<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended APRIL 30, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 1-5190
VARITY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 22-3091314
- - ---------------------------- ---------------------------
(State or other jurisdiction (IRS Employer
of Incorporation) Identification No.)
672 DELAWARE AVENUE, BUFFALO, NEW YORK 14209
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Telephone number including area code: (716) 888-8000
- - --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
--- ---
THE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AS OF MAY 16, 1994 WAS
43,966,662 SHARES.
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Exhibit index appears on page 15.
<PAGE>
VARITY CORPORATION
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION: PAGE
<S> <C> <C>
Item 1. Financial Statements
Consolidated Statements of Operations.................. 3
Consolidated Balance Sheets............................ 4
Consolidated Statements of Cash Flows.................. 5
Notes to Consolidated Financial Statements............. 6
Item 2. Management's Discussion and Analysis................... 9
PART II. OTHER INFORMATION:
Item 1. - Legal Proceedings.................................... 13
Item 2. - Changes in Registered Securities..................... 13
Item 3. - Defaults upon Senior Securities...................... 13
Item 4. - Submission of Matters to a Vote of Security Holders.. 13
Item 5. - Other Information.................................... 13
Item 6.(a) - Exhibits............................................. 13
Item 6.(b) - Reports on Form 8-K.................................. 13
SIGNATURES............................................................. 14
</TABLE>
UNLESS OTHERWISE INDICATED REFERENCES TO "COMPANY" MEAN VARITY CORPORATION AND
ITS SUBSIDIARIES AND REFERENCES TO "FISCAL" MEAN THE COMPANY'S YEAR ENDED
JANUARY 31 (E.G. FISCAL 1994 REPRESENTS THE PERIOD FEBRUARY 1, 1994 TO JANUARY
31, 1995).
Page 2
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
VARITY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED APRIL 30,
(Unaudited)
(Dollars in millions except per share amounts)
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Total sales and revenues $ 505.8 $ 455.6
---------- ----------
Expenses:
Cost of goods sold 417.0 377.4
Marketing, general and administration 38.6 40.3
Engineering and product development 20.5 14.3
Interest, net 5.9 8.6
Exchange (gains) losses (1.6) 0.4
Other income, net (0.8) -
---------- ----------
479.6 441.0
---------- ----------
Income before income taxes, earnings of associated
companies, discontinued operation and cumulative
effect of changes in accounting principles 26.2 14.6
Income tax provision (4.6) (2.3)
---------- ----------
Income before earnings of associated companies,
discontinued operation and cumulative effect
of changes in accounting principles 21.6 12.3
Equity in earnings of associated companies 3.4 2.8
---------- ----------
Income before discontinued operation and cumulative
effect of changes in accounting principles 25.0 15.1
Earnings (loss) from discontinued operation (Note 2) 4.4 (4.1)
---------- ----------
Income before cumulative effect of changes
in accounting principles 29.4 11.0
Cumulative effect of changes in accounting principles - (146.1)
---------- ----------
Net income (loss) $ 29.4 $ (135.1)
========== ==========
Income (loss) attributable to common stockholders $ 28.8 $ (139.7)
Earnings (loss) per common share:
Before discontinued operation and cumulative
effect of changes in accounting principles $ 0.55 $ 0.33
Discontinued operation 0.10 (0.13)
Cumulative effect of changes in accounting
principles - (4.70)
---------- ----------
Net income (loss) $ 0.65 $ (4.50)
========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 3
<PAGE>
VARITY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in millions)
<TABLE>
<CAPTION>
April 30, January 31,
1994 1994
--------- -----------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 58.7 $ 51.2
Marketable securities 54.2 58.0
Receivables 342.9 329.3
Inventories (Note 3(a)) 140.6 127.8
Prepaid expenses and other 18.3 21.2
Net assets of discontinued operation (Note 2) 175.5 197.0
--------- ---------
Total current assets 790.2 784.5
Investments in associated and other companies 97.7 116.3
Fixed assets, net (Note 3(b)) 560.6 522.2
Other assets and intangibles 336.6 336.6
--------- ---------
$1,785.1 $1,759.6
========= =========
Liabilities
Current liabilities:
Notes payable $ 57.5 $ 68.0
Current portion of long-term debt 5.4 5.6
Accounts payable and accrued liabilities
(Note 3(c)) 507.8 490.1
--------- ---------
Total current liabilities 570.7 563.7
--------- ---------
Non-current liabilities:
Long-term debt 178.3 185.5
Other long-term liabilities 371.3 379.7
--------- ---------
Total non-current liabilities 549.6 565.2
--------- ---------
Stockholders' equity (Note 4):
Preferred stock 6.8 6.8
Common stock 637.6 637.4
Contributed surplus 656.3 656.3
Deficit (532.5) (561.3)
Foreign currency translation adjustment (73.7) (79.8)
Pension liability adjustment (28.5) (30.5)
Unrealized gains (losses) on marketable securities (1.2) 1.8
--------- ---------
Total stockholders' equity 664.8 630.7
--------- ---------
$1,785.1 $1,759.6
========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 4
<PAGE>
VARITY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED APRIL 30,
(Unaudited)
(Dollars in millions)
<TABLE>
<CAPTION>
1994 1993
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 29.4 $ (135.1)
Adjustments to reconcile net income (loss) to cash
provided (used) by operating activities:
Depreciation and amortization 18.7 18.2
Gain on sales of fixed assets (0.7) -
Deferred income taxes 1.1 0.8
Equity in earnings of associated companies in excess
of dividends received (3.3) (2.8)
Cumulative effect of changes in accounting principles - 146.1
Changes in:
Receivables (13.1) (26.9)
Inventories (11.3) (9.1)
Prepaid expenses and other 0.5 3.4
Accounts payable and accrued liabilities 15.9 (17.5)
Other long-term liabilities (8.3) (0.9)
Net assets of discontinued operation 26.9 12.1
----------- ----------
Cash provided (used) by operating activities 55.8 (11.7)
----------- ----------
Cash flows from investing activities:
Purchases of marketable securities (8.0) (16.2)
Proceeds from sales of marketable securities 8.8 8.4
Additions to fixed assets (52.7) (18.4)
Proceeds from sales of fixed assets 3.0 6.6
Proceeds from sales of businesses 23.2 33.6
(Additions to) reductions in other assets and intangibles (3.5) 2.4
Other - (1.5)
----------- ----------
Cash provided (used) by investing activities (29.2) 14.9
----------- ----------
Cash flows from financing activities:
Proceeds from bank borrowings 19.6 18.0
Repayments of bank borrowings (30.9) (25.6)
Proceeds from long-term debt 49.0 10.6
Repayments of long-term debt (57.0) (38.6)
Exercise of stock options 0.2 1.6
Dividends paid (0.6) (4.6)
----------- ----------
Cash used by financing activities (19.7) (38.6)
----------- ----------
Effect of foreign currency translation on
cash and cash equivalents 0.6 2.2
----------- ----------
Increase (decrease) in cash and cash equivalents
during the period 7.5 (33.2)
Cash and cash equivalents at beginning of period 51.2 111.4
----------- ----------
Cash and cash equivalents at end of period $ 58.7 $ 78.2
=========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 5
<PAGE>
VARITY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended April 30, 1994 and 1993
(Unaudited)
(Dollars in millions unless otherwise stated)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
by management and in the opinion of management contain all adjustments,
consisting of normal recurring adjustments, necessary to present fairly the
financial position of the Company as of April 30, 1994 and January 31, 1994, and
the results of its operations for the three months ended April 30, 1994 and 1993
and cash flows for each of the three month periods ended April 30, 1994 and
1993. Certain prior period amounts have been reclassified to conform with the
current period's presentation. The consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
included in the Company's Form 10-K for the fiscal year ended January 31, 1994.
Results for interim periods are not necessarily indicative of those to be
expected for the year.
2. DISCONTINUED OPERATION
In April 1994, the Company agreed to sell its worldwide Massey Ferguson farm
machinery business to AGCO Corporation for $310 million in cash and 500,000
shares of AGCO common stock. The transaction is expected to be completed in the
second quarter, at which time the Company will recognize a gain on the
transaction currently estimated to range from $15 to $30 million, which includes
the realization of deferred foreign exchange losses, currently reported in the
accompanying consolidated balance sheets as a reduction in stockholders' equity.
The transaction excludes cash, indebtedness and certain liabilities, primarily
pertaining to pension and retiree medical benefits for all former North American
Massey Ferguson employees, for which the Company will continue to be
responsible. As a result of the aforementioned plan, the farm equipment segment
has been presented as a discontinued operation in the accompanying financial
statements. Prior year financial statements have been reclassified to conform
to the current year presentation.
The operating results of the discontinued operation are as follows:
<TABLE>
<CAPTION>
Three Months Ended
April 30,
--------------------
1994 1993
--------- ---------
<S> <C> <C>
Sales and revenues $253.1 $189.4
====== ======
Income (loss) before income taxes and
cumulative effect of changes in
accounting principles $ 5.0 $ (3.9)
Income tax provision (.6) (.2)
------ ------
Income (loss) before cumulative
effect of changes in accounting
principles $ 4.4 $ (4.1)
====== ======
</TABLE>
Page 6
<PAGE>
A summary of the assets and liabilities of the discontinued operation is as
follows:
<TABLE>
<CAPTION>
April 30, January 31,
1994 1994
--------- -----------
<S> <C> <C>
Current assets $394.0 $356.5
Noncurrent assets 117.7 109.3
------ ------
511.7 465.8
------ ------
Current liabilities 329.6 262.1
Noncurrent liabilities 6.6 6.7
------ ------
336.2 268.8
------ ------
Net assets of discontinued operation $175.5 $197.0
====== ======
</TABLE>
3. OTHER INFORMATION
(a) Inventories
The major classes of inventory are as follows:
<TABLE>
<CAPTION>
April 30, January 31,
1994 1994
--------- -----------
<S> <C> <C>
Raw materials and work in process $ 86.8 $ 66.0
Finished goods 53.8 61.8
------ ------
$140.6 $127.8
====== ======
(b) Fixed assets, net
</TABLE>
Fixed assets are stated net of accumulated depreciation and amortization (April
30, 1994 - $324.8 million and January 31, 1994 - $312.9 million).
(c) Accounts payable and accrued liabilities
A summary of accounts payable and accrued liabilities follows:
<TABLE>
<CAPTION>
April 30, January 31,
1994 1994
--------- -----------
<S> <C> <C>
Accounts payable $297.7 $279.4
Accrued liabilities 210.1 210.7
------ ------
$507.8 $490.1
====== ======
</TABLE>
(d) Supplementary Cash Flows Information
Cash payments by the Company for interest during the three months ended April
30, 1994 and 1993 were $1.7 million and $6.8 million, respectively.
Cash payments for income taxes during the three months ended April 30, 1994 and
1993 were $0.7 million and $0.4 million, respectively.
Page 7
<PAGE>
4. STOCKHOLDERS' EQUITY
The following table summarizes changes in stockholders' equity that occurred
during the three months ended April 30, 1994:
<TABLE>
<CAPTION>
Thousands of
shares
outstanding Equity (Dollars in millions)
----------------- ----------------------------------------------
Class II Class II
preferred Common preferred Common Contributed
stock stock stock stock surplus Deficit
--------- ------ --------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 31, 1994 2,001 43,957 $6.8 $637.4 $656.3 $(561.3)
Exercise of stock options 10 0.2
Foreign currency
translation adjustment
Dividends on Class II
preferred stock (0.6)
Pension liability
adjustment
Unrealized losses on
marketable securities
Net income 29.4
----- ------ ---- ------ ------ --------
Balance, April 30, 1994 2,001 43,967 $6.8 $637.6 $656.3 $(532.5)
===== ====== ==== ====== ====== ========
<CAPTION>
Equity (Dollars in millions)
------------------------------------------------
Unrealized
gains Total
Pension (losses) on stock-
Translation liability marketable holders'
adjustment adjustment securities equity
----------- ----------- ----------- -------
<S> <C> <C> <C> <C>
Balance, January 31, 1994 $(79.8) $(30.5) $ 1.8 $630.7
Exercise of stock options 0.2
Foreign currency
translation adjustment 6.1 6.1
Dividends on Class II
preferred stock (0.6)
Pension liability
adjustment 2.0 2.0
Unrealized losses on
marketable securities (3.0) (3.0)
Net income 29.4
------- ------- ------ -------
Balance, April 30, 1994 $(73.7) $(28.5) $(1.2) $664.8
======= ======= ====== =======
</TABLE>
As of April 30, 1994 options to purchase 2.2 million shares of common stock were
outstanding.
Earnings (loss) per common share are based upon weighted average shares of
common stock and common stock equivalents outstanding of 44,509,000 and
31,046,000 for the three months ended April 30, 1994 and 1993, respectively.
Fully diluted per share amounts are not shown on the accompanying consolidated
statements of operations as no significant dilution exists.
The terms of the Company's Class II preferred stock and certain debt agreements
restrict the payment of dividends on certain of the Company's common stock, as
described in Note 12 to the consolidated financial statements for the fiscal
year ended January 31, 1994.
Page 8
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
OVERVIEW
In April 1994, the Company agreed to sell its worldwide Massey Ferguson farm
machinery business to AGCO Corporation for $310 million in cash and 500,000
shares of AGCO common stock. The transaction is expected to be completed in the
Company's second quarter, at which time the Company will recognize a gain on the
transaction currently estimated to range from $15 to $30 million. As a result
of the aforementioned plan, the farm equipment segment has been presented as a
discontinued operation in the accompanying financial statements.
For the three months ended April 30, 1994, the Company earned $25.0 million
($.55 per share) before the aforementioned discontinued operation on sales and
revenues of $505.8 million, compared with income of $15.1 million ($.33 per
share) on sales and revenues of $455.6 million for the comparable period in
fiscal 1993 before the prior year's cumulative effect of changes in accounting
principles. Earnings of the discontinued farm equipment segment were $4.4
million for the three months ended April 30, 1994 as compared to a loss of $4.1
million in the comparable period for fiscal 1993. During the prior year's first
quarter, the Company recognized a one-time, non-cash $146.1 million charge
($4.70 per share) in connection with the adoption of new accounting standards
for postretirement and postemployment benefits as is further described in Note 1
of the Notes to Consolidated Financial Statements included in the Company's Form
10-K for the year ended January 31, 1994.
SEGMENT OPERATING REVIEW
<TABLE>
<CAPTION>
(Dollars in millions) Three Months Ended
April 30,
--------------------------
1994 1993 % Change
------- ------- --------
<S> <C> <C> <C>
Sales and revenues (1):
Automotive products (Kelsey-Hayes) $ 335 $ 302 11
Engines (Perkins) 180 158 14
Other (Pacoma) 12 13 (8)
Intercompany sales to discontinued
operation (21) (17) 24
------ ------ ---
Total $ 506 $ 456 11
====== ====== ===
Operating income (loss) (1):
Automotive products (Kelsey-Hayes) $ 27 $ 25 8
Engines (Perkins) 13 8 63
Other (Pacoma) - (2) -
------ ------ ---
Total $ 40 $ 31 29
====== ====== ===
</TABLE>
(1) All periods reflect the presentation of the Company's farm equipment segment
as a discontinued operation. In the first quarter last year, the farm
equipment segment reported operating losses of $2 million compared with
operating income for the first quarter of the current year of $6 million.
Page 9
<PAGE>
AUTOMOTIVE PRODUCTS
United States automobile and light truck demand during the first quarter of
fiscal 1994 continued to improve, as measured by a 15% increase in vehicle sales
over the comparable fiscal 1993 period, reflecting further increased consumer
confidence and a generally stronger overall business environment.
Correspondingly, North American production of these vehicles, which incorporate
Kelsey-Hayes' products and influences the Company's automotive products segment,
increased 9% during the same period. Varity's automotive products segment
continued to benefit from its strategic position as a major supplier of anti-
lock braking systems (ABS) and foundation (conventional) brakes for light
trucks, vans and sport utility vehicles. The Company's sales of ABS (and related
products) and foundation brakes for these specific vehicles comprise
approximately 90% and 60%, respectively, of the Company's total ABS and
foundation brakes sales for all vehicles. North American industry production of
these vehicles increased 16% during the first quarter of fiscal 1994. As a
result, the Company's automotive products segment recorded sales of $335 million
in the current quarter, reflecting an increase of 11% over the prior year.
In addition to increased North American light vehicle production, higher sales
also resulted from expanded ABS installation rates in new vehicles and
replacement of two-wheel ABS with higher value four-wheel systems.
The automotive products segment also includes sales of products for the heavy
duty truck and trailer market, which are produced by the heavy duty brake group
of Dayton Walther, a wholly-owned subsidiary of Varity. Sales of this unit
benefitted from higher industry sales for heavy duty and medium duty trucks.
Segment operating income in the current quarter for the automotive products
segment was $27 million, up 8% from 1993 results of $25 million. Earnings
improved over the prior year's first quarter as a direct result of the
aforementioned increased sales and the continued focus on implementing cost
reductions and productivity improvements. The current year's results were
tempered, however, by expenses associated with expanding capacity and pursuing
new ABS business. These expenditures included costs for establishment of the
European ABS marketing and technical center in Wiesbaden, Germany and the
initial start-up activities at the Heerlen, Netherlands and Fowlerville,
Michigan ABS manufacturing facilities, which are scheduled to commence
production in the second half of 1994. The majority of these expenditures were
associated with product engineering and vehicle testing activities to support
customer programs. In addition, capacity constraints and costs of outsourcing
and overtime continue to negatively affect operating margins in the foundation
brakes business pending manufacturing improvements being fully implemented.
ENGINES
Total engines segment sales increased by 14% to $180 million in the first
quarter of fiscal 1994 as compared with the same period in the prior year,
primarily due to increased demand in the agricultural sector in Europe,
especially the United Kingdom, in addition to improvements in the United Kingdom
and United States construction sectors. In the power generation sector, the
high levels of growth that were experienced throughout 1993 have started to slow
and the market is experiencing some softening in demand. Nevertheless, Perkins'
first quarter sales in this sector were above the same period in the prior year
as a result of a shift in demand towards the larger, higher value and higher
margin engines. The comparative strength of these key sectors against the first
quarter of fiscal 1993 has more than offset the continuing difficult economic
conditions being experienced in significant continental European markets where
the prolonged economic downturn is only slowly turning around.
Operating income in the first quarter of fiscal 1994 for the engines segment
increased 63% to $13 million as a result of higher sales, productivity
improvements and continuing efforts to control costs.
Page 10
<PAGE>
NON-SEGMENT OPERATING REVIEW
In April 1994, the Company, in adopting a plan to dispose of its farm
equipment segment, agreed to sell its worldwide Massey Ferguson farm machinery
business to AGCO Corporation for $310 million in cash and 500,000 shares of AGCO
common stock. The transaction is expected to be completed in the Company's
second quarter, at which time the Company will recognize a gain on the
transaction currently estimated to range from $15 to $30 million. The
transaction excludes cash, indebtedness and certain liabilities, primarily
pertaining to pension and retiree medical benefits for all former North American
Massey Ferguson employees, for which the Company will continue to be
responsible. As a result of the aforementioned plan, the farm equipment segment
has been presented as a discontinued operation. Prior year financial statements
have been reclassified to conform to the current year presentation.
Subsequent to the anticipated completion of the sale of Massey Ferguson, the
Company will record additional interest expense (approximating $8 million
annually) associated with retained liabilities for retiree pension and medical
benefits. Such costs, previously recorded as a component of operating income in
the former farm equipment segment, have approximated $2 million quarterly.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Cash provided from operations during the first three months of fiscal 1994
amounted to $55.8 million as compared to cash used of $11.7 million during the
same period last year. This improvement in cash provided was mainly
attributable to improved working capital management and increased earnings from
continuing operations.
Short-term notes payable decreased $10.5 million to $57.5 million at April 30,
1994 as a result of normal operational funding activity.
Long-term debt outstanding at April 30, 1994 (including current maturities)
decreased marginally to $183.7 million from $191.1 million at January 31, 1994,
due primarily to continuing efforts to reduce worldwide debt levels. Further
reductions of long-term and short-term indebtedness are anticipated in
connection with the proceeds to be received upon completion of the sale of the
Company's farm equipment business to AGCO. In addition, a portion of the sale
proceeds will be invested in what the Company believes are high-return, high-
growth product programs at Kelsey-Hayes and Perkins which, coupled with reduced
debt levels, would further improve the Company's financial flexibility.
Unused long-term and short-term lines of credit at April 30, 1994 were $105.4
million and $201.2 million, respectively. Management believes that Varity, as a
result of its continued strategic initiatives, will have improved access to
credit markets and that its credit facilities and cash flow from operations will
continue to be sufficient to meet its operating needs.
Certain of the Company's loan agreements provide for financial covenants
relating to such matters as the maintenance of specified financial ratios and
minimum net worth. Certain loan agreements also contain cross-default
provisions. At April 30, 1994 the Company and each of its subsidiaries were in
compliance with their financial covenants. Management expects that the Company
and each of its subsidiaries will remain in compliance during the period ending
April 30, 1995.
Receivables increased $13.6 million to $342.9 million at April 30, 1994 from
$329.3 million at January 31, 1994, primarily due to increased sales in the
current quarter.
Inventories of raw materials, work-in-process and finished products increased
to $140.6 million at April 30, 1994 from $127.8 million at January 31, 1994,
primarily due to routine adjustments in manufacturing schedules in response to
improved customer demand.
Page 11
<PAGE>
Accounts payable and accrued liabilities increased $17.7 million during the
first three months of fiscal 1994 due to the effect of higher throughput and
normal disbursement activity.
Net fixed assets increased $38.4 million to $560.6 million at April 30, 1994
from $522.2 million at January 31, 1994 due to capital additions exceeding
depreciation and disposals. Capital expenditures for the first three months of
fiscal 1994 were $52.7 million compared to $18.4 million last year, and
depreciation and amortization were $18.7 million and $18.2 million,
respectively, for the same periods. Capital expenditures for fiscal 1994 should
approximate $190.0 million. These expenditures will be mainly for the
completion of construction of new ABS plants in the United States and the
Netherlands, in addition to normal equipment replacements and operating
improvements related to reducing costs and increasing output.
Other long-term liabilities decreased by $8.4 million to $371.3 million at
April 30, 1994 from $379.7 million at January 31, 1994, primarily due to a
decrease in certain pension and postretirement benefit liabilities as a result
of amounts reclassified to current liabilities in anticipation of funding
contributions to be made in fiscal 1994. Such reclassification does not include
any additional cash contributions to underfunded pension plans which may be made
from the proceeds of the Massey Ferguson sale.
Stockholders' equity increased by $34.1 million to $664.8 million at April 30,
1994. This net increase primarily resulted from net income of $29.4 million and
the favorable change in the cumulative foreign currency translation adjustment
of $6.1 million, partially offset by preferred dividends paid of $.6 million.
Varity is primarily dependent on its subsidiaries to meet its cash
requirements. Varity's ability to obtain cash from its subsidiaries or to
transfer cash between subsidiaries is governed by the financial condition and
operating requirements of these subsidiaries, and in certain instances the terms
of loan agreements or similar agreements to which its subsidiaries are parties.
The Company has ongoing short-term cash requirements for working capital,
capital expenditures, dividends, interest and debt payments. The Company
believes that its cash requirements will be met through internally and
externally generated sources, existing cash balances and utilization of
available borrowing facilities.
As a result of the Company's actions over the past few years to reduce debt
and increase operating efficiencies, the Company's financial position and
liquidity have improved markedly. The Company believes these actions have
improved its access to capital markets and will better posture the Company to
finance investment in and expansion of the growth areas of its businesses.
During the next five years the Company believes that its cash requirements for
working capital, capital expenditures, dividends, interest and debt repayments
will continue to be met through internally and externally generated sources and
utilization of available borrowing sources.
The Company, primarily through its automotive products segment, is involved in
a limited number of remedial actions under various federal and state laws and
regulations relating to the environment which impose liability on parties to
clean up, or contribute to the cost of cleaning up, sites on which their
hazardous wastes or materials were disposed or released. The Company believes
that it has made adequate provision for costs associated with known remediation
efforts in accordance with generally accepted accounting principles and does not
anticipate the future cash requirements of such efforts to be significant. The
Company has made no provision for any unasserted claims as it is not possible to
estimate the potential size of such future claims, if any.
OUTLOOK
The Company believes that its automotive products segment is positioned to
benefit in fiscal 1994 from the improving conditions in the North American
automotive industry. The Company is also addressing the incremental cost
burdens it is experiencing as a result of increased production schedules.
Continued management actions and cost reduction efforts have positioned the
engines segment to benefit when the European economy improves, although the
Company does not expect a major upturn in Europe during fiscal 1994.
Page 12
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN REGISTERED SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 10 - Material contracts
Exhibit 11 - Earnings per share computations
(b) Reports on Form 8-K:
None.
Page 13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VARITY CORPORATION
/s/ N.D. Arnold /s/ Kevin C. Shanahan
___________________________________ _____________________________________
N.D. Arnold Kevin C. Shanahan
Senior Vice President and Vice President, Controller
Chief Financial Officer (Principal Accounting Officer)
(Principal Financial Officer)
June 10, 1994
Page 14
<PAGE>
VARITY CORPORATION
INDEX TO EXHIBITS
Exhibit
Number
- - ------
10.2 (k) Purchase and Sale Agreement between and among AGCO
Corporation and Varity Holdings Limited, Varity GmbH,
Massey Ferguson GmbH, Massey Ferguson Industries Limited,
Massey Ferguson (Delaware) Inc. and Varity Corporation
dated as of April 26, 1994
11 Primary Earnings Per Share Computations for Three Months
Ended April 30, 1994 and 1993
Page 15
<PAGE>
================================================================================
EXHIBIT 10.2(K)
PURCHASE AND SALE AGREEMENT
---------------
Between and Among
---------------
AGCO CORPORATION
---------------
and
---------------
VARITY HOLDINGS LIMITED
VARITY GmbH
MASSEY FERGUSON GmbH
MASSEY FERGUSON INDUSTRIES LIMITED
MASSEY FERGUSON (DELAWARE) INC.
and
VARITY CORPORATION
---------------
Dated as of April 26, 1994
================================================================================
<PAGE>
PURCHASE AND SALE AGREEMENT, DATED AS OF APRIL 26, 1994,
BETWEEN AND AMONG AGCO CORPORATION AND
VARITY HOLDINGS LIMITED, VARITY GmbH,
MASSEY FERGUSON GmbH, MASSEY FERGUSON INDUSTRIES
LIMITED, MASSEY FERGUSON (DELAWARE) INC.
AND VARITY CORPORATION
TABLE OF CONTENTS PAGE
----------------- ----
Article I Definitions................................................ 3
-----------
1.1 Certain Definitions........................................ 3
-------------------
1.2 Other Definitions and Meanings; Interpretation............. 3
----------------------------------------------
1.3 Sellers' Knowledge......................................... 3
------------------
Article II Purchase and Sale.......................................... 3
-----------------
2.1 Stock Transfers............................................ 3
---------------
2.2 Asset Transfers............................................ 3
---------------
2.3 Acquired Assets............................................ 4
---------------
2.4 Excluded Assets............................................ 5
---------------
2.5 Assumed Liabilities........................................ 5
-------------------
2.6 Excluded Liabilities....................................... 7
--------------------
2.7 Purchase Price............................................. 8
--------------
2.8 Allocation of Purchase Price............................... 8
----------------------------
2.9 German Real Property....................................... 8
--------------------
Article III Representations and Warranties............................. 8
------------------------------
3.1 Representations and Warranties of Buyer.................... 8
---------------------------------------
(a) Organization and Good Standing....................... 8
------------------------------
(b) Power and Authority.................................. 8
-------------------
(c) Authorization........................................ 9
-------------
(d) Binding Effect....................................... 9
--------------
(e) No Default........................................... 9
----------
(f) Consents............................................. 9
--------
(g) Finders.............................................. 9
-------
(j) Representations and Warranties True and Complete..... 10
------------------------------------------------
3.2 General Representations and Warranties of Sellers.......... 10
-------------------------------------------------
(a) Organization and Good Standing....................... 10
------------------------------
(b) Power and Authority.................................. 10
-------------------
(c) Authorization........................................ 10
-------------
(d) Binding Effect....................................... 10
--------------
(e) No Default........................................... 10
----------
(f) Consents............................................. 10
--------
(g) Finders.............................................. 11
-------
(h) Representations and Warranties True and Complete..... 11
------------------------------------------------
i
<PAGE>
3.3 Representations and Warranties of Seller Concerning
----------------------------------------------------
the Shares................................................. 11
----------
(a) Capitalization....................................... 11
--------------
(b) Subsidiaries......................................... 11
------------
(c) Ownership and Transfer of Shares..................... 11
--------------------------------
3.4 Representations and Warranties of Sellers Concerning the MF
------------------------------------------------------------
Business..................................................... 12
--------
(a) Financial Statements................................. 12
--------------------
(b) Conduct of MF Business............................... 12
----------------------
(c) Receivables.......................................... 12
-----------
(d) Personal Property.................................... 12
-----------------
(e) Defaults............................................. 13
--------
(f) Litigation........................................... 13
----------
(g) Compliance with Laws................................. 13
--------------------
(h) Taxes................................................ 13
-----
(i) Permits and Licenses................................. 13
--------------------
(j) Subsidiaries and Affiliates.......................... 13
---------------------------
(k) Inventories.......................................... 13
-----------
(l) Real Property........................................ 14
-------------
(m) Proprietary Rights................................... 14
------------------
(n) Material Contracts................................... 14
------------------
(o) Material Events...................................... 14
---------------
3.5 Disclaimer................................................. 15
----------
3.6 Survival................................................... 15
--------
Article IV Conditions................................................. 15
----------
4.1 Conditions to Buyer's Obligations.......................... 15
---------------------------------
4.2 Conditions to Sellers' Obligations......................... 16
----------------------------------
4.3 Parties' Best Efforts...................................... 17
---------------------
Article V Actions Before Closing..................................... 17
----------------------
5.1 Investigation by Buyer..................................... 17
----------------------
5.2 Affirmative Covenants...................................... 17
---------------------
5.3 Negative Covenants......................................... 18
------------------
5.4 Removal of Encumbrances.................................... 19
-----------------------
5.5 Governmental Approval...................................... 19
---------------------
5.6 Consent.................................................... 19
-------
5.7 Indebtedness Payments...................................... 19
---------------------
5.9 TAFE Shares................................................ 20
-----------
5.10 Massey Ferguson Name....................................... 21
--------------------
5.11 Structure of Transaction................................... 21
------------------------
5.12 Foreign Exchange Contracts................................. 21
--------------------------
5.13 Redemption of 'A' Deferred MFGL Shares..................... 21
--------------------------------------
ii
<PAGE>
Article VI Closing.................................................... 21
-------
6.1 The Closing................................................ 21
-----------
6.2 Buyer's Obligations........................................ 22
-------------------
6.3 Sellers' Obligations....................................... 23
--------------------
Article VII Actions After Closing...................................... 23
---------------------
7.1 Further Conveyances........................................ 23
-------------------
7.2 Further Consents to Assignment............................. 23
-------------------------------
7.3 Access to Former Business Records.......................... 24
---------------------------------
7.4 Financial Data......................................... 24
--------------
7.5 Taxes...................................................... 24
-----
7.6 Tax Consents and Losses.................................... 25
-----------------------
7.7 Tax Elections.............................................. 25
-------------
7.8 Product Liability Assistance............................... 25
----------------------------
Article VIII Employees and Employee Benefits............................ 25
-------------------------------
8.1 Employment................................................. 25
----------
8.2 Pension Plans.............................................. 26
-------------
8.3 Retiree Benefits........................................... 26
----------------
8.4 Accrued Vacation....................................... 26
----------------
8.5 Severance.................................................. 26
---------
Article IX Indemnification............................................ 26
---------------
9.1 Indemnification of Sellers................................. 26
--------------------------
9.2 Indemnification of Buyer................................... 27
------------------------
9.3 Claims..................................................... 28
------
(a) Notice............................................... 28
------
(b) Responsibility for Defense........................... 28
--------------------------
(c) Right to Participate................................. 28
--------------------
(d) Settlement........................................... 29
----------
9.4 Limitation on Indemnification.............................. 29
-----------------------------
Article X Amendment, Waiver, Termination and Limitation of Buyer's
---------------------------------------------------------
Liability.................................................. 29
---------
10.1 Amendment.................................................. 29
---------
10.2 Waiver..................................................... 29
------
10.3 Termination................................................ 29
-----------
10.4 Limitation of Buyer's Liability............................ 30
-------------------------------
10.5 Force Majeure.............................................. 30
-------------
Article XI Miscellaneous.............................................. 30
-------------
11.1 Confidentiality............................................ 30
---------------
11.2 Severability............................................... 30
------------
11.3 Expenses................................................... 31
--------
11.4 Taxes...................................................... 31
-----
iii
<PAGE>
11.5 Notices.................................................... 31
-------
11.6 Assignment................................................. 31
----------
11.7 Third Parties.............................................. 32
-------------
11.8 Incorporation by Reference................................. 32
--------------------------
11.9 Counterparts............................................... 32
------------
11.10 Governing Law.............................................. 32
-------------
11.11 Complete Agreement......................................... 32
------------------
11.12 Bulk Sales................................................. 32
----------
APPENDICES
----------
Appendix 1.1 Definitions
Appendix 2.3(d) Real Property Leases to be Assumed by Buyer
Appendix 2.4(c) Excluded Trademarks and Trade Names
Appendix 3.1(f) Buyer's Required Consents
Appendix 3.2(f) Seller's Required Consents
Appendix 3.3(b) MFGL Subsidiaries and Affiliates
Appendix 3.4(a) MF Financial Statements
Appendix 3.4(c) Receivables
Appendix 3.4(d) Personal Property
Appendix 3.4(e) Defaults
Appendix 3.4(f) Litigation
Appendix 3.4(g) Non-Compliance with Laws
Appendix 3.4(h) Taxes
Appendix 3.4(i) Permits and Licenses
Appendix 3.4(k) Inventories
Appendix 3.4(l) Real Property
Appendix 3.4(m)(1) Trademarks, Patents and Licenses
Appendix 3.4(m)(2) MF Licensee Distributors
Appendix 3.4(n) Material Contracts
Appendix 3.4(o) Material Events
Appendix 4.1(f) Related Agreements
Appendix 5.7(a) Repayment of Intercompany Indebtedness
Appendix 5.7(b) MF Loans
Appendix 8.1 Excluded Employees
iv
<PAGE>
PURCHASE AND SALE AGREEMENT
---------------------------
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made and entered
into as of the 26th day of April, 1994, between and among AGCO Corporation
("Buyer"), a Delaware corporation with offices at 4830 River Green Parkway,
Duluth, Georgia 30136; and Varity Holdings Limited ("VHL"), an English company,
with offices at 9 Upper Belgrave Street, London, England; Varity GmbH ("Varity
GmbH"), a German company with offices at 37269 Eschwege, Germany;
Massey-Ferguson GmbH ("MF GmbH"), a German company with offices at 37269
Eschwege, Germany; Massey Ferguson Industries Limited ("MFIL"), a Delaware
corporation with offices at 1209 Orange Street, Wilmington, Delaware 19801;
Massey-Ferguson (Delaware) Inc. ("MFDI"), a Delaware corporation with offices
at 1209 Orange Street, Wilmington, Delaware 19801; and Varity Corporation
("Varity"), a Delaware corporation, with offices at 672 Delaware Avenue,
Buffalo, New York 14209 (VHL, Varity GmbH, MF GmbH, MFIL, MFDI and Varity are
sometimes hereinafter referred to individually as a "Seller" and collectively
as the "Sellers").
W I T N E S S E T H:
WHEREAS, Varity owns, directly or indirectly: (i) all of the issued and
outstanding shares of capital stock of each of VHL, Varity GmbH, MF GmbH, MFIL
and MFDI; (ii) certain shares (collectively, the "Incidental Shares")
representing minority equity interests in certain subsidiaries of MFGL; (iii)
250,000 Class "B" shares (the "LTC Shares") of Libyan Tractor Company, a Libyan
limited company; (iv) 384 nominative shares (the "Comagi Shares") of Compagnie
Maghrebine de Materiels Agricoles et Industriels Societe Anonyme, a Mercantile
Joint Stock Company in the City of Casablanca, Morocco; and (v) 850 shares (the
"STMCL Shares") of Saudi Tractor Manufacturing Company Limited, a Saudi Arabian
corporation (the LTC Shares, the Comagi Shares and the STMCL Shares are
hereinafter collectively referred to as the "Associates Shares");
WHEREAS, VHL owns all of the issued and outstanding (i) 'A' Deferred
Shares of (Pounds)1.00 each (the "'A' Deferred MFGL Shares"), (ii) 'B' Deferred
Shares of (Pounds)1.00 each (the "'B' Deferred MFGL Shares"), and (iii)
Ordinary Shares of US$0.000001 each (the "Ordinary MFGL Shares"), all in the
capital stock of Massey Ferguson Group Limited ("MFGL"), an English company with
offices in Stoneleigh, England, and in this Agreement the "MFGL Shares" means
the issued and outstanding 'B' Shares and the Ordinary MFGL Shares;
WHEREAS, MFGL is or was in the business (the "MFGL Business") of
designing, developing, manufacturing, assembling, selling, servicing, financing
and performing other activities relating to agricultural and industrial
equipment, including, without limitation, tractors, combines, industrial
machinery and lawn and garden machinery, and accessories, other equipment and
parts related thereto (collectively, the "Products") primarily under the
<PAGE>
name "Massey Ferguson" and also under the name "Massey Ferguson Industrial" and
other prior names;
WHEREAS, Varity GmbH owns a twenty-three and 75/100 percent (23.75%)
equity interest in Tractors and Farm Equipment Limited ("TAFE"), an Indian
company with offices at 35 Nungambakkam High Road, Madras, India, which is
represented by 1,900,000 shares of the capital stock of TAFE (the "TAFE
Shares");
WHEREAS, TAFE is in the business (the "TAFE Business") of manufacturing
and selling Products primarily under the "Massey Ferguson" name in India;
WHEREAS, MF GmbH is in the business (the "MF GmbH Business") of selling
Products primarily under the "Massey Ferguson" name on a wholesale basis
primarily in Germany;
WHEREAS, among other businesses, MFIL is in the business (the "MFIL
Business") of selling Products primarily under the "Massey Ferguson" name on a
wholesale basis in North America;
WHEREAS, among other businesses, MFDI is in the business (the "MFDI
Business") of selling Products primarily under the "Massey Ferguson" name on a
wholesale basis in Central and South America;
WHEREAS, MFDI and Varity own the trademarks, service marks and
applications therefor (collectively, the "Trademarks") and trademark and
service mark licenses (the "Trademark Licenses") described on Appendix
3.4(m)(1) hereto and are in the business (collectively, the "Trademark
Business") of owning and licensing the Trademarks and the Trademark Licenses
for use in connection with the manufacture and sale of the Products;
WHEREAS, among other businesses, and in addition to its ownership of the
other Sellers, Varity is and has been, directly and indirectly through various
subsidiaries and affiliates, in the business (the "Varity Farm Business") of
designing, developing, manufacturing, assembling, selling, servicing, financing
and performing other activities relating to the Products primarily under the
"Massey Ferguson" name;
WHEREAS, through the operation of the MFGL Business, the TAFE Business,
the MF GmbH Business, the MFIL Business, the MFDI Business, the Varity Farm
Business and the Trademark Business (and the ownership of the LCS Shares and
the Incidental Shares), Sellers are and have been engaged in the worldwide
business (the "MF Business") of designing, developing, manufacturing,
assembling, selling, servicing, financing and performing other activities
relating to the Products primarily under the "Massey Ferguson" name; and
2
<PAGE>
WHEREAS, on and subject to the terms and conditions provided in this
Agreement, Buyer desires to purchase from Sellers, and Sellers desire to
transfer, sell and assign to Buyer, the MF Business;
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, Buyer and Sellers hereby agree as follows:
Article I
Definitions
-----------
1.1 Certain Definitions: Those terms used herein and identified
-------------------
with initial capital letters shall have the meanings ascribed to them in
Appendix 1.1 to this Agreement.
1.2 Other Definitions and Meanings; Interpretation: For purposes
----------------------------------------------
of this Agreement, (a) the term "parties" means (except where the context
otherwise requires) Sellers and Buyer; (b) the term "person" shall include any
natural person, firm, association, partnership, corporation or other entity;
and (c) the words "hereof", "herein", "hereby" and other words of similar
import refer to this Agreement as a whole. The table of contents and the
headings of the Articles and Sections of this Agreement have been included
herein for convenience of reference only and shall not be deemed to be a part
of this Agreement. All monetary amounts referred to herein which are in
dollars are U.S. dollars, in pounds are in U.K. pounds sterling, and in marks
are German marks.
1.3 Sellers' Knowledge: Where a statement contained in this
------------------
Agreement is said to be to "Sellers' knowledge" (or words of similar import)
such expression means that, after having reviewed such statement with the
relevant senior management of the MF Business, Sellers believe such statement
to be true, accurate and complete in all material respects.
Article II
Purchase and Sale
-----------------
2.1 Stock Transfers: On and subject to the terms and conditions
---------------
of this Agreement, at the Closing: (a) Buyer will purchase from VHL, and VHL
will sell, transfer and assign to Buyer, all of the MFGL Shares; (b) Buyer will
purchase from Varity GmbH, and Varity GmbH will sell, transfer and assign to
Buyer, all of the TAFE Shares; and (c) Varity will transfer and assign, or
cause its applicable subsidiary to transfer and assign, to Buyer all of the
Incidental Shares.
2.2 Asset Transfers: On and subject to the terms and conditions
---------------
of this Agreement, at the Closing: (a) Buyer will purchase from MF GmbH, MFIL,
MFDI and Varity (collectively, the "Asset Sellers"), and the Asset Sellers will
sell, transfer and assign to Buyer, all of the Acquired Assets; and (b) Buyer
will assume and become directly and
3
<PAGE>
solely responsible for the payment or discharge of all of the Assumed
Liabilities. Notwithstanding anything contained herein to the contrary, the
Asset Sellers will retain all of the Excluded Assets and Excluded Liabilities.
2.3 Acquired Assets: For purposes hereof, the term "Acquired
---------------
Assets" means all assets, properties and rights held by any of the Asset
Sellers as of the Closing Date which are primarily utilized in or are necessary
to the conduct of the MF Business as conducted by the Sellers as of the Closing
Date, including, without limitation, the Proprietary Rights and all other
assets held by the Asset Sellers as reflected on the MF Financial Statements,
but excluding the Excluded Assets. Without limiting the generality of the
foregoing, the Acquired Assets will include all of each Asset Seller's rights,
title, and interest in and to the following assets (other than Excluded Assets)
which are primarily utilized in or are necessary to the conduct of the MF
Business by the Sellers as of the Closing Date:
(a) All operating cash, cash equivalents, notes, accounts and
trade acceptances receivable;
(b) All prepaid and similar items, including, without
limitation, all prepaid expenses, deferred charges, advance payments, deposits
and other prepaid items;
(c) All inventories, wherever located;
(d) To the extent assignable, all real property leasehold
interests listed on Appendix 2.3(d) hereto;
(e) All owned personal property and, to the extent assignable,
all leased personal property;
(f) To the extent assignable, all orders, contracts and
commitments for the purchase of goods and/or services;
(g) To the extent assignable, all orders, contracts, commitments
and proposals, including, without limitation, all such items relating to
financing, distribution, dealership and similar arrangements, as well as all
items for the sale or return of any Products;
(h) To the extent assignable, all other orders, contracts and
commitments, including, without limitation, all leases (excluding real estate
leases except as provided in (d) above), licenses, causes of action, rights of
action and warranty and product liability claims against other persons;
(i) All owned Proprietary Rights, including, without limitation,
all Trademarks and all computer software developed by any Asset Seller, and, to
the extent
4
<PAGE>
assignable, all licensed intellectual property, including, without limitation,
all Trademark Licenses;
(j) To the extent assignable, all licenses, permits, approvals,
qualifications and similar rights issued by any government or governmental
unit, agency, board, body, or instrumentality, whether federal, state or local,
and all applications therefor; and
(k) All business books and records, including, without
limitation, all financial, operating, inventory, legal, personnel, payroll and
customer records and all sales and promotional literature, correspondence and
files.
2.4 Excluded Assets: For purposes hereof the term "Excluded
---------------
Assets" means the following rights, properties and assets of the Asset Sellers
as the same shall exist as of the Closing:
(a) All rights, properties, and assets used primarily in a
business other than the MF Business;
(b) All rights, properties, and assets of the MF Business which
shall have been transferred or disposed of for value by any of the Asset
Sellers prior to the Closing in transactions conducted in the ordinary course
of the MF Business and not in breach of this Agreement;
(c) The trademarks, corporate names and trade names listed on
Appendix 2.4(c) hereto and all other trademarks, corporate names and trade
names owned by any of the Asset Sellers which are not primarily utilized in or
necessary to the MF Business;
(d) All assets held by any of the Asset Sellers, whether in
trust or otherwise, in respect of employee benefit plans pertaining to current
and/or former employees of the MF Business in North America or employee benefit
plans pertaining to former employees of MF GmbH;
(e) All owned real estate and all real property leasehold
interests not listed on Appendix 2.3(d) hereto;
(f) All tax records, including resale exemption certificates;
and
(g) All causes of action and rights of action existing at the
Closing against persons or entities asserting claims against any of the Asset
Sellers, to the extent such asserted claims are not assumed by Buyer pursuant
to this Agreement.
2.5 Assumed Liabilities: For purposes hereof the term "Assumed
-------------------
Liabilities" means all liabilities and obligations of the Asset Sellers as of
the Closing Date arising
5
<PAGE>
primarily out of the conduct of the MF Business, including, without limitation,
all liabilities of the Asset Sellers reflected on the MF Financial Statements,
but excluding the Excluded Liabilities. Buyer's assumption of the Assumed
Liabilities pursuant hereto is not, and shall not be deemed to be, a waiver of
any defenses any of the Asset Sellers may have with respect to such Assumed
Liabilities, and all of such defenses shall be transferred and assigned to Buyer
at the Closing. Without limiting the generality of the foregoing, the Assumed
Liabilities will include the following liabilities and obligations of the Asset
Sellers (other than Excluded Liabilities) which arise or have arisen primarily
out of the conduct of the MF Business at or prior to the Closing:
(a) All liabilities and obligations (other than Excluded
Liabilities) incurred by any of the Asset Sellers primarily in the conduct of
the MF Business which are due and payable at or after the Closing;
(b) All liabilities and obligations of the Asset Sellers under
orders, contracts and other commitments included in the Acquired Assets;
(c) All liabilities and obligations arising out of, resulting
from, or relating to claims of the current employees of the MF GmbH Business as
of the Closing Date in connection with such employees' contracts of employment
(including pension liabilities);
(d) All liabilities and obligations for claims by employees of
any Asset Seller at the Closing relating to severance or termination at or
after the Closing based on service to the MF Business both prior to and after
the Closing;
(e) All liabilities and obligations for all litigation and
claims made or filed prior to or after the Closing relating to the conduct of
the MF Business by the Asset Sellers or any of their respective predecessors
prior to or after the Closing (excluding product liability claims), including
but not limited to warranty, product return and other litigation and claims
anywhere in the world (including North America) relating to Products produced,
designed, developed, manufactured, assembled, serviced, sold or licensed by the
Asset Sellers or any of their respective predecessors in the conduct of the MF
Business;
(f) All liabilities and obligations for all product liability
claims made on or after the Closing Date relating to events (i.e., the date of
accident or loss) occurring after January 31, 1986, which relate to the
Products produced, designed, developed, manufactured, assembled, sold, serviced
or licensed in connection with the MF Business by the Asset Sellers or any of
their respective predecessors; and
(g) All liabilities and obligations arising out of, resulting
from, or relating to, any violation of any statute, ordinance, or governmental
regulation (other than U.S. or Canadian federal, state, provincial or local
statutes, ordinances or government regulations) relating to pollution or
protection of the environment in connection with the use or operation
6
<PAGE>
of the MF Business assets, or in connection with the operation of the MF
Business, by the Asset Sellers or any of their respective predecessors, either
before or after the Closing.
2.6 Excluded Liabilities: For purposes hereof, the term "Excluded
--------------------
Liabilities" means the following liabilities and obligations of any of the
Asset Sellers as the same shall exist as of the Closing Date:
(a) All liabilities and obligations incurred by any of the Asset
Sellers primarily in connection with the conduct of any business other than the
MF Business;
(b) All liabilities and obligations arising out of, resulting
from or relating to any violation of any U.S. or Canadian federal, state,
provincial or local statute, ordinance or governmental regulation relating to
pollution or protection of the environment in connection with the use and
ownership of the MF Business assets before the Closing or the conduct of the MF
Business before the Closing;
(c) All liabilities and obligations for (i) claims of current or
former employees of any Asset Seller in connection with retiree pensions or
benefit plans maintained by Varity or any Varity subsidiary or affiliate in
North America, and (ii) claims of former employees of any Asset Seller
(determined as of the Closing Date) in connection with retiree pensions or
benefit plans maintained by Varity or any Varity subsidiary or affiliate in
Germany;
(d) All liabilities and obligations for Taxes relating to the
conduct of the MF Business during any tax period ended or ending prior to the
Closing (in excess of the amount of such taxes accrued on the books of the MF
Business as of the Closing), including any adjustments or penalties assessed
after the Closing relating to any such taxes;
(e) All liabilities and obligations for all product liability
claims made prior to the Closing Date, and all product liability claims made on
or after the Closing Date relating to events (i.e., the date of accident or
loss) occurring prior to January 31, 1986, which relate to the Products
produced, designed, developed, manufactured, assembled, sold, serviced or
licensed in connection with the MF Business;
(f) All liabilities and obligations, if any, other than product
liability, warranty, product return and dealer termination obligations (except
to the extent such obligations otherwise constitute Excluded Liabilities
pursuant to this Section 2.6), arising as a result of any action or omission of
MCC or any Asset Seller's prior ownership of any interest in MCC (it being the
understanding and belief of the parties hereto that all such liabilities and
obligations were dismissed as a result of insolvency proceedings for MCC);
(g) All liabilities and obligations arising as a result of the
termination of any MF Industrial dealer, excluding parts returns;
7
<PAGE>
(h) All liabilities and obligations arising pursuant to the MF
Loans; and
(i) All liabilities and obligations related to the Excluded
Assets.
2.7 Purchase Price: On and subject to the terms and conditions of
--------------
this Agreement, at the Closing, as full and complete consideration for the MFGL
Shares, the TAFE Shares, the Incidental Shares and the Acquired Assets
purchased by Buyer pursuant to Sections 2.1, 2.2 and 2.3 hereof, Buyer shall:
(i) pay (via wire transfer of immediately available funds) the aggregate amount
of Three Hundred Ten Million and No/100 Dollars ($310,000,000.00) (the "Cash
Consideration") to the Sellers (apportioned among the Sellers as indicated on
the Allocation Schedule to be prepared pursuant to Section 2.8 hereof); and
(ii) deliver five hundred thousand (500,000) shares of Buyers's One Cent
($.0.01) par value common stock (the "Share Consideration") to MFDI (the Cash
Consideration and the Share Consideration are sometimes hereinafter referred to
together as the "Purchase Price").
2.8 Allocation of Purchase Price: The Purchase Price shall be
----------------------------
allocated among the MFGL Shares, the TAFE Shares and the Acquired Assets as set
forth on an Allocation Schedule to be prepared and agreed upon by the parties
hereto at or prior to the Closing; provided, however, that $70,000,000.00 of
the Purchase Price shall be allocated to the Trademarks held by MFDI (such
$70,000,000.00 to be comprised of the Share Consideration plus such portion of
the Cash Consideration equal to the difference between $70,000,000.00 and the
value of the Share Consideration on the last business day immediately prior to
the Closing).
2.9 German Real Property: Notwithstanding the fact that the MF
--------------------
Financial Statements reflect the German Real Property as an asset of the MF
Business, the parties hereto hereby acknowledge and agree that ownership of the
German Real Property will remain with Varity GmbH and will not be transferred
to Buyer pursuant to this Agreement. Instead, at the Closing, Buyer shall
lease the German Real Property from Varity GmbH pursuant to a real property
lease containing the terms described on Appendix 4.1(f) hereto.
Article III
Representations and Warranties
------------------------------
3.1 Representations and Warranties of Buyer: Buyer hereby
---------------------------------------
represents and warrants to Sellers as follows:
(a) Organization and Good Standing: Buyer is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
(b) Power and Authority: Buyer has full power and authority
-------------------
to execute, deliver and perform this Agreement.
8
<PAGE>
(c) Authorization: The execution, delivery and performance
-------------
of this Agreement by Buyer have been duly authorized by all requisite corporate
action on the part of Buyer.
(d) Binding Effect: This Agreement is a valid, binding and
--------------
legal obligation of Buyer in accordance with its terms, except as otherwise
provided under bankruptcy, insolvency or similar laws.
(e) No Default: Neither the execution and delivery of this
----------
Agreement by Buyer nor the full and timely performance of Buyer's obligations
under this Agreement shall: (i) violate any term or provision of Buyer's
documents of organization and existence, Articles of Incorporation, Bylaws or
similar items; (ii) violate, breach or otherwise constitute or give rise to a
Default under any material contract, commitment or other obligation to which
Buyer is a party or by which any of its assets may be bound; or (iii) conflict
with or violate any applicable law, regulation, judgment, order or decree of
any government, governmental instrumentality or court having jurisdiction over
Buyer or its assets.
(f) Consents: Except as set forth on Appendix 3.1(f)
--------
hereto, to Buyer's knowledge, no consent, approval or authorization of, or
declaration, filing or registration with, any authority, person or entity is
required to be made or obtained by Buyer in connection with the execution,
delivery and performance of this Agreement, except for any such consents,
approvals or authorizations Buyer's failure of which to obtain would not have a
material adverse effect on Buyer.
(g) Finders: Buyer has not engaged and is not directly or
-------
indirectly obligated to anyone acting as a broker, finder or in any other
similar capacity in connection with the transactions contemplated by this
Agreement.
(h) SEC Reports. Since December 31, 1993, Buyer has timely
-----------
filed all reports required to be filed by it with the SEC (collectively, the
"Reports"). Buyer has heretofore furnished to Varity true copies of all of the
Reports that Varity has requested. As of their respective dates, the Reports
complied in all material respects with all rules and regulations promulgated by
the SEC and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. Since the date of the financial statements included
in the most recent set of such Reports, as of the date hereof, there has been
no material adverse change in the financial position or results of operations
of Buyer.
(i) Share Consideration: Upon issuance pursuant to this
-------------------
Agreement, the shares of Buyer's One Cent ($0.01) par value common stock
constituting the Share Consideration shall have been duly authorized, validly
issued and fully paid and nonassessable.
9
<PAGE>
(j) Representations and Warranties True and Complete: All
------------------------------------------------
representations and warranties of Buyer contained in this Agreement are true,
accurate and complete as of the date hereof and shall be true, accurate and
complete as of the Closing as if such representations and warranties were made
anew as of the Closing, except with respect to the effect of any transaction
contemplated or permitted by this Agreement.
3.2 General Representations and Warranties of Sellers: Sellers
-------------------------------------------------
hereby jointly and severally represent and warrant to Buyer as follows:
(a) Organization and Good Standing: Each Seller is a
------------------------------
company or a corporation duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of incorporation as indicated in
the preamble of this Agreement.
(b) Power and Authority: Each Seller has full power and
-------------------
authority to execute, deliver and perform this Agreement.
(c) Authorization: The execution, delivery and performance
-------------
of this Agreement by each Seller have been duly authorized by all requisite
corporate action on the part of each such Seller.
(d) Binding Effect: This Agreement is a valid, binding and
--------------
legal obligation of each Seller in accordance with its terms, except as
otherwise provided under bankruptcy, insolvency or similar laws.
(e) No Default: Neither the execution and delivery of this
----------
Agreement by any Seller nor the full and timely performance of any Seller's
obligations under this Agreement shall: (i) violate any term or provision of
such Seller's documents of organization and existence, Articles of
Incorporation, Bylaws or such similar items; (ii) violate, breach or otherwise
constitute or give rise to a Default under any material contract, commitment or
other obligation, except for the obligations evidenced by the MF Loans, to
which any Seller is a party or by which any of its or their assets or
properties are or may be bound; or (iii) conflict with or violate any
applicable law, regulation, judgment, order or decree of any government,
governmental instrumentality or court having jurisdiction over any Seller, the
MF Business or any of the stock or assets being sold under this Agreement.
(f) Consents: Except as set forth on Appendix 3.2(f)
--------
hereto, to Sellers' knowledge, no consent, approval or authorization of, or
declaration, filing or registration with, any authority, person or entity is
required to be made or obtained by any Seller in connection with the execution,
delivery and performance of this Agreement, except for any such consents,
approvals or authorizations such Seller's failure of which to obtain would not
have a material adverse effect on the MF Business.
10
<PAGE>
(g) Finders: No Seller has engaged, and no Seller is
-------
directly or indirectly obligated to anyone acting as, a broker, finder or in
any other similar capacity in connection with the transactions contemplated by
this Agreement.
(h) Representations and Warranties True and Complete: All
------------------------------------------------
representations and warranties of Sellers contained in this Agreement and all
statements contained in certificates, schedules, and exhibits attached hereto
or contemplated hereby are true, accurate, and complete as of the date hereof
and shall be true, accurate and complete as of the Closing as if such
representations and warranties were made anew as of the Closing, except with
respect to the effect of transactions contemplated or permitted by this
Agreement.
3.3 Representations and Warranties of Seller Concerning the
--------------------------------------------------------
Shares: Sellers hereby jointly and severally represent and warrant to Buyer
- - ------
as follows:
(a) Capitalization: The authorized capital stock of MFGL
--------------
consists of (i) 50,000,000 'A' Deferred MFGL Shares of (Pounds)1.00 per value,
all of which are issued and outstanding, (ii) 150,000,000 'B' Deferred MFGL
Shares of (Pounds)1.00 par value, of which 124,096,463 shares are issued and
outstanding, and (iii) 124,096,463 Ordinary MFGL Shares of US$0.000001 par
value, all of which are issued and outstanding. As of April 15, 1994, Varity
GmbH owned 1,900,000 shares of TAFE, which shares represented a twenty-three and
75/100 percent (23.75%) equity interest in TAFE. The outstanding shares of
capital stock of MFGL and, to Sellers' knowledge, TAFE have been duly authorized
and validly issued and are fully paid and non-assessable. Except as set forth in
Section 5.8 hereof, there are no outstanding options, warrants, calls, rights,
commitments or agreements (collectively, "Options") obligating either MFGL or,
to Sellers' knowledge, TAFE to issue, deliver or sell additional shares of its
capital stock. Each of MFGL and, to Sellers' knowledge, TAFE is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation.
(b) Subsidiaries: Appendix 3.3(b) hereto lists each direct
------------
and indirect Subsidiary and each direct and indirect Affiliate. The authorized
capital stock of each Subsidiary (together with the amount thereof which is
issued and outstanding), and the percentage ownership of each such Subsidiary
held by MFGL or any other Subsidiary, are described on Appendix 3.3(b) hereto.
The outstanding shares of capital stock of each Subsidiary and, to Seller's
knowledge, each Affiliate have been duly authorized and validly issued and are
fully paid and non-assessable, except for assessments to other Subsidiaries.
There are no outstanding Options obligating any Subsidiary or, to Sellers'
knowledge, any Affiliate to issue, deliver or sell additional shares of its
capital stock, except to other Subsidiaries. Each Subsidiary and, to Sellers'
knowledge, each Affiliate is a company or a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation as indicated on Appendix 3.3(b) hereto.
(c) Ownership and Transfer of Shares: VHL has Ownership of
--------------------------------
the MFGL Shares and has full power and authority to transfer the MFGL Shares to
Buyer in
11
<PAGE>
accordance herewith and Buyer will receive ownership of the MFGL Shares free and
clear of all Encumbrances. Subject to the provisions contained in the Articles
of Association of TAFE (a copy of which has been previously furnished to Buyer),
Varity GmbH has ownership of the TAFE Shares and has full power and authority to
transfer the TAFE Shares to Buyer in accordance herewith and Buyer will receive
ownership of the TAFE Shares free and clear of all Encumbrances. Varity or a
subsidiary of Varity has Ownership of the Incidental Shares and has full power
and authority to transfer the Incidental Shares to Buyer in accordance herewith
and Buyer will receive ownership of the Incidental Shares free and clear of all
Encumbrances. MFGL and each Subsidiary have Ownership of the shares of capital
stock of each of their respective Subsidiaries listed on Appendix 3.3(b) hereto.
3.4 Representations and Warranties of Sellers Concerning the MF
------------------------------------------------------------
Business: Sellers hereby jointly and severally represent and warrant to
- - --------
Buyer as follows:
(a) Financial Statements: The Financial Statements attached
--------------------
hereto as Appendix 3.4(a) (the "MF Financial Statements") are true and correct,
were prepared in accordance with the MF Business' accounting practices (applied
on a consistent basis), which practices are consistent with U.S. generally
accepted accounting principles, and in all material respects fairly present the
financial position and results of operations of the MF Business as of the dates
and for the periods therein set forth.
(b) Conduct of MF Business: All of the assets primarily
----------------------
utilized in or necessary to the conduct of the MF Business in the manner that
the same is conducted as of the date hereof are reflected on the MF Financial
Statements (subject to change in the ordinary course of the MF Business since
the date of the MF Financial Statements) to the extent required by generally
accepted accounting principles, and the MFGL Shares, the TAFE Shares, the
Incidental Shares and the Acquired Assets constitute and include all of the
property, assets and rights primarily utilized in or necessary to the conduct
of the MF Business as conducted by the Sellers as of the date hereof, other
than the Excluded Assets. Sellers and the Subsidiaries have Ownership of all
assets reflected on the MF Financial Statements (other than capital leases) and
will transfer to Buyer at the Closing direct or indirect Ownership of all such
assets, except for the German Real Property.
(c) Receivables: Except as otherwise disclosed on Appendix
-----------
3.4(c) hereto or on the MF Financial Statements, (i) Sellers and the
Subsidiaries have Ownership of all accounts, notes and all other receivables
which are reflected in the MF Financial Statements (subject to change in the
ordinary course of the MF Business since the date of the MF Financial
Statements); (ii) all of such receivables are valid receivables; and (iii) such
accounts, notes and receivables represent bona fide transactions, validly owing
by and enforceable against the obligors thereunder.
(d) Personal Property: Except as otherwise disclosed on
-----------------
Appendix 3.4(d) hereto, (i) Sellers and the Subsidiaries have Ownership of all
tangible personal property which is reflected in the MF Financial Statements
(subject to change in the ordinary course
12
<PAGE>
of the MF Business since the date of the MF Financial Statements) as owned
property; and (ii) all such items of tangible personal property are in good
condition and repair, ordinary wear and tear excepted, given the purposes for
which the same are currently used in the conduct of the MF Business.
(e) Defaults: Except as otherwise disclosed on Appendix
--------
3.4(e) hereto, the MF Business is not in Default under any note, bond,
debenture, mortgage, indenture, security agreement, guaranty or other
instrument of indebtedness, which Default is likely to have a material and
adverse effect on the MF Business.
(f) Litigation: Except as otherwise disclosed on Appendix
----------
3.4(f) hereto, as of the date hereof, there exists no litigation, proceeding,
action, claim, investigation or inquiry at law or in equity pending or, to
Sellers' knowledge, threatened which is likely to have a material adverse
effect on the MF Business.
(g) Compliance with Laws: Except as otherwise disclosed on
--------------------
Appendix 3.4(g) hereto, the MF Business is in substantial compliance with all
laws, regulations, orders and other legal requirements applicable to the MF
Business or to the operation of the MF Business, the noncompliance with which
would be likely to have a material adverse effect on the MF Business.
(h) Taxes: Except as otherwise disclosed on Appendix 3.4(h)
-----
hereto, (i) all Tax returns required to be filed prior to the Closing Date with
respect to the MF Business have been or will be filed on or before the Closing
Date; (ii) all Taxes indicated as due and payable on such returns which are
required by law to be paid on or before the Closing Date have been or will be
paid when required by law; and (iii) the assets used in the MF Business are not
encumbered by any liens arising out of unpaid Taxes which are due and payable.
(i) Permits and Licenses: Except as otherwise disclosed on
--------------------
Appendix 3.4(i) hereto, the MF Business currently holds all material permits,
licenses and approvals from all governments or governmental entities which are
necessary for the conduct of the MF Business as the same has been conducted by
Sellers.
(j) Subsidiaries and Affiliates: Except as disclosed on
---------------------------
Appendix 3.3(b) hereto, in connection with the MF Business, no Seller or
Subsidiary owns or holds any material equity interest, directly or indirectly,
or has any obligation to acquire any such interest, in any corporation,
partnership, business, firm or other entity.
(k) Inventories: Except as otherwise disclosed on Appendix
-----------
3.4(k) hereto, (i) Sellers and the Subsidiaries have Ownership of all
inventories wherever located, whether raw materials, components, assemblies,
subassemblies, work-in-progress, or finished goods which are reflected on the
MF Financial Statements (subject to change in the ordinary course of the MF
Business since the date of the MF Financial Statements); and (ii) to Seller's
knowledge and except for inventory reserves reflected on the MF Financial
Statements
13
<PAGE>
(subject to change in the ordinary course of the MF Business since the date of
the MF Financial Statements), all such inventory is generally of a quality and
quantity usable and saleable in accordance with standard practices used by the
MF Business in valuing inventories.
(l) Real Property: Except as otherwise disclosed on
-------------
Appendix 3.4(l) hereto, Sellers and the Subsidiaries have Ownership of all real
property reflected as owned real property on the MF Financial Statements; (2)
in all material respects, Sellers and the Subsidiaries have the right under
valid existing leases to occupy and control as a lessee (subject to the terms
of such leases) all leased real property where the loss of such property would
be likely to have a material adverse effect on the MF Business. All leased
real property used by the MF Business is listed on Appendix 3.4(l) hereto.
(m) Proprietary Rights: Appendix 3.4(m)(1) hereto contains
------------------
detailed information concerning: (i) all of the Trademarks and patents (and
applications therefor) used primarily in the MF Business and owned by any
Seller or Subsidiary; and (ii) all licenses to or from any Seller or Subsidiary
of any trademark or patent, including, without limitation, the Trademark
Licenses, used in the MF Business, other than licenses to the licensee
distributors of the MF Business listed on Appendix 3.4(m)(2) hereto. To
Seller's knowledge, no use of any Proprietary Rights in the MF Business
infringes upon or otherwise violates any rights of a third party in or to such
intellectual property.
(n) Material Contracts: Appendix 3.4(n) hereto contains a
------------------
true and correct list of the following types of material contracts relating to
the MF Business (all of which were entered into in the normal course of the MF
Business by one or more Sellers and/or Subsidiaries), and true and correct
copies of each contract listed thereon have previously been made available to
Buyer: (i) any arrangement concerning a partnership or joint venture with any
other person or entity; (ii) any arrangement (other than the MF Loans) under
which indebtedness for borrowed money in excess of $250,000.00 was created,
incurred, assumed or guaranteed; (iii) any non-employment arrangements with any
subsidiary, affiliate or other related party not primarily engaged in the MF
Business which will remain in effect after the Closing and which contain
material terms less favorable than generally available in the market for arms'
length arrangements of a similar nature; and (iv) any other contract which
obligates any Seller or Subsidiary, or pursuant to which any Seller or
Subsidiary is contingently obligated, to expend more than $500,000.00 and which
such Seller or Subsidiary may not terminate (without penalty or increased
costs) to reduce its total obligations or contingent obligations thereunder to
an amount less than $500,000.00. Appendix 3.4(n) also contains a list of all
executives, directors and key employees of the MF Business, together with the
corresponding salary of each such executive, director and key employee.
(o) Material Events: Except as set forth on Appendix 3.4(o)
---------------
hereto, as of the date hereof there has not been any material adverse change in
the MF Business since January 31, 1994, and the MF Business has been conducted
as of the date hereof, and will
14
<PAGE>
have been conducted as of the Closing Date, only in the ordinary and usual
course since January 31, 1994.
3.5 Disclaimer: Except as set forth in Article III of this
----------
Agreement, none of the parties has made any further representation or warranty,
either express or implied, concerning the subject matter of this Agreement and
none of the parties has relied on any such further representation or warranty.
This Agreement shall not be governed by the warranties provided by Article 2 of
the Uniform Commercial Code as adopted in any jurisdiction.
3.6 Survival: The parties' respective covenants, representations
--------
and warranties contained in this Agreement will survive the execution and
delivery of this Agreement and the Closing. Neither party will, however, have
any liability to the other arising solely out of a breach of any representation
or warranty contained in Section 3.4 of this Article III unless the party
claiming that such breach occurred delivers to the other party written notice
and a full explanation of the alleged breach on or before 5:00 p.m. (Atlanta,
Georgia time) on the first anniversary of the Closing Date.
Article IV
Conditions
----------
4.1 Conditions to Buyer's Obligations: The obligation of Buyer to
---------------------------------
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction of the following conditions at or before the Closing:
(a) The representations and warranties of Sellers contained in
this Agreement shall be true, accurate, and complete in all material respects
as of the date hereof and as of the Closing (as if such representations and
warranties had been made anew as of the Closing, except with respect to the
effect of the transactions contemplated or permitted by this Agreement);
(b) Sellers shall have performed and complied in all material
respects with all material agreements and conditions required to be performed
or satisfied by them under the terms of this Agreement;
(c) Sellers shall have taken all corporate and other proceedings
or actions to be taken by them in connection with the transactions contemplated
by this Agreement;
(d) There shall not have been issued and still in effect any
injunction or similar legal order prohibiting or restraining consummation of
any of the transactions herein contemplated, and no legal action or
governmental investigation shall be pending which is likely to result in
material adverse consequences to Buyer if the transactions contemplated by this
Agreement are consummated;
15
<PAGE>
(e) All governmental approvals and authorizations necessary for
consummation of the transactions contemplated hereby shall have been duly
issued or granted and any required governmental waiting period shall have
expired;
(f) Each agreement ("Related Agreements") set forth on Appendix
4.1(f) hereto shall have been executed and delivered on terms consistent with
those set forth on such Appendix 4.1(f);
(g) Sellers shall have obtained a release effective at or prior
to the Closing of all Encumbrances against the assets of the MF Business under
the MF Loans; and
(h) The Standard and Poors 500 Index shall not have dropped
below 339.53 since the date of this Agreement.
4.2 Conditions to Sellers' Obligations: The obligations of
----------------------------------
Sellers to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction of the following conditions at or before the
Closing:
(a) The representations and warranties of Buyer contained in
this Agreement shall be true, accurate and complete in all material respects as
of the date hereof and as of the Closing (as if such representations and
warranties had been made anew as of the Closing, except with respect to the
effect of the transactions contemplated or permitted by this Agreement);
(b) Buyer shall have performed and complied in all material
respects with all material agreements and conditions required to be performed
or satisfied by it under the terms of this Agreement;
(c) Buyer shall have taken all corporate and other proceedings
to be taken necessary in connection with the transactions contemplated by this
Agreement;
(d) There shall not have been issued and still in effect any
injunction or similar legal order prohibiting or restraining consummation of
any of the transactions herein contemplated, and no legal action or
governmental investigation shall be pending which is likely to result in
material adverse consequences to the Sellers if the transactions contemplated
by this Agreement are consummated;
(e) All governmental approvals and authorizations necessary for
consummation of the transactions contemplated hereby shall have been duly
issued or granted and any required governmental waiting period shall have
expired;
(f) The Related Agreements shall have been executed and
delivered; and
16
<PAGE>
(g) Varity shall have been released from all of its contingent
obligations pursuant to the MF Loans.
4.3 Parties' Best Efforts: From the date hereof to the Closing,
---------------------
the parties will cooperate and use reasonable efforts to cause the conditions
set forth in this Article IV to be satisfied on or before the Closing Date.
Article V
Actions Before Closing
----------------------
5.1 Investigation by Buyer: Between the date hereof and the
----------------------
Closing, subject to the obligation of confidentiality imposed by Section 11.1
hereof, Sellers shall afford to representatives of Buyer during normal business
hours, free and full access to all of the MF Business' assets, properties,
books, and records, and furnish to Buyer such information as to Sellers'
business, assets, liabilities, or condition of the MF Business as Buyer may
reasonably request.
5.2 Affirmative Covenants: Between the date hereof and the
---------------------
Closing, Sellers shall (and shall cause the Subsidiaries to) conduct the MF
Business only in the ordinary and usual course. Without limiting the
generality of the foregoing, Sellers shall (and shall cause the Subsidiaries
to):
(a) Use reasonable efforts to preserve intact the MF Business
relationships with suppliers, customers, employees, creditors, governmental
agencies and others having business dealings with the MF Business;
(b) Use reasonable efforts to preserve the MF Business' assets,
properties, business and rights;
(c) Maintain all of the MF Business' Proprietary Rights in
substantially the same standing as they exist on the date hereof and continue
the prosecution of all applications therefor;
(d) Maintain insurance covering the assets listed on the MF
Financial Statements and all other types of insurance covering the MF Business
at the same levels as such insurance coverage exists as of the date hereof;
(e) Continue performance in the ordinary course of the MF
Business' obligations under contracts, commitments, or other obligations to
which it or any of its assets or properties are bound; and
(f) Comply with all material (i) governmental issued laws,
regulations and orders applicable to the MF Business and its operations, and
(ii) awards, judgments,
17
<PAGE>
decrees and orders of any court, governmental authority or arbitration panel
binding upon the MF Business or applicable to its operations.
5.3 Negative Covenants: Between the date hereof and the Closing,
------------------
Sellers shall not (and shall not cause or permit any Subsidiary to) do any of
the following without the prior written approval of Buyer:
(a) Incur or permit the incurrence of any additional
indebtedness for borrowed money or incur any other individual obligation or
liability in excess of One Hundred Thousand Dollars ($100,000), except in the
ordinary course of the MF Business;
(b) Incur or voluntarily permit to be incurred any Encumbrances
on the MFGL Shares, the TAFE Shares, the Incidental Shares or any of the
Acquired Assets, except in the ordinary course of the MF Business;
(c) Except in accordance with past practice or general
collective bargaining agreements, increase the rate of compensation for any of
the MF Business' employees or otherwise enter into or alter any employment,
consulting or managerial services agreement or arrangement applicable to the MF
Business;
(d) Except for normal increases in accordance with past practice
or general collective bargaining agreements, commence, enter into or increase
any pension, retirement, profit sharing, employee stock option or stock
purchase, bonus, deferred compensation, incentive compensation, life insurance,
health insurance, fringe benefit or other employee benefit or welfare plan or
arrangement applicable to the MF Business;
(e) Sell, assign, transfer or dispose of (collectively,
"Transfer"), or enter into any agreement or arrangement to Transfer any of the
Acquired Assets or properties other than in the ordinary course of the MF
Business or Transfer or enter into any agreement or arrangement to Transfer the
MFGL Shares, the TAFE Shares or the Incidental Shares;
(f) Enter into any agreement with any federal, state or local
tax authority which requires the MF Business to pay any Taxes arising in
connection with the MF Business if such Taxes will not be paid prior to April
29, 1994, without the prior written consent of Buyer (which consent shall not
be unreasonably withheld);
(g) Enter into any individual transaction or contract or make
any individual commitment involving an amount in excess of Fifty Thousand
Dollars ($50,000) other than in the ordinary course of the MF Business; or
(h) Except as provided in Section 5.7 hereof, declare or pay any
dividends, or make any distributions on or with respect to any capital stock of
any Seller or any Subsidiary, to the extent any such dividends or distributions
would be paid or made with
18
<PAGE>
any Acquired Assets, the MFGL Shares, the TAFE Shares, the Incidental Shares or
any asset owned by MFGL or any Subsidiary.
5.4 Removal of Encumbrances: As and to the extent any Encumbrances
-----------------------
(including those under the MF Loans) may exist on the MFGL Shares, the TAFE
Shares or the Acquired Assets, Sellers shall take reasonable efforts to attempt
to remove such Encumbrances no later than the Closing.
5.5 Governmental Approval: If advisable for the completion of the
---------------------
transaction contemplated by this Agreement, Buyer and Sellers shall each
promptly file for approval of this transaction with U.K., Germany, French,
E.U., and U.S. authorities; including, if advisable, notifications relating to
the transaction contemplated hereby pursuant to Title II of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules of the
Federal Trade Commission thereunder. The parties shall cooperate in attempting
to secure the expiration of the U.S. or other waiting periods at the earliest
practicable date.
5.6 Consent: Sellers and Buyer shall work together to obtain
-------
required consents, approvals or waivers of any persons to carry out the
transaction contemplated by this Agreement. Buyer and Sellers shall each bear
fifty percent (50%) of all costs necessary to obtain such consent, approval or
waiver from an unrelated third party, other than those related to the MF Loans
(which shall be paid solely by Sellers). Without limiting the generality of
the foregoing, Buyer and Seller shall each bear fifty percent (50%) of all
costs incurred to obtain for Buyer all rights necessary for Buyer to continue
to use in the MF Business after the Closing all software used by Sellers
primarily in the MF Business prior to the Closing.
5.7 Indebtedness Payments:
---------------------
(a) On or before the Closing, Varity shall repay, or cause its
subsidiaries to repay, in full all intercompany indebtedness owed by or to MFGL
or any Subsidiary. Sellers shall be free to use the cash in the MF Business to
repay such intercompany indebtedness owed by MFGL or any Subsidiary. To the
extent that any Seller contributes cash to the MF Business to repay any such
intercompany debt and any such cash remains in MFGL or any Subsidiary after
such intercompany indebtedness is repaid, Sellers may cause such cash to be
distributed to any Sellers by means of a dividend, capital reduction,
redemption of the 'A' Deferred MFGL Shares or other method from MFGL or any
Subsidiary. The repayment of intercompany indebtedness contemplated by this
Section 5.7(a) is more fully illustrated in Appendix 5.7(a) hereto.
(b) On or before the Closing, Sellers shall repay in full the
indebtedness of the MF Business under the loans listed on Appendix 5.7(b)
hereto (collectively, the "MF Loans"), except for the foreign exchange
contracts listed thereon (which are addressed in Section 5.12 hereof). Sellers
shall be free to use the cash in the MF Business as of the Closing to repay the
MF Loans. Sellers represent and warrant that the intercompany
19
<PAGE>
indebtedness and the MF Loans to be repaid at Closing constitute all of the MF
Business' debt for borrowed money, except finance leases.
(c) The obligations of Varity and its subsidiaries for the
repayment of the MF Loans shall be limited to the difference between the MF
Loans at April 29, 1994 and the cash in the MF Business (including the amount as
of stage 1 intercompany loans as listed on Appendix 5.7(a) other than the
receivable from VHL) at April 29, 1994 (the "Loan Liability"). If the Loan
Liability is greater than the actual payment made by Sellers to repay the MF
Loans at Closing (the "Loan Repayment Amount"), then twenty-eight (28) days
after the Closing Sellers shall pay to Buyer the amount of such difference. If
the Loan Liability is less than the Loan Repayment Amount, then twenty-eight
(28) days after the Closing Buyer shall pay to Varity the amount of such
difference.
(d) If Buyer desires to assume all or any portion of the MF
Loans, and Sellers consent to such assumption (which consents shall not be
unreasonably withheld), Buyer and Sellers shall work together to have such
loans assumed by Buyer with a full release of any liability of Sellers and a
reduction in the Cash Consideration for the amount of the indebtedness so
assumed by the Buyer at the Closing, as more fully set forth on Appendix 5.7(a)
hereto.
(e) Sellers represent and warrant to Buyer that the principal
amount of the intercompany loans listed on Appendix 5.7(a) hereto have not
increased since April 1, 1994, and will not increase prior to the Closing.
5.8 Transfer of Associates Shares: Between the date hereof and
-----------------------------
the Closing, Varity shall transfer and assign, or shall cause its appropriate
subsidiary or affiliate to transfer and assign, all of the Associates Shares to
MFGL in exchange for certain shares of the capital stock of MFGL previously
issued to VHL (and being transferred to Buyer pursuant to this Agreement).
5.9 TAFE Shares: Prior to the Closing, Sellers shall use its best
-----------
efforts to obtain the consents of the other shareholders of TAFE to permit
Varity GmbH to transfer the TAFE Shares to Buyer pursuant to this Agreement.
If Buyer is unable to obtain such consents prior to the Closing, then the
Closing shall occur as provided under this Agreement, except that Sellers shall
not be obligated to deliver the TAFE Shares at Closing. As soon as practicable
thereafter, Sellers shall deliver either the TAFE Shares (if such consents are
obtained after the Closing) or the full amount of the proceeds (the "TAFE
Proceeds") received by Sellers upon the sale of the TAFE Shares to the other
TAFE shareholder(s) pursuant to the terms of the TAFE Articles of Association;
provided, however, that Sellers shall not agree with the other shareholders of
TAFE as to the amount of the TAFE Proceeds without the prior written consent of
Buyer (which consent shall not be unreasonably withheld). During the period
after the Closing Date until the TAFE Shares or TAFE Proceeds are delivered to
Buyer, between Buyer and Sellers, Buyer shall be treated as the beneficial
owner of the TAFE Shares and shall be entitled to all dividends paid on the
TAFE Shares during such period.
20
<PAGE>
5.10 Massey Ferguson Name: As soon as practicable after the
--------------------
Closing, Varity shall discontinue, and shall cause its direct and indirect
subsidiaries to discontinue, all uses of any corporate name, trademark, trade
name, service mark or other advertising symbol containing the words "Massey" or
"Ferguson" or the initials "MF," either alone or in combination with any other
words.
5.11 Structure of Transaction: In the event Buyer desires to
------------------------
restructure the transactions contemplated by this Agreement at or prior to the
Closing for tax planning purposes, Sellers shall cooperate with Buyer to effect
any such restructuring, and Buyer shall reimburse Sellers for any additional
reasonable costs incurred by Sellers in connection with any such restructuring.
5.12 Foreign Exchange Contracts: Buyer and Sellers shall work
--------------------------
together to have the MF Business' foreign exchange contracts remain in place or
assigned to Buyer with the Varity and VHL guarantees being fully released. To
the extent that Varity and VHL are not released as guarantors on arrangement in
place at the Closing, those arrangements shall remain in place until they
expire, with Buyer indemnifying Varity and VHL against any liability incurred
by them under those guarantees as a result of any action or omission of Buyer.
5.13 Redemption of 'A' Deferred MFGL Shares: Varity and VHL
--------------------------------------
severally undertake to procure that MFGL shall no later than two months from
the date of this Agreement, and in any event on or before Closing, purchase the
'A' Deferred MFGL Shares pursuant to and in accordance with Sections 171 - 181
(inclusive) of the Companies Act 1985 for an aggregate consideration no greater
than the amount of any cash contributed by a Seller to the MF Business and
remaining in MFGL, as contemplated by Section 5.7(a) hereof and subject in any
event to a maximum aggregate consideration of $38,895,000. If such purchase of
'A' Deferred MFGL Shares has not been completed on or prior to the Closing, VHL
undertakes to, and Varity undertakes to procure that VHL shall make a gift of
the 'A' Deferred MFGL Shares (for no consideration whatsoever) to MFGL at
Closing.
Article VI
Closing
-------
6.1 The Closing:
-----------
(a) For purposes hereof, the term "Closing" means the time at
which the transactions contemplated hereby shall be consummated after
satisfaction or waiver of the conditions set forth in this Agreement. Subject
to Sections 10,3 and 10.4 hereof, the Closing shall take place on a date (the
"Closing Date") on or after June 15, 1994 which is selected by Buyer and as to
which Buyer shall give Sellers at least five (5) business days advance notice.
The Closing shall occur at the offices of Troutman Sanders (counsel to Buyer),
600 Peachtree Street, N.E., Suite 5200, Atlanta, Georgia 30308-2216 at
10:00 a.m. (Atlanta time).
21
<PAGE>
(b) If any portion of the Cash Consideration is to be obtained by
Buyer through a public offering of securities, it is understood and agreed that,
if Buyer so elects, all documents, certificates and other items which Buyer and
Sellers are required to deliver hereunder shall be delivered to the Escrow Agent
on the Closing Date (the "Escrow Closing") and that Buyer shall have an
additional period of ten (10) business days following the Escrow Closing to
deliver the Cash Consideration contemplated hereunder. Upon delivery of the Cash
Consideration by Buyer, the Escrow Agent shall deliver to Seller and Buyer all
of the documents, certificates and other items deposited with the Escrow Agent
at the Closing and required hereunder to be delivered to the respective parties
at the Closing. In the event that Buyer does not deliver the Cash Consideration
within the ten (10) business days contemplated hereunder, the Escrow Agent shall
return to Buyer and Sellers the documents, certificates and other items
deposited by each of them at the Closing; and the rights and obligations of the
parties shall continue as provided in this Agreement. In the event of an Escrow
Closing pursuant to this Section 6.1, Seller shall waive all of the conditions
to its obligations under this Agreement at the time of the Escrow Closing except
the condition that Seller receive the Cash Consideration. For purposes of this
Agreement, if the parties utilize an Escrow Closing and the Cash Consideration
is paid to the Escrow Agent within ten (10) business days of the Escrow Closing,
the date of the "Closing" shall be deemed to be the date of the Escrow Closing.
Any failure by Buyer to deliver the Cash Consideration within the five (5)
business days contemplated herein shall not be deemed a breach of this Agreement
and shall not preclude Buyer from performing under this Agreement on or before
the November 5, 1994 termination date provided for in Section 10.3 of this
Agreement.
6.2 Buyer's Obligations: At the Closing, Buyer shall deliver to
-------------------
Sellers the following:
(a) The documents, certificates and other items which Buyer is
required to deliver hereunder or which Sellers may reasonably request to
evidence Buyer's due performance of its obligation under this Agreement;
(b) The Cash Consideration and stock certificates representing
the Share Consideration;
(c) The Related Agreements;
(d) An executed instrument satisfactory to Sellers pursuant to
which Buyer assumes the Assumed Liabilities as of the Closing; and
(e) An opinion or opinions of counsel to Buyer in form
reasonably acceptable to Sellers and usual and customary for a transaction of
this nature.
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<PAGE>
6.3 Sellers' Obligations: At the Closing, Sellers shall deliver
--------------------
or cause to be delivered to Buyer the following:
(a) The documents, certificates, and other items which Sellers are
required to deliver hereunder or which Buyer may reasonably request to evidence
Sellers' due performance of their obligations under this Agreement;
(b) The Related Agreements;
(c) An executed bill of sale and such other documents
satisfactory to Buyer pursuant to which the Asset Sellers convey the Acquired
Assets to Buyer;
(d) The share certificates for the MFGL Shares, the TAFE Shares
(subject to Section 5.9 hereof) and the Incidental Shares, duly endorsed in
blank for transfer or accompanied by duly executed blank stock powers;
(e) An update as of the Closing Date of the representations and
warranties of Sellers contained in Sections 3.4(f) and 3.4(o) hereof; and
(f) An opinion or opinions of counsel to Sellers in form
reasonably acceptable to Buyer and usual and customary for a transaction of
this nature.
Article VII
Actions After Closing
---------------------
7.1 Further Conveyances: After the Closing, Sellers shall execute
-------------------
and deliver to Buyer such additional instruments of conveyance or other
documents or certificates as Buyer may reasonably request to complete or
evidence the transactions contemplated by this Agreement.
7.2 Further Consents to Assignment: As and to the extent Buyer and
--------------------------------
Sellers have failed to obtain prior to Closing the consent, approval or waiver
of any person to carry out the transaction contemplated by this Agreement:
(a) the parties will use their best efforts to obtain from such
person or persons the consents, approvals or novations (or effective waivers
thereof); and
(b) if the parties are unable to obtain any such consent,
approval, novations or waiver, then (i) this Agreement shall not constitute or
be deemed to be a contract to assign the same if any attempted assignment
without such consent, approval, novation or waiver would constitute a breach of
such item or create in the issuer or any party thereto the right or power to
cancel or terminate such item, and (ii) Sellers will cooperate with Buyer in
any reasonable arrangement designed to provide Buyer with the benefit of
23
<PAGE>
Sellers' rights under such item, including enforcement (at Buyer's expense) of
any and all rights of Sellers against such person as Buyer may reasonably
request; and
(c) Buyer and Sellers will each bear fifty percent (50%) of all
costs incurred to obtain such consent, approval, novation, waiver or benefits.
7.3 Access to Former Business Records:
---------------------------------
(a) For a period of ten (10) years following the Closing, Buyer
will retain in accordance with Sellers' records retention policy all current
business records relating to the MF Business. During such period, Buyer will
afford duly authorized representatives of Sellers, during normal business
hours, free and full access to all of such records and will permit such
representatives to make abstracts from, or to take copies of any such records,
or to obtain temporary possession of any thereof as may be reasonably required
by Sellers. During such period, Buyer will cooperate with Sellers, and cause
employees of the MF Business to cooperate with Sellers in furnishing
information, evidence, testimony, and other assistance, at no cost to Sellers,
in connection with any action, proceeding, tax audits, or investigation
relating to Sellers' conduct of the MF Business prior to the Closing.
(b) For a period of ten (10) years following the Closing,
Sellers will retain in accordance with their record retention policy all
current business records relating to the MF Business, including, without
limitation, all tax information. During such period, Sellers will afford duly
authorized representatives of Buyer, during normal business hours, free and
full access to all of such records and will permit such representatives to make
abstracts from, or take copies of any such records, or to obtain temporary
possession of any thereof as may be reasonably required by Buyer.
7.4 Financial Data: Buyer shall prepare and submit to Sellers
--------------
at the time required under Sellers' existing financial policies, financial data
for the monthly, quarterly and year end periods ending hereafter and on or
prior to the Closing Date in the form normally delivered by the MF Business to
Sellers.
7.5 Taxes: Buyer shall prepare and file with the appropriate
-----
authorities all tax returns and all annual reports (Form 5471) which are
required or advisable to be filed after the Closing, for any tax period which
relates to the ownership or operation of the MF Business or any business or any
assets being sold under this Agreement. Buyer shall promptly pay all Taxes due
on said tax returns which could otherwise become the responsibility of Sellers.
Buyer shall cause its employees to assist Sellers in complying with tax audits,
defending and supporting tax positions taken and preparing, reviewing and
producing records, returns or documents (or any other compliance requirements)
relating to any Taxes, fees, assessments or charges paid or payable by Sellers,
the MF Business or on any business or any assets being sold under this
Agreement. Sellers shall reimburse Buyer for Buyer's reasonable cost of
providing such assistance related to any tax periods ending prior to the Closing
Date.
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<PAGE>
7.6 Tax Consents and Losses: Buyer shall make all appropriate
-----------------------
returns and sign all group relief surrender consent letters as the Sellers may
require that are necessary or advisable to effect the surrender for all tax
periods ended on or prior to the Closing. The surrender of tax losses by the
companies in the MF Business for tax periods ended on or prior to closing shall
be made without payment by the claimant company. In this regard, both the Buyer
and the Seller shall make all reasonable endeavors to comply with the provisions
of sections 155 to 158 of the Companies Act 1985. The surrender of tax losses by
the companies in the MF Business will first be applied against companies in the
MF Business before surrendering to other UK based Varity subsidiaries which
prior to closing were part of the UK Tax Group. Buyer undertakes to make no
variations to existing claims and surrenders without the Seller's consent. Buyer
undertakes not to disclaim any capital allowances in respect of any tax period
ended prior to closing. Buyer and Sellers shall not adjust or agree to any
adjustments to the taxable profits or losses of any Company in the MF Business
for any accounting period ending on or prior to Closing Date without the consent
from the other party.
7.7 Tax Elections: Buyer shall inform Varity if the acquisition
-------------
of any shares purchased under this Agreement is treated like an asset
acquisition (such as a Section 338(g) election under U.S. tax law). Buyer
agrees to indemnify Sellers at the time of payment for any additional tax costs
(including the use of the U.S. Federal income tax loss carry forwards) paid by
Sellers directly resulting from any such treatment upon receipt of proof (on a
with/without basis) of such costs from Sellers. Sellers shall assist Buyer
prior to Closing with the calculations required to determine the effects of
such treatment on the Buyer and Sellers. Buyer shall provide analysis of the
purchase price allocation included at Schedule 2.8 to the Sellers to reflect
such treatment and facilitate computation of tax costs to Sellers.
7.8 Product Liability Assistance: For such time as the product
----------------------------
liability specialists of the MF Business hired by Buyer in connection with the
transactions contemplated by this Agreement remain employed by Buyer, Buyer
agrees to provide to the Asset Sellers, at their request, assistance from such
product liability specialists to assist Sellers with the defense of product
liability claims retained by the Asset Sellers under Section 2.6 hereof.
Sellers shall reimburse Buyer for Buyer's reasonable costs of providing such
assistance.
Article VIII
Employees and Employee Benefits
-------------------------------
8.1 Employment: Effective as of the Closing, each employee of the
----------
Asset Sellers who is a part of the MF Business (except those listed on Appendix
8.1 hereto) shall cease to be an employee of such entity and will become an
employee of Buyer (on their existing terms and conditions of employment).
Employees of such entities who are on lay-off, workers compensation,
disability, medical or other such leave at the time of the Closing shall have
the same reemployment rights with Buyer as they had with such entity.
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<PAGE>
8.2 Pension Plans: Buyer will not become a sponsor of the MF
-------------
Business' North American pension plans covering the MF Business' current or
former employees and no assets or liabilities of any such plan will be
transferred to or assumed by Buyer or any plan or trust maintained by Buyer.
Further credit for service and vesting under the MF Business' North American
pension plan will end for North American employees of the MF Business at the
Closing. Buyer will not assume any pension benefit liabilities related to former
employees of MF GmbH who are not employed by the MF Business at the Closing.
Buyer will assume liability for pension benefits of employees of MF GmbH who
become employees of the Buyer at the Closing. Buyer will assume Sellers'
obligations under all other pension plans for employees of the MF Business and
the assets of such plans allocable to the transferred employees will be
transferred to Buyer. Buyer and Seller shall mutually agree on the manner in
which the assets of the Varity U.K. Executive Pension Plan are to be reasonably
apportioned between the employees of the MF Business who are participants under
such plan and the other individuals who are participants under such plan. Each
party reserves the right to not offer or to change pension benefits in the
future when and as it deems appropriate.
8.3 Retiree Benefits: Buyer shall be responsible for any retiree
----------------
benefits which it chooses to provide to employees of the MF Business who retire
after the Closing. Buyer agrees at the Closing to count each MF Business
employee's years of service with the MF Business prior to the Closing for
vesting purposes under its retiree benefit plans. Each party reserves the
right to not offer or to change retiree benefits in the future when and as it
deems appropriate.
8.4 Accrued Vacation: As of the Closing, Buyer shall assume
----------------
all obligations of the appropriate Asset Seller for vacation accrued as of the
Closing by the MF Business' employees who become Buyer's employees.
8.5 Severance: If after the Closing Buyer terminates any
---------
individual who became an employee of Buyer pursuant to Section 8.1 above, Buyer
shall give said employee severance pay and benefits at least equal to those
provided to such employee by the appropriate Asset Seller prior to the Closing
and shall count service with the Buyer, Varity and Varity's subsidiaries for
this calculation. Buyer shall be solely responsible for the cost and adequacy
of any employee severance payment incurred in Buyer's termination of any
employees of the MF Business. Buyer shall indemnify and hold harmless Sellers,
as well as Varity, Varity's subsidiaries and their employees and agents from
any and all liabilities related to all such terminations and severance.
Article IX
Indemnification
---------------
9.1 Indemnification of Sellers: Buyer shall indemnify, defend,
--------------------------
and hold Sellers, Sellers' subsidiaries and affiliates as well as their
officers and directors harmless from and
26
<PAGE>
against any and all liabilities, damages, losses, claims, costs, and expenses
(including attorneys' fees) arising out of or resulting from any
misrepresentation or breach of warranty by Buyer for which notice is given by
Sellers within the time period specified in Section 3.6 hereof, Buyer's failure
to perform the Assumed Liabilities or, subject to Section 10.4 hereof, the
nonperformance of any obligation to be performed on the part of Buyer under this
Agreement.
9.2 Indemnification of Buyer: Notwithstanding the disclosure of
------------------------
any information by Sellers to Buyer in this Agreement or otherwise, or the
discovery of any information by Buyer in its due diligence review of the MF
Business, Sellers, jointly and severally, shall indemnify, defend and hold
harmless Buyer, its subsidiaries and affiliates and their respective officers
and directors from and against any and all liabilities, damages, losses,
claims, costs and expenses (including attorneys' fees) arising out of or
resulting from:
(a) any misrepresentation or breach of warranty under Section
3.4 of this Agreement of which notice is given by Buyer within the period
specified in Section 3.6 hereof;
(b) any misrepresentation or breach of warranty under this
Agreement (other than under Section 3.4 hereof);
(c) any Asset Seller's failure to fully pay or satisfy any of
the Excluded Liabilities when due and payable;
(d) the nonperformance of any obligation to be performed by any
Seller pursuant to this Agreement; or
(e) any of the following: (i) any violation of any U.S. or
Canadian federal, state, provincial or local statute, ordinance or governmental
regulation relating to pollution or protection of the environment in connection
with the use and ownership of the MF Business assets before the Closing or the
conduct of the MF Business before the Closing; (ii) any claim of any current or
former employee of any Asset Seller or of the MF Business in connection with
retiree pensions or benefit plans maintained by Varity or any Varity subsidiary
or affiliate in North America; (iii) any claim of any former employee of any
Asset Seller or of the MF Business (determined as of the Closing Date) in
connection with retiree pensions or benefit plans maintained by Varity or any
Varity subsidiary or affiliate in Germany; (iv) Taxes (at the time of payment)
relating to the conduct of the MF Business during any tax period ended or
ending prior to the Closing (in excess of the amount of such taxes accrued on
the books of the MF Business as of the Closing), including any adjustments or
penalties relating to any such taxes (even if such adjustments affect tax
periods after the Closing); (v) any product liability claims made prior to the
Closing Date, and any product liability claims made on or after the Closing
Date relating to events (i.e., the date of accident or loss) occurring prior to
January 31, 1986, which relate to Products produced, designed, developed,
manufactured, assembled, sold, serviced or licensed in connection with the MF
27
<PAGE>
Business; (vi) any claims made with respect to the MF Loans; (vii) any claims,
other than product liability, warranty, product return and dealer termination
claims (except as otherwise provided in Section 9.2(e)(v) hereof), arising as a
result of any action or omission of MCC or any Seller's ownership of any
interest in MCC (it being the understanding and belief of the parties hereto
that all such liabilities and obligations were dismissed pursuant to insolvency
proceedings for MCC); or (viii) any claims arising as a result of the
termination of any MF Industrial dealer.
9.3 Claims: If either party desires to make a claim against the
------
other under Section 9.1 or 9.2 hereof which does not involve a claim by any
person other than the parties, then such party shall make such claim by
promptly delivering written notice to the other. If either Sellers or Buyer
(the "Claimant") desires to make a claim against the other (the "Indemnitor")
under Section 9.1 or 9.2 hereof which involves a claim by a person other than
the parties, then such claim will be made in the following manner and be
subject to the following terms and conditions:
(a) Notice: The Claimant will give prompt notice to the
------
Indemnitor of any demand, claim, or threat of litigation or the actual
institution of any action, suit, or proceeding (collectively, a "Claim") at any
time served on or instituted against the Claimant with respect to which the
Claimant believes it would have a right of indemnification under Section 9.1 or
9.2 hereof. In providing such notice, the Claimant shall only state the
existence of such Claim and shall not admit or deny the validity of the facts
or circumstances out of which such Claim arose. Solely for purposes of
determining whether the Claimant is entitled to indemnification under Section
9.1 or 9.2 hereof, the alleged facts or circumstances on which such Claim is
based shall be deemed to be true until proven otherwise.
(b) Responsibility for Defense: Within thirty (30) days
--------------------------
after receipt of any such notice, but not less than five (5) working days prior
to the time the Claimant is required to respond to a Claim, the Indemnitor
will, by giving written notice to the Claimant, have the right to assume
responsibility for the defense of the Claim in the name of the Claimant or
otherwise as the Indemnitor may elect; provided that the Indemnitor
-------- ----
also agrees that it would have responsibility to indemnify the Claimant with
respect to such Claim. Otherwise, the Claimant will have responsibility for
the defense of the Claim. Subject to the provisions of subsection (c) below,
the party having responsibility for defense of a Claim (the "Defending Party")
will have the full authority to defend such Claim or appeal any judgment or
ruling of a court or other tribunal in connection with such Claim in its own
name and/or in the name of the other party.
(c) Right to Participate: Notwithstanding a defending
--------------------
party's responsibility for the defense of a Claim, the other party shall have
the right to participate, at its own expense and with its own counsel, in the
defense of a Claim and the defending party will consult with the other party
from time to time on matters relating to the defense of such Claim. The
defending party will provide the other party with copies of all pleadings and
material correspondence relating to such Claim.
28
<PAGE>
(d) Settlement: Indemnitor will provide the Claimant with
----------
timely written notice of any proposed adjustment, compromise, or other
settlement of a Claim which the Indemnitor intends to propose or accept. If
the Claimant fails to provide the Indemnitor with timely written notice of
objection to such settlement, then the Indemnitor shall have the authority to
propose or accept such settlement and enter into any agreement, in its own name
and/or in the name of the Claimant (as long as Indemnitor has the ability on its
own to fully comply with such settlement), giving legal effect to such
settlement. If the Claimant objects to a settlement under which the only relief
is the payment of money damages solely by the Indemnitor, then the Indemnitor
may, if it so elects, tender the defense to the Claimant by paying to the
Claimant the amount of money proposed to be paid in settlement of the Claim, in
which case the Indemnitor shall have no further liability to the Claimant
hereunder with respect to such Claim and the Claimant shall have full authority
for the future defense of such Claim and full responsibility for any and all
liabilities, obligations, costs, and expenses resulting therefrom.
9.4 Limitation on Indemnification: Notwithstanding the provisions
-----------------------------
of Section 9.2 hereof, Sellers will not be obligated to indemnify, defend, or
hold Buyer harmless from or against any liability, damage, loss, claim, cost,
or expense pursuant to Sections 9.2(a), 9.2(b) or 9.2(d) unless and to the
extent (a) a given claim exceeds One Hundred Thousand Dollars ($100,000) or (b)
all claims in the aggregate exceed Five Hundred Thousand Dollars ($500,000).
In no event will Sellers' total obligation to Buyer under Section 9.2(a) hereof
exceed, in the aggregate, Thirty Million Dollars ($30,000,000).
Article X
Amendment, Waiver, Termination and Limitation of Buyer's Liability
------------------------------------------------------------------
10.1 Amendment: This Agreement may be amended at any time prior to
---------
the Closing but only by written instrument executed by all of the parties
hereto.
10.2 Waiver: Buyer may at any time waive compliance by Sellers,
------
and Sellers may at any time waive compliance by Buyer, with any covenants or
conditions contained in this Agreement but only by written instrument executed
by the parties waiving such compliance, i.e., Buyer or Sellers, as the case may
be. No such waiver, however, shall be deemed to constitute the waiver of any
such covenant or condition in any other circumstances or the waiver of any
other covenant or condition.
10.3 Termination: Subject to Section 10.5 hereof, this agreement
-----------
may be terminated at any time prior to the Closing, but only by written
instrument signed by all of the parties hereto. This Agreement shall terminate
automatically and without further action by the parties hereto in the event the
Closing shall not have occurred by November 5, 1994, unless otherwise
extended by all of the parties hereto to writing. Such a termination shall not
release any party from breach of contract liability to the extent of such
party's responsibility for the failure of the Closing to occur in a timely
manner.
29
<PAGE>
10.4 Limitation of Buyer's Liability: Notwithstanding anything
-------------------------------
else contained herein to the contrary, in the event Buyer breaches this
Agreement because Buyer is unable, after exercising all reasonable efforts, to
obtain financing on commercially reasonable terms for the funds to be used as
the Cash Consideration, Sellers' sole remedy for such breach shall be as
follows:
(a) In the event the Closing does not occur on or prior to
September 6, 1994, as a result of Buyer's failure to obtain such financing, on
September 7, 1994, Buyer shall pay to Varity (via wire transfer of immediately
available funds) the sum of Five Million Dollars ($5,000,000.00) (the
"Extension Payment"); and
(b) In the event the Closing does not then occur on or prior to
November 5, 1994, as a result of Buyer's failure to obtain such financing,
Varity shall be entitled (as Sellers' sole remedy against Buyer hereunder) to
file a demand for arbitration with the American Arbitration Association for any
additional damages it may have as a result of said breach (to be heard by three
(3) arbitrators pursuant to the rules of the American Arbitration Association)
on the earlier to occur of: (i) November 6, 1995; or (ii) the day immediately
following the Closing Date of any sale of all or substantially all of the MF
Business by Sellers; provided, however, that Buyer's total liability for such
breach shall not be more than Fifteen Million Dollars ($15,000,000.00);
provided further, that the Extension Payment shall be credited against Buyer's
first Five Million Dollars ($5,000,000.00) of liability as determined by the
arbitration proceeding.
10.5 Force Majeure: If prior to the Closing Date the performance
-------------
of Buyer's or Sellers' material obligations hereunder become impossible or
impracticable by reason of any act of God, natural disaster, actions or decrees
of governmental bodies or other events of force majeure not the fault of Buyer
or Sellers, respectively, then Buyer or Sellers, as the case may be, shall
immediately give notice thereof to the other. Upon receipt of such notice, the
obligations of Buyer and Sellers under this Agreement shall be immediately
suspended until such performance becomes possible and practicable. If such
conditions of force majeure then continue for ninety (90) consecutive days, and
Buyer or Sellers, as the case may be, remain unable to perform its or their
obligations hereunder, then either Buyer or Sellers may terminate this
Agreement by giving written notice thereof to the other.
Article XI
Miscellaneous
-------------
11.1 Confidentiality: After the Closing, Sellers will hold all
---------------
confidential information concerning the MF Business in confidence for at least
five (5) years unless such information becomes lawfully obtainable from other
sources.
11.2 Severability: If any provision of this Agreement shall
------------
finally be determined to be unlawful, then such provision shall be deemed to be
severed from this Agreement and every other provision of this Agreement shall
remain in full force and effect.
30
<PAGE>
11.3 Expenses: Each party shall bear its own expenses incurred in
--------
connection with this Agreement and the transactions contemplated hereby whether
or not such transactions are consummated.
11.4 Taxes: Buyer and Sellers shall each bear fifty percent (50%)
-----
of the amount of all transfer, sales, stamp, VAT, gross receipts, turnover, use
or other similar taxes or fees (other than taxes based on the income of any
party) which may result from the purchase of the 'A' Deferred MFGL Shares
and/or the sale and transfer of the MFGL Shares, the TAFE Shares, the
Incidental Shares and/or the Acquired Assets from Sellers to Buyer. To the
extent any such taxes or fees are refunded, Buyer and Sellers shall each be
entitled to fifty percent (50%) of such refund.
11.5 Notices:
-------
(a) All notices, requests and other communications hereunder
shall be in writing and shall be sent by hand delivery, by certified or
registered mail (return-receipt requested), by facsimile or by a recognized
national overnight courier service as set forth below:
If to Buyer, to:AGCO Corporation
4830 River Green Parkway
Duluth, Georgia 30136
Fax No.: (404) 813-6158
Attention: Michael F. Swick, Esq.
If to Sellers, to:Varity Corporation
672 Delaware Avenue
Buffalo, New York 14209
Fax No.: (716) 888-8065
Attention: Kenneth L. Walker, Secretary
(b) Notices delivered pursuant to Section 11.5(a) hereof shall
be deemed given: at the time delivered, if personally delivered,; three (3)
business days after being deposited in the mail, if mailed; one (1) business
day after being sent, if faxed; and one (1) business day after timely delivery
to the courier, if by overnight courier service.
(c) Any party hereto may change the address to which notice is
to be sent by written notice to the other parties hereto in accordance with
this Section 11.5.
11.6 Assignment: This Agreement shall be binding upon and inure to
----------
the benefit of the successors of each of the parties hereto, but shall not be
assignable by any party without the prior written consent of the other;
provided, however, that Buyer may assign its rights and delegate its
- - -------- -------
duties hereunder to one or more subsidiaries or affiliates of Buyer without the
prior consent of Sellers, as long as Buyer shall guaranty the performance by
such assignee of Buyer's obligations under this Agreement.
31
<PAGE>
11.7 Third Parties: This Agreement is not intended to, and shall
-------------
not, create any rights in or confer any benefits upon anyone other than the
parties hereto, as well as its subsidiaries and affiliates.
11.8 Incorporation by Reference: The Appendices to this Agreement
--------------------------
constitute integral parts of this Agreement and are hereby incorporated into
this Agreement by this reference.
11.9 Counterparts: This Agreement may be executed in one or more
------------
counterparts each of which shall be deemed to be an original, but all of which
together shall constitute the same Agreement. Any signature page of any such
counterpart, or any electronic facsimile thereof, may be attached or appended
to any other counterpart to complete a fully executed counterpart of this
Agreement, and any facsimile transmission of any signature shall be deemed an
original and shall bind such party.
11.10 Governing Law: This Agreement shall be governed by and
-------------
construed in accordance with the internal substantive laws of the State of
New York.
11.11 Complete Agreement: This Agreement sets forth the entire
------------------
understanding of the parties hereto with respect to the subject matter hereof
and supersedes all prior letters of intent, agreements, covenants,
arrangements, communications, representations, or warranties, whether oral or
written, by any partner, officer, employee, or representative of either party
relating thereto; provided, however, that nothing contained herein shall in any
way affect any rights or obligations of any party to: (i) that certain
Partnership Interest Purchase Agreement, dated as of February 8, 1994, between
and among AGCO Acceptance Corporation, Agricredit Acceptance Corporation and
Varity; (ii) that certain Asset Purchase and Sale Agreement, dated as of
November 27, 1992, between and among Agricredit Acceptance Company, Agricredit
Acceptance Corporation, Varity and Massey Ferguson Credit Corporation; or (iii)
that certain General Partnership Agreement, dated as of November 27, 1992, by
and between AGCO Acceptance Corporation and Agricredit Acceptance Corporation.
11.12 Bulk Sales: Buyer waives compliance by Sellers as part of
----------
this transaction with the provisions of any bulk sales laws of any state in the
United States.
32
<PAGE>
IN WITNESS WHEREOF, Buyer and Sellers have each caused this Agreement to
be duly executed, as of the date first above written.
AGCO CORPORATION
By:/s/ Robert J. Ratliff
-----------------------------------
Title:Chairman
--------------------------------
VARITY HOLDINGS LIMITED
By:/s/ Frederick J. Chapman
-----------------------------------
Title:Vice President and Treasurer
--------------------------------
VARITY GmbH
By:/s/ Beat Landis
-----------------------------------
Title:Managing Director
--------------------------------
MASSEY FERGUSON GmbH
By:/s/ Stephen Lupton
-----------------------------------
Title:Geschaeftsfuehrer
--------------------------------
33
<PAGE>
MASSEY FERGUSON INDUSTRIES LIMITED
By:/s/ Kenneth L. Walker
-----------------------------------
Title:Secretary
--------------------------------
MASSEY FERGUSON (DELAWARE) INC.
By:/s/ Kenneth L. Walker
-----------------------------------
Title:Secretary
--------------------------------
VARITY CORPORATION
By:/s/ Kenneth L. Walker
-----------------------------------
Title:VP Legal & Secretary
--------------------------------
34
<PAGE>
Appendix 1.1
CERTAIN DEFINITIONS
-------------------
Where used in the Purchase and Sale Agreement and identified with initial
capital letters, the following terms have the meanings set forth below:
'A' Deferred
MFGL Shares As defined in the second recital
Acquired As defined in Section 2.3.
Assets
Affiliate An entity in which MFGL either directly or indirectly owns an
equity interest of less than fifty percent (50%) but more
than one percent (1%).
Agreement As defined in the preamble.
Asset Sellers As defined in Section 2.2.
Associates
Shares As defined in the first recital.
Assumed As defined in Section 2.5.
Liabilities
'B' Deferred
MFGL Shares As defined in the second recital
Buyer As defined in the preamble.
Cash As defined in Section 2.7.
Consideration
Claim As defined in Section 9.3(a).
Claimant As defined in Section 9.3.
Closing As defined in Section 6.1.
Closing Date As defined in Section 6.1.
Comagi Shares As defined in the first recital.
<PAGE>
Default An event, circumstance, or occurrence which constitutes a
breach or default (or which by detection, lapse of time,
and/or notice would constitute a breach or default) with
respect to a contract, agreement, order, decree or other
commitment or obligation.
Defending As defined in Section 9.3(b).
Party
Encumbrance An encumbrance or lien having a material adverse effect on
the thing or right so encumbered (other than the encumbrances
created by the MF Loans), including, without limitation, any
materialman's lien, mechanic's lien, encroachment, easement,
security interest, hypothecation, equity, charge,
restriction, claim, pledge, reversionary interest, executory
interest, or other conflicting interest.
Escrow Agent A banking corporation or a trust company having capital and
surplus in excess of $100 million and having its principal
executive office located in New York, New York or Atlanta,
Georgia. The Escrow Agent shall be designated by Buyer,
subject to Sellers' consent which shall not be unreasonably
withheld. Buyer shall give Sellers written notice of its
designation of the Escrow Agent at least ten (10) days prior
to the Escrow Closing, and if Sellers object to Buyer's
designation of the Escrow Agent, Sellers shall propose an
alternative Escrow Agent in writing within five (5) days of
Buyer's notice of designation hereunder.
Excluded As defined in Section 2.4.
Assets
Excluded As defined in Section 2.3(a).
Cash
Excluded As defined in Section 2.6.
Liabilities
Extension
Payment As defined in Section 10.4(a).
German Real
Property The office building owned by Varity GmbH and used in the MF
Business in Eschwege, Germany.
Incidental As defined in the first recital.
Shares
2
<PAGE>
Indemnitor As defined in Section 9.3(a).
Loan Liability As defined in Section 5.7(c).
Loan Repayment As defined in Section 5.7(c).
Amount
LTC Shares As defined in the first recital.
MCC Massey Combines Corporation and any predecessor to the
business thereof.
MF Business As defined in the eleventh recital.
MF Financial As defined in Section 3.4(a).
Statements
MF GmbH As defined in the preamble.
MF GmbH As defined in the sixth recital.
Business
MF Industrial The industrial machinery business previously conducted by
MFGL and currently conducted by Fermec Holdings Limited as
its successor.
MF Loans As defined in Section 5.7(a).
MFDI As defined in the preamble.
MFDI Business As defined in the eighth recital.
MFGL As defined in the second recital.
MFGL Business As defined in the third recital.
MFGL Shares As defined in the second recital.
MFIL As defined in the preamble.
MFIL Business As defined in the seventh recital.
Options As defined in Section 3.3(a).
3
<PAGE>
Ordinary MFGL
Shares As defined in the second recital
Ownership Such ownership as confers upon the person having it the
complete, good, and marketable title and control over the
thing or right owned, free and clear of any and all
Encumbrances except Permitted Encumbrances.
Permitted
Encumbrances Such Encumbrances which: (a) arose in the ordinary course of
the MF Business; (b) do not secure or otherwise relate to
borrowed money; and (c) do not cover the MFGL Shares, the
TAFE Shares or all or substantially all of the assets of any
Seller or any Subsidiary.
Products As defined in the third recital.
Proprietary
Rights Rights consisting of, conferred by, or otherwise relating to
(i) patents and patent applications (including all renewals,
extensions, or modifications thereof), (ii) trade secrets,
including, without limitation, know-how, inventions,
computerized data and information, computer programs,
business records, files and data, discoveries, formulae,
production outlines, product designs, manufacturing
information, processes and techniques, drawings, and customer
lists, (iii) the Trademarks, Trademark Licenses, service
marks, and applications therefor, (iv) copyrights, (v) trade
names, (vi) other intellectual property, and (vii) other
technology.
Purchase Price As defined in Section 2.7.
Related As defined in Section 4.1(f).
Agreements
Reports As defined in Section 3.1(h)
SEC The United States Securities and Exchange Commission.
Seller As defined in the preamble.
Sellers' As defined in Section 1.3.
Knowledge
Share As defined in Section 2.7.
Consideration
4
<PAGE>
STMCL Shares As defined in the first recital.
Subsidiary An entity in which MFGL either directly or indirectly owns an
equity interest of equal to or greater than fifty percent
(50%).
TAFE As defined in the fourth recital.
TAFE Business As defined in the fifth recital.
TAFE Proceeds As defined in Section 5.9.
TAFE Shares As defined in the fourth recital.
Taxes Federal, state, county, local, foreign or other income,
sales, real estate, excise, employee payroll or other taxes
or assessments of any kind whatsoever.
Trademark As defined in the tenth recital
Business
Trademark As defined in the tenth recital.
Licenses
Trademarks As defined in the tenth recital.
Transfer As defined in Section 5.3(e).
U.K. Tax Group As of the end of any tax year ended or ending prior to the
Closing, VHL and any of its direct or indirect subsidiaries
(which are at least 75% owned by VHL or any other such
subsidiary) incorporated under the laws of the United
Kingdom.
Varity As defined in the preamble.
Varity Farm
Business As defined in the eleventh recital.
Varity GmbH As defined in the preamble.
VHL As defined in the preamble.
5
<PAGE>
APPENDIX 2.3(d)
---------------
REAL PROPERTY LEASES TO BE ASSUMED BY BUYER
-------------------------------------------
1. Lease of facilities at 1800 Appleby Line, Unit #9, Burlington, Ontario,
Canada L7L GA1
2. Lease of facilities at 2800 Skymark Avenue, Unit 4A, Level 3, Building 1,
Mississauga, Ontario, Canada L4W 5A6
3. Lease of facilities at 5255 Triangle Parkway, Suite 150, Norcross, Georgia
USA 30092
4. Lease of facilities at 5440 N.W. 33rd Avenue, Suite 106, Ft. Lauderdale,
Florida USA 33309
<PAGE>
APPENDIX 2.4(c)
---------------
EXCLUDED TRADEMARKS AND TRADE NAMES
-----------------------------------
All trademarks, corporate names and trade names utilized primarily by Varity,
Varity's Kelsey - Hayes business or Perkins business, including, without
limitation, "Varity", "Kelsey-Hayes", "Perkins" and variations thereon.
<PAGE>
APPENDIX 3.1(f)
---------------
BUYER'S REQUIRED CONSENTS
-------------------------
. Buyer's Board of Directors
. Federal Trade Commission (Hart-Scott-Rodino)
. other foreign government consents
. ITT Commercial Finance
. Rabobank
<PAGE>
APPENDIX 3.2(f)
---------------
SELLERS' REQUIRED CONSENTS
--------------------------
. Sellers' respective Boards of Directors
. Federal Trade Commission (Hart-Scott-Rodino)
. other foreign government consents
<PAGE>
APPENDIX 3.3(b)
---------------
MFGL SUBSIDIARIES AND AFFILIATES
--------------------------------
See Attached
<PAGE>
MASSEY FERGUSON ISEKI AUSTRALIA December 1993 1-Australia 2
LIMITED * Changes since previous issue
Incorporated
- - ------------
December 23, 1921 under the Companies
Act of the State of Victoria as
H.V. McKay Proprietary Limited, a
private stock company.
Change of Name
- - --------------
H.V. McKay Massey Harris Proprietary
Limited, on October 8, 1930.
Massey-Ferguson (Australia) Limited,
On April 10, 1958.
Massey Ferguson Iseki Australia
Limited on July 1, 1992.
Head Office
- - -----------
2 Devonshire Road, Sunshine
Victoria 3020, Australia.
Cable Address: MASFERG MELBOURNE
Telex Number: AA31075
Fax: 312-6279
Auditors
- - --------
KPMG Peat Marwick
161 Collins Street
Melbourne 3000
Australia
Tel: (03) 288 5555
Fax: (03) 288 5253
Solicitors
- - ----------
Mallesons Stephen Jaques
Rialto
525 Collins Street
Melbourne, Victoria 3000
Tel: (03) 619 0619*
Fax: (03) 614 1329
Capital
- - -------
Authorized: 250,000 shares of 50 cents each
Issued: 229,520 shares of 50 cents each
Shareholders
- - ------------
Massey Ferguson Nederland
Holding BV: 172,135
Iseki & Co. Limited: 57,380
Varity Corporation:
A. Verhagen: 1
I Dujic: 1
J.L. Esson: 1
Varity Corporation 2
* Directors
- - -----------
D. Chauvin : Chairman
A. Verhagen : Deputy Chairman & M.D.
D.J. Roache
J.H.V. Bradley
I. Dujic
J.L. Esson
Y. Hamada
M. Abe
Principal Officers
- - ------------------
A. Verhagen M.D. & CEO
I. Dujic
J.H. Bradley
J.L. Esson
E.G. Pask (Secretary)
Fiscal Year
- - -----------
Year ending January 31
Annual Meeting
- - --------------
Once at least in every calendar year not more than 15 months after the preceding
meeting and not more than 6 months after the close of the
fiscal year.
Shareholders' Meetings
- - ----------------------
Notice required: 14 days' notice except in the case of a meeting at which it is
proposed to pass a special resolution when 21 days is necessary. With the
consent of all shareholders, not notice is necessary.
Quorum: Two shareholders present in person or by proxy or attorney.
Directors
- - ---------
Not less than two nor, until otherwise determined by a general meeting of
shareholders, more than 14. No shareholding qualification.
Directors' Meetings
- - -------------------
Notice required: Length of notice not less than 14 days.
To be held quarterly or more often as the directors determine.
Quorum: Two directors, of whom one must be a director appointed by MF Nederland
and one a non-executive director appointed by Iseki & Co.
Regular date: None
Operations
- - ----------
Distribution of general line of agricultural implements and combines, and
distribution of agricultural and compact tractors and hay
equipment.
<PAGE>
A.C.N. 059 752 313 Pty. Ltd May 1993 1-Australia 3
* Changes since previous issue
*Incorporated
------------
On 13th April 1993
under the laws of the
Commonwealth of Australia
*Head Office
-----------
2 Devonshire Road
Sunshine
Victoria 3020
Australia
*Auditors
--------
To be appointed.
*Solicitors
----------
To be appointed.
*Capital
-------
Authorised $1,000,000 divided into
1,000,000 shares of $1 each.
Issued: $2 being 2 shares of $1 each.
* Shareholders
-------------
Massey Ferguson Iseki Australia Ltd
- - - 2 Shares.
*Directors
---------
A. Verhagen
I. Dujic
J.H.V. Bradley
J.L. Esson
*Secretary
---------
E.G. Pask
*Principal Officers
------------------
*Fiscal Year
-----------
Year Ending January 31
*Annual Meeting
--------------
Once at least in every calendar year
and not more than 15 months after the
preceding meeting and not more than 6
months after the close of the fiscal year.
*Shareholders' Meetings
----------------------
Notice required - 14 days notice except
in the case of a meeting at which it is
proposed to pass a special resolution
when 21 days is necessary. With the
consent of all shareholders the notice
may be shortened to any convenient period.
*Directors
---------
Not less than 2 nor more than 10.
No shareholding qualification.
*Directors' Meetings
-------------------
Notice required - any convenient notice
which is agreed.
Quorum: Two directors
*Operations
----------
Dormant
<PAGE>
MASSEY FERGUSON COMMERCIAL LIMITADA February 1993 1-Brazil 2
Incorporated
- - ------------
October 21, 1991
Registered Office
- - -----------------
Av. Dr Arnoldo, 2036
Sao Paulo
Auditors
- - --------
Dormant company
Capital
- - -------
CrS 3,000,000 fully paid up
Shareholders
- - ------------
Massey Ferguson Group Ltd: 2,999,998
Massey Ferguson (United Kingdom) Ltd : 2
Solicitors
- - ----------
Colangelo, Araujo, Monteiro Advocacia S/C
Av. Dr Arnoldo No. 2036
Sao Paulo
Tel: 864 3255
Fax: (011) 262 3377
Directors
- - ---------
Macellara )
Colangelo ) Delegate Managers
Fiscal Year
- - -----------
January 1 to December 31
Operations
- - ----------
Dormant
<PAGE>
SCANMASKIN A.S. May 16, 1991 1-Denmark 1
* Changes since previous issue
Incorporated
- - ------------
January 9, 1981 as ApS HVKMD
5 nr.62;
Change of Name
- - --------------
Massey-Ferguson Danmark A.S.
as of June 30, 1981;
Dania Traktor A.S.
as of August 31, 1984
following sate of company;
Massey-Ferguson Danmark A.S.
as of June 26, 1986 following
reacquisition of company.
ScanMaskin A/S : November 1991.
Head Office
- - -----------
Borgmester Christiansens Gade 55
2450 Copenhagen SV
Denmark
*Auditors
--------
KPMG C. Jespersen
Borups Alle 177
Postboks 250
2000 Frederiksbere
Tel: 45 38 18 3000
Solicitors
- - ----------
Reumert & Partners
26 Bredgade
DK 1260, Copenhagen
Contact: Olaf Eskildsen
Tel: 45 33 93 39 60
Fax: 45 33 93 39 50
Capital
- - -------
Authorized: DKK 5,500,000
Issued: All
*Shareholders
------------
Massey-Ferguson Nederland
Holding B.V. (100%)
*Directors
---------
K.O. Freiesleben
C.S.D. Lupton
D.I. Franklin
Officers
- - --------
(No company secretary)
Fiscal Year
- - -----------
Year ending January 31
Annual Meeting
- - --------------
Quorum:
Directors
- - ---------
Number: 3 minimum
Directors' Meetings
- - -------------------
Quorum: Not specified
Operations
- - ----------
Importer and distributor of Massey-Ferguson
Farm and Industrial machinery and Kubota
mini excavators.
<PAGE>
MASSEY-FERGUSON S.A. December 1993 1-France 1
* Changes since previous issue
Incorporated
- - ------------
October 27, 1925, as Societe Anonyme des
Establissements Industriels de Marquette, a
public company.
Change of Name
- - --------------
Cie Massey-Harris, as of
January 26, 1927.
Cie Massey-Harris-Ferguson, as of
November 26, 1954.
Massey-Ferguson S.A. as of
March 27, 1958
Massey Ferguson S.A. as of
October 16, 1992
Head Office
- - -----------
Avenue Blaise Pascal
B.P. 307
60026 Beauvais, Cedex, France
Cable: Masferg Beauvais
Telex: 140396 Masferg Beauvais
Commissaires Aux Comptes
- - ------------------------
KPMG Audit Department Fiduciaire
de France - 47 Rue de Villiers
92200 NEUILLY-SUR-SEINE
and SCP Claude ANDRE & Autres -
2 Bis rue de Villiers -
92300 LEVALLOIS PERRET
Solicitors
- - ----------
Cabinet JALENQUES, BOYER CHAMMARD
& Associes
Maitre J. LECASBLE
Maitre S. BRIANT
47 Avenue Hoche
75008 Paris, France
Notary
- - ------
Maitre J.G. Tamboise
20 rue de Bourgogne,
59000 Lille, France
Maitre F. Naquet
28 Rue des Vignes
60130 Saint Just En Chausse
Capital
- - -------
940,000,000 Fr. consisting of
9,400,000 shares of 100 Fr. each.
*Shareholders
------------
Massey-Ferguson Nederland
Holding BV 9,399,994 shares 99.99%
Massey-Ferguson Finance
Company of Canada Limited 1 share)
Massey Ferguson Delaware 1 share)
D. Chauvin 1 share)
G. Patrick 1 share)
R. Markwell 1 share)
C.S.D. Lupton 1 share)
Conseil d'Administration
- - ------------------------
D. Chauvin, Chairman & PDG
G. Patrick
R. Markwell
C.S.D. Lupton
Fiscal Year
- - -----------
Year ending January 31.
Annual Meeting
- - --------------
Within six months of January 31,
but no penalty for holding at
later date.
Shareholders' Meetings
- - ----------------------
Notice: 15 days
Quorum: 50% of issued share
capital
Conseil d'Administration
- - ------------------------
Not less than three nor more than 12
Qualification: One share (by French
law, these must be kept at Head Office
in France).
Conseil d'Administration Meetings
- - ---------------------------------
Notice: Unspecified
Quorum: One-half
Date: Minimum 2 per year
Operations
- - ----------
Manufacture and sale of farm
equipment.
<PAGE>
MASSEY FERGUSON FINANCE May 1993 France
FRANCE S.N.C. * Changes since previous issue
Incorporated
- - ------------
Societe en nom collectif
August 26, 1992
under the laws of France
49% subsidiary of
MASSEY FERGUSON S.A.
Registered Office
- - -----------------
112 Ter Rue Cardinet
75017 PARIS
FRANCE
Head Office
- - -----------
Avenue Blaise Pascal
60026 BEAUVAIS Cedex
FRANCE
Auditors
- - --------
KPMG AUDIT DEPARTEMENT FIDUCIAIRE
DE FRANCE
47 Rue de Villiers
92200 NEUILLY SUR SEINE
Solicitors
- - ----------
Capital
- - -------
10 000 000 Fr divided into
100 000 shares of 100 Fr each
Shareholders
- - ------------
De Lage Landen Leasing S.A. (51%)
Massey Ferguson S.A. (49%)
Managers
- - --------
De Lage Landen Leasing S.A.
Represented by Josephus KAMEN
Massey Ferguson S.A.
Represented by Richard MARKWELL
Supervisory Board
- - -----------------
On behalf of De Lage Landen Leasing S.A.
Josephus KAMEN
Karel SCHELLENS
On behalf of Massey Ferguson S.A.
Richard MARKWELL
Pierre FONT
Fiscal Year
- - -----------
Year ending 31 December
Directors' Meetings
- - -------------------
Once a year within six months after the
close of business year.
Operations
- - ----------
Provide financial services (leading, credit sale)
in respect of products sold by authorised Massy
Ferguson's dealers.
<PAGE>
G.M.F.E. May 1993 France
* Changes since previous
Incorporated
- - ------------
Societe en nom collectif
under the laws of France
25% subsidiary of
MASSEY FERGUSON S.A.
Head Office
- - -----------
55 Avenue Ampere
458 SAINT JEAN DE BRAYE
FRANCE
Auditors
- - --------
Solicitors
- - ----------
Capital
- - -------
4 000 000 Fr divided into 40 000 shares
of 100 Fr each,
Shareholders
- - ------------
GREENLAND FRANCE S.A. (75%)
MASSEY FERGUSON S.A. (25%)
Managers
- - --------
GREENLAND FRANCE S.A.
Supervisory Board
- - -----------------
On behalf of GREENLAND FRANCE S.A. :
Tony J. KIEWIK
Herve BALLU
Denis LEYLAVERGNE
On behalf of MASSEY FERGUSON S.A. :
Dominique CHAUVIN
Richard MARKWELL
Fiscal Year
- - -----------
Year ending 30 November
Directors' Meeting
- - ------------------
Once a year within six months after
the close of business year.
Operations
- - ----------
Sale of farm machinery and industrial
machiney.
<PAGE>
MASSEY-FERGUSON S.p.A. April 1994 1-Italy 1
* Changes since previous issue
Incorporated
- - ------------
Massey-Ferguson-Landini S.p.A.
incorporated under the laws of Italy
on March 2, 1961.
Change of Name
- - --------------
On November 18, 1975 Massey-
Ferguson ICM S.p.A. was merged into
Massey-Ferguson-Landini S.p.A. the
new company thus formed being named
Massey-Ferguson S.p.A.
Registered Office
- - -----------------
Via De Marchi 15
40123 Bologna
Italy
Auditors
- - --------
KPMG Peat Marwick Fides SNC
Viale Aldo Moro 64
40127 Bologna
Solicitors
- - ----------
Studio Manca, Amenta, Biolato,
Corrao & Co.
Piazza Adriana 12
00193 Rome
Tel: 6 637 9041
Fax: 6 654 5882
Studio Legale Pellegrini Cislaghi
Via Nerino 8
20123 Milano
Italia
Contact: Raffaele De Falco
Tel: 2 80 1031
Fax: 2 80 1034
Statutory Auditors
- - ------------------
Rag. N. Amicucci, Chairman
Avv. Giuseppe V. Biolato
Rag. Maurizio Baroni
Alternates
- - ----------
Dott. M.G. Ridola
Rag. Andrea Baroni
Capital
- - -------
Authorized and issued: 5,951,025
shares of 2,500 lire each
Total capital: 14,877,562,500
Shareholders
- - ------------
Massey-Ferguson Nederland
Holding B.V.: 1,950,625 shares
Varity Corporation: 400 shares
Directors
- - ---------
G. Patrick
C.S.D. Lupton
Fiscal Year
- - -----------
Year Ending January 31
Shareholders' Meetings
- - ----------------------
Annual Meeting must be held within
six months of fiscal year end.
Annual or special meetings require
15 days notice.
Quorum is a majority of the
shareholders present or represented
by proxy.
Directors' Meetings
- - -------------------
Notice: Eight days or three days by
cable in emergency.
Quorum: Majority of the Board.
Directors
- - ---------
Minimum of three; Maximum nine.
* Operations
----------
Non-trading
<PAGE>
LANDINI S.p.A April 1994 2-Italy 2
* Changes since previous
Incorporated
- - ------------
Landagri S.R.L.
incorporated under the laws of Italy
on March 17. 1989
Change of Name
- - --------------
One November 24, 1989 Landagri S.R.L.
changed to Landini S.R.L. Subsequently
changed to Landini S.p.A.
Head Office
- - -----------
via Matteotti 7
42042 Fabricco (R.E.)
Italy
Registered Office
- - -----------------
Via Matteotti 7
42042 Fabricco (R.E.)
Italy
Auditors
- - --------
Hodgson Landau Brands S.A.S.
P.Z.A. Velasca 5
20122 Milano
Solicitors
- - ----------
(TBA)
Statutory Auditors
- - ------------------
Sig. Paolo Giulini, Chairman
Sig. Mario Broggi
Sig. Vittorio Biolato
Alternates
- - ----------
Sig. Ettore Tartaglini
Sig. Nicola Amicucci
* Capital
- - ---------
Lit. 24,200,000,000
* Quotaholders
------------
Argo S.p.A. 1,234,200
Massey Ferguson S.A. 704,220
Iseki: 481,580
*Directors
---------
V. Morra
P. Morra
G. Anchesci
G. Giovanardi
C.S.D. Lupton
J.D. Pitt
Fiscal Year
- - -----------
Year ending November 30.
Quotaholders' Meetings
- - ----------------------
Annual Meeting must be held within
six months of fiscal year end.
Annual or special meeting require 15 days
notice.
Quorum is a majority of the quotaholders
present or represented by proxy, when all
quotaholders present represent more than
the half of the capital.
Directors Meetings
- - ------------------
Notice: Eight days or three days by cable in
emergency.
Quorum: Majority of the Board
Directors
- - ---------
Minimum Three; Maximum twelve
No quotaholding qualification.
Operations
- - ----------
Manufacture and sale of tractors and other
company products.
<PAGE>
MASSEY FERGUSON February 1993 1-Neth 3
NEDERLAND HOLDING B.V. * Changes since previous issue
Incorporated
- - ------------
November 13, 1989
Head Office
- - -----------
Nassaulaan 11
2514 JS The Hague
Netherlands
Tel: 070-3630930
Auditors
- - --------
KPMG Klynveld Kraayenhof & Co.,
The Hague
Solicitors
- - ----------
De Brauw Blackstone Westbroek
Atrium, 7 Verdieping
Strowinskylaan 3115
1077 zx Amsterdam
Tel: 020-5481-481
Fax: 020-5481-485
*Capital
-------
Authorised: Dfl. 100,000,000
(10,000,000 shares)
Issued: Dfl. 82,572,900
Shareholders
- - ------------
Massey Ferguson Group
(International) Limited
Directors
- - ---------
F.J. Chapman
H.F. Eschauzier
C.S.D. Lupton
Fiscal Year
- - -----------
Year ending February 1
Annual Meeting
- - --------------
Quorum: (TBA)
Timing: (TBA)
Directors
- - ---------
Number (TBA)
Directors' Meetings
- - -------------------
Quorum: (TBA)
Notice: (TBA)
Operations
- - ----------
Holding and investment company for
Massey Ferguson non-U.K. businesses.
<PAGE>
MASSEY FERGUSON SERVICES N.V. April 1994 1-Neth. Ant. 1
* In Liquidation * Changes since previous issue
Incorporated
- - ------------
As Massey-Ferguson Services N.V. on
August 31, 1959, in Curacao, by Articles
of Incorporation registered under the laws
of the Netherlands Antilles.
Change of Name
- - --------------
To Massey-Ferguson-Perkins Services N.V.
on December 12, 1978.
To Massey-Ferguson Services N.V. on
October 11, 1979.
Executive Offices
- - -----------------
Abraham de Veerstraat 7A
Curacao, Netherlands Antilles
Cable Address: MASFERSERV CURACAO
Tel: (599-9) 613967
Fax: (599-9) 613167
Capital
- - -------
Authorized: 60,000 shares of $10
(U.S.) p.v.Issued: 13,334 shares of $10
(U.S.) p.v.
* Shareholders
------------
Massey-Ferguson Nederland Holding B.V.:
100%
Auditors
- - --------
KPMG Klynveld Peat Grootens
P.O. Box 3082/Kaya Flamboyan 5
Curacao, Netherlands Antilles
Tel: (599-9) 370500
Fax: (599-9) 375588
Accountant
- - ----------
Karl H. Sjak Shie
KPMG Datam Mirza N.V.
P.O. Box 3082/Dr. Hugenholtzweg 40
Curacao, Netherlands Antilles
Tel: (599-9) 617155
Fax: (599-9) 613905
Solicitors
- - ----------
Mr G.C.A. Smeets
P.O. Box 3048
Emancipatie Blvd 18
Curacao, Netherlands Antilles
Tel: (599-9) 378222/374222
Fax: (599-9) 374268/374741
Directors
- - ---------
A. Boomgaart
A. Brobbel
C.S.D. Lupton
D.J. Roache
Officers
- - --------
A. Boomgaart, Managing Director
A. Brobbel, Managing Director
C.S.D. Lupton, Managing Director
D.J. Roache, Managing Director
Fiscal Year
- - -----------
Year ending February 1.
Annual Meeting
Not later than eight months after
close of fiscal year.
Shareholders' Meetings
- - ----------------------
Notice: Normally, not less than 10
days, five days for urgent matters.
Quorum: Majority of shares, share-
holders present or represented by proxy.
All meetings shall be held in
Curacao, Sint Maarten
(Netherlands Antilles Part) or Bonaire.
Directors may take resolutions
from shareholders in writing if
all shareholders agree.
Directors
- - ---------
Not less than three. No shareholding
qualification.
Directors' Meetings
- - -------------------
Meetings shall be held in Curacao,
Sint Maarten (Netherlands Antilles
part), or Bonaire.
Quorum: Two.
Notice: 24 hours.
* Operations
----------
The corporation has broad legal
powers.
<PAGE>
EIKMASKIN A.S. June 1993 1-Norway 1
* Changes since previous issue
Incorporated
- - ------------
Acquisition date:
December 31, 1989
Head Office
- - -----------
JaHavagen 10
Stavanger
4030 Hinna
Norway
Tel: (Country 47) 457-6011
Fax: (Country 47) 457-0479
Auditors
- - --------
KMPG
Oslo
Solicitors
- - ----------
Arntzen Underland & Co.,
Fr. Nansens Pl.9
0160 Oslo 1
Contact: Sven Steen
Tel: 47 2 42 4227
Fax: 47 1 42 4851
Capital
- - -------
Authorized and issued:
NOK 66,700,000 divided into
66,700 shares each of
NOK 1,000, fully paid
Shareholders
- - ------------
Massey Ferguson Nederland
Holding B.V. 66,700 shares
*Directors
---------
Egil Eik
D.I. Franklin
S. Gjennestad
J. Haaland
C.S.D. Lupton
R. Fiska
Officers
- - --------
(No company secretary)
Fiscal Year
- - -----------
Year ending January 31
(to be changed)
Annual Meeting
- - --------------
Quorum: (TBA)
Directors
- - ---------
Number
: (TBA)
Directors' Meetings
- - -------------------
Quorum:
Notice: (TBA)
Operations
- - ----------
Importer and distributor of Massey
Ferguson farm and industrial machinery,
cars, lawn and garden equipment.
<PAGE>
MASSEY-FERGUSON IBERIA S.A. April 1994 1-Spain 1
* Changes since previous issue
Incorporated
- - ------------
November 20, 1989
Head Office
- - -----------
Prol Avenida Rafael
de Casanovas S/N
Mollet Del Valles
08100 Barcelona
Spain
Tel: 34-35-703-880
Fax: 34-35-702-873
Auditors
- - --------
No auditors.
Solicitors
- - ----------
Ms. Avelina deLeon
Prol & Associados
Enrique Granados 137-3/o/ 1/a/
08007 Barcelona
Spain
Tel: 010 343 415 0728
Fax: 010 343 217 0391
*Capital
-------
Authorized: ESP 473 million
Issued: 4,730,000 shares of
ESP 100 each
*Shareholders
------------
Massey-Ferguson Nederland
Holding B.V. 4,730,000
*Directors
---------
D.I. Franklin
C.S.D. Lupton
D.J. Roache
J.E. Puente
Secretary
- - ---------
C.S.D. Lupton
Fiscal Year
- - -----------
January 31
Annual Meeting
- - --------------
Quorum: 25% of shares present
or by proxy
Timing: Within first 6 months of the
end of each financial year.
Directors
- - ---------
Number: Not less than 2 nor more than 9
Directors' Meetings
- - -------------------
Quorum: 50% plus one
Notice: At least 15 days
Operations
- - ----------
Import, warehousing and distribution
of Massey Ferguson wholegoods and parts.
<PAGE>
OLEMA MASKIN AB April 1993
* Changes since previous issue
Incorporated
- - ------------
1991-03-01
Change of Name
- - --------------
- - -
Head Office
- - -----------
P.O. Box 18
Danmarksgatan 55
S-75103 Uppsala
Sweden
Tel: 010 46 18 11 1220
Fax: 010 46 18 13 0061
Auditors
- - --------
Bohlins KPMG
Box 16106
S-10323
Stockholm
Solicitors
- - ----------
Upsala Advokatbyra
Box 1444, S-751 44 Uppsala 1
Contact: Per Johan Arvidson
Tel: 010 47 18 13 9610
Fax: 010 47 18 15 8834
Capital
- - -------
SEK 15.000.050.-
Shareholders
- - ------------
Massey Ferguson Nederland
Holding B.V.
Directors
- - ---------
D.I, Franklin
C.S.D. Lupton
J. Bostrom
L-G Rahm
Principal Officers
- - ------------------
- - -
Fiscal Year
- - -----------
31 January
Annual Meeting
- - --------------
- - -
Shareholders' Meetings
- - ----------------------
Latest 6 months after
January 31st
Directors
- - ---------
See above
Directors' Meetings
- - -------------------
No specific requirements according
to law and no other schedule is formed.
Operations
- - ----------
Import and distribution of agricultural machinery.
Uppsala
Staffanstorp
subsidiary:
K.L. Maskin AB Kvanum
" Lidkoping
<PAGE>
MASSEY FERGUSON April 1994 1-Switz. 1
INTERNATIONAL AG * Changes since previous issue
Incorporated
- - ------------
November 9, 1960, in Zug by Articles
of Association registered under the
laws of Switzerland under the name of
Agrotrac AG.
Change of Name
- - --------------
To Massey-Ferguson International AG
on October 16, 1964
Registered Office
- - -----------------
Tribschenstrasse 7
CH-6005 Luzern, Switzerland
Tel: 041-448333
Telex: 865544 VAR CH
Telefax: 041-444508
Solicitors
- - ----------
Pestalozzi Gmuer & Patry
Loewenstrasse 1
8001, Zurich, Switzerland
Contact: Dr. Karl Arnold
Tel: 411 217 9111
Fax: 411 217 9217
Auditors
- - --------
KPMG Fides Peat,
Lucerne
Capital
- - -------
1,000 Nominative shares par value
Sw. Frs. 1,000 each
- - - SW. Frs. 1,000,000
Shareholders
- - ------------
Massey-Ferguson Nederland
Holding B.V.: 996 shares
Directors' Qualifying
Shares: 4 shares
Directors
- - ---------
Dr. K. Stocker
Dr. K. Arnold
A.G. Moon
B. Landis
Officers
- - --------
A.G. Moon, Chairman
Fiscal Year
- - -----------
Year ending February 1
Annual Meeting
- - --------------
Once a year within six months after the close of business year.
Shareholders' Meetings
- - ----------------------
Convened by publication in the Swiss Official
Gazette of Commerce at least 20 days before
the date of the meeting.
Quorum: More than one half of share capital.
Directors
- - ---------
Two or more members as elected in General
Meeting for a period of one year.
Qualification: One share
Directors' Meetings
- - -------------------
No regular meetings.
Operations
- - ----------
The Company is incorporated with broad powers to hold shares in enterprises at
home and abroad, to trade in agricultural machinery, to engage in financial
activities, acquire, sell and exploit licences, patents, commissions, acquire,
sell, and administer real estate.
Branch Office
- - -------------
Singapore
Czechoslavakia
Hungary
<PAGE>
MASSEY FERGUSON February 1993 1-Switz. 5
FINANCE AG * Changes since previous issue
Incorporated
- - ------------
October 12, 1973, in Zug by
Articles of Association registered
under the laws of Switzerland.
Registered Office
- - -----------------
Tribschenstrasse 7
CH-Luzern, Switzerland
Tel: 041-448333
Telex: 865544 VAR CH
Telefax: 041-444508
Auditors
- - --------
KPMG Fides Peat,
Lucerne
*Solicitors
----------
Pestalozzi Gmuer & Patry
Loewenstrasse 1
8001, Zurich, Switzerland
Contact: Dr. Karl Arnold
Tel: 411 217 9111
Fax: 411 217 9217
Capital
- - -------
2,240 registered shares par
value Sw. Frs. 1,000 each -
Sw. Frs. 2,240,000.
Shareholders
- - ------------
Massey Ferguson Nederland Holding B.V.
2,235 shares
Directors' Qualifying Shares:
5 shares
Directors
- - ---------
Dr. K. Stocker
Dr. K. Arnold
F.J. Chapman
B. Landis
D.J. Roache
Officers
- - --------
D.J. Roache, Chairman
Dr. K. Stocker, Secretary
Fiscal Year
- - -----------
Year ending February 1
Annual Meeting
- - --------------
Within six months after fiscal
year-end.
*Shareholders' Meetings
----------------------
Convened by notice given at least
20 days before the date of the
meeting.
Quorum: More than one half of share
capital.
Directors
- - ---------
Two or more members as elected
in General Meeting for a period
of one year.
Qualification: One share.
Directors' Meetings
- - -------------------
No regular meetings.
Operations
- - ----------
The objects of the Company are
financial transactions of all
kinds, particularly the
financing of trading operations.
<PAGE>
MASSEY-FERGUSON SERVISLERI December 1993 1-Turkey 1
ANONIM SIRKETI * Changes since previous issue
Incorporated
- - ------------
March 11, 1969 under the laws
of Turkey, as Massey-Ferguson
Change of Name
- - --------------
Massey-Ferguson Servisleri
Anonim Sirketi, as of
July 4, 1988.
Head Office
- - -----------
c/o Mafer A.S.,
Abdilpekci Cad.No.7/17,
Arman Palas
Nisantasi
Istanbul, Turkey
Solicitors
- - ----------
Emil H. Franko & Partners
Valikonagi Caddesi No. 33/6
Harbiye
Istanbul, Turkey
Tel: 172 2055/56/57
Telex: 25242 EHF TR
Fax: 1305747
Capital
- - -------
TL.80,000,000 - (160,000
shares of par value TL.500
each)
Shareholders
- - ------------
Massey-Ferguson Nederland
Holding B.V.:
159,500 shares (99.6875%)
Mafer A.S.:
450 shares ( .28125%)
Agah Aral:
20 shares ( 0.125%)
Omer Aral:
20 shares ( 0.125%)
Sadi Hasip Aral:
10 shares ( 0.00625%)
*Directors
---------
M.H. Norton, Chairman
P.J. Brown
C.S.D. Lupton
R. White
Sadi Aral, Vice Chairman
Agah Aral
Omer Aral
Officers
- - --------
As above and Emil Franko as
Secretary.
Fiscal Year
- - -----------
Year ending October 31.
Annual Meeting
- - --------------
Before end of month of March following
fiscal year-end.
Notice for Meetings
- - -------------------
Seven days.
Quorum: majority
Directors
- - ---------
Not less than three.
Operations
- - ----------
Import/export of farm machinery and
spare parts. Provision of technical
information, assistance and services to
local licensee (Uzel) and local
manufacturers of components
(sub-contractors).
<PAGE>
MASSEY FERGUSON (UNITED April 1994 1-U.K. 5
KINGDOM) LIMITED * Changes since previous issue
Registered number 509133
Incorporated
- - ------------
June 24, 1952 under the English Companies
Act, 1948, as Harry Ferguson of Germany
Limited, a private limited liability company.
Change of Name
- - --------------
Massey-Harris-Ferguson (Germany) Limited
as of September 20, 1954. Massey-Ferguson
(Germany) Limited, as of April 1, 1958.
Massey-Ferguson (United Kingdom) Limited,
as of September 1, 1964.
Massey Ferguson (United Kingdom) Limited
as of September 14, 1992.
Registered Office
- - -----------------
Stareton, Kenilworth
Warwickshire CV8 2LJ
England
Principal Place of Business
- - ---------------------------
P.O. Box 62 Banner Lane,
Coventry CV4 9GF, England.
Auditors
- - --------
KPMG Peat Marwick
Peat House
45 Church Street
Birmingham B3 2DL
Rel: 021 233 1666
Fax: 021 233 4390
Solicitors
- - ----------
Wragge & Co.
Bank House
55 Colmore Row
Birmingham B3 2AS
Tel: 021 233 1000
Fax: 021 214 1099
Capital
- - -------
Authorized: 155,000,000
Ordinary Shares of (Pounds)1 each.
Issued: 151,135,779
Ordinary shares
Shareholders
- - ------------
Massey Ferguson Manufacturing
Limited: 151,135,778 Ordinary Shares;
Massey Ferguson Group (International)
Limited: 11 Ordinary shares (in trust for
Massey Ferguson Manufacturing Limited)
Directors
- - ---------
D. Chauvin
D.I. Franklin
P. Wilkinson
C.S.D. Lupton
Secretary
- - ---------
C.S.D. Lupton
Fiscal Year
- - -----------
Year ending January 31
Annual Meeting
- - --------------
Within 15 months of previous
Annual Meeting.
Shareholders' Meetings
- - ----------------------
Notice required: 21 days
Quorum: Two members
Directors
- - ---------
Not less than two, nor more than
eighteen. No shareholding qualification.
Retirement: all at each
Annual General Meeting
Directors' Meetings
- - -------------------
Notice required: Unspecified
Quorum: Two directors
Date: Held only as necessary
Operations
- - ----------
Sales of farm machinery and
industrial machinery.
* Branch Office
-------------
Dublin
<PAGE>
MASSEY FERGUSON April 1994 1-U.K. 6
MANUFACTURING LIMITED * Changes since previous issue
Registered number 571559
Incorporated
- - ------------
September 14, 1956, under the
English Companies Act, 1948, as
Massey-Harris-Ferguson (Export)
Limited, a private company.
Change of Name
- - --------------
Massey-Harris-Ferguson (Export)
as of November 1, 1956.
Massey-Ferguson (Export) Limited as
of April 1, 1958.
Massey-Ferguson Manufacturing Limited
as of October 3, 1983.
Massey Ferguson Manufacturing Limited
as of September 14, 1992.
Registered
- - ----------
Stareton, Kenilworth
Warwickshire CV8 2LJ
England
Principal Place of Business
- - ---------------------------
P.O. Box 62
Banner Lane
Coventry CV4 9GF
Auditors
- - --------
KPMG Peat Marwick
Peat House
45 Church Street
Birmingham B3 2DL
Rel: 021 233 1666
Fax: 021 233 4390
Solicitors
- - ----------
Wragge & Co.
Bank House
55 Colmore Row
Birmingham B3 2AS
Tel: 021 233 1000
Fax: 021 214 1099
Capital
- - -------
Authorized:
(Pounds)150,000,000 divided into -
3,000 8% Cumulative Redeemable
Participating Reference Shares
of (Pounds)1 each;
149,997,000 Ordinary Shares
of (Pounds)1 each
Issued:
144,263,725 Ordinary Shares
of (Pounds)1 each
* Shareholders
------------
Massey Ferguson Group
Limited: 100%
*Directors
---------
C.S.D. Lupton
D.J. Roache
D. Chauvin
Secretary
- - ---------
C.S.D. Lupton
Fiscal Year
- - -----------
Year ending January 31
Annual Meeting
- - --------------
Within 15 months of previous
Annual Meeting.
Shareholders' Meetings
- - ----------------------
Notice required 21 days
Quorum: Two members
Directors
- - ---------
Not less than two, nor more
than eighteen. No shareholding
qualification.
Retirement: all at each Annual
General Meeting.
Directors' Meetings
- - -------------------
Notice required: Unspecified
Quorum: Two directors
Date: No regular date.
Operations
- - ----------
Manufacture of farm machinery.
<PAGE>
MASSEY FERGUSON TRACTORS LIMITED April 1994 1-U.K. 10
* Changes since previous issue
Registered number 571884
Incorporated
- - ------------
September 24, 1956 under the
English Companies Act, 1948, as
Massey-Harris-Ferguson (London)
Limited, as a private limited
liability company.
Change of Name
- - --------------
Massey-Ferguson (London) Limited,
as of April 1, 1958.
Massey-Ferguson (Europe) Limited,
as of May 7, 1973.
Massey-Ferguson (World Export Operations) Limited as of October 22, 1979.
Massey-Ferguson Group Limited as of
December 30, 1986.
Massey-Ferguson Tractors Limited
as of December 11, 1989.
Massey Ferguson Tractors Limited
as of September 14, 1992
Registered Office
- - -----------------
Stareton, Kenilworth
Warwickshire
England
Principal Place of Business
- - ---------------------------
P.O. Box 62
Banner Lane
Coventry CV4 9GF, England
Auditors
- - --------
Not appointed
Solicitors
- - ----------
Wragge & Co.
Bank House
55 Colmore Row
Birmingham B3 2AS
Tel: 021 233 1000
Fax: 021 214 1099
Capital
- - -------
Authorized and issued: 1,000
Ordinary Shares of (Pounds)1 each.
* Shareholders
------------
Massey Ferguson (United Kingdom)
Limited : 1000 Shares
Directors
- - ---------
D. Chauvin
A.D. Jones
R. White
G.A.V. Owens
N.H. Crighton
F. Cunliffe
J. Lee
A.V. Reeves
Secretary
- - ---------
C.S.D. Lupton
Fiscal Year
- - -----------
Year ending January 31
Annual Meeting
- - --------------
Within 15 months of previous
Annual Meeting.
Shareholders' Meetings
- - ----------------------
Notice required: 21 days
Quorum: Two members personally
present
Directors
- - ---------
Not less than two, nor more than
thirty. No shareholder qualification.
Retirement: all at each Annual
General Meeting.
Directors' Meetings
- - -------------------
Notice: Unspecified
Quorum: Two directors
Date; Held only as necessary
Operations
- - ----------
Dormant.
(Hatrack company for the U.K. factory)
<PAGE>
MASSEY FERGUSON GROUP April 1994 1-U.K. 11
(INTERNATIONAL) LIMITED * Changes since previous issue
Registered number 509134
Incorporated
- - ------------
On June 24, 1952, as a private limited liability company under the English
Companies Act, 1948, - Harry Ferguson of Italy Limited.
Changes of Name
- - ---------------
First: Harry Ferguson ICM Limited
to Massey-Harris Ferguson (Italy) Limited as of September 20, 1954.
Massey-Ferguson (Italy) Limited
as of April 1, 1958.
Massey-Ferguson (ICM) Limited
as of October 3, 1968.
Massey-Ferguson (Export) Limited
as of October 3, 1983.
Massey-Ferguson Group (International) Limited
as of December 11, 1989.
Massey Ferguson Group (International) Limited
as of September 14, 1992.
Registered Office
- - -----------------
Stareton, Kenilworth
Warwickshire CV8 2LJ
England
Principal Place of Business
- - ---------------------------
P.O. Box 62
Banner Lane
Coventry CV4 9GF
Auditors
- - --------
KPMG Peat Marwick
Peat House
45 Church Street
Birmingham B3 2DL
Tel: 021 233 1666
Fax: 021 233 4390
Solicitors
- - ----------
Wragge & Co.
Bank House
55 Colmore Row
Birmingham B3 2AS
Tel: 021 233 1000
Fax: 021 214 1099
Capital
- - -------
Authorized: 10,000 Ordinary
Shares of (Pounds)1 each
Issued 300 Ordinary Shares of
(Pounds)1 each
*Shareholders
------------
Massey Ferguson Group Limited: 100%
*Directors
---------
C.S.D. Lupton
D.J. Roache
D. Chauvin
Secretary
- - ---------
C.S.D. Lupton
Fiscal Year
- - -----------
Year ending January 31
Annual Meeting
- - --------------
Within 15 months of previous
Annual Meeting.
Shareholders' Meeting
- - ---------------------
Notice required: 21 days
Quorum: 2 members
Directors
- - ---------
Not less than 2 nor more than 18.
No shareholding qualifications.
Retirement: All at each Annual
General Meeting.
Directors' Meeting
- - ------------------
Notice required: Unspecified
Quorum: 2 directors
Date: No regular date
Operations
- - ----------
Holding company for Massey Ferguson
Nederland Holding B.V. and its
overseas subsidiaries.
<PAGE>
* MASSEY-FERGUSON IRELAND April 1994 1-UK. 15
* Changes since previous issue
Registered No. 80669
Incorporated
- - ------------
January 28, 1981 under the Irish
Companies Acts, 1963 to 1977 as
Sancreed Ltd., a private company.
* Change of Name
--------------
Massey-Ferguson Ireland Limited as
of July 31, 1981
Massey-Ferguson Ireland as of
17 June 1993
Registered Office
- - -----------------
3 Burlington Road
Dublin 4
Ireland
Principal Place of Business
- - ---------------------------
Unit 40
Cherryorchard Industrial Estate
Ballyfermot
Dublin 10, Eire
Auditors
- - --------
KPMG Peat Marwick McClintock
Peat House
45 Church Street
Birmingham B3 2DL
Tel: 021 233 1666
Fax: 021 233 4390
Solicitors
- - ----------
Mr David W. Prentice
Matheson Ormsby & Prentice
3 Burlington Road
Dublin 4, Eire
Tel: 353 1 760981
Fax: 353 1 760501
Capital
- - -------
Authorised and issued:
100 Ordinary Shares of (Pounds)1 each
* Shareholders
------------
Massey-Ferguson Nederland Holding BV:
99 Ordinary Shares
Massey Ferguson Group Limited
1 Ordinary share
Directors
- - ---------
D.I. Franklin
P. Wilkinson
Secretary
- - ---------
C.S.D. Lupton
Fiscal Year
- - -----------
Year ending January 31
Annual Meeting
- - --------------
Within 15 months of previous
Annual Meeting
Shareholders' Meetings
- - ----------------------
Notice required: 21 days for Annual
General Meeting and General Meetings
for Special Resolution,
7 days for other General Meetings
Quorum: Two members
- - ------
Directors
- - ---------
Not less than two, nor more than 7.
Directors' Meetings
- - -------------------
Notice required: Unspecified
Quorum: 2
Date: No regular date
Operations
- - ----------
Dormant from 1 February 1993
<PAGE>
LIBYAN TRACTOR COMPANY April 1994 3-Libya 1
* Changes since previous issue
Incorporated
- - ------------
February 7, 1977, as a Libyan
limited (joint stock) company.
Registered Office
- - -----------------
c/o General National Organisation
for Industrialization,
Sanaa Street
P.O. Box 4388
Tripoli
Libyan Arab Republic
Capital
- - -------
Authorized and issued (fully paid up):
500,000 Class "A" Shares, nominal
value 10 Libyan Dinars each.
250,000 Class "B" Shares, nominal
value 10 Libyan Dinars each.
*Shareholders
------------
Massey Ferguson Group Ltd
250,000 Class "B" Shares
General National Organization for
Industrialization:
500,000 Class "A" Shares
Directors
- - ---------
Eng. Lufti Elhajrasi, Secretary
Eng. Muhammad Abu Aoun
Eng. Ahmed Al-Younisi
Eng. Abdul Nasser Samoud
+ M.H. Norton
+ B.A. James
+ Representing MF
Officers
- - --------
Eng. Lufti Elhajrasi, Chairman &
General Manager
Fiscal Year
- - -----------
January to December 31
Annual Meeting
- - --------------
Within four months of end of fiscal year.
Shareholders' Meetings
- - ----------------------
Notice 10 days prior to meeting.
Quorum: 50% of shares.
Directors' Meetings
- - -------------------
Notice: Scheduled meetings at least once in
every two months.
Quorum: Majority of directors
Operations
- - ----------
Assembly and manufacture of Massey Ferguson
tractors under licence.
<PAGE>
COMAGI April 1994 3-Morocco 1
* Changes since previous
Compagnie Maghrebine de
Materials Agricoles et
Industriels Societe Anonyme
Incorporated
- - ------------
January 10, 1966 as a Mercantile Joint
Stock Company, in the city of Casablanca,
Morocco.
Head Office
- - -----------
214 Bld. Abdelmoumem
Casablanca
Morocco
Capital
- - -------
Authorised and issued: 1600 nominative
Shares of 1,000 dirhams each.
* Shareholders
------------
Moroccan Group: 816,000 Dirhams, 51%
Cie Marocaine: 400,000 Dirhams, 25%
Massey Ferguson Group Limited
Directors
- - ---------
Mohamed Karim Lamrani
Paul Vitalis (Cie Marocaine)
Moulay Ali Kettani
Saida Lamrani Karim
Hassan Lamrani Karim
Jalil Mohammed Tazi
Michel Bouyssi
Roger Torrigiani
+ D. Anderson
+ M.H. Norton
+ representing Massey-Ferguson
interest.
Principal Officers
- - ------------------
Monsieur Karim Lamrani, President
Fiscal Year
- - -----------
Year ending December 31.
Annual Meeting
- - --------------
Within six months of December 31.
Shareholders' Meeting
- - ---------------------
Notice required: 15 days
Quorum: 25% of issued capital
Extraordinary Shareholders' Meeting
- - -----------------------------------
Notice required: Eight days
Quorum: 50% of issued capital.
Directors
- - ---------
No less than four nor more than 12 chosen
from among the shareholders. Directors are
appointed for six years at a time.
Directors' Meetings
- - -------------------
Notice required: Unspecified.
Quorum: One half of total members present
or represented; at least two directors must
be actually present.
Operations
- - ----------
Assembly and manufacture of tractors and
agricultural implements of MF design under
licence. Dormant at present.
<PAGE>
SAUDI TRACTOR MANUFACTURING April 1994 3-S. Arabia 1
COMPANY LIMITED * Changes since previous issue
Incorporated
- - ------------
April 30, 1980
Registered Office
- - -----------------
Juffali Building
Kureis Road
Riyadha
Saudi Arabia
Auditors
- - --------
Whinney Murray & Co.
P.O. Box 1994
4th Floor, Ace Building
76 Palestine Street
Al Hamra District
Jeddah 21441
Saudi Arabia
Capital
- - -------
4,250 shares of 1,000
Saudi Riyals each
Shareholders
- - ------------
E.A. Juffali & Bros.:
3,400 shares
Massey Ferguson Group Limited
850 shares.
Directors
- - ---------
A.A. Juffali, Chairman
W. Juffali
K. Juffali
+ M.H. Norton
+ H.W. Robinson
(+ Massey Ferguson representative)
Principal Officer
- - -----------------
A.A. Juffali, Chairman
Fiscal Year
- - -----------
Ends December 31.
Annual Meeting
- - --------------
Within 3 months of fiscal year-end
Shareholders' Meetings
- - ----------------------
Quorum: Not specified but
resolutions require approval of votes
representing at least 85% of total issued
share capital
Notice: No time specified.
Directors' Meetings
- - -------------------
Quorum: 3 directors, at least
one appointed by Juffali and
one appointed by MF.
Notice: At least 30 days
Operations
- - ----------
Manufacture and assembly of
agricultural tractors.
<PAGE>
MASSEY-FERGUSON LEASING LIMITED February 1993 3-U.K. 2
* Changes since previous issue
*Incorporation
-------------
July 9, 1973 under the English
Companies Act, 1984, as R.B. Forty
Company Limited, a private company.
Change of Name
- - --------------
Highland Leasing (West) Limited as
of December 13, 1973
Massey-Ferguson Leasing Limited as
February 3, 1982.
*Registered Office
-----------------
Churchill Plaza
Churchill Way
Basingstoke
Hampshire RG21 1GB
Principal Place of Business
- - ---------------------------
As Registered Office
*Auditors
--------
Price Waterhouse
Southwark Towers
32 London Bridge Street
London SE1 9SY
*Solicitors
----------
S.A. Elliott
Churchill Plaza
Churchill Way
Basingstoke
Hampshire RG21 1GP
Capital
- - -------
Authorised:
25,000 Ordinary 'A' Shares of GBP 1 each
75,000 Ordinary 'B' Shares of GBP 1 each
*Shareholders
------------
Massey Ferguson (United Kingdom) Limited:
25,000 Ordinary 'A' Shares
Barclays Mercantile Highland
Finance Limited:
75,000 Ordinary 'B' Shares
*Directors
---------
'A' Directors:
D.I. Franklin, Chairman
A.P. Jones
P. Wilkinson
'B' Directors:
J.C. Hopkin
K. Large
D.G. Lewis
G.P. Macintosh (also alternate to
other 'B' Directors)
*Secretary
---------
C.F. Shoolbred
*Fiscal Year
-----------
Year ending December 31
Annual Meeting
- - --------------
Within 15 months of previous
Annual Meeting
Shareholders' Meetings
- - ----------------------
Notice required: 21 days for
Annual General Meeting and
General Meetings for Special
Resolution
14 days for other General
Meetings.
Quorum: 2 members (being 1 'A' and
1 'B' shareholder)
Directors
- - ---------
Not less than 2 nor more than 7.
Barclays Mercantile Highland Finance Limited
have the right to appoint 4 directors, MF
(UK) Limited, 3 directors. No shareholding
qualification.
Directors' Meeting
- - ------------------
Notice required: Unspecified
Quorum: 2 (at least 1 'A' director and
1 'B' director)
Date: No regular date.
Operations
- - ----------
The Company's activities are now confined to
collecting agreements that still remain
in its portfolio.
<PAGE>
MASSEY-FERGUSON IMPLEMENTS April 1994 3-U.K. 4
(U.K.) LIMITED * Changes since previous issue
Incorporated
- - ------------
August 12, 1988
Registered Office
- - -----------------
7 St. Bridge Street
London
EC4A 4AT
England
Auditors
- - --------
Price Waterhouse
Solicitors
- - ----------
None Appointed
*Capital
-------
Authorised and issued:
600,000 'A' Ordinary Shares
400,000 'B' Ordinary Shares
Shareholders
- - ------------
Greenland U.K. Holdings Ltd: 60%
Massey Ferguson (United Kingdom) Ltd: 40%
*Directors
---------
(Greenland)
C.J.E. Roche, Chairman
L. Gras
D. Burton
(MF)
M.J. Molesworth
P. Wilkinson
P.J. Brown
Secretary
- - ---------
Derek Burton
Fiscal Year
- - -----------
Year Ending 30 November
Annual Meeting
- - --------------
Within 15 months of previous
Annual Meeting.
Shareholders' Meetings
- - ----------------------
Notice: 21 days for Annual General Meeting
and for General Meetings for Special
Resolutions. 14 days for other General
Meetings.
Quorum: 2 members, providing one is or
represents a holder of 'A' Ordinary Shares
and one a holder of 'B' Ordinary Shares.
Directors
- - ---------
Number: Not more than seven.
'A' Ordinary Shareholders may appoint up to
four directors and 'B' Ordinary Shareholders
up to three directors.
Directors Meetings
- - ------------------
Notice required: period unspecified.
Quorum: One 'A' Director and One 'B' Director
*Operations
----------
No longer trading.
<PAGE>
MASSEY-FERGUSON FINANCE LIMITED February 1993 3-U.K. 5
* Changes since previous issue
Incorporated
- - ------------
July 11, 1990
(Registered No: 2521081)
*Registered Office
-----------------
Brook House
7-9 Mount Ephraim Road
Tunbridge Wells
Kent
TN1 1ET
England
Auditors
- - --------
Touche Ross & Co.
Peterborough Court
133 Fleet Street
London
EC4A 2TR
Solicitors
- - ----------
Wilde & Partners
10 John Street
London
W1C 2EB
Capital
- - -------
Authorized: GBP 10,000,000 divided into
5,100,000 'A' shares of
GBP 1 each, and
4,900,000 'B' shares of
GBP 1 each
*Shareholders
------------
De Lage Landen Financial Services Limited
3,060,000 'A' shares
Massey Ferguson (United Kingdom) Limited
2,940,000 'B' shares
*Directors
---------
K. Schellens
P. Black
P. Green
D.I. Franklin +
P. Wilkinson +
+ representing MF
Principal Officers
- - ------------------
D.I. Franklin, Chairman
P. Green, Managing Director
P. Black, Secretary
Fiscal Year
- - -----------
Year ending December 31
Annual Meeting
- - --------------
Within 15 months of previous Annual Meeting
Shareholders Meetings
- - ---------------------
Notice required: 21 days
Quorum: 2
Directors
- - ---------
Number: Not less than 2, nor more than 5
No shareholding qualification
Directors' Meetings
- - -------------------
Notice required: Unspecified
Quorum: 2
Notice: At least every 3 months
Operations
- - ----------
Farm machinery wholesale and retail finance.
<PAGE>
FERMEC HOLDINGS LIMITED April 1994 3-UK. 6
New entry
Registered number 2723989
Incorporated
- - ------------
18 June 1992
Registered Office
- - -----------------
Barton Dock Road
Stretford
Manchester
M32 0YH
Principal Place of Business
- - ---------------------------
Barton Dock Road
Stretford
Manchester
M32 0YH
Auditors
- - --------
Arthur Andersen Corporate Finance
Bank House
9 Charlotte Street
Manchester M1 4EU
Tel: 061 228 2121
Fax: 061 228 1421
Solicitors
- - ----------
Addleshaws Sons & Latham
Dennis House
Marsden Street
Manchester M2 1JD
Tel: 061 832 5994
Fax: 061 832 2250
Capital
- - -------
Authorized: (Pounds)4,100,250
Issued:
- - ------
'A' Ordinary Shares 20,250
'B' Ordinary Shares 270,000
Preferred Ordinary Shares 1,059,750
Redeemable Preference Shares 2,740,250
Deferred Shares 10,000
Shareholders
- - ------------
Massey Ferguson Manufacturing Ltd:
425,211 Redeemable Prefs.
164,444 Preferred Ordinary
10,000 Deferred
Other Shareholders:
- - ------------------
Management and investors
Directors
- - ---------
R. Robson
P. Swift
J. Maguire
B. Long
I. Webb
Secretary
- - ---------
P. Swift
Fiscal Year
- - -----------
Year ending 30 October
Annual Meeting
- - --------------
Within 15 months of previous
Annual General Meeting
Shareholders' Meeting
- - ---------------------
Directors
- - ---------
Directors' Meeting
- - ------------------
Operations
- - ----------
Holding Company for Fermec Manufacturing
Limited, manufacturer and distributor of
industrial machinery.
<PAGE>
[LETTERHEAD OF MASSEY FERGUSON]
F A C S I M I L E T R A N S M I S S I O N - C O N F I D E N T I A L
DIRECT TEL (203) 531234
DIRECT FAX (203) 531398
Page 1 of 2
OUR REF: JBP/std308
TO: Steve Lewis
Troutman Sanders, USA
Fax No: 0101 404 885 3947
FROM: Jeremy Parkin
DATE: 15 April 1994
SUBJECT: PROJECT PLUM
------------
Further to our meetings earlier this week, I am writing with some further
information for the draft Agreement and Schedules.
1. SUBSIDIARIES
------------
There are two further Massey Ferguson subsidiaries in liquidation:
a) Masfergo Holdings (South Africa) (Pty) Ltd., a 100% owned subsidiary
of Massey-Ferguson Nederland Holding BV.
b) SNM S.A., a 100% owned French subsidiary of Massey Ferguson S.A.
In each case, the liquidation is solvent and well-advanced.
There is a Romanian company called Massey Ferguson Romania S.A., 100%
owned by Massey Ferguson International A.G. This company is presently
being re-registered as a branch office of Massey Ferguson International
A.G.
2. AFFILIATES
----------
Again, the Corporate Structures Manual, of which we gave you a copy, does
not contain the following:
a) GIMA S.A. (the MF Renault joint venture company). This is a French
company with a capital of FF 250,000 (2500 x 100FF shares) of which
1250 shares of 100FF each have been issued to MF and the same to
Renault Agriculture SA. The shares are part paid (25%).
<PAGE>
b) G.M.F.E S.A. This is a French company in which Massey Ferguson S.A.
owns 25%. The balance is held by Greenland France S.A., a Dutch-
based implement manufacturer. The share capital is FF 4m.
c) Massey Ferguson Finance France SNC. This is a French company in
which Massey Ferguson SA owns 49%. The balance is held by De Lage
Landen Leasing S.A., a French subsidiary of a Dutch bank. This
company is the French equivalent of Massey Ferguson Finance Ltd and
provides retail finance. The authorised capital is FF 15m (150,000
x 100FF).
d) Dronningborg Industries A.S. This is the Danish combine
manufacturer in which Massey Ferguson Group Limited holds 32.26%.
The balance is owned by various Danish banks and investment
companies.
e) Massey Ferguson Commerciale SpA. This is a dormant Italian company
in which Massey Ferguson Nederland Holding BV owns 25%. It was set
up in 1990 to act as the Italian Distributor for MF, but has never
in fact traded. It is proposed to purchase the remaining 75% (in
order to safeguard the MF name) for net asset value (around $
35,000).
Yours sincerely,
/s/ Jeremy Parkin
JEREMY PARKIN
GROUP LEGAL ADVISER
-------------------
<PAGE>
APPENDIX 3.4(a)
---------------
MF FINANCIAL STATEMENTS
-----------------------
See Attached
<PAGE>
Independent Auditors' Report
----------------------------
The Board of Directors and Stockholders
Varity Corporation:
We have audited the accompanying combined statements of assets, liabilities, and
group equity of the Massey Ferguson Group, an indirect wholly-owned business of
Varity Corporation, as of January 31, 1994 and 1993 and the related statements
of operations, group equity and cash flows for each of the years in the three-
year period ended January 31, 1994. These combined financial statements are the
responsibility of the Massey Ferguson Group's management. Our responsibility is
to express an opinion on these combined financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
Massey Ferguson Group is a part of Varity Corporation and has no separate
combined legal existence. Transactions with Varity Corporation and other
affiliates are described in the notes to the financial statements.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of the Massey
Ferguson Group as of January 31, 1994 and 1993, and the results of its
operations and its cash flows for each of the years in the three-year period
ended January 31, 1994, in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick
Buffalo, New York
March 7, 1994
<PAGE>
MASSEY FERGUSON GROUP
Combined Statements of Assets, Liabilities
and Group Equity
January 31, 1994 and 1993
(In thousands)
<TABLE>
<CAPTION>
Assets (Note 8) 1994 1993
--------------- --------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 14,300 13,900
Receivables (notes 4 and 14) 213,400 248,800
Inventories (note 5) 129,800 134,700
Prepaid expenses and other current assets 11,300 11,300
--------- --------
Total current assets 368,800 408,700
Investments in associated companies (note 11) 13,200 8,500
Fixed assets:
Land and buildings 65,985 63,824
Machinery, equipment and tooling 202,409 198,946
--------- --------
268,394 262,770
Accumulated depreciation and amortization (187,994) (180,970)
--------- --------
Net fixed assets 80,400 81,800
Other assets (notes 6 and 9) 16,100 6,300
--------- --------
$ 478,500 505,300
========= ========
Liabilities and Group Equity
----------------------------
Current liabilities:
Notes payable (note 8) $ 38,800 56,900
Current portion of long-term debt (note 8) 2,500 3,500
Accounts payable and accrued liabilities (notes 7 and 14) 274,200 256,700
--------- --------
Total current liabilities 315,500 317,100
Long-term debt (note 8) 8,100 12,000
Other long-term liabilities (note 9) 3,000 26,500
Minority interest in subsidiaries 3,900 3,600
--------- --------
Total liabilities 330,500 359,200
Group equity (notes 10 and 14) 148,000 146,100
Commitments and contingencies (note 13)
$ 478,500 505,300
========= ========
</TABLE>
See accompanying notes to combined financial statements.
<PAGE>
MASSEY FERGUSON GROUP
Combined Statements of Operations
For the years ended January 31, 1994, 1993 and 1992
(In thousands)
<TABLE>
<CAPTION>
1994 1993 1992
--------- -------- --------
<S> <C> <C> <C>
Net sales (note 14) $898,400 941,400 869,800
Cost of goods sold (note 14) 732,700 772,000 739,100
-------- ------- -------
Gross profit 165,700 169,400 130,700
-------- ------- -------
Marketing, general and administrative expenses (note 14) 121,400 117,900 121,700
Engineering and product development 16,300 14,900 13,900
Management fees and other charges (note 14) 19,600 22,900 22,200
Restructuring charges (note 12) - - 16,900
-------- ------- -------
157,300 155,700 174,700
-------- ------- -------
Income (loss) from operations 8,400 13,700 (44,000)
-------- ------- -------
Other income (expense):
Interest expense (note 14) (10,900) (20,100) (24,200)
Exchange gains (losses) (2,300) 2,300 (200)
Interest income 5,900 4,900 4,100
Other, net 2,100 3,800 400
-------- ------- -------
(5,200) (9,100) (19,900)
-------- ------- -------
Income (loss) before income taxes 3,200 4,600 (63,900)
Income tax provision (note 3) (1,000) (1,700) (2,100)
-------- ------- -------
Net income (loss) $ 2,200 2,900 (66,000)
======== ======= =======
</TABLE>
See accompanying notes to combined financial statements.
<PAGE>
MASSEY FERGUSON GROUP
Combined Statements of Group Equity
For the years ended January 31, 1994, 1993 and 1992
(In thousands)
<TABLE>
<CAPTION>
1994 1993 1992
--------- -------- --------
<S> <C> <C> <C>
Balance at beginning of period $146,100 149,800 234,200
Capital contributions from Varity Corporation (note 14) 15,000 - -
Net income (loss) 2,200 2,900 (66,000)
Other changes in components of group equity (note 10) (15,300) (6,600) (18,400)
-------- ------- -------
Balance at end of period $148,000 146,100 149,800
======== ======= =======
</TABLE>
See accompanying notes to combined financial statements.
<PAGE>
MASSEY FERGUSON GROUP
Combined Statements of Cash Flows
For the years ended January 31, 1994, 1993 and 1992
(In thousands)
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 2,200 2,900 (66,000)
Adjustments to reconcile net income (loss) to
cash provided by operating activities:
Depreciation and amortization 19,400 20,500 22,400
Write-downs of investments in associated companies - 3,300 300
Restructuring charges - - 16,900
Gains on sales of fixed assets (300) - (1,700)
Changes in:
Receivables 26,800 (45,200) 72,600
Inventories 100 11,800 31,800
Prepaid expenses and other current assets (600) (700) -
Other assets (11,300) (100) 2,700
Accounts payable and accrued liabilities 22,100 4,700 (4,100)
Other long-term liabilities (23,300) 21,500 4,500
-------- -------- -------
Cash provided by operating activities 35,100 18,700 79,400
-------- -------- -------
Cash flows from investment activities:
Additions to fixed assets (19,000) (15,200) (19,200)
Proceeds from sales of fixed assets 1,700 10,200 5,700
Additions to investments in associated companies (4,000) (700) -
Changes in minority interest 500 600 (2,400)
-------- -------- -------
Cash used for investment activities (20,800) (5,100) (15,900)
-------- -------- -------
Cash flows from financing activities:
Capital contribution from Varity Corporation 15,000 - -
Proceeds from notes payable 28,300 107,000 800
Repayments of notes payable (44,700) (114,800) (31,000)
Repayments of long-term debt (3,900) (12,100) (29,100)
Other changes in components of group equity (9,000) 1,000 (6,600)
-------- -------- -------
Cash used for financing activities (14,300) (18,900) (65,900)
-------- -------- -------
Effect of foreign currency translation on
cash and cash equivalents 400 1,100 1,100
-------- -------- -------
Increase (decrease) in cash and cash equivalents 400 (4,200) (1,300)
Cash and cash equivalents at beginning of year 13,900 18,100 19,400
-------- -------- -------
Cash and cash equivalents at end of year $ 14,300 13,900 18,100
======== ======== =======
</TABLE>
See accompanying notes to combined financial statements.
<PAGE>
MASSEY FERGUSON GROUP
Notes to Combined Financial Statements
January 31, 1994, 1993 and 1992
(In thousands)
(1) Basis of Presentation and Combination
- - --- -------------------------------------
The accompanying combined financial statements of Massey Ferguson Group (MF
Group or the Company) present substantially all of the operating assets and
liabilities of Massey Ferguson Group Ltd. and subsidiaries, Massey Ferguson
GmbH, Varity Europa B.V. and investments in certain associated companies
(note 11) as of the dates presented and the related results of operations
and cash flows for each of the periods presented. The aforementioned
businesses are each indirect wholly-owned subsidiaries, net assets or
investments of Varity Corporation (Varity), a United States Company, and
together constitute substantially all of the farm equipment business of
Varity.
The MF Group has no separate combined legal existence. Individual companies
within the MF Group operate in the United Kingdom, Australia, Denmark,
France, Italy, Norway, Spain, Sweden and Switzerland. Operating assets in
the United States, Canada and Germany are also combined within the MF
Group. In addition, sales offices are located throughout the world. All
significant intercompany accounts and transactions among the businesses
that constitute the MF Group have been eliminated.
Because the MF Group operated as a unit of Varity, the accompanying financial
statements may not necessarily be indicative of the financial position and
results of operations which might have been incurred had it functioned as a
stand-alone operation. In addition, such financial statements cannot be
directly correlated with the segment reporting in the Varity consolidated
financial statements as previously reported.
Fiscal years ended January 31, 1994, 1993 and 1992 are referred to as fiscal
1993, 1992 and 1991 in the accompanying notes, respectively.
(2) Summary of Significant Accounting Policies
- - --- ------------------------------------------
(a) Operations
--- ----------
The MF Group operates principally in the farm equipment industry,
manufacturing agricultural tractors and parts, which it sells together
with certain tractors and other farm equipment purchased from
associated companies and third parties.
(b) Cash Equivalents
--- ----------------
Cash equivalents consist of liquid instruments with an original maturity
of three months or less.
(c) Revenue Recognition
--- -------------------
Sales are recorded by the Company when product is shipped to customers.
Provisions for sales incentives are made at the time of sale for
existing incentive programs.
<PAGE>
MASSEY FERGUSON GROUP
Notes to Combined Financial Statements, Continued
(In thousands)
(d) Inventories
--- -----------
Inventories are stated at the lower of cost or net realizable value, with
cost determined by the first-in, first-out (FIFO) basis. Cost includes
the cost of materials, direct labor and an applicable share of
manufacturing overhead.
(e) Investments in Associated Companies
--- -----------------------------------
Investments in associated companies in which the Company's ownership
interest ranges from 20 to 50% and over which the Company exercises
influence on operating and financial policies are accounted for using
the equity method of accounting (see note 11). Other investments are
accounted for using the cost method.
(f) Fixed Assets
--- ------------
Additions to fixed assets are stated at cost. Depreciation of fixed
assets is generally provided on a straight-line basis at rates which
are intended to write off the assets over their estimated useful lives
as follows:
Buildings 20 to 50 years
Machinery, equipment and tooling 3 to 10 years
Expenditures for maintenance, repairs and minor replacements of $3.0,
$3.0 and $2.2 million for fiscal years 1993, 1992 and 1991,
respectively, were charged to expense as incurred.
(g) Warranty Reserves
--- -----------------
The Company's agricultural equipment products are generally under
warranty against defects in material and workmanship for a period not
exceeding two years. The Company accrues a provision for future
warranty costs based upon the historical relationship of the products
sold to actual warranty costs.
(h) Research and Development Costs
--- ------------------------------
Research and development costs, the majority of which are included in
engineering and product development costs, are expensed as incurred.
Amounts charged during fiscal years 1993, 1992 and 1991 were
approximately $8.9, $8.2 and $8.6 million, respectively.
(i) Foreign Currency Translation
--- ----------------------------
The local currency for each business within the MF Group is considered to
be the functional currency. Assets and liabilities of these businesses
are translated at year-end rates of exchange. Revenue and expense
items are translated at average rates of exchange for the year.
Translation adjustments, including the translation effect of
intercompany transactions deemed permanent in nature, that arise due to
fluctuations in exchange rates are recorded directly in group equity.
Gains and losses resulting from foreign currency transactions are
included in the statements of operations.
<PAGE>
MASSEY FERGUSON GROUP
Notes to Combined Financial Statements, Continued
(In thousands)
(j) Minority Interest
--- -----------------
The proportionate share of the net assets of the Company's Australian
subsidiary, which is not wholly-owned, has been recorded as minority
interest.
(k) Income Taxes
--- ------------
The Company is included in the consolidated tax return of the Varity
United Kingdom (UK) tax group. The Varity UK tax group allocates the
tax provision and the Company accounts for taxes generally as if the
Company filed on a separate return basis. The Varity UK tax group's
net operating loss carryforwards are made available to other Varity UK
tax group members to offset tax provisions to the extent permitted.
Effective February 1, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting
for Income Taxes," as described in note 3. Deferred income taxes are
provided on all significant temporary differences and represent the tax
effect of transactions recorded for financial reporting purposes in
periods different than for tax purposes.
(l) Financial Instruments
--- ---------------------
The carrying values of the company's financial instruments at January 31,
1994 approximate their estimated fair values. The carrying amounts of
cash and cash equivalents and notes payable approximate fair value due
to the short-term maturity of such instruments. The carrying amount of
foreign exchange contracts approximates fair value as all such
contracts are revalued monthly based on current exchange or forward
rates, as applicable, and substantially all have remaining contractual
terms of six months or less. The carrying amount of long-term debt
approximates fair value based on the current rates offered to the
Company for debt with similar maturities and characteristics.
(3) Income Taxes
- - --- ------------
Effective February 1, 1993, the Company adopted the provisions of SFAS No.
109, replacing SFAS No. 96 which the Company previously followed in
accounting for income taxes. The principal difference between SFAS No. 109
and SFAS No. 96 is the ability, under SFAS No. 109, to record a deferred
tax asset for net operating loss and credit carryforwards when its ultimate
realization is more likely than not. The adoption of SFAS No. 109 had no
effect on the Company's results of operations or financial condition.
<PAGE>
MASSEY FERGUSON GROUP
Notes to Combined Financial Statements, Continued
(In thousands)
Income tax provisions have been recorded in respect of the Company's results
of operations as follows:
<TABLE>
<CAPTION>
Years ended January 31
---------------------------
1994 1993 1992
-------- ------- --------
<S> <C> <C> <C>
Income (loss) before income taxes:
United States $(2,300) (2,600) (2,600)
Foreign 5,500 7,200 (61,300)
------- ------ -------
$ 3,200 4,600 (63,900)
======= ====== =======
Foreign income taxes currently
payable which constitute the
income tax provision $ 1,000 1,700 2,100
======= ====== =======
</TABLE>
The income tax provision is primarily attributable to net income from certain
subsidiaries for which no operating loss carryforwards were available to
offset such income along with operating losses for which no current benefit
is available. These are the primary reconciling items that cause the
Company's effective tax rates of 31%, 37% and (3%) for fiscal years 1993,
1992 and 1991, respectively, to differ from the 35%, 34% and 34% statutory
United States federal income tax rates for fiscal years 1993, 1992 and
1991, respectively.
The tax effects of temporary differences that give rise to deferred tax
assets and deferred tax liabilities recorded on the balance sheet as of
January 31, 1994 are as follows:
<TABLE>
<S> <C>
Deferred tax assets:
Tax loss carryforwards $81,600
Other liabilities and reserves 5,200
-------
Gross deferred tax assets 86,800
Less: valuation allowance 83,500
-------
Total 3,300
Deferred tax liabilities 3,300
-------
Net deferred tax liability $ -
=======
</TABLE>
The valuation allowance results principally from tax operating losses in
prior years which diminish the Company's immediate ability to demonstrate
that it is more likely than not that future benefits will be realized.
<PAGE>
MASSEY FERGUSON GROUP
Notes to Combined Financial Statements, Continued
(In thousands)
At January 31, 1994, the Company had net operating loss carryforwards for tax
purposes aggregating approximately $240.1 million. These loss
carryforwards are principally in the United Kingdom and France, and expire
over the next five fiscal years as follows: 1994 - $.2 million; 1995 -
$5.9 million; 1996 - $1.7 million; 1997 - $1.5 million; 1998 - $.9 million
and beyond - $229.9 million.
Cash payments for income taxes were $.3, $.5 and $.2 million for fiscal years
1993, 1992 and 1991, respectively.
(4) Receivables
- - --- -----------
Receivables are presented net of allowances for doubtful accounts of $10.4
million and $8.6 million at January 31, 1994 and 1993, respectively.
Credit risk is concentrated principally within North America and Europe. The
Company performs ongoing credit evaluations of its customers' financial
condition and, in certain circumstances retains as collateral a security
interest in products sold. Sales outside of North America and Europe are
generally covered by letters of credit, bank guarantees or export credit
insurance.
(5) Inventories
The major categories of inventory are as follows:
<TABLE>
<CAPTION>
January 31
1994 1993
---- ------
<S> <C> <C>
Raw materials and work-in-process $ 41,400 39,600
Finished goods and parts 88,400 95,100
------- -------
$129,800 134,700
======= =======
</TABLE>
The Company's inventory systems do not permit the disaggregation of raw
materials from work-in-process.
<PAGE>
MASSEY FERGUSON GROUP
Notes to Combined Financial Statements, Continued
(In thousands)
(6) Other Assets
- - ---- ------------
Other assets consist of the following:
<TABLE>
<CAPTION>
January 31
1994 1993
<S> <C> <C>
Pension fund prepayment $ 12,800 -
Other, including intangible assets,
net of accumulated amortization of
$4.7 million in 1994 and $4.9 million
in 1993 3,300 6,300
-------- -------
Total $ 16,100 6,300
======== =======
</TABLE>
(7) Accounts Payable and Accrued Liabilities
- - --- ----------------------------------------
Accounts payable and accrued liabilities consist of the following:
<TABLE>
<CAPTION>
January 31
1994 1993
---- ----
<S> <C> <C>
Accounts payable $167,200 146,800
Employee costs 19,900 17,700
Warranty 12,400 9,000
Reserves for sales incentives 28,200 22,500
Other accrued liabilities 46,500 60,700
-------- -------
Total $274,200 256,700
======== =======
</TABLE>
<PAGE>
MASSEY FERGUSON GROUP
Notes to Combined Financial Statements, Continued
(In thousands)
(8) Long-Term Debt and Notes Payable
- - ---- --------------------------------
The Company's long-term debt consists of the following:
<TABLE>
<CAPTION>
January 31
1994 1993
---- ----
<S> <C> <C>
French State loan, maturing in fiscal
years through 1998, interest at 8% plus an
additional fluctuating interest charge or
credit based on cash flow (9.8% at January
31, 1994) (repayable in French francs) $ 7,100 9,200
French State loan, maturing in fiscal
years through 1998, interest at the French
monetary rate plus 1.25% (10.8% at January
31, 1994). Guaranteed by Varity (repayable
in French francs) 2,400 3,100
Other 1,100 3,200
-------- -------
10,600 15,500
Less: current portion of long-term debt 2,500 3,500
-------- -------
Long-term debt $ 8,100 12,000
======== =======
</TABLE>
Aggregate long-term debt matures over the next five fiscal years as follows:
1994 - $2.5 million; 1995 - $2.4 million; 1996 - $1.9 million; 1997 - $1.9
million; and 1998 - $1.9 million.
The Company maintains various short-term credit facilities with lenders
throughout the world for which related amounts outstanding are classified
as notes payable in the combined financial statements. Certain of these
credit facilities are secured by specific assets of the Company and are
restricted as to their level of utilization within predetermined maximum
limits. These facilities, which are subject to periodic lender review and
renewal, bear interest at rates ranging from 6.5% to 12.25% as of January
31, 1994. Unused short-term lines of credit at January 31, 1994 were
$121.8 million (January 31, 1993 - $161.0 million). There were no unused
long-term lines of credit at January 31, 1994 or 1993.
Substantially all of the assets of the Company are pledged as collateral
against its borrowing requirements.
Cash payments of interest were $8.7, $14.0 and $19.3 million for fiscal years
1993, 1992 and 1991, respectively.
<PAGE>
MASSEY FERGUSON GROUP
Notes to Combined Financial Statements, Continued
(In thousands)
(9) Pension Benefits
- - --- ----------------
Pension plans exist in the principal countries where the Company operates.
The majority of its employees are covered by either government or Company
sponsored pension plans. The Company's funding policy is to contribute at
least the amount required by law in the various jurisdictions in which the
pension plans are domiciled.
Most of the Company's defined benefit plans are in the United Kingdom (UK
Plans) and provide pension benefits that are based on the employee's
highest average eligible compensation. Plan assets consist primarily of
exchange-listed stocks and bonds. The measurement date for all plans were
within 90 days of year-end. Pension expense for the UK Plans consist of
the following:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Service cost for the year $ 3,300 4,600 5,800
Interest cost on projected benefit
obligations 16,600 19,700 18,700
Actual (return) loss on plan assets (29,600) 8,600 (39,500)
Net amortization and deferral 14,200 (30,100) 19,200
-------- ------- -------
Net pension expense $ 4,500 2,800 4,200
======== ======= =======
</TABLE>
As a result of company induced early retirement and other programs, the
Company recognized expenses totalling $1.9 and $3.2 million in fiscal years
1993 and 1991, respectively. Such amounts are not included in the above
table.
<PAGE>
MASSEY FERGUSON GROUP
Notes to Combined Financial Statements, Continued
(In thousands)
The funded status of the UK Plans is as follows:
<TABLE>
<CAPTION>
January 31,
January 31, 1994 1993
---------------------- ----
Underfunded Overfunded Underfunded
plans plans plans
----- ----- -----
<S> <C> <C> <C>
Accumulated benefit obligation:
Vested benefit obligation $4,900 162,200 169,800
Nonvested benefit obligation 100 2,900 3,000
$5,000 165,100 172,800
====== ======= =======
Projected benefit obligation $5,700 181,900 177,600
Plan assets at market value 4,700 185,100 147,900
------ ------- -------
Projected benefit obligation in excess
of (less than) plan assets 1,000 (3,200) 29,700
Contributions made after measurement
date but before end of fiscal year (100) (1,200) -
Unrecognized net losses (700) (8,200) (27,900)
Unrecognized transition liabilities (200) (200) (200)
Additional minimum liability recognized 100 - 23,300
------ ------- -------
Pension costs accrued (prepaid) in the
consolidated balance sheets as other
assets and other liabilities $ 100 (12,800) 24,900
====== ======= =======
</TABLE>
The additional minimum pension liabilities are non-cash items which are
offset by intangible assets of $.1 million and $.6 million at January 31,
1994 and 1993, respectively, and a direct reduction in group equity of
$22.7 million at January 31, 1993. There was no additional minimum pension
liability reduction in group equity at January 31, 1994.
The following actuarial assumptions used to develop pension expense reflect
the prevailing economic conditions and interest rate environment of the
United Kingdom:
<TABLE>
<CAPTION>
January 31,
------------
1994 1993 1992
----- ------------ -----------
<S> <C> <C> <C>
Discount rate 8.75% 9.5% 10.0%
Salary increases 5.0% 7.0% - 8.0% 7.5% - 8.5%
Expected long-term rate of return on assets 10.0% 11.0% 11.5%
==== ========== ==========
</TABLE>
<PAGE>
MASSEY FERGUSON GROUP
Notes to Combined Financial Statements, Continued
(In thousands)
In addition to the UK Plans for which the actuarial information is presented
above, accrued pension costs are included in other liabilities in the
balance sheets pertaining to various minor plans in other countries all of
which are substantially funded.
(10) Group Equity
- - ---- ------------
Group equity consists of the capital stock and equity of the Companies,
interests in investments and net assets within the MF Group (note 1),
pension liability adjustments (note 9) and foreign currency translation
adjustments.
(11) Investments in Associated Companies
- - ---- -----------------------------------
The Company's investments in associated and other companies as of January 31,
1994 primarily comprise a 49% interest in Massey Ferguson Finance Limited,
a United Kingdom agricultural and industrial equipment finance company, and
a 49% interest in Massey Ferguson Finance SNC, a finance company in France.
No dividends were received from these companies during fiscal years 1993,
1992 or 1991.
Summarized financial information of these investee companies, as of and for
the years ended January 31, 1994 and 1993 is presented below:
<TABLE>
<CAPTION>
Years ended
Statements of Operations January 31
------------------------ ----------
1994 1993
---- ----
(In thousands)
<S> <C> <C>
Net revenues $18,500 15,700
Expenses:
Interest, net 10,800 10,200
Other costs and expenses 4,400 2,800
Income tax provision 1,200 -
-------- -------
Net income $ 2,100 2,700
======== =======
Balance Sheets
--------------
Receivables $191,100 108,200
Other assets 5,200 4,400
-------- -------
$196,300 112,600
======== =======
Bank borrowings $178,600 100,100
Other liabilities 600 -
Shareholders' equity 17,100 12,500
-------- -------
$196,300 112,600
======== =======
</TABLE>
<PAGE>
MASSEY FERGUSON GROUP
Notes to Combined Financial Statements, Continued
(In thousands)
In addition, the Company has a 23% interest in Tractors and Farm Equipment
Limited (TAFE), from whom dividends of $0.2 million were received in fiscal
year 1993 ($0.1 million in each of fiscal years 1992 and 1991), a 15.5%
interest in Fermec Holdings Limited (Fermec), the management buy-out
purchaser of the Company's industrial machinery business and a 30% interest
in Landini S.p.A. (Landini), an Italian distribution company. In March
1993, the Company invested $2.4 million for a 19% fully-diluted interest in
Dronningborg Industries A/S (Dronningborg), a Danish supplier of combine
harvesters. No dividends have been received from Fermec, Landini or
Dronningborg during the fiscal years 1993, 1992 or 1991.
(12) Restructuring Charges
- - ---- ---------------------
In fiscal year 1991, the Company commenced a series of restructuring actions
and recorded provisions for employment reductions and other activities. As
a result of such actions the Company recorded restructuring charges of
$16.9 million.
(13) Commitments and Contingencies
- - ---- -----------------------------
(a) Capital Expenditure Programs
--- ----------------------------
Approved capital expenditure programs outstanding at January 31, 1994
approximated $23.3 million, including capital commitments of
approximately $5.2 million.
(b) Discounted Obligations
--- ----------------------
The Company has contingent liabilities relating to bills guaranteed and
similar obligations amounting to $3.2 million and $2.5 million at
January 31, 1994 and 1993, respectively.
(c) Foreign Exchange Contracts
--- --------------------------
To protect against fluctuations in foreign currencies, the Company from
time to time enters into foreign exchange contracts for periods
generally consistent with the underlying transaction exposures.
Substantially all such contracts mature within a period of six months.
At January 31, 1994, the Company had approximately $125.0 million of
contracts outstanding (approximately $28.7 million at January 31,
1993).
The Company is exposed to credit loss in the event of nonperformance by
counterparties to the outstanding contracts. The Company does not
anticipate nonperformance by any counterparty, and as the contracts
are principally hedges of underlying transactions, the market risk
associated with fluctuations in exchange rates is not significant.
<PAGE>
MASSEY FERGUSON GROUP
Notes to Combined Financial Statements, Continued
(In thousands)
(d) Leases
--- ------
The Company leases certain facilities and equipment under noncancellable
operating leases. Future minimum payments due under these leases
during the next five fiscal years are as follows: 1994, $6.3 million;
1995, $5.9 million; 1996, $4.2 million; 1997, $2.3 million and 1998,
$.3 million.
Rental expense for all operating leases was $4.6 million, $4.5 million,
and $4.5 million for fiscal years 1993, 1992 and 1991, respectively.
(e) Litigation
--- ----------
The Company is party to various litigation. Management believes that
the outcome of these lawsuits will not have a material adverse effect
on the combined financial statements.
(14) Transactions With Related Parties and Affiliates
- - ---- ------------------------------------------------
The accompanying financial statements reflect significant transactions with
related parties and affiliates as stated below. The transactions are at
amounts and on a basis as determined by the parties. The amounts are not
necessarily indicative of results which might have occurred had the Company
operated as a separate entity.
(a) Varity Corporation
--- ------------------
The Company pays Varity, the indirect parent of the MF Group, amounts as
agreed to by the parties for management services provided by Varity,
trademark and licensing fees, royalties, guarantee fees and expenses
incurred on behalf of the MF Group. Total expenses pertaining to these
items were $19.6, $22.9 and $22.2 million in fiscal years 1993, 1992 and
1991, respectively.
The MF Group has been able to borrow under various lending agreements
with Varity, who allocates interest expense to the Company based on
its average outstanding balance. Charges relating to intercompany
indebtedness with Varity included in interest expense were $.7, $1.6
and $3.3 million in fiscal years 1993, 1992 and 1991, respectively.
The net amounts payable under these arrangements with Varity are
included in group equity on the balance sheets.
In fiscal year 1993, Varity made a capital contribution of $15.0 million
to the Company.
<PAGE>
MASSEY FERGUSON GROUP
Notes to Combined Financial Statements, Continued
(In thousands)
(b) Dronningborg Industries S/A
--- ---------------------------
The Company is the sole customer for the combine harvesters manufactured
by Dronningborg in accordance with the terms of a distributor
agreement between Dronningborg and the Company effective in 1993 for
an initial term expiring on December 31, 1997. Under this agreement,
the Company has no minimum purchase obligation but is required to
source certain combine harvesters exclusively from Dronningborg. The
Company purchased $34.0 million of machines in fiscal 1993 under this
agreement. Accounts payable and accrued liabilities include $8.2
million payable to Dronningborg at January 31, 1994.
Prior to 1993, Dronningborg was a supplier of products to the Company.
However, the MF Group had no ownership interest.
(c) Landini S.p.A.
--- --------------
Under the terms of various commercial trading agreements between the
Company and Landini, the Company is obligated to source certain of its
special tractor requirements from Landini through March 1997. Landini
also acts as the Company's distributor in the Italian market under an
agreement expiring in February 1997. Sales to Landini were $7.0,
$14.7 and $16.8 million in fiscal years 1993, 1992 and 1991,
respectively. Purchases from Landini were $20.0, $20.3 and $25.5
million in fiscal years 1993, 1992 and 1991, respectively.
Receivables include $1.9 and $1.6 million receivable from Landini at
January 31, 1994 and 1993, and accounts payable and accrued
liabilities include $3.0 and $4.3 million payable to Landini at
January 31, 1994 and 1993 under these arrangements.
Also included in accounts payable and accrued liabilities is $12.5 and
$13.6 million at January 31, 1994 and 1993, respectively, pertaining
to a loan agreement between the Company and Landini whereby the
Company offsets amounts to be paid Landini against sales commissions
receivable from Landini upon Landini satisfying defined sales levels.
(d) Fermec Holdings Limited
--- -----------------------
The Company supplies Fermec with rear axles, transmissions and related
components under the terms of a supply agreement with an initial term
beginning in November 1992 and expiring in November, 1995. Sales to
Fermec were $5 million in fiscal 1993. The Company also purchases
from Fermec a range of highway tractors for re-sale. Purchases from
Fermec amounted to approximately $2 million in fiscal 1993. There was
no significant activity in fiscal year 1992. Receivables include $4.1
million from Fermec at January 31, 1994.
<PAGE>
MASSEY FERGUSON GROUP
Notes to Combined Financial Statements, Continued
(In thousands)
(e) Iseki Company, Ltd
--- ------------------
Iseki Company Ltd (Iseki) has a 25% equity interest in the Australian
distribution company, Massey Ferguson Iseki Australia Limited. The
Company initiated various trading relationships with Iseki in fiscal
year 1993 under which 1993 sales to Iseki were $13 million and
purchases from Iseki were $5 million.
(f) Perkins Engines Group Limited
--- -----------------------------
The Company purchases the majority of the engines for its tractors,
together with related parts, from Perkins Engines Group Limited
(Perkins), an indirect wholly-owned subsidiary of Varity. Purchases,
net of purchase rebates, amounted to $61.7, $67.5 and $70.0 million in
fiscal years 1993, 1992 and 1991, respectively. Accounts payable and
accrued liabilities include $8.8 and $7.7 million payable to Perkins
at January 31, 1994 and 1993, respectively.
(g) Pacoma Hydraulik GmbH
--- ---------------------
The Company purchases hydraulic cylinders from Pacoma Hydraulik GmbH
(Pacoma), an indirect wholly-owned subsidiary of Varity. Purchases
amounted to $3.3, $4.7 and $6.1 million in fiscal years 1993, 1992 and
1991, respectively. Accounts payable and accrued liabilities include
$.6 and $.5 million payable to Pacoma at January 31, 1994 and 1993,
respectively.
(h) Finance Companies
--- -----------------
The Company uses the services of finance companies in France and the
United Kingdom, in which it has an equity interest, to provide retail
financing facilities to end users (see note 11).
<PAGE>
MASSEY FERGUSON GROUP
Notes to Combined Financial Statements, Continued
(In thousands)
(15) Business Segment Information
- - ---- ----------------------------
The principal geographic regions in which the Company operates are set
forth below:
<TABLE>
<CAPTION>
January 31,
-------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Revenue by source:
Europe $849,000 907,800 851,300
North America 20,700 6,000 -
Australia 28,700 27,600 18,500
-------- ------- -------
$898,400 941,400 869,800
======== ======= =======
Revenue by destination:
Europe $527,100 561,000 541,400
North America 124,600 102,900 71,600
Australia 38,700 32,600 21,400
Africa 67,300 59,700 112,500
Asia 76,100 92,500 71,900
Other 64,600 92,700 51,000
-------- ------- -------
$898,400 941,400 869,800
======== ======= =======
Operating income (loss), as defined,
by source:
Europe $ 28,400 39,600 (15,700)
North America (2,300) (2,600) (2,600)
Australia 2,300 2,900 100
-------- ------- -------
$ 28,400 39,900 (18,200)
======== ======= =======
Identifiable assets:
Europe 435,600 468,600 499,100
North America 9,300 8,100 1,100
Australia $ 19,800 19,900 19,700
-------- ------- -------
$464,700 496,600 519,900
======== ======= =======
</TABLE>
Sales to one customer were 13.9% of total sales in fiscal year 1993.
<PAGE>
APPENDIX 3.4(c)
---------------
RECEIVABLES
-----------
The receivables, notes and accounts reflected in the MF Financial Statements are
subject to the charges and other security set out in Appendix 5.7(b).
<PAGE>
APPENDIX 3.4(d)
---------------
PERSONAL PROPERTY
-----------------
1. The tangible personal property reflected in the MF Financial Statements is
subject to the charges and other security set out in Appendix 5.7(b);
2. A fire at MFSA's Beauvais factory on 4/5 April 1994 has damaged various
assets. The provisional repair cost is as set out in Appendix 3.4(o);
3. Certain assets which have been purchased but not yet paid for may be
subject to retention of title clauses in the ordinary course of business.
<PAGE>
APPENDIX 3.4(e)
---------------
DEFAULTS
--------
None
<PAGE>
APPENDIX 3.4(f)
---------------
LITIGATION PROCEEDINGS
U.K.
- - ----
1. Massey Ferguson (United Kingdom) Limited v Greenland B.V.
Claims and counter-claims for damages arising out of former implements J.V.
(Massey Ferguson Implements Limited), with MF being the primary plaintiff
for (Pounds)750,000.
2. Municipal and General Insurance Co. Limited v Massey Ferguson (United
Kingdom) Limited.
Claims for damage suffered through tractor fires:
Maximum exposure (Pounds)100,000.
3. NFU Mutual Insurance are threatening to sue Massey Ferguson (United
Kingdom) Limited in respect of a fire which destroyed their assured's MF
combine harvester (value (Pounds)80,000) and several similar incidents
details of which have not yet been received.
4. The software used by MF's UK distribution business, originally supplied by
a Barclays Bank company and now maintained by Unicorn Distributor Services
Ltd, has been held to infringe the copyright of another software Company
IBCOS Computers Ltd. However no legal action against MF is anticipated.
Germany
- - -------
1. Walk, a former MF dealer, is claiming damages due to having lost the
business of "Germanising" (fitting cabs, changing tyres etc) tractors for
sale in Germany upon termination by MF of his dealership. MF GmbH has
given a DM 500,000 Court guarantee, but the claim may well now be out of
time as Walk has failed to provide the Court with details of his claim.
The guarantee expires on 30 June 1994.
Denmark
- - -------
1. Massey Ferguson Group companies owe the old Dronningborg company (in
liquidation) an aggregate of about DKK 16m. This amount is fully provided
in the Massey Ferguson accounts, but a settlement below DKK 16m is
anticipated.
Saudi Arabia/Tunisia
- - --------------------
1. Dronningborg-built combine failures in Saudi Arabia and Tunisia have led to
a possible liability to re-purchase machines to a total value of
(Pounds)435,000.
<PAGE>
Zimbabwe
- - --------
1. Alleged performance/reliability failures on Rosenlev-built combines in
Zimbabwe has led to a possible liability to re-purchase four units (value
$187,000)
Sweden
- - ------
1. SK 1.33m is being claimed by the liquidator of MaskinGruppen Syd AB, a
Swedish dealer. Current advice from outside counsel is that the company
has a valid defence.
France
- - ------
1. Claim by Agritract S.A., a terminated dealer, for FF 2.8m.
3. Claim by Ets. Hubert, a terminated dealer, for FF 880,000.
3. Claim by Ets. Mathieux, a terminated dealer, for FF 1.8m (parts return).
4. Claim by Ets. Quitte, a terminated dealer, for FF 700,000 (parts return).
5. Claim by SOMAG, a terminated dealer, for FF 30.5m.
6. Claim by Savimat/Moreau for FF 1.5m for allegedly defective combine
harvester.
7. Claim by Pompougnac/Faure for FF 1m for allegedly defective combine
harvester.
8. Claim by Knaufkassel for DM 150,000 debt; counterclaim by MFSA for recovery
of exhibition stand.
9. Threatened claim by Groupe Azur for FF 454,000 insurance premium (paid by
MFSA to broker which became insolvent).
U.S.
- - ----
1. Claim by Mendota Equipment Co. for dealer parts return. Estimated
exposure. $325,000.
2. Claim by Abele Tractor & Equipment v MF Industrial Machinery for dealer
losses due to recurring backhoe problems. Estimated exposure $50,000 -
$100,000.
3. Claim by Agri-Plex Inc. for parts return. Estimated exposure $50,000.
4. Claim by Walterman for parts return. Estimated exposure $50,000.
5. Claim by Wallace Equipment for parts return. Estimated exposure $100,000.
6. Claim by Heath for wrongful termination. Estimated exposure $50,000 -
$100,000.
<PAGE>
7. Claim by Harrison for breach of warranty. Estimated exposure Judgement of
$250,000 plus fees.
8. Claim by Lovell for breach of warranty. Estimated exposure $50,000.
9. Claim by Hunt's Generators' Committee for environmental clean up costs.
Estimated exposure $90,000.
10. Claim by Cousin Farms for loss on retail contract, plus misrepresentation
of hours of use on used tractor. Estimated exposure $ 75,000 - $100,000.
11. Claim by City of Detroit for environmental clean up of MF factory site.
Estimated exposure $75,000.
12. Claim by Lee Farm Equipment for parts return. Estimated exposure $50,000.
Australia
- - ---------
1. Claim by Nicholas Pastoral Co. for Australian $70,000 for defective tyres
and consequential loss.
Other
- - -----
1. MF is party to proceedings instituted by the European Competition authority
who allege that an international information exchange run by the major
tractor manufacturers is anti-competitive. No fines are expected.
<PAGE>
APPENDIX 3.4(g)
---------------
NON-COMPLIANCE WITH LAWS
------------------------
None
<PAGE>
APPENDIX 3.4(h)
---------------
TAXES
-----
None
<PAGE>
APPENDIX 3.4(i)
---------------
PERMITS AND LICENSES
--------------------
None
<PAGE>
APPENDIX 3.4(k)
---------------
INVENTORIES
-----------
1. Inventories reflected in the MF Financial Statements will be subject to the
charges and other security set out in Appendix 5.7(b).
2. Certain inventories which have been purchased but not paid for may be
subject to retention of title clauses in the ordinary course of business.
3. Massey Ferguson GmbH made a write-down of US $2,400,000.00 in respect of
implements inventory at the last year end (31 January 1994). The current
book value of US $2,000,000.00 reflects the value that those implements
which have not been retailed are expected to fetch at auction.
<PAGE>
APPENDIX 3.4(l)
---------------
REAL PROPERTY
-------------
The owned real property in the MF Financial Statements is subject to the charges
and other security set out in Appendix 5.7(b).
List of leased property used by the MF Business is attached hereto.
<PAGE>
MASSEY FERGUSON - REAL ESTATE
1. OWNED
1.1 UK
1.1.1 Stoneleigh, nr Coventry - office facilities for UK
Distribution company, Parts
Company, and Group staff.
1.1.2 Banner Lane, Coventry - manufacturing facility.
1.1.3 Barton Dock Road, Manchester the Fermec manufacturing facility
which is the subject of a 999 year
lease to Fermec.
1.2 FRANCE
1.2.1 Beauvais - manufacturing facility.
1.2.2 Athis, nr Paris - parts warehouse.
1.3 AUSTRALIA
1.3.1 Sunshine, Victoria - head office
1.3.2 Tottenham, Victoria - Parts Warehouse
1.4 SWEDEN
1.4.1 Kvanum (central Sweden) - dealership premises
2. LEASED
2.1 Australia
Property Expiry Annual Rent
-------- ------ -----------
13 Aitken Way 12.06.95 AUD 30227
Kewdale
W.A. Office &
Warehouse
14 Barrinia St. 12.10.96 AUD 38508
Slacks Creek
Old Office &
Warehouse
3/241 Lords Pl. 31.07.94 AUD 10910
Orange
N.S.W. Office
<PAGE>
172 Glynburn Rd. Monthly AUD 5757
Tranmere, S.A. Tenancy
Sunshine Monthly AUD 6020
Car Park. Vic. Tenancy
FRANCE
------
Nantes 09.04.95 FF 96400
Amiens 01.04.95 FF 92893
Toulouse 08.96 FF 48000
DENMARK
-------
Borgemester 6 months DKK 2834.000
Christiansens notice
GERMANY
-------
Eschwege 12 months from DEM 150.000
end of fiscal
year
SWEDEN
------
Uppsala 28.02.97 SEK 365.000
Esloev 31.12.94 SEK 42.000
KLM 9 month after SEK 204.000
Lidkoeping notice
UK
--
Park Farm, Sto. 12 months from GBP 24500
notice date
Park Farm House 3 years from GBP 5500
notice date
EIRE
----
Unit 14, Cherry 01.02.97 IRP 23500
Orchard Ind. Est.
Dublin
<PAGE>
NORWAY
------
Oslo Office 30.09.98 NOK 779470
Stavanger Office 30.06.95 NOK 150000
(3 months notice)
Storage Toten Open NOK 60000
(l month notice)
Storage Olberg Open NOK 50000
(3 months notice)
NORWAY - DEALER FACILITIES
--------------------------
Dokka 30.06.95 NOK 87688
Forde 30.09.96 NOK 231972
Harner 31.12.95 NOK 257052
Mysen 28.02.96 NOK 222204
Hafalund 31.12.94 NOK 220347
Gol 31.12.95 NOK 142720
Bodo 21.11.97 NOK 1320000
Bodo 21.11.97 NOK 185894
Sumadal 31.05.96 NOK 218298
Mosloen 31.12.95 NOK 208447
Sortland Open NOK 183404
Flisa 30.06.95 NOK 164548
Honeross 31.12.95 NOK 273352
Jaren 30.09.94 NOK 135344
Namsos 30.11.96 NOK 122913
Sota 31.12.95 NOK 201201
Steinlder 31.10.96 NOK 438604
Vestby 31.12.95 NOK 81928
Gjevik 30.09.96 NOK 235370
SPAIN
-----
Madrid Office 01.01.98 PTS 13,000,000
(180 days
notice)
Barcelona 31.07.94 PTS 8,800,000
Warehouse (30 days
notice)
<PAGE>
CANADA
- - ------
Lease of facilities at 1800 Appleby Line, Unit #9, Burlington, Ontario, Canada
L7L GA1
Lease of facilities at 2800 Skymark Avenue, Unit 4A, Level 3, Building 1,
Mississauga, Ontario, Canada L4W 5A6
USA
- - ---
Lease of facilities at 5255 Triangle Parkway, Suite 150, Norcross, Georgia USA
30092
Lease of facilities at 5440 N.W. 33rd Avenue, Suite 106, Ft. Lauderdale, Florida
USA 33309
<PAGE>
APPENDIX 3.4(m)(1)
------------------
TRADEMARKS, PATENTS AND LICENSES
--------------------------------
1. All trademarks listed on Schedule A to this Appendix 3.4(m)(l).
----------
2. All patents listed on Schedule B to this Appendix 3.4(m)(1).
----------
3. Patent licenses dated 11 January 1983 from SS Kofoed to Massey Ferguson
(front weight patent).
4. Patent license from Massey Ferguson to Cepatos Technology BV (part of
Landini). Some of these patents are still used on the MF300 Series.
5. Infringements:
The Unicorn software package used by Massey Ferguson (United Kingdom)
Limited in its U.K. distribution business has been formed to infringe the
copyright of IBCOS Computers Limited (See Appendix 3.4(f)).
<PAGE>
SCHEDULE A
----------
TRADE MARKS
Listing of trademarks to be agreed upon by and amongst the parties prior to
closing.
<PAGE>
SCHEDULE B
----------
PATENTS
Listing of patents to be agreed upon by and amongst the parties prior to
closing.
<PAGE>
APPENDIX 3.4(m)(2)
------------------
MF LICENSE DISTRIBUTORS
-----------------------
1. MF Argentina S.A. (Argentina)
2. Maxion S.A. (Brazil)
3. PT Swadaya Harapan Nusantara (Indonesia)
4. TAFE (India)
5. Iran Tractor Manufacturing - Company (Iran)
6. LTC (Libya)
7. Siderurgia Nacional S.A. (Mexico)
8. Millat Tractors Ltd. (Pakistan)
9. Ursus (Poland)
10. STMC (Saudi Arabia)
<PAGE>
APPENDIX 3.4(n)
---------------
MATERIAL CONTRACTS
------------------
Note: The list excludes foreign exchange contracts, real property leases and
inter-company commitments; contracts under negotiation are not
included.
(i) Partnerships and Joint Ventures
-------------------------------
(a) GIMA S.A. - joint venture between Renault Agriculture and MFSA;
(b) Purchasing GIE - Collaborative purchasing arrangement between Renault
Agriculture, MFSA, GIMA S.A. and Massey Ferguson Manufacturing
Limited;
(c) Massey Ferguson Finance Limited - UK retail financing joint venture
between Massey Ferguson (United Kingdom) Limited and De Lage Landen;
(d) Massey Ferguson Finance France - French retail financing joint venture
between MFSA and De Lage Landen;
(e) Massey Ferguson Implements (UK) Limited - UK joint venture for
implement distribution between Massey Ferguson (United Kingdom)
Limited and Greenland UK Limited/Greenland N.V. No longer trading;
(f) Massey Ferguson Leasing Limited - UK retail finance joint venture
between Massey Ferguson (United Kingdom) Limited and Barclays Bank.
No longer trading.
(ii) Indebtedness for Borrowed Money over USD 250,000
------------------------------------------------
Lease of IBM hardware and JBA software from IBM
Lease of Makino machine tool from UFB Humberclyde.
(iii) Non-Employment Arrangements
---------------------------
Relationship with Polygon Reinsurance Company Ltd for before Closing
insurance coverage.
(iv) Contracts over USD 500,000
--------------------------
Australia
---------
Iseki product (ordered but not shipped or invoiced) USD 834k.
Germany
-------
NETS parts transport contract; 12 month commitment - approximately USD
600k.
<PAGE>
Altmann contract for services in Wolnzach - annual value approximately USD
600k.
Dronningborg combine orders (delivery July/September 1994) - USD 6.3m.
UK
--
S. Warner instrument supply contract (expires 31.1.95) - annual spend
(Pounds)930k.
Koyo bearings supply contract (expiry 31.1.95) - annual spend
(Pounds)2.17m.
Kanda Syncro's supply contract - annual spend (Pounds)0.75m
Walt Hexagon hardware contract (expiry 30.4.95) - annual spend
(Pounds)2.2m.
Systemline transport contract (expiry 31.5.97) - annual spend (Pounds)750k.
Sundstrand hydraulic pump supplies - continuing under spirit of previous
agreement. Annual spend (Pounds)1.16m
Gates hydraulic hoses supplies - continuing under spirit of previous
agreement. Annual spend (Pounds)540k.
There are contingent liabilities under contracts with Rexroth (hydraulics)
and GKN Sankey (cabs) of (Pounds)310k and (Pounds)900k respectively.
Caterpillar Logistics Services warehousing contract (expiry 2002).
Allens Transport (Athis - Desford)
Swift Transport
HBS, Dallas five year contract for CD-ROM software and discs
SEMA facilities management contract (expiry 31.1.97)
Dronningborg combine orders - USD 6.1m.
Iseki orders USD 2.6m.
France
------
SER new cab supply contract - Tooling and Design FFR 21.2m.
Valeo clutch supply contract (expiry 30.6.95). Annual spend FF 7.3m.
Comaxle axle supply contract (expiry 31.1.97). Annual spend FF 72.4m.
<PAGE>
Bosch hydraulics/electronics supply contract (expiry 31.7.94). Annual
spend FF 24.9m.
SIAC cab supply contract (open ended notice of termination for March 1995
in preparation). Annual spend FF 75.6m.
Koyo bearings supply contract (expiry 31.1.95). Annual spend FF 4.9m.
Valmet engine supply (continuing under spirit of previous agreement).
Annual spend FF 24m.
Sanden condenser supply (continuing under spirit of previous agreement).
Annual spend FF 4.5m.
Caterpillar castings supply (continuing under spirit of previous
agreement). Annual spend FF 13m.
Valeo radiator supply (continuing under spirit of previous agreement).
Annual spend FF 6.8m.
For all major suppliers there are normal scheduled material commitments
ranging from 3 to 6 months, even where we do not have specific long term
supply agreements.
Norway
------
Implement supply contract with Kuhn (France) USD 848k.
Implement supply contract with Pottinger (Austria) USD 693k.
(v) Executives, Directors and Key Employees
---------------------------------------
See Attached.
<PAGE>
EXECUTIVES, DIRECTORS AND KEY EMPLOYEES
---------------------------------------
A. CURRENT
D. Chauvin** Group CEO & Gen.Mgr MFSA
D.J. Roache Group Director Finance GBP 74,000
C.S.D. Lupton Group Director Legal Services 63,000
N.E.C. Hoare Group Director Purchasing 47,500
F. Pask Group Director Mktng & Bus.Plann. 52,000
D.F. Smith Group Product Strategy Director 42,000
R.D. Williams Group Director Human Resources 72,000
A.G. Moon Director International Operations 62,000
A.D. Jones General Manager, MFTL 85,000
J. Stephenson General Manager, Parts 73,300
D.I. Franklin Director European Distribution 75,000
G. Leonard Gen.Mngr, N. American Distribution USD 92,000
A. Verhagen Gen.Mngr, Australian Distribution AUD 135,000
G. Patrick General Manager, Export Operations GBP 65,000
J.D. Pitt Director - Special Projects USD 145,000
R.W. Markwell* Gen.Mngr, French Distribution FRF 615,000
J.E. Puente Gen.Mngr, Spanish Distribution ESP 16,050,000
K.O. Friesleben Gen.Mngr, Danish Distribution DK 540,000
S.Gjennestad Gen.Mngr, Norwegian Distribution NKR 655,500
M.P. Lines* Gen.Mngr, German Distribution DEM 200,000
P. Wilkinson Comptroller - European Distribution GBP 43,000
D. de Villepin Comptroller - French Manufacturing FRF 615,000
R. White Comptroller - UK Manufacturing GBP 42,000
B. FORMER
J-P Richard** Group CEO June 92 - November 93
J.D. Sword** Group CEO - June 92
C. Homfray Group Marketing Director to Feb.94 GBP 71,000
G.T. Fowler Group Product Dr. 1992/93 (Deceased) GBP 35,000
K. Boening Gen.Mngr, German Distribution DEM 200,000
L.G. Rahm Gen.Mngr, Swedish Distribution SKR 516,000
NOTES
- - -----
* Lines and Markwell are on expatriate packages; the salary shown is their base
salary in their foreign location.
** Salary detail obtainable from Ray Harman, Varity Corporation
<PAGE>
APPENDIX 3.4(O)
---------------
MATERIAL EVENTS
---------------
1. Purchase of Landini S.p.A. from the liquidator by ARGO and recapitalisation
by ARGO, MF and Iseki;
2. Fire at MFSA Beauvais factory 4/5 April 1994. The fire has caused damage
estimated at FF 5.7m. Most of the damage was to No. 2 furnace, with other
damage to No. 1 furnace and the surrounding areas.
The main function of No. 2 furnace was heat treatment of gear wheels for
both Beauvais and the UK factory at Banner Lane. This will now have to be
sub-contracted until repairs are completed.
The estimated cost of sub-contracting is FF 500k per month (excluding
packing). The estimated time for repairs if 3 months.
<PAGE>
APPENDIX 4.1(f)
---------------
RELATED AGREEMENTS
------------------
1. Supply Agreement with Perkins Engines substantially in the form of Schedule
--------
A to this Appendix 4.1(f).
-
2. Registration Rights Agreement containing those terms set forth on Schedule
--------
B to this Appendix 4.1(f).
-
3. Letter Agreement regarding Varity Europa containing those terms set forth
on Schedule C to this Appendix 4.1(f).
----------
4. Letter Agreement regarding employees of MFGL and the Subsidiaries
containing those terms set forth on Schedule D to this Appendix 4.1(f).
----------
5. Non-Competition Agreement containing those terms set forth on Schedule E to
----------
this Appendix 4.1(f).
6. Escrow Agreement with respect to the Closing and Buyer's receipt of funds
from the sale of its equity securities.
7. Lease Agreement between Buyer and Varity GmbH for office and warehouse
facilities in Eschwege, Germany (two year term, but terminable by either
party upon six months' notice, at current lease rate).
<PAGE>
SCHEDULE A
----------
FORM OF PERKINS SUPPLY AGREEMENT
--------------------------------
See Attached
<PAGE>
SUPPLY AGREEMENT
BETWEEN
MASSEY FERGUSON GROUP LIMITED
AND
PERKINS GROUP LIMITED
<PAGE>
CONTENTS
--------
1. Definitions.
2. Effective Date
3. Scope of Agreement and Transition Arrangements.
4. Term
5. Engine, Components and Kit Pricing, Shipping and Terms of Payment.
6. Spare Parts Pricing, Shipping and Terms of Payment.
7. Orders and Schedules.
8. Risk and Title.
9. Production Priority.
10. Warranty and Policy.
11. Right to Reject.
12. Emission Controls : Future Products.
13. Cost Reduction : Safety.
14. Indemnification.
15. Proprietary Information.
16. Discontinuation.
17. Copyright and Trademarks.
18. Termination.
19. Force Majeure.
20. Notices.
21. Miscellaneous.
EXHIBIT A MF PRODUCTS.
EXHIBIT B PERKINS ENGINES AND SPECIFICATION.
EXHIBIT C ENGINE PRICING AND ORDERING PROCEDURES.
EXHIBIT D SPARE PARTS DETAILS AND PRICING.
EXHIBIT E MF PRODUCTS PLANNING FORECAST.
EXHIBIT F PERKINS ENGINE STANDARD WARRANTY.
<PAGE>
THIS SUPPLY AGREEMENT is made the __________________ day of April 1994 BETWEEN
MASSEY FERGUSON GROUP LIMITED, Stareton, Kenilworth, Warwickshire, CV8 2LJ,
England and PERKINS GROUP LIMITED, Eastfield, Peterborough, PE1 5NA, England
("PERKINS") representing its subsidiaries Perkins Engines (Peterborough) Ltd.,
Perkins Power Sales & Service Ltd. and Perkins Technology Ltd.
WHEREAS
(A) AGCO Corporation has agreed to acquire the assets and business of MF from
Varity Corporation with effect from ( _______ ) as a going concern with the
intent, inter alia, of maintaining and expanding that business.
(B) PERKINS and its Affiliates and Licensees have for many years supplied MF
with a range of Perkins branded diesel engines, related components and
spare parts for incorporation into MF branded products. In addition
PERKINS and its Affiliates and Licensees have also supplied such products
to MF's associated and/or related companies and licensees in various
countries around the world.
(C) MF wishes to continue the relationship that currently exists between MF and
PERKINS; and for its part PERKINS wishes to establish a relationship with
MF that builds upon and expands the currently existing one with MF.
(D) Therefore PERKINS and MF wish to enter into this Supply Agreement
whereunder inter alia MF will commit to purchase and PERKINS will commit to
supply 100% of MF's requirements for diesel engines, related components and
spare parts for incorporation into present and future MF products.
<PAGE>
THEREFORE, the Parties agree as follows:
(1) DEFINITIONS :
-----------
"Affiliate" shall mean (i) any company, corporation, partnership or other
business entity which is twenty-five percent (25%) or more owned, directly
or indirectly, by a Party or which is twenty-five percent (25%) or more
owned by any company, corporation, partnership or other business entity
falling under paragraph (ii) below; and (ii) any company, corporation,
partnership or other business entity that owns, directly or indirectly,
twenty-five percent (25%) or more of a Party.
"Components" means those items that are to be incorporated into newly built
Perkins Engines by or on behalf of PERKINS prior to their delivery to MF
and shall include manufacturing parts.
"Kits" means an agreed set of Components to be supplied by PERKINS to the
order of MF including but not limited to CKD versions of Perkins Engines.
"Licensee" means any current or future officially appointed licensee of
either Party (as the context so admits) whose operations relate in whole or
in part to this Supply Agreement.
"Party" and "Parties" means individually either PERKINS or MF, or
collectively both PERKINS and MF.
"PERKINS" means Perkins Group Ltd. and its subsidiaries Perkins Engines
(Peterborough) Ltd., Perkins Power Sales & Service Ltd. and Perkins
Technology Ltd. and their respective legal successors and assigns as well
as any Affiliates or associated companies of such entities.
<PAGE>
"Perkins Engine" means any PERKINS branded diesel engine identified in
Exhibit B manufactured by or on behalf of PERKINS in accordance with the
agreed specification and having a power output between 40HP and 155HP.
This definition shall also include any derivative or successor products as
and when introduced by PERKINS.
"MF" means Massey Ferguson Group Limited and their subsidiary Massey
Ferguson Parts Co. Ltd. ("MFPC") and their respective legal successors and
assigns.
"MF Product" means any product manufactured by or on behalf of MF
identified in Exhibit A having a diesel engine with a power range between
40HP and 155HP whether or not currently incorporating a Perkins Engine.
This definition shall also include any derivatives or successor products
within the same power range as and when introduced by MF.
"Policy 3" means the OEM status level granted by PERKINS to MF hereunder
whereby (a) MF and its distribution network will be responsible for
providing all warranty, engine service and spare parts support for the
Products and (b) MF will be able to purchase all its requirements for Spare
Parts direct from PERKINS.
"Product" means collectively Perkins Engines, Components, Kits and Spare
Parts.
"Spare Parts" means replacement or spare parts referenced in Exhibit D for
Perkins Engines and for which PERKINS is the design authority and which are
to be supplied by PERKINS to MF hereunder.
"Supply Agreement" means this document and all Exhibits attached hereto.
<PAGE>
(2) EFFECTIVE DATE :
--------------
This Supply Agreement shall become effective as of ______________ 1994.
(3) SCOPE OF AGREEMENT AND TRANSITION ARRANGEMENTS
----------------------------------------------
3.1 As from the Effective Date :
(a) MF commits to power all current and future MF Products within
the 40HP-155HP power range with Perkins Engines.
(b) MF commits to purchase from PERKINS 100% of MF's requirements
for Perkins Engines, Components, Kits and Spare Parts for
installation into the MF Products.
(c) MF shall not be entitled to resell Perkins Engines, Components
or Kits as loose items other than to its Affiliates or
Licensees and then only if they are to be incorporated into MF
Products.
(d) PERKINS hereby grants to MF Policy 3 status on a world-wide
basis.
3.2.1 With respect to MF's current and future diesel engine requirements
in the power range from 156HP - 250HP, the Parties recognise the
potential mutual benefits of MF selecting PERKINS as the sole
supplier of such diesel engines. The Parties therefore agree to
work jointly towards this goal in the following manner : subject to
PERKINS demonstrating its ability to
(a) meet the required MF Product specification, and
<PAGE>
(b) being able to offer the relevant engine at price consistent
with the other Perkins Engines then being offered and
consistent with the globally competitive price for comparable
engine products manufactured by PERKINS key competitors in the
agricultural sector. The Parties acknowledge that when
reviewing the pricing offered by PERKINS, they will take due
account of all relevant surrounding factors such as product
quality, performance, terms of payment, environmental
compliance, technical and parts support and delivery,
then MF commits to specify only the Perkins Engine in the particular
MF Product within a mutually agreed transition timescale. As and
when this happens all references in this Supply Agreement to "155HP"
as being the upper limit to the power range covered hereby shall be
amended accordingly.
3.2.2 If PERKINS during the term hereof develops within the power range of
40HP-155HP a replacement model for any Perkins Engine, Component or
Spare Part then being currently supplied to MF, MF will subject only
to PERKINS demonstrating its ability to meet the required
specification and being able to offer the item at a price consistent
with the other Products then being supplied, purchase it under the
terms hereof.
3.3 Where MF or any of its Affiliates or Licensees that are under MF's
effective management control develop any new or replacement MF
Products within the power range of 40HP-155HP that require a diesel
engine as motive power, then PERKINS will subject to PERKINS
demonstrating its ability to meet the required specification and
being able to offer the item at a price consistent with the other
Products then being supplied become the sole supplier of the
required diesel engine. This is whether or not that diesel engine is
then currently being
<PAGE>
supplied by PERKINS to MF. The above shall not apply where MF is, by
a prior legally enforceable agreement between it and an Affiliate or
Licensee, precluded from so doing. If for whatever reason PERKINS is
unable immediately to supply a diesel engine that meets MF's overall
specification, then as soon as PERKINS is able to supply such a
product, MF undertakes to substitute it into the particular MF
Product at the earliest opportunity subject only to the conditions
set out above.
3.4 Subject to Clause 3.13 and 3.14 below, the supply of Perkins
Engines, Components, Kits and Spare Parts by PERKINS and its
Affiliates to MF, its Affiliates or Licensees shall be governed
solely by the terms hereof. The terms of any purchase order,
acknowledgement of order form or related documentation shall not
apply unless specifically agreed otherwise between the Parties.
3.5 MF will provide PERKINS with detailed functional specifications for
each specific engine configuration. PERKINS will review the
specifications and discuss with MF any difficulties it foresees in
meeting the specifications and if necessary the Parties will
mutually agree upon any changes.
3.6 Specific changes to the specifications of any Perkins Engine can be
suggested by either Party at any time. No changes which affect fit
or interchangeability will be made by PERKINS without MF's prior
consent, which consent shall not be unreasonably withheld or
delayed. If the Parties agree upon a specification change, they
will also agree upon any appropriate changes to price, delivery,
warranty and any other applicable terms and conditions.
3.7 PERKINS will provide and update as required various types of data
used to support the sales, servicing and Spare
Parts support of the Perkins Engines. This shall include product
design drawings, training
<PAGE>
materials, technical data sheets, service manuals and Spare Parts
books. PERKINS shall provide to MF free of charge one master set of
that data and material agreed with MF as being necessary for their
activities hereunder.
3.8 Throughout the term of this Supply Agreement the Parties will
monitor jointly their overall performance relating to the Policy 3
activities in order to maximise the mutual benefit of this aspect of
their relationship.
3.9 MF acknowledges PERKINS as the design authority for all Spare Parts.
MF will purchase its total requirements for Spare Parts only from
PERKINS, provided that this shall only apply to those items that
were originally supplied by PERKINS with or incorporated into the
Perkins Engines. MF shall only be entitled to resell Spare Parts
(a) in accordance with its Policy 3 status or (b) in conjunction
with sales of MF Products as a package, and they agree not to use,
sell or distribute any Spare Parts for any other purpose.
3.10 PERKINS will use all reasonable endeavours to maintain the ability
to supply Spare Parts of a particular specification for the Perkins
Engines for a period of at least 12 years after the date of last
supply by PERKINS of the relevant Perkins Engines to MF. During the
subsequent 5 years service life of a Perkins Engine (years 13 - 18
for agricultural applications), the Parties will use all reasonable
endeavours to agree a managed phase out plan for that period.
3.11 During any phaseout period referenced in Clause 3.10 above, the
Parties may agree from time to time categories of slow moving and
obsolete Spare Parts which may be bought by MF on a one-off and one-
time buy basis.
<PAGE>
3.12 As and when new engine products are introduced to the list of
Perkins Engines to be bought by MF, the commitment set out in
Clause 3.9 above plus the other relevant terms herein shall
automatically apply to the supply by PERKINS to MF of Spare Parts
for those Perkins Engines.
3.13 The Parties acknowledge that as at the Effective Date there are a
variety of outstanding uncompleted but contractually binding
purchase orders and related delivery schedules ('Orders') covering
PERKINS - MF agreed commitments for the supply of Products by
PERKINS to MF, its Affiliates, associated companies, distributors
and Licensees.
3.14 The Parties expressly agree that all such Orders shall be completed
by PERKINS and paid for by MF under the terms originally agreed
between PERKINS and MF In addition MF agrees not to vary, cancel or
try to vary or cancel any such Order.
3.15 The Parties expressly agree that apart from the Orders all MF's
requirements for Products that are ordered by them as from the
Effective Date shall be ordered strictly under the terms of this
Supply Agreement. They acknowledge however that given the nature,
length and complexity of the previous PERKINS - MF relationship,
there will arise during the initial phase of the new Supply
Agreement operational issues and differences. They therefore
undertake to use all reasonable endeavours in good faith to resolve
these in a mutually acceptable and expeditious way as and when these
issues or differences arise.
3.16 In order to ensure a smooth transition into the new Supply
Agreement, the Parties will establish and fully support a joint
working team embracing the engine and parts supply operations as
well as the technical support services of each organisation.
<PAGE>
3.17 With respect to the relationships between (a) MF and its Licensees
and (b) MF and Landini and (c) MF and Fermec, MF and PERKINS agree
that subject to any prior legally enforceable agreements between MF
and such parties the following principles shall apply:-
- For (a) MF undertakes to ensure that its Licensees will utilise
only the Products when assembling, testing, manufacturing or
servicing MF Products.
- For (b) and (c) MF will make no material alterations in the
previous MF - Landini and MF - Fermec relationships as far as
it concerns the need and procurement of the Products direct
from PERKINS.
4. TERM :
----
4.1 This Supply Agreement shall, subject in particular to Clause 4.2,
continue in effect until terminated by MF or PERKINS upon 36 months
prior written notice to the other Party, provided, however, that
such notice may not be given until 7 years have elapsed from the
Effective Date of this Supply Agreement.
4.2 Notwithstanding the above referenced term of this Supply Agreement,
if at any time during that term MF considers in good faith that with
respect to either pricing or product quality of the then supplied
range of Perkins Engines, PERKINS cannot reasonably be considered to
be competitive in the overall sense across the range then the
following shall apply :-
. MF will notify PERKINS in writing giving full supporting data
and information.
<PAGE>
. A formal meeting at an operational level will be convened
within 30 days of PERKINS receipt of MF's notice. This meeting
will consider firstly MF's concerns and secondly a mutually
acceptable action plan where this is agreed as being necessary.
. The Parties will use all reasonable endeavours and acting in
good faith to resolve MF's concerns, agree an action plan and a
timetable for implementation within 30 days.
. If the Parties fail to agree at an operational level, the
issues will be referred for final resolution to an executive
level meeting to be convened without delay.
. Where an action plan is agreed, the Parties will take all
necessary steps to action this forthwith and to ensure the
desired outcome. If for reasons within PERKINS control the
outcome is not achieved within the target timescale then MF
may, with respect to the affected Perkins Engine(s),
automatically amend its Clause 3.1(b) commitment accordingly.
5. ENGINE, COMPONENTS AND KIT PRICING, SHIPPING AND TERMS OF
---------------------------------------------------------
PAYMENT:
-------
5.1 The prices applicable to Perkins Engines, Components and Kits as
from the Effective Date until January 31, 1995 shall be those set
out in Exhibit C. For the twelve month period commencing February
1, 1995 and finishing on January 31, 1996 the above referenced
prices will be adjusted in accordance with the formula and rules
detailed in Exhibit C.
Commencing no later than October 1995 the Parties will, for the
purposes of agreeing pricing and a pricing adjustment formula for
<PAGE>
Perkins Engines, Components and Kits for the period post 31 January
1996 initiate pricing review discussions. The Parties agree to act
in good faith within this process and to use their best endeavours
to conclude their discussions no later than December 31st 1995.
5.2 All prices quoted in Exhibit C are in pounds sterling.
5.3 For all Perkins Engines Components and Kits to be delivered to MF's
UK manufacturing location, the prices quoted in Exhibit C represent
delivery "Ex Works" Peterborough as per INCOTERMS 1990. However
PERKINS shall be responsible for delivering such items to MF's UK
manufacturing location at no additional charge.
5.4 For all Perkins Engines, Components and Kits to be delivered to MF's
French manufacturing location, the prices quoted in Exhibit C
represent delivery CPT (Beauvais) as per INCOTERMS 1990. MF shall
however be responsible for all customs clearance charges incurred on
all such deliveries.
5.5 PERKINS and MF shall as far as is possible try to ensure that the
former PERKINS - MF working procedures for the shipping of Products
are carried over into the new relationship unless mutually agreed
alternative procedure(s) can be instituted at no disadvantage to
either Party.
5.6 For all sales of Perkins Engines, Components and Kits, PERKINS shall
be entitled to invoice MF upon dispatch Ex Works Peterborough as per
INCOTERMS 1990. For all deliveries outside the UK, "Ex Works" shall
mean Ex Works from the nominated PERKINS engine packers. If the
above items are ready for dispatch but for reasons outside PERKINS
control such dispatch cannot be achieved, they shall be placed in
storage by PERKINS. The first 30 days storage shall be free
<PAGE>
of charge : the reasonable costs of all subsequent periods of
storage shall be to MF's account. Dispatch in such circumstances
shall be deemed to have taken place on the items being placed in
storage by PERKINS.
If PERKINS sources any Perkins Engines, Components or Kits from
outside the UK (having obtained MF's prior consent, which consent
not to be unreasonably delayed or withheld), then PERKINS may
invoice MF upon their dispatch Ex Works (as per INCOTERMS 1990) from
the relevant overseas location.
5.7 All payments will be made by electronic transfer in pounds sterling
in the UK by MF to an account(s) nominated in advance by PERKINS.
Except for all deliveries referenced in Clause 5.4, all payments
will be made on the basis of net monthly account by no later than
the relevant payment day relating to the particular month of
invoicing. Exhibit C sets out the agreed dates for the twelve month
period to January 31st 1995. For all deliveries referenced in
Clause 5.4, the related payments will be made on the basis of 60
days from the date of the invoice and will be made by no later than
the relevant payment day set out in Exhibit C for the 12 month
period to January 31st 1995. For all subsequent twelve month
periods, the Parties will agree by December 31st each year the
details for all payments for the next twelve months. If MF fails to
make payment in full in accordance with the above procedures,
PERKINS reserves the right to charge interest at the then prevailing
UK base lending rate of Lloyds Bank plc plus 2% on all outstanding
sums.
5.8 The Parties agree to work together to achieve by no later than
January 31st 1996 a regularisation of the payment terms as between
the MF UK and French locations with the intent of standardising on
the then current MF UK based terms.
<PAGE>
6. SPARE PARTS PRICING, SHIPPING AND TERMS OF PAYMENT:
--------------------------------------------------
6.1 MF and PERKINS acknowledge the existence of a Heads of Agreement
dated September 16th, 1993 between MFPC and Perkins Power Sales &
Service Ltd. which covered the PERKINS - MF spare parts, service
and warranty arrangements. The Parties confirm that their intent is
to encapsulate the contents of those arrangements within the terms
of this Supply Agreement.
6.2 The Spare Parts covered within this Supply Agreement include all
parts of the Perkins Engines as supplied by PERKINS to MF at their
UK and French manufacturing locations and to that level of fitment
on MF Product. Excluded from this Supply Agreement are all
remanufactured items, all new Perkins Engines and all those items
fitted by MF onto MF Product after PERKINS has delivered the Perkins
Engines.
6.3 With respect to Spare Parts' pricing, the detailed price lists and
relevant discount levels (if applicable) are set out in Exhibit D.
It is accepted by MF that the majority of Spare Parts will be priced
against PERKINS prevailing PK2N price list less a specified
discount. For its part PERKINS accepts that MF should be entitled
to benefit from an annual right (previously enjoyed by MFPC) to
request a rebalance of its purchase prices by category and/or part
number. Any rebalance must have a nil overall impact over the
PERKINS discount given in the previous twelve months.
6.4 In relation to the pricing of Spare Parts for the North American
market, Exhibit D contains details of the applicable prices through
to January 31st 1995.
<PAGE>
6.5 All prices quoted in Exhibit D are inclusive of the standard PERKINS
packaging and all Spare Parts will be supplied to MF in "Perkins
Powerpart" boxes/packaging.
6.6 All prices quoted in Exhibit D are in pounds sterling.
6.7 All prices quoted in Exhibit D represent Ex Works CPT (as per
INCOTERMS 1990) delivery to MF's UK Central Warehouse.
6.8 For all sales of Spare Parts PERKINS shall be entitled to invoice MF
upon dispatch Ex Works CPT (as per INCOTERMS 1990).
6.9 All payments will be made by electronic transfer in pounds sterling
in the UK by MF to an account(s) nominated in advance by PERKINS.
All payments will be made by MF by the 15th day of the second month
following shipping and by no later than the relevant payment day
relating to the particular month of invoicing. Exhibit D sets out
the agreed dates for the twelve month period to January 31st, 1995.
For all subsequent twelve month periods, the Parties will agree by
December 31st each year the details for the next twelve months.
If MF fails to make payment in full in accordance with the above
procedures, PERKINS reserves the right to charge interest at then
prevailing UK base lending rate of Lloyds Bank plc plus 2% on all
outstanding sums.
The Parties agree to work together to achieve by no later than
January 31st 1996 a change in the payment terms to net monthly
account.
6.10 PERKINS will be entitled to review all Spare Parts pricing once per
year, normally in November for the majority of part numbers and in
June for others. In any event an individual Spare Part price may
only
<PAGE>
be changed once per year. For all June related price reviews PERKINS
will give MF 4 weeks prior written notice of the detailed changes.
For all November related price reviews PERKINS will give MF 90 days
prior written notice of the overall impact of any such changes and 6
weeks prior written notice of the detail by part number and
implementation date.
6.11 For all newly introduced or superseding Spare Parts, the applicable
discount will, for newly introduced items, reflect their position in
the discount matrix or will for superseding items, take the discount
applicable to those items they replace.
6.12 PERKINS will during the term hereof offer MF a Spare Parts stock
return privilege once per year between February 1st and April 30.
The stock return privilege will be either 1%, 2% or 3% of the
previous years total MF purchase of Spare Parts and will be
determined in accordance to the formula and rules detailed in
Exhibit D.
7. ORDERS AND SCHEDULES:
--------------------
7.1 MF will provide PERKINS with its 3 year strategic planning
forecast, updated annually and covering its requirements for Perkins
Engines and Kits. The first one is incorporated as Exhibit E hereto.
Such forecast is for planning purposes only so as to inform PERKINS
of the production capacity it may need to meet MF's projected needs.
It does not represent a commitment by MF to purchase.
7.2 MF will provide a 12 month, monthly updated detailed forecast of
its requirements by type of Perkins Engines and Kits. The detailed
ordering/scheduling procedures for MF's UK and French operations
<PAGE>
are set out in Exhibit C. The basic principle will be that PERKINS
is given at any one time a 4 week fixed and firm order period.
Notwithstanding the above, the Parties will work together throughout
the term hereof to achieve progressively shorter fixed and firm
order periods.
7.3 For stock orders for Spare Parts MF will place purchase orders on
PERKINS incorporating a schedule with specific weekly delivery time
slots. The schedule will incorporate a 12 week lead time. Special
orders (not being VOR) or variations to the above schedule can be
agreed between the Parties subject to a minimum of 5 working days
lead time.
7.4 For VOR orders for Spare Parts, if PERKINS receives the order by
5.00 pm, delivery is guaranteed before 9.00 am the next working day
to MF's UK Central Warehouse, subject to Clause 7.5 below. If the
VOR order is received after 5.00 pm, it will be delivered before
9.00 am of the second working day after the day of receipt. PERKINS
may levy a surcharge on VOR orders where the Spare Part is not on
stock back order.
7.5 PERKINS will achieve a 95% VOR order fill rate performance and
subject to receiving a 12 week lead time schedule a 98% stock order
fill rate performance throughout the term hereof. Detailed working
procedures covering the interpretation, management and measurement
of this will be established within 2 months of the Effective Date.
8. RISK AND TITLE:
--------------
Notwithstanding any other provision herein or in any MF issued purchase
order, risk in Products will pass to MF upon their delivery and title in
any
<PAGE>
Products will pass MF upon MF's payment in full of the relevant PERKINS
invoice.
9. PRODUCTION PRIORITY:
-------------------
If PERKINS should have demand exceeding its capability to supply, it will
use all reasonable endeavours to supply sufficient quantities of Perkins
Engines to MF to ensure continued production at its plants and shall treat
MF no less favourably than other major customers of PERKINS.
10. ENGINE WARRANTY AND POLICY:
--------------------------
10.1 All Perkins Engines, Kits and Components supplied hereunder shall
benefit from a warranty from PERKINS. For a period of 12 months
from delivery of any such items to the first user or 24 months from
delivery as per Clause 5 (whichever is shorter), PERKINS will by
repair or (at its option) replacement rectify any failure therein
due to a defect in workmanship or materials. PERKINS will accept
responsibility for labour and material costs incurred during such
activities. With respect to the cylinder block casting, cylinder
head casting, crankshaft (excluding bearings), camshaft and
connecting rods, these major Components will be warranted for a
further 12 months over and above the standard warranty period.
10.2 The detailed procedures supporting the PERKINS warranty are set out
in Exhibit F.
10.3 Spare Parts - The Parties acknowledge the previous PERKINS - MF
-----------
arrangement for Spare Parts warranty under which MF accepted and
funded warranty related claims from its network and customers. The
Parties agree to continue this arrangement within the terms hereof
and to honour fully the intent and spirit of the previous
arrangements:
<PAGE>
therefore MF agrees not to make any claims of a warranty type nature
on PERKINS that arise from the supply of Spare Parts hereunder.
11. RIGHT TO REJECT:
---------------
MF reserves the right to reject any and all Products not in accordance with
the agreed upon specifications. MF shall notify PERKINS of any such non-
conformity or deficiency, or any shortage in shipment, as soon as
reasonably practicable after arrival at the intended destination. The
Parties will agree upon a method for correcting the non-conformity or
deficiency. If MF performs the agreed correction, PERKINS shall reimburse
or credit, at its election, the direct and reasonably incurred expenses of
MF for any repairs performed by MF or its nominee in correcting the non-
conformity or deficiency.
12. EMISSIONS CONTROLS : FUTURE PRODUCTS:
------------------------------------
PERKINS undertakes to meet future emissions regulations in the world as
they may relate to the Perkins Engines. The Parties will meet regularly so
that PERKINS may keep MF informed of its progress toward compliance with
future regulations. Both Parties will exchange technical information and
data to minimise the development costs and product costs associated with
these programmes. PERKINS will supply MF with calculations and test data
reasonably required to satisfy the relevant regulations. The Parties agree
to establish and maintain a close technical and product planning
relationship so as to maximise the mutual benefits arising from such
activities. They agree to share their respective product plans during the
term hereof as far as they relate to this Supply Agreement.
In so much as PERKINS is unable at any time to meet the particular
emissions regulations of a specific market as they may apply to a Perkins
Engine, then the MF commitment in Clause 3.1(b) shall be deemed waived
<PAGE>
for that Perkins Engine for as long as PERKINS inability may continue. Once
PERKINS achieves compliance, the waiver shall be automatically removed.
13. COST REDUCTION : SAFETY:
-----------------------
13.1 PERKINS and MF agree to continue and fully support the existing
joint cost reduction and TQ related activities as established
between PERKINS and MF with the intent of achieving continuous
improvements for their mutual benefit. They agree to share equally
between themselves any benefits that may arise from such activities.
13.2 The Parties agree that product safety is a goal to which each Party
is committed.
13.3 The Parties shall inform each other periodically concerning the
performance of the Products. As part of such discussions the
Parties will update one another on the accident history of Products.
It is intended that PERKINS and MF shall co-operate closely in
undertaking any investigations of any accidents.
14. INDEMNIFICATION:
---------------
14.1 PERKINS shall indemnify and hold MF and its Affiliates and their
dealers, employees, officers and directors, harmless against and
from all claims, demands, penalties, liabilities, loss, damage,
costs, attorneys' fees and expenses of whatsoever nature which are
a consequence of or attributable to, the operation, use or
possession of Products and resulting from any defect of material or
workmanship of Products or failure to adequately instruct or warn
concerning the operation, use or possession of such Products,
excluding, however, any such claims and demands to the extent
attributable to any
<PAGE>
modification or alteration of Products performed by any of the MF or
their Affiliates without the written approval of PERKINS.
14.2 MF shall indemnify and hold PERKINS and its Affiliates and their
employees, officers and directors harmless against and from all
claims, demands, penalties, liabilities, loss, damage, costs,
attorneys' fees, and expenses, of whatsoever nature, which are a
consequence of or attributable to the operation, use or possession
of Products and resulting from any modification to or alteration of
the Product by MF or their Affiliates performed without the written
approval of PERKINS.
14.3 PERKINS shall indemnify and hold MF and its Affiliates and their
dealers, employees, officers and directors, harmless against and
from all claims, demands, penalties, liabilities, loss, damage,
costs, attorneys' fees and expenses, of whatsoever nature, which are
a consequence of or attributable to the operation, use or possession
of Products and resulting from any representation or
misrepresentation made by PERKINS or its Affiliates including, but
not limited to, representations or misrepresentations relating to
the capability, use, application, function, durability, reliability,
quality, serviceability, safety or any other characteristic or
feature of Products, and including representations as required for
government certification, homologation, approval and for any other
purpose whatsoever, except as may have been made in reasonable
reliance upon information furnished by MF or its Affiliates.
14.4 MF shall indemnify and hold PERKINS and its Affiliates and their
employees, officers and directors, harmless against and from all
claims, demands, penalties, liabilities, loss, damage, costs,
attorneys' fees and expenses, of whatsoever nature, which are a
consequence of or attributable to the operation, use or possession
of Products and resulting from any representation or
misrepresentation made by MF or
<PAGE>
its Affiliates including, but not limited to, representations or
misrepresentations relating to the capability, use, application,
function, durability, reliability, quality, serviceability, safety
or any other characteristic or feature of Products, and including
representations as required for government certification,
homologation, approval and for any other purpose whatsoever, except
as may have been made in reasonable reliance upon information
furnished by PERKINS or its Affiliates.
14.5 Each of MF and PERKINS shall indemnify and hold harmless the other
and the directors, officers and employees of the other, from and
against any and all claims, demands, penalties, liabilities, loss,
damage, costs, attorneys' fees and expenses, of whatsoever nature,
arising out of injury to or death of or property damage sustained by
the indemnifying Party's employees, agents and contractors while
such employees, agents or contractors are on the property of the
other.
15. PROPRIETARY INFORMATION:
-----------------------
(For the purposes of this heading, "Party" shall mean a Party to this
Supply Agreement and/or its Affiliates, and references to PERKINS and MF
shall be deemed to include references to their respective Affiliates.)
15.1 In order to accomplish the purposes of this Supply Agreement, it is
expected that both Parties will need to disclose proprietary
information, including technical and business information, to each
other; but such disclosure of information shall not be considered a
publication of such information. "Proprietary Information" shall
mean: a) that tangible information marked as proprietary or
confidential by the disclosing Party; and b) that orally or visually
disclosed information identified as proprietary or confidential at
the time of disclosure and confirmed in writing by the disclosing
Party within thirty (30) days as
<PAGE>
being proprietary or confidential. A Party may use the Proprietary
Information of the other Party to carry out its obligations under
this Supply Agreement. It shall treat Proprietary Information in the
same matter and with the same care with which it treats its own
proprietary information which it does not wish to be disclosed to
others on a non-confidential basis .
For the purposes of this Supply Agreement, "Proprietary Information"
shall not include information (i) already in the possession of the
Party receiving it and not under an obligation of confidence, (ii)
available to the public or later becomes available to the public, or
(iii) rightfully disclosed to the recipient without an obligation of
confidence by a person or entity not party to this Supply Agreement.
15.2 Notwithstanding Clause 15.1, a Party may use and disclose to others
not party to this Supply Agreement, on a confidential basis, such
portions of Proprietary Information of the other Party as may be
directly and reasonably necessary and appropriate to carry out the
provisions of this Supply Agreement. In all such cases the Party so
disclosing shall take all reasonable steps to protect adequately the
disclosed material.
15.3 At any time the disclosing Party may request the return or
destruction of all its tangible Proprietary Information disclosed to
the other Party.
16. DISCONTINUANCE:
--------------
16.1 If PERKINS for any reason determines that it desires to cease
manufacturing any Perkins Engine, PERKINS shall immediately notify
MF of such decision. Such notification shall be made at least 12
months prior to the actual discontinuance.
<PAGE>
16.2 Where Clause 16.1 applies, PERKINS shall use all reasonable
endeavours to offer in an agreed timescale to MF an alternative
engine product to replace the to be discontinued Perkins Engine.
16.3 If MF decides to cease the manufacture of a MF Product, it shall
immediately notify PERKINS in writing and shall ensure that such
notice is given at least 12 months prior to the actual
discontinuance.
17. COPYRIGHT AND TRADEMARKS:
------------------------
17.1 PERKINS grants to MF an irrevocable, non-exclusive, paid-up, world-
wide licence solely for the purposes of this Supply Agreement under
each copyright of PERKINS that is applicable to any works of
authorship fixed in any tangible medium of expression (including,
without limitation, drawings, manuals, and specifications) furnished
to MF in the course of this Supply Agreement, to reproduce and
distribute the copyrighted work (subject to the provisions of Clause
15 hereof), and to prepare derivative works therefrom, all of which
may be used by MF in supplying Products in the same way as MF uses
its own drawings, manuals, specifications and other data of similar
nature.
17.2 PERKINS may brand and identify all Perkins Engines, Kits, Components
and Spare Parts as PERKINS Products. MF agrees not to remove, amend
or otherwise interfere with or add to any PERKINS applied trademark,
plate or other labelling normally affixed to a Product by PERKINS.
18. TERMINATION:
-----------
18.1 Either Party may terminate this Supply Agreement forthwith by notice
in writing to the other Party if :
<PAGE>
(i) the other Party fails for reasons other than Force Majeure to
comply with any of the terms of this Supply Agreement and does
not remedy such breach within 180 days after written notice of
such breach is given to it by the terminating Party; or
(ii) the other Party becomes a party to a voluntary or involuntary
bankruptcy, receivership or liquidation filed by or against it
(except in the case of either Party where if it goes into
bankruptcy or voluntary liquidation for the purpose of
reconstruction, this shall not be considered as an event
permitting the other Party to terminate this Supply Agreement),
or makes an assignment for the benefit of creditors.
18.2 This Supply Agreement shall not be assignable (other than the right
to receive monies) or otherwise transferable by any Party (except to
an Affiliate of a Party) without the prior written consent of the
other Party, which consent shall not be unreasonably withheld or
delayed. During the term hereof, if there is a change in the
ownership and control of either PERKINS, MF or the parent company of
either Party, the other Party shall have the option of terminating
the Supply Agreement immediately by giving written notice thereof.
For purposes of this Clause, a change in the ownership and control
of either Party or a parent company shall be deemed to have occurred
if and when any one or more persons acting individually or jointly
is or becomes a beneficial owner, directly or indirectly, of
securities representing 25% or more of the combined voting power of
the then outstanding securities of the Party or the parent company
of either Party.
18.3 In addition if in MF 's reasonable opinion:
<PAGE>
(a) Products do not consistently meet over time the technical,
quality, reliability and other specifications which the Parties
will mutually agree upon from time to time; or
(b) PERKINS does not consistently meet over time for reasons other
than Force Majeure the delivery schedules agreed upon between
the Parties :
then MF may thereafter notify PERKINS in writing of the event
complained of and require PERKINS to rectify the particular
situation within 180 days. Should PERKINS fail for reasons other
than Force Majeure to rectify within the said period, MF shall be
free to terminate this Supply Agreement in whole or in part
forthwith by written notice.
18.4 For any termination by either Party under Clauses 18.1, 18.2 or 18.3
or any other provision hereof, the following provisions shall
apply:
(a) All sums then outstanding from MF to PERKINS under any purchase
orders or schedules for Products shall become immediately due
and payable,
(b) The Parties shall, within 30 days after the effective date of
any termination, meet to agree upon a programme for the
cessation of supply of Products and the settlement by way of
mutual agreement (wherever possible) of any outstanding issues.
Apart from the above any termination of this Supply Agreement
howsoever caused shall be without prejudice to either Party's rights
existing as at the date of termination.
<PAGE>
19. FORCE MAJEURE:
-------------
19.1 No failure or omission by either Party in the performance of any of
its obligations under this Supply Agreement shall be deemed a breach
of this Supply Agreement, nor create any liability or give rise to
any right to terminate this Supply Agreement, if the same shall
arise from or as a consequence of a general strike, labour dispute,
lockout, fire, flood, severe weather or other act of God, delays in
transportation or delivery of materials, war, insurrection, civil
disturbance, embargoes of goods by any government or any other
governmental action, or any other cause beyond the reasonable
control of such party, whether similar to or different from the
causes above enumerated, and any such cause shall absolve the
affected Party from responsibility for such failure to perform said
obligation.
19.2 Each Party shall notify the other of any material change in
conditions or the occurrence of any event which interferes or
threatens to interfere with the performance of any of its
obligations under this Supply Agreement.
19.3 Upon such notice, the Parties shall consult and co-operate as to
measures which may be taken to overcome the interference or as to
any alternative measures to be undertaken by the Parties with a view
to the continue performance of this Supply Agreement. Such measures
may include the suspension of any condition or obligation, the
modification of this Supply Agreement or of any orders placed
pursuant hereto, and the assumption by any Party of any costs
incurred or to be incurred as a result of the interference which has
arisen or in giving effect to said measures.
<PAGE>
20. NOTICES:
-------
All notices hereunder shall be sent by certified or registered mail, return
receipt requested, with postage prepaid, to the addresses of the Parties
noted above or such other address as notified as between the Parties.
21. MISCELLANEOUS:
-------------
21.1 Nothing herein contained shall be deemed to create an agency, joint
venture, partnership, or fiduciary relationship between the Parties
hereto.
21.2 The headings in this Supply Agreement are for reference only and
shall not affect its construction or interpretation. Words
signifying the singular shall include the plural and vice versa
where the context so admits. All delivery-related terminology shall
wherever relevant be interpreted by reference to Incoterms 1990.
21.3 Any failure of any party to enforce, at any time, any of the
provisions of this Supply Agreement or any rights or remedies with
respect hereto or to exercise any election herein provided shall not
constitute a waiver of any such provision, right, remedy, or
election or in any way affect the validity thereof or of this Supply
Agreement. The exercise by any Party of any of its rights, remedies
or elections under the terms of this Supply Agreement shall not
preclude or prejudice such Party's right to exercise at any other
time the same or any other right, remedy or election it may have
under this Supply Agreement. The rights of termination provided
herein are in addition to any other right, remedy or election a
Party may have hereunder.
21.4 Subject to any contrary reference herein this Supply Agreement
embodies the entire understanding between the Parties and
<PAGE>
supersedes all prior agreements, representations or warranties, oral
or written, concerning the subject matter between the Parties
relating hereto. No modification, renewal, extension or waiver of
this Supply Agreement or any of its provisions shall be binding
unless in writing an duly executed by an authorised representative
of each Party hereto.
21.5 Except to the extent necessary to engage in the transactions
contemplated herein or as required by law, no Party may advise third
parties (other than Affiliates and/or professional advisors retained
by the Parties) of the existence or terms of this Supply Agreement
without the consent of the other Parties : provided, however that
PLUMCO may after the Effective Date freely disclose the existence of
this Agreement to its distribution network.
21.6 The provisions of Clauses 10, 14 and 17 shall survive any
termination or expiration of this Agreement.
21.7 This Supply Agreement shall be governed and construed in accordance
with the Laws of England.
21.8 Any and every dispute or difference between the Parties concerning
the validity, meaning or effect of this Supply Agreement that cannot
be amicably settled, shall be finally settled under the rules of
Conciliation and Arbitration of the International Chamber of
Commerce by one or more arbitrators appointed in accordance with
such Rules. Any such arbitrators shall be fluent in spoken and
written English. The place of arbitration shall be in London,
England. The decision of the arbitration (including any award of
costs) shall be final and binding on the Parties.
21.9 The Parties shall continue to perform their respective obligations
under this Supply Agreement during the period of any arbitration
<PAGE>
proceedings except insofar as such obligations are the subject
matter of the said arbitration proceedings.
21.10 Nothing contained in this Supply Agreement shall prevent either
PERKINS or MF from applying to an appropriate court in any
jurisdiction for any injunction or other like remedy to restrain the
other from committing any breach or any anticipated breach hereof
and for consequential relief.
21.11 Notwithstanding any other provision herein, neither Party shall be
liable to the others for any consequential or indirect loss or
damage, including but not limited to loss of profits, trade or
contracts, howsoever arising out of or in relation to this Supply
Agreement.
IN WITNESS whereof the Parties have caused this Supply Agreement to be executed
the day and year first above written.
<TABLE>
<CAPTION>
<S> <C>
PERKINS GROUP LIMITED
SIGNED : .....................
TITLE : .....................
MASSEY FERGUSON GROUP LIMITED
SIGNED : ...........................
TITLE : ...........................
</TABLE>
<PAGE>
SCHEDULE B
----------
REGISTRATION RIGHTS AGREEMENT - TERM SHEET
------------------------------------------
AGCO Corporation ("AGCO") is issuing 500,000 shares of AGCO Common Stock to
Varity Corporation ("Varity"). The following is a list of proposed terms to be
included in the registration rights agreement.
. SHELF REGISTRATION. AGCO shall file a shelf registration statement
which will not become effective until the expiration of the lock-up
period provided for in the public offering and would remain effective
until three years from the date the stock is issued to Varity.
. HOLDBACK AGREEMENT. Varity shall not effect any sales of Common Stock
during certain periods under the following circumstances:
(i) AGCO notifies Varity that the prospectus needs to be amended
or supplemented, or
(ii) AGCO notifies Varity that AGCO intends to file a
registration statement in connection with an underwritten
offering of any of its capital stock.
In either event, AGCO shall extend the period during which the shelf
registration statement is kept effective by that number of days equal
to the holdback period.
. PIGGYBACK REGISTRATION RIGHTS. In the event that AGCO triggers the
holdback agreement because of an underwritten offering, Varity could
exercise piggyback registration rights for its shares in that
offering, subject to the exercise by the managing underwriter of its
discretion to reduce the number of Varity's shares included in the
offering.
. EXPENSES. Varity is responsible for the expenses of the shelf
registration.
. INDEMNIFICATION AND OTHER TERMS. The agreement would contain normal
indemnification provisions and other customary terms concerning
registration procedures.
<PAGE>
SCHEDULE C
----------
VARITY EUROPA AGREEMENT - TERM SHEET
------------------------------------
Prior to the Closing, by Agreement between the Buyer and Sellers, Sellers shall
cause Varity Europa B.V. to be merged into Massey Ferguson S.A. ("MFSA"). As
part of that merger, MFSA will assume liability for a note payable to Landini
SpA and will also acquire a license fee stream from Landini SpA. Sellers shall
indemnify and defend Buyer and MFSA from any loss which Buyer or MFSA incurs as
a result of MFSA assuming the Note payable to Landini. Buyer shall notify
Sellers of any claims made which could result in liability for Sellers under
this indemnity and Sellers shall defend Buyer and MFSA against such claim(s).
<PAGE>
SCHEDULE D
----------
EMPLOYEE MATTERS - TERM SHEET
-----------------------------
1. Buyer will hire Mr. Fox and Mr. Morton (product liability specialists in
Toronto).
2. Varity has responsibility for bonus and severance agreements with Mr.
Lupton, Mr. Roache and Mr. Beeson.
3. Agreement as to by whom Mr. McLaren and Mr. Chauvin will be employed.
<PAGE>
SCHEDULE E
----------
NON-COMPETITION AGREEMENT - TERM SHEET
--------------------------------------
1. No Seller shall directly or indirectly compete with Buyer in farm equipment
business.
2. Five (5) year term.
<PAGE>
APPENDIX 5.7(a)
---------------
REPAYMENT OF INTERCOMPANY INDEBTEDNESS
--------------------------------------
The attached reflects the principles to be followed under Section 5.7 of
the Agreement relating to the repayment of intercompany indebtedness, the
repayment of the MF Loans, and the use of cash in the MF Business. The attached
is a description of how those items would have been handled under these
principles had they been fixed on April 1, 1994 and the Closing under the
Agreement occurred on April 1, 1994. The actual amounts at Closing will be
different as a result of the continuing operation of the MF Business after April
1, 1994.
<PAGE>
<TABLE>
<CAPTION>
MASSEY FERGUSON GROUP DEBT ANALYSIS APRIL 19, 1994
----------------------------------- --------------
COUNTRY/COMPANY TYPE AGREEMENT DATE FACILITY AMOUNT SECURITY GUARANTEE
- - --------------- ---- -------------- --------------- -------- ---------
<S> <C> <C> <C> <C> <C>
UK
- - --
MF (UK) Ltd. Midland Bank 30.9.93 GBP 20 million Debts; Fixed and ) MF UK Group
MIDFES Export Floating Charges ) Cross Guarantees
Insured Debts over all UK Assets ) Varity Holdings
) Guarantee
) Varity Corporation
MF Group Ltd ) Midland Bank 30.9.93 GBP 5 millions As above except ) Guarantee
MF (UK) Ltd ) Overdraft/foreign bills debts ) As above
MF Manufacturing Ltd ) negotiation/engagements/
documentary or other
credits
MF (UK) Ltd Midland Bank
MF Manufacturing Ltd Forward Foreign Exchange 30.9.93 GBP 6.5 millions As above As above
Contracts
MF (UK) Ltd Midland Bank February 1989 GBP 88,000 ECGD to Midland -95%
ECGD Backed Extended
Term Guarantee
MF (UK) Ltd Bank of Nova Scotia November 1993 USD 50 million
MF Group Ltd Forward Foreign Exchange
MF Manufacturing Ltd Facility
MF (UK) Ltd Chase Manhattan Bank NA November 1993 USD 28 million
MF Group Ltd Forward Foreign Exchange
MF Manufacturing Ltd Facility
MF (UK) Ltd Banco Nacional
Ultramarino S.A. February 1994 GBP 3 million
Forward Foreign Exchange
Facility
MF (UK) Ltd Union Bank of Finland
Forward Foreign Exchange October 1993 USD 0.5 million
Facility
<CAPTION>
COUNTRY/COMPANY COMMENTS
- - --------------- --------
<S> <C>
UK
- - --
MF (UK) Ltd.
MF Group Ltd )
MF (UK) Ltd )
MF Manufacturing Ltd )
MF (UK) Ltd
MF Manufacturing Ltd
MF (UK) Ltd 5 year Trade Deal for
Yemen.
Final payment due
February 1994
MF (UK) Ltd This is a Varity
MF Group Ltd Corporation Facility
MF Manufacturing Ltd allocated to the MF UK
MF Group
MF (UK) Ltd This is a Varity
MF Group Ltd Corporation Facility
MF Manufacturing Ltd allocated to the MF UK
MF Group
MF (UK) Ltd
MF (UK) Ltd
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MASSEY FERGUSON DEBT ANALYSIS APRIL 19, 1994
----------------------------- --------------
COUNTRY/COMPANY TYPE AGREEMENT DATE FACILITY SECURITY GUARANTEES
- - --------------- ---- -------------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
France
- - ------
MF SA Credit National 12.4.83 FRF 33.6 million Subordinated Loan French State
L.T. Loans
8.7.83 FRF 6.0 million Mortgage on Varity Corporation
Beauvais and Guarantee
Athis sites
27.7.88 FRF 14.0 million Varity Corporation
Guarantee
MF SA Overdrafts:
- Societe Generale ) Uncommitted FRF 25.0 million )
- Credit Lyonnais ) Facilities FRF 19.95 million )Varity Corporation
- B.N.P. ) Banks have to FRF 12.45 million )Guarantees
- B.F.C.E. ) give 3 months FRF 20.50 million )
- Credit Du Nord ) notice of FRF 10.0 million )
- C.I.C. ) termination FRF 20.0 million
MF SA Receivable
Discount
Facilities:
- B.F.C.E. - )Uncomitted FRF 48.0 million
- )Facilities FRF 10.0 million
- B.N.P. - )Banks have to FRF 88.5 million
- )give 3 months FRF 30.0 million
- )notice of FRF 95.0 million
- )termination FRF 30.0 million
- Credit Lyonnais FRF 30.0 million Varity Corporation
- Societe Generale Guarantee
MF SA Forward Foreign
Exchange
Facilities
- Societe Generale ) FRF 100.0 million
- B.N.P. )Uncommitted FRF 100.0 million
- B.F.C.E. )Facilities FRF 50.0 million
- Compagnie ) FRF 50.0 million
Financiere )
<CAPTION>
COUNTRY/COMPANY COMMENTS
- - --------------- --------
<S> <C>
France
- - ------
MF SA Early Repayment Penalty
around FRF 4.5 million
Cannot be repaid
voluntarily
Early Repayment Penalty
FRF 126,000
MF SA
New Facility
MF SA
Domestic Bills
Group Invoices
Domestic Bills
Export Invoices
Domestic Bills
Export Invoices
Group Invoices
(All have recourse)
MF SA
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MASSEY FERGUSON DEBT ANALYSIS April 19, 1994
----------------------------- --------------
COUNTRY/COMPANY TYPE AGREEMENT DATE FACILITY AMOUNT SECURITY
- - --------------- ---- -------------- --------------- --------
<S> <C> <C> <C> <C>
France
- - ------
MFSA Ancilliary Facilities
for Bonds, Guarantees etc.
FRF 3.96 million
- Societe Generale ) FRF 0.95 million
- B.N.P. ) Uncommitted Facilities FRF 3.62 million
- Old Pool )
MFSA Compagnie AEP S.A. March 1994 USD 20.0 million
MF (UK) Ltd Intercompany Receivables
MF GmbH Facility
Germany
- - -------
MF GmbH CommerzBank November 1992 DEM 7.0 million The Bills, Tractors
(not part of the Bills Discount Facility and Participates in
MF Group legal the German Companies
entity structure) Security Pool
MF GmbH CommerzBank DEM 0.5 million German Companies
(not part of the MF Ancilliary Facility for a Security Pool
Group legal entity Specific Guarantee
structure)
<CAPTION>
COUNTRY/COMPANY GUARANTEES COMMENTS
- - --------------- ---------- --------
<S> <C> <C>
France
- - ------
MFSA
Old Pool refers to the
previous French Bank
pool containing many of
the same Banks
MFSA Varity Corporation Off-Balance Sheet
MF (UK) Ltd Guarantee Financing
MF GmbH
Germany
- - -------
MF GmbH Varity Corporation This is a Recourse
(not part of the Guarantee Facility
MF Group legal
entity structure)
MF GmbH Varity Corporation This is a one-off;
(not part of the MF Guarantee reference a Dealer court
Group legal entity case.
structure)
</TABLE>
<PAGE>
APPENDIX 5.7(b)
---------------
MF LOANS
--------
See Attached.
<PAGE>
STAGE I
- - -------
INTERCOMPANY BALANCES TO BE REPAID PRIOR TO CLOSING
At April 1, 1994 non-MF subsidiaries of Varity owed MF
subsidiaries the following (net):
<TABLE>
<CAPTION>
Receivables From Payables To Amount USD
---------------- ----------- ----------
<S> <C> <C>
Varity Nederland MF Nederland .598m
Varity Nederland MF International 1.924m
MF Industries MF International 1.686m
MF Industries MF (UK) 1.127m
Varity Holdings MF Group 3.427m
MF SA MF Industries (.225m)
-----
Total Non-Italian
Loans 8.537m
</TABLE>
The non-Italian loans will be dealt with as follows (Attachment
I):
. Varity will loan USD 5.110m to MF Industries. MF SA will
repay its USD .225m advance to MF Industries.
. MF Industries will then advance to Varity Nederland USD
1.910m and repay USD .612m in advances. Varity Nederland
will then repay to MF International USD 1.924m and USD .598m
to MF Nederland.
. MF Industries will repay its advances from MF International
of USD 1.686m and MF (UK) of USD 1.127m.
. The Varity Holdings' payable to MF Group Limited will be
paid at the same time that Varity Holdings pays MF Group for
assuming the Italian loans (see below).
STAGE II
- - --------
TO BE EXECUTED PRIOR TO CLOSING OR AN AGREED DATE
The Italian-related loans at April 1, 1994 were as follows:
<TABLE>
<CAPTION>
Receivables From Payables To Amount USD
---------------- ----------- ----------
<S> <C> <C>
Varity Holdings Varity Europa 13.430m
Varity Nederland MF SpA 22.038m
</TABLE>
<PAGE>
Transfers will be made as follows:
. Varity Europa will be contributed down the ownership chain
from its parent, MF Industries to MF SA (France). Varity
Europa will be liquidated and MF SA will have the receivable
from Varity Holdings.
. The Varity Nederland payable to MF SpA will be assumed by
Varity Holdings in exchange for Varity Nederland reducing
its receivable of USD 58.695m from Varity Holdings to USD
36.657m.
. When the two transactions involving the Italian loans are
completed, Varity Holdings' payables to various companies
within the MF Group will be as follows (USD):
<TABLE>
<S> <C>
MF SpA 22.038m
MF SA 13.430m
MF Group Limited 3.427m
-------
Total 38.895m
</TABLE>
STAGE III
- - ---------
TO BE EXECUTED AT CLOSING OR AN AGREED DATE
REPAYMENT OF BANK DEBT (Attachments II and III)
1. At April 1, 1994 the total bank debt recorded on the balance
sheet, including short and long term debt and the AEP
facility, totalled USD 55.578m. This amount does not
include the non-recourse discount facility at MF SpA in the
amount of USD 1.074m nor the mortgage on the Germany
property in the amount of USD .490m.
2. USD 16.661m of the debt is in Germany and will be paid from
the proceeds of the sale of assets by MF Germany and Varity
GmbH. In addition, the USD .49m balance of the mortgage
obligation by Varity GmbH will be repaid to release the real
estate.
3. The remaining USD 38.917m of debt will be repaid using the
cash balances (including the repayment of intercompany debt
as described in Stage I above) in the various companies to
be applied first to local debt and the balance of the cash,
totaling USD 5.037m distributed to MF Nederland BV, which
together with MF Nederland's own cash of USD .901m, will be
invested in MF SA as capital for partial payment under the
Share Subscription Agreement between MF SA and its parent,
MF Nederland and used by MF SA to reduce its debt.
4. With these transactions completed, the balance of debt in
the Group will be USD 21.596m. VHL will pay to MF Group
Limited the USD 38.895m necessary for MF Group Limited to
assume the MF SpA and MF SA payables on VHL's books and the
intercompany advance owed to MF Group Limited. There will
then be a capital reduction in MF
<PAGE>
Group Limited in the amount of USD 17.229m of cash, leaving a
cash balance of USD 21.596m.
5. USD 2.213m will be repaid to Midland Bank in the UK. the
balance of USD 19.383m will be either lent or contributed as
capital to MF Nederland BV in order to fund repayment of the
debt of the European subsidiaries. MF SA will receive USD
13.159m, of which at least USD 3.758m will be contributed as
capital for the balance of the Share Subscription Agreement.
The balance of USD 6.224m will be loaned or contributed as
capital to repay FINAG borrowings of USD 4.799m, Denmark
borrowings of USD 1.056m and borrowings of USD .369m in
Sweden.
[The above amounts are all given in USD equivalent as at
-------------------------------------------------------
April 1 and changes in exchange rates, payment on long term
-----------------------------------------------------------
debt, operational effects on short term debt and interest
---------------------------------------------------------
accruals on intercompany debt will change the amounts. All
-----------------------------------------------------------
transactions should be cleared with the Tax Department and
----------------------------------------------------------
in some cases the accounting treatment of cash movements
--------------------------------------------------------
should be in consultation with AGCO.]
-----------------------------------
<PAGE>
ANNEX# I
INTERCOMPANY LOANS
(EXCLUDING ITALIAN LOANS AND VHL)
APRIL 1, 1994
[CHART APPEARS HERE]
<PAGE>
ANNEX# 11
COUNTRY BALANCES AND INTERCO REPAYMENT
APRIL 1, 1994 BALANCES
<TABLE>
<CAPTION>
DENMARK FRANCE UK INTERNAT SPAIN NORWAY NED BV
------- ------ -- -------- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
CASH 0 3,627 880 4,990 325 262 303
TOTAL DEBT (1,056) (22,499) (4,220) (4,150) 0 0 0
INTERCO PYMT 0 (225) 1,127 3,610 0 0 598
NET CASH (DEBT)
AFTER APPLYING CASH
AND CLEARING INTERCO ------ ------- ------ ------ ---- ---- ----
ACCOUNTS (1,056) (19,097) (2,213) 4,450 325 262 901
DIVIDEND PO 0 0 0 (4,450) (325) (262) 0
DIVIDEND REC 5,037
INVESTMENT 5,938 (5,938)
------ ------- ------ ------ ---- ---- ------
NET DEBT (1,056) (13,159) (2,213) 0 0 0 0
====== ======= ====== ====== ==== ==== ======
<CAPTION>
SWEDEN FINAG TOTAL
------ ----- -----
<S>
CASH 1 1,823 12,211
TOTAL DEBT (370) (6,622) (38,917)
INTERCO PYMT 0 0 5,110
NET CASH (DEBT)
AFTER APPLYING CASH
AND CLEARING INTERCO ------ ------ -------
ACCOUNTS (369) (4,799) (21,596)
DIVIDEND PO 0 0 (5,037)
DIVIDEND REC 5,037
INVESTMENT 0
------ ------ -------
NET DEBT (369) (4,799) (21,596)
====== ====== =======
</TABLE>
<PAGE>
ANNEX #III
(USD THOUSANDS) PROJECT PLUM
USE OF PROCEEDS -- TAX PLAN
APRIL 1, 1994 BALANCES
(AFTER INTERCOMPANY SETTLEMENTS
AND USE OF CASH BALANCES)
[CHART APPEARS HERE]
<PAGE>
GRAPHICS APPENDIX LIST
PAGE WHERE
GRAPHIC
APPEARS DESCRIPTION OF GRAPHIC OR CROSS REFERENCE
- - --------------------------------------------------------------------------------
Appendix 5.7 Annex #I to be a flow chart depicting the flows of
Annex #I funds to enable the settlement of intercompany loans
between the various Varity corporate companies and
the Massey Ferguson companies. Funds are to be
initially concentrated in Massey Ferguson Industries
Limited, by way of a loan from Varity Corp. and
payment of a loan owed by Massey Ferguson SA. MFIL
is, in turn, to advance these funds in forms of loan
repayments to Massey Ferguson Group and MF
International and a new loan to Varity Nederland.
Varity Nederland is, in turn, to use proceeds
received to pay off its loans owed to MF Nederland
and MF International.
Appendix 5.7 Annex #III to be a flow chart depicting the use of
Annex #III proceeds received by Varity Holdings Limited, Massey
Ferguson GmbH and MF Delaware, from the sale of the
Massey Ferguson companies. VHL is to use partial
proceeds to enable the MF companies to pay off all
outstanding debt owed to third parties as of April
1, 1994. Additionally, proceeds received by MF GmbH
from the sale of the German assets are to be used in
part to pay off outstanding third party debt owed to
the German banks. Lastly, proceeds, plus stock of
the acquiring company received by MF Delaware from
the sale of the MF trademark, is to remain in MF
Delaware.
<PAGE>
APPENDIX 8.1
------------
EXCLUDED EMPLOYEES
------------------
. J.D. Pitt
. North American Benefits Administration Employees.
<PAGE>
EXHIBIT 11
VARITY CORPORATION
PRIMARY EARNINGS PER SHARE COMPUTATIONS
(Dollars in millions except per share amounts)
<TABLE>
<CAPTION>
Three months ended April 30,
------------------------------
1994 1993
-------------- --------------
<S> <C> <C>
Income before discontinued operation and cumulative
effect of changes in accounting principles............... $ 25.0 $ 15.1
Preferred stock dividend entitlements...................... (.6) (4.6)
-------- --------
Income attributable to common stockholders before
discontinued operation and cumulative effect of changes
in accounting principles (A)............................. 24.4 10.5
Earnings (loss) from discontinued operation (B)............ 4.4 (4.1)
Cumulative effect of changes in accounting principles (C).. - (146.1)
-------- --------
Net income (loss) attributable to common stockholders (D).. $ 28.8 $(139.7)
======== ========
Weighted average shares of common stock outstanding
during the period (in thousands)......................... 43,962 31,046
Common stock equivalents:
Common stock options..................................... 536 -
Long-term incentive plans................................ 11 -
-------- --------
Primary weighted average shares of common stock
outstanding during the period (E)........................ 44,509 31,046
======== ========
Primary income per share of common stock before
discontinued operation and cumulative effect of changes
in accounting principles (A/E)........................... $ 0.55 $ 0.33
Discontinued operation per share of common stock (B/E)..... 0.10 (0.13)
Cumulative effect of changes in accounting principles
per share of common stock (C/E).......................... - (4.70)
-------- --------
Primary income (loss) per share of common stock (D/E)...... $ 0.65 $ (4.50)
======== ========
</TABLE>
Note: Fully diluted earnings per share computations are not presented as no
significant dilution exists.
