interest periods (the
"Interest Periods") which appear on the Bloomberg electronic rate
terminals at the Bank's money center, as of 11:00 AM, London time,
each Banking Day. If the appropriate Bloomberg Rate Screen is not
accessible, the applicable LIBOR Rate will be determined by the Bank
on the basis of other electronic information and other broker's quotes
or offered rates for deposits in United States dollars. As used
herein, "Banking Day" shall mean any day Bank's money center is open
for business. LIBOR Rate quotes shall be subject to availability to
the Bank and the Bank retains the right to adjust the reported LIBOR
Rate to reflect reserve or insurance requirements which may be imposed
by any regulatory agency having jurisdiction over the Bank."
1.5 "Guarantor" means Badger Meter, Inc.
1.6 "Guarantee" means the unlimited obligation assumed by Badger Meter,
Inc. to guarantee the performance by the ESSOP of all the terms and
conditions under this loan agreement in the form of Exhibit A attached
1.7 "Interest Period" shall mean, with respect to any Eurodollar Loan,
each period commencing on the date such Eurodollar Loan is made or
converted from a Prime Rate Loan or the last day of the next preceding
Interest Period for such Loan and ending on the numerically
corresponding day in the first, second, third or sixth calendar month
thereafter, as the ESSOP may select, except that each Interest Period
which commences on the last business day of a calendar month (or on
any day for which there is no numerically corresponding day in the
subsequent calendar month; provided, that (I) if any Interest Period
would otherwise end after the Termination Date, such Interest Period
shall end on the Termination Date, and (ii) each Interest Period which
would otherwise end on a day which is not a business day shall end on
the next succeeding business day or, if such next succeeding business
day falls in the next succeeding calendar month, on the next preceding
1.8 "Loan" means the loan described in Section 2.1 of this Agreement.
1.9 "Note" means the Promissory Note in the form of Exhibit B attached
1.10 "Pledge Agreement" means the agreement in the form of Exhibit C
attached hereto by the ESSOP to pledge, as collateral for the Loan,
the Badger Meter, Inc. common stock acquired with the proceeds of a
prior loan made to finance the acquisition of that stock.
1.11 "Prime Rate" shall mean the rate announced by the Bank as its prime
rate, with such rate changing as and when the Bank announces any
change in its prime rate. The Prime Rate is not the lowest rate of
interest charged by the Bank.
1.12 "Prime Rate Loans" shall mean loans under this Agreement, the
interest rate on which are determined on the basis of the Prime Rate.
1.13 "Termination Date" shall mean June 20, 2004.
2. The Loan.
2.1 Stock Acquisition Loan. The Bank agrees to lend to the ESSOP, subject
to the terms and conditions hereof, the principal amount of $1,285,000
to be used by the ESSOP to refinance a prior loan made to finance the
acquisition of Badger Meter, Inc. common stock for the benefit of the
participants of the ESSOP. The entire principal amount and accrued
interest shall be paid in full on or before June 20,
2004. The loan shall be evidenced by the Note.
2.2 Interest. (a) The ESSOP shall have the option of designating the
outstanding balance as a Prime Rate Loan or as a Eurodollar Loan. In
the event that the ESSOP and the Bank have not agreed upon the rate and
interest period for a Eurodollar Loan, then, prior to an event of
default described in Section 6 below, the outstandings shall be deemed
to be a Prime Rate Loan. The ESSOP promises to pay to the Bank interest
on the unpaid principal amount of each loan for the period from and
including the date of such loan to, but excluding the date such loan
shall be paid in full, (i) while such loan is a Prime Rate Loan, at a
rate per annum equal to the Prime Rate (as in effect from time to
time); (ii) while such loan is a Eurodollar Loan, for each Interest
Period relating thereto, at a rate per annum equal to the LIBOR Rate
applicable to such loan for such Interest Period, plus 1.50%. The ESSOP
hereby delegates authority to select interest rates and interest
periods hereunder to the Guarantor, and the Bank may rely on any such
directions received from the Guarantor.
(b) Notwithstanding the foregoing, the ESSOP will pay to the
Bank on demand interest at the rate of two percent in excess of the
rate otherwise in effect for any principal which shall not be paid in
full when due (whether at stated maturity, by acceleration or
otherwise), for each day during the period from and including the due
date thereof to, but excluding the date the same is paid in full.
(c) The Note may be prepaid in whole or in part, at the option
of the ESSOP at any time, provided however, that the ESSOP shall give
the Bank at least one day prior written notice of any such prepayment.
Accrued interest on the amount prepaid shall also be paid on the date
of prepayment. In the event of prepayment of less than all of the
outstanding balance of such Note, such prepayment shall be in the
minimum principal amount of Five Thousand Dollars ($5,000.00) or a
multiple thereof. To the extent at the time of any prepayment there
exists both a Prime Rate Loan and a Eurodollar Loan, the prepayment
shall be applied to the Prime Rate Loan first, until there is no
outstanding principal balance thereon, and the remainder, if any,
applied to the oldest outstanding Eurodollar Loan. There shall be no
prepayment indemnity for any prepayment of a Prime Rate Loan. In the
event any Eurodollar Loan is prepaid prior to the end of the Interest
Period, the ESSOP hereby agrees to indemnify the Bank against any
funding loss or expense which the Bank may sustain or incur by reason
of the liquidation or re-employment of deposits or other funds
acquired by the Bank to fund or maintain any Eurodollar Loan as
reasonably determined by Bank.
3. Representations and Warranties. In order to induce the Bank to make the
loan, the Guarantor represents and warrants to the Bank:
3.1 Valid Existence. The ESSOP is a duly qualified employee stock ownership
plan meeting the requirements of Sections 401(a) and 4975(e)(7) of the
Internal Revenue Code and complies with the applicable requirements
thereof, and with the requirements of any other applicable state or
3.2 Execution and Delivery of Agreement, Note and Pledge Agreement. The
execution and delivery of this Agreement, the Note, and the Pledge
Agreement, and the performance by the ESSOP of its obligations
hereunder and thereunder, are within the ESSOP's general powers, have
been fully authorized by all necessary and proper action under the
terms of the applicable ESSOP Trust documents, and do not (a) conflict
with or result in a breach of any of the provisions of the applicable
Trust documents, (b) contravene any law, rule or regulation of the
State of Wisconsin, or the United States, or any order, writ, judgment,
injunction, decree, determination or award presently in effect which
affects or binds the ESSOP, (c) conflict with or result in a breach of
or default under any indenture or loan or credit agreement or any other
agreement or instrument to which the ESSOP is a party in respect of
indebtedness for money borrowed or (d) require the approval or consent
of any governmental body, agency or authority or any other person or
entity. This Agreement, the Note, and the Pledge Agreement, when
executed and delivered, will constitute the valid and binding
obligations of the ESSOP enforceable in accordance with their terms, in
each case (a) except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforceability of creditors' rights
generally, (b) subject to the availability of equitable remedies for
the enforcement of such obligations, and (c) subject to applicable laws
and equitable principles which may limit or otherwise affect the
remedies provided therein.
3.3 Use of Proceeds. The ESSOP will not use the loan proceeds for any
purpose other than to refinance the acquisition of Badger Meter, Inc.
3.4 Other Loans. The ESSOP will not enter into any other loan agreements
without the prior written consent of the Bank, which consent will not
be unreasonably withheld.
3.5 Investment Company. The ESSOP is not an "investment company" or a
company controlled by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
3.6 Litigation. There is no litigation or administrative or regulatory
proceeding pending or threatened against the ESSOP which might result
in any material adverse change in the financial condition of the ESSOP.
4. Conditions of Borrowing. The Bank's obligation to make the Loan is
subject to the satisfaction of the following conditions:
4.1 Opinion of Counse The Bank shall have received from counsel
for the ESSOP, a favorable opinion in form and substance satisfactory
to the Bank and dated as of the Closing Date as to (i) the matters
referred to in Sections 3.1, 3.2, 3.5 and, to the best of such
counsel's knowledge, 3.6 hereof; and (ii) such other matters incident
to the matters herein contemplated as the Bank may reasonably request.
4.2 Guaranty. The Bank shall have received from the Guarantor the Guaranty
and a favorable opinion from counsel for the Guarantor in form and
substance satisfactory to the Bank and dated as of the Closing Date
that (i) the Guarantor is a legally organized and validly existing
corporation under the laws of the State of Wisconsin; (ii) the
execution and delivery of the Guaranty, and the performance by the
Guarantor of its obligations under the Guaranty are within its
corporate powers, have been duly authorized by all necessary corporate
action on the part of the Guarantor, and do not (a) conflict with or
result in a breach of any of the provisions of its Articles of
Incorporation or By-Laws, (b) contravene any law, rule, or regulation
of the State of Wisconsin, or of the United States, or any order, writ,
judgment, injunction, decree, determination or award presently in
effect which affects or binds it, (c) conflict with or result in a
breach of or default under any indenture or loan or credit agreement or
any other agreement or instrument to which it is a party in respect of
indebtedness for money borrowed or (d) require the approval or consent
of any other person or entity; (iii) the Guaranty, when executed and
delivered, will constitute the valid and binding obligation of the
Guarantor enforceable in accordance with its terms, in each case (a)
except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforceability of creditors' rights generally, (b)
subject to the availability of equitable remedies for the enforcement
of such obligations and (c) subject to applicable laws and equitable
principles which may limit or otherwise affect the remedies provided,
therein; and (iv) such other matters incident to the matters herein
contemplated as the Bank may reasonably request. The Bank shall also
have received copies, certified by the Secretary or Assistant Secretary
of the Guarantor to be true and correct and in full force and effect on
the Closing Date, of (i) the Restated Articles of Incorporation and
Restated By-Laws of the Guarantor; and (ii) resolutions of the Board of
Directors of the Guarantor authorizing the issuance, execution and
delivery of the Guaranty and authorizing and directing the Guarantor to
make a stream of contribution payments to the ESSOP sufficient to
enable the ESSOP to repay the principal and interest as they come due
on the Note.
4.3 Pledge Agreement. The Bank shall have received from the ESSOP, the duly
executed Pledge Agreement in a form acceptable to the Bank.
4.4 Representations and Warranties True and Correct. The representations
and warranties contained in Section 3 hereof shall be true and correct
on and as of the Closing Date; there shall exist on the Closing Date no
conditions, event or act which would constitute a default hereunder and
no condition, event, act or omission shall have occurred which, with
the giving of notice or the passage of time, would constitute an event
of default hereunder.
4.5 Proceedings Satisfactory to Bank. All proceedings taken in connection
with the transactions contemplated by this agreement and all
instruments, authorizations and other documents applicable thereto
shall be satisfactory in form and content to the Bank and the Bank
shall have received copies of all such documents reasonably required by
5. Affirmative Covenants. The Guarantor covenants that it will, while any part
of the Note remains unpaid, unless prior written waiver is granted by
5.1 Books and Records. Keep proper, complete and accurate books of record
and account and permit any representatives of the Bank to visit and
inspect any of the books and records of the ESSOP at any reasonable
time and as often as may reasonably be desired.
5.2 Other Financial Information. Furnish to the Bank from time to time upon
request any information regarding the Guarantor's financial condition
which the Bank reasonably requests; and without request, the Guarantor
will provide annual audited financial statements in form and content
satisfactory to the Bank within 120 days of the end of each year and
management-prepared financial statements within 45 days of the end of
each of the first three quarters of each fiscal year; all financial
information provided to the Bank has been and will be accurate when
5.3 Maintenance of Valid Existence. The Guarantor agrees that the ESSOP
will maintain its valid existence and will neither dissolve nor
institute any proceedings for dissolution.
5.4 ERISA. Notice and Certificate. As soon as possible upon the occurrence
of a reportable event under ERISA and in any event within thirty (30)
days after the Guarantor becomes aware of the same, the Guarantor shall
furnish a certificate setting forth the details as to such reportable
event as well as a copy of each notice thereof which is sent to the
Department of Labor in accordance with applicable regulations.
6. Events of Default. If any one or more of the following events of default
6.1 Failure to Pay Note. The ESSOP shall default in the due and punctual
payment of any installment of principal of or interest on the Note or
any other obligation to the Bank and such default shall continue
uncured for a period of five (5) days; or
6.2 Falsity of Representations and Warranties. Any representation or
warranty made by the ESSOP or Guarantor herein or in any writing
furnished in connection with or pursuant to this Agreement shall be
false in any material respect on the date as of which made or as of
which the same is to be effective; or
6.3 Default in Other Provisions. The ESSOP or Guarantor shall default in
the performance or observance of any other agreement herein contained
and such default shall continue for a period of 30 days after written
notice to the ESSOP or Guarantor from the holder of the Note; or
6.4 Default in Other Agreements. The Guarantor shall default in the
performance of the terms of any other evidence of indebtedness for
borrowed money issued or assumed by the Guarantor aggregating more than
$100,000 or in the terms of any agreement under which such indebtedness
is issued or secured and such default is not waived by the creditor and
shall continue beyond the period of grace, if any, therein provided and
which indebtedness is, in the reasonable judgment of the Bank, material
to the Guarantor; or
6.5 Entry of Final Judgments. A final judgment is entered against the
ESSOP and such judgment shall remain unsatisfied, unbonded or unstayed
for a period of sixty (60) days after the entry thereof; or
6.6 Insolvency, Failure to Pay Debts or Appointment of Receiver, Etc. The
taking of action by the ESSOP or Guarantor to authorize such
organization to become the subject of proceedings under the Federal
Bankruptcy Code; or the execution by the ESSOP or Guarantor of a
petition to become a debtor under the Federal Bankruptcy Code; or the
filing of an involuntary petition against the ESSOP or Guarantor under
the Federal Bankruptcy Code which remains undismissed for a Period of
sixty (60) days; or the entry of an order for relief under the Federal
Bankruptcy Code against the ESSOP or Guarantor.
Then and in any such event, as to the events described in
Section 6.1 through 6.6, inclusive, the Bank may, at its option,
declare the Note to be, and the Note shall thereupon, become
immediately due and payable, together with accrued interest thereon. In
the event of default, said Note shall bear interest at a rate equal to
two percent (2%) in excess of the rate otherwise applicable.
Presentment, demand, protest and notice of acceleration, nonpayment and
dishonor in such case are hereby expressly waived.
7.1 Survival of Representations and Warranties. The ESSOP's representations
and warranties contained in this Agreement shall survive closing and
execution and delivery of the Note.
7.2 Notices. All notices provided for herein shall be sent by first class
mail and, if to the Bank, addressed to it at 000 Xxxx Xxxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxx 00000, and if to the ESSOP, addressed to Xxxxxxxx
and Ilsley Trust Company at 0000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxx 00000, attention of the officer signing this Agreement, with
a copy to the Guarantor, addressed to 0000 Xxxx Xxxxx Xxxx Xxxx, Xxxxx
Xxxx, Xxxxxxxxx, 00000 to the attention of the Vice President-Finance
or to such other address with respect to either party as such party
shall notify the other in writing; such notices shall be deemed given
7.3 Non-Recourse To ESSOP. Notwithstanding any provisions herein to the
contrary, the Bank shall have no recourse against the ESSOP except as
provided in the Pledge Agreement and as to such other assets of the
ESSOP as may be permitted by law.
7.4 Titles. The titles of sections in this Agreement are for convenience
only and do not limit or construe the meaning of any section.
7.5 Parties Bound; Waiver. The provisions of this Agreement shall inure to
the benefit of and be binding upon any successor of any of the parties
hereto and shall extend and be available to any holder of the Note;
provided that the ESSOP's rights under this Agreement are not
assignable. No delay on the part of any holder of the Note in
exercising any right, power or privilege hereunder shall operate as a
waiver thereof, and no single or partial exercise of any right, power
or privilege hereunder shall preclude other or further exercise thereof
or the exercise of any other right, power or privilege. The rights and
herein specified are cumulative and not exclusive of any rights or
remedies which the holder of a Note would otherwise have.
7.6 Governing Law. This Agreement is being delivered and is intended to
be performed in the State of Wisconsin and shall be construed and
enforced in accordance with the internal laws of that state.
7.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of
which together shall constitute but one and the same instrument.
7.8 Severability. Should any portion of this Agreement be found to be
invalid or unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall remain in full force and effect.
7.9 Entire Agreement. This Agreement along with the Note, the Pledge
Agreement and the Guaranty shall constitute the entire agreement of the
parties pertaining to the subject matter hereof and supersede all prior
or contemporaneous agreements and understandings of the parties in
IN WITNESS WHEREOF, the undersigned have executed this Loan
Agreement as of the date first set forth above.
BANK ONE, NA
By: /S/ Xxxxxxx X. Xxxx
First Vice President, Division Manager
BADGER METER EMPLOYEE SAVINGS AND STOCK
OWNERSHIP PLAN & TRUST
By: /S/ Xxxx X. Xxxxxx
(SEAL) On behalf of Xxxxxxxx and Ilsley Trust
Company, as Trustee
The undersigned Badger Meter, Inc. is signing below only to
acknowledge the representations, warranties and covenants set forth in sections
3, 5 and 7 above.
BADGER METER, INC.
By: /S/ Xxxxxxx X. Xxxxxxx
Title: President & CEO
ADDENDUM TO GUARANTY OF SPECIFIC TRANSACTION
DATED JUNE 20, 2003
Guarantor also agrees as follows:
1. DEBTOR'S FINANCIAL CONDITION. The Guarantor
warrants and represents to the Lender that (i) the Guarantor is sufficiently
knowledgeable and experienced in financial and business matters to evaluate and
understand the risks assumed in connection with the execution of this Guaranty;
(ii) the Guarantor has had the opportunity to examine the records, reports,
financial statements, and other information relating to the financial condition
of the Debtor; (iii) the Guarantor has relied solely upon investigations of the
Debtor's financial condition conducted by the Guarantor or the Guarantor's
authorized representative in deciding to execute this Guaranty; and (iv) the
Guarantor, or its authorized representative, shall continue to independently
review, monitor and investigate the financial condition of the Debtor while this
Guaranty is in effect. THE GUARANTOR SPECIFICALLY RELIEVES THE LENDER OF ANY
DUTY, OBLIGATION OR RESPONSIBILITY OF ANY NATURE WHATSOEVER TO ADVISE THE
GUARANTOR OF ANY CHANGE IN THE DEBTOR'S FINANCIAL CONDITION.
2. COLLATERAL. The Guarantor hereby authorizes
the Lender, without further notice to anyone, to charge any account of the
Guarantor for the amount of any and all Obligations due under this Guaranty.
3. ADDITIONAL COLLATERAL. If the market value
of the pledged shares of stock falls below $21.00/share, or the Lender otherwise
has a collateral coverage ratio of less than 1 to 1, then the Guarantor agrees
upon the request of the Lender to provide such additional collateral as the
Lender deems to be sufficient to cover such shortfall.
4. ACCELERATION OF OBLIGATIONS; SUCCESSORS;
MULTIPLE GUARANTORS. If the Guarantor shall become the subject of any bankruptcy
or insolvency proceedings, the Guarantor's liability hereunder to pay the
Obligations shall become immediately due and payable whether or not the
Obligations are then due and payable by the Debtor or any other guarantor. This
Guaranty shall inure to the benefit of the Lender, its successors and assigns
and of the holder and owner of any of the Obligations, and shall be binding on
heirs, executors, administrators, successors and assigns of the Guarantor.
5. NOTICE TO GUARANTOR. By its acceptance of
this Guaranty, the Lender acknowledges that it will, upon any event of default
by the Debtor, notify Guarantor of such default and unless prohibited from doing
so by any applicable law, regular or court order, make demand upon Guarantor,
before liquidating collateral pledged by the Debtor.
6. EXPENSES. In addition to the costs of
collection agreed to in the Guaranty, the Guarantor agrees to pay $3,000 of the
Lender's legal fees (including fees of in-house counsel) incurred in the
preparation of the Loan Agreement between the Debtor and the Lender and all
BADGER METER, INC.
By: /S/ Xxxxxxx X. Xxxxxxx
Title: President & CEO
$1,285,000.00 June 20, 2003
FOR VALUE RECEIVED, the undersigned borrower (the "Borrower"),
promises to pay to the order of Bank One, NA, with its main office in Chicago,
Illinois (the "Bank"), at its office in Milwaukee, Wisconsin, the principal sum
of One Million Two Hundred Eighty-five Thousand and 00/100 Dollars
($1,285,000.00), payable June 20, 2004 (the "MATURITY DATE").
Interest. The unpaid outstanding principal balance of the Note
shall bear interest at rate equal to, at Borrower's option, one or more of the
following: (a) The prime rate of interest as announced and in effect from time
to lime at the Bank, with the rate hereon changing as and when such rate changes
(such a loan a "PRIME RATE LOAN" and such a rate a "PRIME RATE"); or (b) 1.50%
per annum in excess of the LIBOR Rate (such a loan a "EURODOLLAR LOAN" and such
a rate a "LIBOR RATE").
Interest on the outstanding principal amount of the Note shall
be payable per the Loan Agreement described below, with a final payment of any
accrued interest due at the Maturity Date, or the earlier termination of the
Principal. The unpaid principal balance of this Note as may be
outstanding from time to time hereunder, may be paid in the Borrower's sole
discretion, at any time subject to the provisions of the Loan Agreement
described below, but in any event, the entire unpaid principal balance shall be
due and payable on June 20, 2004.
Interest shall be computed daily based on a 360 day year.
Principal and interest not paid when due shall bear interest from and after the
due date until paid at a rate of 2% per annum plus the rate otherwise payable
In no event will the interest rate hereunder exceed that
permitted by applicable law. If any interest or other charge is finally
determined by a court of competent jurisdiction to exceed the maximum amount
permitted by law, the interest or charge shall be reduced to the maximum
permitted by law, and the Bank may credit any excess amount previously collected
against the balance due or refund the amount to the Borrower.
Without affecting the liability of any Borrower, endorser,
surety or guarantor, the Bank may, without notice, renew or extend the time for
payment, accept partial payments, release or impair any collateral security for
the payment of this Note, or agree not to xxx any party liable on it.
This Note constitutes the Note issued under a certain Loan
Agreement dated as of June 20, 2003 between the Borrower and the Bank, to which
Agreement reference is hereby made for a statement of the terms and conditions
under which loans evidenced hereby were or may be made and a description of the
terms and conditions upon which the maturity of this Note may be accelerated,
and for a description of the collateral securing this Note.
BADGER METER EMPLOYEE SAVINGS AND STOCK
OWNERSHIP PLAN AND TRUST
By: XXXXXXXX & XXXXXX TRUST COMPANY N.A., solely as
By: /S/ Xxxx X. Xxxxxx
Name and Title: Xxxx X. Xxxxxx, Vice President
By: /S/ Xxxxxxx X. Xxxxx
Name and Title: Xxxxxxx X. Xxxxx, Vice President
Agreement made June 20, 2003, between Bank One, NA, with its
main office in Chicago, Illinois ("Bank") and Badger Meter Employee Savings and
Stock Ownership Plan and Trust ("ESSOP") as established under that certain Trust
Agreement effective January 1, 1991, by and between Badger Meter, Inc., and
Xxxxxxxx & Xxxxxx Trust Company, as Trustee (the "Trustee").
WHEREAS, the Bank is concurrently making a loan to the ESSOP
in the principal amount of $1,285,000 as evidenced by the Loan Agreement dated
June 20, 2003 (the "Loan Agreement") and the Promissory Note dated June 20, 2003
(the "Note"), and
WHEREAS, the ESSOP has delivered to the Bank 62,487 shares of
Badger Meter, Inc. common stock (the "Pledged Stock") and irrevocable stock
powers executed in blank for the same, as security for the performance of its
obligations under said Loan Agreement and Note,
NOW, THEREFORE, in consideration of the foregoing premises, it
is agreed as follows:
1. The Bank's duty with reference to the Pledged Stock shall be solely to use
reasonable care in the custody and preservation of the Pledged Stock in its
possession, which shall not include any step necessary to preserve rights
against prior parties nor the duty to send notices, perform services, or take
any action in connection with the management of the Pledged Stock.
2. Shares of the Pledged Stock shall be released as security under this Pledge
Agreement upon payment of principal and interest outstanding under the Loan
Agreement and Note, determined as follows: The number of shares to be released
by the Bank shall be: (i) the total number of shares held by the Bank
immediately prior to the release for the plan year times (ii) a fraction, the
numerator of which is the amount of principal and interest paid on the Note (and
interest on the note refinanced by this Note) for the plan year and the
denominator of which is the sum of principal and interest on the Note (and
interest on the note refinanced by this Note) paid for the plan year and the
principal and interest on the Note to be paid for all future plan years,
computed by using the interest rate in effect as of the end of the plan year. In
any event, upon the full performance by the ESSOP of its obligations under the
Loan Agreement and Note, the Bank shall release any and all Pledged Stock
remaining as security hereunder and shall redeliver same to the ESSOP.
3. In the event that the ESSOP defaults in the performance of its obligations
under the Loan Agreement and Note, the Bank shall have the following rights and
remedies under this Pledge Agreement: (a) the Bank (i) may sell any or all of
the Pledged Stock at public or private sale, by one or more contracts, in one or
more parcels, at the same or different times, for cash and/or credit, or upon
any other terms, at such places and times, and to such persons as the Bank deems
best, (ii) shall apply any cash proceeds actually received from any sale in the
order and subject to the conditions provided under Section 409.615 of the
Wisconsin Statutes, and (iii) shall pay any surplus to the ESSOP and (b) the
Bank shall have any other rights and remedies of a secured party under the
Wisconsin Uniform Commercial Code, all such rights and remedies being
cumulative, not exclusive, and enforceable alternatively, successively, or
4. The ESSOP represents and warrants that it owns the Pledged Stock free and
clear of liens, security interests, encumbrances or other restrictions of any
kind other than those created by this Pledge Agreement, and that it is
authorized to enter into this Agreement. At any time requested by the Bank, the
ESSOP shall perform such other acts and sign such other documents and
instruments as may be necessary, proper, or convenient in order to carry out the
purposes and provisions of this Pledge Agreement.
5. This Pledge Agreement shall be binding upon the parties, and their
successors and assigns.
IN WITNESS WHEREOF, the parties have signed this Pledge
Agreement as of the day and year first above written.
BADGER METER EMPLOYEE SAVINGS AND STOCK OWNERSHIP
PLAN & TRUST
By: /S/ Xxxx X. Xxxxxx, Vice President
On behalf of Xxxxxxxx and Ilsley Trust
Company, as Trustee
BANK ONE, NA
By: /S/ Xxxxxxx X. Xxxx
First Vice President, Division Manager