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, 1997
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)
Rights to Purchase Preferred Shares
(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: $123,817,683.00 at February 16, 1998.
Number of shares outstanding of each of the registrant's classes of
common stock, as of February 16, 1998:
Class Shares Outstanding
Common Stock, $.10 Par Value 6,240,565
DOCUMENTS INCORPORATED BY REFERENCE
Gehl Company 1997 Annual Report to Shareholders (Parts I and II)
Gehl Company Proxy Statement for the 1998 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)
GEHL[R] COMPANY
_________________
INDEX TO
ANNUAL REPORT ON FORM 10-K
For The Year Ended December 31, 1997
Page
Part I
Item 1 Business . . . . . . . . 1
Item 2 Properties . . . . . . . . 8
Item 3 Legal Proceedings . . . . . 8
Item 4 Submission of Matters to a Vote of
Security Holders . . . . . . 9
Executive Officers of the Registrant 9
Part II
Item 5 Market for Registrant's Common Equity
and Related Shareholder Matters . . . 11
Item 6 Selected Financial Data . 11
Item 7 Management's Discussion and Analysis
of Financial Condition and Results
of Operations 11
Item 7A Quantitative and Qualitative Disclosures
About Market Risk . . . . . . . 11
Item 8 Financial Statements and Supplementary Data 11
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 11
Part III
Item 10 Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . 12
Item 11 Executive Compensation . . 12
Item 12 Security Ownership of Certain Beneficial
Owners and Management . . . . . . 12
Item 13 Certain Relationships and Related
Transactions . . . . . . . 12
Part IV
Item 14 Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . 13
Signatures. . . . . . . . . . . . . . . . . . 14
<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 139 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.
On October 2, 1997, the Company acquired all of the issued and
outstanding shares of capital stock of Brunel America, Inc. and Subsidiaries,
including Mustang Manufacturing Company, Inc. ("Mustang") from Brunel
Holdings, plc. Mustang[R] designs, manufactures and distributes skid steer
loaders and related attachments. Gehl acquired the Brunel America, Inc. stock
for $26.7 million; and entered into a five year non-competition agreement with
the seller pursuant to which Gehl paid $1.0 million. The Company borrowed
$27.7 million under its existing credit facility to fund the acquisition. The
acquisition has been accounted for as a purchase transaction and resulted in
the recording of $14.0 million of goodwill. The results of the Mustang
operations have been included in the Company's operating results since the
date of the acquisition.
Equipment for Gehl Construction is manufactured in Minnesota and 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.
The statements which are not historical facts contained in this Form 10-K
and other information provided by the Company are forward-looking statements
intended to qualify for the safe harbors from liability established by the
Private Securities Litigation Reform Act of 1995. Such statements are subject
to certain risks and uncertainties which could cause actual results to differ
materially from those currently anticipated. These factors include, without
limitation, competitive conditions in the markets served by the Company,
market acceptance of existing and new products manufactured by the Company,
changes in the cost of raw materials and component parts purchased by the
Company, changes in interest and currency exchange rates, general economic
conditions, and the ability of the Company to successfully integrate its
recent acquisition of the Mustang operations. These factors should be
considered in evaluating the forward-looking statements, and undue reliance
should not be placed on such statements. The Company undertakes no obligation
to update publicly such statements to reflect subsequent events or
circumstances.
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,
1995 1996 1997
Amount % Amount % Amount %
Net sales:
Gehl
Construction $64,381 42.0% $70,826 44.4% $101,635 51.6%
Gehl
Agriculture 89,071 58.0 88,836 55.6 95,420 48.4
------- ---- ------- ---- -------- ----
Total $153,452 100% $159,662 100% $197,055 100%
Income from
operations:
Gehl
Construction $13,164 96.7% $12,967 83.4% $16,277 74.5%
Gehl
Agriculture 449 3.3 2,580 16.6 5,571 25.5
------- ---- ------- ---- ------- -----
Total $13,613 100% $15,547 100% $21,848 100%
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 13 of "Notes to Consolidated Financial
Statements", included on Pages 22 and 23 of the Gehl Company 1997 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 seven models of
Gehl skid steer loaders which feature a choice of hand-operated
controls or hand and foot controls and four models of Mustang
skid steer loaders which feature a choice of T-bar, hand only
and hand/foot controls. The skid steer loader, with its fixed-
wheel four-wheel drive, is used principally for material
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, augers and many more.
2. Rough-Terrain Forklifts - Gehl markets six 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 336
independent dealers (with 627 outlets) and worldwide through 64 distributors.
The Company has no Company-owned dealers and its dealers may sell equipment
produced by other construction equipment manufacturers. The top ten dealers
and distributors in Gehl Construction accounted for approximately 14% of the
Company's sales for the year ended December 31, 1997; however, no single
dealer or distributor accounted for more than 2.5% of the Company's sales for
that period. Sales of the skid steer loader product line by Gehl Construction
accounted for more than 19% of the Company's net sales in 1995, 1996 and 1997.
Sales of the rough terrain forklift product line by Gehl Construction
accounted for more than 17% of the Company's net sales in 1995, 1996 and 1997.
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 (exclusive of Gehl) 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, Australia, Latin America, the Middle East and the Pacific Rim. The
Company believes it is a significant competitor in the skid steer loader
market in most of these markets.
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 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 Gehl skid steer loaders
and the Dyna-Handler 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 is a rough-terrain telescopic
forklift with digging capabilities. The skid steer loader and
Dyna-Handler forklift are marketed by both Gehl Agriculture and
Gehl Construction.
4. Manure Handling - Gehl offers a broad range of manure spreaders,
including the Scavenger . The Scavenger[R] "V-Tank" side-
discharge manure spreader incorporates a hydraulically
controlled 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 500 geographically dispersed dealers (with 556 outlets).
Seventy-one of these dealers are located in Canada. Gehl Agriculture also
markets products through 31 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 6% of the
Company's sales for the year ended December 31, 1997 and no one dealer or
distributor accounted for over 1% of the Company's sales during that period.
Sales of the Gehl skid steer loader product line by Gehl Agriculture accounted
for more than 15% of the Company's net sales in 1995, 1996 and 1997.
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 in the promotion and sale of its product and regional service managers
to assist in 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 1997. 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, 1996 and 1997 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. 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, 1997 was $34.9
million versus $42.7 million at December 31, 1996. Virtually all orders in
the backlog at December 31, 1997 are expected to be shipped in 1998. The
decreased backlog at December 31, 1997 was due primarily to the reduced level
of Gehl Construction backlog. Order backlog is lower in Gehl Construction due
to the introduction of a new series of telescopic handlers in December 1997,
for which orders were not received prior to year-end, and a change in the
Construction dealer order pattern resulting in dealers placing orders at a
point in time closer to their expected utilization of the machinery.
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 six months
and in Gehl Agriculture generally for up to one year. 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 rates between 1.5% to 3.25% above the prime rate or on occasion
provides an interest-free extension of up to six months upon payment by the
dealer of a curtailment of 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 equipment to end users. Additionally, a number of 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 primarily through
Gehl Finance , 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 retail 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 24 to
48 months. The Company continues to service the finance contracts it sells,
including cash collections. See Note 3 of "Notes to Consolidated Financial
Statements," Page 18, and "Management's Discussion and Analysis," Page 13 of
the Gehl Company 1997 Annual Report to Shareholders, which pages are
incorporated by reference herein.
Employees
As of December 31, 1997, the Company had 1,192 employees, of which 801
were hourly employees and 391 were salaried employees. At the production
facilities in West Bend, Wisconsin, one of five Gehl production facilities,
223 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-four years.
Manufacturing
During 1997, the Company completed expansion if its two South Dakota
manufacturing facilities and believes that its present manufacturing
facilities will be sufficient to provide adequate capacity for its operations
in 1998.
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 1997.
Research and Development
The Company attempts to maintain and strengthen its market position
through internal new product development and incremental improvement to
existing products. 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 $2.3 million, $2.2 million and $1.4 million on research
and development for the years ended December 31, 1997, 1996 and 1995,
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 , the Mustang name and the group of patents
relating to the Scavenger 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 13
of "Notes to Consolidated Financial Statements," Page 23, of the Gehl Company
1997 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,
1997, relating to the Company's principal manufacturing facilities. See
"Management's Discussion and Analysis - Liquidity and Capital Resources,
Capital Expenditures," Page 13, of the Gehl Company 1997 Annual Report to
Shareholders, which page is incorporated by reference herein. For information
regarding collateral pledges, see Note 6 of "Notes to Consolidated Financial
Statements", included on Page 19, of the Gehl Company 1997 Annual Report to
Shareholders, which page is incorporated by reference herein.
Approximate Owned
Floor Area or
in Square Leased
Feet Principal Uses
West Bend, WI 450,000 Owned General offices
and engineering,
research and
development and
manufacture of
products for Gehl
Agriculture
Madison, SD 130,000 Owned Manufacture of
Gehl skid steer
loaders for Gehl
Construction and
Gehl Agriculture
Lebanon, PA 170,000 Owned(1) Manufacture of
products for Gehl
Agriculture
Yankton, SD 100,000 Owned Manufacture of
products for Gehl
Construction
Owatonna, MN 235,000 Owned Manufacture of
Mustang skid steer
loaders for Gehl
Construction
(1) 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. The leases have terms ranging from three to five years. The Company
anticipates no difficulty in retaining adequate leased facilities, either by
renewing existing leases prior to expiration or by replacing them with
equivalent leased facilities.
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, 1997.
<PAGE>
Executive Officers of the Registrant.
Set forth below is certain information concerning the executive officers
of the Company as of February 1, 1998:
Name, Age and Position Business Experience
William D. Gehl, 51, Mr. Gehl has served as
Chairman, President, Chairman of the Board
Chief Executive of Directors of the
Officer and Director Company since April,
1996. Mr. Gehl has
served as President and
Chief Executive 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, 54, Mr. Mancinelli has
Executive Vice served as Executive
President and Vice President and
Chief Operating Officer Chief 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. From 1985
to 1987, Mr. Mancinelli
served as Vice
President International
Business for Simplex
Tire Reorder Co. Prior
to 1985, Mr. Mancinelli
served in a variety of
management positions
with Cummins Engine
Company, Inc.
John W. Gehl, 56, Mr. Gehl has served as
Vice President, Vice President,
International 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. Mr. Gehl
has announced his
retirement as an
officer of the Company
effective March 1,
1998.
Kenneth P. Hahn, 40 Mr. Hahn joined the
Vice President of Company as Corporate
Finance Controller in April,
and Treasurer 1988. Mr. Hahn was
elected as an executive
officer of the Company
in April, 1994. Mr.
Hahn was appointed Vice
President of Finance
and Treasurer in
February, 1997.
Michael J. Mulcahy, 51, Mr. Mulcahy has served
Vice President, as General Counsel of
Secretary the Company since 1974
and General Counsel 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, 58, Mr. Semler joined the
Vice President of Company in May, 1960
Data Systems and has served in his
current position with
the Company since
January, 1977.
All officers of the Company are elected annually by the Board of
Directors following the Annual Meeting of Shareholders. The 1998 Annual
Meeting of Shareholders is currently scheduled for April 29, 1998. 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 1997 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 1997 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 10 through 13 of
the Gehl Company 1997 Annual Report to Shareholders, which pages are hereby
incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable
Item 8. Financial Statements and Supplementary Data.
Information required by this item is included on Page 9 and Pages 14
through 23 of the Gehl Company 1997 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 1998 Annual Meeting of Shareholders ("Proxy
Statement")F1. Information with respect to executive officers of the Company
appears at the end of Part I, Pages 9 through 10 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.
There are no relationships or related transactions to be reported
pursuant to this item.
<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 15 hereof.
3. Exhibits.
Reference is made to the separate exhibit index contained
on Pages 18 through 21 hereof.
(b) Reports on Form 8-K.
The Company filed a Current Report on Form 8-K, dated
October 17, 1997, reporting (pursuant to Items 2 and 7) the
acquisition of all of the issued and outstanding shares of
capital stock of Brunel America, Inc. In connection with
this acquisition, the Company, through Brunel America,
Inc., acquired all of the issued and outstanding shares of
capital stock of the following direct and indirect
subsidiaries of Brunel America, Inc.: Mustang America,
Inc.; Mustang Manufacturing Company, Inc.; Mustang Finance
Inc.; and Mustang International, Inc.
The Company filed an amendment, dated December 16, 1997, to the
above-referenced Form 8-K, which amendment includes Financial
Statements and Pro-Forma Financial Information relating to the
acquisition of all of the issued and outstanding stock of
Brunel America, Inc.
<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, 1998 By /s/ William D. Gehl
William D. Gehl,
Chairman of the Board, 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 Chairman of the Board, President, March 6, 1998
William D. Gehl Chief Executive Officer
and Director
(Principal Executive Officer)
/s/ Kenneth P. Hahn Vice President of Finance March 6, 1998
Kenneth P. Hahn and Treasurer
(Principal Financial and
Accounting Officer)
/s/ Thomas J. Boldt Director March 6, 1998
Thomas J. Boldt
/s/ Fred M. Butler Director March 6, 1998
Fred M. Butler
/s/ John W. Gehl Director March 6, 1998
John W. Gehl
/s/ William P. Killian Director March 6, 1998
William P. Killian
/s/ Arthur W. Nesbitt Director March 6, 1998
Arthur W. Nesbitt
/s/ Roger E. Secrist Director March 6, 1998
Roger E. Secrist
/s/ John W. Splude Director March 6, 1998
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 9
Consolidated Balance Sheets at
December 31, 1997 and 1996 14
Consolidated Statements of Income
for the three years ended
December 31, 1997 15
Consolidated Statements of
Shareholders' Equity for the
three years ended December 31, 1997 15
Consolidated Statements of Cash
Flows for the three years ended
December 31, 1997 16
Notes to Consolidated Financial
Statements 17-23
* Incorporated by reference from the indicated pages of the Gehl Company 1997
Annual Report to Shareholders.
Page in
Form 10-K
(2) Financial Statement Schedule:
Report of Independent Accountants
on Financial Statement Schedule 16
For the three years ended
December 31, 1997 --
Schedule II - Valuation and Qualifying Accounts 17
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 10, 1998 appearing in the 1997 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 10, 1998
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Additions
--------------------
Balance Charged to Balance
Beginning Costs and Acquired at End
Period Description of Year Expenses Balances Deductions of Year
- ------ ----------- --------- ---------- --------- ---------- -------
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 of
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
====== ====== ======= ======= ======
Year Ended
December 31,
1996
Return &
Allowances $ 115 $ 35 $ - $ - $ 150
Allowance for
Doubtful
Accounts-Trade
Receivables 752 64 - 255 561
Volume
Discounts 1,803 2,389 - 2,463 1,729
Product
Discontinuance 1,335 (131) - 429 775
------ ------ ------ ------- ------
Total $4,005 $2,357 $ - $3,147 $3,215
====== ====== ====== ======= ======
Allowances of
Doubtful
Accounts -
Retail
Contracts $ 567 $ 276 $ - $ 252 $ 591
====== ====== ====== ======= ======
Inventory
Obsolescence
Reserve $2,777 $ 527 $ - $1,564 $1,740
====== ====== ====== ======= ======
Income Tax
Valuation
Allowance $2,649 $ - $ - $1,414 $1,235
====== ====== ====== ======= ======
Year Ended
December 31,
1997
Return &
Allowances $ 150 $ - $ - $ - $ 150
Allowance for
Doubtful
Accounts-Trade
Receivables 561 144 388 25 1,068
Volume
Discounts 1,729 2,674 - 2,705 1,698
Product
Discontinuance 775 - - 458 317
------ ------ ------ ------- ------
Total $3,215 $2,818 $ 388 $3,188 $3,233
====== ====== ======= ======= ======
Allowances of
Doubtful
Accounts -
Retail
Contracts $ 591 $ 355 $ 28 $ 91 $ 883
Inventory
Obsolescence
Reserve $1,740 $ 576 $ 265 $ 982 $1,599
====== ====== ====== ======= ======
Income Tax
Valuation
Allowance $1,235 $ - $ - $ 268 $ 967
====== ====== ====== ======= ======
<PAGE>
GEHL COMPANY
INDEX TO EXHIBITS
Exhibit Number Document Description
(2) Stock Purchase Agreement, dated as of September 12, 1997, between
Gehl Company and Brunel Holdings, plc [Incorporated by reference
to Exhibit 2 of the Company's Current Report on Form 8-K, dated
October 17, 1997]
(3.1) Restated Articles of Incorporation, as amended, of Gehl Company
[Incorporated by reference to Exhibit 3.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 28,
1997.]
(3.2) By-laws of Gehl Company, as amended [Incorporated by reference to
Exhibit 3.3 of the Company's Annual Report on Form 10-K for the
year ended December 31, 1995]
(4.1) Amended and Restated Loan and Security Agreement by and between
ITT Commercial Finance Corp. and Gehl Company and its
subsidiaries, dated October 1, 1994 [Incorporated by reference to
Exhibit 4.1 of the Company's Annual Report on Form 10-K for the
year ended December 31, 1994]
(4.2) First Amendment to Amended and Restated Loan and Security
Agreement by and between Deutsche Financial Services Corporation,
f/k/a ITT Commercial Finance Corp. and Gehl Company and its
subsidiaries, dated May 10, 1995 [Incorporated by reference to
Exhibit 4.1 of the Company's Quarterly Report on Form 10-Q for
the quarter ended July 1, 1995]
(4.3) 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 [Incorporated by reference to Exhibit 4.1 of the
Company's Annual Report on Form 10-K for the year ended December
31, 1995]
(4.4) Third 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
as of July 15, 1996.
(4.5) 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 October
2, 1997 [Incorporated by reference to Exhibit 4.1 of the
Company's Current Report on Form 8-K dated October 17, 1997]
(4.6) Fifth 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,
a division of Deutsche Bank Canada, and Gehl Company and its
subsidiaries, dated as of February 5, 1998.
(4.7) Common Stock Purchase Warrant No. 2, dated June 4, 1997, from
Gehl Company to William L. Dahl, SVCC TTEE, The Dahl Children's
Trust, FBO James A. Dahl U/A/D 12-31-84.
(4.8) Common Stock Purchase Warrant No. 3, dated June 4, 1997, from
Gehl Company to William L. Dahl, SVCC TTEE, The Dahl Children's
Trust, FBO Kathryn W. Dahl U/A/D 12-31-84.
(4.9) Common Stock Purchase Warrant No. 4, dated June 4, 1997 from Gehl
Company to Rock Creek Partners LTD.
(4.10) 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]
(4.11) 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]
(4.12) 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]
(4.13) 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]
(4.14) Rights Agreement, dated as of May 28, 1997, between Gehl Company
and Firstar Trust Company [Incorporated by reference to Exhibit
4.1 to the Company's Registration Statement on Form 8-A, dated as
of May 28, 1997]
(10.1)* Form of Supplemental Retirement Benefit Agreement between Gehl
Company and Messrs. J.W. Gehl, Hahn, 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)* Gehl Company Director Stock Grant Plan [Incorporated by reference
to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 29, 1997]
(10.3)* Amended and Restated Employment Agreement between Gehl Company
and William D. Gehl dated as of December 19, 1997
(10.4)* Employment Agreement by and between Victor A. Mancinelli and Gehl
Company, dated as of October 1, 1995 [Incorporated by reference
to Exhibit 10.3 of the Company's Annual Report on Form 10-K for
the year ended December 31, 1995]
(10.5)* Supplemental Retirement Benefit Agreement by and between William
D. Gehl and Gehl Company [Incorporated by reference to Exhibit
10.4 of the Company's Annual Report on Form 10-K for the year
ended December 31, 1995]
(10.6)* Supplemental Retirement Benefit Agreement by and between Victor
A. Mancinelli and Gehl Company [Incorporated by reference to
Exhibit 10.5 of the Company's Annual Report on Form 10-K for the
year ended December 31, 1995]
(10.7)* Gehl Company Shareholder Value Added Management Incentive
Compensation Plan [Incorporated by reference to Exhibit 10.6 of
the Company's Annual Report on Form 10-K for the year ended
December 31, 1995]
(10.8)* Gehl Savings Plan, as amended and restated executed March 17,
1997.
(10.9)* 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]
(10.10)* Gehl Company 1987 Stock Option Plan, as amended [Incorporated by
reference to Exhibit 10.9 to the Company's Annual Report on Form
10-K for the year ended December 31, 1996]
(10.11)* 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)]
(10.12)* Gehl Company 1995 Stock Option Plan, as amended [Incorporated by
reference to Exhibit 10.11 to the Company's Annual Report on Form
10-K for the year ended December 31, 1996]
(10.13)* Form of Stock Option Agreement for executive officers used in
conjunction with the Gehl Company 1995 Stock Option Plan.
[Incorporated by reference to Exhibit 10.12 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1995]
(10.14)* Form of Stock Option Agreement for non-employee directors used in
conjunction with the Gehl Company 1995 Stock Option Plan.
[Incorporated by reference to Exhibit 10.13 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1995]
(10.15) 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)]
(10.16) 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)]
(10.17) 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 1997 Annual Report to Shareholders
that are incorporated by reference herein
(21) Subsidiaries of Gehl Company
(23) Consent of Price Waterhouse LLP
(27) Financial Data Schedule
(99) Proxy Statement for 1998 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 1998 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.
Except as otherwise noted, all documents incorporated by reference are to
Commission File No. 0-18110.
THIRD AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Third 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 VALUABLE CONSIDERATION RECEIVED, Gehl Company and DFS agree
to amend the Agreement as follows:
1. The definition of "Banker's Acceptance Rate" in Section 1.1 of the
Agreement is deleted in its entirety and restated to read as follows:
"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 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, as reported on the Reuters Screen
CDOR (Canadian Deposit Offered Rate), the TelerateScreen 3197 or on
the Bloomberg ticker symbol CDOR01.
2. The first sentence of Section 2.1(a) of the Agreement is hereby
deleted in its entirety and restated to read as follows:
(a) "Maximum Line of Credit": In consideration of Gehl Company's
performance of its Obligations and subject to Sections 3 and 4,
DFS grants to Gehl Company separate lines of credit of (i)
SIXTY-NINE MILLION FIVE HUNDRED THOUSAND UNITED STATES DOLLARS
($69,500,000.00 U.S.) (the "U.S. Line"), and (ii) that
fluctuating amount of Canadian Dollars which, from day-to-day,
shall equal, based on the daily noon spot exchange rate of the
Royal Bank of Canada (the "Exchange Rate") FIVE MILLION FIVE
HUNDRED THOUSAND UNITED STATES DOLLARS ($5,500,000.00 U.S.)
(the "Canadian Line") for the period commencing on the
execution of this Agreement until December 31, 1998.
3. 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 Third Amendment to Amended
and Restated Loan and Security Agreement as of this 15th day of July, 1996.
GEHL COMPANY HEDLUND MARTIN, INC.
By: s/s K.F. Kaplan By: s/s K.F. Kaplan
Title: Vice President Title: Treasurer
By: s/s M.J. Mulcahy By: s/s M.J. Mulcahy
Title: Secretary Title: Secretary
GEHL POWER PRODUCTS, INC. DEUTSCHE FINANCIAL SERVICES CORPORATION
By: s/s K.F. Kaplan By: s/s J.J. Jones
Title: Treasurer Title: Regional Vice President
By: s/s M.J. Mulcahy DEUTSCHE FINANCIAL SERVICES
Title: Secretary A division of Deutsche Bank Canada
(successor-in-interest to ITT Commercial
Finance, a division of ITT Industries of
Canada Ltd.)
By: s/s Bill Blight
Title: Vice President
By: s/s Joe Conte
Title: Vice President
FIFTH AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This Fifth Amendment is made to that certain Amended and Restated Loan
and Security Agreement executed as of October 1, 1994 by and between Deutsche
Financial Services Corporation, f/k/a ITT Commercial Finance Corp ("ITT"),
("DFS"), Deutsche Financial Services, a division of Deutsche Bank Canada,
successor-in-interest to ITT Commercial Finance, a division of ITT Industries
of Canada Ltd., ("DFSC")(DFS and DFSC are hereinafter collectively referred to
as "DFS"), and Gehl Company ("Gehl") and its subsidiaries, including, but not
limited to, Hedlund Martin, Inc., Gehl Power Products, Inc., Mustang
Manufacturing Company, Inc. and Mustang Finance, Inc. (collectively "Gehl
Company") as amended ("Agreement").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which
is acknowledged, DFS and Gehl Company agree to amend the Agreement as follows:
1. All subsection letter designations in Subsection 1.1 of the
Agreement are deleted.
2. The following definition is incorporated into Subsection 1.1 as if
fully and originally set forth therein:
"'Maturity Date': December 31, 2000."
3. The last clause of the first sentence of subsection 2.1(a) of the
Agreement is deleted in its entirety and restated as follows:
"for the period commencing on the execution of this Agreement
until the Maturity Date."
4. Section 2.1.2 of the Agreement is deleted in its entirety and
restated as follows:
"Gehl Company agrees to pay DFS in advance of each year of
this Agreement an annual Credit Facility Fee (sometimes also
referred to herein as a "charge") equal to the lesser of (a) (i) One
Hundred Thousand Dollars ($100,000.00) on each of December 31, 1997
and December 31, 1998, (ii) Twenty-five Thousand Dollars on December
31, 1999, and (b) the highest charges from time to time permitted by
applicable law (and amounts received from Gehl Company in excess of
such highest permitted amount or rate will be considered reductions
of principal to the extent of such excess). DFS will rebate to Gehl
Company certain amounts of such Credit Facility Fee based on the
average daily outstanding balance under the Credit Facility during a
calendar year ("ADB"), as set out below, ("Rebates") by January 30
of the following calendar year, provided that Gehl has not given
notice of termination of the Agreement prior to payment of any
applicable rebate.
1998 Rebate
ADB in 1998 Rebate Amount
$30,000,000.01 or greater $75,000.00
$25,000,000.01-$30,000,000.00 $37,500.00
$20,000,000.01-$25,000,000.00 $18,750.00
$20,000,000.00 or less $0
1999 Rebate
ADB in 1999 Rebate Amount
$25,000,000.01 or greater $75,000.00
$20,000,000.01 -$25,000,000.00 $56,250.00
$15,000,000.01-$20,000,000.00 $37,500.00
$10,000,000.01 -$15,000,000.00 $18,750.00
$10,000,000.00 or less $0
2000.00
The Credit Facility Fee payable on December 31, 1999 is
Twenty-Five Thousand Dollars ($25,000.00) and,
regardless of ADB, no rebate is payable for calendar
year 2000.
5. The first three sentences of Section 8.1 of the Agreement are
deleted in their entirety and restated as follows:
"This Agreement shall terminate on the Maturity Date. This
Agreement may not be terminated by either party prior to the
Maturity Date, other than as a result of any Default by Gehl Company
or any default by DFS hereunder. If Gehl Company terminates this
Agreement prior to Maturity, Gehl will remain obligated to pay DFS
all principal, interest, costs, expenses, fees and charges otherwise
payable under this Agreement, including, without limitation, all
Credit Facility Fees, as if the Agreement had not been terminated.
Additionally in the event that Gehl terminates this Agreement prior
to Maturity, Gehl will forfeit the right to receive any Rebates not
paid by DFS prior to DFS' receipt of a notice of termination."
6. The fourth sentence of Section 9.5 of the Agreement is deleted in
its entirety and restated as follows:
"All notices that Gehl Company sends to DFS will be
sufficiently given if mailed or delivered to DFS at:
Deutsche Financial Services Corporation
655 Maryville Centre Dr.
St. Louis, MO 63141
Attention: General Counsel
or such other address as DFS may specify from time to time."
7. All other terms and provisions of the Agreement remain unchanged and
in full force and effect.
IN WITNESS WHEREOF the dully authorized representatives of DFS, DFSC, and
Gehl Company have executed this 5th Amendment to Amended and Restated Loan
and Security Agreement as of this 5th day of February, 1998.
GEHL COMPANY HEDLUND MARTIN, INC.
By: s/s W.D. Gehl By: s/s W.D. Gehl
Title: President Title: President
By: s/s Kenneth P. Hahn By: s/s Kenneth P. Hahn
Title: Vice President Title: Treasurer
GEHL POWER PRODUCTS, INC. MUSTANG MANUFACTURING COMPANY, INC.
By: s/s W.D. Gehl By: s/s W.D. Gehl
Title: President Title: Chairman of the Board
By: s/s Kenneth P. Hahn By: s/s Kenneth P. Hahn
Title: Treasurer Title: Vice President
MUSTANG FINANCE, INC.
By: s/s W.D. Gehl
Title: Chairman of the Board
By: s/s Kenneth P. Hahn
Title: Vice President
DEUTSCHE FINANCIAL SERVICES DEUTSCHE FINANCIAL SERVICES,
CORPORATION a division of Deutsche Bank Canada
By: s/s Thomas L. Meredith By: s/s Bill C. Blight
Title: Vice President Title: Vice President
By:
Title:
<PAGE>
NEGOTIABLE PROMISSORY NOTE
$75,000,000.00 February 5, 1998
For value received, Gehl Company, Hedlund-Martin, Inc., Gehl Power
Products, Inc., Mustang Manufacturing Company, Inc. and Mustang Finance, Inc.
(individually and collectively, "Maker") jointly and severally promise to pay
to Deutsche Financial Services f/k/a ITT Commercial Finance Corp. ("DFS") or
order, on or before December 31, 2000 the sum of Seventy-Five Million Dollars
($75,000,000.00) or such lesser principal amount as has been advanced to Maker
and not repaid under the terms of the Amended and Restated Loan and Security
Agreement dated as of October 1, 1994 between Maker, DFS and Deutsche
Financial Services, a division of Deutsche Bank Canada, successor-in-interest
to ITT Commercial Finance, a division of ITT Industries of Canada, Ltd.
("DFSC"), as amended (the "Agreement"), together with interest thereon at a
rate determined in accordance with Section 2.1.1. of the Agreement, which
section and referenced sections therein is hereby incorporated as if
originally set forth herein.
The principal portion of this note not paid when due shall, at the option
of holder, bear late charges thereon calculated at Prime Rate (as defined in
the Agreement) plus Three percent (3.0%) per annum. Maker promises to pay the
reasonable attorney's fees and expenses, if placed in the hands of an attorney
for collection. This Note is made pursuant to the Agreement. Reference is
made to the Agreement for a description of the terms and conditions of the
indebtedness evidence hereby and the circumstances under which the maturity of
such indebtedness may be accelerated. The holder hereof may grant to the
Maker, any endorsers and any other persons obligated hereon, extensions of
time for payment of this Note and/or the maturity of any installment or
installments, in whole or in part, without limit as to the number of
extensions or the period or periods thereof and without waiving any rights to
enforce payment of any other installment or other obligation hereunder.
Maker hereby waives presentment and demand for payment, protest and
notice of nonpayment and protest and consent that the holder hereof may,
without notice to and without releasing the liability of the undersigned
hereunder, compound or release, any rights against the Maker or any
endorser(s) and grant extensions of time as provided in this Note.
Maker waives any right to trial by jury in connection with any action on
this Note.
This Note shall be governed by the laws of the state of Missouri.
GEHL COMPANY HEDLUND MARTIN, INC.
By: s/s W.D. Gehl By: s/s W.D. Gehl
Its: President Its: President
Date: 2/5/98 Date: 2/5/98
By: s/s Kenneth P. Hahn By: s/s Kenneth P. Hahn
Its: Vice President Its: Treasurer
Date: 2/5/98 Date: 2/5/98
GEHL POWER PRODUCTS, INC. MUSTANG MANUFACTURING COMPANY, INC.
By: s/s W.D. Gehl By: s/s W.D. Gehl
Its: President Its: Chairman of the Board
Date: 2/5/98 Date: 2/5/98
By: s/s Kenneth P. Hahn By: s/s Kenneth P. Hahn
Its: Treasurer Its: Vice President
Date: 2/5/98 Date: 2/5/98
MUSTANG FINANCE, INC.
By: s/s W.D. Gehl
Its: Chairman of the Board
Date: 2/5/98
By: s/s Kenneth P. Hahn
Its: Vice President
Date: 2/5/98
Negotiable and payable Notices to:
at the office of:
Deutsche Financial Services Corporation Deutsche Financial Services Corporation
P.O. Box 31626 655 Maryville Centre Drive
St. Louis, MO 63131 St. Louis, MO 63141-5832
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT MAY NOT BE SOLD,
ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT OR LAWS.
COMMON STOCK PURCHASE WARRANT
To Subscribe for and Purchase Common Stock of
GEHL COMPANY
WARRANT NO. 2
This certifies that, for value received, William L. Dahl, SVCC TTEE, The Dahl
Childrens Trust, FBO James A. Dahl U/A/D 12-31-84, or its transferee or
assignee (the "Holder" which term includes any transferee and assignee), is
entitled to subscribe for and purchase from GEHL COMPANY, a Wisconsin
corporation (the "Company"), at the aggregate exercise price of $175,000
(subject to the adjustment provided in Section 7 hereof) (or, if this Common
Stock Purchase Warrant is issued in substitution or exchange for a predecessor
common stock purchase warrant and represents rights to purchase less than the
maximum number or percentage of shares of Common Stock as hereinafter defined
which were purchasable upon exercise of such predecessor common stock purchase
warrant, a proportionately smaller amount) at any time or times after the date
hereof and until the date specified in Section 12 hereof, twenty-five
thousand (25,000) shares of fully paid and nonassessable (except as otherwise
provided in Section 180.0622 of the Wisconsin Business Corporation Law) shares
of the Company's common stock, $0.10 par value per share (the "Common Stock"),
provided, however, that this Common Stock Purchase Warrant shall be
exercisable for a proportionately fewer or greater number of shares of Common
Stock if the Company combines by reverse stock split or otherwise or
subdivides by stock split, stock dividend or otherwise its outstanding Common
Stock. For the purposes of this Common Stock Purchase Warrant, the term
"Other Common Stock" shall mean other classes of equity securities not limited
to a fixed sum or percentage of a fixed sum in respect of participation in
dividends or distribution of assets in voluntary or involuntary liquidation,
dissolution or winding-up.
The predecessor to this Common Stock Purchase Warrant was originally
issued to the State of Wisconsin Investment Board (the "Board") pursuant to
the terms of the Second Amended and Restated Credit Agreement, dated as of
March 5, 1993 by and between the Company and the Board (the "Credit
Agreement"), in connection with the separate and individual purchases from the
Company by the Board of the Company's Senior Note, Junior Note and Make-Whole
Note (all as defined in the Credit Agreement) (together with any note or notes
issued in substitution or exchange therefor). This Common Stock Purchase
Warrant (and its predecessor) and all Common Stock Purchase Warrants issued in
substitution or exchange herefor are herein individually called a "Warrant"
and collectively called the "Warrants."
This Warrant is subject to the following provisions, terms and
conditions:
1. Exercise; Issuance of Certificates; Payment for Shares. The
rights represented by this Warrant may be exercised by the Holder, in whole or
in part and at one or more times by the surrender of this Warrant (properly
endorsed if required) at the principal office of the Company (or such other
office or agency of the Company as the Company may designate by written notice
to the Holder) and upon payment to the Company by wire transfer, certified
check or bank draft of the purchase price for the shares of Common Stock
purchasable hereunder and upon compliance with any registration requirements
or exemptions therefrom under the Securities Act (as defined below) and
applicable state securities laws. The Company agrees that the shares so
purchased shall and will be deemed to be issued to the Holder as the record
owner of such shares as of the close of business on the date on which this
Warrant shall have been surrendered and payment made for such shares as
aforesaid. Certificates for the shares of Common Stock so purchased shall be
delivered to the Holder within a reasonable time, not exceeding five (5) days,
after the rights represented by this Warrant shall have been so exercised,
and, unless this Warrant has expired, a new Warrant appropriately providing
for the purchase of Common Stock with respect to which this Warrant shall not
then have been exercised and stating the purchase price therefor shall also be
delivered to the Holder within such time.
2. Shares to be Fully Paid; Reservation of Shares. The Company
covenants and agrees that all shares which may be issued upon the exercise of
the rights represented by this Warrant and the payment of the purchase price
hereunder will, upon issuance, be fully paid and nonassessable (except as
otherwise provided by Section 180.0622 of the Wisconsin Business Corporation
Law) and free from all taxes, liens and charges with respect to the issue
thereof. Without limiting the generality of the foregoing, the Company
covenants and agrees that it will from time to time take all such action as
may be requisite to assure that the par value per share of the Common Stock is
at all times equal to or less than the then effective purchase price per share
of the Common Stock issuable upon exercise of this Warrant. The Company
further covenants and agrees that during the period within which the rights
represented by this Warrant may be exercised, the Company will at all times
have authorized, and reserved for the purpose of issue or transfer upon
exercise of the rights evidenced by this Warrant, a sufficient number of
shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant. The Company will take all such action as may be
necessary to assure that such shares of Common Stock may be so issued without
violation of any applicable law or regulation (except for any such violation
that may be a result of the Holder's failure to register the shares of Common
Stock under the Securities Act as hereinafter defined and any applicable state
securities law), or of any requirements of any domestic securities exchange
upon which the Common Stock of the Company may be listed.
3. [Reserved]
4. Record Date. In case the Company shall fix a record date or
otherwise make a record of the holders of its Common Stock for the purpose of
entitling them to receive a dividend or other distribution payable in Common
Stock or Other Common Stock, then such record date shall be deemed to be the
date of the issue of the shares of Common Stock or Other Common Stock deemed
to have been issued upon the declaration of such dividend or the making of
such other distribution.
5. Reorganization, Reclassification, Consolidation, Merger or
Sale. Any capital reorganization, reclassification, consolidation, merger or
sale of all or substantially all of the Company's assets to another person,
entity, firm or partnership which is effected in such a way that holders of
Common Stock or Other Common Stock are entitled to receive (either directly or
upon subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock or Other Common Stock is referred to herein as an
"Organic Change." Prior to the consummation of any Organic Change, the
Company will make appropriate provision (in form and substance satisfactory to
the Holder) to insure that the Holder will thereafter have the right to
purchase and receive, in lieu of or in addition to the Common Stock
immediately theretofore purchasable and receivable upon the exercise of this
Warrant, such shares of stock, securities or assets as the Holder would have
received in connection with such Organic Change if the Holder had exercised
this Warrant. The Company will not effect any such reorganization,
reclassification, consolidation, merger or sale unless, prior to the
consummation thereof, the successor corporation (if other than the Company)
resulting from such Organic Change assumes by written instrument (in form
reasonably satisfactory to the Holder) the obligation to deliver to the Holder
such shares of stock, securities or assets as, in accordance with the
foregoing provisions, the Holder may be entitled to acquire.
6. Liquidating Dividends. If the Company declares or pays a
dividend (other than a stock dividend payable in shares of Common Stock) upon
the Common Stock payable otherwise than in cash out of earnings or earned
surplus, determined in accordance with generally accepted accounting
principles, consistently applied (a "Liquidating Dividend"), then the Company
shall provide written notice of such declaration or payment of the Liquidating
Dividend at least fifteen (15) days prior to the date proposed for the payment
thereof. Said notice shall specify (i) the proposed date of payment of the
Liquidating Dividend and the amount per share of Common Stock thereof. The
Company furthermore shall cooperate with the Holder to effect the exercise of
this Warrant should the Holder desire to so exercise in order to enable the
Holder to participate in the Liquidating Dividend.
7. Adjustment in Aggregate Exercise Price. If the Company while
this Warrant is outstanding shall issue and sell or otherwise distribute any
Common Stock or Other Common Stock (other than a distribution to the existing
holders of Common Stock or Other Common Stock) at a price per share which
would be less than the aggregate exercise price of this Warrant divided by the
number of shares of Common Stock issuable upon the exercise of this Warrant,
then, and thereafter successively upon each such issue, the aggregate exercise
price then if effect shall be reduced to the lowest price obtained by
multiplying such lowest price per share of Common Stock or Other Common Stock
times the number of shares of Common Stock then issuable upon exercise of this
Warrant; provided however that the adjustment in aggregate purchase price
provided in this Section 7 shall not apply unless and until the Company shall
issue and sell or otherwise distribute any Common Stock or Other Common Stock
in excess of six hundred twenty-five thousand (625,000) shares following
March 5, 1993.
(a) In the case of the issuance of additional Common
Stock or Other Common Stock for cash, in determining the price per share of
such issuance, the consideration received by the Company therefor shall be
deemed to be the cash proceeds received by the Company for such shares after
deducting any commissions or other expenses paid or incurred by the Company
for any underwriting of, or otherwise in connection with, the issuance of such
shares.
(b) In the case of the issuance (otherwise than upon
conversion or exchange of obligations or shares of stock of the Company) of
additional Common Stock or Other Common Stock for a consideration other than
cash or a consideration a part of which shall be other than cash, in
determining the price per share of such issuance, the amount of the
consideration other than cash received by the Company for such Common Stock or
Other Common Stock shall be deemed to be the value of such consideration as
determined reasonably and in good faith by the board of directors of the
Company.
(c) In case of the issuance by the Company after the date
hereof of (i) any security that is convertible into Common Stock or Other
Common Stock, (ii) any rights or options to purchase Common Stock or Other
Common Stock, the Company shall be deemed to have issued the maximum number of
shares of Common Stock or Other Common Stock into which such convertible
security may be converted, and the maximum number of shares of Common Stock or
Other Common Stock deliverable on the exercise of such rights or options, for
the consideration received by the Company for such convertible security or for
such rights or options (less the amount of any underwriting discount), as the
case may be, and after deducting therefrom any expenses or commissions
incurred or paid by the Company for any underwriting of, or otherwise in
connection with, the issuance of such convertible security or rights or
options, plus (A) any consideration or adjustment payment to be received by
the Company in connection with such conversion and (B) the minimum
consideration to be received by the Company for the Common Stock or Other
Common Stock issuable upon the exercise of such rights or options. No further
adjustment of the aggregate exercise price shall be made as a result of the
actual issuance of the Common Stock or Other Common Stock upon conversion of
any convertible security or exercise of any rights or options referred to in
this clause (c) or issued prior to the date hereof.
8. Closing of Books. The Company will at no time close its
transfer books against the transfer of this Warrant or of any shares of Common
Stock issued or issuable upon the exercise of this Warrant in any manner which
interferes with the timely exercise of this Warrant.
9. No Voting or Other Rights. This Warrant shall not entitle the
Holder to any voting rights or other rights as a stockholder of the Company.
10. Warrant Transferable. This Warrant and all rights and
obligations hereunder are transferable, in whole, without charge to the Holder
upon surrender of this Warrant with a properly executed assignment (in form
reasonably acceptable to the Company) at the principal office of the Company.
This Warrant is not transferable except pursuant to an effective registration
statement under the Securities Act (as defined below) or in a transaction
exempt from the registration requirements of the Securities Act and in
compliance with any applicable state securities laws.
11. Warrants Exchangeable for Different Denominations. This
Warrant is exchangeable, upon the surrender hereof by the Holder at the office
or agency of the Company referred to in Section 1 hereof, for new Warrants of
like tenor representing in the aggregate the right to subscribe for and
purchase the maximum number of shares of Common Stock which may be subscribed
for and purchased hereunder (subject to reduction to reflect any partial
exercise or exercises of this Warrant), each of such new Warrants to represent
the right to subscribe for and purchase the number of shares of Common Stock
purchasable upon exercise of this Warrant as shall be designated by the Holder
at the time of such surrender.
12. Duration. The rights to purchase shares of Common Stock
hereunder shall remain in existence until March 5, 1998, unless the same are
exercised in full prior thereto, and thereafter the rights evidenced by this
Warrant shall expire.
13. No Dilution or Impairment. The Company shall not undertake or
participate in any action whatsoever for the purpose or having the result of
avoiding or seeking to avoid the observance or performance of any of its
obligations pursuant to this Warrant.
14. Registration Rights. As used in this Section 14, the term
Board shall mean collectively the State of Wisconsin Investment Board, its
transferees or assignees (including the Holder), and any assignee or
transferee of Common Stock from the Board which the Board obtained upon
exercise of this Warrant, other than those who received such Common Stock in a
public offering or pursuant to Rule 144 promulgated under the Securities Act;
provided however that the transferee or assignee of the Common Stock shall be
the same as the transferee or assignee of this Warrant.
14.1 Demand Registrations. At any time within two (2) years
following the exercise of its right to purchase the Company's Common Stock
pursuant to the Warrant, the Board may demand registration under the
Securities Act of 1933, as amended (the "Securities Act"), of all of the
Common Stock issuable or which has been issued upon exercise of the Warrant,
on Form S-1 or any similar long-form registration ("Long-Form Registrations")
or on Form S-2 or S-3 or any similar short-form registration ("Short-Form
Registrations"), if available under applicable rules of the SEC. The written
request to be delivered by the Board to the Company pursuant to this Section
14.1 shall (i) specify the number of shares intended to be offered and sold by
the Board, (ii) express the present intent of the Board to offer such shares
for distribution, and (iii) describe the nature and method of the proposed
offer and sale thereof. The registration requested pursuant to this Section
14.1 is referred to herein as "Demand Registration."
(a) Number of Registrations. The Board will be entitled
to demand two (2) Long-Form or Short-Form Registrations. A registration
initiated as a Demand Registration shall include all shares of Common Stock
issuable or which has been issued upon exercise of the Warrant then owned by
the Board. A registration initiated as a Demand Registration may be withdrawn
at any time at the request of the Board or the underwriters selected by the
Board, but shall count as one of the two (2) Demand Registrations; provided
that in any event, the Company will pay all registration expenses in
connection with any registration initiated as the Demand Registration as
provided in Section 14.5.
(b) Priority on Demand Registrations. The Company will
not include in the Demand Registration any securities which are not Common
Stock owned by the Board, without the written consent of the Board. If the
Demand Registration is an underwritten offering, and the managing underwriters
advise the Company in writing that in their opinion the number of shares of
Common Stock requested to be included exceeds the number of shares of Common
Stock which can be sold in such offering, the Company will include in such
registration, prior to the inclusion of any securities which are not shares of
Common Stock owned by the Board, the number of shares of Common Stock owned by
the Board requested to be included which in the opinion of such underwriters
can be sold; and the balance of the shares of Common Stock which the Board
requested to be included in such offering shall be withheld from sale for a
period of time requested by the underwriters, but not to exceed one hundred
twenty (120) days.
(c) Restrictions on Demand Registration. The Company
will not be obligated to effect a Demand Registration within one hundred
twenty (120) days after the effective date of a registration in which the
Board was given a participation in a registered offering pursuant to Section
14.2 hereof. The Company may postpone for up to ninety (90) days the filing
or the effectiveness of a registration statement for a Demand Registration if
the Company and the Board reasonably and in good faith agree that such Demand
Registration might have an adverse effect on any proposal or plan by the
Company to engage in any financing, acquisition of assets (other than in the
ordinary course of business) or any corporate reorganization, merger,
consolidation, tender offer or similar transaction; provided that in such
event, the Board will be entitled to withdraw such request and that, if such
request is withdrawn, such Demand Registration will not count as the one
Demand Registration to which the Board is entitled.
(d) Selection of Underwriters. The Board will have the
right to select the investment banker(s) and manager(s) to administer the
offering, subject to the Company's approval (which will not be unreasonably
withheld) of such investment banker(s) and manager(s).
14.2 Participation in Registered Offerings. If the Company at
any time or times proposes or is required to register any of its Common Stock
or the equity securities for public sale in an underwritten public offering
for cash (other than in connection with any incentive stock option, bonus or
other employee benefit plan or arrangement) under the Securities Act or any
applicable state securities law, it will each such time give written notice to
the Board, of its intention to do so. Upon the written request of the board
given thirty (30) business days after receipt of any such notice (which
request shall state the intended method of disposition of such equity
securities and shall state in reasonable detail, to the extent practicable,
the net consideration, after all commissions and discounts which the
prospective seller or sellers expect to receive upon such disposition), the
Company shall use its best efforts to cause all such Common Stock requested
(which request will not be for less than thirty percent (30%) of the number of
shares of Common Stock purchasable or receivable upon exercise of the
Warrant(s)) to be registered by the Board to be registered under the
Securities Act and any applicable state securities laws (provided, that if the
managing underwriter advises that less than all of the registered shares of
equity securities should be offered for sale so as not to materially and
adversely affect the price or salability of the offering being registered by
the Company or the Board for a period not to exceed one hundred twenty (120)
days, the Board will withhold from sale for the period of time and for such
number of shares of Common Stock as the underwriter may specify; provided
further that a pro rata number of shares owned by all other shareholders of
the Company also shall be similarly withheld from sale), all to the extent
requisite to permit the sale or other disposition (in accordance with the
intended method of disposition thereof as aforesaid) by the prospective seller
or sellers of the securities so registered. In the event an underwriter is
involved with a registration initiated by the Company of the stock, and the
Board requests to participate in the registration, the Board must commit to
sell through the underwriter. The Company may, in its sole discretion,
withdraw any registration contemplated by this Section 14.2 and abandon the
proposed offering in which the Board had requested to participate without any
further obligation to the Board with respect to such registration statement or
offering; provided however that the Board shall be indemnified by the Company
for any fees, costs and expense of and incidental to such registration,
excluding the fees and disbursements of counsel acting solely on behalf of the
Board.
14.3 Obligations of the Board. It shall be a condition
precedent to the obligation of the Company to register any Common Stock
pursuant to Sections 14.1 and 14.2 hereof that the Board shall (i) furnish to
the Company such information regarding the Common Stock held by it and the
intended method of disposition thereof and other information concerning the
Board as the Company shall reasonably request and as shall be required in
connection with the registration statement to be filed by the Company;
(ii) agree to abide by such additional or customary terms affecting the
proposed offering as reasonably may be requested by the managing underwriter
of such offering, including a requirement, if applicable, to withhold (on a
pro-rata basis) from the public market for a period of at least one hundred
twenty (120) days after any such offering, any shares excluded from the
offering at the instance of the underwriter as permitted under Sections 14.1
and 14.2 hereof; and (iii) agree in writing in form satisfactory to the
Company to pay the underwriting discounts and commissions applicable to the
Common Stock being sold by it.
14.4 Registration Proceedings. If and whenever the Company is
required by the provisions of Sections 14.1 and 14.2 hereof to effect the
registration of the Common Stock under the Securities Act, until the
securities covered by such registration statement have been sold or for six
(6) months after effectiveness, whichever is the shorter period of time, the
Company shall:
(a) Prepare and file with the SEC a registration
statement with respect to such Common Stock and use its best efforts to cause
such registration statement to become and remain effective;
(b) Prepare and file with the SEC such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective;
(c) Furnish to the Board and to the underwriters of the
securities being registered such reasonable number of copies of the
registration statement, preliminary prospectus, final prospectus and such
other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(d) Use its best efforts to register or qualify the
securities covered by such registration statement under such state securities
or "Blue Sky" laws of such jurisdictions as the Board may reasonably request
within twenty (20) days prior to the original filing of such registration
statement, except that the Company shall not for any purpose be required to
qualify to do business as a foreign corporation in any jurisdiction wherein it
is not so qualified, and except that the Company shall not be required to so
register or qualify in more than forty (40) such jurisdictions if in the good
faith judgment of the managing underwriter such additional registrations or
qualifications would be unreasonably expensive or harmful to the consummation
of the proposed offering;
(e) Notify the Board, promptly after it shall receive
notice thereof, of the time when such registration statement has become
effective or a supplement to any prospectus forming a part of such
registration statement has been filed;
(f) Notify the Board promptly of any request by the SEC
for the amending or supplementing of such registration statement or prospectus
or for additional information;
(g) Prepare and file with the SEC, promptly upon the
request of the Board, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for the Board and
counsel for the underwriter or manager of the offering, are required under the
Securities Act or the rules and regulations thereunder in connection with the
distribution of Common Stock by the Board;
(h) Prepare and promptly file with the SEC and promptly
notify the Board of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event
shall have occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading;
(i) In case the Board or any underwriter for the Board is
required to deliver a prospectus at a time when the prospectus then in
circulation is not in compliance with the Securities Act, the Company will
prepare and file such supplements or amendments to such registration statement
and such prospectus or prospectuses as may be necessary to permit compliance
with the requirements of the Securities Act;
(j) Advise the Board, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance of any stop order by the
SEC suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for that purpose and promptly use
its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued;
(k) Not file any amendment or supplement to such
registration statement or prospectus to which a majority in interest of the
Board shall reasonably have objected on the grounds that such amendment or
supplement does not comply in all material respects with the requirements of
the Securities Act or the rules and regulations thereunder, after having been
furnished with a copy thereof at least two (2) business days prior to the
filing thereof; and
(l) At the request of the Board (i) use its best efforts
to obtain and furnish on the effective date of the registration statement or,
if such registration includes an underwritten public offering, at the closing
provided for in the underwriting agreement, an opinion, dated such date, of
the counsel representing the Company for the purposes of such registration,
addressed to the underwriters, if any, and to the Board, which shall contain
such opinions as are customary in an underwritten public offering, or, if the
offering is not underwritten, shall state that such registration statement has
become effective under the Securities Act and that (or substantially to the
effect that): (a) to the best of such counsel's knowledge, no stop order
suspending the effectiveness thereof has been issued and no proceedings for
that purpose have been instituted or are pending or contemplated under the
Securities Act; (b) the registration statement, related prospectus and each
amendment or supplement thereto comply as to form in all material respects
with the requirements of the Securities Act and applicable rules and
regulations of the SEC thereunder (except that such counsel need express no
opinion as to financial statements, schedules or other financial or
statistical data contained therein); (c) such counsel has no reason to believe
that either the registration statement or the prospectus or any amendment or
supplement thereto (other than financial statements and schedules or financial
and statistical data, as to which such counsel need not comment) contains any
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; (d) the description in the registration statement or prospectus or
any amendment or supplement thereto of all legal and governmental matters and
all contracts and other legal documents or instruments described therein are
accurate in all material respects; and (e) such counsel does not know of any
legal or governmental proceedings, pending or threatened, required to be
described in the registration statement or prospectus or any amendment or
supplement thereto which are not described as required, nor of any contracts
or documents or instruments of the character required to be described in the
registration statement or prospectus or amendment or supplement thereto or to
be filed as exhibits to the registration statement, which are not described
and filed as required; and (ii) use its best efforts to obtain letters dated
on such effective date, and such closing date, if any, from the independent
certified public accountants of the Company, addressed to the underwriters, if
any, and to the Board, stating that they are independent certified public
accountants within the meaning of the Securities Act and dealing with such
matters as the underwriters may request, or, if the offering is not
underwritten, stating that in the opinion of such accountants, the financial
statements and other financial data pertaining to the Company included in the
registration statement or the prospectus or any amendment or supplement
thereto comply in all material respects with the applicable accounting
requirements of the Securities Act; such opinion of counsel shall additionally
cover such legal matters with respect to the registration and with respect to
which such opinion is being given as the Board may reasonably request; such
letter from the independent certified public accountants shall additionally
cover such other financial matters, including information as to the period
ending not more than five (5) business days prior to the date of such letter,
with respect to the registration statement and prospectus, as the Board may
reasonably request.
14.5 Expenses. With respect to each inclusion of Common Stock
of the Board in a registration statement pursuant to Sections 14.1 and 14.2
hereof, all registration expenses, fees, costs and expenses of and incidental
to such registration, inclusion and public offering in connection therewith
shall be borne by the Company (excluding the fees and disbursements of
advisors retained by the Board and counsel acting solely on behalf of the
Board); provided, however, that the Board shall bear the Board's pro rata
share of the underwriting discount and commissions. The fees, costs and
expenses of registration to be borne by the Company shall include, without
limitation, all registration, filing and NASD fees, printing expenses, fees
and disbursements of counsel and accountants for the Company (including the
cost of any special audit requested in order to effect such registration),
fees and disbursements of counsel for the underwriter or underwriters of such
securities (if the Company and/or selling security holders are required to
bear such fees and disbursements), all legal fees and disbursements and other
expenses of complying with state securities or "Blue Sky" laws of any
jurisdiction in which the securities to be offered are to be registered or
qualified, and the premiums and other costs of policies of insurance against
liability arising out of such public offering.
14.6 Indemnification of the Board. Subject to the conditions
set forth below, in connection with any registration of securities pursuant to
Sections 14.1 or 14.2 hereof, the Company agrees to indemnify and hold
harmless the Board and each person, if any, who controls the Board (and its
respective officers, directors and agents), within the meaning of Section 15
of the Securities Act, as follows:
(a) Against any and all loss, claim, damage and expense
whatsoever arising out of or based upon (including, but not limited to, any
and all expense whatsoever reasonably incurred in investigating, preparing or
defending any litigation, commenced or threatened, or any claim whatsoever
based upon) any untrue or alleged untrue statement of a material fact
contained in any preliminary prospectus (if used prior to the effective date
of the registration statement), the registration statement or the final
prospectus (as from time to time amended and supplemented if the Company shall
have filed with the SEC any amendment thereof or amendment thereto) if used
within the period during which the Company is required to keep the
registration statement or prospectus current, or in any application or other
document executed by the Company or based upon written information furnished
by the Company filed in any jurisdiction in order to qualify the Company's
securities under the securities laws thereof; or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading; or any other
violation of applicable federal or state statutory or regulatory requirements
or limitations relating to action or inaction by the Company in the course of
preparing, filing, or implementing such registered offering; provided,
however, that the indemnity agreement contained in this Section 14.6(a) shall
not apply to any loss, claim, damage, liability or action arising out of or
based upon any untrue or alleged untrue statement or omission made in reliance
upon and in conformity with any information furnished in writing to the
Company by or on behalf of the Board expressly for use in connection
therewith;
(b) Subject to the proviso contained in Section 14.6(a)
above, against any and all loss, liability, claim, damage and expense
whatsoever to the extent of the aggregate amount paid in settlement of any
litigation, commenced or threatened, or of any claim whatsoever based upon any
such untrue statement or omission or any such alleged untrue statement or
omission (including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing or defending against any such
litigation or claim) if such settlement is effected with the written consent
of the Company and no indemnity shall inure to the benefit of the Board or any
controlling person thereof if the person asserting the claim failed to receive
a copy of the final prospectus at or prior to the written confirmation of the
sale of shares of Common Stock to such person if the untrue statement or
omission has been corrected in such final prospectus and the failure to
receive such final prospectus is not a necessary element of such person's
claim;
(c) In no case shall the Company be liable under this
indemnity agreement with respect to any claim made against the Board or any
such controlling person (or its respective officers, directors and agents)
unless the Company shall be notified, by letter or by telegram confirmed by
letter, of any claim made or action commenced against such persons, reasonably
promptly (but in any event within twenty (20) days of receipt of such claim
or, in the event that any summons or other service of process requiring a
responsive pleading within thirty (30) days or less time, within ten (10) days
after receipt of such summons or other process) after such person shall have
received notice of such claim or been served with the summons or other legal
process giving information as to the nature and basis of the claim, but
failure to so notify the Company shall not relieve it from any liability which
it may have otherwise than on account of this indemnity agreement. The
Company shall be entitled to participate at its own expense in the defense of
any suit brought to enforce any such claim, but if the Company elects to
assume the defense, such defense shall be conducted by counsel chosen by it,
provided that such counsel is reasonably satisfactory to the Board. In the
event the Company elects to assume the defense of any such suit and retain
such counsel, the Board shall, after the date the Board is notified of such
election, bear the fees and expenses of any counsel thereafter retained by the
Board as well as any other expenses thereafter incurred by the Board in
connection with the defense thereof; provided, however, that the Company shall
bear the fees and expenses of any such separate counsel retained by the Board
if the counsel representing the Company has a conflict of interest (which is
not waived) with the Board which would prohibit such counsel from representing
the Board.
14.7 Indemnification of Company. The Board in any registered
offering pursuant to Sections 14.1 or 14.2 above agrees to indemnify and hold
harmless the Company and each of the officers and directors and agents of it
and each other person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act against any and all such losses, liabilities,
claims, damages and expenses as are indemnified against by the Company under
Section 14.6 hereof; provided, however, that such indemnification shall be
limited to statements or omissions, if any, made (or in settlement of any
litigation effected with the written consent of the Board alleged to have been
made) in any preliminary prospectus, the registration statement or prospectus
or any amendment or supplement thereof or any application or other document in
reliance upon, and in conformity with, written information furnished in
respect of the Board, by or on behalf of the Board expressly for use in any
preliminary prospectus, the registration statement or prospectus or any
amendment or supplement thereof or in any such application or other document.
In case any action shall be brought against the Company, or any other person
so indemnified based on any preliminary prospectus, the registration statement
or prospectus or any amendment or supplement thereof or any such application
or other documents, in respect of which indemnity may be sought against the
Board, it shall have the rights and duties given to the Company, and each
other person so indemnified shall have the rights and duties given to the
Board, by the provisions of Section 14.6(c) hereof. The Company agrees to
notify the Board promptly after the assertion of any claim against the Company
in connection with the sale of securities covered by this Warrant.
14.8 Future Registration Rights. The Company may agree with
its shareholders other than the Board to allow their participation in any
registered offering which may be requested pursuant to Section 14.1 hereof,
provided all such rights of participation under Section 14.1 hereof shall be
subordinated to the rights of the Board herein, in a manner reasonably
satisfactory to counsel for the Board.
15. Descriptive Headings and Governing Law. The descriptive
headings of the several Sections of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant is being
delivered and is intended to be performed in the State of Wisconsin and shall
be construed and enforced in accordance with, and the rights of the parties
shall be governed by, the internal laws of such State (regardless of such
State's conflict of law provisions or principles).
IN WITNESS WHEREOF, Gehl Company has caused this Warrant to be
signed by its duly authorized officers this 4th day of June, 1997.
GEHL COMPANY
By: /s/ Kenneth P. Hahn
Title: Vice President
Attest: /s/ Michael J. Mulcahy
Title: Secretary
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT MAY NOT BE SOLD,
ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT OR LAWS.
COMMON STOCK PURCHASE WARRANT
To Subscribe for and Purchase Common Stock
of
GEHL COMPANY
WARRANT NO. 3
This certifies that, for value received, William L. Dahl SVCC TTEE, The Dahl
Childrens Trust, FBO Kathryn W. Dahl U/A/D 12-31-84, or its transferee or
assignee (the "Holder" which term includes any transferee and assignee), is
entitled to subscribe for and purchase from GEHL COMPANY, a Wisconsin
corporation (the "Company"), at the aggregate exercise price of $175,000
(subject to the adjustment provided in Section 7 hereof) (or, if this Common
Stock Purchase Warrant is issued in substitution or exchange for a predecessor
common stock purchase warrant and represents rights to purchase less than the
maximum number or percentage of shares of Common Stock as hereinafter defined
which were purchasable upon exercise of such predecessor common stock purchase
warrant, a proportionately smaller amount) at any time or times after the date
hereof and until the date specified in Section 12 hereof, twenty-five
thousand (25,000) shares of fully paid and nonassessable (except as otherwise
provided in Section 180.0622 of the Wisconsin Business Corporation Law) shares
of the Company's common stock, $0.10 par value per share (the "Common Stock"),
provided, however, that this Common Stock Purchase Warrant shall be
exercisable for a proportionately fewer or greater number of shares of Common
Stock if the Company combines by reverse stock split or otherwise or
subdivides by stock split, stock dividend or otherwise its outstanding Common
Stock. For the purposes of this Common Stock Purchase Warrant, the term
"Other Common Stock" shall mean other classes of equity securities not limited
to a fixed sum or percentage of a fixed sum in respect of participation in
dividends or distribution of assets in voluntary or involuntary liquidation,
dissolution or winding-up.
The predecessor to this Common Stock Purchase Warrant was originally
issued to the State of Wisconsin Investment Board (the "Board") pursuant to
the terms of the Second Amended and Restated Credit Agreement, dated as of
March 5, 1993 by and between the Company and the Board (the "Credit
Agreement"), in connection with the separate and individual purchases from the
Company by the Board of the Company's Senior Note, Junior Note and Make-Whole
Note (all as defined in the Credit Agreement) (together with any note or notes
issued in substitution or exchange therefor). This Common Stock Purchase
Warrant (and its predecessor) and all Common Stock Purchase Warrants issued in
substitution or exchange herefor are herein individually called a "Warrant"
and collectively called the "Warrants."
This Warrant is subject to the following provisions, terms and
conditions:
1. Exercise; Issuance of Certificates; Payment for Shares. The
rights represented by this Warrant may be exercised by the Holder, in whole or
in part and at one or more times by the surrender of this Warrant (properly
endorsed if required) at the principal office of the Company (or such other
office or agency of the Company as the Company may designate by written notice
to the Holder) and upon payment to the Company by wire transfer, certified
check or bank draft of the purchase price for the shares of Common Stock
purchasable hereunder and upon compliance with any registration requirements
or exemptions therefrom under the Securities Act (as defined below) and
applicable state securities laws. The Company agrees that the shares so
purchased shall and will be deemed to be issued to the Holder as the record
owner of such shares as of the close of business on the date on which this
Warrant shall have been surrendered and payment made for such shares as
aforesaid. Certificates for the shares of Common Stock so purchased shall be
delivered to the Holder within a reasonable time, not exceeding five (5) days,
after the rights represented by this Warrant shall have been so exercised,
and, unless this Warrant has expired, a new Warrant appropriately providing
for the purchase of Common Stock with respect to which this Warrant shall not
then have been exercised and stating the purchase price therefor shall also be
delivered to the Holder within such time.
2. Shares to be Fully Paid; Reservation of Shares. The Company
covenants and agrees that all shares which may be issued upon the exercise of
the rights represented by this Warrant and the payment of the purchase price
hereunder will, upon issuance, be fully paid and nonassessable (except as
otherwise provided by Section 180.0622 of the Wisconsin Business Corporation
Law) and free from all taxes, liens and charges with respect to the issue
thereof. Without limiting the generality of the foregoing, the Company
covenants and agrees that it will from time to time take all such action as
may be requisite to assure that the par value per share of the Common Stock is
at all times equal to or less than the then effective purchase price per share
of the Common Stock issuable upon exercise of this Warrant. The Company
further covenants and agrees that during the period within which the rights
represented by this Warrant may be exercised, the Company will at all times
have authorized, and reserved for the purpose of issue or transfer upon
exercise of the rights evidenced by this Warrant, a sufficient number of
shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant. The Company will take all such action as may be
necessary to assure that such shares of Common Stock may be so issued without
violation of any applicable law or regulation (except for any such violation
that may be a result of the Holder's failure to register the shares of Common
Stock under the Securities Act as hereinafter defined and any applicable state
securities law), or of any requirements of any domestic securities exchange
upon which the Common Stock of the Company may be listed.
3. [Reserved]
4. Record Date. In case the Company shall fix a record date or
otherwise make a record of the holders of its Common Stock for the purpose of
entitling them to receive a dividend or other distribution payable in Common
Stock or Other Common Stock, then such record date shall be deemed to be the
date of the issue of the shares of Common Stock or Other Common Stock deemed
to have been issued upon the declaration of such dividend or the making of
such other distribution.
5. Reorganization, Reclassification, Consolidation, Merger or
Sale. Any capital reorganization, reclassification, consolidation, merger or
sale of all or substantially all of the Company's assets to another person,
entity, firm or partnership which is effected in such a way that holders of
Common Stock or Other Common Stock are entitled to receive (either directly or
upon subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock or Other Common Stock is referred to herein as an
"Organic Change." Prior to the consummation of any Organic Change, the
Company will make appropriate provision (in form and substance satisfactory to
the Holder) to insure that the Holder will thereafter have the right to
purchase and receive, in lieu of or in addition to the Common Stock
immediately theretofore purchasable and receivable upon the exercise of this
Warrant, such shares of stock, securities or assets as the Holder would have
received in connection with such Organic Change if the Holder had exercised
this Warrant. The Company will not effect any such reorganization,
reclassification, consolidation, merger or sale unless, prior to the
consummation thereof, the successor corporation (if other than the Company)
resulting from such Organic Change assumes by written instrument (in form
reasonably satisfactory to the Holder) the obligation to deliver to the Holder
such shares of stock, securities or assets as, in accordance with the
foregoing provisions, the Holder may be entitled to acquire.
6. Liquidating Dividends. If the Company declares or pays a
dividend (other than a stock dividend payable in shares of Common Stock) upon
the Common Stock payable otherwise than in cash out of earnings or earned
surplus, determined in accordance with generally accepted accounting
principles, consistently applied (a "Liquidating Dividend"), then the Company
shall provide written notice of such declaration or payment of the Liquidating
Dividend at least fifteen (15) days prior to the date proposed for the payment
thereof. Said notice shall specify (i) the proposed date of payment of the
Liquidating Dividend and the amount per share of Common Stock thereof. The
Company furthermore shall cooperate with the Holder to effect the exercise of
this Warrant should the Holder desire to so exercise in order to enable the
Holder to participate in the Liquidating Dividend.
7. Adjustment in Aggregate Exercise Price. If the Company while
this Warrant is outstanding shall issue and sell or otherwise distribute any
Common Stock or Other Common Stock (other than a distribution to the existing
holders of Common Stock or Other Common Stock) at a price per share which
would be less than the aggregate exercise price of this Warrant divided by the
number of shares of Common Stock issuable upon the exercise of this Warrant,
then, and thereafter successively upon each such issue, the aggregate exercise
price then if effect shall be reduced to the lowest price obtained by
multiplying such lowest price per share of Common Stock or Other Common Stock
times the number of shares of Common Stock then issuable upon exercise of this
Warrant; provided however that the adjustment in aggregate purchase price
provided in this Section 7 shall not apply unless and until the Company shall
issue and sell or otherwise distribute any Common Stock or Other Common Stock
in excess of six hundred twenty-five thousand (625,000) shares following
March 5, 1993.
(a) In the case of the issuance of additional Common
Stock or Other Common Stock for cash, in determining the price per share of
such issuance, the consideration received by the Company therefor shall be
deemed to be the cash proceeds received by the Company for such shares after
deducting any commissions or other expenses paid or incurred by the Company
for any underwriting of, or otherwise in connection with, the issuance of such
shares.
(b) In the case of the issuance (otherwise than upon
conversion or exchange of obligations or shares of stock of the Company) of
additional Common Stock or Other Common Stock for a consideration other than
cash or a consideration a part of which shall be other than cash, in
determining the price per share of such issuance, the amount of the
consideration other than cash received by the Company for such Common Stock or
Other Common Stock shall be deemed to be the value of such consideration as
determined reasonably and in good faith by the board of directors of the
Company.
(c) In case of the issuance by the Company after the date
hereof of (i) any security that is convertible into Common Stock or Other
Common Stock, (ii) any rights or options to purchase Common Stock or Other
Common Stock, the Company shall be deemed to have issued the maximum number of
shares of Common Stock or Other Common Stock into which such convertible
security may be converted, and the maximum number of shares of Common Stock or
Other Common Stock deliverable on the exercise of such rights or options, for
the consideration received by the Company for such convertible security or for
such rights or options (less the amount of any underwriting discount), as the
case may be, and after deducting therefrom any expenses or commissions
incurred or paid by the Company for any underwriting of, or otherwise in
connection with, the issuance of such convertible security or rights or
options, plus (A) any consideration or adjustment payment to be received by
the Company in connection with such conversion and (B) the minimum
consideration to be received by the Company for the Common Stock or Other
Common Stock issuable upon the exercise of such rights or options. No further
adjustment of the aggregate exercise price shall be made as a result of the
actual issuance of the Common Stock or Other Common Stock upon conversion of
any convertible security or exercise of any rights or options referred to in
this clause (c) or issued prior to the date hereof.
8. Closing of Books. The Company will at no time close its
transfer books against the transfer of this Warrant or of any shares of Common
Stock issued or issuable upon the exercise of this Warrant in any manner which
interferes with the timely exercise of this Warrant.
9. No Voting or Other Rights. This Warrant shall not entitle the
Holder to any voting rights or other rights as a stockholder of the Company.
10. Warrant Transferable. This Warrant and all rights and
obligations hereunder are transferable, in whole, without charge to the Holder
upon surrender of this Warrant with a properly executed assignment (in form
reasonably acceptable to the Company) at the principal office of the Company.
This Warrant is not transferable except pursuant to an effective registration
statement under the Securities Act (as defined below) or in a transaction
exempt from the registration requirements of the Securities Act and in
compliance with any applicable state securities laws.
11. Warrants Exchangeable for Different Denominations. This
Warrant is exchangeable, upon the surrender hereof by the Holder at the office
or agency of the Company referred to in Section 1 hereof, for new Warrants of
like tenor representing in the aggregate the right to subscribe for and
purchase the maximum number of shares of Common Stock which may be subscribed
for and purchased hereunder (subject to reduction to reflect any partial
exercise or exercises of this Warrant), each of such new Warrants to represent
the right to subscribe for and purchase the number of shares of Common Stock
purchasable upon exercise of this Warrant as shall be designated by the Holder
at the time of such surrender.
12. Duration. The rights to purchase shares of Common Stock
hereunder shall remain in existence until March 5, 1998, unless the same are
exercised in full prior thereto, and thereafter the rights evidenced by this
Warrant shall expire.
13. No Dilution or Impairment. The Company shall not undertake or
participate in any action whatsoever for the purpose or having the result of
avoiding or seeking to avoid the observance or performance of any of its
obligations pursuant to this Warrant.
14. Registration Rights. As used in this Section 14, the term
Board shall mean collectively the State of Wisconsin Investment Board, its
transferees or assignees (including the Holder), and any assignee or
transferee of Common Stock from the Board which the Board obtained upon
exercise of this Warrant, other than those who received such Common Stock in a
public offering or pursuant to Rule 144 promulgated under the Securities Act;
provided however that the transferee or assignee of the Common Stock shall be
the same as the transferee or assignee of this Warrant.
14.1 Demand Registrations. At any time within two (2) years
following the exercise of its right to purchase the Company's Common Stock
pursuant to the Warrant, the Board may demand registration under the
Securities Act of 1933, as amended (the "Securities Act"), of all of the
Common Stock issuable or which has been issued upon exercise of the Warrant,
on Form S-1 or any similar long-form registration ("Long-Form Registrations")
or on Form S-2 or S-3 or any similar short-form registration ("Short-Form
Registrations"), if available under applicable rules of the SEC. The written
request to be delivered by the Board to the Company pursuant to this Section
14.1 shall (i) specify the number of shares intended to be offered and sold by
the Board, (ii) express the present intent of the Board to offer such shares
for distribution, and (iii) describe the nature and method of the proposed
offer and sale thereof. The registration requested pursuant to this Section
14.1 is referred to herein as "Demand Registration."
(a) Number of Registrations. The Board will be entitled
to demand two (2) Long-Form or Short-Form Registrations. A registration
initiated as a Demand Registration shall include all shares of Common Stock
issuable or which has been issued upon exercise of the Warrant then owned by
the Board. A registration initiated as a Demand Registration may be withdrawn
at any time at the request of the Board or the underwriters selected by the
Board, but shall count as one of the two (2) Demand Registrations; provided
that in any event, the Company will pay all registration expenses in
connection with any registration initiated as the Demand Registration as
provided in Section 14.5.
(b) Priority on Demand Registrations. The Company will
not include in the Demand Registration any securities which are not Common
Stock owned by the Board, without the written consent of the Board. If the
Demand Registration is an underwritten offering, and the managing underwriters
advise the Company in writing that in their opinion the number of shares of
Common Stock requested to be included exceeds the number of shares of Common
Stock which can be sold in such offering, the Company will include in such
registration, prior to the inclusion of any securities which are not shares of
Common Stock owned by the Board, the number of shares of Common Stock owned by
the Board requested to be included which in the opinion of such underwriters
can be sold; and the balance of the shares of Common Stock which the Board
requested to be included in such offering shall be withheld from sale for a
period of time requested by the underwriters, but not to exceed one hundred
twenty (120) days.
(c) Restrictions on Demand Registration. The Company
will not be obligated to effect a Demand Registration within one hundred
twenty (120) days after the effective date of a registration in which the
Board was given a participation in a registered offering pursuant to Section
14.2 hereof. The Company may postpone for up to ninety (90) days the filing
or the effectiveness of a registration statement for a Demand Registration if
the Company and the Board reasonably and in good faith agree that such Demand
Registration might have an adverse effect on any proposal or plan by the
Company to engage in any financing, acquisition of assets (other than in the
ordinary course of business) or any corporate reorganization, merger,
consolidation, tender offer or similar transaction; provided that in such
event, the Board will be entitled to withdraw such request and that, if such
request is withdrawn, such Demand Registration will not count as the one
Demand Registration to which the Board is entitled.
(d) Selection of Underwriters. The Board will have the
right to select the investment banker(s) and manager(s) to administer the
offering, subject to the Company's approval (which will not be unreasonably
withheld) of such investment banker(s) and manager(s).
14.2 Participation in Registered Offerings. If the Company at
any time or times proposes or is required to register any of its Common Stock
or the equity securities for public sale in an underwritten public offering
for cash (other than in connection with any incentive stock option, bonus or
other employee benefit plan or arrangement) under the Securities Act or any
applicable state securities law, it will each such time give written notice to
the Board, of its intention to do so. Upon the written request of the board
given thirty (30) business days after receipt of any such notice (which
request shall state the intended method of disposition of such equity
securities and shall state in reasonable detail, to the extent practicable,
the net consideration, after all commissions and discounts which the
prospective seller or sellers expect to receive upon such disposition), the
Company shall use its best efforts to cause all such Common Stock requested
(which request will not be for less than thirty percent (30%) of the number of
shares of Common Stock purchasable or receivable upon exercise of the
Warrant(s)) to be registered by the Board to be registered under the
Securities Act and any applicable state securities laws (provided, that if the
managing underwriter advises that less than all of the registered shares of
equity securities should be offered for sale so as not to materially and
adversely affect the price or salability of the offering being registered by
the Company or the Board for a period not to exceed one hundred twenty (120)
days, the Board will withhold from sale for the period of time and for such
number of shares of Common Stock as the underwriter may specify; provided
further that a pro rata number of shares owned by all other shareholders of
the Company also shall be similarly withheld from sale), all to the extent
requisite to permit the sale or other disposition (in accordance with the
intended method of disposition thereof as aforesaid) by the prospective seller
or sellers of the securities so registered. In the event an underwriter is
involved with a registration initiated by the Company of the stock, and the
Board requests to participate in the registration, the Board must commit to
sell through the underwriter. The Company may, in its sole discretion,
withdraw any registration contemplated by this Section 14.2 and abandon the
proposed offering in which the Board had requested to participate without any
further obligation to the Board with respect to such registration statement or
offering; provided however that the Board shall be indemnified by the Company
for any fees, costs and expense of and incidental to such registration,
excluding the fees and disbursements of counsel acting solely on behalf of the
Board.
14.3 Obligations of the Board. It shall be a condition
precedent to the obligation of the Company to register any Common Stock
pursuant to Sections 14.1 and 14.2 hereof that the Board shall (i) furnish to
the Company such information regarding the Common Stock held by it and the
intended method of disposition thereof and other information concerning the
Board as the Company shall reasonably request and as shall be required in
connection with the registration statement to be filed by the Company;
(ii) agree to abide by such additional or customary terms affecting the
proposed offering as reasonably may be requested by the managing underwriter
of such offering, including a requirement, if applicable, to withhold (on a
pro-rata basis) from the public market for a period of at least one hundred
twenty (120) days after any such offering, any shares excluded from the
offering at the instance of the underwriter as permitted under Sections 14.1
and 14.2 hereof; and (iii) agree in writing in form satisfactory to the
Company to pay the underwriting discounts and commissions applicable to the
Common Stock being sold by it.
14.4 Registration Proceedings. If and whenever the Company is
required by the provisions of Sections 14.1 and 14.2 hereof to effect the
registration of the Common Stock under the Securities Act, until the
securities covered by such registration statement have been sold or for six
(6) months after effectiveness, whichever is the shorter period of time, the
Company shall:
(a) Prepare and file with the SEC a registration
statement with respect to such Common Stock and use its best efforts to cause
such registration statement to become and remain effective;
(b) Prepare and file with the SEC such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective;
(c) Furnish to the Board and to the underwriters of the
securities being registered such reasonable number of copies of the
registration statement, preliminary prospectus, final prospectus and such
other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(d) Use its best efforts to register or qualify the
securities covered by such registration statement under such state securities
or "Blue Sky" laws of such jurisdictions as the Board may reasonably request
within twenty (20) days prior to the original filing of such registration
statement, except that the Company shall not for any purpose be required to
qualify to do business as a foreign corporation in any jurisdiction wherein it
is not so qualified, and except that the Company shall not be required to so
register or qualify in more than forty (40) such jurisdictions if in the good
faith judgment of the managing underwriter such additional registrations or
qualifications would be unreasonably expensive or harmful to the consummation
of the proposed offering;
(e) Notify the Board, promptly after it shall receive
notice thereof, of the time when such registration statement has become
effective or a supplement to any prospectus forming a part of such
registration statement has been filed;
(f) Notify the Board promptly of any request by the SEC
for the amending or supplementing of such registration statement or prospectus
or for additional information;
(g) Prepare and file with the SEC, promptly upon the
request of the Board, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for the Board and
counsel for the underwriter or manager of the offering, are required under the
Securities Act or the rules and regulations thereunder in connection with the
distribution of Common Stock by the Board;
(h) Prepare and promptly file with the SEC and promptly
notify the Board of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event
shall have occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading;
(i) In case the Board or any underwriter for the Board is
required to deliver a prospectus at a time when the prospectus then in
circulation is not in compliance with the Securities Act, the Company will
prepare and file such supplements or amendments to such registration statement
and such prospectus or prospectuses as may be necessary to permit compliance
with the requirements of the Securities Act;
(j) Advise the Board, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance of any stop order by the
SEC suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for that purpose and promptly use
its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued;
(k) Not file any amendment or supplement to such
registration statement or prospectus to which a majority in interest of the
Board shall reasonably have objected on the grounds that such amendment or
supplement does not comply in all material respects with the requirements of
the Securities Act or the rules and regulations thereunder, after having been
furnished with a copy thereof at least two (2) business days prior to the
filing thereof; and
(l) At the request of the Board (i) use its best efforts
to obtain and furnish on the effective date of the registration statement or,
if such registration includes an underwritten public offering, at the closing
provided for in the underwriting agreement, an opinion, dated such date, of
the counsel representing the Company for the purposes of such registration,
addressed to the underwriters, if any, and to the Board, which shall contain
such opinions as are customary in an underwritten public offering, or, if the
offering is not underwritten, shall state that such registration statement has
become effective under the Securities Act and that (or substantially to the
effect that): (a) to the best of such counsel's knowledge, no stop order
suspending the effectiveness thereof has been issued and no proceedings for
that purpose have been instituted or are pending or contemplated under the
Securities Act; (b) the registration statement, related prospectus and each
amendment or supplement thereto comply as to form in all material respects
with the requirements of the Securities Act and applicable rules and
regulations of the SEC thereunder (except that such counsel need express no
opinion as to financial statements, schedules or other financial or
statistical data contained therein); (c) such counsel has no reason to believe
that either the registration statement or the prospectus or any amendment or
supplement thereto (other than financial statements and schedules or financial
and statistical data, as to which such counsel need not comment) contains any
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; (d) the description in the registration statement or prospectus or
any amendment or supplement thereto of all legal and governmental matters and
all contracts and other legal documents or instruments described therein are
accurate in all material respects; and (e) such counsel does not know of any
legal or governmental proceedings, pending or threatened, required to be
described in the registration statement or prospectus or any amendment or
supplement thereto which are not described as required, nor of any contracts
or documents or instruments of the character required to be described in the
registration statement or prospectus or amendment or supplement thereto or to
be filed as exhibits to the registration statement, which are not described
and filed as required; and (ii) use its best efforts to obtain letters dated
on such effective date, and such closing date, if any, from the independent
certified public accountants of the Company, addressed to the underwriters, if
any, and to the Board, stating that they are independent certified public
accountants within the meaning of the Securities Act and dealing with such
matters as the underwriters may request, or, if the offering is not
underwritten, stating that in the opinion of such accountants, the financial
statements and other financial data pertaining to the Company included in the
registration statement or the prospectus or any amendment or supplement
thereto comply in all material respects with the applicable accounting
requirements of the Securities Act; such opinion of counsel shall additionally
cover such legal matters with respect to the registration and with respect to
which such opinion is being given as the Board may reasonably request; such
letter from the independent certified public accountants shall additionally
cover such other financial matters, including information as to the period
ending not more than five (5) business days prior to the date of such letter,
with respect to the registration statement and prospectus, as the Board may
reasonably request.
14.5 Expenses. With respect to each inclusion of Common Stock
of the Board in a registration statement pursuant to Sections 14.1 and 14.2
hereof, all registration expenses, fees, costs and expenses of and incidental
to such registration, inclusion and public offering in connection therewith
shall be borne by the Company (excluding the fees and disbursements of
advisors retained by the Board and counsel acting solely on behalf of the
Board); provided, however, that the Board shall bear the Board's pro rata
share of the underwriting discount and commissions. The fees, costs and
expenses of registration to be borne by the Company shall include, without
limitation, all registration, filing and NASD fees, printing expenses, fees
and disbursements of counsel and accountants for the Company (including the
cost of any special audit requested in order to effect such registration),
fees and disbursements of counsel for the underwriter or underwriters of such
securities (if the Company and/or selling security holders are required to
bear such fees and disbursements), all legal fees and disbursements and other
expenses of complying with state securities or "Blue Sky" laws of any
jurisdiction in which the securities to be offered are to be registered or
qualified, and the premiums and other costs of policies of insurance against
liability arising out of such public offering.
14.6 Indemnification of the Board. Subject to the conditions
set forth below, in connection with any registration of securities pursuant to
Sections 14.1 or 14.2 hereof, the Company agrees to indemnify and hold
harmless the Board and each person, if any, who controls the Board (and its
respective officers, directors and agents), within the meaning of Section 15
of the Securities Act, as follows:
(a) Against any and all loss, claim, damage and expense
whatsoever arising out of or based upon (including, but not limited to, any
and all expense whatsoever reasonably incurred in investigating, preparing or
defending any litigation, commenced or threatened, or any claim whatsoever
based upon) any untrue or alleged untrue statement of a material fact
contained in any preliminary prospectus (if used prior to the effective date
of the registration statement), the registration statement or the final
prospectus (as from time to time amended and supplemented if the Company shall
have filed with the SEC any amendment thereof or amendment thereto) if used
within the period during which the Company is required to keep the
registration statement or prospectus current, or in any application or other
document executed by the Company or based upon written information furnished
by the Company filed in any jurisdiction in order to qualify the Company's
securities under the securities laws thereof; or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading; or any other
violation of applicable federal or state statutory or regulatory requirements
or limitations relating to action or inaction by the Company in the course of
preparing, filing, or implementing such registered offering; provided,
however, that the indemnity agreement contained in this Section 14.6(a) shall
not apply to any loss, claim, damage, liability or action arising out of or
based upon any untrue or alleged untrue statement or omission made in reliance
upon and in conformity with any information furnished in writing to the
Company by or on behalf of the Board expressly for use in connection
therewith;
(b) Subject to the proviso contained in Section 14.6(a)
above, against any and all loss, liability, claim, damage and expense
whatsoever to the extent of the aggregate amount paid in settlement of any
litigation, commenced or threatened, or of any claim whatsoever based upon any
such untrue statement or omission or any such alleged untrue statement or
omission (including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing or defending against any such
litigation or claim) if such settlement is effected with the written consent
of the Company and no indemnity shall inure to the benefit of the Board or any
controlling person thereof if the person asserting the claim failed to receive
a copy of the final prospectus at or prior to the written confirmation of the
sale of shares of Common Stock to such person if the untrue statement or
omission has been corrected in such final prospectus and the failure to
receive such final prospectus is not a necessary element of such person's
claim;
(c) In no case shall the Company be liable under this
indemnity agreement with respect to any claim made against the Board or any
such controlling person (or its respective officers, directors and agents)
unless the Company shall be notified, by letter or by telegram confirmed by
letter, of any claim made or action commenced against such persons, reasonably
promptly (but in any event within twenty (20) days of receipt of such claim
or, in the event that any summons or other service of process requiring a
responsive pleading within thirty (30) days or less time, within ten (10) days
after receipt of such summons or other process) after such person shall have
received notice of such claim or been served with the summons or other legal
process giving information as to the nature and basis of the claim, but
failure to so notify the Company shall not relieve it from any liability which
it may have otherwise than on account of this indemnity agreement. The
Company shall be entitled to participate at its own expense in the defense of
any suit brought to enforce any such claim, but if the Company elects to
assume the defense, such defense shall be conducted by counsel chosen by it,
provided that such counsel is reasonably satisfactory to the Board. In the
event the Company elects to assume the defense of any such suit and retain
such counsel, the Board shall, after the date the Board is notified of such
election, bear the fees and expenses of any counsel thereafter retained by the
Board as well as any other expenses thereafter incurred by the Board in
connection with the defense thereof; provided, however, that the Company shall
bear the fees and expenses of any such separate counsel retained by the Board
if the counsel representing the Company has a conflict of interest (which is
not waived) with the Board which would prohibit such counsel from representing
the Board.
14.7 Indemnification of Company. The Board in any registered
offering pursuant to Sections 14.1 or 14.2 above agrees to indemnify and hold
harmless the Company and each of the officers and directors and agents of it
and each other person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act against any and all such losses, liabilities,
claims, damages and expenses as are indemnified against by the Company under
Section 14.6 hereof; provided, however, that such indemnification shall be
limited to statements or omissions, if any, made (or in settlement of any
litigation effected with the written consent of the Board alleged to have been
made) in any preliminary prospectus, the registration statement or prospectus
or any amendment or supplement thereof or any application or other document in
reliance upon, and in conformity with, written information furnished in
respect of the Board, by or on behalf of the Board expressly for use in any
preliminary prospectus, the registration statement or prospectus or any
amendment or supplement thereof or in any such application or other document.
In case any action shall be brought against the Company, or any other person
so indemnified based on any preliminary prospectus, the registration statement
or prospectus or any amendment or supplement thereof or any such application
or other documents, in respect of which indemnity may be sought against the
Board, it shall have the rights and duties given to the Company, and each
other person so indemnified shall have the rights and duties given to the
Board, by the provisions of Section 14.6(c) hereof. The Company agrees to
notify the Board promptly after the assertion of any claim against the Company
in connection with the sale of securities covered by this Warrant.
14.8 Future Registration Rights. The Company may agree with
its shareholders other than the Board to allow their participation in any
registered offering which may be requested pursuant to Section 14.1 hereof,
provided all such rights of participation under Section 14.1 hereof shall be
subordinated to the rights of the Board herein, in a manner reasonably
satisfactory to counsel for the Board.
15. Descriptive Headings and Governing Law. The descriptive
headings of the several Sections of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant is being
delivered and is intended to be performed in the State of Wisconsin and shall
be construed and enforced in accordance with, and the rights of the parties
shall be governed by, the internal laws of such State (regardless of such
State's conflict of law provisions or principles).
IN WITNESS WHEREOF, Gehl Company has caused this Warrant to be
signed by its duly authorized officers this 4th day of June, 1997.
GEHL COMPANY
By: /s/ Kenneth P. Hahn
Title: Vice President
Attest: /s/ Michael J. Mulcahy
Title: Secretary
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT MAY NOT BE SOLD,
ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT OR LAWS.
COMMON STOCK PURCHASE WARRANT
To Subscribe for and Purchase Common Stock
of
GEHL COMPANY
WARRANT NO. 4
This certifies that, for value received, ROCK CREEK PARTNERS LTD., or its
transferee or assignee (the "Holder" which term includes any transferee and
assignee), is entitled to subscribe for and purchase from GEHL COMPANY, a
Wisconsin corporation (the "Company"), at the aggregate exercise price of
$560,000 (subject to the adjustment provided in Section 7 hereof) (or, if this
Common Stock Purchase Warrant is issued in substitution or exchange for a
predecessor common stock purchase warrant and represents rights to purchase
less than the maximum number or percentage of shares of Common Stock as
hereinafter defined which were purchasable upon exercise of such predecessor
common stock purchase warrant, a proportionately smaller amount) at any time
or times after the date hereof and until the date specified in Section 12
hereof, eighty thousand (80,000) shares of fully paid and nonassessable
(except as otherwise provided in Section 180.0622 of the Wisconsin Business
Corporation Law) shares of the Company's common stock, $0.10 par value per
share (the "Common Stock"), provided, however, that this Common Stock Purchase
Warrant shall be exercisable for a proportionately fewer or greater number of
shares of Common Stock if the Company combines by reverse stock split or
otherwise or subdivides by stock split, stock dividend or otherwise its
outstanding Common Stock. For the purposes of this Common Stock Purchase
Warrant, the term "Other Common Stock" shall mean other classes of equity
securities not limited to a fixed sum or percentage of a fixed sum in respect
of participation in dividends or distribution of assets in voluntary or
involuntary liquidation, dissolution or winding-up.
The predecessor to this Common Stock Purchase Warrant was originally
issued to the State of Wisconsin Investment Board (the "Board") pursuant to
the terms of the Second Amended and Restated Credit Agreement, dated as of
March 5, 1993 by and between the Company and the Board (the "Credit
Agreement"), in connection with the separate and individual purchases from the
Company by the Board of the Company's Senior Note, Junior Note and Make-Whole
Note (all as defined in the Credit Agreement) (together with any note or notes
issued in substitution or exchange therefor). This Common Stock Purchase
Warrant (and its predecessor) and all Common Stock Purchase Warrants issued in
substitution or exchange herefor are herein individually called a "Warrant"
and collectively called the "Warrants."
This Warrant is subject to the following provisions, terms and
conditions:
1. Exercise; Issuance of Certificates; Payment for Shares. The
rights represented by this Warrant may be exercised by the Holder, in whole or
in part and at one or more times by the surrender of this Warrant (properly
endorsed if required) at the principal office of the Company (or such other
office or agency of the Company as the Company may designate by written notice
to the Holder) and upon payment to the Company by wire transfer, certified
check or bank draft of the purchase price for the shares of Common Stock
purchasable hereunder and upon compliance with any registration requirements
or exemptions therefrom under the Securities Act (as defined below) and
applicable state securities laws. The Company agrees that the shares so
purchased shall and will be deemed to be issued to the Holder as the record
owner of such shares as of the close of business on the date on which this
Warrant shall have been surrendered and payment made for such shares as
aforesaid. Certificates for the shares of Common Stock so purchased shall be
delivered to the Holder within a reasonable time, not exceeding five (5) days,
after the rights represented by this Warrant shall have been so exercised,
and, unless this Warrant has expired, a new Warrant appropriately providing
for the purchase of Common Stock with respect to which this Warrant shall not
then have been exercised and stating the purchase price therefor shall also be
delivered to the Holder within such time.
2. Shares to be Fully Paid; Reservation of Shares. The Company
covenants and agrees that all shares which may be issued upon the exercise of
the rights represented by this Warrant and the payment of the purchase price
hereunder will, upon issuance, be fully paid and nonassessable (except as
otherwise provided by Section 180.0622 of the Wisconsin Business Corporation
Law) and free from all taxes, liens and charges with respect to the issue
thereof. Without limiting the generality of the foregoing, the Company
covenants and agrees that it will from time to time take all such action as
may be requisite to assure that the par value per share of the Common Stock is
at all times equal to or less than the then effective purchase price per share
of the Common Stock issuable upon exercise of this Warrant. The Company
further covenants and agrees that during the period within which the rights
represented by this Warrant may be exercised, the Company will at all times
have authorized, and reserved for the purpose of issue or transfer upon
exercise of the rights evidenced by this Warrant, a sufficient number of
shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant. The Company will take all such action as may be
necessary to assure that such shares of Common Stock may be so issued without
violation of any applicable law or regulation (except for any such violation
that may be a result of the Holder's failure to register the shares of Common
Stock under the Securities Act as hereinafter defined and any applicable state
securities law), or of any requirements of any domestic securities exchange
upon which the Common Stock of the Company may be listed.
3. [Reserved]
4. Record Date. In case the Company shall fix a record date or
otherwise make a record of the holders of its Common Stock for the purpose of
entitling them to receive a dividend or other distribution payable in Common
Stock or Other Common Stock, then such record date shall be deemed to be the
date of the issue of the shares of Common Stock or Other Common Stock deemed
to have been issued upon the declaration of such dividend or the making of
such other distribution.
5. Reorganization, Reclassification, Consolidation, Merger or
Sale. Any capital reorganization, reclassification, consolidation, merger or
sale of all or substantially all of the Company's assets to another person,
entity, firm or partnership which is effected in such a way that holders of
Common Stock or Other Common Stock are entitled to receive (either directly or
upon subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock or Other Common Stock is referred to herein as an
"Organic Change." Prior to the consummation of any Organic Change, the
Company will make appropriate provision (in form and substance satisfactory to
the Holder) to insure that the Holder will thereafter have the right to
purchase and receive, in lieu of or in addition to the Common Stock
immediately theretofore purchasable and receivable upon the exercise of this
Warrant, such shares of stock, securities or assets as the Holder would have
received in connection with such Organic Change if the Holder had exercised
this Warrant. The Company will not effect any such reorganization,
reclassification, consolidation, merger or sale unless, prior to the
consummation thereof, the successor corporation (if other than the Company)
resulting from such Organic Change assumes by written instrument (in form
reasonably satisfactory to the Holder) the obligation to deliver to the Holder
such shares of stock, securities or assets as, in accordance with the
foregoing provisions, the Holder may be entitled to acquire.
6. Liquidating Dividends. If the Company declares or pays a
dividend (other than a stock dividend payable in shares of Common Stock) upon
the Common Stock payable otherwise than in cash out of earnings or earned
surplus, determined in accordance with generally accepted accounting
principles, consistently applied (a "Liquidating Dividend"), then the Company
shall provide written notice of such declaration or payment of the Liquidating
Dividend at least fifteen (15) days prior to the date proposed for the payment
thereof. Said notice shall specify (i) the proposed date of payment of the
Liquidating Dividend and the amount per share of Common Stock thereof. The
Company furthermore shall cooperate with the Holder to effect the exercise of
this Warrant should the Holder desire to so exercise in order to enable the
Holder to participate in the Liquidating Dividend.
7. Adjustment in Aggregate Exercise Price. If the Company while
this Warrant is outstanding shall issue and sell or otherwise distribute any
Common Stock or Other Common Stock (other than a distribution to the existing
holders of Common Stock or Other Common Stock) at a price per share which
would be less than the aggregate exercise price of this Warrant divided by the
number of shares of Common Stock issuable upon the exercise of this Warrant,
then, and thereafter successively upon each such issue, the aggregate exercise
price then if effect shall be reduced to the lowest price obtained by
multiplying such lowest price per share of Common Stock or Other Common Stock
times the number of shares of Common Stock then issuable upon exercise of this
Warrant; provided however that the adjustment in aggregate purchase price
provided in this Section 7 shall not apply unless and until the Company shall
issue and sell or otherwise distribute any Common Stock or Other Common Stock
in excess of six hundred twenty-five thousand (625,000) shares following
March 5, 1993.
(a) In the case of the issuance of additional Common
Stock or Other Common Stock for cash, in determining the price per share of
such issuance, the consideration received by the Company therefor shall be
deemed to be the cash proceeds received by the Company for such shares after
deducting any commissions or other expenses paid or incurred by the Company
for any underwriting of, or otherwise in connection with, the issuance of such
shares.
(b) In the case of the issuance (otherwise than upon
conversion or exchange of obligations or shares of stock of the Company) of
additional Common Stock or Other Common Stock for a consideration other than
cash or a consideration a part of which shall be other than cash, in
determining the price per share of such issuance, the amount of the
consideration other than cash received by the Company for such Common Stock or
Other Common Stock shall be deemed to be the value of such consideration as
determined reasonably and in good faith by the board of directors of the
Company.
(c) In case of the issuance by the Company after the date
hereof of (i) any security that is convertible into Common Stock or Other
Common Stock, (ii) any rights or options to purchase Common Stock or Other
Common Stock, the Company shall be deemed to have issued the maximum number of
shares of Common Stock or Other Common Stock into which such convertible
security may be converted, and the maximum number of shares of Common Stock or
Other Common Stock deliverable on the exercise of such rights or options, for
the consideration received by the Company for such convertible security or for
such rights or options (less the amount of any underwriting discount), as the
case may be, and after deducting therefrom any expenses or commissions
incurred or paid by the Company for any underwriting of, or otherwise in
connection with, the issuance of such convertible security or rights or
options, plus (A) any consideration or adjustment payment to be received by
the Company in connection with such conversion and (B) the minimum
consideration to be received by the Company for the Common Stock or Other
Common Stock issuable upon the exercise of such rights or options. No further
adjustment of the aggregate exercise price shall be made as a result of the
actual issuance of the Common Stock or Other Common Stock upon conversion of
any convertible security or exercise of any rights or options referred to in
this clause (c) or issued prior to the date hereof.
8. Closing of Books. The Company will at no time close its
transfer books against the transfer of this Warrant or of any shares of Common
Stock issued or issuable upon the exercise of this Warrant in any manner which
interferes with the timely exercise of this Warrant.
9. No Voting or Other Rights. This Warrant shall not entitle the
Holder to any voting rights or other rights as a stockholder of the Company.
10. Warrant Transferable. This Warrant and all rights and
obligations hereunder are transferable, in whole, without charge to the Holder
upon surrender of this Warrant with a properly executed assignment (in form
reasonably acceptable to the Company) at the principal office of the Company.
This Warrant is not transferable except pursuant to an effective registration
statement under the Securities Act (as defined below) or in a transaction
exempt from the registration requirements of the Securities Act and in
compliance with any applicable state securities laws.
11. Warrants Exchangeable for Different Denominations. This
Warrant is exchangeable, upon the surrender hereof by the Holder at the office
or agency of the Company referred to in Section 1 hereof, for new Warrants of
like tenor representing in the aggregate the right to subscribe for and
purchase the maximum number of shares of Common Stock which may be subscribed
for and purchased hereunder (subject to reduction to reflect any partial
exercise or exercises of this Warrant), each of such new Warrants to represent
the right to subscribe for and purchase the number of shares of Common Stock
purchasable upon exercise of this Warrant as shall be designated by the Holder
at the time of such surrender.
12. Duration. The rights to purchase shares of Common Stock
hereunder shall remain in existence until March 5, 1998, unless the same are
exercised in full prior thereto, and thereafter the rights evidenced by this
Warrant shall expire.
13. No Dilution or Impairment. The Company shall not undertake or
participate in any action whatsoever for the purpose or having the result of
avoiding or seeking to avoid the observance or performance of any of its
obligations pursuant to this Warrant.
14. Registration Rights. As used in this Section 14, the term
Board shall mean collectively the State of Wisconsin Investment Board, its
transferees or assignees (including the Holder), and any assignee or
transferee of Common Stock from the Board which the Board obtained upon
exercise of this Warrant, other than those who received such Common Stock in a
public offering or pursuant to Rule 144 promulgated under the Securities Act;
provided however that the transferee or assignee of the Common Stock shall be
the same as the transferee or assignee of this Warrant.
14.1 Demand Registrations. At any time within two (2) years
following the exercise of its right to purchase the Company's Common Stock
pursuant to the Warrant, the Board may demand registration under the
Securities Act of 1933, as amended (the "Securities Act"), of all of the
Common Stock issuable or which has been issued upon exercise of the Warrant,
on Form S-1 or any similar long-form registration ("Long-Form Registrations")
or on Form S-2 or S-3 or any similar short-form registration ("Short-Form
Registrations"), if available under applicable rules of the SEC. The written
request to be delivered by the Board to the Company pursuant to this Section
14.1 shall (i) specify the number of shares intended to be offered and sold by
the Board, (ii) express the present intent of the Board to offer such shares
for distribution, and (iii) describe the nature and method of the proposed
offer and sale thereof. The registration requested pursuant to this Section
14.1 is referred to herein as "Demand Registration."
(a) Number of Registrations. The Board will be entitled
to demand two (2) Long-Form or Short-Form Registrations. A registration
initiated as a Demand Registration shall include all shares of Common Stock
issuable or which has been issued upon exercise of the Warrant then owned by
the Board. A registration initiated as a Demand Registration may be withdrawn
at any time at the request of the Board or the underwriters selected by the
Board, but shall count as one of the two (2) Demand Registrations; provided
that in any event, the Company will pay all registration expenses in
connection with any registration initiated as the Demand Registration as
provided in Section 14.5.
(b) Priority on Demand Registrations. The Company will
not include in the Demand Registration any securities which are not Common
Stock owned by the Board, without the written consent of the Board. If the
Demand Registration is an underwritten offering, and the managing underwriters
advise the Company in writing that in their opinion the number of shares of
Common Stock requested to be included exceeds the number of shares of Common
Stock which can be sold in such offering, the Company will include in such
registration, prior to the inclusion of any securities which are not shares of
Common Stock owned by the Board, the number of shares of Common Stock owned by
the Board requested to be included which in the opinion of such underwriters
can be sold; and the balance of the shares of Common Stock which the Board
requested to be included in such offering shall be withheld from sale for a
period of time requested by the underwriters, but not to exceed one hundred
twenty (120) days.
(c) Restrictions on Demand Registration. The Company
will not be obligated to effect a Demand Registration within one hundred
twenty (120) days after the effective date of a registration in which the
Board was given a participation in a registered offering pursuant to Section
14.2 hereof. The Company may postpone for up to ninety (90) days the filing
or the effectiveness of a registration statement for a Demand Registration if
the Company and the Board reasonably and in good faith agree that such Demand
Registration might have an adverse effect on any proposal or plan by the
Company to engage in any financing, acquisition of assets (other than in the
ordinary course of business) or any corporate reorganization, merger,
consolidation, tender offer or similar transaction; provided that in such
event, the Board will be entitled to withdraw such request and that, if such
request is withdrawn, such Demand Registration will not count as the one
Demand Registration to which the Board is entitled.
(d) Selection of Underwriters. The Board will have the
right to select the investment banker(s) and manager(s) to administer the
offering, subject to the Company's approval (which will not be unreasonably
withheld) of such investment banker(s) and manager(s).
14.2 Participation in Registered Offerings. If the Company at
any time or times proposes or is required to register any of its Common Stock
or the equity securities for public sale in an underwritten public offering
for cash (other than in connection with any incentive stock option, bonus or
other employee benefit plan or arrangement) under the Securities Act or any
applicable state securities law, it will each such time give written notice to
the Board, of its intention to do so. Upon the written request of the board
given thirty (30) business days after receipt of any such notice (which
request shall state the intended method of disposition of such equity
securities and shall state in reasonable detail, to the extent practicable,
the net consideration, after all commissions and discounts which the
prospective seller or sellers expect to receive upon such disposition), the
Company shall use its best efforts to cause all such Common Stock requested
(which request will not be for less than thirty percent (30%) of the number of
shares of Common Stock purchasable or receivable upon exercise of the
Warrant(s)) to be registered by the Board to be registered under the
Securities Act and any applicable state securities laws (provided, that if the
managing underwriter advises that less than all of the registered shares of
equity securities should be offered for sale so as not to materially and
adversely affect the price or salability of the offering being registered by
the Company or the Board for a period not to exceed one hundred twenty (120)
days, the Board will withhold from sale for the period of time and for such
number of shares of Common Stock as the underwriter may specify; provided
further that a pro rata number of shares owned by all other shareholders of
the Company also shall be similarly withheld from sale), all to the extent
requisite to permit the sale or other disposition (in accordance with the
intended method of disposition thereof as aforesaid) by the prospective seller
or sellers of the securities so registered. In the event an underwriter is
involved with a registration initiated by the Company of the stock, and the
Board requests to participate in the registration, the Board must commit to
sell through the underwriter. The Company may, in its sole discretion,
withdraw any registration contemplated by this Section 14.2 and abandon the
proposed offering in which the Board had requested to participate without any
further obligation to the Board with respect to such registration statement or
offering; provided however that the Board shall be indemnified by the Company
for any fees, costs and expense of and incidental to such registration,
excluding the fees and disbursements of counsel acting solely on behalf of the
Board.
14.3 Obligations of the Board. It shall be a condition
precedent to the obligation of the Company to register any Common Stock
pursuant to Sections 14.1 and 14.2 hereof that the Board shall (i) furnish to
the Company such information regarding the Common Stock held by it and the
intended method of disposition thereof and other information concerning the
Board as the Company shall reasonably request and as shall be required in
connection with the registration statement to be filed by the Company;
(ii) agree to abide by such additional or customary terms affecting the
proposed offering as reasonably may be requested by the managing underwriter
of such offering, including a requirement, if applicable, to withhold (on a
pro-rata basis) from the public market for a period of at least one hundred
twenty (120) days after any such offering, any shares excluded from the
offering at the instance of the underwriter as permitted under Sections 14.1
and 14.2 hereof; and (iii) agree in writing in form satisfactory to the
Company to pay the underwriting discounts and commissions applicable to the
Common Stock being sold by it.
14.4 Registration Proceedings. If and whenever the Company is
required by the provisions of Sections 14.1 and 14.2 hereof to effect the
registration of the Common Stock under the Securities Act, until the
securities covered by such registration statement have been sold or for six
(6) months after effectiveness, whichever is the shorter period of time, the
Company shall:
(a) Prepare and file with the SEC a registration
statement with respect to such Common Stock and use its best efforts to cause
such registration statement to become and remain effective;
(b) Prepare and file with the SEC such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective;
(c) Furnish to the Board and to the underwriters of the
securities being registered such reasonable number of copies of the
registration statement, preliminary prospectus, final prospectus and such
other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(d) Use its best efforts to register or qualify the
securities covered by such registration statement under such state securities
or "Blue Sky" laws of such jurisdictions as the Board may reasonably request
within twenty (20) days prior to the original filing of such registration
statement, except that the Company shall not for any purpose be required to
qualify to do business as a foreign corporation in any jurisdiction wherein it
is not so qualified, and except that the Company shall not be required to so
register or qualify in more than forty (40) such jurisdictions if in the good
faith judgment of the managing underwriter such additional registrations or
qualifications would be unreasonably expensive or harmful to the consummation
of the proposed offering;
(e) Notify the Board, promptly after it shall receive
notice thereof, of the time when such registration statement has become
effective or a supplement to any prospectus forming a part of such
registration statement has been filed;
(f) Notify the Board promptly of any request by the SEC
for the amending or supplementing of such registration statement or prospectus
or for additional information;
(g) Prepare and file with the SEC, promptly upon the
request of the Board, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for the Board and
counsel for the underwriter or manager of the offering, are required under the
Securities Act or the rules and regulations thereunder in connection with the
distribution of Common Stock by the Board;
(h) Prepare and promptly file with the SEC and promptly
notify the Board of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event
shall have occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading;
(i) In case the Board or any underwriter for the Board is
required to deliver a prospectus at a time when the prospectus then in
circulation is not in compliance with the Securities Act, the Company will
prepare and file such supplements or amendments to such registration statement
and such prospectus or prospectuses as may be necessary to permit compliance
with the requirements of the Securities Act;
(j) Advise the Board, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance of any stop order by the
SEC suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for that purpose and promptly use
its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued;
(k) Not file any amendment or supplement to such
registration statement or prospectus to which a majority in interest of the
Board shall reasonably have objected on the grounds that such amendment or
supplement does not comply in all material respects with the requirements of
the Securities Act or the rules and regulations thereunder, after having been
furnished with a copy thereof at least two (2) business days prior to the
filing thereof; and
(l) At the request of the Board (i) use its best efforts
to obtain and furnish on the effective date of the registration statement or,
if such registration includes an underwritten public offering, at the closing
provided for in the underwriting agreement, an opinion, dated such date, of
the counsel representing the Company for the purposes of such registration,
addressed to the underwriters, if any, and to the Board, which shall contain
such opinions as are customary in an underwritten public offering, or, if the
offering is not underwritten, shall state that such registration statement has
become effective under the Securities Act and that (or substantially to the
effect that): (a) to the best of such counsel's knowledge, no stop order
suspending the effectiveness thereof has been issued and no proceedings for
that purpose have been instituted or are pending or contemplated under the
Securities Act; (b) the registration statement, related prospectus and each
amendment or supplement thereto comply as to form in all material respects
with the requirements of the Securities Act and applicable rules and
regulations of the SEC thereunder (except that such counsel need express no
opinion as to financial statements, schedules or other financial or
statistical data contained therein); (c) such counsel has no reason to believe
that either the registration statement or the prospectus or any amendment or
supplement thereto (other than financial statements and schedules or financial
and statistical data, as to which such counsel need not comment) contains any
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; (d) the description in the registration statement or prospectus or
any amendment or supplement thereto of all legal and governmental matters and
all contracts and other legal documents or instruments described therein are
accurate in all material respects; and (e) such counsel does not know of any
legal or governmental proceedings, pending or threatened, required to be
described in the registration statement or prospectus or any amendment or
supplement thereto which are not described as required, nor of any contracts
or documents or instruments of the character required to be described in the
registration statement or prospectus or amendment or supplement thereto or to
be filed as exhibits to the registration statement, which are not described
and filed as required; and (ii) use its best efforts to obtain letters dated
on such effective date, and such closing date, if any, from the independent
certified public accountants of the Company, addressed to the underwriters, if
any, and to the Board, stating that they are independent certified public
accountants within the meaning of the Securities Act and dealing with such
matters as the underwriters may request, or, if the offering is not
underwritten, stating that in the opinion of such accountants, the financial
statements and other financial data pertaining to the Company included in the
registration statement or the prospectus or any amendment or supplement
thereto comply in all material respects with the applicable accounting
requirements of the Securities Act; such opinion of counsel shall additionally
cover such legal matters with respect to the registration and with respect to
which such opinion is being given as the Board may reasonably request; such
letter from the independent certified public accountants shall additionally
cover such other financial matters, including information as to the period
ending not more than five (5) business days prior to the date of such letter,
with respect to the registration statement and prospectus, as the Board may
reasonably request.
14.5 Expenses. With respect to each inclusion of Common Stock
of the Board in a registration statement pursuant to Sections 14.1 and 14.2
hereof, all registration expenses, fees, costs and expenses of and incidental
to such registration, inclusion and public offering in connection therewith
shall be borne by the Company (excluding the fees and disbursements of
advisors retained by the Board and counsel acting solely on behalf of the
Board); provided, however, that the Board shall bear the Board's pro rata
share of the underwriting discount and commissions. The fees, costs and
expenses of registration to be borne by the Company shall include, without
limitation, all registration, filing and NASD fees, printing expenses, fees
and disbursements of counsel and accountants for the Company (including the
cost of any special audit requested in order to effect such registration),
fees and disbursements of counsel for the underwriter or underwriters of such
securities (if the Company and/or selling security holders are required to
bear such fees and disbursements), all legal fees and disbursements and other
expenses of complying with state securities or "Blue Sky" laws of any
jurisdiction in which the securities to be offered are to be registered or
qualified, and the premiums and other costs of policies of insurance against
liability arising out of such public offering.
14.6 Indemnification of the Board. Subject to the conditions
set forth below, in connection with any registration of securities pursuant to
Sections 14.1 or 14.2 hereof, the Company agrees to indemnify and hold
harmless the Board and each person, if any, who controls the Board (and its
respective officers, directors and agents), within the meaning of Section 15
of the Securities Act, as follows:
(a) Against any and all loss, claim, damage and expense
whatsoever arising out of or based upon (including, but not limited to, any
and all expense whatsoever reasonably incurred in investigating, preparing or
defending any litigation, commenced or threatened, or any claim whatsoever
based upon) any untrue or alleged untrue statement of a material fact
contained in any preliminary prospectus (if used prior to the effective date
of the registration statement), the registration statement or the final
prospectus (as from time to time amended and supplemented if the Company shall
have filed with the SEC any amendment thereof or amendment thereto) if used
within the period during which the Company is required to keep the
registration statement or prospectus current, or in any application or other
document executed by the Company or based upon written information furnished
by the Company filed in any jurisdiction in order to qualify the Company's
securities under the securities laws thereof; or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading; or any other
violation of applicable federal or state statutory or regulatory requirements
or limitations relating to action or inaction by the Company in the course of
preparing, filing, or implementing such registered offering; provided,
however, that the indemnity agreement contained in this Section 14.6(a) shall
not apply to any loss, claim, damage, liability or action arising out of or
based upon any untrue or alleged untrue statement or omission made in reliance
upon and in conformity with any information furnished in writing to the
Company by or on behalf of the Board expressly for use in connection
therewith;
(b) Subject to the proviso contained in Section 14.6(a)
above, against any and all loss, liability, claim, damage and expense
whatsoever to the extent of the aggregate amount paid in settlement of any
litigation, commenced or threatened, or of any claim whatsoever based upon any
such untrue statement or omission or any such alleged untrue statement or
omission (including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing or defending against any such
litigation or claim) if such settlement is effected with the written consent
of the Company and no indemnity shall inure to the benefit of the Board or any
controlling person thereof if the person asserting the claim failed to receive
a copy of the final prospectus at or prior to the written confirmation of the
sale of shares of Common Stock to such person if the untrue statement or
omission has been corrected in such final prospectus and the failure to
receive such final prospectus is not a necessary element of such person's
claim;
(c) In no case shall the Company be liable under this
indemnity agreement with respect to any claim made against the Board or any
such controlling person (or its respective officers, directors and agents)
unless the Company shall be notified, by letter or by telegram confirmed by
letter, of any claim made or action commenced against such persons, reasonably
promptly (but in any event within twenty (20) days of receipt of such claim
or, in the event that any summons or other service of process requiring a
responsive pleading within thirty (30) days or less time, within ten (10) days
after receipt of such summons or other process) after such person shall have
received notice of such claim or been served with the summons or other legal
process giving information as to the nature and basis of the claim, but
failure to so notify the Company shall not relieve it from any liability which
it may have otherwise than on account of this indemnity agreement. The
Company shall be entitled to participate at its own expense in the defense of
any suit brought to enforce any such claim, but if the Company elects to
assume the defense, such defense shall be conducted by counsel chosen by it,
provided that such counsel is reasonably satisfactory to the Board. In the
event the Company elects to assume the defense of any such suit and retain
such counsel, the Board shall, after the date the Board is notified of such
election, bear the fees and expenses of any counsel thereafter retained by the
Board as well as any other expenses thereafter incurred by the Board in
connection with the defense thereof; provided, however, that the Company shall
bear the fees and expenses of any such separate counsel retained by the Board
if the counsel representing the Company has a conflict of interest (which is
not waived) with the Board which would prohibit such counsel from representing
the Board.
14.7 Indemnification of Company. The Board in any registered
offering pursuant to Sections 14.1 or 14.2 above agrees to indemnify and hold
harmless the Company and each of the officers and directors and agents of it
and each other person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act against any and all such losses, liabilities,
claims, damages and expenses as are indemnified against by the Company under
Section 14.6 hereof; provided, however, that such indemnification shall be
limited to statements or omissions, if any, made (or in settlement of any
litigation effected with the written consent of the Board alleged to have been
made) in any preliminary prospectus, the registration statement or prospectus
or any amendment or supplement thereof or any application or other document in
reliance upon, and in conformity with, written information furnished in
respect of the Board, by or on behalf of the Board expressly for use in any
preliminary prospectus, the registration statement or prospectus or any
amendment or supplement thereof or in any such application or other document.
In case any action shall be brought against the Company, or any other person
so indemnified based on any preliminary prospectus, the registration statement
or prospectus or any amendment or supplement thereof or any such application
or other documents, in respect of which indemnity may be sought against the
Board, it shall have the rights and duties given to the Company, and each
other person so indemnified shall have the rights and duties given to the
Board, by the provisions of Section 14.6(c) hereof. The Company agrees to
notify the Board promptly after the assertion of any claim against the Company
in connection with the sale of securities covered by this Warrant.
14.8 Future Registration Rights. The Company may agree with
its shareholders other than the Board to allow their participation in any
registered offering which may be requested pursuant to Section 14.1 hereof,
provided all such rights of participation under Section 14.1 hereof shall be
subordinated to the rights of the Board herein, in a manner reasonably
satisfactory to counsel for the Board.
15. Descriptive Headings and Governing Law. The descriptive
headings of the several Sections of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant is being
delivered and is intended to be performed in the State of Wisconsin and shall
be construed and enforced in accordance with, and the rights of the parties
shall be governed by, the internal laws of such State (regardless of such
State's conflict of law provisions or principles).
IN WITNESS WHEREOF, Gehl Company has caused this Warrant to be
signed by its duly authorized officers this 4th day of June, 1997.
GEHL COMPANY
By: /s/ Kenneth P. Hahn
Title: Vice President
Attest: /s/ Michael J. Mulcahy
Title: Secretary
W.D. GEHL/GEHL EMPLOYMENT AGREEMENT
INDEX
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. . . . . . . . . . . . . . . . . . . . . . 4
SECTION 6. BENEFITS. . . . . . . . . . . . . . . . . . . . . . . . . . 8
(i) Retirement/Death Benefit. . . . . . . . . . . . . . . . . . 8
(ii) Bonus. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(iii) Split Dollar Life Insurance. . . . . . . . . . . . . . . . . 9
SECTION 7. REIMBURSEMENT OF EXPENSES. . . . . . . . . . . . . . . . . . 9
SECTION 8. VACATION. . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 9. STOCK OPTION. . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 10. ADDITIONAL UNDERTAKINGS OF EXECUTIVE; NON-COMPETITION
PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 11. ASSIGNS AND SUCCESSORS. . . . . . . . . . . . . . . . . . . 11
SECTION 12. CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 13. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 14. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 15. LIMITATION ON PAYMENTS. . . . . . . . . . . . . . . . . . . 12
SECTION 16. GOVERNING LAW; RESOLUTION OF DISPUTES. . . . . . . . . . . . 13
SECTION 17. AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 14
<PAGE>
WILLIAM D. GEHL/GEHL COMPANY
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT is 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") as of
December 19, 1997.
RECITALS
WHEREAS, GEHL wishes to continue to retain the services of Executive as
its Chairman of the Board, President and Chief Executive Officer and Executive
desires to continue to serve GEHL in that capacity; and
WHEREAS, GEHL and Executive wish to amend and restate the Employment
Agreement between the parties dated as of December 15, 1995.
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 Chairman of the Board, 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 Chairman of the Board, 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 Chairman of the
Board, 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 period commencing October 1, 1997 through the end of the
term of employment a minimum base salary of Three Hundred Thousand Dollars
($300,000.00) 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 Executive's employment is
involuntarily terminated by Gehl during the term of employment for any reason
other than (i) cause, as defined below in this Section 4, (ii) circumstances
governed by Section 5 hereof or (iii) Executive's death or disability,
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, the Executive's term of employment shall be automatically extended
to a date which is two years after the occurrence of the Change in Control
(such two-year extended term of employment referred to in this Section 5 as
the "Change in Control Contract Term"). In addition, upon the occurrence of a
Change in Control, (i) the unvested stock options awarded to Executive under
the Gehl 1995 Option Plan shall vest, (ii) the Executive's Bank Balance in the
Bonus Bank under the Gehl Shareholder Value Added Management Incentive
Compensation Plan shall vest and be paid and (iii) all restrictions limiting
the exercise, transferability, entitlement or incidents of ownership of any
outstanding award, including options, restricted stock, supplemental
retirement and death benefits, deferred compensation, or other property or
rights granted to the Executive after the date of this Agreement (other than
pursuant to plans of general application to salaried employees such as tax-
qualified retirement plans, life insurance and the health plan) shall lapse,
and such awards shall become fully vested and be held by or for the Executive
free and clear of all such restrictions. This provision shall apply to all
such property or rights notwithstanding the provisions of any other plan or
agreement.
If Executive's employment shall be terminated by GEHL without cause (as
defined in Section 4) or the Executive shall terminate his employment for Good
Reason (as defined below in this Section 5) during the Change in Control
Contract Term, or if GEHL shall terminate Executive's employment without cause
within six (6) months before the execution of a definitive purchase agreement
that ultimately results in a Change in Control and Executive shall reasonably
demonstrate that such termination was in connection with or in anticipation of
the Change in Control, Executive shall be entitled to the following paid in a
lump sum within 30 days of the date of the Executive's termination of
employment hereunder (the "Termination Date"):
(a) The base salary as then in effect under Section 3 hereof ("the
Current Base Salary") through the Termination Date to the extent not
theretofore paid;
(b) The bonus which would be earned by Executive through the Termination
Date computed under GEHL's bonus plan, ignoring any requirement that
Executive be employed through the end of the fiscal year and not reduced
for any deferrals which would otherwise be required under the bonus plan;
(c) Any compensation previously deferred, including that deferred under
any bonus plan as then in effect, which deferrals shall become
immediately vested upon the Change in Control, to the extent not
previously paid; and
(d) Three (3) times the sum of (i) the Current Base Salary and (ii) the
highest bonus amount earned by the Executive in any of the five fiscal
years which precede the year in which the Termination Date occurs,
including any amounts deferred.
In addition, for twenty-four (24) months after the Termination Date, GEHL
shall provide to the Executive and his family medical benefits at least
substantially equal on a pre-tax basis to those provided to him and his family
just prior to the date of the Change in Control, whether pursuant to a group
plan or individual coverage. Notwithstanding the foregoing, if Executive
obtains employment during the 24-month period and family medical benefits are
available from the new employer, GEHL's obligation under this paragraph shall
cease for so long as Executive remains employed.
In no event shall Executive be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to the Executive
under this Section 5 and such amounts shall not be reduced (except to the
extent set forth in the immediately preceding paragraph) whether or not the
Executive obtains other employment. In addition, GEHL will not be entitled to
reduce the amounts payable under this Section 5 for any claims or rights it
may have against Executive.
"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.
"Good Reason" for the purposes of this Agreement, shall be defined as the
occurrence of any one of the followng events or conditions after, or in
anticipation of, the Change in Control.
(i) The removal of the Executive from, or any failure to reelect or
reappoint the Executive to, any of the positions held with GEHL on the
date of the Change in Control or any other posotions with GEHL to which
the Executive shall thereafter be elected, appointed or assigned, except
in connection with the termination of his employment for disability,
cause, as a result of his death or by the Executive other than for Good
Reason;
(ii) A good faith determination by the Executive that there has been a
significant adverse change, without the Executive's written consent, in
the Executive's working conditions or status with GEHL from such working
conditions or status in effect immediately prior to the Change in
Control, including but not limited to (A) a significant change in the
nature or scope of the Executive's authority, powers, functions, duties
or responsibilities, or (B) a significant reduction in the level of
support services, staff, secretarial and other assistance, office space
and accoutrements;
(iii)Any material breach by GEHL of any provision of this Agreement;
(iv) Any purported termination of the Executive's employment for cause by
GEHL which is determined under Section 16 not to be for conduct
encompassed in the definition of cause contained herein;
(v) The failure of GEHL to obtain an agreement, satisfactory to the
Executive, from any successor or assign of GEHL, to assume and agree to
perform this Agreement, as contemplated in Section 11 hereof; or
(vi) GEHL's requiring Executive to be based at any office or location
which is not within a fifty (50) mile radius of West Bend, Wisconsin,
except for travel reasonably required in the performance of Executive's
responsibilities hereunder, without Executive's consent.
For purposes of this Section 5, any good faith determination of Good Reason
made by the Executive shall be conclusive.
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 Company's SVA Plan 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, or circumstances governed by Section 5 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 have entered 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 original execution of this
Agreement, Executive and GEHL entered into a Stock Option Agreement,
specifically referenced herein and made a part hereof, wherein Executive was
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 and GEHL shall require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that GEHL would be required to perform if no
such succession or assignment had taken place.
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 by facsimile to the number provided for such
purpose by the applicable party 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.
Section 15. Limitation on Payments.
(a) Notwithstanding anything contained herein to the contrary, prior to
the payment of any amounts pursuant to Section 5 hereof, a national accounting
firm designated by GEHL (the "Accounting Firm") shall compute whether there
would be any "excess parachute payments" payable to the Executive, within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), taking into account the total "parachute payments," within the
meaning of Section 280G of the Code, payable to the Executive by GEHL or any
successor thereto under this Agreement and any other plan, agreement or
otherwise. If there would be any excess parachute payments, the Accounting
Firm will compute the net after-tax proceeds to the Executive, taking into
account the excise tax imposed by Section 4999 of the Code, if (i) the
payments hereunder were reduced, but not below zero, such that the total
parachute payments payable to the Executive would not exceed three (3) times
the "base amount" as defined in Section 280G of the Code, less One Dollar
($1.00) or (ii) the payments hereunder were not reduced. If reducing the
payments hereunder would result in a greater after-tax amount to the
Executive, such lesser amount shall be paid to the Executive. If not reducing
the payments hereunder would result in a greater after-tax amount to the
Executive, such payments shall not be reduced. The determination by the
Accounting Firm shall be binding upon GEHL and the Executive subject to the
application of Section 22(b) hereof.
(b) As a result of the uncertainty in the application of Section 280G of
the Code, it is possible that excess parachute payments will be paid when such
payment wold result in a lesser after-tax amount to the Executive; this is not
the intent hereof. In such cases, the payment of any excess parachute
payments will be void ab initio as regards any such excess. Any excess will
be treated as a loan by GEHL to the Executive. The Executive will return the
excess to GEHL, within fifteen (15) business days of any determination by the
Accounting Firm that excess parachute payments have been paid when not so
intended, with interest at an annual rate equal to the rate provided in
Section 1274(d) of the Code (or 120% of such rate if the Accounting Firm
determines that such rate is necessary to avoid an excise tax under Section
4999 of the Code) from the date the Executive received the excess until it is
repaid to GEHL.
(c) All fees, costs and expenses (including, but not limited to, the
cost of retaining experts) of the Accounting Firm shall be borne by GEHL and
GEHL shall pay such fees, costs and expenses as they become due. In
performing the computations required hereunder, the Accounting Firm shall
assume that taxes will be paid for state and federal purposes at the highest
possible marginal tax rates which could be applicable to the Executive in the
year of receipt of the payments, unless the Executive agrees otherwise.
Section 16. Governing Law; Resolution of Disputes. This Agreement and
the rights and obligations hereunder shall be governed by and construed in
accordance with the laws of the State of Wisconsin. Any dispute arising out
of this Agreement shall, at the Executive's election, be determined by
arbitration under the rules of the American Arbitration Association then in
effect (in which case both parties shall be bound by the arbitration award) or
by litigation. Whether the dispute is to be settled by arbitration or
litigation, the venue for the arbitration or litigation shall be West Bend,
Wisconsin or, at the Executive's election, if the Executive is no longer
residing or working in the West Bend, Wisconsin metropolitan area, in the
judicial district encompassing the city in which the Executive resides;
provided, that, if the Executive is not then residing in the United States,
the election of the Executive with respect to such venue shall be either West
Bend, Wisconsin or in the judicial district encompassing that city in the
United Sates among the thirty cities having the largest population (as
determined by the most recent United States Census data available at
termination date) which is closest to the Executive's residence. The parties
consent to personal jurisdiction in each trial court in the selected venue
having subject matter jurisdiction notwithstanding their residence or situs,
and each party irrevocably consents to service of process in the manner
provided hereunder for the giving of notices.
Section 17. Amendment. No modification or amendment to this Agreement
may be made without the written consent of the parties hereto.
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 date set forth above.
Attest: GEHL COMPANY
s/s Fred M. Butler
Its: Secretary Its:Director
s/s William D. Gehl
Witness as to William D. Gehl Executive
GEHL SAVINGS PLAN
AND
TRUST AGREEMENT
As Amended and Restated as of October 1, 1996.
<PAGE>
GEHL SAVINGS PLAN
Table of Contents
Page
ARTICLE I.
DEFINITIONS AND CONSTRUCTION
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . 2
Section 1.02. Construction . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II.
PARTICIPATION, VESTING SERVICE, BREAK IN SERVICE
Section 2.01. Participation . . . . . . . . . . . . . . . . . . . . 6
Section 2.02. Vesting Service . . . . . . . . . . . . . . . . . . . 7
Section 2.03. Break in Service . . . . . . . . . . . . . . . . . . 7
Section 2.04. Service for Controlled Group . . . . . . . . . . . . 7
ARTICLE III.
CONTRIBUTIONS TO THE TRUST FUND
Section 3.01. Election to Make Deposits . . . . . . . . . . . . . . 8
Section 3.02. Amount and Payment of Participant Deposits . . . . . 8
Section 3.03. Company Matching Contributions . . . . . . . . . . . 9
Section 3.04. No Liability for Future Company Contributions . . . . 10
Section 3.05. Time Period for Payment of Company Contributions . . 10
ARTICLE IV.
INVESTMENTS
Section 4.01. Direction of Investment . . . . . . . . . . . . . . . 11
Section 4.02. Reallocation of Accounts . . . . . . . . . . . . . . 11
Section 4.03. Description of Funds . . . . . . . . . . . . . . . . 11
Section 4.04. Funding Policy . . . . . . . . . . . . . . . . . . . 12
ARTICLE V.
PARTICIPANT ACCOUNTS
Section 5.01. Participant Accounts . . . . . . . . . . . . . . . . 13
Section 5.02. Allocation of Participant Deposits . . . . . . . . . 13
Section 5.03. Allocation of Company Matching Contributions . . . . 13
Section 5.04. Disposition of Forfeitures . . . . . . . . . . . . . 13
Section 5.05. Allocation of Changes in Value . . . . . . . . . . . 13
Section 5.06. Maximum Allocation Limitations . . . . . . . . . . . 13
ARTICLE VI.
BENEFITS
Section 6.01. Eligibility for Benefits and Vesting . . . . . . . . 15
Section 6.02. Death . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.03. Form and Time of Payment . . . . . . . . . . . . . . 16
Section 6.04. Payments to Minor or Incompetent Person . . . . . . . 18
Section 6.05. Direct Transfer of Eligible Rollover Distributions . 19
Section 6.06. Withdrawals . . . . . . . . . . . . . . . . . . . . . 19
Section 6.07. Erroneous Overpayments . . . . . . . . . . . . . . . 20
Section 6.08. Gehl Company Common Stock . . . . . . . . . . . . . . . 21
ARTICLE VII.
PLAN ADMINISTRATION
Section 7.01. Appointment of Administrator . . . . . . . . . . . . 22
Section 7.02. Responsibility and Authority of the Administrator . . 22
Section 7.03. Use of Professional Services . . . . . . . . . . . . 23
Section 7.04. Fees and Expenses . . . . . . . . . . . . . . . . . . 23
Section 7.05. Delegation of Authority and Responsibility . . . . . 23
Section 7.06. Requirement to Furnish Information and to Use
Administrator's Forms . . . . . . . . . . . . . 24
Section 7.07. Claims Procedure . . . . . . . . . . . . . . . . . . 24
Section 7.08. Agent for Service of Process . . . . . . . . . . . . 24
ARTICLE VIII.
TRUSTEE
Section 8.01. Successor Trustee . . . . . . . . . . . . . . . . . . 25
Section 8.02. General Powers . . . . . . . . . . . . . . . . . . . 25
Section 8.03. Payments from the Trust Fund . . . . . . . . . . . . 26
Section 8.04. Trustee Accounting . . . . . . . . . . . . . . . . . 26
Section 8.05. Settlement of Trustee Accounts . . . . . . . . . . . 26
Section 8.06. Reliance on Written Communications . . . . . . . . . 27
Section 8.07. Trustee Fees and Expenses . . . . . . . . . . . . . . 27 <PAGE>
ARTICLE IX.
INVESTMENT OF TRUST FUND
Section 9.01. Trustee Investment of Trust Fund . . . . . . . . . . 28
Section 9.02. Appointment of Investment Manager . . . . . . . . . . 28
ARTICLE X.
FIDUCIARIES AND ALLOCATION OF RESPONSIBILITIES
Section 10.01. Fiduciaries . . . . . . . . . . . . . . . . . . . . 29
Section 10.02. Allocation of Fiduciary Responsibilities . . . . . . 29
Section 10.03. General Limitation on Liability . . . . . . . . . . 29
Section 10.04. Multiple Fiduciary Capacities . . . . . . . . . . . 29
ARTICLE XI.
AMENDMENT AND TERMINATION
Section 11.01. Amendment . . . . . . . . . . . . . . . . . . . . . 30
Section 11.02. Termination . . . . . . . . . . . . . . . . . . . . 30
ARTICLE XII.
GENERAL PROVISIONS
Section 12.01. Non-Guarantee of Continued Employment or Other
Benefits . . . . . . . . . . . . . . . . . . . 31
Section 12.02. Mergers, Consolidations and Transfers of Plan Assets 31
Section 12.03. Spendthrift Clause . . . . . . . . . . . . . . . . . 31
Section 12.04. Exclusive Benefit . . . . . . . . . . . . . . . . . 31
Section 12.05. Full Satisfaction of Claims . . . . . . . . . . . . 32
Section 12.06. Indemnification . . . . . . . . . . . . . . . . . . 32
Section 12.07. Counterparts . . . . . . . . . . . . . . . . . . . . 32
Section 12.08. Successors and Assigns . . . . . . . . . . . . . . . 32
Section 12.09. IRS Approval . . . . . . . . . . . . . . . . . . . . 32
Section 12.10. Top-Heavy Restrictions . . . . . . . . . . . . . . . 32
Section 12.11. Retroactive Application of Certain Plan Provisions . 34
ARTICLE XIII.
TRUSTEE ACCEPTANCE
Section 13.01. Date of Acceptance . . . . . . . . . . . . . . . . . 35
<PAGE>
GEHL SAVINGS PLAN
THIS TRUST AGREEMENT, revised and continued this 1st day of October,
1996 by and between Gehl Company, a Wisconsin corporation (hereinafter called
the "Company"), and Marshall and Ilsley Trust Company as trustee of the trust
hereby continued (hereinafter called the "Trustee").
W I T N E S S E T H:
WHEREAS, effective as of April 22, 1985, the Company adopted the
Gehl Savings Plan to encourage eligible employees to contribute toward their
own retirement savings through the means of a "cash or deferred arrangement"
under Section 401(k) of the Internal Revenue Code of 1954, as amended; and
WHEREAS, the plan and trust herein set forth is intended to satisfy
the applicable requirements of Sections 401(a), 401(k), and 501(a) of such
Code, as amended by the Tax Reform Act of 1986 (and now known as the Internal
Revenue Code of 1986) and other statutory and regulatory requirements; and
WHEREAS, in order to reflect the change in Trustee and the proposed
change to a daily valuation system, it is necessary to amend and restate the
plan and trust as hereinafter set forth, effective as of October 1, 1996;
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth, the Company and the Trustee agree as follows:
<PAGE>
ARTICLE I.
DEFINITIONS AND CONSTRUCTION
Section 1.01. Definitions. Whenever used herein, the following
words and phrases shall have the following meanings, except as required
otherwise by the context:
(a) "Administrator" means the individual, group of individuals,
corporation or other entity appointed by the Board to administer the Plan
pursuant to Section 7.01 hereof.
(b) "Beneficiary" means the person, trust and/or other entity
entitled to receive benefits in the event of the Participant's death. A
Participant shall designate his Beneficiary on the form and in the manner
prescribed by the Administrator and such designation may be changed or
withdrawn by the Participant at any time. The most recent valid designation
on file with the Administrator at the time of the Participant's death shall be
the Beneficiary. Notwithstanding the foregoing, in the event the Participant
is married at the time of his death, the Beneficiary shall be the
Participant's spouse at such time unless such spouse consented in writing to
the designation of an alternative Beneficiary after notice of the spouse's
rights and such consent was witnessed (i) by a Plan representative appointed
by the Administrator or (ii) by a notary public. In the event no valid
designation of a Beneficiary is on file with the Administrator at the date of
death or no designated Beneficiary survives him, the Participant's spouse
shall be deemed the Beneficiary; in the further event the Participant is
unmarried or his spouse does not survive him, the Participant's estate shall
be deemed to be his Beneficiary.
(c) "Board" means the Board of Directors of the Company.
(d) "Break in Service" means, with respect to a Participant, any
Period of Severance which lasts for twelve (12) or more consecutive months.
(e) "Code" means the Internal Revenue Code of 1986, as interpreted
by applicable regulations and rulings issued pursuant thereto, all as amended
and in effect from time to time.
(f) "Company" means Gehl Company, a Wisconsin corporation, and any
successors and assigns thereto.
(g) "Compensation" means the earnings paid to a Participant for
services on or after his entry date in Section 2.01(a), equal to the sum of
the amount reportable in Box 1 of Form W-2, plus any Deposits hereunder and
salary reduction pursuant to Code Section 125 or 401(k), less any
reimbursements or other expense allowances, fringe benefits (cash or noncash),
moving expenses, deferred compensation, and welfare benefits. The maximum
annual compensation taken into account hereunder for purposes of calculating
any Participant's accrued benefit (including the right to any optional
benefit) and for all other purposes under the Plan shall be $150,000 (or such
higher amount permitted pursuant to Code Section 401(a)(17)). For purposes of
calculating this maximum for any 5 percent owner or highly compensated
employee who is in the group of ten employees paid the greatest compensation
during the year, pursuant to Code Section 414(q)(6), the compensation of a
spouse or a lineal descendant under age nineteen before the end of the Plan
Year shall be treated as if paid to the employee.
(h) "Date of Hire" means the first day on which an individual
performs an hour of employment as defined in Section 2.01(c) hereof.
(i) "Date of Rehire" means the first day on which an individual
performs an hour of employment upon rehire following a Break in Service.
(j) "Deposits" means amounts designated under the Plan by
Participants pursuant to Article III hereof which are contributed by the
Company in lieu of payment of an equal amount to the Participant as
compensation.
(k) "Employee" means any person employed on other than a temporary
basis (i) by the Company in the position of an office, sales, or supervisory
employee or (ii) in a non-union hourly position by either Gehl in Madison,
South Dakota, Gehl Power Products, Inc. in Yankton, South Dakota or
Hedlund-Martin, Inc. in Lebanon, Pennsylvania. Persons working at other
Company facilities shall become Employees only upon specific action of the
Board. A person who is a "leased employee" within the meaning of Code Section
414(n) and (o) shall not be eligible to participate in the Plan, but in the
event such a person was participating or subsequently becomes eligible to
participate herein, credit shall be given for the person's service as a leased
employee toward completion of the Plan's eligibility and vesting requirements,
including any service for a member of the controlled group or affiliated
service group, if applicable. In addition, "Employee" shall also mean any
person employed in West Bend, Wisconsin, in a position represented by a
collective bargaining unit, provided that any such Employee shall not be
eligible for any contributions under Sections 3.03 and 5.03.
(l) "ERISA" means the Employee Retirement Income Security Act of
1974, as interpreted and applied under regulations and rulings issued pursuant
thereto, all as amended and in effect from time to time.
(m) "Investment Manager" means the Administrator or a person,
insurance company, corporation or association which qualifies as an
"investment manager" as defined in Section 3(38) of ERISA, including the
Trustee, appointed pursuant to Section 9.02 to direct the investment of all or
any portion of the assets held by the Trustee under this Agreement.
(n) "Normal Retirement Date" means the Participant's sixty-fifth
(65th) birthday.
(o) "Participant" means any Employee who satisfies the provisions
of Section 2.01 hereof.
(p) "Period of Severance" means the total period of time,
calculated in years, months and days, which elapses between an employee's
Severance from Service Date and such employee's Date of Rehire.
(q) "Plan" means the profit sharing retirement plan herein
contained, as amended and in effect from time to time, which shall be known as
the "Gehl Savings Plan."
(r) "Plan Year" means the twelve (12) month period commencing on
January 1 of each year except that the first Plan Year will be April 22, 1985
through December 31, 1985.
(s) "Severance From Service Date" means the earlier of the date on
which an employee's employment with the Company terminates on account of a
quit, discharge, retirement (including retirement due to Total and Permanent
Disability) or death, or the first anniversary of an employee's absence for
any other reason, including a leave of absence, sick leave or disability
leave; provided, however, that, in the case of an employee who leaves active
service with the Company in connection with his commencing to perform military
duty in the armed forces of the United States of America or of any state
thereof under circumstances entitling him to veterans' reemployment rights
pursuant to the Vietnam Era Veterans' Readjustment Act or any other comparable
federal statute, he shall not be deemed to have incurred a Severance from
Service Date hereunder while performing such military duty and shall have the
period thereof included as part of his Vesting Service hereunder if, but only
if, he returns to the Company's service within the applicable time limit and
under the other conditions prescribed by such statutes for his exercise of
such veterans' reemployment rights.
(t) "Total and Permanent Disability" means a physical or mental
condition which totally and presumably permanently prevents a Participant from
engaging in any substantially gainful activity, as determined by the
Administrator based on a medical examination by a doctor or clinic appointed
by the Administrator. Notwithstanding any other provision of this section, no
Participant shall qualify if the Administrator determines that his disability
results from an injury suffered while engaged in a felonious or criminal act
or enterprise.
(u) "Trust Fund" means all sums of money and other property,
together with all earnings, income and other increment thereon, held in trust
for purposes of providing benefits and defraying the reasonable expenses of
the Plan, pursuant to the terms of this Agreement.
(v) "Trustee" means Marshall and Ilsley Trust Company or any
successor or successors thereto designated by the Board pursuant to Section
8.01 hereof.
(w) "Vesting Service" means a Participant's service with the
Company as calculated under Section 2.02 hereof.
Section 1.02. Construction. (a) Whenever any words are used
herein in the masculine, they shall be construed as though they were used in
the feminine in all cases where they would so apply; and wherever any words
are used in the singular or the plural, they shall be construed as though they
were used in the plural or the singular, as the case may be, in all cases
where they would so apply. The words "hereof," "herein," "hereunder" and
other similar compounds of the word "here" shall mean and refer to this entire
Agreement and not to any particular article or section. Titles of articles
and sections hereof are for general information only, and this Agreement and
the Plan are not to be construed by reference thereto.
(b) The Plan is intended to qualify under Section 401 of the Code
and shall be interpreted so as to comply with the applicable requirements
thereof, where such requirements are not clearly contrary to the express terms
hereof. This Agreement and the Plan shall be construed and their validity
determined according to the laws of the State of Wisconsin to the extent such
laws are not preempted by federal law. In case any provision of this
Agreement and/or the Plan shall be held illegal or invalid for any reason,
said illegality or invalidity shall not affect the remaining parts of this
Agreement and/or the Plan, but this Agreement and/or the Plan shall be
construed and enforced as if said illegal and invalid provisions had never
been inserted therein.
<PAGE>
ARTICLE II.
PARTICIPATION, VESTING SERVICE, BREAK IN SERVICE
Section II.01. Participation. (a) An Employee shall become a
Participant as of the first day of any quarter (i.e., January 1, April 1, July
1 or October 1) coincident with or next following his completion of the
qualifying period and filing of the election of Deposits.
(b) The qualifying period shall be the first to occur of the
following:
(i) the twelve (12) month period immediately following
the employee's date of employment during which the
employee accumulates at least 1,000 hours of
employment; or
(ii) any Plan Year commencing after the date of employment
during which the employee accumulates at least 1,000
hours of employment; or
(iii) for any employee regularly scheduled to work forty
(40) hours per week, sixty (60) days of Vesting
Service.
(c) For purposes of this Section an hour of employment is an hour
for which a person is directly or indirectly paid by the Company for the
performance of duties. Hours of employment shall also include each hour not
credited under the preceding sentence for which back pay has been either
awarded or agreed to, irrespective of mitigation of damages, and each of the
first 501 hours during a single continuous period of absence for which a
Participant is paid or entitled to payment for vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military duty, or leave
of absence. Notwithstanding the foregoing, no credit shall be given for
payments pursuant to applicable workers' compensation or unemployment
compensation or disability insurance laws. The Administrator shall determine
each Participant's hours of employment in accordance with Department of Labor
Regulations 2530.200b-2(b) and (c).
(d) A former Participant who is rehired by the Company shall resume
participation in the Plan as of the first day of the calendar month coincident
with or next following his election to make Deposits.
(e) It is expressly provided that any employee who is in a unit of
employees covered by a collective bargaining agreement shall become, or
continue as, a Participant only if such bargaining agreement specifically
provides that employees in such unit shall be covered by the Plan.
Section II.02. Vesting Service. Each Participant shall be credited
with Vesting Service equal to the aggregate periods of time between his Date
of Hire or subsequent Date of Rehire, as applicable, and the next following
Severance from Service Date. A Participant shall also be credited with
Vesting Service for any Period of Severance of less than twelve (12)
consecutive months in duration. Except for purposes of eligibility to
participate pursuant to Section 2.01(b)(iii), Vesting Service shall not count
any period prior to January 1, 1985.
Section II.03. Break in Service. Vesting Service earned after a
Break in Service which lasts for at least six (6) years shall not be
considered for purposes of determining a Participant's vested interest in
amounts accrued in his account prior to the Break in Service. Vesting Service
earned prior to a Break in Service shall be aggregated with Vesting Service
earned after the Break in Service for purposes of determining a Participant's
vested interest in amounts accrued in his account after the Break in Service.
Separate accounts shall be maintained for amounts accrued with respect to a
Participant before a six (6) year Break in Service and after such a Break in
Service.
Section II.04. Service for Controlled Group. Solely for purposes of
Sections 2.01(b), 2.01(c), 2.02, and 2.03 hereof, employment with the Company
shall include employment with any member of a controlled group of
corporations, a group of trades or businesses under common control or an
affiliated service group member as defined in Code Sections 414(b), (c) and
(m) that includes the Company, but only while such corporation is in such
controlled group.
<PAGE>
ARTICLE III.
CONTRIBUTIONS TO THE TRUST FUND
Section III.01. Election to Make Deposits. Upon completion of his
qualification requirement under Section 2.01, an Employee may file a written
election for the Company to make Deposits under the Plan. An Employee is not
required to file such election immediately upon completion of his qualifying
period but may, subject to any rules the Administrator may adopt, file the
election at a later date. The election shall be filed with the Administrator
on such form and in the manner the Administrator prescribes. The election
shall be effective as of the Employee's participation date in subsection
2.01(a) and shall continue in effect until suspended or terminated pursuant to
the terms hereof.
Section III.02. Amount and Payment of Participant Deposits. (a)
Amount: At the time of his election under Section 3.01 hereof, the Employee
shall select the rate of his Deposits, based on a percentage of his
Compensation. Deposits shall commence with the payroll period which commences
on or immediately after the Employee's participation date. The Employee may
designate any whole percentage from one percent (1%) through fifteen percent
(15%), but only the first six percent (6%) of Compensation shall be eligible
for a match by Company contributions.
(b) Change in Rate: The rate of a Participant's Deposits shall
remain in effect and may be changed only as of the payroll period which
commences on or immediately after the first day of any quarter (i.e., January
1, April 1, July 1 or October 1) and such other dates as determined by the
Administrator, pursuant to such rules as the Administrator may establish.
Deposits may be suspended entirely at any time by thirty (30) days written
notice to the Administrator.
(c) Payment: Deposits shall be made by the Company through regular
payroll deduction in lieu of payment as Compensation to the Participants.
Deposits so received by the Company shall be remitted to the Trustee as soon
as practicable thereafter.
(d) No Participant shall contribute Deposits in excess of $9,500 in
any calendar year (or such higher amount permitted pursuant to Code Section
402(g)) less the amount of any elective deferrals under all other plans,
contracts or arrangements maintained by the Company. In addition, the Plan is
subject to the limitations of Code Section 401(k) which are incorporated
herein by this reference. Accordingly, the actual deferral percentage for
highly compensated employees as defined in Code Section 414(q) shall not
exceed the greater of:
(i) the actual deferral percentage of the nonhighly
compensated employees multiplied by 1.25, or
(ii) the lesser of (A) the actual deferral percentage of the
nonhighly compensated employees plus two percentage
points, or (B) the actual deferral percentage of the
nonhighly compensated employees multiplied by 2.0,
subject to such other applicable limit as may be prescribed by the Secretary
of the Treasury to prevent the multiple use of this alternative limitation.
In order to ensure the favorable tax treatment of Deposits hereunder pursuant
to Code Section 401(k) or to ensure compliance with Code Section 402(g) or
415, the Administrator in its discretion may prospectively decrease the rate
of Deposits of any Participant at any time and, to the extent permitted by
applicable regulations, may direct the Trustee to refund Deposits to any
Participant. Any excess contributions, determined (i) after application of
the family aggregation rules, any recharacterization of deferrals as after-tax
contributions if applicable and use of qualified nonelective contributions
and/or qualified matching contributions as helpful in the actual deferral
percentage test, and (ii) by leveling the highest deferral ratios until the
test is satisfied, and excess deferrals shall be distributed including
applicable income determined pursuant to applicable regulations, including gap
period income after 1988, together with any applicable matching contribution.
Such distributions shall be made during the Plan Year following the year the
excess contributions were made, and the amount shall be determined based on
the respective portions attributable to each highly compensated employee as
defined in Code Section 414(q) and based on compensation as defined in Code
Section 415(c)(3). Testing hereunder shall be done separately for nonunion
Employees and each group of Employees represented by a collective bargaining
unit.
Section III.03. Company Matching Contributions. (a) Subject to the
Company's right to amend or terminate the Plan as herein provided, the Company
shall contribute to the Trust Fund such amount from time to time as it
determines. Such contributions are not intended to be nor shall they be
treated as part of a "cash or deferred arrangement" under Section 401(k) of
the Code.
(b) The Plan is subject to the limitations of Code Section 401(m)
which are incorporated herein by this reference. Accordingly, the actual
contribution percentage of employer contributions for highly compensated
employees as defined in Code Section 414(q) shall not exceed the greater of:
(i) the actual contribution percentage of the nonhighly
compensated employees multiplied by 1.25, or
(ii) the lesser of (A) the actual contribution percentage of
the nonhighly compensated employees plus two percentage
points, or (B) the actual contribution percentage of the
nonhighly compensated employees multiplied by 2.0,
subject to such other applicable limit as may be prescribed by the Secretary
of the Treasury to prevent the multiple use of this alternative limitation.
In order to ensure compliance with Code Section 401(m), any excess aggregate
contributions, determined (i) after application of the family aggregation
rules, any recharacterization of deferrals as after-tax contributions if
applicable and use of qualified nonelective contributions and/or qualified
matching contributions as helpful in the actual deferral percentage test, and
(ii) by leveling the highest contribution ratios until the test is satisfied,
shall be distributed if vested or forfeited if forfeitable, including
applicable income determined pursuant to applicable regulations, including gap
period income after 1988, together with any applicable matching contribution.
Such distributions shall be made during the plan year following the year the
excess aggregate contributions were made, and the amount shall be determined
based on the respective portions attributable to each highly compensated
employee as defined in Code Section 414(q) and based on compensation as
defined in Code Section 415(c)(3). Testing hereunder shall be done separately
for nonunion Employees and each group of Employees represented by a collective
bargaining unit.
Section III.04. No Liability for Future Company Contributions. The
benefits under the Plan shall be only such as can be provided by the assets of
the Trust Fund, and there shall be no liability or obligation to make future
profit sharing contributions hereunder or to make any further contributions in
the event of termination of the Plan.
Section III.05 Time Period for Payment of Company Contributions.
The Company's contributions for any Plan Year shall be paid to the Trustee not
later than the time prescribed by law, including any extensions thereof, for
filing the Company's federal income tax return with respect to such year.
<PAGE>
ARTICLE IV.
INVESTMENTS
Section IV.01. Direction of Investment. (a) Each Participant shall
direct, in the manner the Administrator prescribes, the percentage of
Deposits and allocable share of Company contributions which shall be invested
in each fund described in Section 4.03 hereof. A Participant who is a former
Employee or a Beneficiary, other than the deceased Participant's spouse, may
not direct the investment of his account. Such account shall remain in the
funds in which it was invested as of the date of the Participant's termination
of employment or date of death, whichever is applicable.
(b) In the event a Participant fails to direct investment of any
part of the account, such amount shall be invested on the Participant's behalf
in the Balanced Fund described in Section 4.03(a)(i) hereof.
(c) A Participant's direction of investment may be changed as of
the first day of any quarter (i.e., January 1, April 1, July 1 or October 1),
and such other dates as determined by the Administrator, pursuant to such
rules as the Administrator may establish. The election of investments
designates the percentage of future contributions to be allocated to a
particular fund. No reallocation shall be made due to differences in
investment results between various funds except as provided in Section 4.02
hereof.
Section IV.02. Reallocation of Accounts. Each Participant may
direct the Trustee, in the manner the Administrator prescribes, to reallocate
the Participant's accounts as of the first day of any quarter (i.e., January
1, April 1, July 1 or October 1), and such other dates as determined by the
Administrator, pursuant to such rules as the Administrator may establish.
Except to the extent permitted by the Administrator, no Participant's
direction to the Trustee for reallocation of the Participant's account may
include a reallocation to the Gehl Company Stock Fund. Such direction may
include a reallocation out of the Gehl Company Stock Fund.
Section IV.03. Description of Funds.
(a) There shall be at least four (4) investment funds with the
investment characteristics as determined by the Investment Manager.
(b) Additional funds may be established in the discretion of the
Investment Manager, with such titles and investment characteristics as shall
be determined by the Investment Manager, and communicated to Participants.
Any fund or any additional fund may be eliminated in the discretion of the
Investment Manager after notice to Participants and reallocation of such
amounts to remaining funds.
(c) Pending investment in securities of a character described for
the fund, any part of a fund may be invested in savings accounts or other
deposits with a bank, commercial paper or other short-term securities,
including any common funds of the Trustee utilizing similar investments but
excluding any securities of the Company.
(d) Each Participant's Deposits and allocable share of Company
contributions shall be invested in the various funds as directed by the
Participant pursuant to Sections 4.01 and 4.02 hereof.
Section IV.04. Funding Policy. The funding policy for the Plan is that
Deposits and Company contributions shall be managed in a manner consistent
with ERISA and the general investment objectives for the applicable funds and
for the purpose of defraying the reasonable expenses of administering the
Plan. The Administrator shall have primary responsibility for carrying out
the funding policy, and in addition to its specific responsibilities set forth
elsewhere in the Plan, shall establish and communicate to the Trustee and/or
other Investment Manager the general investment policy and objectives for the
funds designated pursuant to Section 4.03 hereof.
<PAGE>
ARTICLE V.
PARTICIPANT ACCOUNTS
Section V.01. Participant Accounts. The Trustee shall establish and
maintain an account in the name of each Participant for his allocated share of
Company contributions and Participant Deposits. As soon as practicable
following each Plan Year, the Trustee shall prepare for each Participant an
annual statement reflecting the status of the Participant's account as of the
end of the Plan Year.
Section V.02. Allocation of Participant Deposits. As of each December 31
and such other dates as determined by the Administrator, the Trustee shall
allocate each Participant's Deposits for the payroll deduction periods since
the last Deposit applicable Participant's account.
Section V.03. Allocation of Company Matching Contributions. As of each
December 31 and such other dates as determined by the Administrator, the
Trustee shall allocate the Company's matching contribution, if any, and any
allocable forfeitures under Section 5.04 hereof among the Participants on a
pro rata basis with respect to Participant Deposits for the applicable period,
up to a maximum Deposit of six percent (6%) of Compensation for such period.
Notwithstanding the foregoing, Participants who are employed in West Bend,
Wisconsin, represented by a collective bargaining unit shall not be eligible
for any Company matching contributions.
Section V.04. Disposition of Forfeitures. The Trustee shall establish a
special account known as the "Suspense Account" and shall enter into such
account amounts as are forfeited by any former Participant under Section 6.01
hereof. Amounts in the Suspense Account shall be allocated with the Company
matching contribution pursuant to Section 5.03 hereof as soon as practicable.
Section V.05. Allocation of Changes in Value. As of each December 31
and such other dates as determined by the Administrator, the Trustee shall
value each investment fund under Section 4.03 hereof and proportionately
adjust each Participant's account invested in such fund to reflect the effect
of income received, any change in fair market value (whether realized or
unrealized), expenses and all other transactions during the applicable period
respecting such fund.
Section V.06. Maximum Allocation Limitations. The Plan is subject to
the limitations on benefits and contributions imposed by Code Section 415
which are incorporated herein by this reference. The limitation year shall be
the Plan Year. In the event that there are multiple plans, and the sum of the
defined benefit plan fraction and the defined contribution plan fraction, as
defined in Code Section 415, exceeds applicable limits, then such Participants
benefit under the defined benefit plan shall be reduced until such limits are
satisfied. If, notwithstanding the foregoing provisions of this section, the
limitations of Code Section 415 are exceeded as a result of a reasonable error
in estimating a Participant's compensation, a reasonable error in estimating
the amount of Participant's Deposits that a Participant may elect under the
limits of Code section 415, the allocation of forfeitures, or such other facts
and circumstances as the commissioner of the Internal Revenue Service may
prescribe, there shall be deducted from the Participant's account and returned
to the Participant such portion of the Participant's Deposits, together with
earnings thereon, as may be necessary to satisfy Code Section 415. If the
requirements are still not satisfied, there shall be deducted from the
Participant's account all or a portion of the employer contributions for such
limitation year as may be necessary to comply with Code Section 415 which
amounts shall be reallocated among other eligible Participants to the extent
that such additional allocation would not exceed the Code Section 415 limits
with respect to such other Participants. Any amounts which cannot be
allocated or reallocated due to limitations shall be credited to a suspense
account subject to the following conditions: (i) amounts in the suspense
account shall be allocated as a forfeiture among all eligible Participants
hereunder at such time, including termination of the Plan or complete
discontinuance of company contributions, as the foregoing limitations permit,
(ii) no investment gains or losses shall be allocated to the suspense account,
(iii) no further company contributions shall be permitted until the foregoing
limitations permit their allocation to Participant's accounts, and (iv) upon
termination of the Plan any unallocated amounts in the suspense account shall
revert to the Company.
<PAGE>
ARTICLE VI.
BENEFITS
Section VI.01. Eligibility for Benefits and Vesting. (a) A Participant
shall be fully vested and entitled pursuant to Section 6.03 hereof to receive
upon termination of employment the total amount credited to his account if he:
(i) attains age sixty-five (65);
(ii) terminates employment under circumstances eligible for early
retirement under a Company-sponsored, qualified defined benefit
plan in which the Participant is covered;
(iii) terminates employment on account of Total and Permanent
Disability; or
(iv) incurs a layoff without recall which results in his termination
of employment pursuant to Company policy.
If a Participant's employment is terminated under any other circumstances
(except by reason of death which is provided for in Section 6.02 hereof), he
shall be entitled pursuant to Section 6.03 hereof to receive the entire
balance of the account attributable to his Deposits, plus that percentage of
the balance in his account attributable to Company contributions which
represents his vested interest determined in accordance with the following
table, and the remainder of his account balance attributable to Company
contributions shall be subject to forfeiture pursuant to subsection (b) below.
Percentage of Account
Balance Attributable
to Company Contributions
Years of Vesting Service Representing Vested Interest
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 or more 100%
(b) Any amounts in a Participant's account which are not payable
under subsection (a) above when his employment with the Company is severed
shall remain in such account and shall continue to share in allocations under
Section 5.05 hereof until such former Participant incurs a six-year break in
service as defined in Section 2.04 hereof, whereupon they shall be forfeited
and administered pursuant to Section 5.04 hereof. Notwithstanding the
foregoing, if a Participant whose employment with the Company terminates prior
to his becoming one hundred percent (100%) vested in the portion of his
account balance attributable to Company contributions receives a distribution
or distributions of his entire vested interest in his account, such
Participant's nonvested interest in the Company contributions credited to his
account shall be forfeited; provided, however, that if such Participant is
reemployed prior to incurring a six-year break in service, any forfeited
amounts shall be reinstated from current forfeitures if available or a special
Company contribution. Any amounts that are reinstated pursuant to the
previous sentence shall continue to vest according to the schedule in
subsection (a) above taking into consideration any distributed amount. In any
such event, the Participant's vested portion of his remaining account shall
not be less than an amount "X" determined by the formula X = P(AB+D)-D, where
P is the vested percentage at the relevant time, AB is the account balance at
the relevant time, and D is the amount of the distribution. A Participant
whose entire vested interest in his account has been distributed or who has no
vested interest shall be deemed cashed out of the Plan.
(c) Benefits payable in installments to a former Participant shall
be suspended upon his reemployment by the Company. Any undistributed amount
shall be maintained in his account and shall continue to share in allocations
under Section 5.05 hereof until he again terminates his employment with the
Company.
Section VI.02. Death. Upon the death of a Participant before his
termination of employment with the Company, the total amount then credited to
his account shall be fully vested and payable to the Participant's
Beneficiary. Upon the death of a Participant after his termination of
employment, the vested portion of his account shall be payable to the
Participant's Beneficiary.
Section VI.03. Form and Time of Payment. (a) All amounts payable
to a Participant who terminates employment with the Company on account of
Total and Permanent Disability or after attainment of age sixty-five (65)
shall be paid as the Participant shall determine in one of the following ways:
(i) in lump sum; or
(ii) in substantially equivalent installments over a period
determined by the Participant not to exceed up to ten (10)
years.
In any case where the Participant has determined payment to be on an
installment basis, payment of all or any portion of the unpaid balance may be
accelerated in the Participant's sole discretion.
(b) All amounts payable to a Beneficiary shall be paid as the
Beneficiary shall determine in one of the following ways:
(i) in lump sum; or
(ii) in substantially equivalent installments over a period
determined by the Beneficiary not exceeding five (5) years
from the Participant's death; provided, however, that if
payment to the Participant has begun in installments prior
to his death, the balance of his account shall be
distributed at least as rapidly as that method selected
prior to his death.
(c) All amounts not payable pursuant to subsection (a) or (b) above
shall be paid in lump sum.
(d) Payment, under whichever method is determined, shall commence
at such time as the particular Participant or Beneficiary involved shall
determine. Notwithstanding the foregoing,
(i) except with respect to death benefits payable to a
nonspouse Beneficiary, no lump sum cash distribution
shall be made without the consent of the Participant
or deceased Participant's spouse, to the extent
required by law, where the nonforfeitable portion of
such Participant's or spouse's, in case of the
Participant's death, account exceeds, or has ever
exceeded, $3,500; but
(ii) benefits shall not commence later than sixty (60)
days after the end of the Plan Year in which the
Participant attains or would have attained, in the
case of death benefits payable to a deceased
Participant's spouse, age sixty-five (65) or incurs a
termination of employment, whichever shall last
occur; but
(iii) notwithstanding the foregoing, effective April 1,
1990, benefits payable to a Participant shall be paid
or commenced no later than the April 1 following the
calendar year in which the Participant attains age
seventy and one-half (70-1/2), even if the
Participant is still employed; with respect to
benefits payable to a deceased Participant's spouse,
benefits shall be paid or commenced no later than the
later of (A) December 31 of the calendar year
immediately following the calendar year in which the
Participant died and (B) December 31 of the calendar
year in which the Participant would have attained age
seventy and one-half (70-1/2).
(e) For purposes of any distribution or withdrawal pursuant to this
Article, the value of the Participant's account balances shall be determined
as of the end of any quarter (i.e. March 31, June 30, September 30 or December
31) coincident or immediately following the date on which the Trustee receives
the direction from the Administrator to make such payment. At the election of
the Participant or deceased Participant's spouse, the direction to the Trustee
shall include a direction to pay a percentage of the anticipated balance, not
in excess of eighty percent (80%), prior to the applicable end of any quarter
(i.e. March 31, June 30, September 30 or December 31), with a final payment
after the valuation for the end of any quarter (i.e. March 31, June 30,
September 30 or December 31) has been completed; provided however, that if the
Participant or spouse makes such an election, the Participant or spouse shall
pay all costs incurred to effect the early valuation necessitated by his
election. Notwithstanding the foregoing provisions of this section, after the
change to a daily valuation system, for purposes of any distribution or
withdrawal pursuant to this Article, the value of the Participant's account
balances shall be determined as of the business day immediately preceding the
date of the distribution.
(f) The provisions of the Plan are intended to comply with Code
Section 401(a)(9) which prescribes certain rules regarding minimum
distributions and requires that death benefits be incidental to retirement
benefits. All distributions under the Plan shall be made in conformance with
Section 401(a)(9) and the regulations thereunder which are incorporated herein
by reference. The provisions of the Plan governing distributions are intended
to apply in lieu of any default provisions prescribed in regulations;
provided, however, that Code Section 401(a)(9) and the regulations thereunder
override any Plan provisions inconsistent with such Code Section and
regulations.
Section VI.04. Payments to Minor or Incompetent Person. In the
event that any amount is payable under the Plan to any person who is a minor
or is deemed by the Administrator to be incompetent, either mentally or
physically, or for any other reason incapable of receiving such payment, the
Administrator may, in its sole discretion, make such payment for the benefit
of such person in any of the following ways that the Administrator may select:
(i) to such person's legal representative appointed by proceedings
satisfactory to the Administrator; (ii) directly to such person even though he
is not then able to exercise control over such payment; and/or (iii) to any
custodian under the Uniform Gifts to Minors Act or similar statutes or
guardian of such person or of his property with whom such person is making his
home. The Administrator shall not be required to see to the proper
application of any such payment made for such person's benefit pursuant to the
provisions of this Section, and any such payment shall satisfy in full such
person's entitlement to that payment.
Section VI.05. Direct Transfer of Eligible Rollover Distributions.
(a) This section applies to distributions made on or after January
1, 1993. Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this section, a distributee may
elect, at the time and in the
manner prescribed by the Administrator, to have any portion of an eligible
rollover distribution paid directly to an eligible retirement plan specified
by the distributee in a direct rollover as such terms are defined herein.
(b) An eligible rollover distribution is any distribution of all or
any portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any distribution that is one
of a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee or the
joint lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified period of ten years
or more; any distribution to the extent such distribution is required under
Section 401(a) (9) of the Code; and the portion of any distribution that is
not includible in gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer securities).
(c) An eligible retirement plan is an individual retirement account
described in Section 408(a) of the Code, an individual retirement annuity
described in Section 408(b) of the Code, an annuity plan described in Section
403(a) of the Code, or a qualified trust described in Section 401(a) of the
Code, that accepts the distributee's eligible rollover distribution. However,
in the case of an eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account or individual
retirement annuity.
(d) A distributee includes an employee or former employee. In
addition, the employee's or former employee's surviving spouse and the
employee's or former employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Section 414(p)
of the Code, are distributees with regard to the interest of the spouse or
former spouse.
(e) A direct rollover is a payment by the Plan to the eligible
retirement plan specified by the distributee.
Section VI.06. Withdrawals. (a) Upon a showing of substantial
hardship, a Participant may withdraw any portion of the balance in his account
which is attributable to his Participant Deposits upon written request to and
approval of the Administrator. For purposes of this Section, substantial
hardship shall mean:
(i) unreimbursed medical expenses described in Code
Section 213(d) incurred by the Participant, the
Participant's spouse or any dependents of the
Participant (as defined in Code Section 152) or
necessary for these individuals to obtain medical
care;
(ii) costs directly related to the purchase (excluding
mortgagepayments) ofa principalresidence for
the Participant;
(iii) payment of tuition and related educational fees for
the next 12 months of post-secondary education for
the Participant or the Participant's spouse, children
or dependents; or
(iv) payments necessary to prevent the eviction of the
Participant from his principal residence or
foreclosure on the mortgage of the Participant's
principal residence.
The hardship withdrawal (i) shall be limited to the amount of the
immediate and heavy financial need, (ii) including to the extent permitted by
rules established by the Administrator any amounts necessary to pay any
federal, state or local income taxes or penalties reasonably anticipated to
result from the withdrawal. (iii) shall be made only after the Participant
takes all permitted loans and distributions hereunder and pursuant to any
other plan maintained by the Employers and (iv) shall not include any net
earnings credited after December 31, 1988 to the balance in the Participant's
account derived from Deposits.
Any Participant who makes a withdrawal under this Section, shall
have his Deposits and any other elective contributions or employee
contributions under this Plan or any other plan maintained by the Employer
(both qualified and nonqualified) automatically suspended for a period of
twelve (12) months following such withdrawal. The amount which such a
Participant may contribute as Deposits for the calendar year following such
withdrawal shall not exceed the amount described in Section 402(g) for such
year, reduced by the amount of such Participant's actual Deposits for the
calendar year in which the withdrawal occurred.
(b) After attainment of age fifty-nine and one-half (59-1/2), a
Participant may withdraw any portion of the balance in his account which is
attributable to his Participant Deposits upon written request to the
Administrator. No more than two (2) such withdrawals may be made by a
Participant during any twelve (12) month period.
Section VI.07. Erroneous Overpayments. In the event any payments
hereunder to a Participant, former Participant, surviving spouse or any other
Beneficiary hereunder exceed the amounts to which such person was entitled,
the Administrator may withhold or reduce subsequent payments, or may take such
other action as it deems necessary or appropriate.
Section VI.08. Gehl Company Common Stock.
(a) A Participant may direct the voting at each annual meeting and
at each special meeting of the stockholders of Gehl Company of that number of
whole shares of Gehl Company Common Stock attributable to his balance in Gehl
Company Stock Fund, as of the valuation date preceding the record date for
such meeting. Each such Participant will be provided with copies of any
pertinent material together with a request for the Participant's confidential
instructions as to how such shares are to be voted. The Trustee shall vote
such shares in accordance with such instructions. Any shares of Gehl Company
Common Stock for which the Trustee has not received instructions shall not be
voted.
(b) Participant may direct the Trustee with respect to the exercise
of tender offer rights with respect to that number of whole and fractional
shares of Gehl Company Common Stock attributable to his balance in the Gehl
Company Stock Fund as of the valuation date preceding the applicable record
date. Each Participant shall be provided with copies of any pertinent
material distributed to shareholders generally, in addition to a request for
the Participant's instructions. The Trustee shall act in accordance with the
directions received from the Participants. Any shares of Gehl Company Common
Stock for which the Trustee has not received instructions shall not be
tendered. The proceeds of any shares of Gehl Company Common Stock tendered in
accordance with this Section shall be credited to the investment fund or funds
elected by the Participant pursuant to rules established by the Administrator.
(c) The Trustee shall be responsible for ensuring the
confidentiality of a Participant's instructions under this Section to the
extent reasonably possible.
<PAGE>
ARTICLE VII.
PLAN ADMINISTRATION
Section VII.01. Appointment of Administrator. The Plan shall be
administered by an individual, or a committee of individuals appointed by the
Board and serving at its pleasure. An Administrator position may, but need
not, be filled by an officer, director or employee of the Company. Any
vacancy in an Administrator position, whether caused by death, resignation,
removal or other cause, shall be filled by the Board and the President of the
Company shall act as Administrator until such vacancy is filled. If the
Administrator is a committee, such vacancy shall not affect the
Administrator's authority to carry out its duties and responsibilities under
the Plan. Also, if the Administrator is a committee, it may select from its
committee members a chairman and such other officers as it deems appropriate,
and Administrator action may be taken on vote of at least a majority of the
committee members present at any meeting or upon unanimous written consent of
all members without a meeting. Such Administrator meetings shall be scheduled
to be held at least annually and minutes of such meetings shall be kept. All
actions of the Administrator shall be recorded in such minutes or other
appropriate written form. The Administrator may establish such other
procedures and operating rules as it deems appropriate. Any party serving in
an Administrator position may serve in similar capacities under other employee
retirement and welfare benefit plans established and maintained by the
Company. The Administrator shall be deemed the Plan's administrator for all
purposes of ERISA.
Section VII.02. Responsibility and Authority of the Administrator.
The Administrator shall have and exercise all discretionary and other
authority to control and manage the operation and administration of the Plan
as it may be amended by the Board from time to time, except such authority as
is specifically allocated otherwise by or under the terms hereof. Without
limiting the foregoing and in addition to the authority and duties specified
elsewhere herein, the Administrator shall have exclusive authority to:
(a) interpret and apply all provisions hereof, including without
limitation, the power to determine who is a Participant in the Plan, and
the amount of Vesting Service and Compensation to be recognized for each
such Participant;
(b) formulate, issue and apply rules and regulations, which are
consistent with the terms and provisions hereof and the requirements of
applicable law;
(c) make appropriate determinations and calculations and direct the
Trustee to pay benefits accordingly;
(d) prescribe and require the use of appropriate forms;
(e) prepare all reports which may be required by law;
(f) determine the existence of Total and Permanent Disability and,
in this connection, to require any Participant to submit to a physical
examination by a licensed physician, in accordance with uniform rules and
procedures consistently applied to similarly situated individuals;
(g) approve or deny all applications under Article VI hereof and
direct the Trustee as to the timing of any distribution;
(h) transmit to the Trustee the investment elections of
Participants pursuant to Article IV hereof; and
(i) appoint any Investment Managers or otherwise direct investments
pursuant to Section 9.02 hereof.
Section VII.03. Use of Professional Services. The Administrator may
engage the services of and/or consult with any legal counsel, independent
qualified public accountant or other persons as may be deemed appropriate.
Such persons may be employed for the purpose of rendering advice to the
Administrator concerning the Administrator's responsibilities hereunder and
may be persons who render services to the Company and/or the Trustee. In any
case in which such services are utilized, the Administrator shall retain
exclusive discretionary authority and control over the management and
administration of the Plan.
Section VII.04. Fees and Expenses. No employee of the Company shall
receive compensation for services rendered in an Administrator capacity but
shall be reimbursed for all reasonable expenses incurred in that capacity.
Any other person or entity serving in an Administrator capacity shall be
entitled to such reasonable compensation therefor as may be mutually agreed
upon with the Company. Where services are utilized as provided in Section
7.03 hereof, the Administrator shall review and approve fees and other costs
for those services. Such fees and costs and any other expenses incurred in
the administration of the Plan and Trust Fund shall be paid out of the
principal or income of the Trust Fund unless voluntarily paid by the Company.
Section VII.05. Delegation of Authority and Responsibility. The
Administrator may direct other employees to perform duties and functions
relating to the administration of the Plan under the Administrator's
supervision. It is expressly provided, however, that in any such case, the
Administrator retains full and exclusive authority and responsibility for and
respecting any such activities by other employees, and nothing contained in
this Section 7.05 shall be construed to confer upon such other employees any
discretionary authority or control in and respecting the management and
administration of the Plan.
Section VII.06. Requirement to Furnish Information and to Use
Administrator's Forms. Each person entitled to benefits under the Plan shall
furnish to the Administrator such evidence, dates or information as the
Administrator considers necessary or desirable in order to properly administer
the Plan. Any designation of Beneficiary, benefit application, notification
or other writing to be submitted hereunder to the Administrator must be filed
pursuant to the procedure and on the appropriate form prescribed, and its
receipt acknowledged by the Administrator in order to be valid and effective.
Section VII.07. Claims Procedure. (a) A Participant or Beneficiary
who believes that he is then entitled to benefits hereunder in an amount
greater than he is receiving or has received, may file a claim for such
benefits by writing directly to the Administrator. Every claim which is
properly filed shall be decided and answered in writing within ninety (90)
days (or one hundred eighty (180) days if additional time is needed and the
claimant is so notified prior to the commencement of the extension) of its
receipt by the Administrator, stating whether the claim is granted or denied.
If the claim is wholly or partially denied, the specific reasons for denial
and reference to the pertinent Plan provisions shall be set forth in a written
notice to the claimant. Such notice shall also describe any information
necessary for the claimant to perfect an appeal and an explanation of the
Plan's claims appeal procedure as set forth in subsection (b) below.
(b) Within sixty (60) days of notice that a claim is denied, the
claimant may file a written appeal to the Administrator, including any
comments, statements or documents the claimant may wish to provide. Every
appeal shall be decided and answered within sixty (60) days (or one hundred
twenty (120) days if additional time is needed and the claimant is so notified
prior to the commencement of the extension) of its receipt by the
Administrator. If a Committee is serving as Administrator, the appeal shall
be considered and decided by the entire body at its next regularly scheduled
meeting occurring at least thirty (30) days after the appeal is timely filed
unless an extension of time is required to process the appeal, in which case a
written notice thereof shall be given to the claimant prior to the start of
such extension which shall not go beyond the third such regularly scheduled
meeting occurring after such filing. In the event the claim is denied upon
appeal, the specific reasons for denial and reference to the pertinent Plan
provisions shall be set forth in a written decision which shall be sent to the
claimant. The Administrator shall comply with any reasonable request from a
claimant for documents or information relevant to his claim prior to his
filing an appeal. The Administrator shall have discretionary authority to
determine eligibility for benefits and to construe the terms of the Plan; any
such determination or construction shall be final and binding on all parties
unless arbitrary and capricious.
Section VII.08. Agent for Service of Process. The Administrator is
designated as the agent for service of legal process with respect to all
matters pertaining to the Plan and the Trust Fund.
<PAGE>
ARTICLE VIII.
TRUSTEE
Section VIII.01. Successor Trustee. Any Trustee may be removed by
action of the Board at any time, with or without cause, upon thirty (30) days'
written notice. Any Trustee may resign at any time upon thirty (30) days'
written notice to the Company. Upon such removal or resignation of a Trustee
the Board may appoint or designate a successor trustee or trustees and all the
monies and other property then constituting the Trust Fund shall be assigned,
transferred and paid over to such successor trustee or trustees.
Section VIII.02. General Powers. Except as otherwise limited by
Article IV and otherwise herein, in addition to any powers or authority
otherwise granted to the Trustee hereunder, the Trustee is authorized and
empowered:
(a) to act as complete and absolute owner of all assets in the
Trust Fund;
(b) to sell, exchange, convey, transfer or dispose of, or to grant
options with respect to, any asset in the Trust Fund and to apply the
proceeds of any such transaction in any manner consistent with the
purposes of the Trust Fund, including any loans authorized pursuant to
Section 6.06 hereof;
(c) to borrow or raise monies for the purposes of the Trust Fund in
such amount and upon such terms and conditions as the Trustee in its
discretion may deem advisable;
(d) to make, execute, acknowledge and deliver any and all
assignments, documents of transfer or conveyance and any and all other
instruments or documents that may be necessary or appropriate to carry
out the powers herein granted;
(e) to cause any asset in the Trust Fund to be registered in or
transferred to its name as Trustee or the name of its nominee or nominees
or to retain same unregistered or in form permitting transferability by
delivery, but the books and records of the Trustee shall at all times
show that all such assets are part of the Trust Fund;
(f) to execute any option, right or privilege appurtenant to or
respecting any asset of the Trust Fund or any contract with an insurance
company, including the right to vote in person or by proxy as to any
security in the Trust Fund;
(g) to employ such legal counsel, independent qualified public
accountant and other persons as may be deemed necessary for administering
the Trust Fund, which assistants may be those consulted by the Company,
any Investment Manager and/or the Administrator;
(h) to enforce, compromise, settle or abstain from same in its
discretion, any right, obligation or claim, whether asserted by or
against the Trustee and in general to protect in any way the interests of
the Trust Fund;
(i) to do all other acts which the Trustee may deem necessary or
proper and to exercise any and all powers of the Trustee upon such terms
and conditions as is deemed to be for the best interests of the Trust
Fund; and
(j) to employ or appoint investment advisors or managers to manage
any or all of the assets comprising the Trust, including any advisor or
manager which is a member of an affiliated group of which Marshall and
Ilsley Trust Company, or any successor trustee, is a member. To
effectuate such appointment, the Trustee shall have the power to execute
any documents as are necessary and to appoint such advisor or manager as
co-fiduciary.
Section VIII.03. Payments from the Trust Fund. The Trustee shall
make payments from the Trust Fund to such persons, and in such manner and
amounts as may be specified in written directions to the Trustee from the
Administrator. Should any such payment be unclaimed, the Trustee shall notify
the Administrator thereof, and shall dispose of same in accordance with the
Administrator's further directions.
Section VIII.04. Trustee Accounting. The Trustee shall keep accurate
and detailed accounts of all investments, receipts and disbursements and other
transactions hereunder, and all accounts, books and records relating thereto
shall be open to inspection and audit at reasonable times by any person or
persons designated by the Administrator or the Company. Within ninety (90)
days following the last day of each Plan Year, or following the close of such
other annual period as may be agreed upon between the Trustee and the Company,
and within ninety (90) days after the removal or resignation of the Trustee,
the Trustee shall file with the Company a written report setting forth all
investments, receipts and disbursements, and other transactions effected by it
during the period ending as of such date or to the date of such removal or
resignation, as the case may be, including a description of all securities and
investments purchased and sold with the cost or net proceeds of such purchases
or sales, and showing all cash, securities and other property held at the end
of such period.
Section VIII.05. Settlement of Trustee Accounts. In case of any
disapproval of any statement of accounts of the Trustee submitted by the
Company in writing within ninety (90) days of receipt of such statement, an
audit of such statement shall be made by an independent certified public
accountant appointed by the Company unless a corrected statement shall have
been rendered to the Company and approved in writing by the Company. Upon
completion of such audit, the inaccuracies in such statement so audited, if
any, shall be corrected to conform to such audit and a corrected statement
shall be delivered by the Trustee to the Company. Any such corrected
statement shall stand approved as the statement of account of the Trustee as
to all matters embraced therein, without further approval. An approved or
corrected statement of account shall constitute an account stated between the
Trustee and the Company as to all matters embraced in such statement, and
shall be binding and conclusive upon all persons interested in the Trust Fund
to the same extent as if the account of the Trustee had been settled and
allowed in a proceeding for judicial settlement of its accounts in any court
of competent jurisdiction, to which all such persons had been made parties;
provided, however, that no such statement of accounts nor the Company's
approval thereof shall be deemed to relieve the Trustee of any liability which
may be imposed upon it for violation of a specific provision of the Code or
ERISA; provided further that nothing contained herein shall be deemed to
deprive the Trustee and/or the Company of the right to have a judicial
settlement of the Trustee's accounts.
Section VIII.06. Reliance on Written Communications. The Trustee
shall be fully protected in relying upon any written notice, certification or
other document or writing received from the Company, the Board, any Investment
Manager and/or the Administrator and believed to be genuine and shall be under
no duty to make an investigation or inquiry as to statements contained in any
such notice, certification or other document or writing, and may accept the
same as conclusive. Except when otherwise expressly provided herein, any
instrument to be delivered or furnished by the Company or the Board to the
Trustee shall be sufficiently executed if executed in the name of the Company
or Board by any appropriate officer of the former and any instrument to be
delivered or furnished by the Administrator to the Trustee shall be
sufficiently executed in the Administrator's name. The Trustee shall be fully
protected in relying upon a resolution of the Board, duly certified by the
Company's secretary or assistant secretary, as to the identity of any party
serving in the Administrator capacity until a subsequent resolution is filed
with the Trustee by the Board. The Company shall furnish to the Trustee the
name and signature of any person serving in the Administrator capacity and
such other person who shall be entitled to act on behalf of the Company in
dealing with the Trustee. Each Investment Manager appointed pursuant to
Section 9.02 hereof shall, from time to time, furnish the Trustee with the
name and specimen signature of any person authorized to direct the Trust on
its behalf under this Agreement. The Trustee shall have the right to request
that all directions and orders from the Investment Manager be in writing and
shall assume no liability hereunder for failure to act pursuant to such
directions and orders unless and until they are received in a form
satisfactory to it.
Section VIII.07. Trustee Fees and Expenses. The Trustee shall be
entitled to reimbursement of any reasonable expenses properly incurred in the
performance of its duties hereunder and any Trustee who is not an employee of
the Company shall be entitled to such reasonable compensation as shall be
mutually agreed upon with the Company. Such compensation and expenses shall
be paid from the Trust Fund unless paid by the Company.
<PAGE>
ARTICLE IX.
INVESTMENT OF TRUST FUND
Section IX.01. Trustee Investment of Trust Fund. The Trust Fund
shall be invested and reinvested without distinction between principal and
income in such manner as the Trustee or any Investment Manager appointed
pursuant to Section 9.02 shall determine to be consistent and in accord with
the applicable requirements of ERISA and the Code and the provisions of
Article IV. Subject to the foregoing requirements, such investments and
reinvestments shall not be restricted to those of the character authorized for
fiduciaries under any present or future laws or administrative regulations or
pursuant to any rule of court, nor shall any investments be limited to any
amount or type in relation to the amount or type of investments of the Trust
Fund as a whole. The Trustee may hold all or any part of the Trust Fund in
cash, and shall not be liable for interest on monies so held, notwithstanding
that the Trustee, or any affiliate thereof, may accrue interest on such
uninvested cash. Such cash or cash balances may be deposited with any bank or
similar financial institution, including the Trustee, in savings accounts
earning a reasonable rate of interest. The Trustee may, from time to time,
invest and reinvest in interests in common, pooled, diversified, or
consolidated funds created and maintained by any bank, insurance company or
other financial institution, including the Trustee, for the collective
investment of assets in trusts of employee retirement plans qualified under
the applicable provisions of the Code whereupon, during the effective period
of such investment and reinvestment in such a fund, any instrument governing
such fund shall be deemed to be incorporated in and made a part of this
Agreement as fully and to all intents and purposes as if set forth herein at
length. The Trustee may invest in any registered investment company,
including any such company from which the Trustee, or any affiliate thereof,
receives an investment advisory fee or any other fee.
Section IX.02. Appointment of Investment Manager. The Administrator
may appoint one or more Investment Managers to manage the investment and
reinvestment of all or any portion of the investment funds in Section 4.03.
Any such Investment Manager shall serve at the pleasure of the Administrator.
Each Investment Manager shall acknowledge in writing that it is a
fiduciary with respect to the Plan. To the extent that Investment Managers
have been appointed to manage the investment and reinvestment of any assets of
the Trust Fund, then with respect to such assets, the Trustee shall be charged
with responsibility only to execute with reasonable diligence and care the
instructions of such Investment Manager and the Trustee shall not be liable in
any way for depreciation or loss incurred by reason or in respect of any
investments made or assets held pursuant to such instructions. To the extent
that no Investment Manager is appointed with respect to all or any portion of
an investment fund, the Administrator shall be deemed the Investment Manager.
<PAGE>
ARTICLE X.
FIDUCIARIES AND ALLOCATION OF RESPONSIBILITIES
Section X.01. Fiduciaries. The Board, the Administrator, any
Investment Manager and the Trustee shall be deemed to be the only fiduciaries,
named and otherwise, of the Plan and Trust Fund for all purposes of ERISA. No
named fiduciary designated in this Section 10.01 shall be required to give any
bond or other security for the faithful performance of its duties and
responsibilities with respect to the Plan and/or Trust Fund, except as may be
required from time to time under ERISA.
Section X.02. Allocation of Fiduciary Responsibilities. The
fiduciary responsibilities (within the meaning of ERISA) allocated to each
named fiduciary designated in Section 10.01 hereof shall consist of the
responsibilities, duties, authority and discretion of such named fiduciary
which are expressly provided herein and in any related documents. Each such
named fiduciary may obtain the services of such legal, actuarial, accounting
and other assistants as it deems appropriate, any of whom may be assistants
who also render services to any other named fiduciary, the Plan and/or the
Company; provided, however, that where such services are obtained, the named
fiduciary shall not be deemed to have delegated any of its fiduciary
responsibilities to any such assistant but shall retain full and complete
authority over and responsibility for any activities of such assistant. The
Board, Trustee, any Investment Manager, Administrator and any individual
members thereof shall not be responsible for any act or failure to act of any
other one of them except as may be otherwise specifically provided under
ERISA.
Section X.03. General Limitation on Liability. Neither the Board,
the Administrator, the Trustee, any Investment Manager nor any other person or
entity, including the Company and its shareholders, directors and employees,
guarantees the Trust Fund in any manner against loss or depreciation and none
of them shall be jointly or severally liable for any act or failure to act or
for anything whatever in connection with the Plan and the Trust Fund, or the
administration thereof, except and only to the extent of liability imposed
because of a breach of fiduciary responsibility specifically prohibited under
ERISA.
Section X.04. Multiple Fiduciary Capacities. Any person or group
of persons may serve in more than one fiduciary capacity with respect to the
Plan and/or the Trust Fund.
<PAGE>
ARTICLE XI.
AMENDMENT AND TERMINATION
Section XI.01. Amendment. The Company shall have the right by
action of the Board to amend this Agreement and/or the Plan at any time and in
any manner consistent with the Code and ERISA; provided, however, that any
amendment which increases the duties or responsibilities of the Trustee shall
be effective only with the Trustee's consent. In addition, the Administrator
may adopt such amendments to the Plan as may be requested by the Internal
Revenue Service in order to comply with the requirements for qualification
under Sections 401(a) and 501(a) of the Code. Any amendment may be
retroactive to the extent permitted by applicable law. Notwithstanding the
foregoing, no amendment to the Plan shall decrease a Participant's accrued
benefit or vested percentage or eliminate an optional form of distribution for
a previously accrued benefit.
Section 11.02. Termination. The Company shall have the right to
terminate the Plan, in whole or in part, by action of the Board at any time
and in such event, upon any other termination or partial termination, or upon
termination due to permanent discontinuance of all Company contributions, the
Trust Fund shall be fully vested and nonforfeitable to the extent of the
termination. Distribution of benefits shall be in the discretion of the
Administrator pursuant to Section 6.03 hereof.
<PAGE>
ARTICLE XII.
GENERAL PROVISIONS
Section XII.01. Non-Guarantee of Continued Employment or Other
Benefits. Neither the establishment of the Plan, nor any modification or
amendment thereof, nor the payment of any benefit hereunder shall be construed
as giving any Participant or other person whomsoever any legal or equitable
right against the Company, its individual officers and employees, the Board or
its members, any Investment Manager, the Administrator or any Trustee, or the
right to the payment of any benefits hereunder (unless the same shall be
specifically provided herein) or as giving any employee the right to continue
his employment with the Company or as affecting the Company's right to sever
such employment.
Section XII.02. Mergers, Consolidations and Transfers of Plan
Assets. In the case of any merger, consolidation with, or transfer of assets
or liabilities to any other plan, each Participant must be entitled to receive
a benefit immediately after the merger, consolidation, or transfer (if the
applicable plan were then to terminate) which is equal to or greater than the
benefit he would have been entitled to receive immediately before the merger,
consolidation, or transfer (if the applicable plan were then to terminate).
Section XII.03. Spendthrift Clause. No Participant or Beneficiary
shall have the right to transfer, assign, alienate, anticipate, pledge or
encumber any part of such benefits, nor shall such benefits, or any part of
the Trust Fund from which such benefits are payable, be subject to seizure by
legal process by any creditor of such Participant or Beneficiary. Any attempt
to effect such a diversion or seizure as aforedescribed shall be deemed null
and void for all purposes hereunder to the extent permitted by ERISA and the
Code. Notwithstanding the foregoing, the Trustee may recognize a qualified
domestic relations order with respect to child support, alimony payments or
marital property rights if such order contains sufficient information for the
Administrator to determine that it meets the applicable requirements of
Section 414(p) of the Code. The Administrator shall establish written
procedures concerning the notification of interested parties and the
determination of the validity of such orders; if any such order so directs,
distribution of benefits to the alternate payee may be made at a time not
permitted for distributions to the Participant.
Section XII.04. Exclusive Benefit. Anything in the Plan which might
be construed to the contrary notwithstanding, it shall be impossible at any
time prior to the satisfaction of all liabilities with respect to Participants
and their Beneficiaries under the Plan for any part of the Trust Fund assets
to be used for, or diverted to, purposes other than the exclusive benefit of
such Participants or their Beneficiaries and defraying the reasonable expenses
of administering the Plan and the Trust Fund. In no event shall the Company
receive at any time any amounts from such assets except as provided in Section
5.06 or 12.09 hereof or the event of a mistake of fact pursuant to the
directions of the Administrator within one year after such mistake is made.
Notwithstanding any provision herein to the contrary, employer contributions
hereunder are conditioned upon their deductibility under Code Section 404. To
the extent a deduction is disallowed, contributions may be returned to the
Employer within one year after such disallowance.
Section XII.05. Full Satisfaction of Claims. Any payment or
distribution to any Participant or Beneficiary shall be in full satisfaction
of all claims against the Trust Fund, the Trustee, the Administrator, any
Investment Manager and the Company and shall give rise to no claim or
liability notwithstanding it shall later appear that such payment or
distribution was made under a mistake of fact or law, except as otherwise
specifically provided by the Code or ERISA. No payment shall be made
hereunder which would be in violation of any applicable law or governmental
regulation as determined by the Administrator.
Section XII.06. Indemnification. The Company shall indemnify any
director and/or employee of the Company who acts with respect to the Plan as a
member of the Board, in an Administrator capacity or as a Trustee and shall
hold any such director and/or employee harmless from the consequences of his
acts or conduct in connection with the Plan except to the extent that such
consequences are the result of willful misconduct or bad faith shown on the
part of such director and/or employee.
Section XII.07. Counterparts. This Agreement may be executed in a
number of counterparts, each of which shall be deemed an original, and such
counterparts shall constitute but one and the same instrument. This Agreement
may be sufficiently evidenced by any one counterpart.
Section XII.08. Successors and Assigns. This Agreement and the Plan
herein contained shall be binding upon the successors and assigns of the
Company and the Trustee.
Section XII.09. IRS Approval. Any other provision to the contrary
notwithstanding, the effectiveness of this Agreement is subject to the
condition subsequent of the Company obtaining a determination from the
Internal Revenue Service that the Plan meets the requirements for
qualification contained in Code Section 401(a) and that the Trust Fund is
exempt from tax under Code Section 501(a).
Section XII.10. Top-Heavy Restrictions. (a) Notwithstanding any
provision to the contrary herein, in accordance with Code Section 416, if the
Plan is a top-heavy plan for any Plan Year, then the provisions of this
Section shall be applicable. The Plan is "top-heavy" for a Plan Year if as of
its "determination date" (i.e. the last day of the preceding Plan Year or the
last day of the Plan's first Plan Year, whichever is applicable), the total
present value of the accrued benefits of key employees (as defined in Code
Section 416(i)(1) and applicable regulations) exceeds sixty percent (60%) of
the total present value of the accrued benefits of all employees under the
plan (excluding those of former key employees and employees who have not
performed any services during the preceding five (5) year period) (as such
amounts are computed pursuant to Section 416(g) and applicable regulations
using a five percent (5%) interest assumption and a 1971 GAM mortality
assumption) unless such plan can be aggregated with other plans maintained by
the applicable controlled group in either a permissive or required aggregation
group and such group as a whole is not top-heavy. Any nonproportional
subsidies for early retirement and benefit options are counted assuming
commencement at the age at which they are most valuable. In addition, a plan
is top-heavy if it is part of a required aggregation group which is top-heavy.
Any plan of a controlled group may be included in a permissive aggregation
group as long as together they satisfy Code Section 401(a)(4) and 410
discrimination requirements. Plans of a controlled group which must be
included in a required aggregation group include any plan in which a key
employee participates or participated at any time during the determination
period (regardless of whether the plan has terminated) and any plan which
enables such a plan to meet Code Section 401(a)(4) or 410 discrimination
requirements. The present values of aggregated plans are determined
separately as of each plan's determination date and the results aggregated for
the determination dates which fall in the same calendar year. A "controlled
group" for purposes of this Section includes any group employers aggregated
pursuant to Code Sections 414(b), (c) or (m). The calculation of the present
value shall be done as of a valuation date which for a defined contribution
plan is the determination date and for a defined benefit plan is the date as
of which funding calculations are generally made within the twelve-month
period ending on the determination date. Solely for the purpose of
determining if the Plan, or any other plan included in a required aggregation
group of which this Plan is a part, is top-heavy (within the meaning of
Section 416(g) of the Code) the accrued benefit of an Employee other than a
key employee (within the meaning of Section 416(i)(1) of the Code) shall be
determined under (i) the method, if any, that uniformly applies for accrual
purposes under all plans maintained by the Affiliates, or (ii) if there is no
such method, as if such benefit accrued not more rapidly than the slowest
accrual rate permitted under the fractional accrual rate of Section
411(b)(1)(C) of the Code.
(b) If a defined contribution plan is top-heavy in a Plan Year,
non-key employee participants who have not separated from service at the end
of such Plan Year will receive allocations of employer contributions and
forfeitures at least equal to the lesser of three percent (3%) of compensation
(as defined in Code Section 415) for such year or the percentage of
compensation allocated on behalf of the key employee for whom such percentage
was the highest for such year (including any salary reduction contributions).
If a defined benefit plan is top-heavy in a Plan Year and no defined
contribution plan is maintained, the employer-derived accrued benefit on a
life-only basis commencing at the normal retirement age of each non-key
employee shall be at least equal to a percentage of the highest average
compensation for five consecutive years, excluding any years after such Plan
permanently ceases to be top-heavy, such percentage being the lesser of (i)
twenty percent (20%) or (ii) two percent (2%) times the years of service after
December 31, 1983 in which a Plan Year ends in which the Plan is top-heavy.
If the controlled group maintains both a defined contribution plan and a
defined benefit plan which cover the same non-key employee, such employee will
be entitled to the defined benefit plan minimum and not to the defined
contribution plan minimum.
(c) If the controlled group maintains a defined benefit plan and a
defined contribution plan which both cover one or more of the same key
employees, and if such plans are top-heavy, then the limitation stated in a
separate provision of this Plan with respect to the Code Section 415(e)
maximum benefit limitations shall be amended so that a 1.0 adjustment on the
dollar limitation applies rather than a 1.25 adjustment. This provision shall
not apply if the Plan is not "super top-heavy" and if the minimum benefit
requirements of this Section are met when two percent (2%) is changed to three
percent (3%) and twenty percent (20%) is changed to an amount not greater than
thirty percent (30%) which equals twenty percent (20%) plus one percent (1%)
for each year such plan is top-heavy. A plan is "super top-heavy" if the
ratio referred to in subsection (a) above results in a percentage in excess of
ninety percent (90%) rather than a percentage in excess of sixty percent
(60%).
Section XII.11. Retroactive Application of Certain Plan Provisions.
(a) The following provisions shall apply retroactively from and
after the Plan Year beginning in 1987:
(i) leased employees in Section 1.01(1);
(ii) contribution limitations in Sections 3.02(d), 3.03(b)
and 5.06; and
(iii) top-heavy rules in Section 12.10.
(b) The provision describing the direct transfer of eligible
rollover distributions in Section 6.05 shall apply retroactively from and
after January 1, 1993.
(c) The following provisions shall apply retroactively from and
after January 1, 1994:
(i) The maximum annual compensation considered under the Plan
in Section 1.01(g); and
(ii) The description of substantial hardship in Section
6.06(a).
<PAGE>
ARTICLE XIII.
TRUSTEE ACCEPTANCE
Section XIII.01. Date of Acceptance. Effective as of October 1,
1996, the Trustee accepts the Trust hereby amended and restated and agrees to
be bound by all of the terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on this 21st day of March, 1997.
GEHL COMPANY
By: Kenneth P. Hahn
Title: Vice President
Attest: M.J. Mulcahy
Title: Vice President and Secretary
[Corporate Seal]
MARSHALL AND ILSLEY TRUST COMPANY, TRUSTEE
By: Walter A. Lecocq
Title: Vice President
Attest: Forrest Du Pre
Title: Vice President
[Corporate Seal]
[Page 9 of the Annual Report]
Reports of Management and Independent Accountants
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
Chairman of the Board of Directors,
President and Chief Executive Officer
Kenneth P. Hahn
Vice President, Finance and Treasurer
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, 1997 and 1996, and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1997, 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 10, 1998
<PAGE>
[Pages 10 through 13 of the Annual Report]
Management's Discussion and Analysis
Overview
The Company's net income in 1997 was $12.8 million, a 33% increase from $9.6
million earned in 1996. Diluted earnings per share for 1997 were $1.95
compared to $1.54 reported for 1996. Basic earnings per share for 1997 were
$2.06 versus $1.56 reported in 1996. Net sales in 1997 increased 23% to
$197.1 million from $159.7 million in 1996. Construction equipment 1997 net
sales increased 44% to $101.7 million and Agriculture equipment 1997 net sales
increased 7% to $95.4 million. Construction equipment comprised 52% of
Company net sales in 1997 versus 44% in 1996 and 42% in 1995. Agriculture
equipment sales were 48% of Company net sales in 1997, down from 56% in 1996.
Operating profit in 1997 increased 41% to $21.8 million. Construction
equipment accounted for $16.3 million of the operating profit, while
Agriculture equipment contributed the balance of $5.5 million. Interest
expense in 1997 declined $1.1 million, or 32%, to $2.3 million.
On October 2, 1997, the Company acquired all of the issued and outstanding
shares of capital stock of Brunel America, Inc. and subsidiaries, including
Mustang Manufacturing Company, Inc. ("Mustang") from Brunel Holdings, plc .
Mustang designs, manufactures and distributes skid steer loaders and related
attachments. Gehl acquired the Brunel America, Inc. stock for $26.7 million;
and entered into a five year non-competition agreement with the seller
pursuant to which Gehl paid $1.0 million. The Company borrowed $27.7 million
under its existing credit facility to fund the acquisition. The acquisition
has been accounted for as a purchase transaction and resulted in the recording
of $14.0 million of goodwill. The results of the Mustang operation have been
included in the Company's operating results since the date of the acquisition.
The Company continued to reduce its Agriculture equipment accounts receivable
in 1997, from $43.3 million at December 31, 1996 to $41.6 million at December
31, 1997. Cash flow provided by operating activities in 1997 was $15.1
million following $31.8 million provided by operating activities in 1996.
Cash flow generated in 1997 was used to fund capital expenditures and repay
debt outstanding under the Company's line of credit facility. The Company has
reduced its debt by $48.0 million during the last five years, despite
borrowing $27.7 million to fund the Mustang acquisition. The Company's ratio
of debt to total capital was 39.1% at December 31, 1997, as compared with
23.0% and 45.7% at December 31, 1996 and 1995, respectively.
Results of Operations
1997 vs. 1996
Net Sales:
($ millions) 1997 1996 1995 1994 1993
Construction Equipment $101.7 $70.8 $64.4 $51.8 $43.3
Agriculture Equipment 95.4 88.9 89.1 94.8 93.9
------ ------ ------ ------ ------
Total $197.1 $159.7 $153.5 $146.6 $137.2
(% of total)
Construction Equipment 51.6% 44.4% 42.0% 35.3% 31.5%
Agriculture Equipment 48.4% 55.6% 58.0% 64.7% 68.5%
Net sales for 1997 of $197.1 million were 23% greater than the $159.7 million
of net sales in 1996. Construction equipment net sales in 1997 were $101.7
million, 44% higher than sales of $70.8 million in 1996. The increase from
1996 levels was a result of the fourth quarter 1997 shipment of Mustang skid
loaders subsequent to the closing of the acquisition of Mustang and increased
demand for rough-terrain telescopic forklifts and skid loaders due to the
continuation of the favorable economic trends which prevailed in the United
States construction industry.
Agriculture equipment net sales in 1997 increased 7% to $95.4 million from
$88.9 million in 1996. The increase was a result of increased demand for skid
loaders and manure spreading equipment from 1996 levels. Partially offsetting
this increase was a decrease in haytool equipment sales, primarily the result
of approximately $1.7 million of shipments, during 1996, of products not
available in 1997 due to their previous discontinuance.
Gross Profit:
Gross profit in 1997 of $57.8 million was 21% higher than 1996's $47.8
million. Gross profit as a percent of net sales decreased in 1997 to 29.3%
from 29.9% in 1996 (29.3% excluding $1.0 million of decreased cost of sales in
1996 resulting from liquidation of LIFO quantities carried at lower costs
prevailing in prior years See Note 4 of Notes to Consolidated Financial
Statements).
Construction equipment gross profit as a percent of net sales for 1997
decreased to 29.6% from 32.2% in 1996. This decrease was due primarily to:
1) Mustang skid loader gross margins being lower than the gross margin on
other Construction equipment sales; 2) competitive pressures restricting price
increases to lower levels than incurred cost increases; and 3) inefficiencies
incurred late in 1997 in producing the newly redesigned Dynalift line of
telescopic handlers. Historically, the Mustang product line has had a lower
gross profit percentage than other Gehl construction equipment. Thus, in
1998, the gross margin on Construction equipment sales will be impacted by the
full year inclusion of the Mustang operations.
Agriculture equipment 1997 gross profit as a percent of net sales increased to
29.0% from 28.1% (26.9% without the favorable LIFO liquidation impact) in
1996. This increase was due primarily to: 1) the favorable impact of a
change in the mix of products shipped in 1997 versus products shipped in 1996;
2) higher production levels in 1997 over 1996 generating increased absorption
of factory overhead; 3) 1996's gross margin being adversely impacted by the
sale of $1.7 million of previously discontinued, low margin products; and 4)
export sales, typically at lower gross margins than domestic sales, comprising
a lower percentage of sales in 1997 than in 1996.
Selling, General and Administrative Expenses:
Selling, general and administrative expenses increased $3.8 million, or 12%,
to $36.0 million in 1997 as compared with $32.2 million in 1996. As a percent
of sales, however, selling, general and administrative expenses in 1997
decreased to 18.2% from 20.2% in 1996. The increased expenses in 1997
resulted primarily from costs associated with the Mustang operations for the
fourth quarter of 1997 and increased selling expenses.
Income from Operations:
($ millions) 1997 1996 1995 1994 1993
Construction Equipment $16.3 $12.9 $13.2 $8.6 $1.8
Agriculture Equipment 5.5 2.6 .4 4.4 5.5
----- ----- ----- ----- ----
Total $21.8 $15.5 $13.6 $13.0 $7.3
Due primarily to higher net sales volume combined with controlled operating
expense spending, income from operations in 1997 increased 41% from 1996 to
$21.8 million. Construction equipment income from operations increased 26% in
1997 to $16.3 million from $12.9 million in 1996. The impact of increased
Construction equipment sales volume was offset, in part, by reduced gross
margin levels and increased investments in research, development and selling
costs. Agriculture equipment income from operations increased to $5.5 million
in 1997 from $2.6 million in 1996. Increased Agriculture equipment sales
volume coupled with an improved gross margin percentage and lower promotional
costs combined to generate this increase.
Interest Expense:
Interest expense decreased $1.1 million, or 32%, to $2.3 million. During the
last five years, annual interest expense has declined $7.8 million, or 77%,
from the peak of $10.1 million in 1992. Reductions in interest-bearing debt
from $97.7 million at the end of 1992 to $49.7 million at December 31, 1997
and lower borrowing rates have resulted in the significant reduction in the
Company's interest expense. The average rate of interest paid by the Company
in 1997 was 8.0% compared to 8.2% in 1996.
Provision for Income Taxes:
The Company's effective income tax rate was 36.4% for 1997 versus 23.4% for
1996 when the Company utilized its remaining federal net operating loss
carryforwards.
Net Income:
Net income in 1997 of $12.8 million was 33% higher than 1996's $9.6 million of
net income. Diluted earnings per share were $1.95 in 1997 compared to $1.54
in 1996. Basic earnings per share were $2.06 in 1997 versus $1.56 in 1996.
No dividends were declared in 1997 on the Company's common stock.
1996 vs. 1995
Net Sales:
Net sales for 1996 of $159.7 million were 4% greater than the $153.5 million
of net sales in 1995. Construction equipment net sales in 1996 were $70.8
million, 10% higher than sales of $64.4 million in 1995. The increase from
1995 levels was a result of increased demand for rough-terrain telescopic
forklifts and skid loaders due to the favorable construction climate which
prevailed in the United States.
Agriculture equipment net sales in 1996 decreased .3% to $88.9 million from
$89.1 million in 1995. The decrease was due in part to the introduction of
only one redesigned product line in 1996 contrasted to two such introductions
during 1995. The decrease was also due in part to approximately $1.3 million
of shipments, during 1995, of products which have since been discontinued.
Partially offsetting these shipment reductions was an increase in shipments of
forage harvesters and skid loaders in 1996.
Gross Profit:
1996 gross profit of $47.8 million was 7% higher than 1995's $44.6 million.
Gross profit as a percent of net sales increased in 1996 to 29.9% from 29.1%
in 1995. The increase was the result of higher sales volume, the shift in
product mix of sales toward Construction equipment and the favorable impact
associated with a liquidation of LIFO inventory quantities (See Note 4 of
Notes to Consolidated Financial Statements).
Construction equipment gross profit as a percent of net sales for 1996
remained consistent, at 32.2%, with 1995 percent levels.
Agriculture equipment 1996 gross profit as a percent of net sales increased to
28.1% from 26.8% in 1995. This increase was due primarily to: 1) the
favorable impact associated with a liquidation of LIFO inventory quantities;
2) the impact of favorable material purchase prices, especially steel, during
1996; and 3) the impact of a change in the mix of products shipped in 1996
versus products shipped in 1995.
Selling, General and Administrative Expenses:
Selling, general and administrative expenses increased $1.2 million, or 4%, to
$32.2 million in 1996 as compared with $31.0 million in 1995. As a percent of
sales, however, selling, general and administrative expenses in 1996 remained
consistent, at 20.2%, with 1995 percent levels. The increased expenses in
1996 resulted primarily from increased investments in research and development
costs and increased selling expenses.
Income from Operations:
Due primarily to higher net sales combined with improved gross profit, income
from operations in 1996 increased 14% from 1995 to $15.5 million.
Construction equipment income from operations decreased 2% in 1996 to $12.9
million from $13.2 million in 1995. Increased investments in research,
development and selling costs offset the impacts of increased Construction
equipment sales volumes. Agriculture equipment income from operations
increased to $2.6 million in 1996 from $449,000 in 1995, due in part to the
favorable impact associated with a liquidation of LIFO inventory quantities in
1996. The remainder of the improvement results from favorable material
purchase prices and reduced operating expenses.
Interest Expense:
Interest expense decreased $2.3 million, or 40%, to $3.4 million in 1996.
During the last four years, interest expense has declined $6.7 million, or
66%, from 1992's $10.1 million peak. Reductions in interest-bearing debt from
$97.7 million at the end of 1992 to $19.4 million at December 31, 1996 and
lower borrowing rates resulted in the significant reduction in the Company's
interest expense. The average rate of interest paid by the Company in 1996 was
8.2% compared to 9.8% in 1995. The rate decrease was due to the impact of a
reduced interest rate structure negotiated by the Company with the December 1,
1995 amendment to its line of credit facility.
Other Income (Expense), Net:
Other expense increased $615,000 in 1996 to $1,152,000 from $537,000 in 1995.
The increase in expense was due primarily to an increase of $673,000
associated with the costs of selling finance contracts receivable to third
parties in 1996 compared with 1995. The increase in the costs of such sales
was the result of selling approximately $7.4 million more contracts in 1996
than in 1995 combined with lower weighted average yields on such finance
contracts sold due to lower financing rates offered to the Company's retail
customers.
Provision for Income Taxes:
The Company's effective income tax rate was 23.4% for 1996. 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.
The Company has utilized, in years prior to 1996, substantially all of its
federal net operating loss carryforwards.
Net Income:
Net income in 1996 of $9.6 million was 6% higher than 1995's $9.0 million net
income. Diluted earnings per share for 1996 were $1.54 compared to $1.44
reported for 1995. Basic earnings per share for 1996 were $1.56 compared to
$1.46 reported in 1995. No dividends were declared in 1996 on the Company's
common stock.
Liquidity and Capital Resources
Working Capital:
The Company's working capital increased 28% to $73.5 million at December 31,
1997 from $57.6 million twelve months earlier primarily due to the working
capital associated with the acquired Mustang operations at October 2, 1997.
The Company's current ratio at December 31, 1997 decreased to 2.7 to 1 from
2.8 to 1 at the same time a year ago. Cash on hand at December 31, 1997 was
$1.2 million as compared to $4.2 million a year earlier.
Cash Flow Provided by Operating Activities:
($ thousands) 1997 1996 1995 1994 1993
Cash Flow $15,119 $31,795 $9,701 $19,522 $26,113
In 1997, cash flow provided by operating activities was $15.1 million as
compared to $31.8 million in 1996. Net income before depreciation and
amortization was primarily responsible for the positive cash flow. The
decrease from 1996 was due to higher cash flow provided in 1996 by reductions
in accounts receivable ($13.9 million) because of the higher level of accounts
receivable existing at the beginning of 1996. Adjusting for the accounts
receivable acquired at October 2, 1997 associated with the Mustang
acquisition, Gehl reduced accounts receivable levels by $1.5 million during
1997 while increasing net sales by 23%. The 1997 cash flow was used to fund
property, plant and equipment additions and to repay debt.
Accounts Receivable:
The Company's net accounts receivable, net of the $18.5 million in receivables
acquired with the Mustang operation, decreased $1.5 million during 1997.
Agriculture equipment accounts receivable at year-end 1997 decreased $1.7
million from a year earlier, while Construction equipment accounts
receivables, net of the $18.5 million of Mustang receivables, increased
$200,000 over the same period.
Finance Contracts Receivable:
Finance contracts receivable increased $3.1 million to $11.2 million at
December 31, 1997. The combined portfolio of owned and sold-but-serviced
finance contracts receivable was $67.6 million at December 31, 1997 as
compared to $61.7 million at year-end 1996. (See "Sales of Finance Contracts
Receivable" following.)
Capital Expenditures:
($ thousands) 1997 1996 1995 1994 1993
Capital expenditures $8,718 $3,837 $2,437 $2,505 $809
Depreciation $2,955 $2,438 $2,520 $2,692 $2,940
The Company expended $8.7 million for property, plant and equipment in 1997.
Approximately $4.4 million was spent to expand its two South Dakota
manufacturing facilities and add equipment to increase production levels of
skid loaders, rough-terrain telescopic forklifts and pavers. The majority of
the remaining 1997 expenditures were incurred to upgrade and maintain
machinery and equipment, to enhance capability, to improve productivity and to
improve product quality. No significant commitments for capital items were
outstanding at December 31, 1997. Approximately $5.3 million in capital
expenditures are planned for 1998. The Company believes its present
facilities are sufficient to provide adequate capacity for its operations in
1998. The Company believes that the costs necessary to bring its computer
systems into year 2000 compliance will not be material.
Debt and Equity:
($ millions) December 31 1997 1996 1995 1994 1993
Total Debt $49.7 $19.4 $46.9 $54.9 $72.8
Shareholders' Equity $77.6 $64.8 $55.7 $46.3 $40.9
% Total Debt to
Total Capitalization 39.1% 23.0% 45.7% 54.2% 64.0%
At December 31, 1997, shareholders' equity had increased $12.8 million to
$77.6 million from $64.8 million a year earlier. As a result of the $30.2
million increase in outstanding debt primarily resulting from the Mustang
acquisition, the Company's capitalization ratio increased to 39.1% at December
31, 1997.
Borrowing Arrangements (See also Note 6 of Notes to Consolidated Financial
Statements):
The Company maintains a $75 million line of credit facility (the "Facility")
which expires December 31, 2000, and is subject to a borrowing base related to
the Company's accounts receivable, finance contracts receivable and
inventories. The interest rate paid on loans denominated in U.S. dollars is
2.00% above the London Interbank Offered Rate for one-month deposits
("LIBOR"). In Canada, where the Company may borrow up to $5.5 million, the
interest rate is 2.50% above Canadian one-month bankers' acceptance rates ("BA
Rate"). At December 31, 1997, the Company had unused borrowing capacity of
$28.3 million under the Facility, versus $45.4 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 with a 2010 final maturity; repayments commence in 2005.
Sales of Finance Contracts Receivable:
The sale of finance contracts is an important component of the Company's
overall liquidity. The Company has arrangements with several financial
institutions and financial service companies to sell, with recourse, its
finance contracts receivable. The Company continues to service substantially
all contracts whether or not sold. At December 31, 1997, the Company serviced
$67.6 million of such contracts, of which $55.4 million were owned by third
parties. Losses on finance contracts due to customer nonperformance were
$91,000 in 1997 as compared to $252,000 in 1996. As a percentage of
outstanding serviced contracts, the loss ratios were .1% and .4% in 1997 and
1996, respectively.
The Company incurred $1.1 million of costs in selling $37.1 million of its
finance contracts in 1997, as compared to $1.2 million of costs in selling
$38.8 million of such contracts in 1996. 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.
Management believes the Company has sufficient capacity to meet its
requirements to sell its finance contracts for the foreseeable future.
Accounting Pronouncements:
The FASB has issued SFAS No. 130, "Reporting Comprehensive Income" and SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information".
These statements are both effective for periods beginning after December 15,
1997. The adoption of these statements is not expected to affect the
Company's financial condition or results of operations as they are disclosure
only pronouncements.
<PAGE>
[Pages 14 through 23 of Annual Report]
GEHL COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
In Thousands, Except Share Data - December 31, 1997 1996
Assets
Cash $ 1,239 $ 4,208
Accounts receivable - net 72,190 55,141
Finance contracts receivable - net 8,210 5,098
Inventories 30,340 18,642
Prepaid income taxes 4,217 5,035
Prepaid expenses and other assets 1,645 1,624
________ ________
Total current assets 117,841 89,748
________ ________
Property, plant and equipment - net 35,082 21,678
Finance contracts receivable - net, non-current 3,031 3,063
Intangible assets 14,816 -
Other assets 5,453 5,636
________ ________
Total assets $176,223 $120,125
======== ========
Liabilities and Shareholders' Equity
Current portion of long-term debt obligations $ 672 $ 178
Accounts payable 22,212 14,384
Accrued liabilities 21,444 17,574
________ ________
Total current liabilities 44,328 32,136
________ ________
Line of credit facility 39,357 10,454
Long-term debt obligations 9,689 8,740
Deferred inocme taxes 3,421 2,369
Other long-term liabilities 1,855 1,594
________ ________
Total long-term liabilities 54,322 23,157
________ ________
Common stock, $.10 par value, 25,000,000 shares
authorized, 6,212,686 and 6,158,720 shares
outstanding at December 31, 1997 and 1996,
respectively 621 616
Preferred stock, $.10 par value, 2,000,000
shares authorized, no shares issued -- --
Capital in excess of par 26,319 26,155
Retained earnings 50,633 38,061
________ ________
Total shareholders' equity 77,573 64,832
________ ________
Total liabilities and shareholders' equity $176,223 $120,125
======== ========
Contingencies (Notes 3 and 12)
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, 1997 1996 1995
Net sales $197,055 $159,662 $153,452
Cost of goods sold 139,252 111,902 108,838
________ ________ ________
Gross profit 57,803 47,760 44,614
Selling, general and administrative
expenses 35,955 32,213 31,001
________ ________ ________
Income from operations 21,848 15,547 13,613
Interest expense (2,325) (3,443) (5,733)
Interest income 1,429 1,542 1,820
Other (expense) income, net (892) (1,152) (537)
________ ________ ________
Income before income taxes
20,060 12,494 9,163
Provision for income taxes 7,299 2,929 150
________ ________ ________
Net income $12,761 $ 9,565 $ 9,013
======== ======== ========
Diluted net income per common share $ 1.95 $ 1.54 $ 1.44
======== ======== ========
Basic net income per common share $ 2.06 $ 1.56 $ 1.46
======== ======== ========
The accompanying notes are an integral part of the financial statements.
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Capital In
Common Excess of Retained
In Thousands Stock Par Earnings Total
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
Net income -- -- 9,565 9,565
Exercise of stock options 2 102 -- 104
Treasury stock
purchase/cancellation (8) (527) -- (535)
Minimum liability
adjustment -- -- 19 19
____ _______ _______ _______
Balance at December 31, 1996 616 26,155 38,061 64,832
Net income -- -- 12,761 12,761
Exercise of stock options 5 357 -- 362
Purchase of stock warrant -- (193) -- (193)
Minimum liability adjustment -- -- (189) (189)
____ _______ _______ _______
Balance at December 31, 1996 $621 $26,319 $50,633 $77,573
==== ======= ======= =======
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, 1997 1996 1995
Cash Flows from Operating Activities
Net income $ 12,761 $ 9,565 $ 9,013
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 3,211 2,576 2,865
Loss (gain) on sale of equipment 13 10 (13)
Cost of sales of finance contracts 1,123 1,208 534
Deferred income taxes 1,592 306 (2,071)
Proceeds from sales of finance
contracts 35,962 36,824 30,062
Increase (decrease) in cash
due to changes in:
Accounts receivable - net 1,451 13,946 3,306
Finance contracts receivable -
net (39,285) (39,248) (33,432)
Inventories (3,816) 4,678 (1,868)
Prepaid expenses and other
assets (291) (288) 231
Other assets 689 (14) 240
Accounts payable 1,165 301 (394)
Accrued liabilities 544 1,931 1,228
________ ________ ________
Net cash provided by
operating activities 15,119 31,795 9,701
________ ________ ________
Cash Flows from Investing Activities
Acquisition of business -
net of cash acquired (27,857) -- --
Property, plant and equipment
additions (8,718) (3,837) (2,437)
Decrease (increase) in unexpended
plant construction fund 20 (10) (16)
Proceeds from sale of equipment 215 26 47
Decrease in other assets 45 869 777
Other (189) 19 113
________ ________ ________
Net cash (used for) investing
activities (36,484) (2,933) (1,516)
________ ________ ________
Cash Flows from Financing Activities
(Decrease)increase in other
long-term obligations (292) (97) 14
Proceeds from (repayment of)
revolving credit loans 18,258 (27,394) (8,031)
Increase in other long-
term liabilities 261 2 258
Proceeds from issuance of common
stock 362 104 270
Purchase of stock warrant (193) -- --
Treasury stock purchase -- (535) --
________ ________ ________
Net cash provided by (used for)
financing activities 18,396 (27,920) (7,489)
________ ________ ________
Net (decrease) increase in cash (2,969) 942 696
Cash, beginning of year 4,208 3,266 2,570
________ ________ ________
Cash, end of year $ 1,239 $ 4,208 $ 3,266
======== ======== ========
The accompanying notes are an integral part of the financial statements.
<PAGE>
Notes to Consolidated Financial Statements
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.; Brunel America,
Inc. and Subsidiaries (Brunel); and Gehl International, Inc., a foreign sales
corporation. All signifcant 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 incurrence of
indebtedness are capitalized and subsequently amortized over the related
periods of the obligations.
Intangible Assets: The cost in excess of the fair market value of net assets
acquired (goodwill) arising from the acquisition of Brunel is being amortized
on the straight line basis over 30 years. A five year noncompete agreement
with the former owners of Brunel is being amortized on the straight line basis
over the life of the agreement. Accumulated amortization of intangible assets
at December 31, 1997 is $167,000.
Foreign Currency Transactions: Foreign currency transaction gains and losses
are included in the determination of income. Foreign currency (losses) gains
were ($98,000), $24,000 and $107,000 in 1997, 1996 and 1995, 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.
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 $2,326,000, $2,227,000 and $1,363,000 in
1997, 1996 and 1995, respectively.
Other (Expense) Income: Other (expense) income is comprised primarily of
foreign currency transaction gains (losses), cost of sales of finance
contracts, amortization of debt issue costs, and royalty and license (expense)
income.
Accounting Pronouncements: In the fourth quarter of 1997, the Company adopted
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share." All prior period earnings per share data have been restated for
comparative purposes. Additionally, the Financial Accounting Standards Board
(FASB) has issued SFAS No. 130, "Reporting Comprehensive Income" and SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information."
These statements are both effective for periods beginning after December 15,
1997. The adoption of these statements is not expected to affect the Company's
financial condition or results of operations as they are disclosure only
pronouncements.
Note 2 - Acquisition of Business
On October 2, 1997, the Company acquired all of the issued and outstanding
shares of capital stock of Brunel for $27.7 million. Brunel designs,
manufactures and distributes skid steer loaders and related attachments
through its wholly-owned subsidiary Mustang America, Inc. (Mustang). This
acquisition has been accounted for as a purchase and the results of operations
of Brunel have been included in the Company's consolidated financial
statements since the date of the acquisition. The following unaudited
pro-forma consolidated results of operations for the years ended December 31,
1997 and 1996 are presented as if the acquisition occurred as of January 1,
1996 (in thousands, except per share data):
Year Ended December 31 1997 1996
Net sales $ 240,532 $ 214,124
Net income 12,658 8,906
Diluted net income per share 1.93 1.43
Basic net income per share 2.04 1.45
The unaudited pro-forma financial information is not necessarily indicative of
either the results of operations that would have occurred had the acquisition
been made during the period presented or the future results of the combined
operations.
Note 3 - Accounts Receivable and Finance Contracts Receivable
Accounts receivable and finance contracts receivable were comprised of the
following (in thousands):
December 31, 1997 1996
Accounts receivable $75,423 $58,356
Less allowances for:
doubtful accounts (1,068) (561)
returns and dealer
discounts (2,165) (2,654)
_______ _______
$72,190 $55,141
======= =======
Finance contracts receivable $12,879 $ 9,294
Less: unearned interest (755) (542)
allowance for doubtful
accounts (883) (591)
_______ _______
11,241 8,161
Less: non-current portion (3,031) (3,063)
_______ _______
Current portion $ 8,210 $ 5,098
======= =======
The finance contracts receivable at December 31, 1997 have a weighted average
interest rate of approximately 7%.
The Company has entered into various agreements with third parties to sell
with recourse certain finance contracts receivable. The recourse provisions
of certain past agreements required that the Company provide additional
collateral in the form of cash withheld at the time of sale. At December 31,
1997, $716,000 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
substantially all of these contracts which generally have maturities of 24 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 1997 and 1996 (in thousands):
1997 1996
Value of contracts sold
- net of $4.0 million and
$4.4 million, respectively,
of unearned interest $37,085 $38,804
Cash received on sales of
contracts 35,962 36,824
Cash withheld as additional
collateral - 772
_______ _______
Cost of sales of finance
contracts $ 1,123 $ 1,208
======= =======
Net receivables outstanding
at December 31 relating
to finance contracts sold $61,710 $52,971
======= =======
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 4 - 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, 1997 1996
Raw materials and supplies $ 14,830 $ 8,625
Work-in-process 5,182 4,042
Finished machines and
parts 29,578 24,770
________ ________
Total current cost value 49,590 37,437
Adjustment to LIFO basis (19,250) (18,795)
________ ________
$ 30,340 $ 18,642
======== ========
During 1996, inventory quantities were reduced. This reduction resulted in a
liquidation of LIFO inventory quantities carried at lower costs prevailing in
prior years as compared with the cost of 1996 purchases, the effect of which
decreased cost of goods sold by approximately $1 million.
Note 5 - Property, Plant and Equipment - Net
Property, plant and equipment consisted of the following (in thousands):
December 31, 1997 1996
Land $ 1,838 $ 1,411
Buildings 25,507 18,551
Machinery and equipment 36,665 28,972
Autos and trucks 393 410
Office furniture and fixtures 8,346 7,727
_________ _________
72,749 57,071
Less: accumulated
depreciation (37,667) (35,393)
_________ _________
Property, plant and
equipment - net $ 35,082 $ 21,678
========= =========
Note 6 - Debt Obligations
A summary of the Company's debt obligations, and related current maturities,
is as follows (in thousands):
December 31, 1997 1996
Line of credit facility $39,357 $10,454
9.0% industrial
development bonds 8,400 8,400
Other debt obligations 1,961 518
_______ _______
49,718 19,372
Less: current portion (672) (178)
_______ _______
Long-term debt obligations $49,046 $19,194
======= =======
The Company maintains a $75 million line of credit facility (the "Facility")
which expires December 31, 1998. On February 5, 1998, this Facility was
extended to December 31, 2000 and accordingly, all amounts outstanding have
been classified as non-current liabilities. Interest is paid monthly on
outstanding borrowings under the Facility as follows: borrowings in Canadian
denominated dollars up to a $5.5 million credit line are at 2.5% 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"). Under the Facility, $25 million is 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, 1997, the Company had unused borrowing capacity of
approximately $28.3 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 $500,000 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):
1998 $ 672
1999 587
2000 39,864
2001 155
2002 40
Later years 8,400
________
$49,718
========
Interest paid on total debt obligations was $2.4 million, $3.6 million and
$5.9 million in 1997, 1996 and 1995, respectively.
Note 7 - Accrued Liabilities
Accrued liabilities were comprised of the following (in thousands):
December 31, 1997 1996
Accrued salaries and wages $ 4,982 $ 4,132
Dealer recourse deposits 2,335 2,308
Accrued warranty costs 3,581 2,290
Accrued product liability costs 3,272 3,870
Other 7,274 4,974
_______ _______
$21,444 $17,574
======= =======
Note 8 - Income Taxes
The income tax provision recorded for the years ended December 31, 1997, 1996
and 1995 consisted of the following (in thousands):
Year Ended State and
December 31, Federal Foreign Total
1997 Current $ 5,552 $ 155 $ 5,707
Deferred 1,592 - 1,592
________ ________ ________
Total $ 7,144 $ 155 $ 7,299
======== ======== ========
1996 Current $ 2,548 $ 75 $ 2,623
Deferred 306 - 306
________ ________ ________
Total $ 2,854 $ 75 $ 2,929
======== ======== ========
1995 Current $ 2,303 $ 150 $ 2,453
Deferred (2,303) - (2,303)
________ ________ ________
Total $ - $ 150 $ 150
======== ======== ========
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, 1997 1996 1995
Federal statutory rate 35.0% 34.0% 34.0%
Minimum tax credits utilized - (10.5) -
Net operating loss utilized - - (34.0)
State income taxes, net of
Federal income tax effect .5 .5 1.6
Other, net .9 (.6) -
_______ _______ _______
36.4% 23.4% 1.6%
======= ======= =======
The Company's temporary differences and carryforwards which give rise to
deferred tax assets and liabilities consisted of the following (in thousands):
December 31, 1997 1996
Accrued expenses and reserves $5,167 $4,297
Asset valuation reserves 705 1,643
Operating loss carryforwards 1,741 925
Tax credit carryforwards 377 1,615
Installment sales (2,056) (2,118)
Property, plant and equipment (2,802) (1,230)
Other, net (1,369) (1,231)
Valuation allowance (967) (1,235)
______ ______
Net deferred tax asset $ 796 $2,666
====== ======
The net asset is included in the consolidated balance
sheet in the following captions (in thousands):
December 31, 1997 1996
Prepaid income taxes $4,217 $5,035
Deferred income taxes (3,421) (2,369)
______ ______
$ 796 $2,666
====== ======
At December 31, 1997, the Company had alternative minimum tax credit
carryforwards of $233,000 which do not expire, federal net operating loss
carryforwards of $2.7 million and state net operating loss carryforwards of
$15.5 million. The carryforwards will be available for the reduction of
future income tax liabilities; a valuation allowance has been recorded against
certain of these carryforwards for which utilization is uncertain.
Cash paid related to income taxes during 1997, 1996 and 1995 was $5,456,000,
$2,607,000 and $3,012,000, respectively.
Note 9 - Employee Retirement Plans
The Company maintains non-contributory defined benefit pension plans covering
certain 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 expense (income) includes the following components (in thousands):
Year Ended December 31, 1997 1996 1995
Service cost $ 493 $ 483 $ 411
Interest cost on projected
benefit obligation 1,901 1,808 1,830
Actual return on
plan assets (6,175) (1,830) (3,381)
Net amortization and
deferral 3,810 (475) 1,018
_______ _______ _______
Net periodic pension
expense (income) $ 29 $ (14) $ (122)
======= ======= =======
The following schedule details (in thousands) the funded status of the plans.
1997 1996 1995
Actuarial present value
of benefit obligation:
Vested $25,133 $21,866 $21,982
Nonvested 1,575 1,570 1,690
_______ _______ _______
Accumulated benefit
obligation 26,708 23,436 23,672
Effect of projected
salary increases 1,282 1,103 1,186
_______ _______ _______
Total projected benefit
obligation 27,990 24,539 24,858
Plan assets at fair
value 30,199 25,277 23,670
_______ _______ _______
Plan assets in excess of
(less than) projected
benefit obligation 2,209 738 (1,188)
Unrecognized
transitional asset (272) (707) (1,093)
Prior service cost not
yet recognized in net
periodic pension cost 1,396 1,544 1,094
Unrecognized net (gain)
loss (71) 1,315 3,607
_______ _______ _______
Prepaid pension asset $3,262 $2,890 $ 2,420
====== ====== ======
The projected benefit obligation was determined using assumed discount rates
of 7.5% in 1997, 8.0% in 1996 and 7.75% in 1995, and assumed long-term rates
of compensation increase of 4% in 1997, 1996 and 1995. The annual long-term
rate of return on plan assets was assumed to be 9.0% in 1997, 1996 and 1995.
The measurement date used for each of the actuarial calculations was September
30. 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 $1.3 million and $989,000 at December 31, 1997 and 1996,
respectively, using a discount rate of 8.0%.
The Company maintains a savings and profit sharing plan 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 employees annual compensation. Effective January 1, 1997,
the matching percentage was increased to 50%. Vesting of Company contributions
occur at the rate of 20% per year. Contributions approximated $436,000,
$155,000 and $58,000 in 1997, 1996 and 1995, respectively.
The Company maintains a defined contribution plan that covers certain
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 $287,000, $252,000 and $212,000 in connection with this plan for
1997, 1996 and 1995, respectively.
The Company provides postretirement benefits to certain 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 163.
Net postretirement benefit expense included the following components (in
thousands):
Year Ended December 31, 1997 1996 1995
Service cost $ 46 $ 49 $ 47
Interest cost on
projected benefit
obligation 100 102 117
Net amortization and
deferral 45 58 57
_____ _____ _____
Net postretirement
benefit expense $191 $209 $221
===== ===== =====
The Company's postretirement benefit plans are not funded. The status of the
Company's plans was as follows (in thousands):
December 31, 1997 1996
Actuarial present value of
accumulated
postretirement benefit
obligation $1,407 $1,564
Unrecognized transitional
obligation (338) (361)
Unrecognized net loss (573) (667)
_____ _____
Accrued postretirement
benefit liability $ 496 $ 536
===== =====
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation at December 31, 1997 was 9% decreasing to 6%
over four years and at December 31, 1996 was 10% decreasing to 6% over four
years. The discount rate used in determining the accumulated postretirement
benefit obligation was 7.5% in 1997 and 1996. A one percentage point increase
in the health care cost trend rate would increase the accumulated
postretirement benefit obligation by approximately $173,000 and would increase
the net postretirement benefit expense by approximately $28,000.
Note 10 - Shareholders' Equity
During April 1996, the 1995 Stock Option Plan was adopted by the Company as
approved by the shareholders (the "1995 Plan"), which authorized the granting
of options for up to 600,000 shares of the Company's common stock. In
addition, through its expiration in December 1996, the Company was authorized
to grant options for up to 530,000 shares of the Company's common stock under
the 1987 Stock Option Plan. The 1995 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 options vest ratably over a period not exceeding three
years after the grant date. The option period shall not be more than ten years
after the grant date.
Following is a summary of activity in the stock option plans for 1995, 1996
and 1997:
Weighted
Shares Average
Subject Option
to Option Price
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
Granted 323,650 8.60
Exercised (32,082) 5.79
Cancelled (53,751) 8.82
_________ ______
Outstanding, December 31, 1996 593,489 $7.81
Granted 96,000 19.59
Exercised (41,084) 6.70
Cancelled (5,000) 14.88
_________ ________
Outstanding, December 31, 1997 643,405 $9.58
========= ========
Exercisable, December 31, 1997 341,894 $7.46
========= ======
The exercise price for options outstanding at December 31, 1997 range from
$3.00 to $21.25 per share. The weighted-average remaining contractual life of
these options approximates seven years.
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation." Accordingly, no compensation cost has been recognized for
options granted under the stock option plans. Had compensation cost been
determined based on the fair value at the grant date for awards in 1995, 1996
and 1997 consistent with the provisions of SFAS No. 123, the Company's
pro-forma net income and earnings per share would have been as presented below
(in thousands, except per share data):
Year Ended December 31, 1997 1996 1995
Net income $12,414 $9,306 $9,006
Diluted net income per share 1.90 1.49 1.44
Basic net income per share 2.00 1.51 1.46
The fair value of each option granted is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 1997, 1996 and 1995:
Year Ended December 31, 1997 1996 1995
Expected stock price volatility 19.1% 20.9% 21.2%
Risk-free interest rate 6.1% 6.4% 5.6%
Expected life of options - years 7 7 6
The weighted-average grant-date fair value of options granted during 1997,
1996 and 1995 was $7.60, $3.40 and $2.58, respectively.
On May 28, 1997, the Board of Directors of the Company adopted a Shareholder
Rights Plan and declared a rights dividend of one preferred share purchase
right (Right) for each share of common stock outstanding on June 16, 1997, and
provided that one Right would be issued with each share of common stock
thereafter issued. The Shareholder Rights Plan provides that in the event a
person or group acquires or seeks to acquire 15% or more of the outstanding
common stock of the Company, the Rights, subject to certain limitations, will
become exercisable. Each Right once exercisable initially entitles the holder
thereof (other than the acquiring person whose rights are cancelled) to
purchase from the Company one one-hundredth of a share of Series A preferred
stock at an initial exercise price of $55 per one one-hundredth of a share
(subject to adjustment), or, upon the occurrence of certain events, common
stock of the Company or common stock of an "acquiring company" having a market
value equivalent to two times the exercise price. Subject to certain
conditions, the Rights are redeemable by the Board of Directors for $.01 per
Right and are exchangeable for shares of common stock. The Rights have no
voting power and expire on May 28, 2007.
At December 31, 1997, warrants to purchase 130,000 shares of the Company's
common stock for $7 per share, subject to certain adjustments as provided in
the warrant agreement, are outstanding. The warrants can be exercised at any
time through March 5, 1998. During 1997, the Company purchased a previously
issued warrant to purchase 50,000 shares of the Company's stock for $193,000.
Note 11 - Earnings Per Share
Basic net income per common share is computed by dividing net income by the
weighted average number of common shares outstanding for the period. Diluted
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. A
reconciliation of the shares used in the computation follows (in thousands):
Year Ended December 31, 1997 1996 1995
Basic shares 6,194 6,147 6,189
Effect of warrants and options 348 80 63
______ ______ ______
Diluted shares 6,542 6,227 6,252
Note 12 - 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.
Note 13 - Segment Information
The Company manufactures and distributes products into two industry segments.
Construction equipment is manufactured and distributed for customers in the
construction market. As of December 31, 1997, 42% of the Company's accounts
receivable were from customers in the construction market.
Agricultural equipment is manufactured and distributed for customers in the
dairy and livestock agricultural sector. As of December 31, 1997, 58% 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, 1997 1996 1995
Net Sales
Construction $101,635 $ 70,826 $ 64,381
Agriculture 95,420 88,836 89,071
________ ________ ________
Consolidated $197,055 $159,662 $153,452
======== ======== ========
Income from
Operations
Construction $ 16,277 $ 12,967 $ 13,164
Agriculture 5,571 2,580 449
________ ________ ________
Consolidated $ 21,848 $ 15,547 $ 13,613
======== ======== ========
Assets (Year-end)
Construction $ 86,647 $ 27,994 $ 29,999
Agriculture 78,281 76,857 91,612
Unallocated 11,295 15,274 13,312
________ ________ ________
Consolidated $176,223 $120,125 $134,923
======== ======== ========
Depreciation/
Amortization
Construction $ 1,225 $ 760 $ 921
Agriculture 1,957 1,758 1,883
Unallocated 29 58 61
________ ________ ________
Consolidated $ 3,211 $ 2,576 $ 2,865
======== ======== ========
Capital Expenditures
Construction $ 5,265 $ 922 $ 655
Agriculture 3,453 2,915 1,782
________ ________ ________
Consolidated $ 8,718 $ 3,837 $ 2,437
======== ======== ========
Exports of U.S. produced products were approximately $32.9 million, $26.8
million and $28.0 million in 1997, 1996 and 1995, respectively.
Note 14 - Quarterly Financial Data (unaudited)
In Thousands,
Except Per First Second Third Fourth
Share Data Quarter Quarter Quarter Quarter Total
1997
Net sales $43,675 $51,592 $48,140 $53,648 $197,055
Gross profit 12,983 15,547 14,807 14,466 57,803
Net income 2,529 3,885 3,453 2,894 12,761
Diluted net
income per
common
share<F1> .39 .60 .52 .43 1.95
Basic net
income per
common share<F1> .41 .63 .56 .47 2.06
1996
Net sales $39,165 $44,474 $40,550 $35,473 $159,662
Gross profit 11,016 13,352 12,252 11,140 47,760
Net income 1,896 2,933 2,621 2,115 9,565
Diluted net
income per
common share .31 .47 .42 .34 1.54
Basic net
income per
common share .31 .48 .43 .34 1.56
<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 amounts for the year.
<PAGE>
[Page 24 of the Annual Report]
GEHL COMPANY AND SUBSIDIARIES
FIVE-YEAR FINANCIAL SUMMARY
Dollars in
Thousands,
Except Per
Share Data 1997 1996 1995 1994 1993
Summary of
Operations
Net sales $197,055 $159,662 $153,452 $146,620 $137,218
Gross profit 57,803 47,760 44,614 43,274 38,883
Income from
operations 21,848 15,547 13,613 12,961 7,339
Interest
expense 2,325 3,443 5,733 6,711 8,364
Income before
income taxes 20,060 12,494 9,163 5,035 366
Net income 12,761 9,565 9,013 5,035 241
Financial
Position at
December 31
Current assets $117,841 $89,748 $106,563 $102,621 $114,355
Current
liabilities 44,328 32,136 29,561 28,710 30,328
Working
capital 73,513 57,612 77,002 73,911 84,027
Accounts
receivable 72,190 55,141 69,087 72,393 84,969
Finance
contracts
receivable 11,241 8,161 7,716 5,647 6,847
Inventories 30,340 18,642 23,320 21,452 21,633
Property,
plant and
equipment, net 35,082 21,678 20,315 20,433 20,088
Total assets 176,223 120,125 134,923 131,027 144,280
Long-term debt 49,046 19,194 46,666 54,700 72,259
Total debt 49,718 19,372 46,863 54,880 72,808
Shareholders'
equity 77,573 64,832 55,679 46,283 40,895
Common Share
Summary
Diluted net
income per
share $1.95 $1.54 $1.44 $.82 $.04
Basic net
income per
share 2.06 1.56 1.46 .82 .04
Dividends per
share -- -- -- -- --
Book value per
share 12.49 10.53 8.96 7.50 6.67
Shares
outstanding at
year-end 6,212,686 6,158,720 6,216,765 6,169,523 6,132,443
Other
Financial
Statistics
Net cash
provided by
operating
activities $15,119 $31,795 $9,701 $19,522 $26,113
Capital
expenditures 8,718 3,837 2,437 2,505 809
Depreciation 2,955 2,438 2,520 2,692 2,940
Current ratio 2.7 to 1 2.8 to 1 3.6 to 1 3.6 to 1 3.8 to 1
Percent total
debt to total
capitalization 39.1% 23.0% 45.7% 54.2% 64.0%
Net income as
a percent of
net sales 6.5% 6.0% 5.9% 3.4% .2%
After-tax
return on
average
shareholders'
equity 17.9% 15.9% 17.7% 11.6% .6%
Employees at
year-end 1,192 832 842 928 946
Common stock
price range 24-15/16 - 9-3/8 12 - 6-7/8 9-5/8 - 6-1/4 8-1/2 - 5-3/8 7-3/8 - 3
Investor Information
Price Range Dividends
1997 1996 1997 1996
Stock Prices
and Dividends
First Quarter $11- 5/8 - 9-3/8 $8-3/4 - 6-7/8 $ -- $ --
Second Quarter 17- 7/8 - 10 8-3/4 - 7-5/8 -- --
Third Quarter 24- 5/8 - 16-5/8 8-5/8 - 7-3/8 -- --
Fourth Quarter 24-15/16 - 19-3/8 12 - 7-5/8 -- --
__________________ ______________ __________ __________
Year $24-15/16 - 9-3/8 $12 - 6-7/8 $ -- $ --
================== ============== ========== ==========
<PAGE>
[Page 25 of the Annual Report]
Directors and Officers
Board of Directors
Thomas J. Boldt
President, The Boldt Group, Inc. (1)
Fred M. Butler
President and Chief Executive Officer
The Manitowoc Company (*2)
John W. Findley
Chairman and President, Vine and Branches Foundation, Inc. and Chairman and
President, Cedars of Nemahbin Foundation, Inc. (1,2)
John W. Gehl
Retired Vice President, Gehl International (3)
William D. Gehl
Chairman of the Board of Directors,
President and Chief Executive Officer (3)
William P. Killian
Vice President, Corporate Development and Strategy
Johnson Controls, Inc. (3)
Arthur W. Nesbitt
Vice Chairman, ABC School Supply, Inc. (2,*3)
Roger E. Secrist
Retired Chairman and Chief Executive Officer
ANGUS Chemical Company (2,3)
John W. Splude
Chairman, President and Chief Executive Officer
HK Systems, Inc. (*1)
Executive Officers
William D. Gehl
Chairman of the Board of Directors
President and Chief Executive Officer
Victor A. Mancinelli
Executive Vice President and Chief Operating Officer
Kenneth P. Hahn
Vice President, Finance and Treasurer
Michael J. Mulcahy
Vice President, Secretary and General Counsel
Richard J. Semler
Vice President, Data Systems
(*) Chairman
(1) Audit Committee
(2) Compensation and Benefits Committee
(3) Nominating Committee
Information of Interest
Investor Information
Gehl Company provides quarterly financial information to Shareholders through
an automated "News on Demand Service". Gehl Company does not mail out
Quarterly Reports to Shareholders. 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 1997, 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
Gehl Company anticipates making 1998 quarterly earnings announcements:
First Quarter: Week ending, April 17, 1998
Second Quarter: Week ending, July 17, 1998
Third Quarter: Week ending, October 16, 1998
Fourth Quarter: Week ending, February 19, 1999
Stock Market Information
Gehl Company common stock is traded on The Nasdaq Stock Market under the
symbol GEHL. As of February 2, 1998, shareholders of record numbered 693.
This number does not include shareholders who hold Gehl Company Stock in
street name.
Independent Accountants
Price Waterhouse, LLP; Milwaukee, Wisconsin
Annual Meeting
All shareholders are invited to attend our annual meeting which will be held
on Wednesday, April 29, 1998, 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
1555 N. River Center Drive, Suite 301
Milwaukee, Wisconsin 53212
800-637-7549
Special Note Regarding Forward-Looking Statments
Certain matters discussed in this Annual Report (including the capition
"Management's Discussion and Analysis of Financial Position and Operations")
are "forward-looking statements" intended to qualify for the safe harbor from
liability established by the Private Securities Litigation Reform Act of 1995.
These forward-looking statements can generally be identified as such because
the context of the statement will include such words as the Company
"believes," "anticipates" or "expects," or words of similar import.
Similarly, statements that describe the Company's future plans, objectives or
goals are also forward-looking statements. The forward-looking statements are
subject to certain risks and uncertainties which could cause actual results to
differ materially from those currently anticipated. Such risks and
uncertainties include demand for the Company's products, general economic
conditions in the agricultural and construction markets, price and product
competition and foreign currency fluctuations. Shareholders, potential
investors and other readers are urged to consider these factors carefully in
evaluating the forward-looking statements and are cautioned not to place undue
reliance on such forward-looking statements.
Exhibit 21
The following are subsidiaries of Gehl Company
Gehl International, Inc. U.S. Virgin Islands
Gehl Power Products, Inc. South Dakota
Hedlund Martin, Inc. Pennsylvania
Brunel America, Inc. Delaware
Mustang America, Inc. Delaware
Mustang Manufacturing Company, Inc. Minnesota
Mustang Finance, Inc. Minnesota
Mustang International, Inc. Barbados
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 10, 1998 appearing in the 1997 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 in 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)
3. Registration Statement on Form S-8 (Registration No. 333-02195)
4. Registration Statement on Form S-8 (Registration No. 333-04017)
5. Registration Statement on Form S-3 (Registration No. 333-9173)
PRICE WATERHOUSE LLP
Milwaukee, Wisconsin
March 11, 1998
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Gehl
Company's consolidated balance sheet at December 31, 1997 and consolidated
statements of income for the twelve month period ended December 31, 1997 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-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> DEC-31-1997
<CASH> 1239
<SECURITIES> 0
<RECEIVABLES> 87547
<ALLOWANCES> 4116
<INVENTORY> 30340
<CURRENT-ASSETS> 117841
<PP&E> 72749
<DEPRECIATION> 37667
<TOTAL-ASSETS> 176223
<CURRENT-LIABILITIES> 44328
<BONDS> 49046<F1>
<COMMON> 621
0
0
<OTHER-SE> 76952
<TOTAL-LIABILITY-AND-EQUITY> 176223
<SALES> 197055
<TOTAL-REVENUES> 197055
<CGS> 139252
<TOTAL-COSTS> 139252
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2325
<INCOME-PRETAX> 20060
<INCOME-TAX> 7299
<INCOME-CONTINUING> 12761
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12761
<EPS-PRIMARY> 2.06<F2>
<EPS-DILUTED> 1.95
<FN>
<F1>Includes all non-current portion of debt obligations
<F2>Represents the current calculation of Basic Earnings per Share
</FN>
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