Exhibit 10.4

DATED   January 28, 2005

OILGEAR TOWLER LIMITED AS (1)
BORROWER

and

VENTURE FINANCE PLC AS LENDER (2)

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

PLANT & MACHINERY LOAN AGREEMENT

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

     
Hammond Suddards Edge
   
7 Devonshire Square Cutlers Gardens London EC2M 4YH DX 136546 Bishopsgate 2
   
Telephone +44 (0)20 7655 1000 Fax +44 (0)20 7655 1001
  www.hammondsuddardsedge.com

Reference /AJW2

HSE/MAR-JUN02

 

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

 

CONTENTS

             
1
  CONSTRUCTION     2    
2
  THE FACILITY     5    
3
  TERM AND DRAWDOWN     5    
4
  CONDITIONS PRECEDENT     5    
5
  INTEREST AND FEES     6    
6
  REPAYMENT     6    
7
  DEFAULT INTEREST     7    
8
  PAYMENTS     7    
9
  CHANGES IN CIRCUMSTANCES AND INCREASED COSTS     7    
10
  REPRESENTATIONS AND WARRANTIES     7    
11
  FINANCIAL INFORMATION     9    
12
  GENERAL COVENANTS     9    
13
  EVENTS OF DEFAULT     9    
14
  ASSIGNMENT AND TRANSFER     10    
15
  NOTICES     11    
16
  WAIVERS     11    
17
  INDEMNITY FOR EXPENSES     11    
18
  ILLEGALITY     12    
19
  SET-OFF     12    
20
  DEMANDS AND NOTIFICATION BINDING     12    
21
  GENERAL     12    
22
  GOVERNING LAW     13     SCHEDULE 1 PART 1     1     SCHEDULE 2 PART 2 -
SECURITY DOCUMENT     3  

i

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

 

         
DATE OF PLANT & MACHINERY LOAN AGREEMENT
    2005  

PARTIES

(1)    OILGEAR TOWLER LIMITED (Company Number 00565938) whose registered office
is Electraulic Works, Oaklands Road, Rodley, Leeds, West Yorkshire, LS13 1LG
(the “Borrower”)   (2)    VENTURE FINANCE PLC AS LENDER (Company Number 2281768)
whose registered office is at Sussex House, Perrymount Road, Haywards Heath,
West Sussex, RH16 1DN (“VF”)

WHEREAS

  (A)   VF and the Borrower are parties to an agreement for commenced on the
January 28, 2005 (the “Agree Debts”), and     (B)   VF and the Borrower are
parties to:

     a Stock Loan Agreement which commenced on the January 28, 2005 Loan
Agreement”)         (together the “VF Facility Documents”), and

  (C)   VF has agreed to make available to the Borrower a loan facility upon the
terms and subject to the conditions set out in this Agreement.

IT IS AGREED as follows:-

1   CONSTRUCTION   1.1   Definitions

In this Agreement, unless the context otherwise requires, the following words
and expressions will have the meaning set out opposite them:-

“Administration Charge” means the charge referred to in clause 5.4;

“Agreement” means this agreement and the Schedule;

“Aggregate Limit” means the amount specified in (or, if appropriate, calculated
in accordance with) paragraph 2 of Part 1 of the Schedule, or such other greater
or lesser amount as VF may notify to the Borrower from time to time, in each
case in VF’s absolute discretion;

“Availability Period” means the period detailed in paragraph 10 of Part 1 of the
Schedule;

“Base Rate” means the Base Rate set by Venture’s Bankers.

“Collateral Reporting and Monitoring Requirements”  means the reporting and
monitoring requirements of VF in relation to the Eligible Collateral from time
to time including monitoring by way of physical access to premises and access to
such Eligible

2

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

 

Collateral by VF or any of its employees servants or agents and shall for the
time being be those detailed in the Schedule;

“Debt Service Cover” means the covenant specified in paragraph 11 of Part 1 of
the Schedule.

“Default Rate” means the rate which is 4.5 per cent per annum above the Base
Rate;

“Drawdown Period” means the period of three calendar months following the date
upon which the Borrower satisfies the requirements of clause 4;

“Eligible Collateral” means such of the Borrowers undertaking property and
assets as VF may from time to time notify to the Borrower as forming part of the
Borrower’s Eligible Collateral which shall until further notice be such of the
undertaking, property and assets of the Borrower as shall be assessed in
accordance with the Eligible Collateral Formula;

“Eligible Collateral Formula” means the formula referred to in paragraph 7 of
Part 1 of the Schedule as the same may be varied from time to time (in VF’s
absolute discretion) by notice in writing to the Borrower;

“Event of Default” means any of the events specified in Clause 13;

“Facility” means the loan facility to be made available by VF to the Borrower
pursuant to this Agreement and as more particularly specified in clause 2;

“Facility Fee” means the fee referred to in clause 5.3;

“Interest Rate” means the rate specified in paragraph 5 of Part 1 of the
Schedule charged on the Loan Account Balance outstanding from day to day, which
interest shall be debited to the Loan Account upon the last Working Day of each
calendar month

“Loan” means the principal sum drawn under the Facility pursuant to Clause 3
from time to time or, as the context requires, the principal amount of such a
sum from time to time outstanding under this Agreement;

“Loan Account” means a loan account or accounts in the name of the Borrower with
VF opened in connection with the Facility;

“Loan Account Balance” means the debit balance of the Loan Account from time to
time;

“Maximum Loan Amount” means the maximum principal amount which may be drawn as a
Loan hereunder as detailed in paragraph 1 of Part 1 of the Schedule;

“Security Document” means the document listed in Part 2 of the Schedule and any
other documents for the time being securing (directly or indirectly) all or any
of the Borrower’s obligations under this Agreement and/or all or any other
obligations (present or future, actual or contingent) of the Borrower to VF and
references to any such documents shall include the same as varied or amended in
writing by the parties thereto from time to time;

“Schedule” means the schedule to this Agreement consisting of Parts 1 and 2;

“Unencumbered” means not subject to any mortgage, charge, assignment for the
purpose of security, pledge, lien, right of set-off, arrangements for retention
of title (other than in favour of the Borrower), or trust arrangement for the
purpose of, or which has the effect of granting security or any other interest
in the nature of security of any kind

3

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

 

whatsoever or any agreement, whether expressed to be conditional or otherwise,
to create any of the same;

“Venture’s Bankers” HSBC Bank Pic or such other bank as Venture may from time to
time, at its sole discretion, appoint as its bankers.

“Working Day” means a day upon which VF and clearing Banks in London generally
are open for business of the nature required for the purposes of this Agreement.

1.2   Interpretation

  (a)   Any reference in this Agreement to:-

  (i)   clause, sub-clause or Schedule shall (except where the context otherwise
requires) be construed as a reference to the relevant clause or sub-clause in or
Schedule to (and forming a part of) this Agreement;     (ii)   a person shall
include a body corporate, individual, firm or an unincorporated body of persons
(as the case may be);     (iii)   the singular shall include the plural and
vice-versa;     (iv)   any statutory provision shall be deemed to mean and to
include a reference to any modification, consolidation or re-enactment thereof
for the time being in force;     (v)   “Borrower” and “VF” shall, where the
context admits, include their respective personal representatives, successors in
title or assignees (whether immediate or derivative).     (vi)   Any reference
herein to any document, including to this Agreement includes such document as
amended, novated, supplemented, substituted, extended, assigned or replaced from
time to time and includes any document which is supplemental hereto or thereto.
    (vii)   The meaning of general words introduced by the word “other” and the
word “otherwise” shall not be limited by reference to any preceding words or
enumeration including a particular class of acts, matters or things.

  (b)   The headings in this Agreement are inserted for convenience only and
shall not affect its construction or interpretation.     (c)   Any right or
power which may be exercised or any determination which may be made hereunder by
VF may be exercised or made in the absolute and unfettered discretion of VF who
shall not be under any obligation to give reasons therefor.     (d)   Unless the
context otherwise requires, expressions defined in the Agreement for the
Purchase of Debts shall bear the same meaning herein.

4

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

 

2   THE FACILITY   2.1   The Facility shall consist of a loan drawn pursuant to
the terms of this Agreement of a maximum principal amount not exceeding the
Maximum Loan Amount.   2.2   Unless VF otherwise agrees in writing with the
Borrower, the Facility will be used by the Borrower to fund its working capital
requirements. VF shall not be bound to enquire as to, nor shall it be
responsible for, the use or application by the Borrower of all or any part of
the Facility.   3   TERM AND DRAWDOWN   3.1   Subject to Clause 4 and to the
first drawing hereunder taking place prior to the expiry of the Drawdown Period,
the Facility shall be available for drawing by the Borrower at any time within
the Availability Period. VF shall not, other than in its absolute discretion,
permit drawings to be made under this Agreement more frequently than the Drawing
Frequency detailed in paragraph 8 of Part 1 of the Schedule.   3.2   VF shall
not be obliged to permit any drawing hereunder (other than in its absolute
discretion) if following VF’s own assessment of the Borrower’s Eligible
Collateral in accordance with the Eligible Collateral Formula the drawing would
cause the Loan Account Balance to exceed the sum produced by applying such
formula to the Borrower’s Eligible Collateral. If as a consequence of such
assessment the Loan Account Balance is found to be in excess of the sum so
produced, the Borrower shall forthwith upon VF’s demand repay to VF such amount
as shall be required to extinguish such excess.   3.3   VF shall not be obliged
to permit any drawing hereunder or make any payment to the Borrower pursuant to
the Agreement for the Purchase of Debts (other than in its absolute discretion)
if following VF’s own assessment of the Borrower’s Eligible Collateral in
accordance with the Eligible Collateral Formula, and after a notional or actual
combination of all accounts of the Borrower with VF (including all actual and/or
contingent liabilities of the Borrower to VF at the relevant time) (“the Account
Balance”) the drawing or payment of such amount would cause the Account Balance
to exceed the Aggregate Limit. If as a consequence of such assessment and/or
combination it is found that the Account Balance is at that time in excess of
the Aggregate Limit the Borrower shall forthwith upon VF’s demand repay to VF
such amount as shall be required to extinguish such excess.   3.4   VF shall be
entitled from time to time and at any time to combine all and any accounts
maintained in the name of the Borrower in the books of VF, such combination
being deemed to have taken place on the happening of any Event of Default. The
Borrower will upon demand in writing from VF pay such amount as may be required
to bring the account of the Borrower within the monetary limits stated in this
Agreement.   4   CONDITIONS PRECEDENT

The Facility will only be available for drawing under Clause 3 if:-

5

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

 

  (a)   the Agreement for the Purchase of Debts has commenced and all conditions
precedent to the making of prepayments thereunder by VF have been satisfied; and
    (b)   the Stock Loan Agreement has commenced and all conditions precedent to
the making of prepayments thereunder by VF have been satisfied; and     (c)  
the Security Document duly executed by the Borrower has been received by VF
together with copy Board Minutes authorising the entry into and execution of the
same; and     (d)   there is no Event of Default and no event has occurred
which, with the lapse of time or giving of notice or both, might constitute an
Event of Default; and     (e)   the representations and warranties set out in
Clause 10 are true and accurate in all material respects; and     (f)   the
Borrower has notified VF in writing of the amount requested to be drawn by the
Borrower and full details of the account of the Borrower to which the funds are
to be remitted. The Borrower acknowledges that any notice given in accordance
with this clause 4(e) shall be irrevocable and, unless VF otherwise agrees,
shall oblige the Borrower to borrow the amount specified.

5   INTEREST AND FEES   5.1   Interest will be charged on the Loan Account
Balance at the Interest Rate and shall accrue from day to day and shall be
computed on the basis of a 365 day year and the number of days elapsed.   5.2  
The interest accrued on the Loan Account Balance from and including the date
upon which the facility is drawn shall be debited to the Loan Account monthly.
The Borrower and VF hereby agree that for administrative convenience all
interest payable in respect of the Loan Account balance and all other sums
payable by the Borrower pursuant to this Agreement may be debited by VF to the
Current Account of the Borrower maintained by VF pursuant to the Agreement for
the Purchase of Debts. VF reserves the right to require actual payment of all
interest by cheque drawn by the Client or such other form of remittance as VF
may from time to time specify.   5.3   The Borrower shall pay to VF the Facility
Fee in the amount and at the frequency stated in paragraph 3 of Part 1 of the
Schedule.   5.4   The Borrower shall pay to VF the Administration Charge in the
amount and at the frequency specified in paragraph 4 of Part 1 of the Schedule.

6   REPAYMENT

The principal amount of the Facility drawn by the Borrower shall (if not
repayable at an earlier date pursuant to the terms of this Agreement) be repaid
in accordance with the Repayment Terms set out in paragraph 9 of Part 1 of the
Schedule. Notwithstanding any other term of this Agreement the Borrower may at
any time repay the whole or any part of the Loan Account Balance from time to
time.

6

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

 

7   DEFAULT INTEREST   7.1   If the Borrower shall fail to pay any amount due
under this Agreement on its due date, the Borrower shall be liable (if VF so
requires) for interest on such amount from the date of such default until the
date of actual payment (as well as after as before judgement or demand) at the
Default Rate. The Borrower’s liability under this Clause shall be in
substitution for the liability for interest on such defaulted amount at the
Interest Rate. Such interest shall be payable on demand and, to the extent not
actually paid, shall be compounded monthly in arrears (and debited to the Loan
Account or the Current Account as referred to in clause 5.2 above) and shall be
payable before as well as after any judgement.   7.2   VF and the Borrower agree
that the Default Rate represents a genuine pre-estimate of VF’s additional
administrative and funding costs in the event of the Borrower’s failure to pay
any sum due to VF and is not a penalty.   8   PAYMENTS   8.1   The Borrower will
make all payments due under this Agreement without set-off, counterclaim or
deduction whatsoever and howsoever arising.   8.2   If the Borrower is compelled
by law to make any such deduction or witholding, the Borrower shall forthwith
pay to VF such additional amount as shall be required to ensure that VF shall
receive in aggregate the amount it would have received but for such deduction or
witholding.   9   CHANGES IN CIRCUMSTANCES AND INCREASED COSTS   9.1   If at any
time it becomes unlawful or impossible for VF to maintain or fund the whole or
any part of the Loan Account Balance VF may at any time by written notice to the
Borrower require the Borrower to repay the Loan Account Balance immediately,
together with any outstanding interest and all other sums due to VF under this
Agreement, the Agreement for the Purchase of Debts and the Security Document.  
9.2   The Borrower shall pay to VF on demand such amount as VF may from time to
time certify as being necessary to compensate it for any increase in the cost of
funding the Loan Account Balance or for any reduction in the rate of return
under this Agreement, incurred by VF as a result of compliance with any official
directives, requirements or requests of any regulatory authority (whether or not
having the force of law) or any law or regulation (including, without
limitation, those relating to reserve assets, special deposits, taxes, capital
adequacy and/or asset ratios).   10   REPRESENTATIONS AND WARRANTIES

The Borrower hereby represents and warrants that:-

10.1   it has the power to enter into and perform its obligations under this
Agreement and the VF Facility Documents and the Security Document and to borrow
thereunder and has taken all necessary action (corporate or otherwise) to
authorise the unconditional entry into and performance of its obligations under
this Agreement and the VF Facility Documents and the Security Document and the
utilisation of the Facility upon the terms and conditions contained herein and

7

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

 

      unconditionally to authorise the execution, delivery and performance of
this Agreement and the VF Facility Documents and the Security Document in
accordance with their respective terms;

10.2   all authorisations, approvals, consents, licences, exemptions, filings,
registrations and other procedures required in connection with the entry into,
performance and validity of this Agreement, the utilisation of the Facility and
the execution of the Security Document have been obtained and are in full force
and effect;   10.3   this Agreement and the VF Facility Documents and the
Security Document constitute legal, valid, binding and enforceable obligations
of the Borrower;   10.4   the entry into and performance of this Agreement and
the VF Facility Documents and the Security Document and the transactions
contemplated hereby and thereby do not and will not conflict with (i) any law or
regulation or any official or judicial order, or (ii) the Memorandum or Articles
of Association of the Borrower; or (iii) any agreement or document to which the
Borrower is a party or which is binding upon the Borrower or its assets;  
10.5   the financial and other business information and documentation furnished
by the Borrower to VF pursuant to this Agreement;

  (a)   is and was (or shall be) when delivered true and accurate and does not
contain any misstatement or omit any material fact and     (b)   there has been
no material adverse change in the Borrower’s business, assets, conditions and
operation since the delivery of such information to VF;

10.6   save as notified in writing to VF prior to the date of this Agreement all
of the Borrower’s assets are Unencumbered save for the security granted or to be
granted pursuant to the Security Document;   10.7   save as disclosed to VF in
writing prior to the date of this Agreement, no litigation, arbitration or
administrative proceeding or claim exists which might reasonably be expected to
have by itself or together with any other such proceedings or claims either:

  (a)   a material adverse effect on the business, assets or condition of the
Borrower; or     (b)   a material adverse effect on the ability of the Borrower
to observe or perform its obligations under this Agreement or the Security
Document is current or pending or, to the best of the knowledge of the Borrower,
threatened against it.

The representations and warranties set out in this Clause 10 shall be deemed to
be repeated on each day that any amount is or may be outstanding hereunder with
reference to the facts and circumstances then subsisting as if made at each such
time.

8

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

 

11   FINANCIAL INFORMATION

VF reserves the right during the term of the Facility to require the Borrower to
provide VF with such financial information about the Borrower as VF may from
time to time reasonably require.

12     GENERAL COVENANTS

During the time of the Facility the Borrower shall:-

12.1   not without VF’s prior written consent:-

  (a)   create or permit to subsist any mortgage, charge or other Encumbrance
over any of its assets (except pursuant to the Security Document); or     (b)  
make any loans or otherwise make credit (other than normal trade credit)
available to any person; or     (c)   by one or a series of transactions,
whether related or not, sell or otherwise dispose of all or any material part of
its stock or assets (except in the normal course of its business).

12.2   throughout the duration of this Agreement comply at all times with all
provisions contained within the VF Facility Documents and the Security Document,
and shall provide to VF all such information and physical access to premises
owned or under the control of the Borrower as VF may reasonably require and the
Borrower hereby grants an irrevocable licence to VF for VF (and any of its
employees servants or agents) to enter upon any premises owned or under the
control or authority of the Borrower at any time during normal business hours
for the purposes of this Agreement, for confirming and ensuring the compliance
by the Borrower with the terms hereof, and for the purposes of VF’s assessment
and monitoring from time to time as it may require of the location state nature
and value of any Eligible Collateral at that time;   12.3   comply with all the
Collateral Reporting and Monitoring Requirements of VF as detailed in paragraph
6 of Part 1 of the Schedule or as VF may require and may notify to the Borrower
from time to time;   12.4   pay all sums due to VF hereunder or otherwise on the
due date for payment thereof;   12.5   promptly notify VF if any Event of
Default arises under Clause 13 and of anything which might with the passage of
time give rise to an Event of Default.   13   EVENTS OF DEFAULT   13.1   In the
event that:-

  (a)   the Borrower fails to pay on the due date (or within 2 Working Days of
such date where the failure to pay is due to an error by the sending or
receiving bank in the transfer of funds) any amount due under this Agreement or
any other agreement between the Borrower and VF; or

9

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

 

  (b)   the Borrower fails to perform any other of its respective obligations
under this Agreement or any other agreement between VF and the Borrower; or    
(c)   any representation, warranty or statement made under or in connection with
this Agreement and/or the VF Facility Documents and and/or the Security Document
is or proves to be untrue in any material respect on the date as of which it was
made or deemed to be made or repeated; or     (d)   the Agreement for the
Purchase of Debts is terminated (or is subject to notice of termination served
by the Borrower on VF) or any event occurs entitling VF to terminate the
Agreement for the Purchase of Debts and/or the VF Facility Documents and
(whether or not such right is exercised); or     (e)   it becomes impossible or
unlawful:-

  (i)   for the Borrower to perform any of its respective obligations contained
in this Agreement or the VF Facility Documents or the Security Document or any
of them; or     (ii)   for VF to exercise any of its rights under this Agreement
and/or the VF Facility Documents and/or the Security Document; or

  (f)   this Agreement and/or the VF Facility Documents and the Security
Document do not come into or cease to be in full force and effect or is/are not
for any reason valid and binding upon and enforceable in all respects against
the Borrower or VF is of the reasonable opinion that any security conferred
thereby is or may be in jeopardy; or     (g)   VF is of the reasonable opinion
that there has been a material adverse change in the Borrower’s trading or
financial position or condition; or     (h)   anything is done or permitted or
omitted to be done by the Borrower which VF reasonably believes may materially
impair the security created by the Security Document and/or prejudice or detract
from the Borrower’s ability to perform the obligations contained in this
Agreement and the Security Document or any of them; or     (i)   VF is not
furnished with all information required to be delivered to it at the time
required,

then, in any such event VF may by notice in writing terminate the Facility and
declare the Loan Account Balance and any other amounts due hereunder immediately
due and payable, whereupon the Borrower will immediately comply with such demand
by repaying the Loan Account Balance together with all outstanding interest and
any other amounts due under this Agreement.

14   ASSIGNMENT AND TRANSFER   14.1   The Borrower may not transfer or assign
any of its rights under this Agreement and/or the VF Facility Documents and/or
the Security Document.

10

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

 

14.2   VF may, without notice and at any time, transfer or assign all or any
part of this Agreement and/or the Facility and/or the Security Document and the
Borrower hereby irrevocably consents to any such transfer or assignment (and the
disclosure by VF to a transferee or assignee of any information about the
Borrower and the Facility as VF may consider appropriate).   15   NOTICES

Any notice from one party to another hereunder shall be sent to the addressee
and be deemed delivered in accordance with the terms of the Agreement for the
Purchase of Debts.

16   WAIVERS

No failure or delay by VF in exercising any right, power or privilege under this
Agreement and/or the Security Document or any of them shall operate as a waiver
thereof nor will any single or partial exercise of any right, power or privilege
preclude any further exercise thereof or prejudice any other or further exercise
by VF of any of its rights or remedies under this Agreement and/or the Security
Document. Such rights and remedies are cumulative and not exclusive of any right
or remedy provided by law.

17   INDEMNITY FOR EXPENSES

17.1   The Borrower shall pay to VF on demand on a full indemnity basis whether
or not there is a drawing under the Facility:-

  (a)   all funding breakage costs and/or costs in relation to arrangements
incurred by VF in connection with the funding of the Loan Account Balance;    
(b)   any stamp documentary registration and other similar duties or taxes in
connection with this Agreement and/or the Security Document;     (c)   all
reasonably and properly incurred costs and expenses incurred in connection with
the negotiation or enforcement of this Agreement and/or the Security Document
(including reasonably and properly incurred legal fees, charges, disbursements,
survey and valuation fees, and value added tax), and     (d)   the Facility Fee
due upon delivery of this Agreement to VF,

      and if the Borrower shall fail to pay when due any of the above amounts VF
is entitled to debit such amounts either to the Loan Account or any other
account(s) of the Borrower with VF.

17.2   The Borrower shall also indemnify VF against any loss or expense incurred
by it (including all additional out of pocket expenses (of whatsoever nature and
howsoever arising) and the cost of all additional management time and effort
expended by VF in protecting or enforcing VF’s rights and interests hereunder)as
a consequence of any failure by the Borrower to pay any sum due to VF when
payable. For the purposes of calculating the cost of such additional management
time and effort VF shall apportion the salary costs of its personnel involved on
a pro rata basis according to the time spent by such personnel in managing the

11

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

 

    Borrower’s account taking account only of such time as would not have been
spent by such personnel had such failure to pay not occurred.

18   ILLEGALITY

If any of the provisions of this Agreement and/or the Security Document become
invalid, illegal or unenforceable in any respect, under any law, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired.

19   SET-OFF

In addition to any right of set-off or other similar right to which VF may be
entitled in law, VF may at any time and without notice to the Borrower combine
and consolidate all or any of the accounts between the Borrower and VF and/or
set-off any moneys and in any currency whatsoever, which VF may at any time hold
for the account of the Borrower, against any liabilities whatsoever which may be
due or accruing due to VF from the Borrower.

20   DEMANDS AND NOTIFICATION BINDING

Any demand notification or certificate given by VF in writing and signed by a
duly authorised officer of VF specifying any rate of interest or any amounts due
and payable under or in connection with any provision of this Agreement and/or
the Security Document or any of them shall (in the absence of manifest error or
error in law) be conclusive and binding upon the Borrower and in any proceedings
against the Borrower shall be conclusive evidence of such rate of interest or
amounts so due and payable.

21   GENERAL   21.1   The contents of any report (whether written or oral)
prepared by or on behalf of VF for the purposes of VF considering whether or not
to permit any drawing under or to continue the Facility shall remain
confidential and shall not be available to the Borrower for any reason or
purpose (save for any requirement of law) in whole or in part and whether in
original or copy form.   21.2   VF may in its absolute discretion set-off or
reserve against any monies due to the Borrower by VF the amount of any and/or
all actual and/or contingent liability of the Borrower to VF at any time and
from time to time howsoever arising (and whether pursuant to this Agreement or
otherwise) upon or following the occurrence of an Event of Default or in the
event of the Aggregate Limit being exceeded for whatsoever reason.   21.3   VF
may rely and act upon any instruction or communication received or purportedly
received from or on behalf of the Borrower by facsimile or telex transmission
notwithstanding that no hard original copy of such instruction or communication
has been or is received by VF before so relying or acting, provided that any
such instruction or communication is purportedly from or transmitted under the
direction of an authorised signatory of the Borrower, and the Borrower hereby
agrees to indemnify VF and keep VF indemnified in respect of all losses, costs,
damages, expenses, interest or other liability incurred or suffered by VF by
reason of so relying and/or acting.

12

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

 

22   GOVERNING LAW

This Agreement shall be governed by and construed in accordance with English Law
and the Borrower hereby submits to the exclusive jurisdiction of the English
Courts.

13

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

 

SCHEDULE 1

Part 1

1   Maximum Loan Amount:- £250,000 (Pounds Sterling Two Hundred and Fifty
Thousand) (clauses 1.1 and 2.1)   2   Aggregate Limit:- £2,500,000 (Pounds
Sterling Two Million Five Hundred Thousand) including the £2,000,000 (Pounds
Sterling Two Million) Invoice Discounting Facility, the £250,000 (Pounds
Sterling Two Hundred and Fifty) Plant & Machinery Loan and the £250,000 (Pounds
Sterling Two Hundred and Fifty Thousand) Stock Loan. (clauses 1.1, 3.3 and 21.2)
  3   Facility Fee: There will be an Arrangement Fee of 1.0% of the facility
limit, plus VAT at the rate applicable payable in advance. Upon termination of
the Agreement for the Purchase of Debts any outstanding balance will be fully
repayable. (clauses 1.1, 5.3 and 17.1(d) )   4   Administration Charge: N/A
(clause 5.4)   5   Interest Rate: 3.0% above the Base Rate from time to time of
Venture’s Bankers for the time being in force. (clauses 1.1,5.1 and 7.1)   6  
Collateral Reporting and Monitoring Requirements:- (clauses 1.1 and 12(3) )  
6.1   Fixed Assets - Venture will require an annual valuation of any Fixed
Assets detailed within the Eligible Collateral Formula to be conducted by a
valuer acceptable to Venture, the cost of which is to be met by the Client.  
6.2   Eligible Collateral Audits - per quarter annum following commencement of
this Deed.   6.3   Venture will require to be named as First Loss Payee and
joint insured under the terms of any plant & machinery insurance policies held
by the Client. Venture will require copy insurance policies confirming amounts
and terms of cover.   7   Eligible Collateral Formula: (clauses 1.1,3.2 and 3.3)
      The Collateral Formula for the Plant & Machinery Facility will be Eligible
Unencumbered Plant & Machinery as valued on a Ex-situ Market Value assuming a
120 day marketing period x 80% subject to a Limit of £250,000 (Pounds Sterling
Two Hundred and Fifty Thousand).       In the event that any item of plant and
machinery charged to Venture is sold, then provided Venture’s prior written
consent is obtained the sale of the item will trigger a repayment of an
equivalent sum against the facility.       Venture will require an acceptable
waiver from any Landlord or Leaseholder where any plant & machinery comprising
collateral is located.

1

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

 

8   Drawing Frequency (clause 3.1)       The facility must be drawn in full by
the Borrower upon the date of this Agreement   9   Repayment Terms (clause 6.1)
      Venture will require that the Plant & Machinery Loan is repaid by way of
35 monthly payments of £7,000 (Pounds Sterling Seven Thousand) commencing
1 month after the commencement of this facility and then a final payment £5,000
(Pounds Sterling Five Thousand) 36 months after commencement of the facility.  
10.   Availability Period (clause 3.1       The period commencing on the date of
this Agreement and terminating on the 3rd anniversary of the date hereof.  
11.   Venture requires that the Debt Service Cover (measured as the ratio of
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) minus
non-financed capital expenditure to total interest cost (net of any interest
received) and scheduled debt repayments) does not fall below 1.5 times when
measured monthly on a rolling three month basis.

2

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

 

SCHEDULE 2

Part 2 – Security Document

An all assets Debenture in such form as VF may require constituting certain
fixed charges and a floating charge over whole of the Borrower’s undertaking and
assets.

3

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

 

IN WITNESS of which the parties have signed this agreement on the date set out
above.

SIGNED AND DELIVERED AS A DEED

By OILGEAR TOWLER LIMITED

/s/ A. Normington

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

a Director

/s/ W. D. Whitehead

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

*director/company secretary

EXECUTED AS A DEED

By /s/ David Richard Kelsey

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

as Attorney for VENTURE FINANCE PLC

in the presence of:

/s/ Paul Apps

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

4