FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-----------------------
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition period from ___ to ___
Commission file number 0-18110
Gehl Company
(Exact name of registrant as specified in its charter)
Wisconsin 39-0300430
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
143 Water Street, West Bend, WI 53095
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (414) 334-9461
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 par value
(Title of class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [X]
Aggregate market value of voting stock held by non-affiliates of the
registrant: $42,143,230 at February 16, 1996.
Number of shares outstanding of each of the registrant's classes of
common stock, as of February 16, 1996:
Class Shares Outstanding
Common Stock, $.10 Par Value 6,140,872
DOCUMENTS INCORPORATED BY REFERENCE
Gehl Company 1995 Annual Report to Shareholders (Parts I and II)
Gehl Company Proxy Statement for the 1996 Annual Meeting of Shareholders
(to be filed with the Commission under Regulation 14A within 120
days after the end of the registrant's fiscal year and, upon such
filing, to be incorporated by reference into Part III)
<PAGE>
GEHL COMPANY
_________________
INDEX TO
ANNUAL REPORT ON FORM 10-K
For The Year Ended December 31, 1995
Page
Part I
Item 1 Business . . . . . . . . . . . . . 1
Item 2 Properties . . . . . . . . . . . . . 7
Item 3 Legal Proceedings . . . . . . . . . . 7
Item 4 Submission of Matters to a Vote of Security Holders 7
Executive Officers of the Registrant . 8
Part II
Item 5 Market for Registrant's Common Equity and Related
Shareholder Matters . . . . . . . . 10
Item 6 Selected Financial Data . . . . . . 10
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 8 Financial Statements and Supplementary Data 10
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 10
Part III
Item 10 Directors and Executive Officers of the Registrant 11
Item 11 Executive Compensation . . . . . . . 11
Item 12 Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . 11
Item 13 Certain Relationships and Related Transactions 11
Part IV
Item 14 Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . 12
Signatures. . . . . . . . . . . . . . . . . . . . . . 13
<PAGE>
Part I
Item 1. Business
Overview
Gehl Company (the "Company" or "Gehl") designs, manufactures,
distributes, sells and finances equipment used in the light construction
equipment and the agricultural equipment industries. The Company's
construction segment ("Gehl Construction") manufactures and markets skid
steer loaders, rough-terrain telescopic forklifts, and asphalt pavers used
by contractors, sub-contractors, owner operators and municipalities. The
Company's agricultural segment ("Gehl Agriculture") has manufactured
agricultural implements for 137 years, and today markets a broad range of
equipment used primarily in the dairy and livestock industries, including
haymaking, forage harvesting, materials handling (skid steer loaders and
attachments), manure handling and feedmaking equipment. The Company
believes that it is currently the largest non-tractor agricultural
equipment manufacturer in North America.
Equipment for Gehl Construction is manufactured in two South Dakota
facilities and equipment for Gehl Agriculture is manufactured in plants in
Wisconsin, Pennsylvania and South Dakota. The Company was founded in 1859
and was incorporated in the State of Wisconsin in 1890.
Business Segments
The Company operates in two business segments, construction and
agriculture. The following table shows certain information relating to the
Company's operations by industry segment:
(dollars in thousands)
Year ended December 31,
----------------------------------------------
1993 1994 1995
------------- ------------ --------------
Amount % Amount % Amount %
Net sales:
Gehl
Construction.... $ 43,287 31.5% $ 51,796 35.3% $ 64,381 42.0%
Gehl
Agriculture.... 93,931 68.5 94,824 64.7 89,071 58.0
-------- ----- -------- ---- -------- -----
Total....... $137,218 100% $146,620 100% $153,452 100%
Income from
operations:
Gehl
Construction.... $ 1,830 24.9% $ 8,542 65.9% $ 13,164 96.7%
Gehl
Agriculture.... 5,509 75.1 4,419 34.1 449 3.3
-------- ----- -------- ---- -------- ----
Total....... $ 7,339 100% $ 12,961 100% $ 13,613 100%
The Company had no intersegment sales or transfers during the years set
forth above. For segment information with respect to identifiable assets,
depreciation/amortization and capital expenditures for the construction
and agriculture markets, see Note 12 of "Notes to Consolidated Financial
Statements", included on Pages 22 and 23 of the Gehl Company 1995 Annual
Report to Shareholders, which pages are incorporated by reference herein.
Gehl Construction
Products:
Gehl Construction markets equipment in the following three product areas:
1. Skid Steer Loaders - Gehl Construction offers four models of
skid steer loaders which feature a choice of hand-operated
controls or hand and foot controls. The skid steer loader, with
its fixed-wheel four-wheel drive, is used principally for
materials handling duties. The skid steer loader may also be
used with a variety of attachments, including dirt, snow and
cement buckets, pallet forks and hydraulically-operated devices
such as cold planers, backhoes, brooms, trenchers, snowblowers,
industrial grapples, tree diggers, concrete breakers and augers.
2. Rough-Terrain Forklifts - Gehl markets five models of Dynalift
[R] rough-terrain telescopic forklifts and one model of the
Dyna-Handler [R], a rough-terrain telescopic forklift with
digging capabilities. These forklifts are designed to handle
heavy loads (up to 10,000 pounds) reaching horizontally and
vertically for use by a variety of customers, including masons,
roofers and building contractors.
3. Asphalt Pavers - Four models of Power Box [R] pavers are
marketed by Gehl. These pavers allow variable paving widths
from 4 1/2 to 13 feet and are used for both commercial and
municipal jobs such as county and municipal road, sidewalk, golf
cart path, jogging trail, parking lot, driveway, trailer court
and tennis court preparation.
Marketing and Distribution:
The Company maintains a separate distribution system for Gehl
Construction. The Company markets its equipment in North America through
113 independent dealers (with 210 outlets) and worldwide through 22
distributors. The top ten dealers and distributors in Gehl Construction
accounted for approximately 17% of the Company's sales for the year ended
December 31, 1995; however, no single dealer or distributor accounted for
more than 4% of the Company's sales for that period. Sales of the skid
steer loader and rough-terrain forklift product lines by Gehl Construction
each accounted for more than 10% of the Company's net sales in 1993, 1994
and 1995.
The Company believes that maintenance and expansion of its dealer network
is important to its success in the light construction equipment market.
Gehl Construction provides various forms of support for its dealers,
including sales and service training, and, in the United States and Canada,
floor plan financing for its dealers and retail financing for both its
dealers and their customers. The light construction equipment dealers in
North America are also supported by district sales managers who provide a
variety of services, including training, equipment demonstrations and
sales, warranty and service assistance.
Industry and Competition:
Gehl Construction's product lines face competition in each of their
markets. In general, each line competes with a small group of from seven
to twelve different companies. No one company competes directly with Gehl
Construction across all of its product lines. In the compact asphalt
paving equipment market niche Gehl serves, the Company believes it is first
or second in terms of market share. In the rough-terrain telescopic
forklift market, the Company believes it and four other competitors share
at least 75% of the market among them. In the skid steer loader product
market, three other companies share over 80% of the market. The Company
believes that it shares a greater portion of the balance of the skid steer
loader market than does any of its remaining competitors. The Company
competes within the light construction equipment markets based primarily on
price, quality, service and distribution.
Gehl Construction's primary markets outside of North America are in
Europe, Latin America, the Middle East and the Pacific Rim. The Company
believes it is a significant competitor in the skid steer loader market in
Western Europe.
Gehl Agriculture
Products:
Gehl Agriculture markets equipment in five product areas.
1. Haymaking - Gehl's haymaking line includes a broad range of
products used to harvest and process hay crops for livestock
feed. The Company offers disc mowers, a wide range of pull-type
disc and sickle mower conditioners, hay rakes and variable-
chamber round balers.
2. Forage Harvesting - The Company believes that it currently
manufactures and sells one of the industry's most complete lines
of forage harvesting equipment, including forage harvesters,
wagons and blowers.
3. Materials Handling - Gehl Agriculture's materials handling line
consists of seven different models of skid steer loaders and the
Dyna-Handler [R] forklift. The skid steer loader is a compact,
fixed-wheel four-wheel drive unit typically equipped with a
bucket or fork and is used for moving a variety of material.
The Dyna-Handler [R] is a rough-terrain telescopic forklift
with digging capabilities. The skid steer loader and Dyna-
Handler [R] forklift are marketed by both Gehl Agriculture and
Gehl Construction.
4. Manure Handling - Gehl offers a broad range of manure spreaders,
including the Scavenger [R] II. The Scavenger II [R] "V-Tank"
side-discharge manure spreader incorporates a hydraulically
controlled square tube auger which allows the spreader to handle
a wide range of semi-liquid waste products, including municipal
sludge. For handling mostly solid manure, the Company also
markets four models of rear-discharge box spreaders.
5. Feedmaking - The Company believes that it offers the broadest
line of portable feedmaking equipment in the industry. Gehl
Agriculture offers the Gehl Mix-All [R] line of grinder mixers
and a line of mixer feeders and a feeder wagon for both mixing
feed rations and delivery to livestock feeders.
Marketing and Distribution:
In North America, Gehl's agricultural equipment is sold through
approximately 666 geographically dispersed dealers (with 725 outlets).
Ninety-five of these dealers are located in Canada. Gehl Agriculture also
markets products through 25 distributors in Europe, the Middle East, the
Pacific Rim and Latin America. The Company has no Company-owned dealers
and its dealers may sell equipment produced by other agricultural equipment
manufacturers.
It has been and remains the Company's objective to increase the share of
Gehl products sold by a Gehl dealer. Gehl Agriculture is not dependent for
its sales on any specific dealer or group of dealers. The top ten dealers
and distributors in Gehl Agriculture accounted for approximately 7% of the
Company's sales for the year ended December 31, 1995 and no one dealer or
distributor accounted for over 1% of the Company's sales during that
period. Sales of the skid steer loader product line by Gehl Agriculture
accounted for more than 10% of the Company's net sales in 1993, 1994 and
1995.
The Company provides various forms of support for its dealer network,
including sales and service training. The Company also provides floor plan
and retail finance support for products sold by its dealers in the United
States and Canada.
The Company employs district sales managers to assist its agricultural
dealers by providing training, equipment demonstrations and assistance with
sales, warranty and servicing matters. The Company currently operates
three service parts distribution centers located in: Memphis, Tennessee;
Syracuse, New York; and Minneapolis, Minnesota. The Company also contracts
for two service parts distribution locations in Rockwood, Ontario and
Saskatoon, Saskatchewan.
Industry and Competition:
The agricultural equipment industry has seen significant consolidation
and retrenchment since 1980. This has served to reduce the total number of
competitors, to strengthen certain major competitors, and to reduce the
strength of certain other companies in the industry. The Company competes
within the agricultural equipment industry based primarily on price,
quality, service and distribution.
The agricultural equipment markets in North America are highly
competitive and require substantial capital outlays. The Company has four
major competitors as well as numerous other limited line manufacturers and
importers. The largest manufacturers in the agricultural equipment
industry, the Company's major competitors, generally produce tractors and
combines as well as a full line of tillage and planting equipment. Such
manufacturers also market, to varying degrees, haymaking, forage
harvesting, materials handling, manure handling and/or feedmaking
equipment, the areas in which the Company's agricultural products are
concentrated. Except for one competitor, no other single competitor
competes with the Company in each of its product lines. The Company
believes that it is the only non-tractor manufacturer in the industry that
produces equipment in each of these product lines. Smaller manufacturers
which compete with the Company produce only a limited line of specialty
items and often compete only in regional markets.
Gehl Agriculture primarily serves the dairy and livestock industries.
Compared to a more volatile period in the late 1980's through 1992, milk
prices, cash income, land values, and the general economy were more
favorable and stable for the dairy farmer in 1993 through 1995. These more
favorable conditions and lower debt to equity ratios than generally
experienced in most of the 1980's led to increased buying by farmers of
agriculture equipment in 1993 and 1994. In 1995 industry market demand
varied, with demand for the Company's products generally lower than in
1994.
Approximately 80% of the Company's agricultural dealers also carry the
tractor and combine product lines of a major manufacturer. In addition to
selling the tractors and combines of a major manufacturer, many of these
dealers carry the major manufacturer's entire line of products, some of
which directly compete with the products offered by Gehl Agriculture. Gehl
Agriculture's dealers also market equipment manufactured by limited line
manufacturers which compete with specific product lines offered by the
Company.
Gehl Agriculture's primary markets outside of North America are in Europe
and the Pacific Rim and increasingly South and Central America. In these
markets the Company competes with both agricultural manufacturers from the
United States, some of which have manufacturing facilities in foreign
countries, and foreign manufacturers. The Company does not believe,
however, that it is presently a significant competitor in any of these
foreign markets.
Backlog
The backlog of unfilled equipment orders (which orders are subject to
cancellation in certain circumstances) as of December 31, 1995 was $47.5
million versus $60.2 million at December 31, 1994. Virtually all orders in
the backlog at December 31, 1995 should be shipped in 1996. The decreased
backlog at December 31, 1995 was due to similar percentage decreases in
both Gehl Construction and Gehl Agriculture orders. Order backlog is lower
in Gehl Construction due to a reduced rate of sales growth and in Gehl
Agriculture due to reduced market demand.
As the Company has increased its sales of Gehl Construction products, the
Company has been successful in reducing the seasonality of its sales.
However, some sales seasonality still remains, primarily in April through
June, the Company's second fiscal quarter. The Company's first and fourth
fiscal quarters in January through March and October through December,
respectively, have traditionally been its weakest. Because the haymaking
and forage equipment products are primarily retailed by the Company's
dealers in the Spring, Summer, and early Fall, the Company's floor plan
financed accounts receivable generally reach a seasonal peak in early
Summer and a post-seasonal low in late Fall.
Floor Plan and Retail Financing
Floor Plan Financing:
The Company, as is typical in the industry, generally provides floor plan
financing for its dealers. Products shipped to dealers under the Company's
floor plan financing program are recorded by the Company as sales and the
dealers' obligations to the Company are reflected as accounts receivable.
The Company provides interest-free floor plan financing to its dealers,
in Gehl Construction for varying periods of time generally up to nine
months and in Gehl Agriculture generally for up to one year. Gehl dealers
who sell products utilizing floor plan financing are required to make
immediate payment for those products to the Company upon sale or delivery
to the retail customer. At the end of the interest-free period, if the
equipment remains unsold to retail customers, the Company generally charges
interest to the dealer at a rate of between 1.5% to 3.0% above the prime
rate or on occasion provides interest-free extensions of up to six months
upon payment by the dealer of curtailments generally between 10% to 20% of
the original invoice price to the dealer. This type of floor plan
equipment financing accounts for approximately 90% of Gehl's accounts
receivable, with all such floor planned receivables required to be secured
by a first priority security interest in the equipment sold.
Retail Financing:
The Company also provides retail financing primarily to facilitate the
sale of Gehl equipment to end users. Additionally, a number of Gehl
dealers purchase equipment which is held for rental to the public. The
Company also provides retail financing to such dealers in connection with
these purchases. Retail financing in the United States is provided by the
Company through Gehl Finance [R], the Company's finance division. Retail
financing is provided in Canada by third parties at rates subsidized by the
Company. The Company does not offer or sponsor retail financing outside of
North America.
The Company maintains arrangements with third parties pursuant to which
the Company sells with recourse certain of the Company's finance contracts.
The finance contracts require periodic installments of principal and
interest over periods of up to 60 months; interest rates are based on
market conditions. The majority of these contracts have maturities of 36
to 48 months. The Company continues to service the finance contracts it
sells, including cash collections. See Note 2 of "Notes to Consolidated
Financial Statements," Page 18, and "Management's Discussion and Analysis,"
Page 13 of the Gehl Company 1995 Annual Report to Shareholders, which pages
are incorporated by reference herein.
Employees
As of December 31, 1995, the Company had 842 employees, of which 534 were
hourly employees and 308 were salaried employees. At the production
facilities in West Bend, Wisconsin, one of four Gehl production facilities,
228 hourly employees are covered by a collective bargaining agreement with
the United Paperworkers International Union (formerly the Allied Industrial
Workers) which expires December 31, 1999. None of the remaining employees
of the Company are represented by unions. There have been no labor-related
work stoppages at the Company's facilities during the past twenty-two
years.
Manufacturing
The Company believes that its present manufacturing facilities are
sufficient to provide adequate capacity for its operations in 1996.
Component parts needed in the manufacture of the Company's equipment are
primarily produced by the Company. The Company obtains raw materials
(principally steel), component parts that it does not manufacture, most
notably engines and hydraulics, and supplies from third party suppliers.
All such materials and components used are available from a number of
sources. The Company is not dependent on any supplier that cannot be
readily replaced and has not experienced difficulty in obtaining necessary
purchased materials.
In addition to the equipment it manufacturers, the Company markets
equipment acquired from third party suppliers. Products acquired from
these suppliers accounted for less than 10% of the Company's sales in 1995.
Research and Development
The Company attempts to maintain and strengthen its market position
through internal new product development and incremental improvement to
existing products. Products obtained through acquisition have generally
undergone redesign by the Company to enhance their marketability. This
redesign was in some cases major.
The Company's research and development is devoted to developing new
products that meet specific customer needs and to devising incremental
improvements to existing products. Research and development performed by
the Company includes the designing and testing of new and improved products
as well as the fabrication of prototypes. The Company expended
approximately $1.4 million, $1.2 million and $1.0 million on research and
development for the years ended December 31, 1995, 1994 and 1993,
respectively.
Patents and Trademarks
The Company possesses rights under a number of domestic and foreign
patents and trademarks relating to its products and business. While the
Company considers the patents and trademarks important in the operation of
its business, including the Gehl[R] name and the group of patents relating to
the Scavenger II[R] manure spreader, the business of the Company is not
dependent on any single patent or trademark or group of patents or
trademarks.
Export Sales
Information regarding the Company's export sales is included in Note 12
of "Notes to Consolidated Financial Statements," Page 23, of the Gehl
Company 1995 Annual Report to Shareholders, which page is incorporated by
reference herein.
Item 2. Properties
The following table sets forth certain information as of December 31,
1995, relating to the Company's principal manufacturing facilities. See
"Management's Discussion and Analysis - Liquidity and Capital Resources,
Capital Expenditures," Page 12, of the Gehl Company 1995 Annual Report to
Shareholders, which page is incorporated by reference herein.
Approximate
Floor Area
in Square Owned or
Feet Leased(1) Principal Uses
West Bend, WI 450,000 Owned General offices and
engineering,research and
development and manufacture of
products for Gehl Agriculture
West Bend, WI 19,000 Leased Manufacture of products for
Gehl Agriculture
Madison, SD 110,000 Owned Manufacture of skid steer
loaders for Gehl Construction
and Gehl Agriculture
Lebanon, PA 170,000 Owned(2) Manufacture of products for
Gehl Agriculture
Yankton, SD 68,000 Owned Manufacture of products for
Gehl Construction
(1) For information regarding collateral pledges and the Company's
lease commitments and options, see Notes 5 and 10 of "Notes to
Consolidated Financial Statements", included on Pages 18, 19, and
22, of the Gehl Company 1995 Annual Report to Shareholders, which
pages are incorporated by reference herein.
(2) This facility is financed with the proceeds from the sale of
industrial development bonds maturing in 2010.
The Company also operates three service parts centers located in:
Memphis, Tennessee; Syracuse, New York; and Minneapolis, Minnesota. The
Company leases these facilities, except for the Minneapolis center which
is owned.
Item 3. Legal Proceedings.
The Company is a defendant from time to time in actions for product
liability and other matters arising out of its ordinary business
operations. The Company believes that the actions presently pending will
not have a material adverse effect on its consolidated financial position
or results of operations. To the Company's knowledge, there are no
material legal proceedings to which any director, officer, affiliate or
more than 5% shareholder of the Company (or any associate of the foregoing
persons) is a party adverse to the Company or any of its subsidiaries or
has a material interest adverse to the Company or its subsidiaries.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the
quarter ended December 31, 1995.
<PAGE>
Executive Officers of the Registrant.
Set forth below is certain information concerning the executive officers
of the Company as of March 1, 1996:
Name, Age and Position Business Experience
William D. Gehl, 49, Mr. Gehl has served as
President, Chief Executive President and Chief Executive
Officer and Director Officer of the Company since
November, 1992 and has served as a
director of the Company since
1987. From January, 1990 until
joining the Company, Mr. Gehl
served as Executive Vice
President, Chief Operating
Officer, General Counsel and
Secretary of The Ziegler
Companies, Inc. (a financial
services holding company). Mr.
Gehl held various senior
management positions with The
Ziegler Companies from 1978 to
1990.
Victor A. Mancinelli, 52, Mr. Mancinelli has served as
Executive Vice President and Executive Vice President and Chief
Chief Operating Officer Operating Officer of the Company
since November, 1992. From 1990
to 1992, Mr. Mancinelli served as
Group Vice President of W. H.
Brady Co. From 1987 to 1990,
Mr.Mancinelli served as President
and Chief Operating Officer of
Syracuse China Corp., a subsidiary
of Canadian Pacific Ltd. Prior to
1987, Mr. Mancinelli served in a
variety of management positions
with Cummins Engine Company, Inc.
John W. Gehl, 54, Mr. Gehl has served as Vice
Vice President, International President, International of the
Company since 1992. Mr. Gehl
joined the Company in 1962 and has
served as a Vice President of the
Company since 1977 and in a
variety of positions in marketing,
manufacturing and strategic
planning. Mr. Gehl has been a
director of the Company since
1974.
Kenneth F. Kaplan, 50, Mr. Kaplan joined the Company
Vice President of Finance as Corporate Controller in
September, 1985, was
elected Treasurer of the Company
in April, 1986 and was elected
Vice President of Finance and
Treasurer in December, 1987.
Michael J. Mulcahy, 49, Mr. Mulcahy has served as
Vice President, Secretary General Counsel of the Company
and General Counsel since 1974 and became Secretary in
1977 and a Vice President in 1986.
Mr. Mulcahy has also served, since
1988, as President of Equipco
Insurance Company, Ltd., which
provides liability insurance
coverage for equipment
manufacturers, including the
Company.
Richard J. Semler, 56, Mr. Semler joined the Company in
Vice President of May, 1960 and has served in his
Data Systems current position with the Company
since January, 1977.
Kenneth P. Hahn, 38, Mr. Hahn has served in his current
Corporate Controller position since joining the Company
in April, 1988. Mr. Hahn was
elected as an executive officer of
the Company in April, 1994.
All officers of the Company are elected annually by the Board of
Directors following the Annual Meeting of Shareholders. The 1996 Annual
Meeting of Shareholders is currently scheduled for April 25, 1996. The
Company has employment agreements with William D. Gehl, pursuant to which
he is to serve as President and Chief Executive Officer of the Company
through the expiration of the agreement on December 31, 1998, and Victor A.
Mancinelli, pursuant to which he is to serve as Executive Vice President
and Chief Operating Officer of the Company through the expiration of the
agreement on September 30, 1998.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related
Shareholder Matters.
Information required by this item is included on Page 25 of the Gehl
Company 1995 Annual Report to Shareholders, which page is hereby
incorporated herein by reference.
Item 6. Selected Financial Data.
Information required by this item is included on Page 24 of the Gehl
Company 1995 Annual Report to Shareholders, which page is hereby
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Information required by this item is included on Pages 9 through 13 of
the Gehl Company 1995 Annual Report to Shareholders, which pages are hereby
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
Information required by this item is included on Page 8 and Pages 14
through 23 of the Gehl Company 1995 Annual Report to Shareholders, which
pages are hereby incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.
There have been no changes in or disagreements with the Company's
accountants regarding accounting and financial disclosure required to be
reported pursuant to this item.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the
Registrant
Pursuant to Instruction G, the information required by this item with
respect to directors is hereby incorporated herein by reference from the
caption entitled "Election of Directors" set forth in the Company's
definitive Proxy Statement for its 1996 Annual Meeting of Shareholders
("Proxy Statement")<F1>. Information with respect to executive officers of
the Company appears at the end of Part I, Pages 8 through 9 of this Annual
Report on Form 10-K.
Item 11. Executive Compensation.
Pursuant to Instruction G, the information required by this item is
hereby incorporated herein by reference from the captions entitled "Board
of Directors" and "Executive Compensation" set forth in the Proxy
Statement; provided, however, that the subsection entitled "Executive
Compensation - Report on Executive Compensation" shall not be deemed to be
incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial
Owners and Management.
Pursuant to Instruction G, the information required by this item is
hereby incorporated by reference herein from the caption "Principal
Shareholders" set forth in the Proxy Statement.
Item 13. Certain Relationships and Related Transactions.
Pursuant to Instruction G, the information required by this item is
hereby incorporated by reference from the caption "Executive Compensation -
Summary Compensation Information" set forth in the Proxy Statement.
<F1>
The Proxy Statement will be filed with the Commission pursuant to
Regulation 14A within 120 days after the end of the Company's fiscal year.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K.
(a) 1 and 2. Financial statements and financial statement
schedule.
Reference is made to the separate index to the Company's
consolidated financial statements and schedule contained on
Page 14 hereof.
3. Exhibits.
Reference is made to the separate exhibit index contained on
Pages 17 through 19 hereof.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the Company during the
quarter ended December 31, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
GEHL COMPANY
Date: March 6, 1996 By /s/ William D. Gehl
William D. Gehl,
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ William D. Gehl President, Chief March 6, 1996
William D. Gehl Executive Officer and
Director (Principal
Executive Officer)
/s/ Kenneth F. Kaplan Vice President of March 6, 1996
Kenneth F. Kaplan Finance and Treasurer
(Principal Financial
and Accounting Officer)
/s/ Fred M. Butler Director March 6, 1996
Fred M. Butler
/s/ John W. Findley Director March 6, 1996
John W. Findley
/s/ John W. Gehl Director March 6, 1996
John W. Gehl
/s/ Arthur W. Nesbitt Director March 6, 1996
Arthur W. Nesbitt
/s/ Roger E. Secrist Director March 6, 1996
Roger E. Secrist
/s/ John W. Splude Director March 6, 1996
John W. Splude
<PAGE>
GEHL COMPANY
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
Page(s) in
Annual Report*
The following documents are filed as
part of this report:
(1) Financial Statements:
Report of Independent Accountants 8
Consolidated Balance Sheets at
December 31, 1995 and 1994 14
Consolidated Statements of Income
for the three years ended
December 31, 1995 15
Consolidated Statements of
Shareholders' Equity for the
three years ended December 31, 1995 15
Consolidated Statements of Cash
Flows for the three years ended
December 31, 1995 16
Notes to Consolidated Financial
Statements 17-23
* Incorporated by reference from the indicated pages of the Gehl Company
1995 Annual Report to Shareholders.
Page in
Form 10-K
(2) Financial Statement Schedule:
Report of Independent Accountants
on Financial Statement Schedule 15
For the three years ended
December 31, 1995 --
Schedule II - Valuation and Qualifying Accounts 16
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Gehl Company
Our audits of the consolidated financial statements referred to in our
report dated February 12, 1996 appearing on page 8 of the 1995 Annual
Report to Shareholders of Gehl Company (which report and consolidated
financial statements are incorporated by reference in this Annual Report on
Form 10-K) also included an audit of the Financial Statement Schedule
listed in Item 14(a) of this Form 10-K. In our opinion, this Financial
Statement Schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements.
PRICE WATERHOUSE LLP
Milwaukee, Wisconsin
February 12, 1996
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Additions
Balance Charged
at to Costs Charged Balance
Beginning and to Other at End
Period Description of Year Expenses Accounts Deductions of Year
Year Ended
December 31, Return
1993 & Allowances $ 115 $ - $ - $ - $ 115
Allowance for
Doubtful
Accounts-Trade
Receivables 927 1,473 - 557 1,843
Volume
Discounts 2,636 2,117 - 2,645 2,108
----- ----- ---- ----- ------
Total $3,678 $3,590 $ - $3,202 $4,066
====== ====== ==== ====== ======
Allowances for
Doubtful
Accounts-Retail
Contracts $ 432 $ 599 $ - $ 381 $ 650
====== ====== ==== ====== ======
Inventory
Obsolescence
Reserve $3,276 $1,215 $ - $ 610 $3,881
====== ====== ==== ====== ======
Income Tax
Valuation
Allowance $ - $7,096 $ - $ - $7,096
====== ====== ===== ====== ======
Year Ended
December 31,
1994
Return &
Allowances $ 115 $ - $ - $ - $ 115
Allowance for
Doubtful
Accounts-Trade
Receivables 1,843 (888) - 316 639
Volume
Discounts 2,108 2,200 - 2,318 1,990
Product
Discontinuance - 1,600 - - 1,600
------ ------ ---- ----- ------
Total $4,066 $2,912 $ - $2,634 $4,344
====== ====== ==== ====== ======
Allowances for
Doubtful
Accounts-Retail
Contracts $ 650 $ 424 $ - $ 570 $ 504
====== ====== ==== ===== ======
Inventory
Obsolescence
Reserve $3,881 $1,523 $ - $1,352 $4,052
====== ====== ==== ====== ======
Income Tax
Valuation
Allowance $7,096 $ - $ - $1,409 $5,687
====== ====== ==== ====== ======
Year Ended
December 31,
1995
Return &
Allowances $ 115 $ - $ - $ - $ 115
Allowance for
Doubtful
Accounts-Trade
Receivables 639 165 - 52 752
Volume
Discounts 1,990 2,026 - 2,213 1,803
Product
Discontinuance 1,600 - - 265 1,335
------ ------ ---- ----- ------
Total $4,344 $2,191 $ - $2,530 $4,005
====== ====== ==== ====== ======
Allowances for
Doubtful
Accounts-Retail
Contracts $ 504 $ 428 $ - $ 365 $ 567
====== ====== ==== ====== ======
Inventory
Obsolescence
Reserve $4,052 $ 502 $ - $1,777 $2,777
====== ====== ==== ====== ======
Income Tax
Valuation
Allowance $5,687 $ - $ - $3,038 $2,649
====== ====== ==== ====== ======
<PAGE>
GEHL COMPANY
INDEX TO EXHIBITS
Exhibit Number Document Description
-------------- --------------------
(3.1) Restated Articles of Incorporation of Gehl
Company [Incorporated by reference to Exhibit
3.1 to the Company's Form S-1 Registration
Statement (Reg. No. 33-31571)]
(3.2) Amendment to Gehl Company By-laws, dated
February 23, 1996
(3.3) By-laws of Gehl Company, as amended
(4.1) Amendment to Amended and Restated Loan and
Security Agreement by and between Deutsche
Financial Services Corporation, f/k/a ITT
Commercial Finance Corp., Deutsche Financial
Services Canada Corporation and Gehl Company
and its subsidiaries, dated December 1, 1995
(4.2) Common Stock Purchase Warrant, dated as of
March 5, 1993, from Gehl Company to State of
Wisconsin Investment Board [Incorporated by
reference to Exhibit 4.14 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1992]
(4.3) Loan Agreement between Pennsylvania Economic
Development Financing Authority and Gehl
Company, dated as of September 1, 1990
[Incorporated by reference to Exhibit 4.1 to
the Company's Quarterly Report on Form 10-Q
for the quarter ended September 29, 1990]
(4.4) First Supplemental Loan Agreement between
Pennsylvania Economic Development Financing
Authority and Gehl Company, dated as of April
23, 1993 [Incorporated by reference to Exhibit
4.3 to the Company's Quarterly Report on Form
10-Q for the quarter ended April 3, 1993]
(4.5) Second Supplemental Loan Agreement between
Pennsylvania Economic Development Financing
Authority and Gehl Company, dated as of
February 1, 1994 [Incorporated by reference to
Exhibit 4.10 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1993]
(4.6) Mortgage and Security Agreement by and between
Gehl Company and First Pennsylvania Bank N.A.,
dated as of September 1, 1990 [Incorporated by
reference to Exhibit 4.2 to the Company's
Quarterly Report on Form 10-Q for the quarter
ended September 29, 1990]
(10.1)* Form of Supplemental Retirement Benefit
Agreement between Gehl Company and Messrs.
J.W. Gehl, Hahn, Kaplan, Mulcahy and Semler
[Incorporated by reference to Exhibit 10.4 to
the Company's Form S-1 Registration Statement
(Reg. No. 33-31571)].
(10.2)* Employment Agreement between Gehl Company and
William D. Gehl, dated as of July 1, 1995
(10.3)* Employment Agreement by and between Victor A.
Mancinelli and Gehl Company, dated as of
October 1, 1995
(10.4)* Supplemental Retirement Benefit Agreement by
and between William D. Gehl and Gehl Company
(10.5)* Supplemental Retirement Benefit Agreement by
and between Victor A. Mancinelli and Gehl
Company
(10.6)* Gehl Company Shareholder Value Added
Management Incentive Compensation Plan
(10.7)* Gehl Savings Plan, as amended [Incorporated by
reference to Exhibit 10.6 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1994]
(10.8)* Gehl Company Retirement Income Plan "B", as
amended [Incorporated by reference to Exhibit
10.7 to the Company's Annual Report on Form
10-K for the year ended December 31, 1994]
(10.9)* Gehl Company 1987 Stock Option Plan, as
amended [Incorporated by reference to
Exhibit 4.1 to the Company's Form S-8
Registration Statement (Reg. No. 33-38392)]
(10.10)* Form of Stock Option Agreement used in
conjunction with the Gehl Company 1987 Stock
Option Plan [Incorporated by reference to
Exhibit 4.2 to the Company's Form S-8
Registration Statement (Reg. No. 33-38392)]
(10.11)* Gehl Company 1995 Stock Option Plan
(10.12)* Form of Stock Option Agreement for executive
officers used in conjunction with the Gehl
Company 1995 Stock Option Plan.
(10.13)* Form of Stock Option Agreement for non-
employee directors used in conjunction with
the Gehl Company 1995 Stock Option Plan.
(10.14) Technical Assistance and License Agreement by
and between Gehl Company and Rheiner
Maschinenfabrik Windhoff AG, dated as of
May 4, 1985, as amended [Incorporated by
reference to Exhibit 10.13 to the Company's
Form S-1 Registration Statement
(Reg. No. 33-31571)]
(10.15) Distributorship Agreement by and between Gehl
Company and Gehl GmbH, dated as of April 15,
1985 [Incorporated by reference to Exhibit
10.16 to the Company's Form S-1 Registration
Statement (Reg. No. 33-31571)]
(10.16) Trademark Licensing Agreement by and between
Gehl Company and Gehl GmbH, dated as of April
15, 1985 [Incorporated by reference to Exhibit
10.17 to the Company's Form S-1 Registration
Statement (Reg. No. 33-31571)]
(13) Portions of the Gehl Company 1995 Annual
Report to Shareholders that are incorporated
by reference herein
(21) Subsidiaries of Gehl Company [Incorporated by
reference to Exhibit 21 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1994]
(23) Consent of Price Waterhouse LLP
(27) Financial Data Schedule
(99) Proxy Statement for 1996 Annual Meeting of
Shareholders (To be filed with the Securities
and Exchange Commission under Regulation 14A
within 120 days after the end of the Company's
fiscal year; except to the extent incorporated
by reference, the Proxy Statement for the 1996
Annual Meeting of Shareholders shall not be
deemed to be filed with the Securities and
Exchange Commission as part of this Annual
Report or Form 10-K)
__________________
* A management contract or compensatory plan or arrangement.
Fifth
Amendment
of the
Restated 2/22/91
By-Laws
of
GEHL COMPANY
(A Wisconsin Corporation)
Effective immediately, Section 3.01 shall be revised to read as
follows:
"3.01. General Powers and Number. All corporate
powers shall be exercised by or under the authority of,
and the business and affairs of the corporation shall be
managed under the direction of its Board of Directors.
The number of directors of the corporation shall be nine
(9) divided into three (3) classes: Class I-three (3)
directors; Class II - three (3) directors; Class III -
three (3) directors."
Approved at 02/23/96 Board Meeting
(Restated/Approved 2/22/91)
(First Amendment 2/18/92)
(Second Amendment 2/17/93)
(Third Amendment 2/25/94)
(Fourth Amendment 2/24/95)
(Fifth Amendment 2/23/96)
BY-LAWS
OF
GEHL COMPANY
ARTICLE I. OFFICES
1.01. Principal and Business Offices. The corporation may have
such principal and other business offices, either within or without the State
of Wisconsin, as the Board of Directors may designate or as the business of
the corporation may require from time to time.
1.02. Registered Office. The registered office of the
corporation required by the Wisconsin Business Corporation Law to be
maintained in the State of Wisconsin may be, but need not be, identical with
the principal office in the State of Wisconsin, and the address of the
registered office may be changed from time to time by the Board of Directors.
The business office of the registered agent of the corporation shall be
identical to such registered office.
ARTICLE II. SHAREHOLDERS
2.01. Annual Meeting. The annual meeting of shareholders (the
"Annual Meeting") shall be held each year at 7:00 P.M. (Central Time) on the
last Thursday in April, or at such other time and date as may be fixed by or
under the authority of the Board of Directors, for the purpose of electing
that number of directors equal to the number of directors in the class whose
term expires at the time of the Annual Meeting and for the transaction of such
other business as may properly come before the Annual Meeting in accordance
with Section 2.14 of these by-laws. If the day fixed for the Annual Meeting
is a legal holiday in the State of Wisconsin, such meeting shall be held on
the next succeeding business day. In fixing a meeting date for any Annual
Meeting, the Board of Directors may consider such factors as it deems relevant
within the good faith exercise of its business judgment.
2.02. Special Meetings.
(a) A special meeting of shareholders (a "Special Meeting") may be
called only by (i) the President or (ii) the Board of Directors and shall be
called by the President upon the demand, in accordance with this Section 2.02,
of the holders of record of shares representing at least 10% of all the votes
entitled to be cast on any issue proposed to be considered at the Special
Meeting.
(b) In order that the corporation may determine the shareholders
entitled to demand a Special Meeting, the Board of Directors may fix a record
date to determine the shareholders entitled to make such a demand (the "Demand
Record Date"). The Demand Record Date shall not precede the date upon which
the resolution fixing the Demand Record Date is adopted by the Board of
Directors and shall not be more than 10 days after the date upon which the
resolution fixing the Demand Record Date is adopted by the Board of Directors.
Any shareholder of record seeking to have shareholders demand a Special
Meeting shall, by sending written notice to the Secretary of the corporation
by hand or by certified or registered mail, return receipt requested, request
the Board of Directors to fix a Demand Record Date. The Board of Directors
shall promptly, but in all events within 10 days after the date on which a
valid request to fix a Demand Record Date is received, adopt a resolution
fixing the Demand Record Date and shall make a public announcement of such
Demand Record Date. If no Demand Record Date has been fixed by the Board of
Directors within 10 days after the date on which such request is received by
the Secretary, the Demand Record Date shall be the 10th day after the first
date on which a valid written request to set a Demand Record Date is received
by the Secretary. To be valid, such written request shall set forth the
purpose or purposes for which the Special Meeting is to be held, shall be
signed by one or more shareholders of record (or their duly authorized proxies
or other representatives), shall bear the date of signature of each such
shareholder (or proxy or other representative) and shall set forth all
information about each such shareholder and about the beneficial owner or
owners, if any, on whose behalf the request is made that would be required to
be set forth in a shareholder's notice described in paragraph (a)(ii) of
Section 2.14 of these by-laws.
(c) In order for a shareholder or shareholders to demand a Special
Meeting, a written demand or demands for a Special Meeting by the holders of
record as of the Demand Record Date of shares representing at least 10% of all
the votes entitled to be cast on any issue proposed to be considered at the
Special Meeting must be delivered to the corporation. To be valid, each
written demand by a shareholder for a Special Meeting shall set forth the
specific purpose or purposes for which the Special Meeting is to be held
(which purpose or purposes shall be limited to the purpose or purposes set
forth in the written request to set a Demand Record Date received by the
corporation pursuant to paragraph (b) of this Section 2.02), shall be signed
by one or more persons who as of the Demand Record Date are shareholders of
record (or their duly authorized proxies or other representatives), shall bear
the date of signature of each such shareholder (or proxy or other
representative), and shall set forth the name and address, as they appear in
the corporation's books, of each shareholder signing such demand and the class
and number of shares of the corporation which are owned of record and
beneficially by each such shareholder, shall be sent to the Secretary by hand
or by certified or registered mail, return receipt requested, and shall be
received by the Secretary within 70 days after the Demand Record Date.
(d) The corporation shall not be required to call a Special Meeting
upon shareholder demand unless, in addition to the documents required by
paragraph (c) of this Section 2.02, the Secretary receives a written agreement
signed by each Soliciting Shareholder (as defined below), pursuant to which
each Soliciting Shareholder, jointly and severally, agrees to pay the
corporation's costs of holding the Special Meeting, including the costs of
preparing and mailing proxy materials for the corporation's own solicitation,
provided that if each of the resolutions introduced by any Soliciting
Shareholder at such meeting is adopted, and each of the individuals nominated
by or on behalf of any Soliciting Shareholder for election as director at such
meeting is elected, then the Soliciting Shareholders shall not be required to
pay such costs. For purposes of this paragraph (d), the following terms shall
have the meanings set forth below:
(i) "Affiliate" of any Person (as defined herein) shall mean
any Person controlling, controlled by or under common control with
such first Person.
(ii) "Participant" shall have the meaning assigned to such term
in Rule 14a-11 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(iii) "Person" shall mean any individual, firm,
corporation, partnership, joint venture, association, trust,
unincorporated organization or other entity.
(iv) "Proxy" shall have the meaning assigned to such term in
Rule 14a-1 promulgated under the Exchange Act.
(v) "Solicitation" shall have the meaning assigned to such
term in Rule 14a-11 promulgated under the Exchange Act.
(vi) "Soliciting Shareholder" shall mean, with respect to any
Special Meeting demanded by a shareholder or shareholders, any of
the following Persons:
(A) if the number of shareholders signing the demand or
demands of meeting delivered to the corporation pursuant to
paragraph (c) of this Section 2.02 is 10 or fewer, each
shareholder signing any such demand;
(B) if the number of shareholders signing the demand or
demands of meeting delivered to the corporation pursuant to
paragraph (c) of this Section 2.02 is more than 10, each Person
who either (I) was a Participant in any Solicitation of such
demand or demands or (II) at the time of the delivery to the
corporation of the documents described in paragraph (c) of this
Section 2.02 had engaged or intended to engage in any
Solicitation of Proxies for use at such Special Meeting (other
than a Solicitation of Proxies on behalf of the corporation);
or
(C) any Affiliate of a Soliciting Shareholder, if a
majority of the directors then in office determine, reasonably
and in good faith, that such Affiliate should be required to
sign the written notice described in paragraph (c) of this
Section 2.02 and/or the written agreement described in this
paragraph (d) in order to prevent the purposes of this Section
2.02 from being evaded.
(e) Except as provided in the following sentence, any Special
Meeting shall be held at such hour and day as may be designated by whichever
of the President or the Board of Directors shall have called such meeting. In
the case of any Special Meeting called by the President upon the demand of
shareholders (a "Demand Special Meeting"), such meeting shall be held at such
hour and day as may be designated by the Board of Directors; provided,
however, that the date of any Demand Special Meeting shall be not more than 70
days after the Meeting Record Date (as defined in Section 2.05 hereof); and
provided further that in the event that the directors then in office fail to
designate an hour and date for a Demand Special Meeting within 10 days after
the date that valid written demands for such meeting by the holders of record
as of the Demand Record Date of shares representing at least 10% of all the
votes entitled to be cast on each issue proposed to be considered at the
Special Meeting are delivered to the corporation (the "Delivery Date"), then
such meeting shall be held at 2:00 P.M. (Central Time) on the 100th day after
the Delivery Date or, if such 100th day is not a Business Day (as defined
below), on the first preceding Business Day. In fixing a meeting date for any
Special Meeting, the President or the Board of Directors may consider such
factors as he or it deems relevant within the good faith exercise of his or
its business judgment, including, without limitation, the nature of the action
proposed to be taken, the facts and circumstances surrounding any demand for
such meeting, and any plan of the Board of Directors to call an Annual Meeting
or a Special Meeting for the conduct of related business.
(f) The corporation may engage regionally or nationally recognized
independent inspectors of elections to act as an agent of the corporation for
the purpose of promptly performing a ministerial review of the validity of any
purported written demand or demands for a Special Meeting received by the
Secretary. For the purpose of permitting the inspectors to perform such
review, no purported demand shall be deemed to have been delivered to the
corporation until the earlier of (i) 5 Business Days following receipt by the
Secretary of such purported demand and (ii) such date as the independent
inspectors certify to the corporation that the valid demands received by the
Secretary represent at least 10% of all the votes entitled to be cast on each
issue proposed to be considered at the Special Meeting. Nothing contained in
this paragraph (f) shall in any way be construed to suggest or imply that the
Board of Directors or any shareholder shall not be entitled to contest the
validity of any demand, whether during or after such 5 Business Day period, or
to take any other action (including, without limitation, the commencement,
prosecution or defense of any litigation with respect thereto).
(g) For purposes of these by-laws, "Business Day" shall mean any
day other than a Saturday, a Sunday or a day on which banking institutions in
the State of Wisconsin are authorized or obligated by law or executive order
to close.
2.03. Place of Meeting. The Board of Directors or the President
may designate any place, either within or without the State of Wisconsin, as
the place of meeting for any Annual Meeting or for any Special Meeting, or for
any postponement thereof. If no designation is made, the place of meeting
shall be the principal office of the corporation in the State of Wisconsin.
Any meeting may be adjourned to reconvene at any place designated by vote of
the Board of Directors or by the President.
2.04. Notice of Meeting. Written or printed notice stating the
place, day and hour of any Annual Meeting or Special Meeting shall be
delivered not less than 10 days (unless a longer period is required by the
Wisconsin Business Corporation Law) nor more than 70 days, before the date of
such meeting, either personally or by mail, by or at the direction of the
Secretary to each shareholder of record entitled to vote at such meeting and
to other shareholders as may be required by the Wisconsin Business Corporation
Law. In the event of any Demand Special Meeting, such notice of meeting shall
be sent not more than 30 days after the Delivery Date. If mailed, notice
pursuant to this Section 2.04 shall be deemed to be effective when deposited
in the United States mail, addressed to the shareholder at his address as it
appears on the stock transfer books of the corporation, with postage thereon
prepaid. Unless otherwise required by the Wisconsin Business Corporation Law
or the restated articles of incorporation, a notice of an Annual Meeting need
not include a description of the purpose for which the meeting is called. In
the case of any Special Meeting, (a) the notice of meeting shall describe any
business that the Board of Directors shall have theretofore determined to
bring before the meeting and (b) in the case of a Demand Special Meeting, the
notice of meeting (i) shall describe any business set forth in the statement
of purpose of the demands received by the corporation in accordance with
Section 2.02 of these by-laws and (ii) shall contain all of the information
required in the notice received by the corporation in accordance with Section
2.14(b) of these by-laws. If an Annual Meeting or Special Meeting is
adjourned to a different date, time or place, the corporation shall not be
required to give notice of the new date, time or place if the new date, time
or place is announced at the meeting before adjournment; provided, however,
that if a new Meeting Record Date for an adjourned meeting is or must be
fixed, the corporation shall give notice of the adjourned meeting to persons
who are shareholders as of the new Meeting Record Date.
2.05. Fixing of Record Date. The Board of Directors may fix a
future date not less than 10 days and not more than 70 days prior to the date
of any Annual Meeting or Special Meeting as the record date for the
determination of shareholders entitled to notice of, or to vote at, such
meeting (the "Meeting Record Date"). In the case of any Demand Special
Meeting, (i) the Meeting Record Date shall be not later than the 30th day
after the Delivery Date and (ii) if the Board of Directors fails to fix the
Meeting Record Date within 30 days after the Delivery Date, then the close of
business on such 30th day shall be the Meeting Record Date. The shareholders
of record on the Meeting Record Date shall be the shareholders entitled to
notice of and to vote at the meeting. Except as provided by the Wisconsin
Business Corporation Law for a court-ordered adjournment, a determination of
shareholders entitled to notice of or to vote at any Annual Meeting or Special
Meeting is effective for any adjournment of such meeting unless the Board of
Directors fixes a new Meeting Record Date, which it shall do if the meeting is
adjourned to a date more than 120 days after the date fixed for the original
meeting. The Board of Directors may also fix a future date as the record date
for the purpose of determining shareholders entitled to take any other action
or determining shareholders for any other purpose. Such record date shall be
not more than 70 days prior to the date on which the particular action,
requiring such determination of shareholders, is to be taken. The record date
for determining shareholders entitled to a distribution (other than a
distribution involving a purchase, redemption or other acquisition of the
corporation's shares) or a share dividend is the date on which the Board of
Directors authorizes the distribution or share dividend, as the case may be,
unless the Board of Directors fixes a different record date.
2.06. Voting Lists. After a Meeting Record Date has been fixed,
the corporation shall prepare a list of the names of all of the shareholders
entitled to notice of the meeting. The list shall be arranged by class or
series of shares, if any, and show the address of and number of shares held by
each shareholder. Such list shall be available for inspection by any
shareholder, beginning two business days after notice of the meeting is given
for which the list was prepared and continuing to the date of the meeting, at
the corporation's principal office or at a place identified in the meeting
notice in the city where the meeting will be held. A shareholder or his or
her agent may, on written demand, inspect and, subject to the limitations
imposed by the Wisconsin Business Corporation Law, copy the list, during
regular business hours and at his or her expense, during the period that it is
available for inspection pursuant to this Section 2.06. The corporation shall
make the shareholders' list available at the meeting and any shareholder or
his or her agent or attorney may inspect the list at any time during the
meeting or any adjournment thereof. Refusal or failure to prepare or make
available the shareholders' list shall not affect the validity of any action
taken at an Annual Meeting or Special Meeting.
2.07. Quorum and Voting Requirements; Postponements;
Adjournments.
(a) Shares entitled to vote as a separate voting group may take
action on a matter at any Annual Meeting or Special Meeting only if a quorum
of those shares exists with respect to that matter. If the corporation has
only one class of stock outstanding, such class shall constitute a separate
voting group for purposes of this Section 2.07. Except as otherwise provided
in the restated articles of incorporation or the Wisconsin Business
Corporation Law, a majority of the votes entitled to be cast on the matter
shall constitute a quorum of the voting group for action on that matter. Once
a share is represented for any purpose at any Annual Meeting or Special
Meeting, other than for the purpose of objecting to holding the meeting or
transacting business at the meeting, it is considered present for purposes of
determining whether a quorum exists for the remainder of the meeting and for
any adjournment of that meeting unless a new Meeting Record Date is or must be
set for the adjourned meeting. If a quorum exists, except in the case of the
election of directors, action on a matter shall be approved if the votes cast
within the voting group favoring the action exceed the votes cast opposing the
action, unless the restated articles of incorporation, these by-laws or the
Wisconsin Business Corporation Law requires a greater number of affirmative
votes. Unless otherwise provided in the restated articles of incorporation,
each director shall be elected by a plurality of the votes cast by the shares
entitled to vote in the election of directors at any Annual Meeting or Special
Meeting at which a quorum is present.
(b) The Board of Directors acting by resolution may postpone and
reschedule any previously scheduled Annual Meeting or Special Meeting;
provided, however, that a Demand Special Meeting shall not be postponed beyond
the 100th day following the Delivery Date. Any Annual Meeting or Special
Meeting may be adjourned from time to time, whether or not there is a quorum,
(i) at any time, upon a resolution of shareholders if the votes cast in favor
of such resolution by the holders of shares of each voting group entitled to
vote on any matter theretofore properly brought before the meeting exceed the
number of votes cast against such resolution by the holders of shares of each
such voting group or (ii) at any time prior to the transaction of any business
at such meeting, by the President or pursuant to a resolution of the Board of
Directors. No notice of the time and place of adjourned meetings need be
given except as required by the Wisconsin Business Corporation Law. At any
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified.
2.08. Conduct of Meetings. The President, and in his absence a
Vice-President in the order provided under Section 4.06, and in their absence,
any person chosen by the shareholders present shall call any Annual Meeting or
Special Meeting to order and shall act as chairman of such meeting, and the
Secretary of the corporation shall act as secretary of all meetings of the
shareholders, but, in the absence of the Secretary, the presiding officer may
appoint any other person to act as secretary of the meeting.
2.09. Proxies. At any Annual Meeting or Special Meeting, a
shareholder entitled to vote may vote in person or by proxy. A shareholder
may appoint a proxy to vote or otherwise act for the shareholder by signing an
appointment form, either personally or by his attorney-in-fact. An
appointment of a proxy is effective when received by the Secretary or other
officer or agent of the corporation authorized to tabulate votes. An
appointment is valid for 11 months from the date of its signing unless a
different period is expressly provided in the appointment form. Unless
otherwise provided in the proxy, a proxy may be revoked at any time before it
is voted, either by written notice filed with the Secretary or the acting
secretary of the meeting or by oral notice given by the shareholder to the
presiding officer during the meeting. The presence of a shareholder who has
filed his proxy shall not of itself constitute a revocation.
2.10. Voting of Shares. Each outstanding share shall be
entitled to one vote upon each matter submitted to a vote at an Annual Meeting
or Special Meeting, except to the extent that the voting rights of the shares
of any class or classes are enlarged, limited or denied by the Wisconsin
Business Corporation Law or by the restated articles of incorporation.
2.11. Acceptance of Instruments Showing Shareholder Action. If
the name signed on a vote, consent, waiver or proxy appointment corresponds to
the name of the shareholder, the corporation, if acting in good faith, may
accept the vote, consent, waiver or proxy appointment and give it effect as
the act of a shareholder. If the name signed on a vote, consent, waiver or
proxy appointment does not correspond to the name of a shareholder, the
corporation may accept the vote, consent, waiver or proxy appointment and give
it effect as the act of the shareholder if any of the following apply:
(a) The shareholder is an entity and the name signed purports to be
that of an officer or agent of the entity.
(b) The name purports to be that of a personal representative,
administrator, executor, guardian or conservator representing the shareholder
and, if the corporation requests, evidence of fiduciary status acceptable to
the corporation is presented with respect to the vote, consent, waiver or
proxy appointment.
(c) The name signed purports to be that of a receiver or trustee in
bankruptcy of the shareholder and, if the corporation requests, evidence of
this status acceptable to the corporation is presented with respect to the
vote, consent, waiver or proxy appointment.
(d) The name signed purports to be that of a pledgee, beneficial
owner, or attorney-in-fact of the shareholder and, if the corporation
requests, evidence acceptable to the corporation of the signatory's authority
to sign for the shareholder is presented with respect to the vote, consent,
waiver or proxy appointment.
(e) Two or more persons are the shareholder as co-tenants or
fiduciaries and the name signed purports to be the name of at least one of the
co-owners and the person signing appears to be acting on behalf of all
co-owners.
The corporation may reject a vote, consent, waiver or proxy
appointment if the Secretary or other officer or agent of the corporation who
is authorized to tabulate votes, acting in good faith, has reasonable basis
for doubt about the validity of the signature on it or about the signatory's
authority to sign for the shareholder.
2.12. Waiver of Notice by Shareholders. A shareholder may waive
any notice required by the Wisconsin Business Corporation Law, the restated
articles of incorporation or these by-laws before or after the date and time
stated in the notice. The waiver shall be in writing and signed by the
shareholder entitled to the notice, contain the same information that would
have been required in the notice under applicable provisions of the Wisconsin
Business Corporation Law (except that the time and place of meeting need not
be stated) and be delivered to the corporation for inclusion in the corporate
records. A shareholder's attendance at any Annual Meeting or Special Meeting,
in person or by proxy, waives objection to all of the following: (a) lack of
notice or defective notice of the meeting, unless the shareholder at the
beginning of the meeting or promptly upon arrival objects to holding the
meeting or transacting business at the meeting; and (b) consideration of a
particular matter at the meeting that is not within the purpose described in
the meeting notice, unless the shareholder objects to considering the matter
when it is presented.
2.13. Unanimous Consent without Meeting. Any action required or
permitted by the restated articles of incorporation or these by-laws or any
provision of the Wisconsin Business Corporation Law to be taken at an Annual
Meeting or Special Meeting, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
2.14. Notice of Shareholder Business and Nomination of
Directors.
(a) Annual Meetings.
(i) Nominations of persons for election to the Board of Directors
of the corporation and the proposal of business to be considered by the
shareholders may be made at an Annual Meeting (A) pursuant to the
corporation's notice of meeting, (B) by or at the direction of the Board
of Directors or (C) by any shareholder of the corporation who is a
shareholder of record at the time of giving of notice provided for in
this by-law and who is entitled to vote at the meeting and complies with
the notice procedures set forth in this Section 2.14.
(ii) For nominations or other business to be properly brought before
an Annual Meeting by a shareholder pursuant to clause (C) of paragraph
(a)(i) of this Section 2.14, the shareholder must have given timely
notice thereof in writing to the Secretary of the corporation. To be
timely, a shareholder's notice shall be received by the Secretary of the
corporation at the principal office of the corporation not less than 60
days nor more than 90 days prior to the last Thursday in the month of
April; provided, however, that in the event that the date of the Annual
Meeting is advanced by more than 30 days or delayed by more than 60 days
from the last Thursday in the month of April, notice by the shareholder
to be timely must be so received not earlier than the 90th day prior to
the date of such Annual Meeting and not later than the close of business
on the later of (x) the 60th day prior to such Annual Meeting and (y) the
10th day following the day on which public announcement of the date of
such meeting is first made. Such shareholder's notice shall be signed by
the shareholder of record who intends to make the nomination or introduce
the other business (or his duly authorized proxy or other
representative), shall bear the date of signature of such shareholder (or
proxy or other representative) and shall set forth: (A) the name and
address, as they appear on the corporation's books, of such shareholder
and the beneficial owner or owners, if any, on whose behalf the
nomination or proposal is made; (B) the class and number of shares of the
corporation which are beneficially owned by such shareholder or
beneficial owner or owners; (C) a representation that such shareholder is
a holder of record of shares of the corporation entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to
make the nomination or introduce the other business specified in the
notice; (D) in the case of any proposed nomination for election or
re-election as a director, (I) the name and residence address of the
person or persons to be nominated, (II) a description of all arrangements
or understandings between such shareholder or beneficial owner or owners
and each nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination is to be made by such
shareholder, (III) such other information regarding each nominee proposed
by such shareholder as would be required to be disclosed in solicitations
of proxies for elections of directors, or would be otherwise required to
be disclosed, in each case pursuant to Regulation 14A under the Exchange
Act, including any information that would be required to be included in a
proxy statement filed pursuant to Regulation 14A had the nominee been
nominated by the Board of Directors and (IV) the written consent of each
nominee to be named in a proxy statement and to serve as a director of
the corporation if so elected; and (E) in the case of any other business
that such shareholder proposes to bring before the meeting, (I) a brief
description of the business desired to be brought before the meeting and,
if such business includes a proposal to amend these by-laws, the language
of the proposed amendment, (II) such shareholder's and beneficial owner's
or owners' reasons for conducting such business at the meeting and (III)
any material interest in such business of such shareholder and beneficial
owner or owners.
(iii) Notwithstanding anything in the second sentence of
paragraph (a)(ii) of this Section 2.14 to the contrary, in the event that
the number of directors to be elected to the Board of Directors of the
corporation is increased and there is no public announcement naming all
of the nominees for director or specifying the size of the increased
Board of Directors made by the corporation at least 70 days prior to the
last Thursday in the month of April, a shareholder's notice required by
this Section 2.14 shall also be considered timely, but only with respect
to nominees for any new positions created by such increase, if it shall
be received by the Secretary at the principal office of the corporation
not later than the close of business on the 10th day following the day on
which such public announcement is first made by the corporation.
(b) Special Meetings. Only such business shall be conducted at a
Special Meeting as shall have been described in the notice of meeting sent to
shareholders pursuant to Section 2.04 of these by-laws. Nominations of
persons for election to the Board of Directors may be made at a Special
Meeting at which directors are to be elected pursuant to such notice of
meeting (i) by or at the direction of the Board of Directors or (ii) by any
shareholder of the corporation who (A) is a shareholder of record at the time
of giving of such notice of meeting, (B) is entitled to vote at the meeting
and (C) complies with the notice procedures set forth in this Section 2.14.
Any shareholder desiring to nominate persons for election to the Board of
Directors at such a Special Meeting shall cause a written notice to be
received by the Secretary of the corporation at the principal office of the
corporation not earlier than 90 days prior to such Special Meeting and not
later than the close of business on the later of (x) the 60th day prior to
such Special Meeting and (y) the 10th day following the day on which public
announcement is first made of the date of such Special Meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting.
Such written notice shall be signed by the shareholder of record who intends
to make the nomination (or his duly authorized proxy or other representative),
shall bear the date of signature of such shareholder (or proxy or other
representative) and shall set forth: (A) the name and address, as they appear
on the corporation's books, of such shareholder and the beneficial owner or
owners, if any, on whose behalf the nomination is made; (B) the class and
number of shares of the corporation which are beneficially owned by such
shareholder or beneficial owner or owners; (C) a representation that such
shareholder is a holder of record of shares of the corporation entitled to
vote at such meeting and intends to appear in person or by proxy at the
meeting to make the nomination specified in the notice; (D) the name and
residence address of the person or persons to be nominated; (E) a description
of all arrangements or understandings between such shareholder or beneficial
owner or owners and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination is to be made by such
shareholder; (F) such other information regarding each nominee proposed by
such shareholder as would be required to be disclosed in solicitations of
proxies for elections of directors, or would be otherwise required to be
disclosed, in each case pursuant to Regulation 14A under the Exchange Act,
including any information that would be required to be included in a proxy
statement filed pursuant to Regulation 14A had the nominee been nominated by
the Board of Directors; and (G) the written consent of each nominee to be
named in a proxy statement and to serve as a director of the corporation if so
elected.
(c) General.
(i) Only persons who are nominated in accordance with the
procedures set forth in this Section 2.14 shall be eligible to serve as
directors. Only such business shall be conducted at an Annual Meeting or
Special Meeting as shall have been brought before such meeting in
accordance with the procedures set forth in this Section 2.14. The
chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought
before the meeting was made in accordance with the procedures set forth
in this Section 2.14 and, if any proposed nomination or business is not
in compliance with this Section 2.14, to declare that such defective
proposal shall be disregarded.
(ii) For purposes of this Section 2.14, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable national news service or in a
document publicly filed by the corporation with the Securities and
Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange
Act.
(iii) Notwithstanding the foregoing provisions of this Section
2.14, a shareholder shall also comply with all applicable requirements of
the Exchange Act and the rules and regulations thereunder with respect to
the matters set forth in this Section 2.14. Nothing in this Section 2.14
shall be deemed to limit the corporation's obligation to include
shareholder proposals in its proxy statement if such inclusion is
required by Rule 14a-8 under the Exchange Act.
ARTICLE III. BOARD OF DIRECTORS
3.01. General Powers and Number. All corporate powers shall be
exercised by or under the authority of, and the business and affairs of the
corporation shall be managed under the direction of its Board of Directors.
The number of directors of the corporation shall be nine (9), divided into
three (3) classes: Class I - three (3) directors; Class II - three (3)
directors; Class III -three (3) directors.
3.02. Term and Qualifications. At each Annual Meeting the
successors to the class of directors whose terms shall expire at the time of
such Annual Meeting shall be elected to hold office until the third succeeding
Annual Meeting of shareholders, and until their successors are duly elected
and qualified. A director may resign at any time by delivering written notice
which complies with the Wisconsin Business Corporation Law to the Chairman of
the Board or to the corporation. Directors need not be residents of the State
of Wisconsin or shareholders of the corporation.
3.03. Nominations. Nominations for the election of directors
may only be made in accordance with the requirements of Section 2.14 hereof,
which requirements are hereby incorporated by reference in this Section 3.03.
3.04. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this by-law immediately
after the Annual Meeting, and each adjourned session thereof. The place of
such regular meeting shall be the same as the place of the Annual Meeting
which precedes it, or such other suitable place as may be
announced at such Annual Meeting. The Board of Directors may provide, by
resolution, the time and place, either within or without the State of
Wisconsin, for the holding of additional regular meetings without other notice
than such resolution.
3.05. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the President, Secretary or
any two directors. The President or Secretary may fix any place, either
within or without the State of Wisconsin, as the place for holding any special
meeting of the Board of Directors, and if no other place is fixed, the place
of meeting shall be the principal office of the corporation in the State of
Wisconsin.
3.06. Notice; Waiver. Notice of each meeting of the Board of
Directors (unless otherwise provided in or pursuant to Section 3.04) shall be
given by written notice delivered or communicated in person, by telegram,
facsimile or other form of wire or wireless communication, or by mail or
private carrier, to each director at his business address or at such other
address as such director shall have designated in writing filed with the
Secretary, in each case not less than 48 hours prior to the time of the
meeting. If mailed, such notice shall be deemed to be effective when
deposited in the United States mail so addressed, with postage thereon
prepaid. If notice be given by telegram, such notice shall be deemed to be
effective when the telegram is delivered to the telegraph company. If notice
is given by private carrier, such notice shall be deemed to be effective when
the notice is delivered to the private carrier. Whenever any notice whatever
is required to be given to any director of the corporation under the restated
articles of incorporation or these by-laws or any provision of the Wisconsin
Business Corporation Law, a waiver thereof in writing, signed at any time,
whether before or after the time of meeting, by the director entitled to such
notice, shall be deemed equivalent to the giving of such notice. The
corporation shall retain any such waiver as part of the permanent corporate
records. A director's attendance at or participation in a meeting waives any
required notice to him of the meeting unless the director at the beginning of
the meeting or promptly upon his arrival objects to holding the meeting or
transacting business at the meeting and does not thereafter vote for or assent
to action taken at the meeting. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the Board of Directors need
be specified in the notice or waiver of notice of such meeting.
3.07. Quorum. Except as otherwise provided by the Wisconsin
Business Corporation Law or by the restated articles of incorporation or these
by-laws, a majority of the number of directors set forth in Section 3.01 shall
constitute a quorum for the transaction of business at any meeting of the
Board of Directors, but a majority of the directors present (though less than
such quorum) may adjourn the meeting from time to time without further notice.
3.08. Manner of Acting. The act of the majority of the
directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors, unless the act of a greater number is required by
the Wisconsin Business Corporation Law or by the restated articles of
incorporation or these by-laws.
3.09. Conduct of Meetings. The Chairman of the Board, and in
his absence, the President, and in his absence, a Vice-President in the order
provided under Section 4.06, and in their absence, any director chosen by the
directors present, shall call meetings of the Board of Directors to order and
shall act as chairman of the meeting. The Secretary of the corporation shall
act as secretary of all meetings of the Board of Directors, but in the absence
of the Secretary, the presiding officer may appoint any Assistant Secretary or
any director or any other person present to act as secretary of the meeting.
Minutes of any regular or special meeting of the Board of Directors shall be
prepared and distributed to each director.
3.10. Compensation. The Board of Directors, by affirmative vote
of a majority of the directors then in office, and irrespective of any
personal interest of any of its members, may establish reasonable compensation
of all directors for services to the corporation as directors, officers or
otherwise, or may delegate such authority to an appropriate committee. The
Board of Directors also shall have authority to provide for or to delegate
authority to an appropriate committee to provide for reasonable pensions,
disability or death benefits, and other benefits or payments, to directors,
officers and employees and to their estates, families, dependents or
beneficiaries on account of prior services rendered by such directors,
officers and employees to the corporation.
3.11. Presumption of Assent. A director of the corporation who
is present at a meeting of the Board of Directors or a committee thereof of
which he is a member at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless any of the following
occurs: (a) the director objects at the beginning of the meeting or promptly
upon his arrival to holding the meeting or transacting business at the
meeting; (b) the director's dissent or abstention from the action taken is
entered in the minutes of the meeting; or (c) the director delivers written
notice that complies with the Wisconsin Business Corporation Law of his
dissent or abstention to the presiding officer of the meeting before its
adjournment or to the corporation immediately after adjournment of the
meeting. Such right to dissent or abstain shall not apply to a director who
voted in favor of such action.
3.12. Committees. The Board of Directors by resolution adopted
by the affirmative vote of a majority of the number of directors set forth in
Section 3.01 may create one or more committees, appoint members of the Board
of Directors to serve on the committees and designate other members of the
Board of Directors to serve as alternates. Alternate members of a committee
shall take the place of any absent member or members at any meeting of such
committee upon request of the President or upon request of the chairman of
such meeting. Each committee shall have two or more members who shall, unless
otherwise provided by the Board of Directors, serve at the pleasure of the
Board of Directors. A committee may be authorized to exercise the authority
of the Board of Directors, except that a committee may not do any of the
following: (a) authorize distributions; (b) approve or propose to
shareholders action that the Wisconsin Business Corporation Law requires to be
approved by shareholders; (c) fill vacancies on the Board of Directors or,
unless the Board of Directors provides by resolution that vacancies on a
committee shall be filled by the affirmative vote of the remaining committee
members, on any Board committee; (d) amend the corporation's restated articles
of incorporation; (e) adopt, amend or repeal by-laws; (f) approve a plan of
merger not requiring shareholder approval; (g) authorize or approve
reacquisition of shares, except according to a formula or method prescribed by
the Board of Directors; and (h) authorize or approve the issuance or sale or
contract for sale of shares, or determine the designation and relative rights,
preferences and limitations of a class or series of shares, except that the
Board of Directors may authorize a committee to do so within limits prescribed
by the Board of Directors. Unless otherwise provided by the Board of
Directors in creating the committee, a committee may employ counsel,
accountants and other consultants to assist it in the exercise of its
authority.
3.13. Telephonic Meetings. Except as herein provided and
notwithstanding any place set forth in the notice of the meeting or these
by-laws, members of the Board of Directors (and any committee thereof) may
participate in regular or special meetings by, or through the use of, any
means of communication by which all participants may simultaneously hear each
other, such as by conference telephone. If a meeting is conducted by such
means, then at the commencement of such meeting the presiding officer shall
inform the participating directors that a meeting is taking place at which
official business may be transacted. Any participant in a meeting by such
means shall be deemed present in person at such meeting. If action is to be
taken at any meeting held by such means on any of the following: (a) a plan
of merger or share exchange; (b) a sale, lease, exchange or other disposition
of substantial property or assets of the corporation; (c) a voluntary
dissolution or the revocation of voluntary dissolution proceedings; or (d) a
filing for bankruptcy, then the identity of each director participating in
such meeting must be verified by the disclosure at such meeting by each such
director of each such director's social security number to the secretary of
the meeting before a vote may be taken on any of the foregoing matters. For
purposes of the preceding clause (b), the phrase "sale, lease, exchange or
other disposition of substantial property or assets" shall mean any sale,
lease, exchange or other disposition of property or assets of the corporation
having a net book value equal to 10% or more of the net book value of the
total assets of the corporation on and as of the close of the fiscal year last
ended prior to the date of such meeting and as to which financial statements
of the corporation have been prepared. Notwithstanding the foregoing, no
action may be taken at any meeting held by such means on any particular matter
which the presiding officer determines, in his sole discretion, to be
inappropriate under the circumstances for action at a meeting held by such
means. Such determination shall be made and announced in advance of such
meeting.
3.14. Unanimous Consent without Meeting. Any action required or
permitted by the restated articles of incorporation or these by-laws or any
provision of the Wisconsin Business Corporation Law to be taken by the Board
of Directors (or any committee thereof) at a meeting may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all members of the Board of Directors or of the committee, as the
case may be, then in office. Such action shall be effective when the last
director or committee member signs the consent, unless the consent specifies a
different effective date.
ARTICLE IV. OFFICERS
4.01. Number. The principal officers of the corporation shall
be a Chairman of the Board, a President, such number of Vice-Presidents as the
Board of Directors shall elect from time to time by affirmative vote of a
majority of the number of directors present at a meeting at which a quorum is
in attendance, a Secretary, and a Treasurer, each of whom shall be elected by
the Board of Directors. Such other officers and assistant officers as may be
deemed necessary may be elected or appointed by the Board of Directors. The
Board of Directors may also authorize any duly appointed officer to appoint
one or more officers or assistant officers. Any two or more offices may be
held by the same person.
4.02. Election and Term of Office. The officers of the
corporation to be elected by the Board of Directors shall be elected annually
by the Board of Directors at the first meeting of the Board of Directors held
after each Annual Meeting. If the election of officers shall not be held at
such meeting, such election shall be held as soon thereafter as conveniently
may be. Each officer shall hold office until his successor shall have been
duly elected or until his prior death, resignation or removal.
4.03. Removal; Vacancies. The Board of Directors may remove any
officer and, unless restricted by the Board of Directors or these by-laws, an
officer may remove any officer or assistant officer appointed by that officer,
at any time, with or without cause and notwithstanding the contract rights, if
any, of the officer removed. Election or appointment shall not of itself
create contract rights. An officer may resign at any time by delivering
notice to the corporation that complies with the Wisconsin Business
Corporation Law. The resignation shall be effective when the notice is
delivered, unless the notice specifies a later effective date and the
corporation accepts the later effective date. A vacancy in any principal
office because of death, resignation, removal, disqualification or otherwise,
shall be filled by the Board of Directors for the unexpired portion of the
term. If a resignation of an officer is effective at a later date as
contemplated by this Section 4.03, the Board of Directors may fill the pending
vacancy before the effective date if the Board provides that the successor may
not take office until the effective date.
4.04. Chairman of the Board. The Chairman of the Board shall,
when present, preside at all meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors from
time to time.
4.05. President. The President shall be the principal executive
officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the corporation. He shall, when present, preside at all Annual
Meetings and Special Meetings. He shall have authority, subject to such rules
as may be prescribed by the Board of Directors, to appoint such agents and
employees of the corporation as he shall deem necessary, to prescribe their
powers, duties and compensation, and to delegate authority to them. Such
agents and employees shall hold office at the discretion of the President. He
shall have authority to sign, execute and acknowledge, on behalf of the
corporation, all deeds, mortgages, bonds, stock certificates, contracts,
leases, reports and all other documents or instruments necessary or proper to
be executed in the course of the corporation's regular business, or which
shall be authorized by resolution of the Board of Directors; and, except as
otherwise provided by law or the Board of Directors, he may authorize any
Vice-President or other officer or agent of the corporation to sign, execute
and acknowledge such documents or instruments in his place and stead. In
general he shall perform all duties incident to the office of the President
and such other duties as may be prescribed by the Board of Directors from time
to time.
4.06. The Vice-Presidents. In the absence of the President or
in the event of his death, inability or refusal to act, or in the event for
any reason it shall be impracticable for the President to act personally, the
Vice-President (or in the event there be more than one Vice-President, the
Vice-Presidents in the order designated by the Board of Directors, or in the
absence of any designation, then in the order of their election) shall perform
the duties of the President, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the President. Any Vice-President
may sign, with the Secretary or Assistant Secretary, certificates for shares
of the corporation; and shall perform such other duties and have such
authority as from time to time may be delegated or assigned to him by the
President or by the Board of Directors. The execution of any instrument of
the corporation by any Vice-President shall be conclusive evidence, as to
third parties, of his authority to act in the stead of the President.
4.07. The Secretary. The Secretary shall: (a) keep the minutes
of all Annual Meetings and Special Meetings and all meetings of the Board of
Directors in one or more books provided for that purpose (including records of
actions taken without a meeting); (b) see that all notices are duly given in
accordance with the provisions of these by-laws or as required by the
Wisconsin Business Corporation Law; (c) be custodian of the corporate records
and of the seal of the corporation and see that the seal of the corporation is
affixed to all documents the execution of which on behalf of the corporation
under its seal is duly authorized; (d) maintain a record of the shareholders
of the corporation, in the form that permits preparation of a list of the
names and addresses of all shareholders, by class or series of shares and
showing the number and class or series of shares held by each shareholder; (e)
sign with the President, or a Vice-President, certificates for shares of the
corporation, the issuance of which shall have been authorized by resolution of
the Board of Directors; (f) have general charge of the stock transfer books of
the corporation; and (g) in general perform all duties incident to the office of
Secretary and have such other duties and exercise such authority as from time
to time may be delegated or assigned to him by the President or by the Board
of Directors.
4.08. The Treasurer. The Treasurer shall: (a) have charge and
custody of and be responsible for all funds and securities of the corporation;
(b) maintain appropriate accounting records; (c) receive and give receipts for
moneys due and payable to the corporation from any source whatsoever, and
deposit all such moneys in the name of the corporation in such banks, trust
companies or other depositaries as shall be selected in accordance with the
provisions of Section 5.04; and (d) in general perform all of the duties
incident to the office of Treasurer and have such other duties and exercise
such other authority as from time to time may be delegated or assigned to him
by the President or by the Board of Directors. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful discharge of his
duties in such sum and with such surety or sureties as the Board of Directors
shall determine.
4.09. Assistant Secretaries and Assistant Treasurers. There
shall be such number of Assistant Secretaries and Assistant Treasurers as the
Board of Directors may from time to time authorize. The Assistant Secretaries
may sign with the President or a Vice-President certificates for shares of the
corporation the issuance of which shall have been authorized by a resolution
of the Board of Directors. The Assistant Treasurers shall respectively, if
required by the Board of Directors, give bonds for the faithful discharge of
their duties in such sums and with such sureties as the Board of Directors
shall determine. The Assistant Secretaries and Assistant Treasurers, in
general, shall perform such duties and have such authority as shall from time
to time be delegated or assigned to them by the Secretary or the Treasurer,
respectively, or by the President or the Board of Directors.
4.10. Other Assistants and Acting Officers. The Board of
Directors shall have the power to appoint, or to authorize any duly appointed
officer of the corporation to appoint, any person to act as assistant to any
officer, or as agent for the corporation in his stead, or to perform the
duties of such officer whenever for any reason it is impracticable for such
officer to act personally, and such assistant or acting officer or other agent
so appointed by the Board of Directors or the appointing officer shall have
the power to perform all duties of the office to which he is so appointed to
be assistant, or as to which he is so appointed to act, except as such power
may be otherwise defined or restricted by the Board of Directors or the
appointing officer.
4.11. Salaries. The salaries of the principal officers shall be
fixed from time to time by the Board of Directors or by a duly authorized
committee thereof, and no officer shall be prevented from receiving such
salary by reason of the fact that he is also a director of the corporation.
ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS; SPECIAL CORPORATE ACTS
5.01. Contracts. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute or
deliver any instrument in the name of and on behalf of the corporation, and
such authorization may be general or confined to specific instances. In the
absence of other designation, all deeds, mortgages and instruments of
assignment or pledge made by the corporation shall be executed in the name of
the corporation by the President or one of the Vice-Presidents and by the
Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer;
the Secretary or an Assistant Secretary, when necessary or required, shall
affix the corporate seal thereto; and when so executed no other party to such
instrument or any third party shall be required to make any inquiry into the
authority of the signing officer or officers.
5.02. Loans. No indebtedness for borrowed money shall be
contracted on behalf of the corporation and no evidences of such indebtedness
shall be issued in its name unless authorized by or under the authority of a
resolution of the Board of Directors. Such authorization may be general or
confined to specific instances.
5.03. Checks, Drafts, etc. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued in
the name of the corporation, shall be signed by such officer or officers,
agent or agents of the corporation and in such manner as shall from time to
time be determined by or under the authority of a resolution of the Board of
Directors.
5.04. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other depositaries as may be selected by or
under the authority of a resolution of the Board of Directors.
5.05. Voting of Securities Owned by this Corporation. Subject
always to the specific directions of the Board of Directors, (a) any shares or
other securities issued by any other corporation and owned or controlled by
this corporation may be voted at any meeting of security holders of such other
corporation by the President of this corporation if he be present, or in his
absence by any Vice-President of this corporation who may be present, and (b)
whenever, in the judgment of the President, or in his absence, of any
Vice-President, it is desirable for this corporation to execute a proxy or
written consent in respect to any shares or other securities issued by any
other corporation and owned by this corporation, such proxy or consent shall
be executed in the name of this corporation by the President or one of the
Vice-Presidents of this corporation, without necessity of any authorization by
the Board of Directors, affixation of corporate seal or countersignature or
attestation by another officer. Any person or persons designated in the
manner above stated as the proxy or proxies of this corporation shall have
full right, power and authority to vote the shares or other securities issued
by such other corporation and owned by this corporation the same as such
shares or other securities might be voted by this corporation.
5.06. No Nominee Procedures. The corporation has not
established, and nothing in these by-laws shall be deemed to establish, any
procedure by which a beneficial owner of the corporation's shares that are
registered in the name of a nominee is recognized by the corporation as the
shareholder under Section 180.0723 of the Wisconsin Business Corporation Law.
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.01. Certificates for Shares. Certificates representing shares
of the corporation shall be in such form, consistent with the Wisconsin
Business Corporation Law, as shall be determined by the Board of Directors.
Such certificates shall be signed by the President or a Vice-President and by
the Secretary or an Assistant Secretary. All certificates for shares shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered on the stock transfer books of the
corporation. All certificates surrendered to the corporation for transfer
shall be cancelled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
cancelled, except as provided in Section 6.06.
6.02. Facsimile Signatures and Seal. The seal of the
corporation on any certificates for shares may be a facsimile. The signatures
of the President or Vice-President and the Secretary or Assistant Secretary
upon a certificate may be facsimiles if the certificate is countersigned by a
transfer agent, or registered by a registrar, other than the corporation
itself or an employee of the corporation.
6.03. Signature by Former Officers. In case any officer, who
has signed or whose facsimile signature has been placed upon any certificate
for shares, shall have ceased to be such officer before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer at the date of its issue.
6.04. Transfer of Shares. Prior to due presentment of a
certificate for shares for registration of transfer the corporation may treat
the registered owner of such shares as the person exclusively entitled to
vote, to receive notifications and otherwise to exercise all the rights and
powers of an owner. Where a certificate for shares is presented to the
corporation with a request to register for transfer, the corporation shall not
be liable to the owner or any other person suffering loss as a result of such
registration of transfer if (a) there were on or with the certificate the
necessary endorsements, and (b) the corporation had no duty to inquire into
adverse claims or has discharged any such duty. The corporation may require
reasonable assurance that said endorsements are genuine and effective and
compliance with such other regulations as may be prescribed under the
authority of the Board of Directors.
6.05. Restrictions on Transfer. The face or reverse side of
each certificate representing shares shall bear a conspicuous notation of any
restriction imposed by the corporation upon the transfer of such shares.
6.06. Lost, Destroyed or Stolen Certificates. Where the owner
claims that his certificate for shares has been lost, destroyed or wrongfully
taken, a new certificate shall be issued in place thereof if the owner (a) so
requests before the corporation has notice that such shares have been acquired
by a bona fide purchaser, and (b) files with the corporation a sufficient
indemnity bond, and (c) satisfies such other reasonable requirements as the
Board of Directors may prescribe.
6.07. Consideration for Shares. The Board of Directors may
authorize shares to be issued for consideration consisting of any tangible or
intangible property or benefit to the corporation, including cash, promissory
notes, services performed, contracts for services to be performed or other
securities of the corporation. Before the corporation issues shares, the
Board of Directors shall determine that the consideration received or to be
received for the shares to be issued is adequate. In the absence of a
resolution adopted by the Board of Directors expressly determining that the
consideration received or to be received is adequate, Board approval of the
issuance of the shares shall be deemed to constitute such a determination.
The determination of the Board of Directors is conclusive insofar as the
adequacy of consideration for the issuance of shares relates to whether the
shares are validly issued, fully paid and nonassessable. The corporation may
place in escrow shares issued in whole or in part for a contract for future
services or benefits, a promissory note, or other property to be issued in the
future, or make other arrangements to restrict the transfer of the shares, and
may credit distributions in respect of the shares against their purchase
price, until the services are performed, the benefits or property are received
or the promissory note is paid. If the services are not performed, the
benefits or property are not received or the promissory note is not paid, the
corporation may cancel, in whole or in part, the shares escrowed or restricted
and the distributions credited.
6.08. Stock Regulations. The Board of Directors shall have the
power and authority to make all such further rules and regulations not
inconsistent with the statutes of the State of Wisconsin as it may deem
expedient concerning the issue, transfer and registration of certificates
representing shares of the corporation.
ARTICLE VII. SEAL
7.01. The Board of Directors shall provide a corporate seal
which shall be circular in form and shall have inscribed thereon the name of
the corporation and the state of incorporation and the words, "Corporate
Seal."
ARTICLE VIII. AMENDMENTS
8.01. By Shareholders. The affirmative vote of shareholders
possessing at least seventy-five percent of the voting power of the then
outstanding shares of all classes of stock of the corporation generally
possessing voting rights in elections of directors, considered for this
purpose as one class, shall be required to amend, alter, change or repeal, or
to adopt any provision inconsistent with, Sections 2.01 to 2.05 inclusive of
Article II of these by-laws, Sections 8.01 to 8.03 inclusive of Article VIII
of these by-laws and Sections 9.01 to 9.11 inclusive of Article IX of these
by-laws. Subject to the foregoing and except as otherwise provided in the
restated articles of incorporation of the corporation, the by-laws of this
corporation may be altered, amended, changed or repealed by the affirmative
vote of shareholders possessing at least a majority of the voting power of the
shares of all classes of stock of the corporation generally possessing voting
rights in elections of directors considered for this purpose as one class,
which are present or represented at any Annual Meeting or Special Meeting at
which a quorum is present.
8.02. By Directors. A Requisite Vote (as defined herein) of the
directors shall be required to alter, amend, change or repeal, or to adopt any
provision inconsistent with, Sections 2.01 to 2.05 inclusive, Section 2.07 and
Section 2.14 of Article II of these by-laws, Sections 8.01 to 8.03 inclusive
of Article VIII of these by-laws and Sections 9.01 to 9.11 inclusive of
Article IX of these by-laws. For purposes of this Section 8.02, "Requisite
Vote" shall mean the affirmative vote of at least two-thirds of the directors
then in office plus one director. Subject to the foregoing and except as
otherwise provided in the restated articles of incorporation of the
corporation, the by-laws of this corporation may be altered, amended, changed
or repealed by the Board of Directors by the affirmative vote of a majority of
the number of directors present at any meeting at which a quorum is present;
provided, however, that the shareholders in altering, adopting, amending,
changing or repealing a particular by-law may provide therein that the Board
of Directors may not amend, repeal or readopt that by-law.
8.03. Implied Amendments. Any action taken or authorized by the
shareholders or by the Board of Directors, which would be inconsistent with
the by-laws then in effect but is taken or authorized by affirmative vote of
not less than the number of votes or the number of directors required to amend
the by-laws so that the by-laws would be consistent with such action, shall be
given the same effect as though the by-laws had been temporarily amended or
suspended so far, but only so far, as is necessary to permit the specific
action so taken or authorized.
ARTICLE IX. INDEMNIFICATION
9.01. Certain Definitions. All capitalized terms used in this
Article IX and not otherwise hereinafter defined in this Section 9.01 shall
have the meaning set forth in Section 180.0850 of the Statute. The following
capitalized terms (including any plural forms thereof) used in this Article IX
shall be defined as follows:
(a) "Affiliate" shall include, without limitation, any corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise
that directly or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the Corporation.
(b) "Authority" shall mean the entity selected by the Director or
Officer to determine his or her right to indemnification pursuant to Section
9.04.
(c) "Board" shall mean the entire then elected and serving Board of
Directors of the Corporation, including all members thereof who are Parties to
the subject Proceeding or any related Proceeding.
(d) "Breach of Duty" shall mean the Director or Officer breached or
failed to perform his or her duties to the Corporation and his or her breach
of or failure to perform those duties is determined, in accordance with
Section 9.04, to constitute misconduct under Section 180.0851(2)(a) l, 2, 3 or
4 of the Statute.
(e) "Corporation," as used herein and as defined in the Statute and
incorporated by reference into the definitions of certain other capitalized
terms used herein, shall mean this Corporation, including, without limitation,
any successor corporation or entity to this Corporation by way of merger,
consolidation or acquisition of all or substantially all of the capital stock
or assets of this Corporation.
(f) "Director or Officer" shall have the meaning set forth in the
Statute; provided, that, for purposes of this Article IX, it shall be
conclusively presumed that any Director or Officer serving as a director,
officer, partner, trustee, member of any governing or decision-making
committee, employee or agent of an Affiliate shall be so serving at the
request of the Corporation.
(g) "Disinterested Quorum" shall mean a quorum of the Board who are
not Parties to the subject Proceeding or any related Proceeding.
(h) "Party" shall have the meaning set forth in the Statute;
provided, that, for purposes of this Article IX, the term "Party" shall also
include any Director or Officer or employee of the Corporation who is or was a
witness in a Proceeding at a time when he or she has not otherwise been
formally named a Party thereto.
(i) "Proceeding" shall have the meaning set forth in the Statute;
provided, that, in accordance with Section 180.0859 of the Statute and for
purposes of this Article IX, the term "Proceeding" shall also include all
Proceedings (i) brought under (in whole or in part) the Securities Act of
1933, as amended, the Exchange Act, their respective state counterparts,
and/or any rule or regulation promulgated under any of the foregoing; (ii)
brought before an Authority or otherwise to enforce rights hereunder; (iii)
any appeal from a Proceeding; and (iv) any Proceeding in which the Director or
Officer is a plaintiff or petitioner because he or she is a Director or
Officer; provided, however, that any such Proceeding under this subsection
(iv) must be authorized by a majority vote of a Disinterested Quorum.
(j) "Statute" shall mean Sections 180.0850 through 180.0859,
inclusive, of the Wisconsin Business Corporation Law, Chapter 180 of the
Wisconsin Statutes, as the same shall then be in effect, including any
amendments thereto, but, in the case of any such amendment, only to the extent
such amendment permits or requires the Corporation to provide broader
indemnification rights than the Statute permitted or required the Corporation
to provide prior to such amendment.
9.02. Mandatory Indemnification. To the fullest extent
permitted or required by the Statute, the Corporation shall indemnify a
Director or Officer against all Liabilities incurred by or on behalf of such
Director or Officer in connection with a Proceeding in which the Director or
Officer is a Party because he or she is a Director or Officer.
9.03. Procedural Requirements.
(a) A Director or Officer who seeks indemnification under Section
9.02 shall make a written request therefor to the Corporation. Subject to
Section 9.03(b), within 60 days of the Corporation's receipt of such request,
the Corporation shall pay or reimburse the Director or Officer for the entire
amount of Liabilities incurred by the Director or Officer in connection with
the subject Proceeding (net of any Expenses previously advanced pursuant to
Section 9.05).
(b) No indemnification shall be required to be paid by the
Corporation pursuant to Section 9.02 if, within such 60-day period, (i) a
Disinterested Quorum, by a majority vote thereof, determines that the Director
or Officer requesting indemnification engaged in misconduct constituting a
Breach of Duty or (ii) a Disinterested Quorum cannot be obtained.
(c) In either case of nonpayment pursuant to Section 9.03(b), the
Board shall immediately authorize by resolution that an Authority, as provided
in Section 9.04, determine whether the Director's or Officer's conduct
constituted a Breach of Duty and, therefore, whether indemnification should be
denied hereunder.
(d) (i) If the Board does not authorize an Authority to determine
the Director's or Officer's right to indemnification hereunder within such
60-day period and/or (ii) if indemnification of the requested amount of
Liabilities is paid by the Corporation, then it shall be conclusively presumed
for all purposes that a Disinterested Quorum has affirmatively determined that
the Director or Officer did not engage in misconduct constituting a Breach of
Duty and, in the case of subsection (i) above (but not subsection (ii)),
indemnification by the Corporation of the requested amount of Liabilities
shall be paid to the Director or Officer immediately.
9.04. Determination of Indemnification.
(a) If the Board authorizes an Authority to determine a Director's
or Officer's right to indemnification pursuant to Section 9.03, then the
Director or Officer requesting indemnification shall have the absolute
discretionary authority to select one of the following as such Authority:
(i) An independent legal counsel; provided, that such counsel shall
be mutually selected by such Director or Officer and by a majority vote
of a Disinterested Quorum or, if a Disinterested Quorum cannot be
obtained, then by a majority vote of the Board;
(ii) A panel of three arbitrators selected from the panels of
arbitrators of the American Arbitration Association in Wisconsin;
provided, that (A) one arbitrator shall be selected by such Director or
Officer, the second arbitrator shall be selected by a majority vote of a
Disinterested Quorum or, if a Disinterested Quorum cannot be obtained,
then by a majority vote of the Board, and the third arbitrator shall be
selected by the two previously selected arbitrators, and (B) in all other
respects, such panel shall be governed by the American Arbitration
Association's then existing Commercial Arbitration Rules; or
(iii) A court pursuant to and in accordance with Section
180.0854 of the Statute.
(b) In any such determination by the selected Authority there shall
exist a rebuttable presumption that the Director's or Officer's conduct did
not constitute a Breach of Duty and that indemnification against the requested
amount of Liabilities is required. The burden of rebutting such a presumption
by clear and convincing evidence shall be on the Corporation or such other
party asserting that such indemnification should not be allowed.
(c) The Authority shall make its determination within 60 days of
being selected and shall submit a written opinion of its conclusion
simultaneously to both the Corporation and the Director or Officer.
(d) If the Authority determines that indemnification is required
hereunder, the Corporation shall pay the entire requested amount of
Liabilities (net of any Expenses previously advanced pursuant to Section
9.05), including interest thereon at a reasonable rate, as determined by the
Authority, within 10 days of receipt of the Authority's opinion; provided,
that, if it is determined by the Authority that a Director or Officer is
entitled to indemnification against Liabilities incurred in connection with
some claims, issues or matters, but not as to other claims, issues or matters,
involved in the subject Proceeding, the Corporation shall be required to pay
(as set forth above) only the amount of such requested Liabilities as the
Authority shall deem appropriate in light of all of the circumstances of such
Proceeding.
(e) The determination by the Authority that indemnification is
required hereunder shall be binding upon the Corporation regardless of any
prior determination that the Director or Officer engaged in a Breach of Duty.
(f) All Expenses incurred in the determination process under this
Section 9.04 by either the Corporation or the Director or Officer, including,
without limitation, all Expenses of the selected Authority, shall be paid by
the Corporation.
9.05. Mandatory Allowance of Expenses.
(a) The Corporation shall pay or reimburse from time to time or at
any time, within 10 days after the receipt of the Director's or Officer's
written request therefor, the reasonable Expenses of the Director or Officer
as such Expenses are incurred; provided, the following conditions are
satisfied:
(i) The Director or Officer furnishes to the Corporation an
executed written certificate affirming his or her good faith belief that
he or she has not engaged in misconduct which constitutes a Breach of
Duty; and
(ii) The Director or Officer furnishes to the Corporation an
unsecured executed written agreement to repay any advances made under
this Section 9.05 if it is ultimately determined by an Authority that he
or she is not entitled to be indemnified by the Corporation for such
Expenses pursuant to Section 9.04.
(b) If the Director or Officer must repay any previously advanced
Expenses pursuant to this Section 9.05, such Director or Officer shall not be
required to pay interest on such amounts.
9.06. Indemnification and Allowance of Expenses of Certain
Others.
(a) The Board may, in its sole and absolute discretion as it deems
appropriate, pursuant to a majority vote thereof, indemnify a director or
officer of an Affiliate (who is not otherwise serving as a Director or
Officer) against all Liabilities, and shall advance the reasonable Expenses,
incurred by such director or officer in a Proceeding to the same extent
hereunder as if such director or officer incurred such Liabilities because he
or she was a Director or Officer, if such director or officer is a Party
thereto because he or she is or was a director or officer of the Affiliate.
(b) The Corporation shall indemnify an employee of the Corporation
who is not a Director or Officer, to the extent he or she has been successful
on the merits or otherwise in defense of a Proceeding, for all Expenses
incurred in the Proceeding if the employee was a Party because he or she was
an employee of the Corporation.
(c) The Board may, in its sole and absolute discretion as it deems
appropriate, pursuant to a majority vote thereof, indemnify (to the extent not
otherwise provided in Section 9.06(b) hereof) against Liabilities incurred by,
and/or provide for the allowance of reasonable Expenses of, an employee or
authorized agent of the Corporation acting within the scope of his or her
duties as such and who is not otherwise a Director or Officer.
9.07. Insurance. The Corporation may purchase and maintain
insurance on behalf of a Director or Officer or any individual who is or was
an employee or authorized agent of the Corporation against any Liability
asserted against or incurred by such individual in his or her capacity as such
or arising from his or her status as such, regardless of whether the
Corporation is required or permitted to indemnify against any such Liability
under this Article IX.
9.08. Notice to the Corporation. A Director, Officer or
employee of the Corporation shall promptly notify the Corporation in writing
when he or she has actual knowledge of a Proceeding which may result in a
claim of indemnification against Liabilities or allowance of Expenses
hereunder, but the failure to do so shall not relieve the Corporation of any
liability to the Director, Officer or employee hereunder unless the
Corporation shall have been irreparably prejudiced by such failure (as
determined, in the case of Directors or Officers only, by an Authority
selected pursuant to Section 9.04(a)).
9.09. Severability. If any provision of this Article IX shall
be deemed invalid or inoperative, or if a court of competent jurisdiction
determines that any of the provisions of this Article IX contravene public
policy, this Article IX shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any such
provisions which are invalid or inoperative or which contravene public policy
shall be deemed, without further action or deed by or on behalf of the
Corporation, to be modified, amended and/or limited, but only to the extent
necessary to render the same valid and enforceable; it being understood that
it is the Corporation's intention to provide the Directors and Officers with
the broadest possible protection against personal liability allowable under
the Statute.
9.10. Nonexclusivity of Article IX. The rights of a Director,
Officer or employee of the Corporation (or any other person) granted under
this Article IX shall not be deemed exclusive of any other rights to
indemnification against Liabilities or allowance of Expenses which the
Director, Officer or employee (or such other person) may be entitled to under
any written agreement, Board resolution, vote of shareholders of the
corporation or otherwise, including, without limitation, under the Statute.
Nothing contained in this Article IX shall be deemed to limit the
Corporation's obligations to indemnify against Liabilities or allow Expenses
to a Director, Officer or employee of the Corporation under the Statute.
9.11. Contractual Nature of Article IX; Repeal or Limitation of
Rights. This Article IX shall be deemed to be a contract between the
Corporation and each Director, Officer and employee of the Corporation and any
repeal or other limitation of this Article IX or any repeal or limitation of
the Statute or any other applicable law shall not limit any rights of
indemnification against Liabilities or allowance of Expenses then existing or
arising out of events, acts or omissions occurring prior to such repeal or
limitation, including, without limitation, the right to indemnification
against Liabilities or allowance of Expenses for Proceedings commenced after
such repeal or limitation to enforce this Article IX with regard to acts,
omissions or events arising prior to such repeal or limitation.
AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Amendment to Amended and Restated Loan and Security Agreement is
made to that certain Amended and Restated Loan and Security Agreement entered
into on October 1, 1994 ("Agreement") by and between GEHL COMPANY, and its
subsidiaries/divisions including but not limited to Hedlund Martin, Inc., and
Gehl Power Products, Inc. (collectively and individually "Gehl Company"),
DEUTSCHE FINANCIAL SERVICES CORPORATION, f/k/a ITT Commercial Finance Corp.,
("DFS") and DEUTSCHE FINANCIAL SERVICES CANADA CORPORATION, successor in
interest to ITT Commercial Finance, a Division of ITT Industries of Canada
Ltd., (Deutsche Financial Services Corporation and Deutsche Financial Services
Canada Corporation are individually and collectively referred to as "DFS").
FOR GOOD AND VALUE CONSIDERATION RECEIVED, Gehl Company and DFS agree to
amend the Agreement as follows:
1. The following definitions are incorporated into Section 1.1 of the
Agreement:
"Bankers' Acceptance Loans" shall mean loans bearing interest at a rate
determined by reference to the Bankers' Acceptance Rate (Reserve
Adjusted).
"Bankers' Acceptance Rate" shall mean, for Canadian Loans, for any
calendar week commencing on Tuesday of such week, the average rate for
one month Canadian dollar bankers' acceptances that appear on the Reuters
Screen CDOR (Canadian Deposit Offered Rate) page as of 10:00 a.m. Toronto
time on (a) the Monday immediately preceding, or (b) if any such Monday
is not a business day, then on the business day immediately preceding
such Monday.
"Bankers' Acceptance Rate (Reserve Adjusted)" shall mean, for Canadian
loans, the rate per annum obtained by dividing the Bankers' Acceptance
Rate by a percentage equal to 100% minus any increase or plus any
decrease in the Bankers' Acceptance Reserve percentage then in effect
over the Bankers' Acceptance Reserve Percentage in effect as of December
1, 1995, which is zero (0).
"Bankers' Acceptance Reserve Percentage", for all Bankers Acceptance
Loans comprising part of the same borrowing, means the daily average
reserve percentage applicable during each day of such Bankers' Acceptance
Loans under regulations issued from time to time by Canadian Banking
Authorities, for determining the maximum reserve requirement (including
without limitation any emergency, supplemental or other marginal reserve
requirement with respect to liabilities or assets consisting of or
including Bankers' Acceptance liabilities (or with respect to any other
category of liabilities that includes deposits by reference to which the
interest rate on Bankers' Acceptance Loans is determined)).
"Eurocurrency Liabilities" has the meaning specified in Regulation D of
the Board of Governors of the Federal Reserve System, as in effect from
time to time.
"Eurocurrency Reserve Percentage", for all LIBOR Loans comprising part of
the same borrowing, means the daily average reserve percentage applicable
during each day of such LIBOR Loans under regulations issued from time to
time by the Board of Governors of the Federal Reserve System (or any
successor), for determining the maximum reserve requirement (including
without limitation any emergency, supplemental or other marginal reserve
requirement for a member bank of the Federal Reserve System in New York
City with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest
rate on LIBOR Loans is determined)).
"LIBOR Loans" shall mean loans bearing interest at a rate determined by
reference to the LIBOR Rate (Reserve Adjusted).
"LIBOR Rate" shall mean for any calendar week commencing on Tuesday of
such week, the London Interbank Offered Rate (LIBOR) for one-month
deposits for U.S. Loans, in U.S. Dollars as published in The Wall Street
Journal on (a) the Monday immediately preceding, or (b) if any such
Monday is not a business day, then on the business day immediately
preceding such Monday.
"LIBOR Rate (Reserve Adjusted)" shall mean, for loans, the rate per annum
obtained by dividing the applicable U.S.LIBOR Rate by a percentage equal
to 100% minus any increase or plus any decrease in the Eurocurrency
Reserve percentage then in effect over the Eurocurrency Reserve
Percentage in effect as of December 1, 1995, which is zero (0) in the
United States.
2. Section 2.1.1 of the Agreement is hereby deleted in its entirety and
restated to read as follows:
Interest. Gehl Company agrees to pay interest to DFS, payable as provided
in Section 2.2, on the average daily outstanding balance under the Credit
Facility, at a rate as follows:
(A) U.S. Loans. The unpaid principal amount of the U.S. Loans shall bear
interest for a particular week at a rate per annum equal to the U.S.
LIBOR Rate (Reserve Adjusted) in effect for that week, plus (1) for
December, 1995, one percent (1.0%) per annum, and (2) on and after
January 1, 1996, two percent (2.0%) per annum.
(B) Canadian Loans. The unpaid principal amount of the Canadian Loans
shall bear interest for a particular week at a rate per annum equal to
the Bankers' Acceptance Rate (Reserve Adjusted) in effect for that week,
plus (1) for December, 1995, one percent (1.0%) per annum, and (2) on and
after January 1, 1996, two and one-half percent (2.5%) per annum.
3. Section 2.1.2 of the Agreement is hereby deleted in its entirety and
restated to read as follows:
Charges. Gehl Company agrees to pay to DFS, on December 31, 1995,
December 31, 1996 and December 31, 1997, an annual line fee (hereinafter
sometimes referred to as a "charge") equal to the lesser of (a) Twenty-
five Thousand Dollars ($25,000.00); and (b) the highest charges from time
to time permitted by applicable law (and amounts received from Gehl
Company in excess of such highest rate from time to time permitted by
applicable law will be considered reductions of principal to the extent
of such excess).
4. Section 2.1.4 of the Agreement, Non-Use of Credit Facility Fee, is hereby
deleted in its entirety.
5. The third sentence of Section 2.2(a) of the Agreement is hereby deleted
in its entirety and restated to read as follows:
Interest and any charges on U.S. Loans that remain outstanding after the
foregoing due date shall be assessed a finance charge equal to the LIBOR
Rate (Reserve Adjusted) plus four and one-half percent (4.5%) per annum
on such outstanding amounts until paid in full. Interest and any
charges on Canadian Loans that remain outstanding after the foregoing due
date shall be assessed a finance charge equal to the Bankers' Acceptance
Rate (Reserve Adjusted) plus five percent (5.0%) per annum on such
outstanding amounts until paid in full.
6. Section 6.3 of the Agreement is hereby deleted in its entirety and
restated as follows:
Gehl Company will at all times maintain a Tangible Net Worth and
Subordinated Debt in the combined amount of not less than Thirty-five
Million Dollars ($35,000,000.00). Gehl Company will also at all times
maintain a ratio of Debt to Tangible Net Worth and Subordinated Debt of
not more than three and six tenths to one (3.6:1). For purposes of this
Section: (i) "Debt" means the total sum of all creditor claims against
Gehl Company minus Subordinated Debt; (ii) "Tangible Net Worth" means the
net book value of assets less liabilities determined on a consolidated
basis and in accordance with generally accepted accounting principles
("GAAP") consistently applied, excluding from such assets all
Intangibles; (iii) "Intangibles" means and includes general intangibles
(as that term is defined in the Uniform Commercial Code), accounts
receivable from officers, directors and stockholders, and affiliated
companies, leasehold improvements net of depreciation, licenses, good
will, prepaid expenses, covenants not to compete, the excess of cost over
book value of acquired assets, franchise fees, organizational costs,
finance reserves held for recourse obligations, capitalized research and
development costs, the categories of assets listed on Exhibit C attached
hereto which are marked as "intangible," and such similar intangible
assets under GAAP; (iv) "Subordinated Debt" means all of Gehl Company's
indebtedness which is subordinated to the payment of its liabilities to
DFS by an agreement in form and substance satisfactory to DFS; and (v)
"Net Income" and "Net Losses" means the net income or net loss of Gehl
Company for such period after provision for income taxes, determined in
accordance with GAAP. Gehl Company will report its Tangible Net Worth
and Debt to Tangible Net Worth ratio to DFS quarterly, in accordance with
Section 6.1(m)(2) of this Agreement. If Gehl Company violates any of the
foregoing financial covenants to DFS, the parties agree (a) Gehl Company
will pay interest to DFS, payable as provided in Section 2.1, on the
average daily outstanding balance under the Credit Facility, at a rate
that is the lesser of (i) (A) in the case of U.S. Loans, four and one-
half percent (4.5%) per annum higher than the U.S. LIBOR Rate then in
effect, (B) in the case of Canadian Loans, five percent (5.0%) per annum
higher than the Bankers' Acceptance Rate then in effect, and (ii) the
highest rate from time to time permitted by applicable law from the time
when Gehl Company violates any of the financial covenants until such time
as Gehl Company has cured its violation of its financial covenants to
DFS; (b) DFS may elect in its sole discretion, to amend its eligibility
formula of and its advance rate against the Accounts; and (c) DFS may
elect to declare Gehl Company in default under this Agreement and
exercise any of DFS' rights pursuant to Section 7 of this Agreement.
7. Section 8.1 of the Agreement is hereby deleted in its entirety and
restated to read as follows:
Term. This Agreement shall terminate on December 31, 1998. This
Agreement may not be terminated by either party prior to December 31,
1998, other than as a result of any Default by Gehl Company or any
default by DFS hereunder. Gehl Company and DFS agree that in the event
this Agreement shall have been terminated prior to December 31, 1998,
ITT's liquidated damages hereunder shall include, in addition to
principal, interest, charges and expense reimbursements that are then
owed and unpaid, (i) for any termination during 1995, an amount equal to
Three Hundred Thirty-Seven Thousand Five Hundred Dollars ($337,500.00),
or (ii) for any termination during 1996, Two Hundred Forty Three Thousand
Seven Hundred Fifty ($243,750.00); provided, however, that Gehl Company
shall not have any liability to DFS for any liquidated damages for any
termination that is effective after December 31, 1996. Gehl Company
agrees that DFS' actual damages in such event are difficult to calculate,
and that such measure of damages reflects a fair and reasonable
agreement. Such damages shall be payable immediately, upon the date of
termination, without discount to present value. In no event shall Gehl
Company be entitled to the return of all or any portion of any annual or
other charge payable hereunder, notwithstanding any subsequent
termination hereof. The parties agree to consider and negotiate in good
faith an extension or renewal of this Agreement beginning not later than
six (6) months prior to the termination date hereof.
8. The following provisions are incorporated into the Agreement:
10. ADDITIONAL TERMS
10.1 Increased Cost. If, as a result of any law, regulation, treaty or
directive, or any change therein, or in the interpretation or
application thereof or compliance by DFS with any request or
directive (whether or not having the force of law) from any court or
governmental authority, agency or instrumentality:
(a) the basis of taxation of payments to DFS (for purposes of
this Section 10.1, "DFS" shall also refer to any affiliates of
DFS engaged in the funding of the lending obligations
hereunder) of the principal or of interest on any LIBOR Loan or
Bankers' Acceptance Loan (other than taxes imposed on the
overall net income of DFS by the jurisdiction in which DFS has
its principal office) is changed;
(b) any reserve, special deposit or similar requirements
against assets of, deposits with or for the account of, or
credit extended by, DFS are imposed, modified or deemed
applicable; or
(c) any other condition affecting this Agreement or the LIBOR
Loans or Bankers' Acceptance Loans is imposed on DFS or the
interbank eurodollar market or Canadian Bankers' Acceptance
market;
and DFS determines that, by reason thereof, the cost to DFS of
making or maintaining any of the LIBOR Loans or Bankers'
Acceptance Loans is increased, or the amount of any sum
receivable by DFS hereunder in respect of any of the LIBOR
Loans or Bankers' Acceptance Loans is reduced;
then, Gehl Company shall pay to DFS upon demand (which demand
shall be accompanied by a statement setting forth the basis for
the calculation thereof but only to the extent not theretofore
provided to Gehl Company) such additional amount or amounts as
will compensate DFS for such additional cost or reduction
(provided such amount has not been compensated for in the
calculation of the Eurocurrency Reserve Percentage or Bankers'
Acceptance Reserve Percentage). DFS' determinations for
purposes of this Section of the additional amounts required to
compensate DFS in respect of the foregoing shall be conclusive,
absent manifest error.
10.2 Eurodollar Deposits or Bankers' Acceptances Unavailable or Interest
Rate Unascertainable. In the event that prior to any week DFS shall
have determined (which determination shall be conclusive and binding
on the parties hereto) that deposits of the necessary amount for
that relevant week are not available to DFS in the interbank
eurodollar market or Bankers' Acceptances market or that, by reason
of circumstances affecting such market, adequate and reasonable
means do not exist for ascertaining the LIBOR Rate or Bankers'
Acceptance Rate applicable to such period or term, as the case may
be, DFS shall promptly give notice of such determination to Gehl
Company. The rate in effect after the date of such notice for all
loans shall be equal to the Prime Rate (U.S. or Canadian, as
applicable) plus the Margin (as defined below), whether the Margin
is a positive or negative number ("Prime Rate Loans"). The term
"Margin" as used herein shall mean (1) as to U.S. Loans, the
remainder of (i) the last determinable U.S. LIBOR Interest Rate,
less (ii) the then current U.S. Prime Rate; and (2) as to Canadian
Loans, the remainder of (i) the last determinable Bankers'
Acceptance Rate, less (ii) the then current Canadian Prime Rate.
10.3 Changes in Law Rendering LIBOR Loans or Bankers' Acceptance Loans
Unlawful. If at any time due to any new law, treaty or regulation,
or any change of any existing law, treaty or regulation, or any
interpretation thereof by any governmental or other regulatory
authority charged with the administration thereof, or for any other
reason arising subsequent to December 1, 1995, it shall become
unlawful for DFS to fund any LIBOR Loan or Bankers' Acceptance Loan
which it is committed to make hereunder, the obligation of DFS to
provide LIBOR Loans or Bankers' Acceptance Loans shall, upon the
happening of such event, forthwith be suspended for the duration of
such illegality. If any such change shall make it unlawful to
continue LIBOR Loans or Bankers' Acceptance Loans previously made by
it hereunder, DFS shall, upon the happening of such event, notify
Gehl Company thereof in writing stating the reasons therefor, and
Gehl Company shall, if required by such law, regulation or
interpretation, on such date as shall be specified in such notice,
either convert such unlawful LIBOR Loans or Bankers' Acceptance
Loans to Prime Rate Loans, bearing interest at a rate per annum
equal to the U.S. Prime Rate or Canadian Prime Rate, as applicable,
plus the Margin, as defined in Section 10.2, or pay to DFS in full
all such LIBOR Loans or Bankers' Acceptance Loans and terminate this
Agreement without any penalty or premium whatsoever.
10.4 Capital Adequacy. If DFS shall determine at any time after the
Effective Date that the adoption of any law, rule, guideline or
regulation regarding capital adequacy, or compliance with any law,
rule, guideline or regulation regarding capital adequacy, or any
change therein or in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
compliance by DFS with any request or directive or compliance with
any law, rule, guideline or regulation regarding capital adequacy
(whether or not having the force of law) from any such authority,
central bank or comparable agency, has or would have the effect of
reducing the rate of return on DFS' capital as a consequence of its
obligations hereunder to a level below that which DFS could have
achieved but for such adoption, change or compliance (taking into
consideration DFS' policies with respect to capital adequacy) by an
amount deemed by DFS to be material, then Gehl Company shall pay to
DFS upon demand such amount or amounts, in addition to the amounts
payable under the other provisions of this Agreement, as will
compensate DFS for such reduction. Any such demand by DFS hereunder
shall be in writing, and shall set forth the reasons for such demand
and copies of all documentation reasonably relevant in support
thereof. Determinations by DFS for purposes of this Section 10.4 of
the additional amount or amounts required to compensate DFS in
respect of the foregoing shall be conclusive in the absence of
manifest error. In determining such amount or amounts, DFS may use
any reasonable averaging and attribution methods.
10.5 Indemnity. The Gehl Company will indemnify DFS against any loss or
expense which DFS may sustain or incur, including without
limitation, any loss or expense sustained or incurred in obtaining,
liquidating or employing deposits or other funds acquired to effect,
fund or maintain a loan as a consequence of any failure by Gehl
Company to make any payment when due of any amount due hereunder in
connection with a LIBOR Loan or Bankers' Acceptance Loan.
10.6 Discretion as to Manner of Funding LIBOR Loans. Notwithstanding any
provision of this Agreement to the contrary, DFS shall be entitled
to fund and maintain its funding of all or any part of its LIBOR
Loans in any manner it elects, it being understood, however, that
for the purposes of this Agreement all determinations hereunder
shall be made as if DFS had actually funded and maintained each
LIBOR Loan through the purchase of deposits having a maturity
corresponding to the maturity of each LIBOR Loan and bearing an
interest rate equal to the LIBOR Rate. DFS may, if it so elects,
fulfill any commitment to make LIBOR Loans by causing a foreign
affiliate to make or continue such LIBOR Loans, provided, however,
that in such event such Loans shall be deemed for the purposes of
this Agreement to have been made by DFS, and the obligation of the
Gehl Company to repay such Loans shall nevertheless be to DFS and
shall be deemed held by DFS, to the extent of such Loans, for the
account of such branch or affiliate.
9. All references in the Agreement to "ITT Commercial Finance Corp." are
amended to read "Deutsche Financial Services Corporation" and all
references in the Agreement to "ITT" are amended to read "DFS". All
references in this Agreement to "ITT Commercial Finance, a division of
ITT Industries of Canada Ltd." are amended to read "Deutsche Financial
Services Canada Corporation" and all references in this Agreement to "ITT
Canada" are amended to read "DFSC". Gehl Company acknowledges that ITT
Canada assigned all of its rights under this Agreement to DFSC, that DFSC
is substituted for ITT Canada and consents to such assignment and
substitution. Gehl Company further agrees that DFSC may at any time
assign all of its rights under this Agreement to DFS without notice or
penalty.
10. All other terms as they appear in the Agreement, to the extent not
inconsistent with the foregoing, are ratified and remain unchanged and in
full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment to Amended
and Restated Loan and Security Agreement as of this 1st day of December,
1995.
GEHL COMPANY HEDLUND MARTIN, INC.
By: W.D. Gehl By: W.D. Gehl
Its: President Its: President
By: K.F. Kaplan By: K.F. Kaplan
Its: Vice President Its: Treasurer
GEHL POWER PRODUCTS, INC DEUTSCHE FINANCIAL SERVICES CORPORATION
By: W.D. Gehl By: Geoff D. Lyon
Its: President Its: Division President
By: K.F. Kaplan
Its: Treasurer DEUTSCHE FINANCIAL SERVICES
CANADA CORPORATION (f/k/a ITT
Commercial Finance, a division of
ITT Industries of Canada Ltd.)
By: Geoff D. Lyon
Its: Division President
W. D. GEHL/GEHL EMPLOYMENT AGREEMENT
INDEX
Page
SECTION 1. EMPLOYMENT 1
SECTION 2. TERM OF EMPLOYMENT 2
SECTION 3. COMPENSATION 2
SECTION 4. TERMINATION OF EMPLOYMENT 2
SECTION 5. CHANGE IN CONTROL 3
SECTION 6. BENEFITS 4
(i) Retirement/Death Benefit 4
(ii) Bonus 4
(iii) Split Dollar Life Insurance 4
SECTION 7. REIMBURSEMENT OF EXPENSES 5
SECTION 8. VACATION 5
SECTION 9. STOCK OPTION 5
SECTION 10. ADDITIONAL UNDERTAKINGS OF EXECUTIVE;
NON-COMPETITION PROVISIONS 5
SECTION 11. ASSIGNS AND SUCCESSORS 6
SECTION 12. CONSTRUCTION 6
SECTION 13. NOTICES 6
SECTION 14. SEVERABILITY 7
Signatures 7
Exhibit A BONUS ARRANGEMENT 8
<PAGE>
WILLIAM D. GEHL/GEHL COMPANY EMPLOYMENT AGREEMENT
AGREEMENT made by and between Gehl Company ("GEHL"), a Wisconsin
corporation with its principal place of business in West Bend, Wisconsin, and
William D. Gehl, ("Executive").
RECITALS
WHEREAS, GEHL wishes to retain the services of Executive as its President
and Chief Executive Officer and Executive desires to serve GEHL in that
capacity;
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, the parties agree as follows:
Section 1. Employment. GEHL shall employ Executive and Executive shall
serve as the President and Chief Executive Officer of GEHL during the term of
employment set forth in Section 2 of this Agreement, and as such term shall be
extended as provided herein. Executive shall report only to the Board of
Directors of GEHL, and his powers and authority and responsibilities shall be
superior to those of any other officer or employee of GEHL or of any
subsidiary thereof. Executive agrees, subject to his election as such, to
serve as a Director, and as a member of any committee of the Board of
Directors of GEHL, during such term of employment.
If at any time during the term of employment, the Board of Directors of
GEHL shall not reelect Executive as President and Chief Executive Officer of
GEHL or shall remove him from such office (other than for cause), or if at any
time during the term of employment Executive shall fail to be vested by GEHL
with the powers and authority of the President and Chief Executive Officer of
GEHL as described above, Executive shall have the right, by written notice to
GEHL, to terminate his services hereunder, effective as of the last day of the
month of receipt by GEHL of any such written notice, and Executive shall have
no further obligation under this Agreement. Termination by Executive under
this Section 1 shall be treated as a termination of employment by GEHL other
than for cause and shall be governed by the provisions of Section 4 or 5 of
this Agreement, as applicable.
Section 2. Term of Employment. Executive's "term of employment," as this
phrase is used throughout this Agreement, shall be for the period commencing
July 1, 1995, and ending December 31, 1998.
Section 3. Compensation. GEHL shall pay or cause to be paid to Executive
during the term of employment a minimum base salary of Two Hundred Thousand
Dollars ($200,000.00) per annum, payable in twenty-six (26) equal installments
(subject to the appropriate withholding items). This salary shall be reviewed
at least annually by the GEHL Board of Directors or a committee thereof and
increased or decreased in its discretion, subject to the minimum above.
Section 4. Termination of Employment. If, for any reason other than
cause, as defined below in this Section 4 or Executive's death or disability,
Executive's employment shall be terminated by GEHL before the term of
employment has been completed, Executive shall be entitled to receive, and
GEHL shall be obligated to pay, his full base salary set forth in Section 3
above as in effect immediately prior to such termination, for one (1) full
year from date of termination. During such year, Executive shall also
continue to participate in all group welfare benefit plans and programs of
GEHL referred to in the first sentence of Section 6 hereof to the extent that
such continued participation is possible under the general terms and
provisions of such plans and programs. In the event that Executive's
continued participation in any such plans and programs is barred, and in lieu
thereof, Executive shall be entitled to receive for the above period an amount
equal to the sum of the average annual contributions, payments, credits, or
allocations made by GEHL to him, to his account, or on his behalf over the
three (3) fiscal years (or fraction thereof) of GEHL preceding the termination
of his employment under such plans and programs from which his continued
participation is barred.
Termination by GEHL for "cause" shall mean termination by action of the
GEHL Board of Directors because of the failure of Executive to fulfill his
obligations under this Agreement or because of serious willful misconduct by
Executive in respect of his obligations under this Agreement, as, for example,
the commission by Executive of a felony or the perpetration by Executive of a
common-law fraud against GEHL or any major material action (i.e., not
procedural or operational differences) taken against the expressed directive
of the Board.
If Executive's employment is terminated by Executive, as a result of
Executive's death or disability, or by GEHL for cause, Executive's base salary
shall terminate on such date, and Executive's participation in GEHL's fringe
benefit plans shall terminate in accordance with their terms.
Section 5. Change in Control. In the event a change in control, as
defined below, occurs during the term of Executive's employment under this
Agreement and thereafter Executive's employment shall be terminated by GEHL
without cause (as defined in Section 4) before the term of employment has been
completed, Executive shall be entitled to the continuation of base salary and
fringe benefits pursuant to the first paragraph of Section 4 for two (2) full
years from the date of termination. "Change in Control," for the purposes of
this Agreement, shall be defined as one of the following:
(i) securities of GEHL representing 25% or more of the combined voting
power of GEHL's then outstanding voting securities are acquired pursuant
to a tender offer or an exchange offer; or
(ii) the shareholders of GEHL approve a merger or consolidation of GEHL
with any other corporation as a result of which less than fifty percent
(50%) of the outstanding voting securities of the surviving or resulting
entity are owned by the former shareholders of GEHL (other than a
shareholder who is an "affiliate," as defined under rules promulgated
under the Securities Act of 1933, as amended, of any party to such
consolidation or merger); or
(iii) the shareholders of GEHL approve the sale of substantially all of
GEHL's assets to a corporation which is not a wholly-owned subsidiary of
GEHL; or
(iv) any person becomes the "beneficial owner," as defined under rules
promulgated under the Securities Exchange Act of 1934, as amended,
directly or indirectly, of securities of GEHL representing twenty-five
percent (25%) or more of the combined voting power of GEHL's then
outstanding securities the effect of which (as determined by the Board) is
to take over control of GEHL; or
(v) during any period of two consecutive years, individuals who, at the
beginning of such period, constituted the Board of Directors of GEHL
cease, for any reason, to constitute at least a majority thereof, unless
the election or nomination for election of each new director was approved
by the vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period.
Section 6. Benefits. Executive shall be entitled to participate in any
group insurance, hospitalization, medical, health and accident, disability, or
similar plan or program of GEHL now existing or established hereafter to the
extent that he is eligible under the general provisions thereof.
Furthermore, Executive shall be entitled to other payments, in addition to
the base salary above, as provided below:
(i) Retirement/Death Benefit. The Supplemental Retirement Benefit
Agreement between Executive and GEHL shall dictate the Retirement/Death
benefits other than those provided under the employee benefit plans
generally available to all salaried employees. Such Supplemental
Retirement Benefit Agreement is specifically referenced and made a part
hereof.
(ii) Bonus. Executive shall be entitled to an annual cash bonus as
calculated in accordance with the attached Exhibit A in the event the
Executive is employed with GEHL on the last day of the applicable calendar
year. Notwithstanding the foregoing, in the event Executive's employment
is terminated during the applicable year as a result of death or
disability or by GEHL for any reason other than cause as defined in
Section 4 hereof, Executive shall be entitled to a pro rata portion of the
bonus which would otherwise have been payable for such calendar year of
termination. The pro rata portion shall be equal to the number of
completed months in the calendar year through the date of termination
divided by twelve (12).
(iii) Split Dollar Life Insurance. Executive, as the insured, a trust
for the benefit of Executive's family (the "Trust"), as the owner, and
GEHL shall enter into the Split Dollar Insurance Agreement regarding the
purchase of a $1 million whole life insurance policy. The Trust shall
execute a collateral assignment of such policy to GEHL to secure its
interest therein as provided in the Split Dollar Insurance Agreement.
Said agreement is specifically referenced and made a part hereof.
Section 7. Reimbursement of Expenses. GEHL shall pay or reimburse
Executive for all reasonable travel and other expenses in accordance with GEHL
policy. GEHL further agrees to furnish Executive with a private office and a
private secretary and such other assistance and accommodations as shall be
suitable to the character of Executive's position with GEHL and adequate to
the performance of his duties hereunder.
Section 8. Vacation. Executive shall be entitled to four (4) weeks paid
vacation each year.
Section 9. Stock Option. Concurrent with the execution of this Agreement,
Executive and GEHL shall enter into a Stock Option Agreement, specifically
referenced herein and made a part hereof, wherein Executive is granted as of
July 19, 1995 an option to purchase 100,000 shares of GEHL common stock under
the 1995 Stock Option Plan.
Section 10. Additional Undertakings of Executive; Non-competition
Provisions. Executive agrees that during the term of employment under this
Agreement he will apply on a full-time basis (allowing for usual vacations and
sick leave) all of his skill and experience to the performance of his duties
in such employment. It is understood that Executive may have other business
investments and participate in other business ventures which may, from time to
time, require minor portions of his time, but which shall not interfere or be
inconsistent with his duties hereunder. Executive agrees that during the term
of employment and for one (1) year thereafter, or, in the event of termination
of his employment by GEHL for cause (as defined in Section 4 above) for two
(2) years after such termination, Executive will not, without the prior
written approval of the Board of Directors of GEHL, become an owner, officer,
employee, agent, partner, or director of any business enterprise in
substantial direct competition (as defined below) with GEHL or any subsidiary
of GEHL as the business of GEHL or any subsidiary of GEHL may be constituted
during the term of employment or at the termination thereof. If Executive's
employment is terminated by GEHL other than for cause (as defined in Section 4
above), he will not be subject to any restrictions under this Section 10.
If Executive's employment by GEHL is terminated by him (other than under
the circumstances set forth in Section 1 above), in breach of this Agreement
during the term of employment, Executive shall not, for a two (2)-year period
following such termination, become an owner, officer, employee, agent,
partner, or director of any business enterprise in substantial direct
competition (as defined below) with GEHL or any subsidiary of GEHL as the
business of GEHL or any subsidiary of GEHL may be constituted at the time of
such termination.
For the purposes of this Section 10, a business enterprise with which
Executive becomes associated as an owner, officer, employee, agent, partner or
director, shall be considered in "substantial direct competition," if, during
a year (adjusted for fractions of a year in respect of a new enterprise) when
such competition is prohibited, its sales of any product or service sold by
GEHL or any subsidiary of GEHL amount to more than either ten percent (10%) of
its (new enterprise) total sales or Ten Million ($10,000,000.00) Dollars.
Section 11. Assigns and Successors. The rights and obligations of GEHL
under this Agreement shall inure to the benefit of and shall be binding upon
the successors and assigns of GEHL.
Section 12. Construction. This Agreement shall be construed under the
laws of the State of Wisconsin. Section headings are for convenience only and
shall not be considered a part of the terms and provisions of this Agreement.
Section 13. Notices. All notices under this Agreement shall be in
writing and shall be deemed effective when delivered in person (in GEHL's
case, to its Secretary) or forty-eight (48) hours after deposit thereof in the
U.S. mails, postage prepaid, addressed, in the case of Executive, to his last
known address as carried on the personnel records of GEHL and, in the case of
GEHL, to the corporate headquarters, attention of the Secretary, or to such
other address as the party to be notified may specify by notice to the other
party.
Section 14. Severability. Should it be determined that one or more of
the clauses of this Agreement is (are) found to be unenforceable, illegal,
contrary to public policy, etc., this Agreement remains in full force and
effect except for the unenforceable, illegal, or contrary to public policy
provisions.
IN WITNESS WHEREOF, GEHL COMPANY has caused this Agreement to be executed
by its duly authorized officers, and Executive has hereunto set his hand, all
as of the 15th day of December, 1995.
Attest: GEHL COMPANY
M. Mulcahy Arthur W. Nesbitt
Its: Secretary Its: Chairman of the Board
M. Mulcahy
Witness as to William D. Gehl William D. Gehl, Executive
MANCINELLI/GEHL EMPLOYMENT AGREEMENT
INDEX
Page
SECTION 1. EMPLOYMENT 1
SECTION 2. TERM OF EMPLOYMENT 2
SECTION 3. COMPENSATION 2
SECTION 4. TERMINATION OF EMPLOYMENT 2
SECTION 5. CHANGE IN CONTROL 3
SECTION 6. BENEFITS 4
(i) Retirement/Death Benefit 4
(ii) Bonus 4
(iii) Term Life Insurance 4
SECTION 7. REIMBURSEMENT OF EXPENSES 5
SECTION 8. VACATION 5
SECTION 9. STOCK OPTION 5
SECTION 10. ADDITIONAL UNDERTAKINGS OF EXECUTIVE;
NON-COMPETITION PROVISIONS 5
SECTION 11. ASSIGNS AND SUCCESSORS 6
SECTION 12. CONSTRUCTION 6
SECTION 13. NOTICES 6
SECTION 14. SEVERABILITY 7
Signatures 7
Exhibit A BONUS ARRANGEMENT 8
MANCINELLI/GEHL COMPANY EMPLOYMENT AGREEMENT
AGREEMENT made by and between Gehl Company ("GEHL"), a Wisconsin
corporation with its principal place of business in West Bend, Wisconsin, and
Victor A. Mancinelli ("Executive").
RECITALS
WHEREAS, GEHL wishes to retain the services of Executive as its Executive
Vice President and Chief Operating Officer and Executive desires to serve GEHL
in that capacity;
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, the parties agree as follows:
Section 1. Employment. GEHL shall employ Executive and Executive shall
serve as the Executive Vice President and Chief Operating Officer of GEHL
during the term of employment set forth in Section 2 of this Agreement, and as
such term shall be extended as provided herein. Executive shall report to the
President and Chief Executive Officer of GEHL.
If at any time during the term of employment, the Board of Directors of
GEHL shall not reelect Executive as Executive Vice President and Chief
Operating Officer of GEHL or shall remove him from such office (other than for
cause), or if at any time during the term of employment Executive shall fail
to be vested by GEHL with the powers and authority of the Executive Vice
President and Chief Operating Officer of GEHL as described above, Executive
shall have the right, by written notice to GEHL, to terminate his services
hereunder, effective as of the last day of the month of receipt by GEHL of any
such written notice, and Executive shall have no further obligation under this
Agreement. Termination by Executive under this Section 1 shall be treated as
a termination of employment by GEHL other than for cause and shall be governed
by the provisions of Section 4 of this Agreement.
Section 2. Term of Employment. Executive's "term of employment," as this
phrase is used throughout this Agreement, shall be for the three (3)-year
period commencing October 1, 1995, and ending September 30, 1998.
Section 3. Compensation. GEHL shall pay or cause to be paid to Executive
during the term of employment a minimum base salary of One Hundred Seventy-
Five Thousand Dollars ($175,000.00) per annum, payable in twenty-six (26)
equal installments (subject to the appropriate withholding items). The salary
shall be reviewed at least annually by the GEHL Board of Directors or a
committee thereof and increased or decreased in its discretion, subject to the
minimum above.
Section 4. Termination of Employment. If, for any reason other than
cause, as defined below in this Section 4 or Executive's death or disability,
Executive's employment shall be terminated by GEHL before the term of
employment has been completed, Executive shall be entitled to receive, and
GEHL shall be obligated to pay, his full base salary set forth in Section 3
above as in effect immediately prior to such termination, for one (1) full
year from date of termination. During such year, Executive shall also
continue to participate in all group welfare benefit plans and programs of
GEHL referred to in the first sentence of Section 6 hereof to the extent that
such continued participation is possible under the general terms and
provisions of such plans and programs. In the event that Executive's
continued participation in any such plans and programs is barred, and in lieu
thereof, Executive shall be entitled to receive for the above period an amount
equal to the sum of the average annual contributions, payments, credits, or
allocations made by GEHL to him, to his account, or on his behalf over the
three (3) fiscal years (or fraction thereof) of GEHL preceding the termination
of his employment under such plans and programs from which his continued
participation is barred.
Termination by GEHL for "cause" shall mean termination because of the
failure of Executive to fulfill his obligations under this Agreement or
because of serious willful misconduct by Executive in respect of his
obligations under this Agreement, as, for example, the commission by Executive
of a felony or the perpetration by Executive of a common-law fraud against
GEHL or any major material action (i.e., not procedural or operational
differences) taken against the expressed directive of the Board.
If Executive's employment is terminated by Executive, as a result of
Executive's death or disability, or by GEHL for cause, Executive's base salary
shall terminate on such date, and Executive's participation in GEHL's fringe
benefit plans shall terminate in accordance with their terms.
Section 5. Change in Control. In the event a change in control, as
defined below, occurs during the term of Executive's employment under this
Agreement and thereafter Executive's employment shall be terminated by GEHL
without cause (as defined in Section 4) before the term of employment has been
completed, Executive shall be entitled to the continuation of base salary and
fringe benefits pursuant to the first paragraph of Section 4 for one full year
from the date of termination. "Change in Control," for the purposes of this
Agreement, shall be defined as one of the following:
(i) securities of GEHL representing 25% or more of the combined voting
power of GEHL's then outstanding voting securities are acquired pursuant
to a tender offer or an exchange offer; or
(ii) the shareholders of GEHL approve a merger or consolidation of GEHL
with any other corporation as a result of which less than fifty percent
(50%) of the outstanding voting securities of the surviving or resulting
entity are owned by the former shareholders of GEHL (other than a
shareholder who is an "affiliate," as defined under rules promulgated
under the Securities Act of 1933, as amended, of any party to such
consolidation or merger); or
(iii) the shareholders of GEHL approve the sale of substantially all of
GEHL's assets to a corporation which is not a wholly-owned subsidiary of
GEHL; or
(iv) any person becomes the "beneficial owner," as defined under rules
promulgated under the Securities Exchange Act of 1934, as amended,
directly or indirectly, of securities of GEHL representing twenty-five
percent (25%) or more of the combined voting power of GEHL's then
outstanding securities the effect of which (as determined by the Board) is
to take over control of GEHL; or
(v) during any period of two consecutive years, individuals who, at the
beginning of such period, constituted the Board of Directors of GEHL
cease, for any reason, to constitute at least a majority thereof, unless
the election or nomination for election of each new director was approved
by the vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period.
Section 6. Benefits. Executive shall be entitled to participate in any
group insurance, hospitalization, medical, health and accident, disability, or
similar plan or program of GEHL now existing or established hereafter to the
extent that he is eligible under the general provisions thereof.
Furthermore, Executive shall be entitled to other payments, in addition to
the base salary above, as provided below:
(i) Retirement/Death Benefit. The Supplemental Retirement Benefit
Agreement between Executive and GEHL shall dictate the Retirement/Death
benefits other than those provided under the employee benefit plans
generally available to all salaried employees. Such Supplemental
Retirement Benefit Agreement is specifically referenced and made a part
hereof.
(ii) Bonus. Executive shall be entitled to an annual cash bonus as
calculated in accordance with the attached Exhibit A in the event the
Executive is employed with GEHL on the last day of the applicable calendar
year. Notwithstanding the foregoing, in the event Executive's employment
is terminated during the applicable year as a result of death or
disability or by GEHL for any reason other than cause as defined in
Section 4 hereof, Executive shall be entitled to a pro rata portion of the
bonus which would otherwise have been payable for such calendar year of
termination. The pro rata portion shall be equal to the number of
completed months in the calendar year through the date of termination
divided by twelve (12).
(iii) Term Life Insurance. The corporate group term life insurance
benefit shall be supplemented such that Executive is covered for an
aggregate of three (3) times the base salary in Section 2.
Section 7. Reimbursement of Expenses. GEHL shall pay or reimburse
Executive for all reasonable travel and other expenses in accordance with GEHL
policy.
Section 8. Vacation. Executive shall be entitled to three (3) weeks paid
vacation in 1993 and four (4) weeks paid vacation each year thereafter.
Section 9. Stock Option. Concurrent with the execution of this Agreement,
Executive and GEHL shall enter into a Stock Option Agreement, specifically
referenced herein and made a part hereof, wherein Executive is granted an
option to purchase 70,000 shares of GEHL common stock under the 1995 Stock
Option Plan.
Section 10. Additional Undertakings of Executive; Non-competition
Provisions. Executive agrees that during the term of employment under this
Agreement he will apply on a full-time basis (allowing for usual vacations and
sick leave) all of his skill and experience to the performance of his duties
in such employment. It is understood that Executive may have other business
investments and participate in other business ventures which may, from time to
time, require minor portions of his time, but which shall not interfere or be
inconsistent with his duties hereunder. Executive agrees that during the term
of employment and for one (1) year thereafter, or, in the event of termination
of his employment by GEHL for cause (as defined in Section 4 above) for two
(2) years after such termination, Executive will not, without the prior
written approval of the Board of Directors of GEHL, become an owner, officer,
employee, agent, partner, or director of any business enterprise in
substantial direct competition (as defined below) with GEHL or any subsidiary
of GEHL as the business of GEHL or any subsidiary of GEHL may be constituted
during the term of employment or at the termination thereof. If Executive's
employment is terminated by GEHL other than for cause (as defined in Section 4
above), he will not be subject to any restrictions under this Section 10.
If Executive's employment by GEHL is terminated by him (other than under
the circumstances set forth in Section 1 above), in breach of this Agreement
during the term of employment, Executive shall not, for a two (2)-year period
following such termination, become an owner, officer, employee, agent,
partner, or director of any business enterprise in substantial direct
competition (as defined below) with GEHL or any subsidiary of GEHL as the
business of GEHL or any subsidiary of GEHL may be constituted at the time of
such termination.
For the purposes of this Section 10, a business enterprise with which
Executive becomes associated as an owner, officer, employee, agent, partner or
director, shall be considered in "substantial direct competition," if, during
a year (adjusted for fractions of a year in respect of a new enterprise) when
such competition is prohibited, its sales of any product or service sold by
GEHL or any subsidiary of GEHL amount to more than either ten percent (10%) of
its (new enterprise) total sales or Ten Million ($10,000,000.00) Dollars.
Section 11. Assigns and Successors. The rights and obligations of GEHL
under this Agreement shall inure to the benefit of and shall be binding upon
the successors and assigns of GEHL.
Section 12. Construction. This Agreement shall be construed under the
laws of the State of Wisconsin. Section headings are for convenience only and
shall not be considered a part of the terms and provisions of this Agreement.
Section 13. Notices. All notices under this Agreement shall be in
writing and shall be deemed effective when delivered in person (in GEHL's
case, to its Secretary) or forty-eight (48) hours after deposit thereof in the
U.S. mails, postage prepaid, addressed, in the case of Executive, to his last
known address as carried on the personnel records of GEHL and, in the case of
GEHL, to the corporate headquarters, attention of the Secretary, or to such
other address as the party to be notified may specify by notice to the other
party.
Section 14. Severability. Should it be determined that one or more of
the clauses of this Agreement is (are) found to be unenforceable, illegal,
contrary to public policy, etc., this Agreement remains in full force and
effect except for the unenforceable, illegal, or contrary to public policy
provisions.
IN WITNESS WHEREOF, GEHL COMPANY has caused this Agreement to be executed
by its duly authorized officers, and Executive has hereunto set his hand, all
as of the 15th day of December, 1995.
Attest: GEHL COMPANY
M. Mulcahy Arthur W. Nesbitt
Its: Secretary Its: Chairman of the Board
M. Mulcahy
Witness as to Victor A. Mancinelli Victor A. Mancinelli, Executive
W.D. GEHL/GEHL SUPPLEMENTAL RETIREMENT BENEFIT AGREEMENT
INDEX
Page
SECTION 1. DEFINITIONS 1
SECTION 2. SUPPLEMENTAL RETIREMENT BENEFITS 3
SECTION 3. PRE-RETIREMENT DEATH BENEFIT 3
SECTION 4. NON-COMPETITION REQUIREMENT 4
SECTION 5. CHANGE IN CONTROL 4
SECTION 6. NO RIGHTS OF EMPLOYMENT 4
SECTION 7. EMPLOYEE'S RIGHTS NON-ASSIGNABLE 4
SECTION 8. COMPANY NOT REQUIRED TO FUND THIS AGREEMENT 5
SECTION 9. ADMINISTRATION 5
SECTION 10. SUCCESSORS AND ASSIGNS 5
Signatures 5
WILLIAM D. GEHL/GEHL COMPANY
SUPPLEMENTAL RETIREMENT BENEFIT AGREEMENT
THIS AGREEMENT, made this 15th day of December, 1995, by and between
GEHL COMPANY, West Bend, Wisconsin (hereinafter referred to as the
"Company"), and William D. Gehl, of Milwaukee, Wisconsin (hereinafter referred
to as the "Employee"):
W I T N E S S E T H:
WHEREAS, the Employee is currently employed by the Company in the capacity
of President and Chief Executive Officer and in such position can contribute
materially to its continued growth and development and to its future financial
success; and
WHEREAS, the Company desires to insure insofar as possible that the
Company will have the benefit of the Employee's full services and executive
capacities for future years;
NOW, THEREFORE, in consideration of services rendered by the Employee to
the Company, it is agreed as follows:
Section 1. Definitions.
(a) "Average Monthly Compensation" means one-sixtieth (1/60th) of the
Employee's base salary and cash bonus from the Company for the highest five
(5) calendars years within the last ten (10) completed calendar years
preceding the date of the Employee's termination of employment with the
Company. In the event the Employee does not have five (5) calendar years of
employment, only the number of full months from the date of hire through the
December preceding termination of employment shall be used to determine
Average Monthly Compensation. Cash bonus means the cash distributed to the
Employee during a calendar year pursuant to Exhibit A of the Employment
Agreement. Base salary and cash bonus for this purpose include any salary
reduction deferrals pursuant to a cash or deferred arrangement or a cafeteria
plan pursuant to Internal Revenue Code ("Code") Sections 401(k) or 125.
(b) "Beneficiary" means the person, trust and/or other entity
designated by the Employee on the form most recently filed with the Secretary
of the Company prior to the Employee's death. In the event no validly
designated beneficiary survives the Employee by at least one year, the
Beneficiary shall be the Employee's estate. In the event the last designated
beneficiary survives the Employee by more than one year, the Beneficiary shall
be the estate of such last designated beneficiary.
(c) "Disability" means a physical or mental condition which totally and
presumably permanently prevents the Employee from engaging in any
substantially gainful activity as determined in accordance with Section 4.03
of the Gehl Company Retirement Income Plan "B".
(d) "Employment Agreement" means the Employee's employment agreement
effective July 1, 1995.
(e) "Other Benefits" means the sum of:
(i) the Employee's normal retirement age accrued monthly benefit as
determined in accordance with Section 5.02(a) of the Gehl
Company Retirement Income Plan "B" or its successor as in
effect at the time benefits commence hereunder pursuant to
Section 2(b).
(ii) the monthly amount available to the Employee under the
provisions of Title 11 of the Social Security Act (or its
successor) as in effect on, and calculated based on his actual
earnings history for Social Security benefits as of, the date
benefits hereunder commence pursuant to Section 2(b) below and
assuming commencement with the month following attainment of
age sixty-five (65).
(f) "Vested Percentage" means the percentage of the supplemental
retirement benefit in Section 2 earned by the Employee, subject in any event
to the forfeiture provision of Section 4 and the change in control provision
of Section 5. The Vested Percentage is one hundred percent (100%) in any of
the following circumstances:
(i) after the Employee completes five (5) years of Vesting Service;
(ii) if the Employee suffers a Disability; or
(iii) if the Employee retires from the Company after attainment of
age sixty-two (62).
In the event an Employee does not have a Vested Percentage of one hundred
percent (100%), he shall receive ten percent (10%) for each complete year of
Vesting Service.
(g) "Vesting Service" means the period of the Employee's consecutive
employment with the Company from November 24, 1992 through the date of
termination of employment.
Section 2. Supplemental Retirement Benefits.
(a) The amount of the monthly supplemental retirement benefit shall be
the Employee's Vested Percentage times an amount equal to:
(i) fifty percent (50%) of the Employee's Average Monthly
Compensation, less
(ii) the Employee's Other Benefits.
(b) The monthly supplement shall be payable to the Employee commencing
as of the first day of the month following the earlier to occur of:
(i) age sixty-five (65); or
(ii) the later of termination of employment from the Company or age
sixty-two (62).
The supplement shall continue to be paid to the Employee for a period of
fifteen (15) years.
(c) In the event the Employee commences receiving the supplement but
dies prior to the end of the payment period, the remaining monthly payments in
the fifteen (15)-year period shall be made to the Beneficiary.
(d) In the event the Employee dies after termination of employment from
the Company but prior to the commencement of benefits pursuant to (b) above,
the monthly supplement calculated pursuant to subsection (a) above shall be
paid to the Beneficiary for the fifteen (15)-year period commencing as of the
first day of the month following the later to occur of the Employee's death or
the date the Employee would have attained (or if applicable, did attain) age
sixty-two (62).
Section 3. Pre-Retirement Death Benefit.
(a) In the event the Employee dies prior to commencement of the
supplemental retirement benefit under Section 2(b) above and while employed by
the Company, in lieu of any payment pursuant to Section 2 above, a pre-
retirement death benefit shall be paid to the Beneficiary.
(b) The death benefit shall be comprised of ten (10) payments, the
first being due as of the last day of the month following the Employee's
death. Each succeeding payment shall be made on successive anniversaries of
the first payment due date.
(c) The amount of each of the ten (10) payments shall be 3.6 times the
Employee's Average Monthly Compensation as of the Employee's date of death
(i.e., thirty percent (30%) of the Employee's Average Monthly Compensation
annualized).
Section 4. Non-Competition Requirement. Employee agrees that for a period
of two (2) years after termination of active employment hereunder, the
Employee shall not, except as permitted by the Company's prior written
consent, engage in, be employed by, or in any way advise or act for, or have
any financial interest in any business which is in substantial direct
competition with the Company as such term is defined in the Employment
Agreement. If the Employee shall fail to comply with any of the foregoing
conditions, he shall forfeit all right to any payments pursuant to Section 2
hereof which would otherwise be payable to him thereafter.
Section 5. Change in Control. Notwithstanding the definition of Vested
Percentage in Section 1 hereof, an Employee shall be one hundred percent
(100%) vested, subject to Section 4, in the event there is a change in control
of the Company as defined in the Employment Agreement.
Section 6. No Rights of Employment. Nothing herein contained shall be
deemed to confer upon the Employee any right to continue in the employ of the
Company nor to interfere with the right of the Company to terminate his
employment at any time.
Section 7. Employee's Rights Non-Assignable. Neither the Employee nor the
Beneficiary shall have the power to transfer, assign, anticipate, alienate,
sell, pledge, mortgage, or otherwise encumber in advance any of the payments
provided in this Agreement; nor shall any of said payments nor any assets of
the Company, including any insurance policies owned by the Company, be subject
to attachment, garnishment or seizure for the payment of any of the
recipient's debts, judgments or other obligations arising by operation of law
or in the event of bankruptcy, insolvency or otherwise.
Section 8. Company Not Required to Fund This Agreement. The Company is
not obligated to set aside or credit the Employee or the Beneficiary with
funds to provide for the payment of the amounts due under this Agreement, and
nothing in this Agreement shall be construed as creating a trust fund of any
kind for the benefit of the Employee or the Beneficiary. The Employee or
Beneficiary have the status of general unsecured creditors of the Company, and
this Agreement constitutes a mere promise by the Company to make future
benefit payments in accordance with the terms hereof. It is the intention of
the parties that this Agreement is unfunded for purposes of the Code and Title
I of the Employee Retirement Income Security Act of 1974, as amended.
Section 9. Administration. This Agreement shall be administered by the
Gehl Company Compensation and Benefits Committee (herein referred to as the
"Committee"). If the Employee is also a Committee member, he shall abstain
from any deliberations or vote on any matter in connection with this
Agreement.
Section 10. Successors and Assigns. This Agreement shall inure to and
be binding upon the successors and assigns of the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
Attest: GEHL COMPANY
M. Mulcahy Arthur W. Nesbitt
Its: Secretary Its: Chairman of the Board
M. Mulcahy
Witness as to William D. Gehl William D. Gehl, Employee
MANCINELLI/GEHL SUPPLEMENTAL RETIREMENT BENEFIT AGREEMENT
INDEX
Page
SECTION 1. DEFINITIONS 1
SECTION 2. SUPPLEMENTAL RETIREMENT BENEFITS 2
SECTION 3. PRE-RETIREMENT DEATH BENEFIT 3
SECTION 4. NON-COMPETITION REQUIREMENT 3
SECTION 5. CHANGE IN CONTROL 4
SECTION 6. NO RIGHTS OF EMPLOYMENT 4
SECTION 7. EMPLOYEE'S RIGHTS NON-ASSIGNABLE 4
SECTION 8. COMPANY NOT REQUIRED TO FUND THIS AGREEMENT 4
SECTION 9. ADMINISTRATION 5
SECTION 10. SUCCESSORS AND ASSIGNS 5
Signatures 5
VICTOR A. MANCINELLI/GEHL COMPANY
SUPPLEMENTAL RETIREMENT BENEFIT AGREEMENT
THIS AGREEMENT, made this 15th day of December, 1995, by and between
GEHL COMPANY, West Bend, Wisconsin (hereinafter referred to as the
"Company"), and Victor A. Mancinelli, of Mequon, Wisconsin (hereinafter
referred to as the "Employee"):
W I T N E S S E T H:
WHEREAS, the Employee is currently employed by the Company in the capacity
of Executive Vice President and Chief Operating Officer and in such position
can contribute materially to its continued growth and development and to its
future financial success; and
WHEREAS, the Company desires to insure insofar as possible that the
Company will have the benefit of the Employee's full services and executive
capacities for future years;
NOW, THEREFORE, in consideration of services rendered by the Employee to
the Company, it is agreed as follows:
Section 1. Definitions.
(a) "Average Monthly Compensation" means one-sixtieth (1/60th) of the
Employee's base salary and cash bonus from the Company for the highest five
(5) calendar years within the last ten (10) completed calendar years preceding
the date of the Employee's termination of employment with the Company. In the
event the Employee does not have five (5) calendar years of employment, only
the number of full months from the date of hire through the December preceding
termination of employment shall be used to determine Average Monthly
Compensation. Cash bonus means the cash distributed to the Employee during a
calendar year pursuant to Exhibit A of the Employment Agreement. Base salary
and cash bonus for this purpose include any salary reduction deferrals
pursuant to a cash or deferred arrangement or a cafeteria plan pursuant to
Internal Revenue Code ("Code") Sections 401(k) or 125.
(b) "Beneficiary" means the person, trust and/or other entity
designated by the Employee on the form most recently filed with the Secretary
of the Company prior to the Employee's death. In the event no validly
designated beneficiary survives the Employee by at least one year, the
Beneficiary shall be the Employee's estate. In the event the last designated
beneficiary survives the Employee by more than one year, the Beneficiary shall
be the estate of such last designated beneficiary.
(c) "Disability" means a physical or mental condition which totally and
presumably permanently prevents the Employee from engaging in any
substantially gainful activity as determined in accordance with Section 4.03
of the Gehl Company Retirement Income Plan "B".
(d) "Employment Agreement" means the Employee's employment agreement
effective October 1, 1995.
(e) "Vested Percentage" means the percentage of the supplemental
retirement benefit in Section 2 earned by the Employee, subject in any event
to the forfeiture provision of Section 4 and the change in control provision
of Section 5. The Vested Percentage is one hundred percent (100%) in any of
the following circumstances:
(i) after the Employee completes five (5) years of Vesting Service;
(ii) if the Employee suffers a Disability; or
(iii) if the Employee retires from the Company after attainment of
age sixty-two (62).
In the event an Employee does not have a Vested Percentage of one hundred
percent (100%), he shall receive ten percent (10%) for each complete year of
Vesting Service.
(f) "Vesting Service" means the period of the Employee's consecutive
employment with the Company from November 24, 1992, through the date of
termination of employment.
Section 2. Supplemental Retirement Benefits.
(a) The amount of the monthly supplemental retirement benefit shall be
the Employee's Vested Percentage times an amount equal to twenty percent (20%)
of the Employee's Average Monthly Compensation.
(b) The monthly supplement shall be payable to the Employee commencing
as of the first day of the month following the earlier to occur of:
(i) age sixty-five (65); or
(ii) the later of termination of employment from the Company or age
sixty-two (62).
The supplement shall continue to be paid to the Employee for a period of
fifteen (15) years.
(c) In the event the Employee commences receiving the supplement but
dies prior to the end of the payment period, the remaining monthly payments in
the fifteen (15)-year period shall be made to the Beneficiary.
(d) In the event the Employee dies after termination of employment from
the Company but prior to the commencement of benefits pursuant to (b) above,
the monthly supplement calculated pursuant to subsection (a) above shall be
paid to the Beneficiary for the fifteen (15)-year period commencing as of the
first day of the month following the later to occur of the Employee's death or
the date the Employee would have attained (or if applicable, did attain) age
sixty-two (62).
Section 3. Pre-Retirement Death Benefit.
(a) In the event the Employee dies prior to commencement of the
supplemental retirement benefit under Section 2(b) above and while employed by
the Company, in lieu of any payment pursuant to Section 2 above, a pre-
retirement death benefit shall be paid to the Beneficiary.
(b) The death benefit shall be comprised of ten (10) payments, the
first being due as of the last day of the month following the Employee's
death. Each succeeding payment shall be made on successive anniversaries of
the first payment due date.
(c) The amount of each of the ten (10) payments shall be 3.6 times the
Employee's Average Monthly Compensation as of the Employee's date of death
(i.e., thirty percent (30%) of the Employee's Average Monthly Compensation
annualized).
Section 4. Non-Competition Requirement. Employee agrees that for a
period of two (2) years after termination of active employment hereunder, the
Employee shall not, except as permitted by the Company's prior written
consent, engage in, be employed by, or in any way advise or act for, or have
any financial interest in any business which is in substantial direct
competition with the Company as such term is defined in the Employment
Agreement. The ownership of minority and non-controlling shares of any
corporation whose shares are listed on a recognized stock exchange or traded
in an over-the-counter market shall not be deemed as constituting a financial
interest in such corporation. If the Employee shall fail to comply with any
of the foregoing conditions, he shall forfeit all right to any payments
pursuant to Section 2 hereof which would otherwise be payable to him
thereafter.
Section 5. Change in Control. Notwithstanding the definition of Vested
Percentage in Section 1 hereof, an Employee shall be one hundred percent
(100%) vested, subject to Section 4, in the event there is a change in control
of the Company as defined in the Employment Agreement.
Section 6. No Rights of Employment. Nothing herein contained shall be
deemed to confer upon the Employee any right to continue in the employ of the
Company nor to interfere with the right of the Company to terminate his
employment at any time.
Section 7. Employee's Rights Non-Assignable. Neither the Employee nor
the Beneficiary shall have the power to transfer, assign, anticipate,
alienate, sell, pledge, mortgage, or otherwise encumber in advance any of the
payments provided in this Agreement; nor shall any of said payments nor any
assets of the Company, including any insurance policies owned by the Company,
be subject to attachment, garnishment or seizure for the payment of any of the
recipient's debts, judgments or other obligations arising by operation of law
or in the event of bankruptcy, insolvency or otherwise.
Section 8. Company Not Required to Fund This Agreement. The Company is
not obligated to set aside or credit the Employee or the Beneficiary with
funds to provide for the payment of the amounts due under this Agreement, and
nothing in this Agreement shall be construed as creating a trust fund of any
kind for the benefit of the Employee or the Beneficiary. The Employee or
Beneficiary have the status of general unsecured creditors of the Company, and
this Agreement constitutes a mere promise by the Company to make future
benefit payments in accordance with the terms hereof. It is the intention of
the parties that this Agreement is unfunded for purposes of the Code and Title
I of the Employee Retirement Income Security Act of 1974, as amended.
Section 9. Administration. This Agreement shall be administered by the
Gehl Company Compensation and Benefits Committee (herein referred to as the
"Committee"). If the Employee is also a Committee member, he shall abstain
from any deliberations or vote on any matter in connection with this
Agreement.
Section 10. Successors and Assigns. This Agreement shall inure to and be
binding upon the successors and assigns of the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
Attest: GEHL COMPANY
M. Mulcahy Arthur W. Nesbitt
Its: Secretary Its: Chairman of the Board
M. Mulcahy
Witness as to Victor A. Mancinelli Victor A. Mancinelli, Employee
GEHL COMPANY
SHAREHOLDER VALUE ADDED (SVA)
MANAGEMENT INCENTIVE COMPENSATION PLAN
December 15, 1995
ARTICLE I
Statement of Purpose
1.1 The purpose of the Gehl Company Shareholder Value Added (SVA)
Management Incentive Compensation Plan (the "Plan") is to
provide a system of incentive compensation which will promote
the maximization of shareholder value over the long term. In
order to align management incentives with shareholder
interests, incentive compensation will reward the creation of
value. This Plan will tie incentive compensation to
Shareholder Value Added ("SVA") and, thereby, reward management
for creating value and penalize management for destroying
value.
1.2 SVA is the performance measure of value creation. SVA reflects the
benefits and costs of capital employment. Managers create value when
they employ capital in an endeavor that generates a return that exceeds
the cost of the capital employed. Managers destroy value when they
employ capital in an endeavor that generates a return that is less than
the cost of capital employed. By imputing the cost of capital upon the
operating profits generated by a business group, SVA measures the total
value created (or destroyed) by management.
SVA = (Net Operating Profit After Tax - Capital Charge)
1.3 Each Plan Participant is placed in a classification. Each classification
has a prescribed target bonus. The bonus earned in any one year is the
result of multiplying the Actual Bonus Percentage times the Participant's
base pay. Bonuses that fall within a prespecified range will be fully
paid out. Positive and negative bonuses falling outside this range are
banked forward in the Participant's Bonus Bank, with one-third of the net
positive balance paid out each year in cash. A Participant is eligible
for a bonus for a particular calendar year only if the Participant is
employed by Gehl on December 31 of that year.
ARTICLE II
Definition of SVA and the Components of SVA
Unless the context provides a different meaning, the following
terms shall have the following meanings.
2.1 "Participating Group" means a Gehl business value center which has been
uniquely identified for the purpose of calculating SVA and SVA based
bonus awards. Some Participants' awards may be a mixture of two or more
different Participating Groups.
For the purpose of this plan, the Participating Groups are listed on Exhibit
B.
2.2 "Capital" means the net investment employed in the operations of each
Participating Group. The components of Capital are as follows:
Cash
Plus: Wholesale Accounts Receivable--at Gross Value
Plus: Retail Finance Contracts--at Gross Principal Value
Plus: FIFO Inventory
Plus: Prepaid and Other Current Assets
Plus: Fixed Assets at Net Book Value
Plus: Other assets
Plus: Capitalized Research and Development
Plus: Corporate Allocated Capital
Less: Noninterest Bearing Current Liabilities
Equals: Capital
2.3 Each component of Capital will be measured by computing an average
balance based on the ending monthly balance for the twelve months of the
Fiscal Year.
2.4 "Cost of Capital" or "C" means the weighted average of the after tax cost
of debt and equity for the year in question.
The Cost of Capital will be reviewed and revised, if necessary, annually.
Calculations will be carried to one decimal point.
The cost of capital for the initial year is 11.2%. See Exhibit A. In
subsequent plan years the methodology for the calculation of the Cost of
Capital will be as in Exhibit A:
Short-term debt is to be treated as long term for purposes of computing
the cost of capital.
2.5 "Capital Charge" means the deemed opportunity cost of employing Capital
in the business of each Participating Group. The Capital Charge is
computed as follows:
Capital Charge = Capital x Cost of Capital (C*)
2.6 "Net Operating Profit After Tax" or "NOPAT"
"NOPAT" means the after tax cash earnings attributable to the capital
employed in the Participating Group for the year in question. The
components of NOPAT are as follows:
Operating Earnings
Plus: Interest Expense
Plus: Increase (Decrease) in Capitalized R & D (See Note 1)
Plus: Increase (Decrease) in Bad Debt, Warranty, Product
Liability, and Volume Discount Reserves
Plus: Amortization of Goodwill Acquired After January 1, 1996
Less: Other Expense (Excluding Interest on Debt)
Plus: Other Income (Excluding Investment Income, if any)
Equals: Net Operating Profit Before Tax
Less: Taxes (See Note 2)
Equals: Net Operating Profit After Tax
Note: (1) Since R & D is Capitalized, the difference in the balance
is the expensed amount for that year.
(2) Taxes are assumed to be 38% of Net Operating Profit Before
Tax.
2.7 "Shareholder Value Added" or "SVA" means the NOPAT that remains after
subtracting the Capital Charge, expressed as follows:
NOPAT
Less: Capital Charge
Equals: SVA
SVA may be positive or negative.
ARTICLE III
Definition and Computation of Target Bonus Value
3.1 "Actual SVA" means the SVA as calculated for each Participating Group for
the year in question.
3.2 "Target SVA" means the level of SVA that is expected in order for a
Participant of the Participating Group to receive the Target Bonus Value.
The Target SVA for the first year is set at the calculated SVA for the
year prior to the first year of the plan. After the first year, the
Target SVA is revised according to the following formula:
Prior Year's Actual SVA + Prior Year's Target SVA
Target SVA = 2 + Expected Improvement in SVA
(Note: Improvement Factor)
"Expected Improvement in SVA" means the constant SVA improvement (when
prior year's SVA is negative), or the prior year's actual SVA times the
sum of inflation (as per the prior year's CPI (all Urban Consumers)) plus
5% (when prior year's SVA is 0 or positive), that is added to shift the
target up each year. See Exhibit B for the Expected Improvement for each
Participating Group when SVA is negative.
3.3 "Target Bonus Value" means the "Target Bonus Percentage" times a
Participant's base pay.
3.4 "Target Bonus Percentage" is determined for each Participant by the
Compensation Committee of the Board of Directors and approved by the
Board of Directors.
3.5 "Actual Bonus Value" means the bonus earned (see Note 1) by a Participant
and is computed as the Actual Bonus Percentage times a Participant's base
pay. A Participant who participates in more than one Participating Group
will have multiple Actual Bonus Values (see Note 2).
Note:
(1) A portion of the Actual Bonus Value may be
placed in the Participants' Bonus Bank. See Article IV for details on
the Bonus Bank.
(2) A Participant in more than one Participating
Group has a "Weighting Percentage" assigned for each Group. The
Weighting Percentage is applied to determine the bonus earned from
participation in each Participating Group. The Weighting Percentage
always totals to 100%.
3.6 "Actual Bonus Percentage" is determined by multiplying the Target Bonus
Percentage by the Bonus Performance Value.
3.7 "Bonus Performance Value" means the difference between the Actual SVA and
the Target SVA divided by the Leverage Factor, plus 1.0.
[Actual SVA - Target SVA] + 1
Bonus Performance Value = [Leverage Factor]
3.8 "Leverage Factor" is the negative (positive) deviation from Target SVA
necessary before a zero (two times Target) bonus is earned. See Exhibit
B for the Leverage Factor of each Participating Group.
ARTICLE IV
Description of Bonus Banks
4.1 Establishment of a Bonus Bank. To encourage a long-term commitment by
Participants to the Company, a portion of exceptional bonuses (amounts
above Target and all negative bonuses) shall be credited to "at risk"
deferred accounts ("Bonus Banks"), with the level of payout contingent on
sustained high performance and improvements and continued employment as
provided herein.
4.2 Although a Bonus Bank may, as a result of negative SVA, have a deficit,
no Plan Participant shall be required, at any time, to reimburse his/her
Bonus Bank.
4.3 "Bonus Bank" means, with respect to each Participant, a bookkeeping
record of an account to which amounts are credited, or debited as the
case may be, from time to time under the Plan and from which bonus
payments to such Participants are debited.
4.4 "Bank Balance" means, with respect to each Participant, a bookkeeping
record of the net balance of the amounts credited to and debited against
such Participant's Bonus Bank. A Participant's Bank Balance shall
initially be equal to zero.
4.5 Payout Rule: If the Bank balance entering the Plan Year is zero or
positive, then
(1) Pay any positive bonus earned up to the "Target
Bonus Value",
(2) Add any unpaid portion of the bonus earned
(including negative bonuses) to the Bonus Bank,
(3) Pay out 1/3 of any Positive Bank Balance
(4) Carry the remaining Bank Balance forward to the
next year.
If the Bank Balance entering the Plan Year is negative, then
(a) If a positive bonus is earned that is equal to
or more than twice the absolute value of the negative Bank Balance,
then
(1) credit a portion of the bonus earned to the Bank
Balance to bring it to zero,
(2) pay the balance of the bonus earned according to
the rules for a zero or positive Bank Balance.
(b) If a positive bonus is earned that is less than
twice the absolute value of the negative Bank Balance or if any
negative bonus is earned, then
(1) Pay 1/3 of any positive bonus earned up to the
"Target Bonus Value",
(2) Add any unpaid portion of the bonus earned
(including negative bonuses) to the Bonus Bank,
(3) Pay out 1/3 of any Positive Bank Balance,
(4) Carry the remaining Bank Balance forward to the
next year.
ARTICLE V
Plan Participation, Transfers and Terminations
5.1 Participant Group. The Compensation Committee of the Board of Directors
(the "Committee"), upon recommendation of the CEO, will have sole
discretion in determining who shall participate in the Plan. Employees
designated for Plan participation by the Committee shall be management or
highly compensated key employees.
5.2 Transfers. A Participant who transfers his employment from one
Participating Unit of the Company to another shall retain his Bonus Bank
and will be eligible to receive future SVA Plan Awards in accordance with
the provisions of the SVA Plan.
5.3 Retirement or Disability. A Participant who terminates employment with
the Company, at or after age sixty, for any reason ("retirement"), or
suffers a "disability," as such term is defined in the Company's long-
term disability benefits program, while in the Company's employ, shall be
eligible to receive the balance of their Bonus Bank.
5.4 Involuntary Termination Without Cause or Death. A Participant who is
Terminated without cause or who dies shall receive any positive Bonus
Bank balance.
5.5 Voluntary Termination. In the event that a Participant voluntarily
terminates employment with the Company, the right of the Participant to
their Bonus Bank shall be forfeited unless a different determination is
made by the Committee.
5.6 Termination for Cause. "Cause" shall mean:
(1) any act or acts of the Participant constituting
a felony under the laws of the United States, any state thereof
or any foreign jurisdiction;
(2) any material breach by the Participant of any
employment agreement with the Company or the policies of the
Company or the willful and persistent (after written notice to
the Participant) failure or refusal of the Participant to comply
with any lawful directives of the Board;
(3) a course of conduct amounting to gross neglect,
willful misconduct or dishonesty; or
(4) any misappropriation of material property of the
Company by the Participant or any misappropriation of a corporate
or business opportunity of the Company by the Participant.
5.7 Payment and Breach of Agreement. In the event a Participant is entitled
to the payment of a positive Bonus Bank balance pursuant to 5.3 or 5.4,
one-half of such balance shall be paid in December of the year of
termination and the remaining one-half shall be paid in the following
December, without any interest adjustment. Notwithstanding any other
provision of the Plan or any other agreement, in the event that a
Participant shall breach any noncompetition agreement with the Company or
breach any agreement with respect to the postemployment conduct of such
Participant, any remaining payment otherwise due to the Participant
hereunder shall be forfeited.
5.8 No Guarantee. Participation in the Plan provides no guarantee that a
payment under the Plan will be paid. Selection as a Participant is no
guarantee that payments under the Plan will be paid or that selection as
a Participant will be made in the subsequent Calendar Year.
ARTICLE VI
General Provisions
6.1 Withholding of Taxes. The Company shall have the right to withhold the
amount of taxes, which in the determination of the Company, are required
to be withheld under law with respect to any amount due or paid under the
Plan.
6.2 Expenses. All expenses and costs in connection with the adoption and
administration of the Plan shall be borne by the Company.
6.3 No Prior Right or Offer. Except and until expressly granted pursuant to
the Plan, nothing in the Plan shall be deemed to give any employee any
contractual or other right to participate in the benefits of the Plan.
6.4 Claims for Benefits. In the event a Participant (a "claimant") desires
to make a claim with respect to any of the benefits provided hereunder,
the claimant shall submit evidence satisfactory to the Committee of facts
establishing his entitlement to a payment under the Plan. Any claim with
respect to any of the benefits provided under the Plan shall be made in
writing within ninety (90) days of the event which the claimant asserts
entitles him to benefits. Failure by the claimant to submit his claim
within such ninety (90) day period shall bar the claimant from any claim
for benefits under the Plan.
6.5 In the event that a claim which is made by a claimant is wholly or
partially denied, the claimant will receive from the Committee a written
explanation of the reason for denial and the claimant or his duly
authorized representative may appeal the denial of the claim to the
Committee at any time within ninety (90) days after the receipt by the
claimant of written notice from the Committee of the denial of the claim.
In connection therewith, the claimant or his duly authorized
representative may request a review of the denied claim; may review
pertinent documents; and may submit issues and comments in writing. Upon
receipt of an appeal, the Committee shall make a decision with respect to
the appeal and, not later than sixty (60) days after receipt of a request
for review, shall furnish the claimant with a decision on review in
writing, including the specific reasons for the decision written in a
manner calculated to be understood by the claimant, as well as specific
reference to the pertinent provisions of the Plan upon which the decision
is based. In reaching its decision, the Committee shall have complete
discretionary authority to determine all questions arising in the
interpretation and administration of the Plan, and to construe the terms
of the Plan, including any doubtful or disputed terms and the eligibility
of a Participant for benefits.
6.6 Action Taken in Good Faith: Indemnification. The Committee may employ
attorneys, consultants, accountants or other persons and the Company's
directors and officers shall be entitled to rely upon the advice,
opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee in good faith
shall be final and binding upon all employees who have received awards,
the Company and all other interested parties. No member of the
Committee, nor any officer, director, employee or representative of the
Company, or any of its affiliates acting on behalf of or in conjunction
with the Committee, shall be personally liable for any action,
determination, or interpretation, whether of commission or omission,
taken or made with respect to the Plan, except in circumstances involving
actual bad faith or willful misconduct. In addition to such other rights
of indemnification as they may have as members of the Board, as members
of the Committee or as officers or employees of the Company, all members
of the Committee and any officer, employee or representative of the
Company or any of its subsidiaries acting on their behalf shall be fully
indemnified and protected by the Company with respect to any such action,
determination or interpretation against the reasonable expenses,
including attorneys' fees actually and necessarily incurred, in
connection with the defense of any civil or criminal action, suit or
proceeding, or in connection with any appeal therein, to which they or
any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan or an award granted thereunder,
and against all amounts paid by them in settlement thereof (provided such
settlement is approved by independent legal counsel selected by Company)
or paid by them in satisfaction of a judgment in any action, suit or
proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such person claiming
indemnification shall in writing offer the Company the opportunity, at
its own expense, to handle and defend the same. Expenses (including
attorney's fees) incurred in defending a civil or criminal action, suit
or proceeding shall be paid by the Company in advance of the final
disposition of such action, suit or proceeding if such person claiming
indemnification is entitled to be indemnified as provided in this
Section.
6.7 Rights Personal to Employee. Any rights provided to an employee under
the Plan shall be personal to such employee, shall not be transferable
(except by will or pursuant to the laws of descent or distribution), and
shall be exercisable, during his lifetime, only by such employee.
6.8 Distribution of Bank Balances Upon Termination of the Plan. Upon
termination of the Plan, the Bank Balance of each Participant shall be
distributed as soon as practicable but in no event later than 90 days
from such event. The Committee, in its sole discretion, may accelerate
distribution of the Bank Balance, in whole or in part, at any time
without penalty.
6.9 Nonallocation of Award. In the event of a suspension of the Plan in any
Plan Year as provided herein at Article XI, Section 11.1, the Current
Bonus for the subject Plan year shall be deemed forfeited and no portion
thereof shall be allocated to Participants . Any such forfeiture shall
not affect the calculation of SVA in any subsequent year.
ARTICLE VII
Limitation
7.1 No Continued Employment. Nothing contained herein shall provide any
employee with any right to continued employment or in any way abridge the
rights of the Company and its Participating Units to determine the terms
and conditions of employment and whether to terminate employment of any
employee.
7.2 No Vested Rights. Except as otherwise provided herein, no employee or
other person shall have any claim of right (legal, equitable, or
otherwise) to any award, allocation, or distribution or any right, title,
or vested interest in any amounts in his Bonus Bank and no officer or
employee of the Company or any Participating Group or any other person
shall have any authority to make representations or agreements to the
contrary. No interest conferred herein to a Participant shall be
assignable or subject to claim by a Participant's creditors. The right
of the Participant to receive a distribution hereunder shall be an
unsecured claim against the general assets of the Company and the
Participant shall have no rights in or against any specific assets of the
Company as the result of participation hereunder.
7.3 Not Part of Other Benefits. The benefits provided in this Plan shall not
be deemed a part of any other benefit provided by the Company to its
employees. The Company assumes no obligation to Plan Participants except
as specified herein. This is a complete statement, along with the
Schedules and Appendices attached hereto, of the terms and conditions of
the Plan.
7.4 Other Plans. Nothing contained herein shall limit the Company or the
Compensation Committee's power to grant bonuses to employees of the
Company, whether or not Participants in this Plan.
7.5 Limitations. Neither the establishment of the Plan nor the grant of an
award hereunder shall be deemed to constitute an express or implied
contract of employment for any period of time or in any way abridge the
rights of the Company to determine the terms and conditions of employment
or to terminate the employment of any employee with or without cause at
any time.
7.6 Unfunded Plan. This Plan is unfunded and is maintained by the Company in
part to provide deferred compensation to a select group of management and
highly compensated key employees. Nothing herein shall create or be
construed to create a trust of any kind, or a fiduciary relationship
between the Company and any Participant.
ARTICLE VIII
Authority
8.1 Compensation Committee Authority. Except as otherwise expressly provided
herein, full power and authority to interpret and administer this Plan
shall be vested in the Compensation Committee. The Compensation
Committee may from time to time make such decisions and adopt such rules
and regulations for implementing the Plan as it deems appropriate for any
Participant under the Plan. Any decision taken by the Compensation
Committee arising out of or in connection with the construction,
administration, interpretation and effect of the Plan shall be final,
conclusive and binding upon all participants and any person claiming
under or through them.
8.2 Board of Directors Authority. The Board shall be ultimately responsible
for administration of the Plan. References made herein to the
"Compensation Committee" or "Committee" assume that the Board of
Directors has created a Compensation Committee to administer the Plan.
In the event a Compensation Committee is not so designated, the Board
shall administer the Plan. The Board or its Compensation Committee, as
appropriate, shall work with the CEO of the Company in all aspects of the
administration of the Plan.
ARTICLE IX
Notice
9.1 Any notice to be given pursuant to the provisions of the Plan shall be in
writing and directed to the appropriate recipient thereof at his business
address or office location.
ARTICLE X
Effective Date
10.1 This Plan shall be effective as of January 1, 1996.
ARTICLE XI
Amendments
11.1 Amendment. This Plan may be amended, suspended or terminated at any time
at the sole discretion of the Board upon the recommendation of the
Compensation Committee. Any action which suspends the bonus accruals for
more than twelve months shall be deemed a termination of the Plan.
11.2 Compensation Committee Review. As to future targets and awards under the
Plan, the Compensation Committee will review projected performance data
at its October meeting, recommend forward targets at its December meeting
and review for approval specific prior performance so as to make the
appropriate awards under the Plan at its February meeting. The
Compensation Committee will make its recommendations to the Board of
Directors.
11.3 Board of Directors. The Board of Directors reserves, solely to itself,
the right to make decisions as to targets, achievements, and awards
contemplated under the Plan. The decision as to who participates in the
Plan and the duration of the Plan are also the sole rights of the Board
of Directors.
11.4 Protected Benefits. Notwithstanding the foregoing, after December 31 of
an applicable year, the Board may not amend the Plan or otherwise revise
the eligible participants or other Plan provisions such that the
Participant receives less than the smaller of (i) the amount payable by
the Plan prior to such amendment or (ii) the Participant's Target Bonus
Value as determined prior to such amendment.
11.5 Notice. Notice of any amendment, suspension or termination shall be
given promptly to each Participant.
ARTICLE XII
Applicable Law
12.1 This Plan shall be construed in accordance with the provisions of the
laws of the State of Wisconsin to the extent not preempted by Federal
law.
Exhibit A
Calculation of the Cost of Capital
Inputs Variables:
Risk Free Rate = Average Daily closing yield on U.S. Government
30 Yr. Bonds (for the month of October preceding the
Plan Year)
Market Risk Premium = 6.0% (Fixed)
Beta = 1.50 (to be evaluated annually)
Debt/Capital Ratio = Initial Year 40%; subsequent years computed
using the monthly average debt/capital ratio from
the business plan for that subsequent year.
b = Cost of Debt Capital (Weighted Average Yield on the
Company's Long Term Debt Obligations)
Marginal Tax Rate = 38.0%
Calculations:
y = Cost of Equity Capital
= Risk Free Rate + (Beta x Market Risk Premium)
Weighted Average Cost of Capital = [Cost of Equity Capital x
(1 - Debt/Capital Ratio)] +
[Cost of Debt x (Debt/Capital Ratio) x (1 -
Marginal Tax Rate)]
c* = [y x (1-Debt/Capital)] + [b x (Debt/Capital) x (1 -
Marginal Tax Rate)]
Exhibit B
SVA Expected
Participating Groups Leverage Factor Improvement
Factor
Corporate $5,000,000 $1,500,000
Agriculture Group 4,000,000 1,500,000
Construction Group 4,000,000 *
West Bend, WI Plant 4,000,000 1,000,000
Lebanon, PA Plant 2,000,000 500,000
Yankton, SD Plant 2,000,000 *
Madison, SD Plant 2,000,000 *
*Dollar values are only used when SVA is negative. When SVA is 0 or
positive, improvement factor is prior year's actual SVA times the sum of
inflation (U.S. CPI index) plus 5%.
GEHL COMPANY
1995 Stock Option Plan
Section 1. Purpose
The purpose of the Gehl Company 1995 Stock Option Plan (the "Plan") is to
promote the best interests of Gehl Company (together with any successor
thereto, the "Company") and its shareholders by providing key employees of the
Company and its Affiliates (as defined below) and members of the Company's
Board of Directors who are not employees of the Company or its Affiliates with
an opportunity to acquire a proprietary interest in the Company. It is
intended that the Plan will promote continuity of management and increased
incentive and personal interest in the welfare of the Company by those key
employees who are primarily responsible for shaping and carrying out the long-
range plans of the Company and securing the Company's continued growth and
financial success. In addition, by encouraging stock ownership by directors
who are not employees of the Company or its Affiliates, the Company seeks to
attract and retain on its Board of Directors persons of exceptional competence
and to provide a further incentive to serve as a director of the Company.
Section 2. Definitions
As used in the Plan, the following terms shall have the respective
meanings set forth below:
(a) "Affiliate" shall mean any entity that, directly or through one or
more intermediaries, is controlled by, controls, or is under common control
with, the Company.
(b) "Award" shall mean any Option granted under the Plan.
(c) "Stock Option Agreement" shall mean any written agreement, contract,
or other instrument or document evidencing any Award under the Plan.
(d) "Change of Control of the Company" shall mean any one of the
following events: (i) securities of the Company representing 25% or more of
the combined voting power of the Company's then outstanding voting securities
are acquired pursuant to a tender offer or exchange offer; (ii) the
shareholders of the Company approve a merger or consolidation of the Company
with any other Person as a result of which less than 50% of the outstanding
voting securities of the surviving or resulting Person are owned by the former
shareholders of the Company (other than a shareholder who is an Affiliate of
any party to such consolidation or merger); (iii) the shareholders of the
Company approve the sale of substantially all of the Company's assets to a
Person which is not a wholly-owned subsidiary of the Company; (iv) any person
becomes a beneficial owner (as such term is defined in Rule 13d-3 of the
Exchange Act (or any successor provision thereto)), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting
power of the Company's then outstanding securities the effect of which (as
determined by the Board of Directors of the Company and, in the case of Non-
Qualified Stock Options granted to Non-Employee Directors under the Plan, to
the extent permitted by Rule 16b-3) is to take over control of the Company; or
(v) during any period of two consecutive years, individuals who, at the
beginning of such period, constituted the Board of Directors of the Company
cease, for any reason, to constitute at least a majority thereof, unless the
election or nomination for election of each new director was approved by the
vote of at least two-thirds of the directors of the Company then in office who
were directors of the Company at the beginning of the period.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Commission" shall mean the United States Securities and Exchange
Commission or any successor agency.
(g) "Committee" shall mean a committee of the Board of Directors of the
Company designated by such Board to administer the Plan and comprised of not
less than two directors, each of whom is a "disinterested person" within the
meaning of Rule 16b-3 and each of whom is an "outside director" within the
meaning of Section 162(m)(4)(C) of the Code (or any successor provision
thereto).
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(i) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair
market value of such property determined by such methods or procedures as
shall be established from time to time by the Committee.
(j) "Incentive Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is intended to meet the requirements of
Section 422 of the Code (or any successor provision thereto).
(k) "Key Employee" shall mean any officer or other key employee of the
Company or of any Affiliate who is responsible for or contributes to the
management, growth or profitability of the business of the Company or any
Affiliate as determined by the Committee.
(l) "Non-Employee Director" shall mean any member of the Company's Board
of Directors who is not an employee of the Company or of any Affiliate.
(m) "Non-Qualified Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock Option
and shall mean any option granted to a Non-Employee Director under Section
6(b) of the Plan.
(n) "Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option.
(o) "Participating Key Employee" shall mean a Key Employee designated to
be granted an Award under the Plan.
(p) "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, or
government or political subdivision thereof.
(q) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the Commission
under the Exchange Act, or any successor rule or regulation thereto.
(r) "Shares" shall mean shares of common stock of the Company, $.10 par
value, and such other securities or property as may become subject to Awards
pursuant to an adjustment made under Section 4(b) of the Plan.
Section 3. Administration
The Plan shall be administered by the Committee; provided, however, that
if at any time the Committee shall not be in existence, the functions of the
Committee as specified in the Plan shall be exercised by a committee
consisting of those members of the Board of Directors of the Company who
qualify as "disinterested persons" under Rule 16b-3 and as "outside directors"
under Section 162(m)(4)(C) of the Code (or any successor provision thereto).
Subject to the terms of the Plan and without limitation by reason of
enumeration, the Committee shall have full power and authority to: (i)
designate Participating Key Employees; (ii) determine the type or types of
Awards to be granted to each Participating Key Employee under the Plan; (iii)
determine the number of Shares to be covered by (or with respect to which
payments, rights, or other matters are to be calculated in connection with)
Awards granted to Participating Key Employees; (iv) determine the terms and
conditions of any Award granted to a Participating Key Employee; (v) determine
whether, to what extent, and under what circumstances Awards granted to
Participating Key Employees may be settled or exercised in cash, Shares, other
securities, other Awards, or other property, and the method or methods by
which Awards may be settled, exercised, cancelled, forfeited, or suspended;
(vi) interpret and administer the Plan and any instrument or agreement
relating to, or Award made under, the Plan (including, without limitation, any
Stock Option Agreement); (vii) establish, amend, suspend, or waive such rules
and regulations and appoint such agents as it shall deem appropriate for the
proper administration of the Plan; and (viii) make any other determination and
take any other action that the Committee deems necessary or desirable for the
administration of the Plan. Unless otherwise expressly provided in the Plan,
all designations, determinations, interpretations, and other decisions under
or with respect to the Plan or any Award shall be within the sole discretion
of the Committee, may be made at any time, and shall be final, conclusive, and
binding upon all Persons, including the Company, any Affiliate, any
Participating Key Employee, any Non-Employee Director, any holder or
beneficiary of any Award, any shareholder, and any employee of the Company or
of any Affiliate. Notwithstanding the foregoing, Awards to Non-Employee
Directors under the Plan shall be automatic and the amount and terms of such
Awards shall be determined as provided in Section 6(b) of the Plan.
Section 4. Shares Available for Award
(a) Shares Available. Subject to adjustment as provided in Section 4(b):
(i) Number of Shares Available. The number of Shares with respect to
which Awards may be granted under the Plan shall be 600,000. If, after the
effective date of the Plan, any Shares covered by an Award granted under the
Plan, or to which any Award relates, are forfeited or if an Award otherwise
terminates, expires or is cancelled prior to the delivery of all of the Shares
or of other consideration issuable or payable pursuant to such Award, then the
number of Shares counted against the number of Shares available under the Plan
in connection with the grant of such Award, to the extent of any such
forfeiture, termination, expiration or cancellation, shall again be available
for granting of additional Awards under the Plan.
(ii) Limitations on Awards to Individual Participants. During any one
calendar year, no Participating Key Employee shall be granted Awards under the
Plan that could result in such Participating Key Employee receiving Options
for more than 100,000 Shares under the Plan. Such number of Shares as
specified in the preceding sentence shall be subject to adjustment in
accordance with the terms of Section 4(b) hereof. In all cases,
determinations under this Section 4(a)(ii) shall be made in a manner that is
consistent with the exemption for performance-based compensation provided by
Section 162(m) of the Code (or any successor provision thereto) and any
regulations promulgated thereunder.
(iii) Accounting for Awards. The number of Shares covered by an Award
under the Plan, or to which such Award relates, shall be counted on the date
of grant of such Award against the number of Shares available for granting
Awards under the Plan.
(iv) Sources of Shares Deliverable Under Awards. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Shares or of treasury Shares.
(b) Adjustments. In the event that the Committee shall determine that any
dividend or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, issuance
of warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the Shares
such that an adjustment is determined by the Committee to be appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the Committee may, in such
manner as it may deem equitable, adjust any or all of (i) the number and type
of Shares subject to the Plan and which thereafter may be made the subject of
Awards under the Plan, (ii) the number and type of Shares subject to
outstanding Awards, and (ii) the grant, purchase, or exercise price with
respect to any Award, or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award; provided, however, in each
case, that with respect to Awards of Incentive Stock Options no such
adjustment shall be authorized to the extent that such authority would cause
the Plan to violate Section 422(b) of the Code (or any successor provision
thereto); and provided further that the number of Shares subject to an Award
shall always be a whole number. Notwithstanding the foregoing, Non-Qualified
Stock Options subject to grant or previously granted to Non-Employee Directors
under Section 6(b) of the Plan at the time of any event described in the
preceding sentence shall be subject to only such adjustments as shall be
necessary to maintain the relative proportionate interest represented thereby
immediately prior to any such event and to preserve, without exceeding, the
value of such Options.
Section 5. Eligibility
Any Key Employee, including any executive officer or employee-director of
the Company or of any Affiliate, who is not a member of the Committee shall be
eligible to be designated a Participating Key Employee. All Non-Employee
Directors shall receive Awards of Non-Qualified Stock Options as provided in
Section 6(b).
Section 6. Awards
(a) Option Awards to Key Employees. The Committee is hereby authorized to
grant Options to Key Employees with the terms and conditions as set forth
below and with such additional terms and conditions, in either case not
inconsistent with the provisions of the Plan, as the Committee shall determine.
(i) Exercise Price. The exercise price per Share of an Option granted
pursuant to this Section 6(a) shall be determined by the Committee; provided,
however, that such exercise price shall not be less than 100% of the Fair
Market Value of a Share on the date of grant of such Option.
(ii) Option Term. The term of each Option shall be fixed by the
Committee; provided, however, that in no event shall the term of any Option
exceed a period of ten years from the date of its grant.
(iii)Exercisability and Method of Exercise. An Option shall become
exercisable in such manner (including, without limitation, accelerated
exercisability in the event of Change of Control of the Company) and within
such period or periods and in such installments or otherwise as shall be
determined by the Committee. Unless the Committee shall otherwise determine
on or prior to the date of grant of an Option, such Option may be exercised,
in whole or in part, from and after the date it was granted in accordance with
the following schedule:
Cumulative Percentage of
Shares Subject
to Option Which May be
Purchased (which number of
Shares shall be rounded
Elapsed Period of Time down to the nearest whole
After Date Option is Granted number)
Less than One (1) Year 0%
One (1) Year 33-1/3%
Two (2) Years 66-2/3%
Three (3) Years 100%
The Committee also shall determine the method or methods by which, and the
form or forms, including, without limitation, cash, Shares, other securities,
other Awards, or other property, or any combination thereof, having a Fair
Market Value on the exercise date equal to the relevant exercise price, in
which payment of the exercise price with respect to any Option may be made or
deemed to have been made.
(iv) Incentive Stock Options. The terms of any Incentive Stock
Option granted under the Plan shall comply in all respects with the provisions
of Section 422 of the Code (or any successor provision thereto) and any
regulations promulgated thereunder. Notwithstanding any provision in the Plan
to the contrary, no Incentive Stock Option may be granted hereunder after the
tenth anniversary of the adoption of the Plan by the Board of Directors of the
Company.
(b) Non-Qualified Stock Option Awards to Non-Employee Directors.
(i) Eligibility. Each Non-Employee Director shall automatically
be granted Non-Qualified Stock Options under the Plan in the manner set forth
in this Section 6(b). A Non-Employee Director may hold more than one Non-
Qualified Stock Option, but only on the terms and subject to any restrictions
set forth herein.
(ii) Annual Option Grants to Non-Employee Directors. Each Non-
Employee Director (if he or she continues to serve in such capacity) shall, on
the day following the annual meeting of shareholders in each year during the
time the Plan is in effect, automatically be granted a Non-Qualified Stock
Option to purchase 2,000 Shares (which number of Shares shall be subject to
adjustment in the manner provided in Section 4(b) hereof).
(iii) Grant Limitation. Notwithstanding the provisions of Section
6(b)(ii) hereof, Non-Qualified Stock Options shall be automatically granted
to Non-Employee Directors under the Plan only for so long as the Plan remains
in effect and a sufficient number of Shares are available hereunder for the
granting of such Options.
(iv) Exercise Price. The exercise price per Share for a Non-
Qualified Stock Option granted to a Non-Employee Director under the Plan shall
be equal to 100% of the "market value" of a Share on the date of grant of such
Option. The "market value" of a Share on the date of grant to the Non-
Employee Director shall be the last sale price per Share for the Shares on The
Nasdaq Stock Market on the trading date next preceding such grant date;
provided, however, that if the principal market for the Shares is then a
national securities exchange, the "market value" shall be the closing price
per Share for the Shares on the principal securities exchange on which the
Shares are traded on the trading date next preceding the date of grant, or, in
either case above, if no trading occurred on the trading date next preceding
the date on which the Non-Qualified Stock Option is granted, then the "market
price" per Share shall be determined with reference to the next preceding date
on which the Shares were traded.
(v) Exercisability of Options. Non-Qualified Stock Options
granted to Non-Employee Directors under the Plan shall become exercisable in
accordance with the following schedule:
Cumulative Percentage of
Shares Subject
to Option Which May be
Purchased (which number of
Shares shall be rounded
Elapsed Period of Time down to the nearest whole
After Date Option is Granted number)
Less than One (1) Year 0%
One (1) Year 33-1/3%
Two (2) Years 66-2/3%
Three (3) Years 100%
Notwithstanding the foregoing schedule, if a Non-Employee Director ceases to
be a director of the Company by reason of death, disability or retirement
within three (3) years after the date of grant or in the event of a Change of
Control of the Company within three (3) years after the date of grant, the
Option shall become immediately exercisable in full.
(vi) Termination of Options. Non-Qualified Stock Options granted
to Non-Employee Directors shall terminate on the earlier of:
(A) ten years after the date of grant; or
(B) twelve months after the Non-Employee Director ceases
to be a director of the Company for any reason,
including as a result of the Non-Employee Director's
death, disability or retirement.
(vii) Exercise of Options. A Non-Qualified Stock Option granted to
a Non-Employee Director may be exercised, subject to its terms and conditions
and the terms and conditions of the Plan, in full at any time or in part from
time to time by delivery to the Secretary of the Company at the Company's
principal office in West Bend, Wisconsin, of a written notice of exercise
specifying the number of shares with respect to which the Option is being
exercised. Any notice of exercise shall be accompanied by full payment of the
exercise price of the Shares being purchased (x) in cash or its equivalent;
(y) by tendering previously acquired Shares (valued at their "market value"
[as determined in accordance with Section 6(b)(iv)] as of the date of
exercise); or (z) by any combination of the means of payment set forth in
subparagraphs (x) and (y). For purposes of subparagraphs (y) and (z) above,
the term "previously acquired Shares" shall only include Shares owned by the
Non-Employee Director prior to the exercise of the Option for which payment is
being made and shall not include Shares which are being acquired pursuant to
the exercise of said Option. No shares will be issued until full payment
therefor has been made.
(c) General.
(i) No Consideration for Awards. Awards shall be granted to
Participating Key Employees without the requirement of cash consideration
unless otherwise determined by the Committee. Awards of Non-Qualified Stock
Options granted to Non-Employee Directors under Section 6(b) of the Plan shall
be granted for no cash consideration unless otherwise required by law.
(ii) Award Agreements. Each Award granted under the Plan shall be
evidenced by a Stock Option Agreement in such form (consistent with the terms
of the Plan) as shall have been approved by the Committee.
(iii) Awards May Be Granted Separately or Together. Awards to
Participating Key Employees under the Plan may be granted either alone or in
addition to, in tandem with, or in substitution for any other Award or any
award granted under any other plan of the Company or any Affiliate. Awards
granted in addition to or in tandem with other Awards, or in addition to or in
tandem with awards granted under any other plan of the Company or any
Affiliate, may be granted either at the same time as or at a different time
from the grant of such other Awards or awards.
(iv) Limits on Transfer of Awards. No Award, and no right under
any such Award, shall be assignable, alienable, salable, or transferable by a
Participating Key Employee or a Non-Employee Director otherwise than by will
or by the laws of descent and distribution; provided, however, that a
Participating Key Employee at the discretion of the Committee may, and a Non-
Employee Director shall, be entitled, in the manner established by the
Committee, to designate a beneficiary or beneficiaries to exercise his or her
rights, and to receive any property distributable, with respect to any Award
upon the death of the Participating Key Employee or the Non-Employee Director,
as the case may be. Each Award, and each right under any Award, shall be
exercisable, during the lifetime of the Participating Key Employee or the Non-
Employee Director, only by such individual or, if permissible under applicable
law, by such individual's guardian or legal representative. No Award, and no
right under any such Award, may be pledged, alienated, attached, or otherwise
encumbered, and any purported pledge, alienation, attachment, or encumbrance
thereof shall be void and unenforceable against the Company or any Affiliate.
(v) Term of Awards. Except as otherwise provided in the Plan,
the term of each Award shall be for such period as may be determined by the
Committee but the expiration date of an Award shall be not later than ten
years after the date such Award is granted.
(vi) Share Certificates; Representation. All certificates for
Shares delivered under the Plan pursuant to any Award or the exercise thereof
shall be subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the Plan or the rules, regulations, and
other requirements of the Commission, any stock exchange or other market upon
which such Shares are then listed or traded, and any applicable federal or
state securities laws, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions. The Committee may require each Participating Key Employee, Non-
Employee Director or other Person who acquires Shares under the Plan by means
of an Award originally made to a Participating Key Employee or a Non-Employee
Director to represent to the Company in writing that such Participating Key
Employee, Non-Employee Director or other Person is acquiring the Shares
without a view to the distribution thereof.
Section 7. Amendment and Termination of the Plan; Correction of Defects and
Omissions
(a) Amendments to and Termination of the Plan. The Board of Directors of the
Company may at any time amend, alter, suspend, discontinue, or terminate the
Plan; provided, however, that the provisions of Section 6(b) of the Plan shall
not be amended more than once every six months, other than to comport with
changes in the Code, the Employee Retirement Income Security Act of 1974, as
amended, or the rules promulgated thereunder; and provided further that
shareholder approval of any amendment of the Plan shall also be obtained if
otherwise required by: (i) the rules and/or regulations promulgated under
Section 16 of the Exchange Act (in order for the Plan to remain qualified
under Rule 16b-3), (ii) the Code or any rules promulgated thereunder (in order
to allow for Incentive Stock Options to be granted under the Plan), or (iii)
the quotation or listing requirements of The Nasdaq Stock Market or any
principal securities exchange or market on which the Shares are then traded
(in order to maintain the quotation or listing of the Shares thereon).
Termination of the Plan shall not affect the rights of Participating Key
Employees or Non-Employee Directors with respect to Awards previously granted
to them, and all unexpired Awards shall continue in force and effect after
termination of the Plan except as they may lapse or be terminated by their own
terms and conditions.
(b) Correction of Defects, Omissions and Inconsistencies. The Committee may
correct any defect, supply any omission, or reconcile any inconsistency in any
Award or Stock Option Agreement in the manner and to the extent it shall deem
desirable to carry the Plan into effect.
Section 8. General Provisions
(a) No Rights to Awards. No Key Employee, Participating Key Employee or
other Person (other than a Non-Employee Director to the extent provided in
Section 6(b) of the Plan) shall have any claim to be granted an Award under
the Plan, and there is no obligation for uniformity of treatment of Key
Employees, Participating Key Employees, or holders or beneficiaries of Awards
under the Plan. The terms and conditions of Awards need not be the same with
respect to each Participating Key Employee.
(b) Withholding. No later than the date as to which an amount first becomes
includible in the gross income of a Participating Key Employee for federal
income tax purposes with respect to any Award under the Plan, the
Participating Key Employee shall pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, any federal, state,
local or foreign taxes of any kind required by law to be withheld with respect
to such amount. Unless otherwise determined by the Committee, withholding
obligations arising with respect to Awards to Participating Key Employees
under the Plan may be settled with Shares, including Shares that are part of,
or are received upon exercise of, the Award that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements, and the Company and any Affiliate
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment otherwise due to the Participating Key Employee. The
Committee may establish such procedures as it deems appropriate for the
settling of withholding obligations with Shares, including, without
limitation, the establishment of such procedures as may be necessary to
satisfy the requirements of Rule 16b-3.
(c) No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or continuing in
effect other or additional compensation arrangements, and such arrangements
may be either generally applicable or applicable only in specific cases.
(d) Rights and Status of Recipients of Awards. The grant of an Award shall
not be construed as giving a Participating Key Employee the right to be
retained in the employ of the Company or any Affiliate. Further, the Company
or any Affiliate may at any time dismiss a Participating Key Employee from
employment, free from any liability, or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Stock Option Agreement.
The grant of an Award to a Non-Employee Director pursuant to Section 6(b) of
the Plan shall confer no right on such Non-Employee Director to continue as a
director of the Company. Except for rights accorded under the Plan and under
any applicable Stock Option Agreement, Participating Key Employees and Non-
Employee Directors shall have no rights as holders of Shares as a result of
the granting of Awards hereunder.
(e) Unfunded Status of the Plan. Unless otherwise determined by the
Committee, the Plan shall be unfunded and shall not create (or be construed to
create) a trust or a separate fund or funds. The Plan shall not establish any
fiduciary relationship between the Company and any Participating Key Employee,
any Non-Employee Director or other Person. To the extent any Person holds any
right by virtue of a grant under the Plan, such right (unless otherwise
determined by the Committee) shall be no greater than the right of an
unsecured general creditor of the Company.
(f) Governing Law. The validity, construction and effect of the Plan and any
rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Wisconsin and applicable federal law.
(g) Severability. If any provision of the Plan or any Stock Option Agreement
or any Award is or becomes or is deemed to be invalid, illegal, or
unenforceable in any jurisdiction, or as to any Person or Award, or would
disqualify the Plan, any Stock Option Agreement or any Award under any law
deemed applicable by the Committee, such provision shall be construed or
deemed amended to conform to applicable laws, or if it cannot be so construed
or deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan, any Stock Option Agreement or the Award, such
provision shall be stricken as to such jurisdiction, Person, or Award, and the
remainder of the Plan, any such Stock Option Agreement and any such Award
shall remain in full force and effect.
(h) No Fractional Shares. No fractional Shares or other securities shall be
issued or delivered pursuant to the Plan, any Stock Option Agreement or any
Award, and the Committee shall determine (except as otherwise provided in the
Plan) whether cash, other securities, or other property shall be paid or
transferred in lieu of any fractional Shares or other securities, or whether
such fractional Shares or other securities or any rights thereto shall be
canceled, terminated, or otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections of the Plan
solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation
of the Plan or any provision thereof.
Section 9. Effective Date of the Plan
The Plan shall be effective on the date of adoption of the Plan by the
Board of Directors of the Company provided that the Plan is approved by the
shareholders of the Company within twelve months following the date of
adoption of the Plan by the Board of Directors. All Awards granted prior to
shareholder approval of the Plan shall be subject to such approval and shall
not be exercisable until after such approval.
GEHL COMPANY
1995 STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of this ____ day of _______________,
____, by and between GEHL COMPANY, a Wisconsin corporation (the "Company"),
and ______________________________ (the "Optionee").
W I T N E S S E T H :
WHEREAS, the Company has adopted the Gehl Company 1995 Stock Option Plan
(the "Plan"), the terms of which, to the extent not stated herein, are
specifically incorporated by reference in this Agreement; and
WHEREAS, one of the purposes of the Plan is to permit the granting of
options to purchase shares of the Company's Common Stock, $.10 par value (the
"Common Stock"), to certain key employees of the Company and its affiliates;
and
WHEREAS, the Optionee is now employed by the Company or an affiliate of
the Company in a key capacity, and the Company desires the Optionee to remain
in such employ, and to secure or increase his stock ownership in the Company
in order to increase his incentive and personal interest in the welfare of the
Company.
NOW, THEREFORE, in consideration of the premises and of the
covenants and agreements herein set forth, the parties hereby mutually
covenant and agree as follows:
1. Grant of Option. Subject to the terms and conditions of the
Plan and this Agreement, the Company grants to the Optionee an option (the
"Option") to purchase from the Company all or any part of the aggregate amount
of _______ shares of Common Stock (the "Optioned Shares"). The Option is
intended to constitute a non-qualified stock option and shall not be treated
as an incentive stock option within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended.
2. Option Price. The price to be paid for the Optioned Shares
shall be $______ per share, which has been determined by the Compensation and
Benefits Committee of the Board of Directors of the Company (the "Committee")
to be not less than 100% of the fair market value of such stock on the date of
grant of the Option.
3. Exercisability and Termination of Option. Except as provided
herein, the Option may be exercised only while the Optionee is an employee of
either the Company or an affiliate of the Company and only if the Optionee has
been continuously so employed since the date of grant of the Option. Subject
to Paragraph 6, the Option may be exercised by the Optionee in whole, or in
part from time to time, during the period beginning ______________, ____, and
ending _____________________, ____, but only in accordance with the following
schedule:
Cumulative Percentage of Shares
Subject to Option Which May be
Purchased (which number of
shares shall be rounded
Elapsed Period of Time down to the nearest whole
After Date Option is Granted number)
Less than One (1) Year 0%
One (1) Year 33-1/3%
Two (2) Years 66-2/3%
Three (3) Years 100%
provided, however, that notwithstanding the foregoing vesting schedule, the
Option shall become immediately exercisable in full following a Change of
Control of the Company (as such term is defined in the Plan).
4. Manner of Exercise and Payment. Subject to the provisions of
Paragraph 3 hereof, the Option may be exercised only by written notice to the
Company, served upon the Secretary of the Company at its office at West Bend,
Wisconsin, specifying the number of shares in respect to which the Option is
being exercised. Subject to the provisions of this Agreement, the notice of
exercise must be accompanied by full payment of the option price of the shares
being purchased (i) in cash or by certified check or bank draft; (ii) by
tendering previously acquired shares of Common Stock (valued at their "fair
market value" as determined in the manner provided below); or (iii) by any
combination of the means of payment set forth in subparagraphs (i) and (ii).
For purposes of this Paragraph 4, the "fair market value" of a share of Common
Stock shall be equal to the last per share sale price of such Common Stock as
reflected on The Nasdaq Stock Market on the trading day next preceding the
date of exercise; provided, however, that if the principal market for the
shares of Common Stock is then a national securities exchange, the "fair
market value" shall be the closing price per share for the Common Stock on the
principal securities exchange on which the Common Stock is traded on the
trading date next preceding the date of exercise, or, in either case above, if
no trading occurred on the trading date next preceding the exercise date, then
the "fair market value" per share of Common Stock shall be determined with
reference to the next preceding date on which the Common Stock was traded.
For purposes of subparagraphs (ii) and (iii) above, the term "previously
acquired shares of Common Stock" shall only include Common Stock owned by the
Optionee prior to the exercise of the Option and shall not include shares of
Common Stock which are being acquired pursuant to the exercise of the Option.
No shares shall be issued until full payment therefor has been made.
5. Nontransferability of the Option. The Option shall not be
assignable, alienable, saleable or transferable by the Optionee other than by
will or the laws of descent and distribution; provided, however, that the
Optionee shall be entitled, in the manner provided in Paragraph 9 hereof, to
designate a beneficiary to exercise his rights, and to receive any shares of
Common Stock issuable, with respect to the Option upon the death of the
Optionee. The Option may be exercised during the lifetime of the Optionee
only by the Optionee or, if permitted by applicable law, the Optionee's
guardian or legal representative.
6. Exercisability After Termination of Employment.
(a) Death or Disability; Retirement. In the event the Optionee
dies while he is in the employ of the Company or any affiliate or if his
employment is terminated by reason of his retirement on or after attaining age
62 or by reason of his disability, the Option, to the extent not theretofore
exercised, may be exercised in full as follows: (i) by the legal
representative of the Optionee (who for purposes of this Agreement may be the
Optionee's beneficiary as designated pursuant to Paragraph 9) at any time
within twelve months after the date of the Optionee's death while in the
employ of the Company or any affiliate; or (ii) by the Optionee or his legal
representative or guardian at any time within twelve months after the
termination of the Optionee's employment by reason of retirement on or after
attaining age 62 or by reason of his disability, but in no event under
subparagraphs (i) or (ii) later than ten years after the date of grant of the
Option.
(b) Voluntary Termination; Termination for Cause. In the event the
Optionee voluntarily terminates his employment with the Company and any
affiliates or if his employment is terminated for Cause (as hereinafter
defined), the Option, to the extent not theretofore exercised, shall
immediately terminate upon such termination of employment. For purposes of
this Agreement, the term Cause shall mean any termination of the Optionee by
action of the Board of Directors of the Company because of the failure of the
Optionee to fulfill his obligations with the Company or any affiliate thereof
or because of serious willful misconduct by the Optionee in respect of his
obligations with the Company or any affiliate thereof which would cause a
substantial and demonstrable detriment to the Company, as, for example, the
commission by the Optionee of a felony or the perpetration by the Optionee of
a common-law fraud against the Company or any affiliate thereof, or any major
material action (i.e., not procedural or operational differences) taken
against the expressed directive of the Board of Directors of the Company.
(c) Other. In the event that the Optionee is discharged or leaves
the employ of the Company and its affiliates for any reason (other than the
death or disability of the Optionee, the retirement of the Optionee on or
after attaining age 62, the Optionee's voluntary termination of his employment
or the termination of the Optionee for Cause), the Option, to the extent not
theretofore exercised but then permitted under the percentage limitations of
Paragraph 3 hereof, may be exercised by the Optionee or by his legal
representative or guardian at any time within three months after the date of
termination of employment upon the tender to the Company, in cash or its
equivalent, of the full purchase price, but in no event later than ten years
after the date of grant of the Option.
7. Tax Withholding. The Company may deduct and withhold from any
cash otherwise payable to the Optionee (whether payable as salary, bonus or
other compensation) such amount as may be required for the purpose of
satisfying the Company's obligation to withhold Federal, state or local taxes.
Further, in the event the amount so withheld is insufficient for such purpose,
the Company may require that the Optionee pay to the Company upon its demand
or otherwise make arrangements satisfactory to the Company for payment of such
amount as may be requested by the Company in order to satisfy its obligation
to withhold any such taxes.
The Optionee shall be permitted to satisfy the Company's tax
withholding requirements by making a written election (in accordance with such
rules and regulations and in such form as the Committee may determine) to have
the Company withhold shares of Common Stock otherwise issuable to the Optionee
(the "Withholding Election") or to deliver to the Company shares of Common
Stock (the "Delivery Election") in each case having a fair market value on the
date income is recognized (the "Tax Date") pursuant to the exercise of the
Option equal to the minimum amount required to be withheld. If a Delivery
Election is in effect at the time of the exercise of the Option, the Optionee
shall deliver the shares of Common Stock subject to such Delivery Election on,
or as soon as practicable after, the Tax Date. If the number of shares of
Common Stock withheld or delivered to satisfy withholding tax requirements
shall include a fractional share, the number of shares withheld or delivered
shall be reduced to the next lower whole number and the Optionee shall deliver
cash in lieu of such fractional share, or otherwise make arrangements
satisfactory to the Company for payment of such amount. A Withholding
Election or Delivery Election must be received by the Secretary of the Company
on or prior to the Tax Date. In addition, if the Optionee is an officer,
director or more than 10% shareholder of the Company ("Insider"), the
following shall apply:
A Withholding Election or Delivery Election made hereunder by
an Insider will not be effective until at least six months after the
date of grant of the Option (except in the event of the death or
disability of the Optionee) and shall be made by an Insider in one
of two ways. Either (i) the Withholding Election or Delivery
Election, as the case may be, shall be received by the Secretary at
least six months prior to the Tax Date and shall be irrevocable
(provided that a new election revoking the prior Withholding
Election or Delivery Election, as the case may be, may be made with
respect to the unexercised portion of the Option effective six
months after receipt by the Secretary of such new election), or (ii)
the Withholding Election or the Delivery Election, as the case may
be, must be received by the Secretary during a ten business day
period commencing on the third business day following the release of
the Company's quarterly or annual, as the case may be, statement of
sales and earnings and on or prior to the Tax Date.
8. Capital Adjustments Affecting the Common Stock. The number of
Optioned Shares subject hereto and the related per share exercise price shall
be subject to adjustment in accordance with Section 4(b) of the Plan.
9. Designation of Beneficiary. (a) The person whose name appears
on the signature page hereof after the caption "Beneficiary" or any successor
designated by the Optionee in accordance herewith (the person who is the
Optionee's beneficiary at the time of his death is herein referred to as the
"Beneficiary") shall be entitled to exercise the Option, to the extent it is
exercisable, after the death of the Optionee. The Optionee may from time to
time revoke or change his beneficiary without the consent of any prior
beneficiary by filing a new designation with the Committee. The last such
designation received by the Committee shall be controlling; provided, however,
that no designation, or change or revocation thereof, shall be effective
unless received by the Committee prior to the Optionee's death, and in no
event shall any designation be effective as of a date prior to such receipt.
(b) If no such Beneficiary designation is in effect at the time of
the Optionee's death, or if no designated Beneficiary survives the Optionee or
if such designation conflicts with law, the Optionee's estate acting through
his legal representative shall be entitled to exercise the Option, to the
extent it is exercisable after the death of the Optionee. If the Committee is
in doubt as to the right of any person to exercise the Option, the Company may
refuse to recognize such exercise, without liability for any interest or
dividends on the Optioned Shares, until the Committee determines the person
entitled to exercise the Option, or the Company may apply to any court of
appropriate jurisdiction and such application shall be a complete discharge of
the liability of the Company therefor.
10. Transfer Restriction. The shares to be acquired upon exercise
of the Option may not be sold or offered for sale except pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
or in a transaction which, in the opinion of counsel for the Company, is
exempt from the registration provisions of said Act.
11. Status of Optionee. The Optionee shall not be deemed for any
purposes to be a shareholder of the Company with respect to any of the
Optioned Shares except to the extent that the Option shall have been exercised
with respect thereto, the shares shall have been fully paid, and a stock
certificate issued therefor. Neither the Plan nor the Option shall confer
upon the Optionee any right to continue in the employ of the Company, nor to
interfere in any way with the right of the Company to terminate the employment
of the Optionee at any time.
12. Powers of the Company Not Affected. The existence of the
Option shall not affect in any way the right or power of the Company or its
shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issuance of
bonds, debentures, preferred or prior preference stock ahead of or affecting
the Common Stock or the rights thereof, or dissolution or liquidation of the
Company, or any sale or transfer of all or any part of the Company's assets or
business or any other corporate act or proceeding, whether of a similar
character or otherwise.
13. Interpretation by Committee. As a condition of the granting of
the Option, the Optionee agrees, for himself and his legal representatives or
guardians, that this Agreement shall be interpreted by the Committee and that
any interpretation by the Committee of the terms of this Agreement and any
determination made by the Committee pursuant to this Agreement shall be final,
binding and conclusive.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officers and its corporate seal to be hereunto
affixed, and the Optionee has hereunto affixed his hand and seal as of the day
and year first above written.
GEHL COMPANY
By: __________________________________________
[CORPORATE SEAL] Attest: ______________________________________
(SEAL)
____________________________________ , Optionee
Beneficiary:___________________________________
Address of Beneficiary:________________________
Beneficiary's Tax Identification
No.: __________________________________________
GEHL COMPANY
1995 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
FOR NON-EMPLOYEE DIRECTORS
THIS AGREEMENT, dated as of this _____ day of ________________,
____, by and between Gehl Company, a Wisconsin corporation (the "Company"),
and _________________ (the "Optionee").
W I T N E S S E T H :
WHEREAS, the Company has adopted the Gehl Company 1995 Stock Option
Plan (the "Plan"), the terms of which, to the extent not stated herein, are
specifically incorporated by reference in this Agreement; and
WHEREAS, the Plan authorizes the automatic grant of options to
purchase shares of the Company's Common Stock, $.10 par value (the "Common
Stock"), to members of the Company's Board of Directors who are not employees
of the Company or any affiliate of the Company (a "Non-Employee Director");
and
WHEREAS, the Optionee is now a Non-Employee Director, and the
Company desires him to continue as a member of the Company's Board of
Directors and to secure or increase his stock ownership in the Company as an
added incentive for him to continue his association with the Company.
NOW, THEREFORE, in consideration of the premises and of the
covenants and agreements herein set forth, the parties hereby mutually
covenant and agree as follows:
1. Grant of Option. Subject to the terms and conditions of the
Plan and this Agreement, the Company hereby grants to the Optionee an option
(the "Option") to purchase from the Company all or any part of the aggregate
amount of 2,000 shares of Common Stock (the "Optioned Shares"). The Option is
intended to constitute a non-qualified stock option and shall not be treated
as an incentive stock option within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended, or any successor provision thereto.
2. Option Price. The per share exercise price to be paid for the
Optioned Shares shall be $_____.
3. Exercisability and Termination of Option. The Option may be
exercised by the Optionee only in accordance with the following schedule:
Cumulative Percentage of
Shares Subject
to Option Which May be
Purchased (which number of
shares shall be rounded
Elapsed Period of Time down to the nearest whole
After Date Option is Granted number)
Less than One (1) Year 0%
One (1) Year 33-1/3%
Two (2) Years 66-2/3%
Three (3) Years 100%
Notwithstanding the foregoing schedule, if the Optionee ceases to be a
director of the Company by reason of death, disability or retirement prior to
______________, ____, or in the event of a Change of Control of the Company
(as defined in the Plan) prior to ______________, ____, the Option shall
become immediately exercisable in full. The Option shall terminate on the
earlier of: (i) _______________, ____; or (ii) twelve months after the
Optionee ceases to be a director of the Company for any reason, including as a
result of the Optionee's death, disability or retirement.
4. Manner of Exercise and Payment. Subject to the provisions of
Paragraph 3 hereof and the Plan, the Option may be exercised in full at any
time or in part from time to time by delivery to the Secretary of the Company
at the Company's principal office in West Bend, Wisconsin, of a written notice
of exercise specifying the number of shares with respect to which the Option
is being exercised. The notice of exercise must be accompanied by payment in
full of the exercise price of the shares being purchased: (i) in cash or its
equivalent; (ii) by tendering previously acquired shares of Common Stock
(valued at their "market value" as of the date of exercise, as determined in
the manner provided in Section 6(b)(iv) of the Plan); or (iii) by any
combination of the means of payment set forth in subparagraphs (i) and (ii).
For purposes of subparagraphs (ii) and (iii) above, the term "previously
acquired shares of Common Stock" shall only include shares of Common Stock
owned by the Optionee prior to the exercise of the Option for which payment is
being made and shall not include shares of Common Stock which are being
acquired pursuant to the exercise of the Option. No shares shall be issued
until full payment therefor has been made.
5. Nontransferability of the Option. The Option shall not be
transferable by the Optionee other than by will or the laws of descent and
distribution; provided, however, that the Optionee shall be entitled, in the
manner provided in Paragraph 6 hereof, to designate a beneficiary to exercise
his rights, and to receive any shares of Common Stock issuable, with respect
to the Option upon the death of the Optionee. The Option may be exercised
during the lifetime of the Optionee only by the Optionee or, if permitted by
applicable law, the Optionee's guardian or legal representative.
6. Designation of Beneficiary. (a) The person whose name appears
on the signature page hereof after the caption "Beneficiary" or any successor
designated by the Optionee in accordance herewith (the person who is the
Optionee's beneficiary at the time of his death herein referred to as the
"Beneficiary") shall be entitled to exercise the Option, to the extent it is
exercisable, after the death of the Optionee. The Optionee may from time to
time revoke or change his Beneficiary without the consent of any prior
Beneficiary by filing a new designation with the Compensation and Benefits
Committee of the Board of Directors of the Company or such other committee of
the Board which shall have been designated to administer the Plan (the
"Committee"). The last such designation received by the Committee shall be
controlling; provided, however, that no designation, or change or revocation
thereof, shall be effective unless received by the Committee prior to the
Optionee's death, and in no event shall any designation be effective as of a
date prior to such receipt.
(b) If no such Beneficiary designation is in effect at the time of
the Optionee's death, or if no designated Beneficiary survives the Optionee or
if such designation conflicts with law, the Optionee's estate shall be
entitled to exercise the Option, to the extent it is exercisable after the
death of the Optionee. If the Committee is in doubt as to the right of any
person to exercise the Option, the Company may refuse to recognize such
exercise, without liability for any interest or dividends on the Optioned
Shares, until the Committee determines the person entitled to exercise the
Option, or the Company may apply to any court of appropriate jurisdiction and
such application shall be a complete discharge of the liability of the Company
therefor.
7. Capital Adjustments Affecting the Common Stock. The number of
Optioned Shares subject hereto and the related per share exercise price shall
be subject to adjustment in accordance with Section 4(b) of the Plan.
8. Transfer Restrictions. The shares to be acquired upon exercise
of the Option may not be sold or otherwise disposed of except pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
or in a transaction which, in the opinion of counsel for the Company, is
exempt from registration under said Act.
9. Status of Optionee. The Optionee shall have no rights as a
shareholder with respect to shares covered by the Option until the date of
issuance of stock certificates to the Optionee and only after such shares are
fully paid. The Option shall not confer upon the Optionee the right to
continue as a director of the Company.
10. Interpretation by Committee. As a condition of the granting of
the Option, the Optionee agrees, for himself and his personal representatives,
that this Agreement shall be interpreted by the Committee and that, subject to
the express terms of the Plan, any interpretation by the Committee of the
terms of this Agreement and any determination made by the Committee pursuant
to this Agreement shall be final, binding and conclusive.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officers and its corporate seal to be hereunto
affixed, and the Optionee has hereunto affixed his hand and seal as to the day
and year first above written.
GEHL COMPANY
By:____________________________________
[SEAL] Attest:________________________________
[SEAL]
_________________, Optionee
Beneficiary:______________________________
Address of
Beneficiary:_____________________________
Beneficiary's Tax
Identification No.:______________________
[Page 8 of the Annual Report]
Report of Management
The management of Gehl Company is responsible for the preparation and
integrity of all financial statements and other information contained in this
annual report. The financial statements have been prepared by the Company in
conformity with generally accepted accounting principles appropriate in the
circumstances. Such statements necessarily include amounts based on the best
estimates and judgments of management after giving due consideration to
materiality.
The Company maintains an internal control system designed to provide
reasonable assurance that transactions are properly recorded and executed in
accordance with management s authorization and that assets are safeguarded
from loss or unauthorized use. The internal control system is augmented by
careful selection and training of qualified employees, proper division of
responsibilities, and the development and dissemination of written policies
and procedures.
The Board of Directors elects, from among its members, an Audit Committee,
consisting entirely of outside directors, which is responsible for reviewing
and evaluating the overall performance of the Company's financial reporting
and accounting practices and for recommending appointment of the independent
accountants. The Audit Committee meets periodically with management and the
independent accountants to discuss any and all matters within the Committee's
responsibilities. The independent accountants have free access to the
Committee, without the presence of management if so requested.
The Company's financial statements have been audited by Price Waterhouse LLP,
independent accountants, whose report also appears on this page. Included in
the audit process was a review of the Company's system of internal controls.
Price Waterhouse LLP annually provides to management and the Audit Committee a
supplemental report which includes comments on the adequacy of the system and
recommendations for any improvements.
William D. Gehl
President and Chief Executive Officer
Kenneth F. Kaplan
Vice President and Chief Financial Officer
Report of Independent Accountants
PRICE WATERHOUSE LLP
To the Board of Directors and Shareholders of Gehl Company
In our opinion, the statements appearing on pages 14 through 23 of this report
present fairly, in all material respects, the financial position of Gehl
Company and its subsidiaries at December 31, 1995 and 1994, and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1995, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
the Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Milwaukee, Wisconsin
February 12, 1996
<PAGE>
[Pages 9 through 13 of the Annual Report]
Management's Discussion and Analysis
Overview
Gehl Company's net income in 1995 was $9.0 million, or $1.44 per share, a
79% increase from $5.0 million, or $.82 per share, earned in 1994. Net sales
in 1995 increased 5% to $153.5 million from $146.6 million in 1994. Gehl
Construction 1995 net sales increased 24% to $64.4 million, while Gehl
Agriculture 1995 net sales decreased 6% to $89.1 million. Gehl Construction
comprised 42% of Company net sales in 1995 versus 35% in 1994 and 32% in 1993.
Gehl Agriculture's sales were 58% of Company net sales in 1995, down from 65%
in 1994.
Operating profit in 1995 increased 5% to $13.6 million. Gehl
Construction accounted for $13.2 million of the operating profit, while Gehl
Agriculture contributed the balance of $449,000. Interest expense in 1995
declined $978,000, or 15%, to $5.7 million. Other expense, which was $2.9
million in 1994, decreased in 1995 to $537,000.
The Company continued to reduce its Gehl Agriculture accounts receivable
in 1995, from $63.3 million at December 31, 1994 to $ 55.0 million at December
31, 1995. Cash flow provided by operating activities was $9.7 million,
following $19.5 million provided in 1994. Cash flow generated in 1995 was
used in part to reduce debt by $8.0 million to $46.9 million at December 31,
1995. The Company has reduced its debt by $50.8 million during the last three
years. The Company's ratio of debt to total capital was 45.7% at December 31,
1995, as compared to 54.2% and 64.0% at December 31, 1994 and 1993,
respectively.
Results of Operations
1995 vs. 1994
Net Sales:
1995 1994 1993 1992 1991
($ millions)
Gehl
Construction $64.4 $51.8 $43.3 $38.5 $37.0
Gehl
Agriculture 89.1 94.8 93.9 91.2 90.3
---- ------ ------ ------ ------
Total $153.5 $146.6 $137.2 $129.7 $127.3
(% of total)
Gehl
Construction 42.0% 35.3% 31.5% 29.7% 29.1%
Gehl
Agriculture 58.0% 64.7% 68.5% 70.3% 70.9%
Net sales for 1995 of $153.5 million were 5% greater than the $146.6
million of net sales in 1994. Gehl Construction net sales in 1995 were $64.4
million, 24% higher than sales of $51.8 million in 1994. The increase from
1994 levels was primarily due to increased shipments of rough- terrain
telescopic forklifts and skid steer loaders, the latter both domestically and
internationally. Continued strong demand in the Company's residential and
non-residential construction markets and ongoing general construction activity
propelled the sales growth.
Gehl Agriculture net sales in 1995 decreased 6% to $89.1 million from
$94.8 million in 1994. The decrease was due in part to weaker industry-wide
demand for agricultural implements during 1995 and in part to the Company's
continuing efforts to ship product to its agricultural dealers at levels below
the dealers' sales to farmers, thereby reducing field inventory levels at its
dealers.
Gross Profit:
1995 gross profit of $44.6 million was 3% higher than 1994's $43.3
million. The increase was due primarily to higher sales volume. Gross profit
as a percent of net sales decreased slightly in 1995 to 29.1% from 29.5% in
1994.
Gehl Construction's gross profit as a percent of net sales increased to
32.2% in 1995 from 28.6% in 1994. The substantial improvement resulted
primarily from: 1) increased sales of higher margin rough-terrain telescopic
forklifts; and 2) lower unit product costs due to increased overhead
absorption at higher production levels and productivity improvements at both
of the Company's construction plants.
Gehl Agriculture's 1995 gross profit as a percent of net sales decreased
to 26.8% from 30.0% in 1994. This decrease was due primarily to: 1) the
impact of a change in the mix of products shipped in 1995 versus products
shipped in 1994; 2) increased unit costs due to lower overhead absorption
associated with decreases in the levels of production; and 3) increased price
competition due in part to higher inventory levels among the Company's
competitors.
Selling, General and Administrative Expenses:
Selling, general and administrative expenses increased $688,000, or 2%,
to $31.0 million in 1995 as compared to expenses of $30.3 million in 1994. As
a percent of sales, however, selling, general, and administrative expenses
decreased to 20.2% in 1995 from 20.7% in 1994. The increased expenses in 1995
resulted primarily from higher agricultural equipment sales promotion costs
which were incurred to stimulate market demand, partially offset by lower
product liability expenses.
Income (Loss) from Operations:
($ millions) 1995 1994 1993 1992 1991
Gehl Construction $13.2 $8.6 $1.8 $(2.5) $(4.8)
Gehl Agriculture .4 4.4 5.5 (4.4) (8.6)
----- ------ ------ ------ ------
Total $13.6 $13.0 $7.3 $(6.9) $(13.4)
Due primarily to higher net sales, income from operations in 1995
increased 5% from 1994 to $13.6 million. Gehl Construction income from
operations increased 54% in 1995 to $13.2 million from $8.6 million in 1994.
Increased sales volume and higher gross profit margin were the major factors
for the improvement. Income from operations in Gehl Agriculture fell from
$4.4 million in 1994, including a $2.6 million charge to operations for
discontinued products, to $449,000 in 1995. The decrease was primarily due
to lower sales volume and to reduced gross profit margin.
Interest Expense:
Interest expense decreased $978,000, or 15%, to $5.7 million in 1995.
During the last three years, interest expense has declined $4.4 million, or
43%, from 1992's $10.1 million peak. Reductions in interest-bearing debt from
$97.7 million at the end of 1992 to $46.9 million at December 31, 1995,
retirement of the Company's $10 million, 12.6% subordinated debt in November
1994 and lower interest rate mark-ups negotiated with the Company's primary
lender and implemented in October 1994, have resulted in the significant
reduction in the Company's interest expense. Despite the lower interest rate
mark-ups, the average rate of interest paid by the Company in 1995 was 9.8%
compared to 9.6% in 1994, due to the prime rate, upon which the Company's
interest rates were based, averaging approximately 8.8% in 1995 versus 7.1% in
1994.
Other Income (Expense), Net:
Other expense decreased $2.4 million in 1995 to $537,000 from $2.9
million in 1994. The reduction in expense was due primarily to: 1) a gain of
$142,000 on four variable rate sales of finance contracts made in 1993 and
1994 versus a loss of $492,000 recorded on these same sales in 1994, an
improvement of $634,000; 2) a reduction of $608,000 in the costs of selling
finance contracts receivable to third parties in 1995 as compared with 1994;
3) a one-time $400,000 prepayment fee associated with the subordinated debt
retirement in November 1994; 4) a $358,000 reduction in deferred financing
fees amortization; and 5) a $107,000 Canadian foreign exchange gain recorded
in 1995 versus a $181,000 exchange loss in 1994, an improvement of $288,000.
Provision for Income Taxes:
Under generally accepted accounting principles, the Company was not
required to record a federal income tax provision related to its 1995 pre-tax
income due to the existence of net operating loss and tax credit
carryforwards. The $150,000 provision for taxes made in 1995 related
primarily to state tax requirements. Since the Company will have utilized the
majority of its tax loss carryforwards by the end of 1995, the Company expects
to provide for income taxes at a rate of approximately 20% in 1996.
Net Income:
Net income in 1995 of $9.0 million was 79% higher than 1994's $5.0
million net income. 1995 earnings per common share of $1.44 compares to
earnings of $.82 per share in 1994. No dividends were declared in 1995 on the
Company's common stock.
1994 vs. 1993
Net Sales:
Net sales for 1994 of $146.6 million increased 7% from $137.2 million in
1993. Gehl Construction 1994 net sales were $51.8 million, a 20% increase
from 1993's $43.3 million. The sales increase was attributable to strong
demand in the residential and non-residential construction markets. The
Company's rough-terrain telescopic forklifts and skid steer loaders were the
primary beneficiaries of the strong markets.
Gehl Agriculture sales in 1994 were $94.8 million, slightly greater than
1993's $93.9 million. The Company continued during 1994 to reduce dealer
field inventories by shipping to its agricultural dealers (wholesale sales) at
levels below sales by such dealers to their customers (retail sales). In each
of the last two years Gehl Agriculture retail sales by dealers exceeded
wholesale sales to dealers by approximately $10 million. Overall demand for
the Company's agricultural products in 1994 was about the same as in 1993.
Gross Profit:
Gross profit in 1994 increased 11% to $43.3 million as compared to $38.9
million in 1993. The increase was due primarily to higher sales volume,
changes in the product mix of shipments, and a reduction in the Company's
overall cost structure relating to the move, in January 1994, of asphalt paver
manufacturing to Gehl's Yankton, South Dakota plant from the Lithonia, Georgia
leased plant which was closed in January 1994. Gross profit as a percent of
net sales rose to 29.5% in 1994 from 28.3% in 1993. Gross profit as a percent
of net sales for Gehl Construction increased to 28.6% in 1994 from 24.1% in
1993. The primary reasons for this increase were: 1) lower product cost due
to productivity improvements and increased overhead absorption at higher
production levels; 2) savings resulting from the transfer of asphalt paver
production to the Yankton, South Dakota plant; 3) the discontinuance of
several low or no margin construction products; 4) a reduction in sales
discounts; and 5) export sales, typically made at a lower gross margin than
domestic sales, constituting a smaller portion of sales in 1994 than in 1993.
Gross profit as a percent of net sales of Gehl Agriculture decreased to 30.0%
from 30.3% in 1993. The slight decrease was due primarily to the
establishment of an inventory reserve for discontinued agriculture products
which offset a favorable change in the mix of products shipped in 1994 versus
1993. (See "Selling, General and Administrative Expenses" following.)
Selling, General, and Administrative Expenses:
Selling, general and administrative expenses decreased $1.2 million, or
4%, in 1994 as compared to 1993. As a percent of sales, selling, general and
administrative expenses decreased to 20.7% in 1994 from 23.0% in 1993. In the
three year period ended December 31, 1994, the combined expense reductions
total nearly $15 million and the percent of sales has been reduced to 20.7% in
1994 from 35% in 1991. The decrease in 1994 from 1993 resulted primarily from
reduced charges for allowances for doubtful accounts, lower sales promotional
costs, and lower warranty costs, partially offset by the establishment of a
reserve for discontinued agriculture products. In 1993, the Company had
accrued $1.0 million for allowances for doubtful accounts relating to a
European distributor. The Company accrued an additional $650,000 for this
matter during the first half of 1994. By the end of 1994, the distributor was
current in all obligations and the distributor's liquidity problems had been
resolved. Accordingly, the Company reversed to income the $1.65 million
reserve in the fourth quarter of 1994.
In 1994, the Company charged $1.8 million to selling, general and
administrative expenses, and another $800,000 to cost of goods sold, to
establish a $2.6 million reserve for discontinued agriculture products. Of
this reserve, $2.2 million was recorded in the fourth quarter of 1994. The
Company, in order to focus its engineering, manufacturing, and sales efforts
on its more profitable core products, identified several products or product
models to prune from its product offering. In each instance the product to be
discontinued had a low margin, low market share, and was near the end of its
product life. The reserve established provides primarily for costs associated
with retailing such products in dealer inventories at year-end 1994 and for
factory inventory valuation adjustments. In 1994, the Company's sales of the
discontinued products were approximately $7.5 million.
Income from Operations:
Income from operations in 1994 of $13.0 million increased 77% from $7.3
million in 1993. The improvement in 1994 was due to increased sales volume,
improved gross profit as a percent of sales and lower selling, general and
administrative expenses. Gehl Construction income from operations increased
367% from $1.8 million in 1993 to $8.6 million in 1994. This increase in
income from operations resulted primarily from increased sales volume and
gross margin improvement. While Gehl Agriculture income from operations
decreased from $5.5 million in 1993 to $4.4 million in 1994, without the
establishment of a $2.6 million reserve for discontinued products (See
"Selling, General and Administrative Expenses" preceding), income from
operations would have increased to $7.0 million in 1994.
Interest Expense:
Interest expense decreased $1.7 million, or 20%, in 1994. The decrease
resulted from a reduction in average debt outstanding in 1994 to $68.4
million, a 22% decrease from $87.2 million in 1993. The average rate of
interest paid by the Company in 1994 rose to 9.6% from 9.5% in 1993 due to
increases in the prime rate which serves as the base for Gehl's debt under its
line of credit facility. This increase was partially offset by the impact of
retiring the Company's $10 million, 12.6% subordinated debt in November 1994,
and by a decrease in the mark-up over the prime rate on the Company's loans
under its line of credit facility (effective October 1994).
Other Income (Expense), Net:
Other expense rose to $2.9 million in 1994 from $161,000 in 1993. The
increase in expense was due primarily to: 1) a $1.3 million increase in the
cost of selling finance contracts receivable to third parties in 1994 due to
rising interest rates; 2) one-time gains on the sale of a paid-up patent
license and a favorable lawsuit settlement, together totalling $755,000, which
positively impacted 1993 results, and 3) a $400,000 prepayment fee on the
early retirement in November 1994 of the Company's $10 million, 12.6%
subordinated debt.
Provision for Income Taxes:
Under generally accepted accounting principles, the Company was not
required to record a federal income tax provision related to either its 1994
or 1993 pre-tax income due to the existence of net operating loss
carryforwards.
Net Income:
Net income in 1994 of $5.0 million compares to $241,000 in 1993. The
1994 earnings per common share of $.82 improved from $.04 per share for 1993.
No dividends were declared in either 1994 or 1993 on the Company's common
stock.
Liquidity and Capital Resources
Working Capital:
The Company's working capital decreased 2% to $72.6 million at December
31, 1995 from $73.9 million twelve months earlier. The current ratio of the
Company at December 31, 1995 decreased slightly to 3.5 to 1 from 3.6 to 1 at
the same time a year ago. Cash on hand at December 31, 1995 was $3.3 million
as compared to $2.6 million a year earlier.
Cash Flow Provided by (Used for) Operating Activities:
($ thousands) 1995 1994 1993 1992 1991
Cash Flow $9,701 $19,522 $26,113 $(162) $6,061
In 1995 cash flow provided by operating activities was $9.7 million as
compared to $19.5 million in 1994. Net income before depreciation and
amortization was primarily responsible for the positive cash flow. The
decrease from 1994 was due to lower cash flow provided by reductions in
accounts receivable in 1995 as compared with 1994. The smaller reduction in
accounts receivable was due to field inventory levels at the Company's
agricultural equipment dealers being at more appropriate levels. The 1995
cash flow was used primarily to repay $8.0 million of debt.
Accounts Receivable:
The Company's net accounts receivable decreased $3.3 million, or 5%, from
$72.4 million at December 31, 1994 to $69.1 million at December 31, 1995.
Gehl Agriculture accounts receivable at year-end 1995 decreased $8.3 million
from a year earlier, while Gehl Construction accounts receivable increased
$5.0 million over the same period. The Gehl Construction increase reflected
growth in sales volume and unusually low international construction
receivables at December 31, 1994.
Finance Contracts Receivable:
Finance contracts receivable increased $2.1 million to $7.7 million at
December 31, 1995. The combined portfolio of owned and sold-but-serviced
finance contracts receivable was $55.5 million at December 31, 1995 as
compared to $57.7 million at year-end 1994. (See "Sales of Finance Contracts
Receivable" following.)
Capital Expenditures:
($ thousands) 1995 1994 1993 1992 1991
Capital expenditures $2,437 $2,505 $809 $1,473 $10,766
Depreciation $2,520 $2,692 $2,940 $3,093 $2,682
The Company expended $2.4 million for property, plant, and equipment in
1995. The majority of 1995 expenditures were incurred to upgrade and maintain
machinery and equipment, to enhance capability, to improve productivity, and
to improve product quality. At December 31, 1995, Gehl had no significant
outstanding commitments for capital items. The Company plans to make
approximately $4.0 million in capital expenditures in 1996. The Company
believes its present facilities are sufficient to provide adequate capacity
for its operations in 1996.
Debt and Equity:
($ millions) - December 31 1995 1994 1993 1992 1991
Total Debt $46.9 $54.9 $72.8 $97.7 $103.0
Shareholders' Equity $55.7 $46.3 $40.9 $40.4 $58.2
% Total Debt to
Total Capitalization 45.7% 54.2% 64.0% 70.7% 63.9%
At December 31, 1995, shareholders' equity had increased $9.4 million to
$55.7 million from $46.3 million a year earlier. By reducing its debt $8.0
million to $46.9 million, the Company lowered its capitalization ratio to
45.7% at December 31, 1995.
Borrowing Arrangements (See also Note 5 of Notes to Consolidated Financial
Statements):
Effective December 1, 1995, the Company and its primary lender amended
their Amended and Restated Loan and Security Agreement (the "Facility"). The
revised agreement extended the term of this revolving loan Facility through
December 31, 1998, lowered interest rates, and modified other terms and
conditions. Total borrowing capacity remains at $75 million under the
Facility, subject to a borrowing base related to the Company's accounts
receivable, finance contracts receivable, and inventories. Under the terms of
the Facility, the interest rate Gehl pays on loans denominated in U.S. dollars
was lowered from .50% above the U.S. prime rate to 2.00% above the London
Interbank Offered Rate for one-month deposits ("LIBOR"). In Canada, where the
Company may borrow up to $6.5 million, the interest rate was lowered to 2.50%
above Canadian one-month bankers' acceptance rates ("BA Rate") from 1.5% above
the Canadian prime rate. Under the Facility the base LIBOR and BA Rate are
adjusted weekly. The Facility has a net worth covenant and a debt to equity
covenant which were not changed. The Company continues to operate within the
requirements of these covenants. At December 31, 1995, the Company had unused
borrowing capacity of $27.4 million under the Facility, versus $19.2 million a
year earlier. Management believes the Facility provides sufficient borrowing
capacity for the Company to finance its operations for the foreseeable future.
The Company also has outstanding $8.4 million of 9% industrial
development bonds ("IDB") with a 2010 final maturity; repayments commence in
2005. The IDB agreement has a net worth covenant and a debt to equity
covenant; the Company continues to be in compliance with these covenants.
Sales of Finance Contracts Receivable:
The sale of finance contracts is an important component of the Company's
overall liquidity. Gehl has arrangements with several financial institutions
and financial service companies to sell, with recourse, its finance contracts
receivable. The Company continues to service all contracts whether or not
sold. At December 31, 1995, Gehl serviced $55.5 million of such contracts, of
which $47.2 million were owned by third parties. Losses on finance contracts
due to customer nonperformance were $365,000 in 1995 as compared to $570,000
in 1994. As a percentage of outstanding serviced contracts, the loss ratios
were .7% and 1.0% in 1995 and 1994, respectively.
The Company incurred $534,000 of costs in selling $31.4 million of its
finance contracts in 1995, as compared to $1.1 million of costs in selling
$34.4 million of such contracts in 1994. The costs arise primarily from the
difference between the weighted average interest rate on the contracts being
sold and the interest rate negotiated with the purchaser of the contracts. In
1995, the Company's cost of selling such contracts decreased $608,000 from
1994 due to reductions in: 1) the interest rates serving as the base for the
sales of such contracts, and 2) the mark-ups above these interest rates
negotiated with the various purchasers. The Company's costs of selling
finance contracts were further offset by $142,000 of gains during 1995 on the
sale of finance contracts made under several variable rate agreements entered
into between June 1993 and February 1994. These gains were due to decreasing
interest rates in the economy.
Management believes the Company has sufficient capacity to meet its
requirements to sell its finance contracts for the foreseeable future.
Contingencies:
The Company has received notification from the City of West Bend,
Wisconsin that it may have some financial responsibility for environmental
remediation at a landfill site in West Bend. The amount of the Company's
potential obligation, if any, is not presently determinable. (For additional
information on this site, see Note 11 of Notes to Consolidated Financial
Statements).
<PAGE>
[Pages 14 through 23 of the Annual Report]
GEHL COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
In Thousands, Except Share Data - December 31, 1995 1994
Assets
Cash $ 3,266 $ 2,570
Accounts receivable - net 69,087 72,393
Finance contracts receivable - net 4,817 3,389
Inventories 23,320 21,452
Prepaid expenses and other assets 1,676 2,817
________ ________
Total current assets 102,166 102,621
________ ________
Property, plant and equipment - net 20,315 20,433
Finance contracts receivable - net, non-current 2,899 2,258
Other assets 8,118 5,715
________ ________
Total assets $133,498 $131,027
======== ========
Liabilities and Shareholders' Equity
Current portion of long-term debt obligations $ 197 $ 180
Accounts payable 14,083 14,477
Accrued liabilities 15,281 14,053
________ ________
Total current liabilities 29,561 28,710
________ ________
Line of credit facility 37,848 45,879
Long-term debt obligations 8,818 8,821
Other long-term liabilities 1,592 1,334
________ ________
Total long-term liabilities 48,258 56,034
________ ________
Common stock, $.10 par value, 25,000,000 shares
authorized, 6,216,765 and 6,169,523 shares
outstanding at December 31, 1995 and 1994,
respectively 622 617
Preferred stock, $.10 par value, 2,000,000
shares authorized, no shares issued -- --
Capital in excess of par 26,580 26,133
Retained earnings 28,477 19,533
________ ________
Total shareholders' equity 55,679 46,283
________ ________
Total liabilities and shareholders' equity $133,498 $131,027
======== ========
Contingencies (Notes 2 and 11)
The accompanying notes are an integral part of
the financial statements.
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
In Thousands, Except Per Share Data -
Year Ended December 31, 1995 1994 1993
Net sales $153,452 $146,620 $137,218
Cost of goods sold 108,838 103,346 98,335
________ ________ ________
Gross profit 44,614 43,274 38,883
Selling, general and administrative
expenses 31,001 30,313 31,544
________ ________ ________
Income from operations 13,613 12,961 7,339
Interest expense (5,733) (6,711) (8,364)
Interest income 1,820 1,715 1,552
Other income (expense), net (537) (2,930) (161)
________ ________ ________
Income before income taxes 9,163 5,035 366
Provision for income taxes 150 --- 125
________ ________ ________
Net income $ 9,013 $ 5,035 $ 241
======== ======== ========
Net income per common share $ 1.44 $ .82 $ .04
======== ======== ========
The accompanying notes are an integral
part of the financial statements.
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
In Thousands Capital In
Common Excess of Retained
Stock Par Earnings Total
Balance at December 31, 1992 $588 $25,417 $14,400 $40,405
Net income -- -- 241 241
Exercise of stock options 3 120 -- 123
Issuance of stock 4 119 -- 123
Issuance of restricted stock
grants and related
amortization of unearned
compensation - net 18 164 -- 182
Minimum liability adjustment -- -- (179) (179)
____ _______ ________ ________
Balance at December 31, 1993 613 25,820 14,462 40,895
Net income -- -- 5,035 5,035
Exercise of stock options 4 131 -- 135
Amortization of unearned
compensation related to
restricted stock grants -- 182 -- 182
Minimum liability adjustment -- -- 36 36
____ _______ _______ _______
Balance at December 31, 1994 617 26,133 19,533 46,283
Net income -- -- 9,013 9,013
Exercise of stock options 5 265 -- 270
Amortization of unearned
compensation related to
restricted stock grants -- 182 -- 182
Minimum liability adjustment -- -- (69) (69)
____ _______ _______ _______
Balance at December 31, 1995 $622 $26,580 $28,477 $55,679
==== ======= ======= =======
The accompanying notes are an integral part of the financial statements.
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands - Year Ended
December 31, 1995 1994 1993
Cash Flows from Operating Activities
Net income $ 9,013 $ 5,035 $ 241
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 2,865 3,767 4,191
(Gain) loss on sale of equipment (13) 8 (5)
Cost of sales of finance contracts 534 1,142 294
Deferred income taxes (2,071) (900) --
Proceeds from sales of finance
contracts 30,062 31,935 39,331
Increase (decrease) in cash
due to changes in:
Restricted cash -- -- 1,548
Accounts receivable - net 3,306 12,576 16,212
Finance contracts receivable -
net (33,432) (33,241) (38,265)
Inventories (1,868) 181 2,450
Refundable income taxes -- -- 2,422
Prepaid expenses and other
assets 231 155 (462)
Other assets 240 113 (164)
Accounts payable (394) (1,307) (935)
Accrued liabilities 1,228 58 (745)
________ ________ ________
Net cash provided by
operating activities 9,701 19,522 26,113
________ ________ ________
Cash Flows from Investing Activities
Increase in unexpended
plant construction fund (16) (7) (5)
Proceeds from sale of equipment 47 42 28
Property, plant and equipment
additions (2,437) (2,505) (809)
Decrease (increase) in
other assets 777 1,100 (998)
Other 113 217 126
________ ________ ________
Net cash (used for) investing
activities (1,516) (1,153) (1,658)
________ ________ ________
Cash Flows from Financing Activities
Increase (decrease) in other
long-term obligations 14 (9,828) (20,965)
Repayment of
revolving credit loans (8,031) (8,100) (3,903)
Increase in other long-
term liabilities 258 536 113
Proceeds from issuance of common
stock 270 135 123
________ ________ ________
Net cash (used for)
financing activities (7,489) (17,257) (24,632)
________ ________ ________
Net increase (decrease) in cash 696 1,112 (177)
Cash, beginning of year 2,570 1,458 1,635
________ ________ ________
Cash, end of year $ 3,266 $ 2,570 $ 1,458
======== ======== ========
The accompanying notes are an integral part of the financial statements.
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
Note 1 Significant Accounting Policies
Consolidation: Gehl Company is engaged in the manufacture and distribution of
equipment and machinery for the construction market, and in the manufacture
and distribution of farm equipment and machinery primarily for the dairy,
livestock and poultry agricultural sector. The consolidated financial
statements include the accounts of the Company and its wholly-owned
subsidiaries: Hedlund Martin, Inc.; Gehl Power Products, Inc.; and Gehl
International, Inc., a foreign sales corporation. All significant
intercompany transactions and balances are eliminated.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions, in certain circumstances, that affect the reported amounts of
assets and liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting period.
Ultimate realization of assets and settlement of liabilities in the future
could differ from those estimates. Revenue Recognition: Revenue is recorded
upon the shipment of products to dealers and distributors; these dealers and
distributors have no right of return, except as provided by law.
Accounts Receivable: The Company provides financing for its dealers in both
the construction and agricultural markets. The financing agreements provide
for, in certain instances, interest-free periods which generally range from 4
to 12 months.
Finance Contracts Receivable: The Company offers financing for
its products to retail customers and to its dealers through its finance
division. Finance contracts require periodic installments of principal and
interest over periods of up to 60 months. Unearned interest is recognized
over the life of the contracts using the sum of the digits method. Principal
expected to be collected within twelve months of the balance sheet date is
classified as a current asset; the remainder is classified as a non-current
asset.
Inventories: Inventories are valued at the lower of cost or market. Cost is
determined by the last-in, first-out (LIFO) method for substantially all of
the Company's inventories.
Properties and Depreciation: Properties are stated at cost. When properties
are sold or otherwise disposed of, cost and accumulated depreciation are
removed from the respective accounts and any gain or loss is included in
income. The Company provides for depreciation of assets generally using the
straight-line method for financial reporting purposes and accelerated methods
for income tax purposes. Expenditures which substantially increase value or
extend asset lives are capitalized. Expenditures for maintenance and repairs
are charged against income as incurred.
Debt Issue Costs: Costs incurred in conjunction with incurrance
of indebtedness are capitalized and subsequently amortized over the related
periods of the obligations.
Foreign Currency Transactions: Foreign currency transaction gains and losses
are included in the determination of income. Foreign currency gains (losses)
were $107,000, $(181,000) and $(124,000) in 1995, 1994 and 1993, respectively.
Income Taxes: The Company follows the liability method in accounting for
income taxes. The liability method provides that deferred tax assets and
liabilities be recorded based on the difference between the tax bases of
assets and liabilities and their carrying amounts for financial reporting
purposes. The principal items that result in such differences are the
recognition of sales on the installment method for income tax purposes, the
recording of certain accruals for financial reporting purposes which are not
deductible until paid, and the use of accelerated depreciation methods for
income tax purposes.
Product Liability Costs: The Company directly assumes all liability for costs
associated with claims up to specified limits in any policy year. Known
incidents involving the Company's products are investigated and reserves are
established for any estimated liability.
Product Warranty Costs: In general, the Company provides warranty on equipment
for a period of up to twelve months or for a specified period of use after
sale or rental by the dealer. Reserves for estimated warranty costs are
established at the time of sale.
Environmental Costs: Environmental expenditures that relate to current
operations are expensed or capitalized as appropriate. Expenditures that
relate to an existing condition caused by past operations, and that do not
contribute to current or future revenue generation, are expensed.
Liabilities are recorded when environmental assessments and/or remedial
efforts are probable, and the costs can be reasonably estimated.
Research and Development Costs: Costs for research activities relating to
product development and improvement are charged against income as incurred.
Such costs amounted to approximately $1,363,000, $1,172,000 and $1,042,000 in
1995, 1994 and 1993, respectively.
Other Income (Expense): Other income (expense) is comprised primarily of
foreign currency transaction gains (losses), cost of sales of finance
contracts, amortization of debt issue costs, and royalty and license income
(expense).
Net Income Per Common Share: Net income per common share is computed by
dividing net income by the weighted average number of common shares and, if
applicable, common stock equivalents which would arise from the exercise of
stock options and warrants. The weighted average number of shares used in the
computations was 6,252,235, 6,174,476 and 6,097,472 for 1995, 1994 and 1993,
respectively.
Note 2 Accounts Receivable and Finance Contracts Receivable
Accounts receivable and finance contracts receivable were comprised of the
following (in thousands):
December 31, 1995 1994
Accounts receivable $73,092 $76,737
Less allowances for:
doubtful accounts (752) (639)
returns and dealer
discounts (3,253) (3,705)
_______ _______
$69,087 $72,393
======= =======
Finance contracts receivable $ 9,056 $ 6,556
Less: unearned interest (773) (405)
allowance for doubtful
accounts (567) (504)
_______ _______
7,716 5,647
Less: non-current portion (2,899) (2,258)
_______ _______
Current portion $ 4,817 $ 3,389
======= =======
The Company maintains a reserve for discontinued products. The allowance for
returns and dealer discounts contains $1.3 million and $1.6 million to reflect
the anticipated costs of retailing such products in dealer inventory at
December 31, 1995 and 1994, respectively.
The finance contracts receivable at December 31, 1995 have a weighted average
interest rate of 9.1% which approximates fair value.
The Company has entered into various agreements with third parties to sell
with recourse certain finance contracts receivable. The recourse provisions
of certain of these agreements require that the Company provide additional
collateral in the form of cash withheld at the time of sale. At December 31,
1995, $2.2 million of cash previously withheld by third party buyers was
provided as additional collateral. The finance contracts require periodic
installments of principal and interest over periods of up to 60 months;
interest rates are based on market conditions. The Company has retained the
servicing of these contracts which generally have maturities of 36 to 48
months. Amounts to cover potential losses on these sold receivables are
included in the allowance for doubtful accounts.
The following summarizes the Company's sales of retail finance contracts
receivable during 1995 and 1994 (in thousands):
1995 1994
Value of contracts sold
- net of $4.3 million and
$4.6 million, respectively,
of unearned interest $31,363 $34,437
Cash received on sales of
contracts 30,062 31,935
Cash withheld as additional
collateral 767 1,360
_______ _______
Cost of sales of finance
contracts $ 534 $ 1,142
======= =======
Net receivables outstanding
at December 31 relating
to finance contracts sold $47,178 $51,593
======= =======
The Company retains as collateral a security interest in the equipment
associated with accounts receivable and finance contracts receivable. The
Company also maintains certain levels of dealer recourse deposits as
additional security associated with finance contracts receivable.
Note 3 Inventories
If all of the Company's inventories had been valued on a current cost basis,
which approximates FIFO value, estimated inventories by major classification
would have been as follows (in thousands):
December 31, 1995 1994
Raw materials and supplies $ 4,151 $ 3,711
Work-in-process 9,893 10,252
Finished machines and
parts 28,149 24,346
________ ________
Total current cost value 42,193 38,309
Adjustment to LIFO basis (18,873) (16,857)
________ ________
$ 23,320 $ 21,452
======== ========
The Company maintains a reserve for discontinued products. An inventory
valuation adjustment of $625,000 and $800,000 was recorded to reflect the net
realizable value of such products in inventory at December 31, 1995 and 1994,
respectively.
Note 4 Property, Plant and Equipment - Net Property, plant and equipment
consisted of the following (in thousands):
December 31, 1995 1994
Land $ 1,411 $ 1,411
Buildings 17,344 16,800
Machinery and equipment 27,014 25,675
Autos and trucks 418 461
Office furniture and fixtures 7,459 7,216
_________ _________
53,646 51,563
Less: accumulated
depreciation (33,331) (31,130)
_________ _________
Property, plant and
equipment - net $ 20,315 $ 20,433
========= =========
Note 5 Debt Obligations
A summary of the Company's debt obligations, and related current maturities,
is as follows (in thousands):
December 31, 1995 1994
Line of credit facility $37,848 $45,879
9.0% industrial
development bonds 8,400 8,400
Other debt obligations 615 601
_______ _______
46,863 54,880
Less: current portion (197) (180)
_______ _______
Long-term debt obligations $46,666 $54,700
======= =======
Effective December 1, 1995, the Company's $75 million line of
credit facility (the "Facility") was amended. Interest is paid monthly on
outstanding borrowings under the amended Facility as follows: borrowings in
Canadian denominated dollars up to a $6.5 million credit line are at 2.50%
above Canadian one-month bankers' acceptance rates; the remainder of the
borrowings are in U.S. dollars and are at 2.0% above the London Interbank
Offered Rate for one-month deposits ("LIBOR"). Prior to the December 1, 1995
amendment, borrowings in Canadian denominated dollars were at 1.50% above the
Canadian prime rate and the U.S. borrowings were at .5% above the U.S. prime
rate. The term of the Facility was extended one additional year to December
31, 1998. Under the amended agreement, $25 million of the total $75 million
Facility continues to be tied to a borrowing base related to the Company's
finance contracts receivable and inventories. The remaining availability is
tied to a borrowing base related to the Company's accounts receivable.
Borrowings under the Facility are secured by finance contracts receivable,
inventories and accounts receivable. At December 31, 1995, the Company had
unused borrowing capacity of approximately $27.4 million under the Facility.
The Facility also includes financial covenants requiring the maintenance of a
minimum tangible net worth level and a maximum debt to equity ratio.
The 9% industrial development bonds are secured by the Company's Lebanon,
Pennsylvania manufacturing facility and require principal repayment in six
equal annual installments of $1.4 million commencing in 2005. The Company has
established a debt reserve fund of approximately $506,000 until the first
mandatory bond redemption period in 2003. The debt reserve fund was
established with remaining funds in the trustee-controlled unexpended plant
construction fund and interest subsequently earned. Financial covenants
related to the industrial development bonds require the maintenance of a
minimum tangible net worth level and a maximum debt to equity ratio.
Annual maturities of debt obligations are as follows (in thousands):
1996 $197
1997 138
1998 37,998
1999 93
2000 37
Later years 8,400
-------
$46,863
Interest paid on total debt obligations was $5.9 million, $6.9 million and
$8.4 million in 1995, 1994 and 1993, respectively.
Note 6 Accrued Liabilities
Accrued liabilities were comprised of the following
(in thousands):
December 31, 1995 1994
---- ----
Accrued salaries and wages $ 3,033 $ 2,644
Dealer recourse deposits 2,222 2,192
Accrued warranty costs 1,815 1,872
Accrued product liability costs 3,025 2,134
Other 5,186 5,211
----- -----
$15,281 $14,053
======= =======
Note 7 Income Taxes
The income tax provision (benefit) recorded for the years ended December 31,
1995, 1994 and 1993 consisted of the following (in thousands):
December 31, Federal State and Total
Foreign
1995 Current $ 2,303 $ 150 $ 2,453
Deferred (2,303) - (2,303)
________ ________ ________
Total $ - $ 150 $ 150
======== ======== ========
1994 Current $ 900 $ 78 $ 978
Deferred (900) (78) (978)
________ ________ ________
Total $ - $ - $ -
======== ======== ========
1993 Current $ -- $ 125 $ 125
Deferred -- -- --
________ ________ ________
Total $ -- $ 125 $ 125
======== ======== ========
Deferred income taxes are recorded based on the difference between the tax
bases of assets and liabilities and the carrying amounts for financial
reporting purposes offset by net operating loss and credit carryforwards.
In 1995, 1994 and 1993, the Company was not required, under generally accepted
accounting principles, to record a federal income tax provision due to the
existence of net operating loss and credit carryforwards.
A reconciliation between the reported income tax provision and the federal
statutory rate follows (as a percent of pre-tax income):
Year Ended December 31, 1995 1994 1993
Federal statutory rate 34.0% 34.0% 34.0%
Net operating loss utilized (34.0) (34.0) (34.0)
State income taxes, net of
Federal income tax effect 1.6 - 26.5
Other, net - - 7.5
_______ _______ _______
1.6% - 34.0%
======= ======= =======
The Company's temporary differences and carryforwards which
give rise to deferred tax assets and liabilities consisted of the following
(in thousands):
December 31, 1995 1994
Deferred Tax Assets:
Accrued expenses and reserves $ 3,582 $ 2,983
Asset valuation reserves 2,240 2,739
Operating loss carryforwards 1,024 4,721
Tax credit carryforwards 3,584 1,783
Other 197 280
________ ________
10,627 12,506
Valuation allowance (2,649) (5,687)
________ ________
Deferred Tax Asset $ 7,978 $ 6,819
======== ========
Deferred Tax Liabilities:
Installment sales $ 2,718 $ 3,547
Property, plant and equipment 1,222 1,309
Prepaid pension asset 788 869
Other 278 194
________ ________
Deferred Tax Liability $ 5,006 $ 5,919
======== ========
During 1995, the Company recorded a deferred tax benefit of $2,303,000 based
upon the estimated recoverability of its tax credit carryforwards as of
December 31, 1995. During 1994, the Company recorded a deferred tax benefit
of $900,000 based upon the estimated recoverability of its net operating loss
carryforwards as of December 31, 1994. The Company recorded valuation
allowances of $2.6 million and $5.7 million against deferred tax assets at
December 31, 1995 and 1994, respectively.
Cash paid (received) related to income taxes during 1995, 1994 and 1993 was
$3,012,000, $61,000 and $(2,520,000), respectively.
Note 8 Employee Retirement Plans
The Company maintains non-contributory defined benefit pension plans covering
the majority of its employees. The benefits provided by certain of the plans
are based on a defined monthly multiplier applied to the employee's length of
service, with the remaining plans providing benefits based primarily on years
of service and average compensation.
Net pension (income) expense includes the following components (in thousands):
Year Ended December 31, 1995 1994 1993
Service cost $ 411 $ 643 $ 486
Interest cost on projected
benefit obligation 1,830 1,726 1,660
Actual (return) loss on
plan assets (3,381) 4 (2,611)
Net amortization and
deferral 1,018 (2,260) 301
_______ _______ _______
Net periodic pension
(income) expense $ (122) $ 113 $ (164)
======= ======= =======
The following schedule details (in thousands) the funded status of the plans.
1995 1994 1993
Actuarial present value
of benefit obligation:
Vested $21,982 $19,299 $20,567
Nonvested 1,690 1,607 1,732
_______ _______ _______
Accumulated benefit
obligation 23,672 20,906 22,299
Effect of projected
salary increases 1,186 1,316 1,769
_______ _______ _______
Total projected benefit
obligation 24,858 22,222 24,068
Plan assets at fair
value 23,670 21,754 23,152
_______ _______ _______
Plan assets less than
projected benefit
obligation (1,188) (468) (916)
Unrecognized
transitional asset (1,093) (1,579) (2,015)
Prior service cost not
yet recognized in net
periodic pension cost 1,094 1,190 1,265
Unrecognized net loss 3,607 3,154 4,046
_______ _______ _______
Prepaid pension asset $ 2,420 $ 2,297 $ 2,380
======= ======= =======
The projected benefit obligation was determined using assumed discount rates
of 7.75% in 1995, 8.5% in 1994 and 7.5% in 1993, and assumed long-term rates
of compensation increase of 4% in 1995, 1994 and 1993. The measurement dates
used in the actuarial calculations were September 30 in 1995 and December 31
in 1994 and 1993. The annual long-term rate of return on plan assets was
assumed to be 9.0% in 1995, 1994 and 1993. Plan assets consist principally of
common stocks and fixed income investments. Funding for the plans equals or
exceeds the minimum requirements of the Employee Retirement Income Security
Act of 1974.
In addition, the Company maintains an unfunded supplemental retirement benefit
plan for certain management employees. The accumulated benefit obligation for
this plan was $954,000 and $841,000 at December 31, 1995 and 1994,
respectively, using a discount rate of 7.25% and 8.5%, respectively.
The Company maintains a savings and profit sharing plan under Section 401(k)
of the Internal Revenue Code which covers substantially all employees who have
completed sixty (60) days of service with the Company. Effective July 1,
1995, the Company reinstated its policy of matching 25% of non-bargaining
unit employee contributions to the plan not to exceed 6% of the employee's
annual compensation. Vesting of Company contributions occurs at the rate of
20% per year. The contribution for the year ended December 31, 1995
approximated $58,000.
The Company maintains a defined contribution plan that covers substantially
all employees not included under a defined benefit plan. The Company
contributes various percentages of eligible employee compensation (as defined
therein); the plan does not allow employee contributions. The Company has
contributed approximately $212,000, $194,000 and $165,000 in connection with
this plan for 1995, 1994 and 1993, respectively.
The Company only provides postretirement benefits to retirees in two areas: a
$2,500 life insurance policy for retired office employees and subsidized
health insurance benefits for early retirees prior to their attaining age 65.
The number of retirees associated with postretirement benefit costs is
approximately 165.
Net postretirement benefit expense included the following components (in
thousands):
Year Ended December 31, 1995 1994 1993
Service cost $47 $49 $19
Interest cost on projected benefit obligation 117 106 37
Net amortization and deferral 57 70 23
---- ---- ---
Net postretirement benefit expense $221 $225 $79
==== ==== ===
The Company's postretirement benefit plans are not funded. The status of the
Company's plans was as follows (in thousands):
December 31, 1995 1994
Actuarial present value of accumulated
postretirement benefit obligation $1,634 $1,355
Unrecognized transitional obligation (382) (405)
Unrecognized net loss (887) (646)
------- -------
Accrued postretirement benefit liability $365 $304
======= =======
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation at December 31, 1995 and 1994 was 12%
decreasing to 6% over seven years. The discount rate used in determining the
accumulated postretirement benefit obligation was 7.25% at December 31, 1995
and 8.5% at December 31, 1994. A one point percentage increase in the health
care cost trend rate would increase the accumulated postretirement benefit
obligation by approximately $234,000 and would increase the net postretirement
benefit expense by approximately $32,000.
Note 9 Shareholders' Equity
During April 1987, the Board of Directors of the Company adopted the 1987
Stock Option Plan as approved by the shareholders (the 1987 Plan ), which
authorized the granting of options for up to 375,000 shares of the Company's
common stock. In October 1989, the Company increased the number of shares
issuable under the 1987 Plan to 530,000. The 1987 Plan provides that options
be granted at an exercise price not less than fair market value on the date
the options are granted and that the option period shall not be more than
seven years after the grant date. The options vest ratably over a period not
exceeding three years after the grant date.
Following is a summary of activity in the stock option plan for 1994 and 1995:
Shares Weighted
Subject Average
to Option Option
Price
Outstanding, January 1, 1994 232,252 $ 6.14
Granted 58,500 6.25
Exercised (37,080) 3.63
Cancelled (12,753) 5.58
_________ ______
Outstanding, December 31, 1994 240,919 $6.58
========= ======
Outstanding, January 1, 1995 240,919 $ 6.58
Granted 170,500 7.31
Exercised (47,242) 5.71
Cancelled (8,505) 5.94
_________ ______
Outstanding, December 31, 1995 355,672 $7.06
========= ======
Exercisable, December 31, 1995 145,788 $6.95
========= ======
At December 31, 1995, a warrant to purchase 180,000 shares of the Company's
common stock for $7 per share, subject to certain adjustments as provided in
the warrant agreement, was outstanding to a former junior note holder. The
warrant can be exercised at any time through March 5, 1998.
Note 10 Leases
The Company occupies certain warehouse facilities and uses certain equipment
under operating lease arrangements. Rent expense under such arrangements
amounted to $1,510,000, $1,606,000 and $2,093,000 in 1995, 1994 and 1993,
respectively.
The Company maintains non-cancellable operating leases for certain facilities
and equipment. Future minimum lease payments under such leases at
December 31, 1995, are as follows (in thousands):
1996 $958
1997 238
1998 98
1999 40
2000 20
------
Total $1,354
======
Note 11 Contingencies
The Company is involved in litigation of which the ultimate outcome and
liability to the Company, if any, is not presently determinable. Management
believes, based on opinion of counsel, that final disposition of such
litigation will not have a material impact on the Company's results of
operations or financial position.
The Company has received notification from the City of West Bend, Wisconsin
that it may have some financial responsibility with respect to the closure of
a landfill site operated by the City of West Bend from the mid-1960's through
1984. The amount of the Company's potential obligation, if any, is not
presently determinable. The City of West Bend is currently taking remedial
action with respect to the landfill site.
Note 12 Segment Information
The Company manufactures and distributes products into two industry segments.
Gehl Construction is engaged in the manufacture and distribution of equipment
and machinery for the construction market. As of December 31, 1995, 20% of
the Company's accounts receivable were from customers in the construction
market.
Gehl Agriculture is engaged in the manufacture and distribution of farm
equipment and machinery for the dairy and livestock agricultural sector.
As of December 31, 1995, 80% of the Company's accounts receivable were from
customers in the agricultural sector.
Unallocated assets are cash, deferred income taxes and other nonallocable
assets.
Segments of business by industry are presented below (in thousands):
Year Ended December 31, 1995 1994 1993
Net Sales
Construction $ 64,381 $ 51,796 $ 43,287
Agriculture 89,071 94,824 93,931
________ ________ ________
Consolidated $153,452 $146,620 $137,218
======== ======== ========
Income from
Operations
Construction $ 13,164 $ 8,542 $ 1,830
Agriculture 449 4,419 5,509
________ ________ ________
Consolidated $ 13,613 $ 12,961 $ 7,339
======== ======== ========
Assets (Year-end)
Construction $ 29,999 $ 24,029 $ 26,952
Agriculture 91,612 97,730 109,989
Unallocated 11,887 9,268 7,339
________ ________ ________
Consolidated $133,498 $131,027 $144,280
======== ======== ========
Depreciation/
Amortization
Construction $ 921 $ 1,076 $ 1,377
Agriculture 1,883 2,273 2,421
Unallocated 61 418 393
________ ________ ________
Consolidated $ 2,865 $ 3,767 $ 4,191
======== ======== ========
Capital Expenditures
Construction $ 655 $ 1,422 $ 45
Agriculture 1,782 1,083 764
________ ________ ________
Consolidated $ 2,437 $ 2,505 $ 809
======== ======== ========
Exports of U.S. produced products were approximately $28.0 million, $25.9
million and $28.1 million in 1995, 1994 and 1993, respectively.
Note 13 Quarterly Financial Data (Unaudited)
In Thousands,
Except Per First Second Third Fourth
Share Data -- Quarter Quarter Quarter Quarter Total
1995
Net sales $38,268 $42,730 $36,901 $35,553 $153,452
Gross profit 10,680 12,697 10,726 10,511 44,614
Net income 1,813 3,598 2,236 1,366 9,013
Net income
per common
share <F1> .29 .58 .36 .22 1.44
1994
Net sales $34,242 $41,916 $37,592 $32,870 $146,620
Gross profit 9,693 12,854 11,257 9,470 43,274
Net income
(loss) (262) 1,755 2,511 1,031 5,035
Net income
(loss) per
common share (.04) .28 .41 .17 .82
[FN]
<F1>
Due to the use of the weighted average shares outstanding each quarter
for computing net income per share, the sum of the quarterly per share amounts
does not equal the per share amount for the year.
[/FN]
<PAGE>
[Page 24 of the Annual Report]
GEHL COMPANY AND SUBSIDIARIES
FIVE-YEAR FINANCIAL SUMMARY
Dollars in
Thousands,
Except Per
Share Data 1995 1994 1993 1992 1991
Summary of
Operations
Net sales $153,452 $146,620 $137,218 $129,694 $127,290
Gross profit 44,614 43,274 38,883 32,971 31,700
Income (loss)
from
operations 13,613 12,961 7,339 (6,866) (13,374)
Interest
expense 5,733 6,711 8,364 10,103 8,973
Income (loss)
before income
taxes 9,163 5,035 366 (18,150) (25,398)
Net income
(loss) 9,013 5,035 241 (17,900) (19,284)<F1>
Financial
Position at
December 31
Current
assets $102,166 $102,621 $114,355 $138,193 $163,824
Current
liabilities 29,561 28,710 30,328 128,717 55,196
Working
capital 72,605 73,911 84,027 9,476 108,628
Accounts
receivable 69,087 72,393 84,969 101,181 112,561
Finance
contracts
receivable 7,716 5,647 6,847 9,793 12,433
Inventories 23,320 21,452 21,633 24,083 27,399
Property,
plant and
equipment,
net 20,315 20,433 20,088 22,242 23,852
Total
assets 133,498 131,027 144,280 170,225 199,701
Long-term
debt 46,666 54,700 72,259 418 86,043
Total debt 46,863 54,880 72,808 97,676 102,958
Shareholders'
equity 55,679 46,283 40,895 40,405 58,217
Common Share
Summary
Net income
(loss) per
share $1.44 $.82 $.04 $(3.05) $(3.29)<F1>
Dividends per
share -- -- -- -- .08
Book value per
share 8.96 7.50 6.67 6.88 9.93
Shares
outstanding
at year-end 6,216,765 6,169,523 6,132,443 5,875,110 5,865,110
Other
Financial
Statistics
Net cash
provided by
(used for)
operating
activities $9,701 $19,522 $26,113 $(162) $6,061
Capital
expenditures 2,437 2,505 809 1,473 10,766
Depreciation 2,520 2,692 2,940 3,093 2,682
Current ratio 3.5 to 1 3.6 to 1 3.8 to 1 1.1 to 1 3.0 to 1
Percent total
debt to total
capitalization 45.7% 54.2% 64.0% 70.7% 63.9%
Net income
(loss) as a
percent of net
sales 5.9% 3.4% .2% (13.8%) (15.1%)
After-tax
return on
average
shareholders'
equity 17.7% 11.6% .6% (36.3%) (28.3%)
Employees at
year-end 842 928 946 1,001 1,150
Common stock
price range
9-5/8-6-1/4 8-1/2-5-3/8 7-3/8 - 3 6 - 2-1/4 9-3/4 - 3
[FN]
<F1>
Includes $2,325,000 ($.40 per share) extraordinary loss on extinguishment
of debt, net of tax.
[/FN]
Investor Information
Price Range Dividends
1995 1994 1995 1994
Stock Prices
and Dividends
First quarter $7-5/8 - 6-1/4 $7-3/4 - 5-3/8 $ -- $ --
Second quarter 9-3/8 - 6-7/8 6-3/4 - 5-1/2 -- --
Third quarter 9 5/8 - 7-3/4 7 - 5-3/8 -- --
Fourth quarter 8-1/4 - 6-5/8 8-1/2 - 5-1/2 -- --
______________ ______________ ______________ ______________
Year $9-5/8 - 6-1/4 $8-1/2 - 5-3/8 $ -- $ --
============== ============== ============== =============
<PAGE>
[Page 25 of the Annual Report]
Directors and Officers
Board of Directors
Fred M. Butler
President and Chief Executive Officer,
The Manitowoc Company (2)
John W. Findley
Retired Chairman, President, Chief Executive Officer and a Director,
Findley Adhesives, Inc. (1,2)
John W. Gehl
Vice President, International (3)
William D. Gehl
President and Chief Executive Officer (3)
Arthur W. Nesbitt
Chairman of the Board, Gehl Company, and
President, Chief Executive Officer and a Director,
Nasco International (2,*3)
Roger E. Secrist
Retired Chairman and Chief Executive Officer,
ANGUS Chemical Company (*2,3)
John W. Splude
President and Chief Executive Officer,
HK Systems, Inc. (*1)
Executive Officers
William D. Gehl
President and Chief Executive Officer
Victor A. Mancinelli
Executive Vice President and Chief Operating Officer
John W. Gehl
Vice President, International
Kenneth F. Kaplan
Vice President, Finance and Treasurer
Michael J. Mulcahy
Vice President, Secretary and General Counsel
Richard J. Semler
Vice President, Data Systems
Kenneth P. Hahn
Corporate Controller
(*) Chairman
(1) Audit Committee
(2) Compensation and Benefits Committee
(3) Nominating Committee
Information of Interest
Annual Meeting
All shareholders are invited to attend our annual meeting which will be held
on Thursday, April 25, 1996, at 3:00 p.m. at the Cedar Theatre, Cedar Lake
Campus, 5595 Hwy Z, West Bend, Wisconsin.
Transfer Agent
Shareholders with a change of address or related needs should contact:
Firstar Trust Company
615 E. Michigan Street, 4th Floor
P.O. Box 2077
Milwaukee, Wisconsin 53201
800-637-7549
Stock Market Information
Gehl Company common stock is traded on The Nasdaq Stock MarketSM under the
symbol GEHL. As of February 1, 1996, shareholders of record numbered 984. This
number does not include shareholders who hold Gehl Company Stock in street
name.
Independent Accountants
Price Waterhouse LLP
Milwaukee, Wisconsin
Investor Information
The Company is replacing Quarterly Reports to Shareholders with an automated
"News on Demand Service". The Company will not be mailing out Quarterly
Reports to Shareholders in the future. By calling 1-800-882-2786, you will be
able to request from a directory maintained by the Company a faxed copy of
financial and other types of information about the Company to be sent directly
to you. You may also order for mailing to you Forms 10-K and 10-Q and other
available information by calling the same toll-free number.
Additionally, copies of Gehl Company's Form 10-K for 1995, as well as other
financial information about the Company, are available from:
Michael J. Mulcahy
Corporate Secretary
Gehl Company
143 Water Street
West Bend, Wisconsin 53095
414-334-9461
The Company anticipates making 1996 quarterly earnings announcements:
First Quarter: Week ending, April 19, 1996
Second Quarter: Week ending, July 19, 1996
Third Quarter: Week ending, October 18, 1996
Fourth Quarter: Week ending, February 21, 1997
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements listed below of Gehl Company of our report dated February 12, 1996
appearing on page 8 of the 1995 Annual Report to Shareholders which is
incorporated in this Annual Report on Form 10-K. We also consent to the
incorporation by reference of our report on the Financial Statement Schedule,
which appears on page 15 of this Form 10-K.
1. Registration Statement on Form S-8 (Registration No. 33-38392)
2. Registration Statement on Form S-8 (Registration No. 33-39150)
PRICE WATERHOUSE LLP
Milwaukee, Wisconsin
March 6, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Gehl
Company's consolidated balance sheet at December 31, 1995 and consolidated
statements of income for the twelve month period ended December 31, 1995 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> DEC-31-1995
<CASH> 3266
<SECURITIES> 0
<RECEIVABLES> 78476
<ALLOWANCES> 4572
<INVENTORY> 23320
<CURRENT-ASSETS> 102166
<PP&E> 53646
<DEPRECIATION> 33331
<TOTAL-ASSETS> 133498
<CURRENT-LIABILITIES> 29561
<BONDS> 46666<F1>
<COMMON> 622
0
0
<OTHER-SE> 55057
<TOTAL-LIABILITY-AND-EQUITY> 133498
<SALES> 153452
<TOTAL-REVENUES> 153452
<CGS> 108838
<TOTAL-COSTS> 108838
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5733
<INCOME-PRETAX> 9163
<INCOME-TAX> 150
<INCOME-CONTINUING> 9013
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9013
<EPS-PRIMARY> 1.44
<EPS-DILUTED> 0<F2>
<FN>
<F1>Includes all non-current portion of debt obligations
<F2>Not reported
</FN>
</TABLE>
