-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, AXiYT+f0OLtExTfXdOABOfgcFYh3vV9gNQnwYwSV/P9JuXSudhklIeX1ZtgbVUxE +E73TFbHeKYZqhy0LrS8nQ== 0000856386-95-000022.txt : 19950613 0000856386-95-000022.hdr.sgml : 19950613 ACCESSION NUMBER: 0000856386-95-000022 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950308 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEHL CO CENTRAL INDEX KEY: 0000856386 STANDARD INDUSTRIAL CLASSIFICATION: FARM MACHINERY & EQUIPMENT [3523] IRS NUMBER: 390300430 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-18110 FILM NUMBER: 95519183 BUSINESS ADDRESS: STREET 1: 143 WATER STREET CITY: WEST BEND STATE: WI ZIP: 53095 BUSINESS PHONE: 4143349461 MAIL ADDRESS: STREET 1: 143 WATER STREET CITY: WEST BEND STATE: WI ZIP: 53095 10-K405 1 FORM 10-K FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 _________________________ [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition period from __ to __ Commision file number 0-18110 Gehl Company (Exact name of registrant as specified in its charter) Wisconsin 39-0300430 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 143 Water Street, West Bend, WI 53095 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code (414) 334-9461 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.10 par value (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [X] Aggregate market value of voting stock held by non-affiliates of the registrant: $38,705,166 at February 22, 1995. Number of shares outstanding of each of the registrant's classes of common stock, as of February 22, 1995: Class Shares Outstanding Common Stock, $.10 Par Value 6,169,523 DOCUMENTS INCORPORATED BY REFERENCE Gehl Company 1994 Annual Report to Shareholders (Parts I and II) Gehl Company Proxy Statement for the 1995 Annual Meeting of Shareholders (to be filed with the Commission under Regulation 14A within 120 days after the end of the registrant's fiscal year and, upon such filing, to be incorporated by reference into Part III) GEHL COMPANY _________________ INDEX TO ANNUAL REPORT ON FORM 10-K For The Year Ended December 31, 1994 Page Part I Item 1 Business . . . . . . . . . . . . . . . 1 Item 2 Properties . . . . . . . . . . . . . . 7 Item 3 Legal Proceedings . . . . . . . . . . . 8 Item 4 Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . 8 Executive Officers of the Registrant . 9 Part II Item 5 Market for Registrant's Common Equity and Related Shareholder Matters . . . . . . . . . . 11 Item 6 Selected Financial Data . . . . . . . . 11 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations . . 11 Item 8 Financial Statements and Supplementary Data . . 11 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 11 Part III Item 10 Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . 12 Item 11 Executive Compensation . . . . . . . . 12 Item 12 Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . 12 Item 13 Certain Relationships and Related Transactions 12 Part IV Item 14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K . . . . . . . . . . 13 Signatures . . . . . . . . . . . . . . . . . . . . . . . . 14 Part I Item 1. Business Overview Gehl Company (the "Company" or "Gehl") designs, manufactures, distributes, sells and finances equipment used in the agricultural equipment and the light construction equipment industries. The Company's agricultural segment ("Gehl Agriculture") has manufactured agricultural implements for 136 years, and today markets a broad range of equipment used primarily in the dairy and livestock industries, including haymaking, forage harvesting, materials handling (skid steer loaders and attachments), manure handling and feedmaking equipment. The Company believes that it is currently the largest non-tractor agricultural equipment manufacturer in North America. The Company's construction segment ("Gehl Construction") manufactures and markets skid steer loaders, rough-terrain telescoping-boom forklifts and asphalt pavers used by contractors, sub-contractors, owner operators and municipalities. Equipment for Gehl Agriculture is manufactured in plants in Wisconsin, Pennsylvania and South Dakota and equipment for Gehl Construction is manufactured in two South Dakota facilities. The Company was founded in 1859 and was incorporated in the State of Wisconsin in 1890. Business Segments The Company operates in two business segments, agriculture and construction. The following table shows certain information relating to the Company's operations by industry segment: (dollars in thousands) Year Ended December 31, 1992 1993 1994 Amount % Amount % Amount % Net sales: Gehl Agri- culture $ 91,223 70.3% $ 93,931 68.5% $ 94,824 64.7% Gehl Con- struction 38,471 29.7 43,287 31.5 51,796 35.3 -------- ----- -------- ----- ------- ----- Total $129,694 100% $137,218 100% $146,620 100% ======== ===== ======== ===== ======== ===== Income (loss from operations: Gehl Agri- culture $(4,393) 64.0% $ 5,509 75.1% $ 4,419 34.1% Gehl Con- struction (2,473) 36.0 1,830 24.9 8,542 65.9 -------- ----- -------- ----- -------- ----- Total $(6,866) 100% $ 7,339 100% $ 12,961 100% ======== ===== ======== ===== ======== ===== The Company had no intersegment sales or transfers during the years set forth above. For segment information with respect to identifiable assets, depreciation/amortization and capital expenditures for the agriculture and construction markets, see Note 12 of "Notes to Consolidated Financial Statements", included on Page 24 of the Gehl Company 1994 Annual Report to Shareholders, which page is incorporated by reference herein. Gehl Agriculture Products: Gehl Agriculture markets equipment in five product areas. 1. Haymaking - Gehl's haymaking line includes a broad range of products used to harvest and process hay crops for livestock feed. The Company offers disc mowers, a wide range of pull-type disc and sickle mower conditioners, hay rakes and fixed-chamber and variable-chamber round balers. 2. Forage Harvesting - The Company believes that it currently manufactures and sells one of the industry's most complete lines of forage harvesting equipment, including forage harvesters, wagons and blowers. 3. Materials Handling - Gehl Agriculture's materials handling line consists of eight different models of skid steer loaders and the Dyna- Handler[R] introduced in 1993. The skid steer loader is a compact, fixed-wheel four-wheel drive unit typically equipped with a bucket or fork and is used for moving a variety of material. The Dyna-Handler [R] is a rough-terrain telescoping-boom forklift with digging capabilities. The skid steer loader and Dyna-Handler[R] are marketed by both Gehl Agriculture and Gehl Construction. 4. Manure Handling - Gehl offers a broad range of manure spreaders, including the Scavenger[R] II. The Scavenger[R] II "V-Tank" side- discharge manure spreader incorporates a hydraulically controlled square tube auger which allows the spreader to handle a wide range of semi-liquid waste products, including municipal sludge. For handling mostly solid manure, the Company also markets five models of rear- discharge box spreaders. 5. Feedmaking - The Company believes that it offers the broadest line of portable feedmaking equipment in the industry. Gehl Agriculture currently offers the Gehl Mix-All[R] line of grinder mixers and roller mixers and a line of mixer feeders and a feeder wagon for both mixing feed rations and delivery to livestock feeders. Marketing and Distribution: In North America, Gehl's agricultural equipment is sold through approximately 719 geographically dispersed dealers (with 784 outlets). Gehl Agriculture also markets products through 27 distributors in Europe, the Middle East, the Pacific Rim and Latin America. The Company has no Company- owned dealers and its dealers may sell equipment produced by other agricultural equipment manufacturers. It has been and remains the Company's objective to increase the share of Gehl products sold by a Gehl dealer. Gehl Agriculture is not dependent for its sales on any specific dealer or group of dealers. The top ten dealers and distributors in Gehl Agriculture accounted for approximately 7% of the Company's sales for the year ended December 31, 1994 and no one dealer or distributor accounted for over 1% of the Company's sales during that period. Sales of the skid steer loader product line by Gehl Agriculture accounted for more than 10% of the Company's net sales in 1992, 1993 and 1994. The Company, which currently has 108 agricultural dealers in Canada, believes that the dairy and livestock regions of Canada, especially the Provinces of Alberta, Ontario and Quebec, present an opportunity for the Company to expand its agricultural equipment sales. The Company provides various forms of support for its dealer network, including sales and service training. The Company also provides floor plan and retail finance support for products sold by its dealers in the United States and Canada. The Company employs district and regional sales managers to assist its agricultural dealers by providing training, equipment demonstrations and assistance with sales, warranty and servicing matters. The Company currently operates three service parts distribution centers located in: Memphis, Tennessee; Syracuse, New York; and Minneapolis, Minnesota. The Company also contracts for two service parts distribution locations in Rockwood, Ontario and Saskatoon, Saskatchewan. Industry and Competition: The agricultural equipment industry has seen significant consolidation and retrenchment since 1980. This has served to reduce the total number of competitors, to strengthen certain major competitors, and to reduce the strength of certain other companies in the industry. The Company competes within the agricultural equipment industry based primarily on price, quality, service and distribution. The agricultural equipment markets in North America are highly competitive and require substantial capital outlays. The Company has four major competitors as well as numerous other limited line manufacturers and importers. The largest manufacturers in the agricultural equipment industry, the Company's major competitors, generally produce tractors and combines as well as a full line of tillage and planting equipment. Such manufacturers also market, to varying degrees, haymaking, forage harvesting, materials handling, manure handling and/or feedmaking equipment, the areas in which the Company's agricultural products are concentrated. Except for one competitor, no other single competitor competes with the Company in each of its product lines. The Company believes that it is the only non-tractor manufacturer in the industry that produces equipment in each of these product lines. Smaller manufacturers which compete with the Company produce only a limited line of specialty items and often compete only in regional markets. Gehl Agriculture primarily serves the dairy and livestock industries. Compared to a more volatile period in the late 1980's through 1992, milk prices, cash income, land values, and the general economy were more favorable and stable for the dairy farmer in 1993 and 1994. These more favorable conditions and lower debt to equity ratios than generally experienced in most of the 1980's led to increased buying by farmers of agriculture equipment in 1993 and 1994. There can be no assurance, however, that these favorable trends will continue. Approximately 80% of the Company's agricultural dealers also carry the tractor and combine product lines of a major manufacturer. In addition to selling the tractors and combines of a major manufacturer, many of these dealers carry the major manufacturer's entire line of products, some of which directly compete with the products offered by Gehl Agriculture. Gehl Agriculture's dealers also market equipment manufactured by limited line manufacturers which compete with specific product lines offered by the Company. Gehl Agriculture's primary markets outside of North America are in Europe, the Pacific Rim and increasingly South and Central America. In these markets the Company competes with both agricultural manufacturers from the United States, some of which have manufacturing facilities in foreign countries, and foreign manufacturers. The Company does not believe, however, that it is presently a significant competitor in any of these foreign markets. Gehl Construction Products: Gehl Construction markets equipment in the following three product areas: 1. Skid Steer Loaders - Gehl Construction offers four models of skid steer loaders which feature a choice of hand-operated controls or hand and foot controls. The skid steer loader, with its fixed-wheel four- wheel drive, is used principally for materials handling duties. The skid steer loader may also be used with a variety of attachments, including dirt, snow and cement buckets, pallet forks and hydraulically-operated devices such as cold planers, backhoes, brooms, trenchers, snowblowers, industrial grapples, tree diggers, concrete breakers and augers. 2. Rough-Terrain Forklifts - Gehl markets five models of Dynalift[R] rough- terrain telescoping-boom forklifts and one model of the Dyna-Handler[R], a rough-terrain telescoping-boom forklift with digging capabilities. These forklifts are designed to handle heavy loads (up to 10,000 pounds) reaching horizontally and vertically for use by a variety of customers, including masons, roofers and building contractors. 3. Asphalt Paving Equipment - Four models of Power Box[R] pavers are marketed by Gehl. These pavers allow variable paving widths from 4 1/2 to 13 feet and are used for both commercial and municipal jobs such as county and municipal road, sidewalk, golf cart path, jogging trail, parking lot, driveway, trailer court and tennis court preparation. Marketing and Distribution: The Company maintains a separate distribution system for Gehl Construction. The Company markets its equipment in North America through 123 independent dealers (with 217 outlets) and worldwide through 20 distributors. The top ten dealers and distributors in Gehl Construction accounted for approximately 15% of the Company's sales for the year ended December 31, 1994; however, no single dealer or distributor accounted for more than 4% of the Company's sales for that period. Sales of the skid steer loader product line by Gehl Construction accounted for more than 10% of the Company's net sales in 1992, 1993 and 1994. Sales of the Dynalift[R] product line accounted for more than 10% of the Company's net sales in 1993 and 1994. As with Gehl Agriculture, the Company believes that maintenance and expansion of its dealer network is important to its success in the light construction equipment market. Gehl Construction provides various forms of support for its dealers, including sales and service training, and, in the United States and Canada, floor plan financing for its dealers and retail financing for both its dealers and their customers. The light construction equipment dealers in North America are also supported by district sales managers who provide a variety of services, including training, equipment demonstrations and sales, warranty and service assistance. Industry and Competition: Gehl Construction's product lines face competition in each of their markets. In general, each line competes with a small group of from seven to twelve different companies. No one company competes directly with Gehl Construction across all of its product lines. In the compact asphalt paving equipment market niche Gehl serves, the Company believes it has the number 1 or 2 market share. In the rough-terrain telescoping-boom forklift market, the Company believes it and four other competitors share at least 75% of the market among them. In the skid steer loader product market three other companies share over 80% of the market. The Company believes that it shares a greater portion of the balance of the skid steer loader market than does any of its remaining competitors. The Company competes within the light construction equipment markets based primarily on price, quality, service and distribution. Gehl Construction's primary markets outside of North America are in Europe, Latin America, the Middle East and the Pacific Rim. The Company believes it is a significant competitor in the skid steer loader market in Western Europe. Backlog The backlog of unfilled equipment orders (which orders are subject to cancellation in certain circumstances) as of December 31, 1994 was $60.2 million versus $38.5 million at December 31, 1993. Virtually all orders in the backlog at December 31, 1994 should be shipped in 1995. The higher backlog at December 31, 1994 was due primarily to increased orders from Gehl Construction dealers. As the Company has broadened its Gehl Agriculture product offerings and diversified into products serving the light construction equipment market, the Company has been successful in reducing the seasonality of its sales. However, some sales seasonality still remains, primarily in April through June, the Company's second fiscal quarter. The Company's first fiscal quarter in January through March has traditionally been its weakest, with the Company frequently incurring a first quarter loss. Because the haymaking and forage equipment products are primarily retailed by the Company's dealers in the Spring, Summer, and early Fall, the Company's floor plan financed accounts receivable generally reach a seasonal peak in early Summer and a post-seasonal low in late Fall. Floor Plan and Retail Financing Floor Plan Financing: The Company, as is typical in the industry, generally provides floor plan financing for its dealers. Products shipped to dealers under the Company's floor plan financing program are recorded by the Company as sales and the dealers' obligations to the Company are reflected as accounts receivable. The Company provides interest-free floor plan financing to its dealers, in Gehl Agriculture generally for up to one year and in Gehl Construction for varying periods of time generally up to nine months. Gehl dealers who sell products utilizing floor plan financing are required to make immediate payment for those products to the Company upon sale or delivery to the retail customer. At the end of the interest-free period, if the equipment remains unsold to retail customers, the Company generally charges interest to the dealer at a rate of between 1.5% to 3.0% above the prime rate or on occasion provides interest-free extensions of up to six months upon payment by the dealer of curtailments generally between 10% to 20% of the original invoice price to the dealer. This type of floor plan equipment financing accounts for approximately 90% of Gehl's accounts receivable, with all such floor planned receivables required to be secured by a first priority security interest in the equipment sold. Retail Financing: The Company also provides retail financing primarily to facilitate the sale of Gehl equipment to end users. Additionally, a number of Gehl dealers purchase equipment which is held for rental to the public. The Company also provides retail financing to such dealers in connection with these purchases. Retail financing in the United States is provided by the Company through Gehl Finance[R], the Company's finance division. Retail financing is provided in Canada by a third party at rates subsidized by the Company. The Company does not offer or sponsor retail financing outside of North America. The Company maintains arrangements with third parties pursuant to which the Company sells with recourse certain of the Company's finance contracts. The finance contracts require periodic installments of principal and interest over periods of up to 60 months; interest rates are based on market conditions. The majority of these contracts have maturities of 36 to 48 months. The Company continues to service the finance contracts it sells, including cash collections. See Note 2 of "Notes to Consolidated Financial Statements," Page 19, and "Management's Discussion and Analysis," Page 13 of the Gehl Company 1994 Annual Report to Shareholders, which pages are incorporated by reference herein. Employees As of December 31, 1994, the Company had 928 employees, of which 631 were hourly employees and 297 were salaried employees. At the production facilities in West Bend, Wisconsin, one of four Gehl production facilities, 321 hourly employees are covered by a collective bargaining agreement with the United Paperworkers International Union (formerly the Allied Industrial Workers) which expires December 31, 1995. None of the remaining employees of the Company are represented by unions. There have been no labor-related work stoppages at the Company's facilities during the past twenty-one years. Manufacturing The Company believes that its present manufacturing facilities are sufficient to provide adequate capacity for its operations for the foreseeable future. Component parts needed in the manufacture of the Company's equipment are primarily produced by the Company. The Company obtains raw materials (principally steel), component parts that it does not manufacture, most notably engines and hydraulics, and supplies from third party suppliers. All such materials and components used are available from a number of sources. The Company is not dependent on any supplier that cannot be readily replaced and has not experienced difficulty in obtaining necessary purchased materials. In addition to the equipment it manufacturers, the Company markets equipment acquired from third party suppliers. Products acquired from these suppliers accounted for less than 10% of the Company's sales in 1994. Research and Development The Company attempts to maintain and strengthen its market position through internal new product development and incremental improvement to existing products. Products obtained through acquisition have generally undergone redesign by the Company to enhance their marketability. This redesign was in some cases major. The Company's research and development is devoted to developing new products that meet specific customer needs and to devising incremental improvements to existing products. Research and development performed by the Company includes the designing and testing of new and improved products as well as the fabrication of prototypes. The Company expended approximately $1.2 million, $1.0 million and $1.7 million on research and development for the years ended December 31, 1994, 1993 and 1992, respectively. Patents and Trademarks The Company possesses rights under a number of domestic and foreign patents and trademarks relating to its products and business. While the Company considers the patents and trademarks important in the operation of its business, including the Gehl[R] name and the group of patents relating to the Scavenger[R] II manure spreader, the business of the Company is not dependent on any single patent or trademark or group of patents or trademarks. Export Sales Information regarding the Company's export sales is included in Note 12 of "Notes to Consolidated Financial Statements," Pages 24 through 25, of the Gehl Company 1994 Annual Report to Shareholders, which pages are incorporated by reference herein. Item 2. Properties The following table sets forth certain information as of December 31, 1994, relating to the Company's principal manufacturing facilities. See "Management's Discussion and Analysis - Liquidity and Capital Resources, Capital Expenditures," Page 12, of the Gehl Company 1994 Annual Report to Shareholders, which page is incorporated by reference herein. Approximate Floor Area in Square Owned or Feet Leased(1) Principal Uses West Bend, WI 450,000 Owned General offices and engineering, research and development and manufacture of products for Gehl Agriculture West Bend, WI 19,000 Leased Manufacture of products for Gehl Agriculture Madison, SD 110,000 Owned Manufacture of skid steer loaders for Gehl Agriculture and Gehl Construction Lebanon, PA 170,000 Owned(2) Manufacture of products for Gehl Agriculture Yankton, SD 68,000 Owned Manufacture of products for Gehl Construction (1) For information regarding collateral pledges and the Company's lease commitments, see Notes 5 and 10 of "Notes to Consolidated Financial Statements", included on Pages 20 and 23, of the Gehl Company 1994 Annual Report to Shareholders, which pages are incorporated by reference herein. (2) This facility is financed with the proceeds from the sale of industrial development bonds maturing in 2010. The Company also operates three service parts centers located in: Memphis, Tennessee; Syracuse, New York; and Minneapolis, Minnesota. The Company leases these facilities, except for the Minneapolis center, which is owned. Item 3. Legal Proceedings. The Company is a defendant from time to time in actions for product liability and other matters arising out of its ordinary business operations. The Company believes that the actions presently pending will not have a material adverse effect on its consolidated financial position or results of operations. To the Company's knowledge, there are no material legal proceedings to which any director, officer, affiliate or more than 5% shareholder of the Company (or any associate of the foregoing persons) is a party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company or its subsidiaries. Item 4. Submission of Matters to a Vote of Security Holders. No matters were submitted to a vote of security holders during the quarter ended December 31, 1994. Executive Officers of the Registrant. Set forth below is certain information concerning the executive officers of the Company as of March 1, 1995: Name, Age and Position Business Experience William D. Gehl, 48, Mr. Gehl has served as President, Chief President and Chief Executive Executive Officer Officer of the Company since November, 1992 and and Director has served as a director of the Company since 1987. From January, 1990 until joining the Company, Mr. Gehl served as Executive Vice President, Chief Operating Officer, General Counsel and Secretary of The Ziegler Companies, Inc. (a financial services holding company). Mr. Gehl held various positions with The Ziegler Companies from 1978 to 1990. Victor A. Mancinelli, 51 Mr. Mancinelli has served as Executive Vice President Executive Vice President and and Chief Operating Chief Operating Officer of the Company since Officer November, 1992. From 1990 to 1992, Mr. Mancinelli served as Group Vice President of W. H. Brady Co. From 1987 to 1990, Mr. Mancinelli served as President and Chief Operating Officer of Syracuse China Corp., a subsidiary of Canadian Pacific Ltd. Prior to 1987, Mr. Mancinelli served in a variety of management positions with Cummins Engine Company, Inc. John W. Gehl, 53, Mr. Gehl has served as Vice Vice President, International President, International of the Company since 1992. Mr. Gehl joined the Company in 1962 and has served as a Vice President of the Company since 1977 and in a variety of positions in marketing, manufacturing and strategic planning. Mr. Gehl has been a director of the Company since 1974. Kenneth F. Kaplan, 49, Mr. Kaplan joined the Company Vice President of Finance as Corporate Controller in and Treasurer September, 1985, was elected Treasurer of the Company in April, 1986 and was elected Vice President of Finance and Treasurer in December, 1987. Michael J. Mulcahy, 48, Mr. Mulcahy has served as Vice President, Secretary General Counsel of the Company and General Counsel since 1974 and became Secretary in 1977 and a Vice President in 1986. Mr. Mulcahy has also served, since 1988, as President of Equipco Insurance Company, Ltd., which provides liability insurance coverage for equipment manufacturers, including the Company. Richard J. Semler, 55, Mr. Semler has served in his Vice President of current position with the Data Systems Company since January, 1977. Kenneth P. Hahn, 37, Mr. Hahn has served in his Corporate Controller current position since joining the Company in April, 1988. Mr. Hahn was elected as an executive officer of the Company in April, 1994. All officers of the Company are elected annually by the Board of Directors following the Annual Meeting of Shareholders. The 1995 Annual Meeting of Shareholders is currently scheduled for April 27, 1995. The Company has employment agreements with William D. Gehl and Victor A. Mancinelli pursuant to which they are to serve as President and Chief Executive Officer of the Company and Executive Vice President and Chief Operating Officer of the Company, respectively, through the expiration of the agreements on November 23, 1995. PART II Item 5. Market for Registrant's Common Equity and Related Shareholder Matters. Information required by this item is included on Pages 27 and 28 of the Gehl Company 1994 Annual Report to Shareholders, which pages are hereby incorporated herein by reference. As of February 22, 1995, shareholders of record numbered 1,131. This number does not include shareholders who hold Gehl Company stock in street name. Item 6. Selected Financial Data. Information required by this item is included on Page 26 of the Gehl Company 1994 Annual Report to Shareholders, which page is hereby incorporated herein by reference. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Information required by this item is included on Pages 9 through 13 of the Gehl Company 1994 Annual Report to Shareholders, which pages are hereby incorporated herein by reference. Item 8. Financial Statements and Supplementary Data. Information required by this item is included on Page 8 and Pages 14 through 25 of the Gehl Company 1994 Annual Report to Shareholders, which pages are hereby incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. There have been no changes in or disagreements with the Company's accountants regarding accounting and financial disclosure required to be reported pursuant to this item. PART III Item 10. Directors and Executive Officers of the Registrant. Pursuant to Instruction G, the information required by this item with respect to directors is hereby incorporated herein by reference from the caption entitled "Election of Directors" set forth in the Company's definitive Proxy Statement for its 1995 Annual Meeting of Shareholders ("Proxy Statement"). Information with respect to executive officers of the Company appears at the end of Part I, Pages 9 and 10 of this Annual Report on Form 10-K. Item 11. Executive Compensation. Pursuant to Instruction G, the information required by this item is hereby incorporated herein by reference from the captions entitled "Board of Directors" and "Executive Compensation" set forth in the Proxy Statement; provided, however, that the subsection entitled "Executive Compensation - Report on Executive Compensation" shall not be deemed to be incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management. Pursuant to Instruction G, the information required by this item is hereby incorporated by reference herein from the caption "Principal Shareholders" set forth in the Proxy Statement. Item 13. Certain Relationships and Related Transactions. There are no relationships or related transactions required to be reported pursuant to this item. The Proxy Statement will be filed with the Commission pursuant to Regulation 14A within 120 days after the end of the Company's fiscal year. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. (a) 1 and 2. Financial statements and financial statement schedules. Reference is made to the separate index to the Company's consolidated financial statements and schedules contained on Page 15 hereof. 3. Exhibits. Reference is made to the separate exhibit index contained on Pages 18 through 20 hereof. (b) Reports on Form 8-K. No reports on Form 8-K were filed by the Company during the quarter ended December 31, 1994. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GEHL COMPANY Date: March 7, 1995 By /s/ William D. Gehl William D. Gehl, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ William D. Gehl President, Chief March 7, 1995 William D. Gehl Executive Officer and Director (Principal Executive Officer) /s/ Kenneth F. Kaplan Vice President of March 7, 1995 Kenneth F. Kaplan Finance and Treasurer (Principal Financial and Accounting Officer) /s/ John W. Findley Director March 7, 1995 John W. Findley /s/ Peter A. Fischer Director March 7, 1995 Peter A. Fischer /s/ John W. Gehl Director March 7, 1995 John W. Gehl /s/ Arthur W. Nesbitt Director March 7, 1995 Arthur W. Nesbitt /s/ Roger E. Secrist Director March 7, 1995 Roger E. Secrist /s/ Richard G. Sim Director March 7, 1995 Richard G. Sim GEHL COMPANY INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES Page(s) in Annual Report* The following documents are filed as part of this report: (1)Financial Statements: Report of Independent Accountants 8 Consolidated Statements of Income for the three years ended December 31, 1994 14 Consolidated Balance Sheets at December 31, 1994 and 1993 15 Consolidated Statements of Shareholders' Equity for the three years ended December 31, 1994 16 Consolidated Statements of Cash Flows for the three years ended December 31, 1994 17 Notes to Consolidated Financial Statements 18-25 * Incorporated by reference from the indicated pages of the Gehl Company 1994 Annual Report to Shareholders. Page in Form 10-K (2)Financial Statement Schedules: Report of Independent Accountants on Financial Statement Schedule 16 For the three years ended December 31, 1994 -- Schedule VIII - Valuation and Qualifying Accounts 17 All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE To the Board of Directors of Gehl Company Our audits of the consolidated financial statements referred to in our report dated February 10, 1995 appearing on page 8 of the 1994 Annual Report to Shareholders of Gehl Company (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedule listed in Item 14(a) of this Form 10-K. In our opinion, this Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. PRICE WATERHOUSE LLP Milwaukee, Wisconsin February 10, 1995 GEHL COMPANY AND SUBSIDIARIES SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS (in thousands) Additions Balance Charged Charged Balance at to Costs to Other at End Period Description Beginning and Accounts Deductions of Year of Year Expenses Year Ended December 31, Return & 1992 Allowances $ 115 $ - $ - $ - $ 115 Allowance for Doubtful Accounts-Trade Receivables . . 1,108 137 - 318 927 Volume Discounts . . . 3,673 1,464 - 2,501 2,636 ______ ______ ______ ______ ______ Total $4,896 $1,601 $ - $2,819 $3,678 ====== ====== ====== ====== ====== Allowances for Doubtful Accounts - Retail Contracts . . . $ 804 $1,521 $ - $1,893 $ 432 ====== ====== ====== ====== ====== Inventory Obsolescence Reserve $1,825 $1,491 $ - $ 40 $3,276 ====== ====== ====== ====== ====== Year Ended December 31, Return & 1993 Allowances $ 115 $ - $ - $ - $ 115 Allowance for Doubtful Accounts-Trade Receivables . . 927 1,473 - 557 1,843 Volume Discounts . . . 2,636 2,117 - 2,645 2,108 ______ ______ ______ ______ ______ Total $3,678 $3,590 $ - $3,202 $4,066 ====== ====== ====== ====== ====== Allowances for Doubtful Accounts - Retail Contracts . . . $ 432 $ 599 $ - $ 381 $ 650 ====== ====== ====== ====== ====== Inventory Obsolescence Reserve $3,276 $1,215 $ - $ 610 $3,881 ====== ====== ====== ====== ====== Income Tax Valuation Allowance $ - $5,881 $ - $ - $5,881 ====== ====== ====== ====== ====== Year Ended December 31, Return & 1994 Allowances $ 115 $ - $ - $ - $ 115 Allowance for Doubtful Accounts-Trade Receivables . . 1,843 (888) - 316 639 Volume Discounts . . . 2,108 2,200 - 2,318 1,990 Product Discontinuance - 1,600 - - 1,600 ______ ______ ______ ______ ______ Total $4,066 $2,912 $ - $2,634 $4,344 ====== ====== ====== ====== ====== Allowances for Doubtful Accounts - Retail Contracts . . . $ 650 $ 424 $ - $ 570 $ 504 ====== ====== ====== ====== ====== Inventory Obsolescence Reserve $3,881 $1,523 $ - $1,352 $4,052 ====== ====== ====== ====== ====== Income Tax Valuation Allowance $5,881 $ (900) $ - $ 509 $4,472 ====== ====== ====== ====== ====== GEHL COMPANY INDEX TO EXHIBITS Exhibit Number Document Description (3.1) Restated Articles of Incorporation of Gehl Company [Incorporated by reference to Exhibit 3.1 to the Company's Form S-1 Registration Statement (Reg. No. 33- 31571)] (3.2) Amendment to Gehl Company By-laws, dated February 24, 1995 (3.3) By-laws of Gehl Company, as amended (4.1) Amended and Restated Loan and Security Agreement by and between ITT Commercial Finance Corp. and Gehl Company and its subsidiaries, dated October 1, 1994 (4.2) Common Stock Purchase Warrant, dated as of March 5, 1993, from Gehl Company to State of Wisconsin Investment Board [Incorporated by reference to Exhibit 4.14 to the Company's Annual Report on Form 10-K for the year ended December 31, 1992] (4.3) Loan Agreement between Pennsylvania Economic Development Financing Authority and Gehl Company, dated as of September 1, 1990 [Incorporated by reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 29, 1990] (4.4) First Supplemental Loan Agreement between Pennsylvania Economic Development Financing Authority and Gehl Company, dated as of April 23, 1993 [Incorporated by reference to Exhibit 4.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended April 3, 1993] (4.5) Second Supplemental Loan Agreement between Pennsylvania Economic Development Financing Authority and Gehl Company, dated as of February 1, 1994 [Incorporated by reference to Exhibit 4.10 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993] (4.6) Mortgage and Security Agreement by and between Gehl Company and First Pennsylvania Bank N.A., dated as of September 1, 1990 [Incorporated by reference to Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 29, 1990] (10.1)* Form of Supplemental Retirement Benefit Agreement between Gehl Company and Messrs. J.W. Gehl, Hahn, Kaplan, Mulcahy and Semler [Incorporated by reference to Exhibit 10.4 to the Company's Form S-1 Registration Statement (Reg. No. 33-31571)] (10.2)* Employment Agreement between Gehl Company and William D. Gehl, dated as of December 29, 1992 [Incorporated by reference to Exhibit 10.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993] (10.3)* Employment Agreement by and between Victor A. Mancinelli and Gehl Company, dated as of December 29, 1992 [Incorporated by reference to Exhibit 10.3 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993] (10.4)* Supplemental Retirement Benefit Agreement by and between William D. Gehl and Gehl Company, as amended (10.5)* Supplemental Retirement Benefit Agreement by and between Victor A. Mancinelli and Gehl Company, as amended (10.6)* Gehl Savings Plan, as amended (10.7)* Gehl Company Retirement Income Plan "B", as amended (10.8)* Gehl Company 1987 Stock Option Plan, as amended [Incorporated by reference to Exhibit 4.1 to the Company's Form S-8 Registration Statement (Reg. No. 33- 38392)] (10.9)* Form of Stock Option Agreement used in conjunction with the Gehl Company 1987 Stock Option Plan [Incorporated by reference to Exhibit 4.2 to the Company's Form S-8 Registration Statement (Reg. No. 33-38392)] (10.10) Technical Assistance and License Agreement by and between Gehl Company and Rheiner Maschinenfabrik Windhoff AG, dated as of May 4, 1985, as amended [Incorporated by reference to Exhibit 10.13 to the Company's Form S-1 Registration Statement (Reg. No. 33-31571)] (10.11) Distributorship Agreement by and between Gehl Company and Gehl GmbH, dated as of April 15, 1985 [Incorporated by reference to Exhibit 10.16 to the Company's Form S-1 Registration Statement (Reg. No. 33-31571)] (10.12) Trademark Licensing Agreement by and between Gehl Company and Gehl GmbH, dated as of April 15, 1985 [Incorporated by reference to Exhibit 10.17 to the Company's Form S-1 Registration Statement (Reg. No. 33-31571)] (13) Portions of the Gehl Company 1994 Annual Report to Share- holders that are incorporated by reference herein (21) Subsidiaries of Gehl Company (23) Consent of Price Waterhouse (27) Financial Data Schedule (99) Proxy Statement for 1995 Annual Meeting of Shareholders (To be filed with the Securities and Exchange Commission under Regulation 14A within 120 days after the end of the Company's fiscal year; except to the extent incorporated by reference, the Proxy Statement for the 1995 Annual Meeting of Shareholders shall not be deemed to be filed with the Securities and Exchange Commission as part of this Annual Report or Form 10-K) __________________ * A management contract or compensatory plan or arrangement. EX-3.2 2 Fourth Amendment of the Restated 2/22/91 By-Laws of GEHL COMPANY (A Wisconsin Corporation) Effective immediately, Section 3.01 shall be revised to read as follows: "3.01. General Powers and Number. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation shall be managed under the direction of its Board of Directors. The number of directors of the corporation shall be eight (8), divided into three (3) classes: Class I - three (3) directors; Class II - three (3) directors; Class III - two (2) directors." Approved at 02/24/95 Board Meeting EX-3.3 3 (Restated/Approved 2/22//91) (As Amended 2/24/95) BY-LAWS OF GEHL COMPANY ARTICLE I. OFFICES 1.01. Principal and Business Offices. The corporation may have such principal and other business offices, either within or without the State of Wisconsin, as the Board of Directors may designate or as the business of the corporation may require from time to time. 1.02. Registered Office. The registered office of the corporation required by the Wisconsin Business Corporation Law to be maintained in the State of Wisconsin may be, but need not be, identical with the principal office in the State of Wisconsin, and the address of the registered office may be changed from time to time by the Board of Directors. The business office of the registered agent of the corporation shall be identical to such registered office. ARTICLE II. SHAREHOLDERS 2.01. Annual Meeting. The annual meeting of shareholders (the "Annual Meeting") shall be held each year at 7:00 P.M. (Central Time) on the last Thursday in April, or at such other time and date as may be fixed by or under the authority of the Board of Directors, for the purpose of electing that number of directors equal to the number of directors in the class whose term expires at the time of the Annual Meeting and for the transaction of such other business as may properly come before the Annual Meeting in accordance with Section 2.14 of these by-laws. If the day fixed for the Annual Meeting is a legal holiday in the State of Wisconsin, such meeting shall be held on the next succeeding business day. In fixing a meeting date for any Annual Meeting, the Board of Directors may consider such factors as it deems relevant within the good faith exercise of its business judgment. 2.02. Special Meetings. (a) A special meeting of shareholders (a "Special Meeting") may be called only by (i) the President or (ii) the Board of Directors and shall be called by the President upon the demand, in accordance with this Section 2.02, of the holders of record of shares representing at least 10% of all the votes entitled to be cast on any issue proposed to be considered at the Special Meeting. (b) In order that the corporation may determine the shareholders entitled to demand a Special Meeting, the Board of Directors may fix a record date to determine the shareholders entitled to make such a demand (the "Demand Record Date"). The Demand Record Date shall not precede the date upon which the resolution fixing the Demand Record Date is adopted by the Board of Directors and shall not be more than 10 days after the date upon which the resolution fixing the Demand Record Date is adopted by the Board of Directors. Any shareholder of record seeking to have shareholders demand a Special Meeting shall, by sending written notice to the Secretary of the corporation by hand or by certified or registered mail, return receipt requested, request the Board of Directors to fix a Demand Record Date. The Board of Directors shall promptly, but in all events within 10 days after the date on which a valid request to fix a Demand Record Date is received, adopt a resolution fixing the Demand Record Date and shall make a public announcement of such Demand Record Date. If no Demand Record Date has been fixed by the Board of Directors within 10 days after the date on which such request is received by the Secretary, the Demand Record Date shall be the 10th day after the first date on which a valid written request to set a Demand Record Date is received by the Secretary. To be valid, such written request shall set forth the purpose or purposes for which the Special Meeting is to be held, shall be signed by one or more shareholders of record (or their duly authorized proxies or other representatives), shall bear the date of signature of each such shareholder (or proxy or other representative) and shall set forth all information about each such shareholder and about the beneficial owner or owners, if any, on whose behalf the request is made that would be required to be set forth in a shareholder's notice described in paragraph (a)(ii) of Section 2.14 of these by-laws. (c) In order for a shareholder or shareholders to demand a Special Meeting, a written demand or demands for a Special Meeting by the holders of record as of the Demand Record Date of shares representing at least 10% of all the votes entitled to be cast on any issue proposed to be considered at the Special Meeting must be delivered to the corporation. To be valid, each written demand by a shareholder for a Special Meeting shall set forth the specific purpose or purposes for which the Special Meeting is to be held (which purpose or purposes shall be limited to the purpose or purposes set forth in the written request to set a Demand Record Date received by the corporation pursuant to paragraph (b) of this Section 2.02), shall be signed by one or more persons who as of the Demand Record Date are shareholders of record (or their duly authorized proxies or other representatives), shall bear the date of signature of each such shareholder (or proxy or other representative), and shall set forth the name and address, as they appear in the corporation's books, of each shareholder signing such demand and the class and number of shares of the corporation which are owned of record and beneficially by each such shareholder, shall be sent to the Secretary by hand or by certified or registered mail, return receipt requested, and shall be received by the Secretary within 70 days after the Demand Record Date. (d) The corporation shall not be required to call a Special Meeting upon shareholder demand unless, in addition to the documents required by paragraph (c) of this Section 2.02, the Secretary receives a written agreement signed by each Soliciting Shareholder (as defined below), pursuant to which each Soliciting Shareholder, jointly and severally, agrees to pay the corporation's costs of holding the Special Meeting, including the costs of preparing and mailing proxy materials for the corporation's own solicitation, provided that if each of the resolutions introduced by any Soliciting Shareholder at such meeting is adopted, and each of the individuals nominated by or on behalf of any Soliciting Shareholder for election as director at such meeting is elected, then the Soliciting Shareholders shall not be required to pay such costs. For purposes of this paragraph (d), the following terms shall have the meanings set forth below: (i) "Affiliate" of any Person (as defined herein) shall mean any Person controlling, controlled by or under common control with such first Person. (ii) "Participant" shall have the meaning assigned to such term in Rule 14a-11 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (iii) "Person" shall mean any individual, firm, corporation, partnership, joint venture, association, trust, unincorporated organization or other entity. (iv) "Proxy" shall have the meaning assigned to such term in Rule 14a-1 promulgated under the Exchange Act. (v) "Solicitation" shall have the meaning assigned to such term in Rule 14a-11 promulgated under the Exchange Act. (vi) "Soliciting Shareholder" shall mean, with respect to any Special Meeting demanded by a shareholder or shareholders, any of the following Persons: (A) if the number of shareholders signing the demand or demands of meeting delivered to the corporation pursuant to paragraph (c) of this Section 2.02 is 10 or fewer, each shareholder signing any such demand; (B) if the number of shareholders signing the demand or demands of meeting delivered to the corporation pursuant to paragraph (c) of this Section 2.02 is more than 10, each Person who either (I) was a Participant in any Solicitation of such demand or demands or (II) at the time of the delivery to the corporation of the documents described in paragraph (c) of this Section 2.02 had engaged or intended to engage in any Solicitation of Proxies for use at such Special Meeting (other than a Solicitation of Proxies on behalf of the corporation); or (C) any Affiliate of a Soliciting Shareholder, if a majority of the directors then in office determine, reasonably and in good faith, that such Affiliate should be required to sign the written notice described in paragraph (c) of this Section 2.02 and/or the written agreement described in this paragraph (d) in order to prevent the purposes of this Section 2.02 from being evaded. (e) Except as provided in the following sentence, any Special Meeting shall be held at such hour and day as may be designated by whichever of the President or the Board of Directors shall have called such meeting. In the case of any Special Meeting called by the President upon the demand of shareholders (a "Demand Special Meeting"), such meeting shall be held at such hour and day as may be designated by the Board of Directors; provided, however, that the date of any Demand Special Meeting shall be not more than 70 days after the Meeting Record Date (as defined in Section 2.05 hereof); and provided further that in the event that the directors then in office fail to designate an hour and date for a Demand Special Meeting within 10 days after the date that valid written demands for such meeting by the holders of record as of the Demand Record Date of shares representing at least 10% of all the votes entitled to be cast on each issue proposed to be considered at the Special Meeting are delivered to the corporation (the "Delivery Date"), then such meeting shall be held at 2:00 P.M. (Central Time) on the 100th day after the Delivery Date or, if such 100th day is not a Business Day (as defined below), on the first preceding Business Day. In fixing a meeting date for any Special Meeting, the President or the Board of Directors may consider such factors as he or it deems relevant within the good faith exercise of his or its business judgment, including, without limitation, the nature of the action proposed to be taken, the facts and circumstances surrounding any demand for such meeting, and any plan of the Board of Directors to call an Annual Meeting or a Special Meeting for the conduct of related business. (f) The corporation may engage regionally or nationally recognized independent inspectors of elections to act as an agent of the corporation for the purpose of promptly performing a ministerial review of the validity of any purported written demand or demands for a Special Meeting received by the Secretary. For the purpose of permitting the inspectors to perform such review, no purported demand shall be deemed to have been delivered to the corporation until the earlier of (i) 5 Business Days following receipt by the Secretary of such purported demand and (ii) such date as the independent inspectors certify to the corporation that the valid demands received by the Secretary represent at least 10% of all the votes entitled to be cast on each issue proposed to be considered at the Special Meeting. Nothing contained in this paragraph (f) shall in any way be construed to suggest or imply that the Board of Directors or any shareholder shall not be entitled to contest the validity of any demand, whether during or after such 5 Business Day period, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto). (g) For purposes of these by-laws, "Business Day" shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of Wisconsin are authorized or obligated by law or executive order to close. 2.03. Place of Meeting. The Board of Directors or the President may designate any place, either within or without the State of Wisconsin, as the place of meeting for any Annual Meeting or for any Special Meeting, or for any postponement thereof. If no designation is made, the place of meeting shall be the principal office of the corporation in the State of Wisconsin. Any meeting may be adjourned to reconvene at any place designated by vote of the Board of Directors or by the President. 2.04. Notice of Meeting. Written or printed notice stating the place, day and hour of any Annual Meeting or Special Meeting shall be delivered not less than 10 days (unless a longer period is required by the Wisconsin Business Corporation Law) nor more than 70 days, before the date of such meeting, either personally or by mail, by or at the direction of the Secretary to each shareholder of record entitled to vote at such meeting and to other shareholders as may be required by the Wisconsin Business Corporation Law. In the event of any Demand Special Meeting, such notice of meeting shall be sent not more than 30 days after the Delivery Date. If mailed, notice pursuant to this Section 2.04 shall be deemed to be effective when deposited in the United States mail, addressed to the shareholder at his address as it appears on the stock transfer books of the corporation, with postage thereon prepaid. Unless otherwise required by the Wisconsin Business Corporation Law or the restated articles of incorporation, a notice of an Annual Meeting need not include a description of the purpose for which the meeting is called. In the case of any Special Meeting, (a) the notice of meeting shall describe any business that the Board of Directors shall have theretofore determined to bring before the meeting and (b) in the case of a Demand Special Meeting, the notice of meeting (i) shall describe any business set forth in the statement of purpose of the demands received by the corporation in accordance with Section 2.02 of these by-laws and (ii) shall contain all of the information required in the notice received by the corporation in accordance with Section 2.14(b) of these by-laws. If an Annual Meeting or Special Meeting is adjourned to a different date, time or place, the corporation shall not be required to give notice of the new date, time or place if the new date, time or place is announced at the meeting before adjournment; provided, however, that if a new Meeting Record Date for an adjourned meeting is or must be fixed, the corporation shall give notice of the adjourned meeting to persons who are shareholders as of the new Meeting Record Date. 2.05. Fixing of Record Date. The Board of Directors may fix a future date not less than 10 days and not more than 70 days prior to the date of any Annual Meeting or Special Meeting as the record date for the determination of shareholders entitled to notice of, or to vote at, such meeting (the "Meeting Record Date"). In the case of any Demand Special Meeting, (i) the Meeting Record Date shall be not later than the 30th day after the Delivery Date and (ii) if the Board of Directors fails to fix the Meeting Record Date within 30 days after the Delivery Date, then the close of business on such 30th day shall be the Meeting Record Date. The shareholders of record on the Meeting Record Date shall be the shareholders entitled to notice of and to vote at the meeting. Except as provided by the Wisconsin Business Corporation Law for a court-ordered adjournment, a determination of shareholders entitled to notice of or to vote at any Annual Meeting or Special Meeting is effective for any adjournment of such meeting unless the Board of Directors fixes a new Meeting Record Date, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. The Board of Directors may also fix a future date as the record date for the purpose of determining shareholders entitled to take any other action or determining shareholders for any other purpose. Such record date shall be not more than 70 days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. The record date for determining shareholders entitled to a distribution (other than a distribution involving a purchase, redemption or other acquisition of the corporation's shares) or a share dividend is the date on which the Board of Directors authorizes the distribution or share dividend, as the case may be, unless the Board of Directors fixes a different record date. 2.06. Voting Lists. After a Meeting Record Date has been fixed, the corporation shall prepare a list of the names of all of the shareholders entitled to notice of the meeting. The list shall be arranged by class or series of shares, if any, and show the address of and number of shares held by each shareholder. Such list shall be available for inspection by any shareholder, beginning two business days after notice of the meeting is given for which the list was prepared and continuing to the date of the meeting, at the corporation's principal office or at a place identified in the meeting notice in the city where the meeting will be held. A shareholder or his or her agent may, on written demand, inspect and, subject to the limitations imposed by the Wisconsin Business Corporation Law, copy the list, during regular business hours and at his or her expense, during the period that it is available for inspection pursuant to this Section 2.06. The corporation shall make the shareholders' list available at the meeting and any shareholder or his or her agent or attorney may inspect the list at any time during the meeting or any adjournment thereof. Refusal or failure to prepare or make available the shareholders' list shall not affect the validity of any action taken at an Annual Meeting or Special Meeting. 2.07. Quorum and Voting Requirements; Postponements; Adjournments. (a) Shares entitled to vote as a separate voting group may take action on a matter at any Annual Meeting or Special Meeting only if a quorum of those shares exists with respect to that matter. If the corporation has only one class of stock outstanding, such class shall constitute a separate voting group for purposes of this Section 2.07. Except as otherwise provided in the restated articles of incorporation or the Wisconsin Business Corporation Law, a majority of the votes entitled to be cast on the matter shall constitute a quorum of the voting group for action on that matter. Once a share is represented for any purpose at any Annual Meeting or Special Meeting, other than for the purpose of objecting to holding the meeting or transacting business at the meeting, it is considered present for purposes of determining whether a quorum exists for the remainder of the meeting and for any adjournment of that meeting unless a new Meeting Record Date is or must be set for the adjourned meeting. If a quorum exists, except in the case of the election of directors, action on a matter shall be approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the restated articles of incorporation, these by-laws or the Wisconsin Business Corporation Law requires a greater number of affirmative votes. Unless otherwise provided in the restated articles of incorporation, each director shall be elected by a plurality of the votes cast by the shares entitled to vote in the election of directors at any Annual Meeting or Special Meeting at which a quorum is present. (b) The Board of Directors acting by resolution may postpone and reschedule any previously scheduled Annual Meeting or Special Meeting; provided, however, that a Demand Special Meeting shall not be postponed beyond the 100th day following the Delivery Date. Any Annual Meeting or Special Meeting may be adjourned from time to time, whether or not there is a quorum, (i) at any time, upon a resolution of shareholders if the votes cast in favor of such resolution by the holders of shares of each voting group entitled to vote on any matter theretofore properly brought before the meeting exceed the number of votes cast against such resolution by the holders of shares of each such voting group or (ii) at any time prior to the transaction of any business at such meeting, by the President or pursuant to a resolution of the Board of Directors. No notice of the time and place of adjourned meetings need be given except as required by the Wisconsin Business Corporation Law. At any adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. 2.08. Conduct of Meetings. The President, and in his absence a Vice-President in the order provided under Section 4.06, and in their absence, any person chosen by the shareholders present shall call any Annual Meeting or Special Meeting to order and shall act as chairman of such meeting, and the Secretary of the corporation shall act as secretary of all meetings of the shareholders, but, in the absence of the Secretary, the presiding officer may appoint any other person to act as secretary of the meeting. 2.09. Proxies. At any Annual Meeting or Special Meeting, a shareholder entitled to vote may vote in person or by proxy. A shareholder may appoint a proxy to vote or otherwise act for the shareholder by signing an appointment form, either personally or by his attorney-in-fact. An appointment of a proxy is effective when received by the Secretary or other officer or agent of the corporation authorized to tabulate votes. An appointment is valid for 11 months from the date of its signing unless a different period is expressly provided in the appointment form. Unless otherwise provided in the proxy, a proxy may be revoked at any time before it is voted, either by written notice filed with the Secretary or the acting secretary of the meeting or by oral notice given by the shareholder to the presiding officer during the meeting. The presence of a shareholder who has filed his proxy shall not of itself constitute a revocation. 2.10. Voting of Shares. Each outstanding share shall be entitled to one vote upon each matter submitted to a vote at an Annual Meeting or Special Meeting, except to the extent that the voting rights of the shares of any class or classes are enlarged, limited or denied by the Wisconsin Business Corporation Law or by the restated articles of incorporation. 2.11. Acceptance of Instruments Showing Shareholder Action. If the name signed on a vote, consent, waiver or proxy appointment corresponds to the name of the shareholder, the corporation, if acting in good faith, may accept the vote, consent, waiver or proxy appointment and give it effect as the act of a shareholder. If the name signed on a vote, consent, waiver or proxy appointment does not correspond to the name of a shareholder, the corporation may accept the vote, consent, waiver or proxy appointment and give it effect as the act of the shareholder if any of the following apply: (a) The shareholder is an entity and the name signed purports to be that of an officer or agent of the entity. (b) The name purports to be that of a personal representative, administrator, executor, guardian or conservator representing the shareholder and, if the corporation requests, evidence of fiduciary status acceptable to the corporation is presented with respect to the vote, consent, waiver or proxy appointment. (c) The name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder and, if the corporation requests, evidence of this status acceptable to the corporation is presented with respect to the vote, consent, waiver or proxy appointment. (d) The name signed purports to be that of a pledgee, beneficial owner, or attorney-in-fact of the shareholder and, if the corporation requests, evidence acceptable to the corporation of the signatory's authority to sign for the shareholder is presented with respect to the vote, consent, waiver or proxy appointment. (e) Two or more persons are the shareholder as co-tenants or fiduciaries and the name signed purports to be the name of at least one of the co-owners and the person signing appears to be acting on behalf of all co-owners. The corporation may reject a vote, consent, waiver or proxy appointment if the Secretary or other officer or agent of the corporation who is authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the shareholder. 2.12. Waiver of Notice by Shareholders. A shareholder may waive any notice required by the Wisconsin Business Corporation Law, the restated articles of incorporation or these by-laws before or after the date and time stated in the notice. The waiver shall be in writing and signed by the shareholder entitled to the notice, contain the same information that would have been required in the notice under applicable provisions of the Wisconsin Business Corporation Law (except that the time and place of meeting need not be stated) and be delivered to the corporation for inclusion in the corporate records. A shareholder's attendance at any Annual Meeting or Special Meeting, in person or by proxy, waives objection to all of the following: (a) lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting or promptly upon arrival objects to holding the meeting or transacting business at the meeting; and (b) consideration of a particular matter at the meeting that is not within the purpose described in the meeting notice, unless the shareholder objects to considering the matter when it is presented. 2.13. Unanimous Consent without Meeting. Any action required or permitted by the restated articles of incorporation or these by-laws or any provision of the Wisconsin Business Corporation Law to be taken at an Annual Meeting or Special Meeting, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof. 2.14. Notice of Shareholder Business and Nomination of Directors. (a) Annual Meetings. (i) Nominations of persons for election to the Board of Directors of the corporation and the proposal of business to be considered by the shareholders may be made at an Annual Meeting (A) pursuant to the corporation's notice of meeting, (B) by or at the direction of the Board of Directors or (C) by any shareholder of the corporation who is a shareholder of record at the time of giving of notice provided for in this by-law and who is entitled to vote at the meeting and complies with the notice procedures set forth in this Section 2.14. (ii) For nominations or other business to be properly brought before an Annual Meeting by a shareholder pursuant to clause (C) of paragraph (a)(i) of this Section 2.14, the shareholder must have given timely notice thereof in writing to the Secretary of the corporation. To be timely, a shareholder's notice shall be received by the Secretary of the corporation at the principal office of the corporation not less than 60 days nor more than 90 days prior to the last Thursday in the month of April; provided, however, that in the event that the date of the Annual Meeting is advanced by more than 30 days or delayed by more than 60 days from the last Thursday in the month of April, notice by the shareholder to be timely must be so received not earlier than the 90th day prior to the date of such Annual Meeting and not later than the close of business on the later of (x) the 60th day prior to such Annual Meeting and (y) the 10th day following the day on which public announcement of the date of such meeting is first made. Such shareholder's notice shall be signed by the shareholder of record who intends to make the nomination or introduce the other business (or his duly authorized proxy or other representative), shall bear the date of signature of such shareholder (or proxy or other representative) and shall set forth: (A) the name and address, as they appear on the corporation's books, of such shareholder and the beneficial owner or owners, if any, on whose behalf the nomination or proposal is made; (B) the class and number of shares of the corporation which are beneficially owned by such shareholder or beneficial owner or owners; (C) a representation that such shareholder is a holder of record of shares of the corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to make the nomination or introduce the other business specified in the notice; (D) in the case of any proposed nomination for election or re-election as a director, (I) the name and residence address of the person or persons to be nominated, (II) a description of all arrangements or understandings between such shareholder or beneficial owner or owners and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination is to be made by such shareholder, (III) such other information regarding each nominee proposed by such shareholder as would be required to be disclosed in solicitations of proxies for elections of directors, or would be otherwise required to be disclosed, in each case pursuant to Regulation 14A under the Exchange Act, including any information that would be required to be included in a proxy statement filed pursuant to Regulation 14A had the nominee been nominated by the Board of Directors and (IV) the written consent of each nominee to be named in a proxy statement and to serve as a director of the corporation if so elected; and (E) in the case of any other business that such shareholder proposes to bring before the meeting, (I) a brief description of the business desired to be brought before the meeting and, if such business includes a proposal to amend these by-laws, the language of the proposed amendment, (II) such shareholder's and beneficial owner's or owners' reasons for conducting such business at the meeting and (III) any material interest in such business of such shareholder and beneficial owner or owners. (iii) Notwithstanding anything in the second sentence of paragraph (a)(ii) of this Section 2.14 to the contrary, in the event that the number of directors to be elected to the Board of Directors of the corporation is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the corporation at least 70 days prior to the last Thursday in the month of April, a shareholder's notice required by this Section 2.14 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be received by the Secretary at the principal office of the corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the corporation. (b) Special Meetings. Only such business shall be conducted at a Special Meeting as shall have been described in the notice of meeting sent to shareholders pursuant to Section 2.04 of these by-laws. Nominations of persons for election to the Board of Directors may be made at a Special Meeting at which directors are to be elected pursuant to such notice of meeting (i) by or at the direction of the Board of Directors or (ii) by any shareholder of the corporation who (A) is a shareholder of record at the time of giving of such notice of meeting, (B) is entitled to vote at the meeting and (C) complies with the notice procedures set forth in this Section 2.14. Any shareholder desiring to nominate persons for election to the Board of Directors at such a Special Meeting shall cause a written notice to be received by the Secretary of the corporation at the principal office of the corporation not earlier than 90 days prior to such Special Meeting and not later than the close of business on the later of (x) the 60th day prior to such Special Meeting and (y) the 10th day following the day on which public announcement is first made of the date of such Special Meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. Such written notice shall be signed by the shareholder of record who intends to make the nomination (or his duly authorized proxy or other representative), shall bear the date of signature of such shareholder (or proxy or other representative) and shall set forth: (A) the name and address, as they appear on the corporation's books, of such shareholder and the beneficial owner or owners, if any, on whose behalf the nomination is made; (B) the class and number of shares of the corporation which are beneficially owned by such shareholder or beneficial owner or owners; (C) a representation that such shareholder is a holder of record of shares of the corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to make the nomination specified in the notice; (D) the name and residence address of the person or persons to be nominated; (E) a description of all arrangements or understandings between such shareholder or beneficial owner or owners and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination is to be made by such shareholder; (F) such other information regarding each nominee proposed by such shareholder as would be required to be disclosed in solicitations of proxies for elections of directors, or would be otherwise required to be disclosed, in each case pursuant to Regulation 14A under the Exchange Act, including any information that would be required to be included in a proxy statement filed pursuant to Regulation 14A had the nominee been nominated by the Board of Directors; and (G) the written consent of each nominee to be named in a proxy statement and to serve as a director of the corporation if so elected. (c) General. (i) Only persons who are nominated in accordance with the procedures set forth in this Section 2.14 shall be eligible to serve as directors. Only such business shall be conducted at an Annual Meeting or Special Meeting as shall have been brought before such meeting in accordance with the procedures set forth in this Section 2.14. The chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this Section 2.14 and, if any proposed nomination or business is not in compliance with this Section 2.14, to declare that such defective proposal shall be disregarded. (ii) For purposes of this Section 2.14, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. (iii) Notwithstanding the foregoing provisions of this Section 2.14, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.14. Nothing in this Section 2.14 shall be deemed to limit the corporation's obligation to include shareholder proposals in its proxy statement if such inclusion is required by Rule 14a-8 under the Exchange Act. ARTICLE III. BOARD OF DIRECTORS 3.01. General Powers and Number. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation shall be managed under the direction of its Board of Directors. The number of directors of the corporation shall be eight (8), divided into three (3) classes: Class I - three (3) directors; Class II - three (3) directors; Class III - two (2) directors. 3.02. Term and Qualifications. At each Annual Meeting the successors to the class of directors whose terms shall expire at the time of such Annual Meeting shall be elected to hold office until the third succeeding Annual Meeting of shareholders, and until their successors are duly elected and qualified. A director may resign at any time by delivering written notice which complies with the Wisconsin Business Corporation Law to the Chairman of the Board or to the corporation. Directors need not be residents of the State of Wisconsin or shareholders of the corporation. 3.03. Nominations. Nominations for the election of directors may only be made in accordance with the requirements of Section 2.14 hereof, which requirements are hereby incorporated by reference in this Section 3.03. 3.04. Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this by-law immediately after the Annual Meeting, and each adjourned session thereof. The place of such regular meeting shall be the same as the place of the Annual Meeting which precedes it, or such other suitable place as may be announced at such Annual Meeting. The Board of Directors may provide, by resolution, the time and place, either within or without the State of Wisconsin, for the holding of additional regular meetings without other notice than such resolution. 3.05. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the President, Secretary or any two directors. The President or Secretary may fix any place, either within or without the State of Wisconsin, as the place for holding any special meeting of the Board of Directors, and if no other place is fixed, the place of meeting shall be the principal office of the corporation in the State of Wisconsin. 3.06. Notice; Waiver. Notice of each meeting of the Board of Directors (unless otherwise provided in or pursuant to Section 3.04) shall be given by written notice delivered or communicated in person, by telegram, facsimile or other form of wire or wireless communication, or by mail or private carrier, to each director at his business address or at such other address as such director shall have designated in writing filed with the Secretary, in each case not less than 48 hours prior to the time of the meeting. If mailed, such notice shall be deemed to be effective when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be effective when the telegram is delivered to the telegraph company. If notice is given by private carrier, such notice shall be deemed to be effective when the notice is delivered to the private carrier. Whenever any notice whatever is required to be given to any director of the corporation under the restated articles of incorporation or these by-laws or any provision of the Wisconsin Business Corporation Law, a waiver thereof in writing, signed at any time, whether before or after the time of meeting, by the director entitled to such notice, shall be deemed equivalent to the giving of such notice. The corporation shall retain any such waiver as part of the permanent corporate records. A director's attendance at or participation in a meeting waives any required notice to him of the meeting unless the director at the beginning of the meeting or promptly upon his arrival objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. 3.07. Quorum. Except as otherwise provided by the Wisconsin Business Corporation Law or by the restated articles of incorporation or these by-laws, a majority of the number of directors set forth in Section 3.01 shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but a majority of the directors present (though less than such quorum) may adjourn the meeting from time to time without further notice. 3.08. Manner of Acting. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless the act of a greater number is required by the Wisconsin Business Corporation Law or by the restated articles of incorporation or these by-laws. 3.09. Conduct of Meetings. The Chairman of the Board, and in his absence, the President, and in his absence, a Vice-President in the order provided under Section 4.06, and in their absence, any director chosen by the directors present, shall call meetings of the Board of Directors to order and shall act as chairman of the meeting. The Secretary of the corporation shall act as secretary of all meetings of the Board of Directors, but in the absence of the Secretary, the presiding officer may appoint any Assistant Secretary or any director or any other person present to act as secretary of the meeting. Minutes of any regular or special meeting of the Board of Directors shall be prepared and distributed to each director. 3.10. Compensation. The Board of Directors, by affirmative vote of a majority of the directors then in office, and irrespective of any personal interest of any of its members, may establish reasonable compensation of all directors for services to the corporation as directors, officers or otherwise, or may delegate such authority to an appropriate committee. The Board of Directors also shall have authority to provide for or to delegate authority to an appropriate committee to provide for reasonable pensions, disability or death benefits, and other benefits or payments, to directors, officers and employees and to their estates, families, dependents or beneficiaries on account of prior services rendered by such directors, officers and employees to the corporation. 3.11. Presumption of Assent. A director of the corporation who is present at a meeting of the Board of Directors or a committee thereof of which he is a member at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless any of the following occurs: (a) the director objects at the beginning of the meeting or promptly upon his arrival to holding the meeting or transacting business at the meeting; (b) the director's dissent or abstention from the action taken is entered in the minutes of the meeting; or (c) the director delivers written notice that complies with the Wisconsin Business Corporation Law of his dissent or abstention to the presiding officer of the meeting before its adjournment or to the corporation immediately after adjournment of the meeting. Such right to dissent or abstain shall not apply to a director who voted in favor of such action. 3.12. Committees. The Board of Directors by resolution adopted by the affirmative vote of a majority of the number of directors set forth in Section 3.01 may create one or more committees, appoint members of the Board of Directors to serve on the committees and designate other members of the Board of Directors to serve as alternates. Alternate members of a committee shall take the place of any absent member or members at any meeting of such committee upon request of the President or upon request of the chairman of such meeting. Each committee shall have two or more members who shall, unless otherwise provided by the Board of Directors, serve at the pleasure of the Board of Directors. A committee may be authorized to exercise the authority of the Board of Directors, except that a committee may not do any of the following: (a) authorize distributions; (b) approve or propose to shareholders action that the Wisconsin Business Corporation Law requires to be approved by shareholders; (c) fill vacancies on the Board of Directors or, unless the Board of Directors provides by resolution that vacancies on a committee shall be filled by the affirmative vote of the remaining committee members, on any Board committee; (d) amend the corporation's restated articles of incorporation; (e) adopt, amend or repeal by-laws; (f) approve a plan of merger not requiring shareholder approval; (g) authorize or approve reacquisition of shares, except according to a formula or method prescribed by the Board of Directors; and (h) authorize or approve the issuance or sale or contract for sale of shares, or determine the designation and relative rights, preferences and limitations of a class or series of shares, except that the Board of Directors may authorize a committee to do so within limits prescribed by the Board of Directors. Unless otherwise provided by the Board of Directors in creating the committee, a committee may employ counsel, accountants and other consultants to assist it in the exercise of its authority. 3.13. Telephonic Meetings. Except as herein provided and notwithstanding any place set forth in the notice of the meeting or these by-laws, members of the Board of Directors (and any committee thereof) may participate in regular or special meetings by, or through the use of, any means of communication by which all participants may simultaneously hear each other, such as by conference telephone. If a meeting is conducted by such means, then at the commencement of such meeting the presiding officer shall inform the participating directors that a meeting is taking place at which official business may be transacted. Any participant in a meeting by such means shall be deemed present in person at such meeting. If action is to be taken at any meeting held by such means on any of the following: (a) a plan of merger or share exchange; (b) a sale, lease, exchange or other disposition of substantial property or assets of the corporation; (c) a voluntary dissolution or the revocation of voluntary dissolution proceedings; or (d) a filing for bankruptcy, then the identity of each director participating in such meeting must be verified by the disclosure at such meeting by each such director of each such director's social security number to the secretary of the meeting before a vote may be taken on any of the foregoing matters. For purposes of the preceding clause (b), the phrase "sale, lease, exchange or other disposition of substantial property or assets" shall mean any sale, lease, exchange or other disposition of property or assets of the corporation having a net book value equal to 10% or more of the net book value of the total assets of the corporation on and as of the close of the fiscal year last ended prior to the date of such meeting and as to which financial statements of the corporation have been prepared. Notwithstanding the foregoing, no action may be taken at any meeting held by such means on any particular matter which the presiding officer determines, in his sole discretion, to be inappropriate under the circumstances for action at a meeting held by such means. Such determination shall be made and announced in advance of such meeting. 3.14. Unanimous Consent without Meeting. Any action required or permitted by the restated articles of incorporation or these by-laws or any provision of the Wisconsin Business Corporation Law to be taken by the Board of Directors (or any committee thereof) at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all members of the Board of Directors or of the committee, as the case may be, then in office. Such action shall be effective when the last director or committee member signs the consent, unless the consent specifies a different effective date. ARTICLE IV. OFFICERS 4.01. Number. The principal officers of the corporation shall be a Chairman of the Board, a President, such number of Vice-Presidents as the Board of Directors shall elect from time to time by affirmative vote of a majority of the number of directors present at a meeting at which a quorum is in attendance, a Secretary, and a Treasurer, each of whom shall be elected by the Board of Directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors. The Board of Directors may also authorize any duly appointed officer to appoint one or more officers or assistant officers. Any two or more offices may be held by the same person. 4.02. Election and Term of Office. The officers of the corporation to be elected by the Board of Directors shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each Annual Meeting. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Each officer shall hold office until his successor shall have been duly elected or until his prior death, resignation or removal. 4.03. Removal; Vacancies. The Board of Directors may remove any officer and, unless restricted by the Board of Directors or these by-laws, an officer may remove any officer or assistant officer appointed by that officer, at any time, with or without cause and notwithstanding the contract rights, if any, of the officer removed. Election or appointment shall not of itself create contract rights. An officer may resign at any time by delivering notice to the corporation that complies with the Wisconsin Business Corporation Law. The resignation shall be effective when the notice is delivered, unless the notice specifies a later effective date and the corporation accepts the later effective date. A vacancy in any principal office because of death, resignation, removal, disqualification or otherwise, shall be filled by the Board of Directors for the unexpired portion of the term. If a resignation of an officer is effective at a later date as contemplated by this Section 4.03, the Board of Directors may fill the pending vacancy before the effective date if the Board provides that the successor may not take office until the effective date. 4.04. Chairman of the Board. The Chairman of the Board shall, when present, preside at all meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors from time to time. 4.05. President. The President shall be the principal executive officer of the corporation and, subject to the control of the Board of Directors, shall in general supervise and control all of the business and affairs of the corporation. He shall, when present, preside at all Annual Meetings and Special Meetings. He shall have authority, subject to such rules as may be prescribed by the Board of Directors, to appoint such agents and employees of the corporation as he shall deem necessary, to prescribe their powers, duties and compensation, and to delegate authority to them. Such agents and employees shall hold office at the discretion of the President. He shall have authority to sign, execute and acknowledge, on behalf of the corporation, all deeds, mortgages, bonds, stock certificates, contracts, leases, reports and all other documents or instruments necessary or proper to be executed in the course of the corporation's regular business, or which shall be authorized by resolution of the Board of Directors; and, except as otherwise provided by law or the Board of Directors, he may authorize any Vice-President or other officer or agent of the corporation to sign, execute and acknowledge such documents or instruments in his place and stead. In general he shall perform all duties incident to the office of the President and such other duties as may be prescribed by the Board of Directors from time to time. 4.06. The Vice-Presidents. In the absence of the President or in the event of his death, inability or refusal to act, or in the event for any reason it shall be impracticable for the President to act personally, the Vice-President (or in the event there be more than one Vice-President, the Vice-Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Any Vice-President may sign, with the Secretary or Assistant Secretary, certificates for shares of the corporation; and shall perform such other duties and have such authority as from time to time may be delegated or assigned to him by the President or by the Board of Directors. The execution of any instrument of the corporation by any Vice-President shall be conclusive evidence, as to third parties, of his authority to act in the stead of the President. 4.07. The Secretary. The Secretary shall: (a) keep the minutes of all Annual Meetings and Special Meetings and all meetings of the Board of Directors in one or more books provided for that purpose (including records of actions taken without a meeting); (b) see that all notices are duly given in accordance with the provisions of these by-laws or as required by the Wisconsin Business Corporation Law; (c) be custodian of the corporate records and of the seal of the corporation and see that the seal of the corporation is affixed to all documents the execution of which on behalf of the corporation under its seal is duly authorized; (d) maintain a record of the shareholders of the corporation, in the form that permits preparation of a list of the names and addresses of all shareholders, by class or series of shares and showing the number and class or series of shares held by each shareholder; (e) sign with the President, or a Vice-President, certificates for shares of the corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the corporation; and (g) in general perform all duties incident to the office of Secretary and have such other duties and exercise such authority as from time to time may be delegated or assigned to him by the President or by the Board of Directors. 4.08. The Treasurer. The Treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; (b) maintain appropriate accounting records; (c) receive and give receipts for moneys due and payable to the corporation from any source whatsoever, and deposit all such moneys in the name of the corporation in such banks, trust companies or other depositaries as shall be selected in accordance with the provisions of Section 5.04; and (d) in general perform all of the duties incident to the office of Treasurer and have such other duties and exercise such other authority as from time to time may be delegated or assigned to him by the President or by the Board of Directors. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the Board of Directors shall determine. 4.09. Assistant Secretaries and Assistant Treasurers. There shall be such number of Assistant Secretaries and Assistant Treasurers as the Board of Directors may from time to time authorize. The Assistant Secretaries may sign with the President or a Vice-President certificates for shares of the corporation the issuance of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers shall respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties and have such authority as shall from time to time be delegated or assigned to them by the Secretary or the Treasurer, respectively, or by the President or the Board of Directors. 4.10. Other Assistants and Acting Officers. The Board of Directors shall have the power to appoint, or to authorize any duly appointed officer of the corporation to appoint, any person to act as assistant to any officer, or as agent for the corporation in his stead, or to perform the duties of such officer whenever for any reason it is impracticable for such officer to act personally, and such assistant or acting officer or other agent so appointed by the Board of Directors or the appointing officer shall have the power to perform all duties of the office to which he is so appointed to be assistant, or as to which he is so appointed to act, except as such power may be otherwise defined or restricted by the Board of Directors or the appointing officer. 4.11. Salaries. The salaries of the principal officers shall be fixed from time to time by the Board of Directors or by a duly authorized committee thereof, and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the corporation. ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS; SPECIAL CORPORATE ACTS 5.01. Contracts. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute or deliver any instrument in the name of and on behalf of the corporation, and such authorization may be general or confined to specific instances. In the absence of other designation, all deeds, mortgages and instruments of assignment or pledge made by the corporation shall be executed in the name of the corporation by the President or one of the Vice-Presidents and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer; the Secretary or an Assistant Secretary, when necessary or required, shall affix the corporate seal thereto; and when so executed no other party to such instrument or any third party shall be required to make any inquiry into the authority of the signing officer or officers. 5.02. Loans. No indebtedness for borrowed money shall be contracted on behalf of the corporation and no evidences of such indebtedness shall be issued in its name unless authorized by or under the authority of a resolution of the Board of Directors. Such authorization may be general or confined to specific instances. 5.03. Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by or under the authority of a resolution of the Board of Directors. 5.04. Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositaries as may be selected by or under the authority of a resolution of the Board of Directors. 5.05. Voting of Securities Owned by this Corporation. Subject always to the specific directions of the Board of Directors, (a) any shares or other securities issued by any other corporation and owned or controlled by this corporation may be voted at any meeting of security holders of such other corporation by the President of this corporation if he be present, or in his absence by any Vice-President of this corporation who may be present, and (b) whenever, in the judgment of the President, or in his absence, of any Vice-President, it is desirable for this corporation to execute a proxy or written consent in respect to any shares or other securities issued by any other corporation and owned by this corporation, such proxy or consent shall be executed in the name of this corporation by the President or one of the Vice-Presidents of this corporation, without necessity of any authorization by the Board of Directors, affixation of corporate seal or countersignature or attestation by another officer. Any person or persons designated in the manner above stated as the proxy or proxies of this corporation shall have full right, power and authority to vote the shares or other securities issued by such other corporation and owned by this corporation the same as such shares or other securities might be voted by this corporation. 5.06. No Nominee Procedures. The corporation has not established, and nothing in these by-laws shall be deemed to establish, any procedure by which a beneficial owner of the corporation's shares that are registered in the name of a nominee is recognized by the corporation as the shareholder under Section 180.0723 of the Wisconsin Business Corporation Law. ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER 6.01. Certificates for Shares. Certificates representing shares of the corporation shall be in such form, consistent with the Wisconsin Business Corporation Law, as shall be determined by the Board of Directors. Such certificates shall be signed by the President or a Vice-President and by the Secretary or an Assistant Secretary. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. All certificates surrendered to the corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except as provided in Section 6.06. 6.02. Facsimile Signatures and Seal. The seal of the corporation on any certificates for shares may be a facsimile. The signatures of the President or Vice-President and the Secretary or Assistant Secretary upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the corporation itself or an employee of the corporation. 6.03. Signature by Former Officers. In case any officer, who has signed or whose facsimile signature has been placed upon any certificate for shares, shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of its issue. 6.04. Transfer of Shares. Prior to due presentment of a certificate for shares for registration of transfer the corporation may treat the registered owner of such shares as the person exclusively entitled to vote, to receive notifications and otherwise to exercise all the rights and powers of an owner. Where a certificate for shares is presented to the corporation with a request to register for transfer, the corporation shall not be liable to the owner or any other person suffering loss as a result of such registration of transfer if (a) there were on or with the certificate the necessary endorsements, and (b) the corporation had no duty to inquire into adverse claims or has discharged any such duty. The corporation may require reasonable assurance that said endorsements are genuine and effective and compliance with such other regulations as may be prescribed under the authority of the Board of Directors. 6.05. Restrictions on Transfer. The face or reverse side of each certificate representing shares shall bear a conspicuous notation of any restriction imposed by the corporation upon the transfer of such shares. 6.06. Lost, Destroyed or Stolen Certificates. Where the owner claims that his certificate for shares has been lost, destroyed or wrongfully taken, a new certificate shall be issued in place thereof if the owner (a) so requests before the corporation has notice that such shares have been acquired by a bona fide purchaser, and (b) files with the corporation a sufficient indemnity bond, and (c) satisfies such other reasonable requirements as the Board of Directors may prescribe. 6.07. Consideration for Shares. The Board of Directors may authorize shares to be issued for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed, contracts for services to be performed or other securities of the corporation. Before the corporation issues shares, the Board of Directors shall determine that the consideration received or to be received for the shares to be issued is adequate. In the absence of a resolution adopted by the Board of Directors expressly determining that the consideration received or to be received is adequate, Board approval of the issuance of the shares shall be deemed to constitute such a determination. The determination of the Board of Directors is conclusive insofar as the adequacy of consideration for the issuance of shares relates to whether the shares are validly issued, fully paid and nonassessable. The corporation may place in escrow shares issued in whole or in part for a contract for future services or benefits, a promissory note, or other property to be issued in the future, or make other arrangements to restrict the transfer of the shares, and may credit distributions in respect of the shares against their purchase price, until the services are performed, the benefits or property are received or the promissory note is paid. If the services are not performed, the benefits or property are not received or the promissory note is not paid, the corporation may cancel, in whole or in part, the shares escrowed or restricted and the distributions credited. 6.08. Stock Regulations. The Board of Directors shall have the power and authority to make all such further rules and regulations not inconsistent with the statutes of the State of Wisconsin as it may deem expedient concerning the issue, transfer and registration of certificates representing shares of the corporation. ARTICLE VII. SEAL 7.01. The Board of Directors shall provide a corporate seal which shall be circular in form and shall have inscribed thereon the name of the corporation and the state of incorporation and the words, "Corporate Seal." ARTICLE VIII. AMENDMENTS 8.01. By Shareholders. The affirmative vote of shareholders possessing at least seventy-five percent of the voting power of the then outstanding shares of all classes of stock of the corporation generally possessing voting rights in elections of directors, considered for this purpose as one class, shall be required to amend, alter, change or repeal, or to adopt any provision inconsistent with, Sections 2.01 to 2.05 inclusive of Article II of these by-laws, Sections 8.01 to 8.03 inclusive of Article VIII of these by-laws and Sections 9.01 to 9.11 inclusive of Article IX of these by-laws. Subject to the foregoing and except as otherwise provided in the restated articles of incorporation of the corporation, the by-laws of this corporation may be altered, amended, changed or repealed by the affirmative vote of shareholders possessing at least a majority of the voting power of the shares of all classes of stock of the corporation generally possessing voting rights in elections of directors considered for this purpose as one class, which are present or represented at any Annual Meeting or Special Meeting at which a quorum is present. 8.02. By Directors. A Requisite Vote (as defined herein) of the directors shall be required to alter, amend, change or repeal, or to adopt any provision inconsistent with, Sections 2.01 to 2.05 inclusive, Section 2.07 and Section 2.14 of Article II of these by-laws, Sections 8.01 to 8.03 inclusive of Article VIII of these by-laws and Sections 9.01 to 9.11 inclusive of Article IX of these by-laws. For purposes of this Section 8.02, "Requisite Vote" shall mean the affirmative vote of at least two-thirds of the directors then in office plus one director. Subject to the foregoing and except as otherwise provided in the restated articles of incorporation of the corporation, the by-laws of this corporation may be altered, amended, changed or repealed by the Board of Directors by the affirmative vote of a majority of the number of directors present at any meeting at which a quorum is present; provided, however, that the shareholders in altering, adopting, amending, changing or repealing a particular by-law may provide therein that the Board of Directors may not amend, repeal or readopt that by-law. 8.03. Implied Amendments. Any action taken or authorized by the shareholders or by the Board of Directors, which would be inconsistent with the by-laws then in effect but is taken or authorized by affirmative vote of not less than the number of votes or the number of directors required to amend the by-laws so that the by-laws would be consistent with such action, shall be given the same effect as though the by-laws had been temporarily amended or suspended so far, but only so far, as is necessary to permit the specific action so taken or authorized. ARTICLE IX. INDEMNIFICATION 9.01. Certain Definitions. All capitalized terms used in this Article IX and not otherwise hereinafter defined in this Section 9.01 shall have the meaning set forth in Section 180.0850 of the Statute. The following capitalized terms (including any plural forms thereof) used in this Article IX shall be defined as follows: (a) "Affiliate" shall include, without limitation, any corporation, partnership, joint venture, employee benefit plan, trust or other enterprise that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Corporation. (b) "Authority" shall mean the entity selected by the Director or Officer to determine his or her right to indemnification pursuant to Section 9.04. (c) "Board" shall mean the entire then elected and serving Board of Directors of the Corporation, including all members thereof who are Parties to the subject Proceeding or any related Proceeding. (d) "Breach of Duty" shall mean the Director or Officer breached or failed to perform his or her duties to the Corporation and his or her breach of or failure to perform those duties is determined, in accordance with Section 9.04, to constitute misconduct under Section 180.0851(2)(a) l, 2, 3 or 4 of the Statute. (e) "Corporation," as used herein and as defined in the Statute and incorporated by reference into the definitions of certain other capitalized terms used herein, shall mean this Corporation, including, without limitation, any successor corporation or entity to this Corporation by way of merger, consolidation or acquisition of all or substantially all of the capital stock or assets of this Corporation. (f) "Director or Officer" shall have the meaning set forth in the Statute; provided, that, for purposes of this Article IX, it shall be conclusively presumed that any Director or Officer serving as a director, officer, partner, trustee, member of any governing or decision-making committee, employee or agent of an Affiliate shall be so serving at the request of the Corporation. (g) "Disinterested Quorum" shall mean a quorum of the Board who are not Parties to the subject Proceeding or any related Proceeding. (h) "Party" shall have the meaning set forth in the Statute; provided, that, for purposes of this Article IX, the term "Party" shall also include any Director or Officer or employee of the Corporation who is or was a witness in a Proceeding at a time when he or she has not otherwise been formally named a Party thereto. (i) "Proceeding" shall have the meaning set forth in the Statute; provided, that, in accordance with Section 180.0859 of the Statute and for purposes of this Article IX, the term "Proceeding" shall also include all Proceedings (i) brought under (in whole or in part) the Securities Act of 1933, as amended, the Exchange Act, their respective state counterparts, and/or any rule or regulation promulgated under any of the foregoing; (ii) brought before an Authority or otherwise to enforce rights hereunder; (iii) any appeal from a Proceeding; and (iv) any Proceeding in which the Director or Officer is a plaintiff or petitioner because he or she is a Director or Officer; provided, however, that any such Proceeding under this subsection (iv) must be authorized by a majority vote of a Disinterested Quorum. (j) "Statute" shall mean Sections 180.0850 through 180.0859, inclusive, of the Wisconsin Business Corporation Law, Chapter 180 of the Wisconsin Statutes, as the same shall then be in effect, including any amendments thereto, but, in the case of any such amendment, only to the extent such amendment permits or requires the Corporation to provide broader indemnification rights than the Statute permitted or required the Corporation to provide prior to such amendment. 9.02. Mandatory Indemnification. To the fullest extent permitted or required by the Statute, the Corporation shall indemnify a Director or Officer against all Liabilities incurred by or on behalf of such Director or Officer in connection with a Proceeding in which the Director or Officer is a Party because he or she is a Director or Officer. 9.03. Procedural Requirements. (a) A Director or Officer who seeks indemnification under Section 9.02 shall make a written request therefor to the Corporation. Subject to Section 9.03(b), within 60 days of the Corporation's receipt of such request, the Corporation shall pay or reimburse the Director or Officer for the entire amount of Liabilities incurred by the Director or Officer in connection with the subject Proceeding (net of any Expenses previously advanced pursuant to Section 9.05). (b) No indemnification shall be required to be paid by the Corporation pursuant to Section 9.02 if, within such 60-day period, (i) a Disinterested Quorum, by a majority vote thereof, determines that the Director or Officer requesting indemnification engaged in misconduct constituting a Breach of Duty or (ii) a Disinterested Quorum cannot be obtained. (c) In either case of nonpayment pursuant to Section 9.03(b), the Board shall immediately authorize by resolution that an Authority, as provided in Section 9.04, determine whether the Director's or Officer's conduct constituted a Breach of Duty and, therefore, whether indemnification should be denied hereunder. (d) (i) If the Board does not authorize an Authority to determine the Director's or Officer's right to indemnification hereunder within such 60-day period and/or (ii) if indemnification of the requested amount of Liabilities is paid by the Corporation, then it shall be conclusively presumed for all purposes that a Disinterested Quorum has affirmatively determined that the Director or Officer did not engage in misconduct constituting a Breach of Duty and, in the case of subsection (i) above (but not subsection (ii)), indemnification by the Corporation of the requested amount of Liabilities shall be paid to the Director or Officer immediately. 9.04. Determination of Indemnification. (a) If the Board authorizes an Authority to determine a Director's or Officer's right to indemnification pursuant to Section 9.03, then the Director or Officer requesting indemnification shall have the absolute discretionary authority to select one of the following as such Authority: (i) An independent legal counsel; provided, that such counsel shall be mutually selected by such Director or Officer and by a majority vote of a Disinterested Quorum or, if a Disinterested Quorum cannot be obtained, then by a majority vote of the Board; (ii) A panel of three arbitrators selected from the panels of arbitrators of the American Arbitration Association in Wisconsin; provided, that (A) one arbitrator shall be selected by such Director or Officer, the second arbitrator shall be selected by a majority vote of a Disinterested Quorum or, if a Disinterested Quorum cannot be obtained, then by a majority vote of the Board, and the third arbitrator shall be selected by the two previously selected arbitrators, and (B) in all other respects, such panel shall be governed by the American Arbitration Association's then existing Commercial Arbitration Rules; or (iii) A court pursuant to and in accordance with Section 180.0854 of the Statute. (b) In any such determination by the selected Authority there shall exist a rebuttable presumption that the Director's or Officer's conduct did not constitute a Breach of Duty and that indemnification against the requested amount of Liabilities is required. The burden of rebutting such a presumption by clear and convincing evidence shall be on the Corporation or such other party asserting that such indemnification should not be allowed. (c) The Authority shall make its determination within 60 days of being selected and shall submit a written opinion of its conclusion simultaneously to both the Corporation and the Director or Officer. (d) If the Authority determines that indemnification is required hereunder, the Corporation shall pay the entire requested amount of Liabilities (net of any Expenses previously advanced pursuant to Section 9.05), including interest thereon at a reasonable rate, as determined by the Authority, within 10 days of receipt of the Authority's opinion; provided, that, if it is determined by the Authority that a Director or Officer is entitled to indemnification against Liabilities incurred in connection with some claims, issues or matters, but not as to other claims, issues or matters, involved in the subject Proceeding, the Corporation shall be required to pay (as set forth above) only the amount of such requested Liabilities as the Authority shall deem appropriate in light of all of the circumstances of such Proceeding. (e) The determination by the Authority that indemnification is required hereunder shall be binding upon the Corporation regardless of any prior determination that the Director or Officer engaged in a Breach of Duty. (f) All Expenses incurred in the determination process under this Section 9.04 by either the Corporation or the Director or Officer, including, without limitation, all Expenses of the selected Authority, shall be paid by the Corporation. 9.05. Mandatory Allowance of Expenses. (a) The Corporation shall pay or reimburse from time to time or at any time, within 10 days after the receipt of the Director's or Officer's written request therefor, the reasonable Expenses of the Director or Officer as such Expenses are incurred; provided, the following conditions are satisfied: (i) The Director or Officer furnishes to the Corporation an executed written certificate affirming his or her good faith belief that he or she has not engaged in misconduct which constitutes a Breach of Duty; and (ii) The Director or Officer furnishes to the Corporation an unsecured executed written agreement to repay any advances made under this Section 9.05 if it is ultimately determined by an Authority that he or she is not entitled to be indemnified by the Corporation for such Expenses pursuant to Section 9.04. (b) If the Director or Officer must repay any previously advanced Expenses pursuant to this Section 9.05, such Director or Officer shall not be required to pay interest on such amounts. 9.06. Indemnification and Allowance of Expenses of Certain Others. (a) The Board may, in its sole and absolute discretion as it deems appropriate, pursuant to a majority vote thereof, indemnify a director or officer of an Affiliate (who is not otherwise serving as a Director or Officer) against all Liabilities, and shall advance the reasonable Expenses, incurred by such director or officer in a Proceeding to the same extent hereunder as if such director or officer incurred such Liabilities because he or she was a Director or Officer, if such director or officer is a Party thereto because he or she is or was a director or officer of the Affiliate. (b) The Corporation shall indemnify an employee of the Corporation who is not a Director or Officer, to the extent he or she has been successful on the merits or otherwise in defense of a Proceeding, for all Expenses incurred in the Proceeding if the employee was a Party because he or she was an employee of the Corporation. (c) The Board may, in its sole and absolute discretion as it deems appropriate, pursuant to a majority vote thereof, indemnify (to the extent not otherwise provided in Section 9.06(b) hereof) against Liabilities incurred by, and/or provide for the allowance of reasonable Expenses of, an employee or authorized agent of the Corporation acting within the scope of his or her duties as such and who is not otherwise a Director or Officer. 9.07. Insurance. The Corporation may purchase and maintain insurance on behalf of a Director or Officer or any individual who is or was an employee or authorized agent of the Corporation against any Liability asserted against or incurred by such individual in his or her capacity as such or arising from his or her status as such, regardless of whether the Corporation is required or permitted to indemnify against any such Liability under this Article IX. 9.08. Notice to the Corporation. A Director, Officer or employee of the Corporation shall promptly notify the Corporation in writing when he or she has actual knowledge of a Proceeding which may result in a claim of indemnification against Liabilities or allowance of Expenses hereunder, but the failure to do so shall not relieve the Corporation of any liability to the Director, Officer or employee hereunder unless the Corporation shall have been irreparably prejudiced by such failure (as determined, in the case of Directors or Officers only, by an Authority selected pursuant to Section 9.04(a)). 9.09. Severability. If any provision of this Article IX shall be deemed invalid or inoperative, or if a court of competent jurisdiction determines that any of the provisions of this Article IX contravene public policy, this Article IX shall be construed so that the remaining provisions shall not be affected, but shall remain in full force and effect, and any such provisions which are invalid or inoperative or which contravene public policy shall be deemed, without further action or deed by or on behalf of the Corporation, to be modified, amended and/or limited, but only to the extent necessary to render the same valid and enforceable; it being understood that it is the Corporation's intention to provide the Directors and Officers with the broadest possible protection against personal liability allowable under the Statute. 9.10. Nonexclusivity of Article IX. The rights of a Director, Officer or employee of the Corporation (or any other person) granted under this Article IX shall not be deemed exclusive of any other rights to indemnification against Liabilities or allowance of Expenses which the Director, Officer or employee (or such other person) may be entitled to under any written agreement, Board resolution, vote of shareholders of the corporation or otherwise, including, without limitation, under the Statute. Nothing contained in this Article IX shall be deemed to limit the Corporation's obligations to indemnify against Liabilities or allow Expenses to a Director, Officer or employee of the Corporation under the Statute. 9.11. Contractual Nature of Article IX; Repeal or Limitation of Rights. This Article IX shall be deemed to be a contract between the Corporation and each Director, Officer and employee of the Corporation and any repeal or other limitation of this Article IX or any repeal or limitation of the Statute or any other applicable law shall not limit any rights of indemnification against Liabilities or allowance of Expenses then existing or arising out of events, acts or omissions occurring prior to such repeal or limitation, including, without limitation, the right to indemnification against Liabilities or allowance of Expenses for Proceedings commenced after such repeal or limitation to enforce this Article IX with regard to acts, omissions or events arising prior to such repeal or limitation. EX-4.1 4 AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT This Amended and Restated Loan and Security Agreement ("Agreement") is hereby made as of the first day of October, 1994, by and between ITT COMMERCIAL FINANCE CORP., a Nevada corporation, with its principal office at 8251 Maryland Avenue, Clayton, Missouri 63105 ("ITT") and GEHL COMPANY, a Wisconsin corporation, with its principal office at 143 Water Street, West Bend, Wisconsin 53095, and its subsidiaries/divisions including but not limited to Hedlund Manufacturing, Inc., Hedlund Martin, Inc., and Gehl Power Products, Inc. (collectively and individually "Gehl Company"). ITT and Gehl Company desire to amend and restate in its entirety that certain Loan and Security Agreement dated October 21, 1993, as amended. 1. DEFINITIONS 1.1 Special Definitions. The following terms will have the following meanings in this Agreement and in the Other Agreements: (a) "Accounts": all of Gehl Company's rights to payment for goods sold or for services rendered to Dealers and Retail Customers, whether characterized as accounts, contract rights, chattel paper, instruments, or general intangibles, including any lien or other security interest that secures or may secure any of the foregoing, plus all books, invoices, documents and other records in any form evidencing or relating to any of the foregoing, now owned or hereafter acquired by Gehl Company. (b) "Collateral": as defined in Section 5.1. (c) "Dealer": any dealer in goods manufactured, distributed or sold by Gehl Company for resale by such dealer. (d) "Default": the events or occurrences enumerated in Section 6.3 (c) and Section 7 of this Agreement. (e) "Eligible Account": any of the following, solely to the extent that such Accounts do not otherwise constitute Ineligible Accounts: (i) 100% of the outstanding balance of Accounts arising from sales of Finished Goods which have aged not more than 12 months from the Original Invoice Date; (ii) 100% of the outstanding balance of Accounts arising from sales of service parts which require payment within 30 days of the Original Invoice Date and which are not more than 90 days delinquent ("Net Accounts"); (iii) 80% of the outstanding balance of Accounts arising from sales of Finished Goods which have aged more than 12 months but not more than 24 months from the Original Invoice Date, and to the extent that said 12-24 month aged Accounts comprise 35% or less of all Accounts; and (iv) 50% of the outstanding balance of Accounts arising from sales or financing of Used Finished Goods, having maturities of not more than six (6) months, and to the extent current and not past due. (f) "Eligible Inventory": 100% of Gehl Company's Finished Goods and Service Parts that are in the care, control and custody of Gehl Company. (g) "Eligible Retail Accounts" and "Eligible Repurchased Retail Accounts": 100% of Gehl Company's Retail Accounts (including without limitation Repurchased Retail Accounts) which are evidenced by Retail Chattel Paper and which are not more than 90 days delinquent, extended more than once or extended for more than 90 days, or which are in a non-accrual status or otherwise pledged or sold to another financial institution. (h) "Finished Goods": Serialized goods and all attachments for such serialized goods manufactured, distributed or sold by Gehl Company to authorized Dealers and held for sale or lease. (i) "Ineligible Accounts": as defined in Section 3. (j) "Inventory": All of Gehl Company's presently owned and hereafter acquired inventory, which shall have the meaning given to that term in the Uniform Commercial Code as set forth in the Missouri Revised Statutes, as amended from time to time, and, to the extent not included therein shall also mean all of Gehl Company's inventory, goods, merchandise, materials, finished goods, whole goods, work-in-process, component materials, packaging shipping materials, parts, and other tangible personal property, now owned or hereafter acquired, and accessories and attachments thereto held for sale or lease. (k) "Maximum Line of Credit": the maximum amount extended pursuant to Section 2.l of this Agreement. (l) "Obligations": all covenants, agreements, warranties, duties, representations, loans, liabilities and indebtednesses of any kind and nature whatsoever now or hereafter arising, owing, due or payable from Gehl Company to ITT, whether primary or secondary, joint or several, direct, contingent, fixed or otherwise, unsecured or arising under this Agreement, the Other Agreements or any other agreements previously, now or hereafter executed by Gehl Company and delivered to ITT or by oral agreement or operation of law and whether or not evidenced by instruments or evidences of indebtedness. (m) "Original Invoice Date": is the original invoice date of the sale of the Finished Goods or Service Parts to the first Dealer. (n) "Other Agreements": all security agreements, mortgages, leases, instruments, documents, guarantees, schedules of assignment, contracts and similar agreements heretofore, now or hereafter executed by Gehl Company and delivered to ITT or delivered by or on behalf of Gehl Company to a third party and assigned to ITT by operation of law or otherwise. (o) "Person": any individual, association, firm, corporation, governmental body, agency or instrumentality whatsoever. (p) "Policies": all policies of property insurance required to be maintained by Gehl Company under this Agreement or any of the Other Agreements. (q) "Prime Rate": (i) with respect to U.S. Loans, the term "Prime Rate" shall mean the rate of interest publicly announced or so designated from time to time by Chase Manhattan Bank as its prime rate or reference rate, and (ii) with respect to Canadian Loans (as defined in Section 2.1), the term "Prime Rate" shall mean the rate of interest publicly announced or so designated from time to time by the Royal Bank of Canada as its prime rate for loans in Canadian dollars to borrowers in Canada. The Prime Rate in effect on the last business day of any given month will be the Prime Rate for the following month and will be effective as of the first (1st) day of such following month without any notice to either party. (r) "Retail Accounts": Accounts, including, without limitation, Accounts repurchased by Gehl Company from third party creditors to whom Gehl Company previously pledged or sold such Accounts ("Repurchased Retail Accounts"), arising from the sale of Finished Goods to Retail Customers or to Dealers for the purpose of lease or rental to the Dealers' customers. (s) "Retail Chattel Paper": all of Gehl Company's chattel paper arising from Gehl Company's sale of Finished Goods to Dealers under installment sales contracts or arising from Dealer's sale of Finished Goods to retail customers under installment sales contracts. (t) "Retail Customer": any and all purchasers of goods manufactured, distributed or sold by Gehl Company. (u) "Service Parts": Parts manufactured, sold or distributed by Gehl Company to authorized Dealers and in Gehl Company's possession. (v) "Supplemental Line of Credit": a line of credit extended pursuant to Section 4.1 of this Agreement. (w) "Used Finished Goods": means Finished Goods acquired by any Dealer from, or financed by, Gehl Company, which are unable to be sold by Dealer as new and unused, and including, without limitation trade-in Finished Goods and repossessed Finished Goods previously sold at retail. 1.2. Uniform Commercial Code Definitions. Each term used in this Agreement or the Other Agreements and not specifically defined herein shall have the meaning provided by the Uniform Commercial Code (from time to time in effect in the state of Missouri) to the extent the same is defined or used therein. 2. CREDIT FACILITY/INTEREST RATE/CHARGES 2.1 Credit Facility. In consideration of Gehl Company's performance of its Obligations and subject to Sections 3 and 4, ITT grants to Gehl Company an aggregate credit facility in the maximum amount of Seventy-five Million DOLLARS ($75,000,000.00) (the "Credit Facility"), which shall be available in the form as follows: (a) "Maximum Line of Credit": In consideration of Gehl Company's performance of its Obligations and subject to Sections 3 and 4, ITT grants to Gehl Company separate lines of credit of (a) SIXTY-SEVEN MILLION FIVE HUNDRED THOUSAND UNITED STATES DOLLARS ($67,500,000.00 U.S.) (the "U.S. Line"), and (b) that fluctuating amount of Canadian Dollars which, from day-to-day, shall equal, based on the daily noon spot exchange rate of the Royal Bank of Canada (the "Exchange Rate") SEVEN MILLION FIVE HUNDRED THOUSAND UNITED STATES DOLLARS ($7,500,000.00 U.S.) (the "Canadian Line") for the period commencing on the execution of this Agreement until December 31, 1997. Such lines of credit are collectively called the "Maximum Line of Credit"; loans under the U.S. Line are called "U.S. Loans"; and loans under the Canadian Line are called "Canadian Loans". U.S. Loans shall be repayable only in United States Dollars and Canadian Loans shall be repayable only in Canadian Dollars. Gehl Company agrees that for purposes of determining loan availability and over-advance positions, all outstanding Canadian Loans shall be valued daily, at the then current Exchange Rate (for example: if on January 1, Gehl Company borrowed $9,500,000 Canadian which at the time was equivalent to $7,500,000 U.S., and on January 3, the Exchange Rate changed such that $9,500,000 Canadian was then valued at $8,000,000 U.S., Gehl Company will be deemed over-advanced by $500,000). Any over-advance will be immediately repayable by Gehl Company upon demand by ITT. In determining credit available at any given time for U.S. Loans pursuant to the provisions of Sections 3.2 and 4.2 or Canadian Loans pursuant to the provisions of Section 3.2, Canadian Loans may be made only with respect to Eligible Accounts arising from sales payable in Canadian Dollars, and U.S. Loans may be made only with respect to Eligible Accounts, including, but not limited to, Eligible Retail Accounts, arising from sales payable in United States dollars and Eligible Inventory. Gehl Company agrees that all reports, agings, records and other information provided by it pursuant to this Agreement, including without limitation, those provided pursuant to Section 3.1, shall, in form and detail reasonably satisfactory to ITT, separately identify Gehl Company's Accounts payable in Canadian Dollars from those payable in United States Dollars. (b) Supplemental Line of Credit. ITT grants to Gehl Company a Supplemental Line of Credit in an amount not to exceed Fifteen Million Dollars ($15,000,000.00) of the U.S. Line. 2.1.1 Interest. Gehl Company agrees to pay interest to ITT, payable as provided in Section 2.2, on the average daily outstanding balance under the Credit Facility, at a rate that is: U.S. Loans the lesser of (i) one-half of one percent (0.5%) per annum higher than the daily Prime Rate in effect; and (ii) the highest rate from time to time permitted by applicable law (and amounts received from Gehl Company in excess of such highest rate from time to time permitted by applicable law will be considered reductions of principal to the extent of such excess). Notwithstanding the foregoing, the rate shall be adjusted if Gehl Company breaches any financial covenant set forth in Section 6.3 of this Agreement, in which event the rate shall be determined in accordance with that subsection. The rate determined pursuant to the preceding sentence shall take effect upon ITT's receipt of Gehl Company's quarterly or audited fiscal year-end financial statements for such periods, as applicable. Canada Loans. With respect to Canadian Loans, Gehl Company agrees to pay interest to ITT, payable as provided in Section 2.2, on the average daily outstanding balance under the Canadian Line, at a rate (i) that is the lesser of (a) one and one-half of one percent (1.50%) per annum higher than the Prime Rate in effect, and (b) the highest rate from time to time permitted by applicable law (and amounts received from Gehl Company in excess of such highest rate from time to time permitted by applicable law will be considered reductions of principal to the extent of such excess); or (ii) pursuant to Section 6.3 of this Agreement. 2.1.2 Charges. Gehl Company agrees to pay to ITT an annual fee (hereinafter sometimes referred to as a "charge") equal to the lesser of (a) the amount of One-Eighth of One percent (.125%) of the aggregate amount of the Maximum Line of Credit; and (b) the highest charges from time to time permitted by applicable law (and amounts received from Gehl Company in excess of such highest rate from time to time permitted by applicable law will be considered reductions of principal to the extent of such excess). Said charge shall be payable on December 31, 1994, on December 31, 1995, and on December 31, 1996. 2.1.3 Days. All interest to be charged under the Agreement will be computed on the basis of a year of 360 days divided by the actual number of days elapsed in the applicable interest period. 2.1.4 Non-Use of Credit Facility Fee. Gehl Company agrees to pay ITT an annual non-use of credit facility fee on the daily average of the unused amount of the U.S. Line during each calendar year of the term of this Agreement (including without limitation calendar year 1994). Such non-use fee shall be payable within fifteen days following the end of each calendar year. Such non-use fee shall be calculated by multiplying (a) one-half of one percent (0.5%) times (b) the positive difference if any between (i) Thirty Million Dollars ($30,000,000.00) minus (ii) the average daily balance of the U.S. Line for the applicable calendar year. 2.2 Payments. (a) Interest and Charges. Interest and any charges (other than those charges provided in Sections 2.1.2 and 2.1.4) hereafter agreed to by the parties, are payable monthly on the fifteenth (15th) calendar day of the month that follows Gehl Company's receipt of ITT's bill or statement therefor, or within seven (7) days after Gehl Company's receipt of such bill or statement, whichever is later. For example, if Gehl Company receives ITT's interest statement for November at any time on or prior to December 8, the interest charges are payable on December 15, and if Gehl Company receives such interest statement after December 8 the interest charges are payable within seven (7) days after said receipt. Interest and any charges that remain outstanding after the foregoing due date shall be assessed a finance charge equal to the Prime Rate plus Three percent (3.0%) on such outstanding amounts until paid in full. Each statement of account rendered by ITT to Gehl Company and relating to the Obligations will be presumed to be correct and accurate and will constitute an account stated fully binding upon Gehl Company unless, within sixty (60) days from the date of receipt of such statement, Gehl Company gives to ITT written objection specifying the error or errors, if any, contained in that statement. If Gehl Company gives written objection to ITT after said sixty (60) day period, ITT may, but is not obligated to, correct said billing errors. (b) Principal. Principal amounts advanced hereunder shall be due and payable by Gehl Company, as follows: (i) in full upon the termination of this Agreement; (ii) immediately at any time or times during the term of this Agreement by an amount equal to the excess, if any, of Gehl Company's outstanding principal balance over the then applicable line of credit set forth in Section 2.1; and (iii) in full immediately upon any demand for payment made pursuant to Section 7.2. 2.3 Funding Source Gehl Company acknowledges that ITT may, in its sole discretion, make any Canadian Loan by causing its Canadian affiliate, ITT Commercial Finance, a Division of ITT Industries of Canada, Ltd., or any other affiliate of ITT ("ITT Canada") to fund or make advances of such loans on ITT's behalf, or to make or continue such Canadian Loans directly. ITT Canada shall inure to the rights and benefits of this Agreement with respect to Canadian Loans made or funded by it, as though it were a party hereto, although, unless an assignment as described below shall have occurred, ITT may continue to hold all Collateral (and enforce the security interest therein), and receive and issue all communications, notices, requests, waivers, consents and amendments (collectively, "Communications"), in ITT's own name, acting individually and/or on behalf, and for the benefit, of ITT Canada, and Gehl Company may rely upon any Communication received from ITT as being made by ITT both on its own behalf and on behalf of ITT Canada. ITT hereby directs Gehl Company, and Gehl Company hereby agrees (until otherwise advised by ITT), to pay all amounts in respect of Canadian Loans directly to the order of ITT Canada, at such addresses as ITT Canada may from time to time specify in writing. ITT may, upon notice to Gehl Company, elect to assign directly all or any part of the Canadian Loans to ITT Canada, together with an undivided pro-rata portion of all Collateral and any other security for all Loans, and Gehl Company agrees in such event to recognize ITT Canada as its direct lender of the Canadian Loans with all rights and benefits of this Agreement. ITT may elect to also require Gehl Company, and Gehl Company hereby agrees, to amend or execute such financing statements (or Canadian equivalents), and amendments to this Agreement and the other documents entered into in connection herewith, as may be reasonably required to effect such assignment, or to obtain for ITT Canada the rights, protections, security and/or Collateral (or Canadian equivalent) granted to ITT under this Agreement. Without limiting the generality of the foregoing, Gehl Company hereby grants to ITT Canada as continuing security for its Obligations hereunder, a continuing specific and fixed security interest in the Collateral pursuant to all the terms and conditions of this Agreement. 3. LINE OF CREDIT - ACCOUNTS RECEIVABLE - ADDITIONAL PROVISIONS 3.1 Schedules. To facilitate Gehl Company's borrowings and the maintenance of ITT's records, Gehl Company will, no less than monthly or as otherwise agreed to, furnish ITT with a schedule of Accounts in a form mutually agreeable to Gehl Company and ITT ("Schedule") describing all Accounts created or acquired by Gehl Company since the last Schedule furnished ITT (which are readily traceable to Gehl Company's subordinate accounts receivable journal or general ledger accounts), the total collections that Gehl Company received on the outstanding Accounts (including cash, cash equivalents such as checks and drafts, and Retail Chattel Paper), the total of any positive or negative adjustments or adjustments other than cash with supporting documentation (including discounts allowed or credit memorandums or returns), and the Ineligible Accounts. However, failure to provide any such Schedules in a timely manner will not impair ITT's rights and security interest with respect to all of the Accounts. 3.2 Available Credit. On receipt of each Schedule, or as otherwise requested by Gehl Company, ITT will credit Gehl Company with (a) Seventy-Seven and one-half percent (77.5%) of the net amount of the Eligible Accounts listed in such Schedule, excluding Net Accounts, and (b) Fifty percent (50%) of the net amount of Net Accounts listed in such Schedule, and remit to Gehl Company, in immediately available funds, an amount equal to Gehl Company's loan request up to the Maximum Line of Credit, in accordance with the electronic transfer instructions contained in Section 8.16 of this Agreement; provided however, that the outstanding principal balance of all advances or loans made on Net Accounts will at no time exceed Two Million Five Hundred Thousand Dollars ($2,500,000.00), and the outstanding principal balance of all loans made on foreign Accounts which are insured by a policy in form and substance and issued by an insurer acceptable to ITT will at no time exceed Two Million Dollars ($2,000,000.00). ITT will loan Gehl Company, on request, such amounts so credited or a part thereof as requested provided that at no time will such outstanding loans exceed Gehl Company's Maximum Line of Credit. No advances or loans need be made by ITT if Gehl Company is in Default. Gehl Company acknowledges that any advances or loans made on Net Accounts or foreign Accounts will be deemed made under the U.S. Line. 3.3 Ineligible Accounts. The following Accounts will be deemed ineligible accounts ("Ineligible Accounts"): (a) Accounts created from the sale of goods and services on non- standard terms and/or that allow for payment to be made outside standard financing program terms established by Gehl Company, but excluding Accounts as reasonably modified by Gehl Company in accordance with past business practices. With ITT's consent, which consent will not be unreasonably withheld, new terms or programs not in accordance with past business practices will not be grounds for ineligibility; (b) Accounts arising from sales of Finished Goods which have aged by more than twenty-four (24) months from the Original Invoice Date; (c) Accounts arising from sales of Used Finished Goods which are past due; (d) Accounts with respect to which the obligor is an officer, employee, agent, parent, subsidiary or affiliate of Gehl Company or is related or has common shareholders, officers or directors with Gehl Company; (e) Consignment sales; (f) Accounts with respect to which the payment by the obligor is or may be conditional, excluding the effect of any state or provincial buy-back laws; (g) Accounts with respect to which (i) the obligor is not a commercial or institutional entity, or (ii) the obligor is not a resident of the United States, Canada or Puerto Rico, unless said foreign Accounts are either secured by letters of credit acceptable to ITT or insured by a policy in form and substance and issued by an insurer acceptable to ITT; (h) Accounts with respect to which any warranty or representation provided in Subsection 3.4 is not true and correct; (i) Accounts which represent goods purchased for a personal, family or household purpose; (j) Accounts which represent goods that have been used for demonstration purposes or loaned by Gehl Company to another party except as may be presently allowed under the standard financing program terms established by Gehl Company or in accordance with past business practices; (k) Accounts which are progress payment accounts or contra accounts; (l) for Accounts in excess of $500,000.00 and not specifically approved by ITT in writing, which approval will not be unreasonably withheld, all amounts in excess of $500,000.00; (m) Accounts which are unsecured, secured by unperfected security interests, secured but, in ITT's reasonable determination, undercollateralized, not secured by first priority security interests, or which are secured by assets other than Finished Goods or Service Parts which have not been expressly approved by ITT, including, without limitation, Accounts relating to repossessed or returned Finished Goods, but excluding such Accounts that are re-invoiced to another Dealer provided that said Account has not aged more than 24 months from the Original Invoice Date; (n) Accounts with respect to which the obligor is in default of any material provision of the financing or security agreement governing such Account, including, without limitation, Accounts paid with checks returned and marked Insufficient Funds, Accounts relating to Finished Goods sold out of trust, or Accounts which are otherwise in dispute, and in each case not resolved within 30 days; or (o) any and all other Accounts which ITT, by using reasonable business judgment in good faith and after giving Gehl Company three (3) business days to respond, deems to be unacceptable. 3.4 Warranties and Representations. With respect to each Account now or hereafter listed or referred to by Gehl Company on any Schedule, Gehl Company warrants and represents to ITT that (except as otherwise specified in this Agreement or the Other Agreements or as otherwise disclosed in writing to ITT): (a) such Account is genuine, in all respects what it purports to be and is not evidenced by a judgment or promissory note or similar instrument or agreement; (b) it represents undisputed bona fide transactions completed in accordance with the terms and conditions contained in the invoices and purchase orders relating thereto; (c) the goods sold (or services rendered) which resulted in the creation of such Account have been delivered or rendered to and accepted by the obligor; (d) the amounts shown on the respective Schedules, Gehl Company's books and records and all invoices and statements delivered to ITT with respect thereto are absolutely owing to Gehl Company and are not contingent for any reason; (e) no payments have been or will be made thereon except payments turned over to ITT; (f) there are no set- offs, counterclaims or disputes existing or asserted with respect thereto from any Dealer in excess of $50,000.00 that has not been resolved within thirty (30) days; (g) Gehl Company has not made any agreement with any obligor without ITT's written consent, which consent shall not be unreasonably withheld, for any deduction or discount of the sum payable thereunder in excess of 10% of the sum payable thereunder or in excess of $1,000.00, whichever is greater, except discounts allowed by Gehl Company in the ordinary course of its business as set forth in the Dealer's schedule of discounts and terms; Gehl Company and ITT agree, if either party believes that the provisions of this subsection (g) are posing undue administrative hardship or risk, as the case may be, to negotiate in good faith to attempt to satisfy the concerns of the other party; (h) there are no facts, events or occurrences which in any way impair the validity or enforcement thereof or tend to reduce the amount payable thereunder from the amount thereof as shown on the respective Schedules, Gehl Company's books and records and the invoices and statements delivered to ITT with respect thereto; (i) all obligors thereon have the ostensible authority to contract; and (j) there are no proceedings or actions known to Gehl Company which are threatened or pending against any obligor thereon which might result in any material adverse change in its financial condition. 3.5 Notes. Gehl Company's Obligations for loans made pursuant to the Maximum Line of Credit, at ITT's sole discretion, will be evidenced by promissory notes in form satisfactory to ITT. Such loans will bear interest at the rate and will be subject to the terms set forth herein and the Other Agreements. 3.6 Reimbursement for Charges. Gehl Company will reimburse ITT for all charges made by banks for collection of checks, including charges for NSF checks, and other items of payment and for remittances of proceeds of the loans hereunder. 3.7 Collections. Gehl Company is authorized to collect Accounts (excluding payments arising out of Retail Chattel Paper, except as set forth below) in a lockbox account that is to be blocked in the favor of ITT so that only disbursements to be made against the lockbox account will be in favor of ITT ("Lockbox Account"). Gehl Company will advise all obligors of the Accounts to make all payments on Accounts into the Lockbox Account. Such authorization may be terminated by ITT at any time if Gehl Company is in Default under this Agreement and the Obligations have been accelerated by ITT, and ITT may notify any obligor of the assignment of Accounts and collect the same. All payments on Accounts from Canadian Dealers will be deposited into a Canadian lockbox account, converted into U.S. dollars, and then electronically transferred to ITT in accordance with the Electronic Transfer Instructions in Section 8.16 of this Agreement. So long as Gehl Company is not in Default and the Obligations have not been accelerated, Gehl Company has no obligation to make payments on Accounts from Dealers located outside of the United States, Canada or Puerto Rico to ITT into the Lockbox Account, unless such Accounts have not been deemed ineligible pursuant to Section 3.3(g). Until delivery to ITT, Gehl Company will keep all payments on the Accounts that it otherwise receives in trust for ITT separate and apart from Gehl Company's own funds so that they are capable of identification as the property of ITT, and will deposit said payments into the Lockbox Account within one (1) business day of their receipt. In the event of a Default, Gehl Company shall collect any payments arising from Retail Chattel Paper in a separate lockbox account blocked in favor of ITT ("the Standby Lockbox Account"). Any disbursements made against the Standby Lockbox Account will be in favor of ITT. Gehl Company will advise all obligors of such Retail Chattel Paper to make all payments into the Standby Lockbox Account. If Gehl Company is in default under this Agreement and the Obligations have been accelerated by ITT, ITT may notify said obligors of the assignment of the Retail Chattel Paper and the collection of the same. Until delivery to ITT, Gehl Company will keep all payments on the Retail Chattel Paper that it otherwise receives in trust for ITT separate and apart from Gehl Company's own funds so that they are capable of identification as the property of ITT, and will deposit said payments into the Standby Lockbox Account within one (1) business day of their receipt. 3.8 Collection Days. All Gehl Company payments and all amounts received in settlement, adjustment, or liquidation of any Account will be credited by ITT to Gehl Company's account upon the receipt of immediately available funds for said payments. 3.9 Power of Attorney. Gehl Company irrevocably appoints ITT (and any Person designated by it) as Gehl Company's true and lawful Attorney with full power at any time, in the discretion of ITT, if a Default has occurred under this Agreement and ITT has accelerated the indebtedness, to, in a commercially reasonable manner: (a) demand payment, enforce payment and otherwise exercise all of Gehl Company's rights, and remedies with respect to the collection of any Accounts; (b) settle, adjust, compromise, extend or renew any Accounts; (c) settle, adjust or compromise any legal proceedings brought to collect any Accounts; (d) sell or assign any Accounts upon such terms, for such amounts and at such time or times as ITT may deem advisable; (e) discharge and release any Accounts; (f) prepare, file and sign Gehl Company's name on any Proof of Claim in Bankruptcy or similar document against any obligor; (g) endorse the name of Gehl Company upon any chattel paper, document, instrument, invoice, freight bill, bill of lading or similar document or agreement relating to any Account or goods pertaining thereto; (h) endorse the name of Gehl Company upon any of the items of payment of proceeds and deposit the same in the account of ITT for application to the Obligations; (i) sign the name of Gehl Company to verifications of Accounts and notices thereof to obligors; (j) sign the name of Gehl Company on any document or instrument that ITT shall deem necessary or appropriate to perfect and maintain perfected the security interests in the Collateral under this Agreement and the Other Agreements; (k) make, settle and adjust claims under the Policies and endorse Gehl Company's name on any check, instrument or other item of payment of the proceeds of the Policies; (l) take control in any manner of any item of payments or proceeds and for such purpose to notify the Postal Authorities to change the address for delivery of mail addressed to Gehl Company to such address as ITT may designate. The power of attorney granted by this Section is for value and coupled with an interest and is irrevocable so long as any Obligations remain outstanding and nothing done by ITT pursuant to such power of attorney will reduce any of the Obligations, except as pursuant to applicable law. 3.10 Continuing Requirements. Gehl Company will submit to ITT a report each month that contains: (a) if from time to time requested by ITT, copies of all invoices, delivery evidences and other such documents relating to each Account; (b) information of any rejection of goods by any obligor, delays in delivery of goods, non- performance of contracts and of any assertion of any claim, offset or counterclaim by any obligor in excess of $50,000.00; (c) information of all material adverse information relating to the financial condition of any obligor; (d) information of which Accounts may be deemed ineligible as defined in Subsection 3.3; and (e) an aging of its Accounts for each month which shall include its accounts receivable ledger and its on line aging of Accounts. In addition, Gehl Company shall: (a) place the appropriate endorsements or assignments upon all such items of payment and proceeds so that the same may be properly deposited by ITT to ITT's account; (b) not permit or agree to any compromise or settlement or make any material change or modification of any kind or nature with respect to any Account, including any of the terms relating thereto except as in accordance with Section 3.4(g); (c) keep all goods rejected or returned by any obligor and all goods repossessed or stopped in transit by Gehl Company from any obligor in the aggregate in excess of $50,000.00 segregated from other property of Gehl Company, holding the same in trust and as trustee for ITT until such time as Gehl Company reports to ITT that said Account is no longer in its borrowing base; (d) upon ITT's request, stamp or otherwise mark all chattel paper and instruments relating to the Accounts now owned or hereafter acquired by it to show that the same are subject to ITT's security interest and immediately thereafter deliver or cause such chattel paper and instruments to be delivered to ITT with appropriate endorsements and assignments to vest a security interest in and possession in ITT; and (e) continue to conduct floorcheck inspections of its Dealers in accordance with standard financing program terms established by Gehl Company, and assist ITT in conducting periodic floorchecks and/or mail verifications of approximately ten percent (10%) of the Dealers per month. 3.11 Rights of ITT. ITT may, without notice to Gehl Company and at any time or times hereafter verify the validity and amount of any Accounts, and with the consent of Gehl Company, verify any other matter relating to any Account, by mail, telephone or by means otherwise as agreed to by the parties. 3.12 Release. Gehl Company releases ITT from all claims and causes of action which Gehl Company may now or hereafter have for any loss or damage to it claimed to be caused by or arising from any action taken by ITT in accordance with the terms of this Agreement from: (a) any failure of ITT to protect, enforce or collect, in whole or in part, any Account; (b) ITT's notification to any obligors thereon of ITT's security interest in any of the Accounts; (c) ITT's directing any obligor to pay any sum owing to Gehl Company directly to ITT; and (d) any other act or omission to act on the part of ITT, its officers, agents or employees, except for gross negligence or willful misconduct. 3.13 Books and Records. Gehl Company represents and warrants that it keeps and maintains all of its books and records pertaining to the Accounts at its principal place of business designated on page 1 of this Agreement, and agrees to give ITT at least ten (10) days prior written notice before moving any such books and records to any other location. 4. SUPPLEMENTAL LINE OF CREDIT - ADDITIONAL PROVISIONS 4.1 Schedules. To facilitate Gehl Company's borrowings and the maintenance of ITT's records, Gehl Company will, no less than monthly or as otherwise agreed to, furnish ITT with a schedule of Inventory ("Inventory Schedule") and a schedule of Retail Accounts ("Retail Accounts Schedule"). The Inventory Schedule shall specify Gehl Company's cost of Inventory, and such other matters and information relating to Inventory as ITT may from time to time request, and such Retail Accounts Schedule shall describe all Retail Accounts and Ineligible Accounts, in such manner as ITT may from time to time request, created or acquired by Gehl Company since the last Retail Accounts Schedule furnished ITT (which are readily traceable to Gehl Company's subordinate accounts receivable journal or general ledger accounts). However, failure to provide any such Schedules in a timely manner will not impair ITT's rights and security interest with respect to all of the Inventory or Retail Accounts. 4.2 Available Credit. On receipt of each Inventory Schedule and Retail Account Schedule, ITT will credit Gehl Company at the following percentages of the net amount of the Eligible Inventory and Eligible Retail Accounts, respectively, listed in such Schedule: Finished Goods 75% Service Parts 25% Eligible Retail Accounts (except Eligible Repurchased Retail Accounts) 75% Eligible Repurchased Retail Accounts 50% ITT will loan Gehl Company, on request, such amounts so credited or a part thereof as provided by the terms of Section 2.1 and this section; provided, however, that the outstanding principal balance of all advances or loans made on Eligible Repurchased Retail Accounts will at no time exceed One Million Dollars ($1,000,000.00). No advances or loans need be made by ITT if Gehl Company is in Default. 4.3 Payments. Payments shall be made in accordance with Section 2.2 above. 4.4 Warranties and Representations. Gehl Company warrants and represents to ITT and covenants and agrees with ITT that: (a) Inventory will be kept only at the locations identified in Exhibit A, except for demonstrator or repossessed inventory listed in Gehl Company's monthly memorandums to ITT, (b) Gehl Company now keeps and will keep correct and accurate records itemizing and describing the kind, type, quality and quantity of Inventory, Gehl Company's cost therefor and the selling price thereof, and the monthly withdrawals of Finished Goods and Service Parts therefrom; (c) Inventory is not and will not be stored with a bailee, repairman, warehouseman or similar party without ITT's prior written consent, and Gehl Company will, concurrently with delivery to such party, cause any such party to issue and deliver to ITT, in form acceptable to ITT, warehouse receipts, in ITT's name evidencing the storage of such Inventory, and waivers of warehouseman's liens in favor of ITT; (d) ITT and its agents and representatives may, from time to time upon demand, during Gehl Company's usual business hours, inspect and examine Inventory and check and test the same as to quality, quantity, value and condition, and any collection by ITT of any amounts Gehl Company owes ITT under this Agreement at or during ITT's examination of the Inventory will not relieve Gehl Company of its continuing obligation to pay its Obligations owed to ITT in strict accordance with the terms of this Agreement; (e) Gehl Company will pay all taxes, rents, business taxes, and the like on the premises where the Inventory is located; and (f) Gehl Company will not rent, lease, lend, demonstrate, pledge, transfer or secrete any of the Inventory or use any of the Inventory for any purpose other than demonstration, exhibition and sale to buyers in the ordinary course of business, without ITT's prior written consent. 4.5 Revisions. ITT, after consulting with Gehl Company, may in its sole discretion using reasonable business judgment in good faith, and after giving Gehl Company three (3) business days to respond, declare amounts of the Inventory and Retail Accounts ineligible. ITT need not advance on Inventory, including Finished Goods and Service Parts and attachments thereto, which it deems obsolete. 4.6 Release of Security Interest. ITT agrees at Gehl Company's request to release its security interest in Retail Chattel Paper for the purpose of sale of the Retail Chattel Paper to third parties so long as proceeds of such sale of the Retail Chatter Paper are deposited in the Lockbox Account. 5. SECURITY - COLLATERAL 5.1 Grant. To secure Gehl Company's payment of the Obligations and to secure Gehl Company's performance of all of the provisions under this Agreement and the Other Agreements, Gehl Company grants ITT a security interest in all inventory, equipment, fixtures, accounts, contract rights, chattel paper, instruments, reserves, documents of title, deposit accounts, and general intangibles, whether now owned or hereafter acquired by Gehl Company, and all attachments, parts, accessories, accessions, substitutions and replacements thereto, all trade secrets, patents, inventions and other proprietary information, trademarks, service marks, technical know-how, quality control standards, business names and the goodwill of the business relating thereto, all copyrights and all tangible property embodying the copyrights and all license agreements relating to any of the foregoing and income from such license agreements and the right to sue for all past, present and future infringements of the foregoing and any and all other items of intellectual property, whether now owned or hereafter acquired, and all proceeds of any of the foregoing. All of the above assets are hereinafter collectively referred to as "Collateral." Gehl Company covenants with ITT that: (a) ITT may realize upon all or part of any collateral in any order it desires and any realization by any means upon any collateral will not bar realization upon any other collateral; and (b) the security hereby created is a continuing security interest and will secure the payment of all present and future Obligations pursuant to this Agreement and the Other Agreements. 5.2 Instruments. Gehl Company will execute and deliver to ITT, or cause to be executed and delivered, at such time or times as ITT may request, all financing statements, security agreements, assignments, certificates, affidavits, reports, schedules of accounts, and other documents and instruments that ITT may deem necessary to perfect and maintain perfected ITT's security interests in the Collateral and to fully consummate the transactions contemplated under this Agreement and the Other Agreements. Gehl Company will make appropriate entries on its books and records disclosing ITT's security interests in the Collateral. 6. WARRANTIES AND REPRESENTATIONS 6.1 Affirmative Warranties and Representations. Except as otherwise specifically provided in the Other Agreements, Gehl Company warrants and represents to ITT that: (a) Gehl Company has good and valid title to all Collateral, all Accounts are secured by a perfected, first security interest in all Inventory of any Dealer financed by Gehl Company, and ITT's security interest in the Collateral is now and will at all times constitute a perfected, first security interest in such Collateral; (b) ITT's security interest in the Collateral is not now and will not become subordinate to the security interest, lien, encumbrance or claim of any Person; (c) Gehl Company is and will at all times during the term of this Agreement be a corporation duly organized, existing and in good standing under the laws of the state of Wisconsin and qualified and licensed to do business in each state, county, or parish, in which the nature of its business or property requires it be qualified or licensed; (d) Gehl Company has the right and is duly authorized to enter into this Agreement and the Other Agreements; (e) Gehl Company's execution of this Agreement and the Other Agreements does not constitute a breach of any provision contained in Gehl Company's articles of incorporation or by-laws or in any agreement to which Gehl Company is now or hereafter becomes a party or by which Gehl Company is, may or hereafter becomes or may become bound; (f) all financial statements and information relating to Gehl Company which have been delivered by Gehl Company to ITT are true and correct and have been prepared in accordance with generally accepted accounting principles and there has been no material adverse change in the financial or business condition of Gehl Company since the submission of any such financial information to ITT; (g) there are no actions or proceedings pending or threatened against Gehl Company which can be reasonably expected to result in any material adverse change in Gehl Company's financial or business condition or which in any material way adversely affect any of Gehl Company's assets; (h) Gehl Company will maintain all of its properties in good condition and repair and pay and discharge all costs of repair and maintenance thereof and all rental and mortgage payments and related charges pertaining thereto; (i) Gehl Company has duly filed and will hereafter duly file all federal, state, local and other governmental tax returns which it is required by law to file; (j) all taxes, levies, assessments and governmental charges of any nature which are or may be due by Gehl Company have been fully paid and Gehl Company will promptly pay when due all such tax liabilities which may hereafter accrue, unless contested in good faith by Gehl Company with written notice to ITT, and Gehl Company will promptly notify ITT of any tax liens filed against its assets; (k) Gehl Company will maintain a standard and modern system of accounting in accordance with generally accepted accounting principles and ledger and account records which contain such information as may be requested by ITT; (l) Gehl Company will at all times permit ITT (or any Person designated by it) upon demand, during Gehl Company's usual business hours, to have access to and examine the Collateral, Gehl Company's other assets and Gehl Company's books and records and, in connection with the latter, permit the copying of the same; (m) Gehl Company will deliver to ITT (1) within ninety (90) days after the end of each of Gehl Company's fiscal years, a reasonably detailed balance sheet and a reasonably detailed profit and loss statement covering Gehl Company's operations for such fiscal year, certified by an independent certified public accountant satisfactory to ITT, and a copy of Gehl Company's Form 10-K annual report to the Securities and Exchange Commission ("SEC"); (2) within forty-five (45) days after the end of each of Gehl Company's fiscal quarters, Gehl Company will deliver to ITT a reasonably detailed balance sheet as of the last day of such quarter and a profit and loss statement covering Gehl Company's operations for such quarter prepared in accordance with GAAP, and a copy of Gehl Company's Form 10-Q quarterly report to the SEC; (3) within thirty (30) days after the end of each of Gehl Company's fiscal months, Gehl Company will deliver to ITT a reasonably detailed balance sheet as of the last day of such month and a profit and loss statement covering Gehl Company's operations for such month; and (4) within (10) days after request therefor by ITT, any other report reasonably requested by ITT relating to the Collateral or the financial condition of Gehl Company; (n) Gehl Company will promptly supply ITT with such other information concerning its affairs as ITT hereafter may reasonably request; (o) Gehl Company will give ITT thirty (30) days advance notice prior to any change in Gehl Company's identity, name, form of ownership or management and any change in its principal place of business, additions or discontinuances of any locations; (p) Gehl Company, at its sole expense, will keep and maintain the Collateral insured for its full insurable value against loss or damage under an "all risk" property insurance policy. All Policies will be in form, with "A minus" rated insurance companies or better, and in amounts satisfactory to ITT. Gehl Company will deliver to ITT upon ITT's request, true and correct copies of the Policies as well as such evidence of insurance as ITT may require, and evidence of payment of all premiums therefor. Each of the Policies will contain an endorsement, in a form satisfactory to ITT, showing loss payable to ITT as its interests may appear. Each insurer will agree, by endorsement upon the Policy issued by it or by independent instruments furnished to ITT, that it will give ITT at least ten (10) days written notice before any Policy is altered or cancelled and that no act or default of Gehl Company or any other Person will affect the right of ITT to recover under the Policies. Gehl Company hereby directs all insurers under the Policies to pay the proceeds as ITT's interests may appear directly to ITT; (q) Gehl Company will observe and perform all matters necessary or expedient to be observed or performed under or by virtue of any lease, license, concession or franchise forming part of the Collateral in order to preserve, protect and maintain all the rights of ITT thereunder; (r) Gehl Company, upon ITT's request, will pledge, mortgage and convey to ITT real properties to secure the payment and performance of its current and future Obligations to ITT; (s) Gehl Company will advise ITT of the commencement or institution of legal proceedings against Gehl Company before any court, administrative board or tribunal which Gehl Company management reasonably believes seeks damages or which may result in liability in excess of $100,000.00; (t) Gehl Company will diligently maintain, use and operate the Collateral and will conduct its business in a proper and efficient manner so as to preserve and protect the Collateral and the earnings, incomes, rents and profits thereof; (u) it will not revise or amend any documents, instruments, security agreements and other agreements executed by any Dealer with or for the benefit of Gehl Company to document any Account without the express written consent of ITT, which consent will not be unreasonably withheld, except for discounts and deductions as provided in Section 3.4(g); and (v) other than Gehl International, Gehl Company has no subsidiaries or affiliates other than those set forth at the top of the first page of this Agreement. 6.2. Negative Covenants. Gehl Company will not at any time (without ITT's prior written consent): (a) except to ITT, grant to or in favor of any Person a security interest in or permit to exist a lien, claim or encumbrance in the Collateral except for any lien, claim or encumbrance: (i) that secures an obligation incurred in the ordinary course of business and which obligation is not delinquent; (ii) that is subordinated to ITT in a form acceptable to ITT; or (iii) is permitted by the terms of this Agreement; (b) other than in the ordinary course of its business, sell, lease or otherwise dispose of or transfer any of its assets or make any distribution of Gehl Company's property or assets which might in any material way adversely affect the ability of Gehl Company to repay the Obligations; (c) grant a lien in or pledge any real properties to any third party without ITT's prior written consent or further encumber after the date of this Agreement any real properties set forth in Exhibit B hereto; (d) merge or consolidate with another corporation; (e) acquire any other corporation which might in any material way adversely affect the ability of Gehl Company to repay the Obligations; (f) enter into any transaction not in the usual course of its business which might in any material way adversely affect the ability of Gehl Company to repay the Obligations; (g) guarantee or indemnify or otherwise become in any way liable with respect to the obligations of any Person which might in any material way adversely affect the ability of Gehl Company to repay the Obligations, except by endorsement of instruments or items of payment for deposit to the general account of Gehl Company or which are transmitted or turned over to ITT on account of the Obligations; (h) redeem, retire, purchase or otherwise acquire, directly or indirectly, any of Gehl Company's capital stock; (i) make any change in Gehl Company's capital structure or in any of its business objectives, purposes or operations which might in any material way adversely affect the ability of Gehl Company to repay the Obligations; and (j) make any loans, advances, contributions or payments of money or goods to any present subsidiary, affiliated or parent corporation other than in the ordinary course of business, or to any officer, director or stockholder of Gehl Company or of any such corporation not to exceed $500,000.00 (except for compensation for personal services actually rendered). 6.3 Financial Covenants. Gehl Company will at all times maintain a Tangible Net Worth and Subordinated Debt in the combined amount of not less than the sum of (a) THIRTY TWO MILLION DOLLARS ($32,000,000.00), plus (b) the cumulative positive consolidated Net Income for each calendar quarter, commencing with Gehl Company's Net Income earned for the calendar quarter ending December 31, 1994 (Net Losses for any calendar quarter shall not, however, reduce the minimum amount required under this paragraph); provided, however, at such time as Gehl Company's financial statements provided to ITT pursuant to Section 6.1 of this Agreement indicate that Gehl Company's Tangible Net Worth and Subordinated Debt is at least Thirty Five Million Dollars ($35,000,000.00), the amount required to be maintained hereunder will thereafter no longer be increased on a quarterly basis for Gehl Company's Net Income, and Gehl Company will at all times thereafter maintain a Tangible Net Worth and Subordinated Debt in the combined amount of not less than Thirty Five Million Dollars ($35,000,000.00). Gehl Company will also at all times maintain a ratio of Debt to Tangible Net Worth and Subordinated Debt of not more than three and six tenths to one (3.6:1). For purposes of this Section: (i) "Debt" means the total sum of all creditor claims against Gehl Company minus Subordinated Debt; (ii) "Tangible Net Worth" means the net book value of assets less liabilities determined on a consolidated basis and in accordance with generally accepted accounting principles ("GAAP") consistently applied, excluding from such assets all Intangibles; (iii) "Intangibles" means and includes general intangibles (as that term is defined in the Uniform Commercial Code), accounts receivable from officers, directors and stockholders, and affiliated companies, leasehold improvements net of depreciation, licenses, good will, prepaid expenses, covenants not to compete, the excess of cost over book value of acquired assets, franchise fees, organizational costs, finance reserves held for recourse obligations, capitalized research and development costs, the categories of assets listed on Exhibit C attached hereto which are marked as "intangible," and such similar intangible assets under GAAP; (iv) "Subordinated Debt" means all of Gehl Company's indebtedness which is subordinated to the payment of its liabilities to ITT by an agreement in form and substance satisfactory to ITT; and (v) "Net Income" and "Net Losses" mean the net income or net loss of Gehl Company for such period after provision for income taxes, determined in accordance with GAAP. Gehl Company will report its Tangible Net Worth and Debt to Tangible Net Worth ratio to ITT quarterly, in accordance with Section 6.1(m)(2) of this Agreement. If Gehl Company violates any of the foregoing financial covenants to ITT, the parties agree: (a) that Gehl Company will pay interest to ITT, payable as provided in Section 2.1, on the average daily outstanding balance under the Credit Facility, at a rate that is the lesser of (i) Three percent (3.0%) per annum higher than the daily Prime Rate in effect and (ii) the highest rate from time to time permitted by applicable law, from the time in which Gehl Company violates any of the financial covenants until such time as Gehl Company has cured its violation of its financial covenants to ITT; (b) that ITT may elect, in its sole discretion, to amend its eligibility formula of and its advance rate against the Accounts; and (c) that ITT may elect to declare Gehl Company in default under this Agreement and exercise any of its rights pursuant to Section 7 of this Agreement. 7. DEFAULT 7.1 Definition. Any one or more of the following events will constitute a Default by Gehl Company under this Agreement and the Other Agreements, provided that ITT shall allow Gehl Company from the time ITT notifies Gehl Company in writing of said Defaults, five (5) days to fully remedy monetary defaults, and fifteen (15) days to fully remedy non-monetary defaults: (a) Gehl Company fails to perform any term, condition, covenant, or breaches or permits a breach of any warranty or representation contained in this Agreement, except for Section 3.4, in which case Section 3.3(h) would apply, or in any of the Other Agreements; (b) any representation, statement, report, or certificate made or delivered by Gehl Company or any of its officers, employees, or agents to ITT is not true and correct in any material manner as of the date when made or given; (c) Gehl Company fails to immediately pay any of the Obligations when due and payable or declared to be due and payable; (d) ITT believing in good faith that the prospect of payment of any material amount of the Obligations secured hereby is impaired, and after thirty (30) days of said notice to Gehl Company [inclusive of the foregoing fifteen (15) day cure period] Gehl Company has not fully satisfied ITT on a reasonable basis that the payment of any material amount of the Obligations is not impaired; (e) Gehl Company shall sell, transfer, convey, exchange, assign, mortgage, pledge, hypothecate, grant a security interest in or otherwise dispose of or in any way part with the possession of the Collateral, other than in the ordinary course of business or as permitted under this Agreement; (f) Gehl Company removes, other than by sale to the extent allowed under this Agreement, any part of the Collateral from the Gehl Company's locations specified above without providing ITT with at least thirty (30) days prior notice of said removal; (g) Gehl Company abandons the Collateral or any part thereof; (h) judgment issues on any money demand against Gehl Company in which the loss to Gehl Company excluding amounts covered by insurance is in excess of $1,000,000.00, excluding judgments that are paid, appealed or fully satisfied within sixty (60) days; (i) an attachment, sale or seizure is issued against Gehl Company or any of the Collateral which causes the Obligations to exceed the Maximum Line of Credit; (j) Any part of the Collateral is seized or taken in execution which causes the Obligations to exceed the Maximum Line of Credit; (k) Gehl Company ceases or suspends business; (l) Gehl Company makes a general assignment for the benefit of its creditors; (m) Gehl Company becomes bankrupt or insolvent or becomes subject to the provisions of the Federal Bankruptcy Code, state insolvency laws or any Act or Code for the benefit of creditors; (n) any receiver is appointed by any court for any of the assets, of the Gehl Company; (o) Gehl Company is in default in excess of $1,000,000.00, with or without the passage of time and/or giving of notice, under any agreement, contract, document, promissory note or other instrument entered into with or for the benefit of ITT or any third party, for any reason whatsoever; (p) Gehl Company is in material default under the terms of any of the Other Agreements; or (q) Gehl Company misrepresents its respective financial condition or organizational structure in any material manner. 7.2 Rights of ITT. In the event of a Default, and, in the case of clauses (c) and (d) hereunder, acceleration of the Obligations by ITT, ITT may, at its election, agree to waive such Default in writing, or without demand, do any one or more of the following: (a) declare all or any of the Obligations immediately due and payable together with all costs and expenses of ITT's repossession and collection activity, including, but not limited to, reasonable attorney's fees or the amount legally permitted; (b) cease advancing money or extending credit to or for the benefit of Gehl Company; (c) exercise any or all of the rights accruing to a secured party, upon default by a debtor, under the Uniform Commercial Code and any other applicable law including, without limitation, exercising any and all of Gehl Company's rights under any security agreements relating to the Inventory; (d) at its sole election and without demand and in accordance with applicable law and agreements with other Persons, enter, with or without process of law, any premises where Collateral might be and, without charge or liability to ITT therefor do one or more of the following: (i) take possession of the Collateral and use or store it in said premises or remove it to such other place or places as ITT may deem convenient; (ii) exercise an irrevocable license to come upon such premises and place a custodian in the exclusive control of the Collateral until completion of enforcement of ITT's security interest in the Collateral or until ITT's removal of the Collateral, and (iii) remain on such premises and use the same, together with Gehl Company's materials, supplies, books and records, for the purpose of liquidating or collecting such Collateral and conducting and preparing for disposition of such Collateral; and (e) exercise any and all rights pursuant to Section 3.9 of this Agreement. 7.3 Gehl Company's Obligations. In the event of a Default, Gehl Company will, if ITT requests, in accordance with applicable law and agreements with other Persons, assemble the Collateral and make it available to ITT at a place or places to be designated by ITT. All of ITT's rights and remedies granted under this Agreement and Other Agreements are cumulative and non-exclusive. 7.4 Waiver. In the event of a Default, Gehl Company waives and releases, except for instances of ITT's gross negligence or willful misconduct: any claims and causes of action which it may now or ever have against ITT as a direct or indirect result of any possession, repossession, collection or sale by ITT of any of the Collateral, notwithstanding the effect of such possession, repossession, collection or sale upon Gehl Company's business; and the benefit of all valuation, appraisal and exemption laws. 8. MISCELLANEOUS 8.1 Term. The term of this Agreement shall commence on the date hereof and terminate on December 31, 1997. This Agreement may not be terminated by either party prior to December 31, 1997, other than as a result of any Default by Gehl Company, or any default by ITT, hereunder. Gehl Company and ITT agree that in the event that this Agreement shall have been terminated by Gehl Company prior to January 1, 1997, ITT's liquidated damages hereunder shall include, in addition to principal, interest, charges, and expense reimbursements that are then owed and unpaid, (i) an amount equal to all annual charges described in Section 2.1.2 which would have been payable from the date of termination, through December 31, 1996, and (ii) One Hundred Fifty Thousand Dollars ($150,000.00). Gehl Company agrees that ITT's actual damages in such event are difficult to calculate, and that such measure of damages reflects a fair and reasonable agreement. Such damages shall be payable immediately, upon the date of termination, without discount to present value. In no event shall Gehl Company be entitled to the return of all or any portion of any annual or other charge payable hereunder, notwithstanding any subsequent termination hereof. Gehl Company's obligation to pay the non-use of credit facility fee described in Section 2.1.4 above for calendar year 1997 shall survive the termination of this Agreement and be due and payable by January 15, 1998. The parties agree to consider and negotiate in good faith an extension or renewal of this Agreement beginning not later than six (6) months prior to the termination date hereof. 8.2 Collection. Checks and other instruments delivered to ITT on account of the Obligations will constitute conditional payment until such items are actually paid to ITT. Gehl Company waives the right to direct the application of any payments hereafter received by ITT on account of the Obligations. ITT will have the continuing exclusive right to apply and reapply any and all such payments in such manner as ITT may deem advisable notwithstanding any entry by ITT upon its books and records. 8.3 Demand, Etc. Gehl Company waives, except as otherwise expressly set forth in this Agreement: (a) demand, protest and all notices of protest, default or dishonor; (b) all notices of payment and non- payment; and (c) all notices of default, non-payment at maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts, contract rights, documents, instruments, chattel paper and guarantees at any time held by ITT on which Gehl Company may, in any way, be liable and Gehl Company hereby ratifies and confirms whatever ITT may do in that regard. 8.4 Additional Obligations. ITT, without waiving or releasing any Obligation or Default, upon Default, may perform any Obligations that Gehl Company fails or refuses to perform, and, ITT may, but will be under no obligation so to do, pay, acquire or accept any assignment of any security interest, lien, encumbrance or claim against the Collateral asserted by any Person. All sums paid by ITT in performing in satisfaction or on account of the foregoing and any expenses, including reasonable attorney's fees, court costs, and other charges relating thereto, will be a part of the Obligations, payable on demand and secured by the Collateral. 8.5 Alteration/Waiver. This Agreement and the Other Agreements may not be altered or amended except by an agreement in writing signed by Gehl Company and ITT. If ITT at any time dispenses with any requirements specified in this Agreement or any of the Other Agreements, such dispensation may be revoked by ITT at any time and will not be deemed to constitute a waiver of any such requirement subsequent thereto. ITT's failure to require strict performance by Gehl Company of any undertakings, agreements, covenants, warranties and representations will not waive, affect or diminish any right of ITT thereafter to demand strict compliance and performance. Any waiver by ITT of any Default will not waive or affect any other default by Gehl Company under this Agreement or any of the Other Agreements, whether such Default is prior or subsequent to such other default and whether of the same or a different type. None of the undertakings, agreements, warranties and representations of Gehl Company contained in this Agreement or the Other Agreements and no Default will be deemed waived by ITT unless such waiver is by a written instrument specifying such waiver signed by an officer of ITT and directed to Gehl Company. 8.6 Severability. If any provision of this Agreement or the Other Agreements or the application thereof is held invalid or unenforceable, the remainder of this Agreement and the Other Agreements will not be affected thereby, the provisions of this Agreement and the Other Agreements being severable in any such instance. 8.7 One Loan. All loans and advances heretofore, now or hereafter made by ITT to Gehl Company under this Agreement or the Other Agreements will constitute one loan secured by ITT's security interests in the Collateral and by all other security interests, liens and encumbrances heretofore, now or hereafter granted by Gehl Company to ITT. 8.8 Additional Collateral. All monies, reserves and proceeds received or collected by ITT with respect to Accounts and other property of Gehl Company provided by Gehl Company to ITT, in possession of ITT at any time or times hereafter are hereby pledged by Gehl Company to ITT as security for the payment of the Obligations and may be held by ITT (without interest to Gehl Company) until all Obligations are paid in full or, at any time or times, applied by ITT on account of the Obligations. ITT may release to Gehl Company such portions of such monies, reserves, proceeds and other property as ITT may determine. 8.9 Exclusion of Equities. The Obligations hereby secured will be paid without regard to any equities between Gehl Company and ITT or any intermediate holder hereof or to any set-off or counterclaim. 8.10 No Merger or Novation. Neither the taking of any judgment nor the exercise of any power of seizure or sale will operate to extinguish the Obligations secured by this Agreement and will not operate as a merger of any covenant in this Agreement. The acceptance of any payment or alternate security will not constitute or create a novation and the taking of a judgment under a covenant herein contained will not operate as a merger of that covenant or affect ITT's right to interest under this Agreement. 8.11 Entire Agreement. Time is of the essence hereof. This Agreement, together with the Other Agreements and any other documents to be delivered pursuant hereto and thereto, constitutes the entire Agreement between the Gehl Company and ITT pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, with respect to the subject matter hereof. 8.12 Paragraph Titles. The Section titles used in this Agreement are for convenience only and do not define or limit the contents of any Section. 8.13 Binding Effect. This Agreement and the Other Agreements will be binding upon and inure to the benefit of ITT and Gehl Company and their respective successors and assigns but Gehl Company will have no right to assign this Agreement or any of the Other Agreements without the prior written consent of ITT. If ITT assigns all of its rights under this Agreement to any Person, Gehl Company will have the right to terminate this Agreement, only within the thirty (30) day period immediately following its receipt of written notice from ITT or its assignee that ITT has assigned all of its rights under this Agreement, and upon any such timely termination, Gehl Company will be relieved of its obligations to pay charges pursuant to Sections 2.1.2 and 8.1 for the unexpired term of this Agreement. Notwithstanding the foregoing provision, ITT may assign participation interests in this Agreement to other Persons without relieving Gehl Company of its obligations to pay charges pursuant to Sections 2.1.2 and 8.1, provided that ITT remains the lead lender and Gehl Company consents to said participations, which consent will not be unreasonably withheld. 8.14 Submission by Gehl Company. This Agreement and the Other Agreements are submitted by Gehl Company to ITT (for ITT's acceptance or rejection thereof) at ITT's place of business specified at the beginning of this Agreement, as an offer by Gehl Company to borrow monies from ITT. If accepted by ITT, this Agreement and the Other Agreements will be deemed to have been made at ITT's said place of business. 8.15 Recourse Obligations. Gehl Company specifically acknowledges and agrees that the Obligations, including without limitation, repayment of all advances made by ITT pursuant to the Maximum Line of Credit are full recourse obligations of Gehl Company, notwithstanding Gehl Company's grant of a security interest in the Collateral, and assignment of the Accounts, and any foreclosure of ITT's interests therein. 8.16 Electronic Transfer Instructions. All payments under this Agreement shall be made in immediately available funds by the end of the day on the same day as requested pursuant to this Agreement, provided that said request for payment is made by 11:00 a.m., in accordance with the transfer instructions set forth below or as changed from time to time by one party with prior written notice given to the other: If to Gehl Company: Bank One - Milwaukee, N.A. ABA Number: 075-00-00-19 Reference: Gehl Company Account Number: 29-42-92 If to ITT: Boatmen's National Bank of St. Louis ABA Number: 081000032 Reference: ITT Commercial Finance Corp. Account Number: 100-101225551 8.17 Mutual Cooperation. The parties hereto agree to negotiate, in good faith, any other matters related to this Agreement that are not otherwise set forth in this Agreement. 8.18 Notices. All notices sent pursuant to this Agreement will be sent to the parties addresses set forth on the first page of this Agreement, and if sent, first class, postage pre-paid, will be deemed accepted three (3) days after said notice was mailed. 8.19 Previous Agreement. This Agreement amends and supplements that certain Loan and Security Agreement dated October 21, 1993, as amended, between the parties. If the terms hereof conflict with the terms of such prior Loan and Security Agreement, the terms of this Agreement will govern. 9. BINDING ARBITRATION. 9.1 Arbitrators. Except as otherwise specifically provided below, all actions, disputes, claims and controversies heretofore or hereafter arising out of or directly or indirectly relating to (a) this Agreement and/or any renewals, extensions, changes, amendments, addenda, additions or modifications hereto, or the breach, invalidity or termination hereof, (b) any subsequent agreement entered into between the parties hereto, (c) any previous agreement entered into between the parties hereto, (d) any relationship or business dealings between the parties hereto, and/or (e) the transactions contemplated by this Agreement or any previous or subsequent agreement between the parties hereto (collectively the "Disputes"), will be subject to and resolved by binding arbitration pursuant to the Commercial Arbitration Rules in effect from time to time ("Rules") of the American Arbitration Association ("AAA"). If the Rules are cancelled and/or the AAA dissolves or disbands, the parties will remain subject to binding arbitration which will be conducted by a mutually agreeable arbitral forum. The arbitrator(s) selected to arbitrate the Disputes will decide whether any inconsistency exists between the Rules and the arbitration provisions contained herein. If the arbitrator(s) determines (determine) that such an inconsistency exists, the arbitration provisions contained herein will control and supersede the Rules, and the arbitrator(s) will apply the arbitration provisions contained herein. Any fees resulting from any hearing by the arbitrator(s) on any such inconsistency will be shared equally by the parties. 9.2 Jurisdiction. The parties to this Agreement agree that the locale and situs of all arbitration provided for herein will be in the Division of the Federal Judicial District closest to St. Louis Missouri. The parties to this Agreement also agree that the laws of the State of MISSOURI will govern this Agreement and all arbitration hereunder, and that the arbitrator(s) shall interpret this Agreement in accordance with and shall comply with the laws of such state; provided, however, when the jurisdictional requirements of the Federal Arbitration Act, 9 U.S.C., Sections 1-14 (1982), ("FAA") are satisfied, the FAA shall, with respect to all Disputes within the scope of the FAA, supersede the laws of such state, and the FAA will govern the arbitration hereunder and be applied by the arbitrator(s). The parties agree that this Agreement evidences transactions involving commerce among the several states. 9.3 Scope. Nothing in this Agreement will be construed to prevent either party's use of bankruptcy, receivership, injunction, repossession, replevin, claim and delivery, sequestration, seizure, attachment, foreclosure, dation, direct collection from obligors and/or any other prejudgment or provisional action or remedy relating to any collateral or security for any contractual debts now or hereafter owed by either party to the other under this Agreement, any previous agreement entered into between the parties, any subsequent agreement entered into between the parties and/or any renewals, extensions, changes, amendments, addenda, additions or modifications thereto. The institution and maintenance of an action for judicial relief in pursuit of any such prejudgment or provisional remedies will not constitute a waiver of the right of any party, including the plaintiff, to compel arbitration of any Disputes subject to arbitration as provided herein. If, however, either party brings any other action for judicial relief with respect to any Disputes that the parties have agreed to arbitrate under the terms of this Agreement, the party who brought such action will be liable for and will immediately pay to the other party all of the other party's costs and expenses (including attorney's fees) incurred by the other party to stay such action and remove or refer such Disputes to arbitration. Without limiting the foregoing, the parties hereto further specifically and expressly agree that all Disputes arising under common law, statutory law and in equity, including, without limitation, all tort Disputes (including, without limitation, Disputes for negligence, breach of fiduciary duty, restraint of trade, fraud, conversion, duress, interference, wrongful replevin, wrongful sequestration and all other intentional and unintentional torts) and all Disputes involving issues of implied contract, deceptive trade practices and the reasonableness or lawfulness of any act (including, without limitation, implied covenants of good faith, fair dealing, commercial reasonableness of the disposition of any collateral and similar matter), will be subject to binding arbitration pursuant to the terms stated herein. 9.4 Procedure. In any Disputes arbitrated pursuant to the terms of this Agreement, the arbitrator(s) is(are) specifically empowered to hear and decide pre-hearing motions to dismiss such Disputes and for summary judgment on such Disputes. The parties agree to permit discovery proceedings of the type provided by the Federal Rules of Civil Procedure both in advance and during recesses of the arbitration hearings, but only with respect to any Disputes arbitrated where the amount in controversy is at least $250,000.00. Any disagreements relating to such discovery will be resolved by the arbitrator(s) after a hearing by such arbitrator(s). All arbitration proceedings conducted hereunder will be conducted on a confidential basis and all awards granted thereunder will be kept confidential. Any award, judgment or order rendered by the arbitrator(s) pursuant to the terms of this Agreement may be entered and enforced by either party in any state or federal court having competent jurisdiction. Each party agrees to submit to the jurisdiction of any such court for purposes of enforcement of any such award, order or judgment. Any award, judgment or order rendered by the arbitrator(s) pursuant to such arbitration will be included in a written decision signed by the arbitrator(s) joining therein, which will specify the reasons upon which the award, judgment or order was based, including all of the elements involved in the calculation of any award of damages. The arbitrator(s) will deliver a copy of the award, judgment or order rendered by the arbitrator(s) and the written decision to the parties personally or by U.S. mail to the parties' addresses specified in this Agreement. 9.5 Limitations/Notices. Any arbitration proceeding must be instituted within thirteen (13) months after the date: (a) the last payment was received by the instituting party with respect to any Dispute for the collection of contractual debts, now or hereafter owed by either party to the other, that the parties have agreed to arbitrate hereunder; or (b) the incident giving rise to the Dispute initially occurred (regardless of whether any damage was sustained or capable of ascertainment at such time, or whether either party had any knowledge of the occurrence of such Dispute at such time) with respect to any other type of Dispute that the parties have agreed to arbitrate hereunder. Failure to institute an arbitration proceeding within such period will constitute an absolute bar to the institution of any proceeding with respect to such Dispute and a waiver thereof. All notices that ITT sends to Gehl Company will be sufficiently given if mailed or delivered to Gehl Company at the address specified above. All notices that Gehl Company sends to ITT will be sufficiently given if mailed or delivered to ITT at: 8251 Maryland Avenue, Clayton, Missouri 63105, Attention: General Counsel, or such other address as ITT may specify from time to time. 9.6 Parties. No arbitration arising under the terms of this Agreement will include, by consolidation, joinder or in any other manner, any additional Person not a party to this Agreement, except: (a) for any guarantor(s) of our liabilities and obligations to you under this Agreement, if such guarantor(s) has(have) agreed in writing to arbitrate pursuant to the arbitration provisions contained in this Agreement and the Rules, and to abide by and perform any award rendered pursuant thereto; and (b) for any other Person(s), who has(have) agreed to arbitrate pursuant to the arbitration provisions contained in this Agreement and the Rules and to abide by and perform any award rendered pursuant thereto, but only upon the prior written consent of both parties hereto. Any consent to arbitration involving such guarantor(s) or other Person(s) will not constitute consent to arbitrate any dispute that is not an arbitrable Dispute under the terms of this Agreement or with any Person not specifically named therein. 9.7 Expenses. If either party brings legal action to vacate or modify the arbitrator's(s') award and such party does not prevail, such party will pay all costs and expenses, including attorney's fees, incurred by the other party in defending such action. Such costs and expenses will also be assessed against the petitioning party who does not prevail in any subsequent appellate action. 9.8 No Jury Trial. If the arbitration provisions contained in this Agreement are invalid or their application is invalid or unenforceable, thereby allowing the parties to resolve their Disputes outside of arbitration, the parties hereby agree that any legal proceeding with respect to any Disputes in which the parties or any of their affiliates or successors are parties, will be tried in a court of competent jurisdiction by a judge without a jury. The parties hereby waive any right to a jury trial in any such proceeding. THIS CONTRACT CONTAINS BINDING ARBITRATION AND JURY WAIVER PROVISIONS WHICH MAY BE ENFORCED BY THE PARTIES. IN WITNESS WHEREOF, Gehl Company has read this entire Agreement and executed this Agreement by its corporate officers thereunto duly authorized, all as of the first day of October, 1994. GEHL COMPANY By: K.F. Kaplan Its: Vice President By: M. Mulcahy Its: Secretary HEDLUND MANUFACTURING, INC. By: K.F. Kaplan Its: Treasurer By: M. Mulcahy Its: Secretary HEDLUND MARTIN, INC. By: K.F. Kaplan Its: Treasurer By: M. Mulcahy Its: Secretary GEHL POWER PRODUCTS, INC. By: K.F. Kaplan Its: Treasurer By: M. Mulcahy Its: Secretary ACCEPTED as of the first day of October, 1994 at ITT's place of business specified at the beginning of this Agreement. ITT COMMERCIAL FINANCE CORP. By: Thomas L. Meredith Its: Regional Vice President ITT COMMERCIAL FINANCE, A DIVISION OF ITT INDUSTRIES OF CANADA, LTD. By: Geoff D. Lyon Its: Signing Officer EX-10.4 5 As Amended February 2, 1995 WILLIAM D. GEHL/GEHL COMPANY SUPPLEMENTAL RETIREMENT BENEFIT AGREEMENT THIS AGREEMENT, made this 29th day of December, 1992, by and between GEHL COMPANY, West Bend, Wisconsin (hereinafter referred to as the "Company"), and William D. Gehl, of Milwaukee, Wisconsin (hereinafter referred to as the "Employee"): W I T N E S S E T H: WHEREAS, the Employee is currently employed by the Company in the capacity of President and Chief Executive Officer and in such position can contribute materially to its continued growth and development and to its future financial success; and WHEREAS, the Company desires to insure insofar as possible that the Company will have the benefit of the Employee's full services and executive capacities for future years; NOW, THEREFORE, in consideration of services rendered by the Employee to the Company, it is agreed as follows: Section 1. Definitions. (a) "Average Monthly Compensation" means one-sixtieth (1/60th) of the Employee's base salary from the Company for the highest five (5) consecutive calendars years within the last ten (10) completed calendar years preceding the date of the Employee's termination of employment with the Company. In the event the Employee does not have five (5) calendar years of employment, only the number of full months from the date of hire through the December preceding termination of employment shall be used to determine Average Monthly Compensation. Base salary for this purpose includes any salary reduction deferrals pursuant to a cash or deferred arrangement or a cafeteria plan pursuant to Internal Revenue Code ("Code") Sections 401(k) or 125. (b) "Beneficiary" means the person, trust and/or other entity designated by the Employee on the form most recently filed with the Secretary of the Company prior to the Employee's death. In the absence of a valid designation, the Beneficiary shall be the Employee's estate. (c) "Disability means a physical or mental condition which totally and presumably permanently prevents the Employee from engaging in any substantially gainful activity as determined in accordance with Section 4.03 of the Gehl Company Retirement Income Plan "B". (d) "Vested Percentage" means the percentage of the supplemental retirement benefit in Section 2 earned by the Employee, subject in any event to the forfeiture provision of Section 4 and the change in control provision of Section 5. The Vested Percentage is one hundred percent (100%) in any of the following circumstances: (i) after the Employee completes five (5) years of Vesting Service; (ii) if the Employee suffers a Disability; or (iii) if the Employee retires from the Company after attainment of age sixty-two (62). In the event an Employee does not have a Vested Percentage of one hundred percent (100%), he shall receive ten percent (10%) for each complete year of Vesting Service. (e) "Vesting Service" means the period of the Employee's consecutive employment with the Company from November 24, 1992, through the date of termination of employment. Section 2. Supplemental Retirement Benefits. (a) The amount of the monthly supplemental retirement benefit shall be the Employee's Vested Percentage times an amount equal to twenty percent (20%) of the Employee's Average Monthly Compensation. (b) The monthly supplement shall be payable to the Employee commencing as of the first day of the month following the earlier to occur of: (i) age sixty-five (65); or (ii) the later of termination of employment from the Company or age sixty-two (62). The supplement shall continue to be paid to the Employee for a period of fifteen (15) years. (c) In the event the Employee commences receiving the supplement but dies prior to the end of the payment period, the remaining monthly payments in the fifteen (15)-year period shall be made to the Beneficiary. (d) In the event the Employee dies after termination of employment from the Company but prior to the commencement of benefits pursuant to (b) above, the monthly supplement calculated pursuant to subsection (a) above shall be paid to the Beneficiary for the fifteen (15)-year period commencing as of the first day of the month following the later to occur of the Employee's death or the date the Employee would have attained (or if applicable, did attain) age sixty-two (62). Section 3. Pre-Retirement Death Benefit. (a) In the event the Employee dies prior to commencement of the supplemental retirement benefit under Section 2(b) above and while employed by the Company, in lieu of any payment pursuant to Section 2 above, a pre- retirement death benefit shall be paid to the Beneficiary. (b) The death benefit shall be comprised of ten (10) payments, the first being due as of the last day of the month following the Employee's death. Each succeeding payment shall be made on successive anniversaries of the first payment due date. (c) The amount of the ten (10) payments shall be thirty percent (30%) of the Employee's annual salary as of the Employee's date of death. Section 4. Non-Competition Requirement. Employee agrees that for a period of two (2) years after termination of active employment hereunder, the Employee shall not, except as permitted by the Company's prior written consent, engage in, be employed by, or in any way advise or act for, or have any financial interest in any business which is a competitor of the Company. The ownership of minority and non-controlling shares of any corporation whose shares are listed on a recognized stock exchange or traded in an over-the- counter market shall not be deemed as constituting a financial interest in such corporation. If the Employee shall fail to comply with any of the foregoing conditions, he shall forfeit all right to any payments pursuant to Section 2 hereof which would otherwise be payable to him thereafter. Section 5. Change of Control. Notwithstanding the definition of Vested Percentage in Section 1 hereof, an Employee shall be one hundred percent (100%) vested, subject to Section 4, in the event there is a change of control of the Company. For purposes of this Agreement, a "change in control of the Company" occurs when: (i) securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding voting securities are acquired pursuant to a tender offer or an exchange offer; or (ii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation as a result of which less than fifty percent (50%) of the outstanding voting securities of the surviving or resulting entity are owned by the former shareholders of the Company (other than a shareholder who is an "affiliate," as defined in the Act, of any party to such consolidation or merger); or (iii) the shareholders of the Company approve the sale of substantially all of the Company's assets to a corporation which is not a wholly-owned subsidiary of the Company; or (iv) any person becomes the beneficial owner, directly or indirectly, of securities of the Company representing twenty-five percent (25%) or more of the combined voting power of the Company's then outstanding securities the effect of which (as determined by the Board) is to take over control of the Company; or (v) during any period of two consecutive years, individuals who, at the beginning of such period, constituted the Board of Directors of the Company cease, for any reason, to constitute at least a majority thereof, unless the election or nomination for election of each new director was approved by the vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period. Section 6. No Rights of Employment. Nothing herein contained shall be deemed to confer upon the Employee any right to continue in the employ of the Company nor to interfere with the right of the Company to terminate his employment at any time. Section 7. Employee's Rights Non-Assignable. Neither the Employee nor the Beneficiary shall have the power to transfer, assign, anticipate, mortgage, or otherwise encumber in advance any of the payments provided in this Agreement; nor shall any of said payments nor any assets of the Company, including any insurance policies owned by the Company, be subject to seizure for the payment of any of the recipient's debts, judgments or other obligations arising by operation of law or in the event of bankruptcy, insolvency or otherwise. Section 8. Company Not Required to Fund This Agreement. The Company is not obligated to set aside or credit the Employee or the Beneficiary with funds to provide for the payment of the amounts due under this Agreement, and nothing in this Agreement shall be construed as creating a trust fund of any kind for the benefit of the Employee or the Beneficiary. Section 9. Administration. This Agreement shall be administered by the Gehl Company Compensation and Benefits Committee (herein referred to as the "Committee"). If the Employee is also a Committee member, he shall abstain from any deliberations or vote on any matter in connection with this Agreement. Section 10. Successors and Assigns. This Agreement shall inure to and be binding upon the successors and assigns of the Company. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. Attest: GEHL COMPANY M. Mulcahy Joseph J. Zadra Its: Secretary Its: Chairman of the Board Marlys M. Nonhof William D. Gehl Witness as to Employee William D. Gehl EX-10.5 6 As Amended February 2, 1995 VICTOR A. MANCINELLI/GEHL COMPANY SUPPLEMENTAL RETIREMENT BENEFIT AGREEMENT THIS AGREEMENT, made this 29th day of December, 1992, by and between GEHL COMPANY, West Bend, Wisconsin (hereinafter referred to as the "Company"), and Victor A. Mancinelli, of Mequon, Wisconsin (hereinafter referred to as the "Employee"): W I T N E S S E T H: WHEREAS, the Employee is currently employed by the Company in the capacity of Executive Vice President and Chief Operating Officer and in such position can contribute materially to its continued growth and development and to its future financial success; and WHEREAS, the Company desires to insure insofar as possible that the Company will have the benefit of the Employee's full services and executive capacities for future years; NOW, THEREFORE, in consideration of services rendered by the Employee to the Company, it is agreed as follows: Section 1. Definitions. (a) "Average Monthly Compensation" means one-sixtieth (1/60th) of the Employee's base salary from the Company for the highest five (5) consecutive calendars years within the last ten (10) completed calendar years preceding the date of the Employee's termination of employment with the Company. In the event the Employee does not have five (5) calendar years of employment, only the number of full months from the date of hire through the December preceding termination of employment shall be used to determine Average Monthly Compensation. Base salary for this purpose includes any salary reduction deferrals pursuant to a cash or deferred arrangement or a cafeteria plan pursuant to Internal Revenue Code ("Code") Sections 401(k) or 125. (b) "Beneficiary" means the person, trust and/or other entity designated by the Employee on the form most recently filed with the Secretary of the Company prior to the Employee's death. In the absence of a valid designation, the Beneficiary shall be the Employee's estate. (c) "Disability means a physical or mental condition which totally and presumably permanently prevents the Employee from engaging in any substantially gainful activity as determined in accordance with Section 4.03 of the Gehl Company Retirement Income Plan "B". (d) "Vested Percentage" means the percentage of the supplemental retirement benefit in Section 2 earned by the Employee, subject in any event to the forfeiture provision of Section 4 and the change in control provision of Section 5. The Vested Percentage is one hundred percent (100%) in any of the following circumstances: (i) after the Employee completes five (5) years of Vesting Service; (ii) if the Employee suffers a Disability; or (iii) if the Employee retires from the Company after attainment of age sixty-two (62). In the event an Employee does not have a Vested Percentage of one hundred percent (100%), he shall receive ten percent (10%) for each complete year of Vesting Service. (e) "Vesting Service" means the period of the Employee's consecutive employment with the Company from November 24, 1992, through the date of termination of employment. Section 2. Supplemental Retirement Benefits. (a) The amount of the monthly supplemental retirement benefit shall be the Employee's Vested Percentage times an amount equal to ten percent (10%) of the Employee's Average Monthly Compensation. (b) The monthly supplement shall be payable to the Employee commencing as of the first day of the month following the earlier to occur of: (i) age sixty-five (65); or (ii) the later of termination of employment from the Company or age sixty-two (62). The supplement shall continue to be paid to the Employee for a period of fifteen (15) years. (c) In the event the Employee commences receiving the supplement but dies prior to the end of the payment period, the remaining monthly payments in the fifteen (15)-year period shall be made to the Beneficiary. (d) In the event the Employee dies after termination of employment from the Company but prior to the commencement of benefits pursuant to (b) above, the monthly supplement calculated pursuant to subsection (a) above shall be paid to the Beneficiary for the fifteen (15)-year period commencing as of the first day of the month following the later to occur of the Employee's death or the date the Employee would have attained (or if applicable, did attain) age sixty-two (62). Section 3. Pre-Retirement Death Benefit. (a) In the event the Employee dies prior to commencement of the supplemental retirement benefit under Section 2(b) above and while employed by the Company, in lieu of any payment pursuant to Section 2 above, a pre- retirement death benefit shall be paid to the Beneficiary. (b) The death benefit shall be comprised of ten (10) payments, the first being due as of the last day of the month following the Employee's death. Each succeeding payment shall be made on successive anniversaries of the first payment due date. (c) The amount of the ten (10) payments shall be thirty percent (30%) of the Employee's annual salary as of the Employee's date of death. Section 4. Non-Competition Requirement. Employee agrees that for a period of two (2) years after termination of active employment hereunder, the Employee shall not, except as permitted by the Company's prior written consent, engage in, be employed by, or in any way advise or act for, or have any financial interest in any business which is a competitor of the Company. The ownership of minority and non-controlling shares of any corporation whose shares are listed on a recognized stock exchange or traded in an over-the- counter market shall not be deemed as constituting a financial interest in such corporation. If the Employee shall fail to comply with any of the foregoing conditions, he shall forfeit all right to any payments pursuant to Section 2 hereof which would otherwise be payable to him thereafter. Section 5. Change of Control. Notwithstanding the definition of Vested Percentage in Section 1 hereof, an Employee shall be one hundred percent (100%) vested, subject to Section 4, in the event there is a change of control of the Company. For purposes of this Agreement, a "change in control of the Company" occurs when: (i) securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding voting securities are acquired pursuant to a tender offer or an exchange offer; or (ii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation as a result of which less than fifty percent (50%) of the outstanding voting securities of the surviving or resulting entity are owned by the former shareholders of the Company (other than a shareholder who is an "affiliate," as defined in the Act, of any party to such consolidation or merger); or (iii) the shareholders of the Company approve the sale of substantially all of the Company's assets to a corporation which is not a wholly-owned subsidiary of the Company; or (iv) any person becomes the beneficial owner, directly or indirectly, of securities of the Company representing twenty-five percent (25%) or more of the combined voting power of the Company's then outstanding securities the effect of which (as determined by the Board) is to take over control of the Company; or (v) during any period of two consecutive years, individuals who, at the beginning of such period, constituted the Board of Directors of the Company cease, for any reason, to constitute at least a majority thereof, unless the election or nomination for election of each new director was approved by the vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period. Section 6. No Rights of Employment. Nothing herein contained shall be deemed to confer upon the Employee any right to continue in the employ of the Company nor to interfere with the right of the Company to terminate his employment at any time. Section 7. Employee's Rights Non-Assignable. Neither the Employee nor the Beneficiary shall have the power to transfer, assign, anticipate, mortgage, or otherwise encumber in advance any of the payments provided in this Agreement; nor shall any of said payments nor any assets of the Company, including any insurance policies owned by the Company, be subject to seizure for the payment of any of the recipient's debts, judgments or other obligations arising by operation of law or in the event of bankruptcy, insolvency or otherwise. Section 8. Company Not Required to Fund This Agreement. The Company is not obligated to set aside or credit the Employee or the Beneficiary with funds to provide for the payment of the amounts due under this Agreement, and nothing in this Agreement shall be construed as creating a trust fund of any kind for the benefit of the Employee or the Beneficiary. Section 9. Administration. This Agreement shall be administered by the Gehl Company Compensation and Benefits Committee (herein referred to as the "Committee"). If the Employee is also a Committee member, he shall abstain from any deliberations or vote on any matter in connection with this Agreement. Section 10. Successors and Assigns. This Agreement shall inure to and be binding upon the successors and assigns of the Company. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. Attest: GEHL COMPANY M. Mulcahy Joseph J. Zadra Its: Secretary Its: Chairman of the Board Marlys M. Nonhof Victor A. Mancinelli Witness as to Employee Victor A. Mancinelli EX-10.6 7 GEHL SAVINGS PLAN AND TRUST AGREEMENT As Amended and Restated By the Board of Directors as of December 16, 1994 GEHL SAVINGS PLAN Table of Contents Page ARTICLE I. DEFINITIONS AND CONSTRUCTION Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . 2 Section 1.02. Construction . . . . . . . . . . . . . . . . . . . . 5 ARTICLE II. PARTICIPATION, VESTING SERVICE, BREAK IN SERVICE Section 2.01. Participation . . . . . . . . . . . . . . . . . . . . 6 Section 2.02. Vesting Service . . . . . . . . . . . . . . . . . . . 7 Section 2.03. Break in Service . . . . . . . . . . . . . . . . . . 7 Section 2.04. Service for Controlled Group . . . . . . . . . . . . 7 ARTICLE III. CONTRIBUTIONS TO THE TRUST FUND Section 3.01. Election to Make Deposits . . . . . . . . . . . . . . 8 Section 3.02. Amount and Payment of Participant Deposits . . . . . . . . . . . . . . . . . . . . . . 8 Section 3.03. Company Matching Contributions . . . . . . . . . . . 9 Section 3.04. No Liability for Future Company Contributions . . . . . . . . . . . . . . . . . . . . 10 Section 3.05. Time Period for Payment of Company Contributions . . . . . . . . . . . . . . . . . . . . 10 ARTICLE IV. INVESTMENTS Section 4.01. Direction of Investment . . . . . . . . . . . . . . . 11 Section 4.02. Reallocation of Accounts . . . . . . . . . . . . . . 11 Section 4.03. Description of Funds . . . . . . . . . . . . . . . . 11 Section 4.04. Funding Policy . . . . . . . . . . . . . . . . . . . 12 ARTICLE V. PARTICIPANT ACCOUNTS Section 5.01. Participant Accounts . . . . . . . . . . . . . . . . 13 Section 5.02. Allocation of Participant Deposits . . . . . . . . . 13 Section 5.03. Allocation of Company Matching Contributions . . . . . . . . . . . . . . . . . . . . 13 Section 5.04. Disposition of Forfeitures . . . . . . . . . . . . . 13 Section 5.05. Allocation of Changes in Value . . . . . . . . . . . 13 Section 5.06. Maximum Allocation Limitations . . . . . . . . . . . 14 Page ARTICLE VI. BENEFITS Section 6.01. Eligibility for Benefits and Vesting . . . . . . . . 15 Section 6.02. Death . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 6.03. Form and Time of Payment . . . . . . . . . . . . . . 16 Section 6.04. Payments to Minor or Incompetent Person . . . . . . . 18 Section 6.05. Direct Transfer of Eligible Rollover Distributions . . . . . . . . . . . . . . . . . . . . 18 Section 6.06. Withdrawals . . . . . . . . . . . . . . . . . . . . . 19 Section 6.07. Erroneous Overpayments . . . . . . . . . . . . . . . 20 ARTICLE VII. PLAN ADMINISTRATION Section 7.01. Appointment of Administrator . . . . . . . . . . . . 21 Section 7.02. Responsibility and Authority of the Administrator . . . . . . . . . . . . . . . . . . . . 21 Section 7.03. Use of Professional Services . . . . . . . . . . . . 22 Section 7.04. Fees and Expenses . . . . . . . . . . . . . . . . . . 22 Section 7.05. Delegation of Authority and Responsibility . . . . . . . . . . . . . . . . . . . 22 Section 7.06. Requirement to Furnish Information and to Use Administrator's Forms . . . . . . . . . . . . 23 Section 7.07. Claims Procedure . . . . . . . . . . . . . . . . . . 23 Section 7.08. Agent for Service of Process . . . . . . . . . . . . 23 ARTICLE VIII. TRUSTEE Section 8.01. Successor Trustee . . . . . . . . . . . . . . . . . . 24 Section 8.02. General Powers . . . . . . . . . . . . . . . . . . . 24 Section 8.03. Payments from the Trust Fund . . . . . . . . . . . . 25 Section 8.04. Trustee Accounting . . . . . . . . . . . . . . . . . 25 Section 8.05. Settlement of Trustee Accounts . . . . . . . . . . . 25 Section 8.06. Reliance on Written Communications . . . . . . . . . 26 Section 8.07. Trustee Fees and Expenses . . . . . . . . . . . . . . 26 ARTICLE IX. INVESTMENT OF TRUST FUND Section 9.01. Trustee Investment of Trust Fund . . . . . . . . . . 27 Section 9.02. Appointment of Investment Manager . . . . . . . . . . 27 ARTICLE X. FIDUCIARIES AND ALLOCATION OF RESPONSIBILITIES Section 10.01. Fiduciaries . . . . . . . . . . . . . . . . . . . . 28 Section 10.02. Allocation of Fiduciary Responsibilities . . . . . . . . . . . . . . . . . . 28 Section 10.03. General Limitation on Liability . . . . . . . . . . 28 Section 10.04. Multiple Fiduciary Capacities . . . . . . . . . . . 28 Page ARTICLE XI. AMENDMENT AND TERMINATION Section 11.01. Amendment . . . . . . . . . . . . . . . . . . . . . 29 Section 11.02. Termination . . . . . . . . . . . . . . . . . . . . 29 ARTICLE XII. GENERAL PROVISIONS Section 12.01. Non-Guarantee of Continued Employment or Other Benefits . . . . . . . . . . . . . . . . . 30 Section 12.02. Mergers, Consolidations and Transfers of Plan Assets . . . . . . . . . . . . . . . . . . . 30 Section 12.03. Spendthrift Clause . . . . . . . . . . . . . . . . . 30 Section 12.04. Exclusive Benefit . . . . . . . . . . . . . . . . . 30 Section 12.05. Full Satisfaction of Claims . . . . . . . . . . . . 31 Section 12.06. Indemnification . . . . . . . . . . . . . . . . . . 31 Section 12.07. Counterparts . . . . . . . . . . . . . . . . . . . . 31 Section 12.08. Successors and Assigns . . . . . . . . . . . . . . . 31 Section 12.09. IRS Approval . . . . . . . . . . . . . . . . . . . . 31 Section 12.10. Top-Heavy Restrictions . . . . . . . . . . . . . . . 31 Section 12.11. Retroactive Effective Date . . . . . . . . . . . . . 33 ARTICLE XIII. TRUSTEE ACCEPTANCE Section 13.01. Effective Date of Acceptance . . . . . . . . . . . . 34 GEHL SAVINGS PLAN THIS TRUST AGREEMENT, revised and continued this 16th day of December, 1994 by and between Gehl Company, a Wisconsin corporation (hereinafter called the "Company"), and Bank One Wisconsin Trust Company, N.A. as trustee of the trust hereby created (hereinafter called the "Trustee"). W I T N E S S E T H: WHEREAS, effective as of April 22, 1985, the Company adopted the Gehl Savings Plan to encourage eligible employees to contribute toward their own retirement savings through the means of a "cash or deferred arrangement" under Section 401(k) of the Internal Revenue Code of 1954, as amended; and WHEREAS, the plan and trust herein set forth is intended to satisfy the applicable requirements of Sections 401(a), 401(k), and 501(a) of such Code, as amended by the Tax Reform Act of 1986 (and now known as the Internal Revenue Code of 1986) and other statutory and regulatory requirements; and WHEREAS, in order to satisfy such requirements, it is necessary to amend and restate the plan and trust as hereinafter set forth, effective as of December 16, 1994; NOW, THEREFORE, in consideration of the mutual covenants herein set forth, the Company and the Trustee agree as follows: ARTICLE I. DEFINITIONS AND CONSTRUCTION Section 1.01. Definitions. Whenever used herein, the following words and phrases shall have the following meanings, except as required otherwise by the context: (a) "Administrator" means the individual, group of individuals, corporation or other entity appointed by the Board to administer the Plan pursuant to Section 7.01 hereof. (b) "Beneficiary" means the person, trust and/or other entity entitled to receive benefits in the event of the Participant's death. A Participant shall designate his Beneficiary on the form and in the manner prescribed by the Administrator and such designation may be changed or withdrawn by the Participant at any time. The most recent valid designation on file with the Administrator at the time of the Participant's death shall be the Beneficiary. Notwithstanding the foregoing, in the event the Participant is married at the time of his death, the Beneficiary shall be the Participant's spouse at such time unless such spouse consented in writing to the designation of an alternative Beneficiary after notice of the spouse's rights and such consent was witnessed (i) by a Plan representative appointed by the Administrator or (ii) by a notary public. In the event no valid designation of a Beneficiary is on file with the Administrator at the date of death or no designated Beneficiary survives him, the Participant's spouse shall be deemed the Beneficiary; in the further event the Participant is unmarried or his spouse does not survive him, the Participant's estate shall be deemed to be his Beneficiary. (c) "Board" means the Board of Directors of the Company. (d) "Break in Service" means, with respect to a Participant, any Period of Severance which lasts for twelve (12) or more consecutive months. (e) "Code" means the Internal Revenue Code of 1986, as interpreted by applicable regulations and rulings issued pursuant thereto, all as amended and in effect from time to time. (f) "Company" means Gehl Company, a Wisconsin corporation, and any successors and assigns thereto. (g) "Compensation" means the earnings paid to a Participant for services on or after his entry date in Section 2.01(a), equal to the sum of the amount reportable in Box 1 of Form W-2, plus any Deposits hereunder and salary reduction pursuant to Code Section 125 or 401(k), less any reimbursements or other expense allowances, fringe benefits (cash or noncash), moving expenses, deferred compensation, and welfare benefits. The maximum annual compensation taken into account hereunder for purposes of calculating any Participant's accrued benefit (including the right to any optional benefit) and for all other purposes under the Plan shall be $150,000 (or such higher amount permitted pursuant to Code Section 401(a)(17)). For purposes of calculating this maximum for any 5 percent owner or highly compensated employee who is in the group of ten employees paid the greatest compensation during the year, pursuant to Code Section 414(q)(6), the compensation of a spouse or a lineal descendant under age nineteen before the end of the Plan Year shall be treated as if paid to the employee. (h) "Date of Hire" means the first day on which an individual performs an hour of employment as defined in Section 2.01(c) hereof. (i) "Date of Rehire" means the first day on which an individual performs an hour of employment upon rehire following a Break in Service. (j) "Deposits" means amounts designated under the Plan by Participants pursuant to Article III hereof which are contributed by the Company in lieu of payment of an equal amount to the Participant as compensation. (k) "Effective Date" means December 16, 1994, the date on which the provisions of this amended and restated Plan became effective. (l) "Employee" means any person employed on other than a temporary basis (i) by the Company in the position of an office, sales, or supervisory employee or (ii) in a non-union hourly position by either Gehl in Madison, South Dakota, Gehl Power Products, Inc. in Yankton, South Dakota or Hedlund-Martin, Inc. in Lebanon, Pennsylvania. Persons working at Company facilities which are acquired or otherwise made operational after the Effective Date shall become Employees only upon specific action of the Board. A person who is a "leased employee" within the meaning of Code Section 414(n) and (o) shall not be eligible to participate in the Plan, but in the event such a person was participating or subsequently becomes eligible to participate herein, credit shall be given for the person's service as a leased employee toward completion of the Plan's eligibility and vesting requirements, including any service for a member of the controlled group or affiliated service group, if applicable. In addition, "Employee" shall also mean any person employed in West Bend, Wisconsin, in a position represented by a collective bargaining unit, provided that any such Employee shall not be eligible for any contributions under Sections 3.03 and 5.03. (m) "ERISA" means the Employee Retirement Income Security Act of 1974, as interpreted and applied under regulations and rulings issued pursuant thereto, all as amended and in effect from time to time. (n) "Investment Manager" means the Administrator or a person, insurance company, corporation or association which qualifies as an "investment manager" as defined in Section 3(38) of ERISA, including the Trustee, appointed pursuant to Section 9.02 to direct the investment of all or any portion of the assets held by the Trustee under this Agreement. (o) "Normal Retirement Date" means the Participant's sixty-fifth (65th) birthday. (p) "Participant" means any Employee who satisfies the provisions of Section 2.01 hereof. (q) "Period of Severance" means the total period of time, calculated in years, months and days, which elapses between an employee's Severance from Service Date and such employee's Date of Rehire. (r) "Plan" means the profit sharing retirement plan herein contained, as amended and in effect from time to time, which shall be known as the "Gehl Savings Plan." (s) "Plan Year" means the twelve (12) month period commencing on January 1 of each year except that the first Plan Year will be April 22, 1985 through December 31, 1985. (t) "Severance From Service Date" means the earlier of the date on which an employee's employment with the Company terminates on account of a quit, discharge, retirement (including retirement due to Total and Permanent Disability) or death, or the first anniversary of an employee's absence for any other reason, including a leave of absence, sick leave or disability leave; provided, however, that, in the case of an employee who leaves active service with the Company in connection with his commencing to perform military duty in the armed forces of the United States of America or of any state thereof under circumstances entitling him to veterans' reemployment rights pursuant to the Vietnam Era Veterans' Readjustment Act or any other comparable federal statute, he shall not be deemed to have incurred a Severance from Service Date hereunder while performing such military duty and shall have the period thereof included as part of his Vesting Service hereunder if, but only if, he returns to the Company's service within the applicable time limit and under the other conditions prescribed by such statutes for his exercise of such veterans' reemployment rights. (u) "Total and Permanent Disability" means a physical or mental condition which totally and presumably permanently prevents a Participant from engaging in any substantially gainful activity, as determined by the Administrator based on a medical examination by a doctor or clinic appointed by the Administrator. Notwithstanding any other provision of this section, no Participant shall qualify if the Administrator determines that his disability results from an injury suffered while engaged in a felonious or criminal act or enterprise. (v) "Trust Fund" means all sums of money and other property, together with all earnings, income and other increment thereon, held in trust for purposes of providing benefits and defraying the reasonable expenses of the Plan, pursuant to the terms of this Agreement. (w) "Trustee" means Bank One Wisconsin Trust Company, N.A. or any successor or successors thereto designated by the Board pursuant to Section 8.01 hereof. (x) "Vesting Service" means a Participant's service with the Company as calculated under Section 2.02 hereof. Section 1.02. Construction. (a) Whenever any words are used herein in the masculine, they shall be construed as though they were used in the feminine in all cases where they would so apply; and wherever any words are used in the singular or the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply. The words "hereof," "herein," "hereunder" and other similar compounds of the word "here" shall mean and refer to this entire Agreement and not to any particular article or section. Titles of articles and sections hereof are for general information only, and this Agreement and the Plan are not to be construed by reference thereto. (b) The Plan is intended to qualify under Section 401 of the Code and shall be interpreted so as to comply with the applicable requirements thereof, where such requirements are not clearly contrary to the express terms hereof. This Agreement and the Plan shall be construed and their validity determined according to the laws of the State of Wisconsin to the extent such laws are not preempted by federal law. In case any provision of this Agreement and/or the Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts of this Agreement and/or the Plan, but this Agreement and/or the Plan shall be construed and enforced as if said illegal and invalid provisions had never been inserted therein. ARTICLE II. PARTICIPATION, VESTING SERVICE, BREAK IN SERVICE Section 2.01. Participation. (a) Each Employee who has completed the qualifying period is eligible to elect Deposits pursuant to Article III. Eligible Employees who were participating in the Plan as of December 31, 1988, shall continue to participate under this amended Plan if they were employed on the Effective Date. Thereafter, any other Employee shall become a Participant as of the first day of any quarter (i.e., January 1, April 1, July 1 or October 1) coincident with or next following his completion of the qualifying period and filing of the election of Deposits. (b) The qualifying period shall be the first to occur of the following: (i) the twelve (12) month period immediately following the employee's date of employment during which the employee accumulates at least 1,000 hours of employment; or (ii) any Plan Year commencing after the date of employment during which the employee accumulates at least 1,000 hours of employment; or (iii) for any employee regularly scheduled to work forty (40) hours per week, sixty (60) days of Vesting Service before or after the Effective Date. (c) For purposes of this Section an hour of employment is an hour for which a person is directly or indirectly paid by the Company for the performance of duties. Hours of employment shall also include each hour not credited under the preceding sentence for which back pay has been either awarded or agreed to, irrespective of mitigation of damages, and each of the first 501 hours during a single continuous period of absence for which a Participant is paid or entitled to payment for vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty, or leave of absence. Notwithstanding the foregoing, no credit shall be given for payments pursuant to applicable workers' compensation or unemployment compensation or disability insurance laws. The Administrator shall determine each Participant's hours of employment in accordance with Department of Labor Regulations section 2530.200b-2(b) and (c). (d) A former Participant who is rehired by the Company shall resume participation in the Plan as of the first day of the calendar month coincident with or next following his election to make Deposits. (e) It is expressly provided that any employee who is in a unit of employees covered by a collective bargaining agreement shall become, or continue as, a Participant only if such bargaining agreement specifically provides that employees in such unit shall be covered by the Plan. Section 2.02. Vesting Service. Each Participant shall be credited with Vesting Service equal to the aggregate periods of time between his Date of Hire or subsequent Date of Rehire, as applicable, and the next following Severance from Service Date. A Participant shall also be credited with Vesting Service for any Period of Severance of less than twelve (12) consecutive months in duration. Except for purposes of eligibility to participate pursuant to Section 2.01(b)(iii), Vesting Service shall not count any period prior to January 1, 1985. Section 2.03. Break in Service. Vesting Service earned after a Break in Service which lasts for at least six (6) years shall not be considered for purposes of determining a Participant's vested interest in amounts accrued in his account prior to the Break in Service. Vesting Service earned prior to a Break in Service shall be aggregated with Vesting Service earned after the Break in Service for purposes of determining a Participant's vested interest in amounts accrued in his account after the Break in Service. Separate accounts shall be maintained for amounts accrued with respect to a Participant before a six (6) year Break in Service and after such a Break in Service. Section 2.04. Service for Controlled Group. Solely for purposes of Sections 2.01(b), 2.01(c), 2.02, and 2.03 hereof, employment with the Company shall include employment with any member of a controlled group of corporations, a group of trades or businesses under common control or an affiliated service group member as defined in Code Sections 414(b), (c) and (m) that includes the Company, but only while such corporation is in such controlled group. ARTICLE III. CONTRIBUTIONS TO THE TRUST FUND Section 3.01. Election to Make Deposits. Upon completion of his qualification requirement under Section 2.01, an Employee may file a written election for the Company to make Deposits under the Plan. An Employee is not required to file such election immediately upon completion of his qualifying period but may, subject to any rules the Administrator may adopt, file the election at a later date. The election shall be filed with the Administrator on such form and in the manner the Administrator prescribes. The election shall be effective as of the Employee's participation date in subsection 2.01(a) and shall continue in effect until suspended or terminated pursuant to the terms hereof. Section 3.02. Amount and Payment of Participant Deposits. (a) Amount: At the time of his election under Section 3.01 hereof, the Employee shall select the rate of his Deposits, based on a percentage of his Compensation. Deposits shall commence with the payroll period which commences on or immediately after the Employee's participation date. The Employee may designate any whole percentage from one percent (1%) through fifteen percent (15%), but only the first six percent (6%) of Compensation shall be eligible for a match by Company contributions. (b) Change in Rate: The rate of a Participant's Deposits shall remain in effect and may be changed only as of the payroll period which commences on or immediately after the first day of any quarter (i.e., January 1, April 1, July 1 or October 1) or other date provided by the Company, pursuant to such rules as the Administrator may establish. Deposits may be suspended entirely at any time by thirty (30) days written notice to the Administrator. (c) Payment: Deposits shall be made by the Company through regular payroll deduction in lieu of payment as Compensation to the Participants. Deposits so received by the Company shall be remitted to the Trustee as soon as practicable thereafter. (d) No Participant shall contribute Deposits in excess of $9,240 in any calendar year (or such higher amount permitted pursuant to Code Section 402(g)) less the amount of any elective deferrals under all other plans, contracts or arrangements maintained by the Company. In addition, the Plan is subject to the limitations of Code Section 401(k) which are incorporated herein by this reference. Accordingly, the actual deferral percentage for highly compensated employees as defined in Code Section 414(q) shall not exceed the greater of: (i) the actual deferral percentage of the nonhighly compensated employees multiplied by 1.25, or (ii) the lesser of (A) the actual deferral percentage of the nonhighly compensated employees plus two percentage points, or (B) the actual deferral percentage of the nonhighly compensated employees multiplied by 2.0, subject to such other applicable limit as may be prescribed by the Secretary of the Treasury to prevent the multiple use of this alternative limitation. In order to ensure the favorable tax treatment of Deposits hereunder pursuant to Code Section 401(k) or to ensure compliance with Code Section 402(g) or 415, the Administrator in its discretion may prospectively decrease the rate of Deposits of any Participant at any time and, to the extent permitted by applicable regulations, may direct the Trustee to refund Deposits to any Participant. Any excess contributions, determined (i) after application of the family aggregation rules, any recharacterization of deferrals as after-tax contributions if applicable and use of qualified nonelective contributions and/or qualified matching contributions as helpful in the actual deferral percentage test, and (ii) by leveling the highest deferral ratios until the test is satisfied, and excess deferrals shall be distributed including applicable income determined pursuant to applicable regulations, including gap period income after 1988, together with any applicable matching contribution. Such distributions shall be made during the Plan Year following the year the excess contributions were made, and the amount shall be determined based on the respective portions attributable to each highly compensated employee as defined in Code Section 414(q) and based on compensation as defined in Code Section 415(c)(3). Testing hereunder shall be done separately for nonunion Employees and each group of Employees represented by a collective bargaining unit. Section 3.03. Company Matching Contributions. (a) Subject to the Company's right to amend or terminate the Plan as herein provided, the Company shall contribute to the Trust Fund such amount from time to time as it determines. Such contributions are not intended to be nor shall they be treated as part of a "cash or deferred arrangement" under Section 401(k) of the Code. (b) The Plan is subject to the limitations of Code Section 401(m) which are incorporated herein by this reference. Accordingly, the actual contribution percentage of employer contributions for highly compensated employees as defined in Code Section 414(q) shall not exceed the greater of: (i) the actual contribution percentage of the nonhighly compensated employees multiplied by 1.25, or (ii) the lesser of (A) the actual contribution percentage of the nonhighly compensated employees plus two percentage points, or (B) the actual contribution percentage of the nonhighly compensated employees multiplied by 2.0, subject to such other applicable limit as may be prescribed by the Secretary of the Treasury to prevent the multiple use of this alternative limitation. In order to ensure compliance with Code Section 401(m), any excess aggregate contributions, determined (i) after application of the family aggregation rules, any recharacterization of deferrals as after-tax contributions if applicable and use of qualified nonelective contributions and/or qualified matching contributions as helpful in the actual deferral percentage test, and (ii) by leveling the highest contribution ratios until the test is satisfied, shall be distributed if vested or forfeited if forfeitable, including applicable income determined pursuant to applicable regulations, including gap period income after 1988, together with any applicable matching contribution. Such distributions shall be made during the plan year following the year the excess aggregate contributions were made, and the amount shall be determined based on the respective portions attributable to each highly compensated employee as defined in Code Section 414(q) and based on compensation as defined in Code Section 415(c)(3). Testing hereunder shall be done separately for nonunion Employees and each group of Employees represented by a collective bargaining unit. Section 3.04. No Liability for Future Company Contributions. The benefits under the Plan shall be only such as can be provided by the assets of the Trust Fund, and there shall be no liability or obligation to make future profit sharing contributions hereunder or to make any further contributions in the event of termination of the Plan. Section 3.05. Time Period for Payment of Company Contributions. The Company's contributions for any Plan Year shall be paid to the Trustee not later than the time prescribed by law, including any extensions thereof, for filing the Company's federal income tax return with respect to such year. ARTICLE IV. INVESTMENTS Section 4.01. Direction of Investment. (a) Each Participant shall direct, on such a form and in the manner the Administrator prescribes, the percentage of Deposits and allocable share of Company contributions which shall be invested in each fund described in Section 4.03 hereof. A Participant who is a former Employee or a Beneficiary, other than the deceased Participant's spouse, may not direct the investment of his account. Such account shall remain in the funds in which it was invested as of the date of the Participant's termination of employment or date of death, whichever is applicable. (b) In the event a Participant fails to direct investment of any part of the account, such amount shall be invested on the Participant's behalf in the Balanced Fund described in Section 4.03(a)(i) hereof. (c) A Participant's direction of investment may be changed as of the first day of any quarter (i.e., January 1, April 1, July 1 or October 1) pursuant to such rules as the Administrator may establish. The election of investments designates the percentage of future contributions to be allocated to a particular fund. No reallocation shall be made due to differences in investment results between various funds except as provided in Section 4.02 hereof. Section 4.02. Reallocation of Accounts. Each Participant may direct the Trustee, on such a form and in the manner the Administrator prescribes, to reallocate the Participant's accounts as of the first day of any quarter (i.e., January 1, April 1, July 1 or October 1) pursuant to such rules as the Administrator may establish. Except to the extent permitted by the Administrator, no Participant's direction to the Trustee for reallocation of the Participant's account may include a reallocation to the Gehl Company Stock Fund. Such direction may include a reallocation out of the Gehl Company Stock Fund. Section 4.03. Description of Funds. (a) There shall be four (4) investment funds entitled and with the investment characteristics described below: (i) Balanced Fund: This shall be a fund to be invested primarily in assets from a diversified portfolio of stocks, bonds and short-term money market instruments. (ii) Equity Fund: This shall be a fund primarily invested in assets such as common and preferred stocks issued by any corporate entity. (iii) Capital Preservation Fund: This shall be a fund invested primarily in any guaranteed interest contract issued by an insurance company and various money-market securities. (iv) Gehl Company Stock Fund: This fund is invested in Gehl Company Common Stock. The value of this investment will fluctuate with the value of Gehl Company Common Stock. There is no limit on the percentage of Plan assets that may be invested in this fund. Any or all of the investment funds may be invested in common funds of the Trustee or in mutual funds in the discretion of the Investment Manager and pursuant to the provisions hereof. (b) Pending investment in securities of a character described for the fund, any part of a fund may be invested in savings accounts or other deposits with a bank, commercial paper or other short-term securities, including any common funds of the Trustee utilizing similar investments but excluding any securities of the Company. (c) Additional funds shall be established in the discretion of the Administrator, with such titles and investment characteristics as shall be determined by the Administrator and communicated to Participants. Any fund identified in subsection (a) or any additional fund may be eliminated in the discretion of the Administrator after notice to Participants and reallocation of such amounts to remaining funds. (d) Each Participant's Deposits and allocable share of Company contributions shall be invested in the various funds as directed by the Participant pursuant to Sections 4.01 and 4.02 hereof. Section 4.04. Funding Policy. The funding policy for the Plan is that Deposits and Company contributions shall be managed in a manner consistent with ERISA and the general investment objectives for the applicable funds and for the purpose of defraying the reasonable expenses of administering the Plan. The Administrator shall have primary responsibility for carrying out the funding policy, and in addition to its specific responsibilities set forth elsewhere in the Plan, shall establish and communicate to the Trustee and/or other Investment Manager the general investment policy and objectives for the funds designated pursuant to Section 4.03 hereof. ARTICLE V. PARTICIPANT ACCOUNTS Section 5.01. Participant Accounts. The Trustee shall establish and maintain an account in the name of each Participant for his allocated share of Company contributions and Participant Deposits. As soon as practicable following each Plan Year, the Trustee shall prepare for each Participant an annual statement reflecting the status of the Participant's account as of the end of the Plan Year. Section 5.02. Allocation of Participant Deposits. As soon as practicable following each June 30 and December 31, the Trustee shall allocate each Participant's deposits for the payroll deduction periods ending in such semi-annual period to the applicable Participant's account. Section 5.03. Allocation of Company Matching Contributions. As soon as practicable following each June 30 and December 31, and such other date as may be provided by the Company, the Trustee shall allocate the Company's matching contribution for the semi-annual period, if any, and any allocable forfeitures under Section 5.04 hereof among the Participants on a pro rata basis with respect to Participant Deposits for the applicable period, up to a maximum Deposit of six percent (6%) of Compensation for such period. Notwithstanding the foregoing, Participants who are employed in West Bend, Wisconsin, represented by a collective bargaining unit shall not be eligible for any Company matching contributions. Section 5.04. Disposition of Forfeitures. The Trustee shall establish a special account known as the "Suspense Account" and shall enter into such account amounts as are forfeited by any former Participant under Section 6.01 hereof. Amounts in the Suspense Account shall be allocated with the Company matching contribution pursuant to Section 5.03 hereof as soon as practicable. Section 5.05. Allocation of Changes in Value. As of each June 30 and December 31, the Trustee shall value each investment fund under Section 4.03 hereof and proportionately adjust each Participant's account invested in such fund to reflect the effect of income received, any change in fair market value (whether realized or unrealized), expenses and all other transactions during the preceding quarter period respecting such fund. Such valuation and adjustment shall be accomplished by recognizing the beginning balances, any distributions, and one-half of any Participant Deposits and Company contributions during such quarter period. Section 5.06. Maximum Allocation Limitations. The Plan is subject to the limitations on benefits and contributions imposed by Code Section 415 which are incorporated herein by this reference. The limitation year shall be the Plan Year. In the event that there are multiple plans, and the sum of the defined benefit plan fraction and the defined contribution plan fraction, as defined in Code Section 415, exceeds applicable limits, then such Participant's benefit under the defined benefit plan shall be reduced until such limits are satisfied. Any amounts not allocable to a Participant by reason of the limitations incorporated herein shall be allocated and reallocated during the limitation year among all other eligible Participants to the extent permitted by the limitations. Any amounts which cannot be allocated or reallocated due to the limitations shall be credited to a suspense account subject to the following conditions: (i) amounts in the suspense account shall be allocated as a forfeiture among all eligible Participants hereunder at such time, including termination of the Plan or complete discontinuance of Company contributions, as the foregoing limitations permit, (ii) no investment gains or losses shall be allocated to the suspense account, (iii) no further Company contributions shall be permitted until the foregoing limitations permit their allocation to Participants' accounts, and (iv) upon termination of the Plan any unallocated amounts in the suspense account shall revert to the Company. ARTICLE VI. BENEFITS Section 6.01. Eligibility for Benefits and Vesting. (a) A Participant shall be fully vested and entitled pursuant to Section 6.03 hereof to receive upon termination of employment the total amount credited to his account if he: (i) attains age sixty-five (65); (ii) terminates employment under circumstances eligible for early retirement under a Company-sponsored, qualified defined benefit plan in which the Participant is covered; (iii) terminates employment on account of Total and Permanent Disability; or (iv) incurs a layoff without recall which results in his termination of employment pursuant to Company policy. If a Participant's employment is terminated under any other circumstances (except by reason of death which is provided for in Section 6.02 hereof), he shall be entitled pursuant to Section 6.03 hereof to receive the entire balance of the account attributable to his Deposits, plus that percentage of the balance in his account attributable to Company contributions which represents his vested interest determined in accordance with the following table, and the remainder of his account balance attributable to Company contributions shall be subject to forfeiture pursuant to subsection (b) below. Percentage of Account Balance Attributable to Company Contributions Years of Vesting Service Representing Vested Interest Less than 1 10% 1 20% 2 40% 3 60% 4 80% 5 or more 100% (b) Any amounts in a Participant's account which are not payable under subsection (a) above when his employment with the Company is severed shall remain in such account and shall continue to share in allocations under Section 5.05 hereof until such former Participant incurs a six-year break in service as defined in Section 2.04 hereof, whereupon they shall be forfeited and administered pursuant to Section 5.04 hereof. Notwithstanding the foregoing, if a Participant whose employment with the Company terminates prior to his becoming one hundred percent (100%) vested in the portion of his account balance attributable to Company contributions receives a distribution or distributions of his entire vested interest in his account, such Participant's nonvested interest in the Company contributions credited to his account shall be forfeited; provided, however, that if such Participant is reemployed prior to incurring a six-year break in service, any forfeited amounts shall be reinstated from current forfeitures if available or a special Company contribution. Any amounts that are reinstated pursuant to the previous sentence shall continue to vest according to the schedule in subsection (a) above taking into consideration any distributed amount. In any such event, the Participant's vested portion of his remaining account shall not be less than an amount "X" determined by the formula X = P(AB+D)-D, where P is the vested percentage at the relevant time, AB is the account balance at the relevant time, and D is the amount of the distribution. A Participant whose entire vested interest in his account has been distributed or who has no vested interest shall be deemed cashed out of the Plan. (c) Benefits payable in installments to a former Participant shall be suspended upon his reemployment by the Company. Any undistributed amount shall be maintained in his account and shall continue to share in allocations under Section 5.05 hereof until he again terminates his employment with the Company. Section 6.02. Death. Upon the death of a Participant before his termination of employment with the Company, the total amount then credited to his account shall be fully vested and payable to the Participant's Beneficiary. Upon the death of a Participant after his termination of employment, the vested portion of his account shall be payable to the Participant's Beneficiary. Section 6.03. Form and Time of Payment. (a) All amounts payable to a Participant who terminates employment with the Company on account of Total and Permanent Disability or after attainment of age sixty-five (65) shall be paid as the Participant shall determine in one of the following ways: (i) in lump sum; or (ii) in substantially equivalent installments over a period determined by the Participant not to exceed up to ten (10) years. In any case where the Participant has determined payment to be on an installment basis, payment of all or any portion of the unpaid balance may be accelerated in the Participant's sole discretion. (b) All amounts payable to a Beneficiary shall be paid as the Beneficiary shall determine in one of the following ways: (i) in lump sum; or (ii) in substantially equivalent installments over a period determined by the Beneficiary not exceeding five (5) years from the Participant's death; provided, however, that if payment to the Participant has begun in installments prior to his death, the balance of his account shall be distributed at least as rapidly as that method selected prior to his death. (c) All amounts not payable pursuant to subsection (a) or (b) above shall be paid in lump sum. (d) Payment, under whichever method is determined, shall commence at such time as the particular Participant or Beneficiary involved shall determine. Notwithstanding the foregoing, (i) except with respect to death benefits payable to a nonspouse Beneficiary, no lump sum cash distribution shall be made without the consent of the Participant or deceased Participant's spouse, to the extent required by law, where the nonforfeitable portion of such Participant's or spouse's, in case of the Participant's death, account exceeds, or has ever exceeded, $3,500; but (ii) benefits shall not commence later than sixty (60) days after the end of the Plan Year in which the Participant attains or would have attained, in the case of death benefits payable to a deceased Participant's spouse, age sixty-five (65) or incurs a termination of employment, whichever shall last occur; but (iii) notwithstanding the foregoing, effective April 1, 1990, benefits payable to a Participant shall be paid or commenced no later than the April 1 following the calendar year in which the Participant attains age seventy and one-half (70-1/2), even if the Participant is still employed; with respect to benefits payable to a deceased Participant's spouse, benefits shall be paid or commenced no later than the later of (A) December 31 of the calendar year immediately following the calendar year in which the Participant died and (B) December 31 of the calendar year in which the Participant would have attained age seventy and one-half (70-1/2). (e) For purposes of any distribution or withdrawal pursuant to this Article, the value of the Participant's account balances shall be determined as of the June 30 or December 31 coincident or immediately following the date on which the Trustee receives the direction from the Administrator to make such payment. At the election of the Participant or deceased Participant's spouse, the direction to the Trustee shall include a direction to pay a percentage of the anticipated balance, not in excess of eighty percent (80%), prior to the applicable June 30 or December 31, with a final payment after the valuation for such June 30 or December 31 has been completed; provided, however, that if the Participant or spouse makes such an election, the Participant or spouse shall pay all costs incurred to effect the early valuation necessitated by his election. (f) The provisions of the Plan are intended to comply with Code Section 401(a)(9) which prescribes certain rules regarding minimum distributions and requires that death benefits be incidental to retirement benefits. All distributions under the Plan shall be made in conformance with Section 401(a)(9) and the regulations thereunder which are incorporated herein by reference. The provisions of the Plan governing distributions are intended to apply in lieu of any default provisions prescribed in regulations; provided, however, that Code Section 401(a)(9) and the regulations thereunder override any Plan provisions inconsistent with such Code Section and regulations. Section 6.04. Payments to Minor or Incompetent Person. In the event that any amount is payable under the Plan to any person who is a minor or is deemed by the Administrator to be incompetent, either mentally or physically, or for any other reason incapable of receiving such payment, the Administrator may, in its sole discretion, make such payment for the benefit of such person in any of the following ways that the Administrator may select: (i) to such person's legal representative appointed by proceedings satisfactory to the Administrator; (ii) directly to such person even though he is not then able to exercise control over such payment; and/or (iii) to any custodian under the Uniform Gifts to Minors Act or similar statutes or guardian of such person or of his property with whom such person is making his home. The Administrator shall not be required to see to the proper application of any such payment made for such person's benefit pursuant to the provisions of this Section, and any such payment shall satisfy in full such person's entitlement to that payment. Section 6.05. Direct Transfer of Eligible Rollover Distributions. (a) This section applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this section, a distributee may elect, at the time and in the manner prescribed by the Administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover as such terms are defined herein. (b) An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Section 401(a) (9) of the Code; and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (c) An eligible retirement plan is an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, or a qualified trust described in Section 401(a) of the Code, that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. (d) A distributee includes an employee or former employee. In addition, the employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, are distributees with regard to the interest of the spouse or former spouse. (e) A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee. Section 6.06. Withdrawals. (a) Upon a showing of substantial hardship, a Participant may withdraw any portion of the balance in his account which is attributable to his Participant Deposits upon written request to and approval of the Administrator. For purposes of this Section, substantial hardship shall mean: (i) unreimbursed medical expenses described in Code Section 213(d) incurred by the Participant, the Participant's spouse or any dependents of the Participant (as defined in Code Section 152) or necessary for these individuals to obtain medical care; (ii) costs directly related to the purchase (excluding mortgage payments) of a principal residence for the Participant; (iii) payment of tuition and related educational fees for the next 12 months of post-secondary education for the Participant or the Participant's spouse, children or dependents; or (iv) payments necessary to prevent the eviction of the Participant from his principal residence or foreclosure on the mortgage of the Participant's principal residence. The hardship withdrawal (i) shall be limited to the amount of the immediate and heavy financial need, (ii) including to the extent permitted by rules established by the Administrator any amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the withdrawal. (iii) shall be made only after the Participant takes all permitted loans and distributions hereunder and pursuant to any other plan maintained by the Employers and (iv) shall not include any net earnings credited after December 31, 1988 to the balance in the Participant's account derived from Deposits. Any Participant who makes a withdrawal under this Section, shall have his Deposits and any other elective contributions or employee contributions under this Plan or any other plan maintained by the Employer (both qualified and nonqualified) automatically suspended for a period of twelve (12) months following such withdrawal. The amount which such a Participant may contribute as Deposits for the calendar year following such withdrawal shall not exceed the amount described in Section 402(g) for such year, reduced by the amount of such Participant's actual Deposits for the calendar year in which the withdrawal occurred. (b) After attainment of age fifty-nine and one-half (59-1/2), a Participant may withdraw any portion of the balance in his account which is attributable to his Participant Deposits upon written request to the Administrator. No more than two (2) such withdrawals may be made by a Participant during any twelve (12) month period. Section 6.07. Erroneous Overpayments. In the event any payments hereunder to a Participant, former Participant, surviving spouse or any other Beneficiary hereunder exceed the amounts to which such person was entitled, the Administrator may withhold or reduce subsequent payments, or may take such other action as it deems necessary or appropriate. ARTICLE VII. PLAN ADMINISTRATION Section 7.01. Appointment of Administrator. The Plan shall be administered by an individual, or a committee of individuals appointed by the Board and serving at its pleasure. An Administrator position may, but need not, be filled by an officer, director or employee of the Company. Any vacancy in an Administrator position, whether caused by death, resignation, removal or other cause, shall be filled by the Board and the President of the Company shall act as Administrator until such vacancy is filled. If the Administrator is a committee, such vacancy shall not affect the Administrator's authority to carry out its duties and responsibilities under the Plan. Also, if the Administrator is a committee, it may select from its committee members a chairman and such other officers as it deems appropriate, and Administrator action may be taken on vote of at least a majority of the committee members present at any meeting or upon unanimous written consent of all members without a meeting. Such Administrator meetings shall be scheduled to be held at least annually and minutes of such meetings shall be kept. All actions of the Administrator shall be recorded in such minutes or other appropriate written form. The Administrator may establish such other procedures and operating rules as it deems appropriate. Any party serving in an Administrator position may serve in similar capacities under other employee retirement and welfare benefit plans established and maintained by the Company. The Administrator shall be deemed the Plan's administrator for all purposes of ERISA. Section 7.02. Responsibility and Authority of the Administrator. The Administrator shall have and exercise all discretionary and other authority to control and manage the operation and administration of the Plan as it may be amended by the Board from time to time, except such authority as is specifically allocated otherwise by or under the terms hereof. Without limiting the foregoing and in addition to the authority and duties specified elsewhere herein, the Administrator shall have exclusive authority to: (a) interpret and apply all provisions hereof, including without limitation, the power to determine who is a Participant in the Plan, and the amount of Vesting Service and Compensation to be recognized for each such Participant; (b) formulate, issue and apply rules and regulations, which are consistent with the terms and provisions hereof and the requirements of applicable law; (c) make appropriate determinations and calculations and direct the Trustee to pay benefits accordingly; (d) prescribe and require the use of appropriate forms; (e) prepare all reports which may be required by law; (f) determine the existence of Total and Permanent Disability and, in this connection, to require any Participant to submit to a physical examination by a licensed physician, in accordance with uniform rules and procedures consistently applied to similarly situated individuals; (g) approve or deny all applications under Article VI hereof and direct the Trustee as to the timing of any distribution; (h) transmit to the Trustee the investment elections of Participants pursuant to Article IV hereof; and (i) appoint any Investment Managers or otherwise direct investments pursuant to Section 9.02 hereof. Section 7.03. Use of Professional Services. The Administrator may engage the services of and/or consult with any legal counsel, independent qualified public accountant or other persons as may be deemed appropriate. Such persons may be employed for the purpose of rendering advice to the Administrator concerning the Administrator's responsibilities hereunder and may be persons who render services to the Company and/or the Trustee. In any case in which such services are utilized, the Administrator shall retain exclusive discretionary authority and control over the management and administration of the Plan. Section 7.04. Fees and Expenses. No employee of the Company shall receive compensation for services rendered in an Administrator capacity but shall be reimbursed for all reasonable expenses incurred in that capacity. Any other person or entity serving in an Administrator capacity shall be entitled to such reasonable compensation therefor as may be mutually agreed upon with the Company. Where services are utilized as provided in Section 7.03 hereof, the Administrator shall review and approve fees and other costs for those services. Such fees and costs and any other expenses incurred in the administration of the Plan and Trust Fund shall be paid out of the principal or income of the Trust Fund unless voluntarily paid by the Company. Section 7.05. Delegation of Authority and Responsibility. The Administrator may direct other employees to perform duties and functions relating to the administration of the Plan under the Administrator's supervision. It is expressly provided, however, that in any such case, the Administrator retains full and exclusive authority and responsibility for and respecting any such activities by other employees, and nothing contained in this Section 7.05 shall be construed to confer upon such other employees any discretionary authority or control in and respecting the management and administration of the Plan. Section 7.06. Requirement to Furnish Information and to Use Administrator's Forms. Each person entitled to benefits under the Plan shall furnish to the Administrator such evidence, dates or information as the Administrator considers necessary or desirable in order to properly administer the Plan. Any designation of Beneficiary, benefit application, notification or other writing to be submitted hereunder to the Administrator must be filed pursuant to the procedure and on the appropriate form prescribed, and its receipt acknowledged by the Administrator in order to be valid and effective. Section 7.07. Claims Procedure. (a) A Participant or Beneficiary who believes that he is then entitled to benefits hereunder in an amount greater than he is receiving or has received, may file a claim for such benefits by writing directly to the Administrator. Every claim which is properly filed shall be decided and answered in writing within ninety (90) days (or one hundred eighty (180) days if additional time is needed and the claimant is so notified prior to the commencement of the extension) of its receipt by the Administrator, stating whether the claim is granted or denied. If the claim is wholly or partially denied, the specific reasons for denial and reference to the pertinent Plan provisions shall be set forth in a written notice to the claimant. Such notice shall also describe any information necessary for the claimant to perfect an appeal and an explanation of the Plan's claims appeal procedure as set forth in subsection (b) below. (b) Within sixty (60) days of notice that a claim is denied, the claimant may file a written appeal to the Administrator, including any comments, statements or documents the claimant may wish to provide. Every appeal shall be decided and answered within sixty (60) days (or one hundred twenty (120) days if additional time is needed and the claimant is so notified prior to the commencement of the extension) of its receipt by the Administrator. If a Committee is serving as Administrator, the appeal shall be considered and decided by the entire body at its next regularly scheduled meeting occurring at least thirty (30) days after the appeal is timely filed unless an extension of time is required to process the appeal, in which case a written notice thereof shall be given to the claimant prior to the start of such extension which shall not go beyond the third such regularly scheduled meeting occurring after such filing. In the event the claim is denied upon appeal, the specific reasons for denial and reference to the pertinent Plan provisions shall be set forth in a written decision which shall be sent to the claimant. The Administrator shall comply with any reasonable request from a claimant for documents or information relevant to his claim prior to his filing an appeal. The Administrator shall have discretionary authority to determine eligibility for benefits and to construe the terms of the Plan; any such determination or construction shall be final and binding on all parties unless arbitrary and capricious. Section 7.08. Agent for Service of Process. The Administrator is designated as the agent for service of legal process with respect to all matters pertaining to the Plan and the Trust Fund. ARTICLE VIII. TRUSTEE Section 8.01. Successor Trustee. Any Trustee may be removed by action of the Board at any time, with or without cause, upon thirty (30) days' written notice. Any Trustee may resign at any time upon thirty (30) days' written notice to the Company. Upon such removal or resignation of a Trustee the Board may appoint or designate a successor trustee or trustees and all the monies and other property then constituting the Trust Fund shall be assigned, transferred and paid over to such successor trustee or trustees. Section 8.02. General Powers. In addition to any powers or authority otherwise granted to the Trustee hereunder, the Trustee is authorized and empowered: (a) to act as complete and absolute owner of all assets in the Trust Fund; (b) to sell, exchange, convey, transfer or dispose of, or to grant options with respect to, any asset in the Trust Fund and to apply the proceeds of any such transaction in any manner consistent with the purposes of the Trust Fund, including any loans authorized pursuant to Section 6.06 hereof; (c) to borrow or raise monies for the purposes of the Trust Fund in such amount and upon such terms and conditions as the Trustee in its discretion may deem advisable; (d) to make, execute, acknowledge and deliver any and all assignments, documents of transfer or conveyance and any and all other instruments or documents that may be necessary or appropriate to carry out the powers herein granted; (e) to cause any asset in the Trust Fund to be registered in or transferred to its name as Trustee or the name of its nominee or nominees or to retain same unregistered or in form permitting transferability by delivery, but the books and records of the Trustee shall at all times show that all such assets are part of the Trust Fund; (f) to execute any option, right or privilege appurtenant to or respecting any asset of the Trust Fund or any contract with an insurance company, including the right to vote in person or by proxy as to any security in the Trust Fund; (g) to employ such legal counsel, independent qualified public accountant and other persons as may be deemed necessary for administering the Trust Fund, which assistants may be those consulted by the Company, any Investment Manager and/or the Administrator; (h) to enforce, compromise, settle or abstain from same in its discretion, any right, obligation or claim, whether asserted by or against the Trustee and in general to protect in any way the interests of the Trust Fund; (i) to do all other acts which the Trustee may deem necessary or proper and to exercise any and all powers of the Trustee upon such terms and conditions as is deemed to be for the best interests of the Trust Fund; and (j) to employ or appoint investment advisors or managers to manage any or all of the assets comprising the Trust, including any advisor or manager which is a member of an affiliated group of which Bank One Wisconsin Trust Company, N.A., or any successor trustee, is a member. To effectuate such appointment, the Trustee shall have the power to execute any documents as are necessary and to appoint such advisor or manager as co-fiduciary. Section 8.03. Payments from the Trust Fund. The Trustee shall make payments from the Trust Fund to such persons, and in such manner and amounts as may be specified in written directions to the Trustee from the Administrator. Should any such payment be unclaimed, the Trustee shall notify the Administrator thereof, and shall dispose of same in accordance with the Administrator's further directions. Section 8.04. Trustee Accounting. The Trustee shall keep accurate and detailed accounts of all investments, receipts and disbursements and other transactions hereunder, and all accounts, books and records relating thereto shall be open to inspection and audit at reasonable times by any person or persons designated by the Administrator or the Company. Within ninety (90) days following the last day of each Plan Year, or following the close of such other annual period as may be agreed upon between the Trustee and the Company, and within ninety (90) days after the removal or resignation of the Trustee, the Trustee shall file with the Company a written report setting forth all investments, receipts and disbursements, and other transactions effected by it during the period ending as of such date or to the date of such removal or resignation, as the case may be, including a description of all securities and investments purchased and sold with the cost or net proceeds of such purchases or sales, and showing all cash, securities and other property held at the end of such period. Section 8.05. Settlement of Trustee Accounts. In case of any disapproval of any statement of accounts of the Trustee submitted by the Company in writing within ninety (90) days of receipt of such statement, an audit of such statement shall be made by an independent certified public accountant appointed by the Company unless a corrected statement shall have been rendered to the Company and approved in writing by the Company. Upon completion of such audit, the inaccuracies in such statement so audited, if any, shall be corrected to conform to such audit and a corrected statement shall be delivered by the Trustee to the Company. Any such corrected statement shall stand approved as the statement of account of the Trustee as to all matters embraced therein, without further approval. An approved or corrected statement of account shall constitute an account stated between the Trustee and the Company as to all matters embraced in such statement, and shall be binding and conclusive upon all persons interested in the Trust Fund to the same extent as if the account of the Trustee had been settled and allowed in a proceeding for judicial settlement of its accounts in any court of competent jurisdiction, to which all such persons had been made parties; provided, however, that no such statement of accounts nor the Company's approval thereof shall be deemed to relieve the Trustee of any liability which may be imposed upon it for violation of a specific provision of the Code or ERISA; provided further that nothing contained herein shall be deemed to deprive the Trustee and/or the Company of the right to have a judicial settlement of the Trustee's accounts. Section 8.06. Reliance on Written Communications. The Trustee shall be fully protected in relying upon any written notice, certification or other document or writing received from the Company, the Board, any Investment Manager and/or the Administrator and believed to be genuine and shall be under no duty to make an investigation or inquiry as to statements contained in any such notice, certification or other document or writing, and may accept the same as conclusive. Except when otherwise expressly provided herein, any instrument to be delivered or furnished by the Company or the Board to the Trustee shall be sufficiently executed if executed in the name of the Company or Board by any appropriate officer of the former and any instrument to be delivered or furnished by the Administrator to the Trustee shall be sufficiently executed in the Administrator's name. The Trustee shall be fully protected in relying upon a resolution of the Board, duly certified by the Company's secretary or assistant secretary, as to the identity of any party serving in the Administrator capacity until a subsequent resolution is filed with the Trustee by the Board. The Company shall furnish to the Trustee the name and signature of any person serving in the Administrator capacity and such other person who shall be entitled to act on behalf of the Company in dealing with the Trustee. Each Investment Manager appointed pursuant to Section 9.02 hereof shall, from time to time, furnish the Trustee with the name and specimen signature of any person authorized to direct the Trust on its behalf under this Agreement. The Trustee shall have the right to request that all directions and orders from the Investment Manager be in writing and shall assume no liability hereunder for failure to act pursuant to such directions and orders unless and until they are received in a form satisfactory to it. Section 8.07. Trustee Fees and Expenses. The Trustee shall be entitled to reimbursement of any reasonable expenses properly incurred in the performance of its duties hereunder and any Trustee who is not an employee of the Company shall be entitled to such reasonable compensation as shall be mutually agreed upon with the Company. Such compensation and expenses shall be paid from the Trust Fund unless paid by the Company. ARTICLE IX. INVESTMENT OF TRUST FUND Section 9.01. Trustee Investment of Trust Fund. The Trust Fund shall be invested and reinvested without distinction between principal and income in such manner as the Trustee or any Investment Manager appointed pursuant to Section 9.02 shall determine to be consistent and in accord with the applicable requirements of ERISA and the Code and the provisions of Article IV. Subject to the foregoing requirements, such investments and reinvestments shall not be restricted to those of the character authorized for fiduciaries under any present or future laws or administrative regulations or pursuant to any rule of court, nor shall any investments be limited to any amount or type in relation to the amount or type of investments of the Trust Fund as a whole. The Trustee may hold all or any part of the Trust Fund in cash, and shall not be liable for interest on monies so held. Such cash or cash balances may be deposited with any bank or similar financial institution, including the Trustee, in savings accounts earning a reasonable rate of interest. The Trustee may, from time to time, invest and reinvest in interests in common, pooled, diversified, or consolidated funds created and maintained by any bank, insurance company or other financial institution, including the Trustee, for the collective investment of assets in trusts of employee retirement plans qualified under the applicable provisions of the Code whereupon, during the effective period of such investment and reinvestment in such a fund, any instrument governing such fund shall be deemed to be incorporated in and made a part of this Agreement as fully and to all intents and purposes as if set forth herein at length. Section 9.02. Appointment of Investment Manager. The Administrator may appoint one or more Investment Managers to manage the investment and reinvestment of all or any portion of the investment funds in Section 4.03. Any such Investment Manager shall serve at the pleasure of the Administrator. Each Investment Manager shall acknowledge in writing that it is a fiduciary with respect to the Plan. To the extent that Investment Managers have been appointed to manage the investment and reinvestment of any assets of the Trust Fund, then with respect to such assets, the Trustee shall be charged with responsibility only to execute with reasonable diligence and care the instructions of such Investment Manager and the Trustee shall not be liable in any way for depreciation or loss incurred by reason or in respect of any investments made or assets held pursuant to such instructions. To the extent that no Investment Manager is appointed with respect to all or any portion of an investment fund, the Administrator shall be deemed the Investment Manager. ARTICLE X. FIDUCIARIES AND ALLOCATION OF RESPONSIBILITIES Section 10.01. Fiduciaries. The Board, the Administrator, any Investment Manager and the Trustee shall be deemed to be the only fiduciaries, named and otherwise, of the Plan and Trust Fund for all purposes of ERISA. No named fiduciary designated in this Section 10.01 shall be required to give any bond or other security for the faithful performance of its duties and responsibilities with respect to the Plan and/or Trust Fund, except as may be required from time to time under ERISA. Section 10.02. Allocation of Fiduciary Responsibilities. The fiduciary responsibilities (within the meaning of ERISA) allocated to each named fiduciary designated in Section 10.01 hereof shall consist of the responsibilities, duties, authority and discretion of such named fiduciary which are expressly provided herein and in any related documents. Each such named fiduciary may obtain the services of such legal, actuarial, accounting and other assistants as it deems appropriate, any of whom may be assistants who also render services to any other named fiduciary, the Plan and/or the Company; provided, however, that where such services are obtained, the named fiduciary shall not be deemed to have delegated any of its fiduciary responsibilities to any such assistant but shall retain full and complete authority over and responsibility for any activities of such assistant. The Board, Trustee, any Investment Manager, Administrator and any individual members thereof shall not be responsible for any act or failure to act of any other one of them except as may be otherwise specifically provided under ERISA. Section 10.03. General Limitation on Liability. Neither the Board, the Administrator, the Trustee, any Investment Manager nor any other person or entity, including the Company and its shareholders, directors and employees, guarantees the Trust Fund in any manner against loss or depreciation and none of them shall be jointly or severally liable for any act or failure to act or for anything whatever in connection with the Plan and the Trust Fund, or the administration thereof, except and only to the extent of liability imposed because of a breach of fiduciary responsibility specifically prohibited under ERISA. Section 10.04. Multiple Fiduciary Capacities. Any person or group of persons may serve in more than one fiduciary capacity with respect to the Plan and/or the Trust Fund. ARTICLE XI. AMENDMENT AND TERMINATION Section 11.01. Amendment. The Company shall have the right by action of the Board to amend this Agreement and/or the Plan at any time and in any manner consistent with the Code and ERISA; provided, however, that any amendment which increases the duties or responsibilities of the Trustee shall be effective only with the Trustee's consent. In addition, the Administrator may adopt such amendments to the Plan as may be requested by the Internal Revenue Service in order to comply with the requirements for qualification under Sections 401(a) and 501(a) of the Code. Any amendment may be retroactive to the extent permitted by applicable law. Notwithstanding the foregoing, no amendment to the Plan shall decrease a Participant's accrued benefit or vested percentage or eliminate an optional form of distribution for a previously accrued benefit. Section 11.02. Termination. The Company shall have the right to terminate the Plan, in whole or in part, by action of the Board at any time and in such event, upon any other termination or partial termination, or upon termination due to permanent discontinuance of all Company contributions, the Trust Fund shall be fully vested and nonforfeitable to the extent of the termination. Distribution of benefits shall be in the discretion of the Administrator pursuant to Section 6.03 hereof. ARTICLE XII. GENERAL PROVISIONS Section 12.01. Non-Guarantee of Continued Employment or Other Benefits. Neither the establishment of the Plan, nor any modification or amendment thereof, nor the payment of any benefit hereunder shall be construed as giving any Participant or other person whomsoever any legal or equitable right against the Company, its individual officers and employees, the Board or its members, any Investment Manager, the Administrator or any Trustee, or the right to the payment of any benefits hereunder (unless the same shall be specifically provided herein) or as giving any employee the right to continue his employment with the Company or as affecting the Company's right to sever such employment. Section 12.02. Mergers, Consolidations and Transfers of Plan Assets. In the case of any merger, consolidation with, or transfer of assets or liabilities to any other plan, each Participant must be entitled to receive a benefit immediately after the merger, consolidation, or transfer (if the applicable plan were then to terminate) which is equal to or greater than the benefit he would have been entitled to receive immediately before the merger, consolidation, or transfer (if the applicable plan were then to terminate). Section 12.03. Spendthrift Clause. No Participant or Beneficiary shall have the right to transfer, assign, alienate, anticipate, pledge or encumber any part of such benefits, nor shall such benefits, or any part of the Trust Fund from which such benefits are payable, be subject to seizure by legal process by any creditor of such Participant or Beneficiary. Any attempt to effect such a diversion or seizure as aforedescribed shall be deemed null and void for all purposes hereunder to the extent permitted by ERISA and the Code. Notwithstanding the foregoing, the Trustee may recognize a qualified domestic relations order with respect to child support, alimony payments or marital property rights if such order contains sufficient information for the Administrator to determine that it meets the applicable requirements of Section 414(p) of the Code. The Administrator shall establish written procedures concerning the notification of interested parties and the determination of the validity of such orders; if any such order so directs, distribution of benefits to the alternate payee may be made at a time not permitted for distributions to the Participant. Section 12.04. Exclusive Benefit. Anything in the Plan which might be construed to the contrary notwithstanding, it shall be impossible at any time prior to the satisfaction of all liabilities with respect to Participants and their Beneficiaries under the Plan for any part of the Trust Fund assets to be used for, or diverted to, purposes other than the exclusive benefit of such Participants or their Beneficiaries and defraying the reasonable expenses of administering the Plan and the Trust Fund. In no event shall the Company receive at any time any amounts from such assets except as provided in Section 5.06 or 12.09 hereof or the event of a mistake of fact pursuant to the directions of the Administrator within one year after such mistake is made. Notwithstanding any provision herein to the contrary, employer contributions hereunder are conditioned upon their deductibility under Code Section 404. To the extent a deduction is disallowed, contributions may be returned to the Employer within one year after such disallowance. Section 12.05. Full Satisfaction of Claims. Any payment or distribution to any Participant or Beneficiary shall be in full satisfaction of all claims against the Trust Fund, the Trustee, the Administrator, any Investment Manager and the Company and shall give rise to no claim or liability notwithstanding it shall later appear that such payment or distribution was made under a mistake of fact or law, except as otherwise specifically provided by the Code or ERISA. No payment shall be made hereunder which would be in violation of any applicable law or governmental regulation as determined by the Administrator. Section 12.06. Indemnification. The Company shall indemnify any director and/or employee of the Company who acts with respect to the Plan as a member of the Board, in an Administrator capacity or as a Trustee and shall hold any such director and/or employee harmless from the consequences of his acts or conduct in connection with the Plan except to the extent that such consequences are the result of willful misconduct or bad faith shown on the part of such director and/or employee. Section 12.07. Counterparts. This Agreement may be executed in a number of counterparts, each of which shall be deemed an original, and such counterparts shall constitute but one and the same instrument. This Agreement may be sufficiently evidenced by any one counterpart. Section 12.08. Successors and Assigns. This Agreement and the Plan herein contained shall be binding upon the successors and assigns of the Company and the Trustee. Section 12.09. IRS Approval. Any other provision to the contrary notwithstanding, the effectiveness of this Agreement is subject to the condition subsequent of the Company obtaining a determination from the Internal Revenue Service that the Plan meets the requirements for qualification contained in Code Section 401(a) and that the Trust Fund is exempt from tax under Code Section 501(a). Section 12.10. Top-Heavy Restrictions. (a) Notwithstanding any provision to the contrary herein, in accordance with Code Section 416, if the Plan is a top-heavy plan for any Plan Year, then the provisions of this Section shall be applicable. The Plan is "top-heavy" for a Plan Year if as of its "determination date" (i.e. the last day of the preceding Plan Year or the last day of the Plan's first Plan Year, whichever is applicable), the total present value of the accrued benefits of key employees (as defined in Code Section 416(i)(1) and applicable regulations) exceeds sixty percent (60%) of the total present value of the accrued benefits of all employees under the plan (excluding those of former key employees and employees who have not performed any services during the preceding five (5) year period) (as such amounts are computed pursuant to Section 416(g) and applicable regulations using a five percent (5%) interest assumption and a 1971 GAM mortality assumption) unless such plan can be aggregated with other plans maintained by the applicable controlled group in either a permissive or required aggregation group and such group as a whole is not top-heavy. Any nonproportional subsidies for early retirement and benefit options are counted assuming commencement at the age at which they are most valuable. In addition, a plan is top-heavy if it is part of a required aggregation group which is top-heavy. Any plan of a controlled group may be included in a permissive aggregation group as long as together they satisfy Code Section 401(a)(4) and 410 discrimination requirements. Plans of a controlled group which must be included in a required aggregation group include any plan in which a key employee participates or participated at any time during the determination period (regardless of whether the plan has terminated) and any plan which enables such a plan to meet Code Section 401(a)(4) or 410 discrimination requirements. The present values of aggregated plans are determined separately as of each plan's determination date and the results aggregated for the determination dates which fall in the same calendar year. A "controlled group" for purposes of this Section includes any group employers aggregated pursuant to Code Sections 414(b), (c) or (m). The calculation of the present value shall be done as of a valuation date which for a defined contribution plan is the determination date and for a defined benefit plan is the date as of which funding calculations are generally made within the twelve-month period ending on the determination date. Solely for the purpose of determining if the Plan, or any other plan included in a required aggregation group of which this Plan is a part, is top-heavy (within the meaning of Section 416(g) of the Code) the accrued benefit of an Employee other than a key employee (within the meaning of Section 416(i)(1) of the Code) shall be determined under (i) the method, if any, that uniformly applies for accrual purposes under all plans maintained by the Affiliates, or (ii) if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional accrual rate of Section 411(b)(1)(C) of the Code. (b) If a defined contribution plan is top-heavy in a Plan Year, non-key employee participants who have not separated from service at the end of such Plan Year will receive allocations of employer contributions and forfeitures at least equal to the lesser of three percent (3%) of compensation (as defined in Code Section 415) for such year or the percentage of compensation allocated on behalf of the key employee for whom such percentage was the highest for such year (including any salary reduction contributions). If a defined benefit plan is top-heavy in a Plan Year and no defined contribution plan is maintained, the employer-derived accrued benefit on a life-only basis commencing at the normal retirement age of each non-key employee shall be at least equal to a percentage of the highest average compensation for five consecutive years, excluding any years after such Plan permanently ceases to be top-heavy, such percentage being the lesser of (i) twenty percent (20%) or (ii) two percent (2%) times the years of service after December 31, 1983 in which a Plan Year ends in which the Plan is top-heavy. If the controlled group maintains both a defined contribution plan and a defined benefit plan which cover the same non-key employee, such employee will be entitled to the defined benefit plan minimum and not to the defined contribution plan minimum. (c) If the controlled group maintains a defined benefit plan and a defined contribution plan which both cover one or more of the same key employees, and if such plans are top-heavy, then the limitation stated in a separate provision of this Plan with respect to the Code Section 415(e) maximum benefit limitations shall be amended so that a 1.0 adjustment on the dollar limitation applies rather than a 1.25 adjustment. This provision shall not apply if the Plan is not "super top-heavy" and if the minimum benefit requirements of this Section are met when two percent (2%) is changed to three percent (3%) and twenty percent (20%) is changed to an amount not greater than thirty percent (30%) which equals twenty percent (20%) plus one percent (1%) for each year such plan is top-heavy. A plan is "super top-heavy" if the ratio referred to in subsection (a) above results in a percentage in excess of ninety percent (90%) rather than a percentage in excess of sixty percent (60%). Section 12.11. Retroactive Effective Date. (a) The following provisions shall apply retroactively from and after the Plan Year beginning in 1987: (i) leased employees in Section 1.01(1); (ii) contribution limitations in Sections 3.02(d), 3.03(b) and 5.06; and (iii) top-heavy rules in Section 12.10. (b) The provision describing the direct transfer of eligible rollover distributions in Section 6.05 shall apply retroactively from and after January 1, 1993. (c) The following provisions shall apply retroactively from and after January 1, 1994: (i) The maximum annual compensation considered under the Plan in Section 1.01(g); and (ii) The description of substantial hardship in Section 6.06(a). ARTICLE XIII. TRUSTEE ACCEPTANCE Section 13.01. Effective Date of Acceptance. Effective as of January 1, 1995, the Trustee accepts the Trust hereby established and agrees to be bound by all of the terms of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on this 20th day of December, 1994. GEHL COMPANY By: K. F. Kaplan Vice President Attest: M. Mulcahy Secretary [Corporate Seal] BANK ONE WISCONSIN TRUST COMPANY, N.A., TRUSTEE By: Ellen B. Roberts Assistant Vice President Attest: Michael E. Horning Trust Officer [Corporate Seal] EX-10.7 8 GEHL COMPANY RETIREMENT INCOME PLAN "B" As Amended and Restated By the Board of Director's as of December 16, 1994 GEHL COMPANY RETIREMENT INCOME PLAN "B" INDEX Page ARTICLE I. PURPOSE ARTICLE II. DEFINITIONS AND CONSTRUCTION Section 2.01. Definitions . . . . . . . . . . . . . . . . . . . . . 1 Section 2.02. Construction . . . . . . . . . . . . . . . . . . . . 4 ARTICLE III. PARTICIPATION AND SERVICE Section 3.01. Participation . . . . . . . . . . . . . . . . . . . . 5 Section 3.02. Benefit Accrual Service . . . . . . . . . . . . . . . 5 Section 3.03. Vesting Service . . . . . . . . . . . . . . . . . . . 5 Section 3.04. Break in Service . . . . . . . . . . . . . . . . . . 6 Section 3.05. Hour of Service . . . . . . . . . . . . . . . . . . . 7 Section 3.06. Transfer of Employment . . . . . . . . . . . . . . . 7 ARTICLE IV. REQUIREMENTS FOR RETIREMENT BENEFITS Section 4.01. Normal Retirement . . . . . . . . . . . . . . . . . . 8 Section 4.02. Early Retirement . . . . . . . . . . . . . . . . . . 8 Section 4.03. Disability Retirement . . . . . . . . . . . . . . . . 8 Section 4.04. Deferred Vested Pension . . . . . . . . . . . . . . . 9 Section 4.05. Pre-Retirement Surviving Spouse Annuity Pension . . . . . . . . . . . . . . . . . . . . . . . 9 ARTICLE V. BENEFIT ACCRUAL; AMOUNT OF BENEFIT Section 5.01. Benefit Accrual . . . . . . . . . . . . . . . . . . . 11 Section 5.02. Normal Retirement Pension . . . . . . . . . . . . . . 11 Section 5.03. Deferred Retirement Pension . . . . . . . . . . . . . 11 Section 5.04. Early Retirement Pension . . . . . . . . . . . . . . 11 Section 5.05. Deferred Vested Pension . . . . . . . . . . . . . . . 12 Section 5.06. Pre-Retirement Surviving Spouse Annuity Pension . . . . . . . . . . . . . . . . . . . . . . . 13 Section 5.07. Disability Pension . . . . . . . . . . . . . . . . . 13 Section 5.08. Small Pension Payments . . . . . . . . . . . . . . . 13 Section 5.09. Actuarial Equivalents . . . . . . . . . . . . . . . . 13 ARTICLE VI. MANNER AND FORM OF PAYMENT AND OPTIONAL BENEFITS Section 6.01. Participant's Retirement Benefit . . . . . . . . . . 14 Section 6.02. Eligible Spouse Benefit . . . . . . . . . . . . . . . 14 Section 6.03. Life Annuity . . . . . . . . . . . . . . . . . . . . 14 Section 6.04. Joint and Survivor Life Annuity . . . . . . . . . . . 14 Section 6.05. Period Certain Life Annuity . . . . . . . . . . . . . 15 Section 6.06. Annuity Election Conditions . . . . . . . . . . . . . 15 Section 6.07. Disability Pension . . . . . . . . . . . . . . . . . 15 Section 6.08. Beneficiary Designations . . . . . . . . . . . . . . 16 Section 6.09. Reemployment After Termination of Employment . . . . . . . . . . . . . . . . . . . . . 16 Section 6.10. Early Retirement Window . . . . . . . . . . . . . . . 17 Section 6.11. Early Retirement Window . . . . . . . . . . . . . . . 18 Section 6.12. Early Retirement Window . . . . . . . . . . . . . . . 18 Section 6.13. Direct Transfer of Eligible Rollover Distributions . . . . . . . . . . . . . . . . . . . . 19 ARTICLE VII. PLAN FINANCING: CONTRIBUTIONS AND FUNDING Section 7.01. Purpose of Funding . . . . . . . . . . . . . . . . . 20 Section 7.02. Contributions . . . . . . . . . . . . . . . . . . . . 20 Section 7.03. Management Form . . . . . . . . . . . . . . . . . . . 20 ARTICLE VIII. ADMINISTRATION Section 8.01. Allocation of Responsibility Among Fiduciaries for Plan Administration . . . . . . . . . 20 Section 8.02. Appointment of Committee . . . . . . . . . . . . . . 21 Section 8.03. Claims Procedure . . . . . . . . . . . . . . . . . . 21 Section 8.04. Records and Reports . . . . . . . . . . . . . . . . . 21 Section 8.05. Other Committee Powers and Duties . . . . . . . . . . 21 Section 8.06. Rules and Decisions. . . . . . . . . . . . . . . . 22 Section 8.07. Committee Procedures . . . . . . . . . . . . . . . . 22 Section 8.08. Authorization of Benefit Payments . . . . . . . . . . 23 Section 8.09. Application and Forms for Pension . . . . . . . . . . 23 Section 8.10. Facility of Payment . . . . . . . . . . . . . . . . . 23 ARTICLE IX. AMENDMENT AND TERMINATION OF THE PLAN Section 9.01. Amendment of the Plan . . . . . . . . . . . . . . . . 23 Section 9.02. Termination of the Plan . . . . . . . . . . . . . . . 23 Section 9.03. Allocation of Assets Upon Plan Termination . . . . . . . . . . . . . . . . . . . . . 24 Section 9.04. Merger or Consolidation . . . . . . . . . . . . . . . 24 ARTICLE X. MISCELLANEOUS PROVISIONS Section 10.01. Evidence of Survival . . . . . . . . . . . . . . . . 24 Section 10.02. Misstated Information . . . . . . . . . . . . . . . 24 Section 10.03. Action by Company . . . . . . . . . . . . . . . . . 24 Section 10.04. Nonguarantee of Employment . . . . . . . . . . . . . 25 Section 10.05. Rights of Plan Assets . . . . . . . . . . . . . . . 25 Section 10.06. Non-alienation of Benefits . . . . . . . . . . . . . 25 Section 10.07. Notice of Change of Address . . . . . . . . . . . . 25 Section 10.08. Canadian Law . . . . . . . . . . . . . . . . . . . . 25 Section 10.09. Top-Heavy Restrictions . . . . . . . . . . . . . . . 26 Section 10.10. Maximum Benefit . . . . . . . . . . . . . . . . . . 28 Section 10.11. Limitations on Benefits for Highly Compensated Employees . . . . . . . . . . . . . . . 28 Section 10.12. Retroactive Effective Date . . . . . . . . . . . . . 29 ARTICLE I. PURPOSE Effective as of May 1, 1957, GEHL COMPANY, a Wisconsin corporation with its principal place of business located in West Bend, Wisconsin, adopted the GEHL COMPANY RETIREMENT INCOME PLAN "B" to provide retirement benefits for eligible employees. The Plan was subsequently amended, restated as of May 1, 1976, January 1, 1984, January 1, 1989 and January 1, 1991. This restatement is effective December 16, 1994. The Plan is intended to meet the requirements of Sections 401(a) and 501(a) of the Internal Revenue Code of 1986, as amended (the "Code"). The provisions of this Plan shall apply only to an employee who terminates employment on or after the Effective Date. The rights and benefits, if any, of a former employee shall be determined in accordance with the prior provisions of the Plan in effect on the date his employment terminated. The cost of the Plan shall be paid entirely by the Company. The benefits provided under the Plan are in addition to the benefits one shall receive from Social Security. ARTICLE II. DEFINITIONS AND CONSTRUCTION Section 2.01. Definitions. Where the following words and phrases appear in this Plan, they shall have the respective meanings set forth below, unless the context clearly indicates to the contrary: (a) Accrued Benefit: The amount determined in accordance with Section 5.01 for Retirement at Normal Retirement Date. (b) Actuary: The individual actuary or firm of actuaries selected by the Committee to provide actuarial services in connection with the administration of the Plan. (c) Authorized Leave of Absence: Any absence authorized by the Company under the Company's standard personnel practices, provided that all persons under similar circumstances must be treated alike in the granting of such Authorized Leaves of Absence, and provided further that the Participant returns within the period specified in the Authorized Leave of Absence. (d) Average Monthly Compensation: One-sixtieth (1/60th) of a Participant's Compensation received from the Company for the highest five (5) consecutive calendar years within the last ten (10) calendar years preceding the date of his termination of employment with the Company. For any period of authorized absence, an Employee shall be deemed to have received compensation at the rate in effect immediately preceding such absence. (e) Beneficiary: The person designated in writing to receive any benefits upon the death of a Participant. If no such designation is made or if the designated person is not living at the death of a Participant, the Beneficiary shall be the deceased Participant's spouse at his date of death, if living, otherwise the estate of the Participant. (f) Benefit Accrual Service: The period of a Participant's employment considered in determining the amount of benefit payable to or on behalf of a Participant in accordance with Section 3.02. (g) Board: The Board of Directors of the Company. (h) Committee: The persons appointed under the provisions of Article VIII to administer the Plan. (i) Company: Gehl Company, a corporation organized and existing under the laws of the State of Wisconsin, or its successor or successors. (j) Compensation: An Employee's basic wages or salary from the Company before deductions, including any salary reduction deferrals pursuant to a cash or deferred arrangement or a cafeteria plan pursuant to Internal Revenue Code Sections 401(k) or 125, but exclusive of bonuses, overtime, long-term disability benefits or other additional compensation as determined in accordance with uniform rules, regulations and standards as may be prescribed by the Company; provided, however, that in the case of a salary-plus-commission Employee, the term "compensation" shall mean seventy-five percent (75%) of such Employee's aggregate guaranteed salary and commission from the Company. With respect to any Employee terminating employment on or after January 1, 1984, (other than an officer of the Company) who during 1982 or 1983, due to adverse business conditions, received a salary reduction or was temporarily laid off, the term "compensation" for such applicable calendar years shall mean the Employee's base monthly salary prior to such reduction or layoff times twelve (12). The maximum annual compensation taken into account hereunder for purposes of calculating any Participant's accrued benefit (including the right to any optional benefit) and for all other purposes under the Plan shall be $150,000 (or such higher amount permitted pursuant to Code Section 401(a)(17)). For purposes of calculating this maximum for any 5 percent owner or highly compensated employee who is in the group of ten employees paid the greatest compensation during the year, pursuant to Code Section 414(q)(6), the compensation of a spouse or a lineal descendant under age nineteen before the end of the Plan Year shall be treated as if paid to the employee. (k) Deferred Retirement Date: The first day of the month after the Normal Retirement Date coinciding with or next following the date a Participant actually retires from employment with the Company. (l) Disability: A physical or mental condition which totally and presumably permanently prevents a Participant from engaging in any substantially gainful activity as determined in accordance with the provisions of Section 4.03. (m) Early Retirement Date: The first day of any month before his Normal Retirement Date in which a Participant elects to retire, provided he has completed five (5) years of Vesting Service and has attained his 55th birthday. (n) Effective Date: December 16, 1994, the date on which the provisions of this amended and restated Plan became effective. (o) Eligible Spouse: The person to whom a Participant is legally married on the date his benefits hereunder commence, or if benefits have not previously commenced, the person to whom the Participant is legally married at his date of death and has been so married during the 12-month period immediately preceding his date of death. (p) Employee: Any person who: (i) is employed on other than a temporary basis; (ii) is receiving remuneration for personal services rendered to the Company (or would be receiving such remuneration except for an Authorized Leave of Absence) and is not covered under any other defined benefit retirement plan qualified under the Internal Revenue Code to which the Company contributes; and (iii) is either employed in Canada or at the West Bend, Wisconsin facility or as of December 31, 1989 was employed in a salaried position exempt from the Fair Labor Standards Act at the Madison, South Dakota facility. Persons working at Company facilities which are acquired or otherwise made operational after the Effective Date shall become Employees only upon specific action of the Board. A person who is a "leased employee" within the meaning of Code Section 414(n) and (o) shall not be eligible to participate in the Plan, but in the event such a person was participating or subsequently becomes eligible to participate herein, credit shall be given for the person's service as a leased employee toward completion of the Plan's eligibility and vesting requirements, including any service for a member of the controlled group or affiliated service group, if applicable. (q) ERISA: Public Law No. 93-406, the Employee Retirement Income Security Act of 1974, as amended from time to time. (r) Fund: The assets held under the Plan by the Trustee. (s) Normal Retirement Date: The first day of the calendar month coincident with or immediately following the Participant's 65th birthday. (t) Participant: An Employee participating in the Plan in accordance with the provisions of Section 3.01. (u) Plan: Gehl Company Retirement Income Plan "B," the Plan set forth herein, as amended from time to time. (v) Plan Year: The 12-month period commencing on January 1 and ending on December 31. (w) Retirement: Termination of employment for reason other than death after a Participant has fulfilled all requirements for a Normal, Early or Disability Retirement Pension. Retirement shall be considered as commencing on the day immediately following a Participant's last day of employment (or Authorized Leave of Absence, if later). (x) Trustee: First Bank (N.A.) or any other duly appointed successor trustee. (y) Vesting Service: The period of a Participant's employment considered in the determination of his eligibility for benefits under the Plan, in accordance with Section 3.03. Section 2.02. Construction. The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender, and the singular may include the plural, unless the context clearly indicates to the contrary. The words "hereof," "herein," "hereunder" and other similar compounds of the word "here" shall mean and refer to the entire Plan, not to any particular provision or section. ARTICLE III. PARTICIPATION AND SERVICE Section 3.01. Participation. Each Employee shall become a Participant in the Plan as follows: (a) Any Employee included under the prior provisions of the Plan as of the Effective Date shall continue to participate in accordance with the provisions of this amended and restated Plan. (b) The participation of any other eligible Employee shall commence on his date of employment. After a Break in Service, the provisions of Section 3.04 shall be applicable. Section 3.02. Benefit Accrual Service. A Participant shall receive credit for a full year Benefit Accrual Service, or fraction thereof, based on the Months of Service completed during each Plan Year in accordance with the following schedule: Months of Service Benefit Accrual Service 12 1 year 11 9/10 of a year 10 8/10 of a year 9 8/10 of a year 8 7/10 of a year 7 6/10 of a year 6 5/10 of a year 5 4/10 of a year 4 3/10 of a year 3 2/10 of a year 2 2/10 of a year 1 1/10 of a year Years of Benefit Accrual Service shall be the sum of each year of Benefit Accrual Service not forfeited due to a Break in Service in accordance with Section 3.04. For all purposes of the Plan, a Month of Service is credited for any calendar month in which a Participant completes at least one (1) Hour of Service. Section 3.03. Vesting Service. (a) Prior to May 1, 1976, an Employee shall be credited with "Continuous Service" in accordance with the terms of the Plan in effect on April 30, 1976. (b) For service after May 1, 1976, the following schedule shall apply based on the number of hours credited during the Plan Year: Months of Service Vesting Service 6 1 year 5 4/10 of a year 4 3/10 of a year 3 2/10 of a year 2 2/10 of a year 1 1/10 of a year For all purposes of the Plan, a Month of Service is credited for any calendar month in which a Participant completes at least one (1) Hour of Service. In crediting years of service, the Plan shall take into account service with any member of a controlled group of corporations, a group of trades or businesses under common control or an affiliated service group member as defined in Code Sections 414(b), (c) and (m) that includes the Company. (c) Years of Vesting Service shall be the sum of each year of Vesting Service not forfeited due to a Break in Service in accordance with Section 3.04. Section 3.04. Break in Service. A one (1) year Break in Service occurs when a Participant does not complete any Hours of Service during a Plan Year. However, a one (1) year Break in Service shall not occur during periods of military service or an Authorized Leave of Absence during which the Employee's rights were covered by law. A six (6) year Break in Service occurs when a Participant incurs six (6) one year Breaks in Service consecutively. Prior to January 1, 1985, if an Employee incurs a one year Break in Service before he completes ten (10) years of Vesting Service, and the number of consecutive one year Breaks in Service equals or exceeds his years of Vesting Service prior to such Break in Service, he shall be treated upon reemployment as a new Employee for all purposes of the Plan. For any Employee whose Vesting Service had not been canceled pursuant to such rule as of December 31, 1984, an Employee shall only be treated as a new Employee upon reemployment if he incurs a six (6) year Break in Service before he completes ten (10) years of Vesting Service and the number of consecutive one year Breaks in Service equals or exceeds the sum of one (1) plus his years of Vesting Service prior to such Break in Service. Any Employee whose Vesting Service had not been canceled as of December 31, 1988 and who has one (1) Hour of Service on or after January 1, 1989, shall only be treated as a new Employee upon reemployment if he incurs a six (6) year Break in Service before he completes five (5) years of Vesting Service. For purposes of crediting an Employee's service for vesting prior to May 1, 1976, termination of employment shall be considered a Break in Service which caused the Employee to lose all non-vested credit under the Plan and be treated as a new Employee upon rehire. Section 3.05. Hour of Service. For purposes of this Plan, an Employee shall receive credit for an Hour of Service for each hour the Employee is directly or indirectly paid or entitled to payment by the Company including any hour for which back pay is awarded irrespective of mitigation of damages; provided, however, for any single continuous period during which no work is performed, no credit shall be given for any hours in excess of five hundred one (501). Any Participant, however, with a compensable injury will be credited for time lost from work for a maximum of eighteen (18) months. In determining the number of hours for which no work was performed, the method of determination shall be in accordance with the Department of Labor Regulation, Section 2530.200b-2(b) and (c). Section 3.06. Transfer of Employment. (a) In the event an individual employed by the Company and covered by Gehl Company Retirement Income Plan "A" or Gehl Company Retirement Income Plan "C" transfers after May 1, 1980, in the case of Plan "A," or between May 1, 1980 and December 31, 1989, in the case of Plan "C," into the status of an Employee for a period of at least one (1) year, as defined in Section 2.01(p) hereof, such Employee shall commence participation in this Plan as of the date of transfer. For any such individual who remains in the status of an Employee, his Benefit Accrual Service under Section 3.02, Vesting Service under Section 3.03, and Compensation under Section 2.01(j) shall be calculated including all years of his employment with the Company both before and after the date of transfer, subject, however, to an offset under Section 5.01 hereof for the value of any monthly benefit payable under any other qualified defined benefit pension plan sponsored by the Company for service counted hereunder. (b) In the event an individual employed by the Company but not covered by Plan "A" or Plan "C" transfers after December 31, 1988 into the status of an Employee, such Employee shall commence participation in this Plan as of the date of transfer. For any such individual, his Benefit Accrual Service under Section 3.02 and Compensation under Section 2.01(j) shall be calculated from the date of transfer, but Vesting Service under Section 3.03 shall include all years of his employment with the Company. (c) In the event that a Participant herein transfers after May 1, 1980, his employment with the Company to a status not covered by Section 2.01(p) hereof, his Accrued Benefit as defined in Section 2.01(a) shall be frozen as of the date of transfer out of the status of an Employee. Vesting Service under Section 3.03 shall continue to be credited after the date of transfer pursuant to the rules of Section 3.03. As soon as administratively feasible following each Plan Year end, the assets and liabilities for any frozen Accrued Benefit of a Participant, who is covered under another defined benefit pension plan sponsored by the Company, shall be transferred to such pension plan to the extent that no more than a pro rata share of excess plan assets would be required to be transferred as determined by the Actuary. ARTICLE IV. REQUIREMENTS FOR RETIREMENT BENEFITS Section 4.01. Normal Retirement. A Participant shall be eligible for a Normal Retirement Pension if his employment is terminated on or after his attainment of age 65. Payment of a Normal Retirement Pension shall commence as of the first day of the month coinciding with or next following the date of Retirement. Notwithstanding the foregoing, effective April 1, 1990, benefits shall be paid or commence no later than the April 1 after the end of the calendar year in which the Participant attains age 70-1/2, even if the Participant is still employed. Such benefits shall be calculated initially as of the initial commencement date and recalculated annually during continued employment. The benefit resulting from any such recalculation shall be the greater of the monthly benefit from the preceding year or the recalculated benefit minus the actuarial equivalent (as defined in Section 5.09) of the benefits distributed to the Participant in prior years. Section 4.02. Early Retirement. A Participant shall be eligible for an Early Retirement Pension if his employment is terminated on or after his 55th birthday and after he has completed five (5) or more years of Vesting Service. Payment of an Early Retirement Pension shall commence as of the Participant's Normal Retirement Date. However, if a Participant requests the Committee to authorize the commencement of his Early Retirement Pension as of the first day of the month coinciding with or next following his Retirement, or as of the first day of any subsequent month which precedes his Normal Retirement Date, his Pension shall commence as of the beginning of the month so requested, but the amount thereof shall be reduced as provided in Section 5.04. Section 4.03. Disability Retirement. A Participant shall be eligible for a Disability Retirement Pension if his employment is terminated by reason of Disability after he (a) has completed five (5) or more years of Vesting Service, (b) has not attained age 65 and (c) has been disabled for a period of six consecutive months. Payment of a Disability Retirement Pension shall commence as of the first day of the 7th month coinciding with or next following the date employment terminates by reason of Disability. "Disability" under the Plan shall mean a physical or mental condition which totally and presumably permanently prevents a Participant from engaging in any substantially gainful activity, based on a medical examination by a doctor or clinic appointed by the Committee. Notwithstanding any other provision of this section, no Participant shall qualify for a Disability Retirement Pension if the Committee determines that his Disability results from (a) an injury suffered while engaged in a felonious or criminal act or enterprise or (b) service in the armed forces of the United States which entitles the Participant to a veteran's disability pension; but this provision shall not prevent the Participant from qualifying for a Pension under another provision of the Plan. Disability shall be considered to have ended and entitlement to a Disability Retirement Pension shall cease if, prior to his Normal Retirement Date, the Participant (a) is reemployed by the Company, (b) engages in any substantially gainful activity, except for such employment as is found by the Committee to be for the primary purpose of rehabilitation or not incompatible with a finding of total and permanent disability, or (c) has sufficiently recovered, in the opinion of the Committee based on a medical examination by a doctor or clinic appointed by the Committee, to be able to engage in regular employment with the Company and refuses an offer of employment of the Company, or (d) refuses to undergo any medical examination requested by the Committee, provided that a medical examination shall not be required more frequently than twice in any calendar year. If entitlement to a Disability Retirement Pension ceases in accordance with the provisions of this paragraph, such a Participant shall not be prevented from qualifying for a Pension under another provision of the Plan based on his Vesting and Benefit Accrual Service prior to Disability Retirement, and the Disability Pension payments received shall be disregarded. Section 4.04. Deferred Vested Pension. Effective for Participants who complete at least one Hour of Service on or after January 1, 1989, a Participant shall be eligible for a Deferred Vested Pension in accordance with the provisions of Section 5.05 if his employment is terminated before death or Retirement after he has completed at least five (5) years of Vesting Service. Section 4.05. Pre-Retirement Surviving Spouse Annuity Pension. (a) Unless an election to the contrary is made as described below, if (i) an active Participant with five (5) years of Vesting Service, (ii) a Participant who terminated from employment with the Company on or after August 23, 1984 and before January 1, 1989 with ten (10) years of Vesting Service or (iii) a Participant who terminated from employment with the Company on or after January 1, 1989 and is eligible for a deferred vested benefit pursuant to Section 4.04, dies prior to commencement of retirement benefits, his Eligible Spouse, if any, will be entitled to a Pre-Retirement Surviving Spouse Annuity Benefit. If a Participant fails to waive the surviving spouse benefit coverage as provided in this Section, any benefit payable to or on behalf of the Participant or any beneficiary shall be subject to a percentage reduction (in addition to any other applicable reductions under the Plan) for each Plan Year during which such pre-retirement survivor coverage is in effect, commencing with Plan Years after December 31, 1984. The percentage reduction for a particular year shall be based upon the age of the Participant at his birthday during that year, as determined under the following schedule: Attained Age Percentage Reduction Under 35 0.0% 35-44 0.1% 45-54 0.2% 55-65 0.5% Prior to a Participant's attainment of age fifty-five (55), the full percentage reduction for pre-retirement survivor coverage shall be charged for any Plan Year in which the coverage is in effect for at least one day. Once a Participant attains age fifty-five (55), the percentage reduction shall be reduced to a monthly cost, which shall be charged for each month in which the pre-retirement survivor coverage is in effect for at least one day; provided, however, that the annual percentage reduction for any such Participant shall not exceed one-half percent (0.5%). A Participant may elect in writing on a form provided by and filed with the Committee to waive the surviving spouse benefit provided in this Section. Such election may be made (or revoked) at any time during a period commencing with the first day of the Plan Year during which the Participant attains age thirty-five (35) and ending on the date of the Participant's death. Elections filed by a Participant pursuant to this Section to waive the surviving spouse benefit coverage will be deemed invalid unless either his Eligible Spouse has executed the election form and has acknowledged the effect of the waiver and such consent is witnessed by a notary public or a Plan representative appointed by the Committee or the Participant has demonstrated to the Committee that he has no spouse of whom consent is required, his spouse cannot be located or he is excused because of other circumstances approved in federal regulations. If a Participant marries after filing an election under this Section, such election shall be void unless a new election accompanied by the aforementioned consent and acknowledgement of his Spouse is filed with the Committee. The Committee shall provide to the Participant general information with respect to the terms and conditions and the general effect of the surviving spouse benefit which may be waived pursuant to this Section pursuant to applicable regulations and in any event at least ninety (90) days prior to the commencement of the election period specified above. (b) If a Participant separated from employment with the Company after December 31, 1975 but prior to August 23, 1984 with a deferred vested benefit and as of August 23, 1984 was alive and had not begun to receive benefits under this Plan, the Participant may elect to have the surviving spouse benefit of this section apply by submitting a written election to the Committee on or after August 23, 1984, and prior to the commencement of his benefits under the Plan or, if earlier, his death. ARTICLE V. BENEFIT ACCRUAL; AMOUNT OF BENEFIT Section 5.01. Benefit Accrual. The accrued monthly benefit of a Participant terminating employment on or after January 1, 1994, commencing on his Normal Retirement Date shall be equal to the greater of either paragraph (a) or (b) following: (a) One percent (1%) of his Average Monthly Compensation multiplied by the number of years (including fractions of a year to the nearest one-tenth) of his Benefit Accrual Service, to a maximum of thirty-five (35) years. (b) Twenty dollars ($20.00) per month multiplied by the number of years (including fractions of a year to the nearest one-tenth) of his Benefit Accrual Service. Notwithstanding any other provision herein to the contrary, the accrued benefit, including early retirement supplements, of a Participant shall not be less than the amount accrued as of the day preceding the Plan Year beginning in 1989. Section 5.02. Normal Retirement Pension. Subject to the following paragraph, a Participant's Normal Retirement Benefit shall be the amount determined in either (a) or (b). (a) A Participant who retires on the Life Annuity form described in Section 6.03 shall receive a monthly benefit equal to the total benefit accrued in Section 5.01. (b) A Participant who retires on a form of annuity other than the Life Annuity form shall receive a monthly benefit equal to the amount determined in Section 5.01 reduced to the actuarial equivalent in accordance with Section 5.09. Section 5.03. Deferred Retirement Pension. A Participant's Deferred Retirement Benefit shall be computed as in 5.02 above. Section 5.04. Early Retirement Pension. (a) A Participant who elects to retire at an Early Retirement Date shall receive a monthly pension equal to the amount of his Normal Retirement Pension, reduced in accordance with the applicable schedule below if benefits commence prior to the Normal Retirement Date. (b) For benefits commencing on or after January 1, 1985, for Participants who on such date are under age fifty-five (55), the schedule is: Percentage to Apply to Employee's Age at Normal Retirement Benefit Commencement Pension Otherwise Payable 65 100.0% 64 95.0 63 90.0 62 85.0 61 80.0 60 75.0 59 70.0 58 65.0 57 60.0 56 55.0 55 50.0 (c) For benefits commencing on or after January 1, 1985, for Participants who on such date are at least age fifty-five (55), the schedule of reduction factors is based on the Participant's age on January 1, 1985; the table below indicates the age at which full, unreduced benefits could commence and any earlier commencement will result in a reduction of five percent (5%) for each twelve (12) month period: Age on 1-1-85 Unreduced Benefits at Age 60 or over 62 59 62-1/2 58 63 57 63-1/2 56 64 55 64-1/2 Notwithstanding the above, however, effective after December 31, 1989, any Participant otherwise covered by (c) above, due to his age of fifty-five (55) or over as of January 1, 1985, shall not be covered by (c) but shall be covered by (b) if he was a highly compensated employee, as defined in Code Section 414(q), on any date after December 31, 1983. Section 5.05. Deferred Vested Pension. The amount of a Participant's Deferred Vested Pension, commencing as of his Normal Retirement Date, shall be computed in accordance with Section 5.02 above. A Participant may elect pursuant to rules established by the Committee to receive his Deferred Vested Pension at any time after his attainment of age fifty-five (55), subject to the appropriate reductions described in Section 5.04 above. Section 5.06. Pre-Retirement Surviving Spouse Annuity Pension. The Pre-Retirement Surviving Spouse Annuity Pension payable to a Participant's Eligible Spouse shall be equal to the amount which would have been payable to the Eligible Spouse had the Participant (i) ceased earning Benefit Accrual Service and Compensation, (ii) commenced a retirement benefit at the later of his death or the day he would have been fifty-five (55) having elected Option "B" of the Joint and Survivor Life Annuity described in Section 6.04 with his Eligible Spouse as the joint annuitant, and (iii) died the next day. The benefit shall commence to the Eligible Spouse on the first day of the month next following the later of (i) the Participant's death or (ii) the earlier of (A) the day he would have been fifty-five (55) (if he completed five (5) years of service prior to his death) or (B) the day he would have been sixty-five (65), and end with the payment due on the first day of the month in which the Eligible Spouse dies. If applicable, the eligible spouse may elect to defer commencement of such benefit until a date between the two dates in item (ii) above, subject to adjustment for the later commencement in accordance with the terms of Section 5.04 above. Section 5.07. Disability Pension. A Participant who becomes totally and permanently disabled shall be entitled at his Disability Retirement Date to a monthly benefit of $150 (One Hundred Fifty Dollars). If an Employee who is receiving disability benefits attains age sixty-five (65), he shall then receive, in lieu of a disability benefit, an amount equal to the amount which would have been payable as a normal retirement benefit if he had attained his sixty-fifth birthday on the date his permanent disability commenced. A Participant may elect, pursuant to rules established by the Committee, to receive his Normal Retirement Pension in lieu of a Disability Pension at any time after his attainment of age fifty-five (55), subject to the appropriate reductions described in Section 5.04 above. Section 5.08. Small Pension Payments. In the case of any retirement or death benefit with an actuarial equivalent (determined under Section 5.09) which has never exceeded $3,500, the Trustee shall pay such benefit in lump sum as soon as practicable after the end of the Plan Year in which occurs the Participant's termination of employment. A Participant whose vested benefit has been distributed or who has no vested interest shall be deemed cashed out from the Plan. No such single sum settlement shall be available to an Ontario, Canada Employee. Section 5.09. Actuarial Equivalents. "Actuarial equivalent" means a benefit of equivalent value calculated using the following interest and mortality rates: (a) Except as otherwise provided herein, for purposes of converting from one periodic form of payment to another, the interest rate shall be seven and one-half percent (7-1/2%) per annum compounded annually and the mortality rate shall be based on the 1971 Group Annuity Mortality Table for Males; and (b) For purposes of converting from a periodic form of payment to a lump sum form of payment under Section 5.08 or 10.06 hereof, the interest and mortality rates shall be those specified by the Pension Benefit Guaranty Corporation (hereinafter "PBGC") for valuing immediate and deferred annuities for healthy males for a plan terminating on January l prior to the date the distribution occurs. ARTICLE VI. MANNER AND FORM OF PAYMENT AND OPTIONAL BENEFITS Section 6.01. Participant's Retirement Benefit. A Participant's Retirement Pension or Deferred Vested Pension shall, except as provided under Sections 5.04, 5.05, 5.07 or 5.08, be payable in a form of annuity commencing as of the first day of the month coinciding with or next following the Participant's attainment of age sixty-five (65) or termination of employment, whichever is later, subject to the requirements of Section 4.01. Section 6.02. Eligible Spouse Benefit. A Participant who has an Eligible Spouse at his benefit commencement date shall be deemed to have automatically elected to have his Pension paid pursuant to Option "B" of the Joint and Survivor Life Annuity under Section 6.04 with his Eligible Spouse as the joint annuitant. Prior to his benefit commencement date, a Participant, after first receiving a written explanation of the terms and conditions of Option "B", may elect to rescind the automatic election. Subject to the conditions and restrictions of Section 6.06, such Participant may elect to have his benefit paid in accordance with a form of annuity cited in Sections 6.03, 6.04 or 6.05, each of which shall be actuarially equivalent to the Life Annuity form determined pursuant to Section 5.09. Any election under this Section will be deemed invalid unless either (i) the Participant's Eligible Spouse has executed the election form and has acknowledged the effect of the waiver and such consent is witnessed by a notary public or a Plan representative appointed by the Committee or (ii) the Participant has demonstrated to the Committee that he has no spouse of whom consent is required, his spouse cannot be located or he is excused because of other circumstances approved in federal regulations. Section 6.03. Life Annuity. Life Annuity form provides for monthly payments to the Participant continuing to the last day of the month in which his death occurs. Section 6.04. Joint and Survivor Life Annuity. Joint and Survivor Life Annuity form provides for reduced monthly payments during the lifetime of the Participant and ending after the payment for the last day of the month in which the survivor of the Participant and his joint annuitant dies. The monthly payments shall be made in accordance with one of the following options. Option "A" - a monthly Pension payable during the lifetime of the Participant and following his death such monthly Pension payable to his surviving annuitant for the annuitant's lifetime. Option "B" - a monthly Pension payable during the lifetime of the Participant and upon his death 50% of such monthly Pension payable to his surviving annuitant for the annuitant's lifetime. Section 6.05. Period Certain Life Annuity. Period Certain Life Annuity form provides for reduced monthly payments continuing to the first day of the month in which the Participant's death occurs or the end of the certain period (60 to 120 months, whichever duration is elected), whichever is later. If the Participant dies before the end of the certain period, payments in the same amount shall be continued to his Beneficiary to the end of such period. Section 6.06. Annuity Election Conditions. The following conditions and restrictions are applicable to the election of a form of annuity. (a) A Participant shall make his election on a form provided by the Committee or its designee. (b) An election must be filed with the Committee or its designee during the 90-day period prior to the Participant's benefit commencement date. (c) Any election previously made may be changed as provided herein prior to the expiration of the 90-day period referenced in paragraph (b) above by notifying the Committee in writing and fulfilling the applicable Plan requirements. (d) Except as provided in the last sentence of Section 6.04, if a Participant has elected the Joint and Survivor Life Annuity and either the Participant or his joint annuitant dies before his benefit commencement date, the election will be canceled. (e) The provisions of the Plan are intended to comply with Code Section 401(a)(9) which prescribes certain rules regarding minimum distributions and requires that death benefits be incidental to retirement benefits. All distributions under the Plan shall be made in conformance with Section 401(a)(9) and the regulations thereunder which are incorporated herein by reference. The provisions of the Plan governing distributions are intended to apply in lieu of any default provisions prescribed in regulations; provided, however, that Code Section 401(a)(9) and the regulations thereunder override any Plan provisions inconsistent with such Code Section and regulations. Section 6.07. Disability Pension. A Participant who retires at his Disability Retirement Date shall receive monthly payments beginning on such Retirement Date and ending on the earliest of his Early Retirement Date, his Normal Retirement Date, his recovery from Disability or his death. If a Participant remains disabled until his Normal Retirement Date, or he elects an Early Retirement Date pursuant to Section 4.02, he shall at such Retirement Date begin to receive annuity payments as described in this Article. These benefits shall not be cumulative and the benefit commencement date for Retirement Pension shall be the day after Disability Pension ceases. Section 6.08. Beneficiary Designations. Subject to the spouse consent requirements in Section 6.02, each Participant who has elected a Joint and Survivor or Period Certain Life Annuity Option shall have the right at any time prior to Retirement (and thereafter with respect to the Period Certain Life Annuity Option) to designate, and rescind or change any designation of, a joint annuitant or a primary and a contingent Beneficiary or Beneficiaries to receive a Pension in the event of his death. If there is no designated Beneficiary alive when such benefit becomes payable, the Pension under the Period Certain form shall be paid to the estate of the last to die of the Participant and his designated Beneficiaries. If a primary Beneficiary dies before receiving the Pension benefits to which he is entitled, the balance of such payments shall be paid to the contingent Beneficiary. If there is no contingent Beneficiary, or if the contingent Beneficiary dies before receiving all Pension benefit payments to which he is entitled, the balance of such payments shall be paid to the estate of the last to die of such Beneficiaries. Neither the Company nor the Trustee (in its capacity as such) shall be named as Beneficiary. A designation or change of joint annuitant Beneficiary shall be made in writing on such form or forms as the Committee may require. Section 6.09. Reemployment After Termination of Employment. (a) In the event a Participant is reemployed by the Company after he becomes entitled to benefits, any benefit payments which may have commenced shall be suspended during the period of reemployment, effective with the first payment due after the date of the Participant's reemployment. Upon his subsequent termination of employment, the Participant shall be entitled to benefits based upon his prior Benefit Accrual Service, his Benefit Accrual Service during the period of reemployment, his Average Monthly Compensation as of his last date of termination of employment and other relevant factors, but reduced by the actuarial equivalent of any benefits paid to him prior to age sixty-five (65) as determined under Section 5.09, provided that the Participant's accrued benefit prior to any reduction for benefits previously paid shall not be less than the amount of his accrued benefit prior to his reemployment. Such benefits shall be payable in the form determined under Article VI. For purposes of computing his Average Monthly Compensation, the period of absence from his prior termination date to the date of his reemployment shall be excluded in determining the applicable five (5) and ten (10) calendar year periods. (b) Notwithstanding subsection (a) of this Section, a Participant who has attained age sixty-five (65) and receives payment for fewer than forty (40) Hours of Service as defined in Section 3.05 for any calendar month during his period of reemployment shall be deemed to have again terminated employment and shall be entitled to benefit payments hereunder for such month. However, such a Participant shall be deemed to have been reemployed, and his benefits shall be suspended in accordance with subsection (a) of this Section as of the first day of any subsequent month for which he actually receives payment for forty (40) or more Hours in a calendar month. (c) If a Participant whose benefits have been suspended under this Section dies while in the employment of the Company, then the only benefits payable hereunder on the Participant's account shall be the benefits under Section 4.05 hereof if applicable. (d) The Committee shall adopt appropriate rules for the administration of this Section which may include rules (i) relating to the notification of affected Participants, (ii) requiring that affected Participants notify the Committee of any termination of employment and of any reemployment, and (iii) providing for the offset from future benefit payments of any benefits actually paid hereunder for a month in which such benefits should have been suspended. Such rules shall be in compliance with ERISA and the applicable regulations issued thereunder. Section 6.10 Early Retirement Window. (a) Participants listed in subsection (b) below who on December 31, 1991 are at least age fifty-seven (57) may elect during the period November 15, 1991 through December 31, 1991 to retire as of January 1, 1992 and receive the special benefits provided in this Section. For electing eligible participants, (i) no early commencement reduction shall be applied in Section 5.04(b); (ii) no pre-retirement surviving spouse annuity election reduction shall be applied in Section 4.05(a); (iii) until attainment of age 62, a special supplement of $600 shall be paid each month; (iv) until attainment of age 65, a special supplement shall be paid each month of $171 for a participant with single health coverage as of December 31, 1991 and of $436 for a participant with family health coverage as of such date; and (v) for Gehl Agriculture Division sales personnel, the definition of Compensation in Section 2.01(j) shall not be subject to the seventy-five percent (75%) limitation on aggregate guaranteed salary and commission. (b) The Participants eligible for this early retirement window option are: Bandy, John C. Haas, Lawrence J. Schmeling, Marvin M. Bobholz, Maurice G. Hadler, Howard N. Smith, Richard M. Boone, James H. Klein, Ralph E. Spaeth, Charles J. Bowling, John R. Kloke, Ellen M. Stotesbery, Darrell L. Bruesewitz, Leroy W. Koth, Keith K. Stotesbery, Gerald L. Cline, Paul A. Leverenz, John H. Thelen, Norbert W. Cudnohoske, Kenneth C. Luckert, Gerald J. Weber, Ira W. Dell, Arthur P. Nonhof, Loren D. Whiting, James Ecker, Joseph J. Raabe, Gertrude B. Wiedenfield, Donald H. Fiebig, Robert D. Salter, Daniel A. Woelke, Wayne Fischer, Herbert M. Scheffler, David R. Yanna, Roger E. Givens, James G. Scheffner, George J. Groeneveld, Wilbur Schellinger, Laverne Section 6.11. Early Retirement Window. (a) Participants listed in subsection (b) below who on December 31, 1992, are at least age fifty-seven (57) may elect during the period November 14, 1992 through December 30, 1992, to retire as of December 31, 1992 and receive the special benefits provided in this Section. For electing eligible participants, the supplemental benefit shall be equal to the sum of: (i) 2.5% of current salary time years of service, plus (ii) 30% of current salary. Such supplemental payment shall be made in the form of a lump sum payment or in the form of a joint and survivor life annuity using Option "B" of Section 6.04 with an actuarial equivalent monthly benefit determined pursuant to 5.09(b). The annuity form shall apply unless the Participant and spouse consent to the lump sum payment in accordance with procedures of Sections 6.02 and 6.06. (b) The Participants eligible for this early retirement window option are: Kluever, Lou Ann Klupper, Robert J. Section 6.12. Early Retirement Window. (a) Participant listed in subsection (b) below who on July 31, 1993, is at least age fifty-seven (57) may elect during the period April 28, 1993 through June 28, 1993, to retire as of August 1, 1993, and receive the special benefits provided in this Section. For electing eligible participants, (i) until attainment of age sixty-two (62), a special supplement of $500 shall be paid each month as a Social Security supplement; (ii) until attainment of age sixty-five (65), a special supplement shall be paid each month of $450 as a health and dental insurance supplement; and (iii) in lieu of the normal accrued benefit, the life only accrued benefit (subject to adjustment for optional forms of payment pursuant to the terms of the Plan using the participant's actual age) shall be increased so that it is equal to the benefit which would have been payable if the participant worked until age sixty-two (62) with no salary reduction since 9/1/91 and received three percent (3%) salary increases annually. (b) The Participant eligible for this early retirement window option is: Erwin G. Koepp, Jr. Section 6.13. Direct Transfer of Eligible Rollover Distributions. (a) This section applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this section, a distributee may elect, at the time and in the manner prescribed by the Committee, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover as such terms are defined herein. (b) An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (c) An eligible retirement plan is an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, or a qualified trust described in Section 401(a) of the code, that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. (d) A distributee includes an employee or former employee. In addition, the employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, are distributees with regard to the interest of the spouse or former spouse. (e) A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee. ARTICLE VII. PLAN FINANCING: CONTRIBUTIONS AND FUNDING Section 7.01. Purpose of Funding. The Plan shall be funded for the exclusive purpose of providing Pensions to Participants and their Beneficiaries and for defraying reasonable expenses in administering the Plan. Section 7.02. Contributions. The Company shall bear the total costs of the Plan. Such costs will include the amounts necessary to provide Pension payments to Plan Participants and their Beneficiaries and the payment of administrative expenses. Section 7.03. Management Form. Initially, all contributions to the Plan and all Pension payments from the Plan shall be made under the Trust Agreement. ARTICLE VIII. ADMINISTRATION Section 8.01. Allocation of Responsibility Among Fiduciaries for Plan Administration. The Fiduciaries shall have only those specific powers, duties, responsibilities and obligations as are specifically given them under this Plan. In general, the Board shall have the sole authority to appoint and remove members of the Committee and any Investment Manager and to amend or terminate the Plan, in whole or in part. The Committee shall have the sole responsibility for the administration of this Plan, which responsibility is specifically described in this Plan. The Trustee shall have the responsibility for the proper administration and management of the Fund assets. Each Fiduciary warrants that any directions given, information furnished, or action taken by it shall be in accordance with the provisions of the Plan, authorizing or providing for such direction, information or action. Furthermore, each Fiduciary may rely upon any such direction, information or action of another Fiduciary as being proper under this Plan, and is not required under this Plan in inquire into the propriety of any such direction, information or action. It is intended under this Plan that each Fiduciary shall be responsible for the proper exercise of its own powers, duties, responsibilities and obligations under this Plan and shall not be responsible for any act or failure to act of another Fiduciary. No Fiduciary guarantees the Fund in any manner against investment loss or depreciation in asset value. Section 8.02. Appointment of Committee. The Plan shall be administered by the Committee consisting of at least three persons who shall be appointed by and serve at the pleasure of the Board. All usual and reasonable expenses of the Committee may be paid in whole or in part by the Company, and any expenses not paid by the Company shall be paid out of the principal or income of the Fund. Any members of the Committee who are Employees shall not receive Compensation with respect to their services for the Committee. Section 8.03. Claims Procedure. All claims for benefits under the Plan shall be directed to the attention of the Committee. If the Committee determines that any individual who has claimed a right to receive benefits under the Plan is not entitled to receive all or any of the benefits claimed, the claimant shall be informed of the reasons for the denial, with specific reference to pertinent Plan provisions and with a description of the review procedures set forth below. The claimant may within sixty days thereafter submit to the Committee by certified or registered mail such further information as will, in the claimant's opinion, establish his rights to such benefits. If, upon receipt of this further information, the Committee determines that the claimant is not entitled to the benefits claimed, it shall afford the claimant or his representative reasonable opportunity to appear personally before it, to submit issues and comments in writing, and to review pertinent documents. The Committee shall render its final decision with the specific reasons therefor in writing and shall transmit it to the claimant by certified mail within sixty days of any such appearance. The Committee shall have discretionary authority to determine eligibility for benefits and to construe the terms of the Plan; any such determination or construction shall be final and binding on all parties unless arbitrary and capricious. Section 8.04. Records and Reports. The Committee shall exercise such authority and responsibility as it deems appropriate in order to comply with ERISA and governmental regulations issued thereunder relating to: records of Participants' service, Accrued Benefits and the percentage of such Pensions which are nonforfeitable under the Plan, notifications to Participants, and any and all reports to the appropriate governmental agencies as required by law. Section 8.05. Other Committee Powers and Duties. The Committee shall have such duties and powers as may be necessary to discharge its duties hereunder, including, but not by way of limitation, the following: (a) to construe and interpret the Plan, decide all questions of eligibility and determine the amount, manner and time of payment of any Pensions hereunder; (b) to prescribe procedures to be followed by Participants or Beneficiaries filing applications for Pensions; (c) to prepare and distribute, in such manner as the Committee determines to be appropriate, information explaining the Plan; (d) to receive from the Company and from Participants such information as shall be necessary for the proper administration of the Plan; (e) to furnish the Company, upon request, such annual reports with respect to the administration of the Plan as are reasonable and appropriate; (f) to receive and review the periodic valuation of the Plan made by the Actuary; (g) to receive, review and keep on file (as it deems convenient or proper) reports of the financial condition, and of the receipts and disbursements, of the Fund from the Trustee; (h) to appoint or employ individuals to assist in the administration of the Plan and any other agents it deems advisable, including legal and actuarial counsel. The Committee shall have no power to add to, subtract from or modify any of the terms of the Plan, or to change or add to any Pensions provided by the Plan, or to waive or fail to apply any requirements of eligibility for a Pension under the Plan. Section 8.06. Rules and Decisions. The Committee may adopt such rules and actuarial tables as it deems necessary, desirable or appropriate. All rules and decisions of the Committee shall be uniformly and consistently applied to all Participants in similar circumstances. When making a determination or calculation, the Committee shall be entitled to rely upon information furnished by a Participant or Beneficiary, the Company, the legal counsel of the Company, the Actuary, or the Trustee. Section 8.07. Committee Procedures. The Committee may act at a meeting or in writing without a meeting. The Committee shall elect one of its members as chairman, appoint a secretary, who may or may not be a Committee member. The secretary shall keep a record of all meetings. The Committee may adopt such bylaws and regulations as it deems desirable for the conduct of its affairs. All decisions of the Committee shall be made by the vote of the majority including actions in writing taken without a meeting. A dissenting Committee member who, within a reasonable time after he has knowledge of any action or failure to act by the majority, registers his dissent in writing delivered to the other Committee members, the Company and the Trustee shall not be responsible for any such action or failure to act. Section 8.08. Authorization of Benefit Payments. The Committee shall issue directions to the Trustee concerning all benefits which are to be paid from the Fund pursuant to the provisions of the Plan, and warrants that all such directions are in accordance with this Plan. Section 8.09. Application and Forms for Pension. The Committee may require a Participant to complete and file with the Committee an application for Pension and all other forms approved by the Committee, and to furnish all pertinent information requested by the Committee. The Committee may rely upon all such information so furnished it, including the Participant's current mailing address. Section 8.10. Facility of Payment. Whenever, in the Committee's opinion, a person entitled to receive any payment of a Pension or installment thereof hereunder is under a legal Disability or is incapacitated in any way so as to be unable to manage his financial affairs, the Committee may direct the Trustee to make payments to such person or to his legal representative, or the Committee may direct the Trustee to apply the payment for the benefit of such person in such manner as the Committee considers advisable. Any payment of a Pension or installment thereof in accordance with the provisions of this Section shall be a complete discharge of any liability for the making of such payment under the provisions of the Plan. ARTICLE IX. AMENDMENT AND TERMINATION OF THE PLAN Section 9.01. Amendment of the Plan. The Company reserves the right to modify or amend this Plan from time to time and to any extent that it may deem advisable including any amendment deemed necessary to ensure the continued qualification of this Plan under the provisions of the Internal Revenue Code. Any amendment shall be made pursuant to a resolution duly adopted by the Board. No amendment shall have the effect of revesting in the Company the whole or any part of the assets of this Plan or of diverting any part of the assets of this Plan to purposes other than the exclusive benefit of the Participants and their Beneficiaries and defraying reasonable expenses of administering the Plan at any time prior to the satisfaction of all the liabilities under this Plan with respect to such persons. Employer contributions hereunder are conditioned upon their deductibility under Code Section 404. Notwithstanding any provision herein to the contrary, to the extent a deduction is disallowed, contributions may be returned to the Employer within one year after such disallowance. No amendment shall adversely affect the Vested Deferred Pension of a Participant nor decrease a Participant's accrued benefit or vested percentage nor eliminate an optional form of distribution for a previously accrued benefit. Section 9.02. Termination of the Plan. This Plan may be terminated by the Company upon action of the Board at any time for any reason. Benefits are Non-Forfeitable: Upon full or partial termination of the Plan, the rights of all Participants to their Accrued Benefits in accordance with Section 5.01, to the date of termination shall be non-forfeitable, subject to the extent the Pension is funded. Section 9.03. Allocation of Assets Upon Plan Termination. Upon termination of the Plan in accordance with the provisions of Section 9.02, the Plan's assets shall be allocated in accordance with the requirements of the Pension Benefit Guaranty Corporation. Any residual assets of the Plan remaining after the satisfaction of all liabilities of the Plan shall be distributed to the Company. Section 9.04. Merger or Consolidation. No merger or consolidation with, or transfer of assets or liabilities to, any other Plan shall be made unless, (a) each Participant in this Plan would receive a Pension, if the Plan then terminated immediately after the merger, consolidation or transfer, which is equal to or greater than the Pension he would have been entitled to receive immediately before the merger, consolidation or transfer if this Plan had then terminated, and (b) such other Plan is qualified under Sections 401(a) and 501(a) of the Internal Revenue Code. ARTICLE X. MISCELLANEOUS PROVISIONS Section 10.01. Evidence of Survival. Where a Pension payment is contingent upon the survival of any person, evidence of such person's survival must be furnished either by personal endorsement of the check drawn for such payment or by other evidence satisfactory to the Committee or its designee. Section 10.02. Misstated Information. If any information has been misstated on which a Pension under the Plan with respect to a person was based, such benefit shall not be invalidated, but the amount of the Pension shall be adjusted to the proper amount as determined on the basis of the correct information. Overpayments, if any, with interest as determined by the Committee or its designee shall be charged against any payments accruing with respect to the person. The Committee or its designee reserves the right to require proof of age of any person entitled to a Pension under this Plan. Section 10.03. Action by Company. Any action by the Company under this Plan may be by resolution of its Board or by any person or persons duly authorized by resolution of said Board to take such action. Section 10.04. Nonguarantee of Employment. Nothing contained in this Plan shall be construed as a contract of employment between the Company and any Employee, as a right of any Employee to be continued in the employment of the Company, or as a limitation of the right of the Company to discharge any of its Employees, with or without cause. Section 10.05. Rights of Plan Assets. No Employee shall have any right to, or interest in, any assets of the Fund upon termination of his employment or otherwise, except as provided from time to time under this Plan, and then only to the extent of the Pensions payable under the Plan to such Employees out of the assets of the Fund. Except as otherwise may be provided under Title IV of ERISA, all payments of Pensions as provided for in this Plan shall be made solely out of the assets of the Fund and none of the Fiduciaries shall be liable therefor in any manner. At the direction of the Committee, expenses of the Plan shall be paid from the Plan assets. Section 10.06. Non-alienation of Benefits. Pensions payable under this Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary, including any such liability which is for alimony or other payments for the support of a spouse or former spouse, or for any other relative of the Participant, prior to actually being received by the person entitled to the Pension under the terms of the Plan; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits payable hereunder, shall be void. The Fund shall not in any manner be liable for, or subject to, the debts, contracts, liabilities, engagements or torts of any person entitled to a Pension hereunder. Notwithstanding the foregoing, the Trustee may recognize a qualified domestic relations order with respect to child support, alimony payments or marital property rights if such order contains sufficient information for the Committee to determine that it meets the applicable requirements of Section 414(p) of the Code. The Committee shall establish written procedures concerning the notification of interested parties and the determination of the validity of such orders. As necessary, the Committee shall determine the actuarial equivalent of applicable benefits in order to comply with any such order in accordance with Section 5.09; if any such order so directs, distribution of benefits to the alternate payee may be made at a time not permitted for distributions to the Participant and may be made in a lump sum subject to the limitation in Section 5.08. Section 10.07. Notice of Change of Address. It shall be the responsibility of the Deferred Vested Plan Participant to notify the Company of his current address. Section 10.08. Canadian Law. Notwithstanding any other provision of the Plan to the contrary, the Plan will comply in all respects with any applicable Canadian federal or provincial governmental laws and/or regulations. Section 10.09. Top-Heavy Restrictions. (a) Notwithstanding any provision to the contrary herein, in accordance with Code Section 416, if the Plan is a top-heavy plan for any Plan Year, then the provisions of this Section shall be applicable. The Plan is "top-heavy" for a Plan Year if as of its "determination date" (i.e. the last day of the preceding Plan Year or the last day of the Plan's first Plan Year, whichever is applicable), the total present value of the accrued benefits of key employees (as defined in Code Section 416(i)(1) and applicable regulations) exceeds sixty percent (60%) of the total present value of the accrued benefits of all employees under the plan (excluding those of former key employees and employees who have not performed any services during the preceding five (5) year period) (as such amounts are computed pursuant to Section 416(g) and applicable regulations using a five percent (5%) interest assumption and a 1971 GAM mortality assumption) unless such plan can be aggregated with other plans maintained by the applicable controlled group in either a permissive or required aggregation group and such group as a whole is not top-heavy. Any nonproportional subsidies for early retirement and benefit options are counted assuming commencement at the age at which they are most valuable. In addition, a plan is top-heavy if it is part of a required aggregation group which is top-heavy. Any plan of a controlled group may be included in a permissive aggregation group as long as together they satisfy the Code 401(a)(4) and 410 discrimination requirements. Plans of a controlled group which must be included in a required aggregation group include any plan in which a key employee participates or participated at any time during the determination period (regardless of whether the plan has terminated) and any plan which enables such a plan to meet the Section 401(a)(4) or 410 discrimination requirements. The present values of aggregated plans are determined separately as of each plan's determination date and the results aggregated for the determination dates which fall in the same calendar year. A "controlled group" for purposes of this Section includes any group employers aggregated pursuant to Code Sections 414(b), (c) or (m). The calculation of the present value shall be done as of a valuation date which for a defined contribution plan is the determination date and for a defined benefit plan is the date as of which funding calculations are generally made within the twelve month period ending on the determination date. Solely for the purpose of determining if the Plan, or any other plan included in a required aggregation group of which this Plan is a part, is top-heavy (within the meaning of Section 416(g) of the Code) the accrued benefit of an Employee other than a key employee (within the meaning of Section 416(i)(1) of the Code) shall be determined under (i) the method, if any, that uniformly applies for accrual purposes under all plans maintained by the Affiliates, or (ii) if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional accrual rate of Section 411(b)(1)(C) of the Code. (b) If a defined contribution plan is top-heavy in a Plan Year, non-key employee participants who have not separated from service at the end of such Plan Year will receive allocations of employer contributions and forfeitures at least equal to the lesser of three percent (3%) of compensation (as defined in Code Section 415) for such year or the percentage of compensation allocated on behalf of the key employee for whom such percentage was the highest for such year (including any salary reduction contributions). If a defined benefit plan is top-heavy in a Plan Year and no defined contribution plan is maintained, the employer-derived accrued benefit on a life only basis commencing at the normal retirement age of each non-key employee shall be at least equal to a percentage of the highest average compensation for five consecutive years, excluding any years after such Plan permanently ceases to be top-heavy, such percentage being the lesser of (i) twenty percent (20%) or (ii) two percent (2%) times the years of service after December 31, 1983 in which a Plan Year ends in which the Plan is top-heavy. If the controlled group maintains both a defined contribution plan and a defined benefit plan which cover the same non-key employee, such employee will be entitled to the defined benefit plan minimum and not to the defined contribution plan minimum. (c) If the controlled group maintains a defined benefit plan and a defined contribution plan which both cover one or more of the same key employees, and if such plans are top-heavy, then the limitation stated in a separate provision of this Plan with respect to the Code Section 415(e) maximum benefit limitations shall be amended so that a 1.0 adjustment on the dollar limitation applies rather than a 1.25 adjustment. This provision shall not apply if the Plan is not "super top-heavy" and if the minimum benefit requirements of this Section are met when two percent (2%) is changed to three percent (3%) and twenty percent (20%) is changed to an amount not greater than thirty percent (30%) which equals twenty percent (20%) plus one percent (1%) for each year such plan is top-heavy. A plan is "super top-heavy" if the ratio referred to in subsection (a) above results in a percentage in excess of ninety percent (90%) rather than a percentage in excess of sixty percent (60%). (d) If the Plan is top-heavy in a Plan Year, the vesting schedule shall automatically be amended for any employee employed on the first day of such year or thereafter so that the vested percentage for employer-derived benefits is equal to the greater of the vesting provided under other provisions of the Plan or the following schedule: Years of Service Nonforfeitable Percentage 1 0% 2 20% 3 40% 4 60% 5 80% 6 or more 100% where "years of service" means the years credited for vesting purposes under the Plan or, if greater, the years required to be counted under Code Section 411 and applicable regulation thereto. If the Plan thereafter ceases to be top-heavy for a Plan Year, the vesting schedule above shall be disregarded and the original schedule applied, except with respect to any Participant with three (3) or more years of service and except that no Participant's vested percentage as of the end of the prior year shall be decreased. Any non-vested Participant who acquires a vested interest in the employer-derived benefit by operation of the amended vesting schedule shall not be subject thereafter to a cancellation of service. Notwithstanding anything in this Section to the contrary, the amendment of the vesting schedule pursuant to this subsection shall not affect the calculation of benefit amounts or the determination of benefit commencement dates hereunder. Section 10.10. Maximum Benefit. The Plan is subject to the limitations on benefits and contributions imposed by Code Section 415 which are incorporated herein by this reference. The limitation year shall be the Plan Year. In the event that there are multiple plans and the sum of the defined benefit plan fraction and the defined contribution plan fraction, as defined in Code Section 415, exceeds applicable limits for a Participant as of any December 31, then such Participant's benefit under this Plan shall be reduced until such limits are satisfied. Section 10.11. Limitations on Benefits for Highly Compensated Employees. (a) Notwithstanding any provision herein to the contrary, in the event the Plan is terminated, the benefit of any Participant or former Participant who is a highly compensated employee or highly compensated former employee, within the meaning of Code Section 414(q), shall be limited to a benefit that is nondiscriminatory under Code Section 401(a)(4). (b) Notwithstanding any provision herein to the contrary, the annual payments from the Plan to a Participant or former Participant described in Subsection (c) below shall not exceed an amount equal to the payments which would have been made on behalf of such Participant under a single life annuity which is the Actuarial Equivalent of the sum of such Participant's Accrued Benefit and other benefits under the Plan. However, such restrictions shall not apply if: (i) After payment to such Participant of all benefits, the value of Plan assets equals or exceeds one hundred ten percent (110%) of the value of the Plan's current liabilities, as defined in Code Section 412(l)(7); or (ii) The value of the benefits for such Participant is less than one percent (1%) of the value of the plan's current liabilities, as defined in Code Section 412(l)(7), before distribution. For purposes of this subsection (b), the term "benefits" shall include any loans in excess of the amounts set forth in Code Section 72(p)(2)(A), any periodic income, any withdrawal values payable to a living Participant, and any death benefits not provided for by insurance on the Participant's life. (c) The Participants and former Participants who are affected by the restriction in subsection (b) above in any Plan Year shall be limited to the twenty-five (25) highly compensated employees or highly compensated former employees of the Companies (as defined in Code Section 414(q)) whose compensation was highest in the earlier of (i) the immediately preceding Plan Year, or (ii) the last full Plan Year of such Participant's employment by the Companies. Section 10.12. Retroactive Effective Date. (a) The following provisions shall apply retroactively from and after the Plan Year beginning in 1987: (i) leased employees in Section 2.01, (ii) benefit limitations in Section 10.10, (iii) top-heavy rules in Section 10.09, and (iv) deletion of mandatory retirement requirement in Sections 2.01 and 4.01. (b) The following provision shall apply retroactively from and after the Plan Year beginning in 1988 for Participants earning an Hour of Service in such period (i) deletion of age sixty (60) minimum age participation rule in Sections 3.01 and 3.06. (c) The limitations on benefits for highly compensated employees described in Section 10.11 shall apply retroactively from and after January 1, 1989. (d) The provision describing the direct transfer of eligible rollover distributions in Section 6.13 shall apply retroactively from and after January 1, 1993. (e) The maximum annual compensation considered under the Plan as described in Section 2.01(j) shall apply retroactively from and after January 1, 1994. EX-13 9 [Page 8 of the Annual Report] Report of Management The management of Gehl Company is responsible for the preparation and integrity of all financial statements and other information contained in this annual report. The financial statements have been prepared by the Company in conformity with generally accepted accounting principles appropriate in the circumstances. Such statements necessarily include amounts based on the best estimates and judgments of management after giving due consideration to materiality. The Company maintains an internal control system designed to provide reasonable assurance that transactions are properly recorded and executed in accordance with management's authorization and that assets are safeguarded from loss or unauthorized use. The internal control system is augmented by careful selection and training of qualified employees, proper division of responsibilities, and the development and dissemination of written policies and procedures. The Board of Directors elects, from among its members, an Audit Committee, consisting entirely of outside directors, which is responsible for reviewing and evaluating the overall performance of the Company's financial reporting and accounting practices and for recommending appointment of the independent accountants. The Audit Committee meets periodically with management and the independent accountants to discuss any and all matters within the Committee's responsibilities. The independent accountants have free access to the Committee, without the presence of management if so requested. The Company's financial statements have been audited by Price Waterhouse, independent accountants, whose report also appears on this page. Included in the audit process was a review of the Company's system of internal controls. Price Waterhouse annually provides to management and the Audit Committee a supplemental report which includes comments on the adequacy of the system and recommendations for any improvements. William D. Gehl President and Chief Executive Officer Kenneth F. Kaplan Vice President and Chief Financial Officer Report of Independent Accountants Price Waterhouse LLP To the Board of Directors and Shareholders of Gehl Company In our opinion, the statements appearing on pages 14 through 25 of this report present fairly, in all material respects, the financial position of Gehl Company and its subsidiaries at December 31, 1994 and 1993, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As discussed in the Notes to Consolidated Financial Statements, the Company changed its method of accounting for income taxes and postretirement benefits other than pensions effective January 1, 1993. Milwaukee, Wisconsin February 10, 1995 [Pages 9 through 13 of the Annual Report] Management's Discussion and Analysis Overview Gehl Company's net income in 1994 was $5.0 million, or $.82 per share, up from $241,000, or $.04 per share, in 1993. Net sales of $146.6 million in 1994 were 7% higher than 1993's $137.2 million. Gehl Agriculture 1994 net sales increased 1% over 1993 while Gehl Construction 1994 net sales were up 20% from 1993. The Company's operating margins improved significantly in 1994 from 1993, as shown in the following table. Operating Margins: (as a percent of net 1994 1993 sales) Gross Profit 29.5% 28.3% S, G & A Expenses 20.7% 23.0% Income from Operations 8.8% 5.3% Income before Income Taxes 3.4% .3% Net Income 3.4% .2% The Company reduced its net accounts receivable by $12.6 million, or 15%, in 1994 to $72.4 million. This reduction followed a $16.2 million decrease in net accounts receivable in 1993. Cash flow from operating activities, led by the accounts receivable reductions, was $19.5 million in 1994, which followed a $26.1 million positive cash flow from operating activities in 1993. Cash flow generated in 1994 was used to reduce debt, as it was in 1993. The Company reduced its debt by $17.9 million to $54.9 million at year-end 1994. The Company has reduced its debt a combined $42.8 million during the last two years. The Company's ratio of debt to total capital was 54.2% at December 31, 1994, as compared with 64.0% and 70.7% at December 31, 1993 and 1992, respectively. Results of Operations 1994 vs. 1993 Net Sales: 1994 1993 1992 1991 1990 ($ millions) Gehl Agriculture $ 94.8 $ 93.9 $ 91.2 $ 90.3 $132.6 Gehl Construction 51.8 43.3 38.5 37.0 42.3 ------- ------- ------- ------- ------ Total $146.6 $137.2 $129.7 $127.3 $174.9 (% of total) Gehl Agriculture 64.7% 68.5% 70.3% 70.9% 75.8% Gehl Construction 35.3% 31.5% 29.7% 29.1% 24.2% Net sales for 1994 of $146.6 million increased 7% from $137.2 million in 1993. Gehl Agriculture sales in 1994 were $94.8 million, slightly greater than 1993's $93.9 million. The Company continued during 1994 to reduce dealer field inventories by shipping to its agricultural dealers (wholesale sales) at levels below sales by such dealers to their customers (retail sales). In each of the last two years Gehl Agriculture retail sales by dealers exceeded wholesale sales to dealers by approximately $10 million. Overall demand for the Company's agricultural products in 1994 was about the same as in 1993. Gehl Construction 1994 net sales were $51.8 million, a 20% increase from 1993's $43.3 million. The sales increase was attributable to strong demand in the residential and non-residential construction markets. The Company's rough-terrain telescoping-boom forklifts and skid steer loaders were the primary beneficiaries of the strong markets. Gross Profit: Gross profit in 1994 increased 11% to $43.3 million as compared to $38.9 million in 1993. The increase was due primarily to higher sales volume, changes in the product mix of shipments, and a reduction in the Company's overall cost structure relating to the move, in January 1994, of asphalt paver manufacturing to Gehl's Yankton, South Dakota plant from the Lithonia, Georgia leased plant which was closed in January 1994. Gross profit as a percent of net sales rose to 29.5% in 1994 from 28.3% in 1993. Gross profit as a percent of net sales of Gehl Agriculture decreased to 30.0% from 30.3% in 1993. The slight decrease was due primarily to the establishment of an inventory reserve for discontinued agriculture products which offset a favorable change in the mix of products shipped in 1994 versus 1993. (See "Selling, General and Administrative Expenses" following.) Gross profit as a percent of net sales for Gehl Construction increased to 28.6% in 1994 from 24.1% in 1993. The primary reasons for this increase were: 1) lower product cost due to productivity improvements and increased overhead absorption at higher production levels; 2) savings resulting from the transfer of asphalt paver production to the Yankton, South Dakota plant; 3) the discontinuance of several low or no margin construction products; 4) a reduction in sales discounts; and 5) export sales, typically made at a lower gross margin than domestic sales, constituting a smaller portion of sales in 1994 than in 1993. Selling, General, and Administrative Expenses: Selling, general and administrative expenses decreased $1.2 million, or 4%, in 1994 as compared to 1993. As a percent of sales, selling, general and administrative expenses decreased to 20.7% in 1994 from 23.0% in 1993. In the last three years the combined expense reductions total nearly $15 million and the percent of sales has been reduced to 20.7% in 1994 from 35% in 1991. The decrease in 1994 from 1993 resulted primarily from reduced charges for allowances for doubtful accounts, lower sales promotional costs, and lower warranty costs, partially offset by the establishment of a reserve for discontinued agriculture products. In 1993, the Company had accrued $1.0 million for allowances for doubtful accounts relating to a European distributor. The Company accrued an additional $650,000 for this matter during the first half of 1994. By the end of 1994, the distributor was current in all obligations and the distributor's liquidity problems had been resolved. Accordingly, the Company reversed to income the $1.65 million reserve in the fourth quarter of 1994. In 1994, the Company charged $1.8 million to selling, general and administrative expenses, and another $800,000 to cost of goods sold, to establish a $2.6 million reserve for discontinued agriculture products. Of this reserve, $2.2 million was recorded in the fourth quarter of 1994. The Company, in order to focus its engineering, manufacturing, and sales efforts on its more profitable core products, has identified several products or product models to prune from its product offering. In each instance the product to be discontinued has a low margin, low market share, and is near the end of its product life. The reserve established provides primarily for costs associated with retailing such products in dealer inventories at year-end 1994 and for factory inventory valuation adjustments. In 1994, the Company's sales of the discontinued products were approximately $7.5 million. Income (Loss) from Operations: ($ millions) 1994 1993 1992 1991 1990 Gehl Agriculture $4.4 $5.5 $(4.4) $(8.6) $13.9 Gehl Construction 8.6 1.8 (2.5) (4.8) 3.1 ----- ---- ------ ------ ----- Total $13.0 $7.3 $(6.9) $(13.4) $17.0 Income from operations in 1994 of $13.0 million increased 77% from $7.3 million in 1993. The improvement in 1994 was due to increased sales volume, improved gross profit as a percent of sales and lower selling, general and administrative expenses. Gehl Construction income from operations increased 367% from $1.8 million in 1993 to $8.6 million in 1994. This increase in income from operations resulted primarily from increased sales volume and gross margin improvement. While Gehl Agriculture income from operations decreased from $5.5 million in 1993 to $4.4 million in 1994, without the establishment of a $2.6 million reserve for discontinued products (See "Selling, General and Administrative Expenses" preceding), income from operations would have increased to $7.0 million in 1994. Interest Expense: Interest expense decreased $1.7 million, or 20%, in 1994. The decrease resulted from a reduction in average debt outstanding in 1994 to $68.4 million, a 22% decrease from $87.2 million in 1993. The average rate of interest paid by the Company in 1994 rose to 9.6% from 9.5% in 1993 due to increases in the prime rate which serves as the base for Gehl's debt under its line of credit facility. This increase was partially offset by the impact of retiring the Company's $10 million, 12.6% subordinated debt in November 1994, and by a decrease in the mark-up over the prime rate on the Company's loans under its line of credit facility (effective October 1994). Other Income (Expense), Net: Other expense rose to $2.9 million in 1994 from $161,000 in 1993. The increase in expense was due primarily to: 1) a $1.3 million increase in the cost of selling finance contracts receivable to third parties in 1994 due to rising interest rates; 2) one-time gains on the sale of a paid-up patent license and a favorable lawsuit settlement, together totalling $755,000, which positively impacted 1993 results, and 3) a $400,000 prepayment fee on the early retirement in November 1994 of the Company's $10 million, 12.6% subordinated debt. Provision (Benefit) for Income Taxes: Under generally accepted accounting principles, the Company was not required to record a federal income tax provision related to either its 1994 or 1993 pre-tax income due to the existence of net operating loss carryforwards. Net Income (Loss): Net income in 1994 of $5.0 million compares to $241,000 in 1993. The 1994 earnings per common share of $.82 improved from $.04 per share for 1993. No dividends were declared in either 1994 or 1993 on the Company's common stock. 1993 vs. 1992 Net Sales: Sales for 1993 of $137.2 million were 6% higher than the $129.7 million of sales in 1992. Gehl Agriculture sales in 1993 were $93.9 million, 3% higher than the sales of $91.2 million in 1992. Demand in the Company's agricultural market improved modestly during 1993, despite difficult weather conditions experienced in some regions of the United States. The Company continued to reduce dealer field inventories by shipping to its dealers at levels below sales by such dealers to their customers. Gehl Construction sales in 1993 were $43.3 million, 12% higher than sales of $38.5 million in 1992. The increase from 1992 levels was primarily due to increased shipments of skid loaders, both domestically and to the Company's European distributor, and of rough-terrain telescoping-boom forklifts. After two years of recession, the Company's domestic construction market started recovering, with conditions improving as 1993 progressed. Gross Profit: During 1993 gross profit increased 18% to $38.9 million as compared to 1992, primarily due to increased sales volume and a reduction in the Company's overall cost structure. Gross profit as a percent of net sales increased to 28.3% for 1993 from 25.4% in 1992. Gross profit as a percent of net sales of Gehl Agriculture increased to 30.3% in 1993 from 26.1% in 1992. The improvement reflects the impact of numerous actions taken by the Company to reduce its overall cost structure, as well as certain one-time costs incurred in 1992 not being repeated in 1993. One-time costs incurred in 1992 included, among others, 1) manufacturing start-up costs of a new skid loader model in Madison, South Dakota, 2) continued manufacturing start-up costs related to the Lebanon, Pennsylvania manufacturing facility opened in November 1991, and 3) manufacturing start-up costs related to new products manufactured at the West Bend, Wisconsin facility. Gross profit as a percent of net sales for Gehl Construction increased slightly to 24.1% in 1993 from 23.9% in 1992. Selling, General and Administrative Expenses: Selling, general and administrative expenses decreased $8.3 million, or 21%, during 1993 as compared with 1992. As a percent of sales, selling, general and administrative expenses decreased to 23% in 1993 from 31% in 1992. These decreases were due primarily to a reduction in sales promotion expenses (such as rebate programs to purchasers of Gehl equipment) from 1992 levels. Weaker demand in the Company's agricultural markets in 1992 required increased promotion costs to meet competitive sales incentive programs, and to accelerate the sale of older units in dealers' inventories in order to enhance cash flow. During 1993, a moderately improved agricultural market combined with a decrease in the number of older units held by dealers in inventory enabled the Company to reduce promotion costs significantly. The decrease in selling, general and administrative expenses in 1993 was also due to 1) the non-recurrence in 1993 of severance costs associated with the departure during 1992 of certain executive officers, 2) reduced salary and benefit costs associated with a decline from the December 31, 1992 employment levels and 3) tighter control of spending in areas such as advertising, professional fees, travel and rental costs. These decreases were offset, in part, by increased product liability and warranty provisions and by increased allowances for doubtful accounts relating to a European distributor. Income (Loss) from Operations: Income from operations of $7.3 million in 1993 compared to a loss of $6.9 million from operations in 1992. The improvement was due primarily to lower selling, general and administrative expenses in 1993, improved gross profit as a percent of sales and increased sales volume. Gehl Agriculture's income from operations of $5.5 million in 1993 compared to a loss of $4.4 million in 1992. Gehl Construction's income from operations of $1.8 million in 1993 compared to a loss of $2.5 million in 1992. Interest Expense: Interest expense decreased by $1.7 million in 1993. The decrease was a result of a reduction in average debt outstanding in 1993 to $87.2 million from $102.0 million in 1992 combined with a reduction in the average rate of interest paid by the Company to 9.5% in 1993 from 9.8% in 1992. Other Income (Expense), Net: A decrease in other expense from $2.9 million in 1992 to $161,000 in 1993 was due primarily to a reduction in Canadian foreign exchange losses from $1.2 million in 1992 to $123,000 in 1993, a $505,000 gain associated with granting a paid-up patent license agreement on one of the Company's products, a $550,000 reduction in the costs of selling finance contracts, and a $250,000 gain related to a favorable patent litigation settlement. The reduction in Canadian foreign exchange losses was due to two factors. First, in 1992 the Canadian dollar weakened significantly against the U.S. dollar, while in 1993 the exchange rate was more stable. Second, in April 1993 the Company commenced direct borrowing in Canadian dollars to finance approximately 65% of Gehl's Canadian agricultural receivables, which has provided a hedge against exchange rate fluctuation. Provision (Benefit) for Income Taxes: Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes." The adoption of this statement had no significant effect on the Company's financial position or results of operations. Under generally accepted accounting principles, the Company was not required to record a federal income tax provision related to its 1993 operating income nor was it permitted to record a deferred tax benefit related to its 1992 operating loss. Net Income (Loss): The 1993 net income of $241,000 compares with a net loss of $17.9 million in 1992. The 1993 earnings per common share of $.04 compares to a loss per common share of $3.05 for 1992. No dividends were declared in either 1993 or 1992. Liquidity and Capital Resources Working Capital ($ thousands) - 1994 1993 December 31, Current assets $102,621 $114,355 Current liabilities (28,710) (30,328) ---------- ---------- Working capital $ 73,911 $ 84,027 Current ratio 3.6 to 1 3.8 to 1 Working Capital: The Company's working capital declined in 1994 by $10 million, which resulted in a decrease in the current ratio to 3.6:1. The reduction was due primarily to a $12.6 million decline in net accounts receivable. Cash on hand at December 31, 1994 was $2.6 million versus $1.5 million a year earlier. Cash Flow: In 1994 cash flow provided by operating activities was $19.5 million as compared to $26.1 million provided in 1993. While the 1994 cash flow was strong, cash provided by changes in working capital items, though still positive, was reduced from the levels generated in 1993. The major components of the 1994 cash flow were a reduction in accounts receivable, primarily field inventories at dealers, of $12.6 million and net income before depreciation and amortization of $8.8 million. The 1994 cash flow was used primarily to repay $17.9 million of debt. Floor Plan Financing: The Company provides standard interest-free floor plan financing to its dealers, in Gehl Agriculture generally for up to one year and in Gehl Construction for varying periods of time generally up to nine months. Under special order programs occasionally offered to Gehl Agriculture dealers, longer interest-free periods may be available. At the end of the interest- free period, if the equipment remains unsold to retail customers, the Company generally charges interest to the dealer at rates between 1.5% and 3.0% above the prime rate, or on occasion provides interest-free extensions of up to six months upon payment by the dealer of curtailments generally between 10% and 20% of the original invoice price. This type of floor plan equipment financing accounts for approximately 90% of Gehl's accounts receivable, with all such floor planned receivables required to be secured with a first priority security interest in the equipment sold. Accounts Receivable: The Company's net accounts receivable decreased $12.6 million, or 15%, from $85.0 million at December 31, 1993 to $72.4 million at December 31, 1994. This reduction was due to the Company shipping to Gehl dealers at a level below the sales by Gehl dealers to their customers. During the last two years Gehl has reduced its net accounts receivable by nearly $29 million, or 29%, from $101.2 million at December 31, 1992. Gehl Agriculture accounts receivable at December 31, 1994 decreased $10.2 million, or 14%, from a year earlier, while Gehl Construction accounts receivable declined $2.4 million, or 21%, over the same period. Finance Contracts Receivable: Finance contracts receivable decreased $1.2 million to $5.6 million at December 31, 1994. The combined portfolio of owned and sold-but-serviced finance contracts receivable was $57.7 million as compared to $60.2 million at year-end 1993. (See "Sales of Finance Contracts Receivable" following.) Capital Expenditures ($ thousands) 1994 1993 1992 1991 1990 Capital expenditures $2,505 $809 $1,473 $10,766 $5,127 Depreciation $2,692 $2,940 $3,093 $2,682 $2,052 Capital Expenditures: The Company expended $2.5 million for property, plant, and equipment in 1994. Included in the 1994 total was $900,000 spent in June 1994 to exercise the Company's option to purchase its previously leased Yankton, South Dakota manufacturing facility. The remaining expenditures in 1994 were for machinery and equipment for basic upkeep, to enhance capability, to improve productivity, or to improve product quality. At December 31, 1994, Gehl had no significant outstanding commitments for capital items. The Company plans to make approximately $3.5 million in capital expenditures in 1995. Facilities: The Company's present facilities are sufficient to provide adequate capacity for its operations in 1995. On January 31, 1994, the Company closed its leased facility in Lithonia, Georgia. The asphalt paver product line formerly manufactured in Lithonia was transferred to the Company's Yankton, South Dakota manufacturing facility. Contingencies: The Company has received informal notification that it may have some financial responsibility for environmental remediation at a landfill site in the City of West Bend, Wisconsin. The amount of the Company's potential obligation, if any, is not presently determinable. Capitalization Debt and Equity: ($ millions) - 1994 1993 1992 1991 1990 December 31 Total Debt $54.9 $72.8 $97.7 $103.0 $85.4 Shareholders' Equity $46.3 $40.9 $40.4 $58.2 $77.9 % Total Debt to Total Capitalization 54.2% 64.0% 70.7% 63.9% 52.3% At December 31, 1994, shareholders' equity had risen to $46.3 million from $40.9 million a year earlier. Cash flow from operations of $19.5 million enabled the Company to reduce its debt by $17.9 million in 1994, and with $5.0 million of net income, the capitalization ratio was reduced to 54.2% at December 31, 1994. Borrowing Arrangements (See also Note 5 of Notes to Consolidated Financial Statements): In the fourth quarter of 1994, the Company entered into an Amended and Restated Loan and Security Agreement (the "Facility"), effective retroactively to October 1, 1994, with its primary lender. The revised agreement extended the term of the Facility through December 31, 1997, lowered interest rates, and changed other terms and conditions. Total borrowing capacity of $75 million is available under the Facility, subject to a borrowing base related to the Company's accounts receivable, finance contracts receivable, and inventories. Under the terms of the Facility, the interest rate Gehl pays on U.S. dollar loans was lowered to .50% above, from 1.65% above, the U.S. prime rate. In Canada, where the Company may borrow up to $7.5 million, the interest rate was lowered to 1.5% above, from 2.25% above, the Canadian prime rate. Additionally, advance ratios and eligible assets under the borrowing base were increased. The Facility has a net worth covenant and a debt to equity covenant which were also revised in the agreement. The Company is operating within the requirements of these covenants. At December 31, 1994, the Company had unused borrowing capacity of $19.2 million under the Facility. Management believes that the Facility provides sufficient borrowing capacity for the Company to finance its operations for the foreseeable future. On November 4, 1994, the Company prepaid in its entirety $10 million of 12.6% subordinated debt. The prepayment required the Company to pay a $400,000 fee to the lender. Principal repayments on the subordinated debt were to have been made quarterly for 8 years, commencing December 31, 1994. The Company also has outstanding $8.4 million of 9% industrial development bonds ("IDB") with a 2010 final maturity; repayments commence in 2005. On February 1, 1994, the Company and the IDB holders amended the IDB agreement to adjust the two financial covenants, net worth and debt to equity ratio, for the remainder of the IDB agreement. The Company is operating within the requirements of the covenants. Sales of Finance Contracts Receivable: The sale of finance contracts is an important component of the Company's overall liquidity. Gehl has arrangements with several financial institutions and financial service companies to sell, with recourse, its finance contracts receivable. The Company continues to service all contracts whether or not sold. At December 31, 1994, Gehl serviced $57.7 million of such contracts, of which $51.6 million were owned by other parties. Losses on finance contacts due to customer nonperformance were $570,000 in 1994 as compared to $381,000 in 1993. As a percentage of outstanding serviced contracts, the loss ratios were 1.0% and .6% in 1994 and 1993, respectively. The Company incurred $1.1 million of costs in selling approximately $34 million of its finance contracts in 1994, as compared to $294,000 of costs in selling $41 million of such contracts in 1993. The costs arise primarily from the difference between the weighted average interest rate on the contracts being sold and the interest rate required by the purchaser of the contracts. Historically, the Company's costs of selling its finance contracts have risen in periods of rising and high interest rates and decreased in periods of decreasing and low interest rates. This trend was repeated again in 1994. Additionally, due to competitive pressures, the range of interest rates the Company charges its customers has historically been narrower than the fluctuations in interest rate requirements of the purchasers of Gehl's finance contracts. The Company also incurred $492,000 of additional costs on the sale of finance contracts made under several variable rate agreements between June 1993 and February 1994. These costs were due to increasing interest rates in the economy. Management believes it has sufficient capacity to meet the Company's 1995 requirements to sell its finance contracts. [Pages 14 through 25 of the Annual Report] GEHL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME In Thousands, Except Per Share Data - Year Ended December 31, 1994 1993 1992 Net sales $146,620 $137,218 $129,694 Cost of goods sold 103,346 98,335 96,723 ________ ________ ________ Gross profit 43,274 38,883 32,971 Selling, general and administrative expenses 30,313 31,544 39,837 ________ ________ ________ Income (loss) from operations 12,961 7,339 (6,866) Interest expense (6,711) (8,364) (10,103) Interest income 1,715 1,552 1,730 Other income (expense), net (2,930) (161) (2,911) ________ ________ ________ Income (loss) before income taxes 5,035 366 (18,150) Provision (benefit) for income taxes --- 125 (250) ________ ________ ________ Net income (loss) $ 5,035 $ 241 $(17,900) ======== ======== ======== Net Income (loss) per common share $ .82 $ .04 $(3.05) ======= ======= ======= The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS In Thousands, Except Share Data - December 31, 1994 1993 Assets Cash $ 2,570 $ 1,458 Accounts receivable - net 72,393 84,969 Finance contracts receivable - net 3,389 4,223 Inventories 21,452 21,633 Prepaid expenses and other assets 2,817 2,072 ________ ________ Total current assets 102,621 114,355 ________ ________ Property, plant and equipment - net 20,433 20,088 Finance contracts receivable - net, non-current 2,258 2,624 Other assets 5,715 7,213 ________ ________ Total assets $131,027 $144,280 ======== ======== Liabilities and Shareholders' Equity Current portion of long-term debt obligations $ 180 $ 549 Accounts payable 14,477 15,784 Accrued liabilities 14,053 13,995 ________ ________ Total current liabilities 28,710 30,328 ________ ________ Line of credit facility 45,879 53,979 Long-term debt obligations 8,821 18,280 Other long-term liabilities 1,334 798 ________ ________ Total long-term liabilities 56,034 73,057 ________ ________ Common stock, $.10 par value, 25,000,000 shares authorized, 6,169,523 and 6,132,443 shares outstanding at December 31, 1994 and 1993, respectively 617 613 Preferred stock, $.10 par value, 2,000,000 shares authorized, no shares issued -- -- Capital in excess of par 26,133 25,820 Retained earnings 19,533 14,462 ________ ________ Total shareholders' equity 46,283 40,895 ________ ________ Total liabilities and shareholders' equity $131,027 $144,280 ======== ======== Contingencies (Notes 2 and 11) The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY In Thousands, Except Per Share Capital In Data Common Excess of Retained Stock Par Earnings Total Balance at January 1, 1992 $586 $25,331 $32,300 $58,217 Net loss -- -- (17,900) (17,900) Exercise of stock options 2 34 -- 36 Amortization of unearned compensation related to restricted stock grants -- 52 -- 52 ____ _______ ________ ________ Balance at December 31, 1992 588 25,417 14,400 40,405 Net income -- -- 241 241 Exercise of stock options 3 120 -- 123 Issuance of stock 4 119 -- 123 Issuance of restricted stock grants and related amortization of unearned compensation - net 18 164 -- 182 Minimum liability adjustment -- -- (179) (179) _____ _______ _______ ______ Balance at December 31, 1993 613 25,820 14,462 40,895 Net income -- -- 5,035 5,035 Exercise of stock options 4 131 -- 135 Amortization of unearned compensation related to restricted stock grants -- 182 -- 182 Minimum liability adjustment -- -- 36 36 ____ _______ _______ _______ Balance at December 31, 1994 $617 $26,133 $19,533 $46,283 ==== ======= ======= ======= The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS In Thousands - Year Ended December 31, 1994 1993 1992 Cash Flows from Operating Activities Net income (loss) $ 5,035 $ 241 $(17,900) Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: Depreciation and amortization 3,767 4,191 4,361 (Gain) loss on sale of equipment 8 (5) (11) Cost of sales of finance contracts 1,142 294 845 Deferred income taxes (900) -- 14 Proceeds from sales of finance contracts 31,935 39,331 35,575 Increase (decrease) in cash due to changes in: Restricted cash -- 1,548 (1,548) Accounts receivable - net 12,576 16,212 11,380 Finance contracts receivable - net (33,241) (38,265) (33,780) Inventories 181 2,450 3,316 Refundable income taxes -- 2,422 1,724 Prepaid expenses and other assets 155 (462) 2,250 Other assets 113 (164) (65) Accounts payable (1,307) (935) (8,051) Accrued liabilities 58 (745) 1,728 ________ ________ _________ Net cash provided by (used for) operating activities 19,522 26,113 (162) ________ ________ _________ Cash Flows from Investing Activities (Increase) decrease in unexpended plant construction fund (7) (5) 674 Proceeds from sale of equipment 42 28 18 Property, plant and equipment additions (2,505) (809) (1,473) Increase (decrease) in other assets 1,100 (998) (823) Other 217 126 162 ________ ________ _________ Net cash (used for) investing activities (1,153) (1,658) (1,442) ________ _________ _________ Cash Flows from Financing Activities Decrease in other long-term obligations (9,828) (20,965) (63,164) (Repayment of) proceeds from revolving credit loans (8,100) (3,903) 57,882 Increase (decrease) in other long- term liabilities 536 113 (73) Proceeds from issuance of common stock 135 123 36 ________ ________ _________ Net cash (used for) financing activities (17,257) (24,632) (5,319) ________ ________ _________ Net increase (decrease) in cash 1,112 (177) (6,923) Cash, beginning of year 1,458 1,635 8,558 ________ ________ _________ Cash, end of year $ 2,570 $ 1,458 $ 1,635 ======== ======== ========= The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1994 Note 1 - Significant Accounting Policies Consolidation: Gehl Company is engaged in the manufacture and distribution of farm equipment and machinery primarily for the dairy, livestock and poultry agricultural sector, and in the manufacture and distribution of equipment and machinery for the construction market. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: Hedlund Manufacturing Company, Inc.; Hedlund Martin, Inc.; Gehl Power Products, Inc.; and Gehl International, Inc., a foreign sales corporation. All significant intercompany transactions and balances are eliminated. Revenue Recognition: Revenue is recorded upon the shipment of products to dealers and distributors; these dealers and distributors have no right of return, except as provided by law. Accounts Receivable: The Company provides financing for its dealers in both the agricultural and construction markets. The financing agreements provide for, in certain instances, interest-free periods which generally range from 4 to 12 months. Finance Contracts Receivable: The Company offers financing for its products to retail customers and to its dealers through its finance division. Finance contracts require periodic installments of principal and interest over periods of up to 60 months. Unearned interest is recognized over the life of the contracts using the sum of the digits method. Principal expected to be collected within twelve months of the balance sheet date is classified as a current asset; the remainder is classified as a non-current asset. Inventories: Inventories are valued at the lower of cost or market. Cost is determined by the last-in, first-out (LIFO) method for substantially all of the Company's inventories. Properties and Depreciation: Properties are stated at cost. When properties are sold or otherwise disposed of, cost and accumulated depreciation are removed from the respective accounts and any gain or loss is included in income. The Company provides for depreciation of assets generally using the straight-line method for financial reporting purposes and accelerated methods for income tax purposes. Expenditures which substantially increase value or extend asset lives are capitalized. Expenditures for maintenance and repairs are charged against income as incurred. Debt Issue Costs: Costs incurred in conjunction with incurrence of indebtedness are capitalized and subsequently amortized over the related periods of the obligations. Foreign Currency Transactions: Foreign currency transaction gains and losses are included in the determination of income. Foreign currency losses were $181,000, $124,000 and $1,165,000 in 1994, 1993 and 1992, respectively. Income Taxes: Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes," which requires that the Company follow the liability method in accounting for income taxes. The liability method provides that deferred tax assets and liabilities be recorded based on the difference between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. The principal items that result in such differences are the recognition of sales on the installment method for income tax purposes, the recording of certain accruals for financial reporting purposes which are not deductible until paid, and the use of accelerated depreciation methods for income tax purposes. Product Liability Costs: The Company directly assumes all liability for costs associated with claims up to specified limits in any policy year. Known incidents involving the Company's products are investigated and reserves are established for any estimated liability. Product Warranty Costs: In general, the Company provides warranty on equipment for a period of up to twelve months or for a specified period of use after sale or rental by the dealer. Reserves for estimated warranty costs are established at the time of sale. Research and Development Costs: Costs for research activities relating to product development and improvement are charged against income as incurred. Such costs amounted to approximately $1,172,000, $1,042,000, and $1,675,000 in 1994, 1993 and 1992, respectively. Other Income (Expense): Other income (expense) is comprised primarily of foreign currency transaction gains (losses), cost of sales of finance contracts, amortization of debt issue costs, and royalty and license income (expense). During 1993, the Company recognized a gain of $505,000 associated with granting a paid up patent license agreement on one of its products. Net Income (Loss) Per Common Share: Net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares and, if applicable, common stock equivalents which would arise from the exercise of stock options and warrants. The weighted average number of shares used in the computations was 6,174,476, 6,097,472 and 5,873,264 for 1994, 1993 and 1992, respectively. Note 2 - Accounts Receivable and Finance Contracts Receivable Accounts receivable and finance contracts receivable were comprised of the following (in thousands): December 31, 1994 1993 Accounts receivable $76,737 $89,035 Less allowances for: doubtful accounts (639) (1,843) returns and dealer discounts (3,705) (2,223) _______ _______ $72,393 $84,969 ======= ======= Finance contracts receivable $ 6,556 $ 8,053 Less: unearned interest (405) (556) allowance for doubtful accounts (504) (650) _______ _______ 5,647 6,847 Less: non-current portion (2,258) (2,624) _______ _______ Current portion $ 3,389 $ 4,223 ======= ======= In 1994, the Company established a reserve for discontinued products. The allowance for returns and dealer discounts was increased by $1.6 million to reflect the anticipated costs of retailing such products in dealer inventory at December 31, 1994. The finance contracts receivable at December 31, 1994 have a weighted average interest rate of 8.3% which approximates fair value. The Company has entered into various agreements with third parties to sell with recourse certain finance contracts receivable. The recourse provisions of certain of these agreements require that the Company provide additional collateral in the form of cash withheld at the time of sale or unsold finance contracts. At December 31, 1994, $299,000 of unsold finance contracts and $2.4 million of cash previously withheld by third party buyers were provided as additional collateral. The finance contracts require periodic installments of principal and interest over periods of up to 60 months; interest rates are based on market conditions. The Company has retained the servicing of these contracts which generally have maturities of 36 to 48 months. Amounts to cover potential losses on these sold receivables are included in the allowance for doubtful accounts. The following summarizes the Company's sales of retail finance contracts receivable during 1994 and 1993 (in thousands): 1994 1993 Value of contracts sold - net of $4.6 million and $5.5 million, respectively, of unearned interest $34,437 $41,211 Cash received on sales of contracts 31,935 39,331 Cash withheld as additional collateral 1,360 1,586 _______ _______ Cost of sales of finance contracts $ 1,142 $ 294 ======= ======= Net receivables outstanding at December 31 relating to finance contracts sold $51,593 $52,686 ======= ======= The Company retains as collateral a security interest in the equipment associated with accounts receivable and finance contracts receivable. The Company also maintains certain levels of dealer recourse deposits as additional security associated with finance contracts receivable. Note 3 - Inventories If all of the Company's inventories had been valued on a current cost basis, which approximates FIFO value, estimated inventories by major classification would have been as follows (in thousands): December 31, 1994 1993 Raw materials and supplies $ 3,711 $ 3,598 Work-in-process 10,252 10,091 Finished machines and parts 24,346 23,935 ________ ________ Total current cost value 38,309 37,624 Adjustment to LIFO basis (16,857) (15,991) ________ ________ $ 21,452 $ 21,633 ======== ======== In 1994, the Company established a reserve for discontinued products. An inventory valuation adjustment of $800,000 was recorded to reflect the net realizable value of such products in inventory at December 31, 1994. Note 4 - Property, Plant and Equipment - Net Property, plant and equipment consisted of the following (in thousands): December 31, 1994 1993 Land $ 1,411 $ 1,303 Buildings 16,800 15,128 Machinery and equipment 25,675 25,213 Autos and trucks 461 481 Office furniture and fixtures 7,216 7,118 _________ _________ 51,563 49,243 Less: accumulated depreciation (31,130) (29,155) _________ _________ Property, plant and equipment - net $ 20,433 $ 20,088 ========= ========= Note 5 - Debt Obligations A summary of the Company's debt obligations, and related current maturities, is as follows (in thousands): December 31, 1994 1993 Line of credit facility $45,879 $53,979 12.6% junior note - 10,000 9.0% industrial development bonds 8,400 8,400 Other debt obligations 601 429 _______ _______ 54,880 72,808 Less: current portion (180) (549) _______ _______ Long-term debt obligations $54,700 $72,259 ======= ======= Effective October 1, 1994, the Company's $75 million line of credit facility (the "Facility") was amended. Interest is paid monthly on outstanding borrowings under the amended Facility as follows: borrowings in Canadian denominated dollars up to a $7.5 million credit line are at 1.50% above the Canadian prime rate; the remainder of the borrowings are at .5% above the U.S. prime rate. Prior to the October 1, 1994 amendment, borrowings in Canadian denominated dollars were at 2.25% above the Canadian prime rate and the U.S. borrowings were at 1.65% above the U.S. prime rate for the first $50 million of such borrowings and 2.75% above the U.S. prime rate for such borrowings outstanding above $50 million. The term of the Facility was extended one additional year to December 31, 1997. Under the amended agreement, $15 million of the total $75 million Facility continues to be tied to a borrowing base related to the Company's finance contracts receivable and inventories. The remaining availability is tied to a borrowing base related to the Company's accounts receivable. Borrowings under the Facility are secured by finance contracts receivable, inventories and accounts receivable. At December 31, 1994, the Company had unused borrowing capacity of approximately $19.2 million under the Facility. The Facility also includes financial covenants requiring the maintenance of minimum tangible net worth levels and a maximum debt to equity ratio. On November 4, 1994, the Company prepaid, in its entirety, $10 million of the then outstanding 12.6% junior note and paid related accrued interest and a $400,000 prepayment fee. The 9% industrial development bonds are secured by the Company's Lebanon, Pennsylvania manufacturing facility and require principal repayment in six equal annual installments of $1.4 million commencing in 2005. The Company has established a debt reserve fund of approximately $480,000 until the first mandatory bond redemption period in 2003. The debt reserve fund was established with remaining funds in the trustee-controlled unexpended plant construction fund. Financial covenants related to the industrial development bonds require the maintenance of minimum tangible net worth levels and a maximum debt to equity ratio. Annual maturities of debt obligations are as follows (in thousands): 1995 $ 180 1996 166 1997 45,978 1998 108 1999 48 Later years 8,400 ------- $54,880 ======= Interest paid on total debt obligations was $6.9 million, $8.4 million and $9.2 million in 1994, 1993 and 1992, respectively. Note 6 - Accrued Liabilities Accrued liabilities were comprised of the following (in thousands): December 31, 1994 1993 Accrued salaries and wages $ 2,644 $ 2,677 Dealer recourse deposits 2,192 2,233 Accrued warranty costs 1,872 2,226 Accrued product liability costs 2,134 1,953 Other 5,211 4,906 ------- ------- $14,053 $13,995 ======= ======= Note 7 - Income Taxes Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 109 "Accounting for Income Taxes." SFAS No. 109 requires the use of the liability method of accounting for income taxes. The adoption of this statement did not have a material effect on the Company's financial position or results of operations. The income tax provision (benefit) recorded for the years ended December 31, 1994, 1993 and 1992 consisted of the following (in thousands): December 31, Federal State and Total Foreign 1994 Current $ 900 $ 78 $ 978 Deferred (900) (78) (978) ________ ________ ________ Total $ - $ - $ - ======== ======== ======== 1993 Current $ -- $ 125 $ 125 Deferred -- -- -- ________ ________ ________ Total $ -- $ 125 $ 125 ======== ======== ======== 1992 Current $ (300) $ 36 $ (264) Deferred 14 -- 14 ________ ________ ________ Total $ (286) $ 36 $ (250) ======== ======== ======== Deferred income taxes are recorded based on the difference between the tax bases of assets and liabilities and the carrying amounts for financial reporting purposes offset by net operating loss and credit carryforwards. In 1994 and 1993, the Company was not required, under generally accepted accounting principles, to record a federal income tax provision due to the existence of net operating loss carryforwards. In 1992, the Company was not permitted, under generally accepted accounting principles, to record a deferred benefit related to its 1992 net operating loss. A reconciliation between the reported income tax provision (benefit) and the federal statutory rate follows (as a percent of pre-tax income (loss)): Year Ended December 31, 1994 1993 1992 Federal statutory rate 34.0% 34.0% (34.0%) Net operating loss (utilized) not utilized (34.0) (34.0) 32.4 State income taxes, net of Federal income tax effect - 26.5 .2 Other, net - 7.5 -- _______ _______ _______ - 34.0% ( 1.4%) ======= ======= ======= The Company's temporary differences and carryforwards which give rise to deferred tax assets and liabilities consisted of the following (in thousands): December 31, 1994 1993 Deferred Tax Assets: Accrued expenses and reserves $ 2,983 $ 2,852 Asset valuation reserves 2,739 2,752 Operating loss carryforwards 3,506 6,012 Tax credit carryforwards 1,783 869 Other 280 338 ________ ________ 11,291 12,823 Valuation allowance (4,472) (5,881) ________ ________ Deferred Tax Asset $ 6,819 $ 6,942 ======== ======== Deferred Tax Liabilities: Installment sales $ 3,547 $ 4,173 Property, plant and equipment 1,309 1,359 Prepaid pension asset 869 875 Other 194 535 ________ _________ Deferred Tax Liability $ 5,919 $ 6,942 ======== ========= During 1994, the Company, in accordance with the provisions of SFAS No. 109, recorded a deferred tax benefit of $900,000 based upon the estimated recoverability of its net operating loss carryforwards as of December 31, 1994. During 1993, due to its operating loss history, the Company was unable, under generally accepted accounting principles, to record deferred tax assets in excess of deferred tax liabilities. The Company recorded valuation allowances of $4.5 million and $5.9 million against deferred tax assets at December 31, 1994 and 1993, respectively. At December 31, 1994, for income tax purposes, the Company had federal net operating loss carryforwards of approximately $10.3 million and tax credit carryforwards of approximately $1.8 million. The net operating loss carryforwards expire in the years 2006 through 2008 and the majority of the credit carryforwards consist of minimum tax credits which can be carried forward indefinitely. Cash paid (received) related to income taxes during 1994, 1993 and 1992 was $61,000, ($2,520,000) and ($4,110,000) respectively. Note 8 - Employee Retirement Plans The Company maintains non-contributory defined benefit pension plans covering the majority of its employees. The benefits provided by certain of the plans are based on a defined monthly multiplier applied to the employee's length of service, with the remaining plans providing benefits based primarily on years of service and average compensation. Net pension expense (benefit) includes the following components (in thousands): Year Ended December 31, 1994 1993 1992 Service cost $ 643 $ 486 $ 507 Interest cost on projected benefit obligation 1,726 1,660 1,599 Actual return on plan assets 4 (2,611) (2,159) Net amortization and deferral (2,260) 301 (72) _______ _______ _______ Net periodic pension expense (benefit) $ 113 $ (164) $ (125) ======= ======= ======= The following schedule details (in thousands) the funded status of the plans. For all plans, the fair value of assets exceeds the accumulated benefit obligation. December 31, 1994 1993 1992 Actuarial present value of benefit obligation: Vested $19,299 $20,567 $19,323 Nonvested 1,607 1,732 171 _______ _______ _______ Accumulated benefit obligation 20,906 22,299 19,494 Effect of projected salary increases 1,316 1,769 1,236 _______ _______ _______ Total projected benefit obligation 22,222 24,068 20,730 Plan assets at fair value 21,754 23,152 21,402 _______ _______ _______ Plan assets in excess of (less than) projected benefit obligation (468) (916) 672 Unrecognized transitional (asset) (1,579) (2,015) (2,450) Prior service cost not yet recognized in net periodic pension cost 1,190 1,265 647 Unrecognized net loss 3,154 4,046 2,748 _______ _______ _______ Prepaid pension asset $ 2,297 $ 2,380 $ 1,617 ======= ======= ======= The projected benefit obligation was determined using assumed discount rates of 8.5% in 1994, 7.5% in 1993 and 8.25% in 1992, and assumed long-term rates of compensation increase of 4% in 1994, 1993, and 1992. The annual long-term rate of return on plan assets was assumed to be 9.0% in 1994 and 1993 and 9.5% in 1992. Plan assets consist principally of preferred and common stocks and fixed income investments. Funding for the plans equals or exceeds the minimum requirements of the Employee Retirement Income Security Act of 1974. In addition, the Company maintains an unfunded supplemental retirement benefit plan for certain management employees. The accumulated benefit obligation for this plan was $841,000 and $606,000 at December 31, 1994 and 1993, respectively, using a discount rate of 8.5% and 7.5%, respectively. The Company maintains a savings and profit sharing plan under Section 401(k) of the Internal Revenue Code. Effective January 1, 1994, bargaining unit employees were added to the plan which now covers substantially all employees who have completed sixty (60) days of service with the Company. Through June 30, 1992, the Company matched 25% of non-bargaining unit employee contributions to the plan not to exceed 6% of the employee's annual compensation, at which time the Company indefinitely suspended the matching of contributions. Vesting of Company contributions occurs at the rate of 20% per year. The contribution for the year ended December 31, 1992 approximated $70,000. The Company maintains a defined contribution plan that covers substantially all employees not included under a defined benefit plan. The Company contributes various percentages of eligible employee compensation (as defined therein); the plan does not allow employee contributions. The Company has contributed approximately $194,000, $165,000, and $151,000 in connection with this plan for 1994, 1993 and 1992, respectively. The Company only provides postretirement benefits to retirees in two areas: a $2,500 life insurance policy for retired office employees and subsidized health insurance benefits for early retirees prior to their attaining age 65. The number of retirees associated with postretirement benefit costs is approximately 140. Prior to 1993, the cost of these benefits was recognized on a cash basis. Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions," which requires employers to account for the cost of these benefits on an accrual basis. The Company elected to recognize this change in accounting principle using the delayed recognition method. Under this method, the Company's accumulated postretirement benefit obligation of $451,000 as of January 1, 1993 will be amortized to expense over a twenty-year period. Net postretirement benefit expense included the following components (in thousands): Year Ended December 31, 1994 1993 Service cost $ 49 $ 19 Interest cost on projected benefit obligation 106 37 Net amortization and deferral 70 23 ---- ---- Net postretirement benefit expense $225 $ 79 ==== ==== The difference between net postretirement benefit expense on a cash versus accrual basis was not material for the years ended December 31, 1994 and 1993. The Company's postretirement benefit plans are not funded. The status of the Company's plans was as follows (in thousands): December 31, 1994 1993 Actuarial present value of accumulated postretirement benefit obligation $1,355 $507 Unrecognized transitional obligation (405) (428) Unrecognized net loss (646) - ------- ----- Accrued postretirement benefit liability $ 304 $ 79 ======= ===== The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligation at December 31, 1994 was 12% decreasing to 6% over seven years. The discount rate used in determining the accumulated postretirement benefit obligation was 8.5% at December 31, 1994 and 7.5% at December 31, 1993. A one point percentage increase in the health care cost trend rate would increase the accumulated postretirement benefit obligation by approximately $242,000 and would increase the net postretirement benefit expense by approximately $38,000. Note 9 - Shareholders' Equity Pursuant to the terms of employment agreements entered into with the Company's chief executive officer and chief operating officer, effective November 1992, an aggregate of 41,103 shares of the Company's common stock were issued to the two executives in February 1993 at no cost to the executives. Under the same employment agreements, an aggregate of 182,142 restricted shares of the Company's common stock were issued at no cost, in February 1993, to the two executives. Such restricted stock is subject to agreements with the two executives requiring forfeiture of their respective shares in the event of certain types of termination of employment prior to January 3, 1996. During April 1987, the Board of Directors of the Company adopted the 1987 Stock Option Plan as approved by the shareholders (the "1987 Plan"), which authorized the granting of options for up to 375,000 shares of the Company's common stock. In October 1989, the Company increased the number of shares issuable under the 1987 Plan to 530,000. The 1987 Plan provides that options be granted at an exercise price not less than fair market value on the date the options are granted and that the option period shall not be more than seven years after the grant date. The options vest ratably over a period not exceeding three years after the grant date. Following is a summary of activity in the stock option plan for 1993 and 1994: Shares Weighted Subject Average to Option Option Price Outstanding, January 1, 1993 362,674 $ 6.07 Granted 122,000 5.30 Exercised (34,088) 3.60 Cancelled (218,334) 5.95 _________ _______ Outstanding, December 31, 1993 232,252 $ 6.14 ========= ======= Outstanding, January 1, 1994 232,252 $ 6.14 Granted 58,500 6.25 Exercised (37,080) 3.63 Cancelled (12,753) 5.58 _________ _______ Outstanding, December 31, 1994 240,919 $6.58 ========= ======== Exercisable, December 31, 1994 112,738 $7.43 ========= ======== At December 31, 1994, a warrant to purchase 180,000 shares of the Company's common stock for $7 per share, subject to certain adjustments as provided in the agreement, was outstanding to the former junior note holder. The warrant can be exercised at any time through March 5, 1998. Note 10 - Leases The Company occupies certain warehouse facilities and uses certain equipment under operating lease arrangements. Rent expense under such arrangements amounted to $1,606,000, $2,093,000 and $2,383,000 in 1994, 1993 and 1992, respectively. The Company maintains non-cancellable operating leases for certain facilities and equipment. Future minimum lease payments under such leases at December 31, 1994, are as follows (in thousands): 1995 $1,061 1996 892 1997 179 1998 40 1999 20 ------ Total $2,192 ====== Note 11 - Contingencies The Company is involved in litigation of which the ultimate outcome and liability to the Company, if any, is not presently determinable. Management believes, based on opinion of counsel, that final disposition of such litigation will not have a material impact on the Company's results of operations or financial position. The Company has received informal notification from the City of West Bend, Wisconsin that it may have some financial responsibility with respect to the closure of a landfill site used by the City of West Bend from the mid-1960's through 1984. The amount of the Company's potential obligation, if any, is not presently determinable. The City of West Bend is currently taking remedial action with respect to the landfill site. During 1993, the Company recorded a gain of approximately $250,000 related to the favorable settlement of a patent litigation matter. The gain was recorded as other income (expense) in the 1993 consolidated statement of income. Note 12 - Segment Information The Company manufactures and distributes products into two industry segments. Gehl Agriculture is engaged in the manufacture and distribution of farm equipment and machinery for the dairy and livestock agricultural sector. As of December 31, 1994, 87% of the Company's accounts receivable were from customers in the agricultural sector. Gehl Construction is engaged in the manufacture and distribution of equipment and machinery for the construction market. As of December 31, 1994, 13% of the Company's accounts receivable were from customers in the construction market. Unallocated assets are cash, refundable income taxes and other nonallocable assets. Segments of business by industry are presented below (in thousands): Year Ended December 31, 1994 1993 1992 Net Sales Agriculture $ 94,824 $ 93,931 $ 91,223 Construction 51,796 43,287 38,471 ________ ________ ________ Consolidated $146,620 $137,218 $129,694 ======== ======== ======== Income (Loss) from Operations Agriculture $ 4,419 $ 5,509 $ (4,393) Construction 8,542 1,830 (2,473) ________ ________ ________ Consolidated $ 12,961 $ 7,339 $ (6,866) ======== ======== ======== Assets (Year-end) Agriculture $97,730 $109,989 $123,861 Construction 24,029 26,952 37,093 Unallocated 9,268 7,339 9,271 ________ ________ ________ Consolidated $131,027 $144,280 $170,225 ======== ======== ======== Depreciation/ Amortization Agriculture $2,273 $ 2,421 $ 2,521 Construction 1,076 1,377 1,575 Unallocated 418 393 265 ________ ________ ________ Consolidated $ 3,767 $ 4,191 $ 4,361 ======== ======== ======== Capital Expenditures Agriculture $ 1,083 $ 764 $ 1,255 Construction 1,422 45 218 ________ ________ ________ Consolidated $ 2,505 $ 809 $ 1,473 ======== ======== ======== Exports of U.S. produced products were approximately $25.9 million, $28.1 million and $26.6 million in 1994, 1993 and 1992, respectively. Note 13 - Quarterly Financial Data (Unaudited) In Thousands, Except Per First Second Third Fourth Share Data -- Quarter Quarter Quarter Quarter Total 1994 Net sales $34,242 $41,916 $37,592 $32,870 $146,620 Gross profit 9,693 12,854 11,257 9,470 43,274 Net income (loss) (262) 1,755 2,511 1,031 5,035 Net income (loss) per common share (.04) .28 .41 .17 .82 1993 Net sales $29,717 $37,569 $35,860 $34,072 $137,218 Gross profit 7,934 10,661 10,113 10,175 38,883 Net income (loss) (1,497) 950 597 191 241 Net income (loss) per common share (.25) .16 .10 .03 .04 [Page 26 of the Annual Report] GEHL COMPANY AND SUBSIDIARIES FIVE-YEAR FINANCIAL SUMMARY
Dollars in Thousands, Except Per Share Data 1994 1993 1992 1991 1990 Summary of Operations Net sales $146,620 $137,218 $129,694 $127,290 $174,920 Gross profit 43,274 38,883 32,971 31,700 55,361 Income (loss) from operations 12,961 7,339 (6,866) (13,374) 17,006 Interest expense 6,711 8,364 10,103 8,973 6,914 Income (loss) before income taxes 5,035 366 (18,150) (25,398) 11,209 Net income (loss) 5,035 241 (17,900) (19,284) 7,318 Financial Position at December 31 Current assets $102,621 $114,355 $138,193 $163,824 $159,983 Current liabilities 28,710 30,328 128,717 55,196 31,298 Working capital 73,911 84,027 9,476 108,628 128,685 Accounts receivable 72,393 84,969 101,181 112,561 115,567 Finance contracts receivable 5,647 6,847 9,793 12,433 19,085 Inventories 21,452 21,633 24,083 27,399 29,209 Property, plant and equipment, net 20,433 20,088 22,242 23,852 14,015 Total assets 131,027 144,280 170,225 199,701 196,019 Long-term debt 54,700 72,259 418 86,043 83,937 Total debt 54,880 72,808 97,676 102,958 85,389 Shareholders' equity 46,283 40,895 40,405 58,217 77,919 Common Share Summary Net income (loss) per share $.82 $.04 $(3.05) $(3.29) $1.21 Dividends per share -- -- -- .08 .16 Book value per share 7.50 6.67 6.88 9.93 13.30 Shares outstanding at year-end 6,169,523 6,132,443 5,875,110 5,865,110 5,860,360 Other Financial Statistics Capital expenditures $2,505 $809 $1,473 $10,766 $5,127 Depreciation 2,692 2,940 3,093 2,682 2,052 Current ratio 3.6 to 1 3.8 to 1 1.1 to 1 3.0 to 1 5.1 to 1 Percent total debt to total capitalization 54.2% 64.0% 70.7% 63.9% 52.3% Net income (loss) as a percent of net sales 3.4% .2% (13.8%) (15.1%) 4.2% After-tax return on average shareholders' equity 11.6% .6% (36.3%) (28.3%) 9.8% Employees at year-end 928 946 1,001 1,150 1,340 Common stock price range 8-1/2 - 7-3/8 - 6 - 9-3/4 - 16-3/4 - 5-3/8 3 2-1/4 3 6-1/2 Includes $2,325,000 ($.40 per share) extraordinary loss on extinguishment of debt, net of tax.
Investor Information Price Range Dividends 1994 1993 1994 1993 Stock Prices and Dividends First quarter $7-3/4 - 5-3/8 $3-7/8 - 3 $ -- $ -- Second quarter 6-3/4 - 5-1/2 5-3/8 - 3-1/4 -- -- Third quarter 7 - 5-3/8 6-7/8 - 4-1/4 -- -- Fourth quarter 8-1/2 - 5-1/2 7-3/8 - 5-1/2 -- -- ______________ ______________ ______________ _____________ Year $8-1/2 - 5-3/8 $7-3/8 - 3 $ -- $ -- ============== ============== ============== ============= [Pages 27 and 28 of the Annual Report] Directors and Officers Board of Directors John W. Findley Chairman, President, Chief Executive Officer and a Director, Findley Adhesives, Inc. (1,2) Peter A. Fischer Director of, and retired President and Chief Executive Officer, Medalist Industries, Inc. (1,2) John W. Gehl Vice President, International (3) William D. Gehl President and Chief Executive Officer (3) Arthur W. Nesbitt Chairman of the Board, Gehl Company, and President, Chief Executive Officer and a Director, Nasco International (2,*3) Roger E. Secrist Retired Chairman and Chief Executive Officer, ANGUS Chemical Company (*2,3) Richard G. Sim Chairman, President, Chief Executive Officer and a Director, Applied Power Inc. (*1) (*) Chairman (1) Audit Committee (2) Compensation and Benefits Committee (3) Nominating Committee Executive Officers William D. Gehl President and Chief Executive Officer Victor A. Mancinelli Executive Vice President and Chief Operating Officer John W. Gehl Vice President, International Kenneth F. Kaplan Vice President, Finance and Treasurer Michael J. Mulcahy Vice President, Secretary and General Counsel Richard J. Semler Vice President, Data Systems Kenneth P. Hahn Corporate Controller Information of Interest Annual Meeting All shareholders are invited to attend our annual meeting which will be held on Thursday, April 27, 1995, at 3:00 p.m. at the West Bend Inn, 2520 West Washington Street, West Bend, Wisconsin. Locations Gehl Company is headquartered in West Bend, Wisconsin, with manufacturing facilities in West Bend; Lebanon, Pennsylvania; and Madison and Yankton, South Dakota. Form 10-K and Other Company Information Shareholders and prospective investors are welcome to call or write Gehl Company with questions or requests for additional information including obtaining a copy of Gehl Company's Form 10-K for 1994, as filed with the Securities and Exchange Commission. Please direct inquiries to: Michael J. Mulcahy Corporate Secretary Gehl Company 143 Water Street West Bend, Wisconsin 53095 414-334-6663 Transfer Agent Shareholders with a change of address or related needs should contact: Firstar Trust Company 615 E. Michigan Street, 4th Floor P.O. Box 2077 Milwaukee, Wisconsin 53201 800-637-7549 Stock Market Information Gehl Company common stock is traded on the NASDAQ National Market System under the symbol GEHL. Independent Accountants Price Waterhouse LLP Milwaukee, Wisconsin EX-21 10 Exhibit 21 The following are wholly-owned subsidiaries of Gehl Company: - Gehl International, Inc. - Gehl Power Products, Inc. - Hedlund Martin, Inc. EX-23 11 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements listed below of Gehl Company of our report dated February 10, 1995 appearing on page 8 of the 1994 Annual Report to Shareholders which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report on the Financial Statement Schedule, which appears on page 16 of this Form 10-K. 1. Registration Statement on Form S-8 (Registration No. 33-38392) 2. Registration Statement on Form S-8 (Registration No. 33-39150) PRICE WATERHOUSE LLP Milwaukee, Wisconsin March 7, 1995 EX-27 12
5 This schedule contains summary financial information extracted from Gehl Company's consolidated balance sheet at December 31, 1994 and consolidated statements of income for the twelve month period ended December 31, 1994 and is qualified in its entirety by reference to such financial statements. 1000 12-MOS DEC-31-1994 JAN-1-1994 DEC-31-1994 2570 0 80630 4848 21452 102621 51563 31130 131027 28710 54700 617 0 0 45666 131027 146620 146620 103346 103346 0 0 6711 5035 0 5035 0 0 0 5035 .82 0 Includes all non-current portion of debt obligations Not reported
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