e10vq
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
For the quarter ended March 31, 2011
of
AGCO CORPORATION
A Delaware Corporation
IRS Employer Identification No. 58-1960019
SEC File Number 1-12930
4205 River Green Parkway
Duluth, GA 30096
(770) 813-9200
AGCO Corporation (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 and (2) has been subject to such
filing requirements for the past 90 days.
AGCO Corporation has submitted electronically and posted on its corporate web site every
Interactive Data File for the periods required to be submitted and posted pursuant to Rule 405 of
Regulation S-T.
As of April 30, 2011, AGCO Corporation had 94,806,961 shares of common stock outstanding.
AGCO Corporation is a large accelerated filer.
AGCO Corporation is a well-known seasoned issuer and is not a shell company.
AGCO CORPORATION AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited and in millions, except share amounts)
|
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|
|
March 31, |
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|
December 31, |
|
|
|
2011 |
|
|
2010 |
|
ASSETS |
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|
|
|
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|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
314.3 |
|
|
$ |
719.9 |
|
Accounts and notes receivable, net |
|
|
1,023.3 |
|
|
|
908.5 |
|
Inventories, net |
|
|
1,580.7 |
|
|
|
1,233.5 |
|
Deferred tax assets |
|
|
58.4 |
|
|
|
52.6 |
|
Other current assets |
|
|
241.3 |
|
|
|
206.5 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
3,218.0 |
|
|
|
3,121.0 |
|
Property, plant and equipment, net |
|
|
1,048.5 |
|
|
|
924.8 |
|
Investment in affiliates |
|
|
347.8 |
|
|
|
398.0 |
|
Deferred tax assets |
|
|
38.2 |
|
|
|
58.0 |
|
Other assets |
|
|
131.2 |
|
|
|
130.8 |
|
Intangible assets, net |
|
|
231.0 |
|
|
|
171.6 |
|
Goodwill |
|
|
721.0 |
|
|
|
632.7 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
5,735.7 |
|
|
$ |
5,436.9 |
|
|
|
|
|
|
|
|
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|
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|
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|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY |
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|
|
|
|
|
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Current Liabilities: |
|
|
|
|
|
|
|
|
Current portion of long-term debt |
|
$ |
1.0 |
|
|
$ |
0.1 |
|
Convertible senior subordinated notes |
|
|
277.9 |
|
|
|
161.0 |
|
Securitization facilities |
|
|
94.9 |
|
|
|
113.9 |
|
Accounts payable |
|
|
773.8 |
|
|
|
682.6 |
|
Accrued expenses |
|
|
897.2 |
|
|
|
883.1 |
|
Other current liabilities |
|
|
63.7 |
|
|
|
72.2 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
2,108.5 |
|
|
|
1,912.9 |
|
Long-term debt, less current portion |
|
|
290.7 |
|
|
|
443.0 |
|
Pensions and postretirement health care benefits |
|
|
239.3 |
|
|
|
226.5 |
|
Deferred tax liabilities |
|
|
122.6 |
|
|
|
103.9 |
|
Other noncurrent liabilities |
|
|
103.0 |
|
|
|
91.4 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
2,864.1 |
|
|
|
2,777.7 |
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Commitments and contingencies (Note 16) |
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Temporary Equity: |
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|
|
|
Equity component of redeemable convertible senior subordinated notes |
|
|
24.0 |
|
|
|
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Stockholders Equity: |
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|
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|
|
|
AGCO Corporation stockholders equity: |
|
|
|
|
|
|
|
|
Preferred stock; $0.01 par value, 1,000,000 shares authorized, no
shares issued or outstanding in 2011 and 2010 |
|
|
|
|
|
|
|
|
Common stock; $0.01 par value, 150,000,000 shares authorized,
94,787,080 and 93,143,542 shares issued and outstanding
at March 31, 2011 and December 31, 2010, respectively |
|
|
0.9 |
|
|
|
0.9 |
|
Additional paid-in capital |
|
|
1,029.8 |
|
|
|
1,051.3 |
|
Retained earnings |
|
|
1,818.3 |
|
|
|
1,738.3 |
|
Accumulated other comprehensive loss |
|
|
(33.8 |
) |
|
|
(132.1 |
) |
|
|
|
|
|
|
|
Total AGCO Corporation stockholders equity |
|
|
2,815.2 |
|
|
|
2,658.4 |
|
|
|
|
|
|
|
|
Noncontrolling interests |
|
|
32.4 |
|
|
|
0.8 |
|
|
|
|
|
|
|
|
Total stockholders equity |
|
|
2,847.6 |
|
|
|
2,659.2 |
|
|
|
|
|
|
|
|
Total liabilities, temporary equity and stockholders equity |
|
$ |
5,735.7 |
|
|
$ |
5,436.9 |
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial statements.
1
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in millions, except per share data)
|
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|
Three Months Ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
Net sales |
|
$ |
1,797.7 |
|
|
$ |
1,328.2 |
|
Cost of goods sold |
|
|
1,441.8 |
|
|
|
1,103.6 |
|
|
|
|
|
|
|
|
Gross profit |
|
|
355.9 |
|
|
|
224.6 |
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
184.7 |
|
|
|
157.0 |
|
Engineering expenses |
|
|
57.9 |
|
|
|
52.1 |
|
Restructuring and other infrequent expenses |
|
|
0.2 |
|
|
|
1.6 |
|
Amortization of intangibles |
|
|
4.4 |
|
|
|
4.5 |
|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
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Income from operations |
|
|
108.7 |
|
|
|
9.4 |
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
5.5 |
|
|
|
9.6 |
|
Other expense (income), net |
|
|
2.3 |
|
|
|
(2.5 |
) |
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
Income before income taxes and equity in net earnings of affiliates |
|
|
100.9 |
|
|
|
2.3 |
|
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|
|
|
|
|
|
|
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Income tax provision |
|
|
30.7 |
|
|
|
3.8 |
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
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Income (loss) before equity in net earnings of affiliates |
|
|
70.2 |
|
|
|
(1.5 |
) |
|
|
|
|
|
|
|
|
|
Equity in net earnings of affiliates |
|
|
11.4 |
|
|
|
11.5 |
|
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|
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|
|
|
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|
|
|
|
|
|
|
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Net income |
|
|
81.6 |
|
|
|
10.0 |
|
|
|
|
|
|
|
|
|
|
Net (income) loss attributable to noncontrolling interests |
|
|
(1.6 |
) |
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to AGCO Corporation and subsidiaries |
|
$ |
80.0 |
|
|
$ |
10.1 |
|
|
|
|
|
|
|
|
|
|
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|
|
|
Net income per common share attributable to AGCO Corporation and
subsidiaries: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.85 |
|
|
$ |
0.11 |
|
|
|
|
|
|
|
|
Diluted |
|
$ |
0.81 |
|
|
$ |
0.10 |
|
|
|
|
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|
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|
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|
Weighted average number of common and common equivalent shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
94.1 |
|
|
|
92.4 |
|
|
|
|
|
|
|
|
Diluted |
|
|
98.3 |
|
|
|
96.2 |
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial statements.
2
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in millions)
|
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|
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|
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|
|
Three Months Ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
81.6 |
|
|
$ |
10.0 |
|
|
|
|
|
|
|
|
Adjustments to reconcile net income to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
36.4 |
|
|
|
33.0 |
|
Deferred debt issuance cost amortization |
|
|
0.4 |
|
|
|
0.7 |
|
Amortization of intangibles |
|
|
4.4 |
|
|
|
4.5 |
|
Amortization of debt discount |
|
|
2.0 |
|
|
|
4.0 |
|
Stock compensation |
|
|
4.7 |
|
|
|
2.0 |
|
Equity in net earnings of affiliates, net of cash received |
|
|
(7.7 |
) |
|
|
(8.5 |
) |
Deferred income tax benefit |
|
|
(0.6 |
) |
|
|
(5.6 |
) |
Gain on sale of property, plant and equipment |
|
|
(0.5 |
) |
|
|
(0.1 |
) |
Gain on remeasurement of previously held equity interest |
|
|
(0.7 |
) |
|
|
|
|
Changes in operating assets and liabilities, net of effects from purchase of
businesses: |
|
|
|
|
|
|
|
|
Accounts and notes receivable, net |
|
|
(17.5 |
) |
|
|
(29.8 |
) |
Inventories, net |
|
|
(218.2 |
) |
|
|
(178.9 |
) |
Other current and noncurrent assets |
|
|
(28.2 |
) |
|
|
(6.5 |
) |
Accounts payable |
|
|
20.3 |
|
|
|
37.1 |
|
Accrued expenses |
|
|
(21.0 |
) |
|
|
(74.7 |
) |
Other current and noncurrent liabilities |
|
|
(22.8 |
) |
|
|
10.5 |
|
|
|
|
|
|
|
|
Total adjustments |
|
|
(249.0 |
) |
|
|
(212.3 |
) |
|
|
|
|
|
|
|
Net cash used in operating activities |
|
|
(167.4 |
) |
|
|
(202.3 |
) |
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
|
(36.8 |
) |
|
|
(24.1 |
) |
Proceeds from sale of property, plant and equipment |
|
|
0.5 |
|
|
|
0.1 |
|
Purchase of businesses, net of cash acquired |
|
|
(88.3 |
) |
|
|
|
|
Investments in consolidated affiliates, net of cash acquired |
|
|
(25.0 |
) |
|
|
|
|
Investments in unconsolidated affiliates, net |
|
|
(2.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(152.0 |
) |
|
|
(24.0 |
) |
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Conversion of convertible senior subordinated notes |
|
|
(60.4 |
) |
|
|
|
|
Repayment of debt obligations, net |
|
|
(30.9 |
) |
|
|
(2.1 |
) |
Payment of minimum tax withholdings on stock compensation |
|
|
(2.0 |
) |
|
|
(8.8 |
) |
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(93.3 |
) |
|
|
(10.9 |
) |
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
7.1 |
|
|
|
(6.1 |
) |
|
|
|
|
|
|
|
Decrease in cash and cash equivalents |
|
|
(405.6 |
) |
|
|
(243.3 |
) |
Cash and cash equivalents, beginning of period |
|
|
719.9 |
|
|
|
651.4 |
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
314.3 |
|
|
$ |
408.1 |
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial statements.
3
AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
The condensed consolidated financial statements of AGCO Corporation and its subsidiaries (the
Company or AGCO) included herein have been prepared in accordance with United States generally
accepted accounting principles (U.S. GAAP) for interim financial information and the rules and
regulations of the Securities and Exchange Commission (SEC). In the opinion of management, the
accompanying unaudited condensed consolidated financial statements reflect all adjustments, which
are of a normal recurring nature, necessary to present fairly the Companys financial position,
results of operations and cash flows at the dates and for the periods presented. These condensed
consolidated financial statements should be read in conjunction with the Companys audited
financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the
year ended December 31, 2010. Results for interim periods are not necessarily indicative of the
results for the year. Certain prior period amounts have been reclassified to conform to the
current period presentation.
2. JOINT VENTURE AND ACQUISITION
On January 3, 2011, the Company acquired 50% of AGCO-Amity JV, LLC (AGCO-Amity JV), for
approximately $25.0 million, net of approximately $5.0 million cash acquired, thereby creating a
joint venture between the Company and Amity Technology LLC. The joint venture had approximately
$6.2 million of indebtedness as of the date of acquisition. AGCO-Amity JV is located in North
Dakota and manufactures air-seeding and tillage equipment. The investment was funded with
available cash on hand. The Company analyzed the provisions of Accounting Standards Update (ASU)
2009-17, Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved
with Variable Interest Entities as it relates to the joint venture and determined that it has a
controlling financial interest in the joint venture as it has the power to direct the activities
that most significantly impact the joint venture. Therefore, the Company has consolidated the
joint ventures operations in the Companys results of operations and financial position commencing
as of and from the date of the formation of the joint venture. The Company allocated the purchase
price to the assets acquired and liabilities assumed based on a preliminary estimate of their fair
values as of the acquisition date. The acquired net assets consist primarily of accounts
receivable, property, plant and equipment, inventories, trademarks and other intangible assets.
The Company recorded approximately $20.1 million of goodwill and approximately $22.9 million of
tradename, technology and distribution network intangible assets, representing 100% of the value of
these assets within the joint ventures financial position. The goodwill is reported within the
Companys North American geographical reportable segment.
The acquired other identifiable intangible assets of AGCO-Amity JV are summarized in the
following table (in millions):
|
|
|
|
|
|
|
|
|
Intangible Asset |
|
Amount |
|
|
Weighted-Average
Useful Life |
|
Tradenames |
|
$ |
1.4 |
|
|
5 years |
Technology |
|
|
17.1 |
|
|
15 years |
Distribution network |
|
|
4.4 |
|
|
5 years |
|
|
|
|
|
|
|
|
|
|
$ |
22.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
On March 3, 2011, the Company acquired the remaining 50% of Laverda SpA (Laverda) for
63.8 million, net of approximately 1.2 million cash acquired (or approximately $88.3 million,
net). Laverda,
4
Notes to Condensed Consolidated Financial Statements Continued
(unaudited)
previously an operating joint venture between AGCO and the Italian ARGO group, is located in
Breganze, Italy and manufactures harvesting equipment. In addition to producing Laverda-branded
combines, the Breganze factory manufactures mid-range combine harvesters for the Companys Massey
Ferguson, Fendt and Challenger brands for distribution in Europe, Africa and the Middle East. The
Companys 100% ownership of Laverda includes ownership in Fella-Werke GMBH, a German manufacturer
of grass and hay machinery. The Company allocated the purchase price to the assets acquired and
liabilities assumed based on a preliminary estimate of their fair values as of the acquisition
date. The acquired net assets consist primarily of accounts receivable, property, plant and
equipment, inventories, tradename and other intangible assets. The Company recorded approximately
$40.9 million of goodwill and approximately $33.4 million of trademark and distribution network
intangible assets associated with the acquisition. The goodwill recorded is reported within the
Companys Europe/Middle East/Africa geographical reportable segment. In addition, the Company
recorded a gain of approximately $0.7 million on the remeasurement of the previously held equity
interest during the three months ended March 31, 2011 within the Companys Condensed Consolidated
Statements of Operations as a result of the acquisition.
The acquired other identifiable intangible assets of Laverda are summarized in the following
table (in millions):
|
|
|
|
|
|
|
|
|
Intangible Asset |
|
Amount |
|
|
Weighted-Average
Useful Life |
|
Tradenames |
|
$ |
6.6 |
|
|
30 years |
Distribution network |
|
|
26.8 |
|
|
16 years |
|
|
|
|
|
|
|
|
|
|
$ |
33.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
On December 15, 2010, the Company acquired Sparex Holdings Ltd (Sparex),
a U.K. Company, for £51.6 million, net of approximately
£2.7 million cash acquired. Sparex, headquartered in Exeter, United Kingdom, is a global distributor of accessories and
tractor replacement parts serving the agricultural aftermarket, with operations in 17 countries. The acquisition was financed with available
cash on hand.
The Company recorded approximately $25.9 million of goodwill and
approximately $28.6 million of preliminary estimated tradename and customer relationship
intangible assets associated with the acquisition of Sparex.
The results of operations for the Sparex acquisition have been included in the Companys Condensed Consolidated Financial Statements
as of and from the date of acquisition.
The following pro forma data summarizes the results of operations for the three months
ended March 31, 2011 and 2010, as if the Laverda and Sparex acquisitions had occurred as of January 1, 2010.
The unaudited pro forma information has been prepared for comparative purposes only and does not
purport to represent what the results of operations of the Company actually would have been had the
transaction occurred on the date indicated or what the results of operations may be in any future
period (in millions, except per share data):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
Net sales |
|
$ |
1,831.3 |
|
|
$ |
1,398.7 |
|
|
|
|
|
|
|
|
|
|
Net income attributable to AGCO Corporation and subsidiaries |
|
|
80.4 |
|
|
|
11.7 |
|
|
|
|
|
|
|
|
|
|
Net income per common share attributable to AGCO
Corporation and subsidiaries: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.85 |
|
|
$ |
0.13 |
|
Diluted |
|
$ |
0.82 |
|
|
$ |
0.12 |
|
3. RESTRUCTURING AND OTHER INFREQUENT EXPENSES
During 2009 and 2010, the Company announced and initiated several actions to rationalize
employee headcount at various manufacturing facilities, including those located in France and
Finland, as well as at the Companys administrative office located in the United Kingdom. During
2010, the Company recorded approximately $2.2 million associated with these and various other
actions within the Companys Europe/Africa/Middle East geographical segment. As of December 31,
2010, approximately $1.5 million of severance and other related costs were accrued associated with
such actions and 611 of 653 employees expected to be terminated had been terminated. During the
three months
5
Notes to Condensed Consolidated Financial Statements Continued
(unaudited)
ended March 31, 2011, the Company paid and recorded an additional $0.2 million of expenses, primarily related
to severance-related expenditures associated with the rationalization of its French operations. A
majority of the remaining $1.5 million of severance and other related costs accrued as of March 31,
2011, as well as the remaining employees, are expected to be paid and terminated during 2011.
In November 2009, the Company announced the closure of its assembly operations located in
Randers, Denmark. The Company ceased operations in July 2010 and completed the transfer of the
assembly operations to its harvesting equipment manufacturing operations, Laverda, located in
Breganze, Italy, in August 2010. The Company recorded approximately $2.2 million during 2010
associated with the facility closure, primarily related to employee retention payments, which were
accrued over the term of the retention period. As of December 31, 2010, approximately $0.7 million
of severance, retention and other related costs were accrued associated with the closure, and 73 of
the 79 employees expected to be terminated had been terminated. During the three months ended
March 31, 2011, the Company paid approximately $0.4 million of severance, retention and other
related costs associated with the closure. The remaining $0.3 million of severance, retention and
other related costs accrued as of March 31, 2011, as well as the remaining employees, are expected
to be paid and terminated during 2011.
4. STOCK COMPENSATION PLANS
The Company recorded stock compensation expense as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2011 |
|
|
2010 |
|
Cost of goods sold |
|
$ |
0.3 |
|
|
$ |
0.1 |
|
Selling, general and administrative expenses |
|
|
4.4 |
|
|
|
1.9 |
|
|
|
|
|
|
|
|
Total stock compensation expense |
|
$ |
4.7 |
|
|
$ |
2.0 |
|
|
|
|
|
|
|
|
Stock Incentive Plans
Under the Companys 2006 Long Term Incentive Plan (the 2006 Plan), up to 10.0 million shares
of AGCO common stock may be issued. The 2006 Plan allows the Company, under the direction of the
Board of Directors Compensation Committee, to make grants of performance shares, stock
appreciation rights, stock options and restricted stock awards to employees, officers and
non-employee directors of the Company.
Employee Plans
The weighted average grant-date fair value of performance awards granted under the 2006 Plan
during the three months ended March 31, 2011 and 2010 was $52.23 and $33.65, respectively.
During the three months ended March 31, 2011, the Company granted 624,400 awards for the
three-year performance period commencing in 2011 and ending in 2013, assuming the maximum target
level of performance is achieved. The compensation expense associated with all awards granted
under the 2006 Plan is amortized ratably over the vesting or performance period based on the
Companys projected assessment of the level of performance that will be achieved and earned.
Performance award transactions during the three months ended March 31, 2011 were as follows and are
presented as if the Company were to achieve its maximum levels of performance under the plan:
6
Notes to Condensed Consolidated Financial Statements Continued
(unaudited)
|
|
|
|
|
Shares awarded but not earned at January 1 |
|
|
1,916,254 |
|
Shares awarded |
|
|
624,400 |
|
Shares forfeited or unearned |
|
|
(8,900 |
) |
Shares earned |
|
|
|
|
|
|
|
|
Shares awarded but not earned at March 31 |
|
|
2,531,754 |
|
|
|
|
|
As of March 31, 2011, the total compensation cost related to unearned performance awards
not yet recognized, assuming the Companys current projected assessment of the level of performance
that will be achieved and earned, was approximately $44.3 million, and the weighted average period
over which it is expected to be recognized is approximately two years.
During both the three months ended March 31, 2011 and 2010, the Company recorded stock
compensation expense of approximately $0.7 million associated with stock settled stock appreciation
rights (SSAR) awards. The Company estimated the fair value of the grants using the Black-Scholes
option pricing model. The Company utilized the simplified method for estimating the expected
term of granted SSARs during the three months ended March 31, 2011 as afforded by SEC Staff
Accounting Bulletin (SAB) No. 107, Share-Based Payment (SAB Topic 14), and SAB No. 110,
Share-Based Payment (SAB Topic 14.D.2). The expected term used to value a grant under the
simplified method is the mid-point between the vesting date and the contractual term of the SSAR.
As the Company has only been granting SSARs since April 2006, it does not believe it has sufficient
relevant experience regarding employee exercise behavior. The weighted average grant-date fair
value of SSARs granted and the weighted average assumptions under the Black-Scholes option model
were as follows for the three months ended March 31, 2011 and 2010:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
Weighted average grant date fair value |
|
$ |
22.58 |
|
|
$ |
14.51 |
|
|
|
|
|
|
|
|
|
|
Weighted average assumptions under
Black-Scholes option model: |
|
|
|
|
|
|
|
|
Expected life of awards (years) |
|
|
5.5 |
|
|
|
5.5 |
|
Risk-free interest rate |
|
|
2.0 |
% |
|
|
2.5 |
% |
Expected volatility |
|
|
49.5 |
% |
|
|
48.5 |
% |
Expected dividend yield |
|
|
|
|
|
|
|
|
SSAR transactions during the three months ended March 31, 2011 were as follows:
|
|
|
|
|
SSARs outstanding at January 1 |
|
|
798,197 |
|
SSARs granted |
|
|
150,000 |
|
SSARs exercised |
|
|
(86,187 |
) |
SSARs canceled or forfeited |
|
|
|
|
|
|
|
|
SSARs outstanding at March 31 |
|
|
862,010 |
|
|
|
|
|
|
|
|
|
|
SSAR price ranges per share: |
|
|
|
|
Granted |
|
$ |
49.75-52.29 |
|
Exercised |
|
|
21.45-37.38 |
|
Canceled or forfeited |
|
|
|
|
|
|
|
|
|
Weighted average SSAR exercise prices per share: |
|
|
|
|
Granted |
|
$ |
52.23 |
|
Exercised |
|
|
26.09 |
|
Canceled or forfeited |
|
|
|
|
Outstanding at March 31 |
|
|
36.38 |
|
7
Notes to Condensed Consolidated Financial Statements Continued
(unaudited)
At March 31, 2011, the weighted average remaining contractual life of SSARs outstanding
was approximately five years. As of March 31, 2011, the total compensation cost related to
unvested SSARs not yet recognized was approximately $6.6 million and the weighted-average period
over which it is expected to be recognized is approximately three years.
The following table sets forth the exercise price range, number of shares, weighted average
exercise price and remaining contractual lives by groups of similar price:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SSARs Outstanding |
|
SSARs Exercisable |
|
|
|
|
Weighted Average |
|
|
|
Exercisable |
|
|
|
|
|
|
|
|
Remaining |
|
Weighted Average |
|
as of |
|
Weighted Average |
|
|
|
|
|
|
Contractual Life |
|
Exercise |
|
March 31, |
|
Exercise |
Range of Exercise Prices |
|
Number of Shares |
|
(Years) |
|
Price |
|
2011 |
|
Price |
$21.45 $24.51
|
|
|
273,532 |
|
|
|
4.5 |
|
|
$ |
21.69 |
|
|
|
142,063 |
|
|
$ |
21.99 |
|
$26.00 $37.38
|
|
|
336,391 |
|
|
|
4.5 |
|
|
$ |
35.09 |
|
|
|
193,766 |
|
|
$ |
36.41 |
|
$44.55 $66.20
|
|
|
252,087 |
|
|
|
5.6 |
|
|
$ |
54.05 |
|
|
|
75,862 |
|
|
$ |
56.88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
862,010 |
|
|
|
|
|
|
|
|
|
|
|
411,691 |
|
|
$ |
35.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The total fair value of SSARs vested during the three months ended March 31, 2011 was
$2.2 million. There were 450,319 SSARs that were not vested as of March 31, 2011. The total
intrinsic value of outstanding and exercisable SSARs as of March 31, 2011 was $16.2 million and
$8.3 million, respectively. The total intrinsic value of SSARs exercised during the three months
ended March 31, 2011 was approximately $2.6 million. The Company realized an insignificant tax
benefit from the exercise of these SSARs.
Director Restricted Stock Grants
The 2006 Plan provides for annual restricted stock grants of the Companys common stock to all
non-employee directors. The shares are restricted as to transferability for a period of three
years, but are not subject to forfeiture. In the event a director departs from the Companys Board
of Directors, the non-transferability period would expire immediately. The plan allows for the
director to have the option of forfeiting a portion of the shares awarded in lieu of a cash payment
contributed to the participants tax withholding to satisfy the statutory minimum federal, state
and employment taxes which would be payable at the time of grant. The 2011 grant was made on April
21, 2011 and equated to 16,560 shares of common stock, of which 11,482 shares of common stock were
issued, after shares were withheld for withholding taxes. The Company will record stock
compensation expense of approximately $0.9 million during the three months ended June 30, 2011
associated with these grants.
As of March 31, 2011, of the 5.0 million shares reserved for issuance under the 2006 Plan,
approximately 0.1 million shares were available for grant, assuming the maximum number of shares
are earned related to the performance award grants discussed above. On April 21, 2011, the
Companys shareholders approved increasing the number of shares reserved for issuance by an
additional 5.0 million shares, for a total of 10.0 million shares.
Stock Option Plan
There have been no grants under the Companys Option Plan since 2002, and the Company does not
intend to make any grants under the Option Plan in the future. All of the Companys outstanding
stock options are fully vested. Stock option transactions during the three months ended March 31,
2011 were as follows:
8
Notes to Condensed Consolidated Financial Statements Continued
(unaudited)
|
|
|
|
|
Options outstanding and exercisable at January 1 |
|
|
19,275 |
|
Options granted |
|
|
|
|
Options exercised |
|
|
(2,850 |
) |
Options canceled or forfeited |
|
|
|
|
|
|
|
|
Options outstanding and exercisable at March 31 |
|
|
16,425 |
|
|
|
|
|
Options available for grant at March 31 |
|
|
1,935,437 |
|
|
|
|
|
|
|
|
|
|
Option price ranges per share: |
|
|
|
|
Granted |
|
$ |
|
|
Exercised |
|
|
15.12-20.85 |
|
Canceled or forfeited |
|
|
|
|
|
|
|
|
|
Weighted average option exercise prices per share: |
|
|
|
|
Granted |
|
$ |
|
|
Exercised |
|
|
17.13 |
|
Canceled or forfeited |
|
|
|
|
Outstanding at March 31 |
|
|
16.17 |
|
At March 31, 2011, the outstanding and exercisable options had a weighted average
remaining contractual life of approximately one year and an aggregate intrinsic value of
approximately $0.6 million.
The following table sets forth the exercise price range, number of shares, weighted average
exercise price and remaining contractual lives by groups of similar price:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding and Exercisable |
|
|
as of March 31, 2011 |
|
|
|
|
|
|
Weighted Average |
|
|
|
|
|
|
|
|
Remaining |
|
Weighted Average |
|
|
|
|
|
|
Contractual Life |
|
Exercise |
Range of Exercise Prices |
|
Number of Shares |
|
(Years) |
|
Price |
|
$15.12 $20.85
|
|
|
16,425 |
|
|
|
0.7 |
|
|
$ |
16.17 |
|
The total intrinsic value of options exercised during the three months ended March 31,
2011 was approximately $0.1 million. Cash received from stock option exercises was less than $0.1
million for the three months ended March 31, 2011. The Company realized an insignificant tax
benefit from the exercise of these options.
9
Notes to Condensed Consolidated Financial Statements Continued
(unaudited)
5. GOODWILL AND OTHER INTANGIBLE ASSETS
Changes in the carrying amount of acquired intangible assets during the three months ended
March 31, 2011 are summarized as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks |
|
|
|
|
|
|
|
|
|
|
|
|
and |
|
|
Customer |
|
|
Patents and |
|
|
|
|
|
|
Tradenames |
|
|
Relationships |
|
|
Technology |
|
|
Total |
|
Gross carrying amounts: |
|
Balance as of December 31, 2010 |
|
$ |
38.4 |
|
|
$ |
124.9 |
|
|
$ |
50.8 |
|
|
$ |
214.1 |
|
Acquisitions |
|
|
7.7 |
|
|
|
33.3 |
|
|
|
17.1 |
|
|
|
58.1 |
|
Foreign currency translation |
|
|
0.4 |
|
|
|
4.9 |
|
|
|
3.1 |
|
|
|
8.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2011 |
|
$ |
46.5 |
|
|
$ |
163.1 |
|
|
$ |
71.0 |
|
|
$ |
280.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks |
|
|
|
|
|
|
|
|
|
|
|
|
and |
|
|
Customer |
|
|
Patents and |
|
|
|
|
|
|
Tradenames |
|
|
Relationships |
|
|
Technology |
|
|
Total |
|
Accumulated amortization: |
|
Balance as of December 31, 2010 |
|
$ |
11.0 |
|
|
$ |
73.7 |
|
|
$ |
50.4 |
|
|
$ |
135.1 |
|
Amortization expense |
|
|
0.4 |
|
|
|
3.6 |
|
|
|
0.4 |
|
|
|
4.4 |
|
Foreign currency translation |
|
|
|
|
|
|
2.2 |
|
|
|
3.0 |
|
|
|
5.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2011 |
|
$ |
11.4 |
|
|
$ |
79.5 |
|
|
$ |
53.8 |
|
|
$ |
144.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks
and Tradenames |
|
Unamortized intangible assets: |
|
Balance as of December 31, 2010 |
|
$ |
92.6 |
|
Foreign currency translation |
|
|
2.5 |
|
|
|
|
|
Balance as of March 31, 2011 |
|
$ |
95.1 |
|
|
|
|
|
Changes in the carrying amount of goodwill during the three months ended March 31, 2011
are summarized as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North |
|
|
South |
|
|
Europe/Africa/ |
|
|
|
|
|
|
America |
|
|
America |
|
|
Middle East |
|
|
Consolidated |
|
Balance as of December 31, 2010 |
|
$ |
3.1 |
|
|
$ |
196.7 |
|
|
$ |
432.9 |
|
|
$ |
632.7 |
|
Acquisitions |
|
|
20.1 |
|
|
|
|
|
|
|
40.1 |
|
|
|
60.2 |
|
Adjustments related to income taxes |
|
|
|
|
|
|
|
|
|
|
(2.3 |
) |
|
|
(2.3 |
) |
Foreign currency translation |
|
|
|
|
|
|
4.0 |
|
|
|
26.4 |
|
|
|
30.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2011 |
|
$ |
23.2 |
|
|
$ |
200.7 |
|
|
$ |
497.1 |
|
|
$ |
721.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill is tested for impairment on an annual basis and more often if indications of
impairment exist. The Company conducts its annual impairment analyses as of October 1 each fiscal
year.
The Company currently amortizes certain acquired intangible assets, primarily on a
straight-line basis, over their estimated useful lives, which range from five to 30 years.
During the three months ended March 31, 2011, the Company reduced goodwill by
approximately $2.3 million related to the realization of tax benefits associated with excess tax
basis deductible goodwill resulting from its acquisition of Valtra in Finland.
10
Notes to Condensed Consolidated Financial Statements Continued
(unaudited)
6. INDEBTEDNESS
Indebtedness consisted of the following at March 31, 2011 and December 31, 2010 (in millions):
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2011 |
|
|
2010 |
|
6⅞% Senior subordinated notes due 2014 |
|
$ |
284.2 |
|
|
$ |
267.7 |
|
13/4% Convertible senior subordinated notes due 2033 |
|
|
100.6 |
|
|
|
161.0 |
|
11/4% Convertible senior subordinated notes due 2036 |
|
|
177.3 |
|
|
|
175.2 |
|
Securitization facilities |
|
|
94.9 |
|
|
|
113.9 |
|
Other long-term debt |
|
|
7.5 |
|
|
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
664.5 |
|
|
|
718.0 |
|
Less: Current portion of long-term debt |
|
|
(1.0 |
) |
|
|
(0.1 |
) |
13/4% Convertible senior subordinated notes due 2033 |
|
|
(100.6 |
) |
|
|
(161.0 |
) |
11/4% Convertible senior subordinated notes due
2036 |
|
|
(177.3 |
) |
|
|
|
|
Securitization facilities |
|
|
(94.9 |
) |
|
|
(113.9 |
) |
|
|
|
|
|
|
|
Total indebtedness, less current portion |
|
$ |
290.7 |
|
|
$ |
443.0 |
|
|
|
|
|
|
|
|
The Companys $100.6 million of 13/4% convertible senior subordinated notes due December
31, 2033, issued in June 2005, provide for (i) the settlement upon conversion in cash up to the
principal amount of the notes with any excess conversion value settled in shares of the Companys
common stock, and (ii) the conversion rate to be increased under certain circumstances if the notes
had been converted in connection with certain change of control transactions occurring prior to
December 10, 2010. The notes are unsecured obligations and are convertible into cash and shares of
the Companys common stock upon satisfaction of certain conditions. Interest is payable on the
notes at 13/4% per annum, payable semi-annually in arrears in cash on June 30 and December 31 of each
year. The notes are convertible into shares of the Companys common stock at an effective price of
$22.36 per share, subject to adjustment. This reflects an initial conversion rate for the notes of
44.7193 shares of common stock per $1,000 principal amount of notes.
During the three months ended March 31, 2011, holders of the Companys 13/4% convertible senior
subordinated notes converted approximately $60.4 million of principal amount of the notes. The
Company issued 1,568,995 shares associated with the $83.8 million excess conversion value of the
notes. The Company reflected the repayment of the principal of the notes totaling $60.4 million
within Conversion of convertible senior subordinated notes within the Companys Condensed
Consolidated Statements of Cash Flows for the three months ended March 31, 2011.
The Companys $201.3 million of 11/4% convertible senior subordinated notes due December 15,
2036, issued in December 2006, provide for (i) the settlement upon conversion in cash up to the
principal amount of the notes with any excess conversion value settled in shares of the Companys
common stock, and (ii) the conversion rate to be increased under certain circumstances if the notes
are converted in connection with certain change of control transactions occurring prior to December
15, 2013. The notes are unsecured obligations and are convertible into cash and shares of the
Companys common stock upon satisfaction of certain conditions. Interest is payable on the notes
at 11/4% per annum, payable semi-annually in arrears in cash on June 15 and December 15 of each year.
The notes are convertible into shares of the Companys common stock at an effective price of
$40.73 per share, subject to adjustment. This reflects conversion rate for the notes of 24.5525
shares of common stock per $1,000 principal amount of notes.
The following table sets forth as of March 31, 2011 and December 31, 2010 the carrying amount
of the equity component, the principal amount of the liability component, the unamortized discount
and the net carrying amount of the Companys 13/4% convertible senior subordinated notes and its
11
Notes to Condensed Consolidated Financial Statements Continued
(unaudited)
11/4% convertible senior subordinated notes (in millions):
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2011 |
|
|
2010 |
|
13/4% Convertible senior subordinated notes due 2033: |
|
|
|
|
|
|
|
|
Carrying amount of the equity component |
|
$ |
|
|
|
$ |
16.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal amount of the liability component |
|
$ |
100.6 |
|
|
$ |
161.0 |
|
Less: unamortized discount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net carrying amount |
|
$ |
100.6 |
|
|
$ |
161.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/4% Convertible senior subordinated notes due 2036: |
|
|
|
|
|
|
|
|
Carrying amount of the equity component |
|
$ |
54.3 |
|
|
$ |
54.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal amount of the liability component |
|
$ |
201.3 |
|
|
$ |
201.3 |
|
Less: unamortized discount |
|
|
(24.0 |
) |
|
|
(26.1 |
) |
|
|
|
|
|
|
|
Net carrying amount |
|
$ |
177.3 |
|
|
$ |
175.2 |
|
|
|
|
|
|
|
|
The following table sets forth the interest expense recognized relating to both the
contractual interest coupon and the amortization of the discount on the liability component for the
13/4% convertible senior subordinated notes and 11/4% convertible senior subordinated notes (in
millions):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2011 |
|
|
2010 |
|
13/4% Convertible senior subordinated notes: |
|
|
|
|
|
|
|
|
Interest expense |
|
$ |
0.5 |
|
|
$ |
2.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/4% Convertible senior subordinated notes: |
|
|
|
|
|
|
|
|
Interest expense |
|
$ |
2.7 |
|
|
$ |
2.6 |
|
|
|
|
|
|
|
|
The effective interest rate on the liability component for the 13/4% convertible senior
subordinated notes and the 11/4% convertible senior subordinated notes for the three months ended
March 31, 2011 and 2010 was 6.1% for both notes. The discount for the 13/4% convertible senior subordinated notes
was amortized through December 2010 and the unamortized discount for the 11/4% convertible senior
subordinated notes will be amortized through December 2013 as this is the earliest date the notes
holders can require the Company to repurchase the notes.
Holders of the Companys 13/4% convertible senior subordinated notes and its 11/4% convertible
senior subordinated notes may convert the notes, if, during any fiscal quarter, the closing sales
price of the Companys common stock exceeds 120% of the conversion price of $22.36 per share for
the 13/4% convertible senior subordinated notes and $40.73 per share for the 11/4% convertible senior
subordinated notes for at least 20 trading days in the 30 consecutive trading days ending on the
last trading day of the preceding fiscal quarter. As of March 31, 2011 and December 31, 2010, the
closing sales price of the Companys common stock had exceeded 120% of the conversion price of the
13/4% convertible senior subordinated notes for at least 20 trading days in the 30 consecutive
trading days ending March 31, 2011 and December 31, 2010, respectively, and, therefore, the Company
classified the notes as a current liability. As of March 31, 2011, the closing sales price of the Companys common stock had
exceeded 120% of the conversion price of the 11/4% convertible senior
subordinated notes for at least 20 trading days in the 30 consecutive trading days ending March 31, 2011, and, therefore, the
Company classified the notes as a current liability. In accordance with ASU No. 2009-04,
Accounting for Redeemable Equity Instruments, the Company also classified the equity component of
the 11/4% convertible senior
12
Notes to Condensed Consolidated Financial Statements Continued
(unaudited)
subordinated notes as temporary equity. The amount classified as
temporary equity was measured as the excess of (i) the amount of cash that would be required to
be paid upon conversion over (ii) the current carrying amount of the liability-classified
component. As of March 31, 2011 and December 31, 2010, the amount of principal cash required to be
repaid upon conversion of the 13/4% convertible senior subordinated notes was equivalent to the
carrying amount of the liability-classified component. Future classification of both series of
notes between current and long-term debt and classification of the equity component of the 11/4%
convertible senior subordinated notes as temporary equity is dependent on the closing sales price
of the Companys common stock during future quarters.
The Companys 200.0 million of 6⅞% senior subordinated notes due April 15, 2014, issued in
April 2004, are unsecured obligations and are subordinated in right of payment to any existing or
future senior indebtedness. Interest is payable on the notes semi-annually on April 15 and October
15 of each year. On April 1, 2011, the Company notified the holders of the notes that it would be
redeeming the notes at a price of 101.146% of their principal amount on May 2, 2011, in accordance
with the redemption provisions of the indenture agreement. The Company funded the redemption of
the notes with a new 200.0 million senior unsecured term loan with Coöperatieve Centrale
Raiffeisen-Boerenleenbank B.A., Rabobank Nederland. The new term loan is due May 2, 2016 and
bears interest at a fixed rate of 4.5%. The Company will record a loss of approximately $3.1
million associated with the premium paid to the holders of the notes and will record a write-off of
approximately $1.2 million of unamortized deferred debt issuance costs associated with the
redemption. Both of these amounts will be reflected within interest expense, net in the
Companys Condensed Consolidated Statements of Operations during the three months ended June 30,
2011.
At March 31, 2011, the estimated fair values of the Companys 6⅞% senior subordinated notes,
13/4% convertible senior subordinated notes and 11/4% convertible senior subordinated notes, based on
their listed market values, were $287.3 million, $240.6 million and $297.8 million, respectively,
compared to their carrying values of $284.2 million, $100.6 million and $177.3 million,
respectively. At December 31, 2010, the estimated fair values of the Companys 6⅞% senior
subordinated notes, 13/4% convertible senior subordinated notes and 11/4% convertible senior
subordinated notes, based on their listed market values, were $271.7 million, $325.1 million and
$277.1 million, respectively, compared to their carrying values of $267.7 million, $161.0 million
and $175.2 million, respectively.
The Company has arrangements with various banks to issue standby letters of credit or similar
instruments, which guarantee the Companys obligations for the purchase or sale of certain
inventories and for potential claims exposure for insurance coverage. At March 31, 2011 and
December 31, 2010, outstanding letters of credit issued under the revolving credit facility totaled
$10.0 million and $9.8 million, respectively.
7. INVENTORIES
Inventories at March 31, 2011 and December 31, 2010 were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2011 |
|
|
2010 |
|
Finished goods |
|
$ |
612.7 |
|
|
$ |
422.6 |
|
Repair and replacement parts |
|
|
482.8 |
|
|
|
432.4 |
|
Work in process |
|
|
132.1 |
|
|
|
90.2 |
|
Raw materials |
|
|
353.1 |
|
|
|
288.3 |
|
|
|
|
|
|
|
|
Inventories, net |
|
$ |
1,580.7 |
|
|
$ |
1,233.5 |
|
|
|
|
|
|
|
|
13
Notes to Condensed Consolidated Financial Statements Continued
(unaudited)
8. PRODUCT WARRANTY
The warranty reserve activity for the three months ended March 31, 2011 and 2010 consisted of
the following (in millions):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2011 |
|
|
2010 |
|
Balance at beginning of period |
|
$ |
199.5 |
|
|
$ |
181.6 |
|
Acquisitions |
|
|
2.6 |
|
|
|
|
|
Accruals for warranties issued during the period |
|
|
38.3 |
|
|
|
30.0 |
|
Settlements made (in cash or in kind) during the period |
|
|
(30.0 |
) |
|
|
(29.7 |
) |
Foreign currency translation |
|
|
7.8 |
|
|
|
(7.0 |
) |
|
|
|
|
|
|
|
Balance at March 31 |
|
$ |
218.2 |
|
|
$ |
174.9 |
|
|
|
|
|
|
|
|
The Companys agricultural equipment products are generally warranted 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 on historical warranty experience. Approximately $197.0
million and $179.0 million of warranty reserves are included in Accrued expenses in the Companys
Condensed Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010, respectively.
Approximately $21.2 million and $20.5 million of warranty reserves are included in Other noncurrent liabilities
in the Companys Condensed Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010,
respectively.
9. NET INCOME PER COMMON SHARE
Basic earnings per common share is computed by dividing net income attributable to AGCO
Corporation and its subsidiaries by the weighted average number of common shares outstanding during
each period. Diluted earnings per common share assumes exercise of outstanding stock options,
vesting of performance share awards, vesting of restricted stock and the appreciation of the excess
conversion value of the contingently convertible senior subordinated notes using the treasury stock
method when the effects of such assumptions are dilutive. Dilution of weighted shares outstanding
will depend on the Companys stock price for the excess conversion value of the convertible senior
subordinated notes using the treasury stock method. A reconciliation of net income attributable to
AGCO Corporation and its subsidiaries and weighted average common shares outstanding for purposes
of calculating basic and diluted earnings per share for the three months ended March 31, 2011 and
2010 is as follows (in millions, except per share data):
14
Notes to Condensed Consolidated Financial Statements Continued
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
Basic net income per share: |
|
|
|
|
|
|
|
|
Net income attributable to AGCO Corporation and subsidiaries |
|
$ |
80.0 |
|
|
$ |
10.1 |
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding |
|
|
94.1 |
|
|
|
92.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per share attributable to AGCO Corporation and subsidiaries |
|
$ |
0.85 |
|
|
$ |
0.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share: |
|
|
|
|
|
|
|
|
Net income attributable to AGCO Corporation and subsidiaries for
purposes of computing diluted net income per share |
|
$ |
80.0 |
|
|
$ |
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding |
|
|
94.1 |
|
|
|
92.4 |
|
Dilutive stock options, performance share awards and restricted stock
awards |
|
|
0.4 |
|
|
|
0.7 |
|
Weighted average assumed conversion of contingently convertible senior
subordinated notes |
|
|
3.8 |
|
|
|
3.1 |
|
|
|
|
|
|
|
|
Weighted average number of common and common equivalent shares
outstanding for purposes of computing diluted earnings per share |
|
|
98.3 |
|
|
|
96.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share attributable to AGCO Corporation and
subsidiaries |
|
$ |
0.81 |
|
|
$ |
0.10 |
|
|
|
|
|
|
|
|
There were SSARs to purchase approximately 0.3 million shares of the Companys common
stock for the three months ended March 31, 2011 and approximately 0.5 million shares of the
Companys common stock for the three months ended March 31, 2010 that were excluded from the
calculation of diluted earnings per share because the SSARs had an antidilutive impact.
10. INCOME TAXES
At March 31, 2011 and December 31, 2010, the Company had approximately $52.4 million and $48.2
million, respectively, of unrecognized tax benefits, all of which would affect the Companys
effective tax rate if recognized. As of March 31, 2011 and December 31, 2010, the Company had
approximately $16.1 million and $14.2 million, respectively, of current accrued taxes related to
uncertain income tax positions connected with ongoing tax audits in various jurisdictions. The
Company accrues interest and penalties related to unrecognized tax benefits in its provision for
income taxes. As of March 31, 2011 and December 31, 2010, the Company had accrued interest and penalties related to
unrecognized tax benefits of $4.7 million and $5.2 million, respectively.
Generally, the tax years 2005 through 2010 remain open to examination by taxing authorities in
the United States and certain other foreign taxing jurisdictions.
11. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
All derivatives are recognized on the Companys Condensed Consolidated Balance Sheets at fair
value. On the date the derivative contract is entered into, the Company designates the derivative
as either (1) a fair value hedge of a recognized liability, (2) a cash flow hedge of a forecasted
transaction, (3) a hedge of a net investment in a foreign operation, or (4) a non-designated
derivative instrument.
The Company formally documents all relationships between hedging instruments and hedged items,
as well as the risk management objectives and strategy for undertaking various hedge transactions.
The Company formally assesses, both at the hedges inception and on an ongoing basis, whether the
derivatives that are used in hedging transactions are highly effective in offsetting changes in
fair values or
15
Notes to Condensed Consolidated Financial Statements Continued
(unaudited)
cash flow of hedged items. When it is determined that a derivative is no longer
highly effective as a hedge, hedge accounting is discontinued on a prospective basis.
Foreign Currency Risk
The Company has significant manufacturing operations in the United States, France, Germany,
Finland 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 Companys most significant
transactional foreign currency exposures are the Euro, Brazilian real and the Canadian dollar in
relation to the United States dollar, and the Euro in relation to the British pound.
The Company attempts to manage its transactional foreign exchange exposure by hedging foreign
currency cash flow forecasts and commitments arising from the anticipated settlement of receivables
and payables and from future purchases and sales. Where naturally offsetting currency positions do
not occur, the Company hedges certain, but not all, of its exposures through the use of foreign
currency contracts. The Companys translation exposure resulting from translating the financial
statements of foreign subsidiaries into United States dollars is not hedged. When practical, the
translation impact is reduced by financing local operations with local borrowings.
The foreign currency contracts are primarily forward and options contracts. These contracts
fair value measurements fall within the Level 2 fair value hierarchy under ASU 2010-06, Fair Value
Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements.
Level 2 fair value measurements are generally based upon quoted market prices for similar
instruments in active markets, quoted prices for identical or similar instruments in markets that
are not active, and model-derived valuations in which all significant inputs or significant
value-drivers are observable in active markets. The fair value of foreign currency forward
contracts is based on a valuation model that discounts cash flows resulting from the differential
between the contract price and the market-based forward rate. The fair value of foreign currency
option contracts is based on a valuation model that utilizes spot and forward exchange rates,
interest rates and currency pair volatility.
The Companys senior management establishes the Companys foreign currency and interest rate
risk management policies. These policies are reviewed periodically by the Audit Committee of the
Companys Board of Directors. The policy allows for the use of derivative instruments to hedge
exposures to movements in foreign currency and interest rates. The Companys policy prohibits the
use of derivative instruments for speculative purposes.
Cash Flow Hedges
During 2011 and 2010, the Company designated certain foreign currency contracts as cash flow
hedges of expected future sales and purchases. The effective portion of the fair value gains or
losses on these cash flow hedges are recorded in other comprehensive income (loss) and subsequently
reclassified into cost of goods sold during the period the sales and purchases are recognized. The
amount of the gain (loss) recorded in other comprehensive income (loss) that was reclassified to
cost of goods sold during the three months ended March 31, 2011 and 2010 was approximately $1.2
million and $(0.6) million, respectively, on an after-tax basis. The outstanding contracts as of
March 31, 2011 range in maturity through December 2011.
The following table summarizes activity in accumulated other comprehensive loss related to
derivatives held by the Company during the three months ended March 31, 2011 (in millions):
16
Notes to Condensed Consolidated Financial Statements Continued
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Before-Tax |
|
|
Income |
|
|
After-Tax |
|
|
|
Amount |
|
|
Tax |
|
|
Amount |
|
Accumulated derivative net gains as of December 31, 2010 |
|
$ |
1.7 |
|
|
$ |
0.5 |
|
|
$ |
1.2 |
|
Net changes in fair value of derivatives |
|
|
5.4 |
|
|
|
0.1 |
|
|
|
5.3 |
|
Net gains reclassified from accumulated other
comprehensive loss into income |
|
|
(1.3 |
) |
|
|
(0.1 |
) |
|
|
(1.2 |
) |
|
|
|
|
|
|
|
|
|
|
Accumulated derivative net gains as of March 31, 2011 |
|
$ |
5.8 |
|
|
$ |
0.5 |
|
|
$ |
5.3 |
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2011 and December 31, 2010, the Company had outstanding foreign currency
contracts with a notional amount of approximately $148.1 million and $111.1 million, respectively,
that were entered into to hedge forecasted sale and purchase transactions.
Derivative Transactions Not Designated as Hedging Instruments
During 2011 and 2010, the Company entered into foreign currency contracts to hedge receivables
and payables on the Company and its subsidiaries balance sheets that are denominated in foreign
currencies other than the functional currency. These contracts were classified as non-designated
derivative instruments.
As of March 31, 2011 and December 31, 2010, the Company had outstanding foreign currency
contracts with a notional amount of approximately $1,124.3 million and $1,002.3 million,
respectively, that were entered into to hedge receivables and payables that are denominated in
foreign currencies other than the functional currency. Changes in the fair value of these
contracts are reported in Other expense (income), net. For the three months ended March 31, 2011
and 2010, the Company recorded a net gain of approximately $2.2 million and $10.5 million,
respectively, under the caption of Other expense (income), net related to these contracts. Gains
and losses on such contracts are substantially offset by losses and gains on the remeasurement of
the underlying asset or liability being hedged.
The table below sets forth the fair value of derivative instruments as of March 31, 2011 (in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Derivatives |
|
|
|
Liability Derivatives |
|
|
|
As of March 31, 2011 |
|
|
|
As of March 31, 2011 |
|
|
|
Balance Sheet |
|
|
|
|
|
|
|
Balance Sheet |
|
|
|
|
|
|
Location |
|
|
Fair Value |
|
|
|
Location |
|
|
Fair Value |
|
Derivative instruments designated as hedging
instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts |
|
Other current assets |
|
$ |
6.6 |
|
|
|
Other current liabilities |
|
$ |
0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments not designated as
hedging
instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts |
|
Other current assets |
|
|
8.1 |
|
|
|
Other current liabilities |
|
|
4.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative instruments |
|
|
|
|
|
$ |
14.7 |
|
|
|
|
|
|
|
$ |
4.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
Notes to Condensed Consolidated Financial Statements Continued
(unaudited)
The table below sets forth the fair value of derivative instruments as of December 31,
2010 (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Derivatives |
|
|
|
Liability Derivatives |
|
|
|
As of December 31, 2010 |
|
|
|
As of December 31, 2010 |
|
|
|
Balance Sheet |
|
|
|
|
|
|
|
Balance Sheet |
|
|
|
|
|
|
Location |
|
|
Fair Value |
|
|
|
Location |
|
|
Fair Value |
|
Derivative instruments designated as hedging
instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts |
|
Other current assets |
|
$ |
2.3 |
|
|
|
Other current liabilities |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments not designated as
hedging
instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts |
|
Other current assets |
|
|
12.0 |
|
|
|
Other current liabilities |
|
|
8.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative instruments |
|
|
|
|
|
$ |
14.3 |
|
|
|
|
|
|
|
$ |
8.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counterparty Risk
The Company regularly monitors the counterparty risk and credit ratings of all the
counterparties to the derivative instruments. The Company believes that its exposures are
appropriately diversified across counterparties and that these counterparties are creditworthy
financial institutions. If the Company perceives any risk with a counterparty, then the Company
would cease to do business with that counterparty. There have been no negative impacts to the
Company from any non-performance of any counterparties.
12. CHANGES IN EQUITY AND COMPREHENSIVE INCOME (LOSS)
The following table sets forth changes in equity attributed to AGCO Corporation and its
subsidiaries and to noncontrolling interests for the three months ended March 31, 2011 (in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AGCO Corporation and subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
Common |
|
|
Additional |
|
|
Retained |
|
|
Other |
|
|
Noncontrolling |
|
|
Total |
|
|
|
Stock |
|
|
Paid-in Capital |
|
|
Earnings |
|
|
Comprehensive Loss |
|
|
Interests |
|
|
Equity |
|
|
|
|
Balance, December 31, 2010 |
|
$ |
0.9 |
|
|
$ |
1,051.3 |
|
|
$ |
1,738.3 |
|
|
$ |
(132.1 |
) |
|
$ |
0.8 |
|
|
$ |
2,659.2 |
|
Stock compensation |
|
|
|
|
|
|
4.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.7 |
|
Issuance of performance award stock |
|
|
|
|
|
|
(1.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.5 |
) |
Stock options and SSARs exercised |
|
|
|
|
|
|
(0.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.7 |
) |
Reclassification to temporary equity
Equity component of convertible senior
subordinated
notes |
|
|
|
|
|
|
(24.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(24.0 |
) |
Investment by noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30.0 |
|
|
|
30.0 |
|
Comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
80.0 |
|
|
|
|
|
|
|
1.6 |
|
|
|
81.6 |
|
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92.6 |
|
|
|
|
|
|
|
92.6 |
|
Defined benefit pension plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.6 |
|
|
|
|
|
|
|
1.6 |
|
Unrealized gain on derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1 |
|
|
|
|
|
|
|
4.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2011 |
|
$ |
0.9 |
|
|
$ |
1,029.8 |
|
|
$ |
1,818.3 |
|
|
$ |
(33.8 |
) |
|
$ |
32.4 |
|
|
$ |
2,847.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
Notes to Condensed Consolidated Financial Statements Continued
(unaudited)
Total comprehensive income (loss) for the three months ended March 31, 2011 and 2010 was
as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AGCO Corporation and subsidiaries |
|
|
Noncontrolling Interests |
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
Net income (loss) |
|
$ |
80.0 |
|
|
$ |
10.1 |
|
|
$ |
1.6 |
|
|
$ |
(0.1 |
) |
Other comprehensive income (loss), net of
tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
|
92.6 |
|
|
|
(74.3 |
) |
|
|
|
|
|
|
|
|
Defined benefit pension plans |
|
|
1.6 |
|
|
|
1.6 |
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on derivatives |
|
|
4.1 |
|
|
|
(0.7 |
) |
|
|
|
|
|
|
|
|
Unrealized gain on derivatives held
by affiliates |
|
|
|
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income (loss) |
|
$ |
178.3 |
|
|
$ |
(63.2 |
) |
|
$ |
1.6 |
|
|
$ |
(0.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
13. ACCOUNTS RECEIVABLE SALES AGREEMENTS AND SECURITIZATION FACILITIES
At March 31, 2011, the Companys accounts receivable securitization facilities in Europe had
outstanding funding of approximately 66.8 million (or approximately $94.9 million). The Company
recognized approximately $94.9 million of accounts receivable sold through its European
securitization facilities within the Companys Condensed Consolidated Balance Sheet as of March 31,
2011, with a corresponding liability equivalent to the funded balance of the facility. The
European facility expires in October 2011, and is subject to annual renewal. Wholesale accounts
receivable are sold on a revolving basis to commercial paper conduits under the European facility
through a wholly-owned qualified special purpose entity in the United Kingdom. The accrued
interest owed to the commercial paper conduits associated with outstanding funding under the
European facilities was approximately $0.1 million as of March 31, 2011. Losses on sales of
receivables under the European securitization facilities were reflected within Interest expense,
net in the Companys Condensed Consolidated Statements of Operations.
At March 31, 2011, the Company had accounts receivable sales agreements that permit the sale,
on an ongoing basis, of substantially all of its wholesale interest-bearing and non-interest
bearing receivables in North America to AGCO Finance LLC and AGCO Finance Canada, Ltd., its 49%
owned U.S. and Canadian retail finance joint ventures. The Company does not service the
receivables after the sale occurs and does not maintain any direct retained interest in the
receivables. The Company reviewed its accounting for the accounts receivable sales agreements in
accordance with ASU 2009-16, Transfers and Servicing (Topic 860): Accounting for Transfers of
Financial Assets (ASU 2009-16) and determined that these facilities should be accounted for as
off-balance sheet transactions.
As of March 31, 2011, net cash received from receivables sold under the U.S. and Canadian
accounts receivable sales agreements was approximately $441.1 million. For the three months ended
March 31, 2011, the Company paid AGCO Finance LLC and AGCO Finance Canada, Ltd. both a servicing
fee related to the servicing of the sold receivables and a subsidized interest payment. These fees
were
reflected within losses on the sales of receivables included within Other expense (income),
net in the Companys Condensed Consolidated Statements of Operations. The subsidized interest
payment was calculated based upon LIBOR plus a margin on any non-interest bearing accounts
receivable outstanding and sold under the facilities.
19
Notes to Condensed Consolidated Financial Statements Continued
(unaudited)
Losses on sales of receivables associated with the accounts receivable financing facilities
discussed above, reflected within Other expense (income), net and Interest expense, net in the
Companys Condensed Consolidated Statements of Operations, were approximately $3.6 million and $3.4
million during the three months ended March 31, 2011 and 2010, respectively.
The Companys AGCO Finance retail finance joint ventures in Europe, Brazil and Australia also
provide wholesale financing to the Companys dealers. The receivables associated with these
arrangements are without recourse to the Company. The Company does not service the receivables
after the sale occurs and does not maintain any direct retained interest in the receivables. As of
March 31, 2011 and December 31, 2010, these retail finance joint ventures had approximately $209.2
million and $221.8 million, respectively, of outstanding accounts receivable associated with these
arrangements.
The Company reviewed its accounting for these arrangements and determined that these arrangements
should be accounted for as off-balance sheet transactions.
In addition, the Company sells certain trade receivables under factoring arrangements to other
financial institutions around the world. The Company evaluated the sale of such receivables
pursuant to the guidelines of ASU 2009-16 and determined that these arrangements should be
accounted for as off-balance sheet transactions.
14. EMPLOYEE BENEFIT PLANS
Net pension and postretirement cost for the Companys defined pension and postretirement
benefit plans for the three months ended March 31, 2011 and 2010 are set forth below (in millions):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
Pension
benefits |
|
2011 |
|
|
2010 |
|
Service cost |
|
$ |
4.0 |
|
|
$ |
4.3 |
|
Interest cost |
|
|
10.1 |
|
|
|
10.3 |
|
Expected return on plan assets |
|
|
(9.1 |
) |
|
|
(8.5 |
) |
Amortization of net actuarial
loss and prior service cost |
|
|
1.7 |
|
|
|
2.2 |
|
|
|
|
|
|
|
|
Net pension cost |
|
$ |
6.7 |
|
|
$ |
8.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postretirement benefits |
|
2011 |
|
|
2010 |
|
Service cost |
|
$ |
0.1 |
|
|
$ |
|
|
Interest cost |
|
|
0.4 |
|
|
|
0.4 |
|
Amortization of prior service credit |
|
|
(0.1 |
) |
|
|
(0.1 |
) |
Amortization of unrecognized net loss |
|
|
0.1 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
Net postretirement cost |
|
$ |
0.5 |
|
|
$ |
0.4 |
|
|
|
|
|
|
|
|
During the three months ended March 31, 2011, approximately $7.8 million of contributions
had been made to the Companys defined benefit pension plans. The Company currently estimates its
minimum contributions for 2011 to its defined benefit pension plans will aggregate approximately
$33.6 million.
During the three months ended March 31, 2011, the Company made approximately $0.5 million of
contributions to its U.S.-based postretirement health care and life insurance benefit plans.
The Company currently estimates that it will make approximately $1.7 million of contributions to
its U.S.-based postretirement health care and life insurance benefit plans during 2011.
20
Notes to Condensed Consolidated Financial Statements Continued
(unaudited)
15. SEGMENT REPORTING
The Companys four reportable segments distribute a full range of agricultural equipment and
related replacement parts. The Company evaluates segment performance primarily based on income
from operations. Sales for each segment are based on the location of the third-party customer.
The Companys selling, general and administrative expenses and engineering expenses are charged to
each segment based on the region and division where the expenses are incurred. As a result, the
components of income from operations for one segment may not be comparable to another segment.
Segment results for the three months ended March 31, 2011 and 2010 and assets as of March 31, 2011
and December 31, 2010 are as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
North |
|
|
South |
|
|
Europe/Africa/ |
|
|
Rest of |
|
|
|
|
March 31, |
|
America |
|
|
America |
|
|
Middle East |
|
|
World |
|
|
Consolidated |
|
2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
359.4 |
|
|
$ |
410.5 |
|
|
$ |
928.7 |
|
|
$ |
99.1 |
|
|
$ |
1,797.7 |
|
Income from operations |
|
|
12.7 |
|
|
|
33.4 |
|
|
|
82.6 |
|
|
|
6.4 |
|
|
|
135.1 |
|
Depreciation |
|
|
6.3 |
|
|
|
5.1 |
|
|
|
23.8 |
|
|
|
1.2 |
|
|
|
36.4 |
|
Capital expenditures |
|
|
5.4 |
|
|
|
2.6 |
|
|
|
28.4 |
|
|
|
0.4 |
|
|
|
36.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
282.9 |
|
|
$ |
377.3 |
|
|
$ |
612.3 |
|
|
$ |
55.7 |
|
|
$ |
1,328.2 |
|
(Loss) income from operations |
|
|
(7.3 |
) |
|
|
42.8 |
|
|
|
(3.8 |
) |
|
|
1.8 |
|
|
|
33.5 |
|
Depreciation |
|
|
5.9 |
|
|
|
4.6 |
|
|
|
21.8 |
|
|
|
0.7 |
|
|
|
33.0 |
|
Capital expenditures |
|
|
2.7 |
|
|
|
1.7 |
|
|
|
19.7 |
|
|
|
|
|
|
|
24.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2011 |
|
$ |
659.6 |
|
|
$ |
713.0 |
|
|
$ |
1,959.4 |
|
|
$ |
197.7 |
|
|
$ |
3,529.7 |
|
As of December 31, 2010 |
|
|
597.0 |
|
|
|
557.3 |
|
|
|
1,628.2 |
|
|
|
178.0 |
|
|
|
2,960.5 |
|
A reconciliation from the segment information to the consolidated balances for income
from operations and total assets is set forth below (in millions):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2011 |
|
|
2010 |
|
Segment income from operations |
|
$ |
135.1 |
|
|
$ |
33.5 |
|
Corporate expenses |
|
|
(17.4 |
) |
|
|
(16.1 |
) |
Stock compensation expense |
|
|
(4.4 |
) |
|
|
(1.9 |
) |
Restructuring and other infrequent expense |
|
|
(0.2 |
) |
|
|
(1.6 |
) |
Amortization of intangibles |
|
|
(4.4 |
) |
|
|
(4.5 |
) |
|
|
|
|
|
|
|
Consolidated income from operations |
|
$ |
108.7 |
|
|
$ |
9.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
As of December |
|
|
|
March 31, 2011 |
|
|
31, 2010 |
|
Segment assets |
|
$ |
3,529.7 |
|
|
$ |
2,960.5 |
|
Cash and cash equivalents |
|
|
314.3 |
|
|
|
719.9 |
|
Receivables from affiliates |
|
|
122.8 |
|
|
|
106.3 |
|
Investments in affiliates |
|
|
347.8 |
|
|
|
398.0 |
|
Deferred tax assets, other
current and noncurrent assets |
|
|
469.1 |
|
|
|
447.9 |
|
Intangible assets, net |
|
|
231.0 |
|
|
|
171.6 |
|
Goodwill |
|
|
721.0 |
|
|
|
632.7 |
|
|
|
|
|
|
|
|
Consolidated total assets |
|
$ |
5,735.7 |
|
|
$ |
5,436.9 |
|
|
|
|
|
|
|
|
21
Notes to Condensed Consolidated Financial Statements Continued
(unaudited)
16. COMMITMENTS AND CONTINGENCIES
Off-Balance Sheet Arrangements
Guarantees
The Company maintains a remarketing agreement with its U.S. retail finance joint venture, AGCO
Finance LLC, whereby the Company is obligated to repurchase repossessed inventory at market values.
The Company has an agreement with AGCO Finance LLC which limits the Companys purchase obligations
under this arrangement to $6.0 million in the aggregate per calendar year. The Company believes
that any losses that might be incurred on the resale of this equipment will not materially impact
the Companys financial position or results of operations, due to the fair value of the underlying
equipment.
At March 31, 2011, the Company guaranteed indebtedness owed to third parties of approximately
$106.9 million, primarily related to dealer and end-user financing of equipment. Such guarantees
generally obligate the Company to repay outstanding finance obligations owed to financial
institutions if dealers or end users default on such loans through 2016. The Company believes the
credit risk associated with these guarantees is not material to its financial position or results
of operations. Losses under such guarantees have historically been insignificant. In addition,
the Company generally would be able to recover any amounts paid under such guarantees from the sale
of the underlying financed farm equipment, as the fair value of such equipment would be sufficient
to offset a substantial portion of the amounts paid.
Other
The Company sells substantially all of its wholesale accounts receivable in North America to
the Companys U.S. and Canadian retail finance joint ventures. The Company also sells certain
accounts receivable under factoring arrangements to financial institutions around the world. The
Company reviewed the sale of such receivables pursuant to the guidelines of ASU 2009-16 and
determined that these facilities should be accounted for as off-balance sheet transactions.
Legal Claims and Other Matters
As a result of Brazilian tax legislation impacting value added taxes (VAT), the Company
recorded a reserve of approximately $25.7 million and $22.3 million against its outstanding balance
of Brazilian VAT taxes receivable as of March 31, 2011 and December 31, 2010, respectively, due to
the uncertainty of the Companys ability to collect the amounts outstanding.
On June 27, 2008, the Republic of Iraq filed a civil action in a federal court in New York,
Case No. 08 CIV 59617, naming as defendants the Companys French subsidiary and two of its other
foreign subsidiaries that participated in the United Nations Oil for Food Program (the Program).
Ninety-one other entities or companies also were named as defendants in the civil action due to
their participation in the Program. The complaint purports to assert claims against each of the
defendants seeking damages in an unspecified amount. Although the Companys subsidiaries intend to
vigorously defend against this action, it is not possible at this time to predict the outcome of
this action or its impact, if any, on the
Company, although if the outcome was adverse, the Company could be required to pay damages. In
addition, the French government also is investigating the Companys French subsidiary in connection
with its participation in the Program.
22
Notes to Condensed Consolidated Financial Statements Continued
(unaudited)
In August 2008, as part of a routine audit, the Brazilian taxing authorities disallowed
deductions relating to the amortization of certain goodwill recognized in connection with a
reorganization of the Companys Brazilian operations and the related transfer of certain assets to
the Companys Brazilian subsidiaries. The amount of the tax disallowance through March 31, 2011,
not including interest and penalties, was approximately 90.6 million Brazilian reais (or
approximately $55.7 million). The amount ultimately in dispute will be greater because of interest
and penalties. The Company has been advised by its legal and tax advisors that its position with
respect to the deductions is allowable under the tax laws of Brazil. The Company is contesting the
disallowance and believes that it is not likely that the assessment, interest or penalties will be
required to be paid. However, the ultimate outcome will not be determined until the Brazilian tax
appeal process is complete, which could take several years.
The Company is a party to various other 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 its business or financial condition.
23
Managements Discussion and Analysis of Financial Condition and Results of Operations
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Our operations are subject to the cyclical nature of the agricultural industry. Sales of our
equipment have been and are expected to continue to be affected by changes in net cash farm income,
farm land values, weather conditions, demand for agricultural commodities, commodity prices and
general economic conditions. We record sales when we sell equipment and replacement parts to our
independent dealers, distributors or other customers. To the extent possible, we attempt to sell
products to our dealers and distributors on a level basis throughout the year to reduce the effect
of seasonal demands on manufacturing operations and to minimize our 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. As a result, our net sales have historically been the lowest in
the first quarter and have increased in subsequent quarters.
RESULTS OF OPERATIONS
For the three months ended March 31, 2011, we generated net income of $80.0 million, or $0.81
per share, compared to net income of $10.1 million, or $0.10 per share, for the same period in
2010.
Net sales during the first quarter of 2011 were $1,797.7 million, which were approximately
35.3% higher than the first quarter of 2010 due to sales growth in all four of our geographical
segments, as well as the positive impact of currency translation.
Income from operations for the first quarter of 2011 was $108.7 million compared to $9.4
million in the first quarter of 2010. The increase in income from operations during the first
quarter of 2011 was as a result of an increase in net sales as well as improved gross margins
resulting primarily from higher production volumes and a better product mix.
Income from operations increased in our Europe/Africa/Middle East region in the first quarter
of 2011 compared to the first quarter of 2010 primarily due to higher sales and production volumes,
as well as a favorable product mix. In the South America region, income from operations decreased
in the first quarter of 2011 compared to the first quarter of 2010 as a result of higher
engineering and product introduction expenses as well as a less favorable geographic product sales
mix. Income from operations in North America was higher in the first quarter of 2011 compared to
the first quarter of 2010 primarily due to increased sales, higher production levels and expense
control initiatives. Income from operations in the Rest of World region increased in the first
quarter of 2011 compared to the first quarter of 2010 primarily due to the increased sales
resulting from improving market conditions in Eastern Europe and Russia.
Retail Sales
In North America, industry unit retail sales of tractors for the first quarter of 2011
increased by approximately 6% compared to the first quarter of 2010 resulting from increases in
industry unit retail sales of utility and compact tractors, partially offset by a decline in
industry unit retail sales in high horsepower tractors. Industry unit retail sales of combines for
the first quarter of 2011 also increased by approximately 37% compared to the first quarter of
2010. Higher commodity prices and the expectation of record farm income resulted in the strength
in retail sales of tractors and combines. Improvement in the dairy and livestock sector
contributed to higher industry unit retail sales of mid-range tractors and hay equipment, which
both increased compared to 2010 levels. Our unit retail sales of tractors were lower in
24
Managements Discussion and Analysis of Financial Condition and Results of Operations
(continued)
the first quarter of 2011 compared to the first quarter of 2010 and our unit retail sales of
combines increased in the first quarter of 2011 compared to the same period in 2010.
In Western Europe, industry unit retail sales of tractors for the first quarter of 2011
increased approximately 18% compared to the first quarter of 2010. Retail demand was particularly
strong in Germany, Scandinavia, Finland and France. Higher commodity prices and the prospect for
higher farm income contributed to the growth in the first quarter of 2011 compared to weak market
conditions during the first quarter of 2010. Our Western European unit retail sales of tractors
for the first quarter of 2011 were also higher when compared to the first quarter of 2010.
South American industry unit retail sales of tractors and combines in the first quarter of
2011 were relatively flat compared to higher levels in the same period in 2010. Growth in
Argentina and other South American markets offset industry sales declines in Brazil in the first
quarter of 2011 compared to record levels in the first quarter of 2010. Industry unit retail sales
in Brazil declined, but remain solid due to attractive farm economics and supportive government
financing rates that have been extended through the end of 2011. Our South American unit retail
sales of tractors and combines were lower in the first quarter of 2011 compared to the same period
in 2010.
Net sales in our Rest of World segment increased approximately 77.9% during the first quarter
of 2011 compared to the prior year period due to higher sales in Eastern Europe, Russia, Australia
and New Zealand.
STATEMENTS OF OPERATIONS
Net sales for the first quarter of 2011 were $1,797.7 million compared to $1,328.2 million for
the same period in 2010. Foreign currency translation positively impacted net sales by
approximately
$43.5 million, or 3.3%, in the first quarter of 2011. Excluding the positive impact of currency
translation, net sales increased approximately 32.1%. The following table sets forth, for the
three months ended March 31, 2011 and 2010, the impact to net sales of currency translation by
geographical segment (in millions, except percentages):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
Change due to currency |
|
|
|
March 31, |
|
|
Change |
|
|
translation |
|
|
|
2011 |
|
|
2010 |
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
North America |
|
$ |
359.4 |
|
|
$ |
282.9 |
|
|
$ |
76.5 |
|
|
|
27.0 |
% |
|
$ |
4.5 |
|
|
|
1.6 |
% |
South America |
|
|
410.5 |
|
|
|
377.3 |
|
|
|
33.2 |
|
|
|
8.8 |
% |
|
|
28.0 |
|
|
|
7.4 |
% |
Europe/Africa/
Middle East |
|
|
928.7 |
|
|
|
612.3 |
|
|
|
316.4 |
|
|
|
51.7 |
% |
|
|
6.4 |
|
|
|
1.0 |
% |
Rest of World |
|
|
99.1 |
|
|
|
55.7 |
|
|
|
43.4 |
|
|
|
77.9 |
% |
|
|
4.6 |
|
|
|
8.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,797.7 |
|
|
$ |
1,328.2 |
|
|
$ |
469.5 |
|
|
|
35.3 |
% |
|
$ |
43.5 |
|
|
|
3.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
Managements Discussion and Analysis of Financial Condition and Results of Operations
(continued)
The following is a reconciliation of net sales for the three months ended March 31, 2011
at actual
exchange rates compared to 2010 adjusted exchange rates (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
March 31, |
|
|
% change from |
|
|
|
|
|
|
|
2011 at Adjusted |
|
|
2010 due to |
|
|
|
2011 at Actual |
|
|
Exchange |
|
|
currency |
|
|
|
Exchange Rates |
|
|
Rates (1) |
|
|
translation |
|
North America |
|
$ |
359.4 |
|
|
$ |
354.9 |
|
|
|
1.6 |
% |
South America |
|
|
410.5 |
|
|
|
382.5 |
|
|
|
7.4 |
% |
EAME |
|
|
928.7 |
|
|
|
922.3 |
|
|
|
1.0 |
% |
Rest of World |
|
|
99.1 |
|
|
|
94.5 |
|
|
|
8.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1,797.7 |
|
|
$ |
1,754.2 |
|
|
|
3.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Adjusted exchange rates are 2010 exchange rates. |
Regionally, net sales in North America increased during the first quarter of 2011
compared to the production-constrained level in the same period in 2010 resulting from increased
sales of combines, implements, and hay equipment resulting from favorable farm economics and strong
market conditions. In the Europe/Africa/Middle East region, net sales increased in the first
quarter of 2011 compared to the exceptionally low sales levels in same period in 2010 primarily due
to significant sales increases in Germany, France and the United Kingdom resulting from improvement
in market conditions. Sales in the first quarter of 2010 were negatively impacted by weak market
conditions and inventory reduction efforts in the region. Net sales in South America increased
during the first quarter of 2011 compared to the same period in 2010 as a result of sales increases
in Argentina and other South American markets, partially offset by lower sales in Brazil. In the
Rest of World segment, net sales increased in the first quarter of 2011 compared to the same period
in 2010 as a result of sales growth in Eastern Europe and Russia as a result of market recovery.
We estimate that worldwide average price increases during the first quarter of 2011 were
approximately 2.2%. Consolidated net sales of tractors and combines, which comprised approximately
72% of our net sales in the first quarter of 2011, increased approximately 38% in the first quarter
of 2011 compared to the same period in 2010. Unit sales of tractors and combines increased
approximately 17.8% during the first quarter of 2011 compared to the same period in 2010. The
difference between the unit sales increase and the increase in net sales was primarily the result
of foreign currency translation, pricing and sales mix changes.
The following table sets forth, for the periods indicated, the percentage relationship to net
sales of certain items in our Condensed Consolidated Statements of Operations (in millions, except
percentages):
26
Managements Discussion and Analysis of Financial Condition and Results of Operations
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
|
|
|
|
% of |
|
|
|
|
|
% of |
|
|
|
$ |
|
|
Net sales |
|
|
$ |
|
|
Net sales(1) |
|
Gross profit |
|
$ |
355.9 |
|
|
|
19.8 |
% |
|
$ |
224.6 |
|
|
|
16.9 |
% |
Selling, general and administrative expenses |
|
|
184.7 |
|
|
|
10.3 |
% |
|
|
157.0 |
|
|
|
11.8 |
% |
Engineering expenses |
|
|
57.9 |
|
|
|
3.2 |
% |
|
|
52.1 |
|
|
|
3.9 |
% |
Restructuring and other infrequent expenses |
|
|
0.2 |
|
|
|
|
|
|
|
1.6 |
|
|
|
0.1 |
% |
Amortization of intangibles |
|
|
4.4 |
|
|
|
0.2 |
% |
|
|
4.5 |
|
|
|
0.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
$ |
108.7 |
|
|
|
6.1 |
% |
|
$ |
9.4 |
|
|
|
0.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Rounding may impact the summation of amounts. |
Gross profit as a percentage of net sales increased during the first quarter of 2011
compared to the first quarter of 2010, primarily due to higher production levels in Europe and
North America and an improved sales mix, partially offset by higher material costs. Unit
production of tractors and combines during the first quarter of 2011 was approximately 18% higher
than the comparable period in 2010. We recorded approximately $0.3 million and $0.1 million of
stock compensation expense, within cost of goods sold, during the first quarter of 2011 and 2010,
respectively, as is more fully explained in Note 4 to our Condensed Consolidated Financial
Statements.
Selling, general and administrative (SG&A) expenses as a percentage of net sales decreased
during the first quarter of 2011 compared to the same period in 2010 primarily due to higher net
sales. Engineering expenses increased during the first quarter of 2011 compared to the prior year
period primarily due to an increased investment in new product development in order to meet new
emission standards. We recorded approximately $4.4 million and $1.9 million of stock compensation
expense within SG&A, during the first quarter of 2011 and 2010, respectively, as is more fully
explained in Note 4 to our Condensed Consolidated Financial Statements.
We recorded restructuring and other infrequent expenses of approximately $0.2 million during
the first quarter of 2011, primarily related to severance-related expenditures associated with the
rationalization of our French operations. We recorded restructuring and other infrequent expenses
of approximately $1.6 million during the first quarter of 2010, primarily related to severance,
retention and other related costs associated with the rationalization of our operations in Finland
and the United Kingdom, as well as the facility closure of our combine assembly operations in
Randers, Denmark.
Interest expense, net was $5.5 million for the first quarter of 2011 compared to $9.6 million
for the comparable period in 2010. The decrease was primarily due to a reduction in debt levels
and increased interest income earned during first quarter of 2011 compared to 2010.
Other expense, net was $2.3 million during the first quarter of 2011 compared to other income,
net of $2.5 million for the same period in 2010. Foreign currency gains were lower during the
first quarter of 2011 compared to the same period in 2010. Losses on sales of receivables,
primarily under our accounts receivable sales agreements in North America with AGCO Finance LLC and
AGCO Finance Canada, Ltd., were $3.0 million and $2.7 million in the first quarter of 2011 and
2010, respectively.
We recorded an income tax provision of $30.7 million for the first quarter of 2011 compared to
$3.8 million for the comparable period in 2010. Our effective tax rate was lower in the first
quarter of 2011 as a result of an increase in income in jurisdictions, such as the United States,
for which no tax provision is being recorded due to previously established valuation allowances against
deferred tax assets and net operating loss carryforwards.
27
Managements Discussion and Analysis of Financial Condition and Results of Operations
(continued)
Equity in net earnings of affiliates was $11.4 million for the first quarter of 2011 compared
to $11.5 million for the comparable period in 2010.
RETAIL FINANCE JOINT VENTURES
Our AGCO Finance retail finance joint ventures provide retail financing and wholesale
financing to our dealers in the United States, Canada, Brazil, Germany, France, the United Kingdom,
Australia, Ireland, Austria and Argentina. The joint ventures are owned 49% by AGCO and 51% by a
wholly owned subsidiary of Rabobank, a AAA rated financial institution based in the Netherlands.
The majority of the assets of the retail finance joint ventures represent finance receivables. The
majority of the liabilities represent notes payable and accrued interest. Under the various joint
venture agreements, Rabobank or its affiliates are obligated to provide financing to the joint
venture companies, primarily through lines of credit. We do not guarantee the debt obligations of
the retail finance joint ventures other than a portion of the retail portfolio in Brazil that is
held outside the joint venture by Rabobank Brazil, which was approximately $2.8 million as of
December 31, 2010 and will gradually be eliminated over time. As of March 31, 2011, our capital
investment in the retail finance joint ventures, which is included in Investment in affiliates on
our Condensed Consolidated Balance Sheets, was approximately
$325.0 million compared to $305.7 million as of December 31, 2010. The total finance portfolio in
our retail finance joint ventures was approximately $7.3 billion and $7.0 billion as of March 31,
2011 and December 31, 2010, respectively. The total finance portfolio as of March 31, 2011
included approximately $6.4 billion of retail receivables and $0.9 billion of wholesale receivables
from AGCO dealers. The total finance portfolio as of December 31, 2010 included approximately $6.2
billion of retail receivables and $0.8 billion of wholesale receivables from AGCO dealers. The
wholesale receivables were either sold to AGCO Finance without recourse from our operating
companies or AGCO Finance provided the financing directly to the dealers. For the three months
ended March 31, 2011, our share in the earnings of the retail finance joint ventures, included in
Equity in net earnings of affiliates on our Condensed Consolidated Statements of Operations, was
$10.4 million compared to $9.4 million for the same period in 2010.
The retail finance portfolio in our AGCO Finance joint venture in Brazil was approximately
$2.2 billion as of March 31, 2011 and December 31, 2010. As a result of weak market conditions in
Brazil in 2005 and 2006, a substantial portion of this portfolio has been included in a payment
deferral program directed by the Brazilian government. The impact of the deferral program has
resulted in higher delinquencies and lower collateral coverage for the portfolio. While the joint
venture currently considers its reserves for loan losses adequate, it continually monitors its
reserves considering borrower payment history, the value of the underlying equipment financed and
further payment deferral programs implemented by the Brazilian government. To date, our retail
finance joint ventures in markets outside of Brazil have not experienced any significant changes in
the credit quality of their finance portfolios as a result of the recent global economic
challenges. However, there can be no assurance that the portfolio credit quality will not
deteriorate, and, given the size of the portfolio relative to the joint ventures level of equity,
a significant adverse change in the joint ventures performance would have a material impact on the
joint ventures and on our operating results.
LIQUIDITY AND CAPITAL RESOURCES
Our financing requirements are subject to variations due to seasonal changes in inventory and
receivable levels. Internally generated funds are supplemented when necessary from external
sources, primarily our revolving credit facility, accounts receivable sales agreements and accounts
receivable securitization facilities.
28
Managements Discussion and Analysis of Financial Condition and Results of Operations
(continued)
We believe that these facilities, together with available cash and internally generated funds,
will be
sufficient to support our working capital, capital expenditures and debt service requirements
for the foreseeable future:
|
|
|
Our $300.0 million revolving credit facility, which expires in May 2013 (no amounts were
outstanding as of March 31, 2011). |
|
|
|
|
Our 200.0 million (or approximately $284.2 million as of March 31, 2011) 6⅞% senior
subordinated notes (see further discussion below). |
|
|
|
|
Our $100.6 million 13/4% convertible senior subordinated notes senior subordinated notes
could be converted based on the closing sales price of our common stock (see further
discussion below). Our $201.3 million of 11/4% convertible senior subordinated notes may be
required to be repurchased on December 15, 2013, or could be converted earlier based on the
closing sales price of our common stock (see further discussion below). |
|
|
|
|
Our 110.0 million (or approximately $156.3 million as of March 31, 2011) securitization
facilities in Europe, which expire in October 2011. As of March 31, 2011, outstanding
funding related to this facility was approximately 66.8 million (or approximately $94.9
million). |
|
|
|
|
Our accounts receivable sales agreements in the United States and Canada with AGCO
Finance LLC and AGCO Finance Canada, Ltd., with total accounts receivable sales and funding
of up to $600.0 million for U.S. wholesale accounts receivable and up to C$250.0 million
(or approximately $257.8 million as March 31, 2011) for Canadian wholesale accounts
receivable. As of March 31, 2011, approximately $441.1 million of net proceeds had been
received under these agreements. |
In addition, although we are in complete compliance with the financial covenants contained in
these facilities and currently expect to continue to maintain such compliance, should we ever
encounter difficulties, our historical relationship with our lenders has been strong and we
anticipate their continued long-term support of our business.
Current Facilities
Our $100.6 million of 13/4% convertible senior subordinated notes due December 31, 2033, issued
in June 2005, provide for (i) the settlement upon conversion in cash up to the principal amount of
the converted notes with any excess conversion value settled in shares of our common stock, and
(ii) the conversion rate to be increased under certain circumstances if the notes are converted in
connection with certain change of control transactions occurring prior to December 10, 2010. The
notes are unsecured obligations and are convertible into cash and shares of our common stock upon
satisfaction of certain conditions. Interest is payable on the notes at 13/4% per annum, payable
semi-annually in arrears in cash on June 30 and December 31 of each year. The notes are
convertible into shares of our common stock at an effective price of $22.36 per share, subject to
adjustment. This reflects an initial conversion rate for the notes of 44.7193 shares of common
stock per $1,000 principal amount of notes. As of December 31, 2010, we may redeem any of the
notes at a redemption price of 100% of their principal amount, plus accrued interest, as well as
settle any excess conversion value with shares of our common stock. Holders of the notes may also
require us to repurchase the notes at a repurchase price of 100% of their principal amount, plus
accrued interest as of December 31 2010. See Note 6 to our Condensed Consolidated Financial
Statements for a full description of these notes, as well as settle any excess conversion value
with shares of our common stock.
29
Managements Discussion and Analysis of Financial Condition and Results of Operations
(continued)
Our $201.3 million of 11/4% convertible senior subordinated notes due December 15, 2036, issued
in
December 2006, provide for (i) the settlement upon conversion in cash up to the principal
amount of the notes with any excess conversion value settled in shares of our common stock, and
(ii) the conversion rate to be increased under certain circumstances if the notes are converted in
connection with certain change of control transactions occurring prior to December 15, 2013.
Interest is payable on the notes at 11/4% per annum, payable semi-annually in arrears in cash on June
15 and December 15 of each year. The notes are convertible into shares of our common stock at an
effective price of $40.73 per share, subject to adjustment. This reflects an initial conversion
rate for the notes of 24.5525 shares of common stock per $1,000 principal amount of notes.
Beginning December 15, 2013, we may redeem any of the notes at a redemption price of 100% of their
principal amount, plus accrued interest. Holders of the notes may require us to repurchase the
notes at a repurchase price of 100% of their principal amount, plus accrued interest, on December
15, 2013, 2016, 2021, 2026 and 2031. Refer to the Companys Form 10-K for the year ended December
31, 2010 for a full description of these notes.
As of March 31, 2011, the closing sales price of our common stock had exceeded 120% of the
conversion price of $22.36 per share and $40.73 per share, for our 13/4% convertible senior
subordinated notes and 11/4% convertible senior subordinated notes, respectively, for at least 20
trading days in the 30 consecutive trading days ending March 31, 2011, and, therefore, we
classified both the notes as a current liability. In accordance with ASU 2009-04, Accounting for
Redeemable Equity Instruments, we also classified the equity component of the 11/4% convertible
senior subordinated notes as temporary equity as of March 31, 2011. The amount classified as
temporary equity was measured as the excess of (a) the amount of cash that would be required to
be paid upon conversion over (b) the carrying amount of the liability-classified component. As of
March 31, 2011 and December 31, 2010, the principal amount of cash required to be repaid upon
conversion of the 13/4% convertible senior subordinated notes was equivalent to the carrying amount
of the liability-classified component. Future classification of both series of notes between
current and long-term debt and classification of the equity component of the 11/4% convertible senior
subordinated notes as temporary equity is dependent on the closing sales price of our common
stock during future quarters.
During the first quarter of 2011, holders of our 13/4% convertible senior subordinated notes
converted approximately $60.4 million of principal amount of the notes. We issued 1,568,995 shares
associated with the $83.8 million excess conversion value of the notes. We reflected the repayment
of the principal of the notes, totaling $60.4 million, within Conversion of convertible senior
subordinated notes within our Condensed Consolidated Statements of Cash Flows for the three months
ended March 31, 2011.
The 13/4% convertible senior subordinated notes and the 11/4% convertible senior subordinated
notes will impact the diluted weighted average shares outstanding in future periods depending on
our stock price for the excess conversion value using the treasury stock method. Refer to Notes 6
and 9 of the Companys Condensed Consolidated Financial Statements for further discussion.
Our $300.0 million unsecured multi-currency revolving credit facility matures on May 16, 2013.
Interest accrues on amounts outstanding under the facility, at our option, at either (1) LIBOR
plus a margin ranging between 1.00% and 1.75% based upon our total debt ratio or (2) the higher of
the administrative agents base lending rate or one-half of one percent over the federal funds rate
plus a margin ranging between 0.0% and 0.50% based upon our total debt ratio. The facility
contains covenants restricting, among other things, the incurrence of indebtedness and the making
of certain payments, including dividends, and is subject to acceleration in the event of a default,
as defined in the facility. We also must fulfill financial covenants in respect of a total debt to
EBITDA ratio and an interest coverage ratio, as defined in the facility. As of March 31, 2011, we
had no outstanding borrowings under the facility. As of March 31, 2011, we had availability to
borrow approximately $290.0 million under the facility.
30
Managements Discussion and Analysis of Financial Condition and Results of Operations
(continued)
Our 200.0 million of 6⅞% senior subordinated notes due April 15, 2014, issued in April 2004,
are unsecured obligations and are subordinated in right of payment to any existing or future senior
indebtedness. Interest is payable on the notes semi-annually on April 15 and October 15 of each
year. As of and subsequent to April 15, 2009, we may redeem the notes, in whole or in part,
initially at 103.438% of their principal amount, plus accrued interest, declining to 100% of their
principal amount, plus accrued interest, at any time on or after April 15, 2012. The notes include
covenants restricting the incurrence of indebtedness and the making of certain restricted payments,
including dividends. On April 1, 2011, we notified the holders of the notes that we would be
redeeming the notes at a price of 101.146% of their principal amount on May 2, 2011, in accordance
with the redemption provisions of the indenture agreement. We funded the redemption of the notes
with a new 200.0 million senior unsecured term loan with Rabobank. The new term loan is due May
2, 2016 and bears interest at a fixed rate of 4.5%.
We will record a loss of approximately $3.1 million associated with the premium paid to the holders
of the notes and will record a write-off of approximately $1.2 million of unamortized deferred debt
issuance costs associated with the redemption. Both of these amounts will be reflected within
Interest expense, net in our Condensed Consolidated Statements of Operations during the three
months ended June 30, 2011.
Under our European securitization facilities, we sell accounts receivable in Europe on a
revolving basis to commercial paper conduits through a qualifying special-purpose entity (QSPE)
in the United Kingdom. The European facilities expire in October 2011, but are subject to annual
renewal. As of March 31, 2011, the outstanding funded balance of our European securitization
facilities was approximately 66.8 million (or approximately $94.9 million as of March 31, 2011).
We recognized approximately $94.9 million of accounts receivable sold through our European
securitization facilities as of March 31, 2011 with a corresponding liability equivalent to the
funded balance of the facilities. Our risk of loss under the securitization facilities is limited
to a portion of the unfunded balance of receivables sold, which is approximately 10% of the funded
amount. We maintain reserves for doubtful accounts associated with this risk. If the facilities
were terminated, we would not be required to repurchase previously sold receivables but would be
prevented from selling additional receivables to the commercial paper conduits.
The European securitization facilities allow us to sell accounts receivable through financing
conduits which obtain funding from commercial paper markets. Future funding under our
securitization facilities depends upon the adequacy of receivables, a sufficient demand for the
underlying commercial paper and the maintenance of certain covenants concerning the quality of the
receivables and our financial condition. In the event commercial paper demand is not adequate, our
securitization facilities provide for liquidity backing from various financial institutions,
including Rabobank. These liquidity commitments would provide us with interim funding to allow us
to find alternative sources of working capital financing, if necessary.
Our accounts receivable sales agreements permit the sale, on an ongoing basis, of
substantially all of our wholesale interest-bearing and non-interest bearing receivables in North
America to AGCO Finance LLC and AGCO Finance Canada, Ltd., our U.S. and Canadian retail finance
joint ventures. We have a 49% ownership in these joint ventures. The accounts receivable sales
agreements provide for funding up to $600.0 million of U.S. accounts receivable and up to C$250.0
million (or approximately $257.8 million as of March 31, 2011) of Canadian accounts receivable.
The sale of the receivables is without recourse to us. We do not service the receivables after the
sale occurs and we do not maintain any direct retained interest in the receivables. These
agreements are accounted for as off-balance sheet transactions and have the effect of reducing
accounts receivable and short-term liabilities by the same amount. As of March 31, 2011, net cash
received from receivables sold under the U.S. and Canadian accounts receivable sales agreements
with AGCO Finance LLC and AGCO Finance Canada, Ltd. was approximately $441.1 million.
31
Managements Discussion and Analysis of Financial Condition and Results of Operations
(continued)
Our AGCO Finance retail joint ventures in Europe, Brazil and Australia also provide wholesale
financing to our dealers. The receivables associated with these arrangements are also without
recourse to us. As of March 31, 2011 and December 31, 2010, these retail finance joint ventures
had approximately $209.2 million and $221.8 million, respectively, of outstanding accounts
receivable associated with these arrangements. These arrangements are accounted for as off-balance
sheet transactions. In addition, we sell certain trade receivables under factoring arrangements to
other financial institutions around the world. These arrangements are also accounted for as
off-balance sheet transactions.
Cash Flows
Cash flows used in operating activities were $167.4 million for the first quarter of 2011
compared to $202.3 million for the first quarter of 2010. The use of cash in both periods was
primarily due to seasonal increases of working capital.
Our working capital requirements are seasonal, with investments in working capital typically
building in the first half of the year and then reducing in the second half of the year. We had
$1,109.5 million in working capital at March 31, 2011, as compared with $1,208.1 million at
December 31, 2010 and $1,075.3 million at March 31, 2010. The decrease in working capital as of March 31, 2011 compared to December 31, 2010
was primarily attributable to the reclassification of our
11/4%
convertible senior subordinated notes to a current liability during the first quarter of 2011, as was previously discussed. Accounts receivable and inventories,
combined, at March 31, 2011 were $462.0 million higher than at December 31, 2010 and $423.0 million
higher than at March 31, 2010. The increase in accounts receivable and inventories during the
first quarter of 2011 was as a result of our recent acquisitions, the impact of currency
translation and net sales growth.
Capital expenditures for the first quarter of 2011 were $36.8 million compared to $24.1
million for the first quarter of 2010. We anticipate that capital expenditures for the full year
of 2011 will range from approximately $250.0 million to $300.0 million and will primarily be used
to support our manufacturing operations, focused on improving productivity, as well as to support
the development and enhancement of new and existing products.
Our debt to capitalization ratio, which is total indebtedness and temporary equity divided by
the sum of total indebtedness, temporary equity and stockholders equity, was 19.5% at March 31,
2011 compared to 21.3% at December 31, 2010.
COMMITMENTS AND OFF-BALANCE SHEET ARRANGEMENTS
Guarantees
We maintain a remarketing agreement with AGCO Finance LLC, our retail finance joint venture in
the United States, whereby we are obligated to repurchase repossessed inventory at market values,
limited to $6.0 million in the aggregate per calendar year. We believe that any losses, which
might be incurred on the resale of this equipment will not materially impact our consolidated
financial position or results of operations, due to the fair value of the underlying equipment.
At March 31, 2011, we guaranteed indebtedness owed to third parties of approximately
$106.9 million, primarily related to dealer and end-user financing of equipment. Such guarantees
generally obligate us to repay outstanding finance obligations owed to financial institutions if
dealers or end users default on such loans through 2016. We believe the credit risk associated
with these guarantees is not material to our financial position. Losses under such guarantees
historically have been insignificant. In addition, we would be able to recover any amounts paid
under such guarantees from the sale of the underlying financed farm equipment, as the fair value of
such equipment would be sufficient to offset a substantial portion of the amounts paid.
32
Managements Discussion and Analysis of Financial Condition and Results of Operations
(continued)
Other
As of March 31, 2011, we had outstanding designated and non-designated foreign exchange
contracts with a notional amount of approximately $1,272.4 million. The outstanding contracts as
of March 31, 2011 range in maturity through December 2011. Gains and losses on such contracts are
historically substantially offset by losses and gains on the exposures being hedged. See Item 3.
Quantitative and Qualitative Disclosures About Market Risk Foreign Currency Risk Management for
further information.
As discussed in Liquidity and Capital Resources, we sell substantially all of our wholesale
accounts receivable in North America to our U.S. and Canadian retail finance joint ventures, and we
sell certain accounts receivable under factoring arrangements to financial institutions around the
world. We have reviewed the sale of such receivables and have determined that these facilities
should be accounted for as off-balance sheet transactions.
Contingencies
As a result of Brazilian tax legislation impacting value added taxes (VAT), we have recorded
a reserve of approximately $25.7 million and $22.3 million against our outstanding balance of
Brazilian VAT taxes receivable as of March 31, 2011 and December 31, 2010, respectively, due to the
uncertainty as to our ability to collect the amounts outstanding.
In June 2008, the Republic of Iraq filed a civil action against our French subsidiary and two
other foreign subsidiaries that participated in the United Nations Oil for Food Program. The
French government also is investigating our French subsidiary in connection with its participation
in the Program.
In August 2008, as part of a routine audit, the Brazilian taxing authorities disallowed
deductions relating to the amortization of certain goodwill recognized in connection with a
reorganization of our Brazilian operations and the related transfer of certain assets to our
Brazilian subsidiaries.
See Part II, Item 1, Legal Proceedings for further discussion of these matters.
OUTLOOK
Global industry sales are expected to grow in 2011 compared to 2010. Robust growth is
expected in Western Europe and the Commonwealth of Independent States due to market recovery.
Modest growth is projected for North America and healthy market conditions are expected to continue
in South America.
For the full year of 2011, we expect an increase in net sales and earnings compared to the
full year of 2010. Gross margin improvement due to increased production levels and cost control
initiatives is expected to be partially offset by increased engineering and market expansion
expenditures.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The discussion and analysis of our financial condition and results of operations are based
upon our Condensed Consolidated Financial Statements, which have been prepared in accordance with
U.S. generally accepted accounting principles. The preparation of these financial statements
requires management to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses and related disclosures of contingent assets and liabilities.
On an ongoing basis,
33
Managements Discussion and Analysis of Financial Condition and Results of Operations
(continued)
management evaluates estimates, including those related to reserves, intangible assets, income
taxes, pension and other postretirement benefit obligations, derivative financial instruments, and
contingencies. Management bases these estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances. Actual results may differ
from these estimates under different assumptions or conditions. A description of critical
accounting policies and related judgments and estimates that affect the preparation of our
Condensed Consolidated Financial Statements is set forth in our Annual Report on Form 10-K for the
year ended December 31, 2010.
FORWARD-LOOKING STATEMENTS
Certain statements in Managements Discussion and Analysis of Financial Condition and
Results of Operations and elsewhere in this Quarterly Report on Form 10-Q are forward-looking,
including certain statements set forth under the headings Liquidity and Capital Resources,
Commitments and Off-Balance Sheet Arrangements and Outlook. Forward-looking statements reflect
assumptions, expectations, projections, intentions or beliefs about future events. These
statements, which may relate to such matters as industry demand, market conditions, general
economic outlook, availability of financing, margins, engineering expenses, earnings, net sales,
guarantees of indebtedness, compliance with loan covenants, conversion of our notes, equipment
resales, future capital expenditures and indebtedness requirements and working capital needs are
forward-looking statements within the meaning of the federal securities laws. These statements
do not relate strictly to historical or current facts, and you can identify certain of these
statements, but not necessarily all, by the use of the words anticipate, assumed, indicate,
estimate, believe, predict, forecast, rely, expect, continue, grow and other words
of similar meaning. Although we believe that the expectations and assumptions reflected in these
statements are reasonable in view of the information currently available to us, there can be no
assurance that these expectations will prove to be correct.
These forward-looking statements involve a number of risks and uncertainties, and actual
results may differ materially from the results discussed in or implied by the forward-looking
statements. Adverse changes in any of the following factors could cause actual results to differ
materially from the forward-looking statements:
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general economic and capital market conditions; |
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availability of credit to our retail customers; |
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the worldwide demand for agricultural products; |
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grain stock levels and the levels of new and used field inventories; |
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cost of steel and other raw materials; |
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energy costs; |
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performance of the accounts receivable originated or owned by AGCO or AGCO Finance; |
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government policies and subsidies; |
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weather conditions; |
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interest and foreign currency exchange rates; |
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pricing and product actions taken by competitors; |
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commodity prices, acreage planted and crop yields; |
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farm income, land values, debt levels and access to credit; |
34
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pervasive livestock diseases; |
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production disruptions; |
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supply and capacity constraints; |
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our cost reduction and control initiatives; |
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our research and development efforts; |
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dealer and distributor actions; |
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technological difficulties; and |
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political and economic uncertainty in various areas of the world. |
Any forward-looking statement should be considered in light of such important factors. For
additional factors and additional information regarding these factors, please see Risk Factors in
our Form 10-K for the year ended December 31, 2010.
New factors that could cause actual results to differ materially from those described above
emerge from time to time, and it is not possible for us to predict all of such factors or the
extent to which any such factor or combination of factors may cause actual results to differ from
those contained in any forward-looking statement. Any forward-looking statement speaks only as of
the date on which such statement is made, and we disclaim any obligation to update the information
contained in such statement to reflect subsequent developments or information except as required by
law.
35
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
FOREIGN CURRENCY RISK MANAGEMENT
We have significant manufacturing operations in the United States, France, Germany, Finland
and Brazil, and we purchase a portion of our tractors, combines and components from third-party
foreign suppliers, primarily in various European countries and in Japan. We also sell products in
over 140 countries throughout the world. The majority of our net sales outside the United States
are denominated in the currency of the customer location, with the exception of sales in the Middle
East, Africa, Asia and parts of South America where net sales are primarily denominated in British
pounds, Euros or United States dollars (See Segment Reporting in Note 14 to our Consolidated
Financial Statements for the year ended December 31, 2010 for sales by customer location). Our
most significant transactional foreign currency exposures are the Euro, the Brazilian real and the
Canadian dollar in relation to the United States dollar, and the Euro in relation to the British
pound. Fluctuations in the value of foreign currencies create exposures, which can adversely
affect our results of operations.
We attempt to manage our transactional foreign currency exposure by hedging foreign currency
cash flow forecasts and commitments arising from the anticipated settlement of receivables and
payables and from future purchases and sales. Where naturally offsetting currency positions do not
occur, we hedge certain, but not all, of our exposures through the use of foreign currency
contracts. Our translation exposure resulting from translating the financial statements of foreign
subsidiaries into United States dollars is not hedged. Our most significant translation exposures
are the Euro, the British pound and the Brazilian real in relation to the United States dollar.
When practical, this translation impact is reduced by financing local operations with local
borrowings. Our hedging policy prohibits use of foreign currency contracts for speculative trading
purposes.
All derivatives are recognized on our Condensed Consolidated Balance Sheets at fair value. On the
date a derivative contract is entered into, we designate the derivative as either (1) a fair value
hedge of a recognized liability, (2) a cash flow hedge of a forecasted transaction, (3) a hedge of
a net investment in a foreign operation, or (4) a non-designated derivative instrument. We
currently engage in derivatives that are cash flow hedges of forecasted transactions as well as
non-designated derivative instruments. Changes in the fair value of non-designated derivative
contracts are reported in current earnings. During 2011 and 2010, we designated certain foreign
currency contracts as cash flow hedges of forecasted sales and purchases. The effective portion of
the fair value gains or losses on these cash flow hedges are recorded in other comprehensive income
(loss) and subsequently reclassified into cost of goods sold during the period the sales and
purchases are recognized. These amounts offset the effect of the changes in foreign currency rates
on the related sale and purchase transactions. The amount of the gain (loss) recorded in other
comprehensive income (loss) that was reclassified to cost of goods sold during the three months
ended March 31, 2011 and 2010 was approximately $1.2 million and $(0.6) million, respectively, on
an after-tax basis. The outstanding contracts as of March 31, 2011 range in maturity through
December 2011.
Assuming a 10% change relative to the currency of the hedge contract, this could negatively
impact the fair value of the foreign currency instruments by approximately $24.6 million as of
March 31, 2011. Using the same sensitivity analysis as of March 31, 2010, the fair value of such
instruments would have decreased by approximately $37.0 million. Due to the fact that these
instruments are primarily entered into for hedging purposes, the gains or losses on the contracts
would be largely offset by losses and gains on the underlying firm commitment or forecasted
transaction.
36
Interest Rates
We manage interest rate risk through the use of fixed rate debt and may in the future utilize
interest rate swap contracts. We have fixed rate debt from our convertible senior subordinated
notes and the term loan that we recently entered into with Rabobank, replacing our former senior
subordinated notes. Our floating rate exposure is related to our credit facility and our
securitization facilities, which are tied to changes in United States and European LIBOR rates.
Assuming a 10% increase in interest rates, interest expense, net and the cost of our securitization
facilities for the three months ended March 31, 2011 would have increased by approximately less
than $0.1 million.
We had no interest rate swap contracts outstanding during the three months ended March 31,
2011.
37
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of
our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange
Act of 1934, as amended) as of March 31, 2011, have concluded that, as of such date, our disclosure
controls and procedures were effective at the reasonable assurance level. Disclosure controls and
procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed by an issuer in the reports that it files or submits under the Exchange
Act is accumulated and communicated to the issuers management, including its principal executive
and principal financial officers, or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure.
The Companys management, including the Chief Executive Officer and the Chief Financial
Officer, does not expect that the Companys disclosure controls or the Companys internal controls
will prevent all errors and all fraud. A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the objectives of the control
system are met. Further, the design of a control system must reflect the fact that there are
resource constraints, and the benefits of controls must be considered relative to their costs.
Because of the inherent limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any, have been detected.
Because of the inherent limitations in a cost effective control system, misstatements due to error
or fraud may occur and not be detected. We will conduct periodic evaluations of our internal
controls to enhance, where necessary, our procedures and controls.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting identified in
connection with the evaluation described above that occurred during the three months ended March
31, 2011 that have materially affected or are reasonably likely to materially affect our internal
control over financial reporting.
38
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are a party to various other legal claims and actions incidental to our business. These
items are more fully discussed in Note 16 to our Condensed Consolidated Financial Statements.
ITEM 5 (a). Other Information
On April 1, 2011, we notified the holders of our 200.0 million of 6⅞% senior
subordinated notes due April 15, 2014 that we would be redeeming the notes at a price of 101.146%
of their principal amount on May 2, 2011, in accordance with the redemption provisions of the
indenture agreement. We funded the redemption of the notes with a new 200.0 million senior
unsecured term loan with Rabobank. The new term loan is due May 2, 2016 and bears interest at a
fixed rate of 4.5%.
A copy of the credit agreement with Rabobank is attached as Exhibit 10.1 to this Report.
39
ITEM 6. EXHIBITS
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The filings referenced for |
Exhibit |
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incorporation by reference are |
Number |
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Description of Exhibit |
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AGCO Corporation |
10.1
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Credit Agreement with Rabobank
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Filed herewith |
10.2
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2006 Long-term Incentive Plan (as amended and restated)
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Incorporated by reference to
Appendix A to the
Proxy Statement
dated March 21, 2011 |
31.1
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Certification of Martin Richenhagen
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Filed herewith |
31.2
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Certification of Andrew H. Beck
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Filed herewith |
32.0
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Certification of Martin Richenhagen and Andrew H. Beck
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Furnished herewith |
101.INS
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XBRL Instance Document
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* |
101.SCH
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XBRL Taxonomy Extension Schema
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* |
101.CAL
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XBRL Taxonomy Extension Calculation Linkbase
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* |
101.LAB
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XBRL Taxonomy Extension Label Linkbase
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* |
101.PRE
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XBRL Taxonomy Extension Presentation Linkbase
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* |
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* |
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Users of this data are advised pursuant to Rule 406T of Regulation S-T that XBRL
(Extensible Business Reporting Language) information is deemed furnished and not filed or part
of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act
of 1933, is deemed furnished and not filed for purposes of Section 18 of the Securities
Exchange Act of 1934, and otherwise is not subject to liability under these sections. |
40
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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AGCO CORPORATION
Registrant
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Date: May 6, 2011 |
/s/ Andrew H. Beck
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Andrew H. Beck |
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Senior Vice President and Chief Financial Officer
(Principal Financial Officer) |
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41
exv10w1
Exhibit 10.1
CREDIT AGREEMENT
dated as of May 2, 2011
by and among
AGCO INTERNATIONAL GMBH,
as Borrower,
AGCO CORPORATION,
THE LENDERS NAMED HEREIN,
as Lenders,
and
COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
RABOBANK NEDERLAND, NEW YORK BRANCH,
as Administrative Agent
COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
RABOBANK NEDERLAND, NEW YORK BRANCH,
as Sole Lead Arranger and Book Runner
TABLE OF CONTENTS
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Page |
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS |
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1 |
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Section 1.1. Certain Defined Terms |
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1 |
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Section 1.2. Computation of Time Periods |
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17 |
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Section 1.3. Accounting Terms |
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17 |
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Section 1.4. Currency Equivalents |
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18 |
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Section 1.5. Incorporation by Reference of Provisions in the AGCO Revolving
Credit Agreement |
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18 |
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Section 1.6. Construction |
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19 |
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ARTICLE 2. THE TERM LOAN FACILITY |
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Section 2.1. The Term Loan |
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Section 2.2. Making the Term Loan |
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Section 2.3. Reduction of the Commitments |
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Section 2.4. Repayments and Prepayments |
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Section 2.5. Interest |
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Section 2.6. Minimum Interest Rates and Payments |
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Section 2.7. [Intentionally Omitted] |
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Section 2.8. Payments and Computations |
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Section 2.9. Sharing of Payments, Etc |
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Section 2.10. Intentionally Omitted |
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Section 2.11. Defaulting Lenders |
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ARTICLE 3. CONDITIONS PRECEDENT |
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Section 3.1. Conditions Precedent to Agreement Date |
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Section 3.2. Determinations Under Section 3.1 |
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Section 3.3. Qualifications as a Qualifying Bank |
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27 |
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ARTICLE 4. REPRESENTATIONS AND WARRANTIES |
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Section 4.1. Representations and Warranties of AGCO and the Borrower |
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Section 4.2. AGCO Revolving Credit Agreement Representations |
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Section 4.3. Swiss Non-Bank Rules |
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Section 4.4. Survival of Representations and Warranties, etc |
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ARTICLE 5. AFFIRMATIVE COVENANTS |
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Section 5.1. Incorporation of AGCO Affirmative Covenants |
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Section 5.2. Swiss Non-Bank Rule |
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32 |
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ARTICLE 6. INFORMATION COVENANTS |
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Section 6.1. Incorporation of AGCO Information Covenants |
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Section 6.2. Additional Reporting Requirement for the Borrower |
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ARTICLE 7. NEGATIVE COVENANTS |
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Section 7.1. Incorporation of AGCO Negative Covenants |
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Section 7.2. Indebtedness |
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Section 7.3. Fundamental Changes to the Borrower |
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ARTICLE 8. EVENTS OF DEFAULT |
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Section 8.1. Events of Default |
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Section 8.2. Remedies |
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Section 8.3. Intentionally Omitted |
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Section 8.4. Application of Payments |
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ARTICLE 9. THE ADMINISTRATIVE AGENT |
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Section 9.1. Authorization and Action |
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- i -
TABLE
OF CONTENTS
(continued)
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Section 9.2. Administrative Agents Reliance, Etc. |
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Section 9.3. Administrative Agent, in its Individual Capacity and Affiliates |
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Section 9.4. Lender Credit Decision |
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Section 9.5. Notice of Default or Event of Default |
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Section 9.6. Indemnification |
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Section 9.7. Successor Administrative Agent |
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Section 9.8. Administrative Agent May File Proofs of Claim |
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Section 9.9. Sole Lead Arranger and Book Runner |
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ARTICLE 10. MISCELLANEOUS |
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Section 10.1. Amendments, Etc. |
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Section 10.2. Notices, Etc. |
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Section 10.3. No Waiver; Remedies |
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41 |
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Section 10.4. Costs and Expenses |
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41 |
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Section 10.5. Right of Set-off |
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42 |
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Section 10.6. Binding Effect |
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43 |
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Section 10.7. Assignments and Participations. |
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Section 10.8. Marshalling; Payments Set Aside |
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Section 10.9. Intentionally Omitted |
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47 |
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Section 10.10. Intentionally Omitted |
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47 |
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Section 10.11. Patriot Act |
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47 |
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Section 10.12. Limitations on Obligations of the Borrower |
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47 |
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ARTICLE
11. INCREASED COSTS, TAXES, ETC. |
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48 |
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Section 11.1. Increased Costs, Etc. |
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48 |
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Section 11.2. Breakage Costs |
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49 |
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Section 11.3. Judgment Currency |
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50 |
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Section 11.4. Taxes |
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Section 11.5. Replacement of a Lender |
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55 |
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ARTICLE 12. JURISDICTION |
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56 |
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Section 12.1. Consent to Jurisdiction |
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56 |
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Section 12.2. Governing Law |
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56 |
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Section 12.3. Execution in Counterparts |
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57 |
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Section 12.4. Intentionally Omitted |
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57 |
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Section 12.5. Intentionally Omitted |
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57 |
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Section 12.6. Waiver of Jury Trial |
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57 |
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ARTICLE 13. CONFIDENTIALITY |
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57 |
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EXHIBITS AND SCHEDULES:
Exhibit A Form of Assignment and Acceptance
- ii -
CREDIT AGREEMENT
This CREDIT AGREEMENT (this Agreement) dated as of May 2, 2011 by and among AGCO
INTERNATIONAL GMBH (the Borrower); AGCO CORPORATION, a Delaware corporation
(AGCO); the lenders (the Lenders) signatory hereto; COÖPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A., RABOBANK NEDERLAND, NEW YORK BRANCH (Rabobank), as sole
lead arranger and book runner; and COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., RABOBANK
NEDERLAND, NEW YORK BRANCH, as administrative agent for the Lenders (together with any successor,
in such capacity, the Administrative Agent).
WITNESSETH:
WHEREAS, the Borrower has requested that the Lenders make a certain term loan available to the
Borrower, and the Lenders are willing to do so, upon the terms and subject to the conditions set
forth herein; and
WHEREAS, AGCO indirectly owns all of the Stock of the Borrower, and has agreed to guarantee
all of the Obligations of Borrower and be a party to this Agreement; and
WHEREAS, AGCO and the Borrower acknowledge that the credit facility provided hereby is and
will be of direct interest, benefit and advantage to each of them; and
WHEREAS, at the request of AGCO and the Borrower, the Administrative Agent and the Lenders
have agreed to extend the credit provided for hereunder;
NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration,
the parties hereto hereby agree as follows:
ARTICLE 1.
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1.
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):
Administrative Agent has the meaning specified in the introductory paragraph of this
Agreement.
Administrative Agents Account means for Euros, the account of the Administrative
Agent maintained with Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., Rabobank Nederland,
Utrecht Branch, The Netherlands (SWIFT # RABONL2U), For the Account of: Rabobank, NY (SWIFT #
RABOUS33), Account No. 390817333, IBAN: NL21RABO0390817333, and Reference: AGCO International GMBH.
Affected Lender has the meaning specified in Section 11.5.
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, officer or
partner of such Person. For purposes of this definition, with respect to any Loan Party, the term
control (including the terms controlling, controlled by and under common control with) of a
Person includes (a) the direct or indirect beneficial ownership by such other Person of ten percent
(10%) or more of the outstanding voting securities or voting equity of such Person or (b) by such
other Person of the power, directly or indirectly, to direct or cause the direction of the
management and policies of such Person, whether through the ownership of 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 ten percent (10%) or more of the voting Stock of such
Person.
AGCO has the meaning specified in the introductory paragraph of this Agreement.
AGCO Affirmative Covenants means each of the covenants (other than any covenant
pertaining to the use of proceeds of the borrowings thereunder) provided in the AGCO Revolving
Credit Agreement which are generally denoted as affirmative covenants (i.e., covenants which
require affirmative action by AGCO, the Borrower or any of their Subsidiaries in the conduct of
their respective business), which affirmative covenants are, on the date hereof, set forth in
Article 5 of the AGCO Revolving Credit Agreement as in effect on the date hereof.
AGCO Covenants means, collectively, the AGCO Affirmative Covenants, the AGCO
Information Covenants and the AGCO Negative Covenants.
AGCO Information Covenants means each of the covenants providing for the reporting
of information, or delivery of notices, pertaining to the business, condition (financial or
otherwise), liabilities (actual or contingent), operations, properties, default, compliance or
prospects of AGCO or any of its Subsidiaries provided in the AGCO Revolving Credit Agreement, which
covenants are, on the date hereof, set forth in Article 6 of the AGCO Revolving Credit Agreement as
in effect on the date hereof.
AGCO Negative Covenants means each of the negative covenants (other than any
covenant comparable to Section 7.2 hereof) and financial covenants set forth in the AGCO
Revolving Credit Agreement, which are generally denoted as negative covenants (i.e., covenants
which restrict or prohibit actions by AGCO, the Borrower or any of their Subsidiaries in the
conduct of their respective business) or financial covenants or financial ratios (covenants
which require the achievement or maintenance of certain financial ratios or results or prohibit
certain financial targets, ratios or expenditures from being exceeded), which covenants are, on the
date hereof, set forth in Article 7 of the AGCO Revolving Credit Agreement, as in effect on the
date hereof.
AGCO Revolving Credit Agreement means that certain Credit Agreement dated as of May
16, 2008 among AGCO and certain of its Subsidiaries party thereto as borrowers, the banks and
financial institutions party thereto as lenders, Rabobank as administrative agent and the other
agents party thereto, as amended by that certain First Amendment to Credit Agreement dated as of
December 18, 2009 and as the same may be further amended, modified, supplemented,
2
restated, refinanced or otherwise replaced from time to time pursuant to an Approved
Amendment.
AGCO Representations and Warranties means each of the representations and warranties
of AGCO, the Borrower or any of their Subsidiaries set forth in the AGCO Revolving Credit Agreement
(other than those representations comparable to those contained in Section 4.1(a),
(d) (k), (p), and (v) (x) hereof), which
representations and warranties are on the date hereof set forth in Section 4.1(b), (l), (m), (n),
(o), (q), (s), (t) and (u) of the AGCO Revolving Credit Agreement as in effect on the date hereof.
Agreement means this Agreement.
Agreement Date means the date as of which this Agreement is dated.
Anti-Terrorism Laws means, collectively, any law, regulation or order relating to
terrorism, national security, U.S. embargoes or other sanctions, or money laundering, including,
without limitation, the International Emergency Economic Powers Act (50 U.S.C. § 1701 et seq.), the
Trading with the Enemy Act (50 U.S.C. § 5 et seq.), the International Security Development and
Cooperation Act (22 U.S.C. § 2349aa-9 et seq.), Executive Order No. 13224, and the USA Patriot Act,
and any rules and regulations promulgated pursuant to or under the authority of any of the
foregoing (including, without limitation, the rules and regulations promulgated or administered by
OFAC).
Applicable Accounting Standards means, as of the date of this Agreement, GAAP;
provided, however, that AGCO may, upon not less than sixty (60) days prior written
notice to the Administrative Agent, change to IFRS; provided, however, (a) such
notice of its change to IFRS shall be accompanied by a description in reasonable detail of any
material variation between the application of accounting principles under GAAP and the application
of accounting principles under IFRS in calculating the financial covenants under Article 7
hereof and the reasonable estimates of the difference between such calculations arising as a
consequence thereof, and (b) if such change is deemed by the Administrative Agent to be material or
detrimental to the Lenders, such change shall not be effective for purposes of calculating the
financial covenants hereunder until AGCO and the Required Lenders have agreed upon amendments to
the financial covenants contained herein to reflect any change in such basis.
Applicable Law means, in respect of any Person, all provisions of constitutions,
statutes, rules, regulations, permits and orders of governmental bodies or regulatory agencies
applicable to such Person, and all orders and decrees of all courts and arbitrators in proceedings
or actions to which the Person in question is a party or by which it is bound.
Approved Fund means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial loans and similar
extensions of credit in the ordinary course of its business that is administered or managed by (a)
a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.
Approved Amendment means any amendment, supplement, restatement, replacement or
other modification of the AGCO Revolving Credit Agreement, including any waiver of any
3
provision thereof or consent to any departure therefrom by a party thereto, so long as (a) on
the date of such amendment, modification, supplement, restatement or replacement and immediately
after giving effect thereto, Rabobank shall be the Administrative Agent (or such similar term)
thereunder and Lenders constituting Required Lenders shall be Lenders (or such other similar
term) thereunder and (b) Rabobank and such Required Lenders shall consent to such amendment,
modification, supplement, restatement, replacement, waiver or modification; provided,
however, the parties hereto agree that if Rabobank is not the Administrative Agent (or
such similar term) under the AGCO Revolving Credit Agreement after giving effect to any amendment,
modification, waiver, supplement, restatement or replacement that is consented to by the Required
Lenders hereunder in their capacity as a Lender (or such similar term) thereunder (a Lender
Consented Modification), the Borrower and the Administrative Agent shall enter into such
amendments to this Agreement or letter agreements (such amendments or letter agreements being an
Incorporation Amendment) as may be deemed by the Administrative Agent in good faith to be
reasonably necessary to incorporate any provisions of the AGCO Revolving Credit Agreement so
amended, modified, supplemented, restated or replaced equivalent to the AGCO Covenants, and any
other definitions or provisions of the AGCO Revolving Credit Agreement incorporated herein by
reference (to the extent any such comparable provision exists in such Lender Consented
Modification) in a manner substantially similar as such provisions are incorporated herein on the
Agreement Date (or to confirm and clarify such incorporated provisions), and upon the effectiveness
of such Incorporation Amendment, such Lender Consented Modification shall be deemed an Approved
Amendment hereunder.
Assignment and Acceptance means an assignment and acceptance entered into by a
Lender and an Eligible Assignee, accepted by the Administrative Agent, and in accordance with
Section 10.7 and in substantially the form of Exhibit A hereto.
Authorized Financial Officer of a Person means the Chief Financial Officer, the
Treasurer, the Assistant Treasurer, the Controller or such other senior officer of such Person
holding an equivalent position.
Bankruptcy Code means the United States Bankruptcy Code (11 U.S.C. Section 101 et
seq.), and any similar laws relating to the insolvency of debtors in any other country, including
the Swiss Debt Enforcement and Bankruptcy Act of 11 April 1889, as the same may now or hereafter be
amended, and including any successor statute.
Base Rate means, at any date of determination, a fluctuating interest rate per annum
in effect from time to time, which rate per annum shall at all times be equal to the offered
quotation to first class banks in the Euro Zone interbank market for Euro overnight deposits of
amounts in immediately available funds comparable to the amount of the Term Loan or other
applicable Obligations as of 11:00 A.M. (Brussels time) on such date, as determined by the
Administrative Agent. Each change in the Base Rate shall take effect automatically as of the
opening of business on the effective date of the change in the applicable rate described above.
Blocked Person has the meaning specified in Section 4.1(w).
Board of Directors means (a) with respect to a corporation, the board of directors
of such corporation or a duly authorized committee of the board of directors, (b) with respect to a
4
partnership, the board of directors or similar body of the general partner (or, if more than
one general partner, the managing general partner) of such partnership, and (c) with respect to a
limited liability company, any managing or other authorized committee of such limited liability
company or any board of directors or similar body of any managing member.
Borrower has the meaning specified in the introductory paragraph of this Agreement.
Borrowers Account means the account of the Borrower as specified to the
Administrative Agent in writing.
Business Day means a day of the year on which banks are not required or authorized
to close in New York, New York, Atlanta, Georgia, or the city of the jurisdiction of such currency
where the Administrative Agents Account is located.
Capitalized Leases means all leases that have been or should be, in accordance with
Applicable Accounting Standards, recorded as capitalized leases on a balance sheet of the lessee,
excluding operating leases.
Cash Equivalents means, for any Person, any of the following, to the extent owned by
such Person free and clear of all Liens, other than Permitted Liens and having a maturity of not
greater than one (1) year from the date of acquisition: (a) readily marketable direct obligations
of the government of the United States or any agency or instrumentality thereof or obligations
unconditionally guaranteed by the full faith and credit of the government of the United States, (b)
readily marketable direct obligations denominated in U.S. Dollars of any other sovereign government
or any agency or instrumentality thereof which are unconditionally guaranteed by the full faith and
credit of such government and which have a rating equivalent to at least A-1 (or the then
equivalent grade) by S&P (or, if at any time, S&P shall not be rating such obligations, then from
another nationally recognized rating service), (c) insured certificates of deposit of, time
deposits, or bankers acceptances with any commercial bank that issues (or the parent of which
issues) commercial paper rated as described in clause (d) below, is organized under the laws of the
United States or any State thereof or is a foreign bank or branch or agency thereof acceptable to
the Administrative Agent and, in any case, has combined capital and surplus of at least U.S.
$1,000,000,000 (or the foreign currency equivalent thereof) or (d) commercial paper issued by any
corporation organized under the laws of any State of the United States or any commercial bank
organized under the laws of the United States or any State thereof or any foreign bank, each of
which shall have a consolidated net worth of at least U.S. $250,000,000, rated at least A-1 (or
the then equivalent grade) by S&P (or, if at any time, S&P shall not be rating such obligations,
then from another nationally recognized rating service).
CERCLA means the Comprehensive Environmental Response, Compensation and Liability
Act of 1980.
Change of Control means at any time, the occurrence of any of the following: (a) any
Person or two or more Persons (including any group as that term is used in Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934) 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
5
securities convertible into such voting Stock) representing thirty-five percent (35%) or more
of the combined voting power of all voting Stock of AGCO; or (b) during any period of up to
twenty-four (24) consecutive months, commencing after the Agreement Date, individuals who at the
beginning of such twenty-four (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 AGCOs
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
(c) any Change of Control, as defined in any of the Subordinated Debt Documents or the AGCO
Revolving Credit Agreement shall occur; or (d) AGCO shall fail to own, directly or indirectly, one
hundred percent (100%) of the Stock of the Borrower; or (e) to the extent such failure would result
in a Change of Control under, and as such term is defined in, the AGCO Revolving Credit
Agreement, AGCO shall fail to own, directly or indirectly, one hundred percent (100%) of the Stock
of each Subsidiary of AGCO that is a Material Subsidiary.
Commitment means, with respect to any Lender at any time, the amount set forth on it
signature page hereto delivered by such Lender under the caption 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 10.7(e) as such Lenders
Commitment, as such amount may be reduced at or prior to such time pursuant to Section
2.3. The aggregate Commitments of all Lenders as of the Agreement date is 200,000,000.
Common Stock means the common stock, par value U.S. $.01 per share, of AGCO.
Computation Date means the date on which the Equivalent Amount is determined.
Consolidated refers to the consolidation of accounts in accordance with Applicable
Accounting Standards, except that, in the case of AGCO, notwithstanding Applicable Accounting
Standards, Consolidated shall refer to the consolidation of accounts of AGCO and its
Subsidiaries, with any Finance Company being accounted for on an equity basis of accounting.
Default means any of the events specified in Section 8.1 regardless of
whether there shall have occurred any passage of time or giving of notice (or both) that would be
necessary in order to constitute such event an Event of Default.
Defaulting Lender means, at any time, any Lender that, at such time, owes any amount
required to be paid by such Lender to the Administrative Agent or any other Lender hereunder or
under any other Loan Document which has not been so paid as of such time.
Default Rate means a simple per annum interest rate equal to the interest rate
otherwise in effect pursuant to Section 2.5(a) hereof plus two percent (2%).
Eligible Assignee means (a) a commercial bank, savings bank or savings and loan
association having a combined capital and surplus of at least U.S. $250,000,000, (b) a finance
company, insurance company, or other financial institution or fund (whether a corporation,
partnership, trust or other entity) that is engaged in making, purchasing, or otherwise investing
in
6
commercial loans in the ordinary course of its business and having (together with its
Affiliates) total assets in excess of U.S. $250,000,000, (c) a Lender, an Affiliate (other than
individuals) of a Lender or an Approved Fund, and (d) any other Person (other than a natural
person) that shall be approved by (x) the Administrative Agent, and (y) if no Default then exists,
AGCO; provided that notwithstanding the foregoing, Eligible Assignee shall not include
AGCO or any Affiliate or Subsidiary of AGCO.
Environmental Action means any administrative, regulatory, or judicial action, suit,
demand, demand letter, claim, notice of non-compliance or violation, investigation, proceeding,
consent order or consent agreement relating in any way to any Environmental Law or any
Environmental Permit, including, without limitation (a) any claim by any governmental or regulatory
authority for enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any Environmental Law, and (b) any claim by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of injury to the environment or, to
public health and welfare in respect of Hazardous Materials.
Environmental Law means, with respect to any property or Person, any federal, state,
provincial, 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, to the extent
applicable to such property or Person, 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.
Equivalent Amount means (a) whenever this Agreement requires or permits a
determination on any date of the equivalent in Euros of an amount expressed in another currency,
the equivalent amount in Euros of such amount expressed in such other currency as determined by the
Administrative Agent on such date on the basis of the Spot Rate for the purchase of Euros with such
other currency on the relevant Computation Date provided for hereunder; or (b) whenever this
Agreement requires or permits a determination on any date of the equivalent amount in a currency
other than Euros of such amount expressed in Euros, the equivalent amount in such other currency of
such amount expressed in Euros as determined by the Administrative Agent on such date on the basis
of the Spot Rate for the purchase of such other currency with Euros on the relevant Computation
Date provided for hereunder.
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.
7
ERISA Affiliate of any Person means any other Person that for purposes of Title IV
of ERISA is a member of such Persons 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) either (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
thirty (30)-day notice requirement with respect to such event has been waived by the PBGC, or (ii)
the requirements of subsection (b) of Section 4043 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
thirty (30) days;
(b) the provision by the administrator of any Plan of such Person or any of its ERISA
Affiliates of a notice of intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA
(including any such notice with respect to a plan amendment referred to in Section 4041(e) of
ERISA);
(c) the cessation of operations at a facility of such Person or any of its ERISA Affiliates in
the circumstances described in Section 4062(e) of ERISA;
(d) the withdrawal by such Person or any of its ERISA Affiliates from a Multiple Employer Plan
during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA;
(e) the failure by such Person or any of its ERISA Affiliates to make a payment to a Plan
required under Section 303(k) of ERISA or Internal Revenue Code Section 430(k);
(f) a Plan subject to Title IV or ERISA is in at risk status within the meaning of Internal
Revenue Code Section 430(i), or a Multiemployer Plan is in endangered status or critical status
within the meaning of Internal Revenue Code Section 432(b); 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.
European
Subordinated Notes means those certain
67/8% Senior Subordinated Notes issued
by AGCO, due 2014, in an original principal amount of 200,000,000.
Euros and the designation shall mean the currency introduced on January 1, 1999
at the start of the third stage of European economic and monetary union pursuant to the Treaty
(expressed in euros).
Event of Default has the meaning specified in Section 8.1.
8
Executive Order No. 13224 means Executive Order No. 13224 on Terrorist Financing,
effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended,
amended or replaced.
Facility Office means the office or offices notified by a Lender to the
Administrative Agent in writing on or before the date it becomes a Lender (or, following that date,
by not less than five Business Days written notice) as the office or offices through which it will
perform its obligations under this Agreement.
FATCA means Sections 1471 through 1474 of the Internal Revenue Code and any
regulations thereunder or official governmental interpretations thereof.
Fee Letter means that certain fee letter dated as of the date hereof executed by the
Borrower and addressed to the Administrative Agent.
Finance Company means any of AGCO Finance LLC, AGCO Finance Canada, Ltd., Agricredit
Ltd., Agricredit Ltd. Ireland, Agricredit S.N.C., Agricredit GmbH, Agricredit do Brasil, Ltda. and
any other Person (a) not a Subsidiary of AGCO, (b) in whom AGCO or its Subsidiaries holds an
Investment, and (c) which is engaged primarily in the business of providing retail financing to
purchasers of agricultural equipment.
Foreign Subsidiary means a Subsidiary of AGCO not organized under the laws of the
United States or any jurisdiction thereof.
GAAP means generally accepted accounting principles in the United States of America
as in effect from time to time as set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accounts and the statements and
pronouncements of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied.
Governmental Authority means any government or political subdivision of the United
States or any other country or any agency, authority, board, bureau, central bank, commission,
department or instrumentality thereof or therein, including, without limitation, any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic, or any entity
exercising executive, legislative, judicial, regulatory or administrative functions of or
pertaining to such government or political subdivision.
Guaranty or Guaranteed, as applied to any Indebtedness, lease or other
obligations (each a primary obligation), means and includes (a) any guaranty, direct or
indirect, in any manner, of any part or all of such primary obligation, and (b) any agreement,
direct or indirect, contingent or otherwise, the practical effect of which is to assure in any way
the payment or performance (or payment of damages in the event of non-performance) of any part or
all of such primary obligation, including, without limiting the foregoing, any reimbursement
obligations as to amounts drawn down by beneficiaries of outstanding letters of credit, and any
obligation of such Person (the primary obligor), whether or not contingent, (i) to
purchase any such primary obligation or any property or asset constituting direct or indirect
security therefor, (ii) to advance or supply funds (1) for the purchase or payment of such primary
obligation or (2) to maintain working capital, equity capital or the net worth, cash flow, solvency
or other balance sheet or
9
income statement condition of any other Person, (iii) to purchase property, assets, securities
or services primarily for the purpose of assuring the owner or holder of any primary obligation of
the ability of the primary obligor with respect to such primary obligation to make payment thereof
or (iv) otherwise to assure or hold harmless the owner or holder of such primary obligation against
loss in respect thereof; provided, however, Guaranty shall not include
non-binding comfort letters limited to corporate intent or policies.
Guarantors means (a) AGCO, (b) Massey Ferguson Corp., a Delaware corporation and
Export Market Service LLC, Georgia limited liability company, and (c) each other Person that
delivers a Guaranty Agreement at any time hereafter in compliance with Article 5.
Guaranty Agreements means the guaranty agreements, guaranty and indemnity deeds, and
other similar agreements delivered to Administrative Agent from time to time by any Person
providing a Guaranty of any part of the Obligations, in form and substance reasonably acceptable to
Administrative Agent, and in each case, as amended, supplemented or modified from time to time in
accordance with its terms.
Hazardous Materials means any pollutants, contaminants, toxic or hazardous
substances, materials, wastes, constituents, compounds, chemicals, natural or manmade elements or
forces (including, without limitation, petroleum or any by-products or fractions thereof, any form
of natural gas, lead, asbestos and asbestos-containing materials building construction materials
and debris, polychlorinated biphenyls (PCBs) and PCB-containing equipment, radon and
other radioactive elements, ionizing radiation, electromagnetic field radiation and other
non-ionizing radiation, sonic forces and other natural forces, infectious, carcinogenic, mutagenic,
or etiologic agents, pesticides, defoliants, explosives, flammables, corrosives and urea
formaldehyde foam insulation) that are regulated by, or may now or in the future form the basis of
liability under, any Environmental Laws.
IFRS means the International Financial Reporting Standards, as promulgated by the
International Accounting Standards Board.
Incorporation Amendment has the meaning set forth in the definition of Approved
Amendment.
Indebtedness means, with respect to any Person on any date of determination (without
duplication):
(a) the principal of and premium (if any) in respect of (i) indebtedness of such Person for
money borrowed and (ii) indebtedness evidenced by notes, debentures, bonds or other similar
instruments for the payment of which such Person is responsible or liable;
(b) all obligations under Capitalized Leases of such Person;
(c) all obligations of such Person issued or assumed as the deferred purchase price of
property or services, all conditional sale obligations of such Person and all obligations of such
Person under any title retention agreement (excluding trade accounts payable and accrued
liabilities arising in the ordinary course of business but only if and so long as such accounts are
payable on trade terms customary in the industry), which purchase price or obligation is due
10
more than six (6) months after the date of placing such property in service or taking delivery
and title thereto of the completion of such services (provided that, in the case of
obligations of an acquired Person assumed in connection with an acquisition of such Person, such
obligations would constitute Indebtedness of such Person);
(d) all obligations of such Person for the reimbursement of any obligor on any letter of
credit, bankers acceptance or similar credit transaction (other than obligations with respect to
letters of credit securing obligations (other than obligations described in (a) through (c) above)
entered into in the ordinary course of business of such Person to the extent such letters of credit
are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than
the tenth Business Day following receipt by such Person of a demand for reimbursement following
payment on the letter of credit);
(e) the principal amount of any Securitization Funding;
(f) the amount of all obligations of such Person with respect to the redemption, repayment or
other repurchase of the Stock of such Person;
(g) all obligations of the type referred to in clauses (a) through (f) above of other Persons
and all dividends of other Persons for the payment of which, in either case, such Person is
responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by
means of any Guaranty; and
(h) all obligations of the type referred to in clauses (a) through (g) above of other Persons
secured by any Lien on any property or asset of such Person (whether or not such obligation is
assumed by such Person), the amount of such obligation being deemed to be the lesser of the value
of such property or assets or the amount of the obligation so secured.
The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date
of all unconditional obligations as described above and the maximum liability, upon the occurrence
of the contingency giving rise to the obligation, of any contingent obligations as described above
at such date. For purposes of this Agreement, Indebtedness, with respect to any Person as of any
date, means the actual amount of Indebtedness then outstanding with respect to which such Person is
then liable without deduction for any discount therefrom as may be reflected on such Persons
financial statements to reflect the value of any warrants or other equity securities that may be
issued together with such Indebtedness. Indebtedness shall not include, for purposes of this
Agreement, obligations in connection with the factoring of Receivables permitted hereunder,
provided that the Receivables subject to such factoring arrangement are not
required under Applicable Accounting Standards to be included on the Consolidated balance sheet of
AGCO and its Subsidiaries.
Indemnified Party has the meaning specified in Section 10.4.
Initial Lenders has the meaning specified in the definition of Lenders.
Internal Revenue Code means the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated and rulings issued thereunder.
11
IntraLinks means IntraLinks, Inc. or any other digital workspace provider selected
by the Administrative Agent from time to time after notice to AGCO.
Investment by any Person in any other Person means any direct or indirect advance,
loan (other than advances to wholesale or retail customers in the ordinary course of business that
are recorded as Receivables on the balance sheet of such Person) or other extensions of credit
(including by way of Guaranty or similar arrangement) or capital contributions to (by means of any
transfer of cash or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Stock, Indebtedness or other similar
instruments issued by such Person.
Lenders means each of the banks, financial institutions and other lenders executing
a signature page hereto (the Initial Lenders) and any assignees of the Initial Lenders
who hereafter become parties hereto pursuant to and in accordance with Section 10.7 for so
long as such Initial Lender or assignee shall be a party to this Agreement; and Lender means any
one of the foregoing Lenders.
Lien means, with respect to any property, any mortgage, lien, pledge, assignment by
way of security, charge, hypothec, security interest, title retention agreement, levy, execution,
seizure, attachment, garnishment, or other encumbrance of any kind in respect of such property,
whether or not choate, vested, or perfected.
Loan Documents means this Agreement, the Guaranty Agreements, the Fee Letter, any
Incorporation Amendments, and all other documents, instruments, certificates, and agreements
executed or delivered by AGCO or its Subsidiaries in connection with or pursuant to this Agreement.
Loan Parties means the Borrower and the Guarantors.
Material Adverse Effect means, as of any date of determination, (a) Material
Adverse Effect as defined in the AGCO Revolving Credit Agreement, (b) a material adverse effect on
the material rights and remedies of the Administrative Agent or any Lender under any Loan Document,
or (c) a material adverse effect on 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 Subsidiary means, at any time of determination, any direct or indirect
Subsidiary of AGCO that meets any of the following conditions (including as a result of any
acquisition, Investment, merger, reorganization, transfer of assets, or other change in
circumstances after the Agreement Date):
(a) AGCOs and its other Subsidiaries proportionate share of the total assets, in the
aggregate (after intercompany eliminations), of such Subsidiary (and its Subsidiaries) exceeds ten
percent (10%) of the total assets of AGCO and its Subsidiaries Consolidated as of the end of the
most recently completed fiscal quarter; or
(b) AGCOs and its other Subsidiaries equity in the income from continuing operations, in the
aggregate, before income taxes, extraordinary items and cumulative effect of a change in accounting
principles of such Subsidiary (and its Subsidiaries) exceeds ten percent
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(10%) of such income of AGCO and its Subsidiaries Consolidated for the most recently completed
fiscal year.
Maturity Date means May 2, 2016.
Maximum Amount has the meaning specified in Section 10.12(a).
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 (5) 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.
Non-Qualifying Bank means any Person or other legal entity that is not a Qualifying
Bank.
Obligations means, (a) all payment and performance obligations of the Borrower to
the Lenders and the Administrative Agent under this Agreement and the other Loan Documents
(including the Term Loan and any interest, fees and expenses that, but for the provisions of the
Bankruptcy Code, would have accrued), as they may be amended from time to time, or as a result of
making the Term Loan, and (b) the obligation to pay an amount equal to the amount of any and all
damages which the Lenders and the Administrative Agent, or any of them, may suffer by reason of a
breach by any Loan Party of any obligation, covenant, or undertaking with respect to this Agreement
or any other Loan Document.
OFAC means the Office of Foreign Assets Control of the United States Department of
the Treasury.
Original Currency has the meaning specified in Section 11.3.
Other Currency has the meaning specified in Section 11.3.
Other Taxes has the meaning specified in Section 11.4(b).
Participant has the meaning specified in Section 10.7(g).
PBGC means the Pension Benefit Guaranty Corporation.
PCBs has the meaning specified in the definition of Hazardous Materials.
Permitted Liens has the meaning specified in the AGCO Revolving Credit Agreement.
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Person means an individual, partnership, corporation (including a business trust),
limited liability company, 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 means, with respect to a Lenders obligation to make its portion of
the Term Loan and receive payments of principal, interest, fees, costs, and expenses with respect
thereto, (i) prior to the Commitments being terminated or reduced to zero, the percentage obtained
by dividing (y) such Lenders Commitment, by (z) the Commitments of all Lenders, and (ii) from and
after the time that the Commitments have been terminated or reduced to zero, the percentage
obtained by dividing (y) the aggregate outstanding principal amount of such Lenders portion of the
Term Loan by (z) the aggregate outstanding principal amount of the Term Loan.
Qualifying Bank means any entity, which effectively conducts banking activities as
principal purpose with its own infrastructure and staff and which is recognized as a bank by the
banking laws in force in the jurisdiction of its incorporation, or if such entity is acting through
a branch in a jurisdiction other than the jurisdiction of its incorporation, in the jurisdiction
where such branch is located or registered all in accordance with the Swiss Guidelines.
Rabobank has the meaning specified in the introductory paragraph of this Agreement.
Real Property means, in respect of any Person, any estates or interests in real
property now owned or hereafter acquired by such Person.
Receivables means any right to payment for goods sold or leased or for services
rendered whether or not it has been earned by performance.
Register has the meaning specified in Section 10.7(e).
Regulation U means Regulation U of the Board of Governors of the Federal Reserve
System, as in effect from time to time.
Related Assets means, with respect to any Receivable conveyed pursuant to the
Securitization Documents for a Securitization Facility, all records, writings, contracts, payment
intangibles, encumbrances, liens, security interests and similar adverse claims securing and
supporting such Receivable.
Required Lenders means, at any time, Lenders whose Pro Rata Share of the Term Loan
and unused Commitments exceeds fifty percent (50%) of the total the aggregate outstanding principal
amount of the Term Loan and unused Commitments; provided, however, that if any
Lender shall be a Defaulting Lender at such time, there shall be excluded from the determination
hereunder at such time, (y) the aggregate principal amount of the Term Loan made by such Lender and
outstanding at such time and (z) such Lenders unused Commitment at such time.
Replacement Lender has the meaning specified in Section 11.5.
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S&P means Standard & Poors Ratings Group, a division of McGraw-Hill, Inc., and its
successors.
Securitization Documents means the receivable purchase agreements, sales agreements,
servicing and support agreements and other documents evidencing or governing any Securitization
Facility in existence as of the Agreement Date, as the same may be amended, supplemented, modified,
restated or replaced from time to time with the consent of the Administrative Agent, and all
documents evidencing or governing a Securitization Facility entered into after the Agreement Date,
in form and substance satisfactory to the Administrative Agent.
Securitization Facility means any financing transaction or series of financing
transactions that have been or may be entered into by one or more Foreign Subsidiaries (other than
the Borrower) of AGCO pursuant to which such Foreign Subsidiary may sell, convey or otherwise
transfer (without recourse for loss resulting from an account debtors inability to pay) wholesale
Receivables invoiced to third parties at addresses located in Europe to a special purpose entity or
other securitization trust vehicle.
Securitization Funding means any Indebtedness, trust participations or any other
interests that the Administrative Agent determines are equivalent thereto, incurred or issued by
any Person purchasing Receivables in a Securitization Facility and applicable to the purchase of
such Receivables. Any reference to the principal amount of Securitization Funding on any date
refers to the invested amount, capital, investment, or analogous term reflecting the amount
paid for the purchase of Receivables in a Securitization Facility or any trust participations or
other equivalent interests issued in connection therewith, in each case as of such date as
determined by the Administrative Agent. Any reference to the interest expense attributable to any
Securitization Funding refers to any interest expense in respect of any Indebtedness comprising the
same or the equivalent of such interest expense, as determined by the Administrative Agent, with
respect to such purchase of Receivables or any trust participations or other equivalent interests
issued in connection therewith, in each case for such period.
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.
Solvent means, with respect to any Person on a particular date, that on such date
(a) the fair value of the tangible and intangible property of such Person is greater than the total
amount of liabilities, including, without limitation, contingent liabilities, of such Person, (b)
the present fair salable value of the assets of such Person is not less than the amount that will
be required to pay the probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Persons ability to pay such debts and liabilities as they mature and (d)
such Person is not engaged in business or a transaction, and is not about to engage in business or
a transaction, for which such Persons tangible and intangible property would constitute an
unreasonably small
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capital. The amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured liability.
Spot Rate for a currency means the rate quoted by the Administrative Agent as the
spot rate for the purchase by the Administrative Agent of such currency with another currency
through its foreign exchange office at approximately 11:00 a.m. (New York, New York time) on the
date two (2) Business Days prior to the date as of which the foreign exchange computation is made.
Stock means, as applied to any Person, any stock, share capital, partnership
interests or other equity of such Person, regardless of class or designation, and all warrants,
options, purchase rights, conversion or exchange rights, voting rights, calls or claims of any
character with respect thereto.
Subordinated Debt Documents means, collectively, (a) that certain Indenture dated as
of December 23, 2003 among AGCO and SunTrust Bank, as trustee, relating to AGCOs 13/4% Convertible
Senior Subordinated Notes due 2033 and (b) that certain Indenture dated as of December 4, 2006
among AGCO and Union Bank of California, N.A., as trustee, relating to AGCOs 1.25% Convertible
Senior Subordinated Notes due 2036.
Subsidiary of any Person means a corporation, partnership, joint venture, limited
liability company or other entity of which a majority of the Stock having ordinary voting power for
the election of the Board of Directors or other governing body (other than Stock having such power
only by reason of the happening of a contingency) are at the time beneficially owned, or the
management of which is otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a
Subsidiary or to Subsidiaries shall refer to a Subsidiary or Subsidiaries of AGCO.
Swiss Guidelines means, together, the guideline Interbank Loans of 22 September
1986 (S-02.123) (Merkblatt Verrechnungssteuer auf Zinsen von Bankguthaben, deren Gläubiger Banken
sind (Interbankguthaben) vom 22. September 1986); the guideline Syndicated Loans of January 2000
(S-02.128) (Merkblatt Steuerliche Behandlung von Konsortialdarlehen, Schuldscheindarlehen,
Wechseln und Unterbeteiligungen vom Januar 2000); the guideline Bonds of April 1999 (S-02.122.1)
(Merkblatt Obligationen vom April 1999); the guideline Client Credit Balances of April 1999
(S-02.122.2) (Merkblatt Kundenguthaben vom April 1999); each as issued, and as amended from time to
time, by the Swiss federal tax administration.
Swiss Non-Bank Rules means, together, the Swiss Ten Non-Bank Rule and the Swiss
Twenty Non-Bank Rule.
Swiss Ten Non-Bank Rule means the rule that the aggregate number of Lenders which
are Non-Qualifying Banks must not at any time exceed 10 (ten), all in accordance with the Swiss
Guidelines.
Swiss Twenty Non-Bank Rule means the rule that the aggregate number of creditors
(other than Qualifying Banks) of the Borrower under all outstanding borrowings (including
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under this Agreement), such as loans, facilities and private placements, made or deemed to be
made by the Borrower must not at any time exceed 20 (twenty), all in accordance with the Swiss
Guidelines and being understood that for purposes of this Agreement it shall be assumed that there
are 5 (five) Non-Qualifying Banks under this Agreement irrespective of whether or not 5 (five)
Non-Qualifying Banks are Lenders hereunder at any given time.
Swiss Withholding Tax means a tax under the Swiss Federal Act on the Withholding Tax
of 13 October 1965 (Bundesgesetz vom 13. Oktober 1965 über die Verrechnungssteuer).
Tax Credit has the meaning specified in Section 11.4(h).
Taxes has the meaning specified in Section 11.4(a).
Term Loan means the term loan made by the Lenders pursuant to Section
2.1(a).
Treaty means the Treaty establishing the European Community being the Treaty of Rome
of March 25, 1957, as amended by the Single European Act 1986, the Maastricht Treaty (which was
signed at Maastricht on February 7, 1992) and the Treaty of Amsterdam (which was signed in
Amsterdam on October 2, 1997).
Treaty Lender has the meaning specified in Section 11.4(e).
United States Dollars, U.S. Dollars or U.S. $ means lawful money
of the United States of America.
USA Patriot Act means the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272
(2001), as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
Wholly Owned means, as applied to any Subsidiary, a 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 Subsidiaries.
Section 1.2. 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 1.3. 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 Applicable Accounting Standards. All calculations made for
the purposes of determining compliance with this Agreement shall (except as otherwise expressly
provided herein) be made by application of Applicable Accounting Standards applied on a basis
consistent with those used in the preparation of the annual or quarterly financial statements
furnished to the Lenders pursuant to Article 6 most recently prior to or concurrently with
such calculations unless (i) either (x) AGCO shall
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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 one hundred
eighty (180) days after delivery of such financial statements and (ii) AGCO and the Required
Lenders have not agreed upon amendments to the financial covenants incorporated 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.
(b) AGCO shall deliver to the Administrative Agent, at the same time as the delivery of any
annual or quarterly financial statement under Article 6, (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 1.4.
Currency Equivalents.
For purposes of determining in any currency any amount outstanding in another currency, the
Equivalent Amount of such currency on the date of any such determination shall be used. If any
reference to any amount herein would include amounts in Euros and in one or more other currencies
or to an amount in Euros that in fact is in one or more other currencies, such reference (whether
or not it expressly so provides) shall be deemed to refer, to the extent it includes an amount in
any such other currency, the Equivalent Amount in Euros of such amount at the time of
determination.
Section 1.5. Incorporation by Reference of Provisions in the AGCO Revolving Credit
Agreement. Whenever any provision of the AGCO Revolving Credit Agreement is incorporated herein by
reference, such provision shall be construed so as to give maximum effect in this Agreement to (x)
in the case of representations and warranties, to the representations and warranties in the AGCO
Revolving Credit Agreement other than those representations that are
comparable to Section 4.1(a),
(d) - (j), (p) and (v) - (x) hereof, and (y) in the case of covenants, to the affirmative,
negative, information, reporting or financial covenants in the AGCO Revolving Credit Agreement that
are comparable to those covenants set forth in Articles 5, 6 and 7 of the AGCO Revolving Credit
Agreement as in effect on the date hereof (other than any covenant comparable to Section
7.2 hereof), it being understood, however, that the AGCO Revolving Credit Agreement may not
contain all the representations and warranties comparable to Section 4.1(b), (l), (m), (n), (o),
(q), (s), (t) and (u) of the AGCO Revolving Credit Agreement as in effect on the date hereof or all
of the covenants comparable to Articles 5, 6 and 7 of the AGCO Revolving Credit Agreement as in
effect on the date hereof. Without limiting the generality of the foregoing, for purposes of such
incorporation, defined terms used in any such provisions incorporated herein by reference (and
defined terms used in the definitions of any defined terms contained in such provisions) shall have
the meanings ascribed to such terms in the AGCO Revolving Credit Agreement except that (a) to the
extent any such term is defined in this Agreement, the definition contained herein shall control;
(b) any reference therein to this Agreement or the equivalent shall refer to this Agreement
rather than to the AGCO Revolving Credit Agreement; (c) any reference therein to Loan Documents,
Credit Documents, Financing Documents or any comparable term shall be deemed to refer to the
Loan
18
Documents as defined herein; (d) any term used in the AGCO Revolving Credit Agreement to
refer to AGCO Corporation (whether as AGCO, a Borrower, Parent or other similar term), shall
be deemed to refer to AGCO (without, however, limiting any reference to any other Person, in the
case of any use of such term that is plural or otherwise refers to multiple Persons (e.g.,
Borrowers, each Borrower or such Borrower)); (e) any reference therein to Borrower or
Borrower Subsidiary or any other term referring to a borrower under the AGCO Revolving Credit
Agreement shall be deemed to refer to the Borrower hereunder (without, however, limiting any
reference to any other Person, in the case of any use of such term that is plural or otherwise
refers to multiple Persons (e.g., Borrowers, each Borrower or such Borrower)); (f) any
reference therein to a Guarantor or Guarantors or any comparable term shall, subject to clause
(d) hereof, be deemed to refer to the Guarantors hereunder; (g) any reference therein to Agent or
the Administrative Agent or any comparable term shall be deemed to refer to the Administrative
Agent hereunder; (h) any reference therein to Loan Parties or Credit Parties shall, to the extent
such term refers to the borrowers and guarantors under the AGCO Revolving Credit Agreement, be
deemed to refer to the Loan Parties hereunder; (i) the term Loan or any other term used to denote
loans funded under the AGCO Revolving Credit Agreement shall deemed to refer to the Term Loan; and
(j) the terms Letter of Credit, Issuing Bank, Issuer or other term used to denote letters of
credit or the issuer of a letter of credit for the account of AGCO or any Subsidiary, shall be
disregarded. So long as Rabobank is the Administrative Agent under the AGCO Revolving Credit
Agreement, delivery of the financial statements, notices, and other information required by, and in
accordance with, the AGCO Information Covenants under the AGCO Revolving Credit Agreement, other
than the AGCO Information Covenants set forth, on the date hereof, in Sections 6.1(a) (Default
Notice) and (p) (Other Information) of the AGCO Revolving Credit Agreement, as in effect on the
Agreement Date, shall constitute delivery of such items to the Administrative Agent for purposes of
the AGCO Information Covenants under this Agreement.
Section 1.6.
Construction.
The words hereof, herein, hereby, hereunder, and similar terms in this Agreement or
any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as
a whole and not to any particular provision of this Agreement or such other Loan Document, as the
case may be. Section, subsection, clause, schedule, and exhibit references herein are to this
Agreement unless otherwise specified. Any reference in this Agreement or in the other Loan
Documents to any agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations,
amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders,
and supplements set forth herein). Any reference herein to the repayment in full of the
Obligations shall mean the repayment in full in cash of all Obligations other than unaccrued
contingent indemnification Obligations as to which no claim or demand has been given to or made on
any Loan Party. Any reference herein to any Person shall be construed to include such Persons
successors and assigns. All of the schedules and exhibits attached to this Agreement shall be
deemed incorporated herein by reference.
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ARTICLE 2.
THE TERM LOAN FACILITY
Section 2.1.
The Term Loan. Subject to the terms and conditions of, and in reliance upon the representations and
warranties made in, this Agreement and the other Loan Documents, each Lender agrees, severally and
not jointly with any other Lender, to make a term loan in Euros to the Borrower on the Agreement
Date in an aggregate principal amount equal to its Commitment. Amounts repaid in respect of the
Term Loan may not be reborrowed.
Section 2.2. Making the Term Loan.
(a) [Intentionally Omitted].
(b) Advance of Term Loan by Lenders. Each Lender shall, before 11:00 A.M. (London
Time) on the Agreement Date, make available for the account of its Facility Office to the
Administrative Agent at the Administrative Agents Account, in same-day funds in Euros, such
Lenders Pro Rata Share of the Term Loan in accordance with the respective Commitment of such
Lender. After the Administrative Agents receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article 3, the Administrative Agent will make such funds
available to the Borrower by delivering such funds to the Borrowers Account. Receipt of such
funds in the Borrowers Account shall be deemed to have occurred when the Administrative Agent
notifies AGCO, by telephone or otherwise, of the Federal Reserve Bank reference number, CHIPS
identification number or similar number with respect to the delivery of such funds.
Section 2.3.
Reduction of the Commitments. Each Lenders Commitment shall terminate upon the making of its Pro Rata Share of the Term
Loan on the Agreement Date.
Section 2.4. Repayments and Prepayments.
(a) Optional Prepayments. Subject to clause (c) below, the Borrower may, upon at
least five (5) Business Days notice to the Administrative Agent, prepay pro rata among the Lenders
the outstanding amount of the Term Loan in whole or in part with accrued interest to the date of
such prepayment on the amount prepaid. Each such notice of a prepayment shall be irrevocable and
shall specify the prepayment date and the principal amount of the Term Loan to be prepaid. Each
partial prepayment of the Term Loan shall be in an amount equal to not less than an aggregate
principle amount of 5,000,000 or an integral multiple of 1,000,000 in excess thereof.
(b) Payment on Maturity Date. The Borrower shall pay any remaining unpaid principal
balance of the Term Loan in full on the Maturity Date.
(c) Interest and Costs on Principal Amounts Prepaid. All repayments and prepayments
under this Section 2.4 shall be made together with accrued interest to the date of such
payment on the principal amount paid and, in the event that the Borrower prepays any amount of the
Term Loan before the Maturity Date, any amounts owing to the Lenders pursuant to Section
11.2.
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Section 2.5. Interest.
(a) Ordinary Interest. The Borrower shall pay interest on the unpaid principal amount
of the Term Loan owing to the Lenders from the date of the Term Loan until such principal amount
shall be paid in full, at a rate of four and one-half percent (4.50%) per annum, payable in arrears
quarterly on the last day of each calendar quarter.
(b) Default Interest. After the occurrence and during the continuation of an Event of
Default, the Required Lenders shall have the option, in addition to all of the rights and remedies
described in this Agreement, to charge interest on the outstanding principal balance of the Term
Loan at the Default Rate from the date of such Event of Default. Interest at the Default Rate
shall be payable on the earlier of demand by Required Lenders or the Maturity Date, and shall
accrue until the earlier of (i) waiver in writing by Required Lenders of the applicable Event of
Default, (ii) agreement by Required Lenders to rescind the charging of interest at the Default
Rate, or (iii) payment in full of the Obligations.
Section 2.6. Minimum Interest Rates and Payments.
(a) The various rates of interests provided for in this Agreement (including, without
limitation, under Section 2.5 or Section 2.8) are minimum interest rates.
(b) If a deduction on account of Swiss Withholding Tax is imposed on interest payments (the
Relevant Amount) to be made by the Borrower, and should Section 11.4(a) be
unlawful for any reason (where this would otherwise be required by the terms of Section
11.4(a)) then the applicable interest rate in relation to that interest payment date will be
the interest rate which would have otherwise been used to calculate the interest amount payable on
the interest payment date divided by the difference between 1 and the rate at which the relevant
tax deduction is required to be made under Swiss domestic tax law and/or applicable double taxation
treaties (where the rate at which the relevant tax deduction is required to be made is for this
purpose expressed as a fraction of 1) and the Borrower shall be obliged to pay the relevant
interest on that interest payment date at the adjusted rate in accordance with this Section
2.6; and make the tax deduction on the recalculated interest.
(c) Without prejudice to the foregoing, all references to a rate of interest in this Agreement
shall be construed accordingly and all provisions in Section 11.4(a) shall apply to the tax
deduction on the recalculated interest payment.
(d) If requested by the Administrative Agent, the Borrower shall provide to the Administrative
Agent those documents which are required by law and applicable double taxation treaties to be
provided by the payer of such tax for each relevant Lender to prepare a claim for refund of Swiss
Withholding Tax. In the event Swiss Withholding Tax is refunded to the Lender by the Swiss Federal
Tax Administration, the relevant Lender shall pay an amount to the Borrower which will leave it
(after that payment) in the same after-tax position as it would have been in had the deduction of
Swiss Withholding Tax not been required to be made by the Borrower.
Section 2.7. [Intentionally Omitted].
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Section 2.8. Payments and Computations.
(a) The Borrower shall make each payment hereunder free and clear of any setoff or
counterclaim, with such payment being paid not later than 11:00 A.M. (London Time) on the day when
due, in the case of any reimbursements of costs or expenses of the Administrative Agent or any
Lender incurred in a currency other than Euros, in the currency in which such costs and expenses
are incurred, and in the case of principal or interest on the Term Loan, any fees under the Fee
Letter or any other amounts payable under this Agreement, in Euros, to the Administrative Agent in
same-day funds by deposit of such funds to (i) the Administrative Agents Account with respect to
payments in Euros or (ii) to such account as the Administrative Agent may designate with respect to
payments in any other currencies. The Administrative Agent will promptly thereafter (and in any
event, if received from the Borrower by the time specified in the preceding sentence, on the day of
receipt) cause like funds to be distributed (i) if such payment by the Borrower is in respect of
principal, interest, fees or any other Obligation then payable hereunder in a particular currency,
to the applicable Lenders for the account of their respective Facility 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 the Borrower is in respect of any
Obligation then payable hereunder to one Lender, to such Lender for the account of its Facility
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 10.7(e), from and after the effective date of such Assignment and Acceptance, the
Administrative Agent shall make all payments hereunder in respect of the interest assigned hereby
to the Lender assignee hereunder, and the parties to such Assignment and Acceptance shall make all
appropriate adjustments in such payments for periods prior to such effective date directly between
themselves.
(b) If the Administrative Agent receives funds for application to the Obligations under the
Loan Documents under circumstances for which the Loan Documents do not specify the Obligations to
which, or the manner in which, such funds are to be applied, the Administrative Agent may, but
shall not be obligated to, elect to distribute such funds to each Lender ratably in accordance with
such Lenders proportionate share of the principal amount of all the Term Loan then outstanding, in
repayment or prepayment of the outstanding portion of the Term Loan or other Obligations owed to
such Lender, and for application to such principal installments, as the Administrative Agent shall
direct.
(c) All computations of interest and fees payable by the Borrower shall be made by the
Administrative Agent on the basis of a year of three hundred sixty (360) days for the actual number
of days (including the first day but excluding the last day) occurring in the period for which such
interest or fees are payable. Each determination by the Administrative Agent of an interest rate or
fee hereunder shall be conclusive and binding for all purposes, absent manifest error.
(d) Whenever any payment hereunder 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 fees, as the case may
be.
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(e) Unless the Administrative Agent shall have received notice from AGCO prior to the date on
which any payment is due to the Lenders hereunder that the Borrower will not make such payment in
full, the Administrative Agent may assume that the Borrower has made such payment in full to the
Administrative Agent on such date and the Administrative 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 the Administrative Agent and the Administrative Agent makes available to a Lender on
such date a corresponding amount, such Lender shall repay to the Administrative 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 the
Administrative Agent, at the greater of the Base Rate and a rate determined by the Administrative
Agent in accordance with its then-applicable policies regarding interbank compensation.
Section 2.9.
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 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 at such time) of payments on account of the Obligations due and payable to
all Lenders hereunder 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 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 at such time) of payments on account of the
Obligations owing (but not due and payable) to all Lenders hereunder 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 Lenders
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 Lenders ratable share (according to the proportion of (A) the amount of such other Lenders
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 Borrower agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 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 2.10. Intentionally Omitted.
Section 2.11. Defaulting Lenders.
(a) Unless the Administrative Agent shall have received notice from a Lender prior to the
funding of its Pro Rata Share of the Term Loan on the Agreement Date that such Lender will not make
available to the Administrative Agent such Lenders Pro Rata Share of the Term Loan, the
Administrative Agent may assume that such Lender has made such portion available to the
Administrative Agent on the Agreement Date in accordance with Section 2.2(b) and the
Administrative 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 its Pro Rata Share of the Term Loan available to the Administrative Agent and the
Administrative Agent makes available to the Borrower on such date a corresponding amount, such
Lender and the Borrower severally agree to repay or pay to the Administrative Agent forthwith on
demand such corresponding amount and to pay interest thereon, for each day from the date such
amount is made available to the Borrower until the date such amount is repaid or paid to the
Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at such time
under Section 2.5 to the Term Loan and (ii) in the case of such Lender, the greater of the
Base Rate and a rate determined by the Administrative Agent in accordance with its then-applicable
policies regarding interbank compensation. If such Lender shall pay to the Administrative Agent
such corresponding amount, such amount so paid shall constitute such Lenders portion of the Term
Loan for purposes of this Agreement.
(b) The failure of any Lender to make the portion of the Term Loan to be made by it on the
Agreement Date shall not relieve any other Lender of its obligation, if any, hereunder to make its
portion of the Term Loan on the Agreement Date, but no Lender shall be responsible for the failure
of any other Lender to make the portion of the Term Loan to be made by such other Lender on the
Agreement Date.
ARTICLE 3.
CONDITIONS PRECEDENT
Section 3.1.
Conditions Precedent to Agreement Date.
The effectiveness of this Agreement and the obligation of each Lender to make its Pro Rata
Share of the Term Loan on the Agreement Date, is subject to the satisfaction of the following
conditions precedent:
(a) The Lenders shall be satisfied that, in connection with the initial borrowing of the Term
Loan hereunder, prior to or simultaneously with such initial borrowing of the Term Loan, notice of
redemption has been given to the trustee for the European Subordinated Notes and all amounts
necessary for the repayment in full of the European Subordinated Notes upon the redemption date
shall have been deposited with such Trustee;
(b) The Administrative Agent shall have received, on or before the Agreement Date, the
following, each dated such date (unless otherwise specified), in form and substance satisfactory to
the Administrative Agent (unless otherwise specified):
(i) This Agreement, duly executed and delivered by the Borrower, the Administrative Agent, and
each Lender;
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(ii) The Fee Letter, duly executed and delivered by the Borrower;
(iii) Copies of the resolutions of the Managing Officers (Geschäftsführer) of the Borrower and
of the Board of Directors of each Guarantor, in each case, approving the execution and delivery of
this Agreement and certified by the secretary or other similar officer of such Loan Party, and of
all documents evidencing other necessary corporate action and governmental approvals, if any, with
respect to this Agreement;
(iv) A copy of the charter of the Borrower and each amendment thereto, certified (as of a date
reasonably near the Agreement Date), if appropriate in the jurisdiction where the Borrower is
organized, by an appropriate governmental official as being a true and correct copy thereof;
(v) For AGCO and each Guarantor, a copy of a certificate of the Secretary of State (or other
applicable Governmental Authority) of the State of formation or organization of such Loan Party,
dated reasonably near the Agreement Date, listing the charter of such Person and each amendment
thereto on file in his/her office and certifying that (x) such amendments are the only amendments
to such Persons charter on file in his/her office; (y) such Person has paid all franchise taxes to
the date of such certificate; and (z) such Person is duly incorporated and in good standing or
presently subsisting under the laws of such state;
(vi) A certificate of the Borrower and each Guarantor, 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 Agreement Date (the statements made in such certificate shall be true on
and as of the Agreement Date), certifying as to (x) the absence of any amendments to the charter of
such Person since the date of the certificate referred to in clause (iv) and (v) above, as
applicable; (y) a true and correct copy of the bylaws (or similar governing document) of the
Borrower or such Guarantor as in effect on the Agreement Date; and (z) the due incorporation or
formation and good standing of the Borrower or such Guarantor organized under the laws of the
jurisdiction of its organization, and the absence of any proceeding for the dissolution or
liquidation of such Person;
(vii) A certificate of the Secretary or an Assistant Secretary or other appropriate officer of
the Borrower and each Guarantor certifying the names and true signatures of the officers of the
Borrower and such Guarantor authorized to sign this Agreement or the other Loan Documents to which
it is or is to be a party and the other documents to be delivered hereunder and thereunder;
(viii) Each of the Guaranty Agreements duly executed by each Guarantor existing as of the
Agreement Date, each such Guaranty Agreement to be in form and substance satisfactory to the
Administrative Agent; and
(ix) A copy of the quotaholders resolution (Gesellschafterversammlungsbeschluss) of the
Borrower approving the execution and delivery of this Agreement, and of all documents evidencing
other necessary corporate action and governmental approvals, if any, with respect to this
Agreement;
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(c) The Administrative Agent shall be satisfied that no default exists under AGCO Revolving
Credit Agreement or any Subordinated Debt Document;
(d) There shall not have occurred any event, development or circumstance since December 31,
2010 (x) that has caused or could reasonably be expected to cause a material adverse condition or
material adverse change in or affecting (i) the condition (financial or otherwise), results of
operation, assets, properties or liabilities (actual or contingent) of AGCO and its respective
Subsidiaries, taken as a whole; (ii) the ability of the Borrower to repay the credit to be extended
under this Agreement, or (iii) the validity or enforceability of any of the Loan Documents; or (y)
that calls into question in any material respect the projections delivered to the Administrative
Agent prior to the Agreement Date or any material assumption on which such projections were
prepared;
(e) 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 could have a Material Adverse Effect or impair the validity or enforceability of
any Loan Document;
(f) The Administrative Agent shall have received the unaudited financial statements of the
Borrower as at December 31, 2009 and for the fiscal year then ended;
(g) The Administrative Agent shall have received detailed projections for AGCO and its
Subsidiaries for fiscal years 2011 through 2014, prepared by officers of AGCO, in form and
substance satisfactory to the Administrative Agent;
(h) All governmental and third party approvals necessary or, in the discretion of the
Administrative Agent, advisable in connection with the transactions contemplated by this Agreement
and the continuing operations of AGCO and its Subsidiaries shall have been received and be in full
force and effect;
(i) A favorable opinion of (A) Troutman Sanders LLP, counsel to the Loan Parties, and (B)
Pestalozzi Attorneys at Law Ltd, Swiss counsel to the Loan Parties;
(j) [Intentionally omitted];
(k) The Administrative Agent shall have received all required internal know-your-customer
documents, certificates and approvals as the Administrative Agent may reasonably request;
(l) The Borrower shall have paid all fees and expenses (including the fees under the Fee
Letter and fees and expenses of counsel) of the Administrative Agent and Lenders that are due and
payable on the Agreement Date and are in compliance with all terms of the Fee Letter on or before
the Agreement Date;
(m) The Administrative Agent shall be satisfied that the representations and warranties
contained in each Loan Document will be correct on and as of the Agreement Date before and after
giving effect to the making of the Term Loan and to the application of the proceeds therefrom, as
though made on and as of such date;
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(n) The Administrative Agent shall be satisfied that no event shall have occurred and be
continuing, or would result from the making of the Term Loan or from the application of the
proceeds therefrom, that constitutes or would constitute a Default or Event of Default;
(o) At least three (3) Business Days prior to the Agreement Date, Administrative Agent shall
have received a funding indemnity letter from the Borrower, pursuant to which the Borrower agrees
to be pay losses with respect the funding of the Term Loan in Euros on the Agreement Date, in form
and substance acceptable to Administrative Agent; and
(p) The Administrative Agent shall have received such other instruments, documents or
agreements as the Administrative Agent may reasonably request.
Section 3.2.
Determinations Under Section 3.1.
For purposes of determining compliance with the conditions specified in Section
3.1, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied
with each document or other matter required thereunder to be consented to or approved by or
acceptable or satisfactory to the Lenders unless an officer of the Administrative Agent responsible
for the transactions contemplated by the Loan Documents shall have received notice from such Lender
prior to the initial funding of the Term Loan on the Agreement Date specifying its objection
thereto and such Lender shall not have made available to the Administrative Agent such Lenders Pro
Rata Share of the Term Loan.
Section 3.3.
Qualifications as a Qualifying Bank. Each Lender will confirm to the Borrower on the date on which it becomes a party to this
Agreement in its capacity as such whether it is a Qualifying Bank or a Non-Qualifying Bank and each
Initial Lender represents and confirms on the date of this Agreement that it is a Qualifying Bank.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
Section 4.1.
Representations and Warranties of AGCO and the Borrower.
In order to induce the Administrative Agent and the Lenders to enter into this Agreement
and to extend credit to the Borrower, AGCO and the Borrower each hereby agree, represent, and
warrant as follows:
(a) Organization; Power. (i) AGCO (x) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization, (y) is duly
qualified and in good standing (if applicable) 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 (z) has all requisite power and authority and has all
material licenses, authorizations, consents and approvals necessary to own or lease and operate its
properties, to conduct its business as now being conducted and as proposed to be conducted and to
enter into and carry out the terms of the Loan Documents to which it is a party; (ii) the Borrower
and each other Guarantor, (x) is a corporation, partnership or other legal entity duly organized or
formed, validly existing and in good standing (if applicable) under the laws of the
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jurisdiction of its organization, and (y) is duly qualified and in good standing (if
applicable) 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) the Borrower and each other Guarantor has all requisite power and authority and has all
licenses, authorizations, consents and approvals necessary to (x) own or lease and operate its
properties and to conduct its business as now being conducted and as proposed to be conducted other
than such licenses, authorizations, consents and approvals, the failure of which would not
reasonably be expected to have a Material Adverse Effect, and (y) enter into and carry out the
terms of the Loan Documents to which it is a party.
(b) [Intentionally Omitted].
(c) [Intentionally Omitted].
(d) Authorization; No Conflict. The execution, delivery and performance by each Loan
Party of this Agreement and each other Loan Document to which it is or is to be a party and the
other transactions contemplated hereby, are within such Loan Partys corporate or other similar
powers, have been duly authorized by all necessary corporate or other similar action, and do not
(i) contravene such Loan Partys charter or bylaws or other similar organization or governing
documents; (ii) violate any Applicable Law (including, without limitation, to the extent
applicable, the Securities Exchange Act of 1934, the Racketeer Influenced and Corrupt Organizations
Chapter of the Organized Crime Control Act of 1970 and any similar statute); (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. No Loan Party or any of its Subsidiaries is in violation of any such Applicable
Law or in breach of any such contract, loan agreement, indenture, mortgage, deed of trust, lease or
other instrument, the violation or breach of which could have a Material Adverse Effect.
(e) No Authorizations Needed. Giving effect to the execution and delivery of the Loan
Documents and the making of the Term Loan hereunder, 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 the due execution, delivery or performance by any Loan Party of this
Agreement and any other Loan Document to which it is or is to be a party, or for the consummation
of the transactions hereunder.
(f) Enforceability. This Agreement and each other Loan Document have been (or, when
delivered hereunder will have been), duly executed and delivered by each Loan Party thereto. This
Agreement and each other Loan Document have been (or, when delivered hereunder will be), the legal,
valid and binding obligation of each Loan Party thereto, enforceable against such Loan Party in
accordance with its terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws and principles of equity and, with respect to any
obligation of the Borrower to pay, or otherwise compensate any Lender for, any Swiss Withholding
Tax pursuant to Section 11.4, to the extent
28
legally permissible (provided that this provision shall not apply to, and shall not
affect the applicability of, Section 2.6).
(g) Financial Statements. The Consolidated balance sheets of AGCO and its
Subsidiaries and of AGCO and its Subsidiaries, respectively, as at December 31, 2010 and the
related Consolidated statements of income and cash flows of AGCO and its Subsidiaries and AGCO and
its Subsidiaries, respectively, for the fiscal year then ended, accompanied by an opinion of KPMG
LLC, independent public accountants, copies of which have been furnished to each Lender fairly
present the consolidated financial condition of AGCO and its Subsidiaries and AGCO and its
Subsidiaries, respectively, as at such date and the consolidated results of the operations of AGCO
and its Subsidiaries and AGCO and its Subsidiaries, respectively, for the period ended on such
date, all in accordance with Applicable Accounting Standards applied on a consistent basis, and
since December 31, 2010, nothing has occurred that has resulted in a Material Adverse Effect.
(h) Projection; Other Information. The three (3) year projected Consolidated balance
sheets and income statements of AGCO and its Subsidiaries delivered to the Administrative Agent
pursuant to Section 3.1(g) where prepared in good faith on the basis of the assumptions
stated therein, which assumptions were fair in the light of conditions existing at the time of
delivery of such projected financial statements, and represented, at the time of delivery, AGCOs
reasonable estimate of its future financial performance. No information, exhibit or report
furnished by any Loan Party to the Administrative Agent or any Lender in connection with the
negotiation of the Loan Documents or any transaction contemplated herein or therein 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.
(i) Litigation. There is 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 purport to affect the legality, validity or enforceability of this
Agreement or any other Loan Document or the consummation of the transactions contemplated thereby
or hereby, or that individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect.
(j) Use of Proceeds. The Borrower will not, directly or indirectly, use any of the
proceeds of the Term Loan 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 would 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 under such regulations.
(k) Senior Indebtedness. The Obligations under this Agreement will be Senior
Indebtedness and Designated Senior Indebtedness (or such other similar terms) under and as
defined in the Subordinated Debt Documents.
(l) [Intentionally Omitted].
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(m) [Intentionally Omitted].
(n) [Intentionally Omitted].
(o) [Intentionally Omitted].
(p) Solvency. (i) The Borrower is, and will be after giving effect to the
transactions contemplated hereby, Solvent; (ii) AGCO is, and will be after giving effect to the
transactions contemplated hereby, Solvent; and (iii) AGCO, together with its Subsidiaries, is, and
will be after giving effect to the transactions contemplated hereby, Solvent.
(q) [Intentionally Omitted].
(r) [Intentionally Omitted].
(s) [Intentionally Omitted].
(t) [Intentionally Omitted].
(u) [Intentionally Omitted].
(v) Anti-Terrorism Laws. None of AGCO, the Borrower or any Affiliate of the Borrower
knows, or reasonably should know of, any violation of any Anti-Terrorism Law or knowingly engages
in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading
or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.
(w) Blocked Persons. To AGCOs and the Borrowers knowledge, neither AGCO, the
Borrower nor any Affiliate of AGCO is any of the following (each a Blocked Person):
(i) a Person that is listed in the annex to, or is otherwise subject to the provisions of,
Executive Order No. 13224 or the OFAC regulations;
(ii) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed
in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224 or the
OFAC regulations;
(iii) a Person or entity with which any bank or other financial institution is prohibited from
dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;
(iv) a Person or entity that commits, threatens or conspires to commit or supports terrorism
as defined in Executive Order No. 13224 or the OFAC regulations;
(v) a Person or entity that is named as a specially designated national or other blocked
person on the most current list maintained by OFAC and published or
30
made available in the Federal Register or published by OFAC at its official website or any
replacement website or other replacement official publication of such list; or
(vi) a Person or entity who is affiliated with a Person or entity listed above.
Neither AGCO, the Borrower nor any Affiliate of AGCO (i) knowingly conducts any business or
engages in making or receiving any contribution of funds, goods or services to or for the benefit
of any Blocked Person, (ii) knowingly deals in, or otherwise engages in any transaction relating
to, any property or interests in property blocked pursuant to Executive Order No. 13224 or other
applicable Anti-Terrorism Law, or (iii) engages in or conspires to engage in any transaction that
evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in any Anti-Terrorism Law.
(x) Use of the Term Loan. The Term Loan shall be used by the Borrower solely for (a)
the repayment of all Indebtedness under the European Subordinated Notes, (b) the payment of
transaction costs relating to this Agreement and (c) working capital needs and general corporate
purposes for the Borrower and the Borrowers Subsidiaries; and the Term Loan are not intended
specifically to enable any transaction that, if conducted by a United States entity, would violate
any rules or regulations promulgated by OFAC or other United States economic or trade sanctions
restrictions.
Section 4.2.
AGCO Revolving Credit Agreement Representations.
In order to induce the Administrative Agent and the Lenders to enter into this Agreement
and to extend credit to the Borrower, AGCO and the Borrower each hereby further represents,
warrants and agrees that each of the AGCO Representations and Warranties (together with any
Schedules to the AGCO Revolving Credit Agreement referenced therein) are incorporated herein, and
are true and correct, in all respects, as if made herein by AGCO and the Borrower for the benefit
of the Administrative Agent and the Lenders; provided, however, the term
Agreement Date, as used in Section 4.1(b) of the AGCO Revolving Credit Agreement as in effect on
the date hereof shall have the meaning given to such term in the AGCO Revolving Credit Agreement as
in effect on the date hereof.
Section 4.3.
Swiss Non-Bank Rules.
The Borrower represents and warrants that it is in compliance with the Swiss Non-Bank Rules
provided that the Borrower shall not be in breach of this representation and
warranty if its number of creditors in respect of either the Swiss Ten Non-Bank Rule or the Swiss
Twenty Non-Bank Rule is exceeded solely by reason of a failure by one or more Lenders to comply
with the requirements for a transfer, assignment or participation pursuant to Section 10.7.
Section 4.4.
Survival of Representations and Warranties, etc.
All representations and warranties made under this Agreement shall be deemed to be made,
and shall be true and correct, at and as of the Agreement Date (unless otherwise specified). All
representations and warranties made under this Agreement shall survive, and not be waived by, the
execution hereof by the Lenders and the Administrative Agent, any investigation or inquiry by any
Lender or the Administrative Agent, or the making of the Term Loan under this Agreement.
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ARTICLE 5.
AFFIRMATIVE COVENANTS
Section 5.1.
Incorporation of AGCO Affirmative Covenants.
Each of AGCO and the Borrower covenants and agrees that, so long as the Obligations have
not been paid in full, it shall perform and observe the AGCO Affirmative Covenants at all times and
the AGCO Affirmative Covenants shall be incorporated herein, in all respects, as if made herein for
the benefit of the Administrative Agent and the Lenders.
Section 5.2.
Swiss Non-Bank Rule.
The Borrower shall ensure that it is in compliance at all times with the Swiss Non-Bank
Rules provided that the Borrower shall not be in breach of this undertaking if its
number of creditors in respect of either the Swiss Ten Non-Bank Rule or the Swiss Twenty Non-Bank
Rule is exceeded solely by reason of a failure by one or more Lenders to comply with the
requirements for a transfer, assignment or participation pursuant to Section 10.7.
ARTICLE 6.
INFORMATION COVENANTS
Section 6.1. Incorporation of AGCO Information Covenants. Each of AGCO and the Borrower covenants and agrees that, so long as the Obligations have
not been paid in full, it shall perform and observe the AGCO Information Covenants at all times and
the AGCO Information Covenants shall be incorporated herein, in all respects, as if made herein for
the benefit of the Administrative Agent and the Lenders.
Section 6.2.
Additional Reporting Requirement for the Borrower.
The Borrower will deliver to the Administrative Agent, as soon as available, and in any
event within two hundred seventy (270) days after the end of each fiscal year of the Borrower, the
balance sheet of the Borrower, as of the end of such fiscal year, and statements of income and cash
flows of the Borrower, for such fiscal year, setting forth in each case in comparative form the
corresponding figures for the corresponding period of the preceding fiscal year, all in reasonable
detail and duly certified (subject to year-end audit adjustments) by an Authorized Financial
Officer of AGCO as having been prepared in accordance with Applicable Accounting Standards.
ARTICLE 7.
NEGATIVE COVENANTS
Section 7.1.
Incorporation of AGCO Negative Covenants.
Each of AGCO and the Borrower covenants and agrees that, so long as the Obligations have
not been paid in full, it shall perform and observe the AGCO Negative Covenants at all times and
the AGCO Negative Covenants shall be incorporated herein, in all respects, as if made herein for
the benefit of the Administrative Agent and the Lenders, provided, however, the
term Agreement Date, as used in Section 7.4 of the AGCO Revolving Credit Agreement as of the date
hereof, and the terms Agreement and Loan Documents, as used in Section 7.17 of the AGCO
Revolving Credit Agreement as of the date hereof shall have the meanings given to such terms in the
AGCO Revolving Credit Agreement, and, provided further, however, as used in Section
7.5(iii) of the
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AGCO Revolving Credit Agreement as of the date hereof, Borrowers shall have the meaning
given to such term in the AGCO Revolving Credit Agreement.
Section 7.2.
Indebtedness.
AGCO further covenants and agrees that, so long as the Obligations have not been paid in
full, AGCO shall not create, assume, incur or otherwise become or remain obligated in respect of,
or permit to be outstanding, and shall not permit any of its Subsidiaries to create, assume, incur
or otherwise become or remain obligated in respect of, or permit to be outstanding, any
Indebtedness except:
(a) Indebtedness under this Agreement and the other Loan Documents;
(b) Unsecured Indebtedness under the AGCO Revolving Credit Agreement and the other Loan
Documents (as defined in the AGCO Revolving Credit Agreement); and
(c) All other Indebtedness permitted under Section 7.1 of the AGCO Revolving Credit Agreement.
Section 7.3.
Fundamental Changes to the Borrower.
Notwithstanding anything to contrary in this Article 7 or the AGCO Negative
Covenants incorporated herein by reference, AGCO and the Borrower further covenant and agree that,
the Borrower shall not, and AGCO shall not permit the Borrower to, liquidate or dissolve itself or
otherwise wind up its business.
ARTICLE 8.
EVENTS OF DEFAULT
Section 8.1.
Events of Default.
Each of the following shall constitute an Event of Default (an Event of Default),
whatever the reason for such event and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment or order of any court or any order, rule, or
regulation of any governmental or non-governmental body:
(a) (i) the Borrower shall fail to pay (x) any principal or face amount of the Term Loan on
the date when the same becomes due and payable, or (y) any interest or fees due hereunder within
three (3) Business Days 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 (5)
Business 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) (i) AGCO or the Borrower shall fail to perform any term, covenant or agreement contained
in Article 6 if such failure shall remain unremedied for ten (10) days after the earlier of
(x) AGCO or the Borrower having knowledge thereof, and (y) written notice thereof having been given
to AGCO; (ii) AGCO or the Borrower shall fail to perform, observe or comply with any other term,
covenant or agreement contained in Article 7; or (iii) AGCO or the Borrower or any other
Loan Party shall fail to perform any other term, covenant or agreement contained in this Agreement
or any other Loan Document not referenced elsewhere in this Section 8.1 if such failure
shall remain unremedied for thirty (30) days after the earlier of (x)
33
such Loan Party having knowledge thereof, and (y) written notice thereof having been given to
AGCO; or
(d) The occurrence of any event which would constitute an Event of Default under, and as
such term is defined in, the AGCO Revolving Credit Agreement, but without giving effect to any
waiver of or consent to any Default or Event of Default (as such terms are defined in the AGCO
Revolving Credit Agreement in effect at the time of such waiver or consent) or any other
modification, waiver or amendment other than as provided pursuant to an Approved Amendment; or
(e) AGCO, any Material Subsidiary or any Loan Party 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 insolvency or 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 AGCO, any Material Subsidiary or any
Loan Party 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 (including, without limitation, any proceeding under the
Bankruptcy Code, or any similar law in any other jurisdiction) 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
thirty (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 AGCO, any Material Subsidiary or any Loan Party shall take any action to
authorize any of the actions set forth above in this subsection, 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 AGCO, any Material Subsidiary, or any Loan
Party 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 occurs under the laws of any applicable
jurisdictions; or
(f) [intentionally omitted]; or
(g) [intentionally omitted]; or
(h) any material portion of any Loan Document shall at any time and for any reason be declared
to be null and void, or a proceeding shall be commenced by any Loan Party or any of its respective
Affiliates, or by any governmental authority having jurisdiction over any Loan Party or any of its
Affiliates, seeking to establish the invalidity or unenforceability thereof (exclusive of questions
of interpretation of any provision thereof), or any material provision of
34
any Loan Document shall for any reason cease to be valid and binding on or enforceable against
any Loan Party to it, or any such Loan Party shall so state in writing; or
(i) a Change of Control shall occur.
Section 8.2. Remedies
. If an Event of Default shall have occurred and until such Event of Default is waived in
writing by the Required Lenders, or all of the Lenders as may be required by Section 10.1,
the Administrative Agent:
(a) may, and shall at the request of the Required Lenders, by notice to AGCO, declare the
obligation of each Lender to make its Pro Rata Share of the Term Loan to be terminated, whereupon
the same shall forthwith terminate;
(b) may, and shall at the request of the Required Lenders by notice to AGCO, declare the Term
Loan, all interest thereon and all other amounts payable under this Agreement and the other Loan
Documents to be forthwith due and payable, whereupon the Term Loan, 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 Borrower;
provided that in the event of an actual or deemed entry of an order for relief or
any assignment, proposal or the giving of notice of intention to make a proposal with respect to
the Borrower under the Bankruptcy Code, (i) the obligation of each Lender to make its Pro Rata
Share of the Term Loan shall automatically be terminated and (ii) the Term Loan, 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
Borrower; and
(c) may, and shall at the request of the Required Lenders, exercise all of the post-default
rights granted to it and to them under the Loan Documents or under Applicable Law.
Section 8.3. Intentionally Omitted.
Section 8.4.
Application of Payments.
Subsequent to the occurrence and during the continuation of an Event of Default, payments
and prepayments with respect to the Obligations made to the Administrative Agent or the Lenders or
otherwise received by the Administrative Agent or any Lender shall be distributed in the following
order of priority: first, to the reasonable costs and expenses (including reasonable
attorneys fees and expenses), if any, incurred by the Administrative Agent or any Lender in the
collection of such amounts under this Agreement or of the Loan Documents until paid in full;
second, to any fees then due and payable to the Administrative Agent under this Agreement
or any other Loan Document until paid in full; third, to any fees then due and payable to
the Lenders under this Agreement until paid in full; fourth, to the ratable payment of
interest then due in respect of the Term Loan paid in full; fifth, to the ratable payment
of principal of the Term Loan until paid in full, sixth, to any other Obligations not
otherwise referred to in this Section until paid in full; and seventh, to the
Borrower or such other Person entitled thereto under applicable law.
ARTICLE 9.
THE ADMINISTRATIVE AGENT
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Section 9.1.
Authorization and Action.
Each Lender hereby appoints and authorizes Rabobank to take action on its behalf as the
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, the Administrative Agent shall not 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; provided that the
Administrative Agent shall not 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. Except
for action requiring the approval of the Required Lenders, the Administrative Agent shall be
entitled to use its discretion with respect to exercising or refraining from exercising any rights
which may be vested in it by, and with respect to taking or refraining from taking any action or
actions which it may be able to take under or in respect of, any Loan Document, unless the
Administrative Agent shall have been instructed by the Required Lenders to exercise or refrain from
exercising such rights or to take or refrain from taking such action. The Administrative Agent
shall not incur any liability under or in respect of any Loan Document with respect to anything
which it may do or refrain from doing in the reasonable exercise of its judgment or which may seem
to it to be necessary or desirable in the circumstances, except for its gross negligence or willful
misconduct as determined by a final, non-appealable judicial order.
Section 9.2.
Administrative Agents Reliance, Etc.
Neither the Administrative 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 as
determined by a final, non-appealable judicial order. Without limitation of the generality of the
foregoing, the Administrative Agent:
(a) 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;
(b) 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;
(c) 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;
(d) 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;
36
(e) 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;
(f) 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;
(g) 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;
(h) 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
(i) may act directly or through agents or attorneys on its behalf but shall not be responsible
to any Lender for the negligence or misconduct of any agents or attorneys selected by it with
reasonable care.
Section 9.3.
Administrative Agent, in its Individual Capacity and
Affiliates.
With respect to its respective Commitment and the portion of the Term Loan made by
Rabobank, Rabobank 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 the Administrative Agent; and the term
Lender or Lenders shall, unless otherwise expressly indicated, include Rabobank in its
individual capacity. Rabobank and its 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 was
not the Administrative Agent and without any duty to account therefor to the Lenders.
Section 9.4.
Lender Credit Decision.
Each Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender and based on the financial statements referred to in
Section 3.1 and such other documents and information as it has deemed appropriate, made its
own independent credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Administrative 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 9.5.
Notice of Default or Event of Default.
In the event that the Administrative Agent or any Lender shall acquire actual knowledge, or
shall have been notified in writing, of any Default or Event of Default, the Administrative Agent
or such Lender shall promptly notify
37
the other Lenders, and the Administrative Agent shall take such action and assert such rights
under this Agreement as the Required Lenders shall request in writing, and the Administrative Agent
shall not be subject to any liability by reason of its acting pursuant to any such request. If the
Required Lenders shall fail to request the Administrative Agent to take action or to assert rights
under this Agreement in respect of any Event of Default within ten days after their receipt of the
notice of any Event of Default, or shall request inconsistent action with respect to such Event of
Default, the Administrative Agent may, but shall not be required to, take such action and assert
such rights (other than rights under Article 8) as it deems in its discretion to be advisable for
the protection of the Lenders, except that, if the Required Lenders have instructed the
Administrative Agent not to take such action or assert such right, in no event shall the
Administrative Agent act contrary to such instructions.
Section 9.6.
Indemnification.
Each Lender severally agrees to indemnify the Administrative Agent (to the extent not
promptly reimbursed by the Borrower) from and against such Lenders 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, experts, agents and
consultants) of any kind or nature whatsoever that may be imposed on, incurred by, or asserted
against the Administrative Agent in any way relating to or arising out of the Loan Documents or any
action taken or omitted by the Administrative Agent 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 found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted from the
Administrative Agents gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for its
ratable share of any costs and expenses payable by the Borrower under Section 10.4, to the
extent that the Administrative Agent is not promptly reimbursed for such costs and expenses by the
Borrower. For purposes of this Section, the Lenders respective ratable shares of any
amount shall be determined, at any time, with reference to:
(a) at any time after the funding of the Term Loan on the Agreement Date, the aggregate
principal amount of the Term Loan outstanding at such time and owing to the respective Lenders; or
(b) at any time prior to funding the Term Loan on the Agreement Date, their respective unused
Commitments at such time.
Section 9.7. Successor Administrative Agent. The Administrative Agent may resign at any time by giving written notice thereof to the
Lenders and the Borrower. Upon any such resignation, the Required Lenders shall have the right to
appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment, within thirty (30)
days after the retiring Administrative Agents giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which
shall be any Lender or a commercial bank or other financial institution and having a combined
capital and reserves in excess of U.S. $500,000,000. The resignation of such retiring
Administrative Agent shall be effective only upon (i) the acceptance of any appointment as an
Administrative Agent
38
hereunder by a successor Administrative Agent, and (ii) the execution of all documents and the
taking of all other actions reasonably necessary in the opinion of the successor Administrative
Agent, in connection with such substitution. Upon such effectiveness pursuant to the foregoing
clauses (i) and (ii), such successor Administrative Agent shall succeed to and become vested with
all the rights, powers, discretion, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and obligations under the
Loan Documents. After any retiring Administrative Agents resignation or removal hereunder as an
Administrative Agent, the provisions of this Article 9 and Section 10.4 shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was an Administrative
Agent under this Agreement.
Section 9.8. Administrative Agent May File Proofs of Claim. The Administrative Agent may file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Administrative Agent (including any
claim for the reasonable compensation, expenses, disbursements and advances of the Administrative
Agent, its agents, financial advisors and counsel) and the Lenders allowed in any judicial
proceedings relative to any Loan Party, or any of their respective creditors or property, and shall
be entitled and empowered to collect, receive and distribute any monies, securities or other
property payable or deliverable on any such claims and any custodian in any such judicial
proceedings is hereby authorized by each Lender to make such payments to the Administrative Agent
and, in the event that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due to the Administrative
Agent for the reasonable compensation, expenses, disbursements and advances of the Administrative
Agent, its agents, financial advisors and counsel, and any other amounts due the Administrative
Agent. Nothing contained in this Agreement or the other Loan Documents shall be deemed to
authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any
Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations
or the rights of any Lender with respect thereto, or to authorize the Administrative Agent to vote
in respect of the claim of any Lender in any such proceeding.
Section 9.9. Sole Lead Arranger and Book Runner. It is expressly acknowledged and agreed by the Administrative Agent, each Lender and the
Borrower, for the benefit of Rabobank in its capacities as the Sole Lead Arranger and Book Runner,
that the Rabobank, in its capacities as the Sole Lead Arranger and Book Runner, has no duties or
obligations whatsoever with respect to this Agreement or any other documents or any matter related
thereto.
ARTICLE 10.
MISCELLANEOUS
Section 10.1. Amendments, Etc. No amendment or waiver of any provision of this Agreement 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 the Lenders
affected thereby, reduce the principal of, or the rate of interest specified herein on
39
the Term Loan or the rate of fees payable for the account of any Lender hereunder, or postpone
any scheduled date for any payment of principal, interest or fees due to any Lender;
(b) no amendment, waiver or consent shall, unless in writing and signed by all of the Lenders
affected thereby and acknowledged by the Administrative Agent, increase (i) the amount of the
Commitment of any Lender, or (ii) any Lenders Pro Rata Share;
(c) no amendment, waiver or consent shall, unless in writing and signed by all of the Lenders
and acknowledged by Administrative Agent, do any of the following at any time:
(i) waive any of the conditions specified in Section 3.1;
(ii) change the definition of Required Lenders hereunder;
(iii) amend this Section 10.1; or
(iv) extend the Maturity Date;
(d) no amendment, waiver or consent shall, unless in writing and signed by the Administrative
Agent, in addition to the Lenders required above to take such action, affect the rights or duties
of the Administrative Agent under this Agreement; and
(e) An Incorporation Amendment executed by the Administrative Agent shall not require the
consent of the Required Lenders or any of the Lenders provided such Incorporation Amendment
does not amend, modify or waive any provisions of this Agreement except as set forth in the
definition of Approved Amendment.
In addition, anything in this Agreement to the contrary notwithstanding, if any Lender shall
fail to fulfill its obligations to make its Pro Rata Share of the Term Loan hereunder on the
Agreement Date, 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 (including without limitation under this Section 10.1) to
have no share of the Term Loan or Commitment, shall not be treated as a Lender hereunder when
performing the computation of Required Lenders, and shall have no rights under this Section
10.1; provided that any action taken by the other Lenders with respect to the
matters referred to in clause (a) of this Section 10.1 shall not be effective as against
such Lender.
Section 10.2. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including
telecopy communication) and mailed, telecopied or delivered,
(a) if to AGCO or the Borrower to AGCO at its address at 4205 River Green Parkway, Duluth,
Georgia 30096-2568, Attention: General Counsel, Facsimile No. (770) 813-6158, with a copy to the
Chief Financial Officer of AGCO at the same address and telecopier number and a copy to Assistant
Treasurer EAME/ANZ & EEA of AGCO Ltd. at Abbey Park, Stoneleigh, Kenilworth, CV8 2TQ, UK, Telephone
No. +44 2476852549, Facsimile No. +44
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2476852640, and Email: IainWatson@uk.AGCOcorp.com and DLCovUKTreasury@uk.agcocorp.com;
(b) if to any Lender, at its Facility Office specified on its signature page hereto or in the
Assignment and Acceptance pursuant to which it became a Lender;
(c) if to the Administrative Agent, in connection with any notice of any payment or prepayment
of the Obligations, at its address at c/o Rabo Support Services, Inc., 10 Exchange Place, Jersey
City, NJ 07302, Attention: Sui Price; Telecopy No. 201-499-5326; Telephone No. (201) 499-5313;
Email: sui.price@rabobank.com; and
(d) if to Administrative Agent in connection with any other matter (including deliveries under
Article 6 and other matters), to it at 1180 Peachtree Street, Suite 2200, Atlanta GA 30309
Attention: Betty Janelle; Telecopy No. (404) 870-8025; Telephone No. (404) 870-8001; and with a
copy to 245 Park Avenue, New York, NY 10167, Attention: Brett Delfino, Esq.; Telecopy No. (212)
916-3743; Telephone No. (212) 808-7880;);
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 five days
after deposit in the mail and when transmitted by telecopier, except that notices and
communications to the Administrative Agent pursuant to Articles 2, 3 or 9
shall not be effective until received by the Administrative Agent.
Section 10.3. No Waiver; Remedies. No failure on the part of any Lender or Administrative Agent to exercise, and no delay in
exercising, any right hereunder or under any Loan Document 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 10.4. Costs and Expenses.
(a) The Borrower agrees to pay on demand all costs and expenses of the Administrative Agent in
connection with the preparation, execution, delivery, administration, modification and amendment of
the Loan Documents at any time (including without limitation the reasonable fees and expenses of
counsel (including without limitation New York and Swiss counsel) for the Administrative Agent with
respect thereto).
(b) The Borrower further agrees to pay on demand all costs and expenses of the Administrative
Agent and each Lender in connection with the enforcement of its rights in connection with this
Agreement and the other the Loan Documents, whether in any action, suit or litigation, any workout,
bankruptcy, insolvency or other similar proceeding affecting creditors rights generally or
otherwise (including without limitation the reasonable fees and expenses of counsel and consultants
for the Administrative Agent and each Lender with respect thereto), and the Borrower agrees to pay
on demand all such costs and expenses in respect of any such enforcement relating to itself.
(c) AGCO and the Borrower each agree to indemnify and hold harmless the Administrative Agent
and each Lender and each of their Affiliates and their officers, directors,
41
trustees, 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) 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
(ii) the financing hereunder or the use of the proceeds thereof,
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 Partys gross negligence or willful misconduct. Each of AGCO and the Borrower agree
not to assert any claim against the Administrative Agent, any Lender, any of their Affiliates, or
any of their respective directors, officers, employees, attorneys and agents, on any theory of
liability, for special, indirect, consequential or punitive damages arising out of or otherwise
relating to any of the transactions contemplated herein or in any other Loan Document or the actual
or proposed use of the proceeds of the Term Loan.
(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 the Administrative Agent or any Lender, in
its sole discretion.
Section 10.5. 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 8.2 to authorize
the Administrative Agent to declare the Term Loan, all interest thereon and all other amounts
payable under this Agreement and the other Loan Documents due and payable pursuant to the
provisions of Section 8.2, 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, to offset 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, to the extent not prohibited by
Swiss law to the extent applicable, such Affiliate to or for the credit or the account of the
Borrower or AGCO against any and all of the Obligations of the Borrower or AGCO now or hereafter
existing under this Agreement or any Loan Document, irrespective of whether such Lender shall have
made any demand under this Agreement or any Loan Document and although such obligations may be
unmatured. Each Lender agrees promptly to notify the Borrower or AGCO after any such set-off and
application; provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender and its Affiliates under this
Section are in addition to other rights and remedies (including without limitation other
rights of set-off) that such Lender and its Affiliates may have.
42
Section 10.6. Binding Effect. This Agreement shall become effective when it shall have been executed by the Borrower and
the Administrative Agent 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 Borrower, the Administrative Agent and each Lender and their respective successors and assigns,
except that the Borrower shall have no right to assign its rights hereunder or any interest herein
without the prior written consent of each Lender.
Section 10.7. Assignments and Participations.
(a) Each Lender may, with the prior consent of the Administrative Agent, 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 the Term Loan owing to it); provided
that:
(i) no such assignment or transfer results in more than 5 (five) Non-Qualifying Banks being
Lenders under this Agreement;
(ii) in the case of each such assignment (except in the case of an assignment to a Person
that, immediately prior to such assignment, was a Lender or an assignment of all of a Lenders
rights and obligations under this Agreement), the amount of the Term Loan of the assigning 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 5,000,000 and shall be
an integral multiple of 500,000 in excess thereof;
(iii) such assignment shall be to an Eligible Assignee;
(iv) the proposed assignment (if other than an assignment by a Lender to an Affiliate of such
Lender that is a Qualifying Bank) shall be approved by (x) the Administrative Agent, such approval
by the Administrative Agent not to be unreasonably withheld or delayed, and (y) if no Default then
exists, the Borrower, such approval by the Borrower not to be unreasonably withheld or delayed;
provided, however, consent by the Borrower shall not be deemed to be unreasonably
withheld if such assignment would result in Rabobanks Pro Rata Share of the Term Loan being less
than fifty percent (50%) of the total of the aggregate outstanding principal amount of the Term
Loan; and
(v) 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 a processing and recordation fee of U.S. $3,500, payable by the assignee
to the Administrative Agent (with only one such fee payable in connection with contemporaneous
assignments pursuant to the same Assignment and Acceptance to or by two or more Approved Funds of a
single Lender). Such Assignment and Acceptance shall indicate whether the assignee is a Qualifying
Bank or Non-Qualifying Bank as of such date.
(b) An assignment, or transfer in relation to a Term Loan will only be effective if made in
accordance with this Section 10.7 and the new Lender has given the confirmation required pursuant
to Section 3.3. If the new Lender is not a Qualifying Bank, and there are reasonable concerns that
the Swiss Federal Tax Administration could look through such
43
Lender and as a result not accept such Lender as one Non-Qualifying Bank Lender only, the
Borrower may, prior to consenting to the assignment or transfer, require that such new Lender
provide to it a written confirmation signed by the Swiss Federal Tax Administration confirming that
such new Lender is considered by the Swiss Federal Tax Administration to be one Non-Qualifying
Bank.
(c) Upon such execution, delivery, acceptance and recording, from and after the effective date
specified in such Assignment and Acceptance:
(i) 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
(ii) 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 Lenders
rights and obligations under this Agreement, such Lender shall cease to be a party hereto).
(d) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder
and the assignee thereunder confirm to and agree with each other and the other parties hereto as
follows:
(i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any statements, warranties
or representations made in or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto;
(ii) such assigning Lender makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower or the performance or observance by the
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 3.1 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 the Administrative 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;
44
(vi) such assignee appoints and authorizes the 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 by the terms hereof, together with such powers and discretion
as are reasonably incidental thereto;
(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;
(viii) that the benefit of the security interests and guarantees attached to the rights being
assigned shall be transferred to the benefit of the assignee upon the completion of such
assignment;
(ix) such assignee confirms, represents and warrants that its designation as either a
Qualifying Bank or a Non-Qualifying Bank provided in the Assignment and Acceptance is true and
correct; and
(x) such assignee agrees to permit the Borrower to disclose its identity to the Swiss Federal
Tax Administration.
(e) The Administrative Agent shall maintain at its address referred to in Section 10.2
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 Lenders, their respective Commitments, and the
principal amount of the Term Loan owing to each Lender from time to time (the Register).
The entries in the Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Administrative Agent 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 the Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an
assignee, the Administrative Agent shall, if such Assignment and Acceptance has been completed and
is in substantially the form of Exhibit A hereto:
(i) record the information contained therein in the Register; and
(ii) give prompt notice thereof to the Borrower.
(g) 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 rights in
the Term Loan) to a financial institution (a Participant); provided that:
(i) such Lenders obligations under this Agreement shall remain unchanged;
(ii) such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations;
45
(iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lenders rights and obligations under
this Agreement;
(iv) the relationship between the Lender and the Participant is that of a debtor and creditor
(including in the event of the bankruptcy or similar event of the Lender or a Borrower);
(v) the Participant will have no proprietary interest in the benefit of this Agreement or in
any monies received by the Lender under or in relation to this Agreement;
(vi) the Participant will under no circumstances (other than pursuant to an assignment
permitted under Section 10.7) be subrogated to, or substituted in respect of, the Lenders claims
under this Agreement;
(vii) the Participant will under no circumstances (other than pursuant to an assignment
permitted under Section 10.7) otherwise have any contractual relationship with, or rights against,
the Borrower under or in relation to this Agreement; and
(viii) the terms of such participation agreement with a Participant (including any
sub-participant), shall include provisions, in respect of any sub-participations, identical to the
provisions of this Section 10.7(g) mutatis mutandis.
(h) Any Lender may, in connection with any assignment or participation or proposed assignment
or participation pursuant to this Section 10.7, disclose to the assignee or Participant or
proposed assignee or Participant, any public information relating to the Borrower furnished to such
Lender by or on behalf of the Borrower and any information conspicuously labeled by the 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.
(i) 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 portion of the Term Loan owing to it) in favor of any Federal Reserve Bank
in accordance with Regulation A of the Board of Governors of the Federal Reserve System and any
Lender that is a fund may pledge all or any portion of its rights under this Agreement (including
without limitation the portion of the Term Loan owing to it) to its trustee in support of its
obligations to its trustee.
Section 10.8. Marshalling; Payments Set Aside. Neither the Administrative Agent nor any Lender shall be under any obligation to marshal
any assets in favor of the Borrower or any other party or against or in payment of any or all of
the Obligations. To the extent that the Borrower makes a payment or payments to the Administrative
Agent or the Lenders or any of such Persons exercise their rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a
trustee, receiver or any other party, then to the extent of such recovery, the obligation or part
thereof originally intended to be
46
satisfied, and all Liens, right and remedies therefor, shall be revived and continued in full
force and effect as if such payment had not been made or such enforcement or setoff had not
occurred.
Section 10.9.
Intentionally Omitted.
Section 10.10. Intentionally
Omitted.
Section 10.11. Patriot Act. Each Lender hereby notifies the Borrower that pursuant to the requirements of the USA
Patriot Act, it is required to obtain, verify and record information that identifies the Borrower
and the other Loan Parties, which information includes the name and address of the Borrower and the
other Loan Parties and other information that will allow such Lender to identify the Borrower and
the other Loan Parties in accordance with the USA Patriot Act.
Section 10.12. Limitations on Obligations of the Borrower.
(a) If and to the extent that:
(i) the Borrower under this Agreement guarantees, indemnifies or otherwise secures or pays
obligations owing by any other Person (Restricted Obligations) other than obligations of
one of its direct or indirect subsidiaries (i.e. obligations of the Borrowers direct or indirect
parent companies (up-stream liabilities) or sister companies (cross-stream liabilities)); and
(ii) a payment in fulfilling such obligations would, under Swiss law and practice, constitute
a repayment of capital (Einlagerückgewähr), a violation of the legally protected reserves
(gesetzlich geschützte Reserven) or the payment of a (constructive) dividend (Gewinnausschüttung)
by the Borrower or would otherwise be restricted under Swiss corporate law, such Restricted
Obligations (and the amount of any payment in relation thereto) shall from time to time be limited
to the amount permitted to be paid under Swiss law and practice (such amount being the Maximum
Amount); provided, that such Maximum Amount shall at no time be less than such the
profits and reserves of the Borrower available for distribution as dividends (being the balance
sheet profits and any reserves available for this purpose, in each case in accordance with art.
675(2) and art. 671(1) and (2), no. 3 and (4), of the Swiss Federal Code of Obligations) at the
time or times payment under or pursuant to this Section 10.12 is requested from the
Borrower; and such limitation to the Maximum Amount (as may apply from time to time or not) shall
not (generally or definitively) release or discharge the Borrower from its obligations under
Section 10.12 in excess thereof, but merely postpone the payment date therefore until such
times as payment is again permitted notwithstanding such limitation. Any and all indemnities and
guarantees contained in the Loan Documents including, shall be construed in a manner consistent
with the provisos herein contained.
(b) In respect of any Restricted Obligations, the Borrower shall:
(i) if and to the extent required by Applicable Law in force at the relevant time, subject to
any applicable double taxation treaty, (x) deduct Swiss Withholding Tax at the rate of 35% (or such
other rate as in force from time to time) from any payment made by it in respect of Restricted
Obligations, (y) pay any such deduction to the Swiss Federal Tax
47
Administration, and (z) notify and provide evidence to the Administrative Agent that the Swiss
withholding tax has been paid to the Swiss Federal tax administration;
(ii) as soon as possible after a deduction for Swiss withholding tax is made as required by
applicable law, (x) ensure that any Person which is entitled to a full or partial refund of the
Swiss withholding tax, is in a position to be so refunded, and (y) in case it has received any
refund of the Swiss withholding tax, pay such refund to the Administrative Agent promptly upon
receipt thereof.
(iii) if the enforcement of any Restricted Obligations would be limited as a result of any
matter referred to in paragraphs (a) and/or (b) above, that the Borrower shall, to the extent
permitted by applicable law, write up or realize any of its assets shown in its balance sheet with
a book value that is significantly lower than the market value of the assets, in case of
realization, however, only if such assets are not necessary for the Borrowers business (nicht
betriebsnotwendig); and
(iv) take all such other measures necessary or useful to allow the Borrower to make the
payments and perform the obligations agreed hereunder with a minimum of limitations.
(c) For the avoidance of doubt, where a deduction for Swiss withholding tax is required
pursuant to Section 10.12(b), the obligations under Section 2.6 and Section
11.4(a) remain applicable, except to the extent and for as long as that would cause the Maximum
Amount to be exceeded. This Section 10.12 is without prejudice to the gross-up or
indemnification obligations of any Loan Party (other than the Borrower) under this Agreement.
ARTICLE 11.
INCREASED COSTS, TAXES, ETC.
Section 11.1. 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
Agreement Date, there shall be any increase in the cost to any Lender of agreeing to make or of
making, funding or maintaining the Term Loan, in any case to or for the account of the Borrower,
then the Borrower shall from time to time, upon demand by such Lender pay to the Administrative
Agent, for the account of such Lender additional amounts sufficient to compensate such Lender for
such increased cost. A certificate as to the amount of such increased cost and stating that such
Lenders request for payment is consistent with such Lenders internal policies, submitted to the
Borrower by such Lender, shall be conclusive and binding for all purposes, absent manifest error.
(b) If any Lender 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
48
Agreement Date, affects or would affect the amount of capital required or expected to be
maintained by such Lender or any corporation controlling such Lender and that the amount of such
capital is increased by or based upon the existence of such Lenders portion of the Term Loan
hereunder, then, upon demand by such Lender the Borrower shall pay to the Administrative Agent, for
the account of such Lender, from time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender in the light of such circumstances, to the extent that such
Lender reasonably determines such increase in capital to be allocable to the existence of such
Lenders commitment to lend or portion of the Term Loan hereunder. A certificate as to such
amounts and stating that such Lenders request for payment is consistent with such Lenders
internal policies, submitted to the Borrower by such Lender, shall be conclusive and binding for
all purposes, absent manifest error. For the avoidance of doubt, this Section shall apply
to all requests, rules, guidelines or directives concerning capital adequacy issued in connection
with the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules,
guidelines or directives concerning capital adequacy promulgated by the Bank for International
Settlements, the Basel Committee on Banking Regulations and Supervisory Practices (or any successor
or similar authority) or the United States financial regulatory authorities, regardless of the date
adopted, issued, promulgated or implemented.
(c) [Intentionally omitted].
(d) [Intentionally omitted].
(e) [Intentionally omitted].
(f) 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 within
one hundred eighty (180) days, after such Lender obtains actual knowledge thereof; provided
that:
(i) if any Lender fails to give such notice within one hundred eighty (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) of this Section in respect of any costs resulting
from such event, only be entitled to payment under such subsection (a) or (b) of this
Section for costs incurred from and after the date one hundred eighty (180) days prior to
the date that such Lender gives such notice; and
(ii) each Lender will designate a different Facility Office 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 11.2. Breakage Costs. In the event that the Borrower prepays any portion of the principal amount of the Term Loan
before the Maturity Date (either voluntarily, pursuant to Section 2.4, or as may be
required by the Lenders as a result of an Event of Default, pursuant to Article 8), then
the Borrower shall reimburse each Lender for the actual costs, losses and expenses incurred by such
Lender, and any payments made by such Lender to any counterparty (it being agreed that the
application of any funds or other property on deposit with, or held for the benefit of, any
counterparty or any set-off by such counterparty shall be deemed a payment
49
hereunder), in connection with terminating or closing-out, as of such prepayment date, any
interest rate swap transactions, currency swap transactions or other derivative transactions
entered into by the Lender in connection with making the Term Loan (including any interest rate
swap transaction entered into by such Lender pursuant to an assignment or novation of all or a
portion of an Initial Lenders position in such swap or derivative transaction at the time such
Lender becomes a party hereto pursuant to and in accordance with Section 10.7). A
certificate of any Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section 11.2 shall be delivered to the Borrower and the
Administrative Agent by such Lender and shall be presumptively correct absent manifest error. The
Borrower shall pay to the Administrative Agent for the account of such Lender the amount shown as
due on any such certificate within two (2) Business Days after receipt of such certificate or, if
later, on the date of any such prepayment; provided, however, with respect to any
repayment or prepayment required by the Lenders as a result of an Event of Default pursuant to
Article 8, the amount shown as due on such certificate shall be immediately due and payable
by the Borrower on the date the Borrower receives such certificate.
Section 11.3. Judgment Currency.
(a) If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum
due hereunder 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. (New York, New York time) on the second Business Day preceding that on which final
judgment is given.
(b) The obligation of the Borrower in respect of any sum due in the Original Currency from it
to any Lender or the Administrative Agent hereunder 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 the Administrative Agent (as the case may be) of any sum adjudged to be so due in such
Other Currency such Lender or the Administrative 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 the
Administrative Agent (as the case may be) in the Original Currency, the Borrower agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify such Lender or the
Administrative 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 the Administrative Agent (as
the case may be) in the Original Currency, such Lender or the Administrative Agent (as the case may
be) agrees to remit to the Borrower such excess.
Section 11.4. Taxes.
(a) Any and all payments by the Borrower hereunder shall be made, in accordance with
Section 2.8, 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, (i) in the case of each Lender and the
50
Administrative Agent, franchise taxes and taxes imposed or calculated by reference to net
income that are imposed on such Lender, or the Administrative Agent by the state or foreign
jurisdiction under the laws of which such Lender or the Administrative Agent (as the case may be)
is organized or any political subdivision thereof (including the country within which such state or
jurisdiction is located), (ii) in the case of each Lender, franchise taxes and taxes imposed or
calculated by reference to net income that are imposed on such Lender by the state, province or
foreign jurisdiction of such Lenders Facility Office or any political subdivision thereof, (iii)
any Swiss Withholding Tax that is imposed on amounts payable to a Lender under a double taxation
treaty applicable to such Lender at the time such Lender becomes a party hereto (or designates a
new Facility Office) or is attributable to such Lenders failure or inability (other than as a
result of a change in Applicable Law) to comply with Section 11.4(e), except to the extent
that such Lender (or its assignor, if any) was entitled, at the time of designation of a new
Facility Office (or assignment), to receive additional amounts from any Loan Party with respect to
such withholding tax pursuant to this Section 11.4(a) (provided that such
Lender has complied with Section 11.4(e)), and (iv) any United States federal withholding
tax imposed in connection with or relating to a Lender under FATCA (all such taxes, levies,
imposts, deductions, charges, withholdings and liabilities, other than those excluded under the
preceding clauses (i), (ii), (iii) and (iv) being hereinafter referred to as Taxes). If
the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable
hereunder to the Administrative 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) such Lender or the Administrative 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 Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any present or future stamp, documentary, excise,
property or similar taxes, charges or levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this Agreement (hereinafter
referred to as Other Taxes).
(c) The Borrower shall indemnify each Lender and the Administrative 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, paid by or imposed on such Lender or the Administrative Agent
(as the case may be), including without limitation any liability (including penalties, additions to
tax, interest and expenses) arising therefrom or with respect thereto. This indemnification shall
be made within thirty (30) days from the date such Lender or the Administrative 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 the Administrative Agent shall not be required to describe in such
certificate information that such Lender or the Administrative Agent deems to be confidential or
the disclosure of which is inconsistent with such Lenders or the Administrative Agents internal
policies. Any such calculation shall be conclusive, absent manifest error.
(d) Within thirty (30) days after the date of any payment of Taxes, the Borrower shall furnish
to the Administrative Agent at its address referred to in Section 10.2, the
51
original receipt of payment thereof or a certified copy of such receipt. In the case of any
payment hereunder by the Borrower through an account or branch outside the United States or on
behalf of the Borrower by a payor that is not a United States person, if the Borrower determines
that no Taxes are payable in respect thereof, the Borrower shall furnish, or shall cause such payor
to furnish, to the Administrative Agent, at such address, an opinion of counsel reasonably
satisfactory to the Administrative Agent stating that such payment is exempt from Taxes. For
purposes of this subsection (d) and subsection (e) of this Section, the terms United
States and United States person shall have the meanings specified in Section 7701 of the
Internal Revenue Code.
(e) Each Lender 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 the Borrower or the Administrative Agent (but only so long
thereafter as such Lender remains lawfully able to do so), provide the Administrative Agent and the
Borrower with (i) in the case of each Lender organized under the laws of a jurisdiction outside the
United States (A) if such Lender claims an exemption from withholding tax pursuant to its portfolio
interest exception, (I) a statement of the Lender, signed under penalty of perjury, that it is not
(1) a bank as described in Section 881(c)(3)(A) of the Internal Revenue Code, (2) a ten percent
(10%) shareholder of the Borrower (within the meaning of Section 871(h)(3)(B) of the Internal
Revenue Code), or (3) a controlled foreign corporation related to the Borrower within the meaning
of Section 864(d)(4) of the Internal Revenue Code, and (II) a properly completed and executed IRS
Form W-8BEN, (B) if such Lender claims an exemption from, or a reduction of, withholding tax under
a United States tax treaty, properly completed and executed IRS Form W-8BEN; (C) if such Lender
claims that interest paid under this Agreement is exempt from United States withholding tax because
it is effectively connected with a United States trade or business of such Lender, a properly
completed and executed copy of IRS Form W-8ECI; and (D) such other form or forms as may be required
under the Internal Revenue Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax; and (ii) in the case of each Lender organized
under the laws of a jurisdiction outside of jurisdiction where the Borrower is resident, such valid
and fully completed forms, as are 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 the Borrower is resident that reduces the rate of interest withholding tax on payments
under this Agreement (each such Lender entitled to such benefits, a Treaty Lender).
(f) If the appropriate forms provided by a Lender under subsection (e) of this Section
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) of this Section in respect of United
States or the jurisdiction wherein the Borrower is organized with respect to interest paid at such
date by the 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
52
Taxes) 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) of this Section requires the
disclosure of information, other than information necessary to compute the tax payable and
information required on the Agreement Date by Internal Revenue Service form W-8ECI or W-8BEN or
other form that the Borrower has indicated in writing to the Lenders on the Agreement Date as being
a required form to avoid or reduce withholding tax on payments under this Agreement, that a Lender
reasonably considers to be confidential, such Lender shall give notice thereof to the Borrower and
shall not be obligated to include in such form or document such confidential information.
(g) If any Lender claims exemption from, or reduction of, withholding tax pursuant to
subsection (a) of this Section, and such Lender sells, assigns, grants a participation in,
or otherwise transfers all or part of the Obligations of the Borrower to such Lender, such Lender
agrees to notify the Administrative Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Borrower to such Lender. To the extent of such percentage
amount, the Administrative Agent will treat such Lenders documentation as no longer valid. If any
Lender is entitled to a reduction in the applicable withholding tax, the Administrative Agent may
withhold from any interest payment to such Lender in an amount equivalent to the applicable
withholding tax after taking into account such reduction. If the forms or other documentation
required by subsection (e) of this Section are not delivered to the Administrative Agent,
then the Administrative Agent may withhold from any interest payment to such Lender not providing
such forms or other documentation an amount equivalent to the applicable withholding tax. If the
Internal Revenue Service or any other Governmental Authority of the United States or other
jurisdiction asserts a claim that the Administrative Agent did not properly withhold tax from
amounts paid to or for the account of any Lender (because the appropriate form was not delivered,
was not properly executed, or because such Lender failed to notify the Administrative Agent of a
change in circumstances which rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason) such Lender shall indemnify and hold the Administrative Agent
harmless for all amounts paid, directly or indirectly, by the Administrative Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on
the amounts payable to the Administrative Agent under this Section, together with all costs
and expenses (including attorneys fees and expenses). The obligation of the Lenders under this
subsection shall survive the payment of all Obligations and the resignation or replacement of the
Administrative Agent.
(h) For any period with respect to which a Lender has failed to provide the Borrower with the
appropriate form described in subsection (e) of this Section (other than
(A) 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 (B) if such form otherwise is not required under subsection (e) of
this Section), such Lender shall not be entitled to an additional payment or
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 Borrower shall take such steps as such Lender shall
reasonably request to assist such Lender to recover such Taxes.
(i) If the Borrower makes a payment under subsection (a) or (c) of this Section and
the Administrative Agent or Lender determines that a credit against, relief or
53
remission for, or repayment of any tax, is attributable to that payment or to the Taxes which
gave rise to that payment (a Tax Credit), and the Administrative Agent or Lender has
obtained, utilized and retained that Tax Credit, the Administrative Agent or Lender shall pay the
amount of the Tax Credit to the Borrower up to such amount as the Administrative Agent or Lender
determines will leave it (after that payment) in no better and no worse after-tax position as it
would have been in had the payment under subsection (a) or (c) of this Section not been
made by the Borrower.
(j) Without prejudice to the survival of any other agreement of the Borrower hereunder, the
agreements and obligations of the Borrower contained in this Section 11.4 shall survive the
payment in full of principal and interest hereunder.
(k) If, after FATCAs effective date, a payment made to a Lender under any Loan Document would
be subject to U.S. Federal withholding Tax imposed by FATCA if such Lender fails to comply with the
applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b)
of the Internal Revenue Code, as applicable), such Lender shall deliver to the Borrower and
Administrative Agent (A) a certification signed by the chief financial officer, principal
accounting officer, treasurer or controller of such Lender and (B) other documentation reasonably
requested by the Borrower or Administrative Agent sufficient for the Borrower and Administrative
Agent to comply with their obligations under FATCA and to determine that such Lender has complied
with such applicable reporting requirements or otherwise qualified for an exemption under FATCA.
In addition, each Lender shall indemnify the Administrative Agent and the Borrower for any
withholding Tax or other penalties imposed in connection with any withholdable payment, as
defined in Section 1473 of the Code, made to a foreign Lender that has failed to comply with the
reporting requirements or otherwise qualify for an exemption under FATCA.
(l) The Borrower shall not be required to make an additional payment or indemnification under
subsections (a) or (c) of this Section to any specific Lender with respect to Swiss
Withholding Tax (i) if on the date on which the payment falls due such Lender is a Treaty Lender
and the Borrower is able to demonstrate that the payment could have been made to the Lender without
the tax deduction had such Lender not failed to provide the Borrower with the appropriate form
described in subsection (e) of this Section (other than (A) 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 (B) if such form otherwise is not required under subsection (e) of this
Section), or (ii) with respect to any Swiss Withholding Tax payable as a result of a breach
of the Swiss Non-Bank Rules, if (A) any representation made by such Lender made under Section
3.3, in the case of any Initial Lender, or as required under Section 10.7, in the case
of any assignee of an Initial Lender, that such Lender is a Qualifying Bank proves to be false at
the time such representation was made and such Swiss Withholding Tax would not have been payable if
such representation were true, or (B) such breach of the Swiss Non-Bank Rules is the result of (I)
such Lender breaching the requirements and limitations for assignments or participations under
Section 10.7, or (II) to the extent such Lender was a Qualifying Bank at the time such
Lender became a party to this Agreement, such Lender ceasing to be a Qualifying Bank because of a
change in such Lenders Facility Office, jurisdiction of incorporation, branch location or because
of such Lender ceasing to effectively conduct banking activities as its principal purpose.
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Section 11.5. Replacement of a Lender. Subject to the second and third paragraphs of this Section 11.5, if:
(a) a Lender requests compensation under Section 11.1 and other Lenders holding at
least one-third of the aggregate amount of the Term Loan shall not have made a similar request;
(b) a Lender requests compensation under Section 11.4(a) with respect to any Taxes
other than Swiss Withholding Tax;
(c) a Lender that was a Qualifying Bank at the time such Lender became a party to this
Agreement ceases be a Qualifying Bank and after such Lender ceases to be a Qualifying Bank there
would be more than 5 (five) Non-Qualifying Banks as Lenders under this Agreement;
(d) a Lender becomes insolvent, goes into receivership or fails to make the portion of the
Term Loan required to be made by it hereunder; or
(e) any Lender that is not the Administrative Agent or an Affiliate of the Administrative
Agent does not consent to any amendment, waiver or consent to any Loan Document for which the
consent of the Required Lenders is obtained but that requires the consent of all the Lenders,
then the Administrative Agent (i) may replace such Lender (the Affected Lender), or
cause such Affected Lender to be replaced, or (ii) upon the written request of the Borrower, the
Administrative Agent shall replace such Affected Lender with an Eligible Assignee
(provided, that in the case of any Lender replaced pursuant to clause (c) of this Section,
such Eligible Assignee shall also be Qualifying Bank) identified by the Borrower (the
Replacement Lender), by having such Affected Lender sell and assign all of its rights and
obligations under this Agreement and the other Loan Documents to the Replacement Lender pursuant to
Section 10.7; provided, however, that neither the Administrative Agent nor
any Lender shall have any obligation to identify or locate a Replacement Lender for the Borrower
(it being expressly agreed that in such circumstances it is the Borrowers obligation to identify
or locate a Replacement Lender). Upon receipt by any Affected Lender of a written notice from the
Administrative Agent stating that the Administrative Agent or the Borrower is exercising the
replacement right set forth in this Section, such Affected Lender shall sell and assign all
of its rights and obligations under this Agreement and the other Loan Documents to the Replacement
Lender pursuant to an Assignment and Acceptance and Section 10.7 for a purchase price equal
to the sum of the principal amount of such Affected Lenders Pro Rata Share of the Term Loan, all
accrued and unpaid interest thereon and its ratable share of all fees to which it is entitled
through the assignment date.
Subject to the execution and delivery to the Administrative Agent and the Affected Lender by
the Replacement Lender of an Assignment and Acceptance (and the approval thereof by the applicable
Persons specified in Section 10.7(a)) and the payment to the Administrative Agent by the
Borrower on behalf of such Affected Lender of the assignment fee specified in Section
10.7(a)(v), the Replacement Lender shall succeed to the rights and obligations of such
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Affected Lender hereunder and such Affected Lender shall no longer be a party hereto or have
any rights hereunder; provided that the obligations of the Borrower to such
Affected Lender under Sections 11.1, 11.2, 11.3 and 11.4 with
respect to events occurring or obligations arising before or as a result of such replacement shall
survive such replacement.
The Borrower may not exercise its rights under this Section with respect to any Lender
if a Default has occurred and is continuing.
ARTICLE 12.
JURISDICTION
Section 12.1. Consent to Jurisdiction. Each party hereto 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;
(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 the Borrower at its address specified in Section 10.2;
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 shall affect the right of the Administrative Agent or any
Lender to serve legal process in any other manner permitted by law or affect the right of the
Administrative Agent or any Lender to bring any action or proceeding against the Borrower or its
property in the courts of other jurisdictions.
The 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 10.2.
Section 12.2. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the
State of New York, without regard to the conflicts of law principles thereof insofar as such
principles would defer to the substantive laws of some other jurisdiction.
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Section 12.3. 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 or other electronic
transmission shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 12.4. Intentionally Omitted.
Section 12.5. Intentionally Omitted.
Section 12.6. Waiver of Jury Trial. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER 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 TERM LOAN OR THE ACTIONS OF
THE ADMINISTRATIVE AGENT OR ANY LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR
ENFORCEMENT THEREOF.
ARTICLE 13.
CONFIDENTIALITY
The Administrative Agent and the Lenders each individually (and not jointly or jointly and
severally) agree that material, non-public information regarding AGCO and its Subsidiaries, their
operations, assets, and existing and contemplated business plans shall be treated by the
Administrative Agent and the Lenders in a confidential manner, and shall not be disclosed by the
Administrative Agent and the Lenders to Persons who are not parties to this Agreement, except: (a)
to attorneys for and other advisors, accountants, auditors, and consultants to any Lender, (b) to
Subsidiaries and Affiliates of any Lender, provided that any such Subsidiary or
Affiliate shall have agreed to receive such information hereunder subject to the terms of this
Article 13, (c) as may be required by statute, decision or other judicial or administrative
order, rule, or regulation, (d) as may be agreed to in advance by AGCO or its Subsidiaries or as
requested or required by any Governmental Authority pursuant to any subpoena or other legal
process, (e) as to any such information that is or becomes generally available to the public (other
than as a result of prohibited disclosure by the Administrative Agent or the Lenders), (f) in
connection with any assignment, prospective assignment, sale, prospective sale, participation or
prospective participations, or pledge or prospective pledge of any Lenders interest under this
Agreement, provided that any such assignee, prospective assignee, purchaser,
prospective purchaser, participant, prospective participant, pledgee, or prospective pledgee shall
have agreed in writing to in writing to receive such information hereunder subject to the terms of
this Article, and (g) in connection with any litigation or other adversary proceeding
involving parties hereto which such litigation or adversary proceeding involves claims related to
the rights or duties of such parties under this Agreement or the other Loan Documents. The
provisions of this Article 13 shall survive for two (2) years after the payment in full of
the Obligations. Anything contained herein or in any other Loan Document to the contrary
notwithstanding, the obligations of confidentiality contained herein and therein, as they relate to
the transactions contemplated hereby, shall not apply to the federal tax structure or federal tax
treatment of such transactions, and each party
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hereto (and any employee, representative, or agent of any party hereto) may disclose to any
and all Persons, without limitation of any kind, the federal tax structure and federal tax
treatment of such transactions (including all written materials related to such tax structure and
tax treatment). The preceding sentence is intended to cause the transactions contemplated hereby
to not be treated as having been offered under conditions of confidentiality for purposes of
Section 1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations promulgated under
Section 6011 of the Internal Revenue Code and shall be construed in a manner consistent with such
purpose. In addition, each party hereto acknowledges that it has no proprietary or exclusive
rights to the tax structure of the transactions contemplated hereby or any tax matter or tax idea
related thereto.
[SIGNATURE PAGES TO FOLLOW]
58
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.
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BORROWER: |
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AGCO INTERNATIONAL GMBH |
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By: |
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/s/ Roger Batkin |
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Name: Roger Batkin
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Title: Authorized
Signatory |
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AGCO: |
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AGCO CORPORATION |
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By: |
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/s/ Andrew H. Beck |
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Name: Andrew H. Beck
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Title: Senior Vice President
and
Chief
Financial Officer |
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S-1
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ADMINISTRATIVE AGENT AND LENDERS: |
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COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
RABOBANK NEDERLAND, NEW YORK BRANCH, as the
Administrative Agent and a Lender |
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By: |
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/s/ Betty H. Janelle |
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Name: Betty H. Janelle
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Title: Executive
Director |
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By: |
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/s/ Brett Delfino |
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Name: Brett Delfino
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Title: Executive
Director |
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Commitment: 200,000,000
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Facility
Office: 245 Park Avenue,
New York, NY 10167
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S-2
exv31w1
Exhibit 31.1
Certification Pursuant to § 302 of the Sarbanes-Oxley Act of 2002
I, Martin Richenhagen, certify that:
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I have reviewed this Quarterly Report on Form 10-Q of AGCO Corporation; |
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2. |
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Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report; |
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3. |
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Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report; |
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4. |
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The registrants other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have: |
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(a) |
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Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared; |
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(b) |
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Designed such internal control over financial reporting, or
caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles; |
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(c) |
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Evaluated the effectiveness of the registrants disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures as of the end of the
period covered by this report based on such evaluation; and |
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(d) |
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Disclosed in this report any change in the registrants
internal control over financial reporting that occurred during the registrants
most recent fiscal quarter (the registrants fourth fiscal quarter in the case
of an annual report) that materially affected, or is reasonably likely to
materially affect, the registrants internal control over financial reporting;
and |
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5. |
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The registrants other certifying officers and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to the
registrants auditors and the audit committee of registrants board of directors
(or persons performing the equivalent functions): |
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(a) |
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All significant deficiencies in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the registrants ability to record, process, summarize and
report financial information; and |
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b) |
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Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants internal
control over financial reporting. |
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Date: May 6, 2011 |
/s/ Martin Richenhagen
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Martin Richenhagen |
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Chairman, President and Chief Executive Officer |
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exv31w2
Exhibit 31.2
Certification Pursuant to § 302 of the Sarbanes-Oxley Act of 2002
I, Andrew H. Beck, certify that:
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I have reviewed this Quarterly Report on Form 10-Q of AGCO Corporation; |
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2. |
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Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report; |
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3. |
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Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report; |
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4. |
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The registrants other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have: |
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(a) |
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Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared; |
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(b) |
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Designed such internal control over financial reporting, or
caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles; |
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(c) |
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Evaluated the effectiveness of the registrants disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures as of the end of the
period covered by this report based on such evaluations; and |
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(d) |
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Disclosed in this report any change in the registrants
internal control over financial reporting that occurred during the registrants
most recent fiscal quarter (the registrants fourth fiscal quarter in the case
of an annual report) that materially affected, or is reasonably likely to
materially affect, the registrants internal control over financial reporting;
and |
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5. |
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The registrants other certifying officers and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to the
registrants auditors and the audit committee of registrants board of directors
(or persons performing the equivalent functions): |
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(a) |
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All significant deficiencies in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the registrants ability to record, process, summarize and
report financial information; and |
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b) |
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Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants internal
control over financial reporting. |
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Date: May 6, 2011 |
/s/ Andrew H. Beck
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Andrew H. Beck |
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Senior Vice President and Chief Financial Officer |
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exv32w0
Exhibit 32.0
CERTIFICATION
The undersigned, as the Chairman, President and Chief Executive Officer, and as the Chief
Financial Officer of AGCO Corporation, respectively, certify that, to the best of their knowledge
and belief, the Quarterly Report on Form 10-Q for the period ended
March 31, 2011, which accompanies this certification fully complies with the requirements of
Section 13(a) of the Securities Exchange Act of 1934 and the information contained in the periodic
report fairly presents, in all material respects, the financial condition and results of operations
of AGCO Corporation at the dates and for the periods indicated. The foregoing certifications are
made pursuant to 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and shall not be relied
upon for any other purpose.
This 6th day of May 2011.
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/s/ Martin Richenhagen
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Martin Richenhagen |
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Chairman, President and Chief Executive Officer |
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/s/ Andrew H. Beck
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Andrew H. Beck |
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Senior Vice President and Chief Financial Officer |
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A signed original of this written statement required by Section 906, or other document
authenticating, acknowledging, or otherwise adopting the signature that appears in typed form
within the electronic version of this written statement required by Section 906, has been provided
to AGCO Corporation and will be retained by AGCO Corporation and furnished to the Securities and
Exchange Commission or its staff upon request.