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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
{NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996}
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 {NO FEE REQUIRED}
FOR THE TRANSITION PERIOD FROM __________ TO ___________.
COMMISSION FILE NUMBER: 0-19898
AGCO CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
DELAWARE 58-1960019
(STATE OR OTHER JURISIDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
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4830 RIVER GREEN PARKWAY, DULUTH, GEORGIA 30136
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (770) 813-9200
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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COMMON STOCK, ($0.01 PAR VALUE) NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
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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.
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The aggregate market value of common stock held by non-affiliates of
the Registrant as of the close of business on March 14, 1997 was
$1,701,484,000. As of such date, there were 62,458,886 shares of the
registrant's common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the AGCO Corporation Annual Report to Stockholders for the
year ended December 31, 1996 are incorporated by reference in Part II.
Portions of the definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on April 23, 1997 are incorporated by reference in Part
III.
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Item 1. BUSINESS
AGCO Corporation ("AGCO" or the "Company") was incorporated in Delaware
in April 1991. The Company's executive offices are located at 4830 River Green
Parkway, Duluth, Georgia 30136, and its telephone number is 770-813-9200. Unless
otherwise indicated, all references in this Form 10-K to the Company include the
Company's subsidiaries.
THE COMPANY
AGCO is a leading manufacturer and distributor of agricultural
equipment throughout the world. The Company sells a full range of agricultural
equipment and related replacement parts, including tractors, combines, hay tools
and forage equipment and implements. The Company's products are widely
recognized in the agricultural equipment industry and are marketed under the
following brand names: Massey Ferguson, AGCO Allis, GLEANER, Hesston, White,
SAME, Landini, White-New Idea, Black Machine, AGCOSTAR, Glencoe, Tye, Farmhand,
Maxion, IDEAL, Western Combine, PMI, Deutz (South America) and Fendt. The
Company distributes its products through a combination of over 7,500 independent
dealers, wholly-owned distribution companies, associates and licensees. In
addition, the Company provides retail financing in North America, the United
Kingdom, France and Germany through its finance joint ventures with Cooperative
Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland" ("Rabobank").
AGCO was organized in June 1990 by an investment group formed by
management to acquire the successor to the agricultural equipment business of
Allis-Chalmers, a company which began manufacturing and distributing
agricultural equipment in the early 1900s. Since its formation in June 1990,
AGCO has grown substantially through a series of 14 acquisitions for
consideration aggregating approximately $1,222.7 million. These acquisitions
have allowed the Company to broaden its product line, expand its dealer network
and establish strong market positions in several new markets throughout North
America, South America, Western Europe and the rest of the world. The Company
has achieved significant cost savings and efficiencies from its acquisitions by
eliminating duplicative administrative, sales and marketing functions,
rationalizing its dealer network, increasing manufacturing capacity utilization
and expanding its ability to source certain products and components from third
party manufacturers. In addition to acquisitions, the Company has increased its
sales in North America by entering into a substantial number of crossover
contracts with its dealers whereby a dealer carrying one of the Company's brands
also contracts to sell additional AGCO brands or products. The Company has also
grown through successful expansion of its product offerings, particularly
related to the sale of complementary non-tractor products through its
international distribution channel, and new product introductions.
ACQUISITION HISTORY
Hesston Acquisition. In March 1991, the Company acquired Hesston
Corporation ("Hesston"), a leading manufacturer and distributor of hay tools,
forage equipment and related replacement parts, together with over 500 dealer
contracts (the "Hesston Acquisition"). The assets acquired also included
Hesston's 50% interest in a joint venture, Hay and Forage Industries ("HFI"),
between Hesston and Case Corporation ("Case") which manufactures hay and forage
equipment for both parties. Hesston's net sales in its full fiscal year
preceding the acquisition were approximately $91.0 million. The Hesston
Acquisition enabled the Company to provide its dealers with a more complete line
of farm equipment and to expand its dealer network into territories in which the
Company had not previously been represented.
White Tractor Acquisition. In May 1991, the Company acquired the White
Tractor Division ("White") of Allied Products Corporation ("Allied"), together
with over 600 dealer contracts (the "White Acquisition"). White's net sales in
its full fiscal year preceding the acquisition were approximately $58.3 million.
As a result of the White Acquisition, the Company commenced the manufacture of
higher horsepower tractors at its Independence, Missouri facility, ensuring for
AGCO an uninterrupted supply of higher horsepower tractors and increasing
utilization at its Independence facility.
Massey Ferguson North American Acquisition. In January 1993, the
Company entered into an agreement with Varity Corporation ("Varity") to be the
exclusive distributor in the United States and Canada of the Massey Ferguson
line of farm equipment. Concurrently, the Company acquired the North American
distribution operation of Massey Ferguson Group Limited ("Massey") from Varity,
including approximately 1,100 dealer contracts (the "Massey North American
Acquisition"). Net sales attributable to Massey's North American distribution
operation in the full fiscal year preceding the acquisition were approximately
$215.0 million. The Massey North American Acquisition provided AGCO access to
another leading brand name in the agricultural
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equipment industry, and it enabled the Company to expand its dealer network by
entering into a substantial number of crossover contracts.
White-New Idea Acquisition. In December 1993, the Company acquired the
White-New Idea Farm Equipment Division ("White-New Idea") of Allied, together
with approximately 900 dealer contracts (the "White-New Idea Acquisition"). The
White-New Idea Acquisition enabled the Company to offer a more complete line of
planters and spreaders and a broader line of tillage equipment. Of White-New
Idea's net sales of approximately $83.1 million in 1993, approximately 46%
represented sales of products in categories in which the Company previously did
not compete.
Agricredit Acquisition. The Company acquired Agricredit from Varity in
two separate transactions (together, the "Agricredit Acquisition"). The Company
acquired a 50% joint venture interest in Agricredit in January 1993 and acquired
the remaining 50% interest in February 1994. The Agricredit Acquisition has
enabled the Company to provide more competitive and flexible financing
alternatives to end users.
Massey Acquisition. In June 1994, the Company acquired Massey from
Varity, together with Massey's independent dealers and associate and licensee
companies outside the United States and Canada. Massey, with fiscal 1993 net
sales of approximately $898.4 million (including net sales to AGCO of
approximately $124.6 million) (the "Massey Acquisition"), was one of the largest
manufacturers and distributors of tractors in the world. The Massey Acquisition
significantly expanded AGCO's sales and distribution outside North America.
AgEquipment Acquisition. In March 1995, the Company further expanded
its product offerings through its acquisition of AgEquipment Group, a
manufacturer and distributor of farm implements and tillage equipment (the
"AgEquipment Acquisition"). The AgEquipment Acquisition added three brands of
agricultural implements to the Company's product line, including no-till and
minimum tillage products, distributed under the Tye, Farmhand and Glencoe brand
names.
Maxion Acquisition. In June 1996, the Company acquired the agricultural
and industrial equipment business of Iochpe-Maxion S.A. (the "Maxion
Agricultural Equipment Business"), together with approximately 360 dealer
contracts (the "Maxion Acquisition"). The Maxion Agricultural Equipment
Business, with 1995 sales of approximately $265.0 million, was AGCO's Massey
Ferguson licensee in Brazil, manufacturing and distributing agricultural
tractors under the Massey Ferguson brand name, combines under the Massey
Ferguson and IDEAL brand names and industrial loader-backhoes under the Massey
Ferguson and Maxion brand names. The Maxion Acquisition establishes AGCO with
market leadership in the significant Brazilian agricultural equipment market.
Western Combine Acquisition. In July 1996, the Company acquired certain
assets of Western Combine Corporation and Portage Manufacturing, Inc., the
Company's suppliers of Massey Ferguson combines and certain other harvesting
equipment sold in North America (the "Western Combine Acquisition"). The Western
Combine Acquisition provided the Company with access to advanced technology and
will increase the Company's profit margin on certain combines and harvesting
equipment sold in North America.
Agricredit Joint Venture. In November 1996, the Company sold a 51%
interest in Agricredit to a wholly-owned subsidiary of Rabobank. The Company
received total consideration of approximately $44.3 million in the transaction.
The Company retained a 49% interest in Agricredit and now operates Agricredit
with Rabobank as a joint venture (the "Agricredit Joint Venture"). The
Agricredit Joint Venture has continued the business of Agricredit and seeks to
build a broader asset-based finance business through the addition of other lines
of business. The Company has similar joint venture arrangements with Rabobank
with respect to its retail finance companies located in the United Kingdom,
France and Germany.
Deutz Argentina Acquisition. In December 1996, the Company acquired the
operations of Deutz Argentina S.A. ("Deutz Argentina"), together with
approximately 225 dealer contracts (the "Deutz Argentina Acquisition"). Deutz
Argentina, with 1995 sales of approximately $109.0 million, supplies
agricultural equipment, engines and light duty trucks to Argentina and other
markets in South America. The Deutz Argentina Acquisition establishes AGCO as
the dominant supplier of agricultural equipment in Argentina.
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Fendt Acquisition. In January 1997, the Company acquired the operations
of Xaver Fendt GmbH & Co. KG ("Fendt") (the "Fendt Acquisition"). Fendt, which
had 1995 sales of approximately $580.0 million, manufactures and sells tractors
ranging from 45 to 260 horsepower through a network of independent agricultural
cooperatives and dealers in Germany and a network of dealers and distributors
throughout Europe. With this acquisition, AGCO has leading market shares in
Germany and France, two of Europe's largest agricultural equipment markets.
PRODUCTS
Tractors
Tractors are vehicles used to pull farm implements, hay tools, forage
equipment and other farm equipment. The Company participates in three segments
of the tractor market: the compact segment, which includes tractors in the less
than 40 horsepower range; the mid-range segment, which includes tractors in the
40 to 100 horsepower range; and the high horsepower segment, which includes
tractors in excess of 100 horsepower.
All compact tractors are sold under the Massey Ferguson brand name and
are typically used on small farms and in specialty agricultural industries such
as dairies, orchards and vineyards. The Company offers a full range of tractors
in the 40 to 100 horsepower category, including both two-wheel and all-wheel
drive versions. The Company sells mid-range tractors in this category under the
Massey Ferguson, AGCO Allis, White, SAME and Landini brand names. As a result of
recent acquisitions, the Company will also sell mid-range tractors under the
Deutz (South America) and Fendt brand names in 1997. The mid-range tractors are
typically used on small and medium-sized farms and in specialty agricultural
industries. The Company also offers a full range of tractors in the over-100
horsepower segment ranging primarily from 100 to 425 horsepower. High horsepower
tractors are typically used on larger farms and on cattle ranches for hay
production. The Company sells high horsepower tractors under the Massey
Ferguson, AGCO Allis, White, Landini and AGCOSTAR brand names. In 1997, the
Company will also sell high horsepower tractors under the Deutz (South America)
and Fendt brand names. Tractors accounted for approximately 60%, 61% and 51% of
the Company's net sales in 1996, 1995 and 1994, respectively.
Combines
Combines are large, self-propelled machines used for the harvesting of
crops, such as corn, wheat, soybeans and barley. The Company sells combines
under the GLEANER, Massey Ferguson and IDEAL brand names. As a result of the
Deutz Argentina Acquisition, the Company will also sell combines under the Deutz
Fahr brand name in 1997. GLEANER combines utilize a rotary grain handling
system, which provides superior harvesting in moist conditions and over adverse
terrain and ensures maximum yield and grain quality. Depending on the market,
Massey Ferguson combines are sold with conventional or rotary technology while
the IDEAL combines sold in South America utilize conventional technology. All
combines are complemented by a variety of crop-harvesting heads, available in
different sizes, which are designed to maximize harvesting speed and efficiency
while minimizing crop loss. Combines accounted for 11%, 10% and 11% of the
Company's net sales in 1996, 1995 and 1994, respectively.
Hay Tools and Forage Equipment, Implements and Other Products
Hay tools are used to harvest and process hay crops for livestock feed.
Hay tools perform a variety of functions, including mowing and conditioning,
raking, tedding, baling and harvesting. Hay tools include self-propelled
windrowers and tractor-powered mowers, which cut and condition hay crops for
faster drying before forage harvesting or baling; hay tedders and rakes, which
are designed to reduce drying time and place hay crops in windrows; round
balers, which harvest and roll windrowed hay into circular bales; square balers,
which harvest and compress the windrowed hay into solid bales; and forage
harvesters, which are used to cut standing corn crops or windrowed hay crops to
uniform length. The Company sells hay and forage equipment primarily under the
Hesston brand name and, to a lesser extent, the White-New Idea and Massey
Ferguson brand names.
The Company also distributes a wide range of implements, planters and
other equipment for its product lines. Tractor-pulled implements are used in
field preparation and crop management. Implements include disk harrows, which
improve field performance by cutting through crop residue, leveling seed beds
and mixing chemicals with the soil; min-tils, which break up soil and mix crop
residue into topsoil, with or without prior disking; and field cultivators,
which prepare a smooth seed bed and destroy weeds. Tractor-pulled planters apply
fertilizer and place seeds in the field. Other equipment includes tractor-pulled
manure
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spreaders, which fertilize fields with the controlled application of sludge or
solid manure, and loaders, which are used for a variety of tasks including
lifting and transporting hay crops. The Company sells implements, planters and
other products under the Hesston, White-New Idea, Black Machine, Massey
Ferguson, Tye, Farmhand, Glencoe and PMI brand names. As a result of the Deutz
Argentina Acquisition, the Company will also sell agricultural implements under
the Deutz (South America) brand name in 1997. Hay tools and forage equipment,
implements and other products accounted for 12%, 11% and 15% of the Company's
net sales in 1996, 1995 and 1994, respectively.
Replacement Parts
In addition to sales of new equipment, the replacement parts business
is an important source of revenue and profitability for both the Company and its
dealers. The Company sells replacement parts for products sold under all of its
brand names, many of which are proprietary. These parts help keep farm equipment
in use, including products no longer in production. Since most of the Company's
products can be economically maintained with parts and service for a period of
10 to 20 years, each product which enters the marketplace provides the Company
with a potential long-term revenue stream. In addition, sales of replacement
parts typically generate higher gross margins and historically have been less
cyclical than new product sales.
The Company expanded its replacement parts business with sales of a
line of "all makes" parts in North America that are generic to the industry and
are marketed under the Value Line brand name. These products also have
application to competitor's products, enhance the dealers' service capability
and supplement the Company's proprietary products. Replacement parts accounted
for approximately 17%, 18% and 23% of the Company's net sales in 1996, 1995 and
1994, respectively.
MARKETING AND DISTRIBUTION
The Company distributes its products primarily through a network of
independent dealers and distributors. The Company's dealers are responsible for
retail sales to the equipment's end user in addition to after-sales service and
support of the equipment. The Company's distributors may sell the Company
products through a network of dealers supported by the distributor. Through the
Company's acquisitions and dealer development activities, the Company has
broadened its product line, expanded its dealer network and strengthened its
geographic presence in Western Europe, North America, South America and the rest
of the world. The Company's sales are not dependent on any specific dealer,
distributor or group of dealers.
Western Europe
Fully assembled tractors and other Massey Ferguson-branded equipment
are marketed by wholly-owned distribution companies in the United Kingdom,
France, Germany, Norway, Spain, Denmark and Sweden. In addition, the Company
utilizes an associate company to distribute Massey Ferguson-branded products
in Italy. These distribution companies support a combined network of
approximately 1,500 independent dealers in Western Europe. In addition, the
Company sells through independent distributors in the remainder of Western
Europe, which distribute through approximately 500 Massey dealers. As a result
of the Fendt Acquisition, the Company also manufactures and sells Fendt branded
equipment through a network of independent agricultural cooperatives and dealers
in Germany and a network of dealers and distributors throughout Europe. In most
cases, dealers carry competing or complementary products from other
manufacturers. Sales in Western Europe accounted for 43%, 45% and 29% of the
Company's net sales in 1996, 1995 and 1994, respectively.
North America
The Company markets and distributes its farm machinery, equipment and
replacement parts to farmers in North America through a network of dealers
supporting approximately 7,000 dealer contracts. Each of the Company's
approximately 2,800 independent dealers represents one or more of the Company's
distribution lines or brand names. Dealers may also handle competitive and
dissimilar lines of products. The Company intends to maintain the separate
strengths and identities of its brand names and products lines. The Company has
been able to increase sales, as well as dealer focus on its products, by
establishing crossover contracts. Sales in North America accounted for 36%, 38%
and 57% of the Company's net sales in 1996, 1995 and 1994, respectively.
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South America
The Company markets and distributes its farm machinery, equipment and
replacement parts to farmers in South America through several different
networks. In Brazil and Argentina, the Company distributes products directly to
independent dealers supporting either the Massey Ferguson, IDEAL, Maxion or
Deutz (South America) brand names. Outside of Brazil and Argentina, the Company
sells its products in South America through independent distributors. In Brazil,
federal laws are extremely protective of the dealers and prohibit a manufacturer
from selling any of its products in Brazil except through its dealer network.
Additionally, each dealer has the exclusive right to sell its manufacturer's
product in its designated territory and as a result, no dealer may represent
more than one manufacturer. Sales in South America accounted for 4%, 1% and 1%
of the Company's net sales in 1996, 1995 and 1994, respectively.
Rest of the World
Outside Western Europe, North America and South America, the Company
operates primarily through a network of approximately 2,600 independent
distributors and dealers, as well as associates and licensees, marketing the
Company's products and providing customer service support in approximately 100
countries in Africa, the Middle East, Eastern Europe, Australia and Asia. With
the exception of Australia, where the Company directly supports its dealer
network, the Company utilizes independent distributors, associates and licensees
to sell its products. These arrangements allow AGCO to benefit from local market
expertise to establish strong market positions with limited investment. In some
cases, AGCO also sells agricultural equipment directly to governmental agencies.
The Company will also continue to actively support the local production and
distribution of Massey-licensed products by third party distributors, associates
and licensees. Sales outside Western Europe, North America, and South America
accounted for 17%, 16% and 13% of the Company's net sales in 1996, 1995 and
1994, respectively.
In Western Europe and the rest of the world, associates and licensees
provide a significant distribution channel for the Company's products and a
source of low cost production for certain Massey Ferguson products. Associates
are entities in which the Company has an ownership interest, most notably in
India, Morocco and Saudi Arabia. Licensees are entities in which the Company has
no direct ownership interest, most notably in Pakistan, Poland and Turkey. The
associate or licensee generally has the exclusive right to produce and sell
Massey Ferguson equipment in its home country, but may not sell these products
in other countries. The Company generally licenses to these associate companies
certain technology, as well as the right to use Massey Ferguson's trade names.
The Company sells products to associates and licensees in the form of components
used in local manufacturing operations, tractor sets supplied in completely
knocked down ("CKD") kits for local assembly and distribution and fully
assembled tractors for local distribution only. In certain countries, the
arrangements with licensees and associates have evolved to where the Company is
principally providing technology, technical assistance and quality control. In
these situations, licensee manufacturers sell certain tractor models under the
Massey Ferguson brand name in the licensed territory and may also become a
source of low cost production to the Company.
Parts Distribution
In Western Europe, the parts operation is supported by master
distribution facilities in Desford, England and Ennery, France and regional
parts facilities in Spain and Denmark. The Company supports its sales of
replacement parts in North America through its master parts warehouse in
Batavia, Illinois and regional warehouses throughout North America. In South
America, replacement parts are maintained and distributed primarily from its
manufacturing facilities.
Market Conditions and Outlook
The Company's operations are subject to the cyclical nature of the
agricultural industry. Sales of the Company's equipment have been and are
expected to continue to be affected by changes in net cash farm income, farm
land values, weather conditions, the demand for agricultural commodities and
general economic conditions.
The outlook for worldwide sales of agricultural equipment expenditures
remains positive. In North America, as a result of low worldwide grain stocks,
high commodity prices and government payments to farmers under the new U.S. Farm
Bill, net cash farm income has remained at high levels and farmer balance sheets
remain strong enabling farmers to make necessary purchases of
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equipment in 1997. These factors should increase farmers' confidence and result
in continued replacement demand for agricultural equipment.
The Western European agricultural market continues to benefit from
increased export demand and high commodity prices. These items should continue
to support the farmers' replacement demand. Over the longer term, demand for
farm equipment in some parts of Europe is expected to exhibit a slow, modest
decline due to a shift toward fewer but larger farms. This consolidation is
expected to be offset, to some extent, by increased sales of more expensive
higher horsepower equipment to support larger farms.
Beginning in the second half of 1995, the Brazilian agricultural
equipment market experienced a significant decline due to high farm debt levels
and the Brazilian Central Bank's suspension of all loans for agricultural
purposes under the FINAME loan program. Although the loan program has been
reinstated, the high farm debt levels have negatively impacted farm equipment
sales in 1996 and may impact results in 1997. In general, outside of North
America and Western Europe, continued general economic improvement, the
increasing affluence of the population in certain developing countries and the
increased availability of funding sources should positively support equipment
demand. As a result of these favorable market conditions, the Company's
production levels in 1997 are forecasted to be modestly higher than the prior
year.
Dealer Support and Supervision
The Company believes that one of the most important criteria affecting
a farmer's decision to purchase a particular brand of equipment is the quality
of the dealer who sells and services the equipment. The Company provides
significant support to its dealers in order to improve the quality and size of
its dealer network. The Company monitors each dealer's performance and
profitability as well as establishes programs which focuses on the continual
improvement of the dealer. In North America, the Company also identifies open
markets with the greatest potential for each brand and selects an existing AGCO
dealer, or a new dealer, who would best represent the brand in that territory.
AGCO protects each existing dealer's territory and will not place the same brand
within that protected area. Internationally, the Company also focuses on the
development of its dealers. The Company analyzes, on an ongoing basis, the
regions of each country where market share is not acceptable. Based on this
analysis, an additional dealer may be needed in that territory, or a
nonperforming dealer may need to be replaced or refocused on performance
standards.
The Company believes that its ability to offer its dealers a full
product line of agricultural equipment and related replacement parts as well as
its ongoing dealer training and support programs, which focus on business and
inventory management, sales, marketing, warranty and servicing matters and
products, help ensure the vitality and increase the competitiveness of its
dealer network. In addition, the Company maintains dealer advisory groups to
obtain dealer feedback on its operations. The Company believes all of these
programs contribute to the good relations the Company generally enjoys with its
dealers.
The Company agrees to provide dealers with competitive products, terms
and pricing. Dealers are also given volume sales incentives, demonstration
programs and other advertising to assist sales. The Company's competitive sales
programs, including retail financing incentives, and its policy for maintaining
parts and service availability with extensive product warranties are designed to
enhance its dealers' competitive position. Finally, a limited amount of
financial assistance is provided as part of developing new dealers in key market
locations. In general, dealer contracts are cancelable by either party within
certain notice periods.
WHOLESALE FINANCING
Primarily in the United States and Canada, the Company engages in the
standard industry practice of providing dealers with inventories of farm
equipment and replacement parts for extended periods. The terms of the Company's
finance agreements with its dealers vary by region and product line. In the
United States and Canada, dealers are typically not required to make a down
payment, and the Company effectively provides the dealer with the equipment
interest-free for a period of one to twelve months, depending on the product.
Thereafter, dealers are charged interest at varying spreads over the prime rate
until the product is sold. The Company also provides financing to dealers on
used equipment accepted in trade. The Company retains a security interest in all
new and used equipment it finances.
Typically, the sales terms outside the United States and Canada are of
a shorter duration. The sales terms range from 30 day terms to floorplan
financing similar to the arrangements provided to dealers in the United States
and Canada. In many cases, the Company retains a security interest in the
equipment sold on extended terms. In certain international markets, the
Company's
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sales are backed by letters of credit or credit insurance.
RETAIL FINANCING
Through the Agricredit Joint Venture in the United States and Canada
and its retail financing joint ventures located in the United Kingdom, France
and Germany, the Company provides a competitive and dedicated financing source
for AGCO dealers' sales of the Company's products as well as equipment produced
by other manufacturers. These retail finance companies are owned 49% by the
Company and 51% by a wholly-owned subsidiary of Rabobank. Finance programs can
be tailored to prevailing market conditions and can enhance the Company's sales
efforts.
MANUFACTURING AND SUPPLIERS
Manufacturing and Assembly
The Company has consolidated the manufacture of its products in
locations where capacity, technology, or local costs are optimized. Furthermore,
the Company continues to balance its manufacturing resources with externally
sourced machinery, components, and replacement parts to enable the Company to
better control inventory and supply of components. The Company believes that its
manufacturing facilities are sufficient to meet its needs for the foreseeable
future.
Western Europe
The Company's manufacturing operations in Western Europe are performed
in tractor manufacturing facilities located in Coventry, England and Beauvais,
France. The Coventry facility produces Massey Ferguson tractors ranging from 32
to 95 horsepower that are sold worldwide in fully-assembled form or as CKD kits
for final assembly by licensees and associates. The Beauvais facility produces
60 to 180 horsepower tractors sold in fully-assembled form. Consistent with the
Company's United States manufacturing operations, a significant number of
components, including engines and transaxles, are purchased from outside
suppliers. The Company formed a joint venture with Renault Agriculture S.A.
("Renault"), for the manufacture of driveline assemblies for high horsepower
AGCO and Renault tractors at the Company's facility in Beauvais (the "GIMA Joint
Venture"). By sharing overhead and engineering costs, the GIMA Joint Venture has
resulted in a decrease in the cost of these components. As a result of the Fendt
Acquisition, the Company acquired three facilities in Germany located in
Marktoberdorf, Baumenheim and Kempten where Fendt tractors and other products
are manufactured.
North America
The Company currently manufactures and assembles GLEANER combines,
combine heads and 125 to 215 horsepower AGCO Allis and White tractors at its
Independence, Missouri facility. A significant number of components for the
Company's AGCO Allis and White high horsepower tractors and GLEANER combine
products, including engines and transaxles, are manufactured by outside
suppliers. The Company currently leases a manufacturing facility in Coldwater,
Ohio, where it produces its White-New Idea line of hay tools and forage
equipment and implements, Black Machine planters, AGCOSTAR tractors, cultivating
and tillage equipment marketed under the Glencoe brand name and tillage
equipment and loaders marketed under the Farmhand brand name. The Company leases
a manufacturing facility in Lockney, Texas where it produces drill planters and
tillage equipment marketed under the Tye brand name. The Company's Hesston
product line of hay tools and forage equipment is manufactured in Hesston,
Kansas by HFI. The HFI partnership agreement provides for HFI to manufacture hay
tools and forage equipment for sale to the Company and Case at cost. By sharing
the facilities with Case, the Company is able to increase HFI's capacity
utilization and reduce the Company's product cost by sharing overhead and
product development costs. The Company also maintains a facility in Queretaro,
Mexico where tractors are assembled for distribution in the Mexican market.
South America
Through recent acquisitions, the Company has acquired manufacturing
facilities in Brazil and Argentina. In Brazil, the Company currently
manufactures and assembles Massey Ferguson tractors and industrial
loader-backhoes at its facility in Canoas, Rio Grande do Sul. The Company also
acquired a manufacturing facility in Santa Rosa, Rio Grande do Sul where it
produces conventional combines marketed under the Massey Ferguson and IDEAL
brand names. Additionally, the Company acquired three
8
<PAGE> 9
manufacturing facilities in Haedo, Araus and San Luis, Argentina. In 1997, the
Company began manufacturing tractors and engine components and assembling light
duty trucks in Haedo. The Company also manufactures combines in Araus and
assembles diesel engines and transaxles in San Luis.
Third-Party Suppliers
The Company believes that managing the level of its company and dealer
inventory is critical to maintaining favorable pricing for its products. Unlike
many of its competitors, the Company externally sources many of its products,
components and replacement parts. This strategy minimizes the Company's capital
investment requirements and allows greater flexibility to respond to changes in
market conditions. As a result of its limited vertical integration relative to
its competitors, the Company believes it is better able to manage company and
dealer inventory levels.
The Company purchases certain products it distributes from third party
suppliers. The Company purchases its AGCO Allis and White tractor lines ranging
from 40 to 130 horsepower and SAME tractors from S+L+H S.p.A., ("SLH"), an
Italian manufacturer. The Company also purchases standard and specialty tractors
from Landini S.p.A. ("Landini"). The Company distributes these tractors under
the Landini brand name in the United States and Canada and under the Massey
Ferguson brand name outside of North America. In addition, certain Massey
Ferguson tractor models are purchased from licensees in Poland and Turkey, and
Massey Ferguson compact tractors are purchased from Iseki & Company, Limited, a
Japanese manufacturer. The Massey Ferguson conventional combine, distributed in
Western Europe and the rest of the world, is manufactured by Dronningborg
Industries a/s, an associated company in which the Company has an ownership
interest, located in Randers, Denmark. The Company also purchases its Massey
Ferguson implements from various third-party suppliers.
In addition to the purchase of machinery, significant components used
in the Company's manufacturing operations, such as engines and axles, are
supplied by third-party companies. The Company selects third-party suppliers
which it believes have the lowest cost, highest quality and most appropriate
technology. The Company also assists in the development of these products or
component parts based upon its own design requirements. The Company's past
experience with outside suppliers has been favorable. Although the Company is
currently dependent upon outside suppliers for several of its products, the
Company believes that, if necessary, alternative sources of supply could be
found.
COMPETITION
The agricultural industry is highly competitive. During the 1980s, the
industry experienced significant consolidation and retrenchment. The Company
competes with several large national and international full-line suppliers, as
well as numerous short-line and specialty manufacturers with differing
manufacturing and marketing methods. The Company's principal competitors on a
worldwide basis are Deere & Company, Case and New Holland N.V. In certain
Western European and South American countries, regional competitors exist which
have significant market share in a single country or a group of countries.
The Company believes several key factors influence a buyer's choice of
farm equipment, including the strength and quality of a company's dealers, the
quality and pricing of products, dealer or brand loyalty, product availability,
the terms of financing and customer service. The Company has improved and
continually seeks to improve in each of these areas but focuses primarily on
increasing the farmers' loyalty to the Company's dealers and overall dealer
organizational quality in order to distinguish itself in the marketplace. See
"Marketing and Distribution."
ENGINEERING AND RESEARCH
The Company makes significant expenditures for engineering and applied
research to improve the quality and performance of its products and to develop
new products. The Company expended approximately $27.7 million (1.2% of net
sales), $24.1 million (1.2% of net sales) and $19.4 million (1.5% of net sales)
in 1996, 1995 and 1994, respectively, on engineering and research.
9
<PAGE> 10
PATENTS AND TRADEMARKS, TRADE NAMES AND BRAND NAMES
The Company owns and has licenses to the rights under a number of
domestic and foreign patents, trademarks, trade names and brand names relating
to its products and businesses. The Company defends its patent, trademark and
trade and brand name rights primarily by monitoring competitors' machines,
industry publications and conducting other investigative work. The Company
considers its intellectual property rights, including its rights to use the
AGCO, AGCO Allis, Massey Ferguson, GLEANER, White, Hesston, New Idea, SAME,
Landini, Black Machine, AGCOSTAR, Tye, Farmhand, Glencoe, Maxion, IDEAL, Western
Combine, PMI, Deutz (South America) and Fendt trade and brand names, important
in the operation of its businesses; however, the Company does not believe it is
dependent on any single patent, trademark or trade name or group of patents or
trademarks, trade names or brand names. AGCO, GLEANER, Hesston, Massey Ferguson,
AGCOSTAR, New Idea, Tye, Farmhand and Glencoe are registered trademarks of the
Company.
EMPLOYEES
As of December 31, 1996, the Company employed approximately 7,800
employees, including approximately 2,300 employees in the United States and
Canada. Approximately 500 employees at the Company's Independence, Missouri
facility are covered by a collective bargaining agreement which expires in May
2000. Approximately 600 employees at the Company's Coldwater, Ohio facility are
covered by a collective bargaining agreement which expires in April 1998. In
Western Europe, the Company's manufacturing employees are generally represented
by unions. Approximately 1,300 employees are covered under a collective
bargaining agreement in the United Kingdom which expires in March 1998. In
addition, approximately 650 employees are covered under a collective bargaining
agreement in France which expired in December 1996. The Company is currently in
negotiation with the unions in France relating to the terms of new agreements.
In South America, the Company's manufacturing employees are also generally
represented by unions. As a result of the Fendt Acquisition, the Company's
manufacturing employees in Germany are also generally represented by unions.
ENVIRONMENTAL MATTERS AND OTHER GOVERNMENT REGULATION
The Company is subject to environmental laws and regulations concerning
emissions to the air, discharges of processed or other types of waste water and
the generation, handling, storage, transportation, treatment and disposal of
waste materials. These laws and regulations are constantly changing, and it is
impossible to predict with accuracy the effect they may have on the Company in
the future. The Company has been made aware of possible solvent contamination at
the HFI facility in Hesston, Kansas. The extent of any possible contamination is
being investigated in conjunction with the appropriate state authorities. It is
the Company's policy to comply with all applicable environmental, health and
safety laws and regulations, and the Company believes that any expense or
liability it may incur in connection with any noncompliance with any such law or
regulation or the cleanup of any of its properties will not have a material
adverse effect on the Company. The Company believes it is in compliance, in all
material respects, with all applicable laws and regulations.
The Environmental Protection Agency (the "EPA") has issued regulations
concerning permissible emissions from off-road engines. The Company does not
anticipate that the cost of compliance with the regulations will have a material
impact on the Company.
The Company is subject to various national, federal, state and local
laws affecting its business, as well as a variety of regulations relating to
such matters as working conditions and product safety. A variety of state laws
regulate the Company's contractual relationships with its dealers. These laws
impose substantive standards on the relationship between the Company and its
dealers, including events of default, grounds for termination, non-renewal of
dealer contracts and equipment repurchase requirements. Such state laws could
adversely affect the ability of the Company to rationalize its dealer network on
a timely basis.
The Company's international operations are also subject to
environmental laws, as well as various other national and local laws, in the
countries in which it manufactures and sells it products. The Company believes
that it is in compliance with such laws in all material respects, and the cost
of compliance with such laws in the future will not have a material adverse
effect on the Company.
10
<PAGE> 11
REGULATION AND GOVERNMENT POLICY
Domestic and foreign political developments and government regulations
and policies directly affect the agricultural industry in the United States and
abroad and indirectly affect the agricultural equipment business. The
application or modification of existing laws, regulations or policies or the
adoption of new laws, regulations or policies could have an adverse effect on
the Company's business.
The North American Free Trade Agreement ("NAFTA") and the General
Agreement on Tariffs and Trade ("GATT"), in particular, may affect worldwide
agricultural markets. The United States, Canada and Mexico have implemented
NAFTA which reduces internal trade restrictions between the three countries.
Import duties were eliminated for some products on January 1, 1994, while duties
for other economically and politically sensitive commodities and products will
be gradually eliminated over a 15-year period. The Uruguay Round of GATT
concluded in 1994. This agreement promised to reduce agricultural export
subsidies over a period of years beginning in 1995 and grants access for many
products that were previously restricted. The next round of GATT negotiations
are scheduled to occur in 1999. The Company cannot predict with certainty the
effect which existing and future trade agreements may have on the Company's
operations.
FINANCIAL INFORMATION ON GEOGRAPHICAL AREAS
For financial information on geographic areas, see page 49 of the
Annual Report to Stockholders for the year ended December 31, 1996, which is
incorporated herein by reference.
11
<PAGE> 12
Item 2. PROPERTIES
The principal properties of the Company as of December 31, 1996 are as
follows:
<TABLE>
<CAPTION>
LEASED OWNED
LOCATION DESCRIPTION OF PROPERTY (SQ. FT.) (SQ. FT.)
- -------- ----------------------- --------- ---------
<S> <C> <C> <C>
North America:
Duluth, Georgia ............................. Corporate Office 47,000
Coldwater, Ohio (A).......................... Manufacturing 1,490,000
Hesston, Kansas (B).......................... Manufacturing 1,115,000
Independence, Missouri ...................... Manufacturing 450,000
Lockney, Texas............................... Manufacturing 190,000
Queretaro, Mexico............................ Manufacturing 13,500
Batavia, Illinois............................ Parts Distribution 309,000
Des Moines, Iowa (C)......................... Retail Finance Office 23,850
Kansas City, Missouri ....................... Warehouse 425,000
International:
Coventry, United Kingdom..................... Corporate Office/Manufacturing 4,135,150
Stoneleigh, United Kingdom................... Training Facility/Office 56,400
Beauvais, France............................. Manufacturing 3,724,000
Haedo, Argentina............................. Manufacturing 500,170
Araus, Argentina............................. Manufacturing 156,170
San Luis, Argentina.......................... Manufacturing 57,860
Canoas, Rio Grande do Sul, Brazil............ Manufacturing 430,900
Santa Rosa, Rio Grande do Sul, Brazil........ Manufacturing 297,100
Athis, France................................ Warehouse 229,817
Ennery, France............................... Warehouse 269,100
Tottenham, Victoria Australia................ Warehouse/Parts Distribution 179,960
</TABLE>
- --------------
(A) In conjunction with the White-New Idea Acquisition in December 1993,
the Company agreed to purchase the Coldwater, Ohio manufacturing
facility from Allied subject to satisfactory completion of an
environmental audit. During 1995, the Company entered into an agreement
with Allied to lease the Coldwater, Ohio facility for a period of up to
five years. During this time, Allied is responsible for the
environmental clean-up of the facility, including all costs associated
with the clean-up. Upon successful completion of the environmental
clean-up, the Company will acquire the Coldwater, Ohio facility for the
original agreed upon amount of $3.2 million.
(B) Owned by HFI, a joint venture in which the Company has a 50% interest.
(C) Owned by the Agricredit Joint Venture, in which the Company has a 49%
interest.
The Company considers each of its facilities to be in good condition and
adequate for its present use. The Company believes that it has sufficient
capacity to meet its current and anticipated manufacturing requirements.
12
<PAGE> 13
Item 3. LEGAL PROCEEDINGS
The Company is a party to various legal claims and actions incidental
to its business. The Company believes that none of these claims or actions,
either individually or in the aggregate, is material to the business or
financial condition of the Company.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The dividend and market price information under the heading "Trading
and Dividend Information" on page 19 of the Annual Report to Stockholders for
the year ended December 31, 1996 is incorporated herein by reference.
Item. 6. SELECTED FINANCIAL DATA
The information under the heading "Selected Financial Data" for the
years ended December 31, 1992 through 1996 on page 19 of the Annual Report to
Stockholders for the year ended December 31, 1996 is incorporated herein by
reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information under the heading "Management's Discussion and Analysis
of Financial Condition and Results of Operations" on pages 20 through 27 of the
Annual Report to Stockholders for the year ended December 31, 1996 is
incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements of the Registrant and its
subsidiaries included on pages 28 through 50 of the Annual Report to
Stockholders for the year ended December 31, 1996 are incorporated herein by
reference:
Consolidated Statements of Income for the years ended December 31,
1996, 1995 and 1994.
Consolidated Balance Sheets as of December 31, 1996 and 1995.
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1996, 1995 and 1994.
Consolidated Statements of Cash Flows for the years ended December 31,
1996, 1995 and 1994.
Notes to Consolidated Financial Statements.
Report of Independent Public Accountants.
The information under the heading "Quarterly Results" on pages 24 and
25 of the Annual Report to Stockholders for the year ended December 31, 1996 is
incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not Applicable.
13
<PAGE> 14
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
The information under the heading "Election of Directors" and the
information under the heading "Directors Continuing in Office" on page 2 and 3,
respectively, of the Proxy Statement for the Annual Meeting of Stockholders to
be held April 23, 1997 is incorporated herein by reference for information on
the directors of the Registrant. The information under the heading "Executive
Officers" on pages 26 through 28 of the Proxy Statement for the Annual Meeting
of Stockholders to be held April 23, 1997 is incorporated herein by reference
for information on the executive officers of the Registrant. The information
under the heading "Section 16(a) Beneficial Ownership Reporting Compliance" on
pages 28 through 29 of the Proxy Statement for the Annual Meeting of
Stockholders to be held April 23, 1997 is incorporated herein by reference.
Item 11. EXECUTIVE COMPENSATION
The information under the heading "Board of Directors and Certain
Committees of the Board," the information under the heading "Compensation
Committee Interlocks and Insider Participation" and the information under the
heading "Executive Compensation" on pages 3 through 5, page 5 and pages 18
through 20, respectively, of the Proxy Statement for the Annual Meeting of
Stockholders to be held April 23, 1997 are incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the heading "Principal Holders of Common Stock"
on pages 16 through 18 of the Proxy Statement for the Annual Meeting of
Stockholders to be held April 23, 1997 is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the heading "Certain Relationships and Related
Transactions" on page 28 of the Proxy Statement for the Annual Meeting of
Stockholders to be held April 23, 1997 is incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. The following consolidated financial statements of AGCO
Corporation and its subsidiaries, included in the Annual Report of
the registrant to its stockholders for the year ended December 31,
1996, are incorporated by reference in Part II, Item 8:
Consolidated Statements of Income for the years ended December 31,
1996, 1995 and 1994.
Consolidated Balance Sheets at December 31, 1996 and 1995.
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1996, 1995 and 1994.
Consolidated Statements of Cash Flows for the years ended December
31, 1996, 1995 and 1994.
Notes to Consolidated Financial Statements.
Report of Independent Public Accountants.
14
<PAGE> 15
(a) 2. The following Report of Independent Public Accountants and
the Consolidated Financial Statement Schedule of AGCO
Corporation and its subsidiaries are included herein on pages
F-1 through F-2.
Schedule Description
Report of Independent Public Accountants on Schedule
Schedule II Valuation and Qualifying Accounts
Schedules other than that listed above have been omitted
because the required information is contained in the Notes to
the Consolidated Financial Statements or because such
schedules are not required or are not applicable.
(a) 3. The following exhibits are filed or incorporated by reference as
part of this report.
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
3.1 Certificate of Incorporation of the Registrant incorporated by
reference to the Company's Quarterly Report Form 10-Q for the
quarter ended March 31, 1996.
3.2 By-Laws of the Registrant.
4.1 Rights Agreement between and among AGCO Corporation and
Chemical Bank, as rights agent, dated as of April 27, 1994
incorporated by reference to the Company's quarterly report on
Form 10-Q for the quarter ended March 31, 1994.
4.2 Certificate of Designation of the Junior Cumulative Preferred
Stock of the Company incorporated by reference to the
Company's quarterly report on Form 10-Q for the quarter ended
March 31, 1994.
4.4 Indenture between AGCO Corporation and SunTrust Bank, as
Trustee, dated as of March 20, 1996, incorporated by reference
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
10.1 HFI Partnership Agreement incorporated by reference to the
Company's Registration Statement on Form S-1 (No. 33-43437)
dated April 16, 1992.
10.2 Joint Venture Agreement between Massey Ferguson S.A., Renault
Agriculture S.A. and Massey Ferguson Group Limited dated July
20, 1994 incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1994.
10.3 Massey Ferguson Finance France SNC Agreement among and between
Massey Ferguson S.A. and DeLage Landen Leasing S.A. dated
September 15, 1992 incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31,
1994.
10.4 Shareholders Agreement in respect of Massey Ferguson Finance
Limited among and between Massey Ferguson Limited, DeLage
Landen Financial Services Limited and DeLage Landen B.V. dated
June 19, 1990 incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31,
1994.
10.5 Shareholders Agreement dated February 15, 1995 between Massey
Ferguson GmbH and DeLage Landen Leasing GmbH.
10.6 S+L+H Agreement incorporated by reference to the Company's
Registration Statement on Form S-1 (No. 33- 43437) dated April
16, 1992.
10.7 S+L+H Distribution Agreement incorporated by reference to the
Company's Registration Statement on Form S-1 (No. 33-43437)
dated April 16, 1992.
10.8 Tractor Distributor Agreement by and between Landini S.p.A.
and AGCO Corporation dated February 1, 1995 incorporated by
reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 1994.
10.9 Deferred Compensation Plan incorporated by reference to the
Company's Registration Statement on Form S-1
</TABLE>
15
<PAGE> 16
<TABLE>
<S> <C>
(No. 33-43437) dated April 16, 1992.
10.10 Stock Option Plan incorporated to the Company's Registration
Statement on Form S-1 (No. 33-43437) dated April 16, 1992.
10.11 Form of Stock Option Agreements (Statutory and Nonstatutory)
incorporated by reference to the Company's Registration
Statement on Form S-1 (No. 33-43437) dated April 16, 1992.
10.12 Amendment to the 1991 Stock Option Plan incorporated by
reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 1992.
10.13 Amended and Restated Long-Term Incentive Plan incorporated by
reference to the Company's Proxy Statement relating to the
1996 Annual Meeting.
10.14 Nonemployee Director Stock Incentive Plan incorporated by
reference to the Company's Proxy Statement relating to the
1995 Annual Meeting.
10.15 Management Incentive Compensation Plan incorporated by
reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 1995.
10.16 Purchase and Sale Agreement between and among AGCO Corporation
and Varity Holdings Limited, Varity GmbH, Massey Ferguson
GmbH, Massey Ferguson Industries Limited, Massey Ferguson
(Delaware) Inc. and Varity Corporation dated as of April 26,
1994 incorporated by reference to the Company's quarterly
report on Form 10-Q for the quarter ended March 31, 1994.
10.17 Credit Agreement dated as of January 14, 1997 among AGCO
Corporation, AGCO Canada, Ltd., Massey Ferguson Manufacturing
Limited, Massey Ferguson Limited, AGCO Limited, Massey
Ferguson S.A., AGCO Holding B.V., and Massey Ferguson GmbH,
the lenders listed on the signatures pages thereof;
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
"Rabobank Nederland", New York Branch ("Rabobank"), SunTrust
Bank Atlanta, and Deutsche Bank AG, New York Branch, as
Co-Managers; Deutsche Bank Canada, as Canadian administrative
agent, and Rabobank, as administrative agent for the lenders,
as amended by the parties thereto on February 24, 1997.
10.18 Limited Liability Company Agreement of Agricredit Acceptance
LLC dated November 1, 1996.
10.19 Agreement dated June 27, 1996 by and between Iochpe-Maxion
S.A. and AGCO Corporation incorporated by reference to the
Company's current report on Form 8-K dated June 28, 1996.
10.20 Engine Supply Agreement dated June 27, 1996 by and between
Iochpe-Maxion S.A. and AGCO Corporation incorporated by
reference to the Company's current report on Form 8-K dated
June 28, 1996.
10.21 Employment and Severance Agreement by and between AGCO
Corporation and Robert J. Ratliff incorporated by reference to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
10.22 Employment and Severance Agreement by and between AGCO
Corporation and J-P Richard.
10.23 Employment and Severance Agreement by and between AGCO
Corporation and John M. Shumejda incorporated by reference to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
10.24 Employment and Severance Agreement by and between AGCO
Corporation and James M. Seaver incorporated by reference to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
10.25 Employment and Severance Agreement by and between AGCO
Corporation and Daniel H. Hazelton incorporated by reference
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
</TABLE>
16
<PAGE> 17
<TABLE>
<S> <C>
11.0 Statement re: Computation of Per Share Earnings.
12.0 Statement re: Computation of Earnings to Combined Fixed
Charges.
13.0 Portions of the AGCO Corporation Annual Report to
Stockholders for the year ended December 31, 1996 expressly
incorporated herein by reference.
21.0 Subsidiaries of the Registrant.
23.0 Consent of Arthur Andersen LLP, independent public
accountants.
27.1 Financial Data Schedule (filed for SEC reporting purposes
only)
</TABLE>
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K dated November 1, 1996
disclosing the sale of a 51% interest in Agricredit Acceptance Company,
the Company's wholly-owned retail finance subsidiary in North America,
to a wholly-owned subsidiary of Cooperatieve Raiffeisen-Boerenleenbank
B.A., "Rabobank Nederland" (together, "Rabobank").
17
<PAGE> 18
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.
AGCO Corporation
By: /s/ J-P Richard
------------------------------
J-P Richard
President and
Chief Executive Officer
and Director
Dated: March 28, 1997
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 in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Ratliff Chairman of the Board March 28, 1997
- -------------------------------
Robert J. Ratliff
/s/ J-P Richard President and Chief Executive Officer March 28,1997
- ------------------------------- and Director
J-P Richard (Principal Executive Officer)
/s/ Chris E. Perkins Vice President and Chief Financial March 28, 1997
- ------------------------------- Officer (Principal Financial Officer and
Chris E. Perkins Principal Accounting Officer)
/s/ Henry J. Claycamp Director March 28, 1997
- -------------------------------
Henry J. Claycamp
/s/ William H. Fike Director March 28, 1997
- -------------------------------
William H. Fike
/s/ Gerald B. Johanneson Director March 28, 1997
- -------------------------------
Gerald B. Johanneson
/s/ Richard P. Johnston Director March 28, 1997
- -------------------------------
Richard P. Johnston
/s/ J. Patrick Kaine Director March 28, 1997
- -------------------------------
J. Patrick Kaine
/s/ Alan S. McDowell Director March 28, 1997
- -------------------------------
Alan S. McDowell
Director March 28, 1997
- -------------------------------
Charles S. Mechem, Jr.
/s/ Hamilton Robinson, Jr. Director March 28, 1997
- -------------------------------
Hamilton Robinson, Jr.
</TABLE>
18
<PAGE> 19
ANNUAL REPORT ON FORM 10-K
ITEM 14(A)(2)
FINANCIAL STATEMENT SCHEDULE
YEAR ENDED DECEMBER 31, 1996
<PAGE> 20
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and
Stockholders of AGCO Corporation:
We have audited in accordance with generally accepted auditing standards, the
consolidated balance sheets of AGCO CORPORATION and SUBSIDIARIES as of December
31, 1996 and 1995 and the related consolidated statements of income,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1996, and have issued our report thereon dated February 5,
1997. Our audit was made for the purpose of forming an opinion on those
statements taken as a whole. The accompanying Schedule II-Valuation and
Qualifying Accounts is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 5, 1997
F-1
<PAGE> 21
SCHEDULE II
AGCO CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
----------------------
CHARGED CHARGED
BALANCE AT TO COSTS (CREDITED) BALANCE
BEGINNING ACQUIRED AND TO OTHER AT END
DESCRIPTION OF PERIOD BUSINESSES EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
----------- ---------- ---------- -------- ---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Allowances for doubtful receivables:
Equipment Operations .......................... $ 62,547 $ 3,325 $ 91,459 $ -- $(81,505) $ 75,826
======== ======== ======== ====== ======== ========
YEAR ENDED DECEMBER 31, 1995
Allowances for doubtful receivables:
Equipment Operations .......................... $ 60,064 $ 2,244 $ 83,970 $ -- $(83,731) $ 62,547
-------- -------- -------- ------ -------- --------
Finance Company ............................... 10,042 -- 4,279 -- (1,507) 12,814
-------- -------- -------- ------ -------- --------
Consolidated receivable allowances .......... $ 70,106 $ 2,244 $ 88,249 $ -- $(85,238) $ 75,361
======== ======== ======== ====== ======== ========
YEAR ENDED DECEMBER 31, 1994
Allowances for doubtful receivables:
Equipment Operations .......................... $ 41,327 $ 18,102 $ 66,863 $ -- $(66,228) $ 60,064
-------- -------- -------- ------ -------- --------
Finance Company ............................... -- 8,709 4,691 -- (3,358) 10,042
-------- -------- -------- ------ -------- --------
Consolidated receivable allowances .......... $ 41,327 $ 26,811 $ 71,554 $ -- $(69,586) $ 70,106
======== ======== ======== ====== ======== ========
</TABLE>
F-2
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ------------
<S> <C> <C>
3.1 Certificate of Incorporation of Registrant. *
3.2 By-Laws of the Registrant. -
4.1 Rights Agreement between and among AGCO Corporation and Chemical Bank. *
4.2 Certificate of Designation of the Junior Cumulative Preferred Stock of the Company. *
4.4 Indenture between AGCO Corporation and SunTrust Bank, as Trustee. *
10.1 HFI Partnership Agreement. *
10.2 Joint Venture Agreement between Massey Ferguson S.A., Renault Agriculture S.A. *
and Massey Ferguson Group Limited.
10.3 Massey Ferguson Finance France SNC Agreement among and between Massey Ferguson S.A. *
and DeLage Landen Leasing S.A.
10.4 Shareholders Agreement in respect of Massey Ferguson Finance Limited among and between Massey *
Ferguson Limited, DeLage Landen Financial Services Limited and DeLage Landen B.V.
10.5 Shareholders Agreement between Massey Ferguson GmbH and DeLage Landen Leasing GmbH. -
10.6 S+L+H Agreement. *
10.7 S+L+H Distribution Agreement. *
10.8 Tractor Distributor Agreement by and between Landini S.p.A. and AGCO Corporation. *
10.9 Deferred Compensation Plan. *
10.10 Stock Option Plan. *
10.11 Form of Stock Option Agreements (Statutory and Nonstatutory). *
10.12 Amendment to the 1991 Stock Option Plan. *
10.13 Amended and Restated Long-Term Incentive Plan. *
10.14 Nonemployee Director Stock Incentive Plan *
10.15 Management Incentive Compensation Plan. *
10.16 Purchase and Sale Agreement between and among AGCO Corporation and Varity Holdings *
Limited, Varity GmbH, Massey Ferguson GmbH, Massey Ferguson Industries Limited, Massey
Ferguson (Delaware) Inc. and Varity Corporation.
10.17 Credit Agreement dated as of January 14, 1997, among AGCO Corporation, AGCO Canada, Ltd., -
Massey Ferguson Manufacturing Limited, Massey Ferguson Limited, AGCO Limited, Massey
Ferguson S.A., AGCO Holding B.V., Massey Ferguson GmbH and the lenders listed on the
signature pages thereof, Cooperatieve Centrale Raiffesen - Boerenleenbank B.A., "RABOBANK
NEDERLAND", New York Branch ("Rabobank"),SunTrust Bank, Atlanta, and Deutsche Bank AG,
New York Branch, as Co-Managers; Deutsche Bank Canada, as Canadian Administrative
Agent and Rabobank, as Administrative Agent for the lenders, as amended by the parties thereto
on February 24, 1997.
10.18 Limited Liability Company Agreement of Agricredit Acceptance LLC -
10.19 Agreement dated June 27, 1996 by and between Iochpe-Maxion S.A. and AGCO Corporation *
10.20 Engine Supply Agreement dated June 27, 1996 by and between Iochpe-Maxion S.A. and AGCO *
Corporation
10.21 Employment and Severance Agreement by and between AGCO Corporation and Robert J. Ratliff. *
10.22 Employment and Severance Agreement by and between AGCO Corporation and J-P Richard. -
10.23 Employment and Severance Agreement by and between AGCO Corporation and John M. Shumejda. *
10.24 Employment and Severance Agreement by and between AGCO Corporation and James M. Seaver. *
10.25 Employment and Severance Agreement by and between AGCO Corporation and Daniel H. Hazelton. *
11.0 Statement re: Computation of Per Share Earnings. -
12.0 Statement re: Computation of Earnings to Combined Fixed Charges. -
13.0 Portions of AGCO Corporation Annual Report to Stockholders for the year ended December 31, 1996. -
21.0 Subsidiaries of the Registrant. -
23.0 Consent of Arthur Andersen LLP, independent public accountants. -
27.1 Financial Data Schedule -
</TABLE>
- ----------------------------
* Incorporated herein by reference
<PAGE> 1
EXHIBIT 3.2
BY-LAWS
OF
AGCO CORPORATION
ARTICLE I
STOCKHOLDERS MEETINGS
1. PLACES OF MEETINGS. All meetings of stockholders shall be held at
such place or places in or outside of Delaware as the board of directors may
from time to time determine or as may be designated in the notice of meeting or
waiver of notice thereof, subject to any provisions of the laws of Delaware.
2. ANNUAL MEETINGS. Unless otherwise determined from time to time by
the board of directors, the annual meeting of stockholders shall be held each
year for the election of directors and the transaction of such other business as
may properly come before the meeting on the first Monday in the fourth month
following the close of the fiscal year commencing at some time between 10 A.M.
and 3 P.M., if not a legal holiday and if a legal holiday, then on the day
following at the same time. If the annual meeting is not held on the date
designated, it may be held as soon thereafter as convenient and shall be called
the annual meeting. Written notice of the time and place of the annual meeting
shall be given by mail to each stockholder entitled to vote at his address as it
appears on the records of the corporation not less than the minimum nor more
than the maximum number of days permitted under the laws of Delaware prior to
the scheduled date thereof, unless such notice is waived as provided by Article
VIII of these By-Laws.
3. SPECIAL MEETINGS. A special meeting of stockholders may be called at
any time by order of the board of directors or the executive committee. Written
notice of the time, place and specific purposes of such meetings shall be given
by mail to each stockholder entitled to vote thereat at his address as it
appears on
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the records of the corporation not less than the minimum nor more than the
maximum number of days prior to the scheduled date thereof permitted under the
laws of Delaware, unless such notice is waived as provided in Article VIII of
these By-Laws.
4. MEETINGS WITHOUT NOTICE. Meetings of the stockholders may be held at
any time without notice when all the stockholders entitled to vote thereat are
present in person or by proxy.
5. VOTING. At all meetings of stockholders, each stockholder entitled
to vote on the record date as determined under Article V, Section 3 of these
By-Laws or if not so determined as prescribed under the laws of Delaware shall
be entitled to one vote for each share of stock standing on record in his name,
subject to any restrictions or qualifications set forth in the certificate of
incorporation or any amendment thereto.
6. QUORUM. At any stockholders' meeting, a majority of the number of
shares of stock outstanding and entitled to vote thereat present in person or by
proxy shall constitute a quorum but a smaller interest may adjourn any meeting
from time to time, and the meeting may be held as adjourned without further
notice, subject to such limitation as may be imposed under the laws of Delaware.
When a quorum is present at any meeting, a majority of the number of shares of
stock entitled to vote present thereat shall decide any question brought before
such meeting unless the question is one upon which a different vote is required
by express provision of the laws of Delaware, the certificate of incorporation
or these By-Laws, in which case such express provisions shall govern.
7. LIST OF STOCKHOLDERS. At least ten days before every meeting, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of and the number of shares
registered in the name of each stockholder, shall be prepared by the secretary
or the transfer agent in charge of the stock ledger of the corporation. Such
list shall be open for examination by any stockholder as required by the laws of
Delaware. The stock ledger shall be the only evidence as to who are the
stockholders entitled to
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examine such list or the books of the corporation or to vote in person or by
proxy at such meeting.
8. NO ACTION IN WRITING. Any action required or permitted to be taken
by the stockholders of the Corporation must be effected at an annual or special
meeting of stockholders of the Corporation and may not be effected by any
consent in writing by such stockholders.
9. NOTICE OF BUSINESS. No business may be transacted at any meeting of
stockholders, whether annual or special, other than business that is
either (a) specified in the notice of meeting (or any supplement thereto) given
by or at the direction of the board of directors (or any duly authorized
committee thereof), (b) otherwise properly brought before the meeting by or at
the direction of the board of directors (or any duly authorized committee
thereof) or (c) otherwise properly brought before the meeting by any stockholder
of the Corporation (i) who is a stockholder of record on the date of the giving
of the notice provided for in this Section 9 of this Article I and on the record
date for the determination of stockholders entitled to vote at such meeting and
(ii) who complies with the notice procedures set forth in Section 9 of this
Article I. The nomination by a stockholder of any person for election as a
director, other than the persons nominated by the board of directors or any duly
authorized committee thereof, shall be considered business other than business
specified in clauses (a) and (b) above and shall be permitted only upon
compliance with the requirements of this Section 9 of this Article I.
In addition to any other applicable requirements for business
to be properly brought before a meeting by a stockholder, such stockholder must
have given timely notice thereof in proper written form to the Secretary of the
Corporation.
In the case of a meeting of stockholders which is an annual
meeting, to be timely, a stockholder's notice to the secretary must be delivered
to or mailed and received at the principal executive offices of the Corporation
not less than sixty (60) days nor more than ninety (90) days prior to the
anniversary date of the immediately preceding annual meeting of stockholders;
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provided, however, that in the event that the annual meeting is called for a
date that is not within thirty (30) days before or after such anniversary date,
notice by the stockholder in order to be timely must be so received not later
than the close of business on the tenth (10th) day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure of the date of the annual meeting was made, whichever first occurs.
In the case of a meeting of stockholders which is not an annual meeting, to be
timely, a stockholder's notice to the secretary must be delivered to or mailed
and received at the principal executive offices of the Corporation not less
than sixty (60) days nor more than ninety (90) days prior to the meeting;
provided, however, that in the event that less than forty-five (45) days' notice
or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder in order to be timely must be so
received not later than the close of business on the tenth (10) day following
the day on which such notice of the date of the meeting was mailed or such
public disclosure was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the
secretary must be set forth as to each matter such stockholder proposes to bring
before the meeting (i) a brief description of the business described to be
brought before the meeting and the reasons for conducting such business at the
meeting, (ii) the name and record address of such stockholder, (iii) the class
or series and number of shares of capital stock of the Corporation which are
owned beneficially or of record by such stockholder, (iv) a description of all
arrangements or understandings between such stockholder and any other person or
persons (including their names) in connection with the proposal of such business
by such stockholder and any material interest of such stockholder in such
business, (v) a representation that such stockholder intends to appear in person
or by proxy at the meeting to bring such business before the meeting, and (vi)
in the case of the nomination of a person as a director, a brief description of
the background and credentials of such person including (A) the name, age,
business address and residence address of such person, (B) the principal
occupation or employment of such person, (C) the class and number of shares of
the Corporation which are beneficially owned by such person,
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and (D) any other information relating to such person that is required to be
disclosed in solicitations of proxies for election of Directors, or as otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (including without limitation such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected).
No business shall be conducted at a meeting of stockholders
except business brought before such meeting in accordance with the procedures
set forth in this Section 9 of this Article I, provided, however, that, once
business has been properly brought before a meeting in accordance with such
procedures, nothing in this Section 9 of this Article I shall be deemed to
preclude discussion by any stockholder of any such business. If the chairman of
a meeting determines that business was not properly brought before the meeting
in accordance with the foregoing procedures, the chairman shall declare to the
meeting that the business was not properly brought before the meeting and such
business shall not be transacted.
ARTICLE II
BOARD OF DIRECTORS
1. NUMBER AND ELECTION OF DIRECTORS. The business and affairs of the
Corporation shall be managed by or under the direction of a Board of Directors
consisting of not less than three nor more than 13 directors, the exact number
of directors to be determined from time to time by resolution adopted by the
affirmative vote of a majority of the directors then in office. The directors
shall be divided into three classes, designated Class I, Class II and Class III.
Each class shall consist, as nearly as may be possible, of one-third of the
total number of directors constituting the entire Board of Directors.
Immediately following the adoption by the Corporation of this by-law, a majority
of the Board of Directors shall elect Class I directors for a one-year term,
Class II directors for a two-year term and Class III directors for a three-year
term. At the next ensuing annual meeting of stockholders (the "First Meeting"),
the term of office of the Class I
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directors shall expire and successors to the Class I directors shall be elected
for a three-year term. At the next ensuing annual meeting of stockholders held
after the First Meeting (the "Second Meeting"), the term of office of the Class
II directors shall expire and successors to the Class II directors shall be
elected for a three-year term. At the next ensuing annual meeting of
stockholders held after the Second Meeting, the term of office of the Class III
directors shall expire and successors to the Class III directors shall be
elected for a three-year term. Thereafter, at each annual meeting of
stockholders, successors to the class of directors whose term expires at that
annual meeting shall be elected for a three-year term. If the number of
directors is changed, any increase or decrease shall be apportioned among the
classes so as to maintain the number of directors in each class as nearly equal
as possible, but in no case shall a decrease in the number of directors shorten
the term of any incumbent director. A director shall hold office until the
annual meeting for the year in which his term expires and until his successor
shall be elected and shall qualify, subject, however, to prior death,
resignation, retirement, disqualification or removal from office.
Notwithstanding the foregoing, whenever the holders of any one
or more classes or series of preferred stock issued by the Corporation, if any,
shall have the right, voting separately by class or series, to elect directors
at an annual or special meeting of stockholders, the election, term of office,
filling of vacancies and other features of such directorships shall be governed
by the terms of the Restated Certificate of Incorporation applicable thereto,
and such directors so elected shall not be divided into classes pursuant to this
Section 1 of this Article III unless expressly provided by such terms.
2. POWERS. The business and affairs of the Corporation shall be carried
on by or under the direction of the board of directors, which shall have all the
powers authorized by the laws of Delaware, subject to such limitations as may be
provided by the certificate of incorporation or these By-Laws.
3. COMPENSATION. The board of directors may from time to time by
resolution authorize the payment of fees or other compensation to the directors
for services
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as such to the corporation, including, but not limited to, fees for attendance
at all meetings of the board or of the executive or other committees, and
determine the amount of such fees and compensation. Directors shall in any event
be paid their traveling expenses for attendance at all meetings of the board or
of the executive or other committees. Nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor in amounts authorized or otherwise
approved from time to time by the board or the executive committee.
4. MEETINGS AND QUORUM. Meetings of the board of directors may be held
either in or outside of Delaware. A quorum shall be one-third the then
authorized total number of directors, but not less than two directors. A
director will be considered present at a meeting, even though not physically
present, to the extent and in the manner authorized by the laws of Delaware.
The board of directors elected at any annual stockholders' meeting
shall, at the close of that meeting without further notice if a quorum of
directors be then present or as soon thereafter as may be convenient, hold a
meeting for the election of officers and the transaction of any other business.
At such meeting they shall elect a president, a secretary and a treasurer, and
such other officers as they may deem proper, none of whom except the chairman of
the board, if elected, need be members of the board of directors.
The board of directors may from time to time provide for the holding of
regular meetings with or without notice and may fix the times and places at
which such meetings are to be held. Meetings other than regular meetings may be
called at any time by the president or the chairman of the board and must be
called by the president or by the secretary or an assistant secretary upon the
request of any director.
Notice of each meeting, other than a regular meeting (unless required
by the board of directors), shall be given to each director by mailing the same
to each director at his residence or business address at least two days before
the meeting or by delivering the same to him personally or by telephone or
telegraph to
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him at least one day before the meeting unless, in case of exigency, the
chairman of the board, the president or secretary shall prescribe a shorter
notice to be given personally or by telephone, telegraph, cable or wireless to
all or any one or more of the directors at their respective residences or places
of business.
Notice of any meeting shall state the time and place of such meeting,
but need not state the purpose thereof unless otherwise required by the laws of
Delaware, the certificate of incorporation, the By-Laws, or the board of
directors.
5. EXECUTIVE COMMITTEE. The board of directors may by resolution passed
by a majority of the whole board provide for an executive committee of two or
more directors and shall elect the members thereof to serve during the pleasure
of the board and may designate one of such members to act as chairman. The board
may at any time change the membership of the committee, fill vacancies in it,
designate alternate members to replace any absent or disqualified members at any
meeting of the committee, or dissolve it.
During the intervals between the meetings of the board of
directors, the executive committee shall perform all the powers of the Board
except as limited by the General Corporation Law of the State of Delaware or by
the Company's Certificate of Incorporation or By-Laws.
The executive committee may determine its rules of procedure
and the notice to be given of its meetings, and it may appoint such committees
and assistants as it shall from time to time deem necessary. A majority of the
members of the committee shall constitute a quorum.
6. AUDIT COMMITTEE. The functions of the audit committee shall be to
meet with external auditors to discuss the current year audit plan; meet with
external auditors to discuss the results of the audit and their opinion
regarding the fairness of the annual financial statements; review audit fees and
fees for management advisory services; meet with management to discuss the
internal audit plan and current staffing; meet with management, internal and
external auditors to discuss the auditor's "management letter" and
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management's response; and meet with management and the internal auditors to
discuss the corporate control environment and regulatory compliance. The audit
committee is hereby authorized to perform such functions. The audit committee
shall meet once before the external audit begins and again near the completion
date with meetings at other times as appropriate.
7. COMPENSATION COMMITTEE. The functions of the compensation committee
shall be to review, approve, recommend and report to the chief executive officer
and the board matters specifically relative to the compensation of the Company's
chief executive officer and other key executives and administration of the
Company's 1991 Stock Option Plan and Management Incentive Compensation Plan, and
the compensation committee is hereby authorized to perform such functions.
8. NOMINATING COMMITTEE. The function of the nominating committee shall
be to identify candidates and recommend to the board nominees for membership on
the board of directors, and the nominating committee is hereby authorized to
perform such function.
9. OTHER COMMITTEES. The board of directors may by resolution provide
for such other committees as it deems desirable and may discontinue the same at
its pleasure. Each such committee shall have the powers and perform such duties,
not inconsistent with law, as may be assigned to it by the board.
10. ACTION WITHOUT MEETINGS. Any action required or permitted to be
taken at any meeting of the board of directors or any committee thereof may be
taken without meeting by written consent setting forth the action so taken
signed by all of the directors entitled to vote with respect to the subject
matter thereof.
ARTICLE III
OFFICERS
1. TITLES AND ELECTION. The officers of the corporation shall be a
president, a secretary and a treasurer, who shall initially be elected as soon
as convenient by the board of directors and thereafter, in the absence of
earlier resignations or removals, shall be
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elected at the first meeting of the board following any annual stockholders'
meeting, each of whom shall hold office at the pleasure of the board except as
may otherwise be approved by the board or executive committee, or until his
earlier resignation, removal under these By-Laws or other termination of his
employment. Any person may hold more than one office if the duties can be
consistently performed by the same person, and to the extent permitted by the
laws of Delaware.
The board of directors, in its discretion, may also at any
time elect or appoint a chairman of the board of directors who shall be a
director, and one or more vice presidents, assistant secretaries and assistant
treasurers and such other officers as it may deem advisable, each of whom shall
hold office at the pleasure of the board, except as may otherwise be approved by
the board or executive committee, or until his earlier resignation, removal or
other termination of employment, and shall have such authority and shall perform
such duties as may be prescribed or determined from time to time by the board or
in case of officers other than the chairman of the board, it not so prescribed
or determined by the board, as the president or the then senior executive
officer may prescribe or determine.
The board of directors may require any officer or other
employee or agent to give bond for the faithful performance of his duties in
such form and with such sureties as the board may require.
2. DUTIES. Subject to such extension, limitations, and other provisions
as the board of directors or the By-Laws may from time to time prescribe or
determine, the following officers shall have the following powers and duties:
(a) CHAIRMAN OF THE BOARD. The chairman of the board, when
present, shall preside at all meetings of the stockholders and of the board of
directors and shall be charged with general supervision of the management and
policy of the corporation, and shall have such other powers and perform such
other duties as the board of directors may prescribe from time to time.
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(b) PRESIDENT. Subject to the board of directors and the
provisions of these By-Laws, the president shall be the chief executive officer
of the corporation, shall exercise the powers and authority and perform all of
the duties commonly incident to his office, shall in the absence of the chairman
of the board preside at all meetings of the stockholders and of the board of
directors if he is a director, and shall perform such other duties as the board
of directors or executive committee shall specify from time to time. The
president or a vice president, unless some other person is thereunto
specifically authorized by the board of directors or executive committee, shall
sign all bonds, debentures, promissory notes, deeds and contracts of the
corporation.
(c) VICE PRESIDENT. The vice president or vice presidents
shall perform such duties as may be assigned to them from time to time by the
board of directors or by the president if the board does not do so. In the
absence or disability of the president, the vice presidents in order of
seniority may, unless otherwise determined by the board, exercise the powers and
perform the duties pertaining to the office of president, except that if one or
more executive vice presidents has been elected or appointed, the person holding
such office in order or seniority shall exercise the powers and perform the
duties of the office of president.
(d) SECRETARY. The secretary or in his absence the assistant
secretary shall keep the minutes of all meetings of stockholders and of the
board of directors, give and serve all notices, attend to such correspondence as
may be assigned to him, keep in safe custody the seal of the corporation, and
affix such seal to all such instruments properly executed as may require it, and
shall have such other duties and powers as may be prescribed or determined from
time to time by the board of directors or by the president if the board does not
do so.
(e) TREASURER. The treasurer, subject to the order of the
board of directors, shall have the care and custody of the moneys, funds,
valuable papers and documents of the corporation (other than his own bond, if
any, which shall be in the custody of the president), and
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shall have, under the supervision of the board of directors, all the powers and
duties commonly incident to his office. He shall deposit all funds of the
corporation in such bank or banks, trust company or trust companies, or with
such firm or firms doing a banking business as may be designated by the board of
directors or by the president if the board does not do so. He may endorse for
deposit or collection all checks, notes, etc., payable to the corporation or to
its order. He shall keep accurate books of account of the corporation's
transactions, which shall be the property of the corporation, and together with
all its property in his possession, shall be subject at all times to the
inspection and control of the board of directors. The treasurer shall be subject
in every way to the order of the board of directors, and shall render to the
board of directors and/or the president of the corporation, whenever they may
require it, an account of all his transactions and of the financial condition of
the corporation. In addition to the foregoing, the treasurer shall have such
duties as may be prescribed or determined from time to time by the board of
directors or by the president if the board does not do so.
3. DELEGATION OF AUTHORITY. The board of directors or the executive
committee may at any time delegate the powers and duties of any officer for the
time being to any other officer, director or employee.
4. COMPENSATION. The compensation of the chairman of the board, the
president, all vice presidents, the secretary and the treasurer shall be fixed
by the board of directors or the executive committee, and the fact that any
officer is a director shall not preclude him from receiving compensation or from
voting upon the resolution providing the same.
ARTICLE IV
RESIGNATIONS, VACANCIES AND REMOVALS
1. RESIGNATIONS. Any director or officer may resign at any time by
giving written notice thereof to the board of directors, the president or the
secretary. Any such resignation shall take effect at the time specified therein
or, if the time be not specified, upon
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receipt thereof; and unless otherwise specified therein, the acceptance of any
resignation shall not be necessary to make it effective.
2. VACANCIES. (a) DIRECTORS. When the office of any directors, becomes
vacant or unfilled whether by reason of death, resignation, removal, increase in
the authorized number of directors or otherwise, such vacancy or vacancies may
be filled by the remaining director or directors, although less than a quorum.
Any director so elected by the board shall serve until the election and
qualification of his successor or until his earlier resignation or removal as
provided in these By-Laws. The directors may also reduce their authorized number
by the number of vacancies in the board, provided such reduction does not reduce
the board to less than the minimum authorized by the Charter or the laws of
Delaware.
(b) OFFICERS. The board of directors may at any time or from
time to time fill any vacancy among the officers of the corporation.
3. REMOVALS. (a) DIRECTORS. The stockholders may remove directors
from office only for cause.
(b) OFFICERS. Subject to the provisions of any validly
existing agreement, the board of directors may at any meeting remove from office
any officer, with or without cause, and may elect or appoint a successor;
provided that if action is to be taken to remove the president the notice of
meeting or waiver of notice thereof shall state that one of the purposes thereof
is to consider and take action on his removal.
ARTICLE V
CAPITAL STOCK
1. CERTIFICATE OF STOCK. Every stockholder shall be entitled to a
certificate or certificates for shares of the capital stock of the corporation
in such form as may be prescribed or authorized by the board of directors, duly
numbered and setting forth the number and
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kind of shares represented thereby. Such certificates shall be signed by the
chairman of the board, the president or a vice president and by the treasurer or
an assistant treasurer or by the secretary or an assistant secretary. Any or all
of such signatures may be in facsimile if and to the extent authorized under the
laws of Delaware.
In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed on a certificate has ceased
to be such officer, transfer agent or registrar before the certificate has been
issued, such certificate may nevertheless be issued and delivered by the
corporation with the same effect as if he were such officer, transfer agent or
registrar at the date of issue.
2. TRANSFER OF STOCK. Shares of the capital stock of the corporation
shall be transferable only upon the books of the corporation upon the surrender
of the certificate or certificates properly assigned and endorsed for transfer.
If the corporation has a transfer agent or agents or transfer clerk and
registrar of transfers acting on its behalf, the signature of any officer or
representative thereof may be in facsimile.
The board of directors may appoint a transfer agent and one or
more cotransfer agents and a registrar and one or more coregistrars of transfer
and may make or authorize the transfer agents to make all such rule and
regulations deemed expedient concerning the issue, transfer and registration of
shares of stock.
3. RECORD DATES. (a) In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix in advance a record date
which, in the case of a meeting, shall be not less that the minimum nor more
than the maximum number of days prior to the scheduled date of such meeting
permitted under the laws of Delaware and which,
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in the case of any other action, shall be not more than the maximum number of
days prior to any such action permitted by the laws of Delaware.
(b) If no such record date is fixed by the board, the record
date shall be that prescribed by the laws of Delaware.
(c) A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to an adjournment
of the meeting; provided, however, that the board of directors may fix a new
record date for the adjourned meeting.
4. LOST CERTIFICATES. In case of loss or mutilation or destruction of a
stock certificate, a duplicate certificate may be issued upon such terms as may
be determined or authorized by the board of directors or executive committee or
by the president if the board or the executive committee does not do so.
ARTICLE VI
FISCAL YEAR, BANK DEPOSITS, CHECKS, ETC.
1. FISCAL YEAR. The fiscal year of the corporation shall commence or
end at such time as the board of directors may designate.
2. BANK DEPOSITS, CHECKS, ETC. The funds of the corporation shall be
deposited in the name of the corporation or of any division thereof in such
banks or trust companies in the United States or elsewhere as may be designated
from time to time by the board of directors or executive committee, or by such
officer or officers as the board or executive committee may authorize to make
such designations.
All checks, drafts or other orders for the withdrawal of funds
from any bank account shall be signed by such person or persons as may be
designated from time to time by the board of directors or executive committee or
as may be designated by an officer or officers authorized by the board of
directors or executive committee to make such designations. The signatures on
checks, drafts or other orders for the withdrawal of
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funds may be in facsimile if authorized in the designation.
ARTICLE VII
BOOKS AND RECORDS
1. PLACE OF KEEPING BOOKS. Unless otherwise expressly required by the
laws of Delaware, the books and records of the corporation may be kept outside
of Delaware.
2. EXAMINATION OF BOOKS. Except as may otherwise be provided by the
laws of Delaware, the certificate of incorporation or these By-Laws, the board
of directors shall have power to determine from time to time whether and to what
extent and at what times and places and under what conditions any of the
accounts, records and books of the corporation are to be open to the inspection
of any stockholder. No stockholder shall have any right to inspect any account
or book or document of the corporation except as prescribed by statute or
authorized by express resolution of the stockholders or of the board of
directors.
ARTICLE VIII
NOTICES
1. REQUIREMENTS OF NOTICE. Whenever notice is required to be given by
statute, the certificate of incorporation or these By-Laws, it shall not mean
personal notice unless so specified, but such notice may be given in writing by
depositing the same in a post office letter box, or mail chute, postpaid and
addressed to the person to whom such notice is directed at the address of such
person on the records of the corporation, and such notice shall be deemed given
at the time when the same shall be thus mailed.
2. WAIVERS. Any stockholder, director or officer may, in writing or by
telegram or cable, at any
16
<PAGE> 17
time waive any notice or other formality required by statute, the certificate of
incorporation or these By-Laws. Such waiver of notice, whether given before or
after any meeting or action, shall be deemed equivalent to notice. Presence of a
stockholder either in person or by proxy at any stockholders' meeting and
presence of any director at any meeting of the board of directors shall
constitute a waiver of such notice as may be required by any statute, the
certificate of incorporation or these By-Laws.
ARTICLE IX
SEAL
The corporate seal of the corporation shall consist of two concentric
circles between which shall be the name of the corporation and in the center of
which shall be inscribed "Corporate Seal, Delaware."
ARTICLE X
POWERS OF ATTORNEY
The board of directors or the executive committee may authorize one or
more of the officers of the corporation to execute powers of attorney delegating
to named representatives or agents power to represent or act on behalf of the
corporation, with or without power of substitution.
In the absence of any action by the board or the executive committee,
the president, any vice president, the secretary or the treasurer of the
corporation may execute for and on behalf of the corporation waivers of notice
of stockholders' meetings and proxies for such meetings in any company in which
the corporation may hold voting securities.
ARTICLE XI
INDEMNIFICATION OF DIRECTORS AND OFFICERS
1. DEFINITIONS. As used in this article, the term "person" means any
past, present or future director
17
<PAGE> 18
or officer of the corporation or a designated officer of an operating division
of the corporation.
2. INDEMNIFICATION GRANTED. The corporation shall indemnify, defend and
hold harmless against all liability, loss and expenses (including attorneys'
fees reasonably incurred), to the full extent and under the circumstances
permitted by the Delaware General Corporation Law of the State of Delaware in
effect from time to time, any person as defined above, made or threatened to be
made a party to any threatened, pending or completed action, suit or proceeding
whether civil, criminal, administrative or investigative by reason of the fact
that he is or was a director, officer of the corporation or designated officer
of an operating division of the corporation, or is or was as an employee or
agent of the corporation acting as a director, officer, employee or agent of
another company or other enterprise in which the corporation owns, directly or
indirectly, an equity or other interest or of which it may be a creditor.
If a person indemnified herein must retain an attorney directly, the
corporation may, in its discretion, pay the expenses (including attorneys' fees)
incurred in defending any proceeding in advance of its final disposition,
provided, however, that the payment of expenses incurred by a director or
officer in advance of the final disposition of the proceeding shall be made only
upon receipt of an undertaking by the director or officer to repay all amounts
advanced if it should be ultimately determined that the director or officer is
not entitled to be indemnified under this article or otherwise.
This right of indemnification shall not be deemed exclusive of any
other rights to which a person indemnified herein may be entitled by By-Law,
agreement, vote of stockholders or disinterested directors or otherwise, and
shall continue as to a person who has ceased to be a director, officer,
designated officer, employee or agent and shall inure to the benefit of the
heirs, executors, administrators and other legal representatives of such person.
It is not intended that the provisions of this article be applicable to, and
they are not to be construed as granting indemnity with respect to, matters as
to which indemnification would be
18
<PAGE> 19
in contravention of the laws of Delaware or of the United States of America
whether as a matter of public policy or pursuant to statutory provision.
3. MISCELLANEOUS. The board of directors may also on behalf of the
corporation grant indemnification to any individual other than a person defined
herein to such extent and in such manner as the board in its sole discretion may
from time to time and at any time determine.
ARTICLE XII
AMENDMENTS
These By-Laws may be amended or repealed either:
(a) at any meeting of stockholders at which a quorum is
present by vote of a majority of the number of shares of stock entitled to vote
present in person or by proxy at such meeting as provided in Article I Sections
5 and 6 of these By-Laws, or
(b) at any meeting of the board of directors by a majority
vote of the directors then in office;
provided the notice of such meeting of stockholders or directors or
waiver of notice thereof contains a statement of the substance of the proposed
amendment or repeal.
19
<PAGE> 1
EXHIBIT 10.5
SHAREHOLDERS AGREEMENT dated 15 February 1995
between
(1) MASSEY FERGUSON GMBH, a company with registered office at Eschwege,
Germany (hereinafter referred to as: "MF")
and
(2) DE LAGE LANDEN LEASING GMBH, a company with registered office at
Dusseldorf, Germany (hereinafter referred to as: "DLL")
1. Introduction
1.1. DLL is (via De Lage Landen GmbH) a wholly-owned subsidiary of De Lage
Landen International B.V. with registered office at Eindhoven, itself
a 100% subsidiary of Cooperatieve Centrale Raiffeisen -
Boerenleenbank B.A. (Rabobank Nederland) with registered office at
Amsterdam.
1.2. MF is a wholly-owned subsidiary of Massey Ferguson Corporation, itself
a subsidiary of AGCO Corporation.
1.3. The parties hereto will work together in providing exclusive finance
programmes to Massey Ferguson dealers and Massey Ferguson endusers in
Germany.
1.4. The basis for this co-operation is a business plan a copy of which is
annexed hereto as Schedule 1.
The parties hereto enter into this shareholders agreement with a
firm commitment to each other to do all that they reasonably can to
ensure that the business plan's targets are achieved and if possible
surpassed.
1.5. The parties hereto intend to structure their co-operation on a basis
similar to that of the co-operation between Massey Ferguson and De Lage
Landen in the United Kingdom (Massey Ferguson Finance Ltd.) and France
(Massey Ferguson Finance France SNC).
1.6. In view of these intentions the parties hereto propose to incorporate
a German finance company under the legal form of a GmbH, in which DLL
will participate for 51% and MF for 49%.
1.7. The parties hereto have agreed to govern their relationship on the
terms and subject to the conditions hereinafter set out.
<PAGE> 2
-2-
2. Incorporation
2.1. The parties hereto shall take all necessary steps to procure the
incorporation of the finance company as soon as possible.
2.2. The company will be incorporated under the legal form of a
"Gesellschaft mit beschrankter Haftung" with articles of
association in the agreed terms in accordance with German law and the
provisions of this Shareholders Agreement.
2.3. The name of the company will be: Massey Ferguson Finanzierung G.m.b.H.
2.4. The company will have its registered office and principal place of
business at Eschwege.
3. Share capital
3.1. The issued share capital of the company upon incorporation shall be DM
5 million.
3.2. DLL shall own 51% of the issued share capital and MF shall own the
other 49%.
3.3 The capital will be increased as the business grows, provided that the
equity to balance sheet debt ratio of the company shall always
be a minimum of 8%. Unless agreed otherwise an increase of the capital
of the company shall always be in the proportion 51% DLL - 49% MF.
4. Objectives and territory of the company
4.1. The primary objectives of the company will be:
A. to provide finance facilities (e,g. loans, hire purchase) for:
(aa) products sold or otherwise dealt in by MF and/or its dealers
(bb) other products which do not compete as to specification and
price with those falling under subparagraph (aa) above
(cc) secondhand products which may compete with the products
referred to in subparagraph (aa) above
and to provide product related services (e.g. warranty and credit
insurance);
B. to provide wholesale financing (stock finance);
C. to carry on any associated business, approved by the Supervisory
Board;
D. to generate wherever possible synergetic effects on the business
of DLL, in so far as such activities do not endanger the main
objective as set forth in subclause A above.
4.2. The area covered by the company will be the whole of Germany,
including the former East Germany.
<PAGE> 3
-3-
5. Banking license
As soon as practicable after its incorporation the company will
apply for a banking license in accordance with the provisions of the
German banking regulations (Kreditwesengesetz), which covers the
activities of the company.
6. Management of the company
6.1. The day to day operation of the company shall be managed in accordance
with the parameters laid down from time to time by the Supervisory
Board (vide clause 6.3.) and the general principles of the business
plan.
6.2. The company will have two Managing Directors (Geschaftsfuhrer).
6.3. The company will have a Supervisory Board (Aufsichtsrat) who shall
determine the general policy of the company.
The Supervisory Board shall have four members, two of whom will be
appointed on the recommendation of DLL and the other two on the
recommendation of MF. Upon incorporation of the company the members
will be:
- on behalf of DLL: Mr Ph. Green and Mr R. Slaats
- on behalf of MF. Mr. D.I. Franklin and Mr. C. Perkins
One of the members appointed on the recommendation of MF will chair
the Supervisory Board.
The powers of the Supervisory Board will be specified in more detail
in the Articles of Association of the company. The voting rights will
be defined in such a way that the DLL representatives in the
Supervisory Board will have a casting vote.
7. Performance Targets
The parties hereto aim to realize a return on investment in the
company of minimum 15% per annum.
MF and DLL shall do all that they reasonably can to ensure that
this target will be achieved.
In view hereof the business plan will be revised from time to
time.
For the purpose of this agreement return on investment is
defined as Internal Return Capacity (IRC).
The IRC ratio calculates the profit realised over the normalised
own funds, being 8% of the risk adjusted assets and off balance sheet
transactions.
The numerator of the IRC ratio is the net profit resulting from
the profit and loss account, adjusted for interest income on the
surplus or shortage of equity as compared to the normalised own funds.
The denominator of the IRC ratio are the normalised own funds.
<PAGE> 4
-4-
8. Funding
8.1. In order to enable the company to attract funds at a competitive rate
DLL will:
- either fund the operation directly at cost of funds increased with
0.1% to cover handling costs or
- provide guarantees to the intent that the company shall be able to
make use of Rabobank's triple A credit rating to attract funds at
competitive rates.
For the avoidance of doubt it is stated, that it will be the sole
responsibility of the management of the company to negotiate such
rates.
8.2. Given the fact that DLL - being a wholly owned subsidiary of De Lage
Landen International B.V., itself a bank and a 100% subsidiary
of Rabobank Nederland - has a majority interest in the company and
assuming the company itself will show sufficient performance and
financial strength, after a couple of years DLL guarantees may no
longer be required.
8.3. The obligations of DLL to fund the operation of the company directly
or to provide guarantees to funding banks in accordance with
clause 8.1. shall cease to be of effect if in the reasonable opinion
of DLL either serious economical or political developments or any
regulations made by national or European governmental authorities or
other relevant authorities make the continued provision of funding or
the continued provision of guarantees impossible in practice.
9. Subsidies
9.1. MF will supply or procure the supply of subsidies or discounts to the
company from time to time in such a way, that the total finance
cost of the Massey Ferguson products will be competitive with the rates
of other financiers and/or dealers for similar products in the market.
9.2. MF shall adapt the subsidized exclusive finance programmes as an
integrated part of its marketing strategy.
9.3. MF undertakes with DLL that it will not supply or procure the supply
of such subsidies or discounts to any other body or person to
enable them to compete with or improve on the company rates during the
term of this agreement.
During the start-up period of the Company (estimated at 12
months maximum) MF and DLL acknowledge that other forms of subsidized
finance may be required in those areas where MV Finance is not yet
available.
10. Dividend policy
Unless decided otherwise, dividends shall be paid to the
shareholders if and to the extent only that the gearing ratio (the
equity to balance sheet debt ratio) at the end of the accounting year
in question is and remains equal to or more than 1:12.5.
<PAGE> 5
-5-
11. Trade mark licence
MF will permit or procure permission for the company to make
royalty-free use of the "Massey Ferguson" trade mark, the "MF" trade
mark and the triple triangle design.
12. Product failure
In the event that any product sold or otherwise dealt in by MF
is returned or rejected or is the subject of a substantiated complaint
by a dealer or a customer on the grounds that it is defective or is not
in all respects in conformity with the provisions of any contract
concerning it or any statutory requirement in respect of it, MF
undertakes to DLL that it shall indemnify the company against all
losses, damages or expenses resulting from such product failure.
13. Remarketing
In order to avoid or minimize any losses for the company MF undertakes
to do its utmost to remarket the new stock of equipment of a dealer
within the Massey Ferguson dealer network and within a reasonable
period of time, if such a dealer cannot meet his obligations towards
the company any longer.
14. Tax aspects
Parties will seek to structure their co-operation within the
framework of legal possibilities in such a manner that the tax burdens
will be minimized.
15. Internal/external auditors
15.1. The parties shall each be entitled to have the books of the company
examined by their internal auditors and to be supplied with all
relevant information as they may reasonably require to keep them
properly informed about the business of the company and generally to
protect their interests.
15.2. The external auditors of the company shall be such firm of chartered
accountants as the Supervisory Board shall determine.
<PAGE> 6
-6-
16. Other activities DLL
The parties hereto agree that the terms of this agreement do not
prevent DLL from providing leasing - or finance services in connection
with agriculture equipment other than through the company, provided
that DLL shall not actively promote such other services nor enter into
other joint venture or other co-operation arrangements for such
services, and provided that DLL in doing so will not compete with the
core business of the company.
17. Duration
17.1. Subject to clause 17.2. this agreement shall continue in full force
and effect until December 31st, 2000 and thereafter unless and
until terminated by one party serving on the other twelve months'
written notice of termination to expire on or at any time after
December 31st, 2000.
17.2. Notwithstanding the provisions of clause 17.1. either party shall be
entitled to terminate this agreement forthwith on the occurrence
of any of the following events:
- the other party is in material breach of its obligations under this
agreement and fails to remedy the same within a reasonable period
of time;
- the other party ceases or threatens to cease wholly or
substantially to carry on its business;
- the other party is or threatens to be insolvent (e.g. the other
party is declared bankrupt or applies for suspension of payment);
- the other party's conduct is such that the continuation of the
co-operation under this agreement can no longer reasonably be
asked.
17.3. If during the currency of this agreement the actual net results are
materially below the targets set out in clause 7 of this agreement and
in the (revised) business plan and if there is no reasonable prospect
that there will be a major improvement in the results in the
foreseeable future, then either party shall be entitled to terminate
this agreement by serving on the other twelve months' written notice
of termination to expire on or at any time after December 31st, 1996.
17.4. Following termination of this agreement its conditions shall continue
to bind the parties hereto to such extent and for so long as may be
necessary to give effect to the rights and obligations embodied
herein.
18. Consequences of termination
18.1. Upon the termination of this agreement howsoever caused the parties
shall discuss and agree what steps shall then be taken in respect of
the company.
<PAGE> 7
-7-
18.2. Without prejudice to the generality of clause 18.1. the parties
hereto agree that in the event that this agreement is terminated
by DLL pursuant to the provisions of clause 17.2. on the happening of
an event of default for which MF is responsible or in the event that
this agreement is terminated by either party pursuant to the provisions
of clause 17.3. then and in either such case and in recognition of its
financial interest in the company (by way of the provision of
guarantees and the procurement of overdraft facilities and loans as
well as its equity interest as a shareholder) DLL shall be entitled
(should DLL in its absolute discretion so decide) to assume control
over the day-to-day operations of the company.
19. Employees of the company
Except in those cases where the termination of this agreement
has been caused by serious breach of contract or other default of DLL
MF undertakes to DLL to use reasonable endeavours to ensure that all
employees of the company who were employed while DLL was a shareholder
are treated with all due consideration and that in those cases where
the company and/or its subsidiaries no longer require their services,
all reasonable endeavours will be made to find suitable alternative
employment for such employees.
20. Costs
20.1. All costs, legal fees and other expenses related to the preparation
and execution of this agreement shall be borne by the party who
incurred them. All costs, legal fees, registration fees and other
expenses incurred in the formation of the company shall be borne by the
company.
21. Governing law
21.1. The construction, validity and performance of this agreement shall be
governed in all respects by the laws of Germany.
21.2. The courts of Germany shall have exclusive jurisdiction to settle any
dispute which may arise between the parties in respect of the
construction, validity or performance of this agreement.
22. The terms of this agreement to prevail
In the event of any ambiguity or conflict arising between the
terms of this agreement and those of the articles of association of the
company, the terms of this agreement shall prevail as between the
parties.
<PAGE> 8
-8-
23. EC law restrictions
In case one or more clauses of this agreement prove to be in conflict
with EC legislation on competition (e.g. clause 85 and 86 of the EC
treaty), the parties hereto will construe their co-operation on an
alternative basis which will take into account all the essentials of
this agreement.
Dated: 15 February 1995
/s/ R.A.M. Slaats /s/ C.S.D. Lupton
Signed for and on behalf of Signed for and on behalf of
DE LAGE LANDEN LEASING GMBH MASSEY FERGUSON GMBH
by: R.A.M. Slaats by: /s/ C.S.D. Lupton
Geschaftsfuhrer
<PAGE> 1
EXHIBIT 10.17
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") dated as
of February 24, 1997 amends and restates the Credit Agreement dated as of
January 14, 1997 among AGCO CORPORATION, a Delaware corporation ("AGCO"), AGCO
CANADA, LTD., a Saskatchewan corporation (the "Canadian Subsidiary"), MASSEY
FERGUSON MANUFACTURING LIMITED, an English corporation ("English Subsidiary
One"), MASSEY FERGUSON LIMITED, an English corporation ("English Subsidiary
Two"), AGCO LIMITED, an English corporation ("English Subsidiary Three"), MASSEY
FERGUSON S.A., a French societe anonyme (the "French Subsidiary"), AGCO HOLDING
B.V., a Netherlands corporation (the "Netherlands Subsidiary"), and MASSEY
FERGUSON GMBH, a German corporation (the "German Subsidiary"; the Canadian
Subsidiary, English Subsidiary One, English Subsidiary Two, English Subsidiary
Three, the French Subsidiary, the Netherlands Subsidiary and the German
Subsidiary are referred to herein collectively as the "Borrowing Subsidiaries"
and individually as a "Borrowing Subsidiary"; AGCO and the Borrowing
Subsidiaries are referred to herein collectively as the "Borrowers" and
individually as a "Borrower"); the lenders (the "Lenders") listed on the
signature pages hereof; COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH ("Rabobank"), SUNTRUST BANK, ATLANTA, and
DEUTSCHE BANK AG, NEW YORK BRANCH, as co-managers (the "Co-Managers"); DEUTSCHE
BANK CANADA ("Deutsche Bank Canada"), as Canadian administrative agent for the
Canadian Subsidiary Lenders (together with any successor appointed pursuant to
Article VII, the "Canadian Administrative Agent"), and COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH, as
administrative agent for the Lenders (together with any successor appointed
pursuant to Article VII, the "Administrative Agent").
PRELIMINARY STATEMENT:
The Borrowers have asked the Lenders severally to extend
credit to them for the purposes of refinancing debt outstanding under the Old
Credit Agreement and for other general corporate purposes, on the terms and
conditions set forth herein.
NOW THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto hereby
agree as follows:
<PAGE> 2
2
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Acceptance Fee" means, with respect to a Bankers' Acceptance accepted
by a Canadian Subsidiary Lender under this Agreement, a fee payable in Canadian
Dollars by the Borrower to such Lender calculated on the face amount of the
Bankers' Acceptance at a rate equal to the Applicable Margin, on the basis of
the number of days in the Contract Period and on the basis of a year of 365
days.
"Advance" means a Canadian Subsidiary Advance, a Multi-Currency Advance
or a Letter of Credit Advance.
"Administrative Agent" has the meaning specified in the introductory
paragraph of this Agreement.
"Account" means the Administrative Agent's Account or the Canadian
Administrative Agent's Account, as applicable.
"Administrative Agent's Account" means,
(a) for U.S. dollars, the account of the Administrative Agent
with The Bank of New York, ABA # 021000018, at its office at 245 Park
Avenue, New York, New York 10167, Account No. 8026002533, Favor:
Rabobank Nederland, New York Branch, Ref. AGCO/Struc. Fin.;
(b) for British pounds, the account of the Administrative
Agent maintained with Cooperatieve Centrale Raiffeisen-Boerenleenbank
B.A., "Rabobank Nederland", London Branch, in London, Swift #
(RABOGB2L), Account No. 1429957021, Favor: Rabobank Nederland, New York
Branch, Ref. AGCO/Struc. Fin.;
(c) for Dutch guilders, the account of the Administrative
Agent maintained with Cooperatieve Centrale Raiffeisen-Boerenleenbank
B.A., "Rabobank Nederland", Utrecht Branch, The Netherlands, Swift #
RABONL2U, Account No. 3908.17.333, Favor: Rabobank Nederland, New York
Branch, Ref. AGCO/Struc. Fin.;
<PAGE> 3
3
(d) for French francs, the account of the Administrative Agent
maintained with Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
"Rabobank Nederland", Paris Branch, in Paris, Swift # (RABOFRPP)
Account No. 1019230100, Favor: Rabobank Nederland, New York Branch,
Ref. AGCO/Struc. Fin.;
(e) for German deutschemarks, the account of the
Administrative Agent maintained with Rabobank Deutschland A.G., in
Frankfurt, Swift # (RABODEFF), Account No. 603-93775, Favor: Rabobank
Nederland, New York Branch, Ref. AGCO/Struc. Fin.;
(f) for Italian lira, the account of the Administrative Agent
maintained with Credito Italiano, in Milan, Swift # (CRITITMM), Account
No. 995/84020/00, Favor: Rabobank Nederland, New York Branch, Ref.
AGCO/Struc. Fin.; and
(g) for Swiss francs, the account of the Administrative Agent
maintained with Union Bank of Switzerland in Zurich, Swift #
(UBSWCHZH), Account No. 79.147.05H, Favor: Rabobank Nederland, New York
Branch, Ref. AGCO/Struc. Fin.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling," "controlled
by" and "under common control with") of a Person means the possession, direct or
indirect, (a) by such other Person of the power to vote 5% or more of the Voting
Stock of such Person or (b) by such other Person of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of Voting Stock, by contract or otherwise; provided that no mutual
fund shall be deemed to be an Affiliate of such Person solely by reason of
having the power to vote 5% or more of the Voting Stock of such Person.
"AGCO" has the meaning specified in the introductory paragraph of this
Agreement.
"Agent" means Administrative Agent or the Canadian Administrative
Agent.
"Allowances" means, with respect to any Person on any date of
determination, the aggregate amount of all allowances for surplus or obsolete
Inventory that would appear as allowances with respect to Inventory on a balance
sheet of such Person at such date prepared in accordance with GAAP and the
policies and procedures of such Person with respect to the creation and
maintenance of such allowances in effect on the date of this Agreement.
"Alternate Currency" means
<PAGE> 4
4
(a) British pounds, Canadian Dollars, Dutch guilders, German
deutschemarks, French francs, Italian lira and Swiss francs, and
(b) any other lawful currency that is freely transferable and
convertible into United States dollars and that has been approved by
each Lender.
"Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of a Base Rate Advance that is a
Multi-Currency Advance and such Lender's Eurocurrency Lending Office for loans
in another applicable currency, in the case of an Advance denominated in such
other currency .
"Applicable Margin" means, on any date of determination and for any
Eurocurrency Rate Advance, any Base Rate Advance for which the Base Rate is
determined as provided in clause (b)(ii) of the definition thereof, Acceptance
Fee or fee payable pursuant to Section 2.13(e), the percentage rate per annum
determined by reference to the Applicable Rating in effect at such date of
determination, as set forth below:
<TABLE>
<CAPTION>
===============================================================
APPLICABLE RATING APPLICABLE MARGIN
--------------------------------------------------------------
<S> <C>
>=A- 0.25%
--------------------------------------------------------------
BBB+ 0.35%
--------------------------------------------------------------
BBB 0.40%
--------------------------------------------------------------
BBB- 0.45%
--------------------------------------------------------------
Split Rating 0.60%
--------------------------------------------------------------
BB+ 0.70%
--------------------------------------------------------------
BB 0.80%
--------------------------------------------------------------
< BB 1.25%
==============================================================
</TABLE>
"Applicable Rating" means
(a) if the respective credit ratings of AGCO's senior,
unsecured, long-term debt by Moody's and S&P shall be equivalent, such
rating by S&P, and
(b) if the respective ratings of such debt by such rating
agencies shall not be equivalent,
<PAGE> 5
5
(i) if S&P shall rate such debt BBB- or higher
and Moody's shall rate such debt Baa3 or higher, the lower of
the two ratings (except that, if the lower of the two ratings
shall be the Moody's rating, the S&P equivalent of such
Moody's rating shall be the Applicable Rating),
(ii) if either (A) S&P shall rate such debt BBB-
and Moody's shall rate such debt Ba1 or (B) S&P shall rate
such debt BB+ and Moody's shall rate such debt Baa3, the
Applicable Rating shall be referred to as a "Split Rating" and
(iii) in all other circumstances, the S&P rating
that is the equivalent of the average of the ratings of such
debt by Moody's and S&P (or, if such average falls between two
ratings, the S&P rating next below such average).
Any change in the Applicable Rating shall be effective on the seventh Business
Day after any modification of a rating by Moody's or S&P of AGCO's senior,
unsecured, long-term debt giving rise to such change.
"Appropriate Agent" means, at any time, with respect to matters
relating to the Multi-Currency Facility or Letters of Credit issued for the
account of Multi-Currency Borrowers, the Administrative Agent and, with respect
to matters relating to the Canadian Subsidiary Facility or Letters of Credit
issued for the account of the Canadian Subsidiary, the Canadian Administrative
Agent.
"Appropriate Issuing Bank" means, at any time, with respect to matters
relating to Letters of Credit issued for the account of Multi-Currency
Borrowers, the Multi-Currency Issuing Bank and, with respect to matters
relating to the Letters of Credit issued for the account of the Canadian
Subsidiary, the Canadian Issuing Bank.
"Appropriate Lender" means, at any time, with respect to any of the
Multi-Currency Facility, the Letter of Credit Facility or the Canadian
Subsidiary Facility, a Lender that has a Commitment with respect to such
Facility at such time.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and accepted by the Administrative
Agent and, if such assignment and acceptance relates to the Canadian Subsidiary
Facility, the Canadian Administrative Agent, in accordance with Section 8.07
and in substantially the form of Exhibit D hereto.
<PAGE> 6
6
"Available Amount" of any Letter of Credit means, at any time, the
maximum amount available to be drawn under such Letter of Credit at such time
(assuming compliance at such time with all conditions to drawing).
"BA Equivalent Loan" means an Advance made by a Non BA Lender and
evidenced by a Discount Note.
"Bankers' Acceptance" means a bill of exchange substantially in the
form of Exhibit E (or such other form as may be acceptable to the Canadian
Administrative Agent) denominated in Canadian Dollars drawn by the Borrower and
accepted by a Canadian Subsidiary Lender or Participant and the term "Bankers'
Acceptance" shall be construed to include Discount Notes as provided in Section
2.16(k).
"Base Rate" means a fluctuating interest rate per annum in effect from
time to time, which rate per annum shall at all times be equal to:
(a) with respect to Multi-Currency Borrowings in U.S.
dollars, the higher of
(i) the rate of interest announced by the
Administrative Agent, in New York, New York, from time to
time, as its base rate, and
(ii) one-half of one percent per annum above the
Federal Funds Rate, and
(b) with respect to Canadian Subsidiary Borrowings, the
higher of
(i) the annual rate of interest announced from
time to time by the Canadian Administrative Agent as its
reference rate then in effect for determining interest rates
on Canadian Dollar- denominated commercial loans made by the
Canadian Administrative Agent in Canada, and
(ii) the rate per annum announced by the Canadian
Administrative Agent as its rate for cost of funds for
borrowings for a one-month period, plus the Applicable Margin.
"Base Rate Advance" means an Advance denominated in U.S. dollars and
made by a Multi-Currency Lender or denominated in Canadian Dollars and made by
a Canadian Subsidiary Lender, in either case that bears interest as provided in
Section 2.06(a)(i).
"Borrower" and "Borrowers" have the respective meanings specified in
the introductory paragraph of this Agreement; provided that additional Persons
may be added to
<PAGE> 7
7
this Agreement as Borrowers with the consent of the Agents, the Issuing Banks
and each Lender.
"Borrower Outstandings" means, on any date of determination, the sum
of the Multi-Currency Borrower Outstandings and the Canadian Subsidiary
Outstandings on such date.
"Borrower's Account" means the account of the Borrower requesting
such a Borrowing, as specified in such Borrower's Notice of Borrowing.
"Borrowing" means a Multi-Currency Borrowing or a Canadian Subsidiary
Borrowing.
"Borrowing Base" means on any date of determination and for AGCO and
its Restricted Subsidiaries, the sum of
(a) (i) 0.60, multiplied by
(ii) (A) the sum, for all items of Inventory
owned by AGCO and its Restricted Subsidiaries, of the
lowest of (1) manufactured cost, determined in
accordance with GAAP on a first-in, first-out basis,
(2) market value and (3) acquisition cost, for each
such item (or, if any such cost or value is
denominated in an Alternate Currency, the
Multi-Currency Equivalent in U.S. dollars of such
cost or value as of such date of determination),
minus
(B) all Allowances with respect to such Inventory, and
(b) (i) 0.90, multiplied by
(ii) (A) the gross amount of Receivables
owing to AGCO and its Restricted Subsidiaries (other
than any such Receivables arising in respect of
intercompany transactions) (calculated, with respect
to all Receivables denominated in an Alternate
Currency, on the basis of the Multi-Currency
Equivalent in U.S. dollars of such gross amount as of
any date of determination), minus
(B) all Reserves with respect to such Receivables,
in each case as such amounts are specified in the most recent Borrowing Base
Certificate delivered to the Administrative Agent prior to such date of
determination pursuant to Section 5.03(n).
<PAGE> 8
8
"Borrowing Base Certificate" means a certificate in respect of the
Inventory and Receivables of AGCO and its Restricted Subsidiaries substantially
in the form of Exhibit F.
"Borrowing Subsidiary" and "Borrowing Subsidiaries" have the
respective meaning specified in the introductory paragraph of this Agreement.
"Business Day" means a day of the year
(a) on which banks are not required or authorized to
close in New York City or Atlanta, Georgia;
(b) if the applicable Business Day relates to any
Eurocurrency Rate Advance, on which any Lender carries on dealings in
the London interbank and foreign exchange markets; and
(c) if the applicable Business Day relates to any Advance
in a currency other than U.S. dollars, on which banks are not required
or authorized to close in the city of the jurisdiction of such
currency where the Appropriate Agent's Account for such currency is
located.
"Canadian Administrative Agent" has the meaning specified in the
introductory paragraph of this Agreement.
"Canadian Administrative Agent's Account" means the Canadian
Administrative Agent's account maintained with Deutsche Bank Canada in Toronto,
Ontario, Swift # (DEUTCATT), Attention: H. Richardson, Reference AGCO Canada,
Ltd, or such other account as the Canadian Administrative Agent may from time
to time designates as the Canadian Administrative Agent's Account.
"Canadian Dollars" and "Cdn. $" each means lawful money of Canada.
"Canadian Issuing Bank" means Deutsche Bank Canada and its successors
and assigns hereunder as issuer of Letters of Credit for the account of the
Canadian Subsidiary.
"Canadian Reference Banks" means Deutsche Bank Canada, National Bank
of Canada and Bank of Montreal.
"Canadian Subsidiary" has the meaning specified in the introductory
paragraph of this Agreement.
"Canadian Subsidiary Advance" has the meaning specified in Section
2.01(b).
<PAGE> 9
9
"Canadian Subsidiary Borrowing" means a borrowing consisting of
simultaneous Canadian Subsidiary Advances of the same Type made by the Canadian
Subsidiary Lenders.
"Canadian Subsidiary Commitment" means, with respect to any Canadian
Subsidiary Lender at any time, the amount set forth opposite such Lender's name
on Schedule I hereto under the caption "Canadian Subsidiary Commitment" or, if
such Lender has entered into one or more Assignments and Acceptances, set forth
for such Lender in the Register maintained by the Administrative Agent pursuant
to Section 8.07(c) as such Lender's "Canadian Commitment", as such amount may
be reduced at or prior to such time pursuant to Section 2.04.
"Canadian Subsidiary Facility" means, at any time, the aggregate
amount of the Canadian Subsidiary Lenders' Canadian Subsidiary Commitments at
such time, which shall not exceed the Multi-Currency Equivalent of U.S.
$100,000,000.
"Canadian Subsidiary Lender" means any Lender that has a Canadian
Subsidiary Commitment.
"Canadian Subsidiary Outstandings" means, on any date of
determination, the Multi-Currency Equivalent in U.S. dollars of
(a) the aggregate principal amount of all Base Rate
Advances or Eurocurrency Rate Advances to the Canadian Subsidiary
outstanding on such date of determination,
plus
(b) the aggregate face amount of all Bankers' Acceptances
outstanding on such date of determination, plus
(c) the aggregate principal amount of all Letter of
Credit Advances outstanding on such date of determination in respect
of Letters of Credit issued for the account of the Canadian
Subsidiary, plus
(d) the aggregate Available Amount of all Letters of
Credit issued for the account of the Canadian Subsidiary and
outstanding on such date of determination.
"Capitalized Leases" has the meaning specified in clause (e) of the
definition of Debt.
"Cash Equivalents" means any of the following, to the extent owned by
AGCO or a Restricted Subsidiary of AGCO free and clear of all Liens and having
a maturity of not greater than 360 days from the date of issuance thereof:
<PAGE> 10
10
(a) (i) readily marketable direct obligations of the
Government of the United States, Canada, England, France or Germany,
or any agency or instrumentality of any of such Governments, (ii)
obligations unconditionally guaranteed by the full faith and credit of
the Government of the United States, Canada, England, France or
Germany or (iii) a mutual fund investing solely in obligations of the
types described in clauses (i) and (ii);
(b) insured certificates of deposit of, time deposits or
banker's acceptances with or issued by any commercial bank that is
(i) a Lender,
(ii) a member of the Federal Reserve System
organized under the laws of the United States or any State
thereof, that has combined capital and surplus of at least
U.S. $1 billion and that issues (or the parent of which
issues) commercial paper rated as described in clause (c)
below or
(iii) organized under the laws of a country that is
a member of the Organization for Economic Cooperation and
Development, or any jurisdiction of any thereof, that has
combined capital and surplus of at least the equivalent of
U.S. $1 billion and that issues (or the parent of which
issues) commercial paper rated as described in clause (c)
below or with a rating by another rating agency nationally
recognized in any such jurisdiction that is at least the
equivalent of a rating described in clause (c) below; or
(c) commercial paper in an aggregate amount of no more
than U.S. $25,000,000 per issuer outstanding at any time, issued by
(i) any Lender or its parent, or
(ii) any corporation organized under the laws of
any State of the United States, but only if such commercial
paper is rated at least "Prime-1" (or the then-equivalent
grade) by Moody's or "A-1" (or the then-equivalent grade) by
S&P.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980.
"Co-Managers" has the meaning specified in the introductory paragraph
of this Agreement.
<PAGE> 11
11
"Commitment" of any Lender means its Multi-Currency Commitment and/or
Canadian Subsidiary Commitment and of any Issuing Bank means its Letter of
Credit Commitment.
"Common Stock" means the common stock, par value U.S. $.01 per share, of AGCO.
"Competitor" means any Person engaged in, or having an Affiliate
engaged in, the business of manufacturing, sale, distribution or financing of
agricultural equipment and related parts, other than a commercial bank or other
financial institution.
"Consolidated" refers to the consolidation of accounts in accordance
with GAAP, except that, in the case of AGCO, notwithstanding GAAP,
"Consolidated" shall refer to the consolidation of accounts of AGCO and its
Restricted Subsidiaries and not of AGCO and its Subsidiaries.
"Consolidated Funded Debt" means, on any date of determination, the
Funded Debt of AGCO and its Restricted Subsidiaries.
"Consolidated EBITDA" means, for any period,
(a) Consolidated Net Income (or net loss) for such
period, plus
(b) Consolidated Net Interest Expense for such period and
all amounts deducted in arriving at such Consolidated Net Income in
respect of taxes imposed on or measured by income or excess profits
(other than income taxes (either positive or negative) attributable to
extraordinary and non-recurring gains or losses on sales of assets, to
the extent such gains or losses are not included in the definition of
Consolidated Net Income), depreciation expense, amortization expense
and all other non-cash items reducing Consolidated Net Income (other
than items that will require cash payments and for which an accrual or
reserve is, or is required by GAAP to be, made), minus
(c) all non-cash items increasing Consolidated Net
Income,
all as determined in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the sum of all
amounts that would be deducted in arriving at Consolidated Net Income for such
period in respect of interest charges (including amortization of debt discount
and expense and imputed interest on Capitalized Leases).
<PAGE> 12
12
"Consolidated Interest Income" means, for any period, the sum of all
amounts that would be included, for purposes of determining Consolidated Net
Income, as income of AGCO and its Restricted Subsidiaries for such period in
respect of interest payments by third parties to AGCO and its Restricted
Subsidiaries.
"Consolidated Net Income" means, for any period, the net income (or
deficit) of AGCO and its Restricted Subsidiaries for such period (taken as a
cumulative whole), after deducting all operating expenses, provisions for all
taxes and reserves (including reserves for deferred income taxes) and all other
proper deductions, after eliminating all intercompany transactions and after
deducting portions of income properly attributable to minority interests, if
any, in the stock and surplus of Restricted Subsidiaries, but including the
income (or deficit) of
(x) any Person that becomes a Restricted Subsidiary or is
merged into AGCO or a Restricted Subsidiary during such period that
accrued during such period prior to the date on which it became a
Restricted Subsidiary or was merged into AGCO or a Restricted
Subsidiary, and
(y) any Person substantially all of the assets of which
have been acquired by AGCO or a Restricted Subsidiary during such
period that accrued during such period prior to the date on which such
assets were acquired,
to the extent such income or deficit would appear on a pro forma income
statement, or the notes thereto, prepared in accordance with Regulation S-X of
the Securities and Exchange Commission, of AGCO and its Restricted Subsidiaries
reflecting such event; provided that there shall be excluded for purposes of
calculating Consolidated Net Income
(a) the income (or deficit) of any Person (other than a
Restricted Subsidiary) in which AGCO or any Restricted Subsidiary has
an ownership interest, except to the extent that any such income has
been actually received by AGCO or such Restricted Subsidiary in the
form of dividends or similar distributions;
(b) the undistributed earnings of any Restricted
Subsidiary (other than a Borrowing Subsidiary or a Subsidiary
Guarantor) to the extent that the declaration or payment of dividends
or similar distributions by such Restricted Subsidiary is not at the
time permitted by the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Restricted Subsidiary;
(c) any aggregate net gain or aggregate net loss during
such period arising from the sale, exchange or other disposition of
capital assets (such term to include all
<PAGE> 13
13
fixed assets, whether tangible or intangible, all inventory sold in
conjunction with the disposition of fixed assets, and all securities);
(d) any write-up of any asset, or any write-down of any
asset other than Receivables or Inventory;
(e) any net gain from the collection of the proceeds of
life insurance policies;
(f) any gain or loss arising from the acquisition of any
securities, or the extinguishment, under GAAP, of any Debt, of AGCO or
any Restricted Subsidiary;
(g) any net income or gain or any net loss during such
period from any change in accounting, from any discontinued operations
or the disposition thereof, from any extraordinary events or from any
prior period adjustments; and
(h) any deferred credit representing the excess of equity
in any Restricted Subsidiary at the date of acquisition over the cost
of the investment in such Restricted Subsidiary.
"Consolidated Net Interest Expense" means, for any period,
(a) Consolidated Interest Expense for such period, minus
(b) Consolidated Interest Income for such period.
"Consolidated Net Worth" means, as of the last day of any fiscal
quarter of AGCO,
(a) the sum as of such day of the capital stock (but
excluding treasury stock and capital stock subscribed and unissued)
and surplus (including earned surplus, capital surplus and the balance
of the current profit and loss account not transferred to surplus)
accounts of AGCO and its Restricted Subsidiaries appearing on a
consolidated balance sheet of AGCO and its Restricted Subsidiaries,
after eliminating all intercompany transactions, all amounts properly
attributable to minority interests, if any, in the stock and surplus
of Restricted Subsidiaries and all currency-translation gains and
losses, plus
(b) the aggregate principal amount of Convertible
Subordinated Debentures outstanding as of such day.
<PAGE> 14
14
"Consolidated Tangible Net Worth" means, as of the last day of any
fiscal quarter of AGCO, Consolidated Net Worth as of such day, after deducting
therefrom (without duplication of deductions):
(a) the net book amount of all assets, after deducting
any reserves applicable thereto, which would be treated as intangible
under GAAP, including without limitation such items as good will,
trademarks, trade names, service marks, brand names, copyrights,
patents and licenses, and rights with respect to the foregoing,
unamortized debt discount and expense and the excess of cost of
purchased Restricted Subsidiaries over equity in the net assets
thereof at the date of acquisition;
(b) any write-up in the book value of any asset on the
books of AGCO or any Restricted Subsidiary resulting from a
revaluation thereof subsequent to the date hereof and after the date
of acquisition thereof;
(c) all deferred charges (other than prepaid expenses); and
(d) the amounts at which any Investment in any Person
would appear on the asset side of such balance sheet.
"Consolidated Total Assets" means, as of the last day of any fiscal
quarter of AGCO, the total assets of AGCO and its Restricted Subsidiaries that
would appear on a consolidated balance sheet of AGCO and its Restricted
Subsidiaries prepared in accordance with GAAP as of such day, after eliminating
all intercompany transactions and all amounts properly attributable to minority
interests, if any, in the stock and surplus of Restricted Subsidiaries.
"Contract Period" means, with respect to a Bankers' Acceptance, the
term, subject to availability, selected by the Borrower and notified to the
Canadian Administrative Agent in accordance with Section 2.02(a), commencing on
the date of the Advance with respect to such Bankers' Acceptance or on the date
of Conversion or on the date of rollover in accordance with Section 2.16(h), as
applicable, and expiring on a Business Day which shall not be less than 30 days
or more than 180 days thereafter, and which shall not shall not expire after
the Termination Date.
"Conversion", "Convert" and "Converted" each refer to a conversion of
Advances of one Type into Advances of the other Type pursuant to Section 2.08
or 2.09.
"Convertible Subordinated Debentures" means the 6 1/2% Convertible
Subordinated Debentures due 2008 of AGCO outstanding on the date hereof.
<PAGE> 15
15
"Debt" of any Person means, without duplication,
(a) all indebtedness of such Person for borrowed money;
(b) all Obligations of such Person for the deferred
purchase price of property or services, other than trade payables
incurred in the ordinary course of business and not overdue by more
than 90 days;
(c) all Obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments;
(d) all Obligations of such Person created or arising
under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights
and remedies of the seller or lender under such agreement in the event
of default are limited to repossession or sale of such property);
(e) all Obligations of such Person as lessee under leases
that have been or should be, in accordance with GAAP, recorded as
capital leases ("Capitalized Leases");
(f) all Obligations, contingent or otherwise, of such
Person under acceptance, letter of credit or similar facilities;
(g) all Obligations of such Person to purchase, redeem,
retire, defease or otherwise make any payment in respect of any
capital stock of or other ownership or profit interest in such Person
or any other Person or any warrants, rights or options to acquire such
capital stock, valued, in the case of Redeemable Preferred Stock, at
the greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends;
(h) all Guaranties of the Debt of others referred to in
clauses (a) through (g) above, but excluding the Agricredit Keepwell
Agreement; and
(i) all Debt referred to in clauses (a) through (h) above
secured by (or for which the holder of such Debt has an existing
right, contingent or otherwise, to be secured by) any Lien on property
(including without limitation accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable
for the payment of such Debt.
For purposes of any calculation of any Debt of AGCO and its Restricted
Subsidiaries, (A) there shall be no double- counting of direct obligations,
Guaranties and reimbursement obligations for letters of credit; (B) the
principal amount of any Debt of any Person arising by
<PAGE> 16
16
reason of such Person having guaranteed Debt of others, where the amount of such
Guaranty is limited to a specified amount that is less than the principal amount
of the Debt guaranteed, shall be such amount as so limited; and (C) there shall
be excluded from such Debt any Debt of a joint venture the general partner of
which is a single-purpose Subsidiary of AGCO, if the joint venture is not
consolidated with AGCO for financial-reporting purposes and such single-purpose
Subsidiary's sole significant asset is its general partnership interest in such
joint venture.
"Default" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be given or
time elapse or both.
"Deutsche Bank Canada" has the meaning specified in the introductory
paragraph of this Agreement.
"Discount Note" means a non-interest bearing promissory note
substantially in the form of Exhibit F, denominated in Canadian Dollars, issued
by the Borrower to a Non BA Lender to evidence a BA Equivalent Loan.
"Discount Proceeds" means, for any Bankers' Acceptance, an amount
calculated on the date of the Advance with respect to such Bankers' Acceptance
or on the date of the Conversion or on the date of the rollover pursuant to
Section 2.16(h), as applicable, calculated by dividing the face amount of such
Bankers' Acceptance by the sum of one plus the product of (1) the Discount Rate
divided by 100 and multiplied by (2) a fraction, the numerator of which is the
applicable Contract Period and the denominator of which is 365.
"Discount Rate" means, with respect to a Bankers' Acceptance being
issued on any date, the percentage discount rate (rounded up or down to the
second decimal place with .005% being rounded up) published on the Reuters'
Screen CDOR Page as the average discount bid rate for Canadian interbank
bankers' acceptances having a comparable issue and maturity date as the issue
and maturity date of such Bankers' Acceptance. If such percentage discount
rate is not so published, the Discount Rate shall be the percentage discount
rate determined by the Canadian Administrative Agent as being the arithmetic
average (rounded up or down to the second decimal place with .005% being
rounded up) of the percentage discount bid rate quoted on that day by each of
the Canadian Reference Banks for bankers' acceptances issued by each of the
Canadian Reference Banks and having a comparable issue and maturity date as the
issue and maturity date of such Bankers' Acceptance.
"Domestic Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a Lender, as the case may be,
<PAGE> 17
17
or such other office of such Lender as such Lender may from time to time specify
to the Borrowers and the Administrative Agent.
"Dormant Subsidiary" means, as of any date of determination, any
Subsidiary of AGCO not conducting any business or other activities or holding
any assets in excess of U.S. $15,000 on such date.
"Eligible Assignee" means a commercial bank, a finance company, an
insurance company or other financial institution (whether a corporation,
partnership, trust or other entity) that is engaged in making, purchasing or
otherwise investing in commercial loans in the ordinary course of its business,
having a combined capital and surplus of at least U.S. $500,000,000 and that is
not a Competitor.
"English Subsidiary One" has the meaning specified in the introductory
paragraph of this Agreement.
"English Subsidiary Two" has the meaning specified in the introductory
paragraph of this Agreement.
"English Subsidiary Three" has the meaning specified in the
introductory paragraph of this Agreement.
"Environmental Action" means any administrative, regulatory or
judicial action, suit, demand, demand letter, claim, notice of non-compliance
or violation, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law or any Environmental Permit
including without limitation
(a) any claim by any governmental or regulatory authority
for enforcement, cleanup, removal, response, remedial or other actions
or damages pursuant to any Environmental Law, and
(b) any claim by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from
alleged injury or threat of injury to the environment or to public
health and welfare in respect of Hazardous Materials.
"Environmental Law" means, with respect to any property or Person, any
federal, state, local or foreign law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award applicable to such property or
Person relating to the environment, public health and welfare in respect of
Hazardous Materials, including without limitation CERCLA, the Resource
Conservation and Recovery Act, the Hazardous Materials
<PAGE> 18
18
Transportation Act, the Clean Water Act, the Toxic Substances Control Act, the
Clean Air Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal
Insecticide, Fungicide and Rodenticide Act and the Occupational Safety and
Health Act, as any of the foregoing may be from time to time amended,
supplemented or otherwise modified.
"Environmental Permit" means, with respect to any property or Person,
any permit, approval, identification number, license or other authorization
required under any Environmental Law applicable to such property or Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, supplemented or otherwise modified from time to time, and the
regulations promulgated and rulings issued thereunder.
"ERISA Affiliate" of any Person means any other Person that for
purposes of Title IV of ERISA is a member of such Person's controlled group, or
under common control with such Person, within the meaning of Section 414 of the
Internal Revenue Code.
"ERISA Event" with respect to any Person means
(a) (i) the occurrence of a reportable event, within
the meaning of Section 4043 of ERISA, with respect to any Plan for
which such Person or any of its ERISA Affiliates is the plan
administrator or the contributing sponsor, as defined in Section
4001(a)(13) of ERISA unless the 30-day notice requirement with
respect to such event has been waived by the PBGC, or (ii) the
requirements of subsection (a) of Section 4043(b) of ERISA (without
regard to subsection (2) of such Section) are met with respect to a
contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a
Plan, and an event described in paragraph (9), (10), (11), (12) or
(13) of Section 4043(c) of ERISA is reasonably expected to occur with
respect to such Plan within the following 30 days;
(b) the provision by the administrator of any Plan of
such Person or any of its ERISA Affiliates of a notice of intent to
terminate such Plan, pursuant to Section 4041(a)(2) of ERISA
(including any such notice with respect to a plan amendment referred
to in Section 4041(e) of ERISA);
(c) the cessation of operations at a facility of such
Person or any of its ERISA Affiliates in the circumstances described
in Section 4062(e) of ERISA;
(d) the withdrawal by such Person or any of its ERISA
Affiliates from a Multiple Employer Plan during a plan year for which
it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA;
<PAGE> 19
19
(e) the failure by such Person or any of its ERISA
Affiliates to make a payment to a Plan required under Section
302(f)(1) of ERISA;
(f) the adoption of an amendment to a Plan of such Person
or any of its ERISA Affiliates requiring the provision of security to
such Plan, pursuant to Section 307 of ERISA; or
(g) the institution by the PBGC of proceedings to
terminate a Plan of such Person or any of its ERISA Affiliates,
pursuant to Section 4042 of ERISA, or the occurrence of any event or
condition described in Section 4042 of ERISA that could constitute
grounds for the termination of, or the appointment of a trustee to
administer, such Plan.
"Eurocurrency Lending Office" means, with respect to any Lender and
any currency, the office of such Lender specified as its "Eurocurrency Lending
Office" for such currency opposite its name on Schedule I hereto or in the
Assignment and Acceptance pursuant to which it became a Lender (or, if no such
office is specified, its Domestic Lending Office), as the case may be, or such
other office of such Lender as such Lender may from time to time specify to
AGCO and the Administrative Agent.
"Eurocurrency Liabilities" has the meaning specified in Regulation D
of the Board of Governors of the Federal Reserve System, as in effect from time
to time.
"Eurocurrency Rate" means, for any Interest Period for all
Eurocurrency Rate Advances by any Lender (whether or not a commercial bank)
comprising part of the same Borrowing in any currency, an interest rate per
annum equal to the rate per annum
(a) in the case of currencies other than Canadian
Dollars, obtained by dividing
(i) either
(A) the rate per annum for deposits in
such currency that appears on page 3750 (if such
currency is U.S. dollars, British pounds, German
deutschemarks or Swiss francs), page 3740 (if such
currency is Dutch guilders, French francs or Italian
lira) of the Dow Jones Telerate Service (or any other
page that may replace any such page on such service
or is applicable to any other Alternate Currency, in
the judgment of the Administrative Agent), or
<PAGE> 20
20
(B) if a rate cannot be determined
pursuant to clause (A) above, a rate per annum equal
to the average (rounded upward to the nearest whole
multiple of 1/16 of 1% per annum, if such average is
not such a multiple) of the rate per annum at which
deposits in such currency are offered by the
principal office of each of the Reference Banks as
determined by the Administrative Agent (or, if the
Administrative Agent is unable to obtain information
as to such rate from all of the Reference Banks, as
to each Reference Bank from which it has obtained
such information) in London, England to prime banks
in the interbank market,
at 11:00 A.M. (London time) two Business Days before the first
day of such Interest Period and for a period equal to such
Interest Period, by
(ii) a percentage equal to 100%, minus the Eurocurrency
Rate Reserve Percentage for such Interest Period, and
(b) in the case of Canadian Dollars, the rate per annum
announced by the Canadian Administrative Agent as its rate for cost of
funds for borrowings for a period equal to such Interest Period.
"Eurocurrency Rate Advance" means an Advance denominated in U.S.
dollars or in an Alternate Currency that bears interest as provided in Section
2.06(a)(ii).
"Eurocurrency Rate Reserve Percentage", for any Interest Period for
all Eurocurrency Rate Advances comprising part of the same Borrowing, means the
reserve percentage applicable two Business Days before the first day of such
Interest Period under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including without limitation any emergency,
supplemental or other marginal reserve requirement) for a member bank of the
Federal Reserve System in New York City with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities (or with respect to any
other category of liabilities that includes deposits by reference to which the
interest rate on Eurocurrency Rate Advances is determined) having a term equal
to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
"Excess Proceeds" has the meaning specified in the Subordinated Debt
Indenture.
"Facility" means the Multi-Currency Facility, the Canadian Subsidiary
Facility or the Letter of Credit Facility.
<PAGE> 21
21
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average of the quotations for such day for
such transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Finance Subsidiary" means any Subsidiary of AGCO (other than a
Borrower or Guarantor) engaged primarily in the business of providing retail
financing to purchasers of agricultural equipment, and each Subsidiary of any
of such Persons.
"Foreign Subsidiary" means a Subsidiary of AGCO not organized under
the laws of the United States or any jurisdiction thereof.
"French Subsidiary" has the meaning specified in the introductory
paragraph of this Agreement.
"Funded Debt" of any Person means Debt in respect of the Advances, in
the case of the Borrowers, and all other Debt of such Person that by its terms
matures more than one year after the date of its creation or matures within one
year from such date but is renewable or extendible, at the option of such
Person, to a date more than one year after such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders to
extend credit during a period of more than one year after such date (but
excluding trade letters of credit issued in the ordinary course of business and
time drafts), including without limitation all amounts of Funded Debt of such
Person required to be paid or prepaid within one year after the date of
determination.
"GAAP" has the meaning specified in Section 1.03.
"German Subsidiary" has the meaning specified in the introductory
paragraph of this Agreement.
"Guaranty" means any Debt or other Obligation of another Person
guaranteed directly or indirectly in any manner by such Person, or in effect
guaranteed directly or indirectly by such Person through an agreement;
(a) to pay or purchase such Obligation or to advance or
supply funds for the payment or purchase of such Obligation;
<PAGE> 22
22
(b) to purchase, sell or lease (as lessee or lessor)
property, or to purchase or sell services, primarily for the purpose
of enabling the debtor to make payment of such Obligation or to assure
the holder of such Obligation against loss;
(c) to supply funds to or in any other manner invest in
the obligor (including any agreement to pay for property or services
irrespective of whether such property is received or such services are
rendered); or
(d) otherwise to assure a creditor against loss.
"Hazardous Materials" means
(a) petroleum or petroleum products, natural or synthetic
gas, asbestos in any form that is or could become friable, urea
formaldehyde foam insulation and radon gas;
(b) any substances defined as or included in the
definition of "hazardous substances", "hazardous wastes", "hazardous
materials", "extremely hazardous wastes", "restricted hazardous
wastes", "toxic substances", "toxic pollutants", "contaminants" or
"pollutants", or words of similar import, under any applicable
Environmental Law; and
(c) any other substance exposure to which is regulated
under any applicable Environmental Law.
"Hedge Agreements" means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts and other similar agreements.
"Indemnified Party" has the meaning specified in Section 8.04(b).
"Insufficiency" means, with respect to any Plan, the amount, if any,
of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of
ERISA.
"Interest Period" means, for each Eurocurrency Rate Advance comprising
part of the same Borrowing (or portion of the same Borrowing), the period
commencing on the date of such Eurocurrency Rate Advance or the date of the
Conversion of any Base Rate Advance into a Eurocurrency Rate Advance, and ending
on the last day of the period selected by any Borrower pursuant to the
provisions below and, thereafter, each subsequent period commencing on the last
day of the immediately preceding Interest Period and ending on the
<PAGE> 23
23
last day of the period selected by the Borrower requesting a Borrowing pursuant
to the provisions below. The duration of each such Interest Period shall be, for
any Interest Period ending on or prior to March 31, 1997, one, two or three
weeks or one, two or three months, and for any Interest Period ending on any
date thereafter, one, two, three, six or, with the consent of each Appropriate
Lender, nine or 12 months, as such Borrower may, upon notice received by the
Administrative Agent (or, if such Borrower is the Canadian Subsidiary, the
Canadian Administrative Agent) not later than 11:00 A.M. (New York City time) on
the third Business Day prior to the first day of such Interest Period, select;
provided that:
(a) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day; provided that, if such extension would cause the last
day of such Interest Period to occur in the next following calendar
month, the last day of such Interest Period shall occur on the
next-preceding Business Day;
(b) whenever the first day of any Interest Period occurs
on a day of an initial calendar month for which there is no
numerically corresponding day in the calendar month that succeeds such
initial calendar month by the number of months equal to the number of
months in such Interest Period, such Interest Period shall end on the
last Business Day of such succeeding calendar month;
(c) such Borrower shall not select an Interest Period
that ends after the Termination Date; and
(d) until March 31, 1997, no Interest Period shall end on
a date after March 31, 1997.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"Inventory" means, with respect to any Person on any date of
determination, solely for purposes of calculating the Borrowing Base of such
Person, all finished goods and parts owned and held for sale by such Person the
amount of which would appear as inventory on a balance sheet of such Person at
such date prepared in accordance with GAAP.
"Investment" in any Person means any loan or advance to such Person,
any purchase or other acquisition of any capital stock, warrants, rights,
options, obligations or other securities of such Person, any capital
contribution to such Person or any other investment in such Person, including
without limitation any arrangement pursuant to which the investor incurs
<PAGE> 24
24
Debt of the types referred to in clauses (g), (h) and (in respect of Debt
referred to in such clause (g) or (h)) (i) of the definition of "Debt" in
respect of such Person.
"Issuing Bank" means either the Multi-Currency Issuing Bank or the
Canadian Issuing Bank.
"L/C Cash Collateral Account" has the meaning specified in Section
6.02.
"L/C Related Documents" has the meaning specified in Section 2.13(d).
"Lenders" means the financial institutions listed as Multi-Currency
Lenders or Canadian Subsidiary Lenders on the signature pages hereof and each
Eligible Assignee that shall become a party hereto pursuant to Section 8.07.
"Letter of Credit" has the meaning specified in Section 2.13(a).
"Letter of Credit Advance" means an advance made by the Issuing Bank
pursuant to Section 2.13(c).
"Letter of Credit Agreement" has the meaning specified in Section
2.13(b).
"Letter of Credit Commitment" means, with respect to each Issuing
Bank, the amount set forth opposite such Issuing Bank's name on Schedule I
hereto under the caption "Letter of Credit Commitment", or, if such Issuing
Bank has entered into an Assignment and Acceptance, set forth in the Register
maintained by the Administrative Agent pursuant to Section 8.07(c), as such
amount may be reduced at or prior to such time pursuant to Section 2.04.
"Letter of Credit Facility" means the aggregate Available Amounts of
Letters of Credit the Issuing Banks may issue pursuant to Section 2.13(a),
which shall not exceed U.S. $75,000,000.
"Lien" means any lien, security interest or other pledge, charge or
encumbrance of any kind, or any other type of preferential arrangement,
including without limitation the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on title
to real property.
"Loan Documents" means this Agreement, the Notes, the Loan Party
Guaranties and each Letter of Credit Agreement.
<PAGE> 25
25
"Loan Parties" means the Borrowers, the Subsidiary Guarantors and each
Person executing a Loan Party Guaranty pursuant to Section 5.01(l) or 5.02(l).
"Loan Party Guaranty" means the Guaranties specified in Section
3.01(e)(vii) and the Guaranties delivered pursuant to Section 5.01(l) and
5.02(l), in each case as amended from time to time in accordance with its
terms.
"Margin Stock" has the meaning specified in Regulation U.
"Material Adverse Effect" means, as of any date of determination, a
material adverse effect on
(a) the business, condition (financial or otherwise),
operations, properties or prospects of AGCO and its Restricted
Subsidiaries, taken as a whole, or any Borrowing Subsidiary and its
Subsidiaries that are Restricted Subsidiaries, taken as a whole,
(b) the rights and remedies of either Agent or any Lender
under any Loan Document or L/C Related Document, or
(c) the ability of any Loan Party to perform its
Obligations under any Loan Document to which it is or is to be a
party.
"Material Contract" means, with respect to any Person, each contract
to which such Person is a party
(a) involving aggregate minimum consideration payable to
or by such Person in any year of U.S. $25,000,000, or
(b) otherwise material to the business, condition
(financial or otherwise), operations, properties or prospects of AGCO
and its Restricted Subsidiaries, taken as a whole, or any Borrowing
Subsidiary and its Subsidiaries that are Restricted Subsidiaries,
taken as a whole, and for which no alternative source of performance
by the other party or parties thereto is readily available.
"Moody's" means Moody's Investors Service, Inc and it successors.
"Multi-Currency Advance" has the meaning specified in Section 2.01(a).
"Multi-Currency Borrowing" means a borrowing consisting of
simultaneous Multi-Currency Advances of the same Type made by the
Multi-Currency Lenders.
<PAGE> 26
26
"Multi-Currency Borrower" means each Borrower other than the Canadian
Subsidiary.
"Multi-Currency Borrower Outstandings" means, on any date of
determination,
(a) the aggregate principal amount of all Multi-Currency
Advances in U.S. dollars and of the Multi- Currency Equivalent in U.S.
dollars of all Multi-Currency Advances in other currencies, in either
case outstanding on such date of determination, plus
(b) the aggregate principal amount of all Letter of
Credit Advances in U.S. dollars and of the Multi-Currency Equivalent
of all Letter of Credit Advances in other currencies, in either case
in respect of Letters of Credit outstanding on such date of
determination and issued for the account of any Multi-Currency
Borrower, plus
(c) the aggregate of the Available Amount of all Letters
of Credit denominated in U.S. dollars and the Multi-Currency
Equivalent of the Available Amount of all Letters of Credit
denominated in other currencies, in either case issued for the account
of Multi-Currency Borrowers and outstanding on such date of
determination.
"Multi-Currency Commitment" means, with respect to any Lender at any
time, the amount set forth opposite such Lender's name on Schedule I hereto
under the caption "Multi-Currency Commitment" or, if such Lender has entered
into one or more Assignments and Acceptances, set forth for such Lender in the
Register maintained by the Administrative Agent pursuant to Section 8.07(c) as
such Lender's "Multi-Currency Commitment", as such amount may be reduced at or
prior to such time pursuant to Section 2.04.
"Multi-Currency Equivalent" means, on any date of determination, the
equivalent in any Alternate Currency or other currency of an amount in U.S.
dollars, or in U.S. dollars of an amount in any Alternate Currency or other
currency, determined at the rate of exchange quoted by the Administrative Agent
in New York City, at 9:00 A.M. (New York City time) on the Calculation Date
with respect to such date of determination, to prime banks in New York City for
the spot purchase in the New York foreign exchange market of such amount of
U.S. dollars with such Alternate Currency or such amount of such Alternate
Currency or other currency with U.S. Dollars. For purposes of this definition,
"Calculation Date" means, with respect to any date of determination, the date
most recently occurring prior to (or occurring on) such date of determination
that is the 15th day of the first complete calendar month after the end of the
most recently completed fiscal quarter of AGCO (or, if such 15th day is not a
Business Day, the next-following Business Day).
<PAGE> 27
27
"Multi-Currency Facility" means, at any time, the aggregate amount of
the Multi-Currency Lenders' Multi- Currency Commitments at such time, which
shall not exceed the Multi-Currency Equivalent of U.S. $1,100,000,000.
"Multi-Currency Issuing Bank" means Rabobank and its successors and
assigns hereunder as issuer of Letters of Credit for the accounts of
Multi-Currency Borrowers.
"Multi-Currency Lender" means any Lender that has a Multi-Currency
Commitment.
"Multiemployer Plan" of any Person means a multiemployer plan, as
defined in Section 4001(a)(3) of ERISA, that is subject to ERISA and to which
such Person or any of its ERISA Affiliates is making or accruing an obligation
to make contributions, or has within any of the preceding five plan years made
or accrued an obligation to make contributions.
"Multiple Employer Plan" of any Person means a single employer plan,
as defined in Section 4001(a)(15) of ERISA, that is subject to ERISA and (a) is
maintained for employees of such Person or any of its ERISA Affiliates and at
least one Person other than such Person and its ERISA Affiliates or (b) was so
maintained and in respect of which such Person or any of its ERISA Affiliates
could have liability under Section 4064 or 4069 of ERISA in the event such plan
has been or were to be terminated.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer
or other disposition of any asset or the sale or issuance of any Debt or
capital stock, any securities convertible into or exchangeable for capital
stock or any warrants, rights or options to acquire capital stock by any
Person, the aggregate amount of cash received from time to time by or on behalf
of such Person in connection with such transaction, after deducting therefrom
only
(a) reasonable and customary brokerage commissions,
underwriting fees and discounts, legal fees, finder's fees and other
similar fees and commissions, and
(b) the amount of taxes payable in connection with or as
a result of such transaction,
in each case to the extent, but only to the extent, that the amounts so
deducted are, at the time of receipt of such cash, actually paid to a Person
that is not an Affiliate and are properly attributable to such transaction or
to the asset that is the subject thereof.
"Netherlands Subsidiary" has the meaning specified in the introductory
paragraph of this Agreement.
<PAGE> 28
28
"Non BA Lender" means a Canadian Subsidiary Lender or Participant that
cannot or does not as a matter of policy issue Bankers' Acceptances.
"Note" means a promissory note of any Borrower payable to the order of
a Lender, in substantially the form of Exhibit A-1 hereto (subject to the first
sentence of Section 2.16), in the case of any Multi-Currency Borrower, or of
Exhibit A-2 hereto, in the case of the Canadian Subsidiary, evidencing the
aggregate indebtedness of such Borrower to such Lender, including the aggregate
face amount of all outstanding Bankers' Acceptances.
"Notice of Borrowing" has the meaning specified in Section 2.02(a).
"Notice of Issuance" has the meaning specified in Section 2.13(b)(i).
"Obligation" means, with respect to any Person, any obligation of such
Person of any kind, including without limitation any liability of such Person
on any claim, whether or not the right of any creditor to payment in respect of
such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, disputed, undisputed, legal, equitable, secured or unsecured, and
whether or not such claim is discharged, stayed or otherwise affected by any
proceeding referred to in Section 6.01(f). Without limiting the generality of
the foregoing, the Obligations of the Loan Parties under the Loan Documents
include
(a) the obligation to pay principal, interest, face
amount of Bankers' Acceptances, Letter of Credit commissions, charges,
expenses, fees, attorneys' fees and disbursements, indemnities and
other amounts payable by any Loan Party under any Loan Document, and
(b) the obligation to reimburse any amount in respect of
any of the foregoing that any Lender, in its sole discretion, may
elect to pay or advance on behalf of such Loan Party.
"Old Credit Agreement" means the Amended and Restated Credit Agreement
dated as of June 25, 1996 among the Borrowers, Rabobank, as administrative
agent, Deutsche Bank Canada, as Canadian administrative agent, Rabobank,
Deutsche Bank Canada and SunTrust Bank, Atlanta, as co-managers, and the
lenders parties thereto.
"Other Taxes" has the meaning specified in Section 2.11(b).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Participant" has the meaning specified in Section 8.07(e).
<PAGE> 29
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"Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced:
(a) Liens for taxes, assessments and governmental charges
or levies to the extent not required to be paid under Section 5.01(b);
(b) Liens imposed by law, such as landlords',
materialmen's, mechanics', carriers', workmen's and repairmen's Liens
and other similar Liens arising in the ordinary course of business
securing obligations that are not overdue for a period of more than 30
days;
(c) pledges or deposits to secure non-delinquent
obligations under worker's compensation, unemployment insurance and
other social security legislation;
(d) Liens arising in the ordinary course of business that
do not secure the repayment of Debt in respect of borrowed money
(i) to secure the performance of bids, trade
contracts, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature;
(ii) in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties
in connection with the importation of goods;
(iii) consisting of restrictions (other than
pledges or other security interests) on the transferability of
Investments in favor of co-investors or the issuers of such
Investments or imposed by law; and
(iv) on trademarks, patents, copyrights and other
intellectual property (whether individually or as part of a
group) consisting of the license or similar disposition of
such property made in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business and
encumbrances consisting of zoning restrictions, easements, licenses,
sublicenses, restrictions on the use of property or minor
imperfections in title thereto which, in the aggregate, are not
material in amount, and which do not in any case materially detract
from the value of the property subject thereto or interfere with the
ordinary conduct of the business of AGCO or any of its Restricted
Subsidiaries;
<PAGE> 30
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(f) Liens resulting from progress payments or partial
payments under United States government contracts or subcontracts;
(g) Liens arising from legal proceedings, so long as such
proceedings are being contested in good faith by appropriate
proceedings diligently conducted and so long as execution is stayed on
all judgments resulting from any such proceedings;
(h) Liens imposed by or pursuant to ERISA; and
(i) rights with respect to property reserved or vested in
governmental authorities that do not render title to the property
encumbered thereby unmarketable or materially adversely affect the use
of such property for its present purposes.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan that
is subject to ERISA.
"Pro Rata Share" of any amount means,
(a) with respect to any Multi-Currency Lender at any
time, an amount equal to
(i) a fraction the numerator of which is the
amount of such Lender's Multi-Currency Commitment at such time
and the denominator of which is the Multi-Currency Facility at
such time, multiplied by
(ii) such amount, and
(b) with respect to any Canadian Subsidiary Lender at any
time, an amount equal to
(i) a fraction the numerator of which is the amount
of such Lender's Canadian Subsidiary Commitment at
such time and the denominator of which is the
Canadian Subsidiary Facility at such time, multiplied
by
(ii) such amount.
"Rabobank" has the meaning specified in the introductory paragraph of
this Agreement.
<PAGE> 31
31
"Receivables" means, with respect to any Person on any date of
determination, all accounts owing to such Person that would appear as
receivables on a balance sheet of such Person at such date prepared in
accordance with GAAP, but excluding any receivables that, although sold to a
third party as part of a securitization of receivables or otherwise, would
continue to appear on a balance sheet of such Person.
"Reference Banks" means Barclays Bank, National Westminster Bank, Bank
of Tokyo and Citibank, N.A.
"Register" has the meaning specified in Section 8.07(c).
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Relevant Currency Time" means, for any Borrowing in any currency, the
local time in the city where the Appropriate Agent's Account for such currency
is located.
"Renault Joint Venture" means the joint venture between the French
Subsidiary and Renault Agriculture S.A. for, among other things, the
manufacture of drive-line assemblies for higher horsepower tractors at the
Beauvais facility of the French Subsidiary.
"Required Lenders" means at any time, subject to Section 8.01(c),
Lenders owed or holding (or, in the case of Bankers' Acceptances, that
initially accepted) at least 51% of the sum of
(a) the aggregate principal amount of the Advances (other
than Advances by way of Bankers' Acceptances) outstanding at such
time;
(b) the aggregate face amount of Bankers' Acceptances
outstanding at such time;
(c) the aggregate Available Amount of all Letters of
Credit outstanding at such time;
(d) the aggregate Unused Multi-Currency Commitments at
such time; and
(e) the aggregate Unused Canadian Subsidiary Commitments
at such time. For purposes of this definition, the Available Amount of any
Letter of Credit issued for the account of the Canadian Subsidiary shall be
considered to be owed to the Canadian Subsidiary Lenders ratably in accordance
with their respective Canadian Subsidiary Commitments, and
<PAGE> 32
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the Available Amount of any Letter of Credit issued for the account of any
Multi- Currency Borrower shall be considered to be owed to the Multi-Currency
Lenders ratably in accordance with their respective Multi-Currency Commitments
"Reserves" means, with respect to any Person on any date of
determination, the aggregate amount of all reserves for bad debt (including
both general loss provisions and specific known losses), dealer discounts and
intercompany receivables that would appear as reserves with respect to
Receivables on a balance sheet of such Person at such date prepared in
accordance with GAAP and the policies and procedures of such Person with
respect to the creation and maintenance of such reserves in effect on the date
of this Agreement.
"Responsible Employee" shall mean the Chairman, President, Chief
Financial Officer, Treasurer, General Counsel or any Associate or Assistant
General Counsel, Assistant Treasurer or Vice President of AGCO or any Borrowing
Subsidiary; any other employee of any Borrower responsible for monitoring
compliance with this Agreement or any other Loan Document; and, with respect to
matters relating to ERISA, any individual having general management
responsibility with respect to such matters.
"Restricted Subsidiaries" means, as of any date of determination, the
Subsidiaries of AGCO as of such date whose accounts would be consolidated with
AGCO in accordance with GAAP, other than Finance Subsidiaries.
"Reuters' Screen CDOR Page" means the display designated as page CDOR
on the Reuters' Monitor Money Service or such other page as may, from time to
time, replace the Reuters' Screen CDOR Page on that service for the purpose of
displaying bid quotations for Bankers' Acceptances issued by leading Canadian
banks.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc., and its successors.
"Single Employer Plan" of any Person means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that is subject to ERISA and
(a) is maintained for employees of such Person or any of
its ERISA Affiliates and no Person other than such Person and its
ERISA Affiliates, or
(b) was so maintained and in respect of which such Person
or any of its ERISA Affiliates could have liability under Section 4069
of ERISA in the event such plan has been or were to be terminated.
<PAGE> 33
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"Split Rating" has the meaning specified in clause (b)(ii) of the
definition of Applicable Rating.
"Standby Letter of Credit" means any Letter of Credit issued under the
Letter of Credit Facility, other than a Trade Letter of Credit.
"Subordinated Debt Indenture" means the Indenture dated as of March
20, 1996 between AGCO and SunTrust Bank, Atlanta, as trustee, as amended,
modified and supplemented from time to time.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, trust or estate of which (or in which) more than 50% of
(a) the issued and outstanding Voting Stock of such
Person,
(b) the interest in the capital or profits of such
partnership or joint venture or
(c) the beneficial interest in such trust or estate
is at the time directly or indirectly owned or controlled by such Person, by
such Person and one or more of its other Subsidiaries or by one or more of such
Person's other Subsidiaries. Unless otherwise specified in this Agreement, a
reference to a Subsidiary shall mean a Subsidiary of AGCO.
"Subsidiary Guarantor" has the meaning specified in Section
3.01(e)(vii).
"Supermajority Lenders" means at any time, subject to Section 8.01(c),
Lenders owed or holding at least 90% of the sum of
(a) the aggregate principal amount of the Advances (other
than Advances by way of Bankers' Acceptances) outstanding at such
time;
(b) the aggregate face amount of Bankers' Acceptances
outstanding at such time;
(c) the aggregate Available Amount of all Letters of
Credit outstanding at such time;
(d) the aggregate Unused Multi-Currency Commitments at
such time; and
<PAGE> 34
34
(e) the aggregate Unused Canadian-Subsidiary Commitments
at such time. For purposes of this definition, the Available Amount of any
Letter of Credit issued for the account of the Canadian Subsidiary shall be
considered to be owed to the Canadian Subsidiary Lenders ratably in accordance
with their respective Canadian Subsidiary Commitments, and the Available Amount
of any Letter of Credit issued for the account of any Multi- Currency Borrower
shall be considered to be owed to the Multi-Currency Lenders ratably in
accordance with their respective Multi-Currency Commitments.
"Taxes" has the meaning specified in Section 2.11(a).
"Termination Date" means the earlier of January 14, 2002 and the date
of termination in whole of the Commitments pursuant to Section 2.04 or 6.01.
"Trade Letter of Credit" means any Letter of Credit that is issued
under the Letter of Credit Facility for the benefit of a supplier of inventory
to the Borrower or any of its Restricted Subsidiaries to effect payment for such
inventory, the conditions to drawing under which include the presentation to the
Issuing Bank of negotiable bills of lading, invoices and related documents
sufficient, in the judgment of the Issuing Bank, to create a valid and perfected
Lien on such inventory.
"Type" refers to the distinction among Advances bearing interest at
the Base Rate and Advances bearing interest at the Eurocurrency Rate and
Advances by way of Bankers' Acceptances.
"United States dollars", "U.S. dollars" or "U.S. $" means lawful money
of the United States of America.
"Unused Canadian Subsidiary Commitment" means, with respect to any
Canadian Subsidiary Lender at any date of determination,
(a) such Lender's Canadian Subsidiary Commitment at such
time, minus
(b) the Multi-Currency Equivalent in U.S. dollars as of
such date of
(i) the aggregate principal amount of all Base
Rate Advances and Eurocurrency Rate Advances made by such
Lender and outstanding on such date, plus
(ii) the aggregate face amount of all Bankers'
Acceptances outstanding on such date, plus
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(iii) such Lender's Pro Rata Share of
(A) the aggregate Available Amount of
all Letters of Credit issued for the account of the
Canadian Subsidiary and outstanding on such date, plus
(B) the aggregate principal amount of
all Letter of Credit Advances outstanding on such
date in respect of Letters of Credit issued for the
account of the Canadian Subsidiary.
"Unused Multi-Currency Commitment" means, with respect to any
Multi-Currency Lender at any date of determination,
(a) such Lender's Multi-Currency Commitment at such time,
minus
(b) the Multi-Currency Equivalent in U.S. dollars as of
such date of
(i) the aggregate principal amount of all
Multi-Currency Advances made by such Lender and outstanding on
such date, plus
(ii) such Lender's Pro Rata Share of
(A) the aggregate Available Amount of
all Letters of Credit issued for the account of any
Multi-Currency Borrower and outstanding on such date,
plus
(B) the aggregate principal amount of
all Letter of Credit Advances outstanding on such
date in respect of Letters of Credit issued for the
account of any Multi-Currency Borrower.
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even though the right
so to vote has been suspended by the happening of such a contingency.
"Wholly Owned" means, as applied to any Restricted Subsidiary, a
Restricted Subsidiary all the outstanding shares (other than directors'
qualifying shares, if required by law) of every class of stock of which are at
the time owned by AGCO and/or by one or more Wholly Owned Restricted
Subsidiaries.
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"Withdrawal Liability" has the meaning specified in Part I of Subtitle
E of Title IV of ERISA.
SECTION 1.02. Computation of Time Periods. In this Agreement
in the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including" and the words "to"
and "until" each mean "to but excluding".
SECTION 1.03. Accounting Terms. (a) Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Administrative Agent
hereunder shall (unless otherwise disclosed to the Lenders in writing at the
time of delivery thereof in the manner described in subsection (b) below) be
prepared, in accordance with U.S. generally accepted accounting principles
applied on a basis consistent with those used in the preparation of the latest
financial statements furnished to the Lenders hereunder (which, prior to the
delivery of the first financial statements under Section 5.03(c) shall mean the
audited financial statements as at December 31, 1995 referred to in Section
4.01(f)). All calculations made for the purposes of determining compliance
with this Agreement shall (except as otherwise expressly provided herein) be
made by application of generally accepted accounting principles applied on a
basis consistent with those used in the preparation of the annual or quarterly
financial statements furnished to the Lenders pursuant to Section 5.03 most
recently prior to or concurrently with such calculations (or, prior to the
delivery of the first financial statements under Section 5.03(c), used in the
preparation of the audited financial statements as at December 31, 1995 referred
to in Section 4.01(f)) unless (i) either (x) AGCO shall have objected to
determining such compliance on such basis at the time of delivery of such
financial statements or (y) the Required Lenders shall so object in writing
within 180 days after delivery of such financial statements and (ii) AGCO and
the Required Lenders have not agreed upon amendments to the financial covenants
contained herein to reflect any change in such basis, in which event such
calculations shall be made on a basis consistent with those used in the
preparation of the latest financial statements as to which such objection shall
not have been made (which, if objection is made in respect of the first
financial statements delivered under Section 5.03(c), shall mean the financial
statements referred to in Section 4.01(f)) ("GAAP").
(b) AGCO shall deliver to the Administrative Agent, at
the same time as the delivery of any annual or quarterly financial statement
under Section 5.03, (i) a description in reasonable detail of any material
variation between the application of accounting principles employed in the
preparation of such statement and the application of accounting principles
employed in the preparation of the next preceding annual or quarterly financial
statements as to which no objection has been made in accordance with the last
sentence of subsection (a) above, and (ii) reasonable estimates of the
difference between such statements arising as a consequence thereof.
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SECTION 1.04. Currency Equivalents. For purposes of
determining in any currency any amount outstanding in another currency, the
Multi-Currency Equivalent of such currency on the date of any such
determination shall be used. If any reference to any Advances or other amount
herein would include amounts in U.S. dollars and in one or more Alternate
Currencies or to an amount in U.S. dollars that in fact is in one or more
Alternate Currencies, such reference (whether or not it expressly so provides)
shall be deemed to refer, to the extent it includes an amount in any Alternate
Currency, the Multi-Currency Equivalent in U.S. dollars of such amount at the
time of determination.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
SECTION 2.01. The Advances. (a) Multi-Currency Advances.
Each Multi-Currency Lender severally agrees, on the terms and conditions
hereinafter set forth, to make advances (each a "Multi-Currency Advance") to
the Multi-Currency Borrowers from time to time on any Business Day during the
period from the date hereof until the Termination Date in an amount for each
such Advance not to exceed such Lender's Unused Multi-Currency Commitment on
such Business Day. In no event shall the Multi-Currency Lenders be obligated to
make any Multi-Currency Advance if, on the date of such Advance and after giving
effect thereto,
(i) the Multi-Currency Borrower Outstandings on such date
would exceed the amount of the Multi- Currency Facility on such date,
or
(ii) the Borrower Outstandings on such date would exceed
the Borrowing Base on such date.
Each Multi-Currency Borrowing shall be in U.S. dollars in, or the
Multi-Currency Equivalent in the requested Alternate Currency of, an aggregate
amount of U.S. $5,000,000 or an integral multiple of U.S. $1,000,000 in excess
thereof and shall consist of Multi-Currency Advances made by such Lenders
ratably according to their Multi-Currency Commitments. The Multi-Currency
Equivalent in U.S. dollars of each Multi-Currency Advance shall be recalculated
hereunder on each date on which it shall be necessary to determine the Unused
Multi-Currency Commitment, or any or all Advance or Advances outstanding on
such date. Within the limits of each Multi-Currency Lender's Unused
Multi-Currency Commitment in effect from time to time, the Multi-Currency
Borrowers may borrow under this Section 2.01(a), prepay pursuant to Section
2.05(a) and reborrow under this Section 2.01(a).
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(b) Canadian Subsidiary Advances. Each Canadian
Subsidiary Lender severally agrees, on the terms and conditions hereinafter set
forth, to make advances (each a "Canadian Subsidiary Advance") to the Canadian
Subsidiary from time to time on any Business Day during the period from the
date hereof until the Termination Date in an amount for each such Advance not
to exceed such Lender's Unused Canadian Subsidiary Commitment on such Business
Day. In no event shall the Canadian Subsidiary Lenders be obligated to make
any Canadian Subsidiary Advance if, on the date of such Advance and after
giving effect thereto,
(i) the Canadian Subsidiary Outstandings on such date
would exceed the amount of the Canadian Subsidiary Facility on such
date, or
(ii) the Borrower Outstandings on such date would exceed
the Borrowing Base on such Date.
Each Canadian Subsidiary Borrowing shall be by way of (x) Base Rate Advances or
Eurocurrency Rate Advances in the Multi- Currency Equivalent in Canadian
Dollars of an aggregate amount of U.S. $5,000,000 or an integral multiple of
U.S. $1,000,000 in excess thereof or (y) the acceptance and purchase of
Bankers' Acceptances, pursuant to Section 2.16, in a minimum aggregate face
amount of Cdn. $5,000,000 or an integral multiple of Cdn. $1,000,000 in excess
thereof, and shall consist of Canadian Subsidiary Advances made by such Lenders
ratably according to their Canadian Subsidiary Commitments. The Multi-Currency
Equivalent in U.S. dollars of each Canadian Subsidiary Advance shall be
recalculated hereunder on each date on which it shall be necessary to determine
the Unused Canadian Subsidiary Commitment, or any or all Advance or Advances
outstanding on such date. Within the limits of each Canadian Subsidiary Lender's
Unused Canadian Subsidiary Commitment in effect from time to time, the Borrowers
may borrow under this Section 2.01(b), prepay pursuant to Section 2.05(a) and
reborrow under this Section 2.01(b).
(c) Borrower Liability. AGCO shall be jointly and
severally liable for all Borrowings and other liabilities hereunder or under
any other Loan Document by or of itself or any Borrowing Subsidiary. No
Borrowing Subsidiary shall have any liability for any Borrowing or other
liabilities hereunder or under any other Loan Document by or of AGCO or (except
as may otherwise be provided in such Borrowing Subsidiary's Guaranty) any other
Borrowing Subsidiary.
SECTION 2.02. Making the Advances. (a) Except as otherwise
provided in Section 2.13, each Borrowing shall be made on notice, given not
later than
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(w) 11:00 A.M. (New York Time) on the third Business Day
prior to the date of a proposed Borrowing, in the case of a Borrowing
consisting of Eurocurrency Rate Advances,
(x) 10:00 A.M. (New York City time) on the day of a
proposed Borrowing, in the case of a Borrowing consisting of Base Rate
Advances if the aggregate principal amount thereof is less than
$100,000,000,
(y) 10:00 A.M. (New York City time) on the Business Day
prior to the date of a proposed Borrowing, in the case of a Borrowing
consisting of Base Rate Advances if the aggregate principal amount
thereof is $100,000,000 or more, or
(z) 10:00 A.M. (Toronto time) two Business Days prior to
the date of a proposed Borrowing, in the case of a Borrowing
consisting of Bankers' Acceptances
by or on behalf of the Borrower requesting such Advance to the Administrative
Agent (in the case of a Multi-Currency Borrowing) or the Canadian
Administrative Agent (in the case of a Canadian Subsidiary Borrowing), which
shall give to each Appropriate Lender prompt notice thereof by telecopier.
Each such notice of a Borrowing (a "Notice of Borrowing") shall be by telex,
telecopier or cable, confirmed immediately in writing, in substantially the
form of Exhibit B-1 hereto (in the case of a Borrowing by a Multi-Currency
Borrower) or Exhibit B-2 hereto (in the case of a Borrowing by the Canadian
Subsidiary), specifying therein the
(i) requested date of such Borrowing (which shall be a
Business Day);
(ii) requested Type of Advances comprising such Borrowing,
which
(A) may be a Base Rate Advance or a Eurocurrency
Advance if such Advance is denominated in U.S. dollars or
Canadian Dollars,
(B) may be by way of Bankers' Acceptances if such
Advance is denominated in Canadian Dollars, and
(C) shall be a Eurocurrency Rate Advance if such
Advance is a Multi-Currency Advance and the requested currency
for such Borrowing is other than Canadian dollars or U.S.
dollars;
(iii) requested aggregate principal amount or face amount
of such Borrowing, as the case may be;
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(iv) requested currency in which such Borrowing is to be
made; provided that
(A) such currency shall be Canadian dollars, if
the Person requesting such Borrowing is the Canadian
Subsidiary; British pounds or U.S. dollars, if the Person
requesting such Borrowing is English Subsidiary One, English
Subsidiary Two or English Subsidiary Three; Dutch guilders, if
the Person requesting such Borrowing is the Netherlands
Subsidiary; French francs or U.S. dollars, if the Person
requesting such Borrowing is the French Subsidiary; and German
deutschemarks or U.S. dollars, if the Person requesting such
Borrowing is the German Subsidiary,
(B) such currency shall not be Canadian dollars,
if the Borrower is AGCO and
(C) no Borrower shall make a request for a
Borrowing in an Alternate Currency described in clause (b) of
the definition thereof unless it shall have previously
obtained the consent of each Multi-Currency Lender to
Borrowings in such currency;
(v) in the case of a Borrowing consisting of Eurocurrency
Rate Advances, requested initial Interest Period for each such Advance
and in the case of a Borrowing consisting of Bankers' Acceptances, the
Contract Period for each such Advance; and
(vi) Borrower's Account of such Borrower for such
Borrowing (which shall be with an institution located in the same
country as the Appropriate Agent's Account for the requested currency
of such Borrowing).
Each Borrowing by the Canadian Subsidiary shall be a Borrowing under the
Canadian Subsidiary Facility, and each other Borrowing shall be a Borrowing
under the Multi-Currency Facility. In the case of a proposed Borrowing
comprised of Eurocurrency Rate Advances, the Appropriate Agent shall promptly
(and in any case no later than 11:00 A.M. (New York Time) on the second
Business Day before any Eurocurrency Rate Advance or 1:00 P.M. (New York City
time) on the day of any Base Rate Advance) notify each Appropriate Lender of
the applicable interest rate under Section 2.06(a). Each Appropriate Lender
shall, before 11:00 A.M. (Relevant Currency Time) on the date of any Borrowing
consisting of Eurocurrency Rate Advances, or 3:00 P.M. (New York City time) on
the date of any Borrowing consisting of Base Rate Advances, make available for
the account of its Applicable Lending Office to the Appropriate Agent at the
Appropriate Agent's Account for Borrowings in the applicable currency, in
same-day funds, such Lender's Pro Rata Share of such Borrowing in accordance
with the respective Commitments of such Appropriate Lender and
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41
the other Appropriate Lenders. Each Appropriate Lender shall, before 1:00 P.M.
(Toronto time) on the date of any Borrowing consisting of Bankers' Acceptances,
make available to the Borrower by way of the acceptance of Bankers' Acceptances
at the branch of the Appropriate Lender to which notices may be sent under
Section 8.02 such Lender's Pro Rata Share of such Borrowing in accordance with
the respective Commitments of such Appropriate Lender and the other Appropriate
Lenders. After the Appropriate Agent's receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article III, the
Appropriate Agent will make such funds available to the requesting Borrower by
delivering such funds to the relevant Borrower's Account in the applicable
currency; provided that, in the case of any Borrowing, the Appropriate Agent
shall first make a portion of such funds, equal to the aggregate principal
amount of any Letter of Credit Advances to such Borrower made by the Appropriate
Issuing Bank and outstanding on the date of such Borrowing, available for
repayment of such Letter of Credit Advances. Receipt of such funds in a
Borrower's Account shall be deemed to have occurred when the Appropriate Agent
notifies AGCO, by telephone or otherwise, of the Federal Reserve Bank reference
number or CHIPS identification number with respect to the delivery of such
funds.
(b) Each Notice of Borrowing shall be irrevocable and
binding on the Borrower delivering such Notice. Each Borrower (other than
AGCO) (i) irrevocably and unconditionally designates, as its agent for purposes
of delivering any Notice of Borrowing on behalf of such Borrower, AGCO and any
officer or employee of AGCO, and (ii) acknowledges that (A) any such Notice at
any time delivered by AGCO or any such officer or employee shall be binding on
such Borrower and (B) neither Agent nor any Lender shall have any duty to
determine whether the delivery of any such Notice by AGCO or any such officer
or director was duly authorized by such Borrower in any specific instance. In
the case of any Borrowing that the related Notice of Borrowing specifies is to
be comprised of Eurocurrency Rate Advances or Bankers' Acceptances, the
Borrower requesting such Borrowing shall indemnify each Appropriate Lender
against any loss, cost or expense incurred by such Lender as a result of any
failure to fulfill on or before the date specified in such Notice of Borrowing
the applicable conditions set forth in Article III, including without limitation
any loss (including loss of anticipated profits), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund the Advance to be made by such Lender as part of such
Borrowing when such Advance, as a result of such failure, is not made on such
date.
(c) Unless the Appropriate Agent shall have received
notice from an Appropriate Lender prior to the date of any Borrowing under a
Facility under which such Lender has a Commitment that such Lender will not
make available to the Appropriate Agent such Lender's ratable portion of such
Borrowing, the Appropriate Agent may assume that such Lender has made such
portion available to the Appropriate Agent on the date of such Borrowing in
accordance with subsection (a) of this Section 2.02 and the Appropriate Agent
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may, in reliance upon such assumption, make available to the requesting
Borrower on such date a corresponding amount. If and to the extent that such
Lender shall not have so made such ratable portion available to the Appropriate
Agent and the Appropriate Agent makes available to the requesting Borrower on
such date a corresponding amount, such Lender and each Borrower severally agree
to repay or pay to the Appropriate Agent forthwith on demand such corresponding
amount and to pay interest thereon, for each day from the date such amount is
made available to such Borrower until the date such amount is repaid or paid to
the Appropriate Agent, at
(i) in the case of the Borrower, the interest rate
applicable at such time under Section 2.06 to Advances comprising such
Borrowing, and
(ii) in the case of such Lender, the Federal Funds Rate if
such payment is made to the Administrative Agent or the Base Rate
(with respect to Canadian Subsidiary Borrowings) if such payment is
made to the Canadian Administrative Agent.
If such Lender shall pay to the Appropriate Agent such corresponding amount,
such amount so paid shall constitute such Lender's Advance as part of such
Borrowing for purposes of this Agreement.
(d) No Multi-Currency Borrower shall request a Borrowing
if, after giving effect thereto, there would be more than 12 Borrowings
outstanding under the Multi-Currency Facility and the Canadian Subsidiary shall
not request a Borrowing if, after giving effect thereto, there would be more
than 12 Borrowings outstanding under the Canadian Subsidiary Facility.
(e) The failure of any Lender to make the Advance to be
made by it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Advance on the date of such
Borrowing, but no Lender shall be responsible for the failure of any other
Lender to make the Advance to be made by such other Lender on the date of any
Borrowing.
SECTION 2.03. Repayment. (a) Canadian Subsidiary Advances
and Multi-Currency Advances. The Canadian Subsidiary shall repay to the
Canadian Administrative Agent for the ratable account of the Canadian
Subsidiary Lenders the aggregate outstanding principal amount or face amount,
as the case may be, of its Borrowings consisting of Canadian Subsidiary
Advances on the Termination Date and each Multi-Currency Borrower shall repay
to the Administrative Agent for the ratable account of the Multi-Currency
Lenders the aggregate outstanding principal amount of its Borrowings consisting
of Multi-Currency Advances on the Termination Date.
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(b) Letter of Credit Advances. Each Borrower shall, on
demand, repay to the Appropriate Agent for the account of the Appropriate
Lenders the outstanding principal amount of each Letter of Credit Advance made
by them to such Borrower.
SECTION 2.04. Reduction of the Commitments. (a) Optional.
AGCO may, upon at least three Business Days' notice to the Administrative Agent
(and, with respect to a reduction of the Letter of Credit Commitment and the
Unused Canadian Subsidiary Commitments, the Canadian Administrative Agent),
terminate in whole or reduce in part the unused portions of the Letter of
Credit Commitments of the Issuing Banks, the Unused Canadian Subsidiary
Commitments or the Unused Multi-Currency Commitments; provided that each
partial reduction
(i) shall be in an aggregate amount of U.S. $10,000,000
or an integral multiple of U.S. $5,000,000 in excess thereof;
(ii) shall be made ratably among the Appropriate Lenders
in accordance with their Commitments with respect to the applicable
Facility; and
(iii) shall be permanent and irrevocable.
Any reduction of the Letter of Credit Commitments shall apply to the Letter of
Credit Commitments of both Issuing Banks and shall reduce each such Letter of
Credit Commitment by the full amount of such reduction.
(b) Mandatory.
(i) On the date of receipt by AGCO or any of its
Restricted Subsidiaries of the Net Cash Proceeds from the sale, lease,
transfer or other disposition of any assets of AGCO or any of its
Restricted Subsidiaries, other than
(s) dispositions to joint ventures permitted
under Section 5.02(f)(vi),
(t) sales of assets in the ordinary course of
business,
(u) dispositions the Net Cash Proceeds of which
do not exceed U.S. $2,000,000 for any one disposition or
series of related dispositions,
(v) after the date on which the aggregate
Multi-Currency Commitments under the Multi- Currency Facility
shall be $900,000,000 or less, any dispositions, until and to
the extent the aggregate amount of Net Cash Proceeds therefrom
after such date do not exceed U.S. $20,000,000,
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(w) dispositions by a Restricted Subsidiary to
another Restricted Subsidiary or AGCO and dispositions by AGCO
to a Restricted Subsidiary,
(x) the disposition of AGCO's real property
located in Topeka, Kansas or of the former headquarters
building in Stoneleigh, England,
(y) the disposition of any capital stock of
Agricredit Acceptance Corporation and
(z) bulk sales of Receivables permitted under
Section 5.02(e)(v),
the aggregate amount of the Multi-Currency Facility and the Canadian
Subsidiary Facility shall be permanently reduced by the amount of 50%
of such Net Cash Proceeds, with each such facility being reduced by a
portion of such Net Cash Proceeds equal to the amount thereof
multiplied by a fraction, the numerator of which is the amount of such
facility at the time of such reduction and the denominator of which is
the aggregate amount of both such facilities. Upon such reduction,
(A) each Multi-Currency Lender's Multi-Currency Commitment shall be
reduced ratably in accordance with the proportion that such Commitment
bore to the Multi-Currency Facility immediately before giving effect
to such reduction, and (B) each Canadian Subsidiary Lender's Canadian
Subsidiary Commitment shall be reduced ratably in accordance with the
proportion that such Commitment bore to the Canadian Subsidiary
Facility immediately before giving effect to such reduction.
(ii) The aggregate amount of the Multi-Currency Facility
and the Canadian Subsidiary Facility shall be permanently reduced by
the amount of any Excess Proceeds (or of what would be such Excess
Proceeds but for their application pursuant to Section 2.05(b)(iv)) in
existence on any date, with each such Facility being reduced by a
portion of such Excess Proceeds equal to the amount thereof multiplied
by a fraction, the numerator of which is the amount of such Facility
at the time of such reduction and the denominator of which is the
aggregate amount of both such Facilities. Upon such reduction, (A)
each Multi-Currency Lender's Multi- Currency Commitment shall be
reduced ratably in accordance with the proportion that such Commitment
bore to the Multi-Currency Facility immediately before giving effect
to such reduction, and (B) each Canadian Subsidiary Lender's Canadian
Subsidiary Commitment shall be reduced ratably in accordance with the
proportion that such Commitment bore to the Canadian Subsidiary
Facility immediately before giving effect to such reduction.
(iii) On the date of receipt by AGCO or any of its
Restricted Subsidiaries of the Net Cash Proceeds from the sale or
issuance of any Debt or capital stock, the aggregate amount of the
Multi-Currency Facility shall be permanently reduced by the
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Net Cash Proceeds thereof, except that the aggregate amount of the
Multi- Currency Facility shall not be reduced by more than U.S.
$200,000,000 in the aggregate or below $900,000,000 pursuant to this
subsection (iii). Upon such reduction, each Multi-Currency Lender's
Multi-Currency Commitment shall be reduced ratably in accordance with
the proportion that such Commitment bore to the Multi-Currency Facility
immediately before giving effect to such reduction.
(iv) On January 1, 1998, if the aggregate amount of the
Multi-Currency Commitments under the Multi- Currency Facility shall be
then be in excess of U.S. $1,000,000,000, such amount shall be reduced
to U.S. $1,000,000,000 and on January 1, 1999 if the aggregate amount
of the Multi-Currency Commitments under the Multi-Currency Facility
shall be then be in excess of U.S. $900,000,000, such amount shall be
reduced to U.S. $900,000,000. Upon each such reduction, each
Multi-Currency Lender's Multi-Currency Commitment shall be reduced
ratably in accordance with the proportion that such Commitment bore to
the Multi-Currency Facility immediately before giving effect to such
reduction.
(c) Letters of Credit. If on any date the aggregate
amount of the Multi-Currency Facility is less than U.S. $75,000,000 (or, if the
Letter of Credit Facility on such date is in a lesser amount, such lesser
amount), the amount of the Letter of Credit Facility and each Issuing Bank's
Letter of Credit Commitment automatically shall be reduced to such aggregate
amount, except that on no date shall the amount of the Letter of Credit
Facility be reduced below the then-outstanding Available Amount of all Letters
of Credit and the aggregate principal amount of all Letter of Credit Advances.
SECTION 2.05. Prepayments and Deposits. (a) Optional. A
Borrower may, upon at least two Business Days' notice to the Administrative
Agent stating the proposed date (which shall be a Business Day) and aggregate
principal amount of the prepayment, and if such notice is given such Borrower
shall, except as provided in the next- following sentence, prepay the
outstanding aggregate principal amount of the Advances, other than Bankers'
Acceptances, comprising part of the same Borrowing made by it, in whole or
ratably in part; provided that each partial prepayment shall be in an aggregate
principal amount of U.S. $5,000,000 or an integral multiple of U.S. $1,000,000
(or the Multi- Currency Equivalent) in excess thereof. A Borrower shall not be
required to prepay any amount as to which it shall have given a notice of
prepayment; provided that, if a Borrower shall have failed to prepay an Advance
as to which it shall have given a notice of prepayment, then, if such Advance
is a Eurocurrency Rate Advance, such Advance shall accrue interest from the
prepayment date specified in such notice of prepayment for the next following
three Business Days at 2% per annum in excess of the rate per annum at which
interest would accrue on a Eurocurrency Rate Advance with an Interest Period of
one month, beginning on such prepayment date, and from such third Business Day
shall have such Interest Period as such Borrower may specify in accordance with
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the provisions contained in the definition of "Interest Period" in Section 1.01
or, if it shall failed so to have specified an Interest Period, as provided in
Section 2.08(c).
(b) Mandatory.
(i) (A) On any date on which the Multi-Currency
Facility shall be reduced pursuant to Section 2.04(b), if the
Multi-Currency Borrower Outstandings on such date shall exceed
the amount of the Multi- Currency Facility after giving effect
to such reduction, the Multi-Currency Borrowers shall prepay
Multi-Currency Advances or Letter of Credit Advances by the
Multi-Currency Lenders in the aggregate principal amount equal
to such excess. Each such prepayment by a Multi-Currency
Borrower shall be applied ratably to such Multi-Currency
Advances forming part of the same Borrowing by such Borrower,
or to such Letter of Credit Advances pursuant to draws on the
same Letter of Credit issued for the account of such
Multi-Currency Borrower, as AGCO shall designate at the time
of such prepayment.
(B) On any date on which the Canadian Subsidiary
Facility shall be reduced pursuant to Section 2.04(b), if the
Canadian Subsidiary Outstandings on such date shall exceed the
amount of the Canadian Subsidiary Facility after giving effect
to such reduction, the Canadian Subsidiary shall prepay
Canadian Subsidiary Advances or Letter of Credit Advances by
the Canadian Subsidiary Lenders in the aggregate principal
amount equal to such excess. Each such prepayment by the
Canadian Subsidiary shall be applied ratably to such Canadian
Subsidiary Advances forming part of the same Borrowing by the
Canadian Subsidiary, or to such Letter of Credit Advances
pursuant to draws on the same Letter of Credit issued for the
account of the Canadian Subsidiary, as the Canadian Subsidiary
shall designate at the time of such prepayment.
(ii) (A) If, on the last day of any Interest Period
for any Eurocurrency Rate Advance to a Multi-Currency Borrower
and on any date on which a Base Rate Advance to a
Multi-Currency Borrower is outstanding, if the Multi-Currency
Borrower Outstandings on such date shall exceed 105% of the
amount of the Multi-Currency Facility on such date, such
Multi-Currency Borrower shall prepay the lesser of
(1) the aggregate principal amount of
such Eurocurrency Advance as to which such last date
shall have occurred or of such Base Rate Advance, and
<PAGE> 47
47
(2) such portion of such principal
amount as shall be the Multi-Currency Equivalent in
the currency of such Advances of such excess.
(B) On the last day of any Interest Period for
any Eurocurrency Rate Advance to the Canadian Subsidiary and
on the last day of any Contract Period with respect to any
outstanding Bankers' Acceptances and on any date on which a
Base Rate Advance to the Canadian Subsidiary is outstanding,
if the Canadian Subsidiary Outstandings on such date shall
exceed 105% of the amount of the Canadian Subsidiary Facility
on such date, the Canadian Subsidiary shall prepay the lesser
of
(1) the aggregate principal amount of
such Eurocurrency Rate Advance to it as to which such
last day shall have occurred or the aggregate face
amount of such Bankers' Acceptance as to which such
last day shall have occurred or the aggregate
principal amount of such Base Rate Advance, and
(2) such portion of such principal
amount or face amount, as the case may be, as shall
be the Multi-Currency Equivalent in the currency of
such Advances of such excess.
(iii) (A) With respect to any determination of the
Borrowing Base in respect of a certificate delivered pursuant
to Section 5.03(n)(i), the Borrowers shall, on the 30th day
after the end of the fiscal quarter in respect of which such
certificate was delivered (or, if such day is not a Business
Day, the next-following Business Day) prepay an aggregate
principal amount of the Advances equal to the amount, if any
by which the Borrower Outstandings on such day shall exceed
the Borrowing Base as determined pursuant to such certificate.
(B) With respect to any determination of the
Borrowing Base in respect of a certificate delivered pursuant
to Section 5.03(n)(ii), the Borrowers shall, on the Business
Day next following the day on which such certificate shall be
delivered, prepay an aggregate principal amount of the
Advances equal to the amount, if any by which the Borrower
Outstandings on such day shall exceed the Borrowing Base as
determined pursuant to such certificate.
(C) The Borrowers shall, on any Business Day on
which Excess Proceeds exist (or would exist if not applied to
the prepayment provided herein), prepay an aggregate principal
amount of the Advances equal to such Excess Proceeds.
<PAGE> 48
48
Each such prepayment shall be applied ratably to such Advances forming
part of the same Borrowings or such Letter of Credit Advances pursuant
to draws on the same Letters of Credit as AGCO shall designate at the
time of such prepayment.
(iv) On the date on which the aggregate unpaid principal
amount of Eurocurrency Rate Advances comprising any Borrowing under
the Multi-Currency Facility shall be reduced, by payment or
prepayment, to less than U.S. $5,000,000, the Borrower owing such
Borrowing shall prepay such Advances in full.
(v) The Borrowers shall make such prepayments of
Multi-Currency Advances as are required by Sections 2.09(c)(ii),
(d)(ii), (e)(ii) and (f)(ii).
(vi) AGCO shall, on each Business Day, pay to the
Administrative Agent for deposit in the L/C Cash Collateral Account an
amount sufficient to cause the aggregate amount on deposit in such
Account to equal the amount by which (A) the Multi-Currency Equivalent
in U.S. dollars of (1) the aggregate principal amount of all Letter of
Credit Advances, plus (2) the aggregate Available Amount of all
Letters of Credit then outstanding, exceeds (B) the Letter of Credit
Facility on such Business Day.
(c) Interest on Principal Amounts Prepaid. All
prepayments under this Section 2.05 shall be made together with
accrued interest to the date of such prepayment on the principal
amount prepaid.
SECTION 2.06. Interest. (a) Ordinary Interest. Each
Borrower shall pay interest on the unpaid principal amount of each Base Rate
Advance and Eurocurrency Rate Advance to it owing to each Lender from the date
of such Advance until such principal amount shall be paid in full, at the
following rates per annum:
(i) Base Rate Advances. During such periods as such
Advance is a Base Rate Advance, a rate per annum equal at all times to
the Base Rate in effect from time to time, payable in arrears (A)
quarterly on the last day of each March, June, September, and December
during such periods, (B) on the date on which such Base Rate Advance
shall be paid in full and (C) on the Termination Date.
(ii) Eurocurrency Rate Advances. During such periods as
such Advance is a Eurocurrency Rate Advance, a rate per annum equal at
all times during each Interest Period for such Advance to the sum of
(x) the Eurocurrency Rate for such Interest
Period for such Advance, and
<PAGE> 49
49
(y) the Applicable Margin in effect from time to
time,
payable in arrears on (A) the last day of such Interest Period, (B) if
such Interest Period has a duration of more than three months, also on
each day that occurs during such Interest Period every three months
from the first day of such Interest Period, (C) on which such Advance
shall be paid in full and (D) on the Termination Date.
(b) Default Interest. Upon the occurrence and during the
continuance of a Default under Section 6.01(a), and at the election of the
Required Lenders upon the occurrence and during the continuance of any other
Default, each Borrower shall pay interest on the unpaid principal amount or
face amount, as the case may be, of each Advance owing to each Lender or the
amount of any interest, fee or other amount payable hereunder, which in any
case is not paid when due, from the date such amount shall be due until such
amount shall be paid in full, payable in arrears on the date such amount shall
be paid in full and on demand, at a rate per annum equal at all times to
(i) in the case of any Base Rate Advance, 2% per annum
above the rate per annum required to be paid on Base Rate Advances
pursuant to Section 2.06(a)(i) above;
(ii) in the case of any Eurocurrency Rate Advance
denominated in U.S. dollars, (A) until the end of the then-current
Interest Period, 2% per annum above the interest rate that would
otherwise be applicable pursuant to subsection (a)(ii) above, and (B)
thereafter, 2% per annum above the rate per annum required to be paid
on Base Rate Advances pursuant to Section 2.06(a)(i) above;
(iii) in the case of any Eurocurrency Rate Advance
denominated in an Alternate Currency, a rate per annum computed each
day and equal to 2% per annum above the rate per annum at which
interest would accrue on a Eurocurrency Rate Advance with an Interest
Period of one month beginning on such day; and
(iv) in the case of any outstanding Bankers' Acceptances,
2% per annum above the Base Rate applicable to Canadian Subsidiary
Borrowings.
SECTION 2.07. Fees. (a) Commitment Fee. AGCO shall pay to
the Administrative Agent for the account of the Multi-Currency Lenders and to
the Canadian Administrative Agent for the account of the Canadian Subsidiary
Lenders a commitment fee computed each day, beginning on January 14, 1997, on
each Multi-Currency Lender's Unused Multi-Currency Commitment and each
Canadian Subsidiary Lender's Unused Canadian Subsidiary Commitment, from the
date hereof until the Termination Date, at the percentage
<PAGE> 50
50
rate per annum determined by reference to the Applicable Rating in effect as of
such date of determination, as set forth below:
<TABLE>
<CAPTION>
==========================================
APPLICABLE RATING RATE
-----------------------------------------
<S> <C>
>= A- 0.09%
-----------------------------------------
BBB+ 0.11%
-----------------------------------------
BBB 0.15%
-----------------------------------------
BBB- 0.20%
-----------------------------------------
Split Rating 0.25%
-----------------------------------------
BB+ 0.30%
-----------------------------------------
BB 0.35%
-----------------------------------------
< BB 0.50%
=========================================
</TABLE>
(b) Agents' Fee. AGCO shall pay to the Agents for their
respective accounts the fees separately agreed between AGCO and each Agent.
(c) Payment of Fees. The fees and commission described
in this Section 2.07 and in Section 2.13(e)(i) and (ii) shall be payable in
arrears quarterly on the last Business Day of each March, June, September and
December, commencing March 31, 1997, and on the Termination Date.
SECTION 2.08. Conversion and Designation of Interest Periods.
(a) On any Business Day, upon notice given to the
Appropriate Agent not later than 11:00 A.M. (New York City time) on the third
Business Day prior to the date of the proposed Conversion and subject to the
provisions of Section 2.09,
(x) AGCO may Convert all or any portion of the
Multi-Currency Advances (but not Letter of Credit Advances) in U.S.
dollars of one Type comprising the same Borrowing into Advances of
another Type (other than Advances by way of Bankers' Acceptances), and
(y) the Canadian Subsidiary may Convert all or any
portion of the Canadian Subsidiary Advances or Multi-Currency Advances
(but not Letter of Credit Advances) of one Type comprising the same
Borrowing into Advances of another Type;
<PAGE> 51
51
provided that
(i) any Conversion of Eurocurrency Rate Advances into
Base Rate Advances or into Advances by way of Bankers' Acceptances
shall be made only on the last day of an Interest Period for such
Eurocurrency Rate Advances; any Conversion of Base Rate Advances into
Eurocurrency Rate Advances or into Advances by way of Bankers'
Acceptances shall be in an amount not less than the relevant minimum
amount specified in Section 2.01; any Conversion of Advances by way of
Bankers' Acceptances into Base Rate Advances or Eurocurrency Rate
Advances shall be made only on the last day of the relevant Contract
Period; if less than all Advances by way of Bankers' Acceptances or
all Eurocurrency Rate Advances are Converted, after such Conversion,
not less than the relevant minimum amount specified in Section 2.01
shall continue as Advances by way of Bankers' Acceptances or
Eurocurrency Rate Advances, as the case may be;
(ii) if less than all Advances comprising part of the same
Borrowing are Converted, the portion of the Advances Converted must at
least equal the minimum aggregate principal amount of a Borrowing
permitted under Section 2.01 and all Lenders' Advances comprising the
Borrowing to be Converted in part shall be Converted ratably in
accordance with their applicable Pro Rata Shares;
(iii) each Conversion of less than all Advances comprising
part of the same Borrowing shall be deemed to be an additional
Borrowing for purposes of Section 2.02(d), and no such Conversion of
any Advances may result in there being outstanding more separate
Borrowings than permitted under Section 2.02(d); and
(iv) no Advances may be Converted into Eurocurrency Rate
Advances or into Advances by way of Bankers' Acceptances while a
Default has occurred and is continuing.
Each such notice of Conversion shall, within the restrictions specified above,
specify (w) the date of such Conversion, (x) the Advances to be Converted (y)
if such Conversion is into Eurocurrency Rate Advances, the duration of the
initial Interest Period for such Advances and (z) if such Conversion is into
Advances by way of Bankers' Acceptances, the duration of the Contract Period
for such Advances. Each notice of Conversion shall be irrevocable and binding
on AGCO.
(b) On the date on which the aggregate unpaid principal
amount of Eurocurrency Rate Advances denominated in U.S. dollars shall be
reduced, by payment or prepayment or otherwise, to less than U.S. $5,000,000,
such Advances shall automatically Convert into Base Rate Advances; if the
aggregate face amount of outstanding Bankers'
<PAGE> 52
52
Acceptances shall be reduced, by payment or prepayment or otherwise, to less
than Cdn. $5,000,000, the Advances by way of such Bankers' Acceptances shall
automatically convert, on the last day of the relevant Contract Period, into
Base Rate Advances.
(c) If a Borrower shall fail to select the duration of
any Interest Period for any Eurocurrency Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01,
the Appropriate Agent will forthwith so notify such Borrower and the
Appropriate Lenders, whereupon each such Eurocurrency Rate Advance will
automatically, on the last day of the then-existing Interest Period therefor,
(i) if it is an Advance denominated in U.S. dollars or
Canadian Dollars, Convert into a Base Rate Advance, and
(ii) if it is an Advance denominated in an Alternate
Currency (other than Canadian Dollars), be deemed to have an Interest
Period of one month.
(d) If the Canadian Subsidiary shall fail to select the
duration of any Contract Period for any Advances by way of Bankers' Acceptances
in accordance with the provisions contained in the definition of "Contract
Period" in Section 1.01, the Canadian Administrative Agent will forthwith so
notify the Canadian Subsidiary and the Appropriate Lenders, whereupon each such
Advance by way of Banker's Acceptances will automatically, on the last day of
the then-existing Contract Period therefor, Convert into a Base Rate Advance.
SECTION 2.09. Increased Costs, Etc. (a) If, due to either
(i) the introduction of or any change in or in the
interpretation of any law or regulation or
(ii) the compliance with any guideline or request from any
central bank or other governmental authority (whether or not having
the force of law)
made, or effective, after the date hereof, there shall be any increase in the
cost to any Lender or either Issuing Bank of agreeing to make or of making,
funding or maintaining Eurocurrency Rate Advances or of agreeing to accept
Bankers' Acceptances or of agreeing to issue or of issuing, maintaining or
participating in Letters of Credit or of agreeing to make or of making or
maintaining Letter of Credit Advances, in any case to or for the account of any
Borrower, then such Borrower shall from time to time, upon demand by such
Lender or Issuing Bank (with a copy of such demand to the Administrative Agent
and, if such Lender is a Canadian Subsidiary Lender or such Issuing Bank is the
Canadian Issuing Bank, the Canadian Administrative Agent), pay to the
Administrative Agent, if such Lender is a Multi-Currency
<PAGE> 53
53
Lender, and otherwise to the Canadian Administrative Agent for the account of
such Lender or such Issuing Bank additional amounts sufficient to compensate
such Lender or such Issuing Bank for such increased cost. A certificate as to
the amount of such increased cost and stating that such Lender's or Issuing
Bank's request for payment is consistent with such Lender's or Issuing Bank's
internal policies, submitted to such Borrower by such Lender or such Issuing
Bank, shall be conclusive and binding for all purposes, absent manifest error.
(b) If any Lender or either Issuing Bank determines that
compliance with any law or regulation or any guideline or request from any
central bank or other governmental authority (whether or not having the force
of law), which in any such case is adopted, issued, made or effective after the
date hereof, affects or would affect the amount of capital required or expected
to be maintained by such Lender or such Issuing Bank or any corporation
controlling such Lender or such Issuing Bank and that the amount of such
capital is increased by or based upon the existence of such Lender's commitment
to lend or participate in Letters of Credit or, in the case of an Issuing Bank,
to issue Letters of Credit, hereunder and other commitments of such type or the
issuance or maintenance of the Letters of Credit (or similar contingent
obligations), in any case to or for the account of any Borrower, then, upon
demand by such Lender or such Issuing Bank (with a copy of such demand to the
Administrative Agent and, if such Lender is a Canadian Subsidiary Lender or
such Issuing Bank is the Canadian Issuing Bank, the Canadian Administrative
Agent), such Borrower shall pay to the Administrative Agent, if such Lender is
a Multi-Currency Lender or such Issuing Bank is the Multi-Currency Issuing
Bank, and otherwise to the Canadian Administrative Agent for the account of
such Lender or such Issuing Bank, from time to time as specified by such Lender
or such Issuing Bank, additional amounts sufficient to compensate such Lender
or such Issuing Bank in the light of such circumstances, to the extent that
such Lender or such Issuing Bank reasonably determines such increase in capital
to be allocable to the existence of such Lender's commitment to lend or such
Issuing Bank's commitment to issue or maintain of any Letters of Credit. A
certificate as to such amounts and stating that such Lender's or such Issuing
Bank's request for payment is consistent with such Lender's or such Issuing
Bank's internal policies, submitted to such Borrower by such Lender or such
Issuing Bank, shall be conclusive and binding for all purposes, absent manifest
error.
(c) If, with respect to any Eurocurrency Rate Advances in
U.S. dollars or any Alternate Currency, Appropriate Lenders owed more than 50%
of the then-outstanding aggregate unpaid principal amount thereof notify the
Administrative Agent, in the case of Multi-Currency Advances and otherwise the
Canadian Administrative Agent that the Eurocurrency Rate for any Interest
Period for such Advances in U.S. dollars or any Alternate Currency will not
adequately reflect the cost to such Lenders of making, funding or maintaining
their Eurocurrency Rate Advances for such Interest Period, the Administrative
Agent or Canadian Administrative Agent, as applicable, shall forthwith so
notify the affected Borrower and the Appropriate Lenders, whereupon
<PAGE> 54
54
(i) if U.S. dollars are the affected currency, each such
Eurocurrency Rate Advance denominated in U.S. dollars will
automatically, on the last day of the then-existing Interest Period
therefor, Convert into a Base Rate Advance;
(ii) if an Alternate Currency is the affected currency,
the affected Borrower shall, on the last day of the then-existing
Interest Period, prepay in full such Eurocurrency Advances in the
affected currency; and
(iii) the obligation of the Appropriate Lenders to make
such Eurocurrency Rate Advances in the affected currency shall be
suspended,
until the Administrative Agent or Canadian Administrative Agent, as applicable,
shall notify the affected Borrowers that such Lenders have determined that the
circumstances causing such suspension no longer exist.
(d) Notwithstanding any other provision of this
Agreement, if the introduction of or any change in or in the interpretation of
any law or regulation shall make it unlawful, or any central bank or other
governmental authority shall assert that it is unlawful, for any Lender or its
Eurocurrency Lending Office to perform its obligations hereunder to make
Eurocurrency Rate Advances in U.S. dollars or any Alternate Currency or to
continue to fund or maintain such Eurocurrency Rate Advances hereunder, then,
on notice thereof and demand therefor by such Lender to the Borrowers through
the Administrative Agent, if such Lender is a Multi-Currency Lender, and
otherwise through the Canadian Administrative Agent,
(i) the obligation of the Appropriate Lenders to make
Eurocurrency Advances in the affected currency shall be suspended,
(ii) the affected Borrower shall, on the earlier of the
last day of the then-existing Interest Period and such date as may be
required by law, prepay in full all Multi-Currency Advances in any
such Alternate Currency other than Canadian Dollars and
(iii) each Eurocurrency Rate Advance denominated in U.S.
dollars or Canadian Dollars will automatically, upon such demand,
Convert into a Base Rate Advance,
until the Administrative Agent or the Canadian Administrative Agent, as
applicable, shall notify the affected Borrowers that such Lender has determined
that the circumstances causing such suspension no longer exist.
<PAGE> 55
55
(e) During the continuance of any Event of Default, and
upon the election of the Required Lenders and during the continuance of any
Default,
(i) each Eurocurrency Rate Advance denominated in U.S.
dollars or Canadian Dollars will automatically, on the last day of the
then-existing Interest Period therefor, Convert into a Base Rate
Advance and each outstanding Bankers' Acceptance will automatically,
on the last day of the then-existing Contract Period therefor, Convert
into a Base Rate Advance;
(ii) the Borrowers will, on the last day of the
then-existing Interest Period therefor, prepay each Eurocurrency Rate
Advance in an Alternate Currency other than Canadian Dollars; and
(iii) the obligation of the Lenders to make Eurocurrency
Rate Advances and accept Bankers' Acceptances shall be suspended.
(f) If on any date either S&P or Moody's shall cease to
rate the senior, unsecured, long-term debt of AGCO, unless the Supermajority
Lenders consent otherwise,
(i) each Eurocurrency Rate Advance denominated in U.S.
dollars or Canadian Dollars will automatically, on the seventh
Business Day after such date, Convert into a Base Rate Advance and
each outstanding Bankers' Acceptance will automatically, on the later
of the seventh Business Day after such date and the last day of the
then-existing Contract Period therefor, Convert into a Base Rate
Advance;
(ii) the Borrowers will, on the seventh Business Day after
such date, prepay each Eurocurrency Rate Advance in an Alternate
Currency other than Canadian Dollars; and
(iii) the obligation of the Lenders to make Eurocurrency
Rate Advances and accept Bankers' Acceptances shall be suspended until
such time as S&P and Moody's both shall again rate such debt.
(g) Each Lender shall notify AGCO of any event occurring
after the date of this Agreement entitling such Lender to compensation under
subsection (a) or (b) of this Section 2.09 within 180 days, after such Lender
obtains actual knowledge thereof; provided that
(i) if any Lender fails to give such notice within 180
days after it obtains actual knowledge of such an event, such Lender
shall, with respect to compensation
<PAGE> 56
56
payable pursuant to such subsection (a) or (b) in respect of any costs
resulting from such event, only be entitled to payment under such
subsection (a) or (b) for costs incurred from and after the date 180
days prior to the date that such Lender gives such notice, and
(ii) each Lender will designate a different Applicable
Lending Office for the Advances of such Lender affected by such event
if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the sole opinion of such Lender, be
disadvantageous to such Lender or contrary to its policies.
SECTION 2.10. Payments and Computations. (a) Each Borrower
shall make each payment hereunder and under the Notes free and clear of any
setoff or counterclaim not later than 11:00 A.M. (Relevant Currency Time) on
the day when due, in the case of principal or interest on and other amounts
relating to any Borrowing in the currency in which such Borrowing was
denominated and in any other case in U.S. dollars, to the Appropriate Agent in
same-day funds by deposit of such funds to the Appropriate Agent's Account for
payments in the applicable currency. The Appropriate Agent will promptly
thereafter (and in any event, if received from a Borrower by the time specified
in the preceding two sentences, on the day of receipt) cause like funds to be
distributed
(i) if such payment by a Borrower is in respect of
principal, interest, fees or any other Obligation then payable
hereunder in a particular currency and under the Notes to more than
one Lender, to such Lenders for the account of their respective
Applicable Lending Offices for payments in such currency ratably in
accordance with the amounts of such respective Obligations in such
currency then payable to such Lenders, and
(ii) if such payment by a Borrower is in respect of any
Obligation then payable hereunder to one Lender, to such Lender for
the account of its Applicable Lending Office for payments in the
applicable currency.
Upon its acceptance of an Assignment and Acceptance and recording of the
information contained therein in the Register pursuant to Section 8.07(d), from
and after the effective date of such Assignment and Acceptance, the Appropriate
Agent shall make all payments hereunder and under the Notes in respect of the
interest assigned thereby to the Lender assignee thereunder, and the parties to
such Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.
(b) If an Agent receives funds for application to the
Obligations under the Loan Documents under circumstances for which the Loan
Documents do not specify the
<PAGE> 57
57
Advances or the Facility to which, or the manner in which, such funds are to be
applied, such Agent may, but shall not be obligated to, elect to distribute such
funds to each Lender ratably in accordance with such Lender's proportionate
share of the principal amount of all outstanding Advances and the Available
Amount of all Letters of Credit then outstanding, in repayment or prepayment of
such of the outstanding Advances or other Obligations owed to such Lender, and
for application to such principal installments, as such Agent shall direct.
(c) All computations of interest, fees and Letter of
Credit commissions shall be made by the Appropriate Agent on the basis of a
year of 360 days, in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest, fees or commissions are payable, except that
(i) computations of interest for Base Rate Advances, and
for fees and Letter of Credit commissions payable in Canadian dollars,
shall be made by the Administrative Agent on the basis of a year of
365 or 366 days, as applicable, and
(ii) each rate of interest on, and each fee and Letter of
Credit commission payable in respect of, Canadian Subsidiary Advances
that is calculated on the basis of a year of 360 days, shall be
determined pursuant to such calculation and expressed as an annual
rate for the purpose of the Interest Act (Canada) as equivalent to
such rate as so determined, multiplied by the actual number of days in
the calendar year in which the same is to be ascertained and divided
by 360.
The principle of deemed reinvestment of interest will not apply to any interest
calculated under this Agreement, and for the purposes of the Interest Act
(Canada) the rates of interest stipulated in the Agreement are intended to be
nominal rates, and not effective rates or yields. Each determination by an
Agent of an interest rate, fee or commission hereunder shall be conclusive and
binding for all purposes, absent manifest error.
(d) Whenever any payment hereunder or under the Notes
shall be stated to be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of payment of interest or
commitment fee, as the case may be; provided that, if such extension would
cause payment of interest on or principal of Eurocurrency Rate Advances or of
face amounts of Bankers' Acceptances to be made in the next-following calendar
month, such payment shall be made on the next-preceding Business Day.
(e) Unless an Agent shall have received notice from the
Borrower prior to the date on which any payment is due to any Lender hereunder
that the Borrower will not make such payment in full, such Agent may assume
that the Borrower has made such payment in full to the such Agent on such date
and such Agent may, in reliance upon such assumption,
<PAGE> 58
58
cause to be distributed to each such Lender on such due date an amount equal to
the amount then due such Lender. If and to the extent the Borrower shall not
have so made such payment in full to such Agent and such Agent makes available
to a Lender on such date a corresponding amount, such Lender shall repay to such
Agent forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to such Agent, at the
Federal Funds Rate.
SECTION 2.11. Taxes. (a) Any and all payments by the
Borrowers hereunder or under the Notes shall be made, in accordance with
Section 2.10, free and clear of and without deduction for any and all present
or future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto of or by any governmental authorities,
excluding, in the case of each Lender and either Agent, franchise taxes and net
income taxes that are imposed on such Lender, or either Agent by the state or
foreign jurisdiction under the laws of which such Lender or such Agent (as the
case may be) is organized or any political subdivision thereof (including the
country within which such state or jurisdiction is located) and, in the case of
each Lender, franchise taxes and net income taxes that are imposed on such
Lender by the state of such Lender's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as
"Taxes"). If the Borrowers shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder or under any Note to any Lender or
an Agent,
(i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section
2.11) such Lender or such Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions
been made,
(ii) the Borrowers shall make such deductions and
(iii) the Borrowers shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with
applicable law.
(b) In addition, the Borrowers shall pay any present or
future stamp, documentary, excise, property or similar taxes, charges or levies
that arise from any payment made hereunder or under the Notes or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or the Notes (hereinafter referred to as "Other Taxes").
<PAGE> 59
59
(c) The Borrowers shall indemnify each Lender and each
Agent for the full amount of Taxes and Other Taxes, and for the full amount of
taxes imposed by any jurisdiction on amounts payable under this Section 2.11,
paid by or imposed on such Lender or such Agent (as the case may be) and any
liability (including penalties, additions to tax, interest and expenses)
arising therefrom or with respect thereto. This indemnification shall be made
within 30 days from the date such Lender or such Agent (as the case may be)
makes written demand therefor, and delivers to AGCO with a certificate
describing in reasonable detail the manner in which the indemnified amount was
calculated; provided that a Lender or an Agent shall not be required to
describe in such certificate information that such Lender or Agent deems to be
confidential or the disclosure of which is inconsistent with such Lender's or
Agent's internal policies. Any such calculation shall be conclusive, absent
manifest error.
(d) Within 30 days after the date of any payment of
Taxes, the Multi-Currency Borrowers shall furnish to the Administrative Agent,
and the Canadian Subsidiary shall furnish to the Canadian Administrative Agent,
at their respective addresses referred to in Section 8.02, the original receipt
of payment thereof or a certified copy of such receipt. In the case of any
payment hereunder or under the Notes by the Borrowers through an account or
branch outside the United States, in the case of any Multi-Currency Borrower,
or through an account or branch outside Canada, in the case of the Canadian
Subsidiary, or on behalf of the Borrowers by a payor that is not a United
States person, or a person Resident in Canada, as the case may be, if the
Borrowers determine that no Taxes are payable in respect thereof, the Borrowers
shall furnish, or shall cause such payor to furnish, to the Appropriate Agent,
at such address, an opinion of counsel acceptable to such Agent stating that
such payment is exempt from Taxes. For purposes of this subsection (d) and
subsection (e), the terms "United States" and "United States person" shall have
the meanings specified in Section 7701 of the Internal Revenue Code, and the
terms "Canada" and "Resident in Canada" shall have the meanings ascribed
thereto for purposes of the Income Tax Act (Canada).
(e) Each Lender organized under the laws of a
jurisdiction outside the United States, in the case of a Multi-Currency Lender,
and each Lender organized under the laws of a jurisdiction outside the country
of the applicable Borrower, in each other case, shall, on or prior to the date
of its execution and delivery of this Agreement in the case of each initial
Lender hereunder, and on the date of the Assignment and Acceptance pursuant to
which it became a Lender in the case of each other Lender, and from time to
time thereafter if requested in writing by a Borrower or the Appropriate Agent
(but only so long thereafter as such Lender remains lawfully able to do so),
provide the Appropriate Agent and such Borrower with (i) in the case of a
Multi-Currency Lender, Internal Revenue Service form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Lender is entitled to benefits under an income tax treaty
to which the United States is a party that reduces the rate of
interest-withholding tax on payments under this Agreement or the Notes or
certifying that the income receivable pursuant to this Agreement or
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the Notes is effectively connected with the conduct of a trade or business in
the United States, and (ii) in the case of any Lender organized under the laws
of a jurisdiction outside the country within which an applicable Borrower is
organized, such forms, as are reasonably requested by such Borrower and required
by the applicable tax authority of such jurisdiction, indicating that such
Lender is entitled to benefits under an income tax treaty to which the country
within which such Borrower is resident is a party that reduces the rate of
interest- withholding tax on payments under this Agreement or the Notes. If the
appropriate forms provided by a Lender at the time such Lender first becomes a
party to this Agreement indicates an interest-withholding tax rate in excess of
zero, withholding tax at such rate shall be considered excluded from Taxes
unless and until such Lender provides the appropriate form certifying that a
lesser rate applies, whereupon withholding tax at such lesser rate only shall be
considered excluded from Taxes for periods governed by such form; provided that,
if at the date of the Assignment and Acceptance pursuant to which a Lender
assignee becomes a party to this Agreement, the Lender assignor was entitled to
payments under subsection (a) in respect of United States (or the jurisdiction
wherein the applicable Borrower is organized) withholding tax with respect to
interest paid at such date by a Borrower, then, to such extent, the term Taxes
shall include (in addition to withholding taxes that may be imposed in the
future or other amounts otherwise includible in Taxes) (or the jurisdiction
wherein the applicable Borrower is organized) withholding tax, if any,
applicable with respect to the Lender assignee on such date. If any form or
document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form 1001 or
4224 or other form that the applicable Borrower has indicated in writing to the
Lenders on the date hereof as being a required form to avoid or reduce
withholding tax on payments under this Agreement or on the Notes, that a Lender
reasonably considers to be confidential, such Lender shall give notice thereof
to the Borrowers and shall not be obligated to include in such form or document
such confidential information.
(f) For any period with respect to which a Lender has
failed to provide the Borrowers with the appropriate form described in
subsection (e) (other than if such failure is due to a change in law occurring
after the date on which a form originally was required to be provided or if
such form otherwise is not required under subsection (e)), such Lender shall
not be entitled to indemnification under subsection (a) or (c) with respect to
Taxes imposed by the United States; provided that should a Lender become
subject to Taxes because of its failure to deliver a form required hereunder,
the Borrowers shall take such steps as such Lender shall reasonably request to
assist such Lender to recover such Taxes.
(g) Without prejudice to the survival of any other
agreement of the Borrowers hereunder, the agreements and obligations of the
Borrowers contained in this Section 2.11 shall survive the payment in full of
principal and interest hereunder and under the Notes.
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SECTION 2.12. Sharing of Payments, Etc. If any Lender shall
obtain at any time any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) distributed other than in
accordance with the provisions of this Agreement,
(a) on account of Obligations due and payable to such
Lender hereunder and under the Notes at such time in excess of its
ratable share (according to the proportion of (i) the amount of such
Obligations due and payable to such Lender at such time to (ii) the
aggregate amount of the Obligations due and payable to all Lenders
hereunder and under the Notes at such time) of payments on account of
the Obligations due and payable to all Lenders hereunder and under the
Notes at such time obtained by all the Lenders at such time, or
(b) on account of Obligations owing (but not due and
payable) to such Lender hereunder and under the Notes at such time in
excess of its ratable share (according to the proportion of (i) the
amount of such Obligations owing to such Lender at such time to (ii)
the aggregate amount of the Obligations owing (but not due and
payable) to all Lenders hereunder and under the Notes at such time) of
payments on account of the Obligations owing (but not due and payable)
to all Lenders hereunder and under the Notes at such time obtained by
all the Lenders at such time,
such Lender shall forthwith purchase from the other Lenders such participations
in the Obligations due and payable or owing to them, as the case may be, as
shall be necessary to cause such purchasing Lender to share the excess payment
ratably with each of them; provided that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from
each other Lender shall be rescinded and such other Lender shall repay to the
purchasing Lender the purchase price to the extent of such other Lender's
ratable share (according to the proportion of (x) the purchase price paid to
such Lender to (y) the aggregate purchase price paid to all Lenders) of such
recovery together with an amount equal to such Lender's ratable share
(according to the proportion of (A) the amount of such other Lender's required
repayment to (B) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. The Borrowers agree that any Lender
so purchasing a participation from another Lender pursuant to this Section 2.12
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation.
SECTION 2.13. Letters of Credit. (a) The Letter of Credit
Facility. Each Issuing Bank agrees, on the terms and conditions hereinafter
set forth, to issue letters of credit (the "Letters of Credit") for the account
of any Multi-Currency Borrower (in the case of the
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Multi-Currency Issuing Bank) or the Canadian Subsidiary (in the case of the
Canadian Issuing Bank) from time to time on any Business Day during the period
from
(x) in the case of any Letter of Credit issued for the
account of a Multi-Currency Borrower, the date of the initial
Borrowing, and
(y) in the case of any Letter of Credit issued for the
account of the Canadian Subsidiary, the date of this Agreement until
60 days before the Termination Date
(i) in an aggregate Available Amount for all Letters of
Credit issued for the account of all Borrowers not to exceed at any
time the Appropriate Issuing Bank's Letter of Credit Commitment, minus
the aggregate principal amount of all Letter of Credit Advances to any
Borrower then outstanding,
(ii) in an Available Amount for each Letter of Credit
issued for the account of a Multi-Currency Borrower not to exceed
either
(A) the aggregate Unused Multi-Currency Commitments on such Business Day,
or
(B) the excess, if any, of the Borrowing Base
over Borrower Outstandings on such Business Day, and
(iii) in an Available amount for each such Letter of Credit
issued for the account of the Canadian Subsidiary not to exceed either
(A) the aggregate Unused Canadian Subsidiary Commitments on such Business
Day, or
(B) the excess, if any, of the Borrowing Base
over Borrower Outstandings on such Business Day.
No Letter of Credit shall have an expiration date (including all rights of a
Borrower or the beneficiary to require renewal) later than the earlier of 60
days before the Termination Date and, in the case of a Standby Letter of
Credit, one year after the date of issuance thereof, and, in the case of a
Trade Letter of Credit, 180 days after the date of issuance thereof. Each
Letter of Credit shall require that all draws thereon must be presented to the
Issuing Bank by the expiration date therefor, regardless of whether presented
prior to such date to any correspondent bank or other institution. Within the
limits of the Letter of Credit Facility, and subject to the limits referred to
above, the Borrower may request the issuance of Letters of Credit under this
Section 2.13(a), repay any Letter of Credit Advances resulting from
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drawings thereunder pursuant to Section 2.13(c) and request the issuance of
additional Letters of Credit under this Section 2.13(a).
On the date of the initial Borrowing hereunder, each Letter of
Credit issued under the Old Credit Agreement shall be deemed for all purposes,
as of such date, without further action by any Person, to have been issued
hereunder.
(b) Request for Issuance. (i) Each Letter of Credit
shall be issued upon notice, given not later than 11:00 A.M. (New York City
time) on the first Business Day prior to the date of the proposed issuance of
such Letter of Credit, by a Borrower to the Appropriate Issuing Bank, which
shall give to the Appropriate Agent and each Appropriate Lender prompt notice
thereof by telex, telecopier or cable. Each such notice of issuance of a
Letter of Credit (a "Notice of Issuance") shall be by telex, telecopier or
cable, confirmed immediately in writing, specifying therein
(A) the requested date of such issuance (which shall be a
Business Day);
(B) the requested Available Amount of such Letter of
Credit;
(C) the requested expiration date of such Letter of
Credit;
(D) the requested currency in which such Letter of Credit
shall be denominated, which shall be U.S. dollars or an Alternate
Currency; provided that no Borrower shall make a request for a Letter
of Credit in an Alternate Currency described in clause (b) of the
definition thereof unless it shall have previously obtained the
consent of each Lender to the issuance of Letters of Credit in such
currency;
(E) the requested name and address of the beneficiary of
such Letter of Credit; and
(F) the requested form of such Letter of Credit,
and shall be accompanied by such application and agreement for letter of credit
(a "Letter of Credit Agreement") as the Appropriate Issuing Bank may specify to
such Borrower for use in connection with such requested Letter of Credit. If
(x) the requested form of such Letter of Credit is
acceptable to the Appropriate Issuing Bank in its sole discretion, and
(y) it has not received notice of objection to such
issuance from the Required Lenders,
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the Appropriate Issuing Bank will, upon fulfillment of the applicable
conditions set forth in Article III, make such Letter of Credit available to
the requesting Borrower at its office referred to in Section 8.02 or as
otherwise agreed with such Borrower in connection with such issuance. In the
event and to the extent that the provisions of any Letter of Credit Agreement
shall conflict with this Agreement, the provisions of this Agreement shall
govern. A Letter of Credit shall be deemed to have been issued for the account
of each Borrower delivering the Notice of Issuance therefor.
(ii) The Issuing Bank shall furnish
(A) to the Appropriate Agent on the first Business Day of
each week a written report summarizing issuance and expiration dates
of Letters of Credit issued during the previous week, the respective
Available Amounts with respect thereto, currencies in which such
Letters of Credit were denominated, for whose account such letters of
credit were issued and drawings during such week under all Letters of
Credit;
(B) to each Appropriate Lender on the first Business Day
of each month a written report summarizing issuance and expiration
dates of Letters of Credit issued during the preceding month and
drawings during such month under all Letters of Credit; and
(C) to the Appropriate Agent and each Appropriate Lender
on the first Business Day of each calendar quarter a written report
setting forth the average daily aggregate Available Amount during the
preceding calendar quarter of all Letters of Credit.
(c) Drawing and Reimbursement.
(i) The payment by the Appropriate Issuing Bank of a
draft drawn under any Letter of Credit shall constitute for all
purposes of this Agreement the making by such Issuing Bank of a Letter
of Credit Advance, which shall
(A) in the case of payment on a draft drawn under
a Letter of Credit denominated in U.S. dollars or Canadian
Dollars, be a Base Rate Advance in the amount of such draft,
and
(B) in any other case, be a Eurocurrency Rate
Advance that bears interest at the rate per annum equal to the
rate per annum at which interest would accrue on a
Eurocurrency Rate Advance with an Interest Period of one month
beginning on the date of such draw.
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(ii) Upon the issuance of each Letter of Credit for the
account of a Multi-Currency Borrower, each Multi-Currency Credit
Lender (other than the Multi-Currency Issuing Bank) shall be deemed to
have purchased a participation therein equal to its Pro Rata Share of
the Available Amount thereof and, upon written demand by the
Multi-Currency Issuing Bank following a draw on such a Letter of
Credit, with a copy of such demand to the Administrative Agent, each
Multi-Currency Lender (other than the Multi-Currency Issuing Bank)
shall purchase from the Multi-Currency Issuing Bank, directly and not
as a participation, and the Multi-Currency Issuing Bank shall sell and
assign to each such other Multi-Currency Lender, such other Lender's
Pro Rata Share of such Letter of Credit Advance resulting from such
draw as of the date of such purchase, by making available for the
account of its Applicable Lending Office to the Administrative Agent
for the account of the Multi-Currency Issuing Bank, by deposit to the
Administrative Agent's Account, in same-day funds in the currency in
which such Letter of Credit was denominated, an amount equal to the
portion of the outstanding principal amount of such Letter of Credit
Advance to be purchased by such Lender.
(iii) Upon the issuance of each Letter of Credit for the
account of the Canadian Subsidiary, each Canadian Subsidiary Lender
(other than the Canadian Issuing Bank, if it is then a Canadian
Subsidiary Lender) shall be deemed to have purchased a participation
therein equal to its Pro Rata Share of the Available Amount thereof
and, upon written demand by the Canadian Issuing Bank following a draw
on such a Letter of Credit, with a copy of such demand to the
Administrative Agent and the Canadian Administrative Agent, each
Canadian Subsidiary Lender (other than the Canadian Issuing Bank)
shall purchase from the Canadian Issuing Bank, directly and not as a
participation, and the Canadian Issuing Bank shall sell and assign to
each such other Canadian Subsidiary Lender, such other Lender's Pro
Rata Share of the Letter of Credit Advance resulting from such draw as
of the date of such purchase, by making available for the account of
its Applicable Lending Office to the Canadian Administrative Agent for
the account of the Canadian Issuing Bank, by deposit to the Canadian
Administrative Agent's Account, in same-day funds in the currency in
which such Canadian Subsidiary Letter of Credit was denominated, an
amount equal to the portion of the outstanding principal amount of
such Letter of Credit Advance to be purchased by such Canadian
Subsidiary Lender.
(iv) Each Borrower agrees to each participation, sale and
assignment pursuant to this subsection (c).
(v) Each Appropriate Lender agrees to purchase its Pro
Rata Share of an outstanding Letter of Credit Advance on
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(A) the Business Day on which demand therefor is
made by the Issuing Bank, provided notice of such demand is
given not later than 11:00 A.M. (New York City time) on such
Business Day, or
(B) the first Business Day next succeeding such
demand if notice of such demand is given after such time.
Upon any such assignment by the Appropriate Issuing Bank to any
Appropriate Lender of a portion of a Letter of Credit Advance, the
Appropriate Issuing Bank shall be deemed to have represented and
warranted to such Appropriate Lender that such Issuing Bank is the
legal and beneficial owner of such interest being assigned by it, but
makes no other representation or warranty and assumes no
responsibility with respect to such Letter of Credit Advance, the Loan
Documents or any Loan Party. If and to the extent that any
Appropriate Lender shall not have so made the purchase price for its
Pro Rata Share of a Letter of Credit Advance available to the
Appropriate Agent, such Lender agrees to pay to the Appropriate Agent
forthwith on demand such amount together with interest thereon, for
each day from the date of demand by the Appropriate Issuing Bank until
the date such amount is paid to the Appropriate Agent, at the Federal
Funds Rate, in the case of demands made by the Multi-Currency Issuing
Bank, and at the Base Rate (with respect to Canadian Subsidiary
Borrowings) in the case of demands made by the Canadian Issuing Bank.
If such Lender shall pay to the Appropriate Agent such amount for the
account of the Appropriate Issuing Bank on any Business Day, such
amount so paid in respect of principal shall constitute a Letter of
Credit Advance made by such Lender on such Business Day for purposes of
this Agreement, and the outstanding principal amount of the Letter of
Credit Advance made by the Appropriate Issuing Bank shall be reduced by
such amount on such Business Day.
(d) Obligations Absolute. The Obligations of the
Borrowers under this Agreement, any Letter of Credit Agreement and any other
agreement or instrument relating to any Letter of Credit shall be unconditional
and irrevocable, and shall be paid strictly in accordance with the terms of
this Agreement, such Letter of Credit Agreement and such other agreement or
instrument under all circumstances, including without limitation the following
circumstances:
(i) any lack of validity or enforceability of this
Agreement, any Letter of Credit Agreement, any Letter of Credit or any
other agreement or instrument relating thereto (this Agreement and all
of the other foregoing being, collectively, the "
L/C Related Documents");
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(ii) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations of any
Borrower in respect of any L/C Related Document or any other amendment
or waiver of or any consent to departure from all or any of the L/C
Related Documents;
(iii) the existence of any claim, set-off, defense or other
right that any Borrower may have at any time against any beneficiary
or any transferee of a Letter of Credit (or any Persons for whom any
such beneficiary or any such transferee may be acting), the Issuing
Bank or any other Person, whether in connection with the transactions
contemplated by the L/C Related Documents or any unrelated
transaction;
(iv) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(v) payment by the Appropriate Issuing Bank under a
Letter of Credit against presentation of a draft or certificate that
does not strictly comply with the terms of such Letter of Credit;
provided that this
clause (v) shall not be deemed to be a waiver of any claim that any
Borrower might have against such Issuing Bank as a result of any such
payment;
(vi) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to
departure from any Loan Party Guaranty or any other Guaranty, for all
or any of the Obligations of each Borrower in respect of the L/C
Related Documents; or
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing, including without
limitation any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Borrower or a guarantor.
(e) Compensation. (i) Each Multi-Currency Borrower
shall pay to the Administrative Agent, for the account of the Multi-Currency
Lenders (which for purposes of this subsection (e) shall be deemed to include
each such Lender acquiring a participation in a Letter of Credit issued for the
account of a Multi-Currency Borrower pursuant to subsection (c) above) a
commission computed each day at a rate equal to the rate per annum equal to the
Applicable Margin on such day for Eurocurrency Rate Advances on the aggregate
Available Amount of all Letters of Credit outstanding and issued for such
Multi-Currency Borrower's account. Each such Lender's commission shall be
calculated by allocating to such Lender a portion of the total commission
determined ratably according to the proportion that such
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Lender's Multi-Currency Commitments bear to all Multi-Currency Lenders'
Multi-Currency Commitments.
(ii) The Canadian Subsidiary shall pay to the Canadian
Administrative Agent, for the account of the Canadian Subsidiary Lenders (which
for purposes of this subsection (e) shall be deemed to include each such Lender
acquiring a participation in a Letter of Credit issued for the account of the
Canadian Subsidiary pursuant to subsection (c) above) a commission computed
each day at a rate equal to the rate per annum equal to the Applicable Margin
on such day for Eurocurrency Rate Advances on the aggregate Available Amount of
all Letters of Credit outstanding and issued for the Canadian Subsidiary's
account. Each such Lender's commission shall be calculated by allocating to
such Lender a portion of the total commission determined ratably according to
the proportion that such Lender's Canadian Subsidiary Commitments bear to all
Canadian Subsidiary Lenders' Canadian Subsidiary Commitments.
(iii) The commissions specified in this subsection (e)
shall be payable as provided in Section 2.07(c).
(iv) Each Borrower also shall pay to the Appropriate
Issuing Bank, for its own account, such issuance fees, other commissions,
transfer fees and other fees and charges in connection with the issuance or
administration of each Letter of Credit as the Borrowers and such Issuing Bank
have separately agreed.
SECTION 2.14. Use of Proceeds. The proceeds of Advances to
the Borrowers shall be available (and AGCO agrees that it shall use such
proceeds) solely for the purpose of refinancing amounts owing under the Old
Credit Agreement and for general corporate purposes. Neither AGCO nor any
Borrowing Subsidiary will apply any such proceeds in violation of United States
law or any applicable foreign law.
SECTION 2.15. Replacement of a Bank. Subject to the second
and third paragraphs of this Section 2.15, if
(a) a Multi-Currency Lender requests compensation under
Section 2.09(a) or (b) or 2.11 and other Multi-Currency Lenders
holding Commitments equal to at least one third of the Multi-Currency
Facility shall not have made a similar request,
(b) a Canadian Subsidiary Lender requests compensation
under Section 2.09(a) or (b) or 2.11 and other Canadian Subsidiary
Lenders holding Commitments equal to at least one third of the
Canadian Subsidiary Facility shall not have made a similar request,
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(c) the obligation of a Lender to make Eurocurrency Rate
Advances or to Convert Base Rate Advances into Eurocurrency Rate
Advances shall be suspended pursuant to Section 2.09(c) or (d) in
circumstances in which such obligations of other Lenders holding
Commitments equal to at least one third of the Multi-Currency Facility
shall not have been suspended, or
(d) a Lender becomes insolvent, goes into receivership or
fails to make any Advances required to be made by it hereunder,
then, so long as such condition occurs and is continuing with respect to any
Lender (a "Replaced Lender"), AGCO may designate a Person (a "Replacement
Lender") that is an Eligible Assignee to assume such Replaced Lender's
Commitments hereunder and to purchase any Advances by such Replaced Lender and
such Replaced Lender's rights hereunder, without recourse to or representation
or warranty by, or expense to, such Replaced Lender, for a purchase price equal
to the outstanding principal amount of the Advances by such Replaced Lender,
plus any accrued but unpaid interest on such Advances and accrued but unpaid
fees and other amounts owing to such Replaced Lender.
Subject to the execution and delivery to the Appropriate
Agent and the Replaced Lender by the Replacement Lender of an Assignment and
Acceptance (and the approval thereof by the applicable Persons specified in
Section 8.07(a)(v)) and the payment to the Administrative Agent by AGCO on
behalf of such Replaced Lender of the assignment fee specified in Section
8.07(a)(vi), the Replacement Lender shall succeed to the rights and obligations
of such Replaced Lender hereunder and such Replaced Lender shall no longer be a
party hereto or have any rights hereunder; provided that the obligations of the
Borrowers to such Replaced Lender under Sections 2.09, 2.11 and 8.04 with
respect to events occurring or obligations arising before or as a result of such
replacement shall survive such replacement. Promptly following its replacement
by the Replacement Lender, the Replaced Lender shall return to the Borrowers the
Notes delivered by the Borrowers to such Replaced Lender and the Borrowers will
deliver new Notes to the Replacement Lender.
AGCO may not exercise its rights under this Section 2.15 with
respect to any Lender (i) unless its exercises such rights with respect to all
Lenders to which circumstances giving rise to the replacement of such Lender
apply, or (ii) if a Default has occurred and is continuing.
SECTION 2.16. Bankers' Acceptances and BA Equivalent Loans.
(a) Face Amounts. The face amount of each Bankers'
Acceptance shall be Cdn. $100,000 or any whole multiple thereof.
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(b) Discount Rate. On each day on which Bankers'
Acceptances are to be accepted, the Canadian Administrative Agent shall advise
the Borrower as to the Canadian Administrative Agent's determination of the
Discount Rate.
(c) Purchase and Reimbursement of Bankers' Acceptances.
The Borrower shall sell, and each Canadian Subsidiary Lender shall purchase, at
the Discount Rate each Bankers' Acceptance accepted by it and to deliver the
Discount Proceeds less the Acceptance Fee to the Canadian Administrative Agent
for the relevant Borrower's Account in accordance with Section 2.02(a). The
Borrower will reimburse each Canadian Subsidiary Lender, on the last day of the
relevant Contract Period, for the face amount of each Bankers' Acceptance
accepted by it.
(d) Sale of Bankers' Acceptances. Each Canadian
Subsidiary Lender, except a Non BA Lender, may at any time and from time to
time hold, sell, rediscount or otherwise dispose of any or all Bankers'
Acceptances accepted and purchased by it.
(e) Bankers' Acceptances in Blank. To facilitate the
acceptance of Bankers' Acceptances under this Agreement, the Borrower shall
upon execution of this Agreement and from time to time as required, provide to
the Canadian Administrative Agent drafts substantially in the form of Exhibit E
(or such other form as may be acceptable to the Canadian Administrative Agent)
executed and duly endorsed in blank by the Borrower, in quantities sufficient
for each of the Canadian Subsidiary Lenders to fulfill its obligations under
this Agreement. No Canadian Subsidiary Lender shall be responsible or liable
for its failure to accept a Bankers' Acceptance as required under this
Agreement if the cause of such failure is, in whole or in part, due to the
failure of the Borrower to provide duly executed and endorsed drafts to the
Canadian Administrative Agent on a timely basis nor shall the Canadian
Subsidiary Lender be liable for any damage, loss or other claim arising by
reason of any loss or improper use of any such instrument except a loss or
improper use arising by reason of the gross negligence or wilful misconduct of
the Canadian Subsidiary Lender, the Canadian Administrative Agent or their
respective employees.
(f) Execution of Bankers' Acceptances. Bills of exchange
drawn by the Borrower to be accepted as Bankers' Acceptances shall be signed by
a duly authorized officer or officers of the Borrower. Notwithstanding that
any Person whose signature appears on any Bankers' Acceptance may no longer be
an authorized signatory for the Borrower at the date of issuance of a Bankers'
Acceptance, such signature shall nevertheless be valid and sufficient for all
purposes as if such authority had remained in force at the time of such
issuance and any such Bankers' Acceptance so signed shall be binding on the
Borrower.
(g) Issuance of Bankers' Acceptances. The Canadian
Administrative Agent, promptly following receipt of a notice of Advance by way
of Bankers' Acceptances, shall so
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advise the Canadian Subsidiary Lenders and shall advise each Canadian Subsidiary
Lender of the aggregate face amount of the Bankers' Acceptances to be accepted
by it and the applicable Contract Period (which shall be identical for all
Canadian Subsidiary Lenders). The aggregate face amount of the Bankers'
Acceptances to be accepted by a Canadian Subsidiary Lender shall be determined
by the Canadian Administrative Agent by reference to Section 2.01(b), except
that, if the face amount of a Bankers' Acceptance which would otherwise be
accepted by a Canadian Subsidiary Lender would not be Cdn. $100,000 or a whole
multiple thereof, such face amount shall be increased or reduced by the Agent in
its sole discretion to Cdn. $100,000 or the nearest whole multiple of that
amount, as appropriate.
(h) Rollover of Bankers' Acceptances. With respect to
each Advance which is outstanding under this Agreement by way of Bankers'
Acceptances, at or before 10:00 a.m. (Toronto time), two (2) Business Days
before the maturity date of such Bankers' Acceptances, the Borrower shall
notify the Canadian Administrative Agent by telex, telecopier or cable in
substantially the form of Exhibit B-3 hereto, if the Borrower intends to issue
Bankers' Acceptances on such maturity date to provide for the payment of such
maturing Bankers' Acceptances. Such notice shall be irrevocable and binding on
the Borrower delivering such notice. If the Borrower fails to give such
notice, such maturing Bankers' Acceptances shall be converted on their maturity
date into Base Rate Advances in an amount equal to the face amount of such
Bankers' Acceptances.
(i) Rollover. The rollover of Bankers' Acceptances
pursuant to Section 2.16(h) shall not constitute a repayment of any Borrowing
or a new advance of funds.
(j) BA Equivalent Loans by Non BA Lenders. Whenever the
Borrower requests an Advance under this Agreement by way of Bankers'
Acceptances, each Non BA Lender shall, in lieu of accepting a Bankers'
Acceptance, make a BA Equivalent Loan.
(k) Terms Applicable to Discount Notes. The term
"Bankers' Acceptance" shall include Discount Notes and all terms of this
Agreement applicable to Bankers' Acceptances shall apply equally to Discount
Notes evidencing BA Equivalent Loans with such changes as may in the context be
necessary. For greater certainty:
(i) the term of a Discount Note shall be the same as the
Contract Period for Bankers' Acceptances accepted on the same date in
respect of the same Advance;
(ii) an Acceptance Fee will be payable in respect of a
Discount Note and shall be calculated at the same rate and in the same
manner as the Acceptance Fee in respect of a Bankers' Acceptance; and
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(iii) the Discount Rate applicable to a Discount Note shall
be the Discount Rate applicable to Bankers' Acceptances accepted on
the same date, or maturity date in respect of rollovers, in respect of
the same Advance.
(l) Prepayment of Bankers' Acceptances. Whenever the
provisions of this Agreement states that the Borrower shall prepay the
principal amount of Advances or any portion of the principal amount of
Advances, and such Advances are by way of Bankers' Acceptances and not BA
Equivalent Loans, such prepayment of such Advances shall mean that the Borrower
shall deposit the face amount of each such Bankers' Acceptance into such
interest-bearing account of the Canadian Administrative Agent as it shall
specify. Such amounts shall be held by the Canadian Administrative Agent for
payment of the Canadian Subsidiary Lender's obligations in respect of such
Bankers' Acceptances on the applicable maturity date(s). The Borrower's
obligations in respect of any such Bankers' Acceptances shall be satisfied by
any such payment and any interest earned on such amounts shall be paid to the
Borrower.
(m) Rounding. The Canadian Administrative Agent is authorized by
the Canadian Subsidiary and each Canadian Subsidiary Lender to allocate among
the Canadian Subsidiary Lenders the Bankers' Acceptances to be issued in such
manner and amounts as the Canadian Administrative Agent may, in its sole and
unfettered discretion acting reasonably, consider necessary, rounding a
Canadian Subsidiary Lender's allocation up or down, so as to ensure that no
Canadian Subsidiary Lender is required to accept a Bankers' Acceptance for a
fraction of Cdn. $100,000, and in such event, the respective Lenders' Pro Rata
Shares of any such Bankers' Acceptances and repayments thereof shall be altered
accordingly. Further, the Canadian Administrative Agent is authorized by the
Canadian Subsidiary and each Canadian Subsidiary Lender to cause the
proportionate share of one or more Lenders' Canadian Subsidiary Commitments to
be exceeded by not more than Cdn. $100,000 each as a result of such
allocations; provided that (a) the Canadian Subsidiary Outstandings shall not
thereby exceed the amount of the Canadian Subsidiary Facility and (b) no
Canadian Subsidiary Lender shall be required to make available an amount
greater than its Pro Rata Share of the Canadian Subsidiary Facility.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Initial Borrowing. The
obligation of each Lender to make an Advance on the occasion of the initial
Borrowing under this Agreement (as in effect prior to its amendment and
restatement hereby) is subject to the following conditions precedent:
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(a) The Lenders shall be satisfied that, in connection
with the initial Borrowing hereunder, simultaneously with such initial
Borrowing, all amounts owing under the Old Credit Agreement shall have been
paid in full and all commitments to lend thereunder shall be terminated.
(b) There shall exist no action, suit, investigation,
litigation or proceeding affecting AGCO or any of its Subsidiaries pending or
threatened before any court, governmental agency or arbitrator that, in the
sole judgment of any Lender,
(i) could have a Material Adverse Effect on AGCO or any
Subsidiary Guarantor or
(ii) purports to affect the legality, validity or
enforceability of this Agreement, any Note, any other Loan Document,
any L/C Related Document or the consummation of the transactions
contemplated hereby.
(c) Each of the Lenders shall have completed a due
diligence investigation of AGCO and its Subsidiaries in scope, and with
results, satisfactory to each of the Lenders, and the results of such
investigation shall be acceptable to each of the Lenders in their sole
discretion.
(d) AGCO shall have paid to the Administrative Agent the
closing fee separately agreed to between AGCO and the Administrative Agent.
(e) The Administrative Agent shall have received on or
before the day of the initial Borrowing the following, each dated such day
(unless otherwise specified), in form and substance satisfactory to the Lenders
(unless otherwise specified) and (except for the Notes) in sufficient copies
for each Lender:
(i) The Notes to the order of the Lenders.
(ii) Certified copies of the resolutions of the Board of
Directors of each Borrower and each other Loan Party approving this
Agreement, the Notes, each other Loan Document and each L/C Related
Document to which it is or is to be a party, and of all documents
evidencing other necessary corporate action and governmental approvals,
if any, with respect to this Agreement, the Notes, each other Loan
Document and each L/C Related Document.
(iii) A copy of the charter of each Borrower and each other
Loan Party and each amendment thereto, certified (as of a date
reasonably near the date of the initial
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Borrowing) by an appropriate governmental official as being a true and
correct copy thereof.
(iv) For AGCO and each other Loan Party other than a
Foreign Subsidiary, a copy of a certificate of the Secretary of State
of the state of organization of such Person, dated reasonably near the
date of the initial Borrowing, listing the charter of such Person and
each amendment thereto on file in his office and certifying that
(A) such amendments are the only amendments to
such Person's charter on file in his office;
(B) such Person has paid all franchise taxes to the date of such
certificate; and
(C) such Person is duly incorporated and in good
standing or presently subsisting under the laws of the
jurisdiction of organization.
(v) A certificate of each Borrower and each other Loan
Party, signed on behalf of such Person by its President or a Vice
President and its Secretary or any Assistant Secretary, or by other
appropriate officers of it, dated the date of the initial Borrowing
(the statements made in which certificate shall be true on and as of
the date of the initial Borrowing), certifying as to
(A) the absence of any amendments to the charter
of such Person since the date of the certificate referred to
in Section 3.01(e)(iii);
(B) a true and correct copy of the bylaws of such
Person as in effect on the date of the initial Borrowing; and
(C) the due incorporation and (if such Person is
not a Foreign Subsidiary) good standing of such Person as a
corporation organized under the laws of the jurisdiction of
its organization, and the absence of any proceeding for the
dissolution or liquidation of such Person.
(vi) A certificate of the Secretary or an Assistant
Secretary or other appropriate officer of each Borrower and each other
Loan Party certifying the names and true signatures of the officers of
such Person authorized to sign this Agreement, the Notes and each other
Loan Document to which it is or is to be parties and the other
documents to be delivered hereunder and thereunder.
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(vii) Guaranties duly executed by each Person specified in
Schedule 3.01(e)(vii) (each such Subsidiary of AGCO executing the same
being a "Subsidiary Guarantor"), each such Guaranty to be in form and
substance satisfactory to the Administrative Agent, and guaranteeing
the obligations specified in such Schedule.
(viii) Such financial, business and other information
regarding each Loan Party as the Lenders shall have requested,
including without limitation information as to possible contingent
liabilities, tax matters, environmental matters, obligations under
ERISA, collective bargaining agreements and other arrangements with
employees, annual consolidated financial statements dated December 31,
1995, of AGCO and its Restricted Subsidiaries and AGCO and its
Subsidiaries, respectively.
(ix) A letter, in form and substance satisfactory to the
Administrative Agent, from AGCO to Arthur Andersen LLP, its
independent certified public accountants, advising such accountants
that the Co-Managers and the Canadian Administrative Agent have been
authorized to exercise all rights of AGCO to require such accountants
to disclose any and all financial statements and any other information
of any kind that they may have with respect to AGCO and its
Subsidiaries and directing such accountants to comply with any
reasonable request of any Co-Manager or the Canadian Administrative
Agent for such information, and also advising such accountants that
the Lenders have relied and will rely upon the financial statements of
the AGCO and its Subsidiaries examined by such accountants in
determining whether to enter into, or to take action or refrain from
taking action under, the Loan Documents.
(x) A favorable opinion of King & Spalding, counsel for
the Borrowers, in form and substance satisfactory to the Lenders.
(xi) A favorable opinion of Michael Swick, vice president
and general counsel of AGCO, in form and substance satisfactory to the
Lenders.
(xii) A favorable opinion of Jeremy Parkin, in form and
substance satisfactory to the Lenders.
(xiii) A favorable opinion of Herbert Smith, French counsel
to the Borrowers, in form and substance satisfactory to the Lenders.
(xiv) Such favorable opinions of McDougall Ready, Canadian
counsel to the Borrowers, Hengeler Muller Weitzel Wirtz, German
counsel to the Borrowers, and
De Brauw Blackstone Westbroek, Netherlands counsel to the Borrowers,
and such other favorable opinions of counsel as any Co-Manager may
reasonably request, in form and substance satisfactory to the Lenders.
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(xv) A favorable opinion of Shearman & Sterling, counsel
for the Co-Managers, in form and substance satisfactory to the
Co-Managers.
(xvi) Evidence that AGCO has delivered to the trustee under
the Subordinated Debt Indenture a notice stating that this Agreement
and related instruments and documents are the "Bank Credit Agreement"
under such indenture.
(xvii) Such other approvals, opinions or documents as any
Lender may reasonably request.
(f) AGCO shall have paid all accrued fees and expenses of
the Agents, the Co-Managers and the Lenders (including the accrued fees and
expenses of counsel to the Co-Managers) that have theretofore been invoiced.
SECTION 3.02. Conditions Precedent to Each Borrowing and
Issuance. The obligation of each Lender to make an Advance (including the
initial Advance but other than a Letter of Credit Advance), and the right of
any Borrower to request the issuance of Letters of Credit, shall be subject to
the further conditions precedent that on the date of such Borrowing or
issuance, the following statements shall be true and any Notice of Borrowing
delivered to the Appropriate Agent hereunder shall certify that, as of the date
of the Borrowing requested thereunder:
(a) the representations and warranties contained in each
Loan Document will be correct on and as of the date of such Borrowing
or issuance, before and after giving effect to such Borrowing or
issuance and to the application of the proceeds therefrom, as though
made on and as of such date, and request for the issuance of a Letter
of Credit delivered to the Issuing Bank hereunder other than any such
representations or warranties that, by their terms, refer to a date
other than the date of such Borrowing or issuance;
(b) no event shall have occurred and be continuing, or
would result from such Borrowing or issuance or from the application
of the proceeds therefrom, that constitutes or would constitute a
Default; and
(c) such Borrowing is permitted under Section 2.01(a), if
such Borrowing is a Multi-Currency Borrowing, or Section 2.01(b), if
such Borrowing is a Canadian Subsidiary Borrowing.
SECTION 3.03. Determinations Under Section 3.01. For
purposes of determining compliance with the conditions specified in Section
3.01, each Lender shall be
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deemed to have consented to, approved or accepted or to be satisfied with each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to the Lenders unless an officer of the
Appropriate Agent responsible for the transactions contemplated by the Loan
Documents shall have received notice from such Lender prior to the initial
Borrowing specifying its objection thereto and such Lender shall not have made
available to the Appropriate Agent such Lender's ratable portion of such
Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the
Borrowers. Each Borrower represents and warrants as of the date of this
Agreement (as amended and restated) as follows:
(a) AGCO
(i) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation;
(ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases
property or in which the conduct of its business requires it to so
qualify or be licensed, except where the failure to so qualify or be
licensed is not reasonably likely to have a Material Adverse Effect;
and
(iii) has all requisite corporate power and authority to
own or lease and operate its properties and to carry on its business
as now conducted and as proposed to be conducted.
(b) Set forth on Schedule 4.01(b) (or, for purposes of
Section 3.02(a), the most recently delivered replacement for such Schedule, if
any, delivered pursuant to Section 5.03(p) (other than, for purposes of Section
3.02(a), Dormant Subsidiaries)) is a complete and accurate list of all
Subsidiaries of AGCO, showing as of the date hereof (as to each such
Subsidiary) the jurisdiction of its incorporation, the number of shares of each
class of capital stock authorized, and the number outstanding, on the date
hereof and the percentage of the outstanding shares of each such class owned
(directly or indirectly) by AGCO, the number of shares covered by all
outstanding options, warrants, rights of conversion or purchase and similar
rights at the date hereof and whether it is a Restricted Subsidiary or a
Dormant Subsidiary.
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All of the outstanding capital stock of all of the
Subsidiaries of AGCO owned by AGCO or any of its Subsidiaries has been validly
issued, is fully paid and non-assessable and is owned by AGCO or one or more of
its Subsidiaries free and clear of all Liens, except for Liens permitted under
Section 5.02(a)(ix). Each Restricted Subsidiary
(i) is a corporation duly organized, validly existing and
(if not a Foreign Subsidiary) in good standing under the laws of the
jurisdiction of its incorporation;
(ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases
property or in which the conduct of its business requires it to so
qualify or be licensed except where the failure to so qualify or be
licensed is not reasonably likely to have a Material Adverse Effect;
and
(iii) has all requisite corporate power and authority to
own or lease and operate its properties and to carry on its business
as now conducted and as proposed to be conducted.
Also set forth on Schedule 4.01(b) (or, for purposes of
Section 3.02(a)(i), the most recently delivered replacement for such Schedule,
if any, delivered pursuant to Section 5.03(q)) is a complete and accurate list
of all joint ventures of AGCO and/or any of its Subsidiaries and any third
Person showing as of the date hereof (as to each such joint venture) the other
Person or Persons parties thereto, a brief description of the purpose thereof,
and the percentage of the outstanding capital stock or other equity interests
of such joint venture owned on the date hereof by AGCO or any of its
Subsidiaries and any outstanding options, warrants, rights of conversion or
purchase and similar rights on the date hereof with respect thereto.
(c) The execution, delivery and performance by each Loan
Party of this Agreement, the Notes, each other Loan Document and each L/C
Related Document to which it is or is to be a party and the consummation of the
transactions contemplated hereby, are within such Loan Party's corporate
powers, have been duly authorized by all necessary corporate action, and do not
(i) contravene such Loan Party's charter or by-laws;
(ii) violate any law (including without limitation the
Securities Exchange Act of 1934, the Racketeer Influenced and Corrupt
Organizations Chapter of the Organized Crime Control Act of 1970, the
Trading with the Enemy Act and any similar statute), rule, regulation
(including without limitation Regulation X of the Board of Governors
of the Federal Reserve System), order, writ, judgment, injunction,
decree, determination or award;
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(iii) conflict with or result in the breach of, or
constitute a default under, any contract, loan agreement, indenture,
mortgage, deed of trust, lease or other instrument binding on or
affecting any Loan Party, any of its Subsidiaries or any of their
properties; or
(iv) result in or require the creation or imposition of
any Lien upon or with respect to any of the properties of any Loan
Party or any of its Subsidiaries.
Neither AGCO nor any of its Subsidiaries is in violation of any such law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
or in breach of any such contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument, the violation or breach of which is
reasonably likely to have a Material Adverse Effect.
(d) No authorization or approval or other action by, and
no notice to or filing with, any governmental authority or regulatory body or
any other third party is required for
(i) the due execution, delivery, recordation, filing or
performance by any Loan Party of this Agreement, the Notes, any other
Loan Document or any L/C Related Document to which it is or is to be a
party, or for the consummation of the transactions contemplated
hereby; or
(ii) the exercise by either Agent or any Lender of its
rights under the Loan Documents.
(e) This Agreement and each of the Notes, each other Loan
Document and each L/C Related Document have been (or, when delivered hereunder
will have been), duly executed and delivered by each Loan Party party thereto.
This Agreement, each of the Notes, each other Loan Document and each L/C
Related Document have been (or, when delivered hereunder will be), the legal,
valid and binding obligation of each Loan Party party thereto, enforceable
against such Loan Party in accordance with its terms.
(f) The consolidated balance sheets of AGCO and its
Restricted Subsidiaries and of AGCO and its Subsidiaries, respectively, as at
December 31, 1995 and the related consolidated statements of income and cash
flows of AGCO and its Restricted Subsidiaries and AGCO and its Subsidiaries,
respectively, for the fiscal year then ended, accompanied by an opinion of
Arthur Andersen LLP, independent public accountants, copies of which have been
furnished to each Lender, fairly present the consolidated financial condition
of AGCO and its Restricted Subsidiaries and AGCO and its Subsidiaries,
respectively, as at such date and the consolidated results of the operations of
AGCO and its Restricted Subsidiaries and AGCO and
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its Subsidiaries, respectively, for the period ended on such date, all in
accordance with GAAP applied on a consistent basis, and since December 31, 1995,
there has been no Material Adverse Effect.
(g) No information, exhibit or report furnished by any
Loan Party to either Agent or any Lender in connection with the negotiation of
the Loan Documents or pursuant to the terms of the Loan Documents contained any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements made therein not misleading, other than
statements or omissions corrected in writings delivered to the Co-Managers
prior to the date of execution hereof.
(h) There is no action, suit, investigation, litigation
or proceeding affecting AGCO or any of its Subsidiaries, including any
Environmental Action, pending or threatened before any court, governmental
agency or arbitrator that
(i) would be reasonably likely to have a Material Adverse
Effect, or
(ii) purports to affect the legality, validity or
enforceability of this Agreement, any Note, any other Loan Document or
any L/C Related Document or the consummation of the transactions
contemplated thereby or hereby.
(i) No proceeds of any Advance will be used directly to
acquire any equity security of a class that is registered pursuant to Section
12 of the Securities Exchange Act of 1934.
(j) None of the Borrowers will, directly or indirectly,
use any of the proceeds of any Borrowing for the purpose, whether immediate,
incidental or ultimate, of buying a "margin stock" or of maintaining, reducing
or retiring any indebtedness originally incurred to purchase a stock that is
currently a "margin stock", or for any other purpose that might constitute this
transaction a "purpose credit", in each case within the meaning of the margin
regulations of the Board of Governors of the Federal Reserve System, if such
use would violate such regulations or cause any Lender to violate such
regulations or impose any filing or reporting requirement on any Lender.
(k) All Borrowings under this Agreement will be "Senior
Indebtedness", as defined in the Subordinated Debt Indenture. This Agreement
and all related instruments and documents are the "Bank Credit Agreement", as
defined in the Subordinated Debt Indenture.
(l) No ERISA Event has occurred or is reasonably expected
to occur with respect to any Plan of any Loan Party or any of its ERISA
Affiliates that has resulted in or is reasonably likely to result in a Material
Adverse Effect.
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(m) Schedule B (Actuarial Information) to the most recent
annual report (Form 5500 Series) that any Loan Party or any of its ERISA
Affiliates is required to file for any Plan, copies of which have been filed
with the Internal Revenue Service, is complete and accurate and fairly presents
the funding status of such Plan, and since the date of such Schedule B there
has been no material adverse change in such funding status.
(n) Neither any Loan Party nor any of its ERISA
Affiliates has incurred or is reasonably expected to incur any Withdrawal
Liability to any Multiemployer Plan that could result in a Material Adverse
Effect.
(o) Neither any Loan Party nor any of its ERISA
Affiliates has been notified by the sponsor of a Multiemployer Plan of any Loan
Party or any of its ERISA Affiliates that such Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of ERISA,
and to the knowledge of AGCO no such Multiemployer Plan is reasonably expected
to be in reorganization or to be terminated, within the meaning of Title IV of
ERISA, in either case which reorganization or termination could result in a
Material Adverse Effect.
(p) Neither the business nor the properties of AGCO or
any of its Subsidiaries are affected by any fire, explosion, accident, strike,
lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act
of God or of the public enemy or other casualty (whether or not covered by
insurance) that would be reasonably likely to have a Material Adverse Effect.
(q) The operations and properties of AGCO and each of its
Subsidiaries comply in all material respects with all Environmental Laws, all
necessary Environmental Permits have been obtained and are in effect that are
material to the operations and properties of AGCO and its Subsidiaries, AGCO
and its Subsidiaries are in compliance in all material respects with all such
Environmental Permits, and no circumstances exist that would be reasonably
likely to
(i) form the basis of an Environmental Action against any
Loan Party or any of its Subsidiaries or any their properties that
could have a Material Adverse Effect or
(ii) cause any such property to be subject to any
restrictions on ownership, occupancy, use or transferability under any
Environmental Law that could have a Material Adverse Effect.
(r) None of the properties of AGCO or any of its
Subsidiaries is listed or proposed for listing on the National Priorities List
under CERCLA.
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(s) (i) Neither AGCO nor any of its Subsidiaries has
transported or arranged for the transportation of any Hazardous
Materials to any location that is listed or proposed for listing on
the National Priorities List under CERCLA;
(ii) to the best of AGCO's knowledge, Hazardous Materials
have not been generated, used, treated, handled, stored or disposed of
on, or released or transported
to or from, any property of AGCO or any of its Subsidiaries, in an
amount that would require remediation in accordance with applicable
environmental laws; and
(iii) all other wastes generated at any such properties
have been disposed of in compliance in all material respects with all
applicable Environmental Laws and Environmental Permits,
except to the extent that such transportation, generation, use, treatment,
handling, storage, disposition or release would not result in a Material
Adverse Effect.
(t) Neither AGCO nor any of its Subsidiaries is a party
to any indenture, loan or credit agreement or any lease or other agreement or
instrument or subject to any charter or corporate restriction that would be
reasonably likely to have a Material Adverse Effect.
(u) Each of AGCO and each of its Subsidiaries has filed,
has caused to be filed or has been included in all Federal and foreign
income-tax returns, all state income-tax returns where a tax Lien could be
imposed on any assets of AGCO or any of its Restricted Subsidiaries and all
other material income-tax returns required to be filed and has paid all taxes
shown thereon to be due, together with applicable interest and penalties,
except for any taxes being contested in good faith by appropriate proceedings
promptly initiated and diligently pursued and for which reserves or other
appropriate provisions required by GAAP have been established and with respect
to which no Lien has attached to its property or become enforceable against its
other creditors.
(v) Set forth on Schedule 4.01(v) hereto is a complete
and accurate list, as of the date hereof, of each taxable year of AGCO for
which Federal income tax returns have been filed and for which the expiration
of the applicable statute of limitations for assessment or collection has not
occurred by reason of extension or otherwise.
(w) There are no adjustments as of the date hereof to the
Federal income tax liability of AGCO proposed by the Internal Revenue Service
with respect to any such year. No issues have been raised by the Internal
Revenue Service in respect of any such year that, in the aggregate, would be
reasonably likely to have a Material Adverse Effect.
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(x) The aggregate unpaid amount, as of the date hereof,
of adjustments to the state, local and foreign tax liability of AGCO and its
Subsidiaries proposed by all state, local and foreign taxing authorities (other
than amounts arising from adjustments to Federal income tax returns) does not
exceed U.S. $1,000,000. No issues have been raised by such taxing authorities
that, in the aggregate, would be reasonably likely to have a Material Adverse
Effect.
(y) Neither AGCO nor any of its Subsidiaries is an
"investment company," or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended. Neither the making of any
Advances, nor the issuance of any Letters of Credit, nor the application of the
proceeds or repayment thereof by the Borrower, nor the consummation of the
other transactions contemplated hereby, will violate any provision of such Act
or any rule, regulation or order of the Securities and Exchange Commission
thereunder.
(z) Set forth on Schedule 4.01(z) hereto is a complete
and accurate list as of the date hereof of all Debt of AGCO and its
Subsidiaries, showing as of the date hereof the principal amount outstanding
thereunder. There are no Liens on property of AGCO or any of its Restricted
Subsidiaries, other than Liens permitted under the Old Credit Agreement, Liens
approved or consented to by the lenders under the Old Credit Agreement and
other Liens that are immaterial, individually or in the aggregate.
ARTICLE V
COVENANTS OF AGCO
SECTION 5.01. Affirmative Covenants. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
shall have any Commitment hereunder, AGCO will, unless the Required Lenders
shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Except as provided in
Subsection (c), comply, and cause each of its Subsidiaries to comply, in all
material respects, with all applicable laws, rules, regulations and orders,
such compliance to include, without limitation, compliance with ERISA, the
Racketeer Influenced and Corrupt Organizations Chapter of the Organized Crime
Control Act of 1970, the Trading with the Enemy Act and any similar statute.
(b) Payment of Taxes, Etc. Pay and discharge, and cause
each of its Subsidiaries to pay and discharge, before the same shall become
delinquent,
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(i) all Federal and foreign income taxes, all state
income taxes in jurisdictions where a tax Lien could be imposed on any
assets of AGCO or any of its Restricted Subsidiaries, and all other
material income and other taxes, assessments and governmental charges
or levies imposed upon it or upon its property, and
(ii) all lawful claims that, if unpaid, might by law
become a Lien upon its property;
provided that neither AGCO nor any of its Subsidiaries shall be required to pay
or discharge any such tax, assessment, charge or claim that is being contested
in good faith by appropriate proceedings promptly initiated and diligently
pursued and for which reserves or other appropriate provisions required by GAAP
shall have been established, unless and until any Lien resulting therefrom
attaches to its property and becomes enforceable against its other creditors.
(c) Compliance with Environmental Laws. Comply, and
cause each of its Subsidiaries and all lessees and other Persons occupying its
properties to comply with all Environmental Laws and Environmental Permits
applicable to its operations and properties; obtain and renew all Environmental
Permits necessary for its operations and properties; and conduct, and cause
each of its Subsidiaries to conduct, any investigation, study, sampling and
testing, and undertake any cleanup, removal, remedial or other action necessary
to remove and clean up all Hazardous Materials from any of its properties, in
accordance with the requirements of all Environmental Laws, where the failure
to do the same could reasonably be expected to result in a Material Adverse
Effect.
(d) Maintenance of Insurance. Maintain, and cause each
of its Restricted Subsidiaries to maintain, insurance with responsible and
reputable insurance companies or associations in such amounts and covering such
risks as is usually carried by companies engaged in similar businesses and
owning similar properties in the same general areas in which AGCO or such
Restricted Subsidiary operates. Such insurance may be subject to (A) insurance
by Affiliates of AGCO or similar clauses that so long as such self insurance is
in an amount no greater than U.S. $25,000,000 and is in accord with the
approved practices of corporations similarly situated and adequate insurance
reserves are maintained in connection with such self-insurance, and (B)
deductibles and co-payment obligations no greater than those of other
corporations similarly situated.
(e) Preservation of Corporate Existence, Etc. Except as
otherwise permitted by this Agreement, preserve and maintain, and cause each of
its Restricted Subsidiaries to preserve and maintain, its corporate existence,
rights (charter and statutory) and franchises; provided that neither AGCO nor
any of its Restricted Subsidiaries shall be required to preserve
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any right or franchise if the Board of Directors of AGCO or such Restricted
Subsidiary shall determine, and no Restricted Subsidiary (other than a Borrowing
Subsidiary) shall be required to preserve and maintain its corporate existence
if the Board of Directors of AGCO determines, that the preservation and
maintenance thereof is no longer desirable in the conduct of the business of
AGCO or such Restricted Subsidiary, as the case may be, and that the loss
thereof is not disadvantageous in any material respect to the Borrower, such
Restricted Subsidiary or the Lenders.
(f) Visitation Rights. At any reasonable time and from
time to time, permit
(i) the Agents, any Co-Manager and (while any Default
shall have occurred and be continuing) any of the Lenders, and
(ii) if no Default shall have occurred and be continuing,
any of the Lenders on reasonable request,
or any agents or representatives thereof, to examine and make copies of and
abstracts from the records and books of account of, and visit the properties
of, AGCO and any of its Subsidiaries and to discuss the affairs, finances and
accounts of AGCO and any of its Subsidiaries with any of their officers or
directors and with their independent certified public accountants. The Lenders
will use reasonable efforts to coordinate with AGCO and the Co-Managers such
examination, copying, visits, examinations and discussions to limit any
inconvenience to AGCO and its Subsidiaries.
(g) Keeping of Books. Keep, and cause each of its
Subsidiaries to keep, proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of AGCO and each such Subsidiary in accordance with GAAP (or the
foreign equivalent) in effect from time to time.
(h) Maintenance of Properties, Etc. Maintain and
preserve, and cause each of its Restricted Subsidiaries to maintain and
preserve, all of its properties that are used or useful in, and material to,
the conduct of its business in good working order and condition, ordinary wear
and tear excepted.
(i) Qualification in New York. At all times remain
qualified as a foreign corporation entitled to do business in the State of New
York.
(j) Performance of Material Contracts. Perform and
observe all the terms and provisions of each Material Contract to be performed
or observed by it, except where the failure to perform or observe the same
would not have a Material Adverse Effect.
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(k) Transactions with Affiliates. Conduct, and cause
each of its Restricted Subsidiaries to conduct, all transactions otherwise
permitted under the Loan Documents with any of their Affiliates (other than
transactions between AGCO and its Restricted Subsidiaries) (i) in accordance
with current practice, or (ii) on terms that are fair and reasonable and no
less favorable to AGCO or such Restricted Subsidiary than it would obtain in a
comparable arm's-length transaction with a Person not an Affiliate.
(l) Foreign Subsidiary Guaranties, etc. If AGCO shall at
any time consolidate its and its Subsidiaries' financial statements for
tax-reporting purposes on a worldwide basis, cause each wholly owned Foreign
Subsidiary that shall not previously have delivered a Loan Party Guaranty to
execute and deliver to the Lenders a Loan Party Guaranty substantially in the
form of an Exhibit hereto, with such changes as the
Administrative Agent may reasonably request, guarantying the obligations of
AGCO hereunder and under the other Loan Documents.
SECTION 5.02. Negative Covenants. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
shall have any Commitment hereunder, AGCO will not, at any time, without the
written consent of the Required Lenders or, if required under Section 8.01, of
all of the Lenders:
(a) Liens, Etc. Create, incur, assume or suffer to
exist, or permit any of its Restricted Subsidiaries to create, incur, assume or
suffer to exist, any Lien on or with respect to any of its properties of any
character (including without limitation accounts) whether now owned or
hereafter acquired or, except with the consent of the Administrative Agent in
connection with a refinancing of this Agreement in its entirety, (x) sign or
file, or permit any of its Restricted Subsidiaries to sign or file, under the
Uniform Commercial Code of any jurisdiction (or any similar law of any
jurisdiction outside the United States), a financing statement that names AGCO
or any of its Restricted Subsidiaries as debtor, or (y) sign, or permit any of
its Restricted Subsidiaries to sign, any security agreement authorizing any
secured party thereunder to file such financing statement, or assign, or permit
any of its Restricted Subsidiaries to assign, any accounts or other right to
receive income, excluding, however, from the operation of the foregoing
restrictions the following:
(i) Permitted Liens;
(ii) (A) Liens permitted under or approved or consented to
by the lenders under the Old Credit Agreement (other than Liens
described in clause (i), (ii)(B) or (iii) through (x) inclusive of
this subsection (a)) and (B) other Liens existing on the date hereof
that individually do not secure Debt in an aggregate principal amount
in excess of U.S. $100,000 or in the aggregate secure Debt in an
aggregate principal amount in excess of U.S. $1,000,000;
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(iii) purchase money Liens upon or in property acquired or
held by AGCO or any of its Restricted Subsidiaries to secure the
purchase price of such property or to secure Debt permitted under
Section 5.02(b)(v) incurred solely for the purpose of financing the
acquisition, construction or improvement of any such property to be
subject to such Liens, or Liens existing on any such property at the
time of acquisition, or extensions, renewals or replacements of any of
the foregoing for the same or a lesser amount;
provided that no such Lien shall extend to or cover any property other than the
property being acquired, constructed or improved, and no such
extension, renewal or replacement shall extend to or cover any
property not theretofore subject to the Lien being extended, renewed
or replaced;
(iv) the replacement, extension or renewal of any Lien
permitted by clause (iii) above upon or in the same property
theretofore subject thereto or the
replacement, extension or renewal (without increase in the amount or
change in any direct or contingent obligor) of the Debt secured
thereby;
(v) Liens existing on the property of a person
immediately prior to its being merged into AGCO or a Restricted
Subsidiary or its becoming a Restricted Subsidiary, or any Lien
existing on any property acquired by AGCO or a Restricted Subsidiary
at the time such property is so acquired; provided that no such Lien
shall have been created or assumed in contemplation of such merger or
such Person's becoming a Restricted Subsidiary or such acquisition of
property; and provided further that each such Lien shall at all times
be confined solely to the item or items of property so acquired and,
if required by the terms of the instrument originally creating such
Lien, other property that is an improvement to or is acquired for
specific use in connection with such acquired property;
(vi) Liens on cash securing reimbursement obligations in
respect of letters of credit issued under facilities permitted under
subsection (b)(vii) below, so long as the aggregate undrawn amount
thereunder at any time outstanding does not exceed U.S. $15,000,000,
and any such Liens securing obligations under this Agreement;
(vii) a deed to secure debt on the property on which AGCO's
headquarters are located in Duluth, Georgia and a mortgage or other
Lien on AGCO's Coldwater, Ohio facility in favor of an agency of the
State of Ohio;
(viii) Liens on Receivables sold pursuant to a
securitization facility permitted under Section 5.02(e)(v) that, in
either case, nevertheless would appear as Receivables on a balance
sheet of AGCO and its Restricted Subsidiaries;
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(ix) precautionary financing statements filed by lessors
with respect to equipment leases under which AGCO or a Restricted
Subsidiary is lessee.
(b) Debt. Create, incur, assume or suffer to exist, or
permit any of its Restricted Subsidiaries to create, incur, assume or suffer to
exist, any Debt other than:
(i) Debt under the Loan Documents;
(ii) Debt of AGCO, a Borrowing Subsidiary or a Subsidiary
Guarantor subordinated to the Advances on terms and conditions
acceptable to each Co-Manager and the Required Lenders in their sole
discretion;
(iii) in the case of AGCO,
(A) Convertible Subordinated Debentures outstanding on the date hereof, and
(B) Debt issued under the Subordinated Debt Indenture outstanding on the
date hereof;
(iv) in the case of any of the Restricted Subsidiaries,
Debt owed to AGCO or to a Wholly Owned Restricted Subsidiary of AGCO
and, in the case of AGCO, Debt owed to any Wholly Owned Restricted
Subsidiary that is subordinated to the Advances on terms and
conditions acceptable to each Co-Manager and the Required Lenders in
their sole discretion;
(v) Debt incurred in the ordinary course of business for
the deferred purchase price of property or services and secured by
Liens permitted under subsection (a)(iii) above, so long as, after
giving effect to the incurrence thereof, the aggregate principal
amount of such Debt incurred by AGCO and its Restricted Subsidiaries
then outstanding, on a Consolidated basis, does not exceed U.S.
$25,000,000 (or the Multi-Currency Equivalent thereof);
(vi) the Debt outstanding on the date hereof (other than
Debt outstanding under the Old Credit Agreement or described in clause
(iii) above) under the terms with respect thereto in effect as of the
date hereof, and any Debt extending the maturity of, or refunding or
refinancing, in whole or in part, any such Debt, provided that the
terms of any such extending, refunding or refinancing Debt, and of any
agreement entered into and of any instrument issued in connection
therewith, are otherwise permitted by the Loan Documents and further
provided that the principal amount of such Debt shall not be increased
above the principal amount thereof outstanding
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immediately prior to such extension, refunding or refinancing, and the
direct and contingent obligors therefor shall not be changed, as a
result of or in connection with such extension, refunding or
refinancing;
(vii) overdraft and ancillary facilities that are unsecured
(except for Liens permitted under subsection (a)(vi) above), so long
as the aggregate principal amount of Debt of AGCO and its Restricted
Subsidiaries outstanding thereunder, on a Consolidated basis, on any
date of determination, does not exceed U.S. $50,000,000 (or the
Multi-Currency Equivalent thereof), minus the aggregate principal
amount of Debt outstanding on such date and incurred pursuant to
clause (xii) below;
(viii) Debt in an aggregate principal amount not exceeding
(A) U.S. $50,000,000 (or the Multi-Currency
Equivalent thereof) of Xavier Fendt GmbH & Company that is
unsecured and is issued and outstanding on the date on which
such Person becomes a Restricted Subsidiary, and
(B) U.S. $1,000,000 (or the Multi-Currency
Equivalent thereof) of any other Restricted Subsidiary issued
and outstanding on or prior to the date on which such
Restricted Subsidiary was acquired by AGCO (other than Debt
issued as consideration in, or to provide all or any portion
of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to
which such Restricted Subsidiary became a Restricted
Subsidiary or was acquired by AGCO), but only so long as the
aggregate principal amount of all Debt incurred pursuant to
this clause (B) and outstanding on any date does not exceed
U.S. $5,000,000 (or the Multi-Currency Equivalent thereof);
(ix) indorsements of negotiable instruments in the
ordinary course of business;
(x) Debt of AGCO not exceeding $10,000,000 in aggregate
principal amount secured by a Lien permitted under subsection (a)(vii)
above;
(xi) in the case of any Borrower, Debt outstanding under
the Old Credit Agreement, so long as all such Debt is repaid as of the
date of the initial Borrowing hereunder or otherwise is no longer an
obligation of any Borrower as of such date;
(xii) Debt consisting of Guaranties permitted under
subsection (f) below (other than clause (xiv) thereof).
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Notwithstanding clauses (i) through (xiii) inclusive above, the Borrowers shall
not incur any Debt pursuant to clause (i) of the second paragraph of Section
4.03 of the Subordinated Debt Indenture (or that would be incurred pursuant to
such clause if Section 4.03 were then applicable under Section 4.20 of the
Subordinated Debt Indenture), other than
(x) Debt outstanding under this Agreement, and
(y) if the aggregate amount of the Multi-Currency
Commitments and the Canadian Subsidiary Commitments shall have been
reduced (other than pursuant to Section 4.10 of such indenture), Debt
in an aggregate principal amount not exceeding the amount of such
reduction.
(c) Sale-Leasebacks. Directly or indirectly become or
remain liable, or permit any Restricted Subsidiary to become or remain liable,
as lessee or guarantor or other surety with respect to any lease, whether a
Capitalized Lease or otherwise, of any assets (whether real or personal or
mixed), whether now owned or hereafter acquired, that
(i) AGCO or any Restricted Subsidiary has sold or
transferred or is to sell or transfer to any other Person, other than
to another Restricted Subsidiary, or
(ii) AGCO or any Restricted Subsidiary intends to use for
substantially the same purpose as any other property that has been
sold or is to be sold or transferred by AGCO or any Restricted
Subsidiary to any Person in connection with such lease.
(d) Mergers, Etc. Merge into or consolidate with any
Person or permit any Person to merge into it, or permit any of its Restricted
Subsidiaries to do so, except that
(i) any Restricted Subsidiary of AGCO may merge into or
consolidate with any other Restricted Subsidiary of AGCO, but only if
(A) in the case of any such consolidation, the
Person formed by such consolidation shall be a Restricted
Subsidiary of AGCO, and
(B) if a Loan Party (x) is not the surviving
corporation of any such merger, or (y) is a party to any such
consolidation, the surviving corporation or Person formed by
such consolidation, as the case may be, shall assume, in a
manner reasonably satisfactory to the Required Lenders, the
obligations of such Loan Party under the Loan Documents to
which such Loan Party was a party;
(ii) any of AGCO's Restricted Subsidiaries may merge into
AGCO so long as AGCO is the surviving corporation; and
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(iii) any other Person (other than a Subsidiary of AGCO
that is not a Restricted Subsidiary) may merge into AGCO or any of its
Restricted Subsidiaries so long as AGCO or such Restricted Subsidiary
is the surviving corporation;
provided that in each case, immediately after giving effect thereto, no event
shall occur and be continuing that constitutes a Default.
(e) Sales of Assets. Sell, lease, transfer or otherwise
dispose of, or permit any of its Restricted Subsidiaries to sell, lease,
transfer or otherwise dispose of, any assets, including without limitation
substantially all assets constituting the business of a division, branch or
other unit operation, other than Inventory sold in the ordinary course of its
business, except
(i) sales, licenses and other dispositions of assets in
the ordinary course of its business;
(ii) in a transaction authorized by subsection (d) above;
(iii) the sale of any asset by AGCO or any Restricted
Subsidiary (other than a bulk sale of Inventory and a sale of
Receivables other than delinquent accounts for collection purposes
only) so long as
(A) the purchase price paid to AGCO or such
Restricted Subsidiary for such asset shall be no less than the
fair market value of such asset at the time of such sale;
(B) the purchase price for such asset (and all
assets sold in related transactions) shall be paid to AGCO or
such Restricted Subsidiary either (i) solely in cash or by way
of the assumption of liabilities of AGCO or such Restricted
Subsidiary, or (ii) solely in the form of assets (A) that are
not Investments and (B) the aggregate fair-market value of
which, as determined in good faith by the Board of Directors
of AGCO, is equal to the aggregate fair-market value of the
assets sold;
(C) the purchase price (including any portion
thereof in respect of an assumption of liabilities of AGCO or
such Restricted Subsidiary) paid to AGCO or such Restricted
Subsidiary for such asset,
(1) shall not exceed U.S. $25,000,000
in the aggregate for such transaction and all related
transactions, or
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(2) together with the aggregate purchase
prices (including any portions thereof in respect of
an assumption of liabilities of AGCO or any
Restricted Subsidiary) paid to AGCO or any Restricted
Subsidiary for all such sales of assets after the
date of this Agreement, shall not exceed 10% of
Consolidated Tangible Net Worth as of the last day of
the fiscal quarter of AGCO immediately preceding such
sale; and
(D) the Borrowers shall, on the date of such
sale, if required by Section 2.05(b)(i) or (ii), make any
prepayment required by such Section;
(iv) so long as no Default shall occur and be continuing,
the grant of any option or other right to purchase any asset in a
transaction which would be permitted under the provisions of clause
(iii) above;
(v) sales of Receivables to a third party under a
securitization facility pursuant to a program approved by the Required
Lenders;
(vi) transfers of assets between Restricted Subsidiaries
and to AGCO; and
(vii) dispositions of cash to make Investments permitted
under subsection (f) below.
(f) Investments, Guaranties, Etc. Make or hold, or
permit any of its Restricted Subsidiaries to make or hold, any Investment in,
or enter into a Guaranty of any Obligation of, any Person other than
(i) (A) Investments in Restricted Subsidiaries
existing on the date hereof, and
(B) Investments by AGCO and its Wholly Owned
Restricted Subsidiaries in any Restricted Subsidiary at least
51% of all classes and series of stock, interests in capital
or profits and beneficial interests of which are owned by AGCO
and/or by one or more Wholly Owned Restricted Subsidiaries
(other than Financial Services Insurance Company of
Tennessee); provided that no Investments shall be made
pursuant to this clause (i) while a Default has occurred and
is continuing;
(ii) Investments after the date hereof (in addition to any
Investment permitted under clause (i) above or clauses (iii) through
(v) below) by AGCO and its
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Restricted Subsidiaries in any Person (other than Financial Services
Insurance Company of Tennessee)
(x) at least 5% of all classes and series of
stock, interests in capital or profits and beneficial
interests of which are owned by AGCO and/or by one or more
Wholly Owned Restricted Subsidiaries, and
(y) that is solely engaged in businesses that are
related, ancillary or complementary to the business of AGCO
and its Restricted Subsidiaries as of the date hereof,
the sole consideration for which consists of Common Stock of AGCO
and/or cash consideration not exceeding in the aggregate, on the date
of any such Investment,
(A) the sum of
(1) U.S. $50,000,000 (or the Multi-Currency Equivalent thereof), and
(2) 50% of Consolidated Net Income for
the period beginning January 1, 1995 and ending at
the end of the fiscal quarter immediately preceding
the date of such Investment, minus
(B) the aggregate amount of any dividends paid by
AGCO pursuant to subsection (g)(i)(B) below prior to the date
of such Investment, minus
(C) the aggregate amount of any cash Investments
then outstanding and made pursuant to clause (v);
provided that no Investments shall be made pursuant to this clause
(ii):
(I) while a Default has occurred and is
continuing,
(II) in the case of any such Investment in any
Person that has equity securities of any class that is
registered pursuant to Section 12 of the Securities Exchange
Act of 1934, at least five Business Days prior to the date of
such Investment, AGCO shall have notified each Lender of the
type and amount of such Investment and the issuer of such
equity securities and shall have certified that such
Investment will not result in a breach of the representation
and warranty contained in Section 4.01(i) or
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(III) in a Finance Subsidiary if a default has
occurred and is continuing under any credit or loan agreement
or similar facility to which such Finance Subsidiary is a
party or under any Debt of such Finance Subsidiary;
(iii) Investments by AGCO and its Restricted Subsidiaries
in joint ventures outstanding as of the date hereof and specified in
Schedule 4.01(b);
(iv) other Investments in joint ventures approved by the
Required Lenders;
(v) Investments in capital stock and other equity
interests in Persons (other than Financial Services Insurance Company
of Tennessee), in addition to those permitted under clauses (i)
through (iv) inclusive above, but only so long as
(A) the aggregate amount of such Investments
outstanding on the date of any such Investment does not exceed
U.S. $25,000,000 (or the Multi-Currency Equivalent thereof),
(B) the amount of any such Investment does not
exceed the aggregate amount of any additional Investments that
could be made under clause (ii) above on the date of such
Investment,
(C) in the case of any such Investment in any
Person that has equity securities of any class that is
registered pursuant to Section 12 of the Securities Exchange
Act of 1934, if, after giving effect to such Investment, the
aggregate amount of all Investments by AGCO and the Restricted
Subsidiaries in such Person would exceed US $10,000 (or the
Multi-Currency Equivalent thereof), at least five Business
Days prior to the date of such Investment, AGCO shall have
notified each Lender of the type and amount of such Investment
and the issuer of such equity securities and shall have
certified that such Investment will not result in a breach of
the representation and warranty contained in Section 4.01(i),
(D) at the time of such Investment, no Default shall have occurred and be
continuing and
(E) AGCO and its Restricted Subsidiaries shall
not own in the aggregate 5% or more of any class or series of
stock, interests in capital or profits or beneficial interests
of any Person in which an Investment is made pursuant this
clause (v);
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(vi) Investments received in settlement of Debt of third
parties created in the ordinary course of business;
(vii) Investments by AGCO and its Restricted Subsidiaries
in Cash Equivalents and in Hedge Agreements;
(viii) the indorsement of negotiable instruments in the
ordinary course of business;
(ix) Investments by AGCO and its Restricted Subsidiaries
in Financial Services Insurance Company of Tennessee in cash in an
aggregate amount invested not to exceed, on a Consolidated basis, U.S.
$5,000,000 at any one time outstanding;
(x) advances to officers and employees of AGCO or any of
its Restricted Subsidiaries in the ordinary course of business for
travel and entertainment expenses;
(xi) Guaranties required to be delivered pursuant to
Section 3.01(e)(vii), 5.01(l) or 5.02(l);
(xii) Investments in Agricredit Acceptance Corporation,
Massey Ferguson Finance Ltd., Massey Ferguson France SNC and Massey
Ferguson Finanzierung G.m.b.H. in existence on the date hereof;
(xiii) Guaranties by AGCO of (A) the hedging and
foreign-exchange arrangements that any Subsidiary may enter into with
any financial institution, (B) dealer lines of credit in an aggregate
principal amount at any one time outstanding not exceeding U.S.
$50,000,000 in favor of any Restricted Subsidiary conducting business
in Brazil and (C) Indebtedness of Xavier Fendt GmbH & Company
permitted under subsection (b)(viii)(A) above;
(xiv) Guaranties permitted under subsection (b) above
(other than clause (xiii) thereof);
(xv) Guaranties of obligations (other than obligations
constituting Debt) of any Subsidiary incurred in the ordinary course
of such Subsidiary's business; and
(xvi) securities received in settlement of bankruptcy
claims.
(g) Dividends, Etc. Declare or pay any dividends,
purchase, redeem, retire, defease or otherwise acquire for value any of its
capital stock or any warrants, rights or options to acquire such capital stock,
now or hereafter outstanding, return any capital to its
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stockholders as such, make any distribution of assets, capital stock, warrants,
rights, options, obligations or securities to its stockholders as such or permit
any of its Restricted Subsidiaries to purchase, redeem, retire, defease or
otherwise acquire for value any capital stock of AGCO or any warrants, rights or
options to acquire such capital stock, except that
(i) so long as no Default shall have occurred and be
continuing, AGCO may
(A) declare and deliver dividends and
distributions payable only in, or convert any preferred stock
into, Common Stock of AGCO, and
(B) declare and pay cash dividends to its
stockholders and purchase, redeem, retire or otherwise acquire
shares of its own outstanding capital stock for cash so long
as the aggregate amount thereof does not exceed
(1) 50% of Consolidated Net Income for
the period beginning January 1, 1995 and ending at
the end of the fiscal quarter immediately preceding
such declaration or payment, minus
(2) the aggregate amount of any cash
Investments then outstanding and made pursuant to
subsection (f)(ii) above in excess of U.S.
$50,000,000;
(ii) AGCO may acquire shares of its capital stock to
eliminate fractional shares; provided that the aggregate amount paid
by AGCO pursuant to acquisitions under this clause (ii) after the date
of this Agreement shall not exceed U.S. $20,000,000.
Any dividend permitted under this Subsection (g) on the date of its declaration
may continue to be paid notwithstanding any subsequent change; provided that
any dividend shall be paid within 90 days after its declaration.
(h) Change in Nature of Business. Engage, or permit any
of its Restricted Subsidiaries (including without limitation any Persons
becoming Restricted Subsidiaries after the date hereof) to engage in any
business that is not related, ancillary or complementary to the business of
AGCO and its Restricted Subsidiaries as of the date hereof.
(i) Charter Amendments. Amend, or permit any of its
Restricted Subsidiaries to amend, its charter, bylaws or similar constituent
documents that would have a Material Adverse Effect.
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(j) Prepayments, Etc. of Debt. Prepay, redeem, purchase,
defease or otherwise satisfy prior to the scheduled maturity thereof in any
manner, or make any payment in violation of, or amend, modify or supplement in
any way, any subordination terms of, any Debt, other than
(i) the prepayment of the Advances in accordance with the
terms of this Agreement;
(ii) payments and prepayments of Debt outstanding under
any overdraft facility permitted under subsection (b)(viii) above;
(iii) regularly scheduled or required repayments or
redemptions of Debt outstanding on the date hereof;
(iv) regularly scheduled payments in respect of New
Subordinated Debt (to the extent such payment is not contrary to the
terms of subordination thereof);
(v) payments and prepayments of Debt owed by (A) AGCO to
any Restricted Subsidiary (other than a Foreign Subsidiary), (B) any
Restricted Subsidiary to AGCO, and (C) any Restricted Subsidiary to
another Restricted Subsidiary (other than a Foreign Subsidiary); and
(vi) the prepayment of the Debt outstanding under the Old
Credit Agreement;
or amend, modify or change in any manner any term or condition (including
without limitation any financial covenant) of any such Debt, or permit any of
its Restricted Subsidiaries to do any of the foregoing (other than to prepay
any Debt payable to AGCO); or cancel, forgive or modify in any respect
materially adverse to AGCO or the Lenders any Debt owing by a Subsidiary to
AGCO or another Subsidiary.
(k) Restrictions on Dividends. Permit any of its
Restricted Subsidiaries to enter into agreements that prohibit or limit the
amount of dividends or loans that may be paid or made to AGCO or another
Subsidiary of AGCO by any of its Restricted Subsidiaries or any demands for
payment on Debt owing by any Restricted Subsidiary of AGCO to AGCO or another
Subsidiary of AGCO, other than (i) restrictions imposed under an agreement for
the sale of all of the capital stock or other equity interest of a Subsidiary
or for the sale of a substantial part of the assets of such Subsidiary, in
either case to the extent permitted hereunder and pending the consummation of
such sale, and (ii) restrictions in any agreement with another Person relating
to a joint venture conducted through a Subsidiary of AGCO in
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which such Person is a minority stockholder requiring the consent of such Person
to the payment of dividends.
(l) New Subsidiaries. Acquire, or permit any of its
Restricted Subsidiaries to acquire, any new Subsidiary, or permit any Dormant
Subsidiary to cease to meet the conditions necessary to qualify as a Dormant
Subsidiary hereunder, unless such new Subsidiary or Dormant Subsidiary (if
other than a Finance Subsidiary) shall have executed and delivered to the
Administrative Agent a Loan Party Guaranty in form and substance satisfactory
to the Administrative Agent of any or all Loan Parties' obligations hereunder
and under the other Loan Documents, as determined by the Administrative Agent;
provided that, subject to Section 5.01(l), no Foreign Subsidiary shall be
required to guaranty the obligations of any Subsidiary that is not a Foreign
Subsidiary.
(m) Issuance or Sales of Stock. Either
(i) sell, assign or otherwise transfer, or permit any of
its Restricted Subsidiaries to sell, assign or otherwise transfer, any
capital stock of any Restricted Subsidiary owned at any time after the
date hereof, or
(ii) permit any Restricted Subsidiary to issue or sell any
shares of its capital stock, except
(A) to qualify directors of Subsidiaries where
required by applicable law or to satisfy other requirements of
applicable law with respect to the ownership of capital stock
of Subsidiaries incorporated in jurisdictions outside of the
United States of America, and
(B) issuances and sales of capital stock by
Wholly Owned Restricted Subsidiaries to AGCO or other Wholly
Owned Subsidiaries of AGCO permitted by subsection (f)(ii)
above,
except that AGCO or any Restricted Subsidiary may so transfer, issue
or sell such capital stock or shares:
(1) if, after giving effect to such transfer, issuance or
sale, no Default shall have occurred and be continuing (including
without limitation any Default under subsection (b) or (f) above);
(2) in circumstances where, as a result of such transfer,
issuance or sale, any Person would cease to be a Restricted
Subsidiary, no Default would have existed under Section 5.04 as of the
end of the most recent fiscal quarter of AGCO, assuming
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that such
Person had not been a Restricted Subsidiary at any time during the
periods or on any date used in making any calculation or determination
under such Section; and
(3) if AGCO shall have delivered to each Lender (x) a
certification to the effect set forth in clause (1) and (if
applicable) clause (2) above (together with a reasonably detailed
statement showing the basis for its certification as to the matters
described in clause (ii)) and (y) if requested by the Administrative
Agent pro-forma financial statements for each period and date referred
to in clause (2) above prepared as if such Person had not been a
Restricted Subsidiary for such period or as of such date.
(n) Change in Policies Regarding Receivables, Reserves
and Allowances. Modify, supplement or fail to carry out, or permit any
Restricted Subsidiary to modify, supplement or fail to carry out, in any
material respect, its policies and procedures in effect on the date hereof
regarding the creation of Reserves and Allowances or the terms of the
obligations of the obligors under Receivables, or implement any such policies
or procedures that differ materially from those of AGCO in effect on the date
hereof.
(o) Excess Proceeds. Permit to exist any Excess Proceeds
(as defined in the Subordinated Debt Indenture), if the existence thereof would
require AGCO to offer to purchase the New Subordinated Debt.
(p) No Notice Under Subordinated Debt Indenture.
Deliver, or permit there to be delivered, to the trustee under the Subordinated
Debt Indenture any notice that any agreement, instrument or document, other
than this Agreement and related instruments and documents, is the "Bank Credit
Agreement" thereunder.
SECTION 5.03. Reporting Requirements. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
shall have any Commitment hereunder, AGCO will, unless the Required Lenders
shall otherwise consent in writing, furnish to the Administrative Agent (with a
sufficient number of copies so that the Administrative may distribute a copy to
the Canadian Administrative Agent and each of the Lenders, and the
Administrative Agent agrees promptly following receipt thereof to distribute to
the Canadian Administrative Agent and each Lender a copy of each item received
by it pursuant to this Section 5.03):
(a) Default Notice. As soon as possible and in any event
within two days after a Responsible Employee shall know of the occurrence of
each Default, a statement of the chief financial officer of AGCO setting forth
details of such Default and the action that AGCO has taken and proposes to take
with respect thereto.
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(b) Quarterly Financials. As soon as available and in
any event within 45 days after the end of each of the first three quarters of
each fiscal year of AGCO, and within 100 days after the end of the fourth
quarter of each fiscal year of AGCO, consolidated balance sheets of AGCO and
its Restricted Subsidiaries and (in the case of the first three fiscal
quarters) AGCO and its Subsidiaries, respectively, as of the end of such
quarter and consolidated statements of income and cash flows of AGCO and its
Restricted Subsidiaries and (if applicable) AGCO and its Subsidiaries,
respectively, for the period commencing at the end of the previous fiscal year
and ending with the end of such quarter, setting forth in each case in
comparative form the corresponding figures for the corresponding period of the
preceding fiscal year, all in reasonable detail and duly certified (subject to
year-end audit adjustments) by the chief financial officer of AGCO as having
been prepared in accordance with GAAP, together with, in the case of the
financial statements relating to the first three fiscal quarters,
(i) a certificate of said officer stating that no Default
has occurred and is continuing or, if a Default has occurred and is
continuing, a statement as to the nature thereof and the action that
AGCO has taken and proposes to take with respect thereto, and
(ii) a schedule in form satisfactory to the Administrative
Agent of the computations used by AGCO in determining compliance with
the covenants contained in Sections 5.02(e)(iii), 5.02(f)(ii) and (v),
5.02(g)(i)(B) and (iii) and 5.04(a), (b), (c) and (d).
(c) Annual Financials. As soon as available and in any
event within 100 days after the end of each fiscal year of AGCO, a copy of the
annual audit report for such year for AGCO and its Subsidiaries, including
therein consolidated balance sheets and consolidated statements of income and
cash flows of AGCO and its Subsidiaries for such fiscal year, in each case
accompanied by an opinion acceptable to the Required Lenders of Arthur Andersen
LLP or other independent public accountants of recognized national standing,
together with
(i) a certificate of such accounting firm to the Lenders
stating that in the course of the regular audit of the business of
AGCO and its Subsidiaries, which audit was conducted by such
accounting firm in accordance with generally accepted auditing
standards, such accounting firm has obtained no knowledge that a
Default has occurred and is continuing, or if, in the opinion of such
accounting firm, a Default has occurred and is continuing, a statement
as to the nature thereof;
(ii) a schedule in form satisfactory to the Administrative
Agent of the computations used by such accountants in determining, as
of the end of such fiscal year, the Consolidated Average Funded
Debt/EBITDA Ratio and compliance with the
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covenants contained in
Sections 5.02(e)(iii), 5.02(f)(ii) and (v), 5.02(g)(i)(B) and (iii)
and 5.04(a), (b), (c) and (d); and
(iii) a certificate of the chief financial officer of AGCO
stating that no Default has occurred and is continuing or, if a
default has occurred and is continuing, a statement as to the nature
thereof and the action that AGCO has taken and proposes to take with
respect thereto.
(d) ERISA Events and ERISA Reports. (i) Promptly and in
any event within 10 Business Days after any Responsible Employee of any Loan
Party or any of its ERISA Affiliates knows or has reason to know that any ERISA
Event with respect to any Loan Party or any of its ERISA Affiliates has
occurred, a statement of the chief financial officer of AGCO describing such
ERISA Event and the action, if any, that such Loan Party or such ERISA
Affiliate has taken and proposes to take with respect thereto, and (ii) on the
date on which any records, documents or other information must be furnished to
the PBGC with respect to any Plan pursuant to Section 4010 of ERISA, a copy of
such records, documents and information.
(e) Plan Terminations. Promptly and in any event within
two Business Days after receipt thereof by any Loan Party or any of its ERISA
Affiliates, copies of each notice from the PBGC stating its intention to
terminate any Plan of any Loan Party or any of its ERISA Affiliates or to have
a trustee appointed to administer any such Plan.
(f) Plan Annual Reports. Promptly and in any event
within 30 days after the filing thereof with the Internal Revenue Service,
copies of each Schedule B (Actuarial Information) to the annual report (Form
5500 Series) with respect to each Plan for which any Loan Party or any of its
ERISA Affiliates is required to file such report.
(g) Multiemployer Plan Notices. Promptly and in any
event within five Business Days after receipt thereof by any Loan Party or any
of its ERISA Affiliates from the sponsor of a Multiemployer Plan of any Loan
Party or any of its ERISA Affiliates, copies of each notice concerning
(i) the imposition of Withdrawal Liability by any such
Multiemployer Plan that might have a Material Adverse Effect,
(ii) the reorganization or termination, within the meaning
of Title IV of ERISA, of any such Multiemployer Plan that might be
expected to have a Material Adverse Effect or
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(iii) the amount of liability incurred by such Loan Party
or any of its ERISA Affiliates in connection with any event described
in clause (i) or (ii), if paying such liability might have a Material
Adverse Effect.
(h) Litigation. Promptly after the commencement thereof,
notice of all actions, suits, investigations, litigation and proceedings before
any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting AGCO or any of its Subsidiaries
of the type described in Section 4.01(h).
(i) Securities Reports. Promptly after the sending or
filing thereof, copies of all proxy statements, financial statements and
reports that AGCO or any of its Subsidiaries sends to its stockholders, and
copies of all regular, periodic and special reports, and all registration
statements, that any Loan Party or any of its Subsidiaries files with the
Securities and Exchange Commission or any governmental authority that may be
substituted therefor, or with any national securities exchange.
(j) Creditor Reports. Upon request by either Agent or
any Lender, copies of any statement or report furnished to any other holder of
the securities of any Loan Party or of any of its Subsidiaries pursuant to the
terms of any indenture, loan or credit or similar agreement and not otherwise
required to be furnished to the Lenders pursuant to any other clause of this
Section 5.03.
(k) Material Contract Notices. Promptly upon receipt
thereof, copies of all default notices received by any Loan Party or any of its
Subsidiaries under or pursuant to any Material Contract and, from time to time
upon request by the Administrative Agent, such information regarding any
Material Contracts as the Administrative Agent may reasonably request.
(l) Environmental Conditions. Promptly after the
occurrence thereof, notice of any condition or occurrence on any property of
any Loan Party or any of its Subsidiaries that results in a material
noncompliance by any Loan Party or any of its Subsidiaries with any
Environmental Law or Environmental Permit or would be reasonably likely to form
the basis of an Environmental Action against any Loan Party or any of its
Subsidiaries or such property that could have a Material Adverse Effect.
(m) Adverse Developments. Promptly after the occurrence
thereof, notice of any other event or condition relating to the business,
condition (financial or otherwise), operations, performance, properties or
prospects of AGCO and its Restricted Subsidiaries (including without limitation
any events or conditions described in Section 4.01(q) or the loss of use of any
trademarks or patents) that is reasonably likely to have a Material Adverse
Effect.
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103
(n) Borrowing Base Certificates. As soon as practicable
and, in any event by (i) the 30th day after each fiscal quarter of AGCO (or, if
such day is not a Business Day, on the next-following day that is a Business
Day), and (ii) if a Default shall have occurred and be continuing, not later
than the fifth Business Day after the Required Lenders shall have requested the
same, a Borrowing Base Certificate, executed by the Chief Financial Officer,
the Treasurer or an Assistant Treasurer of AGCO with respect to the Receivables
and Inventory of AGCO and its Restricted Subsidiaries as of the last Business
Day of the immediately preceding fiscal quarter, in the case of a Borrowing
Base Certificate delivered pursuant to clause (i) above, and as of the date of
such request, in the case of a Borrowing Base Certificate delivered pursuant to
clause (ii) above.
(o) Quarterly Operations Report. As soon as possible and
in any event by the 30th day after each fiscal quarter of AGCO, beginning with
the fiscal quarter ending December 31, 1996, a quarterly operations report in
respect of the immediately preceding fiscal quarter in substantially the form
prepared by AGCO for its internal use and containing substantially the
information as is contained in such report as of the date hereof.
(p) Replacement Schedules. Promptly, and in any event
within 30 days, after any information contained in Schedule 4.01(b) (other than
with respect to Dormant Subsidiaries) or any representation or warranty herein
referring to such Schedule, if repeated as of any date, shall become or would
be incorrect or incomplete, deliver to the Administrative Agent a replacement
for such Schedule that will cause such information, or such representation or
warranty, to be correct and complete.
(q) Other Information. Such other information respecting
the business, condition (financial or otherwise), operations, performance,
taxes, properties or prospects of any Loan Party or any of its Subsidiaries as
any Co-Manager may reasonably request or any Lender may from time to time
reasonably request through a Co-Manager.
SECTION 5.04. Financial Covenants. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
shall have any Commitment hereunder, AGCO will, unless the Required Lenders
otherwise consent in writing:
(a) Consolidated Total Debt Ratio. Maintain, as of the
end of each fiscal quarter of AGCO, the ratio of
(i) the aggregate principal amount of all Debt of AGCO
and its Restricted Subsidiaries, to
(ii) such aggregate principal amount, plus Consolidated
Net Worth,
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in each case at the last day of such fiscal quarter, at no more than .60 to 1.
(b) EBITDA Ratio. Maintain, as of the end of each fiscal
quarter of AGCO, the ratio of
(i) Consolidated EBITDA, to
(ii) (A) Consolidated Net Interest Expense, plus
(B) the aggregate principal amount of
Consolidated Funded Debt to be paid within one year after the
last day of such fiscal quarter, plus
(C) the aggregate amount of all capital
expenditures made by AGCO and its Restricted Subsidiaries,
in the case of clauses (i), (ii)(A) and (ii)(C) above for such fiscal quarter
and the three fiscal quarters of AGCO immediately preceding such fiscal
quarter, at no less than 2.0 to 1.
(c) Consolidated Funded Debt Ratio. Maintain, as of the
last day of each fiscal quarter of AGCO, the ratio of
(i) the aggregate principal amount of Consolidated
Funded Debt as of the end of such fiscal quarter to
(ii) Consolidated EBITDA for such fiscal quarter and the
three complete fiscal quarters of AGCO immediately preceding such
fiscal quarter,
at no more than 5.0 to 1.
(d) Consolidated Tangible Net Worth Ratio. Maintain, as
of the last day of each fiscal quarter of AGCO, the ratio of
(i) the sum of (A) Consolidated Tangible Net Worth, and
(B) the aggregate principal amount of all New Subordinated Debt and
the Convertible Subordinated Debentures, to
(ii) Consolidated Total Assets,
in each case as of the last day of such fiscal quarter, at no less than
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(A) 0.22 to 1.00, if such fiscal quarter ends before July
1, 1997,
(A) 0.26 to 1.00, if such fiscal quarter ends after July
1, 1997 but before October 1, 1997,
(A) 0.30 to 1.00, if such fiscal quarter ends after
October 1, 1997.
SECTION 5.05. Covenants of the Borrowing Subsidiaries. Each
Borrowing Subsidiary will perform and observe each covenant in Section 5.01 and
5.02 that AGCO is required to cause it to perform or observe under such
Sections.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following
events ("Events of Default") shall occur and be continuing:
(a) (i) Any Borrower shall fail to pay (A) any principal
or face amount of any Advance on the date when the same becomes due
and payable, or (B) any interest on any Advance within one day after
the date when the same becomes due and payable, or (ii) any Loan Party
shall fail to make any other payment under any Loan Document, in any
case within five days after the date when the same becomes due and
payable; or
(b) any representation or warranty made by any Loan Party
(or any of its officers) under or in connection with any Loan Document
shall prove to have been incorrect in any material respect when made;
or
(c) AGCO shall fail to perform or observe any term,
covenant or agreement contained in Section 5.01(e)(with respect to any
Borrower), 5.02(c), (d), (e), (g) or (m), 5.03(a) or 5.04; or
(d) any Loan Party shall fail to perform any other term,
covenant or agreement contained in any Loan Document on its part to be
performed or observed if such failure shall remain unremedied for 30
days after the earlier of (i) such Loan Party having knowledge
thereof, and (ii) written notice thereof having been given to AGCO; or
(e) any Loan Party or any of AGCO's other Restricted
Subsidiaries shall fail to pay any principal of, premium or interest
on or any other amount payable in respect
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of any Debt, if such Debt is
outstanding in a principal or notional amount of at least U.S.
$10,000,000 in the aggregate (but excluding Debt outstanding
hereunder), when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to
such Debt; or any other event shall occur or condition shall
exist under any agreement or instrument relating to any such Debt and
shall continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such event or condition
is to accelerate, or to permit the acceleration of, the maturity of
such Debt or otherwise to cause, or to permit the holder thereof to
cause, such Debt to mature; or any such Debt shall be declared to be
due and payable or required to be prepaid or redeemed (other than by a
regularly scheduled required prepayment or redemption), purchased or
defeased, or an offer to prepay, redeem, purchase or defease such Debt
shall be required to be made, in each case prior to the stated
maturity thereof; or
(f) any Loan Party or any of AGCO's other Restricted
Subsidiaries shall generally not pay its debts as such debts become
due, shall suspend or threaten to suspend making payment whether of
principal or interest with respect to any class of its debts or shall
admit in writing its inability to pay its debts generally, or shall
make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against any Loan Party or any of
AGCO's other Restricted Subsidiaries seeking, or seeking the
administration, to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the
appointment of a receiver, administrator, receiver and manager,
trustee, or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted
against it (but not instituted by it) that is being diligently
contested by it in good faith, either such proceeding shall remain
undismissed or unstayed for a period of 30 days or any of the actions
sought in such proceeding (including without limitation the entry of
an order for relief against, or the appointment of a receiver,
administrator, receiver and manager, trustee, custodian or other
similar official for, it or any substantial part of its property)
shall occur; or any Loan Party or any of AGCO's other Restricted
Subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this subsection (f), or an encumbrancer
takes possession of, or a trustee or administrator or other receiver
or similar officer is appointed in respect of, all or any part of the
business or assets of any Loan Party or any of AGCO's other
Restricted Subsidiaries, or distress or any form of execution is
levied or enforced upon or sued out against any such assets and is not
discharged within seven days of being levied, enforced or sued out, or
any Lien that may for the time being affect any of its assets becomes
enforceable, or anything analogous to any of
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the events specified in
this subsection (f) occurs under the laws of any applicable
jurisdictions; or
(g) any judgment or order for the payment of money in
excess of U.S. $10,000,000 (other than any such judgment for a
monetary amount insured against by a reputable insurer that shall have
admitted liability therefor) shall be rendered against any Loan Party
or any of AGCO's other Restricted Subsidiaries and either
(i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order, or
(ii) there shall be any period of 30 consecutive
days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not
be in effect; or
(h) any non-monetary judgment or order shall be rendered
against any Loan Party or any of AGCO's other Restricted Subsidiaries
that is reasonably likely to have a Material Adverse Effect, and there
shall be any period of 30 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal
or otherwise, shall not be in effect; or
(i) any provision of any Loan Document after delivery
thereof pursuant to Section 3.01 shall for any reason cease to be
valid and binding on or enforceable against any Loan Party party to
it, or any such Loan Party shall so state in writing; or
(j) any of the following shall occur:
(i) any Person or two or more Persons acting in
concert shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934),
directly or indirectly, of Voting Stock of AGCO (or other
securities convertible into such Voting Stock) representing
40% or more of the combined voting power of all Voting Stock
of AGCO; or
(ii) during any period of up to 24 consecutive
months, commencing after the date of this Agreement,
individuals who at the beginning of such 24-month period were
directors of AGCO (together with any new directors whose
election to the board of directors or whose nomination for
election by AGCO's stockholders was approved by a vote of at
least two-thirds of the members of the board of directors at
the beginning of such period or whose
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election or nomination
for election was previously so approved) shall cease for any
reason to constitute a majority of the board of directors of
AGCO; or
(iii) any Person or two or more Persons acting in
concert shall have acquired by contract or otherwise, or shall
have entered into a contract or arrangement that, upon
consummation, will result in its or their acquisition of,
control over Voting Stock of AGCO (or other securities
convertible into such securities) representing 40% or more of
the combined voting power of all Voting Stock of AGCO; or
(iv) any "Change of Control", as defined in the
Subordinated Debt Indenture, shall occur; or
(k) any ERISA Event shall have occurred with respect to a
Plan of any Loan Party or any of its ERISA Affiliates and the sum
(determined as of the date of occurrence of such ERISA Event) of the
Insufficiency of such Plan and the Insufficiency of any and all other
Plans of the Loan Parties and their ERISA Affiliates with respect to
which an ERISA Event shall have occurred and then exist for which the
liability of the Loan Parties and their ERISA Affiliates is reasonably
likely to have a Material Adverse Effect; or
(l) any Loan Party or any of its ERISA Affiliates shall
have been notified by the sponsor of a Multiemployer Plan of any Loan
Party or any of its ERISA Affiliates that it has incurred Withdrawal
Liability to such Multiemployer Plan in an amount that, when
aggregated with all other amounts then required to be paid to
Multiemployer Plans by the Loan Parties and their ERISA Affiliates as
Withdrawal Liability (determined as of the date of such notification),
is reasonably likely to have a Material Adverse Effect; or
(m) any Loan Party or any of its ERISA Affiliates shall
have been notified by the sponsor of a Multiemployer Plan of any Loan
Party or any of its ERISA Affiliates that such Multiemployer Plan is
in reorganization or is being terminated, within the meaning of Title
IV of ERISA, and as a result of such reorganization or termination the
aggregate annual contributions of the Loan Parties and their ERISA
Affiliates to all Multiemployer Plans that are then in reorganization
or being terminated have been or will be increased over the amounts
contributed to such Multiemployer Plans for the plan years of such
Multiemployer Plans immediately preceding the plan year in which such
reorganization or termination occurs by an amount that is reasonably
likely to have a Material Adverse Effect,
then, and in any such event, the Administrative Agent
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(i) may, and shall at the request of the Required
Lenders, by notice to AGCO, declare the obligation of each Lender to
make Advances and of the Issuing Banks to issue Letters of Credit to
be terminated, whereupon the same shall forthwith terminate, and
(ii) may, and shall at the request of the Required
Lenders,
(A) by notice to AGCO, declare the Notes, all
interest thereon and all other amounts payable under this
Agreement and the other Loan Documents to be forthwith due and
payable, whereupon the Notes, all such interest and all such
amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of
which are hereby expressly waived by the Borrowers, and
(B) by notice to each party required under the
terms of any agreement in support of which a Standby Letter of
Credit is issued, request that all Obligations under such
agreement be declared to be due and payable;
provided that in the event of an actual or deemed entry of an order for relief
with respect to any Borrower under the Federal Bankruptcy Code,
(x) the obligation of each Lender to make Advances and of
the Issuing Bank to issue Letters of Credit shall automatically be
terminated and
(y) the Notes, all such interest and all such amounts
shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which
are hereby expressly waived by the Borrowers.
SECTION 6.02. Actions in Respect of the Letters of Credit. If
(a) an event of an actual or deemed entry of an order for
relief with respect to any Borrower under the Federal Bankruptcy Code
shall have occurred, AGCO will forthwith, and
(b) any other Event of Default shall have occurred and be
continuing, the Administrative Agent may, irrespective of whether it
is taking any of the actions described in Section 6.01 or otherwise,
make demand upon AGCO to, and forthwith upon such demand AGCO will,
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pay to the Administrative Agent on behalf of the Lenders in same-day funds at
the Administrative Agent's office designated in such demand, for deposit in
such interest-bearing account as the Administrative Agent shall specify (the
"L/C Cash Collateral Account"), an amount equal to the aggregate Available
Amount of all Letters of Credit then outstanding. If at any time the
Administrative Agent determines that any funds held in the L/C Cash Collateral
Account are subject to any right or claim of any Person other than the
Administrative Agent and the Lenders or that the total amount of such funds is
less than the amount required to be on deposit hereunder, AGCO will, forthwith
upon demand by the Administrative Agent, pay to the Administrative Agent, as
additional funds to be deposited and held in the L/C Cash Collateral Account,
an amount equal to the excess of (i) such amount required to be deposited
hereunder over (ii) the total amount of funds, if any, then held in the L/C
Cash Collateral Account that the Administrative Agent determines to be free and
clear of any such right and claim. The L/C Cash Collateral Account shall be in
the name and under the sole dominion and control of the Administrative Agent.
The Administrative Agent shall have no obligation to invest any amounts on
deposit in the L/C Cash Collateral Account. AGCO grants to the Administrative
Agent, for its benefit and the benefit of the Lenders, the Agents and the
Issuing Banks, a lien on and security interest in the L/C Cash Collateral
Account and all amounts on deposit therein as collateral security for the
performance of the Borrowers' obligations under this Agreement and the other
Loan Documents. The Administrative Agent shall have all rights and remedies
available to it under applicable law with respect to the L/C Cash Collateral
Account and all amounts on deposit therein.
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ARTICLE VII
THE AGENTS
SECTION 7.01. Authorization and Action. Each Lender hereby
appoints and authorizes Rabobank to take action on its behalf as the
Administrative Agent, and each Canadian Subsidiary Lender hereby appoints and
authorizes Deutsche Bank Canada to act on its behalf as Canadian Administrative
Agent, to exercise such powers and discretion under this Agreement and the
other Loan Documents as are delegated to them respectively by the terms hereof
and thereof, together with such powers and discretion as are reasonably
incidental thereto. As to any matters not expressly provided for by the Loan
Documents (including without limitation enforcement or collection of the
Notes), neither Agent shall be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions
of the Required Lenders, and such instructions shall be binding upon all
Lenders and all holders of Notes; provided that neither Agent shall be required
to take any action that exposes it or its officers or directors to personal
liability or that is contrary to this Agreement or applicable law. Each Agent
will give to each Lender prompt notice of each notice given to it by the
Borrower pursuant to the terms of this Agreement.
SECTION 7.02. Agents' Reliance, Etc. Neither Agent nor any
of its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with the Loan
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, each Agent:
(i) may treat the payee of any Note as the holder thereof
until the Administrative Agent receives and accepts an Assignment and
Acceptance entered into by the Lender that is the payee of such Note,
as assignor, and an Eligible Assignee, as assignee, as provided in
Section 8.07;
(ii) respectively, may consult with legal counsel
(including counsel for any Loan Party), independent public accountants
and other experts selected by it, and may rely on any opinion of
counsel delivered under this Agreement, and shall not be liable
for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts or
any such opinion;
(iii) make no warranty or representation to any Lender and
shall not be responsible to any Lender for any statements, warranties
or representations made in or in connection with the Loan Documents by
any other Person;
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112
(iv) shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or
conditions of any Loan Document on the part of any Loan Party or to
inspect the property (including the books and records) of any Loan
Party;
(v) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness,
sufficiency or value of any Loan Document or any other instrument or
document furnished pursuant hereto (other than its own execution and
delivery thereof) or the creation, attachment perfection or priority
of any Lien purported to be created under or contemplated by any Loan
Document;
(vi) respectively, shall incur no liability under or in
respect of any Loan Document by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telegram,
telecopy, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties;
(vii) shall have no liability or responsibility to any Loan
Party for any failure on the part of any Lender to comply with any
obligation to be performed by such Lender under this Agreement;
(viii) shall not be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default under this Agreement
unless they have received notice from a Lender or Loan Party referring
to this Agreement, describing such Default or Event of Default and
stating that such notice is a "Notice of Default";
(ix) shall incur no liability as a result of any
determination whether the transactions contemplated by the Loan
Documents constitute a "highly leveraged transaction" within the
meaning of the interpretations issued by the Comptroller of the
Currency, the Federal Deposit Insurance Corporation and the Board of
Governors of the Federal Reserve System; and
(xi) may act directly or through agents on its behalf.
SECTION 7.03. Agents, in their Individual Capacity and
Affiliates. With respect to their respective Commitments, and the Advances
made by each of them, respectively, and the Notes issued to each of them,
respectively, Rabobank and Deutsche Bank Canada shall have the same rights and
powers under the Loan Documents as any other Lender and may exercise the same as
though it were not an Agent; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include Rabobank and Deutsche Bank Canada in
their individual capacities. Rabobank and Deutsche Bank Canada and their
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113
respective affiliates may accept deposits from, lend money to, act as trustee
under indentures of, accept investment banking engagements from and generally
engage in any kind of business with, any Loan Party, any of its Subsidiaries and
any Person who may do business with or own securities of any Loan Party or any
such Subsidiary, all as if Rabobank and Deutsche Bank Canada were not Agents and
without any duty to account therefor to the Lenders.
SECTION 7.04. Lender Credit Decision. Each Lender
acknowledges that it has, independently and without reliance upon either Agent
or any other Lender and based on the financial statements referred to in
Section 4.01(f) and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon either Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement.
SECTION 7.05. Indemnification. Each Lender severally agrees
to indemnify each Agent and each Co- Manager (to the extent not promptly
reimbursed by the Borrowers) from and against such Lender's ratable share of
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements (including without
limitation fees and expenses of legal counsel consulted pursuant to Section
7.02(ii)) of any kind or nature whatsoever that may be imposed on, incurred by,
or asserted against such Agent or any Co-Manager in any way relating to or
arising out of the Loan Documents or any action taken or omitted by such Agent
or any Co-Manager under the Loan Documents; provided that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Agent's or such Co- Manager's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse each Agent and each Co-Manager promptly upon demand for its ratable
share of any costs and expenses payable by any Borrower under Section 8.04, to
the extent that such Agent or such Co-Manager is not promptly reimbursed for
such costs and expenses by the Borrower. For purposes of this Section 7.05,
the Lenders' respective ratable shares of any amount shall be determined, at
any time, according to the sum of
(a) the aggregate principal amount of the Advances (other
than Advances by way of Bankers' Acceptances) outstanding at such time
and owing to the respective Lenders;
(b) the aggregate face amount of Bankers' Acceptances
outstanding at such time and owing to the respective Lenders;
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114
(c) their respective Pro Rata Shares of the aggregate
Available Amount of all Letters of Credit outstanding at such time and
(d) their respective Unused Multi-Currency Commitments
and Unused Canadian Subsidiary Commitments at such time.
SECTION 7.06. Successor Agent. Either Agent may resign at
any time by giving written notice thereof to the Lenders and the Borrowers and
may be removed (but only as to all of the Facilities) at any time with cause by
the Required Lenders. Upon any such resignation or removal, the Required
Lenders shall have the right to appoint a successor Agent. If no successor
Agent shall have been so appointed by the Required Lenders, and shall have
accepted such appointment, within 30 days after the retiring Agent's giving of
notice of resignation or the Required Lenders' removal of the retiring Agent,
then the retiring Agent may, on behalf of the Lenders, appoint a successor
Agent, which shall be a commercial bank or other financial institution and
having a combined capital and surplus of at least U.S. $1,000,000,000. Upon
the acceptance of any appointment as an Agent hereunder by a successor Agent,
such successor Agent shall succeed to and become vested with all the rights,
powers, discretion, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under the
Loan Documents. After any retiring Agent's resignation or removal hereunder as
an Agent, the provisions of this Article VII and Section 8.04 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
an Agent under this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement, the Notes or any other Loan Document, nor consent
to any departure by the Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Required Lenders, and
then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided that
(a) no amendment, waiver or consent shall, unless in
writing and signed by all of the Lenders, do any of the following at
any time:
(i) waive any of the conditions specified in
Section 3.02,
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115
(ii) change the percentage of the Commitments or
of the aggregate unpaid principal amount of the Notes, or the
number of Lenders, that shall be required for the Lenders or
any of them to take any action hereunder,
(iii) amend this Section 8.01,
(iv) reduce or forgive the principal of, or
interest on, the Notes or any fees or other amounts payable
hereunder or increase the aggregate amount of the Commitments,
(v) postpone any date fixed for any payment of
principal of, or interest on, the Notes or any fees or other
amounts payable hereunder or amend Section 2.05,
(vi) permit any Letter of Credit to have an
expiration date (including all rights of a Borrower or
beneficiary to require renewal) later than 60 days before the
Termination Date or
(vii) waive any rights under, consent to any
departure from or agree to any amendment of any provision of,
the Subordinated Debt Indenture;
(b) no amendment, waiver or consent shall be made to
Section 2.09(f) except with the consent of the Supermajority Lenders;
(c) no amendment, waiver or consent shall, unless in
writing and signed by the Required Lenders and each Lender that has a
Commitment under the Facility affected by such amendment, waiver or
consent,
(i) increase the Commitments of such Lender or
subject such Lender to any additional obligations,
(ii) reduce the principal of, or interest on, the
Notes held by such Lender or any fees or other amounts payable
hereunder to such Lender,
(iii) postpone any date fixed for any payment of
principal of, or interest on, the Notes held by such Lender or
any fees or other amounts payable hereunder to such Lender or
(iv) change the order of application of any
prepayment set forth in Section 2.05 in any manner that
materially affects such Lender;
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116
(d) no amendment, waiver or consent shall, unless in
writing and signed by the Appropriate Issuing Bank in addition to the
Lenders required above to take such action, affect the rights or
obligations of such Issuing Bank under this Agreement; and
(e) no amendment, waiver or consent shall, unless in
writing and signed by the Appropriate Agent, in addition to the
Lenders required above to take such action, affect the rights or
duties of such Agent under this Agreement or any Note.
Anything in this Agreement to the contrary notwithstanding, if
any Lender shall fail to fulfill its obligations to make an Advance hereunder
then, for so long as such failure shall continue, such Lender shall (unless
AGCO and the Required Lenders, determined as if such Lender were not a "Lender"
hereunder, shall otherwise consent in writing) be deemed for all purposes
relating to amendments, modifications, waivers or consents under this Agreement
or the Notes (including without limitation under this Section 8.01) to have no
Advances or Commitments, shall not be treated as a "Lender" hereunder when
performing the computation of Required Lenders, and shall have no rights under
this Section 8.01; provided that any action taken by the other Lenders with
respect to the matters referred to in clause (a) or (b) of this Section 8.01
shall not be effective as against such Lender.
SECTION 8.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including telecopy
communication) and mailed, telecopied or delivered,
(a) if to the AGCO or any Borrowing Subsidiary to AGCO at
its address at 4830 River Green Parkway, Duluth, Georgia 30136,
Attention: General Counsel, Telecopier No. (404) 813-6158, with a
copy to the Chief Financial Officer at the same address and telecopier
number;
(b) if to any Lender, at its Domestic Lending Office
specified opposite its name on Schedule I hereto or in the Assignment
and Acceptance pursuant to which it became a Lender;
(c) if to the Administrative Agent, at its address at 245
Park Avenue, 38th Floor, New York, New York 10167, Attention:
Structured Finance Department, Telecopier No. (212) 922-0969; and
(d) if to the Canadian Administrative Agent, at its
address at P.O. Box 196, 222 Bay Street, 12th Floor, Toronto, Ontario
M5K 1H6, Attention: Francois Wentzel, Vice President and Director,
Telecopier No. (416) 682-8484,
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or, as to each party, at such other address as shall be designated by such party
in a written notice to the other parties. All such notices and communications
shall be effective when five days after deposit in the mails and when
transmitted by telecopier, except that notices and communications to an Agent
pursuant to Article II, III or VII shall not be effective until received by such
Agent.
SECTION 8.03. No Waiver; Remedies. No failure on the part of
any Lender or either Agent to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. Costs and Expenses. (a) (i) AGCO agrees to
pay on demand all costs and expenses of the Agents and each Co-Manager in
connection with the preparation, execution, delivery, administration,
modification and amendment of the Loan Documents at any time (including without
limitation in connection with this amendment and restatement) (including
without limitation (A) all due diligence, syndication, transportation,
computer, duplication, appraisal, audit, insurance and consultant fees and
expenses and (B) the reasonable fees and expenses of counsel (including without
limitation New York, local and foreign counsel) for the Agents and/or the
Co-Managers with respect thereto, with respect to advising the Agents and
Co-Managers as to their respective rights and responsibilities, or the
perfection, protection or preservation of rights or interests, under the Loan
Documents, with respect to negotiations with any Loan Party or with other
creditors of any Loan Party or any of its Subsidiaries arising out of any
Default or any events or circumstances that may give rise to a Default and with
respect to presenting claims in or otherwise participating in or monitoring any
bankruptcy, insolvency or other similar proceeding involving creditors' rights
generally and any proceeding ancillary thereto); provided that AGCO shall not
be obligated to pay out-of-pocket expenses of the Administrative Agent or the
Co-Managers referred to in clause (A) above to the extent that the aggregate
amount thereof exceeds U.S. $50,000.
(ii) AGCO further agrees to pay on demand all costs and
expenses of each Agent, each Co-Manager and each Lender in connection with the
enforcement of the Loan Documents against any Borrower, whether in any action,
suit or litigation, any bankruptcy, insolvency or other similar proceeding
affecting creditors' rights generally or otherwise (including without
limitation the reasonable fees and expenses of counsel for each Agent, each
Co-Manager and each Lender with respect thereto), and each Borrowing Subsidiary
severally agrees to pay on demand all such costs and expenses in respect of any
such enforcement relating to itself.
(b) AGCO agrees to indemnify and hold harmless each
Agent, each Co-Manager and each Lender and each of their affiliates and their
officers, directors, employees,
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118
agents and advisors (each, an "Indemnified Party") from and against any and all
claims, damages, losses, liabilities and expenses (including without limitation
reasonable fees and expenses of counsel) that may be incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of, or in connection with the preparation for a
defense of, any investigation, litigation or proceeding arising out of, related
to or in connection with
(i) any acquisition or proposed acquisition;
(ii) the actual or alleged presence of Hazardous Materials
on any property of any Loan Party or any of its Subsidiaries or any
Environmental Action relating in any way to any Loan Party or any of
its Subsidiaries; or
(iii) any financing hereunder;
in each case whether or not such investigation, litigation or proceeding is
brought by any Loan Party, its directors, shareholders or creditors or an
Indemnified Party or any Indemnified Party is otherwise a party thereto and
whether or not the transactions contemplated hereby are consummated, except to
the extent such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful misconduct. The
Borrowers agree not to assert any claim against the either Agent, any
Co-Manager, any Lender, any of their affiliates, or any of their respective
directors, officers, employees, attorneys and agents, on any theory of
liability, for special, indirect, consequential or punitive damages arising out
of or otherwise relating to any of the transactions contemplated herein or in
any other Loan Document or the actual or proposed use of the proceeds of the
Advances.
(c) If any prepayment or payment (or failure to prepay
after the delivery of a notice of prepayment) of principal of, or Conversion
of, any Eurocurrency Rate Advance is made by Borrower to or for the account of
a Lender other than on the last day of the Interest Period for such Advance, as
a result of a payment or Conversion, acceleration of the maturity of the Notes
pursuant to Section 6.01 or for any other reason, or by an Eligible Assignee to
a Lender other than on the last day of the Interest Period for such Advance
upon an assignment of rights and obligations under this Agreement pursuant to
Section 2.15, such Borrower shall, upon demand by such Lender (with a copy of
such demand to the Appropriate Agent), pay to the Appropriate Agent for the
account of such Lender any amounts required to compensate such Lender for all
losses, costs or expenses that such Lender may reasonably incur as a result of
such failure, including without limitation foreign exchange losses, based on
customary funding and foreign exchange hedging arrangements, whether or not
such arrangements actually occur, and any and all other losses, costs or
expenses incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender to fund or
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119
maintain any Borrowing and the unavailability of funds as a result of such
Borrower failing to prepay any amount when specified in a notice of prepayment
or otherwise when due, but excluding loss of anticipated profits.
(d) If any Loan Party fails to pay when due any costs,
expenses or other amounts payable by it under any Loan Document, including
without limitation fees and expenses of counsel and indemnities, such amount
may be paid on behalf of such Loan Party by either Agent, any Co-Manager or any
Lender, in its sole discretion.
SECTION 8.05. Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making of the
request or the granting of the consent specified by Section 6.01 to authorize
the Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 6.01, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted
by law and subject to Section 2.12, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender or such Affiliate
to or for the credit or the account of a Borrower against any and all of the
Obligations of such Borrower now or hereafter existing under this Agreement and
the Note or Notes held by such Lender, irrespective of whether such Lender
shall have made any demand under this Agreement or such Note or Notes and
although such obligations may be unmatured. Each Lender agrees promptly to
notify such Borrower after any such set-off and application; provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender and its Affiliates under this Section
are in addition to other rights and remedies (including without limitation
other rights of set-off) that such Lender and its Affiliates may have.
SECTION 8.06. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrowers and the Agents and
when the Administrative Agent shall have been notified by each Lender that such
Lender has executed it and thereafter shall be binding upon and inure to the
benefit of the Borrowers, the Agents, the Issuing Banks and each Lender and
their respective successors and assigns, except that no Borrower shall have the
right to assign its rights hereunder or any interest herein without the prior
written consent of each Lender except as permitted under Section 5.02(d).
Section 8.13 shall also inure to the benefit of each Subsidiary of AGCO
referred to therein.
SECTION 8.07. Assignments and Participations. (a) Each
Lender and the Issuing Bank may assign to one or more banks or other entities
all or a portion of its rights and obligations under this Agreement (including
without limitation all or a portion of its Commitment or Commitments, and the
Advances owing to it and the Note or Notes held by it), and the Issuing Bank
may assign its Letter of Credit Commitment; provided that
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(i) any such assignment by an Issuing Bank of its Letter
of Credit Commitment shall be of its entire Letter of Credit
Commitment;
(ii) in the case of each such assignment of a
Multi-Currency Commitment (except in the case of an assignment to a
Person that, immediately prior to such
assignment, was a Multi-Currency Lender or an assignment of all of a
Multi-Currency Lender's rights and obligations under this Agreement),
(A) the amount of the Multi-Currency Commitment of the assigning
Multi- Currency Lender being assigned pursuant to such assignment
(determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than U.S.
$15,000,000 and shall be an integral multiple of U.S. $1,000,000, and
(B) the assignor shall simultaneously assign to the assignee a ratable
share of (1) all participations in Letters of Credit issued for the
account of Multi-Currency Borrowers and then outstanding, and (2) all
Letter of Credit Advances then owing to such Lender as a result of
draws on Letters of Credit issued for the account of Multi-Currency
Borrowers;
(iii) in the case of each such assignment of a Canadian
Subsidiary Commitment (except in the case of an assignment to a Person
that, immediately prior to such assignment, was a Canadian Subsidiary
Lender or an assignment of all of a Canadian Subsidiary Lender's
rights and obligations under this Agreement), (A) the amount of the
Canadian Subsidiary Commitment of the assigning Canadian Subsidiary
Lender being assigned pursuant to such assignment (determined as of
the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than U.S. $10,000,000 and shall
be an integral multiple of U.S. $1,000,000, and (B) the assignor
shall simultaneously assign to the assignee a ratable share of (1) all
participations in Letters of Credit issued for the account of the
Canadian Subsidiary and then outstanding, and (2) all Letter of Credit
Advances then owing to such Lender as a result of draws on Letters of
Credit issued for the account of the Canadian Subsidiary;
(iv) each such assignment shall be to an Eligible
Assignee;
(v) the proposed Assignee (if other than an affiliate of
the assignor) shall be approved by the Administrative Agent, AGCO, the
Canadian Administrative Agent and the Canadian Issuing Bank (if such
assignment relates to Canadian Subsidiary Advances or Canadian
Subsidiary Commitments) and the Multi-Currency Issuing Bank (if such
assignment relates to Multi-Currency Advance or Multi-Currency
Commitments) (such approval in each case not to be unreasonably
withheld or delayed); and
(vi) the parties to each such assignment shall execute and
deliver to the Administrative Agent for its own account, for its
acceptance and recording in the
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Register, an Assignment and
Acceptance, together with any Note or Notes subject to such assignment
and a processing and recordation fee of U.S. $2,500, payable by the
assignee to the Administrative Agent.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in such Assignment and Acceptance,
(x) the assignee thereunder shall be a party hereto and,
to the extent that rights and obligations hereunder or under any other
Loan Document have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender
hereunder, and
(y) the Lender assignor thereunder shall, to the extent
that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and
be released from its obligations under this Agreement and under each
other Loan Document (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a
party hereto).
(b) By executing and delivering an Assignment and
Acceptance, the Lender assignor thereunder and the assignee thereunder confirm
to and agree with each other and the other parties hereto as follows:
(i) other than as provided in such Assignment and
Acceptance, such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto;
(ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of any Borrower or the performance or observance by any
Borrower of any of its obligations under this Agreement or any other
instrument or document furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements
referred to in Section 4.01(f) and such other documents and
information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance;
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(iv) such assignee will, independently and without
reliance upon either Agent, such assigning Lender or any other Lender
and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement;
(v) such assignee confirms that it is an Eligible
Assignee or an Affiliate of the assignor;
(vi) such assignee appoints and authorizes the
Administrative Agent (and, if such assignee will be a Canadian
Subsidiary Lender, the Canadian Administrative Agent) to take such
action as agent on its behalf and to exercise such powers and
discretion under this Agreement as are delegated to the Administrative
Agent (and the Canadian Administrative Agent, if applicable) by the
terms hereof, together with such powers and discretion as are
reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations that by the terms
of this Agreement are required to be performed by it as a Lender.
(c) The Administrative Agent shall maintain at its
address referred to in Section 8.02 a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Issuing Banks and the Lenders and their respective
Commitment under each Facility of, the principal amount of the Advances owing
under each Facility to, and the Notes held by, each Lender from time to time
(the "Register"). The entries in the Register shall be conclusive and binding
for all purposes, absent manifest error, and the Borrowers, the Agents, the
Issuing Banks and the Lenders may treat each Person whose name is recorded in
the Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by any Borrower, the Canadian
Administrative Agent, either Issuing Bank or any Lender at any reasonable time
and from time to time upon reasonable prior notice. The Administrative Agent,
promptly following receipt thereof, will notify the Canadian Administrative
Agent of any Assignment and Acceptance relating to the Canadian Subsidiary
Facility.
(d) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee, together with any Note or
Notes subject to such assignment, the Administrative Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the form
of Exhibit D hereto,
(i) record the information contained therein in the
Register, and
(ii) give prompt notice thereof to the Borrowers.
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Within five Business Days after its receipt of such notice, the Borrowers, at
their own expense, shall execute and deliver to the Administrative Agent in
exchange for the surrendered Note or Notes a new Note to the order of such
Eligible Assignee in an amount equal to the Commitment assumed by it under a
Facility pursuant to such Assignment and Acceptance and, if the assigning Lender
has retained a Commitment hereunder under such Facility, a new Note to the order
of the assigning Lender in an amount equal to the Commitment retained by it
hereunder. Such new Note or Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered Note or Notes, shall
be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit A hereto for AGCO and the
Borrowing Subsidiaries.
(e) Each Lender may sell participations in or to all or a
portion of its rights and obligations under this Agreement (including without
limitation all or a portion of its Commitments, the Advances owing to it and
the Note or Notes held by it) to a financial institution (a "Participant");
provided that
(i) such Lender's obligations under this Agreement
(including without limitation its Commitments) shall remain unchanged;
(ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations;
(iii) such Lender shall remain the holder of any such Note
for all purposes of this Agreement,
(iv) the Borrowers, the Agents and the other Lenders
shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement and
(v) no Participant under any such participation shall
have any right to approve any amendment or waiver of any provision of
any Loan Document, or any consent to any departure by any Loan Party
therefrom, except to the extent that such amendment, waiver or consent
would reduce or forgive the principal of, or interest on, the Notes or
any fees or other amounts payable hereunder, in each case to the
extent subject to such participation, postpone any date fixed for any
payment of principal of, or interest on, the Notes or any fees or
other amounts payable hereunder, in each case to the extent subject to
such participation, except in accordance with the terms hereof or of
any other Loan Document.
<PAGE> 124
124
(f) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
8.07, disclose to the assignee or Participant or proposed assignee or
Participant, any public information relating to any Borrower furnished to such
Lender by or on behalf of such Borrower and any information conspicuously
labelled by a Borrower as being confidential at the time such information is
furnished to such Lender if such assignee or Participant or proposed assignee
or Participant has agreed to use reasonable efforts to keep such information
confidential.
(g) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in all or any
portion of its rights under this Agreement (including without limitation the
Advances owing to it and the Note or Notes held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System.
Section 8.08. Judgment Currency. (a) If for the purposes of
obtaining judgment in any court it is necessary to convert a sum due hereunder
or under the Notes in any currency (the "Original Currency") into another
currency (the "Other Currency") the parties hereto agree, to the fullest extent
that they may effectively do so, that the rate of exchange used shall be that
at which in accordance with normal banking procedures the Administrative Agent
could purchase the Original Currency with the Other Currency at 11:00 A.M. on
the second Business Day preceding that on which final judgment is given.
(b) The obligation of a Borrower in respect of any sum
due in the Original Currency from it to any Lender or either Agent hereunder or
under the Notes held by such Lender shall, notwithstanding any judgment in any
Other Currency, be discharged only to the extent that on the Business Day
following receipt by such Lender or such Agent (as the case may be) of any sum
adjudged to be so due in such Other Currency such Lender or such Agent (as the
case may be) may in accordance with normal banking procedures purchase the
Original Currency with such Other Currency; if the amount of the Original
Currency so purchased is less than the sum originally due to such Lender or
such Agent (as the case may be) in the Original Currency, such Borrower agrees,
as a separate obligation and notwithstanding any such judgment, to indemnify
such Lender or such Agent (as the case may be) against such loss, and if the
amount of the Original Currency so purchased exceeds the sum originally due to
any Lender or such Agent (as the case may be) in the Original Currency, such
Lender or such Agent (as the case may be) agrees to remit to such Borrower such
excess.
SECTION 8.09. Consent to Jurisdiction. Each Borrower irrevocably
(a) submits to the jurisdiction of any New York State or
Federal court sitting in New York City and any appellate court from
any thereof in any action or proceeding arising out of or relating to
any Loan Document;
<PAGE> 125
125
(b) agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York State or in
such Federal court;
(c) waives, to the fullest extent that it may effectively
do so, the defense of an inconvenient forum to the maintenance of such
action or proceeding (including without limitation Articles 14 and 15
of the French Civil Code);
(d) consents to the service of any and all process in any
such action or proceeding by the mailing of copies of such process to
such Borrower at its address specified in Section 8.02; and
(e) agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided
by law.
Nothing in this Section 8.09 shall affect the right of either Agent or any
Lender to serve legal process in any other manner permitted by law or affect
the right of either Agent or any Lender to bring any action or proceeding
against any Borrower or its property in the courts of other jurisdictions.
Each Borrower irrevocably appoints and designates AGCO as its
agent for service of process and, without limitation of any other method of
service, consents to service of process by mail at the address of AGCO for
delivery of notices specified in Section 8.02.
SECTION 8.10. Governing Law. This Agreement and the Notes
shall be governed by, and construed in accordance with, the laws of the State
of New York.
SECTION 8.11. Execution in Counterparts. This Agreement may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 8.12. No Liability of the Issuing Banks. Each
Borrower assumes all risks of the acts or omissions of any beneficiary or
transferee of any Letter of Credit with respect to its use of such Letter of
Credit. Neither Issuing Bank nor any of its officers or directors shall be
liable or responsible for:
<PAGE> 126
126
(a) the use that may be made of any Letter of Credit or
any acts or omissions of any beneficiary or transferee in connection
therewith;
(b) the validity, sufficiency or genuineness of
documents, or of any endorsement thereon, even if such documents
should prove to be in any or all respects invalid, insufficient,
fraudulent or forged;
(c) payment by such Issuing Bank against presentation of
documents that do not comply with the terms of a Letter of Credit,
including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or
(d) any other circumstances whatsoever in making or
failing to make payment under any Letter of Credit,
except that no Borrower shall have a claim against such Issuing Bank, and such
Issuing Bank shall be liable to a Borrower, to the extent of any direct, but
not consequential, damages suffered by such Borrower that such Borrower proves
were caused by
(i) such Issuing Bank's willful misconduct or gross
negligence in determining whether documents presented under any Letter
of Credit comply with the terms of the Letter of Credit or
(ii) such Issuing Bank's willful failure to make lawful
payment under a Letter of Credit after the presentation to it of a
draft and certificates strictly complying with the terms and
conditions of the Letter of Credit.
In furtherance and not in limitation of the foregoing, either Issuing Bank may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
SECTION 8.13. Certain Cash Deposits.
(a) If, as of the 15th day of the first complete calendar month
after the end of the each fiscal quarter of AGCO (or, if such 15th day is not a
Business Day, the next-following Business Day), the Multi-Currency Borrower
Outstandings shall exceed 105% of the Multi-Currency Facility (the
"Multi-Currency Borrower Excess Outstandings") and to the extent that a
Multi-Currency Borrower is not required on such date to prepay Multi-Currency
Advances in an aggregate principal amount equal to the Multi-Currency Borrower
Excess Outstandings pursuant to Section 2.05(b)(ii)(A), AGCO will, promptly
after a request therefor by the Administrative Agent, deposit in same-day funds
at the Administrative Agent's office designated in such request, for deposit in
such interest-bearing account as the Administrative
<PAGE> 127
127
Agent shall specify (the "Multi-Currency Borrower Cash Collateral Account"), an
amount equal to the Multi-Currency Borrower Excess Outstandings (net of any
prepayment pursuant to Section 2.05(b)(ii)(A)). The Multi-Currency Borrower Cash
Collateral Account shall be in the name and under the sole dominion and control
of the Administrative Agent. The Administrative Agent shall have no obligation
to invest any amounts on deposit in the Multi-Currency Borrower Cash Collateral
Account. AGCO grants to the Administrative Agent, for its benefit and the
benefit of the Lenders, a lien on and security interest in the Multi-Currency
Borrower Cash Collateral Account and all amounts from time to time on deposit
therein as collateral security for the performance of AGCO's obligations under
this Agreement and the other Loan Documents. The Administrative Agent shall have
all rights and remedies available to it under applicable law with respect to the
Multi- Currency Borrower Cash Collateral Account and all amounts on deposit
therein. Promptly after any date on which there shall occur a reduction in the
amount of the Multi-Currency Borrower Excess Outstandings, the Administrative
Agent will return to AGCO, free and clear of any Lien under this subsection (a),
an amount equal to the excess of amounts then on deposit in the Multi-Currency
Borrower Cash Collateral Account (including accrued interest) over the amount of
the Multi-Currency Borrower Excess Outstandings as of the date of and after
giving effect to such reduction.
(b) If, as of the 15th day of the first complete calendar month
after the end of the each fiscal quarter of AGCO (or, if such 15th day is not a
Business Day, the next-following Business Day), the Canadian Subsidiary
Outstandings shall exceed 105% of the Canadian Subsidiary Facility (the
"Canadian Subsidiary Excess Outstandings") and to the extent that the Canadian
Subsidiary is not required on such date to prepay Canadian Subsidiary Advances
in an aggregate principal amount equal to the Canadian Subsidiary Excess
Outstandings pursuant to Section 2.05(b)(ii)(B), the Canadian Subsidiary will,
promptly after a request therefor by the Canadian Administrative Agent, deposit
in same-day funds at the Canadian Administrative Agent's office designated in
such request, for deposit in such interest-bearing account as the Canadian
Administrative Agent shall specify (the "Canadian Subsidiary Cash Collateral
Account"), an amount equal to the Canadian Subsidiary Excess Outstandings (net
of any prepayment pursuant to Section 2.05(b)(ii)(A)). The Canadian Subsidiary
Cash Collateral Account shall be in the name and under the sole dominion and
control of the Canadian Administrative Agent. The Canadian Administrative
Agent shall have no obligation to invest any amounts on deposit in the Canadian
Subsidiary Cash Collateral Account. The Canadian Subsidiary grants to the
Canadian Administrative Agent, for its benefit and the benefit of the Lenders,
a lien on and security interest in the Canadian Subsidiary Cash Collateral
Account and all amounts from time to time on deposit therein as collateral
security for the performance of the Canadian Subsidiary's obligations under
this Agreement and the other Loan Documents. The Canadian Administrative Agent
shall have all rights and remedies available to it under applicable law with
respect to the Canadian Subsidiary Cash Collateral Account and all amounts on
deposit therein. Promptly after any date on which there shall occur a
reduction in the amount of the Canadian Subsidiary Excess Outstandings, the
Canadian Administrative
<PAGE> 128
128
Agent will return to the Canadian Subsidiary, free and clear of any Lien under
this subsection (b), an amount equal to the excess of amounts then on deposit in
the Canadian Subsidiary Cash Collateral Account (including accrued interest)
over the amount of the Canadian Subsidiary Excess Outstandings as of the date of
and after giving effect to such reduction.
SECTION 8.14. Conditions to Effectiveness of this Agreement.
Conditions to the effectiveness of this Agreement are (a) the delivery by each
Subsidiary Guarantor that is not a Borrower of the confirmation and
ratification attached hereto and (b) the delivery of secretaries' certificates
or other evidence, in each case in form and substance satisfactory to the
Agents, that this Agreement has been duly authorized by each Borrower. Until
such conditions shall have been satisfied, this Agreement shall continue to be
in effect as in effect prior to its amendment and restatement hereby. Promptly
after the effective date of this Agreement on request by any Lender the
Borrowers will execute and deliver Notes to such Lender in the applicable form
attached to this Agreement as Exhibits A-1 and A-2. Prior to any such
delivery, the Notes previously delivered by the Borrowers pursuant to this
Agreement as in effect prior to its amendment and restatement hereby shall
remain valid and binding obligations of the Borrowers for all purposes,
notwithstanding the amendment and restatement of the form thereof as provided in
this Agreement.
SECTION 8.15. Schedules to this Agreement. The Schedules
(other than Schedule I, which is attached to this amendment and restatement)
attached to this Agreement as in effect prior to its amendment and restatement
hereby are the Schedules referred to in this Agreement, as amended and
restated, and shall be deemed to be the Schedules attached to, and to form a
part of, this Agreement, as amended and restated.
SECTION 8.16. Ratification of Guaranties, etc. Each Borrower
that entered into a Guaranty of the obligations of some or all of the other
Borrowers under the Credit Agreement or another Loan Document unconditionally
confirms and agrees that each such Loan Document is and shall continue to be in
full force and effect and is hereby ratified and confirmed in all respects,
except that, on and after the date of this Agreement, each reference therein to
"this Agreement", "the Credit Agreement", "thereunder", "thereof" or words of
like import referring to the Credit Agreement shall mean and be a reference to
this Agreement, as amended and restated hereby.
SECTION 8.17. Waiver of Jury Trial. EACH OF EACH BORROWER,
EACH AGENT, EACH CO-MANAGER AND THE LENDERS HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS, THE ADVANCES OR THE ACTIONS OF EITHER AGENT, ANY CO-MANAGER OR ANY
<PAGE> 129
129
LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
<PAGE> 130
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first-above written.
AGCO CORPORATION MASSEY FERGUSON
MANUFACTURING LIMITED
By_________________________
By_________________________ Title:
Title:
MASSEY FERGUSON (UNITED KINGDOM) LIMITED MASSEY FERGUSON S.A.
By_________________________
By_________________________ Title:
Title:
AGCO LIMITED AGCO HOLDING B.V.
By_________________________
By_________________________ Title:
Title:
MASSEY FERGUSON GMBH AGCO CANADA, LTD.
By_________________________
By_________________________ Title:
Title:
The undersigned, as a guarantor of the Borrowers' obligations under
the above Credit Agreement, consents to the amendment and restatement of such
Credit Agreement as set forth above and confirms that its guaranty of such
obligations is, and shall continue to be, in full force and effect and ratifies
and confirms such guaranty in all respects, in each case except that, on and
after the effective date of such amendment and restatement, each reference in
such guaranty to "the Credit Agreement", "thereunder", "thereof" or words of
like import referring to the Credit Agreement shall mean and be a reference to
the Credit Agreement, as amended and restated as provided above.
MASSEY FERGUSON CORP.
By_________________________
<PAGE> 131
131
Title:
<PAGE> 132
COOPERATIEVE CENTRALE DEUTSCHE BANK CANADA,
RAIFFEISEN-BOERENLEENBANK B.A., as Canadian Administrative
"RABOBANK NEDERLAND", NEW Agent and Canadian Subsidiary
YORK BRANCH, as Administrative Agent,
Lender Co-Manager and
Multi-Currency Lender
By_________________________ Title:
By_________________________
Title:
By_________________________
Title:
SUNTRUST BANK, ATLANTA, as Co-Manager and Multi- DEUTSCHE BANK AG, NEW
YORK BRANCH and/or CAYMAN Currency Lender
ISLANDS BRANCH, as Co-Manager and Multi-Currency
Lender
By_________________________
Title:
By_________________________
Title:
By_________________________
Title:
By_________________________
Title:
<PAGE> 1
EXHIBIT 10.18
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
AGRICREDIT ACCEPTANCE LLC
November 1, 1996
<PAGE> 2
EXHIBIT 10.18
LIMITED LIABILITY COMPANY AGREEMENT
OF
AGRICREDIT ACCEPTANCE LLC
TABLE OF CONTENTS
PAGE
----
<TABLE>
<S> <C>
ARTICLE I GENERAL PROVISIONS............................................. 2
Section 1.01. Company Name and Address................................. 2
Section 1.02. Registered Office and Registered Agent................... 2
Section 1.03. Purposes and Powers of the Company....................... 2
Section 1.04. Commencement of Business................................. 2
Section 1.05. Fiscal Year.............................................. 2
Section 1.06. Limited Liability of Members............................. 2
Section 1.07. Title to Property........................................ 3
Section 1.08. No Payments of Individual Obligations.................... 3
Section 1.09. Statutory Compliance..................................... 3
ARTICLE II MANAGEMENT OF THE COMPANY..................................... 3
Section 2.01. Management Generally..................................... 3
Section 2.02. Authority of the CEO..................................... 3
Section 2.03. Reliance by Third Parties................................ 4
Section 2.04. Activity of the Managing Boards.......................... 4
Section 2.05. Exculpation.............................................. 5
Section 2.06. Indemnification.......................................... 5
Section 2.07. Other Matters Concerning the Members..................... 6
</TABLE>
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Section 2.08. Expenses................................................ 6
Section 2.09. Standard of Care........................................ 7
ARTICLE III CAPITAL ACCOUNTS OF MEMBERS AND OPERATION THEREOF............. 7
Section 3.01. Definitions............................................. 7
Section 3.02. Capital Contributions................................... 9
Section 3.03. Capital Accounts........................................ 9
Section 3.04. Allocations............................................. 10
Section 3.05. Special Allocations..................................... 10
Section 3.06. Liabilities............................................. 10
Section 3.07. Allocation of Income and Loss for Tax Purposes.......... 10
Section 3.08. Determination by the Managing Board of Certain Matters.. 10
Section 3.09. Adjustments by the Managing Board to Take Account of
Interim Year Events..................................... 11
ARTICLE IV LOANS TO MEMBERS; COMPENSATION OF THE MEMBERS; WITHDRAWALS BY
MEMBERS; DISTRIBUTIONS; LIMITATIONS ON DISTRIBUTIONS AND WITHDRAWALS...... 11
Section 4.01. Loans to Members........................................ 11
Section 4.02. Compensation of the Members............................. 11
Section 4.03. Withdrawals............................................. 11
Section 4.04. Distributions........................................... 11
Section 4.05. Limitation on Distributions and Withdrawals............. 12
ARTICLE V CERTAIN RESTRICTIONS ON AFFILIATES............................. 12
Section 5.01. Non-Competition......................................... 12
Section 5.02. Restrictions on Transfer by Affiliates.................. 13
ARTICLE VI - MANAGING BOARD AND OFFICERS OF THE COMPANY................... 14
Section 6.01. Managing Board.......................................... 14
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Section 6.02. Action by the Managing Board............................ 14
Section 6.03. Officers................................................ 15
Section 6.04. Oversight Committee..................................... 16
Section 6.05. Unanimous Consent....................................... 16
Section 6.06. Restrictions on the Business of the Company............. 18
Section 6.07. New Businesses of the Company........................... 19
ARTICLE VII RESTRICTIONS ON TRANSFER; PREEMPTIVE RIGHTS................... 20
Section 7.01. General Restrictions on Transfer........................ 20
Section 7.02. Right of First Refusal.................................. 21
Section 7.03. Transfers to Subsidiaries............................... 23
Section 7.04. Preemptive Rights....................................... 23
Section 7.05. Substitution of Transferees............................. 23
ARTI VIII WITHDRAWAL OF A MEMBER.......................................... 24
Section 8.01. Withdrawal Events....................................... 24
ARTI IX DURATION AND TERMINATION OF THE COMPANY.......................... 24
Section 9.01. Events of Dissolution................................... 24
Section 9.02. Liquidation............................................. 25
Section 9.03 Continuance of Company................................... 25
Section 9.04. Failure Event........................................... 26
Section 9.05. Procedures for Certain Transfers Between Members........ 26
Section 9.06. Certificate of Cancellation............................. 27
ARTICLE X BOOKS AND RECORDS; REPORTS TO MEMBERS; TAX RETURNS.............. 28
Section 10.01. Books and Records...................................... 28
Section 10.02. Monthly Reports........................................ 28
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Section 10.03. Annual Reports......................................... 28
Section 10.04. Filing of Tax Returns.................................. 28
Section 10.05. Tax Matters Partner.................................... 29
ARTICLE XI MISCELLANEOUS.................................................. 29
Section 11.01. General................................................ 29
Section 11.02. Power of Attorney...................................... 29
Section 11.03. Amendments............................................. 29
Section 11.04. Choice of Law.......................................... 29
Section 11.05. Notices................................................ 30
Section 11.06. Headings............................................... 31
Section 11.07. Successors and Assigns................................. 31
Section 11.08. Terms.................................................. 31
Section 11.09. Invalidity............................................. 31
Section 11.10. Counterparts........................................... 31
Section 11.11. Further Assurances..................................... 31
Section 11.12. Confidentiality........................................ 33
Section 11.13. Complete Agreement..................................... 33
Section 11.14. No Third Party Beneficiary............................. 33
</TABLE>
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<PAGE> 6
LIMITED LIABILITY COMPANY AGREEMENT
OF
AGRICREDIT ACCEPTANCE LLC
Dated as of November 1, 1996
THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
of AGRICREDIT ACCEPTANCE LLC (the "Company") is entered into as of November 1,
1996, by and among De Lage Landen Finance, Inc., a Delaware corporation
("DFI"), Agricredit Acceptance Corporation, a Delaware corporation ("AAC"),
and, for purposes of withdrawing from the Company, AGCO Corporation (the
"Withdrawing Member"). DFI and AAC are referred to herein collectively as the
"Members", which term shall include any persons hereafter admitted to the
Company pursuant to Section 7.05 hereof and shall exclude any person who ceases
to be a Member.
WHEREAS, AAC and the Withdrawing Member have formed the
Company, as of July 15, 1996, by the filing of a Certificate of Formation with
the Secretary of State of the State of Delaware, pursuant to the provisions of
the Delaware Limited Liability Company Act (6 Del. C. Section 18-101, et seq.)
(the "Act");
WHEREAS, heretofore, the Company has been operated pursuant to
a limited liability company agreement dated July 15, 1996 by and between AAC
and the Withdrawing Member (herein called the "Initial Agreement");
WHEREAS, the Company and AAC are parties to a Contribution
Agreement, (the "Contribution Agreement"), pursuant to which AAC has
contributed, on the day prior to the date hereof, to the capital of the Company
the Assets (as defined in the Contribution Agreement) in exchange for 100% of
the capital interests and 99% of the profits interests in the Company;
WHEREAS, the Company, the Members, and certain affiliates of
the Members (the "Parents") are party to a Purchase Agreement, dated as of July
16, 1996 (the "Purchase Agreement"), pursuant to which DFI is acquiring from
AAC a 51% interest in the Company; and
WHEREAS, the Members now desire to amend and restate all of
the terms and provisions of the Initial Agreement by admitting DFI as a Member
with a 51% interest in the Company and entering into this amended and restated
limited liability company agreement (herein called the "Agreement"); the
Withdrawing Member desires to withdraw from the Company; and the Parents desire
to make certain agreements to induce the Members to execute this Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in consideration
of the mutual agreements set forth in this Agreement, and intending to be
legally bound, the parties hereto agree as follows:
1. DFI is hereby admitted as a Member of the Company without
the need for any act, approval, consent or vote of any person.
1
<PAGE> 7
2. Immediately following the admission to the Company of DFI
as a Member of the Company, the Withdrawing Member hereby withdraws as a Member
of the Company, and the Company hereby delivers to the Withdrawing Member all
contributions made by the Withdrawing Member to the Company upon its admission
to the Company.
3. The Initial Agreement is hereby amended and restated to
read in its entirety as follows:
ARTICLE I
General Provisions
Section 1.01 Company Name and Address. The name of the
Company shall continue to be "Agricredit Acceptance LLC". Its principal office
is located at 4412 N.W. 114th Street, Des Moines, Iowa 50322, or at such other
location as the Managing Board (as defined in Section 6.01) in the future may
designate.
Section 1.02 Registered Office and Registered Agent. The
address of the registered office of the Company in the State of Delaware is c/o
National Corporate Research, Ltd., 9 East Loockerman Street, Dover, Delaware
19901. The name and address of the registered agent of the Company in the
State of Delaware is National Corporate Research, Ltd., 9 East Loockerman
Street, Dover, Delaware 19901. The registered office or agent of the Company
may be changed by the Managing Board from time to time through appropriate
filings with the Delaware Secretary of State.
Section 1.03 Purposes and Powers of the Company.
(a) The Company has been organized (i) to acquire the
business and substantially all of the assets of AAC, (ii) to continue the
business thereof, conduct any New Line of Business (as defined in Section
6.07(a)) (provided that such New Line of Business relates to the financing of
equipment or receivables in the agricultural industry) and conduct any other
activities as are necessary or incidental thereto, and (iii) to engage in any
other activity or business permitted by law.
(b) The Company shall have the power to engage in all
actions, proceedings, activities and transactions that the Managing Board may
deem necessary or advisable in connection with the foregoing purposes.
Section 1.04 Commencement of Business. The Company shall
commence business on the date hereof.
Section 1.05 Fiscal Year. The fiscal year of the Company
(herein called the "Fiscal Year") shall end on December 31 of each year.
Section 1.06 Limited Liability of Members. Except as
otherwise expressly provided in the Act, the debts, obligations and liabilities
of the Company, whether arising in contract, tort or otherwise, shall be solely
the debts, obligations and liabilities of the Company,
2
<PAGE> 8
and no Member shall be obligated personally for any such debt, obligation or
liability solely by reason of being a Member; provided, however, that AAC shall
remain liable for all Excluded Liabilities (as defined in the Contribution
Agreement). Except as otherwise expressly provided in the Act, the liability
of each Member shall be limited to the amount of capital contributions required
to be made by such Member in accordance with the provisions of this Agreement,
but only when and to the extent the same shall become due pursuant to the
provisions of this Agreement.
Section 1.07. Title to Property. All real and personal
property owned by the Company shall be owned by the Company as an entity and,
insofar as permitted by applicable law, no Member shall have any ownership
interest in such property in its individual name or right and each Member's
interest in the Company shall be personal property for all purposes.
Section 1.08. No Payments of Individual Obligations. The
Members shall use the Company's credit and assets solely for the benefit of the
Company. No asset of the Company shall be transferred or encumbered for or in
payment of any obligation of a Member.
Section 1.09. Statutory Compliance. The Company shall
continue to exist under and be governed by, and this Agreement shall be
construed in accordance with, the applicable laws of the State of Delaware,
including the Act. The Members shall make all filings and disclosures required
by, and shall otherwise comply with, all such laws, and shall execute and file
such documents and instruments as may be necessary or appropriate with respect
to the continuation of, and conduct of business by, the Company.
ARTICLE II
Management of the Company
Section 2.01. Management Generally. The power to make
decisions regarding the management of the Company shall be vested exclusively
in the Managing Board, as more fully set forth in Article VI. Subject to the
provisions of Article VI and in accordance with Section 18-407 of the Act,
certain powers of the Managing Board shall be delegated to the CEO (as defined
in Section 6.03). The CEO may be an employee, officer or director of DFI, the
Parent of DFI ("Rabobank"), or any subsidiary or affiliate thereof.
Section 2.02. Authority of the CEO. Except as otherwise
expressly provided in Sections 6.05 and 6.06, the CEO, acting at the direction
of the Managing Board on behalf of the Company, shall have the right, power and
authority to do or cause to be done any and all acts in the daily management of
the business and affairs of the Company, including, without limitation, the
power and authority:
(a) to maintain, at the expense of the Company, adequate
records and accounts of all operations and expenditures and furnish the Members
with the reports referred to in Article X;
3
<PAGE> 9
(b) to purchase, at the expense of the Company,
liability, casualty, fire and other insurance and bonds to protect the
Company's properties, business, partners and employees and to protect the
Members and their Affiliates;
(c) to acquire, own, lease, sublease, manage, finance,
hold, deal in, request re-zoning of, control or dispose of any interests or
rights in personal property or real property necessary or incidental to the
conduct of the Company's business as described in Section 1.03;
(d) to negotiate, enter into, renegotiate, extend, renew,
terminate, modify, amend, waive, execute, acknowledge or take any other action
with respect to any lease, contract or security agreement in respect of any
assets of the Company;
(e) to pay, collect, compromise, litigate, arbitrate or
otherwise adjust or settle any and all other claims or demands of or against
the Company or to hold such proceeds against the payment of contingent
liabilities;
(f) to issue a call for additional capital contributions
in accordance with Article III, provided that such capital call is approved by
the Managing Board;
(g) to make, execute, deliver, perform, assign,
acknowledge and file on behalf of the Company any and all documents or
instruments of any kind that are necessary, appropriate, incidental or
convenient, in furtherance of the Company's business;
(h) to employ and engage suitable agents, employees,
advisers, consultants and counsel (including any custodian, investment adviser,
accountant, attorney, corporate fiduciary, bank or other reputable financial
institution), or any other agents or employees to carry out any activities that
the CEO is authorized or required to carry out under this Agreement, including,
without limitation, a person who may be engaged to undertake some or all of the
property management, financial accounting and record keeping or other
administrative duties of the CEO;
(i) to qualify the Company to engage in business in any
state, territory, protectorate or foreign jurisdiction; and
(j) to form or cause to be formed, and to own the stock
of, one or more corporations.
Section 2.03. Reliance by Third Parties. Persons dealing
with the Company are entitled to rely conclusively upon the certificate of any
Member or the CEO to the effect that it is then acting on behalf of the
Company, and upon the power and authority of the Managing Board as herein set
forth.
Section 2.04. Activity of the Members. Each Member shall
devote so much of their time to the affairs of the Company as in the judgment
of the Managing Board the conduct of the business of the Company shall
reasonably require, and such Member and its Affiliates shall not be obligated
to do or perform any act or thing in connection with the business of the
Company not expressly set forth herein. Subject to Section 5.01, nothing
herein contained shall be deemed to preclude any Member or any other entity
controlling, controlled by or under common control with
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such Member (with respect to such Member, its "Affiliates") from engaging,
directly or indirectly, in any other business. No Member shall have the right
to participate in any manner in any profits or income earned or derived by or
accruing to another Member or its Affiliates from the conduct of any business
other than the business of the Company.
Section 2.05. Exculpation.
(a) No Member or any agent of any Member, including the
Directors and the Executive Officers (each, as defined in Article VI and
collectively with the Members, the "Indemnified Parties") shall be liable to
any other Member, Affiliate of any Member or the Company for mistakes of
judgment or for any action or inaction, unless such mistakes, action or
inaction arise out of, or are attributable to, the gross negligence, willful
misconduct or bad faith of the Indemnified Party; nor shall any Indemnified
Party be liable to any other Member, any Affiliate of any Member or the Company
for any action or inaction of any agent of the Company or the Managing Board;
provided that such employee or agent was selected, engaged or retained by such
Indemnified Party with reasonable care. Any Indemnified Party may consult with
counsel, accountants, investment bankers, financial advisers, appraisers and
other specialized, reputable, professional consultants or advisers in respect
of Company affairs and be fully protected and justified in any action or
inaction that is taken in accordance with the advice or opinion of such
persons, provided that they shall have been selected with reasonable care.
(b) Notwithstanding any of the foregoing to the contrary,
the provisions of this Section 2.05 shall not be construed so as to relieve (or
attempt to relieve) the Indemnified Parties of any liability, to the extent
(but only to the extent) that such liability may not be waived, modified or
limited under applicable law (including the Act), but shall be construed so as
to effectuate the provisions of this Section 2.05 to the fullest extent
permitted by law (including the Act).
Section 2.06. Indemnification.
(a) Each Indemnified Party shall be indemnified and held
harmless by the Company from and against any and all losses, claims, damages,
liabilities, expenses (including legal and other professional fees and
disbursements), judgments, fines, settlements, and other amounts (collectively,
the "Indemnification Obligations") arising from any and all claims, demands,
actions, suits or proceedings (civil, criminal, administrative or
investigative), actual or threatened, in which such Indemnified Party may be
involved, as a party or otherwise, by reason of such person's service to or on
behalf of, or management of the affairs of, the Company, or rendering of advice
or consultation with respect thereto, or that relate to the Company, its
properties, business or affairs, provided that such Indemnification Obligation
resulted from a mistake of judgment, or from action or inaction of such
Indemnified Party that did not constitute gross negligence, willful misconduct
or bad faith, and that such Indemnified Party was acting in accordance with
authority granted to it, him or her by the Managing Board. The Company shall
also indemnify and hold harmless an Indemnified Party from and against any
Indemnification Obligation suffered or sustained by it, him or her by reason of
any action or inaction of any employee or other agent of an Indemnified Party;
provided that such employee or agent was selected, engaged or retained by the
Indemnified Party with reasonable care. The termination of a
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proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not, of itself, create a presumption that
such Indemnification Obligation resulted from the gross negligence, willful
misconduct or bad faith of the Indemnified Party. Expenses (including legal
and other professional fees and disbursements) incurred in any proceeding may
be paid by the Company in advance of the final disposition of such proceeding
upon receipt of an undertaking by or on behalf of the Indemnified Party to
repay such amount if it shall ultimately be determined that such Indemnified
Party is not entitled to be indemnified by the Company as authorized hereunder.
(b) The indemnification provided by this Section 2.06
shall not be deemed to be exclusive of any other rights to which each
Indemnified Party may be entitled under any agreement, or as a matter of law,
or otherwise, both as to action in such Indemnified Party's official capacity
and to action in another capacity, and shall continue as to such Indemnified
Party who has ceased to have an official capacity for acts or omissions during
such official capacity or otherwise when acting at the request of a Member and
shall inure to the benefit of the heirs, successors and administrators of such
Indemnified Party.
(c) The Managing Board shall have the power to purchase
and maintain insurance on behalf of itself and each Indemnified Party, at the
expense of the Company, against any liability that may be asserted against or
incurred by them in any such capacity, whether or not the Company would have
the power to indemnify the Indemnified Parties against such liability under the
provisions of this Agreement.
(d) Notwithstanding any of the foregoing to the contrary,
the provisions of this Section 2.06 shall not be construed so as to provide for
the indemnification of an Indemnified Party for any liability to the extent
(but only to the extent) that such indemnification would be in violation of
applicable law or that such liability may not be waived, modified or limited
under applicable law (including the Act), but shall be construed so as to
effectuate the provisions of this Section 2.06 to the fullest extent permitted
by law (including the Act).
Section 2.07. Other Matters Concerning the Members. Each
Member and each agent of each Member, including the Directors and the Executive
Officers, may rely, and shall be protected in acting or refraining from acting,
upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, bond, debenture or other paper or document
believed by it, him or her to be genuine and to have been signed or presented
by the proper party or parties.
Section 2.08. Expenses. The Company shall be responsible
for paying, and the Members hereby authorize the Managing Board to pay,
directly out of Company funds, all reasonable costs and expenses incurred in
connection with the business of the Company, including, without limitation, (i)
any out-of-pocket expenses of the Members and each agent of each Member
(including the Directors and the Executive Officers) incurred in connection
with the business of the Company, (ii) liability and other insurance premiums,
(iii) expenses incurred in the preparation of reports to the Members, (iv)
expenses incurred in meetings with and reports to and for Bank Authorities (as
defined in Section 11.11) in connection with the business of the Company,
provided that, unless approved by the Managing Board, DFI shall be solely
responsible
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for such expenses to the extent they exceed $100,000 per annum, and (v)
expenses incurred in connection with and reports to and for Bank Authorities
in connection with any proposed New Line of Business (as defined in Section
6.07(a)) (but only if such proposed New Line of Business is approved by the
Managing Board in accordance with Section 6.07(a)), and (vi) legal, accounting
and other professional fees and expenses, if any.
Section 2.09. Standard of Care. Each Member hereby agrees
that any standard of care or duty imposed in this Agreement or under the Act or
any other applicable law, rule or regulation shall be modified, waived or
limited in each case as required to permit the Members and their agents,
including the Directors and the Executive Officers, to act under this Agreement
or any other agreement contemplated herein and to make any decision pursuant to
the authority prescribed in this Agreement so long as such action or decision
does not constitute willful misconduct and is reasonably believed by the such
Member (or its agent) to be consistent (x) with the overall purposes of the
Company and (y) with such Member's (or its agent's) authority as defined
herein.
ARTICLE III
Capital Accounts of Members and Operation Thereof
Section 3.01. Definitions. For the purposes of this
Agreement, unless the context otherwise requires:
"Book Value" means the total assets less total liabilities of
the Company and AAC Canada, as determined in accordance with GAAP.
"Canada Stock" means the Common Stock of AAC Canada.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute thereto.
"Fair Market Value" means, with respect to any property or
asset, the dollar value of such property or asset, as determined (i) by mutual
agreement of the Members, or (ii) if the members cannot so agree within 20 days
after one Member first proposes in writing to the other Member that Fair Market
Value be determined by two independent appraisers (each, an "Appraiser"), one
selected by each Member, provided that if a Member fails to appoint an
Appraiser within 10 days following the expiration of such 20 day period, Fair
Market Value shall be determined by the Appraiser selected by the other Member.
If two Appraisers are selected, each Appraiser shall submit to the Members
their respective appraisals within 30 days after their selection. If a
discrepancy between the dollar value of the appraisals exceeds 10% of the
higher appraisal and the Members do not agree on a settlement of the
discrepancy within 10 days after receipt of the appraisals, then a third
Appraiser mutually selected by the Members (or if they cannot so select, then
selected by the first two Appraisers), shall be afforded access to the first
two appraisals. The third Appraiser shall select one of the appraisals of the
first two Appraisers, which selection shall constitute a final determination of
Fair Market Value of the property or asset
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and shall be binding upon the Members. If a discrepancy between the appraisals
of the first two Appraisers is less than 10% of the higher appraisal, then the
Fair Market Value of the property or assets shall be the average of the two
appraisals.
"Member Nonrecourse Liability" means any "partner nonrecourse
liability" of the Company as defined in Treasury Regulations Section
1.704-2(b)(4).
"Net Income and Net Loss" means, for each Fiscal Year or other
period, an amount equal to the Company's taxable income or loss for such year
or period, determined in accordance with Code Section 703(a), adjusted to take
into account the adjustments required under Treasury Regulations Section
1.704-1(b)(2)(iv) to reflect the difference between the value of the assets of
the Company and their tax bases, including, but not limited, to adjustments
required (i) under Treasury Regulations Section 1.704-1(b)(2)(iv)(d) relating
to contribution of assets, (ii) under Treasury Regulations Section
1.704-1(b)(2)(iv)(g) to reflect revaluations of assets, (iii) correlative
adjustments to reflect depreciation and gain or loss upon a sale or
distribution of Company assets with an adjusted basis for book purposes of the
Section 704(b) Regulations that differs from its adjusted basis for federal
income tax purposes, (iv) for any income of the Company that is exempt from
federal income and not otherwise taken into account in computing Net Income and
Net Loss and (v) for any amount of Code Section 705(a)(2)(B) expenditures
(within the meaning of Treasury Regulations Section 1.704-1(b)(2)(iv)(i)) of
the Company not otherwise taken into account in computing Net Income and Net
Loss.
"Option Price" means (i) if the Purchase Option or Buy Out
Option is being exercised on or after the third anniversary of the date hereof,
Fair Market Value, and (ii) if the Purchase Option or Buy Out Option is being
exercised prior to the third anniversary of the date hereof, the sum of Book
Value plus $10 million. If the Option Price is being determined in connection
with the purchase of Interests and Canada Stock, then the Option Price shall
mean the amount determined pursuant to the preceding sentence, multiplied by
the Percentage Interest represented by the Interest and Canada Stock being
acquired. If the Percentage Interests of DFI and AAC (and their Affiliates) in
the Company and in AAC Canada are not the same, then Book Value or Fair Market
Value, as applicable, of the Company and AAC Canada shall be separately
determined, the $10 million increment to the Option Price contemplated by
clause (x) shall be ascribed solely to the Purchase Option or Buy Out Option
for the Company, and the Book Value or Fair Market Value, as so separately
determined, shall be multiplied by the applicable Percentage Interest in the
Interests or Canada Stock subject to the Purchase Option or Buy Out Option.
"Percentage Interests" has the meaning specified in Section
3.03, and with respect to AAC Canada means the percentage of the Canada Stock
owned by DFI or AAC (or their respective Affiliates), as the case may be.
"Section 704(b) Regulations" shall mean the Treasury
Regulations promulgated under Section 704(b) of the Code.
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Section 3.02. Capital Contributions.
(a) In the discretion of the Managing Board, the Members
shall make additional capital contributions to the Company at such times and in
such amounts (pro rata in accordance with their respective Percentage Interests
in the Company) if the Gearing Ratio (as such term is defined in the Purchase
Agreement) of the Company at the end of any month as reflected in the monthly
reports delivered in accordance with Section 10.02 hereof exceeds 11.5:1.0 (or
is projected in the approved Annual Budget and Strategic Plan for the then
pending fiscal year to exceed such Gearing Ratio at the end of any month during
such pending fiscal year), to the extent necessary (in the judgment of the
Managing Board) to decrease the Gearing Ratio of the Company to 11.5:1.0.
(b) Subject to paragraph (a) of this Section 3.02, a
Member shall not have any obligation to the Company or to any other Member to
restore any negative balance in the Capital Accounts of such Member. No
interest shall be paid by the Company on any capital contributions.
(c) Failure by a Member to satisfy a call for additional
capital contribution shall have the consequences specified in the last sentence
of Section 7.04.
Section 3.03. Capital Accounts.
There shall be established for each Member on the books of the
Company a Capital Account (a "Capital Account"), which shall be maintained and
adjusted as provided in Section 3.02 and this Section 3.03. The name, address
and initial Capital Accounts of each of the Members are set forth in a schedule
entitled "Schedule of Members' Capital Accounts" (herein called the
"Schedule"), which shall be filed with the records of the Company at the
Company's principal office and is hereby incorporated by reference and made a
part of this Agreement. DFI shall have a 51% interest in the Company, and AAC
shall have a 49% interest in the Company (respectively, their "Percentage
Interests"), which proportion shall not change without the written consent of
both Members, subject to the provisions set forth in Section 7.04. The initial
Capital Account of a Member shall be equal to such Member's Percentage Interest
multiplied by the net fair market value of the Company's assets, determined for
this purpose by dividing the Purchase Price (as defined in the Purchase
Agreement) by 0.51. Thereafter, the Capital Account of a Member shall be
increased by (A) any amounts credited to such Member pursuant to Sections 3.04
and 3.05, (B) the amount of all cash capital contributions by such Member to
the Company pursuant to Section 3.02 and (C) the Fair Market Value of any
property contributed by such Member to the Company (net of any liabilities
secured by such property that the Company is considered to assume or take
subject to under Section 752 of the Code). The Capital Account of a Member
shall be reduced by (A) any amounts debited to such Member pursuant to Sections
3.04 and 3.05, (B) the amount of any cash distributed to such Member from its
Capital Account pursuant to Article IV and (C) the Fair Market Value of any
asset distributed in kind to such Member pursuant to Section 4.04(c) (net of
any liabilities secured by such asset that such Member is considered to assume
or take subject to under Section 752 of the Code). The Capital Account of a
Member shall be adjusted appropriately to reflect any other adjustment required
pursuant to Treasury Regulation Section 1.704-1 or 1.704-2.
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Section 3.04. Allocations. Subject to Section 3.05, any
Net Income and Net Loss of the Company for each fiscal year shall be credited
or debited to the Capital Accounts of the Members in accordance with their
respective Percentage Interests.
Section 3.05. Special Allocations. It is the intent of the
Members that allocations of Net Income and Net Loss (or items thereof) of the
Company shall be made in a manner which complies with provisions of Sections
704(b) of the Code and the Treasury Regulations thereunder and reflects the
Member's interests in the Company as determined under Treasury Regulations
Section 1.704-1(b)(3). In furtherance of the foregoing, the Managing Board is
authorized and directed to allocate Net Income or Net Loss in a manner that is
inconsistent with Section 3.04 hereof to the extent necessary to comply with
Sections 704(b) of the Code and the Treasury Regulations thereunder. In this
regard, (i) items of loss and deduction attributable to Member Nonrecourse
Liabilities shall be allocated as provided in the 704(b) Regulations; (ii) if
in any period, there is a net decrease in the amount of the Company's Minimum
Gain (as defined in the 704(b) Regulations), or in the amount of Minimum Gain
attributable to Member Nonrecourse Liabilities, then the Members shall be
allocated items of income or gain for such period and subsequent periods to the
extent and in the manner provided in Treasury Regulations Sections 1.704-2(f)
and 1.704-(2)(i)(4) as Minimum Gain Chargebacks (as defined in the 704(b)
Regulations); (iii) the Company shall make such allocations of income as shall
be required by a Qualified Income Offset provision (as defined in the 704(b)
Regulations) as described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d);
and (iv) in no event shall losses or deductions be allocated to a Member if
such allocation would result in such Member having a negative Capital Account
balance which exceeds the sum of its share of Minimum Gain of the Company and
Member Nonrecourse Liability Minimum Gain and the amount such Member is
obligated (or deemed obligated) to contribute to the Company upon liquidation
of the Company.
Section 3.06. Liabilities. Liabilities shall be determined
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis. The Managing Board, in its discretion, may provide
reserves for estimated accrued expenses, liabilities or contingencies, whether
or not in accordance with GAAP.
Section 3.07. Allocation of Income and Loss for Tax
Purposes. The Company's taxable income and losses for Federal income tax
purposes (and each item of income, gain, loss or deduction entering into the
computation thereof) shall be allocated to the Members in the same proportions
as the corresponding items of Net Income and Net Loss are allocated pursuant to
Sections 3.04 and 3.05; provided, however, that federal income tax items shall
be allocated among the Members in accordance with the Section 704(c) of the
Code and the Treasury Regulations thereunder to take into account the
difference between the value of the Company's assets as determined under
Section 3.03 and the basis of such assets on the date hereof. Schedule 3.07
sets forth the fair market value and tax basis of the Company's assets
attributable to each Member as of the date hereof. Allocations pursuant to
this Section 3.07 shall not be reflected in the Member's Capital Accounts. The
Company shall adopt the method for making such Code Section 704(c) allocations
that is selected by the Tax Matters Partner (as defined in Section 10.05) from
the methods permitted by Treasury Regulations Section 1.704-3.
Section 3.08. Determination by the Managing Board of
Certain Matters.
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(a) All matters concerning valuations and the allocation of
taxable income, deductions, credits, Net Profits or Net Income or Net Loss
among the Members, including taxes thereon and accounting procedures, not
expressly provided for by the terms of this Agreement, shall be equitably
determined in good faith by the Managing Board.
(b) Notwithstanding anything to the contrary contained
herein, the Company shall not make an election under Section 754 of the Code
except upon the written request of DFI.
Section 3.09. Adjustments by the Managing Board to Take
Account of Interim Year Events. If a Member shall be admitted to, or shall
withdraw from, the Company other than at the end of the Fiscal Year, or the
Percentage Interests of the Members otherwise changes during the Fiscal Year,
allocations among the Members and accounting procedures shall be equitably
determined in good faith by the Managing Board.
ARTICLE IV
Loans to Members; Compensation of the Members;
Withdrawals by Members;
Distributions; Limitations on Distributions and Withdrawals
Section 4.01. Loans to Members. Without unanimous approval
of Members, the Company may not make loans to any of its Members.
Section 4.02. Compensation of the Members. In the
discretion of the Managing Board, the Company may pay a salary or other
compensation to any agent of any Member (including the Directors and Executive
Officers), which shall be treated as an expense of the Company.1
Section 4.03. Withdrawals. Without the consent of each
Member, no Member may make withdrawals from its Capital Account.
Section 4.04. Distributions. Distributions shall be made
to the Members at the end of each Fiscal Year following approval of the Annual
Budget and Strategic Plan for the pending Fiscal Year to the extent that, after
giving effect to such distributions, (x) the Gearing Ratio of the Company (at
the end of the month immediately preceding such approval) does not exceed
11.5:1.0 and (y) that the projected Gearing Ratio of the Company (as set forth
in the Annual Budget and Strategic Plan for the pending Fiscal Year) is not
reasonably anticipated by the Managing Board to exceed 11.5 to 1.0 at the end
of any month during such Fiscal Year. In the discretion of the Managing Board,
distributions may be made in excess of the foregoing amounts, subject to the
Capital Contribution requirements of Section 3.02(a). Such distributions shall
be made as follows:
- ----------------------
(1) Lawrence Sidwell may be compensated pursuant to a management agreement.
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(a) All amounts available for distribution shall be
distributed to the Members in accordance with, and in proportion to, their
respective Capital Accounts.
(b) All amounts distributed in connection with a
liquidation of the Company or the sale or other disposition of all or
substantially all of the assets of the Company that leads to a liquidation of
the Company shall be distributed to the Members in accordance with, and in
proportion to, their respective Capital Account Balances, as adjusted for all
Company operations up to and including the date of such distribution and
subject to the provision of Section 9.02.
(c) Upon the mutual written agreement of the Members, the
Company may distribute any assets in kind. If cash and property are to be
distributed in kind simultaneously, the Company shall distribute such cash and
property in kind in the same proportion to each Member. For purposes of
determining amounts distributable to the respective Members under this Section
4.04(c), any property to be distributed in kind shall be valued at its Fair
Market Value, and the amount of Net Profit or Net Loss that would have been
realized had such assets been sold at their Fair Market Value shall be
allocated to the Capital Accounts of the Members, as determined by the Managing
Board, immediately prior to such distribution.
Section 4.05. Limitation on Distributions and Withdrawals.
Distributions and permitted withdrawals are subject to the provision by the
Company for (i) all Company liabilities in accordance with the Act and (ii)
reserves for liabilities taken in accordance with Section 3.06 hereof. The
unused portion of any reserve shall be distributed after the Managing Board has
determined that the need therefor shall have ceased. No distribution shall be
made that shall contravene applicable law.
ARTICLE V
Certain Restrictions on Affiliates
Section 5.01. Non-Competition.
(a) No Member and no Parent shall, prior to the
occurrence of an event of dissolution (as specified in Section 9.01), directly
or indirectly;
(i) engage in any managerial, administrative,
operational or sales activities in a Restricted Business anywhere in the
Restricted Area;
(ii) organize, establish, operate, own, manage,
control or have a direct or indirect investment or ownership interest in any
corporation, partnership (limited or general), limited liability company
enterprise or other business entity that engages in a Restricted Business
anywhere in the Restricted Area; or
(iii) solicit or actively recruit any employees of
the Company or AAC Canada or any of their subsidiaries or solicit any employee
of the Company or AAC Canada or any of their subsidiaries to leave the
employment of the Company or AAC Canada.
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(b) Nothing contained in this Section 5.01 shall prohibit
or otherwise restrict either Member or either Parent from (X) acquiring or
owning, directly or indirectly, for investment or other legitimate business
purposes not intended to circumvent this Agreement, securities of any Person
engaged, directly or indirectly, in a Restricted Business in the Restricted
Area (1) if such Member or Parent does not control such Person (which for
purposes of this Section 5.01 shall be presumed if either (i) such Person is a
public Person and neither Member and neither Parent (A) is a controlling Person
of, or a member of a group that controls, such Person and (B) owns, directly or
indirectly, no more than 5% of any class of equity securities of such Person,
or (ii) such Person is not a public Person and no director or officer of either
Member or either Parent (A) is a controlling Person of, or a member of a group
that controls, such Person and (B) owns, directly and indirectly, no more than
10% of any class of equity securities of such Person), or (2) if such Member or
Parent does control such Person, but the Restricted Business is not a material
part of such Person's business (provided, that such Member or Parent shall use
its reasonable efforts (i) to cause such person to divest such Restricted
Business, or (ii) in accordance with Section 6.07, to cause the Company to
acquire such Restricted Business as a New Line of Business (as defined in
Section 6.07)); or (Y) extending credit or other financing to any Person that
is engaged, directly or indirectly, in a Restricted Business.
(c) For purposes of this Section 5.01
(i) "Restricted Business" means the business of
(x) receivables-based financing for customers of Agricultural Equipment (as
hereinafter defined) but solely with respect to such Agricultural Equipment,
(y) receivables-based lending for customers of other agricultural machinery and
equipment (but solely with respect to such machinery and equipment), and (z)
receivables-based lending for customers of agricultural producers, vendors,
dealers and suppliers (but solely with respect to agricultural products and
inputs).
(ii) "Agricultural Equipment" means tractors,
harvesting equipment, tillage equipment, planting equipment, hay and foraging
equipment, irrigation installations, and outdoor materials handling equipment,
power products and diesel engines (but solely in connection with their use in
agriculture), grain silos and services parts, attachments and accessories for
the foregoing.
(iii) "Restricted Area" means the United States and
Canada.
Section 5.02. Restrictions on Transfer by Affiliates.
(a) Each Parent agrees to cause each of DFI and AAC,
respectively, to comply with the restrictions on transfer of Interests
contained in Article VII.
(b) Each Parent agrees not to Transfer (as defined in
Article VII) its ownership interest in DFI and AAC, respectively, unless both
Members shall consent in writing to such Transfer.
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ARTICLE VI
Managing Board and Officers of the Company
Section 6.01. Managing Board.
(a) Subject to the provisions contained in Section 6.03, the
power to direct the business and affairs and general policies of the Company
and its subsidiaries, if any, shall be vested exclusively in a managing board
(the "Managing Board"). The Managing Board shall consist of six members, three
of whom shall be designated by DFI (the "DLL Designees") and three of whom
shall be designated by AAC (the "AAC Designees"). Each member of the Managing
Board shall hereinafter be referred to as a "Director". DFI shall designate
one of the DLL Designees to act as the Chair (the "Chair") of the Managing
Board, and the Chair shall preside at all meetings of the Managing Board. The
DLL Designees shall serve at the pleasure of DFI, and the AAC Designees shall
serve at the pleasure of AAC. Any Director may be removed from the Managing
Board only by the Member that appointed him or her, in such Member's sole
discretion and for any reason or for no reason, by delivering written notice of
such removal to the Company and the other Member.
(b) Regular meetings of the Managing Board shall be held
quarterly at the offices of the Company or at such other times and places as
may be fixed by the Managing Board, including by conducting meetings via
telephonic conference calls. A quorum of the Managing Board shall consist of
at least one DLL Designee and at least one AAC Designee, which quorum must be
present at all meetings or telephonic conference calls of the Managing Board.
The Board may hold special meetings, which meetings may be called by at least
two Directors or by the CEO. Written notice of such special meetings must be
provided to all Directors who did not call such special meeting, at least seven
days prior to the scheduled date of such special meeting, which notice shall
identify the purpose(s) of the special meeting; provided, however, that any
Director may waive such notice by attendance or in writing. Directors may
participate in a meeting by means of telephone conference, and participation in
a meeting by such means shall be deemed to constitute presence in person at the
meeting. Directors may be represented at meetings by written proxy or by a
designee. All documents, data and other information necessary to the effective
functioning of the Managing Board shall be furnished to each Director
reasonably prior to a meeting.
(c) Any Director may resign by giving to the Chair and the
other Directors 30 days' prior written notice. Any vacancy in the Managing
Board, whether created by such a resignation, or by the death of any Director
or by the removal of a Director in accordance with Section 6.01(a), shall
promptly be filled by a new designee of the Member that had appointed such
Director. The new Director shall serve on the terms described herein.
Section 6.02. Action by the Managing Board . The Managing
Board shall act by the vote of a majority of the Directors, except as otherwise
specified in this Agreement. Action of the Managing Board may be taken at a
meeting, or by written consent of a majority of Directors (or the requisite
number of members as specified elsewhere in this Agreement) with all Directors
being promptly notified of any action taken by written consent, or by means of
telephone
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conference. In the event of a deadlocked vote on any matter before the
Managing Board, the Managing Board shall act by the vote of the Chair (a "Tie
Break Vote"), or in the absence of the Chair, by a majority of the DFI
Designees.
Section 6.03. Officers . The daily affairs of the Company
shall be managed by a chief executive officer (who shall initially be Lawrence
Sidwell) (the "CEO"). The Managing Board may appoint additional officers as it
deems appropriate, with such duties as may be established by the Managing Board
(together with the CEO, the "Executive Officers").
(a) Chief Executive Officer. (i) The CEO shall be the
chief executive officer of the Company and shall be responsible for the general
management of the business and the affairs of the Company, shall carry out the
directions of the Managing Board, and shall effectuate the business plan, as
set forth in the Annual Budget and Strategic Plan (as defined below). Subject
to the control of the Managing Board, the CEO shall have such other powers and
duties as the Managing Board assigns to him or her.
(ii) In addition to the responsibilities described
above and in Section 2.02, the CEO shall prepare, and submit to the Managing
Board, as of the Closing Date under the Purchase Agreement for the Fiscal Year
ending December 31, 1996 and at least 30 days prior to the commencement of each
subsequent Fiscal Year (or, if the CEO has not received the AGCO Business Plan
as defined in the AGCO Agreement, dated the date hereof (the "AGCO Agreement"),
by and between the Company and the Parent of AAC ("AGCO"), by such date, as
soon as is reasonably practicable after the CEO does receive such report), an
annual budget and a strategic plan (the "Annual Budget and Strategic Plan")
that describes the business plan for the Company for such Fiscal Year.
(b) Delegation of Authority. The Executive Officers may
delegate such of their powers and authority to managers, employees and agents
of the Company as they deem necessary or appropriate for the conduct of the
Company's business, subject to the authority of the Managing Board.
(c) Term; Removal. Subject to his or her earlier death,
resignation or removal, each Executive Officer shall hold his or her office
until his or her successor shall have been elected or appointed and shall have
qualified, or until his or her earlier death, resignation or removal. Subject
to the provisions of Section 6.05, any Executive Officer may be removed at any
time, with or without cause.
(d) Resignations. An Executive Officer may resign at any
time by giving written notice of his or her resignation to the Company. A
resignation shall take effect at the time specified therein or, if the time
when it shall become effective shall not be specified therein, immediately upon
its receipt, and, unless otherwise specified therein, the acceptance of a
resignation shall not be necessary to make it effective.
(e) Vacancies. If an office becomes vacant for any
reason, the Managing Board may fill such vacancy. Each Executive Officer so
elected or appointed shall serve for the
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remainder of his or her predecessor's term and until his or her successor shall
have been elected or appointed and shall have qualified.
Section 6.04. Oversight Committee. The Parents shall
establish an oversight committee (the "Oversight Committee"), which shall
consist of four members, two of whom shall be designated by AGCO and two of
whom shall be designated by Rabobank. The Oversight Committee shall meet
periodically to review the coordination of the various joint ventures between
AGCO and Rabobank, including the Company and AAC Canada, and to offer guidance
with respect thereto. The Oversight Committee shall be only advisory in
nature.
Section 6.05. Unanimous Consent . Unless AAC's Percentage
Interest, when combined with the percentage interests in the Company of all
Affiliates of AAC, is less than 33% (a "Reduced Interest Event"),
notwithstanding anything contained in Section 6.02, the Company may take the
following actions only by the unanimous affirmative vote or unanimous written
consent of the Managing Board. For purposes hereof (unless a Reduced Interest
Event has occurred), (i) the DLL Designees shall collectively have one vote,
(ii) the AAC Designees shall collectively have one vote, and (iii) the Chair
shall not have the authority to exercise the Tie Break Vote.
(i) approval of any material transaction between the
Company or any subsidiary thereof and any Affiliate of the
Company or of a Member, other than pursuant to the terms of
(w) the AGCO Agreement, (x) those agreements and arrangements
set forth on Schedule 4.13 of the Purchase Agreement that are
assigned to the Company, (y) the Servicing Agreement (as
defined in Section 6.07(c) or (z) the Financing Documents;
provided that approval by the Managing Board shall be required
for amendments to and modifications of the agreements and
arrangements described in (w), (x), (y) and (z) of this
paragraph if such amendments or modifications are adverse to
the Company or any subsidiary thereof;
(ii) approval of each Annual Budget and Strategic
Plan or any material amendment thereof;
(iii) approval of all changes in the distribution
policy;
(iv) any call for additional capital contribution
which would result in the Gearing Ratio of the Company at the
end of the month immediately preceding such call (or projected
Gearing Ratio of the Company at the end of any month for the
then pending Fiscal Year) being less than 11.5:1.0;
(v) approval of the entry of the Company or AAC
Canada into any other partnership arrangement or joint venture;
(vi) except in the ordinary course of business, the
guarantee by the Company of any indebtedness or contractual
obligation of any other Person (other
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than AAC-Canada and any wholly-owned subsidiary of the
Company or AAC-Canada);
(vii) any change in accounting principles used by
the Company, except to the extent required by a concurrent
change in U.S. GAAP;
(viii) subject to the provisions of Section 6.07,
approval of the acquisition (in one transaction or a series of
related transactions) of any business or business division
from any Person whether by asset purchase, stock purchase,
merger or other business combination, which business or
business division represents at least 20% of the revenues of
the Company and its subsidiaries taken as a whole (or their
predecessors) for the most recently ended Fiscal Year; or the
acquisition of a portfolio of loans from any Person, whether
by asset purchase, stock purchase, merger or other business
combination which portfolio represents at least 20% of the
assets of the Company and its subsidiaries taken as a whole
(or their predecessors) as of the last day of the most
recently completed Fiscal Year; or the acquisition of any
business, business division or portfolio of loans that would
require AAC to make a Capital Contribution of $3,000,000 or
more in accordance with Section 3.02.
(ix) any transaction involving a sale, transfer or
other disposition (including by means of merger or
consolidation) of (x) all or substantially all of the assets
of the Company and its subsidiaries taken as a whole, except
for any such transaction involving a disposition by the
Company or any of its subsidiaries to the Company or any of
its wholly-owned subsidiaries or (y) any material portion of
the Company's business related to the financing of
Agricultural Equipment (the "AEF Business");
(x) the liquidation or dissolution of the Company;
(xi) the admission of new members to the Company;
(xii) any merger between the Company and any of its
subsidiaries or between subsidiaries of the Company,
liquidation, dividend of substantially all assets or other
restructuring of the Company and its subsidiaries if such
restructuring would have a materially adverse consequence to
Rabobank as a result of its indirect ownership of the
interests in the Company owned by DFI or a materially adverse
consequence to the Company or its subsidiaries taken as a
whole;
(xiii) approval of any contracts, agreements or
arrangements that involve payments or commitments for payments
of $10 million or more; provided that no such approval shall
be required for (w) contracts, agreements or arrangements
contemplated by the approved Annual Budget and Strategic Plan
or any approved amendment thereof, (x) any extension of credit
to any customer in the AEF Business or approved New Line of
Business, (y) any obligation for borrowed
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money, whether pursuant to a loan agreement, capitalized
lease, note, debenture, security or other instrument, any
grant of collateral in connection therewith, or any hedging
arrangement, or (z) any contract the subject matter of which
is addressed in clauses (i), (iv), (v), (vi), (viii), (ix), or
(xii) above; and
(xiv) any change in the CEO.
For purposes of this Section 6.05, AAC Canada shall be deemed
a wholly-owned subsidiary of the Company.
Section 6.06. Restrictions on the Business of the Company.
(a) Notwithstanding anything contained in this Agreement,
the Company shall comply, and the Members shall cause the Company to comply,
and the actions of the Managing Board shall be consistent, with each of the
following requirements:
(i) The Company shall only engage in activities in
which bank holding companies are legally permitted to engage,
as established by the Bank Act (as defined in Section 11.11)
and the rules and regulations promulgated thereunder;
(ii) The Company shall not engage in any additional
activities without the knowledge and consent of, as well as
prior authorization from, the Board of Governors of the
Federal Reserve System (the "FRB");
(iii) The Company shall comply with the legal lending
limits of Rabobank;
(iv) the Company shall observe the anti-tying
provisions of the Bank Holding Company Act Amendments of 1970
and the anti-tying provisions of the FRB's Regulation Y, as
amended, including the tying restrictions set forth in Section
225.7 (12 C.F.R. 225.7); and
(v) The Company shall submit to the regulation,
supervision and examination of the FRB.
(b) In connection with the foregoing, each Member
acknowledges the following:
(i) DFI has the authority to veto any activities
that are impermissible for bank holding companies (which event
shall constitute a Mandatory Sale Condition, as defined in
Section 7.01(b));
(ii) DFI shall not be liable for the debts,
obligations or liabilities of the other Member, and DFI and
its Affiliates shall act at all times on an arm's length basis
in deciding whether to extend credit to the Company, its
Affiliates and competitors;
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(iii) Rabobank shall not solicit business on behalf
of AGCO or its Affiliates (excluding the Company, the Company's
subsidiaries and foreign joint ventures jointly owned by the
Parents); and
(iv) DFI shall maintain active participation and
control of the Company;
(c) In the event that any federal or national law of the
United States or The Netherlands is enacted, or any rule, regulation, order or
decree of any federal or national governmental or administrative body of the
United States of America or The Netherlands is promulgated as a result of which
the Company shall be prohibited by virtue of the direct or indirect ownership
thereof by Rabobank from conducting the AEF Business substantially in the same
manner as conducted by the Company prior to the date hereof (an "Impacting
Law"), and within 180 days after the date of such enactment or promulgation,
DFI has been unable to obtain waiver of, approval under or exemption from the
Impacting Law, then a "Failure Event" shall be deemed to have occurred, and
each Member may then exercise the Purchase Options in accordance with Section
9.05. A Failure Event may arise from a change in law or regulation (including
the revision or reinterpretation of current law or regulation).
Section 6.07. New Businesses of the Company .
(a) If a Member proposes that the Company or AAC Canada
engage in a line of business involving the financing of a type of assets or
receivables in the agricultural industry, whether through development of a
portfolio, acquisition or otherwise, not included in the AEF Business or
another line of business previously approved by the Managing Board pursuant to
this Section 6.07, then such Member shall submit a written proposal (the
"Proposal") to the Managing Board describing in reasonable detail the material
terms and conditions of such business (the "New Line of Business"), including a
business plan with respect thereto. No Member may propose to engage in any New
Line of Business that relates to the financing of equipment or receivables
outside of the agricultural industry.
(b) The Managing Board shall determine whether or not the
Company or AAC Canada shall pursue the New Line of Business in accordance with
the Proposal. The Managing Board shall make such determination within 30 days
of the receipt of the Proposal by providing written notice to such effect to
the Member proposing the New Line of Business. For purposes of making such
determination, the Chair shall not have the authority to exercise the Tie Break
Vote.
(c) If the Managing Board determines not to pursue the
New Line of Business described in the Proposal, then the Member making such
Proposal may pursue such business outside of the Company and AAC Canada through
itself or any of its Affiliates and may continue to develop and build such New
Line of Business (and business ancillary thereto) without future approval of
the other Member, and such New Line of Business shall not be deemed Restricted
Business. In such event the Company shall, if requested by the proposing
member, provide services in respect of such New Line of Business, and any and
all extensions thereof, pursuant to a servicing agreement, substantially in the
form attached hereto as Exhibit I (the "Servicing
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Agreement"); provided that in no event shall the Company be required or
permitted to provide any services to any Member (or its Affiliates) that would
violate any Applicable Law.
(d) If DFI or AAC elects to pursue the New Business pursuant
to paragraph (c) above and enters into the Servicing Agreement, the Company and
AAC Canada shall have no obligation and no borrowing under the Company's credit
facility shall be used, directly or indirectly, to fund the New Line of
Business.
(e) If the Managing Board determines to pursue the New Line of
Business, all expenses and costs incurred in connection with such New Line of
Business shall be for the account of the Company, and the Company shall
reimburse the proposing Member (and its Affiliates as applicable) for all
reasonable expenses and costs incurred by the proposing Member or its
Affiliates since the date the Proposal was delivered. Following any such
determination, the authority to direct the business and affairs of the New Line
of Business shall thereafter be vested in the Managing Board, and, subject to
Section 6.05, the Chair shall have the authority to exercise the Tie Breaker
Vote in connection therewith.
(f) Notwithstanding the foregoing, DFI shall not require the
consent of Managing Board to pursue a New Line of Business pursuant to the
Section 6.07 if a Reduced Interest Event has occurred.
ARTICLE VII
RESTRICTIONS ON TRANSFER; PREEMPTIVE RIGHTS
Section 7.01. General Restrictions on Transfer.
(a) Except as otherwise contemplated by Section 7.02 or
Section 7.03, each Member agrees, without the prior written consent of the
other Member (which consent may be withheld for any reason or for no reason),
not to offer, transfer, sell or otherwise dispose of (each, a "Transfer") any
or all of its ownership interests in the Company (the "Interests") (or any
interest therein). Except as required by Section 7.01(b), no Transfer may be
proposed on or prior to December 31, 1997. Any purported Transfer in violation
of the foregoing, other than in compliance with this Agreement, shall be null
and void. Each Member agrees not to pledge, hypothecate, grant a security
interest in or otherwise encumber any or all of its Interests (or any interest
therein), and any attempt to do any of the foregoing shall be null and void.
(b) Notwithstanding subsection (a) hereof, but subject to
Section 7.02 hereof, if at any time a Mandatory Sale Condition (as hereinafter
defined) exists with respect to a Member, such Member may Transfer the least
amount of its Interests required for it to comply with the Mandatory Sale
Condition. A Mandatory Sale Condition shall be deemed to exist if (i) the
continued ownership by such Member of all or any portion of the Interests then
owned by such Member is prohibited (a "Prohibition") by any federal or national
law of the United States of America or The Netherlands or by any rule,
regulation, order or decree of any federal or national governmental or
administrative body in the United States of America or The Netherlands
("Applicable Law") and (ii) such Member has delivered to the other Member an
opinion of
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counsel, in form and substance satisfactory to the other Member, reaching the
conclusion set forth in clause (i) hereof, stating that no governmental
procedure or alternative method (other than the sale of the Interests or
another procedure or method that would have a burdensome effect on it) is
available to such Member to obtain waiver of, approval under or exemption from
the Applicable Law or that such waiver, approval or exemption, upon application
therefor duly made by such Member, has been finally denied by the applicable
governmental authority, and stating the amount of the Interests required to be
sold by such Member. A Prohibition may arise from a change in Applicable Law
(including the revision or reinterpretation of current Applicable Law) or a
change in the nature of the business of the Company.
Section 7.02. Right of First Refusal.
(a) If at any time subsequent to December 31, 1997, any
Member or any person, corporation, partnership or other entity (other than any
successor of such Member and other than the other Member) that acquires
Interests from such Member or from such a transferee of such Member (a
"Transferee") (such Member or Transferee being hereinafter referred to as the
"Proposed Seller") wishes to Transfer some or all of its Interests, or at any
time a Mandatory Sale Condition exists with respect to any Member requiring
such Member to Transfer some or all of its Interests, in either case to a third
party (the "Proposed Buyer"), the Proposed Seller shall first give written
notice (an "Offer Notice") thereof to the other Member (the "Remaining
Member"). Each Offer Notice shall state, in reasonable detail, (i) the
Proposed Buyer, (ii) the amount of Interests to be sold (which shall be a
proportional amount of Interests in the Company and AAC Canada), (iii) the
offering price (which shall be payable in cash) and (iv) all other significant
terms and conditions of such offer.
(b) Not later than 60 days following receipt by the
Remaining Member of an Offer Notice, the Remaining Member shall give written
notice (the "Response Notice") to the Proposed Seller indicating whether the
Remaining Member elects to exercise its rights hereunder (the "Options"), which
consist of the following:
(i) the Remaining Member may require that its
Interests be Transferred to the Proposed Buyer on a pro rata
basis with the Transfer of the Proposed Seller's Interest, and
on the same terms and conditions specified in the Offer Notice
with respect to the Proposed Seller's Interest;
(ii) the Remaining Member may purchase the
Proposed Seller's entire Interest on the same terms and
conditions specified in the Offer Notice; or
(iii) the Remaining Member may neither sell its
Interests nor purchase the Proposed Seller's Interest.
The failure to deliver a Response Notice within such 60 day
period shall be deemed to be an election of Option (iii) above.
(c) If the Remaining Member elects to exercise Option (i)
above:
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(i) The Proposed Seller shall promptly seek to
cause the Proposed Buyer to purchase both its and the Remaining
Member's Interests on a pro rata basis at the same price and
upon the same terms and conditions as specified in the Offer
Notice; provided, however, that such terms and conditions
shall not be deemed to include the making of any
representations and warranties, indemnities or other similar
agreement to the Proposed Buyer, other than representations
and warranties with respect to title to the Interests being
sold and authority to sell such Interests and indemnities
related thereto.
(ii) If the Proposed Buyer is not willing to
purchase the Interests of the Remaining Member on the
same terms and conditions as specified in the Offer Notice,
then the Proposed Seller shall not be permitted to Transfer
its Interests to the Proposed Buyer.
(iii) At the closing of the purchase and sale of the
Interests pursuant to this Section 7.02 (c), each Member
selling its respective Interests shall deliver to the Proposed
Buyer a duly authorized and executed amendment to this
Agreement or a schedule hereto reflecting the respective
Interests of the Members or such other documentation as is
reasonably satisfactory to the Proposed Buyer evidencing its
ownership of such Interests; and (ii) the Proposed Buyer shall
pay the purchase price to the Proposed Seller and the
Remaining Member on a pro rata basis in respect of their
respective Interests being sold.
(iv) In order to provide for just and equitable
contribution if the Proposed Seller makes a payment to the
Proposed Buyer with respect to an obligation or liability
arising under an indemnity by the Proposed Seller covering
representations and warranties (excluding representations and
warranties, if any, with respect to post-acquisition events)
made in any agreement by which Interests are sold pursuant to
this Section 7.02(c), the Remaining Member shall contribute to
the aggregate amount of such payments in the proportion that
the amount received by the Remaining Member from the sale of
its Interests to the Proposed Buyer bears to the aggregate
amount received by the Proposed Seller and the Remaining
Member from the sale of their respective Interests to the
Proposed Buyer.
(d) If the Remaining Member elects to exercise Option
(ii) above, the Transfer to the Remaining Member shall take place at a mutually
agreeable time and place not more than 30 days after the Response Notice has
been given, subject to compliance with any applicable statutory or regulatory
requirements, receipt of all necessary governmental consents, clearances and
approvals and deferral of the date for such Transfer until completion of
compliance with such requirement and the issuance of such approvals, but in no
event to a date more than 180 days after the Response Notice has been given
(such event being referred to as a "Deferral"). Each such Transfer of
Interests shall be on the same terms and conditions as those proposed by the
Proposed Buyer named in such Offer Notice.
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(e) If the Remaining Member does not exercise Option (i)
or Option (ii), the Proposed Seller may sell the Interests that were the
subject of the Offer Notice to the Proposed Buyer named therein, on the same
terms set forth in the Offer Notice, pursuant to a binding written agreement
entered into within 60 days following receipt by the Proposed Seller of the
related Response Notice. If a binding written agreement to sell such Interests
is not entered into within such 60 day period, and if such Interests are not
sold pursuant to such agreement within such 60 day period, as the same may be
extended by a Deferral, the restrictions of this Section 7.02 shall again
apply.
(f) No Member shall pledge or encumber its Interest in
the Company and it shall be a condition to any sale of Interests by a Proposed
Seller to a Remaining Member pursuant to this Section 7.02 that such Interests
be sold free and clear of all liens, claims and encumbrances whatsoever, other
than such liens, claims or encumbrances in connection with the Company's credit
facility.
(g) Notwithstanding any of the foregoing, AAC shall not
have the Options described in Section 7.02(b)(ii) if a Reduced Interest Event
shall have occurred.
Section 7.03. Transfers to Subsidiaries. Notwithstanding
any other provision of this Agreement, upon written notice to the other
Members, each Member may Transfer some or all of its Interests to any direct or
indirect wholly owned subsidiaries of such Member's Parent; provided, that (i)
such Transfer does not cause a Mandatory Sale Condition to exist; (ii) if at
any time such Member's interest in the common and common equivalent stock of
such subsidiary is about to decline below 100%, such Member shall cause such
Interests to be promptly retransferred to it or to another of its wholly owned
subsidiaries before such subsidiary ceases to be wholly owned, directly or
indirectly, by such Member; and (iii) such Member shall remain liable for the
performance by such subsidiary of its obligations hereunder.
Section 7.04. Preemptive Rights. Each Member shall have
preemptive rights to subscribe to its respective allocation of any additional
Interests that the Company may issue or sell from time to time. The initial
allocation of each Member shall be in proportion to such Member's Percentage
Interest. If any Member shall fail to subscribe fully to its initial
allocation of Interests within 45 days after such Interests have become
available for subscription, the remaining unsubscribed Interests shall be
re-offered for an additional period of 30 days to the other Member, if such
other Member has fully subscribed to its initial allocation of Interests. If
any Member shall fail to satisfy a call for additional capital contribution
made pursuant to Section 3.02, then the Percentage Interests of the Members
shall be adjusted based upon the ratio of the Capital Accounts of each Member
(after giving effect to the capital contribution actually made) to the Capital
Account of all Members, and the non-defaulting Member shall have the right for
a period of 30 days to make an additional Capital Contribution equal to the
unsatisfied capital call on the defaulting Member.
Section 7.05. Substitution of Transferees.
Notwithstanding any provision to the contrary herein, no Transferee of an
Interest of a Member shall become a Member of the Company (a "Substituted
Member") without the prior written consent of the other Members, in their sole
discretion.
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ARTICLE VIII
Withdrawal of a Member
Section 8.01. Withdrawal Events. If any of the following
shall occur with respect to a Member or a Parent (each, a "Withdrawal Event"):
(a) a receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator (or other similar official) shall take possession of
a Member or Parent or any substantial part of its property without its consent,
or a court having jurisdiction in the premises shall enter a decree or order
for relief in respect of a Member or Parent in an involuntary case under any
applicable bankruptcy, insolvency, moratorium or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, conservator, sequestrator (or other similar official) of such Member
or Parent or for any substantial part of its property, or ordering the
winding-up or liquidation of its affairs and such decree or order shall remain
unstayed and in effect for a period of 60 consecutive days;
(b) a Member or Parent shall commence a voluntary case under
any applicable bankruptcy, insolvency, moratorium or other similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
conservator, sequestrator (or other similar official) of such Member or Parent
or of any substantial part of its property, or shall make any general
assignment for the benefit of creditors, or shall take any corporate action in
furtherance of any of the foregoing; or
(c) a Member or Parent shall commence proceedings to
dissolve or liquidate; then, such Member shall be obligated to withdraw from the
Company, and the non withdrawing Member shall have the option (the "Buy Out
Option"), which option may be delegated to any of such Member's Affiliates, to
acquire the Interest of the withdrawing Member at Fair Market Value in
accordance with the terms of Section 9.05.
ARTICLE IX
Duration and Termination of the Company
Section 9.01. Events of Dissolution. The Company shall be
dissolved and its affairs shall be wound up on the first to occur of any of the
following events: (i) December 31, 2045; (ii) any date during the Company's
duration by written decision of all of the Members; (iii) the sale or other
disposition (including, without limitation, taking by eminent domain) of all or
substantially all of the assets of the Company unless such sale or other
disposition involves any deferred payment of the consideration for such sale or
disposition, in which case the Company shall not dissolve until the last day of
the Fiscal Year during which the Company shall receive the balance of such
deferred payment; (iv) the occurrence of a Withdrawal Event, unless the Company
is continued pursuant to Section 9.03; (v) the occurrence of a Failure Event
(as defined in Section 9.04) provided that the period for the exercise of the
Purchase Option has expired; or (vi) the effective date of a decree of judicial
dissolution under the Act.
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Section 9.02. Liquidation.
(a) Upon the dissolution of the Company as
provided in Section 9.01, the Company shall designate the CEO as the
"liquidating trustee" (as defined in the Act), who shall cause the Company to
continue solely for the purposes of liquidating all of the assets owned by the
Company (until all such assets have been sold or liquidated) and collecting the
proceeds from such sales and all receivables of the Company until the same has
been written off as uncollectible.
(b) Upon dissolution, the Company shall engage in
no further business thereafter other than that necessary to cause the Company
to collect its receivables, liquidate its assets and pay or discharge its
liabilities; provided that (i) if any computer programs, software or databases
have been created and/or developed by or on behalf of the Company or AAC
Canada, then each of DFI and AAC shall be deemed the joint owners of such
programs, software or databases and shall be entitled to license the use of
such programs, software or databases to its Affiliates; (ii) AAC shall have the
option (which option may be delegated to any of its Affiliates) to purchase the
assets of the Company and AAC Canada related to the AEF Business; and (iii) DFI
or AAC, as the case may be, shall have the option (which option may be
delegated to any of its Affiliates) to purchase the assets of the Company and
AAC Canada related to the New Lines of Business proposed by such Member (each
such option being a "Purchase Option").
(c) Notwithstanding any provision of the Act and
any other laws, the proceeds of liquidation and all other assets of the Company
shall be applied and distributed by the liquidating trustee in the following
order of priority:
(i) First to the payment of (x) liabilities of the
Company, except loans or advances that may have been made by any of the Members
to the Company and (y) expenses of liquidation;
(ii) Then to the setting up of any reserves that
the liquidating trustee may deem necessary for any contingent or unforeseen
liabilities or obligations of the Company or of the Members out of or in
connection with the Company;
(iii) Then to the repayment of any other loans that
may have been made by any of the Members to the Company; and
(iv) Then any balance remaining shall be
distributed to the Members in accordance with their respective positive Capital
Account balances.
Section 9.03 Continuance of Company. Notwithstanding
anything contained in Section 9.01, upon the occurrence of a Withdrawal Event,
the Company shall not be terminated if the remaining Member(s) elect within 90
days of such Withdrawal Event to continue the Company and the Company's
business and, if there is only one remaining Member, to admit an additional
Member.
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Section 9.04. Failure Event. If (i) at the end of any
Fiscal Year commencing with the Fiscal Year ending December 31, 1996, the
return on equity (i.e., operating profit divided by Members' equity) of the
Company and AAC Canada for such Fiscal Year is substantially below the targets
set forth in the Annual Budget and Strategic Plan for such Fiscal Year, and
there is no reasonable prospect that there will be a major improvement thereof,
or (ii) for any period of three consecutive calendar months following the date
hereof the retail market share of AGCO's production of Agricultural Equipment
held by the Company and AAC Canada falls substantially below the lesser of (x)
such average market share for the comparable three-month period in the twelve
months preceding the date hereof and (y) the retail market share target set
forth in the Annual Budget and Strategic Plan for such Fiscal Year, upon
request of a Member (evidenced in a written notice to the other Member) the
Members will negotiate in good faith to restructure the Company, AAC Canada and
their businesses on terms reasonably satisfactory to both Members. If the
Members do not reach agreement within 12 months from the date of commencement
of such notice, either Member may give written notice to the other Member
declaring that a "Failure Event" shall have occurred, and each Member may then
exercise the Purchase Options, in accordance with Section 9.05. No Member
shall be entitled to give notice of a "Failure Event" pursuant to this Section
9.04 if such Member (or its Affiliates) is in material breach of its
obligations to the Company, AAC Canada or any Member (or its Affiliates) under
this Agreement or any other related agreements or if such Failure Event results
primarily from the acts or omissions of such Member or its Affiliates.
Section 9.05. Procedures for Certain Transfers Between
Members.
(a) If a Member elects to exercise the Buy Out
Option or the Purchase Option, such Member shall deliver written notice (the
"Exercise Notice") to the other Member, indicating its intent to exercise the
Buy Out Option or the Purchase Option, as the case may be, not later than 60
days following the occurrence of the event triggering such Buy Out Option or
Purchase Option. If within such 60-day period, one Member delivers the
Exercise Notice in connection with the proposed exercise of a Purchase Option
and the other does not, the exercising Member shall have the option (the
"Purchase All Option") to acquire not only the AEF Business (in the case of
AAC) or the New Lines of Business proposed by that Member (in the case of DFI
or AAC), but any or all assets or businesses of the Company and AAC Canada.
Such Member may exercise the Purchase All Option by complying with the terms of
this Section 9.05.
(b) If both Members exercise Purchase Options,
they shall negotiate in good faith for a period not exceed 30 days to determine
the allocation of systems, technology and personnel related to both the AEF
Business and the New Lines of Business. In the event that the parties are
unable to reach agreement on such allocation within such 30-day period, then
such systems, technology and personnel shall be assigned to DFI, if the
consideration being paid by DFI for the New Lines of Business being acquired by
DFI exceeds the consideration being paid by AAC for the AEF Business and New
Lines of Business being acquired by AAC, and to AAC, if the consideration being
paid by AAC for the AEF Business and New Lines of Business being acquired by
AAC exceeds the consideration being paid by DFI for the New Lines of Business
being acquired by DFI, and the parties shall then negotiate in good faith a
servicing agreement (which shall be substantially on the terms of the Servicing
Agreement except that the servicing
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<PAGE> 32
profit shall be fixed by agreement of the parties based on then market terms)
pursuant to which the Member acquiring the systems, technology and personnel
shall continue to service the AEF Business or New Lines of Business, as the
case may be, for the other Member. If only one Member exercises its Purchase
Option, such Member shall also have the option (which option may be delegated
to any of its Affiliates) to purchase all remaining assets of the Company and
AAC Canada.
(c) The Transfer of Interests, in the case of the
Buy Out Option, or the acquisition of the New Lines of Business or the AEF
Business (as the case may be), in the case of the Purchase Option, shall take
place at a mutually agreeable time and place not more than 30 days after
delivery of the Exercise Notice, subject to compliance with any applicable
statutory or regulatory requirements, receipt of all necessary governmental
consents, clearances and approvals and deferral of the date for such Transfer
or acquisition until completion of compliance with such requirements and the
issuance of such approvals, but in no event to a date more than 180 days after
delivery of the Exercise Notice.
(d) In connection with the exercise of a Buy Out
Option or a Purchase Option, no Member shall be required to make any
representations or warranties, indemnities or other similar agreements to the
other Member or to the Company or AAC Canada, other than representations and
warranties with respect to title to the Interests being sold by such Member (in
the case of the Buy Out Option) or title to the assets being sold by the
Company (in the case of the Purchase Option).
(e) The consideration to be paid at the
consummation of the transactions contemplated by the Buy Out Option or the
Purchase Option, as the case may be, shall be the Option Price of the Interests
or assets (as applicable) being acquired by the Member that exercised the Buy
Out Option or the Purchase Option, as the case may be. Such consideration
shall consist solely of cash.
(f) It shall be a condition to any sale of
Interests or assets, as the case may be, that such Interests or assets be sold
free and clear of all liens, claims and encumbrances whatsoever, other than
such of the foregoing in connection with the credit facilities of the Company
and AAC Canada.
(g) If a Member shall have delegated the Buy Out
Option or the Purchase Option to an Affiliate of such Member (which shall be
evidenced by a written instrument between such Member and such Affiliate, to be
promptly delivered to the other Member), all references to "Member" in
paragraphs (a) through (e) of this Section 9.05 shall be deemed to be
references to such Affiliate.
(h) Notwithstanding any of the foregoing, AAC
shall not have the Buy Out Option or the Purchase Option if a Reduced Interest
Event shall have occurred.
Section 9.06. Certificate of Cancellation. Upon the
completion of the distribution of Company assets as provided in Section 9.02,
the Company shall be terminated and the
27
<PAGE> 33
liquidating trustee shall cause the cancellation of the Company's certificate
of formation and shall take such other actions as may be necessary or
appropriate to terminate the Company.
ARTICLE X
Books and Records; Reports to Members; Tax Returns
Section 10.01. Books and Records. The CEO shall cause the
Company to keep at the Company's principal office separate books of account,
which shall show a true, complete and accurate record of all assets and
liabilities, operations, transactions and financial condition of the Company.
All financial statements shall be accurate in all material respects, shall
present fairly the financial position and results of the Company, and shall be
prepared in accordance with the accrual method of accounting for GAAP,
consistently applied. Without limiting the generality of the foregoing, the
Company shall prepare such financial information and maintain such books and
records as are: (i) required by any law, rule or regulation applicable to the
Company; or (ii) reasonably requested by any Member. Each Member shall, at its
sole expense, have the right, at any time upon reasonable notice to the CEO, to
examine, copy and audit the Company's books and records during normal business
hours.
Section 10.02. Monthly Reports. No later than 10 business
days after each month, the CEO, on behalf of the Company, shall prepare and
submit or cause to be prepared and submitted to each Member, an accrual basis
balance sheet together with an accrual basis profit and loss statement for the
month next preceding with a cumulative Fiscal Year accrual basis profit and
loss statement to date and with such other financial statements and information
as may be reasonably requested by a Member or any of its Affiliates, including
any such information required to enable a Member or any of its Affiliates to
prepare quarterly reports to be filed pursuant to U.S. or foreign securities or
banking laws.
Section 10.03. Annual Reports. As soon as practicable
after the end of each Fiscal Year, a general accounting and audit shall be
taken and made by the Company's independent certified public accountants, which
shall initially be KPMG Peat Marwick, and thereafter a "Big Six" accounting
firm designated by DFI, covering the assets, properties, liabilities and net
worth of the Company, and its dealings, transactions and operations during such
Fiscal Year, and all other matters and things customarily included in such
accounts and audits, and a full, detailed certified statement shall be
furnished to each Member within 45 days after the end of such Fiscal Year. A
full and complete report of the audit scope and audit findings in the form of a
management audit report shall also be furnished to each Member within 45 days
after the end of such Fiscal Year. Such financial statements shall disclose
and/or footnote, in sufficient detail, all items of taxable income, gain, loss
or accounts that vary from the reporting of such items for financial accounting
purposes. The CEO, on behalf of the Company, shall distribute to the Members
copies of all management letters prepared by the Accountants in connection with
their certification of the audited financial statements.
Section 10.04. Filing of Tax Returns. Subject to Article
III, the CEO, at the Company's expense, shall prepare and file timely, or cause
independent accountants to prepare and file, a Federal information tax return
in compliance with Section 6031 of the Code and any
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<PAGE> 34
other required federal, state and local income tax and information returns for
each tax year of the Company.
Section 10.05. Tax Matters Partner. DFI shall be designated
on the Company's annual Federal information tax return as the "Tax Matters
Partner" of the Company for purposes of Section 6231(a)(7) of the Code.
ARTICLE XI
Miscellaneous
Section 11.01. General. This Agreement: (a) shall be
binding on the successors of the Members; and (b) may be executed, through the
use of separate signature pages or in any number of counterparts with the same
effect as if the parties executing such counterparts had all executed one
counterpart.
Section 11.02. Power of Attorney. Each of the Members
hereby appoints the CEO, with power of substitution as its true and lawful
representative and attorney-in-fact, in its name, place and stead to make,
execute, sign, acknowledge, swear to and file:
(a) any and all instruments, certificates, and other
documents that may be deemed necessary or desirable to effect the winding-up
and dissolution of the Company in accordance with Section 9.02;
(b) any business certificate, fictitious name
certificate, amendment thereto, or other instrument or document of any kind
necessary or desirable to accomplish the business, purpose and objectives of
the Company, or required by any applicable federal, state or local law; and
(c) all amendments or modifications to the Agreement to
the extent made in accordance with Section 11.03 hereof.
The power of attorney hereby granted by each of the Members is
coupled with an interest, is irrevocable, and shall survive, and shall not be
affected by, the bankruptcy or insolvency of such Member.
Section 11.03. Amendments . The terms and provisions of
this Agreement may only be modified or amended at any time with the unanimous
written consent of all the Members.
Section 11.04. Choice of Law. Notwithstanding the place
where this Agreement may be executed by any of the parties hereto, the parties
expressly agree that all the terms and provisions hereof shall be construed
under the laws of the State of Delaware and, without limitation thereof, that
the Act as now adopted or as may be hereafter amended shall govern this
Agreement.
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<PAGE> 35
Section 11.05. Notices. Each notice or other communication
relating to this Agreement shall be in writing and delivered in person or by
registered or certified mail, or by telecopier, and shall be addressed to such
Member at its respective address as set forth below:
<TABLE>
<S> <C>
(i) If to DFI:
De Lage Landen Finance, Inc.
c/o De Lage Landen International B.V.
Vestdijk 51
P.O. Box 652
5600 AR Eindhoven
The Netherlands
Attention: Department of General Affairs
Telephone: 31-40-233-9835
Telecopier: 31-40-233-8600
with a copy to:
Cooperatieve Centrale Raiffeisen-
Boerenleenbank B.A., "Rabobank Nederland"
245 Park Avenue
New York, New York 10017
Attention: Guillermo Bilbao, Esq.
Telephone: 212-916-7800
Telecopier: 212-818-0233
with a copy to:
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
Attention: Stuart D. Freedman, Esq.
Telephone: 212-758-0404
Telecopier: 212-593-5955
(ii) if to AAC:
AGCO Corporation
4830 River Green Parkway
Duluth, Georgia 30136
Attention: Chief Financial Officer
Telephone: 770-813-9200
Telecopier: 770-813-6158
</TABLE>
30
<PAGE> 36
with a copy to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303
Attention: John J. Kelley III, Esq.
Telephone: 404-572-4600
Telecopier: 404-572-5100
Any Member may designate a new address by notice to that
effect given to the Company. Unless otherwise specifically provided in this
Agreement, a notice shall be deemed to have been effectively given when mailed
by registered or certified mail or telecopied to the proper address or
delivered in person.
Section 11.06. Headings. The titles of the Articles and the
headings of the Sections of this Agreement are for convenience of reference
only, and are not to be considered in construing the terms and provisions of
this Agreement.
Section 11.07. Successors and Assigns. Subject to the
restrictions on Transfer set forth herein, this Agreement shall bind and inure
to the benefit of the parties hereto and their respective legal
representatives, successors and permitted assigns
Section 11.08. Terms. Common nouns and pronouns shall be
deemed to refer to the masculine, feminine, neuter, singular and plural, as the
identity of the person or entity may in the context require. Any reference to
the Code or other statutes or laws shall include all amendments, modifications
or replacements of the specific sections and provisions concerned.
Section 11.09. Invalidity. If any provision of this
Agreement shall be held invalid, it shall not affect in any respect whatsoever
the validity of the remainder of this Agreement.
Section 11.10. Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original and all of which,
when taken together, shall constitute one and the same instrument, binding on
the Members (and, in the case of Article V, the Parents), and the signature of
any party to any counterpart shall be deemed a signature to, and may be
appended to, any other counterpart.
Section 11.11. Further Assurances.
(a) For purposes hereof:
(i) "Bank Act" means the Bank Holding Company Act
of 1956, as amended from time to time, 12 U.S.C. Section 1841 et al and the
International Banking Act of 1978, as amended from time to time, 12 U.S.C.
Section 3101 et. seq.
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<PAGE> 37
(ii) "Bank Authority" means the Board of Governors
of the Federal Reserve System; any other Federal governmental authority,
agency, body, or official responsible for the regulation, supervision and/or
examination of banks, bank holding companies or subsidiaries thereof or other
depository institutions; any governmental authority, agency, body or official
responsible for the regulation, supervision and/or examination of banks, bank
holding companies or subsidiaries thereof or other depository institutions
under the laws of a state, territory, commonwealth, district, possession, or
political subdivision of, or within, the United States; any governmental
authority, agency, body or official responsible for the regulation, supervision
and/or examination of banks, bank holding companies or subsidiaries thereof or
other depository institutions under the laws of a country other than the United
States or a political subdivision of such country; any non-governmental
self-regulatory agency, body or official responsible for the regulation,
supervision and/or examination of banks, bank holding companies or subsidiaries
thereof or other depository institutions.
(iii) "Bank Regulatory Approval" means an
authorization, approval, consent, license, order, waiver or other action of a
Bank Authority.
(b) The parties hereto agree that they will use their
respective best efforts to cooperate with each other and to execute and
deliver, or cause to be delivered, all such other instruments, and will take
all such other actions, as either party hereto may reasonably request from time
to time in order to effectuate the provisions and purposes hereof and promptly,
upon request by one party (the "Requesting Party"), furnish to the Requesting
Party any information relating to the furnishing party, its employees, officers
and directors and Affiliates, which is required under any applicable law or
regulation for inclusion in any filing that the Requesting Party or any of its
Affiliates is required to make with any applicable regulatory authority. Each
party, at the date such information is furnished, shall use its reasonable best
efforts to assure that all information furnished by it pursuant to this Section
11.11 is true, complete and correct without omission of any material fact
required to be stated to make the information stated therein not misleading.
(c) If at any time a Bank Regulatory Approval is required
for any transaction, investment or activity authorized or permitted by this
Agreement, DFI or its Affiliates may take whatever steps it deems necessary and
appropriate to obtain such Bank Regulatory Approval, including the submission
of an application to any Bank Authority. In such event, each party hereto
shall use its respective reasonable efforts to comply fully with any request of
any Bank Authority for information, including, but not limited to, affording
any Bank Authority or any representative thereof access during normal business
hours to their employees, managers, equipment, records, files, books of account
and tax returns.
(d) No Member shall, without the prior written consent of
the other Members, take any action or exercise any right, power and authority
of a Member of the Company that, in the reasonable judgment of DFI:
(i) would cause a violation of or conflict with
the Bank Act, or any rule or regulation promulgated thereunder
or of any Bank Authority applicable to the Member or any of
its Affiliates; or
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<PAGE> 38
(ii) would require a Bank Regulatory Approval.
Section 11.12. Confidentiality. Each Member acknowledges that
it has acquired and will continue to acquire confidential and proprietary
information regarding the business and operations of the Company, each other
and its respective affiliates. Accordingly, each Member agrees that, without
the prior written consent of the other Member, it will neither (i) disclose any
such information to any third party nor (ii) use, or permit the use of, any
such information in the other businesses of such Member and its Affiliates
(other than the Company and its subsidiaries). For purposes of this Agreement,
information shall be considered confidential and proprietary if it was
developed or acquired by either Member or any of its Affiliates and is not
publicly available.
Section 11.13. Complete Agreement. This Agreement
constitutes the complete and exclusive statement of the agreement between the
Members with respect to the matters to which it relates. It supersedes all
prior written and oral statements and no representation, statement, condition
or warranty not contained in this Agreement shall be binding on the Members or
have any force or effect whatsoever.
Section 11.14. No Third Party Beneficiary. Any agreement to
pay any amount and any assumption of liability herein contained, express or
implied, shall be only for the benefit of the Members and their respective
successors and permitted assigns, and such agreements and assumption shall not
inure to the benefit of the obligees of any indebtedness or any other party,
whomsoever, it being the intention of the Members that no one shall be deemed
to be a third party beneficiary of this Agreement.
(Remainder of page intentionally left blank)
33
<PAGE> 39
IN WITNESS WHEREOF, the undersigned have hereunto set their
hands as of the date first set forth above.
MEMBERS:
DE LAGE LANDEN FINANCE, INC.
By: /s/
---------------------------------------
Name:
Title:
AGRICREDIT ACCEPTANCE CORPORATION
By: /s/
-------------------------------------
Name:
Title:
WITHDRAWING MEMBER:
Solely to reflect its withdrawal from the
Company:
AGCO CORPORATION
By: /s/
---------------------------------------
Name:
Title:
PARENTS:
Solely for purposes of Article V:
AGCO CORPORATION
By: /s/
---------------------------------------
Name:
Title:
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLE
ENBANK B.A., "Rabobank Nederland"
By: /s/
---------------------------------------
Name:
Title:
34
<PAGE> 40
AGRICREDIT ACCEPTANCE LLC
Schedule of Members' Capital Contributions
<TABLE>
<CAPTION>
Member Amount
- ------ ------
<S> <C>
De Lage Landen Finance, Inc. $28,493,492
Agricredit Acceptance Corporation $27,376,100
</TABLE>
35
<PAGE> 1
EXHIBIT 10.22
EMPLOYMENT AND SEVERANCE AGREEMENT
This Employment and Severance Agreement (the "Agreement") is entered into this
18th day of November 1996, by and between AGCO CORPORATION, a Delaware
corporation (the "Company"), and Jean-Paul Richard (the "Executive"),
WITNESSETH:
In consideration of the mutual covenants and agreements hereinafter set forth,
the Company and the Executive do hereby agree as follows:
1. EMPLOYMENT.
(a) Agreement of Employment. The Company hereby employs the Executive
and the Executive hereby agrees to serve the Company on the terms and conditions
set forth herein, and further agrees that this contract supersedes all previous
agreements between the parties.
(b) Term. The employment shall commence on November 18, 1996 and shall
be for a period of five (5) years, unless amended in writing by both parties or
unless otherwise terminated earlier in accordance with Section 6 or any other
provision of this Agreement. Each year, at the end of the first year of service
and on the anniversary date of the end of the first year of service under the
Agreement, the Agreement shall be automatically extended for an additional year,
unless the Company notifies the Executive prior to the anniversary date, in
writing, that it desires to terminate the Agreement or unless otherwise
terminated earlier in accordance with Section 6 or any other provision of the
Agreement. The Company may terminate the Agreement in this manner without cause.
If the Executive is notified of the termination of the Agreement, the Executive
will continue similar service to the Company as directed, and the Company shall
pay the Executive his Base Salary (as defined in Section 3(a) of the Agreement)
then in effect and will continue the Executive's group health and life insurance
for the balance of the four (4) year period remaining on the Agreement. If the
Executive fails to perform similar duties as directed by the Company or
voluntarily terminates the availability of services to accept other employment,
the company may cease payment of the Base Salary and insurance coverage upon
thirty (30) days written notice. If the Executive is terminated for cause and
obtains other employment, the Company may adjust the compensation and insurance
coverage for the period remaining on the contract so that the total compensation
and coverage provided to the Executive by his new employer and the Company does
not exceed the provisions of this Agreement. In the event of notice of
termination without cause, the Company will reasonably cooperate with the
Executive and not be unreasonable in providing the use of facilities or free
time for outplacement.
2. POSITION AND DUTIES
The Executive shall serve as a Director and as an President and Chief Executive
Officer of the Company with such duties and responsibilities as may from time to
time be prescribed by the Company's Board of Directors (the "Board"), provided
that such duties and responsibilities are consistent with the Executive's
position. The Executive shall perform and discharge faithfully,
<PAGE> 2
diligently and to the best of his ability such duties and responsibilities and
shall devote all of his working time and efforts to the business and affairs of
the Company and its affiliates.
3. COMPENSATION.
(a) Base Salary. The Company shall pay to the Executive an annual
base salary ("Base Salary") of Five Hundred Thousand Dollars ($500,000.00),
payable upon request, subject to applicable tax and payroll deductions.
(b) Incentive Compensation. Provided Executive has duly performed his
obligations pursuant to this agreement, the Executive shall be entitled to
participation or receive benefits under any Long Term Incentive Stock Plan
(LTIP) implemented by the Company and offered to senior management or directors.
(c) The Executive will also participate in the annual Incentive
Compensation Plan, with the maximum potential bonus equal to 100% of salary and
based on the goals established by the Compensation Committee.
(d) Fringe Benefits. During the term of this Agreement, the Executive
shall be entitled to participate in fringe and employee benefit plans and
arrangements which are available to senior executive officers of the Company,
including, without limitation, group health and life insurance disability
coverage, pension and savings plans, current deferred compensation plans, and
the Senior Management Employment Policy.
(e) Other Benefits.
(i) The Company shall pay or reimburse the Executive for all
reasonable and necessary expenses incurred by him in connection with
his duties hereunder, upon submission by Executive to the Company of
such written evidence of such expense as the Company may require.
(ii) Throughout the term of this Agreement, the Company will provide
Executive with the use of a vehicle of the Cadillac class and a
multi-purpose vehicle or equivalent value in a car of executive choice
for purposes within the scope of his employment and shall pay all
expenses for fuel, maintenance and insurance in connection with such
use of the automobiles.
(iii) The Company will also pay all fees for membership by Executive in
two (2) country clubs, together with the dues therefor for use by the
Executive for conferences, meetings and entertainment in the scope of
this employment.
(iv) The Company further agrees that Executive shall be entitled to
four (4) weeks of vacation time in any year of the term of employment
hereunder.
2
<PAGE> 3
(v) The Company shall provide full access to the use of the Company
leased or chartered aircraft for the purpose of conducting company
business and as stipulated in the Corporate Aircraft Policy for
executives.
(vi) The Company shall provide a suitable office for the Executive's
position and necessary support services, including total access to all
Company facilities, records, information and personnel. In addition,
the Company shall provide computer tools and a fax machine for use in
the personal residence.
(vii) The Company shall provide reimbursement for membership in
associations, industry, organizations and civic organizations wherein
the merits of the Company can be promoted.
(viii) The Company shall provide the Executive liability insurance in
an amount not less than $5 million and shall defend the Executive at
Company expense for any litigation related to his position or
responsibilities on behalf of the Company in the past or future.
(ix) Nothing paid to the Executive under any such Company plans or
arrangements shall be deemed to be in lieu of compensation to the
Executive hereunder.
(f) Split-Dollar Arrangement.
(i) The Executive shall be eligible to participate in a Split-Dollar
Plan whereby the said Executive can be provided with life insurance
coverage during employment and the option of supplementary retirement
income in lieu of the life insurance policy at retirement. The
supplementary retirement income option can be exercised at age sixty
(60). In either option, the Company shall be repaid an amount equal to
the Company's share of the premiums paid less any indebtedness on the
policy. This plan will allow for the conversion option of coverage to a
"last to die" policy which includes the spouse or the transfer of the
policy to a trust or entity of lineal ownership at anytime prior to
exercising any distribution of benefits from the plan, so long as the
company maintains collateral assignment for the repayment of premiums.
This plan will vest after ten (10) years of service from the initial
date of this Agreement and the policy will be portable after that
period so long as the investment by the company, plus accrued interest,
is repaid by the Executive.
(ii) The Company's annual share of the policy premium shall be equal
to the Executive's annual salary on the initial date of this Agreement
and shall be paid by the Company for a period of four (4) years from
the origin date of this Agreement.
(iii) In the event of a termination of this Agreement under Sections 5
and 6 of this Agreement, any collateral assignment agreement on the
Split-Dollar Insurance Policy shall provide that the Executive or his
trust shall have the right to repay the Company at anytime within the
term of this Agreement an amount equal to the Company's share of the
premiums paid less any indebtedness on the policy.
3
<PAGE> 4
(iv) Notwithstanding anything else in the Agreement to the contrary,
the Company's obiligation to share in the payment of the policy premium
described in (iii) above will survive termination of this Agreement for
any reason other than a termination pursuant to Section 6 (c).
4. NON-DISCLOSURE, NON-COMPETITION AND NON-SOLICITATION COVENANTS.
(a) Acknowledgments. The Executive acknowledges that as a Director
and Officer of the Company:
(i) he frequently will be exposed to certain "Trade Secrets" and
"Confidential Information" of the Company (as those terms are defined
in Subsection 4(b),
(ii) his responsibilities on behalf of the Company will extend to all
geographical areas where the Company is doing business, and
(iii) any competitive activity on his part during the term of his
employment and for a reasonable period thereafter would necessarily
involve his use of the Company's Trade Secrets and Confidential
Information and, therefore, would unfairly threaten the Company's
legitimate business interests, including its substantial investment in
the proprietary aspects of its business and the goodwill associated
with its customer base.
Moreover, the Executive acknowledges that, in the event of the
termination of his employment with the Company, he would have sufficient skills
to find alternative, commensurate work in his field of expertise that would not
involve a violation of any of the provisions of this Section 4. Therefore, the
Executive acknowledges and agrees that it is reasonable for the Company to
require him to abide by the covenants set forth in this Section 4. The parties
acknowledge and agree that if the nature of the Executive's responsibilities for
or on behalf of the Company and the geographical areas in which the Executive
must fulfill them materially change, the parties will execute appropriate
amendments to the scope of the covenants in this Section 4.
(b) Definitions. For purposes of this Section 4, the following terms
shall have the following meanings:
(i) "Competitive Position" shall mean (A) the Executive's direct or
indirect equity ownership (excluding equity ownership of less than one
percent (1%) or control of all or any portion of a Competitor, or (B)
any employment, consulting, partnership, advisory, directorship,
agency, promotional or independent Contractor arrangement between the
Executive and any Competitor whereby the Executive is required to
perform executive level services substantially similar to those that he
will perform for the Company as its Chairman, President and Chief
Executive Officer.
(ii) "Competitor" of the Company shall refer to any person or entity
engaged, wholly or partly, in the business of manufacturing and
distributing farm equipment machinery and replacement parts.
4
<PAGE> 5
(iii) "Confidential Information" shall mean the proprietary and
confidential data or information of the Company, other than "Trade
Secrets" (as defined below), which is of tangible or intangible value
to the Company and is not public information or is not generally known
or available to the Company's competitors.
(iv) "Trade Secrets" shall mean information of the Company, including,
but not limited to, technical or non-technical data, formulas,
patterns, compilations, programs, devices, methods, techniques,
drawings, processes, financial data, financial plans, products plans,
or lists of actual or potential customers or suppliers, which: (A)
derives economic value, actual or potential, from not being generally
known to, and not being readily ascertainable by proper means by other
persons who can obtain economic value from its disclosure or use; and
(B) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
(v) "Work Product" shall mean all work product, property, data,
documentation, "know-how", concepts or plans, inventions, improvements,
techniques, processes, or information of any kind, relating to the
Company and its business prepared, conceived, discovered, developed or
created by the Executive for the Company or any of the Company's
customers.
(c) Nondisclosure: Ownership of Proprietary Property.
(i) The Executive hereby covenants and agrees that: (A) with regard
to information constituting a Trade Secret, at all times during the
Executive's employment with the Company and all times thereafter during
which such information continues to constitute a Trade Secret; and (B)
with regard to any Confidential Information, at all times during the
Executive's employment with the Company and for three (3) years after
the termination of the Executive's employment with the Company, the
Executive shall regard and treat all information constituting a Trade
Secret or Confidential Information as strictly confidential and wholly
owned by the Company and will not, for any reason in any fashion,
either directly or indirectly, use, sell, lend, lease, distribute,
License, give, transfer, assign, show, disclose, disseminate,
reproduce, copy, appropriate or otherwise communicate any such
information to any party for any purpose other than strictly in
accordance with the express terms of this Agreement and other than as
may be required by law.
(ii) To the greatest extent possible, any Work Product shall be deemed
to be "work made for hire" (as defined in the Copyright Act, 17
U.S.C.A, ss. 101 et seq., as amended) and owned exclusively by the
Company. The Executive hereby unconditionally and irrevocably transfers
and assigns to the Company all rights, title and interest the Executive
may currently have or in the future may have by operation of law or
otherwise in or to any Work Product, including, without limitation, all
patents, copyrights, trademarks, service marks and other intellectual
property rights. The Executive agrees to execute and deliver to the
Company any transfers, assignments, documents or other instruments
which the Company may deem necessary or appropriate to vest complete
title and ownership of any Work Product, and all rights therein,
exclusively in the Company.
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(iii) The Executive shall immediately notify the Company of any
intended or unintended, unauthorized disclosure or use of any Trade
Secrets or Confidential Information by the Executive or any other
person of which the Executive becomes aware. In addition to complying
with the provisions of section 4(c) (i) and 4 (c) (ii), the Executive
shall exercise his best efforts to assist the Company, to the extent
the Company deems reasonably necessary, in the procurement of any
protection of the Company's rights to or in any of the Trade Secrets or
Confidential Information.
(iv) Immediately upon termination of the Executive's employment with
the Company, or at any point prior to or after that time upon the
specific request of the Company the Executive shall return to the
Company all written or descriptive materials of any kind in the
Executive's possession or to which the Executive has access that
constitute or contain any Confidential Information or Trade Secrets,
and the confidentiality obligations of this Agreement shall continue
until their expiration under the terms of this Agreement.
(d) Non-competition. The Executive agrees that during the term of
his employment, he will not, either directly or indirectly, alone or in
conjunction with any other party:
(i) accept or enter into a Competitive Position with a Competitor of
the Company or
(ii) take any action in furtherance of or in conjunction with a
Competitive Position with a Competitor of the Company.
The Executive agrees that for two (2) years after any termination of
his employment with the Company, he will not, either directly or indirectly,
alone or in conjunction with any other party:
(i) accept or enter into a Competitive Position with a Competitor of
the Company, or
(ii) take any action in furtherance of or in conjunction with a
Competitive Position with a Competitor of the Company.
(e) Non-solicitation of Customers. The Executive agrees that during
the term of his employment, he will not, either directly or indirectly, alone
or in conjunction with any other party, solicit, divert or appropriate or
attempt to solicit, divert or appropriate any customer or actively sought
prospective customer of the Company for or on behalf of any Competitor of the
Company. The Executive agrees that for two (2) years after any termination of
his employment with the Company, he will not either directly or indirectly,
alone or in conjunction with any other party, for or on behalf of a Competitor
of the Company, solicit, divert or appropriate or attempt to solicit, divert or
appropriate any customer or actively sought prospective customer of the Company
with whom he had substantial contact during a period of time of up to, but no
longer than, eighteen (18) months prior to any termination of his employment
with the Company.
(f) Non-solicitation of Company Personnel. The Executive agrees
that, except to the extent that he is required to do so in connection with his
express employment responsibilities on behalf of the Company, during the term
of his employment he will not, either directly or indirectly, alone or in
conjunction with any other party, solicit or attempt to solicit any employee,
consultant, contractor
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<PAGE> 7
or other personnel of the Company to terminate, alter or lessen that party's
affiliation with the Company or to violate the terms of any agreement or
understanding between such employee, consultant, contractor or other person and
the Company. The Executive agrees that for two (2) years after any termination
of his employment with the Company, he will not, either directly or indirectly,
alone or in conjunction with any other party, solicit or attempt to solicit any
"material" or "key" (as those terms are defined in the next sentence) employee,
consultant, contractor or other personnel of the Company to terminate, alter or
lessen that party's affiliation with the Company or to violate the terms of any
agreement or understanding between such employee, consultant, contractor or
other person and the Company. For purposes of the preceding sentence, "material"
or "key" employees, consultants, contractors or other personnel of the Company
are those who have access to the Company's Trade Secrets and Confidential
Information and whose position or affiliation with the Company is significant.
(g) Remedies. Executive agrees that damages at law for the Executive's
violation of any of the covenants in this Section 4 would not be an adequate or
proper remedy and that should the Executive violate or threaten to violate any
of the provisions of such covenants, the Company or its successors or assigns
shall be entitled to obtain a temporary or permanent injunction against
Executive in any court having jurisdiction prohibiting any further violation of
any such covenants, in addition to any award or damages, compensatory, exemplary
or otherwise, for such violation, if any.
(h) Partial Enforcement. The Company has attempted to limit the rights
of the Executive to compete only to the extent necessary to protect the Company
from unfair competition. The Company, however, agrees that, if the scope of
enforceability of these restrictive covenants is in any way disputed at any
time, a court or other trier of fact may modify and enforce the covenant to the
extent that it believes to be reasonable under the circumstances existing at the
time.
5. SEVERANCE.
(a) Change in Control. In order to induce the Executive to remain in
the employ of the Company, the Executive is provided the severance benefits set
forth in this Section 5, in the event the Executive's employment with the
Company is terminated subsequent to a change in control under the circumstances
described below. In exchange for the severance benefits the Executive agrees
that in the event of a Change In Control (as defined in Subsection (f) below),
the Executive will not voluntarily terminate his employment with the Company
until at least ninety (90) days after the Change in Control.
(b) Severance Benefits. No benefits shall be payable under this Section
5 unless there shall have been a Change in Control. In the event a Change in
Control occurs, the Executive is entitled to the following benefits upon any
subsequent termination of the Executive's employment within four (4) years from
the date of such Change in Control, unless such termination is because of the
death or Incapacity (as defined in Section 6(b) below) of the Executive, by the
Company for Cause (as defined in Subsection (f) below), by the Executive other
than for Good Reason (as defined in Subsection (f) below), or upon the
Executive's voluntary retirement.
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(i) The Company shall pay the Executive within thirty (30) days of
the date of termination (subject to Subsection (ii below) an amount in
cash equal to three times the Executive's Annual Base Compensation (as
defined in Subsection (f) below; provided that in no event shall the
amount payable pursuant to this Section 5, when added to any other
payments which are deemed to be "parachute payments" as defined in
Section 280G of the Internal Revenue Code, as amended (the "Code"),
equal or exceed three (3) times the Executive's "base amount" as
determined pursuant to Section 280G of the Code for purposes of any
excise tax under Section 4999 of the Code. The foregoing shall be
calculated and determined by Arthur Andersen & Co. or such other
nationally recognized Independent accounting firm as may be mutually
acceptable to the Company and the Executive hereafter. In all events
and notwithstanding anything herein to the contrary, any amounts
payable under this Section 5, when taken together with the present
value of all other payments in the nature of compensation to the
Executive which are contingent on a Change in Control shall be reduced
by the smallest amount necessary to reduce the aggregate amount of all
such payments to an amount equal to three (3) times such base amount
less One Dollar ($1.00).
(ii) The Executive may elect by written notice given to the Company
prior to a Change in Control to receive all or any portion of the
payments to which the Executive is entitled to receive as described
above in one or more installment payments at such time or times as the
Executive shall specify in the written notice, together with interest
thereon calculated at a rate of interest equal to the prime rate of
Chemical Bank - NYC as in effect from time to time from the date of
termination.
(iii) The Company shall continue to cover the Executive under, or
provide the Executive with insurance coverage no less favorable than,
the life, disability and health benefit plans which are provided to the
Executive, including payment of the split dollar insurance premiums
under the collateral assignment agreement as defined in Section 3,
paragraph (e), (ii), for a period equal to the term of this Agreement
or until the Executive is provided benefits by another employer
substantially comparable to the benefits provided by the Company.
(iv) In the event of a change in control, the Company will require any
successor to fulfill the terms and conditions of the Long Term
Incentive Plan and any Stock Option Plans previously provided to the
Executive in the same manner and to the same extent that the Company
would be required to perform if no such succession had taken place.
However, effective with the change in control, the Executive will be
immediately vested for all shares earned under the LTIP program and for
those shares awarded under any Stock Option Plan.
(v) In the event of the Executive's death subsequent to termination,
all payments or benefits to which the Executive is entitled under this
Section 5 shall be paid to the Executive's designated beneficiary or
beneficiaries or, if none are designated, to the Executive's estate.
(vi) All payments and benefits to which the Executive is entitled
under this Section 5 shall be made and provided without offset,
deduction or mitigation on account of income the Executive may
receive from otheer employment or otherwise.
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(vii) All payments and benefits due or required to be made or provided
in the future to the Executive under this Section 5 shall become
immediately due and payable without further notice or demand, upon the
occurrence of any event of Acceleration.
The Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
of the Company, by agreement satisfactory to the Executive, to expressly assume
and agree to perform the terms of this Section 5 in the same manner and to the
same extent that the Company would be required to perform if no such succession
had taken place. The provisions of this Section 5 shall continue to apply to
each subsequent successor.
(c) Payment of Costs and Expenses. The Company shall pay all of the
costs and expenses, including all attorneys' fees and disbursements, at least
monthly, in connection with any disputes, legal proceedings, arbitration or
other conflicts, whether or not instituted by the Company or the Executive
relating to the interpretation or enforcement of any provision of this Section.
(d) Effect. This Section 5 is not intended and shall not be deemed to
guarantee the Executive of any term of employment with the Company but only to
designate the severance benefits the Executive is entitled to under the
circumstances set forth in this Section 5. Moreover, this Section 5 is not
intended to and shall not effect, limit or terminate any other agreement or
arrangement between the Executive and the Company presently in effect or entered
into hereafter.
(e) Relief from Other Obligations. The Executive and the Company
acknowledge and agree that in the event the Executive receives compensation
under this Section 5, the Company shall be relieved of any and all other
obligations under this Agreement except for full compliance with the terms of
this Section 5. By way of illustration and not limitation, if the Executive's
employment is terminated in connection with a Change in Control, the Company
would pay the Executive severance benefits pursuant to the terms of this Section
5 and would not be obligated to the Executive for continuation of the
Executive's employment pursuant to Section 2 or payment under Section 6(e)
below.
(f) Definitions. As used in this Section 5, the following capitalized
terms have the meaning indicated below:
(i) "Annual Base Compensation" shall mean the Executive's annualized
includable compensation for the base period as defined, discussed and
illustrated in Section 280G of the Code and the duly promulgated
Treasury Regulations thereunder.
(ii) "Cause" shall be defined as set forth in Section 6(c) below.
(iii) "Change in Control" shall mean changes in the ownership of a
corporation, changes in the effective control of a corporation and
changes in ownership of a substantial portion of a corporation's assets
all as defined, discussed and illustrated in Section 280G of the Code
and the duly promulgated Treasury Regulations thereunder and
specifically Q-27, Q-28 and Q-29 respectively of proposed Treasury
Regulation Section 1.28OG-1. Without limiting the foregoing and by way
of example:
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(A) A change in the ownership of a corporation occurs on the
date that any one person, or more than one person acting as a
group, acquires ownership of stock of that corporation that,
together with stock held by such person or group, possess more
than fifty percent (50%) of the total fair market value or
total voting power of the stock of such corporation. However,
if any one person, or more than one person acting as a group,
is considered to own more than fifty percent (50%) of the
total fair market value or total voting power of the stock of
a corporation, the acquisition of additional stock by the same
person or persons is not considered to cause a change in the
ownership of the corporation. An increase in the percentage of
stock owned by any one person, or persons acting as a group,
as a result of a transaction in which the corporation acquires
its stock in exchange for property will be treated as an
acquisition of stock.
(B) A change in the effective control of a corporation is
presumed (which presumption may be rebutted) to occur on the
date that either: any one person, or more than one person
acting as a group, acquires (or has acquired during the twelve
(12)-month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of
the corporation possessing twenty percent (20%) or more of the
total voting power of the stock of such corporation; or a
majority of members of the Corporation's board of directors is
replaced during any twenty four (24)-month period by directors
whose appointment or election is not endorsed by a majority of
the members of the corporation's board of directors prior to
the date of the appointment or election of such new directors.
(C) A change in the ownership of a substantial portion of a
corporation's assets occurs on the date that any one person,
or more than one person acting as a group, acquires (or has
acquired during the twelve (12) month period ending on the
date of the most recent acquisition by such person or persons)
assets from the corporation that have a total fair market
value equal to or more than one-third of the total fair market
value of all of the assets of the corporation immediately
prior to such acquisition or acquisitions. The transfer of
assets by a corporation is not treated as a change in the
ownership of such assets if the assets are transferred to: a
shareholder of the corporation (immediately before the asset
transfer) in exchange for or with respect to its stock; an
entity, fifty percent (50%) or more of the total value or
voting power of which is owned, directly or indirectly by the
corporation; a person, or more than one person acting as a
group, that owns, directly or indirectly, fifty percent (50%)
or more of the total value or voting power of all of the
outstanding stock of the corporation; or an entity, at least
fifty percent (50%) of the total value or voting power is
owned, directly or indirectly, by a person, or more than one
person acting as a group, that owns directly or indirectly,
fifty percent (50%) or more of the total value of voting power
of all of the outstanding stock of the corporation.
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(iv) "Event of Acceleration" shall mean:
(A) The failure of the Company to make any payment or provide
any benefit to which the Executive is entitled under this
Agreement when due or as accelerated which failure continues
thirty (30) days after the due date thereof; or
(B) The failure by the Company to obtain the assumption of the
agreement to perform this Agreement by any successor as
contemplated herein; or
(C) A decrease by more than forty percent (40%) within any two
(2) year period of the book value of the net assets of the
Company and its subsidiaries, taken as a whole; or
(D) The filing of a petition by or against the Company for
adjudication as a bankrupt under the Federal Bankruptcy Act,
or for reorganization, or the filing of any petitions for
similarly relief; the commencement of any action or proceeding
for the appointment of a receiver or a trustee of all or
substantially all of the property of the Company; the taking
or possession of any property of the Company by any
governmental or judicial officer or agency pursuant to
statutory authority for the dissolution, rehabilitation,
reorganization, or liquidation of the Company; the dissolution
or commencement of any action or proceeding, whether voluntary
or involuntary, for the dissolution or liquidation of the
Company; or the making by the Company of an assignment for the
benefit of creditors; provided that the Company shall have
ninety (90) days within which to affect the dismissal of any
involuntary proceedings of a type referred to above that is
commenced against it.
(v) "Good Reason" shall mean, without the written consent of the
Executive:
(A) A reduction in the Executive's base salary or a reduction
in the Executive's benefits received from the Company other
than in connection with an across the board reduction in
salaries and/or benefits for similarly situated employees of
the Company or pursuant to the Company's standard retirement
policy; or
(B) The relocation of the Executive's full time office to a
location greater than fifty (50) miles from the Company's
current corporate office; or
(C) A reduction in the Executive's corporate title or duties;
or
(D) A material breach by the Company of this Agreement.
(vi) "Normal Retirement Date" shall mean the first day of the month
coincident with or next following the Executive's sixty-fifth (65th)
birthday.
(g) Long Term Incentive and Other Stock Plans. In the event of a
Change In Control (as defined in Subsection (f) above), the Company will require
any successor to fulfill the terms and conditions of the Long Term Incentive
Plans and any Stock Option Plans previously provided to the
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Executive in the same manner and to the same extent that the company would be
required to perform if no succession had taken place. However, effective with
the Change in Control, the Executive will be immediately vested for all shares
earned under the Long Term Incentive Plans and for those shares awarded under
any Stock Option Plan.
6. TERMINATION.
(a) Death. The Executive's employment hereunder shall terminate upon
the death of the Executive, provided, however, that for purposes of the payment
of compensation and benefits to the Executive under this Agreement the death of
the Executive shall be deemed to have occurred ninety (90) days from the last
day of the month in which the death of the Executive shall have occurred.
(b) Incapacity. The Company may terminate the Executive's employment
hereunder at the end of any calendar month by giving written Notice of
Termination to the Executive in the event of the Executive's incapacity due to
physical or mental illness which prevents the proper performance of the duties
of the Executive set forth herein or established pursuant hereto for a
substantial portion of any six (6) month period of the Executive's term of
employment hereunder. Any question as to the existence, extent or potentiality
of illness or incapacity of Executive upon which Company and Executive cannot
agree shall be determined by a qualified independent physician selected by the
Company and approved by Executive (or, if Executive is unable to give such
approval, by any adult member of the immediate family or the duty appointed
guardian of the Executive). The determination of such physician certified in
writing to the Company and to Executive shall be final and conclusive for all
purposes of this Agreement.
(c) Cause. The Company may terminate the Executive's employment
hereunder for Cause by giving written Notice of Termination to the Executive.
For the purposes of this Agreement, the Company shall have "Cause" to terminate
the Executive's employment hereunder upon the Executive's (i) habitual
drunkenness or willful failure materially to perform and discharge the duties
and responsibilities of the Executive hereunder or any breach of the Executive
of the provisions of Section 4 hereof, or (ii) misconduct that is materially
injurious to the Company or (iii) conviction of a felony involving the personal
dishonesty of the Executive or moral turpitude.
(d) Notice of Termination. Any termination by the Company pursuant to
the Subsections (b) or (c) above shall be communicated by written Notice of
Termination to the Executive. For purposes of this Agreement, a Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision of this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for such termination. A
date of termination specified in Notice of Termination shall not be dated
earlier than ninety (90) days from the date such Notice is delivered or mailed
to the Executive.
(e) Obligation to Pay. Except upon voluntary termination by the
Executive or termination of the Executive's employment in connection with a
Change in Control (In which case Section 5 shall govern) and subject to Section
7 below, the Company shall pay the compensation specified in this Agreement to
the Executive for the remainder of the term set forth in Section 1(b) or for the
period specified in this Subsection 6 (e), whichever period is the lesser. The
Company also will continue insurance benefits during the remainder of the term
set forth in Section 1(b). If the Executive's
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employment shall be terminated by reason of death, the estate of the Executive
shall be paid all sums otherwise payable to the Executive through the end of the
third month after the month in which the death of the Executive occurred and all
bonus or other incentive benefits accrued or accruable to the Executive through
the end of the month in which the death of the Executive occurred and the
Company shall have no further obligations to the Executive under this Agreement.
If the Executive's employment is terminated by reason of incapacity, the
Executive or the person charged with legal responsibility for the Executive's
estate shall be paid all sums otherwise payable to the Executive, including the
bonus and other benefits accrued or accruable to the Executive, through the date
of termination specified in the Notice of Termination, and the Company shall
have no further obligations to the Executive under this Agreement. If the
Executive's employment shall be terminated for Cause, the Company shall pay the
Executive his Base Salary through the date of termination specified in the
Notice of Termination and the Company shall have no further obligations to the
Executive under this Agreement.
7. EFFECT OF RE-EMPLOYMENT/OTHER COMPENSATION.
(a) Re-Employment. If at any time after the termination of the
Executive's employment, the Company is continuing to pay benefits to the
Executive pursuant to Section 6(e) above, and the Executive enters into new
employment with a party other than the Company ("Re-Employment"), the Executive
shall immediately notify the Company in writing of the Executive's monthly
compensation to be received from such Re-Employment and any insurance coverage
provided pursuant thereto, and the following provisions shall apply:
(i) If the Executive's monthly compensation from Re-Employment is equal
to or in excess of the compensation being paid by the Company, the
Company shall promptly pay the Executive, in full satisfaction of all
obligations to compensate the Executive under Section 6(e), an amount
equal to fifty percent (50%) of Company's remaining compensation
obligation. Notwithstanding anything herein to the contrary and except
for the obligations in Subsection (b) below, upon payment by the
Company of the amounts Set forth in this Section 7(a)(i), the Company
shall cease to have any obligation under Section 6(c) of this
Agreement.
(ii) If the Executive's monthly compensation from Re-Employment is less
than the compensation being paid by the Company, compensation payable
to the Executive shall automatically be reduced by the amount of the
Executive's monthly compensation from Re-Employment; provided, however,
that at the end of the Company's obligations to pay under Section 6(e)
it shall pay the Executive an amount equal to 100 percent (100%) of the
remainder of: (A) total compensation obligations of the Company under
Section 6(e) less (b) the actual compensation paid the Executive during
the period. Notwithstanding termination period. Notwithstanding
anything herein to the contrary and except for the obligations in
Subsection (b) below, upon payment of the final payment the Company
shall cease to have any obligations under this Agreement. The Executive
shall immediately notify the Company of any change in the level of
compensation received from Re-Employment and, if such compensation
increases to a level equal to or in excess of the compensation being
paid by the Company the provisions of Section 7(a)(i) shall then
apply.
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(b) Termination of Insurance Coverage. Provided COBRA requirements have
been met, the Company's obligation to provide insurance coverage to the
Executive under Section 3(c) or Section 5(b)(iii) hereof shall terminate as to
any specific coverage if and when comparable coverage is made available to the
Executive in connection with Re-Employment.
8. NOTICES.
For the purpose of this Agreement, notices and all other communications
to either party hereunder provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered in person or mailed by
certified first-class mail, postage prepaid, addressed in the case of the
Company to:
AGCO Corporation
4830 River Green Parkway
Duluth, Georgia 30136
Attention: Michael F. Swick
in the case of the Executive to:
or to such other address as either party shall designate by giving written
notice of such change to the other party.
9. ARBITRATION.
Any claim, controversy, or dispute arising between the parties with
respect to this Agreement, to the maximum extent allowed by applicable law,
shall be submitted to and resolved by binding arbitration. The arbitration shall
be conducted pursuant to the terms of the Federal Arbitration Act and (except as
otherwise specified herein) the Commercial Arbitration Rules of the American
Arbitration Association in effect at the time the arbitration is commenced. The
venue for the arbitration shall be the Atlanta, Georgia offices of the American
Arbitration Association. Either party may notify the other party at any time of
the existence of an arbitrable controversy by delivery in person or by certified
mail of a Notice of Arbitrable Controversy. Upon receipt of such a Notice, the
parties shall attempt in good faith to resolve their differences within fifteen
(15) days after the receipt of such Notice. Notice to the Company and the
Executive shall be sent to the addresses specified in Section 8 above. If the
dispute cannot be resolved within the fifteen (15) day period, either party may
file a written Demand for Arbitration with the American Arbitration
Association's Atlanta, Georgia Regional Office, and shall send a copy of the
Demand for Arbitration to the other party. The arbitration shall be conducted
before a panel of three (3) arbitrators. The arbitrators shall be selected as
follows: (a) The party filing the Demand for Arbitration shall simultaneously
specify his or its arbitrator, giving the name, address and telephone number of
said arbitrator; (b) The party receiving such notice shall notify the party
demanding the arbitration of his or its arbitrator, giving the name, address and
telephone number of the arbitrator within five (5) days of the receipt of such
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<PAGE> 15
Demand for Arbitration; (c) A neutral person shall he selected through the
American Arbitration Association's arbitrator selection procedures to serve as
the third arbitrator.
The arbitrator designated by any party need not be neutral. In the event that
any person fails or refuses timely to name his arbitrator within the time
specified in this Section 9, the American Arbitration Association shall
(immediately upon notice from the other party) appoint an arbitrator. The
arbitrators thus constituted shall promptly meet, select a chairperson, fix the
time, date(s), and place of the hearing, and notify the parties. To the extent
practical the arbitrators shall schedule the hearing to commence within sixty
(60) days after the arbitrators have been impaneled. A majority of the panel
shall render an award within ten (10) days of the completion of the hearing
which award may include an award of interest, legal fees and costs of
arbitration. The panel of arbitrators shall promptly transmit an executed copy
of the award to the respective parties. The award of the arbitrators shall be
final binding and conclusive upon the parties hereto. Each party shall have the
right to have the award enforced by any court of competent jurisdiction.
Executive initials: /s/ JPR Company initials: /s/ RJR
------- --------
10. NO WAIVER
No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is approved by the Board and
agreed to in a writing signed by the Executive and such officer as may be
specifically authorized by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of any other provisions or conditions of this Agreement
at the same or at any prior or subsequent time.
11. SUCCESSORS AND ASSIGNS.
The rights and obligations of the Company under this Agreement shall
inure to the benefit of and be binding upon the successors and assigns of the
Company and the Executive's rights under this Agreement shall inure to the
benefit of and be binding upon his heirs and executors. Neither this Agreement
or any rights or obligations of the Executive herein shall be transferable or
assignable by the Executive.
12. VALIDITY.
The invalidity or unenforceability of any provision or provisions of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect. The
parties intend for each of the covenants contained in Section 4 to be severable
from one another.
13. SURVIVAL.
The provisions of Section 4 hereof shall survive the termination of
Executive's employment and shall be binding upon the Executive's personal or
legal representative, executors, administrators,
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successors, heirs, distributees, devisees and legatees and the provisions of
Sections 5 and 6 hereof relating to payments and termination of the Executive's
employment hereunder shall survive such termination and shall be binding upon
the Company.
14. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instruments
15. ENTIRE AGREEMENT.
This Agreement constitutes the full agreement and understanding of the
parties hereto with respect to the subject matter hereof and all prior or
contemporaneous agreements or understandings are merged herein, except for the
collateral assignment agreement that shall be executed under Section 3(e) of
this Agreement. The parties to this Agreement each acknowledge that both of them
and their respective agents and advisors were active in the negotiation and
drafting of the terms of this Agreement.
16. GOVERNING LAW.
The validity, construction and enforcement of this Agreement, and the
determination of the rights and duties of the parties hereto, shall be governed
by the laws of the State of Georgia.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
AGCO CORPORATION AGCO CORPORATION
By /s/ R.J. Ratliff By /s/ Michael F. Swick
---------------------------- -------------------------------
Name: R.J. Ratliff Name: Michael F. Swick
-------------------------- -----------------------------
Title: Chairman Title: VP
------------------------- ----------------------------
/s/ J.P. Richard
- --------------------------------
Executive
11/18/96
- --------------------------------
Date
<PAGE> 1
EXHIBIT 11
AGCO CORPORATION AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (1)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------
1996 1995 1994
--------- -------- --------
<S> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
Weighted average number of common shares outstanding ........................ 54,749 45,506 35,206
Shares issued upon assumed exercise of outstanding
stock options ............................................................ 437 620 714
--------- -------- --------
Weighted average number of common and common
equivalent shares outstanding ............................................ 55,186 46,126 35,920
========= ======== ========
Income before extraordinary loss ............................................ $ 129,390 $129,142 $115,534
Extraordinary loss (3) ...................................................... (3,503) -- --
--------- -------- --------
Net income .................................................................. 125,887 129,142 115,534
Preferred stock dividends ................................................... -- 2,012 5,421
--------- -------- --------
Net income available for common stockholders \ .............................. $ 125,887 $127,130 $110,113
========= ======== ========
Net income per common share:
Income before extraordinary loss ........................................ $ 2.34 $ 2.76 $ 3.07
Extraordinary loss (3) .................................................. (0.06) -- --
--------- -------- --------
Net income .............................................................. $ 2.28 $ 2.76 $ 3.07
========= ======== ========
FULLY DILUTED EARNINGS PER SHARE
Weighted average number of common shares outstanding ........................ 54,749 45,506 35,206
Shares issued upon assumed conversion of the Cumulative Convertible
Exchangeable Preferred Stock ................................................ -- -- 13,224
Shares issued upon assumed conversion of the Convertible
Subordinated Debentures ..................................................... 2,224 10,458 --
Shares issued upon assumed exercise of outstanding
stock options (2) ........................................................ 468 720 740
--------- -------- --------
Weighted average number of common and common
equivalent shares outstanding ............................................ 57,441 56,684 49,170
========= ======== ========
Income before extraordinary loss ............................................ $ 129,390 $129,142 $115,534
Extraordinary loss (3) ...................................................... (3,503) -- --
--------- -------- --------
Net income .................................................................. 125,887 129,142 115,534
Interest expense on Convertible Subordinated Debentures, net of
applicable income taxes ..................................................... 529 1,382 --
--------- -------- --------
Net income available for common stockholders ................................ $ 126,416 $130,524 $115,534
========= ======== ========
Net income per common share:
Income before extraordinary loss ........................................ $ 2.26 $ 2.30 $ 2.35
Extraordinary loss (3) .................................................. (0.06) -- --
--------- -------- --------
Net income .............................................................. $ 2.20 $ 2.30 $ 2.35
========= ======== ========
</TABLE>
- ---------------
(1) All numbers of shares in this exhibit are weighted on the basis of the
number of days the shares were outstanding or assumed to be outstanding
during each period. All share data has been restated to reflect all
stock splits.
(2) Based on the treasury stock method using the higher of the average or
period end market price.
(3) Represents the write-off of unamortized debt costs in March 1996
related to the refinancing of the Company's $550.0 million secured
revolving credit facility with a $650.0 million unsecured revolving
credit facility.
<PAGE> 1
EXHIBIT 12
AGCO CORPORATION AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
(in thousands, except ratio data)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------
1996 1995 1994 1993 1992
------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Fixed Charges Computation:
Interest expense ................................................... $ 45,158 $ 73,287 $ 52,712 $17,927 $12,392
Interest component of rent expense (a) ............................. 5,394 5,023 2,417 1,058 766
Proportionate share of fixed charges of 50%-owned affiliates ....... 2,054 2,044 2,064 10,131 209
Amortization of debt costs ......................................... 1,384 1,579 760 13 11
------- -------- -------- ------- -------
Total fixed charges ............................................ $ 53,990 $ 81,933 $ 57,953 $29,129 $13,378
======= ======== ======== ======= =======
Earnings Computation:
Pretax earnings .................................................... $171,629 $190,581 $102,275 $34,089 $ 6,042
Fixed charges ...................................................... 53,990 81,933 57,953 29,129 13,378
------- -------- -------- ------- -------
Total earnings as adjusted ..................................... $225,619 $272,514 $160,228 $63,218 $19,420
======= ======== ======== ======= =======
Ratio of earnings to combined fixed charges .................... 4.2:1 3.3:1 2.8:1 2.2:1 1.5:1
======= ======== ======== ======= =======
</TABLE>
- ------------------------
(a) The interest factor was calculated to be one-third of rental expense
and is considered to be a representative interest factor.
<PAGE> 1
EXHIBIT 13
SELECTED FINANCIAL DATA
(in thousands, except per share data and number of employees)
<TABLE>
<CAPTION>
YEAR ENDED Year Ended Year Ended Year Ended Year Ended
DECEMBER 31, December 31, December 31, December 31, December 31,
1996(1) 1995(1) 1994(1) 1993(1) 1992
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Net sales ............................. $2,317,486 $2,068,427 $1,319,271 $595,736 $314,542
Finance income ........................ -- 56,621 39,741 -- --
Total revenue ...................... 2,317,486 2,125,048 1,359,012 595,736 314,542
Gross profit (2) ...................... 470,320 440,711 276,341 125,284 58,067
Income from
operations (2) ........................ 211,952(3) 220,609(3) 119,800(3) 47,926(3) 14,140
Net income ............................ 125,887(3)(4) 129,142(3) 115,534(3)(5) 34,089(3) 6,042
Net income per common
share-fully diluted (6) ............ $ 2.20(3)(4) $ 2.30(3) $ 2.35(3)(5) $ 0.93(3) $ 0.27
Weighted average number
of common and common
equivalent shares outstanding
-fully diluted (6) ................. 57,441 56,684 49,170 36,774 22,516
Dividends declared per
common share (6) ................... $ 0.04 $ 0.02 $ 0.013 $ 0.013 $ 0.003
- --------------------------------------------------------------------------------------------------------------------------------
Other Financial Data
Working capital
Consolidated ....................... $ 750,474 $ 485,521 $ 497,793 $339,987 $221,592
Equipment Operations ............... 750,474 661,482 513,873 339,987 221,592
Total assets
Consolidated ....................... 2,116,531 2,162,915 1,823,294 578,346 320,713
Equipment Operations ............... 2,116,531 1,628,611 1,399,496 578,346 320,713
Long-term debt
Consolidated ....................... 567,055 568,894(7) 589,833 173,892 121,047
Equipment Operations ............... 567,055 415,894(7) 366,833 173,892 121,047
Stockholders' equity .................. 774,665 588,928 476,666 212,229 93,672
Number of employees ................... 7,801 5,548 5,789 2,417 1,280
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) AGCO acquired a 50% joint venture interest in Agricredit in 1993 and
the Agricredit operations were reflected in the Company's consolidated
financial statements using the equity method of accounting for the year
ended December 31, 1993. AGCO acquired the remaining 50% interest in
Agricredit in 1994 and accordingly reflected the Agricredit operations
in the Company's consolidated financial statements on a consolidated
basis for the period from February 11, 1994 to December 31, 1994 and
the year ended December 31, 1995. AGCO sold a 51% joint venture
interest in Agricredit effective November 1, 1996. Accordingly, the
Company's consolidated financial statements as of and for the year
ended December 31, 1996 reflect Agricredit on the equity method of
accounting for the entire period presented.
(2) Gross profit represents net sales less cost of goods sold. Income from
operations represents net sales less cost of goods sold, selling,
general and administrative expenses for the Equipment Operations,
engineering expenses and nonrecurring expenses.
(3) These amounts include nonrecurring expenses of $15,027, $6,000, $19,500
and $14,000 for the years ended December 31, 1996, 1995, 1994 and 1993,
respectively. The effect of these nonrecurring charges reduced net
income per common share, on a fully diluted basis, by $0.17, $0.07,
$0.33 and $0.38 for the years ended December 31, 1996, 1995, 1994 and
1993, respectively. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Charges for
Nonrecurring Expenses."
(4) Includes extraordinary loss, net of taxes, of $3,503, or $0.06 per
share, for the write-off of unamortized debt costs related to the
refinancing in March 1996 of the Company's $550.0 million secured
credit facility with a $650.0 million unsecured credit facility.
(5) These amounts include a deferred income tax benefit of $29,947 related
to the reduction of a portion of the valuation allowance. The deferred
income tax benefit had the effect of increasing net income by $29,947
and net income per common share, on a fully diluted basis, by $0.61.
See Note 6 to the Consolidated Financial Statements.
(6) Net income per common share - fully diluted, weighted average number of
common and common equivalent shares outstanding - fully diluted and
dividends declared per common share have been restated for all periods
to reflect all stock splits.
(7) These amounts include $37,558 of the Company's 6.5% Convertible
Subordinated Debentures. See Note 8 to the Consolidated Financial
Statements.
19
<PAGE> 2
TRADING AND DIVIDEND INFORMATION(1)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Dividends
(in dollars) High Low Declared
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
1996
First Quarter $ 28 5/8 $21 3/16 $.01
Second Quarter 31 5/8 22 .01
Third Quarter 27 7/8 19 1/4 .01
Fourth Quarter 29 3/8 23 3/4 .01
1995
First Quarter $ 16 5/8 $ 12 3/8 $.005
Second Quarter 20 1/2 16 1/16 .005
Third Quarter 27 5/16 18 13/16 .005
Fourth Quarter 26 20 .005
- ------------------------------------------------------------------------------
</TABLE>
(1) The Company's stock trades on the New York Stock Exchange under the
symbol AG. As of February 28, 1997, there were approximately 611
stockholders of record. Stock prices and dividends declared have
been restated for 1995 to reflect the two-for-one stock split,
effected January 31, 1996.
19
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
During the periods discussed below, the Company's results of operations
were significantly affected by a series of acquisitions that expanded the size
and geographic scope of its distribution network, enabled it to offer new
products and increased its manufacturing capacity. Primarily as a result of
these acquisitions, revenues increased from $1,359.0 million in 1994 to $2,317.5
million in 1996. The results of operations for the years ended December 31,
1994, 1995 and 1996 were affected by the following transactions completed by the
Company:
- In December 1993, the Company acquired the White-New Idea Farm Equipment
Division from Allied Products Corporation which added a line of farm
implements including planters, spreaders and tillage equipment to the
Company's wide range of products (the "White-New Idea Acquisition").
- The Company acquired Agricredit Acceptance Company ("Agricredit"), a
retail finance company, from Varity Corporation ("Varity") in two
separate transactions (together, the "Agricredit Acquisition"). The
Company acquired a 50% joint venture interest in Agricredit in January
1993 and acquired the remaining 50% interest in February 1994. The
Agricredit Acquisition enabled the Company to provide flexible financing
alternatives to end users in North America as well as to provide an
additional source of income to the Company.
- In June 1994, the Company acquired from Varity the outstanding stock of
Massey Ferguson Group Limited ("Massey"), a producer of one of the top
selling brands of tractors sold worldwide, and certain related assets
(the "Massey Acquisition"). The Massey Acquisition significantly expanded
the Company's sales and operations outside of North America.
- In March 1995, the Company further expanded its product offerings through
its acquisition of AgEquipment Group, a manufacturer and distributor of
farm implements and tillage equipment (the "AgEquipment Acquisition"),
and its agreement to become the exclusive distributor of Landini tractors
in the United States and Canada (the "Landini Distribution Agreement").
- In June 1996, the Company acquired the agricultural and industrial
equipment business of Iochpe-Maxion S.A. (the "Maxion Acquisition"),
which expanded its product offerings and its distribution network in
South America, particularly in Brazil.
- In July 1996, the Company acquired certain assets of Western Combine
Corporation and Portage Manufacturing, Inc., which were the Company's
suppliers of Massey Ferguson combines and certain other harvesting
equipment sold in North America (the "Western Combine Acquisition"). The
Western Combine Acquisition provided the Company with access to advanced
technology and will increase the Company's profit margin on certain
combines and harvesting equipment sold in North America.
- In November 1996, the Company sold a 51% interest in Agricredit to a
wholly-owned subsidiary of Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland" ("Rabobank") (the
"Agricredit Sale"). The Company retained a 49% interest in Agricredit and
now operates the finance company with Rabobank as a joint venture (the
"Agricredit Joint Venture").
As a result of these transactions, the historical results of the Company
are not comparable from year to year in the periods presented and may not be
indicative of future performance.
Recently, the Company has completed two additional acquisitions which will
affect the Company's future results of operations:
- In December 1996, the Company further enhanced its market presence in
Argentina and South America by acquiring the operations of Deutz Argentina
S.A. ("Deutz Argentina"), a manufacturer and distributor of agricultural
equipment, engines and trucks to Argentina and other markets in South
America (the "Deutz Argentina Acquisition"). The Deutz Argentina
Acquisition had no effect on the results of operations for the year ended
December 31, 1996.
- In January 1997, the Company acquired the operations of Xaver Fendt GmbH
& Co. KG ("Fendt"), a manufacturer and distributor of tractors, primarily
in Germany and throughout Europe (the "Fendt Acquisition"). The Fendt
Acquisition added a new line of tractors to the Company's product
offerings and expanded the Company's market presence in Europe,
particularly in Germany.
RESULTS OF OPERATIONS
Sales are recorded by the Company when equipment and replacement parts are
shipped by the Company to its independent dealers, distributors or other
customers. To the extent possible, the Company attempts to ship products to its
dealers and distributors on a level basis throughout the year to reduce the
effect of seasonal demands on its manufacturing operations and to minimize its
investment in inventory. Retail sales by dealers to farmers are highly seasonal
and are a function of the timing of the planting and harvesting seasons. In
certain markets, particularly in North America, there is often a time lag,
generally from one to twelve months between the date the Company records a sale
(a "billing") and the date a dealer sells the equipment to a farmer (a
"settlement"). During this time lag between a billing and a settlement, dealers
may not return equipment to the Company unless the Company terminates a dealer's
contract or agrees to accept returned products. Commissions payable under the
Company's salesman incentive programs are paid at the time of settlement, as
opposed to when products are billed. Due to fluctuations in dealer inventory
levels, settlements are more indicative of retail demand than billings.
Effective November 1, 1996, the Company completed the Agricredit Sale.
Accordingly, the Company's consolidated financial statements as of and for the
year ended December 31, 1996 reflect Agricredit on the equity method of
accounting for the entire period presented. The consolidated financial
statements as of December 31, 1995 and 1994 and for the year ended December 31,
1995 and for the period from February 11, 1994 to December 31, 1994 reflect
Agricredit on a consolidated basis with the Company's other majority-owned
subsidiaries. As a result of the change in the basis of presentation, the
historical results of the Company are not comparable from year to year.
The consolidated financial statements include, on a separate, supplemental
basis, the Company's Equipment Operations, and for 1995 and for the period from
February 11, 1994 to December 31, 1994, its Finance Company. "Equipment
Operations" reflect the consolidation of all operations of the Company and its
majority-owned subsidiaries with the exception of Agricredit, which is included
using the equity method of accounting. For the year ended December 31, 1995 and
for the period from February 11, 1994 to December 31, 1994, the results of
operations of Agricredit are included under the caption "Finance Company."
20
<PAGE> 4
The following table sets forth, for the periods indicated, the percentage
relationship to revenues of certain items included in the Company's Consolidated
Statements of Income:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------------
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Revenues:
Net sales................................................. 100.0% 97.3% 97.1%
Finance income............................................ -- 2.7 2.9
----- ----- -----
100.0 100.0 100.0
----- ----- -----
Costs and Expenses:
Cost of goods sold(1)..................................... 79.7 76.6 76.7
Selling, general and administrative expenses.............. 9.3 9.6 9.5
Engineering expenses...................................... 1.2 1.1 1.4
Interest expense, net..................................... 1.4 3.0 3.2
Other expense, net........................................ 0.3 0.4 0.3
Nonrecurring expenses..................................... 0.7 0.3 1.4
----- ----- -----
92.6 91.0 92.5
----- ----- -----
Income before income taxes, equity in net earnings of
unconsolidated
affiliates and extraordinary loss......................... 7.4 9.0 7.5
Provision (benefit) for income taxes........................ 2.6 3.1 (0.8)
----- ----- -----
Income before equity in net earnings of unconsolidated
affiliates and extraordinary loss......................... 4.8 5.9 8.3
Equity in net earnings of unconsolidated affiliates......... 0.8 0.2 0.2
----- ----- -----
Income before extraordinary loss............................ 5.6 6.1 8.5
Extraordinary loss, net of taxes............................ (0.2) -- --
----- ----- -----
Net income.................................................. 5.4% 6.1% 8.5%
===== ===== =====
</TABLE>
- ---------------
(1) Cost of goods sold as a percent of net sales for the years ended December
31, 1996, 1995 and 1994 was 79.7%, 78.7%, and 79.1%, respectively. Gross
profit, which is defined as net sales less cost of goods sold, was 20.3%,
21.3% and 20.9% for the years ended December 31, 1996, 1995 and 1994,
respectively.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Net Income
The Company recorded net income for the year ended December 31, 1996 of
$125.9 million compared to $129.1 million for the year ended December 31, 1995.
Net income per common share on a fully diluted basis was $2.20 for 1996 compared
to $2.30 for 1995. Net income for 1996 included nonrecurring expenses of $15.0
million, or $0.17 per share on a fully diluted basis, primarily related to the
further restructuring of the Company's European operations, acquired in the
Massey Acquisition in June 1994, and the integration and restructuring of the
Company's Brazilian operations, acquired in the Maxion Acquisition in June 1996
(see "Charges for Nonrecurring Expenses"). In addition, net income for 1996
included an extraordinary after-tax charge of $3.5 million, or $0.06 per share
on a fully diluted basis, for the write-off of unamortized debt costs related to
the refinancing of the Company's $550.0 million secured revolving credit
facility (see "Liquidity and Capital Resources"), a gain on the Agricredit Sale
of $4.7 million, or $0.05 per share on a fully diluted basis, and severance
costs including accelerated amortization of shares earned under the Company's
long-term incentive plan and related cash severance totaling $7.3 million, or
$0.08 per share on a fully diluted basis, related to the resignation of a
Company executive. Net income for 1995 included nonrecurring expenses of $6.0
million, or $0.07 per share on a fully diluted basis, associated with the
initial integration of the Massey Acquisition (see "Charges for Nonrecurring
Expenses"). The Company's results for the year ended December 31, 1996 were also
negatively impacted by losses, including the related financing costs, in the
newly acquired Brazilian operations as a result of the poor industry conditions
experienced in the region. Excluding the items discussed above, the Company's
results of operations were improved over 1995, primarily the result of sales
growth in existing markets.
Retail Sales
Conditions in the United States and Canadian agricultural markets were
favorable in 1996 compared to 1995. Industry unit retail sales of tractors,
combines and hay and forage equipment for 1996 increased approximately 7%, 6%
and 2%, respectively, over 1995. The Company believes general market conditions
were positive due to favorable economic conditions relating to high net cash
farm incomes, strong commodity prices and increased export demand. Company unit
retail sales of tractors in the United States and Canada were slightly above the
industry in 1996 compared to 1995. The increase in tractor settlements was
attributable to the favorable industry conditions and the impact of the
Company's expanded dealer network, which resulted primarily from dealers
entering into crossover contracts whereby an existing dealer carrying one of the
Company's brands contracts to sell an additional AGCO brand. In addition, the
Company has benefited from the successful acceptance of improved tractor product
offerings, including the new Massey Ferguson high horsepower tractors which were
introduced in the middle of 1995. Company unit retail sales of combines in the
United States and Canada for 1996 increased 24% compared to 1995 primarily due
to the Company's increased sales to contract harvesters and dealer development
activities which strengthened the Company's dealer network for combines. Company
hay and forage equipment retail sales increased in line with the industry.
Industry conditions in Western Europe were favorable in 1996 with retail
sales of tractors increasing approximately 12% compared to 1995 primarily due to
higher net cash farm incomes, improved economic conditions, strong commodity
prices and increased export demand. Retail sales of Massey Ferguson tractors in
Western Europe increased approximately 15% over 1995 with the most significant
market share increases in France, Spain and Scandinavia, primarily due to the
Company's focus on dealer development. Outside North America and Western Europe,
industry retail sales of tractors also showed gains in most markets where the
Company competes due to a general improvement in economic conditions. Retail
sales of Massey Ferguson tractors increased in these markets with significant
growth in the Middle East, Africa, East Asia/Pacific and Australia compared to
1995, primarily due to improved market conditions and the Company's strong
distribution channels in these regions. Company retail sales of tractors in
Brazil were affected by industry conditions in Brazil which remained depressed
throughout 1996 relative to historic volumes due
21
<PAGE> 5
to high farm debt levels and the suspension and subsequent reinstatement of
Brazilian Central Bank loan programs.
Revenues
Net sales for the Company's Equipment Operations for 1996 increased 12.0%
to $2,317.5 million compared to $2,068.4 million for 1995. A portion of the
increase was the result of the Company's sales of $85.1 million in Brazil for
the six months ended December 31, 1996 resulting from the Maxion Acquisition.
The Company achieved net sales increases in 1996 in Western Europe of $63.8
million , or 7% over 1995. In the remaining international markets, the Company
achieved net sales increases of $63.2 million, or 19% over 1995. The increase in
Western Europe and other international markets primarily related to increased
sales of tractors due to the Company's favorable retail sales performance and
increased sales of combines and other non-tractor products resulting from the
Company's successful efforts to expand non-tractor sales in all international
markets. The Company also experienced increased net sales of $37.0 million, or
4% over 1995, in North America primarily due to a 17% increase in the Company's
North American retail dollar sales compared to 1995. Total revenues on a
consolidated basis for 1995 also included finance income of $56.6 million
associated with the operations of Agricredit.
Costs and Expenses
Cost of good sold for the Company's Equipment Operations was $1,847.2
million (79.7% of net sales) for 1996 compared to $1,627.7 million (78.7% of net
sales) for 1995. Gross profit, defined as net sales less cost of goods sold, was
$470.3 million (20.3% of net sales) for 1996 as compared to $440.7 million
(21.3% of net sales) for 1995. Gross margins in 1996 were negatively impacted by
the following: (i) lower margins related to the Brazilian operations acquired in
the Maxion Acquisition due to low volumes related to depressed industry
conditions and (ii) a change in the mix of products sold, particularly due to a
lower mix of high margin North American replacement parts, a shift in North
American sales from higher margin utility tractors (under 100 horsepower) to
high horsepower tractors (over 100 horsepower) and increased sales of combines
in Europe, which have lower than average margins.
Selling, general and administrative expenses for the Company's Equipment
Operations were $215.6 million (9.3% of net sales) for 1996 compared to $190.0
million (9.2% of net sales) for 1995. The increase in selling, general and
administrative expenses was primarily due to an increase in sales volume and an
increase in the amortization of stock-based compensation expense of $15.9
million compared to 1995 related to the Company's long-term incentive plan which
is tied to stock price appreciation. Included in the stock-based compensation
expense for 1996 was accelerated amortization of $5.8 million related to
severance costs associated with the resignation of a Company executive.
Excluding the amortization expense related to the long-term incentive plan, the
Company's Equipment Operations had selling, general and administrative expenses
of $189.8 million (8.2% of net sales) for 1996 and $180.0 million (8.7% of net
sales) for 1995. The decrease in selling, general and administrative expenses as
a percentage of net sales was primarily due to cost reduction initiatives in the
Company's European operations. In connection with the Massey Acquisition, the
Company implemented a restructuring plan which has eliminated duplicate costs by
centralizing certain sales, marketing and administrative functions. See "Charges
for Nonrecurring Expenses" for further discussion. On a consolidated basis for
1995, selling, general and administrative expenses were $203.9 million, which
included $13.8 million related to the operations of Agricredit.
Engineering expenses for the Company's Equipment Operations were $27.7
million (1.2% of net sales) for 1996 compared to $24.1 million (1.2% of net
sales) for 1995. The increase in engineering expenses compared to 1995 primarily
related to the development of new products including a new Massey Ferguson
utility tractor line to be introduced in 1997.
Interest expense, net for the Company's Equipment Operations was $32.7
million for 1996 compared to $31.5 million for 1995. The increase in interest
expense, net was primarily due to the additional borrowings associated with the
financing of the Maxion Acquisition and higher fixed interest rates associated
with the 8 1/2% Senior Subordinated Notes which were issued in March 1996 as
compared to the floating rates on the Company's revolving credit facility. The
Company financed the entire purchase price for the Maxion Acquisition with
additional indebtedness. On a consolidated basis, interest expense, net was
$63.2 million for 1995, which included $31.7 million relating to the operations
of Agricredit.
Other expense, net was $7.6 million for 1996 compared to $9.6 million for
1995. The decrease in other expense, net was primarily due to the gain recorded
on the Agricredit Sale in 1996 and foreign exchange gains recorded in 1996
compared to foreign exchange losses in 1995 related to the Company's
international operations. The decrease in other expense, net was partially
offset by increased amortization of intangible assets resulting from the Maxion
and Western Combine Acquisitions.
Nonrecurring expenses were $15.0 million in 1996 compared to $6.0 million
in 1995. The nonrecurring charge recorded in 1996 related to the further
restructuring of the Company's European operations, acquired in the Massey
Acquisition in June 1994 and the integration and restructuring of the Brazilian
operations, acquired in the Maxion Acquisition in June 1996. The 1995
nonrecurring charge primarily related to the initial integration and
restructuring of the Company's European operations. See "Charges for
Nonrecurring Expenses" for further discussion.
The Company recorded a net income tax provision for the Company's
Equipment Operations of $60.0 million for 1996 compared to $61.6 million for
1995. On a consolidated basis, the Company recorded an income tax provision of
$65.9 million for 1995, which included $4.3 million related to the operations
of Agricredit. In 1996 and 1995, the Company's income tax provision
approximated statutory rates, although actual income tax payments remained at
rates below statutory rates resulting from the utilization of net operating
loss carryforwards acquired in the Massey Acquisition. Primarily due to the
availability of acquired net operating loss carryforwards, the Company expects
to pay taxes in 1997 at effective rates substantially below statutory rates. At
December 31, 1996, the Company had net operating loss carryforwards totaling
$171.3 million, primarily in France, Brazil and Argentina.
Equity in net earnings of unconsolidated subsidiary and affiliates for the
Company's Equipment Operations was $17.7 million in 1996 compared to $11.2
million in 1995. The increase in equity in net earnings of unconsolidated
subsidiary and affiliates was primarily due to an increase in the Company's
pro-rata share in net earnings of Agricredit from $6.8 million in 1995 to $10.4
million in 1996 despite the Company recognizing only 49% of the equity in net
earnings of Agricredit from November 1, 1996 to December 31, 1996 as a result of
the Agricredit Sale. In addition, the increase in equity in net earnings of
unconsolidated subsidiary and affiliates related to the
22
<PAGE> 6
Company's pro-rata share in net earnings of certain equity investments
in the European operations, including its 49% interest in Massey Ferguson
Finance which provides retail financing to end users in the United Kingdom,
France and Germany. On a consolidated basis, equity in net earnings of
unconsolidated subsidiary and affiliates for 1995 was $4.5 million due to
Agricredit being presented on a consolidated basis rather than the equity
method of accounting.
Finance Company Operations
On November 1, 1996, the Company sold a 51% interest in Agricredit to
Rabobank. The Company received total consideration of approximately $44.3
million in the transaction, the proceeds of which were used to repay borrowings
under the Company's $650.0 million unsecured revolving credit facility. The
Company retained a 49% interest in Agricredit and now operates the finance
company with Rabobank as a joint venture. The Agricredit Joint Venture has
continued the business of Agricredit and seeks to build a broader asset-based
finance business through the addition of other lines of business. The Company's
benefits from the transaction also include deleveraging the consolidated balance
sheet by approximately $550.0 million and the redeployment of approximately
$44.3 million of capital. The Company has similar joint venture arrangements
with Rabobank and its affiliates with respect to its retail finance companies
located in the United Kingdom, France and Germany.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Net Income
The Company recorded net income for the year ended December 31, 1995 of
$129.1 million compared to $115.5 million for the year ended December 31, 1994.
Net income per common share on a fully diluted basis was $2.30 for 1995 compared
to $2.35 for 1994. Net income for 1995 included nonrecurring expenses of $6.0
million, or $0.07 per share on a fully diluted basis, primarily related to the
initial integration of the Massey Acquisition (see "Charges for Nonrecurring
Expenses"). Net income for 1994 included nonrecurring expenses of $19.5 million,
or $0.33 per share on a fully diluted basis, associated with the integration of
the Massey and White-New Idea Acquisitions and a deferred income tax benefit of
$29.9 million, or $0.61 per share on a fully diluted basis, relating to the
reduction of a portion of the deferred tax valuation allowance. Excluding the
nonrecurring expenses and deferred income tax benefit, the improved results in
1995 reflected the impact of the Company's acquisitions, sales growth in
existing product lines and improved operating efficiencies.
Retail Sales
Conditions in the United States and Canadian agricultural markets were
generally favorable in 1995 compared to 1994. Industry unit retail sales of
tractors and combines for 1995 increased 2% and 10%, respectively, over 1994.
Unit settlements of hay and forage equipment decreased 6% compared to 1994. The
Company believes the increases in the tractor and combine markets were primarily
due to high net cash farm incomes, strong commodity prices, high replacement
demand and aggressive marketing programs associated with competitors'
introduction of new products. The decrease in hay and forage equipment unit
settlements reflects the effects of a softening in cattle and dairy commodity
prices during 1995.
Company unit settlements of tractors in the United States and Canada
increased in line with the industry retail unit sales for 1995 compared to 1994.
The increase in tractor settlements was attributable to the favorable industry
conditions as well as the impact of the Company's expanded dealer network which
resulted primarily from dealers entering into crossover contracts whereby an
existing dealer carrying one of the Company's brands contracts to sell an
additional AGCO brand. Company hay and forage equipment settlements were level
in comparison to the prior year. This improvement in relation to the industry
retail sales also reflected the benefit of an expanded dealer network which
resulted from the Company's crossover contract strategy. Company unit
settlements of combines in the United States and Canada for 1995 were
approximately 8% below the prior year primarily due to aggressive marketing
programs to introduce new products by certain of the Company's competitors and
the discontinuance of certain retail incentive programs by the Company in the
first six months of 1994 to move older, discontinued models.
Industry conditions in Western Europe were favorable in 1995 with retail
sales of tractors increasing approximately 7% compared to 1994 primarily due to
improved economic conditions, strong commodity prices and high export demand.
Retail sales of Massey Ferguson tractors in Western Europe outperformed the
industry by increasing approximately 14% over 1994. The Company experienced the
most significant market share increases in France, Germany and Spain due to the
Company's focus on dealer development and expansion. Additionally, the Company's
successful introduction of the new Massey Ferguson high horsepower tractor line
contributed to the market share increases, particularly in France. Outside North
America and Western Europe, industry retail sales of tractors also showed gains
in many markets where the Company competes due to a general improvement in
economic conditions. Retail sales of Massey Ferguson tractors increased
significantly in the Middle East and Eastern Europe compared to 1994 primarily
due to favorable government incentive programs and improved funding sources in
these regions. These gains were partially offset by decreased retail sales in
Africa due to widespread drought conditions.
Revenues
Total revenues for 1995 were $2,125.0 million representing an increase of
$766.0 million, or 56.4%, over total revenues of $1,359.0 million for 1994. The
increase was primarily attributable to sales in the Company's international
markets as a result of the Massey Acquisition with increased net sales of $712.3
million for 1995. In addition to the full year impact of the Massey Acquisition,
the increase reflects year over year sales increases due to the strong
international retail sales achieved in the Company's Massey Ferguson products in
1995. The Company also experienced net sales increases of $36.8 million in 1995
in North America as a result of an expanded dealer network, the AgEquipment
Acquisition, the Landini Distribution Agreement and new product introductions.
The North American sales increase was partially offset by a decrease in
replacement parts sales compared to 1994 as a result of a late planting season
and smooth harvest which decreased demand on an industry-wide basis. Total
revenues also increased in 1995 due to an increase in finance income of $16.9
million associated with the operations of Agricredit. The increase in finance
income was primarily due to the growth in the Agricredit credit receivable
portfolio as a result of Agricredit's increased penetration into the Company's
North American dealer network and its expansion
23
<PAGE> 7
into the Canadian market. In addition, prior to the acquisition of the
remaining 50% interest in Agricredit on February 10, 1994, the results of
Agricredit were accounted for under the equity method of accounting and,
accordingly, were not consolidated with those of the Company.
Costs and Expenses
Cost of goods sold for the Company's Equipment Operations in 1995 was
$1,627.7 million (78.7% of net sales) compared to $1,042.9 million (79.1% of net
sales) in 1994. Gross profit, defined as net sales less cost of goods sold, was
$440.7 million (21.3% of net sales) for 1995 as compared to $276.3 million
(20.9% of net sales) for 1994. The Company's gross profit margin increased in
1995 compared to 1994 despite a decrease in the proportion of higher margin part
sales to total net sales. The change in sales mix occurred because the majority
of the Company's sales growth in 1995 related to machinery sales. The negative
effect of this change in sales mix on the gross profit margin was primarily
offset by the Company's ability to record the entire gross profit on Massey
Ferguson equipment sold in North America as a result of the Massey Acquisition.
Prior to the Massey Acquisition, the gross profit margin on sales of Massey
Ferguson equipment in North America was recognized by both the Company and by
Varity. In addition, the Company's gross profit margin benefited from the
introduction of the new high horsepower Massey Ferguson tractor line in Western
Europe and cost reduction efforts related to the integration of the Company's
European operations acquired in the Massey Acquisition.
Selling, general and administrative expenses for 1995 were $203.9 million
(9.6% of total revenues) compared to $129.5 million (9.5% of total revenues) for
1994. The decrease in selling, general and administrative expenses as a
percentage of total revenues was primarily due to cost reduction initiatives in
the Company's European operations and lower operating expenses as a percentage
of total revenues related to Agricredit. These improvements as a percentage of
total revenues were partially offset by increased amortization of long-term
incentive compensation related to restricted stock awards tied to stock price
appreciation. In connection with the Massey Acquisition, the Company implemented
a restructuring plan which has eliminated duplicate costs by centralizing
certain sales, marketing and administrative functions. See "Charges for
Nonrecurring Expenses" for further discussion. Excluding Agricredit, the
Company's Equipment Operations had selling, general and administrative expenses
of $190.0 million (9.2% of net sales) and $117.7 million (8.9% of net sales) for
1995 and 1994, respectively. The increase as a percentage of net sales was
primarily the result of the increased amortization of restricted stock awards
offset by cost reductions in the Company's European operations as discussed
above.
Engineering expenses for the Company's Equipment Operations were $24.1
million (1.2% of net sales) for 1995 compared to $19.4 million (1.5% of net
sales) for 1994. The higher engineering expenses as a percentage of net sales in
1994 primarily related to the redesign of the Massey Ferguson 6100/8100 series
high horsepower tractors introduced in early 1995.
Interest expense, net for 1995 was $63.2 million compared to $42.8 million
for 1994. The increase in interest expense, net was primarily due to the
additional borrowings associated with the Massey and the AgEquipment
Acquisitions. The Company financed the entire purchase price for the AgEquipment
Acquisition and a portion of the purchase price for the Massey Acquisition with
additional indebtedness. In addition, interest expense, net increased at
Agricredit due to the additional borrowings associated with the increase in the
credit receivable portfolio and an increase in the rates charged on outstanding
borrowings.
Other expense, net was $9.6 million for 1995 compared to $3.1 million for
1994. The increase in other expense, net was primarily due to increased
amortization of intangible assets as a result of the Massey Acquisition and
foreign exchange losses related to the Company's international operations.
Nonrecurring expenses were $6.0 million in 1995 and $19.5 million in 1994.
The nonrecurring charge recorded in 1995 primarily related to costs associated
with the initial integration of the Company's European operations, acquired in
the Massey Acquisition in June 1994. The 1994 nonrecurring charge related to the
initial integration in Europe and the integration in North America of White-New
Idea, which was acquired in December 1993. See "Charges for Nonrecurring
Expenses" for further discussion.
The Company recorded a net income tax provision of $65.9 million for 1995
and a net income tax benefit of $10.6 million in 1994. In 1995, the Company's
income tax provision approximated statutory rates. The 1994 net income tax
benefit included a $29.9 million United States deferred income tax benefit
related to a reduction of a portion of the deferred tax valuation allowance. The
reduction in the valuation allowance was supported by the Company's generation
of taxable income in recent years and expectations of taxable income in future
periods. The United States income tax benefit was partially offset by a foreign
income tax provision of $19.3 million consisting primarily of a deferred income
tax provision which resulted from the realization of deferred tax assets
relating to net operating loss carryforwards acquired in the Massey Acquisition.
Primarily due to the availability of acquired net operating loss carryforwards ,
the Company paid taxes in 1994 and 1995 at effective rates substantially below
statutory rates.
Equity in net earnings of unconsolidated subsidiary and affiliates on a
consolidated basis was $4.5 million in 1995 and $3.2 million in 1994. The
increase in equity in net earnings of unconsolidated subsidiary and affiliates
was primarily due to the inclusion in 1994 of the Company's pro-rata share in
net earnings of its 49% interest in Massey Ferguson Finance, acquired in the
Massey Acquisition in June 1994. The amount recognized for 1994 includes the
Company's pro-rata share of net earnings in Agricredit from January 1, 1994
through February 10, 1994. From February 11, 1994 through December 31, 1994, the
results of operations of Agricredit were consolidated with the Company's
operations and were no longer accounted for under the equity method of
accounting.
Finance Company Operations
Agricredit recorded net income of $6.8 million for 1995 and $4.9 million
for the period from the acquisition date to December 31, 1994. Retail
acceptances were approximately $362.7 million for 1995 compared to $321.6
million for 1994. The increase was primarily the result of Agricredit's
increased penetration into the Company's North American dealer network and its
expansion into the Canadian market.
QUARTERLY RESULTS
To the extent possible, the Company attempts to ship products to its
dealers on a level basis throughout the year to reduce the effect of seasonal
demands on its manufacturing operations and to minimize its investment in
inventory. However, settlements of agricultural equipment are highly seasonal,
with farmers traditionally purchasing agricultural equipment in the spring and
fall in conjunction with the major planting and harvesting seasons. The
Company's net sales and income from operations have historically been the lowest
in the first quarter and have increased in subsequent quarters as dealers
increase inventory in anticipation of increased retail sales in the third and
fourth quarters.
24
<PAGE> 8
The following table presents unaudited interim operating results of the
Company. The Company believes that the following information includes all
adjustments (consisting only of normal, recurring adjustments) that the Company
considers necessary for a fair presentation, in accordance with generally
accepted accounting principles. The operating results for any interim period are
not necessarily indicative of results for any future interim period or the
entire fiscal year.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- -------- ------------ -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
1996:(1)
Net sales............................... $453,884 $584,681 $588,859 $690,062
Gross profit(2)......................... 93,740 115,794 123,540 137,246
Income from operations(2)............... 34,592(4) 59,617(4) 54,068(4) 63,675(4)(6)
Income before extraordinary loss........ 20,595(4) 37,508(4) 31,299(4) 39,988(4)(6)(7)
Net income.............................. 17,092(4)(5) 37,508(4) 31,299(4) 39,988(4)(6)(7)
Net income per common share before
extraordinary loss -- fully
diluted.............................. 0.37(4)(5) 0.66(4) 0.54(4) 0.69(4)(6)(7)
1995:
Revenues................................ $456,219 $571,718 $498,639 $598,472
Gross profit(2)......................... 93,198 117,444 112,793 117,276
Income from operations(2)............... 41,957(4) 61,973(4) 60,693(4) 55,986(4)
Net income.............................. 23,384(4) 35,888(4) 36,195(4) 33,675(4)
Net income per common share -- fully
diluted(3)........................... 0.42(4) 0.64(4) 0.64(4) 0.60(4)
</TABLE>
- ---------------
(1) As a result of the Agricredit Sale, the 1996 operating results are restated
for each quarter presented to reflect Agricredit on the equity method of
accounting.
(2) Gross profit is defined as net sales less cost of goods sold, and income
from operations is defined as net sales less cost of goods sold, selling,
general and administrative expenses for the Company's Equipment Operations,
engineering expenses and nonrecurring expenses.
(3) Net income per common share-fully diluted has been restated for 1995 to
reflect the two-for-one stock split, effected January 31, 1996.
(4) The 1996 operating results include nonrecurring expenses of $5.9 million, or
$0.07 per share, for the three months ended March 31, 1996, $0.8 million, or
$0.01 per share, for the three months ended June 30, 1996, $6.2 million, or
$0.07 per share, for the three months ended September 30, 1996 and $2.1
million, or $0.02 per share, for the three months ended December 31, 1996.
The 1995 operating results include nonrecurring expenses of $2.0 million,
or $0.02 per share, for the three months ended March 31, 1995, $1.7
million, or $0.02 per share, for the three months ended June 30, 1995,
$0.9 million, or $0.01 per share, for the three months ended September
30, 1995 and $1.4 million, or $0.02 per share, for the three months ended
December 31, 1995.
(5) The 1996 operating results include an extraordinary after-tax charge of $3.5
million, or $0.06 per share, for the write-off of unamortized debt costs
related to the refinancing of the Company's $550.0 million revolving credit
facility for the three months ended March 31, 1996.
(6) The 1996 operating results include severance costs related to a Company
executive of $7.3 million, or $0.08 per share, for the three months ended
December 31, 1996 which includes accelerated amortization of shares earned
under the Company's long-term incentive plan and related cash severance.
(7) The 1996 operating results include a gain on the sale of a 51% interest in
Agricredit of $4.7 million, or $0.05 per share, for the three months ended
December 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's financing requirements for its Equipment Operations are
subject to variations due to seasonal changes in inventory and dealer receivable
levels. Internally generated funds are supplemented when necessary from external
sources primarily from the Company's revolving credit facility.
In March 1996, the Company replaced its $550.0 million secured revolving
credit facility (the "June 1994 Credit Facility"), obtained in conjunction with
the Massey Acquisition in June 1994, with a $650.0 million unsecured revolving
credit facility (the "March 1996 Credit Facility"). The March 1996 Credit
Facility provided the Company's Equipment Operations with increased borrowing
capacity over the June 1994 Credit Facility. As of December 31, 1996,
approximately $317.4 million was outstanding under the March 1996 Credit
Facility and available borrowings were approximately $310.6 million. The Company
used borrowings from the March 1996 Credit Facility to finance the Maxion and
Deutz Argentina Acquisitions. The Company's borrowings under revolving credit
facilities decreased $60.9 million from December 31, 1995 to December 31, 1996
primarily due to the repayment of outstanding borrowings with proceeds from the
Company's issuance of $250.0 million of 8 1/2% Senior Subordinated Notes in
March 1996 and from the sale of a 51% interest in Agricredit to Rabobank. Total
long-term debt for the Company's Equipment Operations increased from $378.3
million at December 31, 1995 to $567.1 million at December 31, 1996. The
increase in long-term debt was due to the financing of the Maxion, Western
Combine and Deutz Argentina Acquisitions, partially offset by the use of
operating cash flow to repay indebtedness.
On January 14, 1997, the Company replaced the March 1996 Credit Facility
with a new revolving credit facility (the "January 1997 Credit Facility"), which
initially provided for borrowings of up to $1.0 billion. In February 1997, the
January 1997 Credit Facility was amended to allow for borrowings of up to $1.2
billion. The January 1997 Credit Facility will be the Company's primary source
of financing for its Equipment Operations and will provide increased borrowing
capacity over the March 1996 Credit Facility. Borrowings under the January 1997
Credit Facility may not exceed the sum of 90% of eligible accounts receivable
and 60% of eligible inventory. Lending commitments under the January 1997 Credit
Facility reduce to $1.1 billion on January 1, 1998 and $1.0 billion on January
1, 1999. If the Company consummates offerings of debt or capital stock prior to
such dates, the proceeds of such offerings will be used to reduce the lending
commitments, but not below $1.0 billion. The Company used proceeds from the
January 1997 Credit Facility to finance the Fendt Acquisition.
In March 1996, the Company issued $250.0 million of 8 1/2% Senior
Subordinated Notes due 2006 (the "Notes") at 99.139% of their principal amount.
The net proceeds from the sale of the Notes were used to repay outstanding
indebtedness under the June 1994 Credit Facility. The sale of the Notes provided
the Company with subordinated capital and replaced a portion of its floating
rate debt with longer term fixed rate debt.
On January 22, 1997, the Company filed a registration statement with the
Securities and Exchange Commission for the sale of 4.5 million shares of its
common stock (the "Offering"). The Company intends to use the proceeds from the
Offering to reduce a portion of the borrowings outstanding under the
25
<PAGE> 9
January 1997 Credit Facility and expects to complete the transaction in
March 1997.
Prior to the Agricredit Sale on November 1, 1996, Agricredit obtained funds
from a separate $630.0 million revolving credit facility (the "Agricredit
Revolving Credit Agreement") to finance its credit receivable portfolio.
Borrowings under the Agricredit Revolving Credit Agreement were based on the
amount and quality of outstanding credit receivables and were generally issued
for terms with maturities matching anticipated credit receivable liquidations.
On November 1, 1996, in connection with the Agricredit Joint Venture, the
Agricredit Revolving Credit Agreement was repaid and the Agricredit Joint
Venture entered into a new credit agreement.
The Company's working capital requirements for its Equipment Operations are
seasonal, with investments in working capital typically building in the first
half of the year and then reducing in the second half of the year. As of
December 31, 1996, the Company's Equipment Operations had $750.5 million of
working capital compared to $661.5 million as of December 31, 1995 and $513.9
million as of December 31, 1994. The increase in working capital in 1996
compared to 1995 was primarily due to working capital acquired in the Maxion and
Deutz Argentina Acquisitions. The increase in working capital in 1995 compared
to 1994 was primarily due to an increase in dealer receivables resulting from
the Company's sales growth in 1995, the AgEquipment Acquisition, the Landini
Distribution Agreement and the timing of international sales which were
significantly higher in late 1995 than in late 1994.
Cash flow provided by operating activities was $206.7 million for 1996
compared to $67.1 million for 1995. The increase in operating cash flow was
primarily due to (i) the collection of receivables in 1996 related to unusually
high international accounts receivable levels at December 31, 1995, which were
collected in 1996 and (ii) strong retail sales in North America during 1996
which resulted in lower levels of dealer inventories relative to billings in
1996 compared to 1995. The cash flow provided by operating activities was
primarily used to repay indebtedness and to fund capital expenditures. Cash flow
provided by operating activities was $67.1 million for 1995 compared to $96.4
million for 1994. The decrease in operating cash flow was primarily due to
increases in working capital as discussed above, partially offset by an increase
in net income. The cash flow provided by operating activities was primarily used
to fund the AgEquipment Acquisition and capital expenditures.
Capital expenditures were $45.2 million in 1996 compared to $45.3 million
in 1995 and $20.7 million in 1994. The increase in 1995 compared to 1994
primarily resulted from a full year's impact of capital expenditures recorded in
1995 by the Company's European operations related to its manufacturing
operations. For all years, the Company's capital expenditures related to the
development of new and existing products as well as the maintenance and
improvement of existing facilities. The Company currently estimates that
aggregate capital expenditures for 1997 will range from approximately $70.0
million to $80.0 million and will primarily be used to support the development
and enhancement of new and existing products. The increase in the expected
capital expenditures in 1997 is primarily the result of capital expenditures
required for the manufacturing operations acquired in the Deutz Argentina and
Fendt Acquisitions. The capital expenditures for 1997 are expected to be funded
with cash flows from operations.
The Company's debt to capitalization ratio for its Equipment Operations was
42.3% at December 31, 1996 compared to 37.7% at December 31, 1995, assuming
conversion of the Convertible Subordinated Debentures at December 31, 1995 (see
Note 8 to the Consolidated Financial Statements). The increase in the Company's
leverage was due to increased borrowing requirements to fund the Maxion, Western
Combine and Deutz Argentina Acquisitions.
The Company believes that available borrowings under the January 1997
Credit Facility, available cash and internally generated funds will be
sufficient to support its working capital, capital expenditures, and debt
service requirements for the foreseeable future.
The Company from time to time reviews and will continue to review
acquisition and joint venture opportunities as well as changes in the capital
markets. If the Company were to consummate a significant acquisition or elect to
take advantage of favorable opportunities in the capital markets, the Company
may supplement availability or revise the terms under its credit facilities or
complete public or private offerings of equity or debt securities.
CHARGES FOR NONRECURRING EXPENSES
Maxion Acquisition
The Company identified $6.0 million of nonrecurring expenses related to the
integration and restructuring of the Company's Brazilian operations, acquired in
June 1996 as a result of the Maxion Acquisition. The Company recorded $4.7
million of nonrecurring expenses during 1996 to recognize a portion of these
costs. These costs are primarily related to the rationalization of
manufacturing, sales and administrative functions designed to resize the
operations to current sales and production volumes. Savings from the integration
and restructuring of the Brazilian operations are expected to result primarily
in reduced selling, general and administrative expenses and product cost
reductions. The Company expects to record the remaining $1.3 million of
nonrecurring expenses and complete the integration in 1997. While the Company
believes that cost savings from its restructuring plans can be attained, there
can be no assurance that all objectives of the restructuring will be achieved.
Massey Acquisition
The Company identified $19.5 million of nonrecurring expenses primarily
related to the initial integration and restructuring of the Company's European
operations, acquired in June 1994 as a result of the Massey Acquisition. The
Company recorded a charge of $13.5 million in the fourth quarter of 1994 to
recognize a portion of these costs and recorded the remaining $6.0 million in
1995. These costs primarily related to the centralization and rationalization of
the Company's European operations' administrative, sales and marketing
functions. Prior to the Massey Acquisition, Massey's operations were organized
in a decentralized business unit structure. The Company's restructuring plan has
centralized many functions duplicated under the previous organization. This
restructuring has resulted in a reduction in personnel and the elimination of
administrative offices, thereby eliminating excessive costs and redundancies in
future periods. The combined $19.5 million charge recorded through December 31,
1995 included estimates for employee severance, contractual obligations arising
from the acquisition and certain payroll expenses incurred through December 31,
1995 for employees that have been terminated or will be terminated in future
periods. All of the costs associated with the $19.5 million charge recorded
through December 31, 1995 have been incurred.
The Company's successful implementation of its restructuring plan has
resulted in significant savings in the Company's European operations. The
majority of these savings resulted from personnel reductions, facilities
rationalizations, and other savings which primarily resulted from the
centralization of the Company's European operations' administrative, sales and
marketing functions. In addition, the Company has achieved material cost savings
from the redesign of certain components, an increased use of common components
throughout the Massey product line and more effective purchasing from the
centralization of that function. In addition, material cost savings have been
achieved from the Company's strategic alliance with Renault Agriculture S.A.
(the "GIMA Joint Venture") to produce driveline assemblies for both companies.
By sharing overhead and engineering costs, the GIMA Joint Venture resulted in
decreased costs for these components.
26
<PAGE> 10
In 1996, the Company recorded approximately $10.3 million of nonrecurring
expenses related to the further restructuring of the Company's European
operations, acquired in June 1994 as a result of the Massey Acquisition. These
costs primarily related to the centralization of certain parts warehousing,
administrative, sales and marketing functions. The Company expects to record an
additional $7.5 million of nonrecurring expenses and to complete the
restructuring in 1997. Savings from the further restructuring of the Company's
European operations are expected to result primarily from reduced selling,
general and administrative expenses primarily relating to the Company's parts
warehousing, finance, dealer communications, sales and marketing functions.
While the Company believes that cost savings from its restructuring plan can be
attained, there can be no assurance that all objectives of the restructuring
will be achieved.
White-New Idea Acquisition
In the first quarter of 1994, the Company recorded a $6.0 million charge
for nonrecurring expenses related to the integration of White-New Idea, which
was acquired in December 1993. The nonrecurring charge included employee
severance and relocation expenses, costs associated with operating duplicate
parts distribution operations, costs for dealer signs and other nonrecurring
costs related to the integration.
Savings from the integration of White-New Idea resulted primarily from the
elimination of three of White-New Idea's four parts distribution facilities and
the consolidation of the Company's and White-New Idea's parts distribution
operations. In addition, certain efficiencies and cost savings were achieved in
sales, marketing and administrative functions resulting from the integration of
these operations in the first quarter of 1994.
OUTLOOK
The Company's operations are subject to the cyclical nature of the
agricultural industry. Sales of the Company's equipment have been and are
expected to continue to be affected by changes in net cash farm income, farm
land values, weather conditions, the demand for agricultural commodities and
general economic conditions.
The outlook for worldwide sales of agricultural equipment expenditures
remains positive. In North America, as a result of low worldwide grain stocks,
high commodity prices and government payments to farmers under the new U.S. Farm
Bill, net cash farm income has remained at high levels and farmer balance sheets
remain strong, which the Company believes will enable farmers to make necessary
purchases of equipment in 1997. These factors should increase farmers'
confidence and result in continued replacement demand for agricultural
equipment.
The Western European agricultural market continues to benefit from
increased export demand and high commodity prices. These items should continue
to support the farmers' replacement demand. Over the longer term, demand for
farm equipment in some parts of Europe is expected to exhibit a slow, modest
decline due to a shift to fewer but larger farms. This consolidation is expected
to be offset, to some extent, by increased sales of more expensive higher
horsepower equipment to support larger farms.
Beginning in the second half of 1995, the Brazilian agricultural equipment
market experienced a significant decline due to high farm debt levels and the
Brazilian Central Bank's suspension of all loans for agricultural purposes under
the FINAME loan program. Although the loan program has been reinstated, the high
farm debt levels have negatively impacted farm equipment sales in 1996 and may
impact results in 1997. In general, outside of North America and Western Europe,
continued general economic improvement, the increasing affluence of the
population in certain developing countries and the increased availability of
funding sources should positively support equipment demand. As a result of these
favorable market conditions, the Company's production levels in 1997 are
forecasted to be modestly higher than the prior year.
FOREIGN CURRENCY RISK MANAGEMENT
The Company has significant manufacturing operations in the United States,
the United Kingdom, France, Brazil, and, as a result of the Company's recent
acquisitions, Argentina and Germany, and it purchases a portion of its tractors,
combines and components from third party foreign suppliers primarily in various
European countries and in Japan. The Company also sells products in over 140
countries throughout the world. Fluctuations in the value of foreign currencies
create exposures which can adversely affect the Company's results of operations.
The Company attempts to manage its foreign exchange exposure by hedging
identifiable foreign currency commitments arising from receivables, payables,
and expected purchases and sales. Where naturally offsetting currency positions
do not occur, the Company hedges its exposures through the use of foreign
currency forward contracts. The Company's hedging policy prohibits foreign
currency forward contracts for speculative trading purposes.
ACCOUNTING CHANGES
In October 1995, the Financial Accounting Standards Board issued Statement
No. 123, "Accounting for Stock-Based Compensation", which requires companies to
estimate the value of all stock-based compensation using a recognized pricing
model. The Company has adopted the disclosure requirements of this statement and
has chosen to continue to apply the accounting provisions of Accounting
Principles Board Opinion No. 25 to stock-based employee compensation
arrangements as allowed by Statement No. 123. As a result, the adoption of this
new standard did not have an effect on the Company's financial position or
results of operations.
Effective January 1996, the Company adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," which established
accounting standards for the impairment of long-lived assets, certain
identifiable intangibles and goodwill related to those assets to be held and
used, as well as for long-lived assets and certain identifiable intangibles to
be disposed. The adoption of this new standard did not have a material effect on
the Company's financial position.
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits," which requires accrual of postemployment benefits for former or
inactive employees after employment but before retirement. The adoption of this
new standard did not have a material effect on the Company's financial position
or results of operations.
FORWARD LOOKING STATEMENTS
Certain information included in Management's Discussion and Analysis of
Financial Condition and Results of Operations include forward looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, including the information set forth under "-- Outlook". Although the
Company believes that the expectations reflected in such forward looking
statements are based upon reasonable assumptions, it can give no assurance that
its expectations will be achieved. Additionally, the Company's financial
results are sensitive to movement in interest rates and foreign currencies, as
well as general economic conditions, pricing and product actions taken by
competitors, production disruptions and changes in environmental, international
trade and other laws which impact the way in which it conducts its business.
Important factors that could cause actual results to differ materially from the
Company's current expectations are disclosed in conjunction with the Company's
filings with the Securities and Exchange Commission.
27
<PAGE> 11
AGCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
CONSOLIDATED
------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Net sales...................................... $2,317,486 $2,068,427 $1,319,271
Finance income................................. -- 56,621 39,741
---------- ---------- ----------
2,317,486 2,125,048 1,359,012
---------- ---------- ----------
Costs and Expenses:
Cost of goods sold............................. 1,847,166 1,627,716 1,042,930
Selling, general and administrative expenses... 215,636 203,861 129,538
Engineering expenses........................... 27,705 24,077 19,358
Interest expense, net.......................... 32,684 63,211 42,836
Other expense (income), net.................... 7,639 9,602 3,141
Nonrecurring expenses.......................... 15,027 6,000 19,500
---------- ---------- ----------
2,145,857 1,934,467 1,257,303
---------- ---------- ----------
Income before income taxes, equity in net
earnings of unconsolidated subsidiary and
affiliates and extraordinary loss.............. 171,629 190,581 101,709
Provision (benefit) for income taxes............. 59,963 65,897 (10,610)
---------- ---------- ----------
Income before equity in net earnings of
unconsolidated
subsidiary and affiliates and extraordinary
loss........................................... 111,666 124,684 112,319
Equity in net earnings of unconsolidated
subsidiary and affiliates...................... 17,724 4,458 3,215
---------- ---------- ----------
Income before extraordinary loss................. 129,390 129,142 115,534
Extraordinary loss, net of taxes................. (3,503) -- --
---------- ---------- ----------
Net income....................................... 125,887 129,142 115,534
Preferred stock dividends...................... -- 2,012 5,421
---------- ---------- ----------
Net income available for common stockholders..... $ 125,887 $ 127,130 $ 110,113
========== ========== ==========
Net income per common share:
Primary:
Income before extraordinary loss............ $ 2.34 $ 2.76 $ 3.07
Extraordinary loss.......................... (0.06) -- --
---------- ---------- ----------
Net income.................................. $ 2.28 $ 2.76 $ 3.07
========== ========== ==========
Fully diluted:
Income before extraordinary loss............ $ 2.26 $ 2.30 $ 2.35
Extraordinary loss.......................... (0.06) -- --
---------- ---------- ----------
Net income.................................. $ 2.20 $ 2.30 $ 2.35
========== ========== ==========
Weighted average number of common and common
equivalent shares outstanding:
Primary........................................ 55,186 46,126 35,920
========== ========== ==========
Fully diluted.................................. 57,441 56,684 49,170
========== ========== ==========
</TABLE>
28
<PAGE> 12
AGCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
EQUIPMENT OPERATIONS FINANCE COMPANY
------------------------------------ ----------------------------------------
YEAR ENDED DECEMBER 31, FOR THE PERIOD FROM
------------------------------------ YEAR ENDED FEBRUARY 11, 1994
1996 1995 1994 DECEMBER 31, 1995 TO DECEMBER 31, 1994
---------- ---------- ---------- ----------------- --------------------
<S> <C> <C> <C> <C>
$2,317,486 $2,068,427 $1,319,271 $ -- $ --
-- -- -- 56,621 39,741
---------- ---------- ---------- ------- -------
2,317,486 2,068,427 1,319,271 56,621 39,741
---------- ---------- ---------- ------- -------
1,847,166 1,627,716 1,042,930 -- --
215,636 190,025 117,683 13,836 11,855
27,705 24,077 19,358 -- --
32,684 31,490 24,104 31,721 18,732
7,639 9,654 1,978 (52) 1,163
15,027 6,000 19,500 -- --
---------- ---------- ---------- ------- -------
2,145,857 1,888,962 1,225,553 45,505 31,750
---------- ---------- ---------- ------- -------
171,629 179,465 93,718 11,116 7,991
59,963 61,563 (13,733) 4,334 3,123
---------- ---------- ---------- ------- -------
111,666 117,902 107,451 6,782 4,868
17,724 11,240 8,083 -- --
---------- ---------- ---------- ------- -------
129,390 129,142 115,534 6,782 4,868
(3,503) -- -- -- --
---------- ---------- ---------- ------- -------
125,887 129,142 115,534 6,782 4,868
-- 2,012 5,421 -- --
---------- ---------- ---------- ------- -------
$ 125,887 $ 127,130 $ 110,113 $ 6,782 $ 4,868
========== ========== ========== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
29
<PAGE> 13
AGCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
CONSOLIDATED
-------------------------------
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 41,707 $ 27,858
Accounts and notes receivable, net of allowances.......... 856,985 785,801
Receivables from unconsolidated subsidiary and
affiliates............................................. 12,486 4,029
Credit receivables, net................................... -- 185,401
Inventories, net.......................................... 473,844 360,969
Other current assets...................................... 81,440 60,442
---------- ----------
Total current assets.............................. 1,466,462 1,424,500
Noncurrent credit receivables, net.......................... -- 397,177
Property, plant and equipment, net.......................... 292,437 146,521
Investments in unconsolidated subsidiary and affiliates..... 80,501 45,963
Other assets................................................ 71,488 44,510
Intangible assets, net...................................... 205,643 104,244
---------- ----------
Total assets...................................... $2,116,531 $2,162,915
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt......................... $ -- $ 361,376
Accounts payable.......................................... 361,512 325,701
Payables to unconsolidated subsidiary and affiliates...... 14,567 4,837
Accrued expenses.......................................... 316,958 233,848
Other current liabilities................................. 22,951 13,217
---------- ----------
Total current liabilities......................... 715,988 938,979
---------- ----------
Long-term debt.............................................. 567,055 531,336
Convertible subordinated debentures......................... -- 37,558
Postretirement health care benefits......................... 24,445 23,561
Other noncurrent liabilities................................ 34,378 42,553
---------- ----------
Total liabilities................................. 1,341,866 1,573,987
Commitments and Contingencies (Note 14)
Stockholders' Equity:
Common stock; $0.01 par value, 150,000,000 shares
authorized, 57,260,151 and 50,557,040 shares issued
and outstanding in 1996 and 1995, respectively........ 573 506
Additional paid-in capital............................. 360,119 307,189
Retained earnings...................................... 411,422 287,706
Unearned compensation.................................. (17,779) (22,587)
Additional minimum pension liability................... -- (2,619)
Cumulative translation adjustment...................... 20,330 18,733
---------- ----------
Total stockholders' equity........................ 774,665 588,928
---------- ----------
Total liabilities and stockholders' equity........ $2,116,531 $2,162,915
========== ==========
</TABLE>
30
<PAGE> 14
AGCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
EQUIPMENT OPERATIONS FINANCE COMPANY
------------------------------- ----------------
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1995
------------ ------------ ----------------
<S> <C> <C>
$ 41,707 $ 20,023 $ 7,835
856,985 785,801 --
12,486 4,029 4,686
-- -- 185,401
473,844 360,969 --
81,440 56,950 3,492
---------- ---------- --------
1,466,462 1,227,772 201,414
-- -- 397,177
292,437 146,172 349
80,501 105,913 --
71,488 44,510 --
205,643 104,244 --
---------- ---------- --------
$2,116,531 $1,628,611 $598,940
========== ========== ========
$ -- $ -- $361,376
361,512 319,711 5,990
14,567 9,523 --
316,958 223,839 10,009
22,951 13,217 --
---------- ---------- --------
715,988 566,290 377,375
---------- ---------- --------
567,055 378,336 153,000
-- 37,558 --
24,445 23,561 --
34,378 33,938 8,615
---------- ---------- --------
1,341,866 1,039,683 538,990
573 506 1
360,119 307,189 48,834
411,422 287,706 11,150
(17,779) (22,587) --
-- (2,619) --
20,330 18,733 (35)
---------- ---------- --------
774,665 588,928 59,950
---------- ---------- --------
$2,116,531 $1,628,611 $598,940
========== ========== ========
</TABLE>
See accompanying notes to consolidated financial statements.
31
<PAGE> 15
AGCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<S> <C>
Balance, December 31, 1993..................................
Net income................................................
Issuance of common stock, net of offering expenses........
Issuance of restricted stock..............................
Three-for-two common stock split..........................
Conversions of preferred stock into common stock..........
Stock options granted.....................................
Stock options exercised...................................
Common stock dividends....................................
Preferred stock dividends.................................
Amortization of unearned compensation.....................
Additional minimum pension liability......................
Change in cumulative translation adjustment...............
Balance, December 31, 1994..................................
Net income................................................
Issuance of restricted stock..............................
Two-for-one common stock split............................
Conversions of subordinated debentures into common
stock..................................................
Conversions of preferred stock into subordinated
debentures.............................................
Conversions of preferred stock into common stock..........
Stock options exercised...................................
Common stock dividends....................................
Preferred stock dividends.................................
Amortization of unearned compensation.....................
Additional minimum pension liability......................
Change in cumulative translation adjustment...............
Balance, December 31, 1995..................................
Net income................................................
Issuance of restricted stock..............................
Conversions of subordinated debentures into common
stock..................................................
Stock options exercised...................................
Common stock dividends....................................
Amortization of unearned compensation.....................
Additional minimum pension liability......................
Change in cumulative translation adjustment...............
Balance, December 31, 1996..................................
</TABLE>
32
<PAGE> 16
AGCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
ADDITIONAL
PREFERRED STOCK COMMON STOCK ADDITIONAL MINIMUM CUMULATIVE
--------------- ------------ PAID-IN RETAINED UNEARNED PENSION TRANSLATION
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS COMPENSATION LIABILITY ADJUSTMENT TOTAL
--------- ------ ---------- ------ ---------- -------- ------------ ---------- ----------- --------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
368,000 $ 4 8,989,779 $ 90 $160,447 $ 51,837 $ (292) $ (155) $ 298 $212,229
-- -- -- -- -- 115,534 -- -- -- 115,534
-- -- 4,237,500 42 151,562 -- -- -- -- 151,604
-- -- 243,000 3 11,542 -- (11,545) -- -- --
-- -- 7,227,398 72 (72) -- -- -- -- --
(66,442) (1) 876,641 9 (8) -- -- -- -- --
-- -- -- -- 352 -- (352) -- -- --
-- -- 115,291 1 741 -- -- -- -- 742
-- -- -- -- -- (467) -- -- -- (467)
-- -- -- -- -- (5,421) -- -- -- (5,421)
-- -- -- -- -- -- 1,595 -- -- 1,595
-- -- -- -- -- -- -- (183) -- (183)
-- -- -- -- -- -- -- -- 1,033 1,033
--------- ---- ---------- ---- -------- -------- -------- ------- ------- --------
301,558 3 21,689,609 217 324,564 161,483 (10,594) (338) 1,331 476,666
-- -- -- -- -- 129,142 -- -- -- 129,142
-- -- 454,000 5 19,165 -- (19,170) -- -- --
-- -- 25,278,520 253 (253) -- -- -- -- --
-- -- 2,315,661 23 29,267 -- -- -- -- 29,290
(267,453) (3) -- -- (66,845) -- -- -- -- (66,848)
(34,105) -- 673,094 7 (7) -- -- -- -- --
-- -- 146,156 1 1,298 -- -- -- -- 1,299
-- -- -- -- -- (907) -- -- -- (907)
-- -- -- -- -- (2,012) -- -- -- (2,012)
-- -- -- -- -- -- 7,177 -- -- 7,177
-- -- -- -- -- -- -- (2,281) -- (2,281)
-- -- -- -- -- -- -- -- 17,402 17,402
--------- ---- ---------- ---- -------- -------- -------- ------- ------- --------
-- -- 50,557,040 506 307,189 287,706 (22,587) (2,619) 18,733 588,928
-- -- -- -- -- 125,887 -- -- -- 125,887
-- -- 474,500 5 13,690 -- (13,695) -- -- --
-- -- 5,916,319 59 37,499 -- -- -- -- 37,558
-- -- 312,292 3 1,741 -- -- -- -- 1,744
-- -- -- -- -- (2,171) -- -- -- (2,171)
-- -- -- -- -- -- 18,503 -- -- 18,503
-- -- -- -- -- -- -- 2,619 -- 2,619
-- -- -- -- -- -- -- -- 1,597 1,597
--------- ---- ---------- ---- -------- -------- -------- ------- ------- --------
-- $ -- 57,260,151 $573 $360,119 $411,422 $(17,779) $ -- $20,330 $774,665
========= ==== ========== ==== ======== ======== ======== ======= ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
33
<PAGE> 17
AGCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
CONSOLIDATED
-------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994
--------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income.............................................. $ 125,887 $ 129,142 $ 115,534
--------- ----------- -----------
Adjustments to reconcile net income to net cash provided
by operating activities:
Extraordinary loss, net of taxes..................... 3,503 -- --
Gain on sale of Agricredit........................... (4,745) -- --
Depreciation and amortization........................ 29,199 24,288 15,713
Equity in net earnings of unconsolidated subsidiary
and affiliates, net of cash received............... (17,724) (4,458) (3,031)
Deferred income tax provision (benefit).............. 20,097 32,915 (40,958)
Amortization of intangibles.......................... 5,761 4,007 2,044
Amortization of unearned compensation................ 18,503 7,177 1,595
Provision for losses on credit receivables........... -- 4,279 4,691
Changes in operating assets and liabilities, net of
effects from purchase of businesses:
Accounts and notes receivable, net................. 3,743 (131,341) (84,458)
Inventories, net................................... (22,646) (32,273) 30,683
Other current and noncurrent assets................ (14,099) 2,794 247
Accounts payable................................... (9,384) 8,076 32,498
Accrued expenses................................... 54,306 16,624 19,039
Other current and noncurrent liabilities........... 14,259 5,898 2,767
--------- ----------- -----------
Total adjustments............................... 80,773 (62,014) (19,170)
--------- ----------- -----------
Net cash provided by operating activities....... 206,660 67,128 96,364
--------- ----------- -----------
Cash flows from investing activities:
Purchase of businesses, net of cash acquired............ (347,075) (27,044) (324,249)
Purchase of property, plant and equipment............... (45,180) (45,259) (20,661)
Credit receivables originated........................... -- (393,510) (327,636)
Principal collected on credit receivables............... -- 286,009 224,289
Proceeds from disposition of (investments in)
unconsolidated subsidiary and affiliates............. 45,216 1,070 --
--------- ----------- -----------
Net cash used for investing activities.......... (347,039) (178,734) (448,257)
--------- ----------- -----------
Cash flows from financing activities:
Proceeds from long-term debt............................ 977,737 1,467,499 1,619,507
Payment on long-term debt............................... (803,196) (1,352,620) (1,367,368)
Payment of debt issuance costs.......................... (12,473) -- --
Proceeds from issuance of common stock.................. 1,744 1,299 133,721
Dividends received from (paid to) finance company....... -- -- --
Dividends paid on common stock.......................... (2,171) (907) (467)
Dividends paid on preferred stock....................... -- (2,420) (5,511)
(Payments) proceeds on short-term borrowings from
unconsolidated subsidiary............................ -- -- (3,440)
--------- ----------- -----------
Net cash provided by financing activities....... 161,641 112,851 376,442
--------- ----------- -----------
Effect of exchange rate changes on cash and cash
equivalents.......................................... 422 787 1,063
Increase (decrease) in cash and cash equivalents........ 21,684 2,032 25,612
Cash and cash equivalents, beginning of period.......... 20,023 25,826 214
--------- ----------- -----------
Cash and cash equivalents, end of period................ $ 41,707 $ 27,858 $ 25,826
========= =========== ===========
</TABLE>
34
<PAGE> 18
AGCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
EQUIPMENT OPERATIONS FINANCE COMPANY
----------------------------------------- ----------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED FOR THE PERIOD FROM
----------------------------------------- DECEMBER 31, FEBRUARY 11, 1994
1996 1995 1994 1995 TO DECEMBER 31, 1994
--------- --------- --------- ----------------- --------------------
<S> <C> <C> <C> <C>
$ 125,887 $ 129,142 $ 115,534 $ 6,782 $ 4,868
--------- --------- --------- ---------- ---------
3,503 -- -- -- --
(4,745) -- -- -- --
29,199 24,166 15,659 122 54
(17,724) (11,240) (7,899) -- --
20,097 33,920 (38,961) (1,005) (1,997)
5,761 4,007 2,044 -- --
18,503 7,177 1,595 -- --
-- -- -- 4,279 4,691
3,743 (144,469) (92,063) -- --
(22,646) (32,273) 30,683 -- --
(14,099) 3,048 306 (254) (59)
(9,384) 32,812 30,711 (11,608) 9,392
54,306 14,349 17,108 2,275 1,931
14,259 5,162 1,862 736 905
--------- --------- --------- ---------- ---------
80,773 (63,341) (38,955) (5,455) 14,917
--------- --------- --------- ---------- ---------
206,660 65,801 76,579 1,327 19,785
--------- --------- --------- ---------- ---------
(347,075) (27,044) (311,448) -- --
(45,180 (45,161) (20,525) (98) (136)
-- -- -- (393,510) (327,636)
-- -- -- 286,009 224,289
45,216 1,070 (23,226) -- --
--------- --------- --------- ---------- ---------
(347,039) (71,135) (355,199) (107,599) (103,483)
--------- --------- --------- ---------- ---------
977,737 366,143 790,007 1,101,356 829,500
(803,196) (354,640) (593,468) (997,980) (773,900)
(12,473) -- -- -- --
1,744 1,299 133,721 -- --
-- 500 -- (500) --
(2,171) (907) (467) -- --
-- (2,420) (5,511) -- --
-- (7,249) (25,095) 7,249 21,655
--------- --------- --------- ---------- ---------
161,641 2,726 299,187 110,125 77,255
--------- --------- --------- ---------- ---------
422 787 1,063 -- --
21,684 (1,821) 21,630 3,853 (6,443)
20,023 21,844 214 3,982 10,425
--------- --------- --------- ---------- ---------
$ 41,707 $ 20,023 $ 21,844 $ 7,835 $ 3,982
========= ========= ========= ========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
35
<PAGE> 19
AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
AGCO Corporation (the "Company") is a leading manufacturer and distributor
of agricultural equipment throughout the world. The Company sells a full range
of agricultural equipment and related replacement parts, including tractors,
combines, hay tools and forage equipment and implements. The Company's products
are widely recognized in the agricultural equipment industry and are marketed
under the following brand names: Massey Ferguson, AGCO Allis, GLEANER, Hesston,
White, SAME, White-New Idea, Black Machine, AGCOSTAR, Landini, Tye, Farmhand,
Glencoe, Maxion, IDEAL, Western Combine, PMI, Deutz and Fendt. The Company
distributes its products through a combination of over 7,500 independent
dealers, wholly-owned distribution companies, associates and licensees. In
addition, the Company provides retail financing in North America, the United
Kingdom, France and Germany through its finance joint ventures with Cooperatieve
Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland" ("Rabobank").
Basis of Presentation
Effective November 1, 1996, the Company sold a 51% interest in Agricredit
Acceptance Company ("Agricredit"), the Company's wholly-owned retail finance
subsidiary in North America (Note 2). Accordingly, the Company's consolidated
financial statements as of and for the year ended December 31, 1996 reflect
Agricredit on the equity method of accounting for the entire period presented.
As of and for the year ended December 31, 1995 and for the period after February
11, 1994, the date the Company acquired the remaining 50% interest in Agricredit
(Note 2), the consolidated financial statements reflect Agricredit on a
consolidated basis with the Company's other majority-owned subsidiaries.
The consolidated financial statements include, on a separate, supplemental
basis, the Company's Equipment Operations, and for 1995 and for the period from
February 11, 1994 to December 31, 1994, its Finance Company. "Equipment
Operations" reflect the consolidation of all operations of the Company and its
majority-owned subsidiaries with the exception of Agricredit, which is included
using the equity method of accounting. For the year ended December 31, 1995 and
for the period from February 11, 1994 to December 31, 1994, the results of
operations of Agricredit are included under the caption "Finance Company." All
significant intercompany transactions for the year ended December 31, 1995 and
for the period from February 11, 1994 to December 31, 1994, including activity
within and between the Equipment Operations and Finance Company, have been
eliminated to arrive at the "Consolidated" financial statements. Certain prior
period amounts have been reclassified to conform with the current period
presentation.
Revenue Recognition
Sales of equipment and replacement parts are recorded by the Company when
shipped to independent dealers, distributors or other customers. Provisions for
sales incentives and returns and allowances are made at the time of sale to the
dealer for existing incentive programs or at the inception of new incentive
programs. Provisions are revised in the event of subsequent modification to the
incentive programs. In certain markets, particularly in North America, there is
a time lag, which varies based on the timing and level of retail demand, between
the date the Company records a sale and when the dealer sells the equipment to a
retail customer.
Foreign Currency Translation
The financial statements of the Company's foreign subsidiaries are
translated into United States currency in accordance with Statement of
Financial Accounting Standards No. 52, "Foreign Currency Translation." Assets
and liabilities are translated to United States dollars at period-end exchange
rates. Income and expense items are translated at average rates of exchange
prevailing during the period. Translation adjustments are accumulated as a
separate component of stockholders' equity. Gains and losses which result from
foreign currency transactions are included in the accompanying consolidated
statements of income. For subsidiaries operating in highly inflationary
economies, financial statements are remeasured into the United States dollar
with adjustments resulting from the translation of monetary assets and
liabilities reflected in the accompanying consolidated statements of income.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions 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. Actual results could differ from those
estimates. The estimates made by management primarily relate to receivable and
inventory allowances and certain accrued liabilities, principally relating to
reserves for volume discounts and sales incentives, warranty and insurance.
Transactions with Affiliates
The Company enters into transactions with certain affiliates relating
primarily to the purchase and sale of inventory. All transactions were in the
ordinary course of business and are not considered material to the financial
statements.
Cash and Cash Equivalents
The Company considers all investments with an original maturity of three
months or less to be cash equivalents.
Accounts and Notes Receivable
Accounts and notes receivable arise from the sale of parts and finished
goods inventory to independent dealers, distributors or other customers. Terms
vary by market, generally ranging from 30 day terms to requiring payment when
the equipment is sold to retail customers. Interest is charged on the balance
outstanding after certain interest-free periods, which generally range from 1 to
12 months.
36
<PAGE> 20
AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Accounts and notes receivable are shown net of allowances for sales
incentive discounts available to dealers and for doubtful accounts. Accounts and
notes receivable allowances at December 31, 1996 and 1995 were as follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Sales incentive discounts................................... $45,809 $39,433
Doubtful accounts........................................... 30,017 23,114
------- -------
$75,826 $62,547
======= =======
</TABLE>
Inventories
Inventories consist primarily of tractors, combines, implements, hay and
forage equipment and service parts and are valued at the lower of cost or
market. Cost is determined on a first-in, first-out basis. Market is net
realizable value for finished goods and repair and replacement parts. For work
in process, production parts and raw materials, market is replacement cost.
Inventory balances at December 31, 1996 and 1995 were as follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Finished goods.............................................. $171,105 $121,034
Repair and replacement parts................................ 222,601 196,863
Work in process, production parts and raw materials......... 134,734 84,505
-------- --------
Gross inventories........................................... 528,440 402,402
Allowance for surplus and obsolete inventories.............. (54,596) (41,433)
-------- --------
Inventories, net............................................ $473,844 $360,969
======== ========
</TABLE>
Property, Plant and Equipment
Property, plant and equipment are recorded at cost less accumulated
depreciation and amortization. Depreciation is provided on a straight-line basis
over the estimated useful lives of 10 to 40 years for buildings and
improvements, 3 to 15 years for machinery and equipment, and 3 to 10 years for
furniture and fixtures. Expenditures for maintenance and repairs are charged to
expense as incurred.
The property, plant and equipment balances at December 31, 1996 and 1995
were as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Land........................................................ $ 32,537 $ 13,260
Buildings and improvements.................................. 93,203 42,877
Machinery and equipment..................................... 206,098 110,726
Furniture and fixtures...................................... 31,218 23,572
-------- --------
Gross property, plant and equipment......................... 363,056 190,435
Accumulated depreciation and amortization................... (70,619) (43,914)
-------- --------
Property, plant and equipment, net.......................... $292,437 $146,521
======== ========
</TABLE>
Intangible Assets
Intangible assets at December 31, 1996 and 1995 consisted of the following
(in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Excess of cost over net assets acquired..................... $162,485 $ 52,001
Trademarks.................................................. 66,042 70,000
Other....................................................... 5,232 4,598
Accumulated amortization.................................... (20,835) (12,750)
-------- --------
212,924 113,849
-------- --------
Excess of net assets acquired over cost..................... (23,235) (23,235)
Accumulated amortization.................................... 15,954 13,630
-------- --------
(7,281) (9,605)
-------- --------
Intangible assets, net...................................... $205,643 $104,244
======== ========
</TABLE>
The excess of cost over net assets acquired ("goodwill") is being
amortized to income on a straight-line basis over periods ranging from 10 to 40
years. The Company also assigned values to certain trademarks which were
acquired in connection with the Massey Acquisition (Note 2). The trademarks are
being amortized to income on a straight-line basis over 40 years. The excess of
net assets acquired over cost is being amortized on a straight-line basis over
10 years and has been reflected along with the related accumulated amortization
as a reduction to intangible assets. The net amortization expense, included in
other expense, net in the accompanying consolidated statements of income was
$5,761,000, $4,007,000 and $2,044,000 for the years ended December 31, 1996,
1995 and 1994, respectively.
The Company periodically reviews the carrying values assigned to goodwill
and other intangible assets based upon expectations of future cash flows and
operating income generated by the underlying tangible assets.
Accrued Expenses
Accrued expenses at December 31, 1996 and 1995 consisted of the following
(in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Reserve for volume discounts and sales incentives........... $ 69,099 $ 62,557
Warranty reserves........................................... 47,147 39,883
Accrued employee compensation and benefits.................. 46,985 28,940
Accrued taxes............................................... 51,484 23,041
Other....................................................... 102,243 79,427
-------- --------
$316,958 $233,848
======== ========
</TABLE>
Warranty Reserves
The Company's agricultural equipment products are generally under warranty
against defects in material and workmanship for a period of one to four years.
The Company provides for future warranty costs based upon the relationship of
sales in prior periods to actual warranty costs.
37
<PAGE> 21
AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Insurance Reserves
Under the Company's insurance programs, coverage is obtained for
significant liability limits as well as those risks required to be insured by
law or contract. It is the policy of the Company to self-insure a portion of
certain expected losses related primarily to workers' compensation and
comprehensive general, product and vehicle liability. Provisions for losses
expected under these programs are recorded based on the Company's estimates of
the aggregate liabilities for the claims incurred.
Extraordinary Loss
In March 1996, as part of the refinancing of the Company's $550,000,000
secured revolving credit facility with a five-year $650,000,000 unsecured
revolving credit facility (Note 7), the Company recorded an extraordinary loss
of $3,503,000, net of taxes of $2,239,000, for the write-off of unamortized debt
costs related to the $550,000,000 revolving credit facility.
Net Income Per Common Share
Primary net income per common share is computed by dividing net income
available for common stockholders (net income less preferred stock dividend
requirements) by the weighted average number of common and common equivalent
shares outstanding during each period. Common equivalent shares include shares
issuable upon the assumed exercise of outstanding stock options (Note 13). Fully
diluted net income per common share assumes (i) conversion of the Convertible
Subordinated Debentures (Note 8) into common stock after the Exchange (Note 8)
and the elimination of interest expense related to the Convertible Subordinated
Debentures, net of applicable income taxes and (ii) conversion of the Preferred
Stock (Note 11) into common stock and the elimination of the preferred stock
dividend requirements prior to the Exchange.
All references in the financial statements and the accompanying notes to
the financial statements to the weighted average number of common shares
outstanding and net income per common share have been restated to reflect all
stock splits (Note 12).
Financial Instruments
The carrying amounts reported in the Company's consolidated balance sheets
for cash and cash equivalents, accounts and notes receivable, receivables from
unconsolidated subsidiary and affiliates, accounts payable and payables to
unconsolidated subsidiary and affiliates approximate fair value due to the
immediate or short-term maturity of these financial instruments. The carrying
amount of long-term debt under the Company's revolving credit facility (Note 7)
approximates fair value based on the borrowing rates currently available to the
Company for loans with similar terms and average maturities. At December 31,
1996, the estimated fair value of the Company's 8 1/2% Senior Subordinated Notes
(Note 7), based on its listed market value, was $252,600,000 compared to the
carrying value of $247,957,000.
The Company enters into foreign exchange forward contracts to hedge the
foreign currency exposure of certain receivables, payables and expected
purchases and sales. These contracts are for periods consistent with the
exposure being hedged and generally have maturities of one year or less. Gains
and losses on foreign exchange forward contracts are deferred and recognized in
income in the same period as the hedged transaction. The Company's foreign
exchange forward contracts do not subject the Company's results of operations to
risk due to exchange rate fluctuations because gains and losses on these
contracts generally offset gains and losses on the exposure being hedged. The
Company does not enter into any foreign exchange forward contracts for
speculative trading purposes. At December 31, 1996 and 1995, the Company had
foreign exchange forward contracts with notional amounts of $218,127,000 and
$179,072,000, respectively. The deferred gains or losses from these contracts
were not material at December 31, 1996 and 1995.
The notional amounts of foreign exchange forward contracts do not represent
amounts exchanged by the parties and therefore, are not a measure of the
Company's risk. The amounts exchanged are calculated on the basis of the
notional amounts and other terms of the foreign exchange hedging contracts. The
credit and market risk under these contracts are not considered to be
significant since the Company deals with counterparties that have high credit
ratings.
Accounting Changes
In October 1995, the Financial Accounting Standards Board issued Statement
No. 123, "Accounting for Stock-Based Compensation", which requires companies to
estimate the value of all stock-based compensation using a recognized pricing
model. The Company has adopted the disclosure requirements of this statement and
has chosen to continue to apply the accounting provisions of Accounting
Principles Board Opinion No. 25 to stock-based employee compensation
arrangements as allowed by Statement No. 123 (Note 13). As a result, the
adoption of this new standard did not have an effect on the Company's financial
position or results of operations for the year ended December 31, 1996.
Effective January 1996, the Company adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," which established
accounting standards for the impairment of long-lived assets, certain
identifiable intangibles and goodwill related to those assets to be held and
used, as well as for long-lived assets and certain identifiable intangibles to
be disposed. The adoption of this standard did not have a material effect on the
Company's financial position.
2. ACQUISITIONS AND DISPOSITIONS
On December 27, 1996, the Company acquired the operations of Deutz
Argentina S.A. ("Deutz Argentina") for approximately $62,500,000 (the "Deutz
Argentina Acquisition"). The purchase price was financed primarily by borrowings
under the Company's $650,000,000 revolving credit facility (the "March 1996
Credit Facility" -- Note 7). The acquired assets and assumed liabilities
consisted primarily of accounts receivable, inventories, property, plant and
equipment (including three manufacturing and assembly facilities), accounts
payable and accrued liabilities. Deutz Argentina is a manufacturer and
distributor of a broad range of agricultural equipment, engines
38
<PAGE> 22
AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
and light trucks in Argentina and other South American markets.
Effective November 1, 1996, the Company entered into an agreement with De
Lage Landen International, B.V., a wholly-owned subsidiary of Rabobank, to be
its joint venture partner in Agricredit, the Company's wholly-owned retail
finance subsidiary in North America (the "Agricredit Joint Venture"). As a
result of the agreement, the Company sold a 51% interest in Agricredit to
Rabobank. The Company received total consideration of approximately $44,300,000
in the transaction and recorded a gain, before taxes, of approximately
$4,745,000. Under the Agricredit Joint Venture, Rabobank has a 51% interest in
Agricredit and the Company retained a 49% interest in the finance company.
Substantially all of the net assets of Agricredit were transferred to the
Agricredit Joint Venture. Proceeds from the transaction were used to repay
outstanding borrowings under the Company's March 1996 Credit Facility.
Effective July 8, 1996, the Company acquired certain assets of Western
Combine Corporation and Portage Manufacturing, Inc., the Company's suppliers of
Massey Ferguson combines and certain other harvesting equipment sold in North
America (the "Western Combine Acquisition"). The acquired assets consisted
primarily of inventories, manufacturing equipment and technology. The purchase
price of approximately $19,443,000 was financed primarily by borrowings under
the Company's March 1996 Credit Facility.
Effective June 28, 1996, the Company acquired certain assets and
liabilities of the agricultural and industrial equipment business of
Iochpe-Maxion S.A. (the "Maxion Agricultural Equipment Business") for
approximately $260,000,000 (the "Maxion Acquisition"). The purchase price, which
is subject to adjustment, was financed primarily by borrowings under the
Company's March 1996 Credit Facility. The acquired assets and assumed
liabilities consisted primarily of accounts receivable, inventories, property,
plant and equipment (including two manufacturing facilities), accounts payable
and accrued liabilities. Prior to the acquisition, the Maxion Agricultural
Equipment Business was AGCO's Massey Ferguson licensee in Brazil, manufacturing
and distributing agricultural and industrial equipment in Brazil and other South
American markets.
Effective March 31, 1995, the Company acquired substantially all the net
assets of AgEquipment Group, a manufacturer and distributor of agricultural
implements and tillage equipment (the "AgEquipment Acquisition"). The acquired
assets and assumed liabilities consisted primarily of dealer accounts
receivable, inventories, machinery and equipment, trademarks and trade names,
accounts payable and accrued liabilities. The purchase price was approximately
$25,100,000 and was financed through borrowings under the Company's $550,000,000
revolving credit facility (the "June 1994 Credit Facility" -- Note 7).
On June 29, 1994, the Company acquired from Varity Corporation ("Varity")
the outstanding stock of Massey Ferguson Group Limited, certain assets of MF
GmbH, a German operating subsidiary, the Massey Ferguson trademarks and certain
other related assets for aggregate consideration consisting of $310,000,000 in
cash and 500,000 shares of common stock of the Company (the "Massey
Acquisition"). The acquired assets and assumed liabilities consisted primarily
of accounts receivable, inventories, property, plant and equipment (including
two manufacturing facilities), trademarks, stock in associated companies,
accounts payable and accrued liabilities. The total purchase price was
approximately $328,625,000. The cash portion of the purchase price for the
Massey Acquisition and the related transaction costs were financed through the
public offering of 3,737,500 shares of common stock at $37.50 per share
resulting in proceeds of $132,980,000, net of underwriters' discount and
offering expenses (the "1994 Offering"), and incremental borrowings of
$177,020,000 under the June 1994 Credit Facility. The 1994 Offering and the
execution of the June 1994 Credit Facility were completed concurrently with the
Massey Acquisition.
Effective February 10, 1994, the Company acquired the remaining 50%
interest in Agricredit from Varity. Prior to that date, the Company owned a 50%
interest in Agricredit through a joint venture with Varity which was accounted
for using the equity method of accounting since the original date of investment
in 1993. The acquired assets and assumed liabilities consisted primarily of
credit receivables, accounts payable, accrued liabilities and borrowings under a
revolving credit agreement. The purchase price for the remaining 50% interest
was $23,226,000 and was financed through borrowings under the Company's
revolving credit facility in place at that time.
The above acquisitions were accounted for as purchases in accordance with
Accounting Principles Board Opinion No. 16, and accordingly, each purchase price
has been allocated to the assets acquired and the liabilities assumed based on
the estimated fair values as of the acquisition dates. The purchase price
allocations for the Maxion and the Deutz Argentina Acquisitions are preliminary
and subject to adjustment. In 1995, the purchase price allocation for the Massey
Acquisition was completed, with the exception of the recognition of acquired
deferred income tax assets. The total purchase price allocation for the Massey
Acquisition, excluding the recognition of deferred income tax assets, resulted
in an increase in goodwill of $6,733,000. In addition, the Company has
recognized $79,753,000 of deferred income tax assets resulting in a decrease in
goodwill and values assigned to certain trademarks acquired in the Massey
Acquisition. These adjustments were a result of the completion of certain asset
and liability valuations related primarily to property, plant and equipment and
certain allowance and reserve accounts. The purchase price allocations for the
Maxion and Deutz Argentina Acquisitions will be completed in 1997. The results
of operations for these acquisitions are included in the Company's consolidated
financial statements as of and from the respective dates of acquisition. The
Deutz Argentina Acquisition had no effect on the Company's results of operations
for the year ended December 31, 1996.
The following unaudited pro forma data summarizes the results of operations
for the year ended December 31, 1996 and 1995 as if the Maxion Acquisition and
the Agricredit Joint Venture, including the related financings, had occurred at
the beginning of 1995. The unaudited pro forma information has been prepared for
comparative purposes only and does not purport to represent what the results of
operations of
39
<PAGE> 23
AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
the Company would actually have been had the transactions occurred
on the dates indicated or what the results of operations may be in any future
period.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995
---------- ----------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
Net sales................................................... $2,410,621 $2,316,019
Net income.................................................. 86,109 35,131
Net income per common share -- fully diluted (1)............ $ 1.51 $ 0.64
</TABLE>
- ---------------
(1) Net income per common share-fully diluted for the year ended December 31,
1996 excludes an extraordinary loss, net of taxes, of $3,503,000, or $0.06
per share on a fully diluted basis.
3. CHARGES FOR NONRECURRING EXPENSES
The results of operations for 1996 included a charge for nonrecurring
expenses of $15,027,000, or $0.17 per common share on a fully diluted basis.
This nonrecurring charge related to the further restructuring of the Company's
European operations, acquired in the Massey Acquisition (Note 2) in June 1994,
and the integration and restructuring of the Company's Brazilian operations,
acquired in the Maxion Acquisition (Note 2) in June 1996.
The nonrecurring charge for the further restructuring of the Company's
European operations included costs associated with the centralization of certain
parts warehousing, administrative, sales and marketing functions. The
$10,357,000 nonrecurring charge recorded through December 31, 1996 included
$6,385,000 for employee related costs consisting primarily of severance costs
and $3,972,000 for other nonrecurring costs. Of the total $10,357,000 charge,
$6,702,000 has been incurred at December 31, 1996. The remaining accrual of
$3,655,000 primarily consists of employee severance costs which relate to the
planned reduction of 118 employees, of which 96 employees have been terminated
at December 31, 1996.
The nonrecurring charge for the integration and restructuring of the
Company's Brazilian operations included costs associated with the
rationalization of manufacturing, sales, and administrative functions. The
$4,670,000 recorded through December 31, 1996 included $2,656,000 for employee
related costs, including severance costs, and $2,014,000 for other nonrecurring
costs. Included in the $2,656,000 of employee related costs was $1,315,000 of
payroll costs incurred through December 31, 1996 for personnel that have been
terminated. Of the total $4,670,000 charge, $3,635,000 has been incurred through
December 31, 1996. The employee severance costs relate to the reduction of
approximately 220 employees at December 31, 1996.
The results of operations for the years ended December 31, 1995 and 1994
included charges for nonrecurring expenses primarily related to the integration
and restructuring of the Company's European operations, acquired in the Massey
Acquisition. The Company recorded nonrecurring expenses of $13,500,000, or $0.21
per common share on a fully diluted basis, in the fourth quarter of 1994 and
recorded an additional $6,000,000, or $0.07 per common share on a fully diluted
basis, in 1995. The nonrecurring charge included costs primarily associated with
the centralization and rationalization of the Company's European operations'
administrative, sales and marketing functions and other nonrecurring costs. The
combined $19,500,000 charge recorded through December 31, 1995 included
$10,148,000 for employee related costs which primarily were severance costs,
$3,300,000 for fees associated with the termination of the credit facility
existing at that time which was replaced by the June 1994 Credit Facility, in
conjunction with the Massey Acquisition, and $6,052,000 for other nonrecurring
costs. All of the costs associated with the $19,500,000 charge recorded through
December 31, 1995 have been incurred.
The results of operations for the year ended December 31, 1994 also
included charges for nonrecurring expenses of $6,000,000, or $0.12 per common
share on a fully diluted basis, relating to the integration of the White-New
Idea Farm Equipment Division ("White-New Idea"), acquired from Allied Products
Corporation in December 1993. The nonrecurring charge included $2,700,000 for
employee severance and relocation expenses, $1,000,000 for costs associated with
operating duplicate parts distribution facilities, $800,000 for certain data
processing expenses, $700,000 for dealer signs, and $800,000 for other
nonrecurring costs. All of the costs associated with the integration of
White-New Idea were incurred in 1994 and 1995.
4. AGRICREDIT
The Company acquired a 50% joint venture interest in Agricredit from
Varity in 1993 (Note 2) and the operations for the finance company were
reflected in the Company's consolidated financial statements using the equity
method of accounting for the period ended December 31, 1993. The Company
acquired the remaining 50% interest in Agricredit from Varity on February 10,
1994 and accordingly, the Company's consolidated financial statements reflect
Agricredit on a consolidated basis with the Company's other majority-owned
subsidiaries as of December 31, 1994 and 1995 and for the period from February
11, 1994 through December 31, 1994 and for the year ended December 31, 1995.
Effective November 1, 1996, the Company sold a 51% joint venture interest in
Agricredit. Accordingly, the Company's consolidated financial statements as of
and for the year ended December 31,1996 reflect the operations of Agricredit on
the equity method of accounting for the entire period presented. The following
is certain information related to Agricredit for the periods that the
Agricredit operations were accounted for on a consolidated basis. See Note 5
for information related to Agricredit for the periods in which it was accounted
for under the equity method of accounting.
Revenue Recognition
Agricredit recognizes finance income on credit receivables utilizing the
effective interest method. Accrual of interest and finance fees is suspended
when collection is deemed doubtful. Direct costs incurred in origination of the
credit receivables are amortized to income over the expected term of the credit
receivables using methods that approximate the effective interest method.
40
<PAGE> 24
AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Financial Instruments
At December 31, 1995, the estimated fair value of Agricredit's credit
receivables was $573,851,000 compared to the carrying value of $582,578,000. The
fair value of credit receivables was based on the discounted values of their
related cash flows at current market interest rates. Long-term debt associated
with Agricredit approximated fair value at December 31, 1995 based on borrowing
rates available to Agricredit for loans with similar terms and average
maturities.
In 1995, Agricredit entered into interest rate swap agreements in order to
reduce its exposure to portions of its revolving credit agreement which carried
floating rates of interest and in order to more closely match the interest rates
of the borrowings to those of the credit receivables being funded. The
differential to be paid or received on the swap agreements was recognized as an
adjustment to interest expense. At December 31, 1995, the total notional
principal amount of the interest rate swap agreements was $25,652,000, having
fixed rates ranging from 8.03% to 8.22% and terminating in 1998. The notional
amount of the swap agreements do not represent amounts exchanged by the parties
and therefore, are not representative of the Company's risk. The credit and
market risk under the swap agreements is not considered significant and the fair
values and carrying values were not material at December 31, 1995.
Credit Receivables
Agricredit's credit receivables consisted of the following at December 31,
1995 (in thousands):
<TABLE>
<CAPTION>
1995
---------
<S> <C>
Retail notes................................................ $ 498,732
Sales finance contracts..................................... 199,087
Wholesale notes............................................. 16,588
---------
Gross credit receivables.................................. 714,407
Less:
Unearned finance income................................... (119,015)
Allowance for credit losses............................... (12,814)
---------
Net credit receivables................................. 582,578
Less: current portion....................................... (185,401)
---------
Noncurrent credit receivables, net..................... $ 397,177
=========
</TABLE>
At December 31, 1995, contractual maturities of gross credit receivables
were as follows (in thousands):
<TABLE>
<CAPTION>
1995
--------
<S> <C>
1996........................................................ $243,873
1997........................................................ 191,572
1998........................................................ 139,462
1999........................................................ 91,191
2000........................................................ 40,713
Thereafter.................................................. 7,596
--------
$714,407
========
</TABLE>
The maximum maturities for retail notes and sales finance contracts is 7
years, while the maximum maturity for wholesale notes is 1 year. Interest rates
on the credit receivables vary depending on prevailing market interest rates and
certain sales incentive programs offered by the Company. Although the Company
has a diversified receivable portfolio, credit receivables have significant
concentrations of credit risk in the agricultural business sector. At December
31, 1995, approximately 78% of the net credit receivables related to the
financing of products sold by the Company's dealers and distributors to end
users. Agricredit retains as collateral a security interest in the equipment
financed.
The allowance for credit losses was $12,814,000 at December 31, 1995. In
addition, the Company had deposits withheld from dealers and manufacturers
available for potential credit losses of $8,615,000 at December 31, 1995. An
analysis of the allowance for credit losses is as follows (in thousands):
<TABLE>
<CAPTION>
1995
-------
<S> <C>
Balance, beginning of year.................................. $10,042
Provision for credit losses............................... 4,279
Charge-offs............................................... (3,425)
Recoveries................................................ 1,918
-------
Balance, end of year........................................ $12,814
=======
</TABLE>
Long-Term Debt
Prior to the Agricredit Joint Venture on November 1, 1996, Agricredit
obtained funds from a separate $630,000,000 revolving credit facility (the
"Agricredit Revolving Credit Agreement") to finance its credit receivable
portfolio. In 1996, the terms of the Agricredit Revolving Credit Agreement were
amended and restated to increase Agricredit's available borrowings from
$545,000,000 to $630,000,000. Borrowings under the Agricredit Revolving Credit
Agreement were based on the amount and quality of outstanding credit receivables
and were generally issued with maturities matching anticipated credit receivable
liquidations, and at December 31, 1995, the terms ranged from 1 to 31 months.
Interest rates on the notes outstanding at December 31, 1995 ranged from 5.1% to
9.1%, with a weighted average interest rate of 6.8%. The Agricredit Revolving
Credit Agreement contained certain financial covenants which Agricredit and the
Company were required to maintain including a minimum specified net worth and,
specifically for the Company, a ratio of debt to net worth, as defined. At
December 31, 1995, $514,376,000 was outstanding under the Agricredit Revolving
Credit Agreement and available borrowings were $24,986,000. On November 1, 1996,
the Agricredit Revolving Credit Agreement was repaid and the Agricredit Joint
Venture entered into a new credit agreement.
5. INVESTMENTS IN UNCONSOLIDATED AFFILIATES
At December 31, 1996 and 1995, the Company's investments in unconsolidated
affiliates primarily consisted of (i) a 49% investment in Massey Ferguson
Finance, consisting of retail finance subsidiaries in the United Kingdom, France
and Germany, which are owned by the Company and Rabobank, (ii) its 50%
investment in Hay and Forage Industries ("HFI"), a joint venture with Case
Corporation ("Case"), which designs and manufactures hay and forage equipment
for distribution by the Company and Case, (iii) its 50% investment in a joint
venture with Renault Agriculture S.A. ("GIMA"), which manufactures driveline
assemblies for Massey Ferguson and Renault tractors, and (iv) certain other
minority investments
41
<PAGE> 25
AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
in farm equipment manufacturers and licensees. In addition, as a result
of the Agricredit Joint Venture, investments in unconsolidated affiliates at
December 31, 1996 included the Company's 49% equity investment in Agricredit.
Investments in unconsolidated affiliates, accounted for under the equity
method, as of December 31, 1996 and 1995 were as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Agricredit.................................................. $28,032 $ --
Massey Ferguson Finance..................................... 20,390 13,523
HFI......................................................... 12,029 12,029
GIMA........................................................ 5,346 5,651
Other....................................................... 14,704 14,760
------- -------
$80,501 $45,963
======= =======
</TABLE>
The Company's equity in net earnings of unconsolidated affiliates for 1996,
1995, and 1994 were as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------ ------
<S> <C> <C> <C>
Agricredit.................................................. $10,384 $ -- $ 566
Massey Ferguson Finance..................................... 4,400 3,459 1,370
Other....................................................... 2,940 999 1,279
------- ------ ------
$17,724 $4,458 $3,215
======= ====== ======
</TABLE>
Both HFI and GIMA sell their products to the joint venture partners at
prices which result in them operating at or near breakeven on an annual basis.
Equity in net earnings of unconsolidated affiliates for 1994 included the equity
in net earnings of Agricredit prior to February 10, 1994, the date the remaining
50% interest was acquired by the Company (Note 2). The Company also has various
minority interest investments which are accounted for under the cost method.
Summarized financial information of Agricredit as of and for the year ended
December 31,1996 is as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
Current assets.............................................. $ 220,699
Noncurrent assets........................................... 453,018
---------
Total assets...................................... $ 673,717
=========
Current liabilities......................................... $ 533,362
Noncurrent liabilities...................................... 83,147
Partners' equity............................................ 57,208
---------
Total liabilities and partners' equity............ $ 673,717
=========
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED
DECEMBER 31,
1996
------------
<S> <C>
Interest and finance fees................................... $69,507
Expenses.................................................... 58,107
-------
Net income.................................................. $11,400
=======
</TABLE>
The Company's equity in net earnings of Agricredit for the year ended
December 31, 1996 of $10,384,000 represents 100% of the net earnings of
Agricredit prior to the completion of the Agricredit Joint Venture on November
1, 1996 and 49% of Agricredit's net earnings thereafter.
6. INCOME TAXES
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No.
109"). SFAS No. 109 requires recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been included in
the financial statements or tax returns. Under this method, deferred tax assets
and liabilities are determined based on the differences between the financial
reporting and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse.
The sources of income before income taxes, equity in net earnings of
unconsolidated subsidiary and affiliates and extraordinary loss were as follows
for the years ended December 31, 1996, 1995 and 1994 (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
United States.......................................... $ 31,904 $ 41,893 $ 50,404
Foreign................................................ 139,725 148,688 51,305
-------- -------- --------
Income before income taxes, equity in net earnings of
unconsolidated subsidiary and affiliates and
extraordinary loss................................... $171,629 $190,581 $101,709
======== ======== ========
</TABLE>
The provision (benefit) for income taxes by location of the taxing
jurisdiction for the years ended December 31, 1996, 1995 and 1994 consisted of
the following (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- --------
<S> <C> <C> <C>
Current:
United States:
Federal............................................. $ 9,715 $15,769 $ 23,123
State............................................... 461 1,521 3,300
Foreign................................................ 29,690 15,692 3,925
------- ------- --------
39,866 32,982 30,348
------- ------- --------
Deferred:
United States:
Federal............................................. (1,096) (2,485) (51,872)
State............................................... 63 297 (4,498)
Foreign................................................ 21,130 35,103 15,412
------- ------- --------
20,097 32,915 (40,958)
------- ------- --------
Provision (benefit) for income taxes................... $59,963 $65,897 $(10,610)
======= ======= ========
</TABLE>
Certain foreign operations of the Company are subject to United States as
well as foreign income tax regulations. Therefore, the preceding sources of
income before income taxes by location and the provision (benefit) for income
taxes by taxing jurisdiction are not directly related.
A reconciliation of income taxes computed at the United States federal
statutory income tax rate (35% in 1996, 1995 and 1994) to the provision
(benefit) for income taxes reflected
42
<PAGE> 26
AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
in the consolidated statements of income for the years ended December
31, 1996, 1995 and 1994 is as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- --------
<S> <C> <C> <C>
Provision for income taxes at United States federal
statutory rate......................................... $60,070 $66,703 $ 35,598
State and local income taxes, net of federal income tax
benefit................................................ 341 1,182 2,145
Taxes on foreign income which differ from the United
States statutory rate.................................. (818) (1,246) 572
Reduction in valuation allowance......................... -- (234) (49,734)
Other.................................................... 370 (508) 809
------- ------- --------
$59,963 $65,897 $(10,610)
======= ======= ========
</TABLE>
For the years ended December 31, 1996 and 1995, the Company's provision for
income taxes approximated statutory rates. For the year ended December 31, 1994,
the Company's United States current income tax provision was offset by the
recognition of deferred income tax benefits through a reduction of a portion of
the valuation allowance. In 1994, the reduction in the valuation allowance
resulted in a United States net income tax benefit of $29,947,000, or $0.61 per
common share on a fully diluted basis. The reduction in the valuation allowance
was supported by the generation of taxable income in recent years and
expectations for taxable income in future periods.
For the years ended December 31, 1996 and 1995, the Company's foreign
income tax provision primarily related to the Company's European operations
acquired in the Massey Acquisition. The deferred income tax provision resulted
from the realization of deferred tax assets acquired in the Massey Acquisition
primarily consisting of net operating loss carryforwards.
The significant components of the net deferred tax assets at December 31,
1996 and 1995 were as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Deferred Tax Assets:
Net operating loss carryforwards.......................... $ 63,199 $ 51,260
Sales incentive discounts................................. 18,262 15,727
Inventory valuation reserves.............................. 11,093 11,327
Postretirement benefits................................... 9,534 8,256
Other..................................................... 48,600 41,488
Valuation allowance....................................... (63,664) (42,109)
-------- --------
Total deferred tax assets......................... 87,024 85,949
-------- --------
Deferred Tax Liabilities:
Tax over book depreciation................................ 2,857 145
Tax over book amortization of goodwill.................... 6,592 5,805
Other..................................................... 5,391 5,590
-------- --------
Total deferred tax liabilities.................... 14,840 11,540
-------- --------
Net deferred tax assets..................................... 72,184 74,409
Less: current portion..................................... (48,084) (51,214)
-------- --------
Noncurrent net deferred tax assets.......................... $ 24,100 $ 23,195
======== ========
</TABLE>
As reflected in the preceding table, the Company established a valuation
allowance of $63,664,000 and $42,109,000 for the years ended December 31, 1996
and 1995, respectively, due to the uncertainty regarding the realizability of
certain deferred tax assets. Included in the valuation allowance at December 31,
1996 and 1995 was $12,702,000 and $27,778,000, respectively, of deferred tax
assets primarily related to net operating loss carryforwards acquired in the
Massey Acquisition which will reduce goodwill and values assigned to trademarks
if realized. The increase in the valuation allowance in 1996 is primarily the
result of the Company's valuation allowance for net operating loss carryforwards
acquired in the Deutz Argentina Acquisition.
The Company had United States net operating loss carryforwards of
approximately $11,400,000 at December 31, 1996 which expire in years 2004 and
2005. The Company's United States net operating loss carryforwards are subject
to an annual limitation of $1,280,000 to reduce income taxes in future years.
The Company has foreign net operating loss carryforwards of $159,856,000, which
are principally in France, Brazil and Argentina. The foreign net operating loss
carryforwards have expiration dates as follows: 1997 -- $12,848,000,
1998 -- $3,692,000, 1999 -- $13,087,000, 2000 -- $30,834,000,
2001 -- $35,122,000, thereafter and unlimited -- $64,273,000.
The Company paid income taxes of $23,120,000, $22,558,000 and $24,861,000
for the years ended December 31, 1996, 1995, and 1994, respectively.
7. LONG-TERM DEBT
Long-term debt consisted of the following at December 31, 1996 and 1995 (in
thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Revolving Credit Facility-Equipment Operations.............. $317,439 $378,336
Senior Subordinated Notes................................... 247,957 --
Other Long-Term Debt........................................ 1,659 --
-------- --------
Total Long-Term Debt-Equipment Operations................. 567,055 378,336
Total Long-Term Debt-Agricredit (Note 4).................. -- 514,376
-------- --------
Total Long-Term Debt-Consolidated................. 567,055 892,712
Less: current portion............................. -- (361,376)
-------- --------
$567,055 $531,336
======== ========
</TABLE>
In March 1996, the Company replaced its $550,000,000 secured revolving
credit facility (the "June 1994 Credit Facility"), obtained in conjunction with
the Massey Acquisition, with a five-year $650,000,000 unsecured revolving credit
facility (the "March 1996 Credit Facility"). Aggregate borrowings outstanding
under the March 1996 Credit Facility are subject to a borrowing base limitation
and may not at any time exceed the sum of 90% of eligible accounts receivable
and 60% of eligible inventory. Interest accrues on borrowings outstanding under
the March 1996 Credit Facility primarily at LIBOR plus an applicable margin, as
defined. At December 31, 1996, interest rates on the outstanding borrowings
ranged from 6.2% to 8.3%, with a
43
<PAGE> 27
AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
weighted average interest rate during 1996 of 6.3%. The March 1996
Credit Facility contains certain covenants, including covenants restricting the
incurrence of indebtedness and the making of certain restrictive payments,
including dividends. In addition, the Company must maintain certain financial
covenants including, among others, a debt to capitalization ratio, an interest
coverage ratio and a ratio of debt to cash flow, as defined. At December 31,
1996, $317,439,000 was outstanding under the March 1996 Credit Facility and
available borrowings were $327,740,000.
In March 1996, the Company issued $250,000,000 of 8 1/2% Senior
Subordinated Notes due 2006 (the "Notes") at 99.139% of their principal amount.
The Notes are unsecured obligations of the Company and are redeemable at the
option of the Company, in whole or in part, at any time on or after March 15,
2001 initially at 104.25% of their principal amount, plus accrued interest,
declining ratably to 100% of their principal amount plus accrued interest, on or
after March 15, 2003. The Notes include certain covenants, including covenants
restricting the incurrence of indebtedness and the making of certain restrictive
payments, including dividends. The net proceeds from the sale of the Notes were
used to repay outstanding indebtedness under the Company's June 1994 Credit
Facility.
Prior to November 1, 1996, Agricredit obtained funds from the Agricredit
Revolving Credit Agreement to finance its credit receivable portfolio (Note 4).
In connection with the Agricredit Joint Venture, the Agricredit Revolving Credit
Agreement was repaid and the Agricredit Joint Venture entered into a new credit
agreement.
At December 31, 1996, the aggregate scheduled maturities of long-term debt
is primarily in year 2001 and thereafter. The scheduled maturities in years 1997
through 2000 are not material.
Cash payments for interest were $54,066,000, $77,281,000 and $56,868,000
for the years ended December 31, 1996, 1995 and 1994, respectively.
The Company has arrangements with various banks to issue letters of
credit or similar instruments which guarantee the Company's obligations for the
purchase or sale of certain inventories and for potential claims exposure for
insurance coverage. At December 31, 1996, outstanding letters of credit totaled
$35,080,000, of which $4,821,000 was issued under the March 1996 Credit
Facility. At December 31, 1995, outstanding letters of credit totaled
$19,945,000, of which $9,525,000 was issued under the June 1994 Credit
Facility.
8. CONVERTIBLE SUBORDINATED DEBENTURES
In June 1995, the Company exchanged all of its outstanding 2,674,534
depositary shares (the "Exchange"), each representing 1/10 of a share of
Convertible Preferred Stock (Note 11), into $66,848,000 of 6.5% Convertible
Subordinated Debentures due 2008 (the "Convertible Subordinated Debentures").
The effect of this transaction resulted in a reduction to stockholders' equity
and an increase to liabilities in the amount of $66,848,000. The Convertible
Subordinated Debentures were convertible at any time at the option of the holder
into shares of the Company's common stock at a conversion rate of 157.85 shares
of common stock for each $1,000 principal amount of the debentures. In addition,
on or after June 1, 1996, the Convertible Subordinated Debentures were
redeemable at the option of the Company initially at an amount equivalent to
$1,045.50 per $1,000 principal amount of the debentures and thereafter, at
prices declining to an amount equivalent to the face amount of the debentures on
or after June 1, 2003, plus all accrued and unpaid interest.
In April 1996, the Company announced its election, effective June 1, 1996,
to redeem all of its outstanding Convertible Subordinated Debentures. Prior to
the execution of redemption, all of the outstanding Convertible Subordinated
Debentures were converted into common stock.
9. EMPLOYEE BENEFIT PLANS
The Company has defined benefit pension plans covering certain hourly and
salaried employees in the United States and certain foreign countries. Under the
United States plans, benefits under the salaried employees' plan are generally
based upon participant earnings, while the hourly employees' benefits are
determined by stated monthly benefit amounts for each year of credited service.
The United States salaried employees' retirement plan was amended to freeze all
future benefit accruals and participation after December 31, 1988, but to
continue the plan provisions with respect to service accumulations toward
achieving eligibility for, and vesting in, plan benefits. The Company also
sponsors certain foreign defined benefit plans. These plans are principally in
the United Kingdom (the "U.K. Plans") and provide pension benefits that are
based on the employees' highest average eligible compensation. The Company's
policy is to fund amounts to the defined benefit plans necessary to comply with
the funding requirements as prescribed by the laws and regulations in each
country where the plans are located.
Net periodic pension cost for the United States plans for the years ended
December 31, 1996, 1995 and 1994 included the following components (in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Service cost.............................................. $ 571 $ 480 $ 590
Interest cost............................................. 2,732 2,633 2,482
Actual (return) loss on plan assets....................... (4,592) (4,629) 787
Net amortization and deferral............................. 2,439 2,941 (2,588)
------- ------- -------
$ 1,150 $ 1,425 $ 1,271
======= ======= =======
</TABLE>
The following assumptions were used to measure the projected benefit
obligation for the United States plans at December 31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Discount rate to determine the projected benefit
obligation................................................ 7.50% 7.25% 8.75%
Expected long-term rate of return on plan assets used to
determine net periodic pension cost....................... 8.00% 8.00% 8.00%
</TABLE>
44
<PAGE> 28
AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The following table sets forth the United States defined benefit plans'
funded status at December 31, 1996 and 1995 (in thousands):
<TABLE>
<CAPTION>
1996 1995
---------------- ----------------
HOURLY SALARY HOURLY SALARY
------- ------ ------- ------
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligation:
Vested benefit obligation......................... $30,764 $7,725 $28,997 $7,598
======= ====== ======= ======
Accumulated benefit obligation.................... $31,559 $7,875 $29,336 $7,764
======= ====== ======= ======
Projected benefit obligation........................ $32,742 $7,875 $29,336 $7,833
Plan assets at fair value, primarily listed stock
and U.S. bonds.................................... 26,632 8,958 21,961 7,922
------- ------ ------- ------
Projected benefit obligation (in excess of) less
than plan assets.................................. (6,110) 1,083 (7,375) 89
Unrecognized net loss (gain)........................ 334 (431) 2,619 487
Unrecognized prior service cost..................... 3,140 -- 1,666 --
Adjustment required to recognize minimum
liability......................................... (2,291) -- (4,285) --
------- ------ ------- ------
(Accrued) prepaid pension cost...................... $(4,927) $ 652 $(7,375) $ 576
======= ====== ======= ======
</TABLE>
Net periodic pension cost for the U.K. Plans for the years ended December
31, 1996, 1995 and the period from the Massey Acquisition date (June 29,1994) to
December 31, 1994 included the following components (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- -------
<S> <C> <C> <C>
Service cost............................................ $ 4,665 $ 3,319 $ 1,690
Interest cost........................................... 19,613 16,944 8,478
Actual return on plan assets............................ (33,353) (29,752) (5,127)
Net amortization and deferral........................... 10,418 10,110 (4,598)
-------- -------- -------
$ 1,343 $ 621 $ 443
======== ======== =======
</TABLE>
The following assumptions were used to measure the projected benefit
obligation for the U.K. Plans:
<TABLE>
<CAPTION>
1996 1995 1994
---- ----- -----
<S> <C> <C> <C>
Discount rate to determine the projected benefit
obligation................................................ 8.50% 8.75% 9.25%
Rate of increase in future compensation levels used to
determine the projected benefit obligation................ 5.00% 5.00% 5.50%
Expected long-term rate of return on plan assets used to
determine net periodic pension cost....................... 9.75% 10.00% 10.50%
</TABLE>
The following table sets forth the U.K. Plans' funded status at December
31, 1996 and 1995 (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Actuarial present value of benefit obligation:
Vested benefit obligation................................. $245,057 $203,292
======== ========
Accumulated benefit obligation............................ $249,387 $206,890
======== ========
Projected benefit obligation................................ $258,847 $214,753
Plan assets at fair value, primarily listed stock and
bonds..................................................... 268,279 217,426
-------- --------
Projected benefit obligation less than plan assets.......... 9,432 2,673
Unrecognized net loss....................................... 2,386 3,647
-------- --------
Prepaid pension cost................................... $ 11,818 $ 6,320
======== ========
</TABLE>
In addition to the U.K. Plans, the Company accrues pension costs relating
to various pension plans in other foreign countries all of which are
substantially funded.
The Company maintains a separate defined contribution 401(k) savings plan
covering certain salaried employees. Under the plan, the Company contributes a
specified percentage of each eligible employee's compensation. The Company
contributed $1,570,000 ,$1,301,000 and $1,272,000 for the years ended December
31, 1996, 1995 and 1994, respectively.
10. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
The Company provides certain postretirement health care and life insurance
benefits for United States salaried and hourly employees and their eligible
dependents who retire after attaining specified age and service requirements.
Net periodic postretirement benefit cost for the years ended December 31,
1996, 1995 and 1994 included the following components (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Service cost................................................ $ 909 $ 890 $1,008
Interest cost on accumulated postretirement benefit
obligation................................................ 1,263 1,287 1,178
Net amortization of transition obligation and prior service
cost...................................................... (688) (688) (688)
Net amortization of unrecognized net gain................... (403) (495) (482)
------ ------ ------
$1,081 $ 994 $1,016
====== ====== ======
</TABLE>
45
<PAGE> 29
AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the postretirement benefit plans' funded
status at December 31, 1996 and 1995 (in thousands):
<TABLE>
<CAPTION>
1996 1995
---------------- ----------------
HOURLY SALARY HOURLY SALARY
------- ------ ------- ------
<S> <C> <C> <C> <C>
Accumulated postretirement benefit obligation:
Retiree........................................... $ 3,600 $1,328 $ 3,191 $ 985
Fully eligible active plan participants........... 2,224 1,262 1,521 1,213
Other active participants......................... 8,434 1,786 9,552 2,058
------- ------ ------- ------
14,258 4,376 14,264 4,256
Plan assets at fair value........................... -- -- -- --
------- ------ ------- ------
Accumulated postretirement benefit obligation in
excess of plan assets............................. 14,258 4,376 14,264 4,256
Unrecognized prior service cost..................... 1,487 -- 2,723 --
Unrecognized transition obligation.................. -- (429) -- (456)
Unrecognized net gain............................... 4,015 738 2,541 233
------- ------ ------- ------
$19,760 $4,685 $19,528 $4,033
======= ====== ======= ======
</TABLE>
For measuring the expected postretirement benefit obligation, a 10.5%
health care cost trend rate was assumed for 1996, decreasing 0.75% per year to
6% and remaining at that level thereafter. The weighted average discount rate
used to determine the accumulated postretirement benefit obligation was 7.5% at
December 31, 1996.
Increasing the assumed health care cost trend rates by one percentage point
each year and holding all other assumptions constant would increase the
accumulated postretirement benefit obligation at December 31, 1996 by $1,736,000
and increase the aggregate of the service and interest cost components of the
net periodic postretirement benefit cost by $229,000.
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits," which requires accrual of postemployment benefits for former or
inactive employees after employment but before retirement. Adoption of this new
standard did not have a material effect on the Company's financial position or
operating results.
11. PREFERRED STOCK
At December 31, 1996, the Company had 1,000,000 authorized shares of
preferred stock with a par value of $0.01 per share. In May 1993, the Company
completed an offering of 3,680,000 depositary shares, each representing 1/10 of
a share of $16.25 Cumulative Convertible Exchangeable Preferred Stock (the
"Convertible Preferred Stock") at $25.00 per depositary share (the "Convertible
Preferred Stock Offering"). The net proceeds to the Company from the Convertible
Preferred Stock Offering, after deducting the underwriters' discount and
offering expenses, were $87,967,000. Dividends on the Convertible Preferred
Stock were cumulative from the date of original issue and were payable quarterly
at $1.625 per annum per depositary share. Shares of the Convertible Preferred
Stock were convertible at any time at the option of the holder into shares of
the Company's common stock at a conversion price of $6.33. In June 1995, the
Company exchanged all of its outstanding 2,674,534 depositary shares of
Convertible Preferred Stock into $66,848,000 of Convertible Subordinated
Debentures (Note 8).
In April 1994, the Company designated 300,000 shares as Junior Cumulative
Preferred Stock (the "Junior Preferred Stock") in connection with the adoption
of a Stockholders' Rights Plan (the "Rights Plan" -- Note 12). No shares of
Junior Preferred Stock have been issued.
12. COMMON STOCK
At December 31, 1996, the Company had 150,000,000 authorized shares of
common stock with a par value of $0.01, with 57,260,151 shares of common stock
outstanding, 1,228,728 shares reserved for issuance under the Company's 1991
Stock Option Plan (Note 13), 81,000 shares reserved for issuance under the
Company's Nonemployee Director Stock Incentive Plan (Note 13) and 1,657,500
shares reserved for issuance under the Company's Long-Term Incentive Plan (Note
13).
In April 1994, the Company adopted the Rights Plan. Under the terms of the
Rights Plan, one-third of a preferred stock purchase right (a "Right") is
attached to each outstanding share of the Company's common stock. The Rights
Plan contains provisions that are designed to protect stockholders in the event
of certain unsolicited attempts to acquire the Company. Under the terms of the
Rights Plan, each Right entitles the holder to purchase one one-hundredth of a
share of Junior Preferred Stock, par value of $0.01 per share, at an exercise
price of
46
<PAGE> 30
AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
$200 per share. The Rights are exercisable a specified number of days
following (i) the acquisition by a person or group of persons of 20% or more of
the Company's common stock or (ii) the commencement of a tender or exchange
offer for 20% or more of the Company's common stock. In the event the Company is
the surviving company in a merger with a person or group of persons that owns
20% or more of the Company's outstanding stock each Right will entitle the
holder (other than such 20% stockholder) to receive, upon exercise, common stock
of the Company having a value equal to two times the Right's exercise price. In
addition, in the event the Company sells or transfers 50% or more of its assets
or earning power, each Right will entitle the holder to receive, upon exercise,
common stock of the acquiring company having a value equal to two times the
Right's exercise price. The Rights may be redeemed by the Company at $0.01 per
Right prior to their expiration on April 27, 2004.
On January 31, 1996, the Company effected a two-for-one stock split of the
Company's outstanding common stock in the form of a stock dividend payable to
stockholders of record on January 15, 1996. On December 15, 1994, the Company
effected a three-for-two split of the Company's outstanding common stock in the
form of a 50% stock dividend payable to stockholders of record on December 1,
1994. All references to common share and per share information and the weighted
average number of common and common equivalent shares outstanding, with the
exception of stock offering information, have been restated to reflect both
stock splits.
13. STOCK PLANS
In April 1995, the Company adopted a nonemployee director stock incentive
plan (the "Director Plan"), and reserved 100,000 common shares for issuance
under the Director Plan. At December 31, 1996, 19,000 shares have been awarded
to plan participants. The awarded shares are earned in specified increments for
each 15% increase in the average market value of the Company's common stock over
the initial base price established under the plan. When an increment of the
awarded shares is earned, the shares are issued to the participant in the form
of restricted stock which vests at the earlier of 12 months after the specified
performance period or upon departure from the board of directors. When the
restricted shares are earned, a cash bonus equal to 40% of the value of the
shares on the date the restricted stock award is earned is paid by the Company
to satisfy a portion of the estimated income tax liability to be incurred by the
participant. At December 31, 1996, 19,000 shares awarded under the Director Plan
had been earned and 1,000 shares have vested.
In April 1994 and subsequently amended in April 1996, the Company
adopted a long-term incentive plan for executive officers (the "LTIP") and
reserved 3,750,000 common shares for issuance under the LTIP. The awarded
shares are earned in specified increments for each 20% increase in the average
market value of the Company's common stock over the initial base price
established under the plan. When an increment of the awarded shares is earned,
the shares are issued to the participant in the form of restricted stock which
generally carries a five year vesting period with one-third of each award
vesting on the last day of the 36th, 48th and 60th month, respectively, after
each award is earned. When the restricted shares are vested, a cash bonus equal
to 40% of the value of the vested shares on the date the restricted stock award
is earned is paid by the Company to satisfy a portion of the estimated income
tax liability to be incurred by the participant.
At the time the awarded shares are earned, the market value of the stock is
added to common stock and additional paid-in capital and an equal amount is
deducted from stockholders' equity as unearned compensation. The LTIP unearned
compensation and the amount of cash bonus to be paid when the awarded shares
become vested are amortized to expense ratably over the vesting period. The
Company recognized compensation expense associated with the LTIP of $25,757,000,
$9,763,000 and $1,508,000 for the years ended December 31, 1996, 1995 and 1994,
respectively, consisting of amortization of the stock award and the related cash
bonus.
Additional information regarding the LTIP for the years ended December 31,
1996, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
--------- -------- ---------
<S> <C> <C> <C>
Shares awarded but not earned at January 1............ -- 891,000 1,620,000
Shares awarded, net of forfeitures ................... 2,070,000 -- --
Shares earned......................................... (472,500) (891,000) (729,000)
--------- -------- ---------
Shares awarded but not earned at December 31.......... 1,597,500 -- 891,000
Shares available for grant............................ 60,000 180,000 180,000
--------- -------- ---------
Total shares reserved................................. 1,657,500 180,000 1,071,000
========= ======== =========
Shares vested......................................... 792,500 -- --
========= ======== =========
</TABLE>
In September 1991 and subsequently amended in May 1993, the Company adopted
a stock option plan (the "Option Plan") for officers, employees, directors and
others and reserved 2,400,000 shares of common stock for distribution under the
Option Plan. Options granted under the Option Plan may be either nonqualified or
incentive stock options as determined by the board of directors. The stock
option exercise price is determined by the board of directors except in the case
of an incentive stock option for which the purchase price shall not be less than
100% of the fair market value at the date of grant. Each recipient of stock
options is entitled to immediately exercise up to 20% of the options issued to
such person, and an additional 20% of such options vest ratably over a four-year
period and expire not later than ten years from the date of grant.
47
<PAGE> 31
AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Stock option transactions during the three years ended December 31, 1996
were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ------------ ------------
<S> <C> <C> <C>
Options outstanding at January 1.............. 899,190 1,198,400 1,043,722
Options granted............................... 229,720 20,000 508,650
Options exercised............................. (312,292) (292,312) (345,872)
Options canceled.............................. (29,368) (26,898) (8,100)
----------- ------------ ------------
Options outstanding at December 31............ 787,250 899,190 1,198,400
=========== ============ ============
Options available for grant at December 31.... 441,478 641,830 634,938
=========== ============ ============
Option price ranges per share:
Granted..................................... $25.50 $14.69-18.25 $11.75-16.96
Exercised................................... 1.52-25.50 1.52-18.25 1.52-14.63
Canceled.................................... 14.63-25.50 1.52-14.63 2.50-3.75
Weighted average option prices per share:
Granted..................................... $25.50 $16.47 $14.41
Exercised................................... 5.58 4.43 2.14
Canceled.................................... 18.94 10.00 3.19
Outstanding at December 31.................. 14.14 8.43 7.35
</TABLE>
At December 31, 1996, the outstanding options had a weighted average
remaining contractual life of approximately 7.9 years and there were 426,292
options currently exercisable with option prices ranging from $1.52 to $25.50
and with a weighted average exercise price of $9.67.
The Company accounts for the Director Plan, the LTIP, and the Option Plan
under the provisions of APB No. 25. The following pro forma information is based
on estimating the fair value of grants under the above plans based upon the
provisions of SFAS No. 123. For the Option Plan, the fair value of each option
granted in 1995 and 1996 has been estimated as of the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions: risk free interest rate of 5.7%, expected life for the option plan
of 7 years, expected dividend yield of 2.0%, and expected volatility of 35.0%.
For the Director Plan and LTIP, the fair value of each award in 1995 and 1996
has been estimated using the Black-Scholes option pricing model with the same
assumptions above for the risk free interest rate, expected dividend yield, and
expected volatility. Under these assumptions for the Option Plan, the weighted
average fair value of options granted in 1996 and 1995 was $12.22 and $8.52,
respectively. Under these assumptions for the Director Plan and the LTIP, the
weighted average fair value of awards granted in 1995 under the Director Plan,
including the related cash bonus, was $22.22, and the weighted average fair
value of awards granted in 1996 under the LTIP, including the related cash
bonus, was $31.36. There were no awards under the Director Plan in 1996 or under
the LTIP in 1995. The fair value of the grants and awards would be amortized
over the vesting period for stock options and earned awards under the Director
Plan and LTIP and over the performance period for unearned awards under the
Director Plan and LTIP. Accordingly, the Company's pro forma net income and net
income per common share assuming compensation cost was determined under SFAS No.
123 would have been the following (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1996 1995
---------- ----------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
Net income.................................................. $123,928 $129,130
Net income per common share -- fully diluted................ $ 2.17 $ 2.30
</TABLE>
Because the SFAS No. 123 method of accounting has not been applied to
grants and awards prior to January 1, 1995, the resulting pro forma compensation
cost may not be representative of that expected in future years.
14. COMMITMENTS AND CONTINGENCIES
The Company leases land, buildings, machinery, equipment and furniture
under various noncancelable operating lease agreements. At December 31, 1996,
future minimum lease payments under noncancelable operating leases were as
follows (in thousands):
<TABLE>
<S> <C>
1997........................................................ $12,262
1998........................................................ 9,023
1999........................................................ 7,041
2000........................................................ 4,784
2001........................................................ 3,498
Thereafter.................................................. 15,655
-------
$52,263
=======
</TABLE>
Total lease expense under noncancelable operating leases was $16,181,000,
$15,069,000, and $7,250,000 for the years ended December 31, 1996, 1995 and
1994, respectively.
The Company is party to various claims and lawsuits arising in the normal
course of business. It is the opinion of management, after consultation with
legal counsel, that those claims and lawsuits, when resolved, will not have a
material adverse effect on the financial position or results of operations of
the Company.
48
<PAGE> 32
AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
15. SEGMENT REPORTING
The Company's operations consist of the following geographic segments as
set forth below (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-------------------------------------------------------
WESTERN
UNITED EUROPE AND
STATES AND SOUTH OTHER
CANADA AMERICA INTERNATIONAL CONSOLIDATED(1)
---------- -------- ------------- ---------------
<S> <C> <C> <C> <C>
Revenues:
Net sales to unaffiliated customers... $850,015 $ 85,151 $1,382,320 $2,317,486
Net sales between geographic
segments........................... 38,548 2,898 149,331 --
-------- -------- ---------- ----------
Total revenues................ $888,563 $ 88,049 $1,531,651 $2,317,486
======== ======== ========== ==========
Income from operations(2)............... $ 46,777 $ (6,784) $ 166,256 $ 206,191
======== ======== ========== ==========
Identifiable assets..................... $867,934 $404,291 $1,258,015 $2,116,531
======== ======== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
--------------------------------------------
WESTERN
UNITED EUROPE AND
STATES AND OTHER
CANADA INTERNATIONAL CONSOLIDATED(1)
---------- ------------- ---------------
<S> <C> <C> <C>
Revenues:
Net sales to unaffiliated customers......... $ 807,499 $1,260,928 $2,068,427
Net sales between geographic segments....... 20,218 203,882 --
---------- ---------- ----------
827,717 1,464,810 2,068,427
Finance income.............................. 56,621 -- 56,621
---------- ---------- ----------
Total revenues...................... $ 884,338 $1,464,810 $2,125,048
========== ========== ==========
Income from operations(2)................... $ 65,175 $ 163,948 $ 227,666
========== ========== ==========
Identifiable assets......................... $1,406,778 $ 943,588 $2,162,915
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
--------------------------------------------
WESTERN
UNITED EUROPE AND
STATES AND OTHER
CANADA INTERNATIONAL CONSOLIDATED(1)
---------- ------------- ---------------
<S> <C> <C> <C>
Revenues:
Net sales to unaffiliated customers......... $ 770,661 $548,610 $1,319,271
Net sales between geographic segments....... 1,276 61,930 --
---------- -------- ----------
771,937 610,540 1,319,271
Finance income.............................. 39,741 -- 39,741
---------- -------- ----------
Total revenues...................... $ 811,678 $610,540 $1,359,012
========== ======== ==========
Income from operations(2)................... $ 81,736 $ 47,484 $ 126,910
========== ======== ==========
Identifiable assets......................... $1,192,788 $738,268 $1,823,294
========== ======== ==========
</TABLE>
- ---------------
(1) Consolidated information reflects the elimination of intersegment
transactions. Intersegment sales are made at selling prices that are
intended to reflect the market value of the products.
(2) Income from operations represents revenues less cost of goods sold, selling,
general and administrative expenses, engineering expenses, nonrecurring
expenses, interest expense for Agricredit for the years ended December 31,
1995 and 1994, and intangible asset amortization.
Net sales by customer location for the years ended December 31, 1996, 1995
and 1994 were as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Net Sales:
Europe........................................... $1,021,016 $ 947,628 $ 389,687
United States.................................... 681,064 660,879 626,205
Canada........................................... 153,773 134,458 130,316
Asia............................................. 122,519 135,031 42,907
South America.................................... 100,216 20,011 14,906
Africa........................................... 80,643 71,672 44,053
Middle East...................................... 72,473 41,203 34,846
Australia........................................ 67,000 39,477 23,132
Mexico, Central America and Caribbean............ 18,782 18,068 13,219
---------- ---------- ----------
$2,317,486 $2,068,427 $1,319,271
========== ========== ==========
</TABLE>
Total export sales from the United States were $194,472,000 in 1996,
$157,663,000 in 1995 and $138,540,000 in 1994 with the large majority of
products sold in Canada. In 1996, the remaining sales to customers outside the
United States were sourced from the Company's operations in Europe and Brazil.
In 1995 and 1994, the remaining sales to customers outside the United States
were sourced solely from the Company's operations in Europe.
16. SUBSEQUENT EVENTS
On January 14, 1997, the Company replaced the March 1996 Credit Facility
with a new revolving credit facility (the "January 1997 Credit Facility"), which
initially provided for borrowings of up to $1.0 billion. In February 1997, the
January 1997 Credit Facility was amended to allow for borrowings of up to $1.2
billion. Borrowings under the January 1997 Credit Facility may not exceed the
sum of 90% of eligible accounts receivable and 60%
49
<PAGE> 33
AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
of eligible inventory. Lending commitments under the January 1997
Credit Facility reduce to $1.1 billion on January 1, 1998 and $1.0 billion on
January 1, 1999. If the Company consummates offerings of debt or capital stock
prior to such dates, the proceeds of such offerings will be used to reduce the
lending commitments, but not below $1.0 billion.
On January 20, 1997, the Company acquired the operations of Xaver Fendt
GmbH & Co. KG ("Fendt") for approximately $283,500,000 plus approximately
$38,304,000 of assumed working capital debt (the "Fendt Acquisition"). The Fendt
Acquisition was financed by borrowings under the Company's January 1997 Credit
Facility. The transaction consists of the purchase of the outstanding stock of
Fendt and its interests in other subsidiaries. Fendt's primary business is the
manufacture and sale of tractors through a network of independent agricultural
cooperatives, dealers and distributors in Germany and throughout Europe and
Australia.
On January 22, 1997, the Company filed a registration statement with the
Securities and Exchange Commission for the sale of 4,500,000 shares of its
common stock (the "Offering"). The Company intends to use the proceeds from the
Offering to reduce a portion of the borrowings outstanding under the January
1997 Credit Facility and expects the transaction to be completed in March 1997.
50
<PAGE> 34
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
AGCO Corporation:
We have audited the accompanying consolidated balance sheets of AGCO
CORPORATION AND SUBSIDIARIES as of December 31, 1996 and 1995 and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the three years in the period ended December 31, 1996. 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 in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of AGCO Corporation and
subsidiaries as of December 31, 1996 and 1995 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 5, 1997
50
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
STATE OR JURISDICTION
NAME OF SUBSIDIARY OF INCORPORATION
AGCO Corporation Delaware
Blue Corp Delaware
AGCO Farm Finance Corp. Delaware
Gleaner-Allis Company, Ltd. Delaware
The Hesston Company Ltd. Delaware
Massey Ferguson Corp. Delaware
Financial Services Insurance Co. of Tennessee Tennessee
Manufacturers Leasing Corp. Delaware
Hesston Ventures Corp. Kansas
AGCO Export Corp. Barbados
AGCO Acceptance Corporation Delaware
AGCO Canada, Ltd. Canada
AGCO de Argentina Argentina
AGCO, Ltd. United Kingdom
AGCO de Mexico SA de CV Mexico
Massey Ferguson de Mexico, SA de CV Mexico
Massey Ferguson Manufacturing Ltd. United Kingdom
AGCO Holding BV Netherlands
Massey Ferguson Group International Ltd. United Kingdom
Massey Ferguson Ltd. United Kingdom
Massey Ferguson Works Pension Trust Ltd. United Kingdom
Massey Ferguson Executive Pension Trust Ltd. United Kingdom
Eikmaskin AS Norway
Massey Ferguson SA France
Massey Ferguson Iberia SA Spain
AGCO Australia Ltd. Australia
Massey Ferguson Europa BV Netherlands
Olema Maskin AB Sweden
Massey Ferguson Staff Pension Trust Ltd. United Kingdom
AGCO GmbH Germany
AGCO Verwaltungs Germany
Massey Ferguson Finance SNC France
Societe Nouvelle De Motoculture France
AGCO do Brazil Brazil
Massey Ferguson Servisleri AS Turkey
Deutz do Brazil Brazil
Massey Ferguson Danmark AS Denmark
Deutz Argentina SA Argentina
Massey Ferguson Franta SRL Romania
Massey Ferguson SPA Italy
Kemptener Maschinenfabrik GmbH Germany
<PAGE> 2
SUBSIDIARIES OF THE REGISTRANT (CONTINUED)
Fendt Australia Pty Ltd. Australia
Fendt SARL France France
Wohungsbau GmbH Germany
Fendt Italiana Italy
Araus SA Argentina
Terramec SA Argentina
Actium Germany
Indamo SA Argentina
<PAGE> 1
Exhibit 23.0
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports included (or incorporated by reference) in this Form 10-K into the
Company's previously filed Registration Statements on Form S-8 (File No.
33-63802, File No. 33-83104, and File No. 33-91686).
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 26, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 41,707
<SECURITIES> 0
<RECEIVABLES> 856,985
<ALLOWANCES> 0
<INVENTORY> 473,844
<CURRENT-ASSETS> 1,466,462
<PP&E> 292,437
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,116,531
<CURRENT-LIABILITIES> 715,988
<BONDS> 567,055
0
0
<COMMON> 573
<OTHER-SE> 774,092
<TOTAL-LIABILITY-AND-EQUITY> 2,116,531
<SALES> 2,317,486
<TOTAL-REVENUES> 2,317,486
<CGS> 1,847,166
<TOTAL-COSTS> 1,847,166
<OTHER-EXPENSES> 27,705
<LOSS-PROVISION> 5,736
<INTEREST-EXPENSE> 32,684
<INCOME-PRETAX> 171,629
<INCOME-TAX> 59,963
<INCOME-CONTINUING> 129,390
<DISCONTINUED> 0
<EXTRAORDINARY> (3,503)
<CHANGES> 0
<NET-INCOME> 125,887
<EPS-PRIMARY> 2.28
<EPS-DILUTED> 2.20
</TABLE>
