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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO ___________.
COMMISSION FILE NUMBER: 1-12930
AGCO CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 58-1960019
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
4205 RIVER GREEN PARKWAY, DULUTH, GEORGIA 30096
(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 .
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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 10, 1999 was $292,501,366.
As of such date, there were 59,535,921 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, 1998 are incorporated by reference in Part II.
Portions of the definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on April 28, 1999 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 4205 River Green
Parkway, Duluth, Georgia 30096, 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, sprayers, forage equipment and implements. The Company's products are
widely recognized in the agricultural equipment industry and are marketed under
the following brand names: AGCO(R) Allis, Massey Ferguson(R), Hesston(R), White,
GLEANER(R), New Idea(R), AGCOSTAR(R), Black Machine, Landini, Tye(R),
Farmhand(R), Glencoe(R), Deutz (South America), IDEAL, Fendt, Spra-Coupe(R) and
Willmar(R). The Company distributes its products through a combination of over
8,500 independent dealers and distributors, associates and licensees. In
addition, the Company provides retail financing in North America, the United
Kingdom, France, Germany, and Brazil 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 17 acquisitions for
consideration aggregating approximately $1.4 billion. 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 duplicate 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 expansion of its product offerings into new distribution channels
and through new product introductions.
TRANSACTION 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 (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 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.
White Tractor Acquisition. In May 1991, the Company acquired the White
Tractor Division ("White") of Allied Products Corporation (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 added a new line of tractors to its product offerings
and expanded its North America dealer network.
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
(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
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agricultural equipment industry and 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 Products
Corporation (the "White-New Idea Acquisition"). White-New Idea's net sales in
1993 were approximately $83.1 million. 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.
Agricredit-North America Acquisition. The Company acquired Agricredit
Acceptance Company ("Agricredit-North America"), a retail finance company, from
Varity in two separate transactions (together, the "Agricredit-North America
Acquisition"). The Company acquired a 50% joint venture interest in
Agricredit-North America in January 1993 and acquired the remaining 50% interest
in February 1994. The Agricredit-North America Acquisition 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, including Massey's network of independent dealers and distributors and
associate and licensee companies outside the United States and Canada (the
"Massey Acquisition"). Massey, with fiscal 1993 net sales of approximately
$898.4 million (including net sales to AGCO of approximately $124.6 million),
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") (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 expanded the Company's product offerings and distribution network in
South America, particularly 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 other harvesting equipment
sold in North America (the "Western Combine Acquisition"). The Western Combine
Acquisition provided the Company with access to advanced technology and
increased the Company's profit margin on certain combines and harvesting
equipment sold in North America.
Agricredit-North America Joint Venture. In November 1996, the Company
sold a 51% interest in Agricredit-North America to a wholly-owned subsidiary of
Rabobank. The Company retained a 49% interest in Agricredit-North America and
now operates Agricredit-North America with Rabobank as a joint venture (the
"Agricredit-North America Joint Venture"). The Agricredit North-America Joint
Venture has continued the business of Agricredit-North America 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, Germany and Brazil.
Deutz Argentina Acquisition. In December 1996, the Company acquired the
operations of Deutz Argentina S.A. ("Deutz Argentina") (the "Deutz Argentina
Acquisition"). Deutz Argentina, with 1995 sales of approximately $109.0 million,
was a manufacturer and distributor of agricultural equipment, engines and light
duty trucks in Argentina and other markets in South America. The Deutz Argentina
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Acquisition established AGCO as a leading supplier of agricultural equipment in
Argentina. In February 1999, the Company sold its manufacturing operations in
Haedo, Argentina which will allow the Company to consolidate the assembly of
tractors into an existing facility in Brazil.
Fendt Acquisition. In January 1997, the Company acquired the operations
of Xaver Fendt GmbH & Co. KG ("Fendt") (the "Fendt Acquisition"). Fendt, which
had 1996 sales of approximately $650.0 million, manufactures and distributes
tractors through a network of independent agricultural cooperatives, dealers and
distributors in Germany and throughout Europe and Australia. With this
acquisition, AGCO has a leading market share in Germany and France, two of
Europe's largest agricultural equipment markets. In December 1997, the Company
sold Fendt's caravan and motor home business in order to focus on its core
agricultural equipment business.
Dronningborg Acquisition. In December 1997, the Company acquired the
remaining 68% of Dronningborg Industries a/s (the "Dronningborg Acquisition"),
the Company's supplier of combine harvesters sold under the Massey Ferguson
brand name in Europe. The Company previously owned 32% of this combine
manufacturer which developed and manufactured combine harvesters exclusively for
AGCO. The Dronningborg Acquisition enabled the Company to achieve certain
synergies within its worldwide combine manufacturing and increased the Company's
gross profit margin on combines sold primarily in Europe.
Argentina Engine Joint Venture. In December 1997, the Company sold 50%
of Deutz Argentina's engine production and distribution business to Deutz AG, a
global supplier of diesel engines in Cologne, Germany. The Company retained a
50% interest in the engine business and now operates it with Deutz AG as a joint
venture (the "Argentina Engine Joint Venture"). The Argentina Engine Joint
Venture will allow the Company to share in research and development costs and
gain access to advanced technology.
MF Argentina Acquisition. In May 1998, the Company acquired the
distribution rights for the Massey Ferguson brand in Argentina (the "MF
Argentina Acquisition"). The MF Argentina Acquisition expanded the Company's
distribution network in the second largest market in South America.
Spra-Coupe and Willmar Acquisitions. In July 1998, the Company acquired
the Spra-Coupe product line, a brand of agricultural sprayers sold primarily in
North America (the "Spra-Coupe Acquisition"). In October 1998, the Company
acquired the Willmar product line, a brand of agricultural self-propelled
sprayers, spreaders and loaders sold primarily in North America (the "Willmar
Acquisition"). Spra-Coupe and Willmar had combined net sales of approximately
$81.8 million in their respective full fiscal years preceding these
acquisitions. The Spra-Coupe and Willmar Acquisitions expanded the Company's
product offerings to include a full line of self-propelled sprayers.
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 the 40 to 100 horsepower
segment under the Massey Ferguson, Fendt, AGCO Allis, White, Landini, and Deutz
brand names. 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
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Company sells high horsepower tractors under the Massey Ferguson, Fendt, AGCO
Allis, White, Landini, AGCOSTAR and Deutz brand names. Tractors accounted for
approximately 62%, 62% and 60% of the Company's net sales in 1998, 1997 and
1996, 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, Deutz, IDEAL, and beginning in 1999, Fendt
brand names. Depending on the market, Gleaner and Massey Ferguson combines are
sold with conventional or rotary technology while the Deutz, Fendt and IDEAL
combines 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 10%, 10% and 11% of the Company's net sales in 1998, 1997
and 1996, respectively.
Hay Tools and Forage Equipment, Sprayers, 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.
Sprayers are used to apply materials such as fertilizers and crop
protection chemicals to fields before or after crops have emerged. The Company
offers under 500-gallon self-propelled agricultural sprayers under the
Spra-Coupe brand name and 500 to 1,000 gallon self-propelled agricultural
sprayers under the Willmar brand name.
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 primarily includes
tractor-pulled manure 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, Deutz, Fendt and Willmar brand
names. Hay tools and forage equipment, sprayers, implements and other products
accounted for 11%, 12% and 12% of the Company's net sales in 1998, 1997 and
1996, 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. Replacement parts accounted for approximately
17%, 16% and 17% of the Company's net sales in 1998, 1997 and 1996,
respectively.
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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's
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 equipment are marketed in most major
Western European markets directly through a network of approximately 2,400
independent Massey Ferguson and Fendt dealers and agricultural cooperatives in
Western Europe. In addition, the Company sells through independent distributors
and associates in certain markets in Western Europe, which distribute through
approximately 770 Massey Ferguson and Fendt dealers. In most cases, dealers
carry competing or complementary products from other manufacturers. Sales in
Western Europe accounted for 47%, 47% and 43% of the Company's net sales in
1998, 1997 and 1996, 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 6,500 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 product lines. Sales in North
America accounted for 32%, 30% and 36% of the Company's net sales in 1998, 1997
and 1996, respectively.
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
approximately 475 independent dealers primarily supporting either the Massey
Ferguson, IDEAL, or Deutz 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 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
11%, 10% and 4% of the Company's net sales in 1998, 1997 and 1996, respectively.
Rest of the World
Outside Western Europe, North America and South America, the Company
operates primarily through a network of approximately 2,115 independent Massey
Ferguson and Fendt 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 and
Central 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 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 10%, 13% and 17%
of the Company's net sales in 1998, 1997 and 1996, 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. Licensees are entities in which the Company has no direct ownership
interest, most notably in Pakistan and Turkey. The associate or licensee
generally has
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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; Ennery, France; and Marktoberdorf,
Germany and regional parts facilities in Spain, Denmark, Germany and Italy. 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 the Asia/Pacific region, the Company's parts operation is
supported by a master distribution facility in Melbourne, Australia. In South
America, replacement parts are maintained and distributed primarily from its
facilities in Brazil and Argentina.
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 of
its dealer network. The Company monitors each dealer's performance and
profitability as well as establishes programs which focus 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, a dealer may be added in that territory, or a nonperforming
dealer may 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.
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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 sales are backed by letters of credit or credit insurance.
RETAIL FINANCING
Through its retail financing joint ventures located in North America,
the United Kingdom, France, Germany and Brazil, the Company provides a
competitive and dedicated financing source to the end users 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. Retail 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; Beauvais,
France and Marktoberdorf, Germany and a combine manufacturing facility in
Randers, Denmark. The Coventry facility produces tractors marketed under the
Massey Ferguson, AGCO Allis and White brand names ranging from 38 to 110
horsepower that are sold worldwide in fully-assembled form or as CKD kits for
final assembly by licensees and associates. The Beauvais facility produces 70 to
260 horsepower tractors marketed under the Massey Ferguson, AGCO Allis and White
brand names. The Marktoberdorf facility produces 50 to 225 horsepower tractors
marketed under the Fendt brand name. The Randers facility produces conventional
combines under the Massey Ferguson brand name, and beginning in 1999, the Fendt
brand name. The Company also assembles forklifts for sale to third parties and
manufactures hydraulics for its Fendt tractors and for sale to third parties in
its Kempten, Germany facility, and assembles cabs for its Fendt tractors in
Baumenheim, Germany. The Company also has 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.
North America
The Company manufactures and assembles GLEANER and Massey Ferguson
rotary and conventional combines and combine heads at its Independence, Missouri
facility. The Company produces its White-New Idea line of planters, hay tools
and forage equipment and implements; Black Machine planters; AGCO Allis, White,
Massey Ferguson and AGCOSTAR tractors; cultivating and tillage equipment
marketed under the Glencoe brand name and tillage equipment and loaders marketed
under the Farmhand brand name at its Coldwater, Ohio facility. The Company also
leases a manufacturing facility in Lockney, Texas where it produces drill
planters and tillage equipment marketed under the Tye brand name. In Willmar,
Minnesota, the Company manufactures self-propelled sprayers marketed under the
Spra-Coupe and Willmar brand names and loaders and spreaders under the Willmar
brand name. As part of the HFI
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joint venture, the Company produces Hesston, White-New Idea and Massey Ferguson
hay tools and forage equipment in Hesston, Kansas. The HFI partnership agreement
provides for HFI to manufacture hay tools and forage equipment for sale to the
Company and Case Corporation at cost. By sharing the facilities with Case
Corporation, 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
The Company's manufacturing operations in South America are located in
Brazil and Argentina. In Brazil, the Company manufactures and assembles Massey
Ferguson tractors, ranging from 50 to 173 horsepower, and industrial
loader-backhoes at its facility in Canoas, Rio Grande do Sul. The Company also
manufactures conventional combines marketed under the Massey Ferguson, Deutz and
IDEAL brand names in Santa Rosa, Rio Grande do Sul. In February 1999, the
Company sold its Haedo, Argentina plant which manufactured Deutz branded
tractors, ranging from 60 to 190 horsepower, engine components and light duty
trucks. The Haedo sale will allow the Company to consolidate certain operations,
principally tractor assembly, into its Canoas, Brazil facility in the year 2000.
In addition, the Company will outsource certain components currently
manufactured in Haedo as part of the transaction. The Argentina Engine Joint
Venture manufactures diesel engines, for the Company's equipment and for sale to
third parties, at a facility in San Luis, Argentina, which is owned by the joint
venture.
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.
The Company purchases certain products it distributes from third party
suppliers. The Company purchases its standard and specialty tractors from
Landini S.p.A. ("Landini") and 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 from Iseki &
Company, Limited, a Japanese manufacturer. The Company also purchases certain
other tractors, implements, and hay and forage equipment from various
third-party suppliers.
In addition to the purchase of machinery, significant components used
in the Company's manufacturing operations, such as engines, 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.
SEASONALITY
Retail sales by dealers to farmers are highly seasonal and are a
function of the timing of the planting and harvesting seasons. 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 retail
demands on its manufacturing operations and to minimize its investment in
inventory. The Company's financing requirements are subject to variations due to
seasonal changes in working capital levels, which typically build in the first
half of the year and then reduce in the second half of the year.
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 Case Corporation, Deere & Company 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.
8
<PAGE> 10
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 $56.1 million (1.9% of net
sales), $54.1 million (1.7% of net sales) and $27.7 million (1.2% of net sales)
in 1998, 1997 and 1996, respectively, on engineering and research.
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, Fendt, GLEANER, White, Hesston, New Idea,
Landini, Black Machine, AGCOSTAR, Tye, Farmhand, Glencoe, Willmar, Spra-Coupe,
IDEAL and Deutz (South America) 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, Glencoe, Spra-Coupe and Willmar are
registered trademarks of the Company. In addition, Fendt is a registered
trademark in Germany, and the Company has a pending trademark registration for
the Fendt brand name in the U.S. and Canada.
EMPLOYEES
As of December 31, 1998, the Company employed approximately 10,500
employees, including approximately 2,300 employees in the United States and
Canada. A majority of the Company's employees at its manufacturing facilities,
both domestic and international, are represented by collective bargaining
agreements with expiration dates ranging from 2000 to 2002. The Company is
currently in negotiations with national labor unions in France relating to the
renewal of their collective bargaining agreements which expired December 31,
1998.
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
9
<PAGE> 11
contracts and equipment repurchase requirements. Such state laws could adversely
affect the ability of the Company to rationalize its dealer network.
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.
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.
FINANCIAL INFORMATION ON GEOGRAPHICAL AREAS
For financial information on geographic areas, see page 43 of the
Annual Report to Stockholders for the year ended December 31, 1998, which is
incorporated herein by reference.
FORWARD LOOKING STATEMENTS
Certain information included in Management's Discussion and Analysis of
Financial Condition and Results of Operations constitute 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.
10
<PAGE> 12
Item 2. PROPERTIES
The principal properties of the Company as of December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
Leased Owned
Location Description of Property (sq. ft.) (sq. ft.)
- -------- ----------------------- --------- ---------
<S> <C> <C> <C>
North America:
Duluth, Georgia ............................ Corporate Headquarters 125,000
Coldwater, Ohio............................. Manufacturing 1,490,000
Hesston, Kansas (A)......................... Manufacturing 1,115,000
Independence, Missouri...................... Manufacturing 450,000
Lockney, Texas.............................. Manufacturing 190,000
Queretaro, Mexico........................... Manufacturing 13,500
Willmar, Minnesota.......................... Manufacturing 223,400
Eagan, Minnesota............................ Sales office 8,300
Kansas City, Missouri....................... Warehouse 425,000
Batavia, Illinois........................... Parts Distribution 310,200
Des Moines, Iowa (B)........................ Retail Finance Office 23,850
International:
Coventry, United Kingdom.................... Regional Headquarters/Manufacturing 4,135,150
Beauvais, France (C)........................ Manufacturing 3,740,000
Marktoberdorf, Germany...................... Manufacturing 2,411,000
Baumenheim, Germany......................... Manufacturing 1,890,000
Kempten, Germany............................ Manufacturing 582,000
Randers, Denmark............................ Manufacturing 683,000
Haedo, Argentina (D)........................ Manufacturing 489,450
Noetinger, Argentina........................ Manufacturing 156,170
San Luis, Argentina (E).................... Manufacturing 57,860
Canoas, Rio Grande do Sul, Brazil........... Regional Headquarters /Manufacturing 452,400
Santa Rosa, Rio Grande do Sul, Brazil....... Manufacturing 297,100
Ennery, France.............................. Parts Distribution 269,100
Sunshine, Victoria, Australia............... Regional Headquarters 37,200
Tottenham, Victoria, Australia.............. Parts Distribution 179,960
Stoneleigh, United Kingdom.................. Training Facility/Office 44,000
</TABLE>
- ------------
(A) Owned by HFI, a joint venture in which the Company has a 50% interest.
(B) Owned by the Agricredit-North America Joint Venture, in which the
Company has a 49% interest.
(C) Includes the GIMA Joint Venture, in which the Company has a 50%
interest.
(D) In February 1999, the Company sold the Haedo, Argentina facility. See
Manufacturing and Suppliers - South America in Item 1.
(E) Owned by the Argentina Engine Joint Venture, in which the Company has a
50% 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.
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.
11
<PAGE> 13
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, 1998 is incorporated herein by reference.
Item. 6. SELECTED FINANCIAL DATA
The information under the heading "Selected Financial Data" for the
years ended December 31, 1994 through 1998 on page 19 of the Annual Report to
Stockholders for the year ended December 31, 1998 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, 1998 is
incorporated herein by reference.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information under the heading "Foreign Currency Risk Management"
and "Interest Rates" in "Management's Discussion and Analysis and Results of
Operations" on pages 26 and 27 of the Annual Report to Stockholders and in
Footnote 1 - "Financial Instruments" of the Notes to Consolidated Financial
Statements on page 34 of the Annual Report to Stockholders for the year ended
December 31, 1998 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 45 of the Annual Report to
Stockholders for the year ended December 31, 1998 are incorporated herein by
reference:
Consolidated Statements of Income for the years ended December 31,
1998, 1997 and 1996.
Consolidated Balance Sheets as of December 31, 1998 and 1997.
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1998, 1997 and 1996.
Consolidated Statements of Cash Flows for the years ended December 31,
1998, 1997 and 1996.
Notes to Consolidated Financial Statements.
Report of Independent Public Accountants.
The information under the heading "Quarterly Results" on page 24 of the
Annual Report to Stockholders for the year ended December 31, 1998 is
incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
12
<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 pages 2, and 3
and 4, respectively, of the Proxy Statement for the Annual Meeting of
Stockholders to be held April 28, 1999 is incorporated herein by reference for
information on the directors of the Registrant. The information under the
heading "Executive Officers" on pages 16 through 18 of the Proxy Statement for
the Annual Meeting of Stockholders to be held April 28, 1999 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 page 18 of the Proxy Statement for the Annual Meeting of
Stockholders to be held April 28, 1999 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 4 and 5, page 5, and pages 8 through
10, respectively, of the Proxy Statement for the Annual Meeting of Stockholders
to be held April 28, 1999 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 6 through 8 of the Proxy Statement for the Annual Meeting of
Stockholders to be held April 28, 1999 is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the heading "Certain Relationships and Related
Transactions" on page 18 of the Proxy Statement for the Annual Meeting of
Stockholders to be held April 28, 1999 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, 1998, are incorporated
by reference in Part II, Item 8:
Consolidated Statements of Income for the years ended December
31, 1998, 1997 and 1996.
Consolidated Balance Sheets at December 31, 1998 and 1997.
Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1998, 1997 and 1996.
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996.
Notes to Consolidated Financial Statements.
Report of Independent Public Accountants.
(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
Financial Statement Schedule
Schedule II Valuation and Qualifying Accounts
13
<PAGE> 15
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 on Form 10-Q for
the quarter ended March 31, 1996.
3.2 By-Laws of the Registrant incorporated by reference to the
Company's Annual Report on From 10-K for the year ended
December 31, 1997.
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.
4.3 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 incorporated by
reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.
10.6 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.
10.7 Deferred Compensation Plan incorporated by reference to the
Company's Registration Statement on Form S-1 (No. 33-43437)
dated April 16, 1992.
10.8 1991 Stock Option Plan, as amended.
10.9 Form of Stock Option Agreements (Statutory and Nonstatutory)
incorporated by reference to the
</TABLE>
1
<PAGE> 16
<TABLE>
<S> <C>
Company's Registration Statement on Form S-1 (No. 33-43437)
dated April 16, 1992.
10.10 Amended and Restated Long-Term Incentive Plan incorporated by
reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997.
10.11 Nonemployee Director Stock Incentive Plan, as amended
incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1997.
10.12 Management Incentive Compensation Plan incorporated by
reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 1995.
10.13 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.
10.14 Second Amended and Restated Credit Agreement dated as of March
12, 1999 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.
10.15 Limited Liability Company Agreement of Agricredit Acceptance
LLC dated November 1, 1996 incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1996.
10.16 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.
10.17 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.
10.18 Employment and Severance Agreement by and between AGCO
Corporation and James M. Seaver incorporated by reference to
the Company's Annual Report on From 10-K for the year ended
December 31, 1995.
10.19 Employment and Severance Agreement by and between AGCO
Corporation and Edward R. Swingle.
10.20 Employment and Severance Agreement by and between AGCO
Corporation and Chris E. Perkins incorporated by reference to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
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, 1997 expressly incorporated
herein by reference.
21.0 Subsidiaries of the Registrant.
23.0 Consent of Arthur Andersen LLP, independent public
accountants.
</TABLE>
2
<PAGE> 17
<TABLE>
<S> <C>
24.0 Power of Attorney
27.1 Financial Data Schedule - December 31, 1998 (filed for SEC
reporting purposes only).
</TABLE>
(b) Reports on Form 8-K
None
3
<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/ John M. Shumejda
-----------------------------
John M. Shumejda
President and Chief Executive
Officer
Dated: March 31, 1999
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>
* Chairman of the Board March 31, 1999
---------------------------
Robert J. Ratliff
/s/ John M. Shumejda President and Chief Executive March 31, 1999
--------------------------- Officer, Director
John M. Shumejda
/s/ Patrick S. Shannon Vice President and Chief Financial March 31, 1999
--------------------------- Officer (Principal
Patrick S. Shannon Financial Officer and Principal
Accounting Officer)
* Director March 31, 1999
---------------------------
Henry J. Claycamp
Director
---------------------------
Wolfgang Deml
* Director March 31, 1999
---------------------------
William H. Fike
* Director March 31, 1999
---------------------------
Gerald B. Johanneson
* Director March 31, 1999
---------------------------
Richard P. Johnston
Director
---------------------------
Anthony D. Loehnis
Director
---------------------------
Alan S. McDowell
* Director March 31, 1999
---------------------------
Hamilton Robinson, Jr.
* Director March 31, 1999
---------------------------
Wolfgang Sauer
*By: /s/ Patrick S. Shannon
----------------------
Patrick S. Shannon
Attorney-in-Fact
</TABLE>
4
<PAGE> 19
ANNUAL REPORT ON FORM 10-K
ITEM 14(A)(2)
FINANCIAL STATEMENT SCHEDULE
YEAR ENDED DECEMBER 31, 1998
<PAGE> 20
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To 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, 1998 and 1997 and the related consolidated statements of income,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1998, and have issued our report thereon dated February 3,
1999. Our audit was made for the purpose of forming an opinion on the basic
financial 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 3, 1999
<PAGE> 21
Schedule II
AGCO CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in millions)
<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
----------- ---------- ---------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1998
Allowances for sales incentive discounts and
doubtful receivables ....................... $ 97.2 $ 2.0 $ 118.7 $-- $ (110.1) $ 107.8
======= ===== ======== === ======== ========
Year ended December 31, 1997
Allowances for sales incentive discounts and
doubtful receivables ....................... $ 75.8 $ 4.1 $ 116.1 $-- $ (98.8) $ 97.2
======= ===== ======== === ======== ========
Year ended December 31, 1996
Allowances for sales incentive discounts and
doubtful receivables ....................... $ 62.5 $ 3.3 $ 91.5 $-- $ (81.5) $ 75.8
======= ===== ======== === ======== ========
<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
----------- ---------- ---------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1998
Accruals of severance, relocation and
other integration costs .................... $ 12.4 $ 6.5 $ 32.8(a) $-- $ (16.7) $ 35.0
======= ===== ======== === ======== ========
Year ended December 31, 1997
Accruals of severance, relocation and
other integration costs .................... $ 4.7 $ 6.5 $ 18.2 $-- $ (17.0) $ 12.4
======= ===== ======== === ======== ========
Year ended December 31, 1996
Accruals of severance, relocation and
other integration costs .................... $ 1.3 $ -- $ 16.5(b) $-- $ (13.1) $ 4.7
======= ===== ======== === ======== ========
</TABLE>
(a) Excludes nonrecurring expenses related to pension and postretirement
benefit expenses of $7.2 million.
(b) Excludes $5.8 million of nonrecurring expenses for stock compensation
expenses under the Company's Long-Term Incentive Plan related to
executive severance.
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
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. *
4.3 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 Leasing Gmbh *
10.5 Shareholders Agreement between Massey Ferguson GmbH and DeLage Landen B.V. *
10.6 Tractor Distributor Agreement by and between Landini S.p.A. and AGCO Corporation. *
10.7 Deferred Compensation Plan. *
10.8 1991 Stock Option Plan, as amended. -
10.9 Form of Stock Option Agreements (Statutory and Nonstatutory). *
10.10 Amended and Restated Long-Term Incentive Plan. *
10.11 Nonemployee Director Stock Incentive Plan, as amended. *
10.12 Management Incentive Compensation Plan. *
10.13 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. *
10.14 Second Amended and Restated 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. -
10.15 Limited Liability Company Agreement of Agricredit Acceptance LLC *
10.16 Employment and Severance Agreement by and between AGCO Corporation and Robert J. Ratliff. *
10.17 Employment and Severance Agreement by and between AGCO Corporation and John M. Shumejda. *
10.18 Employment and Severance Agreement by and between AGCO Corporation and James M. Seaver. *
10.19 Employment and Severance Agreement by and between AGCO Corporation and Edward R. Swingle -
10.20 Employment and Severance Agreement by and between AGCO Corporation and Chris E. Perkins. *
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, 1998.
21.0 Subsidiaries of the Registrant. -
23.0 Consent of Arthur Andersen LLP, independent public accountants. -
27.1 Financial Data Schedule - December 31, 1998 (filed for SEC reporting purposes only) -
</TABLE>
- ---------------------
* Incorporated herein by reference
<PAGE> 1
EXHIBIT 10.8
AGCO CORPORATION
1991 STOCK OPTION PLAN, as amended
April 29, 1998
<PAGE> 2
AGCO Corporation
1991 STOCK OPTION PLAN
<TABLE>
<S> <C> <C>
I. Purposes.............................................................2
II. Amount of Stock Subject to the Plan..................................2
III. Administration.......................................................3
IV. Eligibility..........................................................4
V. Maximum Allotment of Incentive Options...............................4
VI. Option Price and Payment.............................................5
VII. Use of Proceeds......................................................6
VIII. Loans, Loan Guarantees and Installment Payments......................6
IX. Term of Options and Limitations on the Right of Exercise.............6
X. Exercise of Options..................................................6
XI. Nontransferability of Options........................................7
XII. Termination of Employment............................................7
XIII. Adjustment of Shares; Effect of Certain Transactions.................9
XIV. Right to Terminate Employment.......................................10
XV. Purchase for Investment.............................................10
XVI. Issuance of Certificates; Legends; Payment of Expenses..............10
XVII. Withholding Taxes...................................................11
XVIII. Listing of Shares and Related Matters...............................11
XIX. Amendment of the Plan...............................................11
XX. Termination or Suspension of the Plan...............................12
XXI. Governing Law.......................................................12
XXII. Partial Invalidity..................................................12
XXIII. Effective Date......................................................12
</TABLE>
<PAGE> 3
AGCO Corporation
1991 STOCK OPTION PLAN
I. PURPOSES
AGCO Corporation (the "Company") desires to afford certain directors,
key employees and consultants of the Company and its subsidiaries who are
responsible for the continued growth of the Company an opportunity to acquire a
proprietary interest in the Company, and thus to create in such persons interest
in and a greater concern for the welfare of the Company.
The stock options offered pursuant to this 1991 Stock Option Plan (the
"Plan") are a matter of separate inducement and are not in lieu of any salary or
other compensation for services.
The Company, by means of the Plan, seeks to retain the services of
persons now holding key positions and to secure the services of persons capable
of filling such positions.
The options granted under the Plan may be designated as either
incentive stock options ("Incentive Options") within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"), or options that
do not meet the requirements for Incentive Options ("Non-Qualified Options") but
the Company makes no warranty as to the qualification of any option as an
Incentive Option. Only key employees may be granted Incentive Options under the
Plan.
II. AMOUNT OF STOCK SUBJECT TO THE PLAN
The total number of shares of common stock of the Company which may be
purchased pursuant to the exercise of options granted under the Plan shall not
exceed, in the aggregate, 4,000,000 shares of the authorized common stock, $0.01
par value, per share, of the Company (the "Shares").
Shares which may be acquired under the Plan may be either authorized
but unissued Shares or Shares of issued stock held in the Company's treasury, or
both, at the discretion of the Company. If and to the extent that options
granted under the Plan expire or terminate without having been exercised, new
options may be granted with respect to the Shares covered by such expired or
terminated options, provided that the grant and the terms of such new options
shall in all respects comply with the provisions of the Plan.
Except as provided in Article XX, the Company may, from time to time
during the period beginning September 18, 1991 (the "Effective Date") and ending
September 17, 2001 (the "Termination Date") grant options to certain directors,
key employees and consultants under the terms hereinafter set forth.
-2-
<PAGE> 4
No individual shall be granted options to purchase in the aggregate
more than 250,000 shares.
III. ADMINISTRATION
The Board of Directors of the Company (the "Board of Directors") shall
designate from among its members an option committee (the "Committee") to
administer the Plan. The Committee shall consist of no fewer than three (3)
members of the Board of Directors, each of whom shall be a "nonemployee
director" within the meaning of Rule 16b-3 (or any successor rule or regulation)
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and an "outside director" within the meaning of Section 162(m)(4)(C)(i)
of the Code. A majority of the members of the Committee shall constitute a
quorum, and the act of a majority of the members of the Committee shall be the
act of the Committee. Any member of the Committee may be removed at any time,
either with or without cause, by resolution adopted by a majority of the Board
of Directors, and any vacancy on the Committee may at any time be filled by
resolution adopted by a majority of the Board of Directors.
Any or all powers and functions of the Committee may at any time and
from time to time be exercised by the Board of Directors; provided, however,
that, with respect to the participation in the Plan by persons who are members
of the Board of Directors, such powers and functions of the Committee may be
exercised by the Board of Directors only if, at the time of such exercise, all
of the members of the Board of Directors acting in the particular matter are
"nonemployee directors" within the meaning of Rule 16b-3 (or any successor rule
or regulation) promulgated under the Exchange Act and "outside directors" within
the meaning of Section 162(m)(4)(C)(i) of the Code.
Subject to the express provisions of the Plan, the Board of Directors
or the Committee, as the case may be, shall have authority, in its discretion,
to determine the persons to whom options shall be granted, the time when such
options shall be granted, the number of Shares which shall be subject to each
option, the purchase price of each Share which shall be subject to each option,
the period(s) during which such options shall be exercisable (whether in whole
or in part) and the other terms and provisions thereof. In determining the
employees to whom options shall be granted and the number of Shares for which
options shall be granted to each person, the Board of Directors or the
Committee, as the case may be, shall consider the length of service, the amount
of earnings, and the responsibilities and duties of such person.
Subject to the express provisions of the Plan, the Board of Directors
or the Committee, as the case may be, also shall have authority to construe the
Plan and options granted thereunder, to amend the Plan and options granted
thereunder, to prescribe, amend and rescind rules and regulations relating to
the Plan, to determine the terms and provisions of the respective options (which
need not be identical) and to make all other determinations necessary or
advisable for administering the Plan; provided, however, that neither the Board
of Directors nor the Committee shall issue any new option in exchange for the
cancellation of an existing option if such new option
-3-
<PAGE> 5
would have an exercise price lower than the exercise price of the cancelled
option. The Board of Directors or the Committee, as the case may be, also shall
have the authority to require, in its discretion, as a condition of the granting
of any such option, that the optionee agree (i) not to sell or otherwise dispose
of Shares acquired pursuant to the option for a period of six (6) months
following the date of acquisition of such Shares and (ii) that in the event of
termination of service of the optionee with the Company or any subsidiary of the
Company, other than as a result of dismissal without cause, such optionee will
not, for a period to be fixed at the time of the grant of the option, enter into
any other employment or participate directly or indirectly in any other business
or enterprise which is competitive with the business of the Company or any
subsidiary of the Company, or enter into any employment in which such optionee
will be called upon to utilize special knowledge obtained through service with
the Company or any subsidiary of the Company.
The determination of the Board of Directors or the Committee, as the
case may be, on matters referred to in this Article III shall be conclusive.
The Board of Directors or the Committee, as the case may be, may
employ such legal counsel, consultants and agents as it may deem desirable for
the administration of the Plan and may rely upon any opinion received from any
such counsel or consultant and any computation received from any such consultant
or agent. Expenses incurred by the Board of Directors or the Committee in the
engagement of such counsel, consultant or agent shall be paid by the Company. No
member or former member of the Committee or of the Board of Directors shall be
liable for any action or determination made in good faith with respect to the
Plan or any option granted hereunder.
IV. ELIGIBILITY
Options may be granted only to directors, key employees and
consultants of the Company and its subsidiaries who are not members of the
Committee.
An Incentive Option shall not be granted to any person who, at the
time the option is granted, owns stock of the Company or any subsidiary or
parent of the Company possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of any
subsidiary or parent of the Company unless (i) the option price is at least one
hundred ten percent (110%) of the fair market value per share (as defined in
Article VI) of the stock subject to the option and (ii) the option is not
exercisable after the fifth anniversary of the date of grant of the option. In
determining stock ownership of an employee, the rules of Section 424 (d) of the
Code shall be applied, and the Board of Directors or the Committee, as the case
may be, may rely on representations of fact made to it by the employee and
believed by it to be true.
V. MAXIMUM ALLOTMENT OF INCENTIVE OPTIONS
If the aggregate fair market value of stock with respect to which
Incentive Options are exercisable for the first time by an employee during any
calendar year (under all stock option plans of the Company and any parent or any
subsidiary of the Company) exceeds $100,000, any options
-4-
<PAGE> 6
which otherwise qualify as Incentive Options, to the extent of the excess, will
be treated as NonQualified Options.
VI. OPTION PRICE AND PAYMENT
The price per Share under any option granted hereunder shall be such
amount as the Board of Directors or the Committee, as the case may be, shall
determine but, in the case of an Incentive Option, such price shall not be less
than one hundred percent (100%) of the fair market value of the Shares subject
to such option, as determined in good faith by the Board of Directors or the
Committee, as the case may be, at the date the option is granted.
If the Shares are listed on a national securities exchange in the
United States on the date any option is granted, the fair market value per Share
shall be deemed to be the average of the high and low quotations at which such
Shares are sold on such national securities exchange in the United States on the
date next preceding the date upon which the option is granted, but if the Shares
are not traded on such date, or such national securities exchange is not open
for business on such date, the fair market value per Share shall be determined
as of the closest preceding date on which such exchange shall have been open for
business and the Shares were traded. If the Shares are listed on more than one
national securities exchange in the United States on the date any such option is
granted, the Committee shall determine which national securities exchange shall
be used for the purpose of determining the fair market value per Share. If the
Shares are not listed on a national securities exchange but are reported on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ"), the fair market value per share shall be deemed to be the average of
the high bid and low asked prices on the date next preceding the date upon which
the option is granted as reported by NASDAQ.
For purposes of this Plan, the determination by the Board of Directors
or the Committee, as the case may be, of the fair market value of a Share shall
be conclusive.
Upon the exercise of an option granted hereunder, the Company shall
cause the purchased Shares to be issued only when it shall have received the
full purchase price for the Shares in cash; provided, however, that in lieu of
cash, the holder of an option may, if and to the extent the terms of such option
so provide and to the extent permitted by applicable law, exercise an option in
whole or in part, by delivering to the Company shares of common stock of the
Company (in proper form for transfer and accompanied by all requisite stock
transfer tax stamps or cash in lieu thereof) owned by such holder having a fair
market value equal to the cash exercise price applicable to that portion of the
option being exercised by the delivery of such Shares. The fair market value of
the stock so delivered shall be determined as of the date immediately preceding
the date on which the option is exercised, or as may be required in order to
comply with or to conform to the requirements of any applicable laws or
regulations.
-5-
<PAGE> 7
VII. USE OF PROCEEDS
The cash proceeds of the sale of Shares subject to the options granted
hereunder are to be added to the general funds of the Company and used for its
general corporate purposes as the Board of Directors shall determine.
VIII. LOANS, LOAN GUARANTEES AND INSTALLMENT PAYMENTS
In order to assist an optionee (including an optionee who is an
officer or director of the Company or any subsidiary of the Company) in the
acquisition of shares of Common Stock pursuant to an option granted under the
Plan, the Board of Directors or the Committee, as the case may be, may
authorize, at either the time of the grant of an option or the time of the
acquisition of Common Stock pursuant to the option, (i) the extension of a loan
to the optionee by the Company, (ii) the payment by the optionee of the purchase
price, if any, for the Common Stock in installments, or (iii) the guarantee by
the Company or a subsidiary of the Company of a loan obtained by the optionee
from a third party. The terms of any loans, guarantees or installment payments,
including the interest rate and terms of repayment, will be subject to the
discretion of the Board of Directors or the Committee, as the case may be.
Loans, installment payments and guarantees may be granted without security, the
maximum credit available being the purchase price, if any, of the Common Stock
acquired plus the maximum federal and state income and employment tax liability
which may be incurred in connection with the acquisition. In no event, however,
may the amount of any loan exceed the amounts allowable to the loan to such
individual for the purposes stated hereunder as provided by any regulation of
the United States Treasury or other State or Federal statute.
IX. TERM OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE
Unless the Board of Directors or the Committee, as the case may be,
shall determine otherwise (in which event the instrument evidencing the option
granted hereunder shall so specify), any option granted hereunder shall be
exercisable during a period of not more than ten (10) years from the date of
grant of such option.
The Board of Directors or the Committee, as the case may be, shall
have the right to accelerate, in whole or in part, from time to time,
conditionally or unconditionally, rights to exercise any option granted
hereunder.
To the extent that an option is not exercised within the period of
exercisability specified therein, it shall expire as to the then unexercised
part.
X. EXERCISE OF OPTIONS
Options granted under the Plan shall be exercised by the optionee as
to all or part of the Shares covered thereby by the giving of written notice of
the exercise thereof to the Corporate Secretary of the Company and the stock
transfer agent for the Company at the principal business
-6-
<PAGE> 8
office of the Company, specifying the number of Shares to be purchased and
specifying a business day not more than fifteen (15) days from the date such
notice is given, for the payment of the purchase price against delivery of the
Shares being purchased. Subject to the terms of Articles XV, XVI, XVII and
XVIII, the Company shall cause certificates for the Shares so purchased to be
delivered to the optionee, against payment of the full purchase price, on the
date specified in the notice of exercise.
XI. NONTRANSFERABILITY OF OPTIONS
An option granted hereunder shall not be transferable, whether by
operation of law or otherwise, other than by will or the laws of descent and
distribution, and any option granted hereunder shall be exercisable, during the
lifetime of the holder, only by such holder.
XII. TERMINATION OF EMPLOYMENT
Upon termination of employment of any employee with the Company or any
subsidiary of the Company any option previously granted to such employee, unless
otherwise specified by the Board of Directors or the Committee, as the case may
be, shall, to the extent not theretofore exercised, terminate and become null
and void, provided that:
(a) if the employee shall die while in the employ of the Company or
any subsidiary of the Company or during either the three (3) month or
one (1) year period, whichever is applicable, specified in clause (b)
below and at a time when such employee was entitled to exercise an
option as herein provided, the legal representative of such employee,
or such person who acquired such option by bequest or inheritance or
by reason of the death of the employee, may, not later than one (1)
year from the date of death, exercise such option, to the extent not
theretofore exercised, in respect of any or all of such number of
Shares as specified by the Board of Directors or the Committee, as the
case may be, in such option grant; and
(b) if the employment of any employee to whom such option shall have
been granted shall terminate by reason of the employee's retirement
(at such age or upon such conditions as shall be specified by the
Board of Directors or the Committee, as the case may be), disability
(as described in Section 22(e) (3) of the Code) or dismissal by the
employer other than for cause (as defined below), and while such
employee is entitled to exercise such option as herein provided, such
employee shall have the right to exercise such option so granted, to
the extent not theretofore exercised, in respect of any or all of such
number of Shares as specified by the Board of Directors or the
Committee, as the case may be, in such option at any time up to and
including (i) three (3) months after the date of such termination of
employment in the case of termination by reason of retirement or
dismissal other than for cause and (ii) one (1) year after the date of
termination of employment in the case of termination by reason of
disability.
-7-
<PAGE> 9
In no event, however, shall any person be entitled to exercise any
option after the expiration of the period of exercisability of such option as
specified therein.
If an employee voluntarily terminates his or her employment, or is
discharged for cause, any option granted hereunder shall, unless otherwise
specified by the Board of Directors or the Committee, as the case may be, in the
option, forthwith terminate with respect to any unexercised portion thereof.
Notwithstanding any other provision of this Article XII, if the
employment of any employee with the Company or any subsidiary of the Company is
terminated, whether voluntarily or involuntarily, within a one-year period
following a change in the ownership or effective control of the Company (within
the meaning of Section 280G(b)(2)(A)(i) of the Code) and while such employee is
entitled to exercise an option as herein provided, other than a termination of
such employment by the Company or any subsidiary of the Company for cause, such
employee shall have the right to exercise all or any portion of such option at
any time up to and including three (3) months after the date of such termination
of employment, at which time such option shall cease to be exercisable.
If an option granted hereunder shall be exercised by the legal
representative of a deceased employee or former employee, or by a person who
acquired an option granted hereunder by bequest or inheritance or by reason of
the death of any employee or former employee, written notice of such exercise
shall be accompanied by a certified copy of letters testamentary or equivalent
proof of the right of such legal representative or other person to exercise such
option.
For the purposes of the Plan, the term "for cause" shall mean (i) with
respect to an employee who is a party to a written agreement with, or,
alternatively, participates in a compensation or benefit plan of the Company or
any subsidiary of the Company, which agreement or plan contains a definition of
"for cause or cause" (or words of like import) for purposes of termination of
employment thereunder by the Company or such subsidiary of the Company, "for
cause" or "cause" as defined in the most recent of such agreements or plans, or
(ii) in all other cases, as determined by the Committee or the Board of
Directors, as the case may be, in its sole discretion, (a) the willful
commission by an employee of a criminal or other act that causes or will
probably cause substantial economic damage to the Company or a substantial
injury to the business reputation of the Company; (b) the commission by an
employee of an act of fraud in the performance of such employee's duties on
behalf of the Company or any subsidiary of the Company; or (c) the continuing
willful failure of an employee to perform the duties of such employee to the
Company or any subsidiary of the Company (other than such failure resulting from
the employee's incapacity due to physical or mental illness) after written
notice thereof (specifying the particulars thereof in reasonable detail) and a
reasonable opportunity to be heard and cure such failure are given to the
employee by the Board of Directors or the Committee, as the case may be. For
purposes of the Plan, no act, or failure to act, on the employee's part shall be
considered "willful" unless done or omitted to be done by the
-8-
<PAGE> 10
employee not in good faith and without reasonable belief that the employee's
action or omission was in the best interest of the Company or a subsidiary of
the Company.
For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and a corporation if, at the time of the
determination, the individual was an "employee" of such corporation for purposes
of Section 422(a) of the Code. If an individual is on military, sick leave or
other bona fide leave of absence such individual shall be considered an
"employee" for purposes of the exercise of an option and shall be entitled to
exercise such option during such leave if the period of such leave does not
exceed 90 days, or, if longer, so long as the individual's right to reemployment
with the Company is guaranteed either by statute or by contract. If the period
of leave exceeds ninety (90) days, the employment relationship shall be deemed
to have terminated on the ninety-first (91st) day of such leave, unless the
individual's right to re-employment is guaranteed by statute or contract.
A termination of employment shall not be deemed to occur by reason of
(i) the transfer of an employee from employment by the Company to employment by
a subsidiary of the Company or (ii) the transfer of an employee from employment
by a subsidiary of the Company to employment by the Company or by another
subsidiary of the Company.
XIII. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTIONS
In the event of any change in the outstanding Shares through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
split-up, split-off, spin-off, combination of shares, exchange of shares, or
other like change in capital structure of the Company, an adjustment shall be
made to each outstanding option such that each such option shall thereafter be
exercisable for such securities, cash and/or other property as would have been
received in respect of the Shares subject to such option had such option been
exercised in full immediately prior to such change, and such an adjustment shall
be made successively each time any such change shall occur. The term "Shares"
shall after any such change refer to the securities, cash and/or property then
receivable upon exercise of an option. In addition, in the event of any such
change, the Board of Directors or the Committee, as the case may be, shall make
any further adjustment as may be appropriate to the maximum number of Shares
subject to the Plan, the maximum number of Shares for which options may be
granted to any one employee, and the number of Shares and price per Share
subject to outstanding options as shall be equitable to prevent dilution or
enlargement of rights under such options, and the determination of the Board of
Directors or the Committee, as the case may be, as to these matters shall be
conclusive. Notwithstanding the foregoing, (i) each such adjustment with respect
to an Incentive Option shall comply with the rules of Section 424(a) of the
Code, and (ii) in no event shall any adjustment be made which would render any
Incentive Option granted hereunder other than an incentive stock option for
purposes of Section 422 of the Code without the consent of the grantee.
-9-
<PAGE> 11
XIV. RIGHT TO TERMINATE EMPLOYMENT
The Plan shall not impose any obligation on the Company or any
subsidiary of the Company to continue the employment of any holder of an option
and it shall not impose any obligation on the part of any holder of an option to
remain in the employ of the Company or of any subsidiary thereof.
XV. PURCHASE FOR INVESTMENT
Except as hereafter provided, the holder of an option granted
hereunder shall, upon any exercise thereof, execute and deliver to the Company a
written statement, in form satisfactory to the Company, in which such holder
represents and warrants that such holder is purchasing or acquiring the Shares
acquired thereunder for such holder's own account, for investment only and not
with a view to the resale or distribution thereof, and agrees that any
subsequent offer for sale or sale or distribution of any of such Shares shall be
made only pursuant to either (a) a Registration Statement on an appropriate form
under the Securities Act of 1933, as amended (the "Securities Act"), which
Registration Statement has become effective and is current with regard to the
Shares being offered or sold, or (b) a specific exemption from the registration
requirements of the Securities Act, but in claiming such exemption the holder
shall, prior to any offer for sale or sale of such Shares, obtain a prior
favorable written opinion, in form and substance satisfactory to the Company,
from counsel for or approved by the Company, as to the applicability of such
exemption thereto. The foregoing restriction shall not apply to (i) issuances by
the Company so long as the Shares being issued are registered under the
Securities Act and a prospectus in respect thereof is current or (ii)
reofferings of Shares by affiliates of the Company (as defined in Rule 405 or
any successor rule or regulation promulgated under the Securities Act) if the
Shares being reoffered are registered under the Securities Act and a prospectus
in respect thereof is current.
XVI. ISSUANCE OF CERTIFICATES; LEGENDS; PAYMENT OF EXPENSES
Upon any exercise of an option which may be granted hereunder and
payment of the purchase price, a certificate or certificates for the Shares as
to which the option has been exercised shall be issued by the Company in the
name of the person exercising the option and shall be delivered to or upon the
order of such person or persons.
The Company may endorse such legend or legends upon the certificates
for Shares issued upon exercise of an option granted hereunder and may issue
such "stop transfer" instructions to its transfer agent in respect of such
Shares as, in its discretion, it determines to be necessary or appropriate to
(i) prevent a violation of, or to perfect an exemption from, the registration
requirements of the Securities Act, (ii) implement the provisions of the Plan
and any agreement between the Company and the optionee or grantee with respect
to such Shares, or (iii) permit the Company to determine the occurrence of a
disqualifying disposition, as described in Section 421(b) of the Code, of Shares
transferred upon exercise of an Incentive Option granted under the Plan.
-10-
<PAGE> 12
The Company shall pay all issue or transfer taxes with respect to the
issuance or transfer of Shares upon exercise of an option, as well as all fees
and expenses necessarily incurred by the Company in connection with such
issuance or transfer, except fees and expenses which may be necessitated by the
filing or amending of a Registration Statement under the Securities Act, which
fees and expenses shall be borne by the recipient of the Shares unless such
Registration Statement has been filed by the Company for its own corporate
purposes (and the Company so states) in which event the recipient of the Shares
shall bear only such fees and expenses as are attributable solely to the
inclusion of the Shares he or she receives in the Registration Statement,
provided that the Company shall have no obligation to include any shares in any
Registration Statement.
All Shares issued as provided herein shall be fully paid and
non-assessable to the extent permitted by law.
XVII. WITHHOLDING TAXES
The Company may require an employee exercising a Non-Qualified Option
or disposing of Shares acquired pursuant to the exercise of an Incentive Option
in a disqualifying disposition (within the meaning of Section 421(b) of the
Code) to reimburse the corporation that employs such employee for any taxes
required by any government to be withheld or otherwise deducted and paid by such
corporation in respect of the issuance or disposition of Shares. In lieu
thereof, the corporation that employs such employee shall have the right to
withhold the amount of such taxes from any other sums due or to become due from
such corporation to the employee upon such terms and conditions as the Board of
Directors or the Committee, as the case may be, shall prescribe.
XVIII. LISTING OF SHARES AND RELATED MATTERS
If at any time the Board of Directors shall determine in its
discretion that the listing, registration or qualification of the Shares covered
by the Plan upon any national securities exchange or under any state or federal
law or the consent or approval of any governmental regulatory body, is necessary
or desirable as a condition of, or in connection with, the sale or purchase of
Shares under the Plan, no Shares shall be issued unless and until such listing,
registration, qualification, consent or approval shall have been effected or
obtained, or otherwise provided for, free of any conditions not acceptable to
the Board of Directors.
XIX. AMENDMENT OF THE PLAN
The Board of Directors may, from time to time, amend the Plan without
stockholder approval except to the extent that any such amendment fails to
comply with any applicable provision of the Code, the Employee Retirement Income
Security Act of 1974 or the rules of the New York Stock Exchange or causes the
Plan to fail to be treated as qualified performance-based compensation under
applicable Treasury Regulations.
-11-
<PAGE> 13
XX. TERMINATION OR SUSPENSION OF THE PLAN
The Board of Directors may at any time suspend or terminate the Plan.
The Plan, unless sooner terminated by action of the Board of Directors, shall
terminate at the close of business on the Termination Date. An option may not be
granted while the Plan is suspended or after it is terminated. Rights and
obligations under any option granted while the Plan is in effect shall not be
altered or impaired by suspension or termination of the Plan, except upon the
consent of the person to whom the option was granted. The power of the Board of
Directors or the Committee, as the case may be, to construe and administer any
options granted prior to the termination or suspension of the Plan under Article
III nevertheless shall continue after such termination or during such
suspension.
XXI. GOVERNING LAW
The Plan, such options as may be granted thereunder and all related
matters shall be governed by, and construed and enforced in accordance with, the
laws of the State of Delaware.
XXII. PARTIAL INVALIDITY
The invalidity or illegality of any provision herein shall not be
deemed to affect the validity of any other provision.
XXIII. EFFECTIVE DATE
The Plan shall become effective at 5:00 p.m., New York City time, on
the Effective Date; provided, however, that if the Plan is not approved by a
vote of the shareholders of the Company at an annual meeting or any special
meeting or by unanimous written consent within twelve (12) months before or
after the Effective Date, the Plan and any options granted thereunder shall
terminate.
-12-
<PAGE> 1
EXHIBIT 10.14
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
dated as of March 12, 1999
among
AGCO CORPORATION
and
CERTAIN SUBSIDIARIES NAMED HEREIN,
Borrowers,
THE LENDERS NAMED HEREIN,
Lenders,
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH,
SUNTRUST BANK, ATLANTA
and
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Co-Managers,
DEUTSCHE BANK CANADA,
as Canadian Administrative Agent,
and
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH,
as Administrative Agent
-----------------------
-----------------------
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH,
SUNTRUST CAPITAL MARKETS, INC.
and
DEUTSCHE BANK SECURITIES INC.,
as Syndication Agents
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Defined Terms....................................................................................2
1.02. Computation of Time Periods.............................................................................36
1.03. Accounting Terms........................................................................................36
1.04. Currency Equivalents....................................................................................37
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT
2.01. The Advances............................................................................................37
2.02. Making the Advances.....................................................................................39
2.03. Repayment...............................................................................................43
2.04. Reduction of the Commitments............................................................................43
2.05. Prepayments and Deposits................................................................................46
2.06. Interest................................................................................................49
2.07. Fees....................................................................................................50
2.09. Increased Costs, Etc....................................................................................53
2.10. Payments and Computations...............................................................................57
2.11. Taxes...................................................................................................59
2.12. Sharing of Payments, Etc................................................................................61
2.13. Letters of Credit.......................................................................................62
2.14. Use of Proceeds.........................................................................................69
2.15. Replacement of a Bank...................................................................................69
ARTICLE III
CONDITIONS OF LENDING
3.01. Conditions Precedent to Initial Borrowing...............................................................73
3.02. Conditions Precedent to Each Borrowing and Issuance.....................................................77
3.03. Determinations Under Section 3.01.......................................................................77
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties of the Borrowers.........................................................78
ARTICLE V
COVENANTS OF AGCO
5.01. Affirmative Covenants...................................................................................84
5.02. Negative Covenants......................................................................................88
5.03. Reporting Requirements.................................................................................102
5.04. Financial Covenants....................................................................................106
5.05. Covenants of the Borrowing Subsidiaries................................................................108
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default......................................................................................109
6.02. Actions in Respect of the Letters of Credit............................................................113
ARTICLE VII
THE AGENTS
7.01. Authorization and Action...............................................................................114
7.02. Agents' Reliance, Etc..................................................................................114
7.03. Agents, in their Individual Capacity and Affiliates....................................................116
7.04. Lender Credit Decision.................................................................................116
7.05. Indemnification........................................................................................116
7.06. Successor Agent........................................................................................117
ARTICLE VIII
MISCELLANEOUS
8.01. Amendments, Etc........................................................................................118
8.02. Notices, Etc...........................................................................................119
8.03. No Waiver; Remedies....................................................................................120
8.04. Costs and Expenses.....................................................................................120
8.05. Right of Set-off.......................................................................................122
8.06. Binding Effect.........................................................................................123
8.07. Assignments and Participations.........................................................................123
8.08. Judgment Currency......................................................................................127
8.09. Consent to Jurisdiction................................................................................128
8.10. Governing Law..........................................................................................129
8.11. Execution in Counterparts..............................................................................129
8.12. No Liability of the Issuing Banks......................................................................129
8.13. Certain Cash Deposits..................................................................................130
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
8.14. Conditions to Effectiveness of this Agreement..........................................................131
8.15. Schedules to this Agreement............................................................................131
8.16. Ratification of Guaranties, etc........................................................................132
8.17. Waiver of Jury Trial...................................................................................132
</TABLE>
<PAGE> 5
Section iv Page
<TABLE>
<CAPTION>
SCHEDULES
<S> <C>
Schedule I Information regarding the Lenders and their Commitments
Schedule 3.01(e)(vii) Guarantors and Persons Whose Obligations Are Guaranteed
Schedule 4.01(b) Subsidiaries and Joint Ventures [Incomplete]
Schedule 4.01(v) Open Tax Years [Incomplete]
Schedule 4.01(z) Existing Debt [Incomplete]
EXHIBITS
Exhibit A-1 Form of Note--Multi-Currency Borrower
Exhibit A-2 Form of Note--Canadian Subsidiary
Exhibit B-1 Form of Notice of Borrowing--Multi-Currency Borrower
Exhibit B-2 Form of Notice of Borrowing--Canadian Subsidiary
Exhibit B-3 Form of Notice of Rollover--Canadian Subsidiary
Exhibit C Form of Borrowing Base Certificate
Exhibit D Form of Assignment and Acceptance
Exhibit E Form of Bankers' Acceptance
Exhibit F Form of Discount Note
</TABLE>
<PAGE> 6
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement")
dated as of March 12, 1999 amends and restates the Amended and Restated Credit
Agreement dated as of February 24, 1997, as amended, among AGCO CORPORATION, a
Delaware corporation ("AGCO"), AGCO CANADA, LTD., a Saskatchewan corporation
(the "Canadian Subsidiary"), AGCO MANUFACTURING LIMITED (formerly known as
MASSEY FERGUSON MANUFACTURING LIMITED), an English corporation ("English
Subsidiary One"), AGCO LIMITED (formerly known as MASSEY FERGUSON LIMITED), an
English corporation ("English Subsidiary Two"), AGCO INTERNATIONAL LIMITED
(formerly known as AGCO LIMITED), an English corporation ("English Subsidiary
Three"), AGCO S.A. (formerly known as MASSEY FERGUSON S.A.), a French societe
anonyme (the "French Subsidiary"), AGCO HOLDING B.V., a Netherlands corporation
(the "Netherlands Subsidiary"), and AGCO VERTRIEBS GMBH (formerly known as
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 purpose 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> 7
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> 8
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.;
(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.; and
(h) for European Union euros, 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.
"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.
<PAGE> 9
4
"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
------------------
(a) British pounds, Canadian Dollars, Dutch guilders, German
deutschemarks, French francs, Italian lira, Swiss francs and European Union
euros, 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):
(a) until AGCO shall have delivered to the Administrative Agent pursuant
to Section 5.03(b) financial statements for its fiscal quarter ending March
31, 1999,1.00% per annum, and
(b) thereafter, the percentage rate per annum determined by reference to
the Applicable Rating and Senior Funded Debt/EBITDA Ratio in effect at such
date of determination, as set forth below in the matrix below but subject to
the next-following sentence:
<PAGE> 10
5
<TABLE>
<CAPTION>
=========================================================================================================
APPLICABLE RATING SENIOR FUNDED DEBT/EBITDA RATIO
=========================================================================================================
<S> <C> <C> <C> <C>
<2.0 >=2.0 but <3.0 >=3.0 but <4.0 >=4.0
- ---------------------------------------------------------------------------------------------------------
>=A- 0.250% 0.375% 0.500% 0.625%
- ---------------------------------------------------------------------------------------------------------
>=BBB+ but <A- 0.375% 0.500% 0.625% 0.750%
- ---------------------------------------------------------------------------------------------------------
>=BBB but <BBB+ 0.500% 0.750% 0.875% 1.000%
- ---------------------------------------------------------------------------------------------------------
>=BBB- but <BBB 0.750% 1.000% 1.250% 1.375%
- ---------------------------------------------------------------------------------------------------------
>=BB+ but <BBB- 0.875% 1.250% 1.500% 1.750%
- ---------------------------------------------------------------------------------------------------------
>=BB but <BB+ 1.125% 1.500% 1.750% 2.000%
=========================================================================================================
<BB 1.250% 1.750% 2.000% 2.500%
=========================================================================================================
</TABLE>
If the Applicable Rating is a Split Rating and the margins set forth in the
matrix above that are applicable to the S&P rating immediately above and
immediately below such Split Rating differ, the Applicable Margin shall be the
average of such two margins.
"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,
(b) if the respective ratings of such debt by such rating agencies
shall not be equivalent, the S&P rating that is the equivalent of the
average of the rating of such debt by S&P and the S&P rating that is the
equivalent of such rating by Moody's and
(c) if either Moody's or S&P does not rate such debt for any reason, a
rating that is less than an S&P rating of BB.
The Applicable Rating determined pursuant to clause (b) above may fall between
two S&P rating levels, and any such rating shall be referred to as a "Split
Rating". 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.
<PAGE> 11
6
"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.
"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
<PAGE> 12
7
(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 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
<PAGE> 13
8
respect of intercompany transactions and Receivables discounted in
transactions permitted under Section 5.02(e)(x)) (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).
"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.
<PAGE> 14
9
"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).
"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
<PAGE> 15
10
(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:
(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
<PAGE> 16
11
(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.
"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 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
<PAGE> 17
12
(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 (a) 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) and (b) interest expense
attributable to any Securitization Debt for such period.
"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;
<PAGE> 18
13
(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 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
<PAGE> 19
14
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.
"Consolidated Senior Funded Debt" means, on any date of determination, the
Funded Debt of AGCO and its Restricted Subsidiaries, other than any such Debt
that is permitted under Section 5.02(b)(iii).
"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
<PAGE> 20
15
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.
"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 or in respect of
discounted Receivables;
(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;
<PAGE> 21
16
(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 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
<PAGE> 22
17
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, 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
<PAGE> 23
18
(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 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;
<PAGE> 24
19
(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;
(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
<PAGE> 25
20
(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), the page that from time to time may be
applicable thereto (if such currency is European Union euros)
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
(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
<PAGE> 26
21
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.
"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.
<PAGE> 27
22
"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;
(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).
<PAGE> 28
23
"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 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.
<PAGE> 29
24
"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 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.
<PAGE> 30
25
"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,
any agreements entered into pursuant to Section 5.01(n) and each Letter of
Credit Agreement.
"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.
<PAGE> 31
26
"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.
"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
<PAGE> 32
27
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).
"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. $900,000,000.
"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,
<PAGE> 33
28
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.
"New Subordinated Debt" means Debt issued under the Subordinated Debt
Indenture.
"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
<PAGE> 34
29
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).
"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;
<PAGE> 35
30
(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;
(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
<PAGE> 36
31
(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.
"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;
<PAGE> 37
32
(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 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.
"Securitization Debt" means any Debt, trust participations or any other
-------------------
interests that the Administrative Agent determines are equivalent thereto,
incurred or issued by any Person purchasing Receivables in a transaction
permitted under Section 5.02(e)(v) and applicable to the purchase of such
Receivables. Any reference to the principal amount of Securitization
<PAGE> 38
33
Debt on any date refers to the principal amount of any Debt comprising the same
or the equivalent of such principal amount, as determined by the Administrative
Agent, with respect to any trust participations or other equivalent interests
comprising the same, in each case as of such date. Any reference to the interest
expense attributable to any Securitization Debt refers to any interest expense
in respect of any Debt comprising the same or the equivalent of such interest
expense, as determined by the Administrative Agent, with respect to any trust
participations or other equivalent interests comprising the same, in each case
for such period.
"Senior Funded Debt/EBITDA Ratio" means, on any date of determination, the
ratio of (a) the aggregate principal amount of Consolidated Senior Funded Debt
and Securitization Debt outstanding on such date of determination to (b)
Consolidated EBITDA for the most recent fiscal quarter of AGCO for which
financial statements have been delivered to the Administrative Agent pursuant to
Section 5.03(b) and for the three complete fiscal quarters of AGCO immediately
preceding such fiscal quarter.
"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.
"Split Rating" has the meaning specified in 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
<PAGE> 39
34
(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
(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
<PAGE> 40
35
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
(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
<PAGE> 41
36
(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.
"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
<PAGE> 42
37
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.
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
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38
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).
(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
<PAGE> 44
39
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
(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
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40
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;
(iv) requested currency in which such Borrowing is to be made;
provided that
(A) such currency shall be (1) Canadian dollars, if the Person
requesting such Borrowing is the Canadian Subsidiary; (2) British
pounds, U.S. dollars or European Union euros, if the Person requesting
such Borrowing is English Subsidiary One or English Subsidiary Two;
(3) British pounds, U.S. dollars, Dutch guilders or European Union
euros, if the person requesting such Borrowing is English Subsidiary
Three; (4) Dutch guilders or European Union euros, if the Person
requesting such Borrowing is the Netherlands Subsidiary; (5) French
francs, U.S. dollars or European Union euros, if the Person requesting
such Borrowing is the French Subsidiary; and (6) German deutschemarks,
U.S. dollars or European Union euros, 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
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41
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 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.
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42
(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 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.
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43
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.
(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;
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44
(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
(o) Receivables discounted in transactions permitted under
Section 5.02(e)(x),
(p) the sale by AGCO and its Subsidiaries of an interest in the
business of AGCO Argentina S.A., to the extent permitted under Section
5.02(e)(ix),
(q) the sale of the Caravan division of Xavier Fendt GmbH &
Company,
(r) the sale by AGCO of its existing and former headquarters
buildings and related land, to the extent permitted under Section
5.02(e)(viii),
(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) any dispositions to the extent that the aggregate amount of
Net Cash Proceeds therefrom after such date do not exceed the greater
of (A) U.S. $20,000,000 or (B) the aggregate Net Cash Proceeds
received by AGCO and its Restricted Subsidiaries during 1999 from the
sale of (1) the Haedo, Argentina plant, (2) the small-truck business
located in Haedo, Argentina, (3) the interest of
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AGCO and its Restricted Subsidiaries in Morotes de San Luis S.A. and
(4) the industrial-machinery division of AGCO do Brazil S.A.,
(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.
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46
(iii) The aggregate amount of the Multi-Currency Facility and the
Canadian Subsidiary Facility shall be permanently reduced by:
(A) the maximum gross proceeds that could be received by AGCO and
its Subsidiaries) from purchasers that are parties to any
securitization facility permitted under Section 5.02(e)(v), assuming
that such purchasers purchased the maximum face amount of Receivables
that may be outstanding on any date and that they are committed to
purchase under such securitization facility (whether or not such
commitments are subject to contingencies), minus
(B) any amounts payable by AGCO and its Subsidiaries to such
purchasers at the time of AGCO's and its Subsidiaries' receipt of such
proceeds,
with each of the Multi-Currency Facility and the Canadian Subsidiary
Facility being reduced by a portion of such amount 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.
(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
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47
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 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
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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
(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
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49
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.
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.
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(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
(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.
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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 the effective date of this
Second Amended and Restated Credit Agreement, 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,
(i) until AGCO shall have delivered to the Administrative Agent
pursuant to Section 5.03(b) financial statements for its fiscal quarter
ending March 31, 1999, 0.25% per annum, and
(b) thereafter at the percentage rate per annum determined by
reference to the Senior Funded Debt/EBITDA Ratio in effect at such date of
determination, as set forth below in the matrix below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
===============================================================================
SENIOR FUNDED DEBT/ <2.0 >=2.0 but <3.0 >=3.0 but <4.0 >=4.0
EBITDA RATIO
- -------------------------------------------------------------------------------
PERCENTAGE RATE 0.150% 0.250% 0.300% 0.350%
===============================================================================
</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, 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
<PAGE> 57
52
(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;
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.
<PAGE> 58
53
(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' 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,
<PAGE> 59
54
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 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
<PAGE> 60
55
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
(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,
<PAGE> 61
56
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.
(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
<PAGE> 62
57
(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 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.
<PAGE> 63
58
(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 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
<PAGE> 64
59
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, 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> 65
60
(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
<PAGE> 66
61
Agreement or the Notes or certifying that the income receivable pursuant to this
Agreement or 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
<PAGE> 67
62
Section 2.11 shall survive the payment in full of principal and interest
hereunder and under the Notes.
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.
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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 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
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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 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
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(y) it has not received notice of objection to such issuance from the
Required Lenders,
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
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would accrue on a Eurocurrency Rate Advance with an Interest Period of
one month beginning on the date of such draw.
(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).
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(v) Each Appropriate Lender agrees to purchase its Pro Rata Share of
an outstanding Letter of Credit Advance on
(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.
(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
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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 deemed to have consented to, approved or accepted or to be
satisfied with each document or
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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
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its Subsidiaries, respectively, as at such date and the consolidated results of
the operations of AGCO and its Restricted Subsidiaries and AGCO and 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, nothing
has occurred that has resulted in a 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 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
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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.
(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)
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(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.
(m) Year 2000. Take, and cause each of its Subsidiaries to take, all
actions necessary to assure that its and its Subsidiaries' software, hardware,
firmware, equipment, goods and systems (including embedded systems) are able
effectively to process data including dates prior to, on and after January 1,
2000 and, at the request of either Agent or any Lender, provide, and cause each
of its Subsidiaries to provide, such Agent or Lender, as the case may be, with
assurance acceptable to such Agent or Lender, as the case may be, of their
respective year 2000 capabilities.
(n) Covenant to Give Security. Upon the request of the Administrative
Agent acting at the direction of the Required Lenders at any date when the
Applicable Rating shall be BB or less, and at the expense of the AGCO,
(i) within 15 Business Days after such request, furnish to the Agent a
description of the material real and personal properties of AGCO and its
Subsidiaries in detail satisfactory to the Agent;
(ii) within 60 Business Days after such request,
(A) duly execute and deliver to the Administrative Agent or its
designee such mortgages, pledges, assignments and other security
agreements, as specified by and in form and substance reasonably
satisfactory to the Administrative Agent (and which shall include
provision that the release of any collateral security thereunder other
than in accordance with the terms thereof shall require the consent of
each Lender), securing payment of all the Obligations of the Borrowers
under the Loan Documents and constituting Liens on such properties of
AGCO and its Subsidiaries as the Required Lenders may require,
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(B) take whatever action (including without limitation, the
recording of mortgages, the filing of Uniform Commercial Code
financing statements, the giving of notices and the endorsement of
notices on title documents) may be necessary or advisable in the
opinion of the Administrative Agent to vest in the Administrative
Agent or its designee valid and subsisting Liens on the properties
purported to be subject to the security agreements delivered pursuant
to this Section 5.01(p), enforceable against all third parties in
accordance with their terms, and
(C) deliver to the Administrative Agent signed copies of
favorable opinions, addressed to the Administrative Agent, the
Canadian Administrative Agent and the Lenders, of counsel for AGCO and
its Subsidiaries reasonably acceptable to the Administrative Agent,
and who are qualified to practice in such jurisdictions where such
collateral is or such Subsidiaries are located as the Administrative
Agent may reasonably require, as to the matters contained in this
Section 5.01(p), as to such security agreements being legal, valid and
binding obligations of AGCO and its Subsidiaries enforceable in
accordance with their terms, the creation and perfection of the Liens
created thereby and such other matters as the Agent may reasonably
request; and
(iii) at any time and from time to time, promptly execute and deliver
any and all further instruments and documents and take all such other
action as the Administrative Agent may reasonably deem desirable in
obtaining the full benefits of, or in preserving the Liens of, such
security agreements.
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:
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(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;
(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;
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(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;
(ix) precautionary financing statements filed by lessors with respect
to equipment leases under which AGCO or a Restricted Subsidiary is lessee;
(x) Liens on cash and deposit accounts in an aggregate amount not
exceeding US$120,000,000 (or the Multi-Currency Equivalent thereof) as of
the date of the creation thereof by the French Subsidiary in favor of
Rabobank securing Debt, or Guaranties by the French Subsidiary of Debt,
owing by English Subsidiary Three to Rabobank;
(xi) Liens on Receivables discounted in transactions permitted under
Section 5.02(e)(x); and
(xii) Liens on capital stock of AGCO purchased with the proceeds of
Debt incurred pursuant to Section 5.02(b)(viii).
(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;
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(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 outstanding on the date hereof 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 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;
(vi) indorsements of negotiable instruments in the ordinary course of
business;
(vii) Debt in an aggregate principal amount not exceeding
US$120,000,000 (or the Multi-Currency Equivalent thereof) incurred by
English Subsidiary Three, owing by such Borrower to Rabobank and secured by
(or a Guaranty of which by the French Subsidiary is secured by) a Lien on
cash or deposit accounts of the French Subsidiary permitted under
subsection (a)(x) above;
(viii) Debt of AGCO and its Restricted Subsidiaries in an aggregate
principal amount not exceeding US$150,000,000 (or the Multi-Currency
Equivalent thereof) the proceeds of which are used, substantially
simultaneously with the incurrence thereof, to repurchase capital stock of
AGCO in a transaction otherwise permitted under this Agreement;
(ix) other Debt of AGCO and its Restricted Subsidiaries (including
without limitation Debt in respect of Receivables discounted in a
transaction permitted under subsection (e)(x) below and, without
duplication, Guaranties permitted under subsection (f)(xiii)(B) or (C)
below) in an aggregate principal amount not exceeding US$200,000,000 (or
the Multi-Currency Equivalent thereof); provided that, on the date of and
after giving effect to the incurrence of any Debt under this clause (ix),
the aggregate principal amount of Funded Debt owing by AGCO and its
Restricted Subsidiaries not permitted to be incurred or outstanding under
any clause of this subsection (b) other than this clause (ix) shall not
exceed US$100,000,000 (or the Multi-Currency Equivalent thereof);
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(x) Debt consisting of a Capitalized Lease in an aggregate principal
amount not exceeding US$20,000,000 arising from the lease by AGCO of its
headquarters building pursuant to Section 5.02(c);
(xi) Debt consisting of Guaranties permitted under subsection (f)
below (other than clause (xiii)(B) or (C) or (xiv) thereof); and
(xii) to the extent, if any, that the same shall be Debt of AGCO and
its Restricted Subsidiaries, Securitization Debt.
Notwithstanding clauses (i) through (xii) 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,
except for the lease by AGCO of its headquarters building and related land at
4205 River Green Parkway, Duluth, Georgia following a sale thereof permitted
under Section 5.02(e)(viii).
(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
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(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
(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;
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(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
(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 invoiced to third parties at addresses
located in the United States and Canada under a securitization facility,
but only so long as the aggregate face amount of Receivables purchased by
the purchasers under such facility and outstanding on any date of
determination may not exceed U.S. $500,000,000;
(vi) transfers of assets between Restricted Subsidiaries and to AGCO;
(vii) dispositions of cash to make Investments permitted under
subsection (f) below;
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(viii) the sale by AGCO of its headquarters building and related land
at 4205 River Green Parkway, Duluth, Georgia and its former headquarters
building land at 4830 River Green Parkway, Duluth, Georgia;
(ix) any sale by AGCO or any of its Restricted Subsidiaries of an
interest in the business of AGCO Argentina S.A. to Deutz AG that closes on
or before December 31, 1997;
(x) subject to Section 5.02(b)(ix), the discounting of Receivables by
Xavier Fendt GmbH & Company and by AGCO Argentina S.A.; and
(xi) the sale of the Caravan division of Xavier Fendt GmbH & Company.
(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 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,
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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
(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
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(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);
(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;
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98
(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 (A) by AGCO of the hedging and foreign-exchange
arrangements that any Subsidiary may enter into with any financial
institution, (B) by AGCO or any Restricted Subsidiary of lines of credit of
dealers conducting business in Brazil and financing for retail purchasers
in Brazil or Argentina of products manufactured by AGCO or its Restricted
Subsidiaries, or by AGCO of Guaranties by Restricted Subsidiaries of such
lines of credit, and (C) by AGCO of Indebtedness of Xavier Fendt GmbH &
Company;
(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;
(xvi) securities received in settlement of bankruptcy claims;
(xvii) Guaranties by the French Subsidiary of Debt of English
Subsidiary Three permitted under Section 5.02(b)(vii); and
(xviii) Guaranties by AGCO of Indebtedness of its Restricted
Subsidiaries permitted under Section 5.02(b)(ix).
(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 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
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(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.
(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;
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(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);
(vi) the prepayment of the Debt outstanding under the Old Credit
Agreement; and
(vii) the payment of Debt with the Net Cash Proceeds of the sale of
the Caravan division of Xavier Fendt GmbH & Company;
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 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
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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 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
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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.
(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
<PAGE> 108
103
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 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.
<PAGE> 109
104
(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
(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).
<PAGE> 110
105
(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.
(n) Borrowing Base Certificates. As soon as practicable and, in any
event by
(i) the 15th day after the last day of each calendar month (or, if such
day is not a Business Day, on the next-following day that is a Business
Day),
(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, and
<PAGE> 111
106
(iii) if a sale of Receivables shall have occurred pursuant to Section
5.02(e)(v), not later than the fifth Business Day after the date of such
sale,
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 calendar month, in the case of a Borrowing Base
Certificate delivered pursuant to clause (i) above, as of the date of such
request, in the case of a Borrowing Base Certificate delivered pursuant to
clause (ii) above and as of the date of such sale, in the case of a Borrowing
Base Certificate delivered pursuant to clause (iii) above.
(o) Quarterly Operations Report. As soon as possible and in any event
by the 45th 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) Securitization Debt. Promptly on request by the Administrative
Agent, such information as the Administrative Agent may request to determine the
aggregate principal amount of Securitization Debt outstanding on any date.
(r) 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
<PAGE> 112
107
(i) the aggregate principal amount of all Debt of AGCO and its
Restricted Subsidiaries, to
(ii) such aggregate principal amount, plus Consolidated Net Worth, 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 Senior 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 the ratio set forth below with respect to the date on which such
fiscal quarter ends:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
RATIO FISCAL QUARTERS ENDING:
- -------------------------------------------------------------------
<S> <C>
2.00 to 1.00 Prior to March 31, 1999
- -------------------------------------------------------------------
1.20 to 1.00 On or after March 31, 1999 but prior to
December 31, 1999
- -------------------------------------------------------------------
1.30 to 1.00 On or after December 31, 1999 but prior to
December 31, 2000
- -------------------------------------------------------------------
1.50 to 1.00 On or after December 31, 2000 but prior to
March 31, 2001
- -------------------------------------------------------------------
1.75 to 1.00 On or after March 31, 2001
- -------------------------------------------------------------------
</TABLE>
<PAGE> 113
108
(c) Consolidated Senior Funded Ratio. Maintain, as of the last day of
each fiscal quarter of AGCO, the ratio of
(i) the aggregate principal amount of Consolidated Senior Funded Debt
and Securitization 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 the ratio set forth below with respect to the date on which
such fiscal quarter ends:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
RATIO FISCAL QUARTERS ENDING:
- ----------------------------------------------------------------------
<S> <C>
5.00 to 1.00 Prior to December 31, 1999
- ----------------------------------------------------------------------
4.00 to 1.00 On or after December 31, 1999 but prior to
September 30, 2000
- ----------------------------------------------------------------------
3.75 to 1.00 On or after September 30, 2000 but prior to
December 31, 2000
- ----------------------------------------------------------------------
3.50 to 1.00 On or after December 31, 2000
- ----------------------------------------------------------------------
</TABLE>
(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
(1) 0.22 to 1.00, if such fiscal quarter ends before July 1,
1997,
(2) 0.26 to 1.00, if such fiscal quarter ends after July 1, 1997
but before October 1, 1998,
(3) 0.30 to 1.00, if such fiscal quarter ends after October 1,
1998.
<PAGE> 114
109
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 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
<PAGE> 115
110
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 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
<PAGE> 116
111
(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 security agreement or other document delivered pursuant to
Section 5.01(n) shall for any reason (other than pursuant to the terms
thereof) cease to create a valid and perfected first-priority Lien (or a
valid first-priority Lien in the case of collateral provided by a Foreign
Subsidiary) on any purported collateral referred to therein; or
(k) 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 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
<PAGE> 117
112
(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
(l) 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
(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 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
(n) 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
<PAGE> 118
113
(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,
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
<PAGE> 119
114
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.
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.
<PAGE> 120
115
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;
(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;
<PAGE> 121
116
(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 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
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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;
(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.
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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,
(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;
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(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;
(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,
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(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,
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
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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, 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
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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 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
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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
(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
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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 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:
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(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;
(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
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"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.
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;
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(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.
(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
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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;
(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.
<PAGE> 134
129
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:
(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.
<PAGE> 135
130
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 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
<PAGE> 136
131
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 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 Second Amended and Restated Credit Agreement are
(a) the delivery by each Subsidiary Guarantor that is not a Borrower of the
confirmation and ratification attached hereto, (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 and
(c) the execution of this Second Amended and Restated Credit Agreement by each
Borrower, each Agent, the Appropriate Issuing Banks and the Required Lenders.
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.
<PAGE> 137
132
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 LENDER IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
<PAGE> 138
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.
<TABLE>
<S> <C>
AGCO CORPORATION AGCO MANUFACTURING LIMITED
(formerly known as MASSEY FERGUSON
MANUFACTURING LIMITED)
By_________________________
Title:
By_________________________
Title:
AGCO LIMITED (formerly known as
MASSEY FERGUSON LIMITED) AGCO S.A. (formerly known as MASSEY
FERGUSON S.A.)
By_________________________ By_________________________
Title: Title:
AGCO INTERNATIONAL LIMITED AGCO HOLDING B.V.
(formerly known as AGCO LIMITED)
By_________________________
By_________________________ Title:
Title:
AGCO VERTRIEBS GMBH (formerly AGCO CANADA, LTD.
known as MASSEY FERGUSON GMBH)
By_________________________
By_________________________ Title:
Title:
</TABLE>
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________________________
Title:
<PAGE> 139
<TABLE>
<S> <C>
COOPERATIEVE CENTRALE DEUTSCHE BANK CANADA, as Canadian
RAIFFEISEN-BOERENLEENBANK B.A., Administrative Agent, a Canadian Subsidiary
"RABOBANK NEDERLAND", NEW Lender and Canadian Issuing Bank
YORK BRANCH, as Administrative Agent,
Co-Manager, a Multi-Currency Lender
and Issuing Bank By_________________________
Title:
By_________________________
Title:
By_________________________
Title:
SUNTRUST BANK, ATLANTA, as Co- DEUTSCHE BANK AG, NEW YORK
Manager and a Multi-Currency Lender BRANCH and/or CAYMAN ISLANDS
BRANCH, as Co-Manager and a Multi-
Currency Lender
By_________________________
Title:
By_________________________
Title:
By_________________________
Title:
By_________________________
Title:
</TABLE>
<PAGE> 140
THE FIRST NATIONAL BANK OF CHICAGO,
as a Multi-Currency Lender
By_________________________
Title:
CREDIT LYONNAIS, ATLANTA AGENCY,
as a Multi-Currency Lender
By_________________________
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as a Multi-Currency Lender
By_________________________
Title:
MELLON BANK, N.A., as a
Multi-Currency Lender
By_________________________
Title:
BANKERS TRUST COMPANY,
as a Multi-Currency Lender
By_________________________
Title:
CHRISTIANIA BANK OG KREDITKASSE,
as a Multi-Currency Lender
By_________________________
Title:
CIBC INC., as a Multi-Currency Lender
By_________________________
Title:
COMMERZBANK AKTIEN-GESELLSCHAFT,
ATLANTA AGENCY, as a Multi-Currency Lender
By_________________________
Title:
KBC BANK, N.V., as a Multi-Currency Lender
By_________________________
Title:
CREDIT INDUSTRIEL ET COMMERCIAL,
as a Multi-Currency Lender
By_________________________
Title:
COBANK, ACB, as a Multi-Currency Lender
By_________________________
Title:
MARINE MIDLAND BANK,
as a Multi-Currency Lender
By_________________________
Title:
<PAGE> 141
THE BANK OF TOKYO-MITSUBISHI, LTD.,
ATLANTA AGENCY, as a Multi-Currency Lender
By_________________________
Title:
UNION BANK OF CALIFORNIA,
as a Multi-Currency Lender
By_________________________
Title:
BAYERISCHE HYPOTHEKEN-UND
WECHSEL BANK AKTIEN-GESSELSCHAFT,
NEW YORK BRANCH, as a Multi-Currency Lender
By_________________________
Title:
WACHOVIA BANK OF GEORGIA, N.A.,
as a Multi-Currency Lender
By_________________________
Title:
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR, as a Multi-Currency Lender
By_________________________
Title:
BANK OF MONTREAL, as a Multi-Currency
Lender and a Canadian Subsidiary Lender
By_________________________
Title:
SOCIETE GENERALE,
as a Multi-Currency Lender
By_________________________
Title:
TORONTO DOMINION (TEXAS), INC.,
as a Multi-Currency Lender
By_________________________
Title:
BANQUE NATIONALE DE PARIS,
as a Multi-Currency Lender
By_________________________
Title:
CLYDESDALE BANK PLC,
as a Multi-Currency Lender
By_________________________
Title:
DG BANK DEUTSCHE GENOSSEN-
SCHAFTSBANK, CAYMAN ISLAND
BRANCH, as a Multi-Currency Lender
By_________________________
Title:
ISTITUTO BANCARIO SAN PAOLO
DI TORINO ISTITUTO MOBILIARE
ITALIANO SPA, as a Multi-Currency Lender
By_________________________
Title:
By_________________________
Title:
STANDARD CHARTERED BANK,
as a Multi-Currency Lender
By_________________________
Title:
THE SUMITOMO BANK, LIMITED,
as a Multi-Currency Lender
By_________________________
Title:
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH,
as a Multi-Currency Lender
By_________________________
Title:
BANCA NAZIONALE DEL LAVORO SPA,
NEW YORK BRANCH, as a Multi-Currency Lender
By_________________________
Title:
NATIONAL BANK OF CANADA,
as a Canadian Subsidiary Lender
By_________________________
Title:
THE TORONTO DOMINION BANK,
as a Canadian Subsidiary Lender
By_________________________
Title:
BANK AUSTRIA AKTIENGESELLSCHAFT,
NEW YORK BRANCH,
as a Multi-Currency Lender
By_________________________
Title:
<PAGE> 142
EXHIBIT A-1 - FORM OF PROMISSORY NOTE -
MULTI-CURRENCY FACILITY
PROMISSORY NOTE
U.S.$_______ Dated: ___________ __, ____
FOR VALUE RECEIVED, the undersigned, [NAME OF BORROWER],
HEREBY PROMISES TO PAY to the order of ______________ (the "Lender"), for the
account of its Applicable Lending Office (such term and other capitalized terms
used herein and not otherwise defined having the respective meanings specified
in the Credit Agreement referred to below) the aggregate principal amount of
the Advances (or such portion thereof as may be specified in the Credit
Agreement) made by the Lender to the Borrower pursuant to the Credit Agreement
outstanding on the Termination Date or on such earlier date as may be specified
in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal
amount of each Advance from the date of such Advance until such principal
amount is paid in full, at such interest rates, and payable at such times, as
are specified in the Credit Agreement.
Both principal and interest in respect of each Advance made
to it (a) in United States Dollars are payable in lawful money of the United
States of America to Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
"Rabobank Nederland", New York Branch ("Rabobank") (or any successor appointed
as administrative agent pursuant to Article VII of the Credit Agreement), as
administrative agent, at 245 Park Avenue, New York, New York 10167, Attention:
Corporate Services Department, in same-day funds and (b) in an Alternate
Currency are payable in such currency at the Administrative Agent's office
specified in the Credit Agreement for payments in such currency, in same-day
funds. Each Advance owing to the Lender by the Borrower pursuant to the Credit
Agreement (including each Letter of Credit Advance purchased by the Lender as
provided in the Credit Agreement), and the maturity thereof, and all payments
made on account of principal thereof, shall be recorded by the Lender and,
prior to any transfer hereof, endorsed on the grid attached hereto which is
part of this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Second Amended and Restated Credit Agreement
dated as of February __, 1999 (as amended, modified and supplemented from time
to time, the "Credit Agreement") among [AGCO CORPORATION] [THE BORROWER] and
certain subsidiaries thereof; the lenders listed on the signature pages thereof;
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. The Credit Agreement, among other things,
<PAGE> 143
2
(a) provides for the making of Advances by the Lender to the Borrower from time
to time in an aggregate amount not to exceed at any time outstanding the amount
specified above (or the equivalent in other currencies), all such Advances to
the undersigned being evidenced by this Promissory Note and (b) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.
[NAME OF BORROWER]
By________________________
Title:
<PAGE> 144
ADVANCES AND PAYMENTS OF PRINCIPAL
<TABLE>
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DATE TYPE OF AMOUNT OF CURRENCY PRINCIPAL PAID UNPAID PRINCIPAL NOTATION
ADVANCE ADVANCE OR PREPAID BALANCE MADE BY
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<S> <C> <C> <C> <C> <C> <C>
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<PAGE> 145
EXHIBIT A-2 - FORM OF PROMISSORY NOTE
CANADIAN SUBSIDIARY FACILITY
PROMISSORY NOTE
U.S.$_______ Dated: ___________ __, ____
FOR VALUE RECEIVED, the undersigned, AGCO CANADA, LTD., a Saskatchewan
corporation, HEREBY PROMISES TO PAY to the order of ______________ (the
"Lender"), for the account of its Applicable Lending Office (such term and
other capitalized terms used herein and not otherwise defined having the
respective meanings specified in the Credit Agreement referred to below) the
aggregate principal amount of the Advances (or such portion thereof as may be
specified in the Credit Agreement) made by the Lender to the Borrower pursuant
to the Credit Agreement outstanding on the Termination Date or on such earlier
date as may be specified in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount
of each Advance from the date of such Advance until such principal amount is
paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.
Both principal and interest in respect of each Advance made to it in
any currency are payable in such currency to Deutsche Bank Canada (or any
successor appointed as Canadian administrative agent pursuant to Article VII of
the Credit Agreement), as Canadian administrative agent, at _______, _______,
_______, in same-day funds. Each Advance owing to the Lender by the Borrower
pursuant to the Credit Agreement (including each Letter of Credit Advance
purchased by the Lender as provided in the Credit Agreement), and the maturity
thereof, and all payments made on account of principal thereof, shall be
recorded by the Lender and, prior to any transfer hereof, endorsed on the grid
attached hereto which is part of this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Second Amended and Restated Credit Agreement
dated as of February __, 1999 (as amended, modified and supplemented from time
to time, the "Credit Agreement") among AGCO Corporation and certain
subsidiaries thereof; the lenders listed on the signature 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. The Credit Agreement, among other
things, (a) provides for the making of Advances by the Lender to the Borrower
from time to time in an aggregate amount not to exceed at any time outstanding
the amount specified above (or the equivalent in other currencies), all such
Advances to the undersigned being evidenced by this Promissory Note and (b)
contains provisions for acceleration of the maturity hereof
<PAGE> 146
upon the happening of certain stated events and also for prepayments on account
of principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
AGCO CANADA, LTD.
By:
-----------------------------
Title:
<PAGE> 147
ADVANCES AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
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AMOUNT OF
DATE TYPE OF AMOUNT OF CURRENCY PRINCIPAL PAID UNPAID PRINCIPAL NOTATION
ADVANCE ADVANCE OR PREPAID BALANCE MADE BY
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<S> <C> <C> <C> <C> <C> <C>
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</TABLE>
<PAGE> 148
EXHIBIT B-1 - FORM OF NOTICE OF BORROWING -
MULTI-CURRENCY BORROWERS
NOTICE OF BORROWING
Cooperatieve Centrale Raiffeisen-
Boerenleenbank B.A.,
"Rabobank Nederland", New York Branch,
as Administrative Agent
under the Credit Agreement
referred to below
245 Park Avenue, 38th Fl.
New York, NY 10167 ______ __, ____
Attention: Structured Finance Department
Ladies and Gentlemen:
The undersigned refers to the Second Amended and Restated Credit
Agreement dated as of February __, 1999 (as amended, modified and supplemented
from time to time, the "Credit Agreement", the terms defined therein being used
herein as therein defined) among AGCO Corporation and certain subsidiaries
thereof; the lenders listed on the signature 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; and hereby gives you
notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the
undersigned hereby requests a Borrowing under the Credit Agreement, and in that
connection sets forth below the information relating to such Borrowing (the
"Proposed Borrowing"), as required by Section 2.02(a) of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is _________ __, 199_.
(ii) The Type of the Advances to comprise the Proposed Borrowing is a
[Eurocurrency Rate Advance] [Base Rate Advance].
(iii) The aggregate principal amount of the Proposed Borrowing is
$__________.
(iv) The currency in which such Proposed Borrowing is to be made is
_______. [U.S. dollars or Alternate Currency.]
[(v) The initial Interest Period for each Eurocurrency Rate Advance
comprising the proposed Borrowing is _______.] [Necessary for Eurocurrency Rate
Borrowings only.]
<PAGE> 149
[(vi) The Borrower's Account for the undersigned for the Proposed
Borrowing is _______.]
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed
Borrowing:
(A) the representations and warranties contained in each Loan Document
are correct and will be correct on the date of the Proposed Borrowing, before
and after giving effect to the Proposed Borrowing and to the application of
the proceeds therefrom, as though made on and as of such date, other than any
such representations or warranties that, by their terms, refer to a date
other than the date of the Proposed Borrowing;
(B) no event has occurred and is continuing, or would result from such
Proposed Borrowing or from the application of the proceeds therefrom, that
constitutes a Default;
(C) on the date of the Proposed Borrowing and after giving effect
thereto, the aggregate principal amount of all Borrower Outstandings will not
exceed the Borrowing Base on such date; and
(D) there has occurred no Material Adverse Effect since December 31,
1995.
Very truly yours,
[NAME OF BORROWER]
By______________________________
Title:
<PAGE> 150
EXHIBIT B-2 - FORM OF NOTICE OF BORROWING -
CANADIAN SUBSIDIARY
NOTICE OF BORROWING
Deutsche Bank Canada,
as Canadian Administrative Agent under
the Credit Agreement
referred to below
P.O. Box 196
222 Bay Street, 12th Floor
Toronto, Ontario M5K 1H6 ______ __, ____
Attention: Corporate Finance Department/Syndications
Ladies and Gentlemen:
The undersigned refers to the Second Amended and Restated Credit
Agreement dated as of February __, 1999 (as amended, modified and supplemented
from time to time, the "Credit Agreement", the terms defined therein being used
herein as therein defined) among AGCO Corporation and certain subsidiaries
thereof; the lenders listed on the signature pages thereof; Cooperatieve
Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York Branch
("Rabobank"), SunTrust Bank, Atlanta, and Deutsche Bank, New York Branch, as
co-managers; Deutsche Bank Canada, as Canadian administrative agent, and
Rabobank, as administrative agent for the lenders; and hereby gives you notice,
irrevocably, pursuant to Section 2.02 of the Credit Agreement that the
undersigned hereby requests a Borrowing under the Credit Agreement, and in that
connection sets forth below the information relating to such Borrowing (the
"Proposed Borrowing"), as required by Section 2.02(a) of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is _________ __, 199_.
(ii) The Type of the Advances to comprise the Proposed Borrowing is a
[Eurocurrency Rate Advance] [Base Rate Advance] [Bankers' Acceptance].
(iii) The aggregate principal amount [face amount] of the Proposed
Borrowing is $__________.
(iv) The initial Interest Period for each Eurocurrency Rate Advance
comprising the proposed Borrowing is _______. [Necessary for Eurocurrency Rate
Borrowings only.]
(v) The Contact Period for each Bankers' Acceptance comprising the
proposed Borrowing is ____________. [Necessary for Bankers' Acceptances only.]
<PAGE> 151
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed
Borrowing:
(A) the representations and warranties contained in each Loan Document
are correct and will be correct on the date of the Proposed Borrowing, before
and after giving effect to the Proposed Borrowing and to the application of
the proceeds therefrom, as though made on and as of such date, other than any
such representations or warranties that, by their terms, refer to a date
other than the date of the Proposed Borrowing;
(B) no event has occurred and is continuing, or would result from such
Proposed Borrowing or from the application of the proceeds therefrom, that
constitutes a Default;
(C) on the date of the Proposed Borrowing and after giving effect
thereto, the aggregate principal amount of all Borrower Outstandings will not
exceed the Borrowing Base on such date; and
(D) there has occurred no Material Adverse Effect since December 31,
1995.
Very truly yours,
AGCO CANADA, LTD.
By_______________________________
Title:
Copy to: Deutsche Bank Securities Inc.
Loan Syndications
31 West 52nd Street
New York, NY 10019
<PAGE> 152
EXHIBIT B-3 - FORM OF NOTICE OF ROLLOVER -
CANADIAN SUBSIDIARY
NOTICE OF BORROWING
Deutsche Bank Canada,
as Canadian Administrative Agent under
the Credit Agreement
referred to below
P.O. Box 196
222 Bay Street, 12th Floor
Toronto, Ontario m5K 1H6 ______ __, ____
Attention: Corporate Finance Department/Syndications
Ladies and Gentlemen:
The undersigned refers to the Second Amended and Restated Credit
Agreement dated as of February __, 1999 (as amended, modified and supplemented
from time to time, the "Credit Agreement", the terms defined therein being used
herein as therein defined) among AGCO Corporation and certain subsidiaries
thereof; the lenders listed on the signature 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; and hereby gives you notice,
irrevocably, pursuant to Section 2.16(h) of the Credit Agreement that the
undersigned hereby requests that Bankers' Acceptances with an aggregate face
value of Cdn. $[ ] maturing on [ ] (the "Rollover Date") in accordance with
Section 2.16(h) of the Credit Agreement (the "Proposed Rollover").
Each new Bankers' Acceptance should be dated so as to mature on [ ],
19[ ], resulting in a term of [ ] days.
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the Rollover Date:
(A) the representations and warranties contained in each Loan Document
are correct and will be correct on the Rollover Date, before and after giving
effect to the Proposed Rollover and to the application of the proceeds
therefrom, as though made on and as of such date, other than any such
representations or warranties that, by their terms, refer to a date other
than the Rollover Date;
(B) no event has occurred and is continuing, or would result from such
Proposed Rollover or from the application of the proceeds therefrom, that
constitutes a Default;
<PAGE> 153
(C) on the Rollover Date and after giving effect thereto, the
aggregate principal amount of all Borrower Outstandings will not exceed the
Borrowing Base on such date; and
(D) there has occurred no Material Adverse Effect since December 31,
1995.
Very truly yours,
AGCO CANADA, LTD.
By:__________________________
Title:
Copy to: Deutsche Bank North America
Loan Syndications
31 West 52nd Street
New York, NY 10019
<PAGE> 154
EXHIBIT C
AGCO CORPORATION
BORROWING BASE CERTIFICATE
THE UNDERSIGNED REFERS to the Second Amended and Restated Credit
Agreement dated as of February __, 1999 (as amended, modified and supplemented
from time to time, the "Credit Agreement", the terms defined therein being used
herein as therein defined) among AGCO Corporation and certain subsidiaries
thereof; the lenders listed on the signature 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, and CERTIFIES that the
amounts and computations set forth in the attached Schedule have been prepared
in compliance with and as required by the Credit Agreement and are correct as
of _______ __, 199_.
AGCO CORPORATION
By_________________________
Title:
<PAGE> 155
SCHEDULE TO BORROWING BASE CERTIFICATE
AGCO BORROWING BASE COMPONENTS
A. RECEIVABLES
1. Gross Receivables $
------------------------
2. Reserves $
------------------------
3. Net Receivables (A.1 Minus A.2) $
------------------------
4. Loan Value Percentage Rate $ 0.9000
------------------------
5. Availability (A.3 x A.4) $
------------------------
B. INVENTORY
1. Gross Inventory $
------------------------
2. Allowances $
------------------------
3. Net Inventory (B.1 Minus B.2) $
------------------------
4. Loan Value Percentage Rate $ 0.6000
------------------------
5. Availability (B.3 x B.4) $
------------------------
C. TOTAL AVAILABILITY
1. Total Borrowing Base Component Availability
(A.5 Plus B.5) $
------------------
<PAGE> 156
EXHIBIT D
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Second Amended and Restated Credit
Agreement dated as of February __, 1999 (as amended, modified and supplemented
from time to time, the "Credit Agreement") among AGCO Corporation and certain
subsidiaries thereof; the lenders listed on the signature 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 (the "Canadian Administrative Agent"); and Rabobank, as administrative
agent for the lenders (the "Administrative Agent"). Terms defined in the Credit
Agreement are used herein with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1
agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, an interest in and
to the Assignor's rights and obligations under the Credit Agreement as of the
date hereof equal to the percentage interest specified on Schedule 1 of all
outstanding rights and obligations under the Credit Agreement. After giving
effect to such sale and assignment, the Assignee's Commitments and the amount
of the Advances owing to the Assignee will be as set forth on Schedule 1.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any other instrument
or document furnished pursuant thereto; (iii) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any Loan Party or the performance or observance by any Loan Party of any of
its obligations under the Loan Documents or any other instrument or document
furnished pursuant thereto; and (iv) attaches the Notes held by the Assignor
and requests that the Administrative Agent exchange such Note or Notes for a
new Note or Notes payable to the order of the Assignee in an amount equal to
the Commitments assumed by the Assignee pursuant hereto or new Notes payable to
the order of the Assignee in an amount equal to the Commitments assumed by the
Assignee pursuant hereto and the Assignor in an amount equal to the Commitments
retained by the Assignor under the Credit Agreement, respectively, as specified
on Schedule 1.
3. The Assignee (i) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial statements referred
to in Section 4.01 thereof
<PAGE> 157
2
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Acceptance; (ii) agrees that it will, independently and without reliance upon
either Agent, the Assignor 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 the Credit Agreement;
(iii) confirms that it is an Eligible Assignee; (iv) appoints and authorizes
the Administrative Agent (and, if this Assignment and Acceptance relates to the
Canadian Subsidiary Facility, the Canadian Administrative Agent) to take such
action as agent on its behalf and to exercise such powers and discretion under
the Credit Agreement as are delegated to such Agent by the terms thereof,
together with such powers and discretion as are reasonably incidental thereto;
(v) agrees that it will perform in accordance with their terms all of the
obligations that by the terms of the Credit Agreement are required to be
performed by it as a Lender; and (vi) attaches any U.S. Internal Revenue
Service forms required under Section 2.11.
4. Following the execution of this Assignment and Acceptance,
it will be delivered to the Administrative Agent for acceptance and recording
by the Administrative Agent and, if applicable, the Canadian Administrative
Agent. The effective date for this Assignment and Acceptance (the "Effective
Date") shall be the date of acceptance hereof by the Administrative Agent and,
if applicable, the Canadian Administrative Agent, unless otherwise specified on
Schedule 1.
5. Upon such acceptance and recording by the Administrative
Agent, as of the Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Assignment and Acceptance,
have the rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent provided in this Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Administrative
Agent, from and after the Effective Date, the Appropriate Agent shall make all
payments under the Credit Agreement and the Notes in respect of the interest
assigned hereby (including, without limitation, all payments of principal,
interest and commitment fees with respect thereto) to the Assignee. The
Assignor and Assignee shall make all appropriate adjustments in payments under
the Credit Agreement and the Notes for periods prior to the Effective Date
directly between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
8. This Assignment and Acceptance 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 this Assignment and Acceptance by
telecopier shall be effective as delivery of a manually executed counterpart of
this Assignment and Acceptance.
<PAGE> 158
3
IN WITNESS WHEREOF, the Assignor and the Assignee have caused
this Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date specified thereon.
[NAME OF ASSIGNOR], as Assignor
By:
-----------------------------
Title:
Dated: , 19
--------- -- --
[NAME OF ASSIGNEE], as Assignee
By:
-----------------------------
Title:
[For Multi-Currency Facility:
Domestic Lending Office:
Eurodollar Lending Offices:
Multi-Currency Facility:
For British pounds:
For Dutch guilders:
For French francs:
For German deutschemarks:
For Italian lira:
For Swiss francs:
AFor European Union euros:]
[For Canadian Subsidiary Facility:]
<PAGE> 159
4
ACCEPTED AND APPROVED THIS DAY
----
OF , .
------------- --
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., NEW YORK BRANCH, as
Administrative Agent [and Multi-Currency Issuing Bank]
By:
------------------------------
Title:
AGCO CORPORATION
By:
------------------------------
Title:
[DEUTSCHE BANK CANADA,
as Canadian Administrative Agent
and Canadian Issuing Bank
By:
------------------------------
Title:]
<PAGE> 160
SCHEDULE 1
TO
ASSIGNMENT AND ACCEPTANCE
Percentage interest in Commitments assigned:
--------------
Assignee's Canadian Subsidiary Commitment: $
--------------
Assignee's Multi-Currency Commitment: $
--------------
Aggregate outstanding principal amount
of Canadian Subsidiary Advances assigned: $
--------------
Aggregate outstanding principal amount
of Multi-Currency Advances assigned: $
--------------
Aggregate outstanding principal amount
of Letter of Credit Advances of the account of
Multi-Currency Borrowers assigned: $
--------------
Aggregate outstanding principal amount
of Letter of Credit Advances for the account of
the Canadian Subsidiary assigned: $
--------------
Amount of participations in Letters of Credit
issued for the account of Multi-Currency Borrowers: $
--------------
Amount of participations in Letters of Credit
issued for the account of the Canadian Subsidiary: $
--------------
Principal amount of Notes of Multi-Currency Borrowers
payable to Assignee: $
--------------
Principal amount of Note of Multi-Currency Borrowers
payable to Assignor: $
--------------
Principal amount of Note of the Canadian Subsidiary
payable to Assignee: $
--------------
Principal amount of Note of the Canadian Subsidiary
payable to Assignor: $
--------------
Effective Date (if other than date of
acceptance by Administrative Agent): , 199
--------- -
<PAGE> 161
EXHIBIT E - FORM OF BANKERS' ACCEPTANCE
[TO BE ATTACHED]
<PAGE> 162
EXHIBIT F - FORM OF
DISCOUNT NOTE
Cdn.$ Date:
--------------
FOR VALUE RECEIVED, the undersigned unconditionally promises
to pay on __________________, 19__, to or to the order of [NAME OF NON BA
LENDER] ("Holder"), the sum of Cdn$_____________________________________ with
no interest thereon.
The undersigned hereby waives presentment, protest and notice
of every kind and waives any defenses based upon indulgences which may be
granted by the holder hereof to any party liable hereon and any days of grace.
This promissory note evidences a BA Equivalent Loan, as
defined in the Second Amended and Restated Credit Agreement dated as of
February __, 1999 among AGCO Corporation and certain subsidiaries named therein
as Borrowers, the lenders named therein as Lenders, 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 (the "Credit Agreement") and constitutes
evidence of indebtedness to the Holder arising from such BA Equivalent Loan.
Payment of this note shall be made at the Canadian Administrative Agent's
Account as defined in the Credit Agreement.
AGCO CANADA, LTD.
By:
--------------------------------
Name:
Title:
<PAGE> 163
SCHEDULE 3.01(E)(VII)
<TABLE>
<CAPTION>
Guarantor Persons Whose Obligations are Guaranteed
- --------- ----------------------------------------
<S> <C>
AGCO Corporation AGCO Canada Limited
Massey Ferguson Manufacturing Limited
Massey Ferguson Limited
Massey Ferguson GmbH
Massey Ferguson S.A.
AGCO Limited
AGCO Holding B.V.
Massey Ferguson Manufacturing Limited Massey Ferguson Limited
Massey Ferguson Corp. AGCO Corporation
AGCO Canada Limited
Massey Ferguson Manufacturing Limited
Massey Ferguson Limited
Massey Ferguson GmbH
Massey Ferguson S.A.
AGCO Limited
AGCO Holding B.V.
Massey Ferguson Limited Massey Ferguson Manufacturing Limited
AGCO Limited Massey Ferguson Manufacturing Limited
Massey Ferguson Limited
Massey Ferguson S.A.
AGCO Holding B.V.
AGCO Holding B.V. AGCO Limited
Massey Ferguson Manufacturing Limited
Massey Ferguson Limited
Massey Ferguson S.A.
</TABLE>
<PAGE> 164
SCHEDULE I
Information Regarding Lenders and their Commitments
<TABLE>
<CAPTION>
================================================================================================================================
Lender Multi-Currency Facility Canadian Facility Letter of Credit Lending Offices
- ------ ----------------------- ----------------- ---------------- ---------------
Commitment Commitment Commitment
---------- ---------- ----------
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COOPERATIEVE CENTRALE $74,841,531 $75,000,000 DOMESTIC:
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK Rabobank Nederland
RANCH 245 Park Avenue
New York, NY
EUROCURRENCY:
For British Pounds:
-------------------
Rabobank Nederland
London Branch
108 Cannon Street
London EC4N 6RN
England
For Dutch Guilders:
-------------------
Rabobank Nederland
Utrecht Branch
Croeselaan 18
3500 HG Utrecht
The Netherlands
For French Francs:
------------------
Rabobank Nederland
69, Boulevard Haussmann
75008-Paris, France
For German Deutschemarks:
-------------------------
Rabobank Deutschebank A.G.
Solmstrasse 2-26 (City West)
6000 Frankfurt am Main 90
Federal Republic of Germany
For Italian Lira:
-----------------
Raofin Italia S.p.A.
Via Spadari
20123 Milan
Italy
For European Euro Euros:
------------------------
-----------
-----------
-----------
</TABLE>
<PAGE> 165
<TABLE>
<CAPTION>
=================================================================================================================================
Lender Multi-Currency Facility Canadian Facility Letter of Credit Lending Offices
- ------ ----------------------- ----------------- ---------------- ---------------
Commitment Commitment Commitment
---------- ---------- ----------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SUNTRUST BANK, ATLANTA $40,909,091 DOMESTIC and EUROCURRENCY:
SunTrust Bank, Atlanta
25 Park Place
Atlanta, GA 30303
- ---------------------------------------------------------------------------------------------------------------------------------
DEUTSCHE BANK CANADA $20,000,000 $75,000,000 Deutsche Bank Canada
222 Bay Street, 12th Floor
Suite 1200
P.O. Box 196
Toronto, Ontario M5K1H6
- ---------------------------------------------------------------------------------------------------------------------------------
DEUTSCHE BANK AG, NEW $36,818,182 Deutsche Bank AG, New York Branch
YORK BRANCH 31 West 52nd Street
New York, New York 10019
- ---------------------------------------------------------------------------------------------------------------------------------
BANK AUSTRIA $14,080,478 Bank Austria
AKTIENGESELLSCHAFT, 2 Greenwich Plaza
NEW YORK BRANCH Greenwich, CT 06830
- ---------------------------------------------------------------------------------------------------------------------------------
THE FIRST NATIONAL BANK $40,909,091 The First National Bank of Chicago
OF CHICAGO One First National Plaza
Chicago, IL 60670
- ---------------------------------------------------------------------------------------------------------------------------------
CREDIT LYONNAIS, $40,909,091 Credit Lyonnais Atlanta Agency
ATLANTA AGENCY 303 Peachtree Street, NE
Atlanta, GA 30308
- ---------------------------------------------------------------------------------------------------------------------------------
MORGAN GUARANTY TRUST $28,636,364 Morgan Guaranty Trust Company
COMPANY OF NEW YORK 60 Wall Street
New York, NY 10260
- ---------------------------------------------------------------------------------------------------------------------------------
MELLON BANK, N.A. $20,454,545 Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
- ---------------------------------------------------------------------------------------------------------------------------------
BANKERS TRUST COMPANY $32,727,273 Bankers Trust Company
130 Liberty Street
New York, NY 10006
- ---------------------------------------------------------------------------------------------------------------------------------
CHRISTIANIA BANK OG $14,555,885 Christiania Bank
KREDITKASSE 11 West 42nd Street
New York, NY 10036
- ---------------------------------------------------------------------------------------------------------------------------------
CIBC INC. $40,909,091 CIBC Inc.
425 Lexington Avenue
New York, New York 10017
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 166
<TABLE>
<CAPTION>
===============================================================================================================================
Lender Multi-Currency Facility Canadian Facility Letter of Credit Lending Offices
- ------ ----------------------- ----------------- ---------------- ---------------
Commitment Commitment Commitment
---------- ---------- ----------
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMERZBANK AKTIEN- $17,441,627 Commerzbank AG, Atlanta Agency
GESELLSCHAFT, ATLANTA 1230 Peachtree Street, N.E.
AGENCY Atlanta, GA 30309
- -------------------------------------------------------------------------------------------------------------------------------
KBC BANK, N.V. $14,080,478 KBC Bank N.V.
125 West 55th Street
New York, NY 10019
- -------------------------------------------------------------------------------------------------------------------------------
CREDIT INDUSTRIEL ET $28,636,364 DOMESTIC:
COMMERCIAL
CIC Paris
57 Rue de la Victoire
75009 Paris, France
- -------------------------------------------------------------------------------------------------------------------------------
COBANK, ACB $28,636,364 CoBank, ACB
5500 South Quebec
Englewood, CO 80111
- -------------------------------------------------------------------------------------------------------------------------------
MARINE MIDLAND BANK $20,454,545 Marine Midland Bank
140 Broadway
New York, NY 10005
- -------------------------------------------------------------------------------------------------------------------------------
THE BANK OF TOKYO- $20,454,545 The Bank of Tokyo-Mitsubishi, Ltd.,
MITSUBISHI, LTD., Atlanta Agency
ATLANTA AGENCY 133 Peachtree Street, NE
Atlanta, GA 30303
- -------------------------------------------------------------------------------------------------------------------------------
UNION BANK OF $20,454,545 Union Bank of California
CALIFORNIA 445 South Figueroa Street
Los Angeles, CA 90071
- -------------------------------------------------------------------------------------------------------------------------------
BAYERISCHE HYPOTHEKEN- $40,909,091 Bayerische Hypo-and Vereinsbank AG
UND WECHSEL BANK 150 East 42nd Street
AKTIEN-GESSELSCHAFT, New York, NY 10017
NEW YORK BRANCH
- -------------------------------------------------------------------------------------------------------------------------------
WACHOVIA BANK OF $40,909,091 Wachovia Bank of Georgia, N.A.
GEORGIA, N.A. 191 Peachtree Street, N.E.
Atlanta, GA 30303
- -------------------------------------------------------------------------------------------------------------------------------
BANQUE FRANCAISE DU $20,454,545 Banque Francaise du Commerce
COMMERCE EXTERIEUR Exterie
645 Fifth Avenue
New York, NY 10022
- -------------------------------------------------------------------------------------------------------------------------------
BANK OF MONTREAL $16,363,636 $30,000,000 Bank of Montreal
115 South LaSalle Street
Chicago, IL 60603
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 167
<TABLE>
<CAPTION>
==================================================================================================================================
Lender Multi-Currency Facility Canadian Facility Letter of Credit Lending Offices
- ------ ----------------------- ----------------- ---------------- ---------------
Commitment Commitment Commitment
---------- ---------- ----------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SOCIETE GENERALE $28,636,364 Societe Generale
2001 Ross Avenue
Dallas, TX 75201
- ----------------------------------------------------------------------------------------------------------------------------------
TORONTO DOMINION $16,363,636 The Toronto-Dominion Bank
(TEXAS), INC. 909 Fannin Street
Houston, TX 77010
- ----------------------------------------------------------------------------------------------------------------------------------
BANQUE NATIONALE DE $20,454,545 DOMESTIC:
PARIS
Banque Nationale de Paris
Houston Agency
333 Clay Street
Houston, TX 77002
- ----------------------------------------------------------------------------------------------------------------------------------
CLYDESDALE BANK PLC $28,636,364 Clydesdale Bank PLC
150 Buchanan Street
Glasgow, Scotland, U.K.
- ----------------------------------------------------------------------------------------------------------------------------------
DG DEUTSCHE GENOSSEN- $28,636,364 DG Deutsche Genossen-Schaftsbank,
SCHAFTBANK, CAYMAN Cayman Islands Branch
ISLANDS BRANCH 609 Fifth Avenue
New York, New York 10017
- ----------------------------------------------------------------------------------------------------------------------------------
ISTITUTO BANCARIO SAN $20,454,545 Istituto Bancario San Paolo di Torino
PAOLO DI TORINO ISTITUTO Istituto Mobiliare Italiano SPA
MOBILIARE ITALIANO SPA 245 Park Avenue
New York, New York 10167
- ----------------------------------------------------------------------------------------------------------------------------------
STANDARD CHARTERED $20,454,545 Standard Chartered Bank
BANK 7 World trad Center
New York, NY 10048
- ----------------------------------------------------------------------------------------------------------------------------------
THE SUMITOMO BANK, $20,454,545 The Sumitomo Bank, Limted
LIMITED 277 Park Avenue
New York, NY 10172
- ----------------------------------------------------------------------------------------------------------------------------------
WESTDEUTSCHE $40,909,091 Westdeutsche Landesbank Girozentrale
LANDESBANK 1211 Avenue of the Americas
GIROZENTRALE, NEW YORK New York, NY 10036
BRANCH
- ----------------------------------------------------------------------------------------------------------------------------------
BANCA NAZIONALE DEL $20,454,545 Banca Nazionale de Lavoro S.p.A.
LAVORO SPA, NEW YORK New York Branch
BRANCH 25 West 51st Street
New York, NY 10019
- ----------------------------------------------------------------------------------------------------------------------------------
NATIONAL BANK OF CANADA $20,000,000
</TABLE>
<PAGE> 168
<TABLE>
<CAPTION>
=================================================================================================================
Lender Multi-Currency Facility Canadian Facility Letter of Credit Lending Offices
- ------ ----------------------- ----------------- ---------------- ---------------
Commitment Commitment Commitment
---------- ---------- ----------
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
THE TORONTO DOMINION BANK $ 30,000,000
=================================================================================================================
</TABLE>
<PAGE> 1
EXHIBIT 10.19
EMPLOYMENT AND SEVERANCE AGREEMENT
This Employment and Severance Agreement (the "Agreement") entered into
this 5th day of September, 1993, by and between AGCO CORPORATION, a Delaware
corporation (the "Company"), and Edward R. Swingle (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) The Company hereby employs the Executive and the Executive
hereby agrees to serve the Company on the terms and conditions set forth herein.
(b) The employment term shall commence on September 5, 1993,
and shall be for a term of three (3) years, unless extended in writing by both
parties at least 180 days prior to the expiration of such term or unless
otherwise terminated earlier in accordance with Section 6 or any other provision
of this Agreement. If the employment term is not extended pursuant to a mutually
acceptable written agreement at least 180 days prior to the expiration of such
employment term, then at such expiration the Company shall be obligated to
continue to pay to the Executive his Base Salary (as defined in section 3(a)
herein) then in effect, and will continue the Executive's group health and life
insurance, for a period of six (6) months following such expiration.
2. POSITION AND DUTIES.
The Executive shall serve as Vice President, Marketing, of the
Company and shall perform 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
1
<PAGE> 2
consistent with the Executive's position. The Executive shall perform and
discharge faithfully, 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 One Hundred Sixty Thousand Dollars
($160,000), payable in equal semimonthly installments throughout the term of
such employment subject to Sections 5 and 6 hereof and subject to applicable,
tax and payroll deductions. The Company shall consider increases in the
Executive's Base Salary annually, and any such increase in salary implemented by
the Company shall become the Executive's Base Salary for purposes of this
Agreement.
(b) INCENTIVE COMPENSATION. Provided Executive has duly
performed his obligations pursuant to this Agreement, the Executive shall be
entitled to participate in or receive benefits under any Management Incentive
Compensation Plan implemented by the Company.
(c) OTHER BENEFITS. During the term of this Agreement, the
Executive shall be entitled to participate in the Stock Option Plan implemented
by the Company and any employee benefit plans and arrangements which are
available to senior executive officers of the Company, including, without
limitation, group health and life insurance, pension and savings and the Senior
Management Employment Policy.
(d) FRINGE BENEFITS. The Company shall pay or reimburse
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.
Throughout the term of this Agreement, the Company will provide Executive with
the use of a vehicle 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 automobile. The Company further agrees that Executive shall be
entitled to four (4) weeks of vacation in any year of the term of employment
hereunder. Nothing paid to the Executive under any such
2
<PAGE> 3
Company plans or arrangements shall be deemed to be in lieu of compensation to
the Executive hereunder.
4. NON-DISCLOSURE, NON-COMPETITION AND NON-SOLICITATION
----------------------------------------------------
COVENANTS.
----------
(a) ACKNOWLEDGEMENTS. The Executive acknowledges that as Vice
-----------------
President, Marketing 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 (i) 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 (ii) 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
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executive level services substantially similar to those that he will
perform for the Company as its Vice President, Marketing.
(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.
(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:
(i) with regard to information constituting a Trade Secret, at all
times during the Executive's employment
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<PAGE> 5
with the Company and all times thereafter during which such information
continues to constitute a Trade Secret; and (ii) 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.
(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.
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<PAGE> 6
(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, in the "Restricted
Territory" (as defined in the next sentence), either directly or indirectly,
alone or in conjunction with any other party, (A) accept or enter into a
Competitive Position with a Competitor of the Company, or (B) take any action in
furtherance of or in conjunction with a Competitive Position with a Competitor
of the Company. For purposes of this Section 4, "Restricted Territory' shall
refer to all geographical areas comprised within the fifty United States of
America. The Executive and the Company each acknowledge that the scope of the
Restricted Territory is reasonable because (1) the Company is conducting
substantial business in all fifty states (as well as several foreign countries),
(2) the Executive occupies one of the top executive positions with the Company,
and (3) the Executive will be carrying out his employment responsibilities in
all locations where the Company is doing business.
(e) NON-SOLICITATION OF CUSTOMERS. The Executive agrees that
------------------------------
during the term of his employment, he will not, either directly or indirectly,
along 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
6
<PAGE> 7
employment with the Company, he will not, in the Restricted Territory, 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 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, and in the Restricted
Territory, 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
7
<PAGE> 8
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 thirty (30) 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 two (2)
years from the date of such Change in Control, unless such termination is (a)
because of the death or Incapacity (as defined in Section 6(b) below) of the
Executive, (b) by the Company for Cause (as defined in Subsection (f) below),
(c) by the Executive other than for Good Reason (as defined in Subsection (f)
below) or (d) upon the Executive's voluntary retirement.
(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
8
<PAGE> 9
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 (and as hereafter 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 Company's then-current, similarly situated
Executives for a period equal to the lesser of (X) three (3) years
following the date of termination, or (Y) until the Executive is
provided benefits by another employer substantially comparable to the
benefits provided by the Company.
(iv) In the event of the Executive's death subsequent
to termination, all
9
<PAGE> 10
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.
(v) 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 other employment or otherwise.
(vi) 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) 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, arbitrations 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.
10
<PAGE> 11
(e) EXCLUSIVE REMEDY. 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 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 1.280G-1. Without limiting the
foregoing and by way of example:
(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
11
<PAGE> 12
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
12
<PAGE> 13
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.
(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 similar relief; the commencement of any action
or proceeding for the appointment of
13
<PAGE> 14
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
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<PAGE> 15
coincident with or next following the Executive's sixty-fifth (65th)
birthday.
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.
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<PAGE> 16
(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 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.
16
<PAGE> 17
7. EFFECT OF RE-EMPLOYMENT/OTHER COMPENSATION.
-------------------------------------------
(a) 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(e) 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
----
post-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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<PAGE> 18
(b) 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
5295 Triangle Parkway
Norcross, Georgia 30092
Attention: Robert J. Ratliff
in the case of the Executive to:
Edward R. Swingle
610 Montauk Way
Alpharetta, Georgia 30202
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
18
<PAGE> 19
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 Demand for Arbitration; (c) A neutral person shall be
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/ ERS Company initials: /s/ RJR
-------- -------
19
<PAGE> 20
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,
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 instrument.
15. ENTIRE AGREEMENT. This Agreement constitutes the full
agreement and
20
<PAGE> 21
understanding of the parties hereto with respect to the subject matter hereof
and all prior or contemporaneous agreements or understandings are merged
herein. 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 term 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
By: /s/ R.J. Ratliff
-------------------------------
Name: R.J. Ratliff
-----------------------------
Title: Chairman
----------------------------
EXECUTIVE
/s/ Edward R. Swingle
----------------------------------
21
<PAGE> 22
AMENDMENT TO EMPLOYMENT AND SEVERANCE AGREEMENT
-----------------------------------------------
This Agreement is to amend the Employment and Severance Agreement (the
"Agreement") between AGCO Corporation, a Delaware corporation, (the "Company")
and Edward R. Swingle, (the "Executive"), dated September 5, 1993.
Section 5 of the Agreement is amended to add Section 5 (g) as
follows:
(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 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
Long Term Incentive Plans and for those shares awarded under any
Stock Option Plan.
AGCO Corporation Executive
By: /s/ Allen W. Ritchie /s/ E. R. Swingle
---------------------- ------------------------
Title: President
-------------------- Edward R. Swingle
<PAGE> 23
AMENDMENT TO EMPLOYMENT AND SEVERANCE AGREEMENT
This Agreement is to amend the Employment and Severance Agreement (the
"Agreement" between AGCO Corporation, a Delaware corporation (the "Company")
and Edward R. Swingle, (the "Executive"), dated September 5, 1993.
Section 1.b of the Agreement is amended to read as follows:
The employment term shall commence on September 5, 1993 and shall be
for a term of three (3) years. 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 two (2) 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. 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.
AGCO CORPORATION
By: /s/ R. J. Ratliff
----------------------------------
Name: R. J. Ratliff
----------------------------------
Title: Chairman & CEO
----------------------------------
EXECUTIVE
/s/ E. R. Swingle
----------------------------------
<PAGE> 1
Exhibit 12.0
AGCO CORPORATION AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
(in millions, except ratio data)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Fixed Charges Computation:
Interest expense ........................................... $ 79.7 $ 69.1 $ 45.2 $ 73.3 $ 52.7
Interest component of rent expense (a) ..................... 5.3 5.6 5.4 5.0 2.4
Proportionate share of fixed charges of 50%-owned affiliates 2.8 1.8 2.0 2.0 2.1
Amortization of debt costs ................................. 1.7 1.6 1.4 1.6 0.7
------ ------ ------ ------ ------
Total fixed charges .................................... $ 89.5 $ 78.1 $ 54.0 $ 81.9 $ 57.9
====== ====== ====== ====== ======
Earnings Computation:
Pretax earnings ............................................ $ 84.8 $245.7 $171.6 $190.6 $102.3
Fixed charges .............................................. 89.5 78.1 54.0 81.9 57.9
------ ------ ------ ------ ------
Total earnings as adjusted ............................. $174.3 $323.8 $225.6 $272.5 $160.2
====== ====== ====== ====== ======
Ratio of earnings to combined fixed charges ............ 1.9:1 4.2:1 4.2:1 3.3:1 2.8:1
====== ====== ====== ====== ======
</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
SELECTED FINANCIAL DATA
(in millions, except per share data and number of employees)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998 1997 1996 1995(1) 1994(1)
- ---------------------------------------------------------------------------------------------------------------------
Operating Results
<S> <C> <C> <C> <C> <C>
Net sales $2,941.4 $3,224.4 $2,317.5 $2,068.4 $1,319.3
Gross profit 537.3 666.8 470.3 440.7 276.3
Income from operations(2) 170.5 319.1 211.9 220.6 119.8
Net income(2) 60.6 168.7(3) 125.9(3) 129.1 115.5(4)
Net income per common share-diluted(2)(5) $ 0.99 $ 2.71(3) $ 2.20(3) $ 2.31 $ 2.35(4)
Weighted average number of common
and common equivalent shares
outstanding-diluted(5) 61.2 62.1 57.4 56.6 49.1
Dividends declared per common share(5) $ 0.04 $ 0.04 $ 0.04 $ 0.02 $ 0.01
- ---------------------------------------------------------------------------------------------------------------------
Other Financial Data
Working capital $1,029.9 $ 884.3 $ 750.5 $ 661.5 $ 513.9
Total assets 2,750.4 2,620.9 2,116.5 1,628.6 1,399.5
Long-term debt 924.2 727.4 567.1 415.9(6) 366.8
Stockholders' equity 982.1 991.6 774.6 588.9 476.7
Number of employees 10,572 11,829 7,801 5,548 5,789
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) AGCO sold a 51% joint venture interest in Agricredit-North America effective
November 1, 1996. Accordingly, Agricredit-North America is reflected on the
equity basis of accounting for the years ended December 31, 1996, 1997, and
1998. For comparative purposes, the above table also reflects
Agricredit-North America on the equity basis of accounting for the years
ended December 31, 1995 and 1994. If the Company's 100% interest in
Agricredit-North America were reflected on a consolidated basis for the
years ending December 31, 1995 and 1994, total revenues would be $2,125.0
million and $1,359.0 million, respectively, total assets would be $2,162.9
million and $1,823.3 million, respectively, and long-term debt would be
$568.9 million and $589.8 million, respectively.
(2) These amounts include nonrecurring expenses of $40.0 million, $18.2 million,
$22.3 million, $6.0 million and $19.5 million for the years ended December
31, 1998, 1997, 1996, 1995 and 1994, respectively. The effect of these
nonrecurring charges reduced net income per common share on a diluted basis
by $0.41, $0.19, $0.25, $0.07 and $0.33 for the years ended December 31,
1998, 1997, 1996, 1995 and 1994, respectively. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Charges for
Nonrecurring Expenses."
(3) Includes extraordinary loss, net of taxes, of $2.1 million, or $0.03 per
share, and $3.5 million, or $0.06 per share, for the write-off of
unamortized debt costs related to the refinancing of the Company's revolving
credit facility in January 1997 and March 1996, respectively.
(4) These amounts include a deferred income tax benefit of $29.9 million related
to the reduction of a portion of the valuation allowance. The deferred
income tax benefit had the effect of increasing net income by $29.9 million
and net income per common share on a diluted basis by $0.61.
(5) Net income per common share - diluted, weighted average number of common and
common equivalent shares outstanding - diluted and dividends declared per
common share have been restated for all periods to reflect all stock splits.
(6) Includes $37.6 million of the Company's 6.5% Convertible Subordinated
Debentures. See Note 7 to the Consolidated Financial Statements.
Trading and Dividend Information(1)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
Dividends
(in dollars) High Low Declared
- ---------------------------------------------------------------
1998
<S> <C> <C> <C>
First Quarter $30 9/16 $26 15/16 $.01
Second Quarter 29 7/16 20 7/16 .01
Third Quarter 20 11/16 6 7/16 .01
Fourth Quarter 10 3/8 5 3/4 .01
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
Dividends
(in dollars) High Low Declared
- ---------------------------------------------------------------
1997
<S> <C> <C> <C>
First Quarter $30 3/8 $27 $.01
Second Quarter 35 1/2 25 9/16 .01
Third Quarter 35 1/8 30 11/16 .01
Fourth Quarter 32 5/8 25 9/16 .01
- ---------------------------------------------------------------
</TABLE>
(1) The Company's stock trades on the New York Stock Exchange under the symbol
AG. As of February 26, 1999, there were approximately 777 stockholders of
record.
19
<PAGE> 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
TRANSACTION HISTORY
During the periods discussed below, AGCO's results of operations were
significantly affected by a series of transactions that expanded the size and
geographic scope of its distribution network, enabled it to offer new products
and increased its manufacturing capacity. The results of operations and
financial position for the years ended December 31, 1998, 1997 and 1996 were
affected by the following transactions completed by the Company:
- - 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 other harvesting equipment sold in
North America (the "Western Combine Acquisition"). The Western Combine
Acquisition provided the Company with access to advanced technology and
increased the Company's gross profit margin on certain combines and harvesting
equipment sold in North America.
- - In November 1996, the Company sold a 51% interest in Agricredit Acceptance
Company ("Agricredit-North America"), the Company's retail finance subsidiary
in North America, 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-North
America and now operates the finance company with Rabobank as a joint venture
(the "Agricredit-North America Joint Venture"). The Agricredit-North America
Joint Venture has continued the business of Agricredit-North America and seeks
to build a broader asset-based finance business through the addition of other
lines of business.
- - 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").
- - 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 and Australia (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 Germany and throughout Europe
and Australia. In December 1997, the Company sold Fendt's caravan and motor
home business in order to focus on its core agricultural equipment business
(the "Fendt Caravan Sale").
- - In December 1997, the Company acquired the remaining 68% of Dronningborg
Industries a/s (the "Dronningborg Acquisition"), the Company's supplier of
combine harvesters sold under the Massey Ferguson brand name in Europe. The
Company previously owned 32% of this combine manufacturer which developed and
manufactured combine harvesters exclusively for AGCO. The Dronningborg
Acquisition enabled the Company to achieve certain synergies within its
worldwide combine manufacturing and increased the Company's gross profit
margin on combines sold primarily in Europe.
- - In December 1997, the Company sold 50% of Deutz Argentina's engine production
and distribution business to Deutz AG, a global supplier of diesel engines.
This joint venture (the "Engine Joint Venture") will allow the Company to
share in research and development costs and gain access to advanced
technology.
- - In May 1998, the Company acquired the distribution rights for the Massey
Ferguson brand in Argentina (the "MF Argentina Acquisition"). The MF Argentina
Acquisition expanded the Company's distribution network in the second largest
market in South America.
- - In July 1998, the Company acquired the Spra-Coupe product line, a brand of
agricultural sprayers sold primarily in North America (the "Spra-Coupe
Acquisition"). In October 1998, the Company acquired the Willmar product line,
a brand of agricultural self-propelled sprayers, spreaders and loaders sold
primarily in North America (the "Willmar Acquisition"). The Spra-Coupe and
Willmar Acquisitions expanded the Company's product offerings to include a
full line of self-propelled sprayers.
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.
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
and the date a dealer sells the equipment to a farmer. During this time lag
between the wholesale and retail sale, 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 retail sale, as opposed to when products are
sold to dealers.
20
<PAGE> 3
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, 1998 1997 1996
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of goods sold 81.7 79.3 79.7
- -----------------------------------------------------------------------
Gross profit 18.3 20.7 20.3
Selling, general and
administrative expenses 9.2 8.5 9.0
Engineering expenses 1.9 1.7 1.2
Nonrecurring expenses 1.4 0.6 1.0
- -----------------------------------------------------------------------
Income from operations 5.8 9.9 9.1
Interest expense, net 2.3 1.7 1.4
Other expense, net 1.0 0.6 0.3
- -----------------------------------------------------------------------
Income before income taxes,
equity in net earnings
of affiliates and
extraordinary loss 2.5 7.6 7.4
Provision for income taxes 0.9 2.7 2.6
- -----------------------------------------------------------------------
Income before equity in net
earnings of affiliates and
extraordinary loss 1.6 4.9 4.8
Equity in net earnings
of affiliates 0.5 0.4 0.8
- -----------------------------------------------------------------------
Income before
extraordinary loss 2.1 5.3 5.6
Extraordinary loss,
net of taxes -- (0.1) (0.2)
- -----------------------------------------------------------------------
Net income 2.1% 5.2% 5.4%
=======================================================================
</TABLE>
YEAR ENDED DECEMBER 31, 1998 COMPARED TO
YEAR ENDED DECEMBER 31, 1997
The Company recorded net income for 1998 of $60.6 million compared to $168.7
million for 1997. Net income per common share on a diluted basis was $0.99 for
1998 compared to $2.71 in 1997. Net income for 1998 included nonrecurring
expenses of $40.0 million, or $0.41 per common share on a diluted basis,
primarily related to reductions in the Company's worldwide workforce (see
"Nonrecurring Expenses"). Net income for 1997 included nonrecurring expenses of
$18.2 million, or $0.19 per share on a diluted basis, primarily related to the
restructuring of the Company's European Operations, the integration of the Deutz
Argentina and Fendt operations and executive severance costs. In addition, net
income for 1997 included an extraordinary loss of $2.1 million, or $0.03 per
share on a diluted basis, for the write-off of unamortized debt costs related to
the refinancing of the Company's revolving credit facility (see "Liquidity and
Capital Resources"). The results for 1998 were negatively impacted by lower
sales and operating margins caused by unfavorable industry conditions, lower
production, lower price realization and the negative impact of currency
translation.
RETAIL SALES
Global demand for agricultural equipment weakened in the second half of 1998 in
most major markets. The industry decline was primarily due to the effects of
high global commodity stocks and lower export demand for farm commodities which
resulted in lower commodity prices. These conditions have the effect of reducing
farm income thereby reducing demand for new equipment purchases. In many
markets, this impact offset relatively favorable industry demand in the first
half of the year.
In the United States and Canada, industry unit retail sales of tractors
increased approximately 4% in 1998 over 1997 despite declining in the second
half of the year. Industry retail sales of combines declined approximately 4%
compared to 1997. Company retail sales of tractors were 2% higher than 1997 and
Company retail sales of combines were 9% below the prior year. The Company's
combine sales were negatively impacted relative to the industry primarily due to
lower 1998 pre-season sales and new product introductions by competitors.
In Western Europe, industry unit retail sales of tractors in 1998
decreased approximately 3% compared to 1997. Industry results were mixed with
significant declines experienced in the United Kingdom and Scandinavia offset by
increases in Germany and Italy. Company retail sales of tractors decreased
approximately 6% in 1998 compared to 1997. The Company's retail sales were
negatively impacted by sales declines of the Massey Ferguson high horse-power
tractors and aggressive pricing in this segment of the market.
In South America, industry unit retail sales of tractors in 1998 decreased
approximately 5% compared to 1997. Industry results in 1998 were also mixed in
this region with favorable industry results in Brazil offset by industry
declines in Argentina and the remaining markets. Company retail sales of
tractors were 2% below 1997, thereby slightly outperforming the market primarily
due to favorable acceptance of new product introductions.
In other international markets, industry unit retail sales of tractors
were lower than 1997, particularly in Asia and Africa. The Company also
experienced lower retail sales in these markets.
STATEMENT OF INCOME
Net sales for 1998 were $2.9 billion compared to $3.2 billion in 1997. This
decline primarily reflects lower retail demand in the majority of markets
throughout the world. Net sales for 1998 were also negatively impacted by the
Fendt Caravan Sale and Engine Joint Venture divestitures and the negative impact
on foreign currency translation due to the strengthening of the U.S. dollar
against most European currencies. Net sales for 1998 were positively impacted by
the Dronningborg, MF Argentina, Spra-Coupe and Willmar Acquisitions. Excluding
the impact of currency translation, acquisitions and divestitures, net sales
decreased approximately 6% compared to 1997.
On a regional basis, net sales in North America decreased $15.7 million,
or 1.6%, compared to 1997, primarily due to unfavorable market conditions which
particularly impacted sales of
21
<PAGE> 4
combines and replacement parts. In the Europe/Africa/Middle East region, net
sales in 1998 declined $183.6 million, or 10.3%, compared to 1997 primarily due
to unfavorable industry conditions, the impact of the Fendt Caravan Sale, and
the negative impact of foreign currency translation. Net sales in South America
decreased $19.0 million, or 5.7%, for 1998 compared to 1997, primarily due to
the impact of the Engine Joint Venture and the negative impact of foreign
exchange. In the East Asia/Pacific region, net sales declined $64.7 million, or
42.5%, for 1998 compared to 1997, primarily due to depressed industry conditions
resulting from the Asian currency devaluation and the negative impact of
currency translation.
Income from operations was $170.5 million for 1998 compared to $319.1
million in 1997. Excluding nonrecurring expenses (see "Nonrecurring Expenses"),
operating income for 1998 was $210.5 million, or 7.2% of net sales, compared to
$337.3 million, or 10.5% of net sales, for 1997. The reduction in operating
margin was a result of lower gross margins, higher selling, general and
administrative expenses ("S,G&A expenses") and higher engineering expenses as a
percentage of net sales. Gross margins of 18.3% for 1998 were lower than gross
margins of 20.7% for 1997 due to lower production overhead absorption, lower
price realization in the majority of markets, and unfavorable foreign currency
exchange relating primarily to the weakening of the Canadian dollar in relation
to the U.S. dollar and the strengthening of the British pound compared to other
European currencies. The Company lowered 1998 tractor and combine unit
production volumes by approximately 13% to reduce inventory levels in response
to weakening industry conditions. Price realization in 1998 was impacted by a
more competitive market environment and higher discounts to liquidate older,
slower-moving inventory. S,G&A expenses for 1998 were $270.7 million, or 9.2% of
net sales, compared to $275.4 million, or 8.5% of net sales, for 1997. As a
percentage of net sales, S,G&A expenses were higher in 1998 due to the lower
sales volumes and Year 2000 costs recorded in 1998 (see "Year 2000").
Engineering expenses for 1998 were $56.1 million, or 1.9% of net sales, compared
to $54.1 million, or 1.7% of net sales, for 1997. As a percentage of net sales,
engineering expenses were higher in 1998 primarily due to lower sales volumes
and higher expenses due to the Dronningborg Acquisition.
Interest expense, net was $67.7 million in 1998 compared to $53.5 million
in 1997. The higher expense was primarily due to additional borrowings to fund
the Company's recent acquisitions, common stock repurchases in the second
quarter of 1998 and higher levels of working capital.
Other expense, net was $28.5 million in 1998 compared to $19.9 million in
1997. The increase in other expense primarily relates to increased hedging costs
and foreign exchange losses in addition to higher amortization of intangibles
due to the Company's recent acquisitions.
The Company recorded an income tax provision of $27.5 million in 1998
compared to $87.5 million in 1997. The Company's effective tax rate increased in
1998 compared to 1997 due to a change in the mix of income to jurisdictions with
higher tax rates.
Equity in net earnings of affiliates was $13.8 million in 1998 compared to
$12.6 million in 1997. The increase primarily related to increased earnings in
the Company's retail finance joint ventures.
YEAR ENDED DECEMBER 31,1997 COMPARED TO
YEAR ENDED DECEMBER 31,1996
The Company recorded net income for the year ended December 31, 1997 of $168.7
million compared to $125.9 million for the year ended December 31, 1996. Net
income per common share on a diluted basis was $2.71 for 1997 compared to $2.20
for 1996. Net income for 1997 included nonrecurring expenses of $18.2 million,
or $0.19 per share on a diluted basis, primarily related to the restructuring of
the Company's European operations, the integration of the Deutz Argentina and
Fendt operations and executive severance costs (see "Nonrecurring Expenses"). In
addition, net income for 1997 included an extraordinary after-tax charge of $2.1
million, or $0.03 per share on a diluted basis, for the write-off of unamortized
debt costs related to the refinancing of the Company's revolving credit facility
(see "Liquidity and Capital Resources"). Net income for 1996 included
nonrecurring expenses of $22.3 million, or $0.25 per share on a diluted basis,
primarily related to the restructuring of the Company's European operations, the
integration and restructuring of the Company's Brazilian operations acquired in
the Maxion Acquisition and executive severance costs (see "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 diluted basis, for the write-off
of unamortized debt costs related to the refinancing of the Company's revolving
credit facility and a gain on the Agricredit Sale of $4.7 million, or $0.05 per
share on a diluted basis. The Company's improved results for 1997 primarily
reflected the positive impact of the Fendt Acquisition completed in January 1997
and improved operating margins, particularly in the Company's South American
operations, partially offset by the negative currency translation effect of the
strengthening dollar against most European currencies.
RETAIL SALES
Conditions in the United States and Canadian agricultural markets were favorable
in 1997 compared to 1996. Industry unit retail sales of tractors, combines and
hay and forage equipment for 1997 increased approximately 12%, 9% and 8%,
respectively, over 1996. The Company believes general market conditions were
positive due to favorable economic conditions relating to high net cash farm
incomes, stable commodity prices and strong domestic and export demand of
commodities. Company unit retail sales of tractors in the United States and
Canada increased 5% in 1997 compared to 1996 and were negatively impacted by a
change in the timing of the Massey Ferguson volume bonus plan from January 1997
to December 1996. Company unit retail sales of combines in the United States and
Canada for 1997 were flat compared to 1996. Company hay and forage equipment
retail sales increased in line with the industry compared to the prior year
primarily due to new products and improvements in the dairy and cattle industry.
The
22
<PAGE> 5
Company believes that aggressive competitor pricing and the introduction of
certain new products contributed to the strong industry growth while the Company
maintained its focus on improved profit margins.
Industry conditions in Western Europe showed mixed results in 1997 with
unit retail sales of tractors decreasing approximately 3% compared to 1996
primarily due to declines in the U.K., France and Germany. The industry decline
was partially due to farm consolidation in Western Europe and the relatively
strong retail sales of tractors in 1996. Company unit retail sales of tractors
in Western Europe, including sales of Fendt tractors in both periods, decreased
in line with the industry compared to 1996. In addition to the industry
conditions, the strength of the British pound against other European currencies
also had a negative impact on sales and gross margins of the Company's tractors
produced in the U.K.
Industry unit retail sales of tractors in South America increased
approximately 35% compared to the prior year. This increase was primarily due to
a recovery in Brazil resulting from increasingly favorable economic conditions
and reduced farm debt levels. Company retail unit sales of tractors in South
America increased approximately 25% and were negatively impacted by competitor
discounting which the Company chose not to match. In other international
markets, Company retail unit sales of tractors increased approximately 11%,
consistent with the industry.
STATEMENT OF INCOME
Net sales for 1997 increased 39.1% to $3.2 billion compared to $2.3 billion for
1996. The increase was primarily the result of the Company's recent
acquisitions. This increase was partially offset by the negative currency
translation effect of the strengthening dollar against most European currencies.
Net sales for 1997 were approximately $181.0 million lower than they would have
been at 1996 foreign exchange rates. On a regional basis in 1997, the Company
experienced increased net sales of $94.0 million, or 10.9% over 1996, in North
America primarily due to the strong industry and introduction of new products.
The Company achieved net sales increases in the Europe/Africa/Middle East region
of $596.5 million, or 50.3% over 1996, primarily resulting from the Fendt
Acquisition, which was acquired effective January 1, 1997. In South America, the
Company achieved net sales increases of $234.0 million, or 233% over 1996,
primarily related to the impact of acquired operations in Brazil and Argentina,
acquired in June 1996 and December 1996, respectively. In the Asia/Pacific
region, net sales in 1997 decreased $17.6 million, or 10.4%, compared to 1996,
primarily due to weak economic conditions in Asia.
Income from operations was $319.1 million in 1997 compared to $211.9
million in 1996. Excluding nonrecurring expenses, operating income for 1997 was
$337.3 million or 10.5% of net sales, compared to $234.2 million, or 10.1% of
net sales, in 1996. The improvement in operating margin in 1997 was the result
of higher gross margins and lower S,G&A expenses as a percent of net sales.
Gross profit for 1997 was $666.8 million, or 20.7% of net sales, as compared to
$470.3 million, or 20.3% of net sales, for 1996. Gross margins were favorably
impacted by cost reduction efforts, particularly in the Company's South American
operations, partially offset by the negative effect of foreign exchange related
to the Company's products sourced from the U.K., resulting from the strength of
the British pound. S,G&A expenses were $275.4 million, or 8.5% of net sales, for
1997 compared to $208.4 million, or 9.0% of net sales, for 1996. The decrease in
S,G&A expenses as a percentage of net sales was primarily due to a decrease in
the amortization of stock-based compensation expense of $5.2 million related to
the Company's long-term incentive plan. Excluding the amortization expense
related to the long-term incentive plan, S,G&A expenses were $260.5 million, or
8.1% of net sales, in 1997 compared to $188.3 million, or 8.1% of net sales, in
1996. Excluding the amortization expense related to the long-term incentive
plan, S,G&A expenses as a percentage of net sales in 1997 were equal to 1996
primarily due to cost reduction initiatives in the Company's European operations
offset by increased marketing expenses related to new product introductions. The
cost reduction efforts involved the centralization of certain selling, general
and administrative functions (see "Nonrecurring Expenses"). Engineering expenses
were $54.1 million, or 1.7% of net sales, for 1997 compared to $27.7 million, or
1.2% of net sales, for 1996. The increase in engineering expenses as a
percentage of net sales compared to 1996 primarily related to the higher level
of engineering expenses in the newly acquired Fendt operations relative to the
Company's other operations.
Interest expense, net was $53.5 million for 1997 compared to $32.7 million
for 1996. The increase in interest expense, net was primarily due to the
additional borrowings associated with the financing of the Maxion, Deutz
Argentina and Fendt Acquisitions. The increased interest expense related to
acquisition indebtedness was partially offset by proceeds from the Company's
offering of 5.2 million shares of common stock in March 1997.
Other expense, net was $19.9 million for 1997 compared to $7.6 million for
1996. The increase in other expense, net was primarily due to increased
amortization of intangible assets resulting from the Maxion, Deutz Argentina and
Fendt Acquisitions and a gain of $4.7 million recorded in 1996 for the
Agricredit Sale.
The Company recorded a net income tax provision of $87.5 million for 1997
compared to $59.9 million for 1996. In 1997 and 1996, the Company's income tax
provision approximated statutory rates, although actual income tax payments
remained at rates below statutory rates. The Company's effective tax rate
increased slightly in 1997 compared to 1996 due to a change in the mix of income
to jurisdictions with higher tax rates.
Equity in net earnings of affiliates was $12.6 million in 1997 compared to
$17.7 million in 1996. The decrease in income was primarily due to a decrease in
net income recognized relating to Agricredit-North America. As a result of the
Agricredit Sale in November 1996, the Company recognized only 49% of net income
of the North American retail finance company in 1997 compared to 100% through
October 31, 1996.
23
<PAGE> 6
QUARTERLY RESULTS
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 millions, except per share data)
1998:
<S> <C> <C> <C> <C>
Net sales $ 701.5 $ 816.1 $ 665.7 $ 758.1
Gross profit 144.5 156.5 131.2 105.1
Income from operations(1) 67.9 73.2 46.1 (16.7)
Net income(1) 32.7 32.3 17.9 (22.3)
Net income per common share - diluted(1) 0.52 0.52 0.30 (0.37)
1997:
Net sales $ 704.3 $ 871.9 $ 759.5 $ 888.7
Gross profit 134.3 175.8 169.5 187.2
Income from operations(1) 56.6 89.2 82.4 90.9
Income before extraordinary loss(1) 27.8 48.8 44.2 50.0
Net income(1)(2) 25.7 48.8 44.2 50.0
Net income per common share before extraordinary loss - diluted(1)(2) 0.47 0.77 0.70 0.79
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The 1998 operating results include nonrecurring expenses of $40.0 million,
or $0.42 per share, for the three months ended December 31, 1998. The 1997
operating results include nonrecurring expenses of $2.6 million, or $0.03
per share, for the three months ended March 31, 1997, $5.2 million, or $0.05
per share, for the three months ended June 30, 1997, $4.9 million, or $0.05
per share, for the three months ended September 30, 1997 and $5.5 million,
or $0.06 per share, for the three months ended December 31, 1997.
(2) The 1997 operating results include an extraordinary after-tax loss of $2.1
million, or $0.03 per share, for the write-off of unamortized debt costs
related to the refinancing of the Company's revolving credit facility for
the three months ended March 31, 1997.
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 investments in inventory. However,
retail sales 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. The
Company's results in the fourth quarter of 1998 reflect the impact of lower
sales due to weakening industry conditions, a significant reduction in worldwide
production resulting in low production overhead absorption and increased
competitive pricing environment in certain markets.
LIQUIDITY AND CAPITAL RESOURCES
The Company's financing requirements 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 the Company's
revolving credit facility. In January 1997, the Company replaced its $650.0
million unsecured revolving credit facility with a new $1.2 billion unsecured
revolving credit facility (the "January 1997 Credit Facility"). The January 1997
Credit Facility is the Company's primary source of financing. In March 1997, the
lending commitment for the January 1997 Credit Facility was reduced by $141.2
million which represented the proceeds to the Company, net of underwriting
discounts, from the Company's common stock offering. Effective January 1, 1999,
lending commitments under the January 1997 Credit Facility were further reduced
to $1.0 billion. Borrowings under the January 1997 Credit Facility may not
exceed the sum of 90% of eligible accounts receivable and 60% of eligible
inventory. As of December 31, 1998, approximately $661.2 million was outstanding
under the January 1997 Credit Facility and available borrowings, based on the
lending commitment of $1 billion, were approximately $338.6 million. Total
long-term debt for the Company increased from $727.4 million at December 31,
1997 to $924.2 million at December 31, 1998.
In December 1997, the Company's Board of Directors authorized the
repurchase of up to $150.0 million of its outstanding common stock. As of
December 31, 1998, the Company has repurchased approximately 3.5 million shares
of its common stock at a cost of approximately $88.1 million. The purchases are
made through open market transactions, and the timing and number of shares
purchased depends on various factors, such as price and other market conditions.
In March 1997, the Company completed a public offering of 5.2 million
shares of its common stock (the "Offering"). The net proceeds to the Company
from the Offering were approximately $140.4 million after deduction of
underwriting discounts and commissions and other expenses. The Company used the
proceeds from the Offering to reduce a portion of the borrowings outstanding
under the January 1997 Credit Facility.
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 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.
The Company's working capital requirements are seasonal, with investments
in working capital typically building in the first
24
<PAGE> 7
half of the year and then reducing in the second half of the year. The Company
had $1,029.9 million of working capital as of December 31, 1998 compared to
$884.3 million as of December 31, 1997. The increase in working capital was
primarily due to working capital acquired in the Company's recent acquisitions
and lower accounts payables due to lower production volume in 1998 compared to
1997.
Cash flow provided by operating activities was $11.2 million for 1998,
$100.0 million for 1997, and $206.7 million for 1996. The decrease in operating
cash flow for 1998 compared to 1997 was primarily due to lower net income, a
lower provision for deferred income taxes primarily due to the utilization of
net operating losses in 1997, and lower accounts payable. This impact was offset
to some extent by a lower use of cash for receivables and inventories in 1998
compared to 1997. In response to the weakening industry conditions, the Company
reduced production levels, particularly in the second half of 1998. The lower
production levels had the effect of generating positive cash flow by reducing
the Company's receivables and inventory levels, partially offset by reducing
payables due to lower raw material requirements.
The operating cash flow for 1996 was impacted favorably by the collection
in 1996 of unusually high accounts receivable levels at December 31, 1995. The
1995 international receivables were unusually high due to the timing of
shipments of tractors in Western Europe which were delayed until the fourth
quarter of 1995 due to tire supply shortages resulting from a labor strike of a
major supplier. While this tire shortage impacted the Company's cash flow at
that time, the Company has alternative sources of supply and adequate borrowing
availability should a similar situation occur in the future. Excluding this
impact, cash flow provided by operating activities for 1997 was lower compared
to 1996 primarily due to increases in inventory compared to the prior year
partially caused by higher inventory levels related to the introduction of new
tractors sourced from the Company's U.K. and France production facilities and
increased accounts receivable related to sales growth in certain markets that
require longer than average payment terms.
Capital expenditures were $61.0 million in 1998, $72.1 million in 1997 and
$45.2 million in 1996. 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 decrease in capital expenditures in 1998
compared to 1997 was due to lower capital requirements for new products. The
increase in capital expenditures in 1997 compared to 1996 was primarily due to
capital expenditures at Fendt. The Company currently estimates that aggregate
capital expenditures for 1999 will range from approximately $55 million to $65
million and will primarily be used to support the development and enhancement of
new and existing products. The capital expenditures for 1999 are expected to be
funded with cash flows from operations.
The Company's debt to capitalization ratio was 48.5% at December 31, 1998
compared to 42.3% at December 31, 1997. The increase in the debt to
capitalization ratio was primarily due to the common stock repurchases and
acquisitions completed in 1998.
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.
NONRECURRING EXPENSES
In 1998, the Company recorded nonrecurring expenses of $40.0 million primarily
related to severance and related costs associated with the reduction in the
Company's worldwide permanent workforce of approximately 1,400 employees. These
headcount reductions were made to address the negative market conditions which
are expected to adversely affect demand in the majority of markets. The
headcount reductions are expected to result in cost savings related to
manufacturing costs and S,G&A expenses.
In 1997, the Company recorded nonrecurring expenses of $18.2 million which
consisted of (i) $15.0 million related to the restructuring of the Company's
European operations and the integration of the Deutz Argentina and Fendt
operations, acquired in December 1996 and January 1997, respectively, and (ii)
$3.2 million related to executive severance. The costs associated with the
restructuring and integration activities primarily related to the centralization
and rationalization of certain manufacturing, selling and administrative
functions in addition to the rationalization of a small portion of the Company's
European dealer network. These restructuring and integration activities resulted
in cost savings related to manufacturing costs and selling, general and
administrative expenses. In addition, the European dealer rationalization is
expected to improve long-term sales in certain markets.
In 1996, the Company recorded nonrecurring expenses of $22.3 million which
consisted of (i) $15.0 million related to the restructuring of the Company's
European operations and the integration and restructuring of the Company's
Brazilian operations, acquired in the Maxion Acquisition in June 1996, and (ii)
$7.3 million related to executive severance. The European restructuring costs
are primarily related to the centralization of certain parts warehousing,
administrative, sales and marketing functions. As a result of these actions, the
Company achieved savings in reduced selling, general and administrative expenses
primarily relating to the Company's parts warehousing, finance, dealer
communications, sales and marketing functions. The Brazilian integration costs
are primarily related to the rationalization of manufacturing, sales and
administrative functions designed to resize the operations to then existing
sales and production volumes. The Company achieved savings from the integration
and restructuring of the Brazilian operations resulting primarily in reduced
selling, general and administrative expenses and product cost reductions.
25
<PAGE> 8
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.
Global demand for agricultural equipment weakened in the second half of
1998 in most major markets. Economic uncertainty coupled with low commodity
prices caused by strong harvests and reduced export demand of commodities are
expected to continue to adversely affect agricultural equipment sales in the
world's significant markets. In 1999, retail demand in North America is expected
to decrease 15-20% due to the continued impact that low commodity prices will
have on net cash farm income. In Western Europe, retail demand in 1999 is
expected to decline 5-10% due to uncertainty surrounding the Common Agricultural
Policy reforms discussions and projected lower European Union farm income.
Retail demand in 1999 in South America is expected to decline 10-15% resulting
from the recent Brazilian currency devaluation and economic uncertainty in the
region. In other international markets, retail demand in 1999 is expected to
decline due to continued weak economic conditions in many regions.
As a result of these conditions, the Company has taken and will continue
to take aggressive actions to reduce manufacturing overheads and operating
expenses in order to resize the business in line with anticipated lower levels
of demand. In addition, the Company has reduced its production schedules in 1999
compared to 1998 to minimize its investments in inventories and receivables.
Based on these conditions, the Company expects to remain profitable in 1999 but
below 1998 levels. The Company will focus its efforts in 1999 on generating
strong cash flow and on its long-term growth and profit improvement initiatives.
FOREIGN CURRENCY RISK MANAGEMENT
The Company has significant manufacturing operations in the United States, the
United Kingdom, France, Germany, Denmark and Brazil, 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. The Company's most
significant transactional foreign currency exposures are the Canadian dollar in
relation to the U.S. dollar and the British pound in relation to other European
currencies. 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 transactional foreign exchange exposure
by hedging identifiable foreign currency cash flow commitments arising from
receivables, payables, and expected purchases and sales. Where naturally
offsetting currency positions do not occur, the Company hedges certain of its
exposures through the use of foreign currency forward contracts. The Company's
hedging policy prohibits foreign currency forward contracts for speculative
trading purposes. The Company's translation exposure resulting from translating
the financial statements of foreign subsidiaries into U.S. dollars is not
hedged. When practical, this translation impact is reduced by financing local
operations with local borrowings.
The following is a summary of foreign currency forward contracts used to
hedge currency exposures. All contracts have a maturity of less than one year.
The net notional amounts and fair value gains or losses as of December 31, 1998
stated in U.S. dollars are as follows (in millions):
<TABLE>
<CAPTION>
- -------------------------------------------------------------
Net
Notional Average Fair
Amount Contract Value
Buy/(Sell) Rate* Gain/(Loss)
- -------------------------------------------------------------
<S> <C> <C> <C>
Australian dollar $ 3.7 1.61 $(0.1)
Austrian shilling (3.5) 11.85 -
Belgian franc (3.1) 34.91 -
British pound 40.7 0.60 (0.3)
Canadian dollar (13.8) 1.53 0.1
Danish krone 16.9 6.25 (0.3)
Dutch guilder 14.3 1.89 0.1
French franc 173.0 5.74 3.8
German mark (100.6) 1.64 1.7
Greek drachma (5.6) 284.49 (0.1)
Irish punt (4.0) 0.68 (0.1)
Italian lira 32.5 1,651.70 -
Japanese yen (3.4) 103.63 0.3
Spanish peseta (6.6) 145.02 (0.1)
Other 0.5 0.2
- -------------------------------------------------------------
$141.0 $5.2
=============================================================
</TABLE>
*per U. S. dollar
Because these contracts were entered into for hedging purposes, the gains
and losses on the contracts would largely be offset by gains and losses on the
underlying firm commitment.
Since December 31, 1998, the Brazilian currency has devalued
significantly. The devaluation will have the result of decreasing the Company's
stockholders' equity and reducing the value of sales of the Brazilian subsidiary
when translated into U.S. dollars. As of January 31, 1999, the translation of
the Brazilian financial statements resulted in a decrease to stockholders'
equity of approximately $95 million.
INTEREST RATES
The Company manages its debt structure and interest rate risk through the use of
fixed and floating rate debt. The fixed rate debt is primarily the 8 1/2% Senior
Subordinated Notes due 2006. The floating rate debt is primarily the January
1997 Credit Facility (see "Liquidity and Capital Resources"). The Company's net
exposure to interest rate risk consists of its floating rate debt which is tied
to
26
<PAGE> 9
changes in U.S. and European libor rates. Assuming a 10% increase in interest
rates, interest expense, net for 1998 would have increased by approximately $4.6
million.
YEAR 2000
The Company has assessed the impact of the Year 2000 issue on its reporting
systems and operations. Based on its assessment, the Company has developed a
Year 2000 compliance plan, in which all key information systems are being tested
and all noncompliant software or technology is being modified or replaced. This
review included all information technology systems and embedded systems in the
Company's manufacturing equipment, facility equipment and in the Company's
products. The Company is also reviewing the Year 2000 compliance status and
compatibility of customers' and suppliers' systems which interface with the
Company's systems or could impact the Company's operations.
The Company has completed the majority of the necessary modifications to
its information technology systems and plans to complete testing of its systems
for Year 2000 compliance during 1999. During 1998, the Company reviewed a
majority of its embedded systems and identified a small percentage of systems
with Year 2000 problems. The Company expects to have these affected systems
replaced or corrected by mid-1999 and to complete testing of all systems during
1999. Based on its reviews, the Company estimates that the required costs to
modify existing computer systems and applications will be approximately $10
million to $12 million of which $5.9 million has been incurred to date. The
remaining costs will be incurred in 1999.
While the Company believes that its plans are adequate to ensure that the
Year 2000 issue will not materially impact future operations, the risks of these
plans not being adequate or the risk that the Company's major customers and
suppliers do not modify or replace their affected systems could have a material
adverse impact on the Company's results of operations or financial condition in
the future. Failure by the Company or its customers or suppliers to resolve the
Year 2000 problem could result in a temporary slowdown or cessation of
manufacturing operations at one or more of the Company's facilities and a
temporary inability of the Company to process some orders and to deliver some
finished products to customers. The Company is currently identifying and
considering various contingency options, to minimize the risks of any Year 2000
problems.
EURO CURRENCY
The Company has established the capability to trade in the Common European
currency (the "Euro") in all European locations beginning January 1, 1999. The
Company began communicating with suppliers, dealers and financial institutions
in 1998 and has formulated a transition plan to move to a Euro based business in
2001. The Company does not expect its competitive position (including pricing,
purchasing contracts and systems modifications) to be materially affected by the
change to the Euro.
ACCOUNTING CHANGES
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards requiring that every derivative instrument be recorded in
the balance sheet as either an asset or liability measured at its fair value.
SFAS No. 133 requires that changes in a derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. The
Company will be required to adopt the new statement in 2000. The Company has not
yet quantified the financial impact of adopting SFAS No. 133 and has not
determined the method of adoption. However, SFAS No. 133 could increase
volatility in earnings and other comprehensive income.
Effective December 31, 1998, the Company adopted SFAS No. 132, "Employer's
Disclosures About Pensions and Other Postretirement Benefits," which revises
disclosure requirements related to the Company's employee benefit plans and
postretirement benefits, and SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information," which revises disclosure requirements
related to segment reporting. SFAS No. 132 and SFAS No. 131 require disclosure
only; therefore their adoption had no impact on the Company's financial position
or results of operations.
Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income," which requires disclosures regarding the Company's
comprehensive income defined as the total of net income and all other non-owner
changes in equity. SFAS No. 130 requires disclosure only; therefore its adoption
had no impact 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 constitute 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 on 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> 10
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $2,941.4 $3,224.4 $2,317.5
Cost of goods sold 2,404.1 2,557.6 1,847.2
- ----------------------------------------------------------------------------------------------------------
Gross profit 537.3 666.8 470.3
Selling, general and administrative expenses 270.7 275.4 208.4
Engineering expenses 56.1 54.1 27.7
Nonrecurring expenses 40.0 18.2 22.3
- ----------------------------------------------------------------------------------------------------------
Income from operations 170.5 319.1 211.9
Interest expense, net 67.7 53.5 32.7
Other expense, net 28.5 19.9 7.6
- ----------------------------------------------------------------------------------------------------------
Income before income taxes, equity in net earnings of affiliates and
extraordinary loss 74.3 245.7 171.6
Provision for income taxes 27.5 87.5 59.9
- ----------------------------------------------------------------------------------------------------------
Income before equity in net earnings of affiliates and extraordinary loss 46.8 158.2 111.7
Equity in net earnings of affiliates 13.8 12.6 17.7
- ----------------------------------------------------------------------------------------------------------
Income before extraordinary loss 60.6 170.8 129.4
Extraordinary loss, net of taxes -- (2.1) (3.5)
- ----------------------------------------------------------------------------------------------------------
Net income $ 60.6 $ 168.7 $ 125.9
==========================================================================================================
Net income per common share:
Basic:
Income before extraordinary loss $ 1.01 $ 2.82 $ 2.44
Extraordinary loss -- (0.03) (0.07)
- ---------------------------------------------------------------------------------------------------------
Net Income $ 1.01 $ 2.79 $ 2.37
==========================================================================================================
Diluted:
Income before extraordinary loss $ 0.99 $ 2.74 $ 2.26
Extraordinary loss -- (0.03) (0.06)
- ---------------------------------------------------------------------------------------------------------
Net Income $ 0.99 $ 2.71 $ 2.20
==========================================================================================================
Weighted average number of common and common equivalent
shares outstanding:
Basic 59.7 60.4 53.0
==========================================================================================================
Diluted 61.2 62.1 57.4
==========================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
28
<PAGE> 11
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
December 31, 1998 1997
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 15.9 $ 31.2
Accounts and notes receivable, net of allowances 1,016.3 997.2
Inventories, net 671.6 622.7
Other current assets 86.7 63.7
- ---------------------------------------------------------------------------------------------------------
Total current assets 1,790.5 1,714.8
Property, plant and equipment, net 417.6 403.7
Investments in affiliates 95.2 87.6
Other assets 76.6 75.8
Intangible assets, net 370.5 339.0
- ---------------------------------------------------------------------------------------------------------
Total assets $ 2,750.4 $ 2,620.9
=========================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 287.0 $ 367.5
Accrued expenses 428.0 430.0
Other current liabilities 45.6 33.0
- ---------------------------------------------------------------------------------------------------------
Total current liabilities 760.6 830.5
- ---------------------------------------------------------------------------------------------------------
Long-term debt 924.2 727.4
Postretirement health care benefits 24.5 24.5
Other noncurrent liabilities 59.0 46.9
- ---------------------------------------------------------------------------------------------------------
Total liabilities 1,768.3 1,629.3
Commitments and Contingencies (Note 11)
Stockholders' Equity:
Common stock; $0.01 par value, 150,000,000 shares authorized, 59,535,921 and
62,972,423 shares issued and outstanding in 1998 and 1997, respectively 0.6 0.6
Additional paid-in capital 427.3 515.0
Retained earnings 635.8 577.6
Unearned compensation (11.1) (20.0)
Accumulated other comprehensive income (70.5) (81.6)
- ---------------------------------------------------------------------------------------------------------
Total stockholders' equity 982.1 991.6
- ---------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 2,750.4 $ 2,620.9
=========================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
29
<PAGE> 12
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(dollars in millions)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ADDITIONAL
COMMON STOCK ADDITIONAL MINIMUM CUMULATIVE TOTAL
------------------ PAID-IN RETAINED UNEARNED PENSION TRANSLATION STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS COMPENSATION LIABILITY ADJUSTMENT EQUITY
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 50,557,040 $ 0.5 $ 307.2 $ 287.7 $ (22.6) $ (2.6) $ 18.7 $ 588.9
Net income -- -- -- 125.9 -- -- -- 125.9
Issuance of restricted stock 474,500 -- 13.7 -- (13.7) -- -- --
Conversions of subordinated
debentures into
common stock 5,916,319 0.1 37.5 -- -- -- -- 37.6
Stock options exercised 312,292 -- 1.7 -- -- -- -- 1.7
Common stock dividends
($0.04 per common share) -- -- -- (2.2) -- -- -- (2.2)
Amortization of unearned
compensation -- -- -- -- 18.5 -- -- 18.5
Additional minimum
pension liability -- -- -- -- -- 2.6 -- 2.6
Change in cumulative
translation adjustment -- -- -- -- -- -- 1.6 1.6
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 57,260,151 0.6 360.1 411.4 (17.8) -- 20.3 774.6
Net income -- -- -- 168.7 -- -- -- 168.7
Issuance of common stock,
net of offering expenses 5,175,000 -- 140.4 -- -- -- -- 140.4
Issuance of restricted stock 373,017 -- 12.7 -- (12.7) -- -- --
Stock options exercised 164,255 -- 1.8 -- -- -- -- 1.8
Common stock dividends
($0.04 per common share) -- -- -- (2.5) -- -- -- (2.5)
Amortization of unearned
compensation -- -- -- -- 10.5 -- -- 10.5
Change in cumulative
translation adjustment -- -- -- -- -- -- (101.9) (101.9)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 62,972,423 0.6 515.0 577.6 (20.0) -- (81.6) 991.6
Net income -- -- -- 60.6 -- -- -- 60.6
Repurchases of
common stock (3,487,200) -- (88.1) -- -- -- -- (88.1)
Stock options exercised 50,698 -- 0.4 -- -- -- -- 0.4
Common stock dividends
($0.04 per common share) -- -- -- (2.4) -- -- -- (2.4)
Amortization of unearned
compensation -- -- -- -- 8.9 -- -- 8.9
Change in cumulative
translation adjustment -- -- -- -- -- -- 11.1 11.1
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 59,535,921 $ 0.6 $ 427.3 $ 635.8 $ (11.1) $ -- $ (70.5) $ 982.1
===================================================================================================================================
<CAPTION>
- ---------------------------------------------------
Comprehensive
Income
- ---------------------------------------------------
<C> <C>
Balance, December 31, 1995
Net income $ 125.9
Issuance of restricted stock
Conversions of subordinated
debentures into
common stock
Stock options exercised
Common stock dividends
($0.04 per common share)
Amortization of unearned
compensation
Additional minimum
pension liability 2.6
Change in cumulative
translation adjustment 1.6
- ---------------------------------------------------
Balance, December 31, 1996 130.1
========
Net income 168.7
Issuance of common stock,
net of offering expenses
Issuance of restricted stock
Stock options exercised
Common stock dividends
($0.04 per common share)
Amortization of unearned
compensation
Change in cumulative
translation adjustment (101.9)
- ---------------------------------------------------
Balance, December 31, 1997 66.8
========
Net income 60.6
Repurchases of
common stock
Stock options exercised
Common stock dividends
($0.04 per common share)
Amortization of unearned
compensation
Change in cumulative
translation adjustment 11.1
- ---------------------------------------------------
Balance, December 31, 1998 $ 71.7
===================================================
</TABLE>
See accompanying notes to consolidated financial statements.
30
<PAGE> 13
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 60.6 $ 168.7 $ 125.9
Adjustments to reconcile net income to net cash provided by operating activities:
Extraordinary loss, net of taxes -- 2.1 3.5
Gain on sale of affiliate -- -- (4.7)
Depreciation and amortization 57.6 49.4 29.2
Equity in net earnings of affiliates, net of cash received (3.3) (12.6) (17.7)
Deferred income tax provision (benefit) (22.4) 53.4 20.1
Amortization of intangibles 13.2 12.1 5.8
Amortization of unearned compensation 8.9 10.5 18.5
Changes in operating assets and liabilities, net of effects from
purchase/sale of businesses:
Accounts and notes receivable, net 17.7 (94.7) 3.7
Inventories, net (17.3) (100.4) (22.6)
Other current and noncurrent assets (1.2) (10.0) (14.1)
Accounts payable (87.7) 25.5 (9.4)
Accrued expenses (15.0) (1.3) 54.3
Other current and noncurrent liabilities 0.1 (2.7) 14.2
- ---------------------------------------------------------------------------------------------------------------------------
Total adjustments (49.4) (68.7) 80.8
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 11.2 100.0 206.7
- ---------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
(Purchase)/sale of businesses, net (60.6) (289.2) (347.0)
Purchase of property, plant and equipment (61.0) (72.1) (45.2)
Proceeds from sale of affiliates -- -- 45.2
- ---------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (121.6) (361.3) (347.0)
- ---------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from long-term debt 984.4 932.2 977.8
Payments on long-term debt (798.9) (813.8) (803.2)
Payment of debt issuance costs -- (3.5) (12.5)
Proceeds from issuance of common stock 0.4 142.2 1.7
Repurchases of common stock (88.1) -- --
Dividends paid on common stock (2.4) (2.5) (2.2)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 95.4 254.6 161.6
- ---------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents (0.3) (3.8) 0.4
(Decrease)increase in cash and cash equivalents (15.3) (10.5) 21.7
Cash and cash equivalents, beginning of period 31.2 41.7 20.0
- ---------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 15.9 $ 31.2 $ 41.7
===========================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
31
<PAGE> 14
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 and related replacement parts throughout the world. The
Company sells a full range of agricultural equipment, including tractors,
combines, hay tools, sprayers, forage equipment and implements. The Company's
products are widely recognized in the agricultural equipment industry and are
marketed under the following brand names: AGCO Allis, Massey Ferguson, Hesston,
White, GLEANER, New Idea, AGCOSTAR, Black Machine, Landini, Tye, Farmhand,
Glencoe, Deutz (South America), IDEAL, Fendt, Spra-Coupe and Willmar. The
Company distributes its products through a combination of over 8,500 independent
dealers, distributors, associates and licensees. In addition, the Company
provides retail financing in North America, the United Kingdom, France, Germany
and Brazil through its finance joint ventures with Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland" ("The Retail Finance Joint
Ventures").
BASIS OF PRESENTATION
The consolidated financial statements represent the consolidation of all
majority owned companies. The Company records all affiliate companies
representing a 20%-50% ownership using the equity method of accounting. Other
investments representing an ownership of less than 20% are recorded at cost. All
significant inter-company transactions have been eliminated to arrive at the
consolidated financial statements.
Effective November 1, 1996, the Company sold a 51% interest in Agricredit
Acceptance Company ("Agricredit-North America"), the Company's retail finance
subsidiary in North America (Note 2). Accordingly for all periods presented, the
Company's consolidated financial statements reflect Agricredit-North America on
the equity method of accounting.
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. 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 ("SFAS") 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.
For 1997 and 1996, the Company accounted for its subsidiary in Brazil by
applying the highly inflationary economy provisions of SFAS No. 52, where the
U.S. dollar is substituted as the functional currency. For the year ended
December 31, 1998, the Company ceased the application of highly inflationary
accounting of its Brazilian subsidiary and established the functional currency
as the Brazilian Real.
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.
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.
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, 1998 and 1997 were as follows (in
millions):
<TABLE>
<CAPTION>
- ----------------------------------------------------
1998 1997
- ----------------------------------------------------
<S> <C> <C>
Sales incentive discounts $ 58.4 $53.1
Doubtful accounts 49.4 44.1
- ----------------------------------------------------
$107.8 $97.2
====================================================
</TABLE>
The Company occasionally transfers certain accounts receivable to various
financial institutions. The Company records such transfers as sales of accounts
receivable when it is considered to
32
<PAGE> 15
have surrendered control of such receivables under the provisions of SFAS No.
125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities."
INVENTORIES
Inventories are valued at the lower of cost or market using the first-in,
first-out method. 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, 1998 and 1997 were as follows (in
millions):
<TABLE>
<CAPTION>
- ----------------------------------------------------------
1998 1997
- ----------------------------------------------------------
<S> <C> <C>
Finished goods $271.2 $267.7
Repair and replacement parts 256.7 250.2
Work in process, production parts
and raw materials 222.6 184.5
- ----------------------------------------------------------
Gross inventories 750.5 702.4
Allowance for surplus and
obsolete inventories (78.9) (79.7)
- ----------------------------------------------------------
Inventories, net $671.6 $622.7
==========================================================
</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.
Property, plant and equipment at December 31, 1998 and 1997 consisted of
the following (in millions):
<TABLE>
<CAPTION>
- -----------------------------------------------------------
1998 1997
- -----------------------------------------------------------
<S> <C> <C>
Land $ 52.2 $ 51.5
Buildings and improvements 139.7 127.7
Machinery and equipment 325.5 274.9
Furniture and fixtures 51.5 45.0
- -----------------------------------------------------------
Gross property, plant and equipment 568.9 499.1
Accumulated depreciation and
amortization (151.3) (95.4)
- -----------------------------------------------------------
Property, plant and equipment $ 417.6 $403.7
===========================================================
</TABLE>
INTANGIBLE ASSETS
Intangible assets at December 31, 1998 and 1997 consisted of the following (in
millions):
<TABLE>
<CAPTION>
- ---------------------------------------------------------
1998 1997
- ---------------------------------------------------------
<S> <C> <C>
Goodwill $330.1 $287.1
Trademarks 66.0 66.0
Other 4.2 2.9
Accumulated amortization (29.8) (17.0)
- ---------------------------------------------------------
Intangible assets $370.5 $339.0
=========================================================
</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. Goodwill and accumulated amortization are shown net of the excess of net
assets over cost ("negative goodwill") of $23.2 million for both 1998 and 1997
and its related accumulated amortization of $19.5 million and $17.4 million for
1998 and 1997, respectively. The Company also assigned values to certain
acquired trademarks which are being amortized to income on a straight-line basis
over 40 years. The net amortization expense included in other expense, net in
the accompanying consolidated statements of income was $13.2 million, $12.1
million and $5.8 million for the years ended December 31, 1998, 1997 and 1996,
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, 1998 and 1997 consisted of the following (in
millions):
<TABLE>
<CAPTION>
- -----------------------------------------------------------
1998 1997
- -----------------------------------------------------------
<S> <C> <C>
Reserve for volume discounts and
sales incentives $ 93.8 $ 86.9
Warranty reserves 79.4 63.5
Accrued employee compensation
and benefits 55.7 58.4
Accrued taxes 50.1 88.7
Other 149.0 132.5
- -----------------------------------------------------------
$ 428.0 $ 430.0
===========================================================
</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 accrues for future warranty costs at the time of sale based upon
historical warranty experience.
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 1997, the Company recorded an extraordinary loss of $2.1 million, net of
taxes of $1.4 million, for the write-off of unamortized debt costs related to
the March 1996 Credit Facility (Note 6) which was refinanced with the January
1997 Credit Facility (Note 6). In 1996, the Company recorded an extraordinary
loss of $3.5 million, net of taxes of $2.2 million, for the write-off of
unamortized debt
33
<PAGE> 16
costs related to the Company's $550.0 million secured revolving credit facility
which was refinanced with the March 1996 Credit Facility.
NET INCOME PER COMMON SHARE
The computation, presentation and disclosure requirements for earnings per share
are presented in accordance with SFAS No. 128, "Earnings Per Share." Basic
earnings per common share is computed by dividing net income by the weighted
average number of common shares outstanding during each period. Diluted earnings
per share assumes exercise of outstanding stock options, vesting of restricted
stock and the conversion of the Convertible Subordinated Debentures (Note 7)
into common stock during the periods outstanding.
A reconciliation of net income and the weighted average number of common
shares outstanding used to calculate basic and diluted earnings per common share
for the years ended December 31, 1998, 1997 and 1996 is as follows (in millions,
except per share data):
BASIC EARNINGS PER SHARE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
1998 1997 1996
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Weighted average number of
common shares outstanding 59.7 60.4 53.0
=======================================================================
Income before extraordinary loss $60.6 $170.8 $129.4
Extraordinary loss - (2.1) (3.5)
- -----------------------------------------------------------------------
Net income 60.6 168.7 125.9
Net income per common share:
Income before extraordinary loss $1.01 $ 2.82 $ 2.44
Extraordinary loss - (0.03) (0.07)
- -----------------------------------------------------------------------
Net income $1.01 $ 2.79 $ 2.37
=======================================================================
Diluted Earnings Per Share
- -----------------------------------------------------------------------
Weighted average number of
common shares outstanding 59.7 60.4 53.0
Shares issued upon assumed
vesting of restricted stock 1.3 1.4 1.7
Shares issued upon assumed
conversion of the Convertible
Subordinated Debentures - - 2.2
Shares issued upon assumed
exercise of outstanding
stock options 0.2 0.3 0.5
- -----------------------------------------------------------------------
Weighted average number of
common and common
equivalent shares outstanding 61.2 62.1 57.4
=======================================================================
Income before extraordinary loss $60.6 $170.8 $129.4
Extraordinary loss - (2.1) (3.5)
- -----------------------------------------------------------------------
Net income 60.6 168.7 125.9
Interest expense on Convertible
Subordinated Debentures, net
of applicable income taxes - - 0.5
- -----------------------------------------------------------------------
Net income available for
common stockholders $60.6 $168.7 $126.4
=======================================================================
Net income per common share:
Income before extraordinary loss $0.99 $ 2.74 $ 2.26
Extraordinary loss - (0.03) (0.06)
- -----------------------------------------------------------------------
Net income $0.99 $ 2.71 $ 2.20
=======================================================================
</TABLE>
COMPREHENSIVE INCOME
The Company reports comprehensive income, defined as the total of net income and
all other non-owner changes in equity and the components thereof in the
Consolidated Statements of Stockholders' Equity. The cumulative translation
adjustment is the sole component of Accumulated other comprehensive income on
the Consolidated Balance Sheets.
FINANCIAL INSTRUMENTS
The carrying amounts reported in the Company's consolidated balance sheets for
cash and cash equivalents, accounts and notes receivable and accounts payable
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 6) approximates fair value based on the
borrowing rates currently available to the Company for loans with similar terms
and average maturities. At December 31, 1998, the estimated fair value of the
Company's 8 1/2% Senior Subordinated Notes (Note 6), based on its listed market
value, was $242.6 million compared to the carrying value of $248.3 million.
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, 1998 and 1997, the Company had
foreign exchange forward contracts with gross notional amounts of $429.1 million
and $609.0 million, respectively. The deferred gains or losses from these
contracts were not material at December 31, 1998 and 1997.
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 risks under these contracts are not considered to be
significant.
ACCOUNTING CHANGES
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
establishes accounting and reporting standards requiring that every derivative
instrument be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS No. 133 requires that changes in a derivative's
fair value be recognized currently in earnings unless specific hedge accounting
criteria are met. The Company will be required to adopt the new statement in
2000. The Company has not yet quantified
34
<PAGE> 17
the financial impact of adopting SFAS No. 133 and has not determined the method
of adoption. However, SFAS No. 133 could increase the volatility in earnings and
other comprehensive income.
Effective December 31, 1998, the Company adopted SFAS No. 132, "Employer's
Disclosures About Pensions and Other Postretirement Benefits," which revises
disclosure requirements related to the Company's employee benefit plans and
postretirement benefits (Note 8), and SFAS No. 131, "Disclosure about Segments
of an Enterprise and Related Information," which revises disclosure requirements
related to segment reporting (Note 12). SFAS No. 132 and SFAS No. 131 require
disclosure only; therefore their adoption had no impact on the Company's
financial position or results of operations.
Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income," which requires disclosures regarding the Company's
comprehensive income defined as the total of net income and all other non-owner
changes in equity. SFAS No. 130 requires disclosure only; therefore, its
adoption had no impact on the Company's financial position or results of
operations.
2. ACQUISITIONS AND DISPOSITIONS
ACQUISITIONS
The Company completed several acquisitions in 1998, 1997 and 1996 which were
primarily financed with borrowings under the Company's revolving credit facility
(Note 6). In most cases, the Company acquired assets and assumed liabilities
consisting primarily of accounts receivable, inventories, property, plant and
equipment, trademarks, trade names and technology, accounts payable and accrued
liabilities. The results of operations for the Company's acquisitions are
included in the Company's consolidated financial statements as of and from the
respective dates of acquisition.
Effective October 1, 1998, the Company acquired the net assets of the
Willmar product line, a brand of agricultural self-propelled sprayers, spreaders
and loaders, sold primarily in North America (the "Willmar Acquisition"). The
purchase price, which is subject to change, was for $32.5 million.
Effective July 1, 1998, the Company acquired certain assets related to the
Spra-Coupe product line, a brand of agricultural self-propelled sprayers sold
primarily in North America, for approximately $37.2 million (the "Spra-Coupe
Acquisition").
On December 4, 1997, the Company acquired the remaining 68% of
Dronningborg Industries a/s ("Dronningborg") for approximately $22.0 million
(the "Dronningborg Acquisition"). Prior to the acquisition, the Company owned
32% of Dronningborg which manufactures combine harvesters sold exclusively to
the Company for sale under the Massey Ferguson brand name.
Effective January 1, 1997, the Company acquired Xaver Fendt GmbH & Co. KG
("Fendt") for approximately $283.5 million plus approximately $38.3 million of
assumed working capital debt (the "Fendt Acquisition"). Fendt's primary business
is the manufacture and distribution of tractors through a network of independent
agricultural cooperatives, dealers and distributors in Germany and throughout
Europe and Australia. Effective December 31, 1997, the Company sold Fendt's
caravan and motor home business for approximately $10.0 million.
On December 27, 1996, the Company acquired Deutz Argentina S.A. ("Deutz
Argentina") for approximately $62.5 million (the "Deutz Argentina Acquisition").
Deutz Argentina is a manufacturer and distributor of a broad range of
agricultural equipment, engines and light trucks in Argentina and other South
American markets. Effective January 5, 1998, the Company sold 50% of its Deutz
Argentina engine business in a joint venture to produce engines for its
equipment for approximately $7.6 million.
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") for approximately $19.4 million.
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 $260.0 million (the "Maxion Acquisition"). 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.
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 Fendt, Dronningborg, Willmar and Spra-Coupe Acquisitions
resulted in a decrease in goodwill of $47.6 million from the amounts originally
recorded. 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
Willmar and Spra-Coupe Acquisitions are preliminary and will be completed in
1999.
In addition, the purchase price allocations for the Deutz Argentina,
Fendt, Western Combine, Spra-Coupe and Willmar Acquisitions included liabilities
associated with certain costs to integrate the acquired businesses into the
Company's operations. These costs related to the consolidation of certain
acquired manufacturing operations into existing Company facilities and the
integration of certain sales and marketing functions. As of December 31, 1998,
the Company had established liabilities totaling $13.0 million for employee
severance and relocation and other integration costs and had incurred $6.5
million of expenses charged against these liabilities.
35
<PAGE> 18
DISPOSITIONS
Effective November 1, 1996, the Company entered into an agreement with De Lage
Landen International, B.V., a wholly-owned subsidiary of Rabobank Nederland, to
be its joint venture partner in Agricredit-North America, the Company's
wholly-owned retail finance subsidiary in North America (the "Agricredit-North
America Joint Venture"). As a result of the agreement, the Company sold a 51%
interest in Agricredit-North America to Rabobank Nederland. The Company received
total consideration of approximately $44.3 million in the transaction and
recorded a gain, before taxes, of approximately $4.7 million. Under the
Agricredit-North America Joint Venture, Rabobank Nederland has a 51% interest
and the Company retained a 49% interest in the finance company. Substantially
all of the net assets of Agricredit-North America were transferred to the
Agricredit-North America Joint Venture. Proceeds from the transaction were used
to repay outstanding borrowings under the Company's revolving credit facility.
Effective February 5, 1999, the Company sold its manufacturing plant in
Haedo, Argentina (the "Haedo Sale") for approximately $19.0 million. The Company
received $12.3 million of the purchase price in December 1998 in the form of a
deposit and will receive the remaining balance in December 1999. The Haedo Sale
included property, plant and equipment at the plant in addition to the transfer
of manufacturing hourly and salaried employees. The Haedo Sale is not expected
to have a material impact on the Company's financial position or results of
operations.
3. CHARGES FOR NONRECURRING EXPENSES
The results of operations for 1998 included nonrecurring expenses of $40.0
million, or $0.41 per common share on a diluted basis. The nonrecurring
expenses primarily related to severance, pension and postretirement benefit
expense and related costs associated with reductions in the Company's worldwide
permanent workforce. Approximately 1,225 of the 1,400 employees identified for
termination were terminated as of December 31, 1998. Of the $40.0 million total
expense, $9.1 million had been incurred as of December 31, 1998.
The results of operations for 1997 included nonrecurring expenses of $18.2
million, or $0.19 per common share on a diluted basis. These nonrecurring
expenses included $15.0 million related to the restructuring of the Company's
European operations and certain costs associated with the integration of the
Deutz Argentina and Fendt operations. The nonrecurring expenses for 1997 also
included $3.2 million related to executive severance costs. The costs included
for these restructuring and integration activities in 1997 primarily related to
the centralization and rationalization of certain manufacturing, selling and
administrative functions in addition to the rationalization of a certain portion
of the Company's European dealer network. Excluding the executive severance
costs, the nonrecurring expenses for 1997 included $9.2 million for employee
related costs, consisting of employee severance, and $4.7 million of payroll
costs incurred through December 31, 1997 for employees that were subsequently
terminated. Of the $18.2 million total expense, $13.4 million had been incurred
as of December 31, 1998.
The results of operations for 1996 included nonrecurring expenses of $22.3
million, or $0.25 per common share on a diluted basis. These nonrecurring
expenses included $15.0 million related to the restructuring of the Company's
European operations and the integration and restructuring of the Company's
Brazilian operations, acquired in the Maxion Acquisition (Note 2) in June 1996.
In addition, the nonrecurring expenses included $7.3 million related to
executive severance costs. The nonrecurring expenses for the integration and
restructuring activities in 1996 included costs associated with the
rationalization and centralization of certain manufacturing, parts warehousing,
sales, and administrative functions. The $15.0 million recorded in 1996 included
$9.0 million for employee related costs, including severance costs, and $6.0
million for other nonrecurring costs. Included in the $9.0 million of employee
related costs was $1.3 million of payroll costs incurred through December 31,
1996 for personnel that were subsequently terminated. All costs associated with
the 1996 nonrecurring expenses have been incurred.
4. INVESTMENTS IN AFFILIATES
At December 31, 1998 and 1997, the Company's investments in affiliates primarily
consisted of (i) the Retail Finance Joint Ventures which includes the
Agricredit-North America Joint Venture (Note 2), (ii) the Company's 50%
investments in manufacturing joint ventures with various unrelated manufacturers
to produce hay and forage equipment in North America, driveline assemblies in
Europe, and engines in South America and (iii) certain other minority
investments in farm equipment manufacturers and licensees.
Investments in affiliates as of December 31, 1998 and 1997 were as follows
(in millions):
<TABLE>
<CAPTION>
- -------------------------------------------------------
1998 1997
- -------------------------------------------------------
<S> <C> <C>
Retail Finance Joint Ventures $ 61.2 $ 55.6
Manufacturing joint ventures 24.2 23.4
Other 9.8 8.6
- -------------------------------------------------------
$ 95.2 $ 87.6
=======================================================
</TABLE>
The Company's equity in net earnings of affiliates for 1998, 1997, and
1996 were as follows (in millions):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
1998 1997 1996
- -------------------------------------------------------------------
<S> <C> <C> <C>
Retail Finance Joint Ventures $ 11.4 $ 10.9 $ 14.8
Other 2.4 1.7 2.9
- -------------------------------------------------------------------
$ 13.8 $ 12.6 $ 17.7
===================================================================
</TABLE>
The manufacturing joint ventures of the Company primarily sell their
products to the joint venture partners at prices which result in operating at or
near breakeven on an annual basis.
36
<PAGE> 19
Summarized combined financial information of the Retail Finance Joint
Ventures as of and for the years ended December 31, 1998 and 1997 were as
follows (in millions):
<TABLE>
<CAPTION>
- ------------------------------------------------------------
December 31, 1998 1997
- ------------------------------------------------------------
<S> <C> <C>
Total assets $ 1,340.2 $ 1,239.2
Total liabilities 1,220.8 1,128.9
Partner's equity 119.4 110.3
For the Year Ended December 31, 1998 1997
- ------------------------------------------------------------
Revenues $ 136.6 $ 126.8
Costs 102.2 94.6
- ------------------------------------------------------------
Income before income taxes $ 34.4 $ 32.2
============================================================
</TABLE>
5. INCOME TAXES
The Company accounts for income taxes under the provisions of SFAS No. 109,
"Accounting for Income Taxes." 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
affiliates and extraordinary loss were as follows for the years ended December
31, 1998, 1997 and 1996 (in millions):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
1998 1997 1996
- ---------------------------------------------------------------------
<S> <C> <C> <C>
United States $ (9.4) $ 51.7 $ 31.9
Foreign 83.7 194.0 139.7
- ---------------------------------------------------------------------
Income before income taxes,
equity in net earnings of
affiliates and extraordinary
loss $ 74.3 $ 245.7 $ 171.6
=====================================================================
</TABLE>
The provision (benefit) for income taxes by location of the taxing
jurisdiction for the years ended December 31, 1998, 1997 and 1996 consisted of
the following (in millions):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
1998 1997 1996
- -------------------------------------------------------------------
<S> <C> <C> <C>
Current:
United States:
Federal $ 0.6 $ (2.6) $ 9.7
State 0.2 (0.8) 0.5
Foreign 49.1 37.5 29.6
- -------------------------------------------------------------------
49.9 34.1 39.8
- -------------------------------------------------------------------
Deferred:
United States:
Federal (6.1) 19.0 (1.1)
State (0.8) 2.6 0.1
Foreign (15.5) 31.8 21.1
- -------------------------------------------------------------------
(22.4) 53.4 20.1
- -------------------------------------------------------------------
Provision for income taxes $ 27.5 $ 87.5 $ 59.9
===================================================================
</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%) to the provision for income taxes reflected in
the consolidated statements of income for the years ended December 31, 1998,
1997 and 1996 is as follows (in millions):
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
1998 1997 1996
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Provision for income taxes at
United States federal
statutory rate of 35% $ 26.0 $ 86.0 $ 60.1
State and local income taxes,
net of federal income
tax benefit (0.4) 1.8 0.3
Taxes on foreign income which
differ from the United States
statutory rate (0.3) (0.5) (0.8)
Foreign losses with no tax benefit 4.3 1.8 -
Benefit of foreign sales corporation (1.3) (1.0) (0.9)
Other (0.8) (0.6) 1.2
- ----------------------------------------------------------------------------
$ 27.5 $ 87.5 $ 59.9
============================================================================
</TABLE>
The significant components of the net deferred tax assets at December 31,
1998 and 1997 were as follows (in millions):
<TABLE>
<CAPTION>
- --------------------------------------------------------------
1998 1997
- --------------------------------------------------------------
<S> <C> <C>
Deferred Tax Assets:
Net operating loss carryforwards $ 63.6 $ 56.7
Sales incentive discounts 15.5 5.4
Inventory valuation reserves 13.1 11.5
Postretirement benefits 7.2 10.3
Other 77.3 47.5
Valuation allowance (75.0) (66.4)
- --------------------------------------------------------------
Total deferred tax assets 101.7 65.0
- --------------------------------------------------------------
Deferred Tax Liabilities:
Tax over book depreciation 35.9 28.4
Tax over book amortization
of goodwill 21.9 7.1
Other 11.8 10.0
- --------------------------------------------------------------
Total deferred tax liabilities 69.6 45.5
- --------------------------------------------------------------
Net deferred tax assets 32.1 19.5
Less: Current portion of deferred
tax liability (asset) (22.9) 1.6
- --------------------------------------------------------------
Noncurrent net deferred tax assets $ 9.2 $ 21.1
==============================================================
</TABLE>
37
<PAGE> 20
At December 31, 1998, the Company has recorded a net deferred tax asset of
$32.1 million. Realization of the asset is dependent on generating sufficient
taxable income in future periods. Management believes that it is more likely
than not that the deferred tax asset will be realized. As reflected in the
preceding table, the Company established a valuation allowance of $75.0 million
and $66.4 million as of December 31, 1998 and 1997, respectively. The majority
of the valuation allowance relates to net operating loss carryforwards in
certain foreign entities where there is an uncertainty regarding their
realizability.
The Company has net operating loss carryforwards of $163.5 million as of
December 31, 1998, with expiration dates as follows: 1999 - $12.0 million, 2000
- - $29.7 million, 2001 - $26.0 million, 2002 - $14.9 million, 2003 - $11.7
million, thereafter and unlimited - $69.2 million. The Company paid income taxes
of $87.8 million, $42.0 million and $23.1 million for the years ended December
31, 1998, 1997, and 1996, respectively.
6. LONG-TERM DEBT
Long-term debt consisted of the following at December 31, 1998 and 1997 (in
millions):
<TABLE>
<CAPTION>
- ---------------------------------------------------
1998 1997
- ---------------------------------------------------
<S> <C> <C>
Revolving credit facility $ 661.2 $ 460.7
Senior Subordinated Notes 248.3 248.1
Other long-term debt 14.7 18.6
- ---------------------------------------------------
Total long-term debt $ 924.2 $ 727.4
===================================================
</TABLE>
In January 1997, the Company replaced its $650.0 million unsecured
revolving credit facility (the "March 1996 Credit Facility") with a new credit
facility (the "January 1997 Credit Facility"), which allowed for borrowings up
to $1.2 billion. In March 1997, the lending commitment for the January 1997
Credit Facility was reduced by $141.2 million which represented the proceeds to
the Company, net of underwriting discounts, from the Company's common stock
offering (Note 9). Effective January 1, 1999, the lending commitment under the
January 1997 Credit Facility reduced to $1.0 billion. Aggregate borrowings
outstanding under the January 1997 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 January 1997 Credit Facility primarily at LIBOR
plus an applicable margin, as defined. At December 31, 1998, interest rates on
the outstanding borrowings ranged from 3.8% to 6.1%, and the weighted average
interest rate during 1998 was 6.3%. The January 1997 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, a fixed charge coverage
ratio and a ratio of debt to cash flow, as defined. At December 31, 1998, $661.2
million was outstanding under the January 1997 Credit Facility and available
borrowings, based on the lending commitment of $1.0 billion, were $338.6
million.
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 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.
At December 31, 1998, the aggregate scheduled maturities of long-term debt
are primarily in the year 2002 and thereafter. The scheduled maturities in years
1999 through 2001 are not material. Cash payments for interest were $79.0
million, $70.9 million and $54.1 million for the years ended December 31, 1998,
1997 and 1996, 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, 1998, outstanding letters of credit totaled
$22.2 million, of which $0.3 million was issued under the January 1997 Credit
Facility. At December 31, 1997, outstanding letters of credit totaled $28.9
million, of which $1.8 million was issued under the January 1997 Credit
Facility.
7. CONVERTIBLE SUBORDINATED DEBENTURES
In June 1995, the Company exchanged all outstanding Convertible Preferred Stock
into $66.8 million of 6.5% Convertible Subordinated Debentures due 2008 (the
"Convertible Subordinated Debentures"). 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. All the remaining outstanding
Convertible Subordinated Debentures were converted into common stock during
1996.
8. EMPLOYEE BENEFIT PLANS
The Company has defined benefit pension plans covering certain employees
principally in the United States, the United Kingdom and Germany. The Company
also provides certain postretirement health care and life insurance benefits for
certain employees principally in the United States.
38
<PAGE> 21
Net annual pension and postretirement cost and the measurement assumptions
for the plans for the years ended December 31, 1998, 1997 and 1996 are set forth
below (in millions):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Pension Benefits
- ---------------------------------------------------------------------------------
1998 1997 1996
<S> <C> <C> <C>
Service cost $ 8.4 $ 6.5 $ 5.2
Interest cost 25.1 24.4 22.3
Expected return on plan assets (29.7) (27.2) (25.5)
Amortization of prior service cost 0.5 0.5 0.5
Special termination benefits 6.7 - -
- ---------------------------------------------------------------------------------
Net annual pension costs $ 11.0 $ 4.2 $ 2.5
=================================================================================
Weighted average discount rate 6.1% 7.0% 8.4%
Weighted average expected
long-term rate of return on
plan assets 7.6% 8.0% 9.5%
Rate of increase in future
compensation 4.0% 4.0% 5.0%
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Postretirement Benefits
1998 1997 1996
- ---------------------------------------------------------------------------------
Service cost $ 0.9 $ 0.8 $ 0.9
Interest cost 1.3 1.2 1.3
Amortization of transition
and prior service cost (0.6) (0.6) (0.7)
Amortization of unrecognized
net gain (0.8) (0.7) (0.4)
Special termination benefits 0.5 - -
- ---------------------------------------------------------------------------------
Net annual postretirement costs $ 1.3 $ 0.7 $ 1.1
=================================================================================
Weighted average discount rate 7.0% 7.3% 7.5%
- ---------------------------------------------------------------------------------
</TABLE>
The following tables set forth reconciliations of the changes in benefit
obligations, plan assets and funded status as of December 31, 1998 and 1997 (in
millions):
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Postretirement
Pension Benefits Benefits
Change in benefit obligation 1998 1997 1998 1997
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Benefit obligation at
beginning of year $ 364.0 $ 299.5 $ 18.9 $ 18.6
Service cost 8.4 6.5 0.9 0.8
Interest cost 25.1 24.4 1.3 1.3
Plan participant
contributions 3.0 2.7 - -
Actuarial (gain) loss 50.6 46.3 1.3 (1.1)
Acquisitions - 17.0 - -
Amendments - - 0.5 -
Curtailments - - 0.2 -
Special termination
benefits 6.7 - 0.5 -
Benefits paid (18.6) (19.7) (1.3) (0.7)
Foreign currency exchange
rate changes 4.2 (12.7) - -
- ----------------------------------------------------------------------------------------
Benefit obligation at
end of year $ 443.4 $ 364.0 $ 22.3 $ 18.9
========================================================================================
- ----------------------------------------------------------------------------------------
Postretirement
Pension Benefits Benefits
Change in plan assets 1998 1997 1998 1997
- ----------------------------------------------------------------------------------------
Fair value of plan assets
at beginning of year $ 352.5 $ 302.3 $ - $ -
Actual return of
plan assets 33.3 68.2 - -
Employer contributions 11.6 9.5 1.3 0.7
Plan participant
contributions 3.0 2.7 - -
Benefits paid (18.6) (19.7) (1.3) (0.7)
Foreign currency exchange
rate changes 2.9 (10.5) - -
- ----------------------------------------------------------------------------------------
Fair value of plan assets
at end of year $ 384.7 $ 352.5 $ - $ -
========================================================================================
Funded status $ (58.7) $ (11.5) $ (22.3) $ (18.9)
Unrecognized net
obligation 0.9 0.9 0.4 0.4
Unrecognized net
loss (gain) 58.0 10.0 (2.8) (5.2)
Unrecognized prior
service cost 2.2 2.6 0.2 (0.8)
- ----------------------------------------------------------------------------------------
Net amount recognized $ 2.4 $ 2.0 $ (24.5) $ (24.5)
========================================================================================
Amounts recognized in
Consolidated Balance Sheet:
Prepaid benefit cost $ 20.5 $ 19.0 $ - $ -
Accrued benefit liability (19.4) (17.0) (24.5) (24.5)
Intangible asset 1.3 - - -
- ----------------------------------------------------------------------------------------
Net amount recognized $ 2.4 $ 2.0 $ (24.5) $ (24.5)
========================================================================================
</TABLE>
The aggregate projected benefit obligation, accumulated benefit obligation
and fair value of plan assets for pension plans with accumulated benefit
obligations in excess of plan assets were $433.8 million, $420.5 million and
$374.3 million, respectively, as of December 31, 1998 and $48.1 million, $48.1
million and $30.7 million, respectively, as of December 31, 1997.
For measuring the expected postretirement benefit obligation, a 9.0%
health care cost trend rate was assumed for 1998, decreasing 0.75% per year to
6% and remaining at that level thereafter. For 1997, a 9.75% health care cost
trend rate was assumed. Changing the assumed health care cost trend rates by one
percentage point each year and holding all other assumptions constant would have
the following effect to service and interest
39
<PAGE> 22
cost and the accumulated postretirement benefit obligation at December 31, 1998
(in millions):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
One One
percentage percentage
point point
increase decrease
- -------------------------------------------------------------------------
<S> <C> <C>
Effect on service and interest cost $0.3 $(0.2)
Effect on accumulated benefit obligation $2.1 $(1.8)
- -------------------------------------------------------------------------
</TABLE>
The Company maintains a separate defined contribution 401(k) savings plan
covering certain salaried employees in the United States. Under the plan, the
Company contributes a specified percentage of each eligible employee's
compensation. The Company contributed $1.6 million, $1.7 million and $1.6
million for the years ended December 31, 1998, 1997 and 1996, respectively.
9. COMMON STOCK
At December 31, 1998, the Company had 150.0 million authorized shares of common
stock with a par value of $0.01, with 59.5 million shares of common stock
outstanding, 1.4 million shares reserved for issuance under the Company's 1991
Stock Option Plan (Note 10), 0.1 million shares reserved for issuance under the
Company's Nonemployee Director Stock Incentive Plan (Note 10) and 2.3 million
shares reserved for issuance under the Company's Long-Term Incentive Plan (Note
10).
In December 1997, the Company's Board of Directors authorized the
repurchase of up to $150.0 million of its outstanding common stock. As of
December 31, 1998, the Company repurchased approximately 3.5 million shares of
its common stock at a cost of approximately $88.1 million. The purchases are
made through open market transactions, and the timing and number of shares
purchased depend on various factors, such as price and other market conditions.
In March 1997, the Company completed a public offering of 5.2 million
shares of its common stock (the "Offering"). The net proceeds to the Company
from the Offering were approximately $140.4 million, after deduction of
underwriting discounts and commissions and other expenses. The Company used the
proceeds from the Offering to reduce a portion of the borrowings outstanding
under the Company's revolving credit facility.
In April, 1994, the Company designated 300,000 shares of Junior Cumulative
Preferred Stock ("Junior Preferred Stock") in connection with the adoption of a
Stockholders' Rights Plan (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
$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.
10. STOCK PLANS
The Company's Nonemployee Director Stock Incentive Plan (the "Director Plan")
provides for restricted stock awards to nonemployee directors based on increases
in the price of the Company's common stock. 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, 1998, 68,500 shares have been
contingently awarded to plan participants, 29,500 shares awarded under the
Director Plan had been earned and 16,500 shares have vested.
The Company's Long-Term Incentive Plan (the "LTIP") provides for
restricted stock awards to executives based on increases in the price of the
Company's common stock. 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
40
<PAGE> 23
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 $12.0
million, $14.8 million and $25.8 million for the years ended December 31, 1998,
1997 and 1996, respectively, consisting of amortization of the stock award and
the related cash bonus. The compensation expense in 1996 included $5.8 million
of accelerated vesting related to executive severance.
Additional information regarding the LTIP for the years ended December 31,
1998, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
1998 1997 1996
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Shares awarded but not
earned at January 1 965,000 1,597,500 -
Shares awarded, net of
forfeitures (37,500) (270,000) 2,070,000
Shares earned - (362,500) (472,500)
- -------------------------------------------------------------------------
Shares awarded but not
earned at December 31 927,500 965,000 1,597,500
Shares available for grant 1,367,500 1,330,000 60,000
- -------------------------------------------------------------------------
Total shares reserved
for issuance 2,295,000 2,295,000 1,657,500
- -------------------------------------------------------------------------
Shares vested during year 375,833 194,000 792,500
=========================================================================
</TABLE>
The Company's Stock Option Plan (the "Option Plan") provides for the
granting of nonqualified and incentive stock options to officers, employees,
directors and others. 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. In 1998, the Option Plan was amended to increase the
number of shares authorized for issuance by 1,600,000 shares.
Stock option transactions during the three years ended December 31, 1998,
1997 and 1996 were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
1998 1997 1996
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Options outstanding at
January 1 797,968 787,250 899,190
Options granted 586,700 193,900 229,720
Options exercised (50,698) (164,255) (312,292)
Options canceled (95,676) (18,927) (29,368)
- ---------------------------------------------------------------------------------------------------
Options outstanding at
December 31 1,238,294 797,968 787,250
====================================================================================================
Options available for
grant at December 31 1,375,481 266,505 441,478
====================================================================================================
Option price ranges
per share:
Granted $8.31-27.00 $ 31.25 $ 25.50
Exercised 1.52-27.00 1.52-31.25 1.52-25.50
Canceled 11.75-31.25 14.63-31.25 14.63-25.50
Weighted average option prices per share:
Granted $ 22.08 $ 31.25 $ 25.50
Exercised 9.52 10.36 5.58
Canceled 23.78 21.68 18.94
Outstanding at
December 31 20.39 18.87 14.14
- ---------------------------------------------------------------------------------------------------
</TABLE>
At December 31, 1998, the outstanding options had a weighted average
remaining contractual life of approximately 8.3 years and there were 607,946
options currently exercisable with option prices ranging from $1.52 to $31.25
and with a weighted average exercise price of $16.84.
The Company accounts for the Director Plan, the LTIP, and the Option Plan
under the provisions of Accounting Principles Board 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, "Accounting for
Stock-Based Compensation." For the Option Plan, the fair value of each option
granted since 1995 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 5.6% for 1998, 6.1% for 1997 and 5.7%
for 1996, expected life for the option plan of 7 years, expected dividend yield
of 2.0%, and expected volatility of 46% for 1998 and 35.0% for 1997 and 1996.
For the Director Plan and LTIP, the fair value of each award granted since 1995
has been estimated using the Black-Scholes option
41
<PAGE> 24
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 1998,
1997 and 1996 was $12.18, $15.75, and $12.22, respectively. Under these
assumptions for the Director Plan and the LTIP, the weighted average fair value
of awards granted in 1998 and 1997 under the Director Plan, including the
related cash bonus, was $43.47 and $39.96, respectively, 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 1998 or 1997. 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 millions):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
Year Ended December 31, 1998 1997 1996
- ------------------------------------------------------------------
(in millions, except per share data)
<S> <C> <C> <C>
Net income $57.4 $166.5 $123.9
Net income per common
share - diluted $0.94 $ 2.60 $ 2.16
- ------------------------------------------------------------------
</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.
11. COMMITMENTS AND CONTINGENCIES
The Company leases land, buildings, machinery, equipment and furniture under
various noncancelable operating lease agreements. At December 31, 1998, future
minimum lease payments under non-cancelable operating leases were as follows (in
millions):
<TABLE>
- ------------------------------------------------
<S> <C>
1999 $10.6
2000 7.8
2001 5.9
2002 3.8
2003 3.2
Thereafter 12.8
- ------------------------------------------------
$44.1
================================================
</TABLE>
Total lease expense under noncancelable operating leases was $15.9
million, $16.8 million, and $16.2 million, for the years ended December 31,
1998, 1997 and 1996, respectively.
At December 31, 1998, the Company was obligated under certain
circumstances to purchase through the year 2001 up to $79.1 million of equipment
upon expiration of certain operating leases between Agricredit-North America and
end users. Purchases to date have been or are expected to be sold to third
parties at amounts approximating the purchase price. Management believes that
any losses which might be incurred on the resale of this equipment will not be
material.
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.
42
<PAGE> 25
12. SEGMENT REPORTING
The Company has four geographic reportable segments: North America; South
America; Europe/Africa/Middle East; and Asia/Pacific. Each segment distributes a
full range of agricultural equipment and related replacement parts. The
accounting policies of the segments are the same as described in the summary of
significant accounting policies. The Company evaluates segment performance based
on income from operations. Sales for each segment are based on the location of
the third-party customer. All intercompany transactions between segments have
been eliminated. The Company's selling, general and administrative expenses and
engineering expenses are charged to each segment based on the region where the
expenses are incurred. As a result, the components of operating income for one
segment may not be comparable to another segment. Segment results for 1998, 1997
and 1996 are as follows (in millions):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Europe/Africa/ Asia/
North America South America Middle East Pacific Consolidated
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1998
Net Sales $940.9 $315.3 $1,597.8 $ 87.4 $2,941.4
Income from operations 57.0 13.5 136.2 15.8 222.5
Depreciation and amortization 14.3 8.9 32.9 1.5 57.6
Assets 876.7 260.9 922.5 30.2 2,090.3
Capital expenditures 14.5 6.4 40.1 - 61.0
- ------------------------------------------------------------------------------------------------------------------------
1997
Net Sales $956.6 $334.3 $1,781.4 $152.1 $3,224.4
Income from operations 108.3 19.3 192.4 32.1 352.1
Depreciation and amortization 11.1 9.4 27.2 1.7 49.4
Assets 799.9 245.2 926.4 33.6 2,005.1
Capital expenditures 20.4 7.2 44.4 0.1 72.1
- ------------------------------------------------------------------------------------------------------------------------
1996
Net Sales $862.6 $100.3 $1,184.9 $169.7 $2,317.5
Income from operations 94.1 (0.3) 125.1 35.3 254.2
Depreciation and amortization 9.3 2.9 15.1 1.9 29.2
Assets 715.8 253.4 614.3 39.7 1,623.2
Capital expenditures 12.2 0.8 32.0 0.2 45.2
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
A reconciliation from the segment information to the consolidated balances
for income from operations and assets is set forth below (in millions):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
1998 1997 1996
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Segment income from operations $ 222.5 $ 352.1 $ 254.2
Restricted stock compensation expense (12.0) (14.8) (20.0)
Nonrecurring expenses (40.0) (18.2) (22.3)
- -----------------------------------------------------------------------------------
Consolidated income from operations $ 170.5 $ 319.1 $ 211.9
===================================================================================
Segment assets $ 2,090.3 $ 2,005.1 $ 1,623.2
Cash and cash equivalents 15.9 31.2 41.7
Receivables from affiliates 15.2 18.5 12.5
Investments in affiliates 95.2 87.6 80.5
Other current and noncurrent assets 163.3 139.5 153.0
Intangible assets 370.5 339.0 205.6
- -----------------------------------------------------------------------------------
Consolidated total assets $ 2,750.4 $ 2,620.9 $ 2,116.5
===================================================================================
</TABLE>
43
<PAGE> 26
Net sales by customer location for the years ended December 31, 1998, 1997
and 1996 were as follows (in millions):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
1998 1997 1996
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales:
United States $ 759.0 $ 738.5 $ 690.0
Canada 142.4 182.6 153.8
Germany 449.3 470.5 141.3
France 321.5 347.8 231.2
United Kingdom and Ireland 122.2 179.5 217.1
Other Europe 540.3 614.6 422.4
South America 315.3 334.3 100.3
Middle East 115.8 105.7 92.3
Asia 36.7 87.8 102.7
Australia 50.7 64.3 67.0
Africa 48.7 63.3 80.6
Mexico, Central America and Caribbean 39.5 35.5 18.8
- -----------------------------------------------------------------------------------
$ 2,941.4 $ 3,224.4 $ 2,317.5
===================================================================================
</TABLE>
Net sales by product for the years ended December 31, 1998, 1997 and 1996
were as follows (in millions):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
1998 1997 1996
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales:
Tractors $ 1,838.8 $ 1,990.6 $ 1,393.0
Combines 293.5 330.5 262.5
Other machinery 318.5 389.7 258.6
Replacement parts 490.6 513.6 403.4
- -----------------------------------------------------------------------------------
$ 2,941.4 $ 3,224.4 $ 2,317.5
===================================================================================
</TABLE>
44
<PAGE> 27
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To AGCO Corporation:
We have audited the accompanying consolidated balance sheets of AGCO
CORPORATION AND SUBSIDIARIES as of December 31,1998 and 1997 and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the three years in the period ended December 31, 1998. 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, 1998 and 1997 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.
/s/ Arthur Anderson LLP
Atlanta, Georgia
February 3, 1999
45
<PAGE> 1
EXHIBIT 21.0
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
STATE OR JURISDICTION
NAME OF SUBSIDIARY OF INCORPORATION
<S> <C>
AGCO Corporation Delaware
Actium Germany
AGCO AB Sweden
AGCO Argentina SA Argentina
AGCO Australia Ltd. Australia
AGCO Canada, Ltd. Canada
AGCO Danmark AS Denmark
AGCO de Mexico SA de CV Mexico
AGCO do Brazil Brazil
AGCO Export Corp. Barbados
AGCO Farm Finance Corp. Delaware
AGCO Finance Corporation Delaware
AGCO France SA France
AGCO GmbH Germany
AGCO Holding BV Netherlands
AGCO Iberia SA Spain
AGCO International, Ltd. United Kingdom
AGCO Manufacturing Ltd. United Kingdom
AGCO Pension Trust Ltd. United Kingdom
AGCO Romania SRL Romania
AGCO SA France
AGCO Services, Ltd. United Kingdom
AGCO Vertriebs GmbH Germany
AGCO Verwaltungs Germany
AGCO, Ltd. United Kingdom
Araus SA Argentina
Blue Corp Delaware
Deutz SA Argentina
Dronningborg Industries AS Denmark
Eikmaskin AS Norway
Fendt GmbH Germany
Fendt Italiana GmbH Italy
Financial Services Insurance Co. of Tennessee Tennessee
Gleaner-Allis Company, Ltd. Delaware
Hesston Ventures Corp. Kansas
Indamo SA Argentina
Kemptener Maschinenfabrik GmbH Germany
Manufacturers Leasing Corp. Delaware
Massey Ferguson SPA Italy
Massey Ferguson Corp. Delaware
Massey Ferguson de Mexico, SA de CV Mexico
Massey Ferguson Europa BV Netherlands
Massey Ferguson Executive Pension Trust Ltd. United Kingdom
Massey Ferguson Staff Pension Trust Ltd. United Kingdom
Massey Ferguson Works Pension Trust Ltd. United Kingdom
MF Europa BV Netherlands
Terramec SA Argentina
The Hesston Company Ltd. Delaware
Wohungsbau GmbH Germany
</TABLE>
<PAGE> 1
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 AGCO
Corporation's previously filed Registration Statements on Form S-8 (File No.
33-63802, File No. 33-83104, File No. 33-91686 and File No. 333-04707).
Arthur Andersen LLP
Atlanta, Georgia
March 29, 1999
<PAGE> 1
EXHIBIT 24.0
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below, hereby constitutes and appoints Robert J. Ratliff, Patrick S.
Shannon and Michael F. Swick his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign the annual report on Form
10-K of AGCO Corporation for the fiscal year ended December 31, 1998, and any or
all amendments or supplements thereto, and to file the same with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing necessary or
appropriate to be done with respect to the Form 10-K or any amendments or
supplements thereto in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Date: March 29, 1999
/s/ Henry J. Claycamp
- ------------------------------
Henry J. Claycamp
- ------------------------------ ----------------------------
Wolfgang Deml Alan S. McDowell
/s/ William H. Fike /s/ Hamilton Robinson, Jr.
- ------------------------------ ----------------------------
William H. Fike Hamilton Robinson, Jr.
/s/ Gerald B. Johanneson /s/ Robert J. Ratliff
- ------------------------------ ----------------------------
Gerald B. Johanneson Robert J. Ratliff
/s/ Richard P. Johnston /s/ Wolfgang Sauer
- ------------------------------ ----------------------------
Richard P. Johnston Wolfgang Sauer
/s/ John M. Shumejda
- ------------------------------ ----------------------------
Anthony D. Loehnis John M. Shumejda
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF AGCO CORPORATION FOR THE YEAR ENDED DECEMBER 31, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 16
<SECURITIES> 0
<RECEIVABLES> 1,001
<ALLOWANCES> 0
<INVENTORY> 672
<CURRENT-ASSETS> 87
<PP&E> 418
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,750
<CURRENT-LIABILITIES> 761
<BONDS> 924
0
0
<COMMON> 1
<OTHER-SE> 982
<TOTAL-LIABILITY-AND-EQUITY> 2,750
<SALES> 2,941
<TOTAL-REVENUES> 2,941
<CGS> 2,404
<TOTAL-COSTS> 2,404
<OTHER-EXPENSES> 56
<LOSS-PROVISION> 5
<INTEREST-EXPENSE> 68
<INCOME-PRETAX> 74
<INCOME-TAX> 28
<INCOME-CONTINUING> 61
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61
<EPS-PRIMARY> 1.01<F1>
<EPS-DILUTED> 0.99
<FN>
<F1>(EPS-PRIMARY) DENOTES BASIC EPS.
</FN>
</TABLE>
