-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JHkfijznXmGgYNwamTv1UVPO1axX4dGHVHT1cpCNiXhE59fQ0Lx2co8ZTiJ4cpdw C06Rtfv0iHy2MzRwD/Mdjw== 0000856386-96-000007.txt : 19960307 0000856386-96-000007.hdr.sgml : 19960307 ACCESSION NUMBER: 0000856386-96-000007 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960306 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: 96531737 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, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition period from ___ to ___ Commission file number 0-18110 Gehl Company (Exact name of registrant as specified in its charter) Wisconsin 39-0300430 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 143 Water Street, West Bend, WI 53095 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code (414) 334-9461 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.10 par value (Title of class) 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: $42,143,230 at February 16, 1996. Number of shares outstanding of each of the registrant's classes of common stock, as of February 16, 1996: Class Shares Outstanding Common Stock, $.10 Par Value 6,140,872 DOCUMENTS INCORPORATED BY REFERENCE Gehl Company 1995 Annual Report to Shareholders (Parts I and II) Gehl Company Proxy Statement for the 1996 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, 1995 Page Part I Item 1 Business . . . . . . . . . . . . . 1 Item 2 Properties . . . . . . . . . . . . . 7 Item 3 Legal Proceedings . . . . . . . . . . 7 Item 4 Submission of Matters to a Vote of Security Holders 7 Executive Officers of the Registrant . 8 Part II Item 5 Market for Registrant's Common Equity and Related Shareholder Matters . . . . . . . . 10 Item 6 Selected Financial Data . . . . . . 10 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 8 Financial Statements and Supplementary Data 10 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 10 Part III Item 10 Directors and Executive Officers of the Registrant 11 Item 11 Executive Compensation . . . . . . . 11 Item 12 Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . 11 Item 13 Certain Relationships and Related Transactions 11 Part IV Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . . . . . . 12 Signatures. . . . . . . . . . . . . . . . . . . . . . 13 Part I Item 1. Business Overview Gehl Company (the "Company" or "Gehl") designs, manufactures, distributes, sells and finances equipment used in the light construction equipment and the agricultural equipment industries. The Company's construction segment ("Gehl Construction") manufactures and markets skid steer loaders, rough-terrain telescopic forklifts, and asphalt pavers used by contractors, sub-contractors, owner operators and municipalities. The Company's agricultural segment ("Gehl Agriculture") has manufactured agricultural implements for 137 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. Equipment for Gehl Construction is manufactured in two South Dakota facilities and equipment for Gehl Agriculture is manufactured in plants in Wisconsin, Pennsylvania and South Dakota. The Company was founded in 1859 and was incorporated in the State of Wisconsin in 1890. Business Segments The Company operates in two business segments, construction and agriculture. The following table shows certain information relating to the Company's operations by industry segment: (dollars in thousands) Year ended December 31, ---------------------------------------------- 1993 1994 1995 ------------- ------------ -------------- Amount % Amount % Amount % Net sales: Gehl Construction.... $ 43,287 31.5% $ 51,796 35.3% $ 64,381 42.0% Gehl Agriculture.... 93,931 68.5 94,824 64.7 89,071 58.0 -------- ----- -------- ---- -------- ----- Total....... $137,218 100% $146,620 100% $153,452 100% Income from operations: Gehl Construction.... $ 1,830 24.9% $ 8,542 65.9% $ 13,164 96.7% Gehl Agriculture.... 5,509 75.1 4,419 34.1 449 3.3 -------- ----- -------- ---- -------- ---- Total....... $ 7,339 100% $ 12,961 100% $ 13,613 100% The Company had no intersegment sales or transfers during the years set forth above. For segment information with respect to identifiable assets, depreciation/amortization and capital expenditures for the construction and agriculture markets, see Note 12 of "Notes to Consolidated Financial Statements", included on Pages 22 and 23 of the Gehl Company 1995 Annual Report to Shareholders, which pages are incorporated by reference herein. Gehl Construction Products: Gehl Construction markets equipment in the following three product areas: 1. Skid Steer Loaders - Gehl Construction offers 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 telescopic forklifts and one model of the Dyna-Handler [R], a rough-terrain telescopic forklift with digging capabilities. These forklifts are designed to handle heavy loads (up to 10,000 pounds) reaching horizontally and vertically for use by a variety of customers, including masons, roofers and building contractors. 3. Asphalt Pavers - Four models of Power Box [R] pavers are marketed by Gehl. These pavers allow variable paving widths from 4 1/2 to 13 feet and are used for both commercial and municipal jobs such as county and municipal road, sidewalk, golf cart path, jogging trail, parking lot, driveway, trailer court and tennis court preparation. Marketing and Distribution: The Company maintains a separate distribution system for Gehl Construction. The Company markets its equipment in North America through 113 independent dealers (with 210 outlets) and worldwide through 22 distributors. The top ten dealers and distributors in Gehl Construction accounted for approximately 17% of the Company's sales for the year ended December 31, 1995; 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 and rough-terrain forklift product lines by Gehl Construction each accounted for more than 10% of the Company's net sales in 1993, 1994 and 1995. The Company believes that maintenance and expansion of its dealer network is important to its success in the light construction equipment market. Gehl Construction provides various forms of support for its dealers, including sales and service training, and, in the United States and Canada, floor plan financing for its dealers and retail financing for both its dealers and their customers. The light construction equipment dealers in North America are also supported by district sales managers who provide a variety of services, including training, equipment demonstrations and sales, warranty and service assistance. Industry and Competition: Gehl Construction's product lines face competition in each of their markets. In general, each line competes with a small group of from seven to twelve different companies. No one company competes directly with Gehl Construction across all of its product lines. In the compact asphalt paving equipment market niche Gehl serves, the Company believes it is first or second in terms of market share. In the rough-terrain telescopic forklift market, the Company believes it and four other competitors share at least 75% of the market among them. In the skid steer loader product market, three other companies 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. 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 variable- chamber round balers. 2. Forage Harvesting - The Company believes that it currently manufactures and sells one of the industry's most complete lines of forage harvesting equipment, including forage harvesters, wagons and blowers. 3. Materials Handling - Gehl Agriculture's materials handling line consists of seven different models of skid steer loaders and the Dyna-Handler [R] forklift. The skid steer loader is a compact, fixed-wheel four-wheel drive unit typically equipped with a bucket or fork and is used for moving a variety of material. The Dyna-Handler [R] is a rough-terrain telescopic forklift with digging capabilities. The skid steer loader and Dyna- Handler [R] forklift 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 II [R] "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 four models of rear-discharge box spreaders. 5. Feedmaking - The Company believes that it offers the broadest line of portable feedmaking equipment in the industry. Gehl Agriculture offers the Gehl Mix-All [R] line of grinder mixers and a line of mixer feeders and a feeder wagon for both mixing feed rations and delivery to livestock feeders. Marketing and Distribution: In North America, Gehl's agricultural equipment is sold through approximately 666 geographically dispersed dealers (with 725 outlets). Ninety-five of these dealers are located in Canada. Gehl Agriculture also markets products through 25 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, 1995 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 1993, 1994 and 1995. The Company provides various forms of support for its dealer network, including sales and service training. The Company also provides floor plan and retail finance support for products sold by its dealers in the United States and Canada. The Company employs district sales managers to assist its agricultural dealers 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 through 1995. These more favorable conditions and lower debt to equity ratios than generally experienced in most of the 1980's led to increased buying by farmers of agriculture equipment in 1993 and 1994. In 1995 industry market demand varied, with demand for the Company's products generally lower than in 1994. Approximately 80% of the Company's agricultural dealers also carry the tractor and combine product lines of a major manufacturer. In addition to selling the tractors and combines of a major manufacturer, many of these dealers carry the major manufacturer's entire line of products, some of which directly compete with the products offered by Gehl Agriculture. Gehl Agriculture's dealers also market equipment manufactured by limited line manufacturers which compete with specific product lines offered by the Company. Gehl Agriculture's primary markets outside of North America are in Europe and the Pacific Rim 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. Backlog The backlog of unfilled equipment orders (which orders are subject to cancellation in certain circumstances) as of December 31, 1995 was $47.5 million versus $60.2 million at December 31, 1994. Virtually all orders in the backlog at December 31, 1995 should be shipped in 1996. The decreased backlog at December 31, 1995 was due to similar percentage decreases in both Gehl Construction and Gehl Agriculture orders. Order backlog is lower in Gehl Construction due to a reduced rate of sales growth and in Gehl Agriculture due to reduced market demand. As the Company has increased its sales of Gehl Construction products, the Company has been successful in reducing the seasonality of its sales. However, some sales seasonality still remains, primarily in April through June, the Company's second fiscal quarter. The Company's first and fourth fiscal quarters in January through March and October through December, respectively, have traditionally been its weakest. Because the haymaking and forage equipment products are primarily retailed by the Company's dealers in the Spring, Summer, and early Fall, the Company's floor plan financed accounts receivable generally reach a seasonal peak in early Summer and a post-seasonal low in late Fall. Floor Plan and Retail Financing Floor Plan Financing: The Company, as is typical in the industry, generally provides floor plan financing for its dealers. Products shipped to dealers under the Company's floor plan financing program are recorded by the Company as sales and the dealers' obligations to the Company are reflected as accounts receivable. The Company provides interest-free floor plan financing to its dealers, in Gehl Construction for varying periods of time generally up to nine months and in Gehl Agriculture generally for up to one year. 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 third parties at rates subsidized by the Company. The Company does not offer or sponsor retail financing outside of North America. The Company maintains arrangements with third parties pursuant to which the Company sells with recourse certain of the Company's 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 18, and "Management's Discussion and Analysis," Page 13 of the Gehl Company 1995 Annual Report to Shareholders, which pages are incorporated by reference herein. Employees As of December 31, 1995, the Company had 842 employees, of which 534 were hourly employees and 308 were salaried employees. At the production facilities in West Bend, Wisconsin, one of four Gehl production facilities, 228 hourly employees are covered by a collective bargaining agreement with the United Paperworkers International Union (formerly the Allied Industrial Workers) which expires December 31, 1999. None of the remaining employees of the Company are represented by unions. There have been no labor-related work stoppages at the Company's facilities during the past twenty-two years. Manufacturing The Company believes that its present manufacturing facilities are sufficient to provide adequate capacity for its operations in 1996. 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 1995. 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 $1.4 million, $1.2 million and $1.0 million on research and development for the years ended December 31, 1995, 1994 and 1993, 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 II[R] 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," Page 23, of the Gehl Company 1995 Annual Report to Shareholders, which page is incorporated by reference herein. Item 2. Properties The following table sets forth certain information as of December 31, 1995, 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 1995 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 Construction and Gehl Agriculture 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 and options, see Notes 5 and 10 of "Notes to Consolidated Financial Statements", included on Pages 18, 19, and 22, of the Gehl Company 1995 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, 1995. Executive Officers of the Registrant. Set forth below is certain information concerning the executive officers of the Company as of March 1, 1996: Name, Age and Position Business Experience William D. Gehl, 49, Mr. Gehl has served as President, Chief Executive President and Chief Executive Officer and Director Officer of the Company since November, 1992 and has served as a director of the Company since 1987. From January, 1990 until joining the Company, Mr. Gehl served as Executive Vice President, Chief Operating Officer, General Counsel and Secretary of The Ziegler Companies, Inc. (a financial services holding company). Mr. Gehl held various senior management positions with The Ziegler Companies from 1978 to 1990. Victor A. Mancinelli, 52, Mr. Mancinelli has served as Executive Vice President and Executive Vice President and Chief Chief Operating Officer Operating Officer of the Company since November, 1992. From 1990 to 1992, Mr. Mancinelli served as Group Vice President of W. H. Brady Co. From 1987 to 1990, Mr.Mancinelli served as President and Chief Operating Officer of Syracuse China Corp., a subsidiary of Canadian Pacific Ltd. Prior to 1987, Mr. Mancinelli served in a variety of management positions with Cummins Engine Company, Inc. John W. Gehl, 54, 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, 50, Mr. Kaplan joined the Company Vice President of Finance as Corporate Controller in 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, 49, 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, 56, Mr. Semler joined the Company in Vice President of May, 1960 and has served in his Data Systems current position with the Company since January, 1977. Kenneth P. Hahn, 38, Mr. Hahn has served in his current Corporate Controller 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 1996 Annual Meeting of Shareholders is currently scheduled for April 25, 1996. The Company has employment agreements with William D. Gehl, pursuant to which he is to serve as President and Chief Executive Officer of the Company through the expiration of the agreement on December 31, 1998, and Victor A. Mancinelli, pursuant to which he is to serve as Executive Vice President and Chief Operating Officer of the Company through the expiration of the agreement on September 30, 1998. PART II Item 5. Market for Registrant's Common Equity and Related Shareholder Matters. Information required by this item is included on Page 25 of the Gehl Company 1995 Annual Report to Shareholders, which page is hereby incorporated herein by reference. Item 6. Selected Financial Data. Information required by this item is included on Page 24 of the Gehl Company 1995 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 1995 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 23 of the Gehl Company 1995 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 1996 Annual Meeting of Shareholders ("Proxy Statement"). Information with respect to executive officers of the Company appears at the end of Part I, Pages 8 through 9 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. Pursuant to Instruction G, the information required by this item is hereby incorporated by reference from the caption "Executive Compensation - Summary Compensation Information" set forth in the Proxy Statement. 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 schedule. Reference is made to the separate index to the Company's consolidated financial statements and schedule contained on Page 14 hereof. 3. Exhibits. Reference is made to the separate exhibit index contained on Pages 17 through 19 hereof. (b) Reports on Form 8-K. No reports on Form 8-K were filed by the Company during the quarter ended December 31, 1995. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GEHL COMPANY Date: March 6, 1996 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 6, 1996 William D. Gehl Executive Officer and Director (Principal Executive Officer) /s/ Kenneth F. Kaplan Vice President of March 6, 1996 Kenneth F. Kaplan Finance and Treasurer (Principal Financial and Accounting Officer) /s/ Fred M. Butler Director March 6, 1996 Fred M. Butler /s/ John W. Findley Director March 6, 1996 John W. Findley /s/ John W. Gehl Director March 6, 1996 John W. Gehl /s/ Arthur W. Nesbitt Director March 6, 1996 Arthur W. Nesbitt /s/ Roger E. Secrist Director March 6, 1996 Roger E. Secrist /s/ John W. Splude Director March 6, 1996 John W. Splude 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 Balance Sheets at December 31, 1995 and 1994 14 Consolidated Statements of Income for the three years ended December 31, 1995 15 Consolidated Statements of Shareholders' Equity for the three years ended December 31, 1995 15 Consolidated Statements of Cash Flows for the three years ended December 31, 1995 16 Notes to Consolidated Financial Statements 17-23 * Incorporated by reference from the indicated pages of the Gehl Company 1995 Annual Report to Shareholders. Page in Form 10-K (2) Financial Statement Schedule: Report of Independent Accountants on Financial Statement Schedule 15 For the three years ended December 31, 1995 -- Schedule II - Valuation and Qualifying Accounts 16 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 12, 1996 appearing on page 8 of the 1995 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 12, 1996 GEHL COMPANY AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (in thousands) Additions Balance Charged at to Costs Charged Balance Beginning and to Other at End Period Description of Year Expenses Accounts Deductions of Year 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 $ - $7,096 $ - $ - $7,096 ====== ====== ===== ====== ====== Year Ended December 31, 1994 Return & 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 $7,096 $ - $ - $1,409 $5,687 ====== ====== ==== ====== ====== Year Ended December 31, 1995 Return & Allowances $ 115 $ - $ - $ - $ 115 Allowance for Doubtful Accounts-Trade Receivables 639 165 - 52 752 Volume Discounts 1,990 2,026 - 2,213 1,803 Product Discontinuance 1,600 - - 265 1,335 ------ ------ ---- ----- ------ Total $4,344 $2,191 $ - $2,530 $4,005 ====== ====== ==== ====== ====== Allowances for Doubtful Accounts-Retail Contracts $ 504 $ 428 $ - $ 365 $ 567 ====== ====== ==== ====== ====== Inventory Obsolescence Reserve $4,052 $ 502 $ - $1,777 $2,777 ====== ====== ==== ====== ====== Income Tax Valuation Allowance $5,687 $ - $ - $3,038 $2,649 ====== ====== ==== ====== ====== 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 23, 1996 (3.3) By-laws of Gehl Company, as amended (4.1) Amendment to Amended and Restated Loan and Security Agreement by and between Deutsche Financial Services Corporation, f/k/a ITT Commercial Finance Corp., Deutsche Financial Services Canada Corporation and Gehl Company and its subsidiaries, dated December 1, 1995 (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 July 1, 1995 (10.3)* Employment Agreement by and between Victor A. Mancinelli and Gehl Company, dated as of October 1, 1995 (10.4)* Supplemental Retirement Benefit Agreement by and between William D. Gehl and Gehl Company (10.5)* Supplemental Retirement Benefit Agreement by and between Victor A. Mancinelli and Gehl Company (10.6)* Gehl Company Shareholder Value Added Management Incentive Compensation Plan (10.7)* Gehl Savings Plan, as amended [Incorporated by reference to Exhibit 10.6 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994] (10.8)* Gehl Company Retirement Income Plan "B", as amended [Incorporated by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994] (10.9)* 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)] (10.10)* 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)] (10.11)* Gehl Company 1995 Stock Option Plan (10.12)* Form of Stock Option Agreement for executive officers used in conjunction with the Gehl Company 1995 Stock Option Plan. (10.13)* Form of Stock Option Agreement for non- employee directors used in conjunction with the Gehl Company 1995 Stock Option Plan. (10.14) 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)] (10.15) 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)] (10.16) 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 1995 Annual Report to Shareholders that are incorporated by reference herein (21) Subsidiaries of Gehl Company [Incorporated by reference to Exhibit 21 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994] (23) Consent of Price Waterhouse LLP (27) Financial Data Schedule (99) Proxy Statement for 1996 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 1996 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 Fifth 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 nine (9) divided into three (3) classes: Class I-three (3) directors; Class II - three (3) directors; Class III - three (3) directors." Approved at 02/23/96 Board Meeting EX-3.3 3 (Restated/Approved 2/22/91) (First Amendment 2/18/92) (Second Amendment 2/17/93) (Third Amendment 2/25/94) (Fourth Amendment 2/24/95) (Fifth Amendment 2/23/96) 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 nine (9), divided into three (3) classes: Class I - three (3) directors; Class II - three (3) directors; Class III -three (3) 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 AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT This Amendment to Amended and Restated Loan and Security Agreement is made to that certain Amended and Restated Loan and Security Agreement entered into on October 1, 1994 ("Agreement") by and between GEHL COMPANY, and its subsidiaries/divisions including but not limited to Hedlund Martin, Inc., and Gehl Power Products, Inc. (collectively and individually "Gehl Company"), DEUTSCHE FINANCIAL SERVICES CORPORATION, f/k/a ITT Commercial Finance Corp., ("DFS") and DEUTSCHE FINANCIAL SERVICES CANADA CORPORATION, successor in interest to ITT Commercial Finance, a Division of ITT Industries of Canada Ltd., (Deutsche Financial Services Corporation and Deutsche Financial Services Canada Corporation are individually and collectively referred to as "DFS"). FOR GOOD AND VALUE CONSIDERATION RECEIVED, Gehl Company and DFS agree to amend the Agreement as follows: 1. The following definitions are incorporated into Section 1.1 of the Agreement: "Bankers' Acceptance Loans" shall mean loans bearing interest at a rate determined by reference to the Bankers' Acceptance Rate (Reserve Adjusted). "Bankers' Acceptance Rate" shall mean, for Canadian Loans, for any calendar week commencing on Tuesday of such week, the average rate for one month Canadian dollar bankers' acceptances that appear on the Reuters Screen CDOR (Canadian Deposit Offered Rate) page as of 10:00 a.m. Toronto time on (a) the Monday immediately preceding, or (b) if any such Monday is not a business day, then on the business day immediately preceding such Monday. "Bankers' Acceptance Rate (Reserve Adjusted)" shall mean, for Canadian loans, the rate per annum obtained by dividing the Bankers' Acceptance Rate by a percentage equal to 100% minus any increase or plus any decrease in the Bankers' Acceptance Reserve percentage then in effect over the Bankers' Acceptance Reserve Percentage in effect as of December 1, 1995, which is zero (0). "Bankers' Acceptance Reserve Percentage", for all Bankers Acceptance Loans comprising part of the same borrowing, means the daily average reserve percentage applicable during each day of such Bankers' Acceptance Loans under regulations issued from time to time by Canadian Banking Authorities, for determining the maximum reserve requirement (including without limitation any emergency, supplemental or other marginal reserve requirement with respect to liabilities or assets consisting of or including Bankers' Acceptance liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Bankers' Acceptance Loans is determined)). "Eurocurrency Liabilities" has the meaning specified in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Eurocurrency Reserve Percentage", for all LIBOR Loans comprising part of the same borrowing, means the daily average reserve percentage applicable during each day of such LIBOR Loans under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor), for determining the maximum reserve requirement (including without limitation any emergency, supplemental or other marginal reserve requirement for a member bank of the Federal Reserve System in New York City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on LIBOR Loans is determined)). "LIBOR Loans" shall mean loans bearing interest at a rate determined by reference to the LIBOR Rate (Reserve Adjusted). "LIBOR Rate" shall mean for any calendar week commencing on Tuesday of such week, the London Interbank Offered Rate (LIBOR) for one-month deposits for U.S. Loans, in U.S. Dollars as published in The Wall Street Journal on (a) the Monday immediately preceding, or (b) if any such Monday is not a business day, then on the business day immediately preceding such Monday. "LIBOR Rate (Reserve Adjusted)" shall mean, for loans, the rate per annum obtained by dividing the applicable U.S.LIBOR Rate by a percentage equal to 100% minus any increase or plus any decrease in the Eurocurrency Reserve percentage then in effect over the Eurocurrency Reserve Percentage in effect as of December 1, 1995, which is zero (0) in the United States. 2. Section 2.1.1 of the Agreement is hereby deleted in its entirety and restated to read as follows: Interest. Gehl Company agrees to pay interest to DFS, payable as provided in Section 2.2, on the average daily outstanding balance under the Credit Facility, at a rate as follows: (A) U.S. Loans. The unpaid principal amount of the U.S. Loans shall bear interest for a particular week at a rate per annum equal to the U.S. LIBOR Rate (Reserve Adjusted) in effect for that week, plus (1) for December, 1995, one percent (1.0%) per annum, and (2) on and after January 1, 1996, two percent (2.0%) per annum. (B) Canadian Loans. The unpaid principal amount of the Canadian Loans shall bear interest for a particular week at a rate per annum equal to the Bankers' Acceptance Rate (Reserve Adjusted) in effect for that week, plus (1) for December, 1995, one percent (1.0%) per annum, and (2) on and after January 1, 1996, two and one-half percent (2.5%) per annum. 3. Section 2.1.2 of the Agreement is hereby deleted in its entirety and restated to read as follows: Charges. Gehl Company agrees to pay to DFS, on December 31, 1995, December 31, 1996 and December 31, 1997, an annual line fee (hereinafter sometimes referred to as a "charge") equal to the lesser of (a) Twenty- five Thousand Dollars ($25,000.00); 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). 4. Section 2.1.4 of the Agreement, Non-Use of Credit Facility Fee, is hereby deleted in its entirety. 5. The third sentence of Section 2.2(a) of the Agreement is hereby deleted in its entirety and restated to read as follows: Interest and any charges on U.S. Loans that remain outstanding after the foregoing due date shall be assessed a finance charge equal to the LIBOR Rate (Reserve Adjusted) plus four and one-half percent (4.5%) per annum on such outstanding amounts until paid in full. Interest and any charges on Canadian Loans that remain outstanding after the foregoing due date shall be assessed a finance charge equal to the Bankers' Acceptance Rate (Reserve Adjusted) plus five percent (5.0%) per annum on such outstanding amounts until paid in full. 6. Section 6.3 of the Agreement is hereby deleted in its entirety and restated as follows: Gehl Company will at all times 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 DFS by an agreement in form and substance satisfactory to DFS; and (v) "Net Income" and "Net Losses" means 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 DFS quarterly, in accordance with Section 6.1(m)(2) of this Agreement. If Gehl Company violates any of the foregoing financial covenants to DFS, the parties agree (a) Gehl Company will pay interest to DFS, 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) (A) in the case of U.S. Loans, four and one- half percent (4.5%) per annum higher than the U.S. LIBOR Rate then in effect, (B) in the case of Canadian Loans, five percent (5.0%) per annum higher than the Bankers' Acceptance Rate then in effect, and (ii) the highest rate from time to time permitted by applicable law from the time when Gehl Company violates any of the financial covenants until such time as Gehl Company has cured its violation of its financial covenants to DFS; (b) DFS may elect in its sole discretion, to amend its eligibility formula of and its advance rate against the Accounts; and (c) DFS may elect to declare Gehl Company in default under this Agreement and exercise any of DFS' rights pursuant to Section 7 of this Agreement. 7. Section 8.1 of the Agreement is hereby deleted in its entirety and restated to read as follows: Term. This Agreement shall terminate on December 31, 1998. This Agreement may not be terminated by either party prior to December 31, 1998, other than as a result of any Default by Gehl Company or any default by DFS hereunder. Gehl Company and DFS agree that in the event this Agreement shall have been terminated prior to December 31, 1998, ITT's liquidated damages hereunder shall include, in addition to principal, interest, charges and expense reimbursements that are then owed and unpaid, (i) for any termination during 1995, an amount equal to Three Hundred Thirty-Seven Thousand Five Hundred Dollars ($337,500.00), or (ii) for any termination during 1996, Two Hundred Forty Three Thousand Seven Hundred Fifty ($243,750.00); provided, however, that Gehl Company shall not have any liability to DFS for any liquidated damages for any termination that is effective after December 31, 1996. Gehl Company agrees that DFS' 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. 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. The following provisions are incorporated into the Agreement: 10. ADDITIONAL TERMS 10.1 Increased Cost. If, as a result of any law, regulation, treaty or directive, or any change therein, or in the interpretation or application thereof or compliance by DFS with any request or directive (whether or not having the force of law) from any court or governmental authority, agency or instrumentality: (a) the basis of taxation of payments to DFS (for purposes of this Section 10.1, "DFS" shall also refer to any affiliates of DFS engaged in the funding of the lending obligations hereunder) of the principal or of interest on any LIBOR Loan or Bankers' Acceptance Loan (other than taxes imposed on the overall net income of DFS by the jurisdiction in which DFS has its principal office) is changed; (b) any reserve, special deposit or similar requirements against assets of, deposits with or for the account of, or credit extended by, DFS are imposed, modified or deemed applicable; or (c) any other condition affecting this Agreement or the LIBOR Loans or Bankers' Acceptance Loans is imposed on DFS or the interbank eurodollar market or Canadian Bankers' Acceptance market; and DFS determines that, by reason thereof, the cost to DFS of making or maintaining any of the LIBOR Loans or Bankers' Acceptance Loans is increased, or the amount of any sum receivable by DFS hereunder in respect of any of the LIBOR Loans or Bankers' Acceptance Loans is reduced; then, Gehl Company shall pay to DFS upon demand (which demand shall be accompanied by a statement setting forth the basis for the calculation thereof but only to the extent not theretofore provided to Gehl Company) such additional amount or amounts as will compensate DFS for such additional cost or reduction (provided such amount has not been compensated for in the calculation of the Eurocurrency Reserve Percentage or Bankers' Acceptance Reserve Percentage). DFS' determinations for purposes of this Section of the additional amounts required to compensate DFS in respect of the foregoing shall be conclusive, absent manifest error. 10.2 Eurodollar Deposits or Bankers' Acceptances Unavailable or Interest Rate Unascertainable. In the event that prior to any week DFS shall have determined (which determination shall be conclusive and binding on the parties hereto) that deposits of the necessary amount for that relevant week are not available to DFS in the interbank eurodollar market or Bankers' Acceptances market or that, by reason of circumstances affecting such market, adequate and reasonable means do not exist for ascertaining the LIBOR Rate or Bankers' Acceptance Rate applicable to such period or term, as the case may be, DFS shall promptly give notice of such determination to Gehl Company. The rate in effect after the date of such notice for all loans shall be equal to the Prime Rate (U.S. or Canadian, as applicable) plus the Margin (as defined below), whether the Margin is a positive or negative number ("Prime Rate Loans"). The term "Margin" as used herein shall mean (1) as to U.S. Loans, the remainder of (i) the last determinable U.S. LIBOR Interest Rate, less (ii) the then current U.S. Prime Rate; and (2) as to Canadian Loans, the remainder of (i) the last determinable Bankers' Acceptance Rate, less (ii) the then current Canadian Prime Rate. 10.3 Changes in Law Rendering LIBOR Loans or Bankers' Acceptance Loans Unlawful. If at any time due to any new law, treaty or regulation, or any change of any existing law, treaty or regulation, or any interpretation thereof by any governmental or other regulatory authority charged with the administration thereof, or for any other reason arising subsequent to December 1, 1995, it shall become unlawful for DFS to fund any LIBOR Loan or Bankers' Acceptance Loan which it is committed to make hereunder, the obligation of DFS to provide LIBOR Loans or Bankers' Acceptance Loans shall, upon the happening of such event, forthwith be suspended for the duration of such illegality. If any such change shall make it unlawful to continue LIBOR Loans or Bankers' Acceptance Loans previously made by it hereunder, DFS shall, upon the happening of such event, notify Gehl Company thereof in writing stating the reasons therefor, and Gehl Company shall, if required by such law, regulation or interpretation, on such date as shall be specified in such notice, either convert such unlawful LIBOR Loans or Bankers' Acceptance Loans to Prime Rate Loans, bearing interest at a rate per annum equal to the U.S. Prime Rate or Canadian Prime Rate, as applicable, plus the Margin, as defined in Section 10.2, or pay to DFS in full all such LIBOR Loans or Bankers' Acceptance Loans and terminate this Agreement without any penalty or premium whatsoever. 10.4 Capital Adequacy. If DFS shall determine at any time after the Effective Date that the adoption of any law, rule, guideline or regulation regarding capital adequacy, or compliance with any law, rule, guideline or regulation regarding capital adequacy, or any change therein or in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by DFS with any request or directive or compliance with any law, rule, guideline or regulation regarding capital adequacy (whether or not having the force of law) from any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on DFS' capital as a consequence of its obligations hereunder to a level below that which DFS could have achieved but for such adoption, change or compliance (taking into consideration DFS' policies with respect to capital adequacy) by an amount deemed by DFS to be material, then Gehl Company shall pay to DFS upon demand such amount or amounts, in addition to the amounts payable under the other provisions of this Agreement, as will compensate DFS for such reduction. Any such demand by DFS hereunder shall be in writing, and shall set forth the reasons for such demand and copies of all documentation reasonably relevant in support thereof. Determinations by DFS for purposes of this Section 10.4 of the additional amount or amounts required to compensate DFS in respect of the foregoing shall be conclusive in the absence of manifest error. In determining such amount or amounts, DFS may use any reasonable averaging and attribution methods. 10.5 Indemnity. The Gehl Company will indemnify DFS against any loss or expense which DFS may sustain or incur, including without limitation, any loss or expense sustained or incurred in obtaining, liquidating or employing deposits or other funds acquired to effect, fund or maintain a loan as a consequence of any failure by Gehl Company to make any payment when due of any amount due hereunder in connection with a LIBOR Loan or Bankers' Acceptance Loan. 10.6 Discretion as to Manner of Funding LIBOR Loans. Notwithstanding any provision of this Agreement to the contrary, DFS shall be entitled to fund and maintain its funding of all or any part of its LIBOR Loans in any manner it elects, it being understood, however, that for the purposes of this Agreement all determinations hereunder shall be made as if DFS had actually funded and maintained each LIBOR Loan through the purchase of deposits having a maturity corresponding to the maturity of each LIBOR Loan and bearing an interest rate equal to the LIBOR Rate. DFS may, if it so elects, fulfill any commitment to make LIBOR Loans by causing a foreign affiliate to make or continue such LIBOR Loans, provided, however, that in such event such Loans shall be deemed for the purposes of this Agreement to have been made by DFS, and the obligation of the Gehl Company to repay such Loans shall nevertheless be to DFS and shall be deemed held by DFS, to the extent of such Loans, for the account of such branch or affiliate. 9. All references in the Agreement to "ITT Commercial Finance Corp." are amended to read "Deutsche Financial Services Corporation" and all references in the Agreement to "ITT" are amended to read "DFS". All references in this Agreement to "ITT Commercial Finance, a division of ITT Industries of Canada Ltd." are amended to read "Deutsche Financial Services Canada Corporation" and all references in this Agreement to "ITT Canada" are amended to read "DFSC". Gehl Company acknowledges that ITT Canada assigned all of its rights under this Agreement to DFSC, that DFSC is substituted for ITT Canada and consents to such assignment and substitution. Gehl Company further agrees that DFSC may at any time assign all of its rights under this Agreement to DFS without notice or penalty. 10. All other terms as they appear in the Agreement, to the extent not inconsistent with the foregoing, are ratified and remain unchanged and in full force and effect. IN WITNESS WHEREOF, the parties have executed this Amendment to Amended and Restated Loan and Security Agreement as of this 1st day of December, 1995. GEHL COMPANY HEDLUND MARTIN, INC. By: W.D. Gehl By: W.D. Gehl Its: President Its: President By: K.F. Kaplan By: K.F. Kaplan Its: Vice President Its: Treasurer GEHL POWER PRODUCTS, INC DEUTSCHE FINANCIAL SERVICES CORPORATION By: W.D. Gehl By: Geoff D. Lyon Its: President Its: Division President By: K.F. Kaplan Its: Treasurer DEUTSCHE FINANCIAL SERVICES CANADA CORPORATION (f/k/a ITT Commercial Finance, a division of ITT Industries of Canada Ltd.) By: Geoff D. Lyon Its: Division President EX-10.2 5 W. D. GEHL/GEHL EMPLOYMENT AGREEMENT INDEX Page SECTION 1. EMPLOYMENT 1 SECTION 2. TERM OF EMPLOYMENT 2 SECTION 3. COMPENSATION 2 SECTION 4. TERMINATION OF EMPLOYMENT 2 SECTION 5. CHANGE IN CONTROL 3 SECTION 6. BENEFITS 4 (i) Retirement/Death Benefit 4 (ii) Bonus 4 (iii) Split Dollar Life Insurance 4 SECTION 7. REIMBURSEMENT OF EXPENSES 5 SECTION 8. VACATION 5 SECTION 9. STOCK OPTION 5 SECTION 10. ADDITIONAL UNDERTAKINGS OF EXECUTIVE; NON-COMPETITION PROVISIONS 5 SECTION 11. ASSIGNS AND SUCCESSORS 6 SECTION 12. CONSTRUCTION 6 SECTION 13. NOTICES 6 SECTION 14. SEVERABILITY 7 Signatures 7 Exhibit A BONUS ARRANGEMENT 8 WILLIAM D. GEHL/GEHL COMPANY EMPLOYMENT AGREEMENT AGREEMENT made by and between Gehl Company ("GEHL"), a Wisconsin corporation with its principal place of business in West Bend, Wisconsin, and William D. Gehl, ("Executive"). RECITALS WHEREAS, GEHL wishes to retain the services of Executive as its President and Chief Executive Officer and Executive desires to serve GEHL in that capacity; NOW, THEREFORE, in consideration of the mutual promises and agreements set forth herein, the parties agree as follows: Section 1. Employment. GEHL shall employ Executive and Executive shall serve as the President and Chief Executive Officer of GEHL during the term of employment set forth in Section 2 of this Agreement, and as such term shall be extended as provided herein. Executive shall report only to the Board of Directors of GEHL, and his powers and authority and responsibilities shall be superior to those of any other officer or employee of GEHL or of any subsidiary thereof. Executive agrees, subject to his election as such, to serve as a Director, and as a member of any committee of the Board of Directors of GEHL, during such term of employment. If at any time during the term of employment, the Board of Directors of GEHL shall not reelect Executive as President and Chief Executive Officer of GEHL or shall remove him from such office (other than for cause), or if at any time during the term of employment Executive shall fail to be vested by GEHL with the powers and authority of the President and Chief Executive Officer of GEHL as described above, Executive shall have the right, by written notice to GEHL, to terminate his services hereunder, effective as of the last day of the month of receipt by GEHL of any such written notice, and Executive shall have no further obligation under this Agreement. Termination by Executive under this Section 1 shall be treated as a termination of employment by GEHL other than for cause and shall be governed by the provisions of Section 4 or 5 of this Agreement, as applicable. Section 2. Term of Employment. Executive's "term of employment," as this phrase is used throughout this Agreement, shall be for the period commencing July 1, 1995, and ending December 31, 1998. Section 3. Compensation. GEHL shall pay or cause to be paid to Executive during the term of employment a minimum base salary of Two Hundred Thousand Dollars ($200,000.00) per annum, payable in twenty-six (26) equal installments (subject to the appropriate withholding items). This salary shall be reviewed at least annually by the GEHL Board of Directors or a committee thereof and increased or decreased in its discretion, subject to the minimum above. Section 4. Termination of Employment. If, for any reason other than cause, as defined below in this Section 4 or Executive's death or disability, Executive's employment shall be terminated by GEHL before the term of employment has been completed, Executive shall be entitled to receive, and GEHL shall be obligated to pay, his full base salary set forth in Section 3 above as in effect immediately prior to such termination, for one (1) full year from date of termination. During such year, Executive shall also continue to participate in all group welfare benefit plans and programs of GEHL referred to in the first sentence of Section 6 hereof to the extent that such continued participation is possible under the general terms and provisions of such plans and programs. In the event that Executive's continued participation in any such plans and programs is barred, and in lieu thereof, Executive shall be entitled to receive for the above period an amount equal to the sum of the average annual contributions, payments, credits, or allocations made by GEHL to him, to his account, or on his behalf over the three (3) fiscal years (or fraction thereof) of GEHL preceding the termination of his employment under such plans and programs from which his continued participation is barred. Termination by GEHL for "cause" shall mean termination by action of the GEHL Board of Directors because of the failure of Executive to fulfill his obligations under this Agreement or because of serious willful misconduct by Executive in respect of his obligations under this Agreement, as, for example, the commission by Executive of a felony or the perpetration by Executive of a common-law fraud against GEHL or any major material action (i.e., not procedural or operational differences) taken against the expressed directive of the Board. If Executive's employment is terminated by Executive, as a result of Executive's death or disability, or by GEHL for cause, Executive's base salary shall terminate on such date, and Executive's participation in GEHL's fringe benefit plans shall terminate in accordance with their terms. Section 5. Change in Control. In the event a change in control, as defined below, occurs during the term of Executive's employment under this Agreement and thereafter Executive's employment shall be terminated by GEHL without cause (as defined in Section 4) before the term of employment has been completed, Executive shall be entitled to the continuation of base salary and fringe benefits pursuant to the first paragraph of Section 4 for two (2) full years from the date of termination. "Change in Control," for the purposes of this Agreement, shall be defined as one of the following: (i) securities of GEHL representing 25% or more of the combined voting power of GEHL's then outstanding voting securities are acquired pursuant to a tender offer or an exchange offer; or (ii) the shareholders of GEHL approve a merger or consolidation of GEHL with any other corporation as a result of which less than fifty percent (50%) of the outstanding voting securities of the surviving or resulting entity are owned by the former shareholders of GEHL (other than a shareholder who is an "affiliate," as defined under rules promulgated under the Securities Act of 1933, as amended, of any party to such consolidation or merger); or (iii) the shareholders of GEHL approve the sale of substantially all of GEHL's assets to a corporation which is not a wholly-owned subsidiary of GEHL; or (iv) any person becomes the "beneficial owner," as defined under rules promulgated under the Securities Exchange Act of 1934, as amended, directly or indirectly, of securities of GEHL representing twenty-five percent (25%) or more of the combined voting power of GEHL's then outstanding securities the effect of which (as determined by the Board) is to take over control of GEHL; or (v) during any period of two consecutive years, individuals who, at the beginning of such period, constituted the Board of Directors of GEHL cease, for any reason, to constitute at least a majority thereof, unless the election or nomination for election of each new director was approved by the vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period. Section 6. Benefits. Executive shall be entitled to participate in any group insurance, hospitalization, medical, health and accident, disability, or similar plan or program of GEHL now existing or established hereafter to the extent that he is eligible under the general provisions thereof. Furthermore, Executive shall be entitled to other payments, in addition to the base salary above, as provided below: (i) Retirement/Death Benefit. The Supplemental Retirement Benefit Agreement between Executive and GEHL shall dictate the Retirement/Death benefits other than those provided under the employee benefit plans generally available to all salaried employees. Such Supplemental Retirement Benefit Agreement is specifically referenced and made a part hereof. (ii) Bonus. Executive shall be entitled to an annual cash bonus as calculated in accordance with the attached Exhibit A in the event the Executive is employed with GEHL on the last day of the applicable calendar year. Notwithstanding the foregoing, in the event Executive's employment is terminated during the applicable year as a result of death or disability or by GEHL for any reason other than cause as defined in Section 4 hereof, Executive shall be entitled to a pro rata portion of the bonus which would otherwise have been payable for such calendar year of termination. The pro rata portion shall be equal to the number of completed months in the calendar year through the date of termination divided by twelve (12). (iii) Split Dollar Life Insurance. Executive, as the insured, a trust for the benefit of Executive's family (the "Trust"), as the owner, and GEHL shall enter into the Split Dollar Insurance Agreement regarding the purchase of a $1 million whole life insurance policy. The Trust shall execute a collateral assignment of such policy to GEHL to secure its interest therein as provided in the Split Dollar Insurance Agreement. Said agreement is specifically referenced and made a part hereof. Section 7. Reimbursement of Expenses. GEHL shall pay or reimburse Executive for all reasonable travel and other expenses in accordance with GEHL policy. GEHL further agrees to furnish Executive with a private office and a private secretary and such other assistance and accommodations as shall be suitable to the character of Executive's position with GEHL and adequate to the performance of his duties hereunder. Section 8. Vacation. Executive shall be entitled to four (4) weeks paid vacation each year. Section 9. Stock Option. Concurrent with the execution of this Agreement, Executive and GEHL shall enter into a Stock Option Agreement, specifically referenced herein and made a part hereof, wherein Executive is granted as of July 19, 1995 an option to purchase 100,000 shares of GEHL common stock under the 1995 Stock Option Plan. Section 10. Additional Undertakings of Executive; Non-competition Provisions. Executive agrees that during the term of employment under this Agreement he will apply on a full-time basis (allowing for usual vacations and sick leave) all of his skill and experience to the performance of his duties in such employment. It is understood that Executive may have other business investments and participate in other business ventures which may, from time to time, require minor portions of his time, but which shall not interfere or be inconsistent with his duties hereunder. Executive agrees that during the term of employment and for one (1) year thereafter, or, in the event of termination of his employment by GEHL for cause (as defined in Section 4 above) for two (2) years after such termination, Executive will not, without the prior written approval of the Board of Directors of GEHL, become an owner, officer, employee, agent, partner, or director of any business enterprise in substantial direct competition (as defined below) with GEHL or any subsidiary of GEHL as the business of GEHL or any subsidiary of GEHL may be constituted during the term of employment or at the termination thereof. If Executive's employment is terminated by GEHL other than for cause (as defined in Section 4 above), he will not be subject to any restrictions under this Section 10. If Executive's employment by GEHL is terminated by him (other than under the circumstances set forth in Section 1 above), in breach of this Agreement during the term of employment, Executive shall not, for a two (2)-year period following such termination, become an owner, officer, employee, agent, partner, or director of any business enterprise in substantial direct competition (as defined below) with GEHL or any subsidiary of GEHL as the business of GEHL or any subsidiary of GEHL may be constituted at the time of such termination. For the purposes of this Section 10, a business enterprise with which Executive becomes associated as an owner, officer, employee, agent, partner or director, shall be considered in "substantial direct competition," if, during a year (adjusted for fractions of a year in respect of a new enterprise) when such competition is prohibited, its sales of any product or service sold by GEHL or any subsidiary of GEHL amount to more than either ten percent (10%) of its (new enterprise) total sales or Ten Million ($10,000,000.00) Dollars. Section 11. Assigns and Successors. The rights and obligations of GEHL under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of GEHL. Section 12. Construction. This Agreement shall be construed under the laws of the State of Wisconsin. Section headings are for convenience only and shall not be considered a part of the terms and provisions of this Agreement. Section 13. Notices. All notices under this Agreement shall be in writing and shall be deemed effective when delivered in person (in GEHL's case, to its Secretary) or forty-eight (48) hours after deposit thereof in the U.S. mails, postage prepaid, addressed, in the case of Executive, to his last known address as carried on the personnel records of GEHL and, in the case of GEHL, to the corporate headquarters, attention of the Secretary, or to such other address as the party to be notified may specify by notice to the other party. Section 14. Severability. Should it be determined that one or more of the clauses of this Agreement is (are) found to be unenforceable, illegal, contrary to public policy, etc., this Agreement remains in full force and effect except for the unenforceable, illegal, or contrary to public policy provisions. IN WITNESS WHEREOF, GEHL COMPANY has caused this Agreement to be executed by its duly authorized officers, and Executive has hereunto set his hand, all as of the 15th day of December, 1995. Attest: GEHL COMPANY M. Mulcahy Arthur W. Nesbitt Its: Secretary Its: Chairman of the Board M. Mulcahy Witness as to William D. Gehl William D. Gehl, Executive EX-10.3 6 MANCINELLI/GEHL EMPLOYMENT AGREEMENT INDEX Page SECTION 1. EMPLOYMENT 1 SECTION 2. TERM OF EMPLOYMENT 2 SECTION 3. COMPENSATION 2 SECTION 4. TERMINATION OF EMPLOYMENT 2 SECTION 5. CHANGE IN CONTROL 3 SECTION 6. BENEFITS 4 (i) Retirement/Death Benefit 4 (ii) Bonus 4 (iii) Term Life Insurance 4 SECTION 7. REIMBURSEMENT OF EXPENSES 5 SECTION 8. VACATION 5 SECTION 9. STOCK OPTION 5 SECTION 10. ADDITIONAL UNDERTAKINGS OF EXECUTIVE; NON-COMPETITION PROVISIONS 5 SECTION 11. ASSIGNS AND SUCCESSORS 6 SECTION 12. CONSTRUCTION 6 SECTION 13. NOTICES 6 SECTION 14. SEVERABILITY 7 Signatures 7 Exhibit A BONUS ARRANGEMENT 8 MANCINELLI/GEHL COMPANY EMPLOYMENT AGREEMENT AGREEMENT made by and between Gehl Company ("GEHL"), a Wisconsin corporation with its principal place of business in West Bend, Wisconsin, and Victor A. Mancinelli ("Executive"). RECITALS WHEREAS, GEHL wishes to retain the services of Executive as its Executive Vice President and Chief Operating Officer and Executive desires to serve GEHL in that capacity; NOW, THEREFORE, in consideration of the mutual promises and agreements set forth herein, the parties agree as follows: Section 1. Employment. GEHL shall employ Executive and Executive shall serve as the Executive Vice President and Chief Operating Officer of GEHL during the term of employment set forth in Section 2 of this Agreement, and as such term shall be extended as provided herein. Executive shall report to the President and Chief Executive Officer of GEHL. If at any time during the term of employment, the Board of Directors of GEHL shall not reelect Executive as Executive Vice President and Chief Operating Officer of GEHL or shall remove him from such office (other than for cause), or if at any time during the term of employment Executive shall fail to be vested by GEHL with the powers and authority of the Executive Vice President and Chief Operating Officer of GEHL as described above, Executive shall have the right, by written notice to GEHL, to terminate his services hereunder, effective as of the last day of the month of receipt by GEHL of any such written notice, and Executive shall have no further obligation under this Agreement. Termination by Executive under this Section 1 shall be treated as a termination of employment by GEHL other than for cause and shall be governed by the provisions of Section 4 of this Agreement. Section 2. Term of Employment. Executive's "term of employment," as this phrase is used throughout this Agreement, shall be for the three (3)-year period commencing October 1, 1995, and ending September 30, 1998. Section 3. Compensation. GEHL shall pay or cause to be paid to Executive during the term of employment a minimum base salary of One Hundred Seventy- Five Thousand Dollars ($175,000.00) per annum, payable in twenty-six (26) equal installments (subject to the appropriate withholding items). The salary shall be reviewed at least annually by the GEHL Board of Directors or a committee thereof and increased or decreased in its discretion, subject to the minimum above. Section 4. Termination of Employment. If, for any reason other than cause, as defined below in this Section 4 or Executive's death or disability, Executive's employment shall be terminated by GEHL before the term of employment has been completed, Executive shall be entitled to receive, and GEHL shall be obligated to pay, his full base salary set forth in Section 3 above as in effect immediately prior to such termination, for one (1) full year from date of termination. During such year, Executive shall also continue to participate in all group welfare benefit plans and programs of GEHL referred to in the first sentence of Section 6 hereof to the extent that such continued participation is possible under the general terms and provisions of such plans and programs. In the event that Executive's continued participation in any such plans and programs is barred, and in lieu thereof, Executive shall be entitled to receive for the above period an amount equal to the sum of the average annual contributions, payments, credits, or allocations made by GEHL to him, to his account, or on his behalf over the three (3) fiscal years (or fraction thereof) of GEHL preceding the termination of his employment under such plans and programs from which his continued participation is barred. Termination by GEHL for "cause" shall mean termination because of the failure of Executive to fulfill his obligations under this Agreement or because of serious willful misconduct by Executive in respect of his obligations under this Agreement, as, for example, the commission by Executive of a felony or the perpetration by Executive of a common-law fraud against GEHL or any major material action (i.e., not procedural or operational differences) taken against the expressed directive of the Board. If Executive's employment is terminated by Executive, as a result of Executive's death or disability, or by GEHL for cause, Executive's base salary shall terminate on such date, and Executive's participation in GEHL's fringe benefit plans shall terminate in accordance with their terms. Section 5. Change in Control. In the event a change in control, as defined below, occurs during the term of Executive's employment under this Agreement and thereafter Executive's employment shall be terminated by GEHL without cause (as defined in Section 4) before the term of employment has been completed, Executive shall be entitled to the continuation of base salary and fringe benefits pursuant to the first paragraph of Section 4 for one full year from the date of termination. "Change in Control," for the purposes of this Agreement, shall be defined as one of the following: (i) securities of GEHL representing 25% or more of the combined voting power of GEHL's then outstanding voting securities are acquired pursuant to a tender offer or an exchange offer; or (ii) the shareholders of GEHL approve a merger or consolidation of GEHL with any other corporation as a result of which less than fifty percent (50%) of the outstanding voting securities of the surviving or resulting entity are owned by the former shareholders of GEHL (other than a shareholder who is an "affiliate," as defined under rules promulgated under the Securities Act of 1933, as amended, of any party to such consolidation or merger); or (iii) the shareholders of GEHL approve the sale of substantially all of GEHL's assets to a corporation which is not a wholly-owned subsidiary of GEHL; or (iv) any person becomes the "beneficial owner," as defined under rules promulgated under the Securities Exchange Act of 1934, as amended, directly or indirectly, of securities of GEHL representing twenty-five percent (25%) or more of the combined voting power of GEHL's then outstanding securities the effect of which (as determined by the Board) is to take over control of GEHL; or (v) during any period of two consecutive years, individuals who, at the beginning of such period, constituted the Board of Directors of GEHL cease, for any reason, to constitute at least a majority thereof, unless the election or nomination for election of each new director was approved by the vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period. Section 6. Benefits. Executive shall be entitled to participate in any group insurance, hospitalization, medical, health and accident, disability, or similar plan or program of GEHL now existing or established hereafter to the extent that he is eligible under the general provisions thereof. Furthermore, Executive shall be entitled to other payments, in addition to the base salary above, as provided below: (i) Retirement/Death Benefit. The Supplemental Retirement Benefit Agreement between Executive and GEHL shall dictate the Retirement/Death benefits other than those provided under the employee benefit plans generally available to all salaried employees. Such Supplemental Retirement Benefit Agreement is specifically referenced and made a part hereof. (ii) Bonus. Executive shall be entitled to an annual cash bonus as calculated in accordance with the attached Exhibit A in the event the Executive is employed with GEHL on the last day of the applicable calendar year. Notwithstanding the foregoing, in the event Executive's employment is terminated during the applicable year as a result of death or disability or by GEHL for any reason other than cause as defined in Section 4 hereof, Executive shall be entitled to a pro rata portion of the bonus which would otherwise have been payable for such calendar year of termination. The pro rata portion shall be equal to the number of completed months in the calendar year through the date of termination divided by twelve (12). (iii) Term Life Insurance. The corporate group term life insurance benefit shall be supplemented such that Executive is covered for an aggregate of three (3) times the base salary in Section 2. Section 7. Reimbursement of Expenses. GEHL shall pay or reimburse Executive for all reasonable travel and other expenses in accordance with GEHL policy. Section 8. Vacation. Executive shall be entitled to three (3) weeks paid vacation in 1993 and four (4) weeks paid vacation each year thereafter. Section 9. Stock Option. Concurrent with the execution of this Agreement, Executive and GEHL shall enter into a Stock Option Agreement, specifically referenced herein and made a part hereof, wherein Executive is granted an option to purchase 70,000 shares of GEHL common stock under the 1995 Stock Option Plan. Section 10. Additional Undertakings of Executive; Non-competition Provisions. Executive agrees that during the term of employment under this Agreement he will apply on a full-time basis (allowing for usual vacations and sick leave) all of his skill and experience to the performance of his duties in such employment. It is understood that Executive may have other business investments and participate in other business ventures which may, from time to time, require minor portions of his time, but which shall not interfere or be inconsistent with his duties hereunder. Executive agrees that during the term of employment and for one (1) year thereafter, or, in the event of termination of his employment by GEHL for cause (as defined in Section 4 above) for two (2) years after such termination, Executive will not, without the prior written approval of the Board of Directors of GEHL, become an owner, officer, employee, agent, partner, or director of any business enterprise in substantial direct competition (as defined below) with GEHL or any subsidiary of GEHL as the business of GEHL or any subsidiary of GEHL may be constituted during the term of employment or at the termination thereof. If Executive's employment is terminated by GEHL other than for cause (as defined in Section 4 above), he will not be subject to any restrictions under this Section 10. If Executive's employment by GEHL is terminated by him (other than under the circumstances set forth in Section 1 above), in breach of this Agreement during the term of employment, Executive shall not, for a two (2)-year period following such termination, become an owner, officer, employee, agent, partner, or director of any business enterprise in substantial direct competition (as defined below) with GEHL or any subsidiary of GEHL as the business of GEHL or any subsidiary of GEHL may be constituted at the time of such termination. For the purposes of this Section 10, a business enterprise with which Executive becomes associated as an owner, officer, employee, agent, partner or director, shall be considered in "substantial direct competition," if, during a year (adjusted for fractions of a year in respect of a new enterprise) when such competition is prohibited, its sales of any product or service sold by GEHL or any subsidiary of GEHL amount to more than either ten percent (10%) of its (new enterprise) total sales or Ten Million ($10,000,000.00) Dollars. Section 11. Assigns and Successors. The rights and obligations of GEHL under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of GEHL. Section 12. Construction. This Agreement shall be construed under the laws of the State of Wisconsin. Section headings are for convenience only and shall not be considered a part of the terms and provisions of this Agreement. Section 13. Notices. All notices under this Agreement shall be in writing and shall be deemed effective when delivered in person (in GEHL's case, to its Secretary) or forty-eight (48) hours after deposit thereof in the U.S. mails, postage prepaid, addressed, in the case of Executive, to his last known address as carried on the personnel records of GEHL and, in the case of GEHL, to the corporate headquarters, attention of the Secretary, or to such other address as the party to be notified may specify by notice to the other party. Section 14. Severability. Should it be determined that one or more of the clauses of this Agreement is (are) found to be unenforceable, illegal, contrary to public policy, etc., this Agreement remains in full force and effect except for the unenforceable, illegal, or contrary to public policy provisions. IN WITNESS WHEREOF, GEHL COMPANY has caused this Agreement to be executed by its duly authorized officers, and Executive has hereunto set his hand, all as of the 15th day of December, 1995. Attest: GEHL COMPANY M. Mulcahy Arthur W. Nesbitt Its: Secretary Its: Chairman of the Board M. Mulcahy Witness as to Victor A. Mancinelli Victor A. Mancinelli, Executive EX-10.4 7 W.D. GEHL/GEHL SUPPLEMENTAL RETIREMENT BENEFIT AGREEMENT INDEX Page SECTION 1. DEFINITIONS 1 SECTION 2. SUPPLEMENTAL RETIREMENT BENEFITS 3 SECTION 3. PRE-RETIREMENT DEATH BENEFIT 3 SECTION 4. NON-COMPETITION REQUIREMENT 4 SECTION 5. CHANGE IN CONTROL 4 SECTION 6. NO RIGHTS OF EMPLOYMENT 4 SECTION 7. EMPLOYEE'S RIGHTS NON-ASSIGNABLE 4 SECTION 8. COMPANY NOT REQUIRED TO FUND THIS AGREEMENT 5 SECTION 9. ADMINISTRATION 5 SECTION 10. SUCCESSORS AND ASSIGNS 5 Signatures 5 WILLIAM D. GEHL/GEHL COMPANY SUPPLEMENTAL RETIREMENT BENEFIT AGREEMENT THIS AGREEMENT, made this 15th day of December, 1995, 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 and cash bonus from the Company for the highest five (5) 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. Cash bonus means the cash distributed to the Employee during a calendar year pursuant to Exhibit A of the Employment Agreement. Base salary and cash bonus for this purpose include 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 event no validly designated beneficiary survives the Employee by at least one year, the Beneficiary shall be the Employee's estate. In the event the last designated beneficiary survives the Employee by more than one year, the Beneficiary shall be the estate of such last designated beneficiary. (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) "Employment Agreement" means the Employee's employment agreement effective July 1, 1995. (e) "Other Benefits" means the sum of: (i) the Employee's normal retirement age accrued monthly benefit as determined in accordance with Section 5.02(a) of the Gehl Company Retirement Income Plan "B" or its successor as in effect at the time benefits commence hereunder pursuant to Section 2(b). (ii) the monthly amount available to the Employee under the provisions of Title 11 of the Social Security Act (or its successor) as in effect on, and calculated based on his actual earnings history for Social Security benefits as of, the date benefits hereunder commence pursuant to Section 2(b) below and assuming commencement with the month following attainment of age sixty-five (65). (f) "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. (g) "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: (i) fifty percent (50%) of the Employee's Average Monthly Compensation, less (ii) the Employee's Other Benefits. (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 each of the ten (10) payments shall be 3.6 times the Employee's Average Monthly Compensation as of the Employee's date of death (i.e., thirty percent (30%) of the Employee's Average Monthly Compensation annualized). 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 in substantial direct competition with the Company as such term is defined in the Employment Agreement. 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 in 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 in control of the Company as defined in the Employment Agreement. 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, alienate, sell, pledge, 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 attachment, garnishment or 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. The Employee or Beneficiary have the status of general unsecured creditors of the Company, and this Agreement constitutes a mere promise by the Company to make future benefit payments in accordance with the terms hereof. It is the intention of the parties that this Agreement is unfunded for purposes of the Code and Title I of the Employee Retirement Income Security Act of 1974, as amended. 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 Arthur W. Nesbitt Its: Secretary Its: Chairman of the Board M. Mulcahy Witness as to William D. Gehl William D. Gehl, Employee EX-10.5 8 MANCINELLI/GEHL SUPPLEMENTAL RETIREMENT BENEFIT AGREEMENT INDEX Page SECTION 1. DEFINITIONS 1 SECTION 2. SUPPLEMENTAL RETIREMENT BENEFITS 2 SECTION 3. PRE-RETIREMENT DEATH BENEFIT 3 SECTION 4. NON-COMPETITION REQUIREMENT 3 SECTION 5. CHANGE IN CONTROL 4 SECTION 6. NO RIGHTS OF EMPLOYMENT 4 SECTION 7. EMPLOYEE'S RIGHTS NON-ASSIGNABLE 4 SECTION 8. COMPANY NOT REQUIRED TO FUND THIS AGREEMENT 4 SECTION 9. ADMINISTRATION 5 SECTION 10. SUCCESSORS AND ASSIGNS 5 Signatures 5 VICTOR A. MANCINELLI/GEHL COMPANY SUPPLEMENTAL RETIREMENT BENEFIT AGREEMENT THIS AGREEMENT, made this 15th day of December, 1995, 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 and cash bonus from the Company for the highest five (5) calendar 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. Cash bonus means the cash distributed to the Employee during a calendar year pursuant to Exhibit A of the Employment Agreement. Base salary and cash bonus for this purpose include 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 event no validly designated beneficiary survives the Employee by at least one year, the Beneficiary shall be the Employee's estate. In the event the last designated beneficiary survives the Employee by more than one year, the Beneficiary shall be the estate of such last designated beneficiary. (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) "Employment Agreement" means the Employee's employment agreement effective October 1, 1995. (e) "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. (f) "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 each of the ten (10) payments shall be 3.6 times the Employee's Average Monthly Compensation as of the Employee's date of death (i.e., thirty percent (30%) of the Employee's Average Monthly Compensation annualized). 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 in substantial direct competition with the Company as such term is defined in the Employment Agreement. 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 in 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 in control of the Company as defined in the Employment Agreement. 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, alienate, sell, pledge, 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 attachment, garnishment or 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. The Employee or Beneficiary have the status of general unsecured creditors of the Company, and this Agreement constitutes a mere promise by the Company to make future benefit payments in accordance with the terms hereof. It is the intention of the parties that this Agreement is unfunded for purposes of the Code and Title I of the Employee Retirement Income Security Act of 1974, as amended. 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 Arthur W. Nesbitt Its: Secretary Its: Chairman of the Board M. Mulcahy Witness as to Victor A. Mancinelli Victor A. Mancinelli, Employee EX-10.6 9 GEHL COMPANY SHAREHOLDER VALUE ADDED (SVA) MANAGEMENT INCENTIVE COMPENSATION PLAN December 15, 1995 ARTICLE I Statement of Purpose 1.1 The purpose of the Gehl Company Shareholder Value Added (SVA) Management Incentive Compensation Plan (the "Plan") is to provide a system of incentive compensation which will promote the maximization of shareholder value over the long term. In order to align management incentives with shareholder interests, incentive compensation will reward the creation of value. This Plan will tie incentive compensation to Shareholder Value Added ("SVA") and, thereby, reward management for creating value and penalize management for destroying value. 1.2 SVA is the performance measure of value creation. SVA reflects the benefits and costs of capital employment. Managers create value when they employ capital in an endeavor that generates a return that exceeds the cost of the capital employed. Managers destroy value when they employ capital in an endeavor that generates a return that is less than the cost of capital employed. By imputing the cost of capital upon the operating profits generated by a business group, SVA measures the total value created (or destroyed) by management. SVA = (Net Operating Profit After Tax - Capital Charge) 1.3 Each Plan Participant is placed in a classification. Each classification has a prescribed target bonus. The bonus earned in any one year is the result of multiplying the Actual Bonus Percentage times the Participant's base pay. Bonuses that fall within a prespecified range will be fully paid out. Positive and negative bonuses falling outside this range are banked forward in the Participant's Bonus Bank, with one-third of the net positive balance paid out each year in cash. A Participant is eligible for a bonus for a particular calendar year only if the Participant is employed by Gehl on December 31 of that year. ARTICLE II Definition of SVA and the Components of SVA Unless the context provides a different meaning, the following terms shall have the following meanings. 2.1 "Participating Group" means a Gehl business value center which has been uniquely identified for the purpose of calculating SVA and SVA based bonus awards. Some Participants' awards may be a mixture of two or more different Participating Groups. For the purpose of this plan, the Participating Groups are listed on Exhibit B. 2.2 "Capital" means the net investment employed in the operations of each Participating Group. The components of Capital are as follows: Cash Plus: Wholesale Accounts Receivable--at Gross Value Plus: Retail Finance Contracts--at Gross Principal Value Plus: FIFO Inventory Plus: Prepaid and Other Current Assets Plus: Fixed Assets at Net Book Value Plus: Other assets Plus: Capitalized Research and Development Plus: Corporate Allocated Capital Less: Noninterest Bearing Current Liabilities Equals: Capital 2.3 Each component of Capital will be measured by computing an average balance based on the ending monthly balance for the twelve months of the Fiscal Year. 2.4 "Cost of Capital" or "C" means the weighted average of the after tax cost of debt and equity for the year in question. The Cost of Capital will be reviewed and revised, if necessary, annually. Calculations will be carried to one decimal point. The cost of capital for the initial year is 11.2%. See Exhibit A. In subsequent plan years the methodology for the calculation of the Cost of Capital will be as in Exhibit A: Short-term debt is to be treated as long term for purposes of computing the cost of capital. 2.5 "Capital Charge" means the deemed opportunity cost of employing Capital in the business of each Participating Group. The Capital Charge is computed as follows: Capital Charge = Capital x Cost of Capital (C*) 2.6 "Net Operating Profit After Tax" or "NOPAT" "NOPAT" means the after tax cash earnings attributable to the capital employed in the Participating Group for the year in question. The components of NOPAT are as follows: Operating Earnings Plus: Interest Expense Plus: Increase (Decrease) in Capitalized R & D (See Note 1) Plus: Increase (Decrease) in Bad Debt, Warranty, Product Liability, and Volume Discount Reserves Plus: Amortization of Goodwill Acquired After January 1, 1996 Less: Other Expense (Excluding Interest on Debt) Plus: Other Income (Excluding Investment Income, if any) Equals: Net Operating Profit Before Tax Less: Taxes (See Note 2) Equals: Net Operating Profit After Tax Note: (1) Since R & D is Capitalized, the difference in the balance is the expensed amount for that year. (2) Taxes are assumed to be 38% of Net Operating Profit Before Tax. 2.7 "Shareholder Value Added" or "SVA" means the NOPAT that remains after subtracting the Capital Charge, expressed as follows: NOPAT Less: Capital Charge Equals: SVA SVA may be positive or negative. ARTICLE III Definition and Computation of Target Bonus Value 3.1 "Actual SVA" means the SVA as calculated for each Participating Group for the year in question. 3.2 "Target SVA" means the level of SVA that is expected in order for a Participant of the Participating Group to receive the Target Bonus Value. The Target SVA for the first year is set at the calculated SVA for the year prior to the first year of the plan. After the first year, the Target SVA is revised according to the following formula: Prior Year's Actual SVA + Prior Year's Target SVA Target SVA = 2 + Expected Improvement in SVA (Note: Improvement Factor) "Expected Improvement in SVA" means the constant SVA improvement (when prior year's SVA is negative), or the prior year's actual SVA times the sum of inflation (as per the prior year's CPI (all Urban Consumers)) plus 5% (when prior year's SVA is 0 or positive), that is added to shift the target up each year. See Exhibit B for the Expected Improvement for each Participating Group when SVA is negative. 3.3 "Target Bonus Value" means the "Target Bonus Percentage" times a Participant's base pay. 3.4 "Target Bonus Percentage" is determined for each Participant by the Compensation Committee of the Board of Directors and approved by the Board of Directors. 3.5 "Actual Bonus Value" means the bonus earned (see Note 1) by a Participant and is computed as the Actual Bonus Percentage times a Participant's base pay. A Participant who participates in more than one Participating Group will have multiple Actual Bonus Values (see Note 2). Note: (1) A portion of the Actual Bonus Value may be placed in the Participants' Bonus Bank. See Article IV for details on the Bonus Bank. (2) A Participant in more than one Participating Group has a "Weighting Percentage" assigned for each Group. The Weighting Percentage is applied to determine the bonus earned from participation in each Participating Group. The Weighting Percentage always totals to 100%. 3.6 "Actual Bonus Percentage" is determined by multiplying the Target Bonus Percentage by the Bonus Performance Value. 3.7 "Bonus Performance Value" means the difference between the Actual SVA and the Target SVA divided by the Leverage Factor, plus 1.0. [Actual SVA - Target SVA] + 1 Bonus Performance Value = [Leverage Factor] 3.8 "Leverage Factor" is the negative (positive) deviation from Target SVA necessary before a zero (two times Target) bonus is earned. See Exhibit B for the Leverage Factor of each Participating Group. ARTICLE IV Description of Bonus Banks 4.1 Establishment of a Bonus Bank. To encourage a long-term commitment by Participants to the Company, a portion of exceptional bonuses (amounts above Target and all negative bonuses) shall be credited to "at risk" deferred accounts ("Bonus Banks"), with the level of payout contingent on sustained high performance and improvements and continued employment as provided herein. 4.2 Although a Bonus Bank may, as a result of negative SVA, have a deficit, no Plan Participant shall be required, at any time, to reimburse his/her Bonus Bank. 4.3 "Bonus Bank" means, with respect to each Participant, a bookkeeping record of an account to which amounts are credited, or debited as the case may be, from time to time under the Plan and from which bonus payments to such Participants are debited. 4.4 "Bank Balance" means, with respect to each Participant, a bookkeeping record of the net balance of the amounts credited to and debited against such Participant's Bonus Bank. A Participant's Bank Balance shall initially be equal to zero. 4.5 Payout Rule: If the Bank balance entering the Plan Year is zero or positive, then (1) Pay any positive bonus earned up to the "Target Bonus Value", (2) Add any unpaid portion of the bonus earned (including negative bonuses) to the Bonus Bank, (3) Pay out 1/3 of any Positive Bank Balance (4) Carry the remaining Bank Balance forward to the next year. If the Bank Balance entering the Plan Year is negative, then (a) If a positive bonus is earned that is equal to or more than twice the absolute value of the negative Bank Balance, then (1) credit a portion of the bonus earned to the Bank Balance to bring it to zero, (2) pay the balance of the bonus earned according to the rules for a zero or positive Bank Balance. (b) If a positive bonus is earned that is less than twice the absolute value of the negative Bank Balance or if any negative bonus is earned, then (1) Pay 1/3 of any positive bonus earned up to the "Target Bonus Value", (2) Add any unpaid portion of the bonus earned (including negative bonuses) to the Bonus Bank, (3) Pay out 1/3 of any Positive Bank Balance, (4) Carry the remaining Bank Balance forward to the next year. ARTICLE V Plan Participation, Transfers and Terminations 5.1 Participant Group. The Compensation Committee of the Board of Directors (the "Committee"), upon recommendation of the CEO, will have sole discretion in determining who shall participate in the Plan. Employees designated for Plan participation by the Committee shall be management or highly compensated key employees. 5.2 Transfers. A Participant who transfers his employment from one Participating Unit of the Company to another shall retain his Bonus Bank and will be eligible to receive future SVA Plan Awards in accordance with the provisions of the SVA Plan. 5.3 Retirement or Disability. A Participant who terminates employment with the Company, at or after age sixty, for any reason ("retirement"), or suffers a "disability," as such term is defined in the Company's long- term disability benefits program, while in the Company's employ, shall be eligible to receive the balance of their Bonus Bank. 5.4 Involuntary Termination Without Cause or Death. A Participant who is Terminated without cause or who dies shall receive any positive Bonus Bank balance. 5.5 Voluntary Termination. In the event that a Participant voluntarily terminates employment with the Company, the right of the Participant to their Bonus Bank shall be forfeited unless a different determination is made by the Committee. 5.6 Termination for Cause. "Cause" shall mean: (1) any act or acts of the Participant constituting a felony under the laws of the United States, any state thereof or any foreign jurisdiction; (2) any material breach by the Participant of any employment agreement with the Company or the policies of the Company or the willful and persistent (after written notice to the Participant) failure or refusal of the Participant to comply with any lawful directives of the Board; (3) a course of conduct amounting to gross neglect, willful misconduct or dishonesty; or (4) any misappropriation of material property of the Company by the Participant or any misappropriation of a corporate or business opportunity of the Company by the Participant. 5.7 Payment and Breach of Agreement. In the event a Participant is entitled to the payment of a positive Bonus Bank balance pursuant to 5.3 or 5.4, one-half of such balance shall be paid in December of the year of termination and the remaining one-half shall be paid in the following December, without any interest adjustment. Notwithstanding any other provision of the Plan or any other agreement, in the event that a Participant shall breach any noncompetition agreement with the Company or breach any agreement with respect to the postemployment conduct of such Participant, any remaining payment otherwise due to the Participant hereunder shall be forfeited. 5.8 No Guarantee. Participation in the Plan provides no guarantee that a payment under the Plan will be paid. Selection as a Participant is no guarantee that payments under the Plan will be paid or that selection as a Participant will be made in the subsequent Calendar Year. ARTICLE VI General Provisions 6.1 Withholding of Taxes. The Company shall have the right to withhold the amount of taxes, which in the determination of the Company, are required to be withheld under law with respect to any amount due or paid under the Plan. 6.2 Expenses. All expenses and costs in connection with the adoption and administration of the Plan shall be borne by the Company. 6.3 No Prior Right or Offer. Except and until expressly granted pursuant to the Plan, nothing in the Plan shall be deemed to give any employee any contractual or other right to participate in the benefits of the Plan. 6.4 Claims for Benefits. In the event a Participant (a "claimant") desires to make a claim with respect to any of the benefits provided hereunder, the claimant shall submit evidence satisfactory to the Committee of facts establishing his entitlement to a payment under the Plan. Any claim with respect to any of the benefits provided under the Plan shall be made in writing within ninety (90) days of the event which the claimant asserts entitles him to benefits. Failure by the claimant to submit his claim within such ninety (90) day period shall bar the claimant from any claim for benefits under the Plan. 6.5 In the event that a claim which is made by a claimant is wholly or partially denied, the claimant will receive from the Committee a written explanation of the reason for denial and the claimant or his duly authorized representative may appeal the denial of the claim to the Committee at any time within ninety (90) days after the receipt by the claimant of written notice from the Committee of the denial of the claim. In connection therewith, the claimant or his duly authorized representative may request a review of the denied claim; may review pertinent documents; and may submit issues and comments in writing. Upon receipt of an appeal, the Committee shall make a decision with respect to the appeal and, not later than sixty (60) days after receipt of a request for review, shall furnish the claimant with a decision on review in writing, including the specific reasons for the decision written in a manner calculated to be understood by the claimant, as well as specific reference to the pertinent provisions of the Plan upon which the decision is based. In reaching its decision, the Committee shall have complete discretionary authority to determine all questions arising in the interpretation and administration of the Plan, and to construe the terms of the Plan, including any doubtful or disputed terms and the eligibility of a Participant for benefits. 6.6 Action Taken in Good Faith: Indemnification. The Committee may employ attorneys, consultants, accountants or other persons and the Company's directors and officers shall be entitled to rely upon the advice, opinions or valuations of any such persons. All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon all employees who have received awards, the Company and all other interested parties. No member of the Committee, nor any officer, director, employee or representative of the Company, or any of its affiliates acting on behalf of or in conjunction with the Committee, shall be personally liable for any action, determination, or interpretation, whether of commission or omission, taken or made with respect to the Plan, except in circumstances involving actual bad faith or willful misconduct. In addition to such other rights of indemnification as they may have as members of the Board, as members of the Committee or as officers or employees of the Company, all members of the Committee and any officer, employee or representative of the Company or any of its subsidiaries acting on their behalf shall be fully indemnified and protected by the Company with respect to any such action, determination or interpretation against the reasonable expenses, including attorneys' fees actually and necessarily incurred, in connection with the defense of any civil or criminal action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or an award granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by Company) or paid by them in satisfaction of a judgment in any action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person claiming indemnification shall in writing offer the Company the opportunity, at its own expense, to handle and defend the same. Expenses (including attorney's fees) incurred in defending a civil or criminal action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding if such person claiming indemnification is entitled to be indemnified as provided in this Section. 6.7 Rights Personal to Employee. Any rights provided to an employee under the Plan shall be personal to such employee, shall not be transferable (except by will or pursuant to the laws of descent or distribution), and shall be exercisable, during his lifetime, only by such employee. 6.8 Distribution of Bank Balances Upon Termination of the Plan. Upon termination of the Plan, the Bank Balance of each Participant shall be distributed as soon as practicable but in no event later than 90 days from such event. The Committee, in its sole discretion, may accelerate distribution of the Bank Balance, in whole or in part, at any time without penalty. 6.9 Nonallocation of Award. In the event of a suspension of the Plan in any Plan Year as provided herein at Article XI, Section 11.1, the Current Bonus for the subject Plan year shall be deemed forfeited and no portion thereof shall be allocated to Participants . Any such forfeiture shall not affect the calculation of SVA in any subsequent year. ARTICLE VII Limitation 7.1 No Continued Employment. Nothing contained herein shall provide any employee with any right to continued employment or in any way abridge the rights of the Company and its Participating Units to determine the terms and conditions of employment and whether to terminate employment of any employee. 7.2 No Vested Rights. Except as otherwise provided herein, no employee or other person shall have any claim of right (legal, equitable, or otherwise) to any award, allocation, or distribution or any right, title, or vested interest in any amounts in his Bonus Bank and no officer or employee of the Company or any Participating Group or any other person shall have any authority to make representations or agreements to the contrary. No interest conferred herein to a Participant shall be assignable or subject to claim by a Participant's creditors. The right of the Participant to receive a distribution hereunder shall be an unsecured claim against the general assets of the Company and the Participant shall have no rights in or against any specific assets of the Company as the result of participation hereunder. 7.3 Not Part of Other Benefits. The benefits provided in this Plan shall not be deemed a part of any other benefit provided by the Company to its employees. The Company assumes no obligation to Plan Participants except as specified herein. This is a complete statement, along with the Schedules and Appendices attached hereto, of the terms and conditions of the Plan. 7.4 Other Plans. Nothing contained herein shall limit the Company or the Compensation Committee's power to grant bonuses to employees of the Company, whether or not Participants in this Plan. 7.5 Limitations. Neither the establishment of the Plan nor the grant of an award hereunder shall be deemed to constitute an express or implied contract of employment for any period of time or in any way abridge the rights of the Company to determine the terms and conditions of employment or to terminate the employment of any employee with or without cause at any time. 7.6 Unfunded Plan. This Plan is unfunded and is maintained by the Company in part to provide deferred compensation to a select group of management and highly compensated key employees. Nothing herein shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant. ARTICLE VIII Authority 8.1 Compensation Committee Authority. Except as otherwise expressly provided herein, full power and authority to interpret and administer this Plan shall be vested in the Compensation Committee. The Compensation Committee may from time to time make such decisions and adopt such rules and regulations for implementing the Plan as it deems appropriate for any Participant under the Plan. Any decision taken by the Compensation Committee arising out of or in connection with the construction, administration, interpretation and effect of the Plan shall be final, conclusive and binding upon all participants and any person claiming under or through them. 8.2 Board of Directors Authority. The Board shall be ultimately responsible for administration of the Plan. References made herein to the "Compensation Committee" or "Committee" assume that the Board of Directors has created a Compensation Committee to administer the Plan. In the event a Compensation Committee is not so designated, the Board shall administer the Plan. The Board or its Compensation Committee, as appropriate, shall work with the CEO of the Company in all aspects of the administration of the Plan. ARTICLE IX Notice 9.1 Any notice to be given pursuant to the provisions of the Plan shall be in writing and directed to the appropriate recipient thereof at his business address or office location. ARTICLE X Effective Date 10.1 This Plan shall be effective as of January 1, 1996. ARTICLE XI Amendments 11.1 Amendment. This Plan may be amended, suspended or terminated at any time at the sole discretion of the Board upon the recommendation of the Compensation Committee. Any action which suspends the bonus accruals for more than twelve months shall be deemed a termination of the Plan. 11.2 Compensation Committee Review. As to future targets and awards under the Plan, the Compensation Committee will review projected performance data at its October meeting, recommend forward targets at its December meeting and review for approval specific prior performance so as to make the appropriate awards under the Plan at its February meeting. The Compensation Committee will make its recommendations to the Board of Directors. 11.3 Board of Directors. The Board of Directors reserves, solely to itself, the right to make decisions as to targets, achievements, and awards contemplated under the Plan. The decision as to who participates in the Plan and the duration of the Plan are also the sole rights of the Board of Directors. 11.4 Protected Benefits. Notwithstanding the foregoing, after December 31 of an applicable year, the Board may not amend the Plan or otherwise revise the eligible participants or other Plan provisions such that the Participant receives less than the smaller of (i) the amount payable by the Plan prior to such amendment or (ii) the Participant's Target Bonus Value as determined prior to such amendment. 11.5 Notice. Notice of any amendment, suspension or termination shall be given promptly to each Participant. ARTICLE XII Applicable Law 12.1 This Plan shall be construed in accordance with the provisions of the laws of the State of Wisconsin to the extent not preempted by Federal law. Exhibit A Calculation of the Cost of Capital Inputs Variables: Risk Free Rate = Average Daily closing yield on U.S. Government 30 Yr. Bonds (for the month of October preceding the Plan Year) Market Risk Premium = 6.0% (Fixed) Beta = 1.50 (to be evaluated annually) Debt/Capital Ratio = Initial Year 40%; subsequent years computed using the monthly average debt/capital ratio from the business plan for that subsequent year. b = Cost of Debt Capital (Weighted Average Yield on the Company's Long Term Debt Obligations) Marginal Tax Rate = 38.0% Calculations: y = Cost of Equity Capital = Risk Free Rate + (Beta x Market Risk Premium) Weighted Average Cost of Capital = [Cost of Equity Capital x (1 - Debt/Capital Ratio)] + [Cost of Debt x (Debt/Capital Ratio) x (1 - Marginal Tax Rate)] c* = [y x (1-Debt/Capital)] + [b x (Debt/Capital) x (1 - Marginal Tax Rate)] Exhibit B SVA Expected Participating Groups Leverage Factor Improvement Factor Corporate $5,000,000 $1,500,000 Agriculture Group 4,000,000 1,500,000 Construction Group 4,000,000 * West Bend, WI Plant 4,000,000 1,000,000 Lebanon, PA Plant 2,000,000 500,000 Yankton, SD Plant 2,000,000 * Madison, SD Plant 2,000,000 * *Dollar values are only used when SVA is negative. When SVA is 0 or positive, improvement factor is prior year's actual SVA times the sum of inflation (U.S. CPI index) plus 5%. EX-10.11 10 GEHL COMPANY 1995 Stock Option Plan Section 1. Purpose The purpose of the Gehl Company 1995 Stock Option Plan (the "Plan") is to promote the best interests of Gehl Company (together with any successor thereto, the "Company") and its shareholders by providing key employees of the Company and its Affiliates (as defined below) and members of the Company's Board of Directors who are not employees of the Company or its Affiliates with an opportunity to acquire a proprietary interest in the Company. It is intended that the Plan will promote continuity of management and increased incentive and personal interest in the welfare of the Company by those key employees who are primarily responsible for shaping and carrying out the long- range plans of the Company and securing the Company's continued growth and financial success. In addition, by encouraging stock ownership by directors who are not employees of the Company or its Affiliates, the Company seeks to attract and retain on its Board of Directors persons of exceptional competence and to provide a further incentive to serve as a director of the Company. Section 2. Definitions As used in the Plan, the following terms shall have the respective meanings set forth below: (a) "Affiliate" shall mean any entity that, directly or through one or more intermediaries, is controlled by, controls, or is under common control with, the Company. (b) "Award" shall mean any Option granted under the Plan. (c) "Stock Option Agreement" shall mean any written agreement, contract, or other instrument or document evidencing any Award under the Plan. (d) "Change of Control of the Company" shall mean any one of the following events: (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 exchange offer; (ii) the shareholders of the Company approve a merger or consolidation of the Company with any other Person as a result of which less than 50% of the outstanding voting securities of the surviving or resulting Person are owned by the former shareholders of the Company (other than a shareholder who is an Affiliate of any party to such consolidation or merger); (iii) the shareholders of the Company approve the sale of substantially all of the Company's assets to a Person which is not a wholly-owned subsidiary of the Company; (iv) any person becomes a beneficial owner (as such term is defined in Rule 13d-3 of the Exchange Act (or any successor provision thereto)), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities the effect of which (as determined by the Board of Directors of the Company and, in the case of Non- Qualified Stock Options granted to Non-Employee Directors under the Plan, to the extent permitted by Rule 16b-3) 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 of the Company then in office who were directors of the Company at the beginning of the period. (e) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. (f) "Commission" shall mean the United States Securities and Exchange Commission or any successor agency. (g) "Committee" shall mean a committee of the Board of Directors of the Company designated by such Board to administer the Plan and comprised of not less than two directors, each of whom is a "disinterested person" within the meaning of Rule 16b-3 and each of whom is an "outside director" within the meaning of Section 162(m)(4)(C) of the Code (or any successor provision thereto). (h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. (i) "Fair Market Value" shall mean, with respect to any property (including, without limitation, any Shares or other securities), the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee. (j) "Incentive Stock Option" shall mean an option granted under Section 6(a) of the Plan that is intended to meet the requirements of Section 422 of the Code (or any successor provision thereto). (k) "Key Employee" shall mean any officer or other key employee of the Company or of any Affiliate who is responsible for or contributes to the management, growth or profitability of the business of the Company or any Affiliate as determined by the Committee. (l) "Non-Employee Director" shall mean any member of the Company's Board of Directors who is not an employee of the Company or of any Affiliate. (m) "Non-Qualified Stock Option" shall mean an option granted under Section 6(a) of the Plan that is not intended to be an Incentive Stock Option and shall mean any option granted to a Non-Employee Director under Section 6(b) of the Plan. (n) "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock Option. (o) "Participating Key Employee" shall mean a Key Employee designated to be granted an Award under the Plan. (p) "Person" shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, or government or political subdivision thereof. (q) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the Commission under the Exchange Act, or any successor rule or regulation thereto. (r) "Shares" shall mean shares of common stock of the Company, $.10 par value, and such other securities or property as may become subject to Awards pursuant to an adjustment made under Section 4(b) of the Plan. Section 3. Administration The Plan shall be administered by the Committee; provided, however, that if at any time the Committee shall not be in existence, the functions of the Committee as specified in the Plan shall be exercised by a committee consisting of those members of the Board of Directors of the Company who qualify as "disinterested persons" under Rule 16b-3 and as "outside directors" under Section 162(m)(4)(C) of the Code (or any successor provision thereto). Subject to the terms of the Plan and without limitation by reason of enumeration, the Committee shall have full power and authority to: (i) designate Participating Key Employees; (ii) determine the type or types of Awards to be granted to each Participating Key Employee under the Plan; (iii) determine the number of Shares to be covered by (or with respect to which payments, rights, or other matters are to be calculated in connection with) Awards granted to Participating Key Employees; (iv) determine the terms and conditions of any Award granted to a Participating Key Employee; (v) determine whether, to what extent, and under what circumstances Awards granted to Participating Key Employees may be settled or exercised in cash, Shares, other securities, other Awards, or other property, and the method or methods by which Awards may be settled, exercised, cancelled, forfeited, or suspended; (vi) interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan (including, without limitation, any Stock Option Agreement); (vii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (viii) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time, and shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any Participating Key Employee, any Non-Employee Director, any holder or beneficiary of any Award, any shareholder, and any employee of the Company or of any Affiliate. Notwithstanding the foregoing, Awards to Non-Employee Directors under the Plan shall be automatic and the amount and terms of such Awards shall be determined as provided in Section 6(b) of the Plan. Section 4. Shares Available for Award (a) Shares Available. Subject to adjustment as provided in Section 4(b): (i) Number of Shares Available. The number of Shares with respect to which Awards may be granted under the Plan shall be 600,000. If, after the effective date of the Plan, any Shares covered by an Award granted under the Plan, or to which any Award relates, are forfeited or if an Award otherwise terminates, expires or is cancelled prior to the delivery of all of the Shares or of other consideration issuable or payable pursuant to such Award, then the number of Shares counted against the number of Shares available under the Plan in connection with the grant of such Award, to the extent of any such forfeiture, termination, expiration or cancellation, shall again be available for granting of additional Awards under the Plan. (ii) Limitations on Awards to Individual Participants. During any one calendar year, no Participating Key Employee shall be granted Awards under the Plan that could result in such Participating Key Employee receiving Options for more than 100,000 Shares under the Plan. Such number of Shares as specified in the preceding sentence shall be subject to adjustment in accordance with the terms of Section 4(b) hereof. In all cases, determinations under this Section 4(a)(ii) shall be made in a manner that is consistent with the exemption for performance-based compensation provided by Section 162(m) of the Code (or any successor provision thereto) and any regulations promulgated thereunder. (iii) Accounting for Awards. The number of Shares covered by an Award under the Plan, or to which such Award relates, shall be counted on the date of grant of such Award against the number of Shares available for granting Awards under the Plan. (iv) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares. (b) Adjustments. In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event affects the Shares such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee may, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares subject to the Plan and which thereafter may be made the subject of Awards under the Plan, (ii) the number and type of Shares subject to outstanding Awards, and (ii) the grant, purchase, or exercise price with respect to any Award, or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award; provided, however, in each case, that with respect to Awards of Incentive Stock Options no such adjustment shall be authorized to the extent that such authority would cause the Plan to violate Section 422(b) of the Code (or any successor provision thereto); and provided further that the number of Shares subject to an Award shall always be a whole number. Notwithstanding the foregoing, Non-Qualified Stock Options subject to grant or previously granted to Non-Employee Directors under Section 6(b) of the Plan at the time of any event described in the preceding sentence shall be subject to only such adjustments as shall be necessary to maintain the relative proportionate interest represented thereby immediately prior to any such event and to preserve, without exceeding, the value of such Options. Section 5. Eligibility Any Key Employee, including any executive officer or employee-director of the Company or of any Affiliate, who is not a member of the Committee shall be eligible to be designated a Participating Key Employee. All Non-Employee Directors shall receive Awards of Non-Qualified Stock Options as provided in Section 6(b). Section 6. Awards (a) Option Awards to Key Employees. The Committee is hereby authorized to grant Options to Key Employees with the terms and conditions as set forth below and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine. (i) Exercise Price. The exercise price per Share of an Option granted pursuant to this Section 6(a) shall be determined by the Committee; provided, however, that such exercise price shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option. (ii) Option Term. The term of each Option shall be fixed by the Committee; provided, however, that in no event shall the term of any Option exceed a period of ten years from the date of its grant. (iii)Exercisability and Method of Exercise. An Option shall become exercisable in such manner (including, without limitation, accelerated exercisability in the event of Change of Control of the Company) and within such period or periods and in such installments or otherwise as shall be determined by the Committee. Unless the Committee shall otherwise determine on or prior to the date of grant of an Option, such Option may be exercised, in whole or in part, from and after the date it was granted in accordance with the following schedule: Cumulative Percentage of Shares Subject to Option Which May be Purchased (which number of Shares shall be rounded Elapsed Period of Time down to the nearest whole After Date Option is Granted number) Less than One (1) Year 0% One (1) Year 33-1/3% Two (2) Years 66-2/3% Three (3) Years 100% The Committee also shall determine the method or methods by which, and the form or forms, including, without limitation, cash, Shares, other securities, other Awards, or other property, or any combination thereof, having a Fair Market Value on the exercise date equal to the relevant exercise price, in which payment of the exercise price with respect to any Option may be made or deemed to have been made. (iv) Incentive Stock Options. The terms of any Incentive Stock Option granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code (or any successor provision thereto) and any regulations promulgated thereunder. Notwithstanding any provision in the Plan to the contrary, no Incentive Stock Option may be granted hereunder after the tenth anniversary of the adoption of the Plan by the Board of Directors of the Company. (b) Non-Qualified Stock Option Awards to Non-Employee Directors. (i) Eligibility. Each Non-Employee Director shall automatically be granted Non-Qualified Stock Options under the Plan in the manner set forth in this Section 6(b). A Non-Employee Director may hold more than one Non- Qualified Stock Option, but only on the terms and subject to any restrictions set forth herein. (ii) Annual Option Grants to Non-Employee Directors. Each Non- Employee Director (if he or she continues to serve in such capacity) shall, on the day following the annual meeting of shareholders in each year during the time the Plan is in effect, automatically be granted a Non-Qualified Stock Option to purchase 2,000 Shares (which number of Shares shall be subject to adjustment in the manner provided in Section 4(b) hereof). (iii) Grant Limitation. Notwithstanding the provisions of Section 6(b)(ii) hereof, Non-Qualified Stock Options shall be automatically granted to Non-Employee Directors under the Plan only for so long as the Plan remains in effect and a sufficient number of Shares are available hereunder for the granting of such Options. (iv) Exercise Price. The exercise price per Share for a Non- Qualified Stock Option granted to a Non-Employee Director under the Plan shall be equal to 100% of the "market value" of a Share on the date of grant of such Option. The "market value" of a Share on the date of grant to the Non- Employee Director shall be the last sale price per Share for the Shares on The Nasdaq Stock Market on the trading date next preceding such grant date; provided, however, that if the principal market for the Shares is then a national securities exchange, the "market value" shall be the closing price per Share for the Shares on the principal securities exchange on which the Shares are traded on the trading date next preceding the date of grant, or, in either case above, if no trading occurred on the trading date next preceding the date on which the Non-Qualified Stock Option is granted, then the "market price" per Share shall be determined with reference to the next preceding date on which the Shares were traded. (v) Exercisability of Options. Non-Qualified Stock Options granted to Non-Employee Directors under the Plan shall become exercisable in accordance with the following schedule: Cumulative Percentage of Shares Subject to Option Which May be Purchased (which number of Shares shall be rounded Elapsed Period of Time down to the nearest whole After Date Option is Granted number) Less than One (1) Year 0% One (1) Year 33-1/3% Two (2) Years 66-2/3% Three (3) Years 100% Notwithstanding the foregoing schedule, if a Non-Employee Director ceases to be a director of the Company by reason of death, disability or retirement within three (3) years after the date of grant or in the event of a Change of Control of the Company within three (3) years after the date of grant, the Option shall become immediately exercisable in full. (vi) Termination of Options. Non-Qualified Stock Options granted to Non-Employee Directors shall terminate on the earlier of: (A) ten years after the date of grant; or (B) twelve months after the Non-Employee Director ceases to be a director of the Company for any reason, including as a result of the Non-Employee Director's death, disability or retirement. (vii) Exercise of Options. A Non-Qualified Stock Option granted to a Non-Employee Director may be exercised, subject to its terms and conditions and the terms and conditions of the Plan, in full at any time or in part from time to time by delivery to the Secretary of the Company at the Company's principal office in West Bend, Wisconsin, of a written notice of exercise specifying the number of shares with respect to which the Option is being exercised. Any notice of exercise shall be accompanied by full payment of the exercise price of the Shares being purchased (x) in cash or its equivalent; (y) by tendering previously acquired Shares (valued at their "market value" [as determined in accordance with Section 6(b)(iv)] as of the date of exercise); or (z) by any combination of the means of payment set forth in subparagraphs (x) and (y). For purposes of subparagraphs (y) and (z) above, the term "previously acquired Shares" shall only include Shares owned by the Non-Employee Director prior to the exercise of the Option for which payment is being made and shall not include Shares which are being acquired pursuant to the exercise of said Option. No shares will be issued until full payment therefor has been made. (c) General. (i) No Consideration for Awards. Awards shall be granted to Participating Key Employees without the requirement of cash consideration unless otherwise determined by the Committee. Awards of Non-Qualified Stock Options granted to Non-Employee Directors under Section 6(b) of the Plan shall be granted for no cash consideration unless otherwise required by law. (ii) Award Agreements. Each Award granted under the Plan shall be evidenced by a Stock Option Agreement in such form (consistent with the terms of the Plan) as shall have been approved by the Committee. (iii) Awards May Be Granted Separately or Together. Awards to Participating Key Employees under the Plan may be granted either alone or in addition to, in tandem with, or in substitution for any other Award or any award granted under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards, or in addition to or in tandem with awards granted under any other plan of the Company or any Affiliate, may be granted either at the same time as or at a different time from the grant of such other Awards or awards. (iv) Limits on Transfer of Awards. No Award, and no right under any such Award, shall be assignable, alienable, salable, or transferable by a Participating Key Employee or a Non-Employee Director otherwise than by will or by the laws of descent and distribution; provided, however, that a Participating Key Employee at the discretion of the Committee may, and a Non- Employee Director shall, be entitled, in the manner established by the Committee, to designate a beneficiary or beneficiaries to exercise his or her rights, and to receive any property distributable, with respect to any Award upon the death of the Participating Key Employee or the Non-Employee Director, as the case may be. Each Award, and each right under any Award, shall be exercisable, during the lifetime of the Participating Key Employee or the Non- Employee Director, only by such individual or, if permissible under applicable law, by such individual's guardian or legal representative. No Award, and no right under any such Award, may be pledged, alienated, attached, or otherwise encumbered, and any purported pledge, alienation, attachment, or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate. (v) Term of Awards. Except as otherwise provided in the Plan, the term of each Award shall be for such period as may be determined by the Committee but the expiration date of an Award shall be not later than ten years after the date such Award is granted. (vi) Share Certificates; Representation. All certificates for Shares delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the Commission, any stock exchange or other market upon which such Shares are then listed or traded, and any applicable federal or state securities laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. The Committee may require each Participating Key Employee, Non- Employee Director or other Person who acquires Shares under the Plan by means of an Award originally made to a Participating Key Employee or a Non-Employee Director to represent to the Company in writing that such Participating Key Employee, Non-Employee Director or other Person is acquiring the Shares without a view to the distribution thereof. Section 7. Amendment and Termination of the Plan; Correction of Defects and Omissions (a) Amendments to and Termination of the Plan. The Board of Directors of the Company may at any time amend, alter, suspend, discontinue, or terminate the Plan; provided, however, that the provisions of Section 6(b) of the Plan shall not be amended more than once every six months, other than to comport with changes in the Code, the Employee Retirement Income Security Act of 1974, as amended, or the rules promulgated thereunder; and provided further that shareholder approval of any amendment of the Plan shall also be obtained if otherwise required by: (i) the rules and/or regulations promulgated under Section 16 of the Exchange Act (in order for the Plan to remain qualified under Rule 16b-3), (ii) the Code or any rules promulgated thereunder (in order to allow for Incentive Stock Options to be granted under the Plan), or (iii) the quotation or listing requirements of The Nasdaq Stock Market or any principal securities exchange or market on which the Shares are then traded (in order to maintain the quotation or listing of the Shares thereon). Termination of the Plan shall not affect the rights of Participating Key Employees or Non-Employee Directors with respect to Awards previously granted to them, and all unexpired Awards shall continue in force and effect after termination of the Plan except as they may lapse or be terminated by their own terms and conditions. (b) Correction of Defects, Omissions and Inconsistencies. The Committee may correct any defect, supply any omission, or reconcile any inconsistency in any Award or Stock Option Agreement in the manner and to the extent it shall deem desirable to carry the Plan into effect. Section 8. General Provisions (a) No Rights to Awards. No Key Employee, Participating Key Employee or other Person (other than a Non-Employee Director to the extent provided in Section 6(b) of the Plan) shall have any claim to be granted an Award under the Plan, and there is no obligation for uniformity of treatment of Key Employees, Participating Key Employees, or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to each Participating Key Employee. (b) Withholding. No later than the date as to which an amount first becomes includible in the gross income of a Participating Key Employee for federal income tax purposes with respect to any Award under the Plan, the Participating Key Employee shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. Unless otherwise determined by the Committee, withholding obligations arising with respect to Awards to Participating Key Employees under the Plan may be settled with Shares, including Shares that are part of, or are received upon exercise of, the Award that gives rise to the withholding requirement. The obligations of the Company under the Plan shall be conditional on such payment or arrangements, and the Company and any Affiliate shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Participating Key Employee. The Committee may establish such procedures as it deems appropriate for the settling of withholding obligations with Shares, including, without limitation, the establishment of such procedures as may be necessary to satisfy the requirements of Rule 16b-3. (c) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases. (d) Rights and Status of Recipients of Awards. The grant of an Award shall not be construed as giving a Participating Key Employee the right to be retained in the employ of the Company or any Affiliate. Further, the Company or any Affiliate may at any time dismiss a Participating Key Employee from employment, free from any liability, or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Stock Option Agreement. The grant of an Award to a Non-Employee Director pursuant to Section 6(b) of the Plan shall confer no right on such Non-Employee Director to continue as a director of the Company. Except for rights accorded under the Plan and under any applicable Stock Option Agreement, Participating Key Employees and Non- Employee Directors shall have no rights as holders of Shares as a result of the granting of Awards hereunder. (e) Unfunded Status of the Plan. Unless otherwise determined by the Committee, the Plan shall be unfunded and shall not create (or be construed to create) a trust or a separate fund or funds. The Plan shall not establish any fiduciary relationship between the Company and any Participating Key Employee, any Non-Employee Director or other Person. To the extent any Person holds any right by virtue of a grant under the Plan, such right (unless otherwise determined by the Committee) shall be no greater than the right of an unsecured general creditor of the Company. (f) Governing Law. The validity, construction and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Wisconsin and applicable federal law. (g) Severability. If any provision of the Plan or any Stock Option Agreement or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, or as to any Person or Award, or would disqualify the Plan, any Stock Option Agreement or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan, any Stock Option Agreement or the Award, such provision shall be stricken as to such jurisdiction, Person, or Award, and the remainder of the Plan, any such Stock Option Agreement and any such Award shall remain in full force and effect. (h) No Fractional Shares. No fractional Shares or other securities shall be issued or delivered pursuant to the Plan, any Stock Option Agreement or any Award, and the Committee shall determine (except as otherwise provided in the Plan) whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Shares or other securities, or whether such fractional Shares or other securities or any rights thereto shall be canceled, terminated, or otherwise eliminated. (i) Headings. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. Section 9. Effective Date of the Plan The Plan shall be effective on the date of adoption of the Plan by the Board of Directors of the Company provided that the Plan is approved by the shareholders of the Company within twelve months following the date of adoption of the Plan by the Board of Directors. All Awards granted prior to shareholder approval of the Plan shall be subject to such approval and shall not be exercisable until after such approval. EX-10.12 11 GEHL COMPANY 1995 STOCK OPTION PLAN NON-QUALIFIED STOCK OPTION AGREEMENT THIS AGREEMENT, made and entered into as of this ____ day of _______________, ____, by and between GEHL COMPANY, a Wisconsin corporation (the "Company"), and ______________________________ (the "Optionee"). W I T N E S S E T H : WHEREAS, the Company has adopted the Gehl Company 1995 Stock Option Plan (the "Plan"), the terms of which, to the extent not stated herein, are specifically incorporated by reference in this Agreement; and WHEREAS, one of the purposes of the Plan is to permit the granting of options to purchase shares of the Company's Common Stock, $.10 par value (the "Common Stock"), to certain key employees of the Company and its affiliates; and WHEREAS, the Optionee is now employed by the Company or an affiliate of the Company in a key capacity, and the Company desires the Optionee to remain in such employ, and to secure or increase his stock ownership in the Company in order to increase his incentive and personal interest in the welfare of the Company. NOW, THEREFORE, in consideration of the premises and of the covenants and agreements herein set forth, the parties hereby mutually covenant and agree as follows: 1. Grant of Option. Subject to the terms and conditions of the Plan and this Agreement, the Company grants to the Optionee an option (the "Option") to purchase from the Company all or any part of the aggregate amount of _______ shares of Common Stock (the "Optioned Shares"). The Option is intended to constitute a non-qualified stock option and shall not be treated as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended. 2. Option Price. The price to be paid for the Optioned Shares shall be $______ per share, which has been determined by the Compensation and Benefits Committee of the Board of Directors of the Company (the "Committee") to be not less than 100% of the fair market value of such stock on the date of grant of the Option. 3. Exercisability and Termination of Option. Except as provided herein, the Option may be exercised only while the Optionee is an employee of either the Company or an affiliate of the Company and only if the Optionee has been continuously so employed since the date of grant of the Option. Subject to Paragraph 6, the Option may be exercised by the Optionee in whole, or in part from time to time, during the period beginning ______________, ____, and ending _____________________, ____, but only in accordance with the following schedule: Cumulative Percentage of Shares Subject to Option Which May be Purchased (which number of shares shall be rounded Elapsed Period of Time down to the nearest whole After Date Option is Granted number) Less than One (1) Year 0% One (1) Year 33-1/3% Two (2) Years 66-2/3% Three (3) Years 100% provided, however, that notwithstanding the foregoing vesting schedule, the Option shall become immediately exercisable in full following a Change of Control of the Company (as such term is defined in the Plan). 4. Manner of Exercise and Payment. Subject to the provisions of Paragraph 3 hereof, the Option may be exercised only by written notice to the Company, served upon the Secretary of the Company at its office at West Bend, Wisconsin, specifying the number of shares in respect to which the Option is being exercised. Subject to the provisions of this Agreement, the notice of exercise must be accompanied by full payment of the option price of the shares being purchased (i) in cash or by certified check or bank draft; (ii) by tendering previously acquired shares of Common Stock (valued at their "fair market value" as determined in the manner provided below); or (iii) by any combination of the means of payment set forth in subparagraphs (i) and (ii). For purposes of this Paragraph 4, the "fair market value" of a share of Common Stock shall be equal to the last per share sale price of such Common Stock as reflected on The Nasdaq Stock Market on the trading day next preceding the date of exercise; provided, however, that if the principal market for the shares of Common Stock is then a national securities exchange, the "fair market value" shall be the closing price per share for the Common Stock on the principal securities exchange on which the Common Stock is traded on the trading date next preceding the date of exercise, or, in either case above, if no trading occurred on the trading date next preceding the exercise date, then the "fair market value" per share of Common Stock shall be determined with reference to the next preceding date on which the Common Stock was traded. For purposes of subparagraphs (ii) and (iii) above, the term "previously acquired shares of Common Stock" shall only include Common Stock owned by the Optionee prior to the exercise of the Option and shall not include shares of Common Stock which are being acquired pursuant to the exercise of the Option. No shares shall be issued until full payment therefor has been made. 5. Nontransferability of the Option. The Option shall not be assignable, alienable, saleable or transferable by the Optionee other than by will or the laws of descent and distribution; provided, however, that the Optionee shall be entitled, in the manner provided in Paragraph 9 hereof, to designate a beneficiary to exercise his rights, and to receive any shares of Common Stock issuable, with respect to the Option upon the death of the Optionee. The Option may be exercised during the lifetime of the Optionee only by the Optionee or, if permitted by applicable law, the Optionee's guardian or legal representative. 6. Exercisability After Termination of Employment. (a) Death or Disability; Retirement. In the event the Optionee dies while he is in the employ of the Company or any affiliate or if his employment is terminated by reason of his retirement on or after attaining age 62 or by reason of his disability, the Option, to the extent not theretofore exercised, may be exercised in full as follows: (i) by the legal representative of the Optionee (who for purposes of this Agreement may be the Optionee's beneficiary as designated pursuant to Paragraph 9) at any time within twelve months after the date of the Optionee's death while in the employ of the Company or any affiliate; or (ii) by the Optionee or his legal representative or guardian at any time within twelve months after the termination of the Optionee's employment by reason of retirement on or after attaining age 62 or by reason of his disability, but in no event under subparagraphs (i) or (ii) later than ten years after the date of grant of the Option. (b) Voluntary Termination; Termination for Cause. In the event the Optionee voluntarily terminates his employment with the Company and any affiliates or if his employment is terminated for Cause (as hereinafter defined), the Option, to the extent not theretofore exercised, shall immediately terminate upon such termination of employment. For purposes of this Agreement, the term Cause shall mean any termination of the Optionee by action of the Board of Directors of the Company because of the failure of the Optionee to fulfill his obligations with the Company or any affiliate thereof or because of serious willful misconduct by the Optionee in respect of his obligations with the Company or any affiliate thereof which would cause a substantial and demonstrable detriment to the Company, as, for example, the commission by the Optionee of a felony or the perpetration by the Optionee of a common-law fraud against the Company or any affiliate thereof, or any major material action (i.e., not procedural or operational differences) taken against the expressed directive of the Board of Directors of the Company. (c) Other. In the event that the Optionee is discharged or leaves the employ of the Company and its affiliates for any reason (other than the death or disability of the Optionee, the retirement of the Optionee on or after attaining age 62, the Optionee's voluntary termination of his employment or the termination of the Optionee for Cause), the Option, to the extent not theretofore exercised but then permitted under the percentage limitations of Paragraph 3 hereof, may be exercised by the Optionee or by his legal representative or guardian at any time within three months after the date of termination of employment upon the tender to the Company, in cash or its equivalent, of the full purchase price, but in no event later than ten years after the date of grant of the Option. 7. Tax Withholding. The Company may deduct and withhold from any cash otherwise payable to the Optionee (whether payable as salary, bonus or other compensation) such amount as may be required for the purpose of satisfying the Company's obligation to withhold Federal, state or local taxes. Further, in the event the amount so withheld is insufficient for such purpose, the Company may require that the Optionee pay to the Company upon its demand or otherwise make arrangements satisfactory to the Company for payment of such amount as may be requested by the Company in order to satisfy its obligation to withhold any such taxes. The Optionee shall be permitted to satisfy the Company's tax withholding requirements by making a written election (in accordance with such rules and regulations and in such form as the Committee may determine) to have the Company withhold shares of Common Stock otherwise issuable to the Optionee (the "Withholding Election") or to deliver to the Company shares of Common Stock (the "Delivery Election") in each case having a fair market value on the date income is recognized (the "Tax Date") pursuant to the exercise of the Option equal to the minimum amount required to be withheld. If a Delivery Election is in effect at the time of the exercise of the Option, the Optionee shall deliver the shares of Common Stock subject to such Delivery Election on, or as soon as practicable after, the Tax Date. If the number of shares of Common Stock withheld or delivered to satisfy withholding tax requirements shall include a fractional share, the number of shares withheld or delivered shall be reduced to the next lower whole number and the Optionee shall deliver cash in lieu of such fractional share, or otherwise make arrangements satisfactory to the Company for payment of such amount. A Withholding Election or Delivery Election must be received by the Secretary of the Company on or prior to the Tax Date. In addition, if the Optionee is an officer, director or more than 10% shareholder of the Company ("Insider"), the following shall apply: A Withholding Election or Delivery Election made hereunder by an Insider will not be effective until at least six months after the date of grant of the Option (except in the event of the death or disability of the Optionee) and shall be made by an Insider in one of two ways. Either (i) the Withholding Election or Delivery Election, as the case may be, shall be received by the Secretary at least six months prior to the Tax Date and shall be irrevocable (provided that a new election revoking the prior Withholding Election or Delivery Election, as the case may be, may be made with respect to the unexercised portion of the Option effective six months after receipt by the Secretary of such new election), or (ii) the Withholding Election or the Delivery Election, as the case may be, must be received by the Secretary during a ten business day period commencing on the third business day following the release of the Company's quarterly or annual, as the case may be, statement of sales and earnings and on or prior to the Tax Date. 8. Capital Adjustments Affecting the Common Stock. The number of Optioned Shares subject hereto and the related per share exercise price shall be subject to adjustment in accordance with Section 4(b) of the Plan. 9. Designation of Beneficiary. (a) The person whose name appears on the signature page hereof after the caption "Beneficiary" or any successor designated by the Optionee in accordance herewith (the person who is the Optionee's beneficiary at the time of his death is herein referred to as the "Beneficiary") shall be entitled to exercise the Option, to the extent it is exercisable, after the death of the Optionee. The Optionee may from time to time revoke or change his beneficiary without the consent of any prior beneficiary by filing a new designation with the Committee. The last such designation received by the Committee shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Committee prior to the Optionee's death, and in no event shall any designation be effective as of a date prior to such receipt. (b) If no such Beneficiary designation is in effect at the time of the Optionee's death, or if no designated Beneficiary survives the Optionee or if such designation conflicts with law, the Optionee's estate acting through his legal representative shall be entitled to exercise the Option, to the extent it is exercisable after the death of the Optionee. If the Committee is in doubt as to the right of any person to exercise the Option, the Company may refuse to recognize such exercise, without liability for any interest or dividends on the Optioned Shares, until the Committee determines the person entitled to exercise the Option, or the Company may apply to any court of appropriate jurisdiction and such application shall be a complete discharge of the liability of the Company therefor. 10. Transfer Restriction. The shares to be acquired upon exercise of the Option may not be sold or offered for sale except pursuant to an effective registration statement under the Securities Act of 1933, as amended, or in a transaction which, in the opinion of counsel for the Company, is exempt from the registration provisions of said Act. 11. Status of Optionee. The Optionee shall not be deemed for any purposes to be a shareholder of the Company with respect to any of the Optioned Shares except to the extent that the Option shall have been exercised with respect thereto, the shares shall have been fully paid, and a stock certificate issued therefor. Neither the Plan nor the Option shall confer upon the Optionee any right to continue in the employ of the Company, nor to interfere in any way with the right of the Company to terminate the employment of the Optionee at any time. 12. Powers of the Company Not Affected. The existence of the Option shall not affect in any way the right or power of the Company or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock or the rights thereof, or dissolution or liquidation of the Company, or any sale or transfer of all or any part of the Company's assets or business or any other corporate act or proceeding, whether of a similar character or otherwise. 13. Interpretation by Committee. As a condition of the granting of the Option, the Optionee agrees, for himself and his legal representatives or guardians, that this Agreement shall be interpreted by the Committee and that any interpretation by the Committee of the terms of this Agreement and any determination made by the Committee pursuant to this Agreement shall be final, binding and conclusive. IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly authorized officers and its corporate seal to be hereunto affixed, and the Optionee has hereunto affixed his hand and seal as of the day and year first above written. GEHL COMPANY By: __________________________________________ [CORPORATE SEAL] Attest: ______________________________________ (SEAL) ____________________________________ , Optionee Beneficiary:___________________________________ Address of Beneficiary:________________________ Beneficiary's Tax Identification No.: __________________________________________ EX-10.13 12 GEHL COMPANY 1995 STOCK OPTION PLAN STOCK OPTION AGREEMENT FOR NON-EMPLOYEE DIRECTORS THIS AGREEMENT, dated as of this _____ day of ________________, ____, by and between Gehl Company, a Wisconsin corporation (the "Company"), and _________________ (the "Optionee"). W I T N E S S E T H : WHEREAS, the Company has adopted the Gehl Company 1995 Stock Option Plan (the "Plan"), the terms of which, to the extent not stated herein, are specifically incorporated by reference in this Agreement; and WHEREAS, the Plan authorizes the automatic grant of options to purchase shares of the Company's Common Stock, $.10 par value (the "Common Stock"), to members of the Company's Board of Directors who are not employees of the Company or any affiliate of the Company (a "Non-Employee Director"); and WHEREAS, the Optionee is now a Non-Employee Director, and the Company desires him to continue as a member of the Company's Board of Directors and to secure or increase his stock ownership in the Company as an added incentive for him to continue his association with the Company. NOW, THEREFORE, in consideration of the premises and of the covenants and agreements herein set forth, the parties hereby mutually covenant and agree as follows: 1. Grant of Option. Subject to the terms and conditions of the Plan and this Agreement, the Company hereby grants to the Optionee an option (the "Option") to purchase from the Company all or any part of the aggregate amount of 2,000 shares of Common Stock (the "Optioned Shares"). The Option is intended to constitute a non-qualified stock option and shall not be treated as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, or any successor provision thereto. 2. Option Price. The per share exercise price to be paid for the Optioned Shares shall be $_____. 3. Exercisability and Termination of Option. The Option may be exercised by the Optionee only in accordance with the following schedule: Cumulative Percentage of Shares Subject to Option Which May be Purchased (which number of shares shall be rounded Elapsed Period of Time down to the nearest whole After Date Option is Granted number) Less than One (1) Year 0% One (1) Year 33-1/3% Two (2) Years 66-2/3% Three (3) Years 100% Notwithstanding the foregoing schedule, if the Optionee ceases to be a director of the Company by reason of death, disability or retirement prior to ______________, ____, or in the event of a Change of Control of the Company (as defined in the Plan) prior to ______________, ____, the Option shall become immediately exercisable in full. The Option shall terminate on the earlier of: (i) _______________, ____; or (ii) twelve months after the Optionee ceases to be a director of the Company for any reason, including as a result of the Optionee's death, disability or retirement. 4. Manner of Exercise and Payment. Subject to the provisions of Paragraph 3 hereof and the Plan, the Option may be exercised in full at any time or in part from time to time by delivery to the Secretary of the Company at the Company's principal office in West Bend, Wisconsin, of a written notice of exercise specifying the number of shares with respect to which the Option is being exercised. The notice of exercise must be accompanied by payment in full of the exercise price of the shares being purchased: (i) in cash or its equivalent; (ii) by tendering previously acquired shares of Common Stock (valued at their "market value" as of the date of exercise, as determined in the manner provided in Section 6(b)(iv) of the Plan); or (iii) by any combination of the means of payment set forth in subparagraphs (i) and (ii). For purposes of subparagraphs (ii) and (iii) above, the term "previously acquired shares of Common Stock" shall only include shares of Common Stock owned by the Optionee prior to the exercise of the Option for which payment is being made and shall not include shares of Common Stock which are being acquired pursuant to the exercise of the Option. No shares shall be issued until full payment therefor has been made. 5. Nontransferability of the Option. The Option shall not be transferable by the Optionee other than by will or the laws of descent and distribution; provided, however, that the Optionee shall be entitled, in the manner provided in Paragraph 6 hereof, to designate a beneficiary to exercise his rights, and to receive any shares of Common Stock issuable, with respect to the Option upon the death of the Optionee. The Option may be exercised during the lifetime of the Optionee only by the Optionee or, if permitted by applicable law, the Optionee's guardian or legal representative. 6. Designation of Beneficiary. (a) The person whose name appears on the signature page hereof after the caption "Beneficiary" or any successor designated by the Optionee in accordance herewith (the person who is the Optionee's beneficiary at the time of his death herein referred to as the "Beneficiary") shall be entitled to exercise the Option, to the extent it is exercisable, after the death of the Optionee. The Optionee may from time to time revoke or change his Beneficiary without the consent of any prior Beneficiary by filing a new designation with the Compensation and Benefits Committee of the Board of Directors of the Company or such other committee of the Board which shall have been designated to administer the Plan (the "Committee"). The last such designation received by the Committee shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Committee prior to the Optionee's death, and in no event shall any designation be effective as of a date prior to such receipt. (b) If no such Beneficiary designation is in effect at the time of the Optionee's death, or if no designated Beneficiary survives the Optionee or if such designation conflicts with law, the Optionee's estate shall be entitled to exercise the Option, to the extent it is exercisable after the death of the Optionee. If the Committee is in doubt as to the right of any person to exercise the Option, the Company may refuse to recognize such exercise, without liability for any interest or dividends on the Optioned Shares, until the Committee determines the person entitled to exercise the Option, or the Company may apply to any court of appropriate jurisdiction and such application shall be a complete discharge of the liability of the Company therefor. 7. Capital Adjustments Affecting the Common Stock. The number of Optioned Shares subject hereto and the related per share exercise price shall be subject to adjustment in accordance with Section 4(b) of the Plan. 8. Transfer Restrictions. The shares to be acquired upon exercise of the Option may not be sold or otherwise disposed of except pursuant to an effective registration statement under the Securities Act of 1933, as amended, or in a transaction which, in the opinion of counsel for the Company, is exempt from registration under said Act. 9. Status of Optionee. The Optionee shall have no rights as a shareholder with respect to shares covered by the Option until the date of issuance of stock certificates to the Optionee and only after such shares are fully paid. The Option shall not confer upon the Optionee the right to continue as a director of the Company. 10. Interpretation by Committee. As a condition of the granting of the Option, the Optionee agrees, for himself and his personal representatives, that this Agreement shall be interpreted by the Committee and that, subject to the express terms of the Plan, any interpretation by the Committee of the terms of this Agreement and any determination made by the Committee pursuant to this Agreement shall be final, binding and conclusive. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officers and its corporate seal to be hereunto affixed, and the Optionee has hereunto affixed his hand and seal as to the day and year first above written. GEHL COMPANY By:____________________________________ [SEAL] Attest:________________________________ [SEAL] _________________, Optionee Beneficiary:______________________________ Address of Beneficiary:_____________________________ Beneficiary's Tax Identification No.:______________________ EX-13 13 [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 LLP, independent accountants, whose report also appears on this page. Included in the audit process was a review of the Company's system of internal controls. Price Waterhouse LLP annually provides to management and the Audit Committee a supplemental report which includes comments on the adequacy of the system and recommendations for any improvements. William D. Gehl 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 23 of this report present fairly, in all material respects, the financial position of Gehl Company and its subsidiaries at December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Milwaukee, Wisconsin February 12, 1996 [Pages 9 through 13 of the Annual Report] Management's Discussion and Analysis Overview Gehl Company's net income in 1995 was $9.0 million, or $1.44 per share, a 79% increase from $5.0 million, or $.82 per share, earned in 1994. Net sales in 1995 increased 5% to $153.5 million from $146.6 million in 1994. Gehl Construction 1995 net sales increased 24% to $64.4 million, while Gehl Agriculture 1995 net sales decreased 6% to $89.1 million. Gehl Construction comprised 42% of Company net sales in 1995 versus 35% in 1994 and 32% in 1993. Gehl Agriculture's sales were 58% of Company net sales in 1995, down from 65% in 1994. Operating profit in 1995 increased 5% to $13.6 million. Gehl Construction accounted for $13.2 million of the operating profit, while Gehl Agriculture contributed the balance of $449,000. Interest expense in 1995 declined $978,000, or 15%, to $5.7 million. Other expense, which was $2.9 million in 1994, decreased in 1995 to $537,000. The Company continued to reduce its Gehl Agriculture accounts receivable in 1995, from $63.3 million at December 31, 1994 to $ 55.0 million at December 31, 1995. Cash flow provided by operating activities was $9.7 million, following $19.5 million provided in 1994. Cash flow generated in 1995 was used in part to reduce debt by $8.0 million to $46.9 million at December 31, 1995. The Company has reduced its debt by $50.8 million during the last three years. The Company's ratio of debt to total capital was 45.7% at December 31, 1995, as compared to 54.2% and 64.0% at December 31, 1994 and 1993, respectively. Results of Operations 1995 vs. 1994 Net Sales: 1995 1994 1993 1992 1991 ($ millions) Gehl Construction $64.4 $51.8 $43.3 $38.5 $37.0 Gehl Agriculture 89.1 94.8 93.9 91.2 90.3 ---- ------ ------ ------ ------ Total $153.5 $146.6 $137.2 $129.7 $127.3 (% of total) Gehl Construction 42.0% 35.3% 31.5% 29.7% 29.1% Gehl Agriculture 58.0% 64.7% 68.5% 70.3% 70.9% Net sales for 1995 of $153.5 million were 5% greater than the $146.6 million of net sales in 1994. Gehl Construction net sales in 1995 were $64.4 million, 24% higher than sales of $51.8 million in 1994. The increase from 1994 levels was primarily due to increased shipments of rough- terrain telescopic forklifts and skid steer loaders, the latter both domestically and internationally. Continued strong demand in the Company's residential and non-residential construction markets and ongoing general construction activity propelled the sales growth. Gehl Agriculture net sales in 1995 decreased 6% to $89.1 million from $94.8 million in 1994. The decrease was due in part to weaker industry-wide demand for agricultural implements during 1995 and in part to the Company's continuing efforts to ship product to its agricultural dealers at levels below the dealers' sales to farmers, thereby reducing field inventory levels at its dealers. Gross Profit: 1995 gross profit of $44.6 million was 3% higher than 1994's $43.3 million. The increase was due primarily to higher sales volume. Gross profit as a percent of net sales decreased slightly in 1995 to 29.1% from 29.5% in 1994. Gehl Construction's gross profit as a percent of net sales increased to 32.2% in 1995 from 28.6% in 1994. The substantial improvement resulted primarily from: 1) increased sales of higher margin rough-terrain telescopic forklifts; and 2) lower unit product costs due to increased overhead absorption at higher production levels and productivity improvements at both of the Company's construction plants. Gehl Agriculture's 1995 gross profit as a percent of net sales decreased to 26.8% from 30.0% in 1994. This decrease was due primarily to: 1) the impact of a change in the mix of products shipped in 1995 versus products shipped in 1994; 2) increased unit costs due to lower overhead absorption associated with decreases in the levels of production; and 3) increased price competition due in part to higher inventory levels among the Company's competitors. Selling, General and Administrative Expenses: Selling, general and administrative expenses increased $688,000, or 2%, to $31.0 million in 1995 as compared to expenses of $30.3 million in 1994. As a percent of sales, however, selling, general, and administrative expenses decreased to 20.2% in 1995 from 20.7% in 1994. The increased expenses in 1995 resulted primarily from higher agricultural equipment sales promotion costs which were incurred to stimulate market demand, partially offset by lower product liability expenses. Income (Loss) from Operations: ($ millions) 1995 1994 1993 1992 1991 Gehl Construction $13.2 $8.6 $1.8 $(2.5) $(4.8) Gehl Agriculture .4 4.4 5.5 (4.4) (8.6) ----- ------ ------ ------ ------ Total $13.6 $13.0 $7.3 $(6.9) $(13.4) Due primarily to higher net sales, income from operations in 1995 increased 5% from 1994 to $13.6 million. Gehl Construction income from operations increased 54% in 1995 to $13.2 million from $8.6 million in 1994. Increased sales volume and higher gross profit margin were the major factors for the improvement. Income from operations in Gehl Agriculture fell from $4.4 million in 1994, including a $2.6 million charge to operations for discontinued products, to $449,000 in 1995. The decrease was primarily due to lower sales volume and to reduced gross profit margin. Interest Expense: Interest expense decreased $978,000, or 15%, to $5.7 million in 1995. During the last three years, interest expense has declined $4.4 million, or 43%, from 1992's $10.1 million peak. Reductions in interest-bearing debt from $97.7 million at the end of 1992 to $46.9 million at December 31, 1995, retirement of the Company's $10 million, 12.6% subordinated debt in November 1994 and lower interest rate mark-ups negotiated with the Company's primary lender and implemented in October 1994, have resulted in the significant reduction in the Company's interest expense. Despite the lower interest rate mark-ups, the average rate of interest paid by the Company in 1995 was 9.8% compared to 9.6% in 1994, due to the prime rate, upon which the Company's interest rates were based, averaging approximately 8.8% in 1995 versus 7.1% in 1994. Other Income (Expense), Net: Other expense decreased $2.4 million in 1995 to $537,000 from $2.9 million in 1994. The reduction in expense was due primarily to: 1) a gain of $142,000 on four variable rate sales of finance contracts made in 1993 and 1994 versus a loss of $492,000 recorded on these same sales in 1994, an improvement of $634,000; 2) a reduction of $608,000 in the costs of selling finance contracts receivable to third parties in 1995 as compared with 1994; 3) a one-time $400,000 prepayment fee associated with the subordinated debt retirement in November 1994; 4) a $358,000 reduction in deferred financing fees amortization; and 5) a $107,000 Canadian foreign exchange gain recorded in 1995 versus a $181,000 exchange loss in 1994, an improvement of $288,000. Provision for Income Taxes: Under generally accepted accounting principles, the Company was not required to record a federal income tax provision related to its 1995 pre-tax income due to the existence of net operating loss and tax credit carryforwards. The $150,000 provision for taxes made in 1995 related primarily to state tax requirements. Since the Company will have utilized the majority of its tax loss carryforwards by the end of 1995, the Company expects to provide for income taxes at a rate of approximately 20% in 1996. Net Income: Net income in 1995 of $9.0 million was 79% higher than 1994's $5.0 million net income. 1995 earnings per common share of $1.44 compares to earnings of $.82 per share in 1994. No dividends were declared in 1995 on the Company's common stock. 1994 vs. 1993 Net Sales: Net sales for 1994 of $146.6 million increased 7% from $137.2 million 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 telescopic forklifts and skid steer loaders were the primary beneficiaries of the strong markets. 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. 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 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. 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.) 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 three year period ended December 31, 1994, 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, identified several products or product models to prune from its product offering. In each instance the product to be discontinued had a low margin, low market share, and was 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 from Operations: 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 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: 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. Liquidity and Capital Resources Working Capital: The Company's working capital decreased 2% to $72.6 million at December 31, 1995 from $73.9 million twelve months earlier. The current ratio of the Company at December 31, 1995 decreased slightly to 3.5 to 1 from 3.6 to 1 at the same time a year ago. Cash on hand at December 31, 1995 was $3.3 million as compared to $2.6 million a year earlier. Cash Flow Provided by (Used for) Operating Activities: ($ thousands) 1995 1994 1993 1992 1991 Cash Flow $9,701 $19,522 $26,113 $(162) $6,061 In 1995 cash flow provided by operating activities was $9.7 million as compared to $19.5 million in 1994. Net income before depreciation and amortization was primarily responsible for the positive cash flow. The decrease from 1994 was due to lower cash flow provided by reductions in accounts receivable in 1995 as compared with 1994. The smaller reduction in accounts receivable was due to field inventory levels at the Company's agricultural equipment dealers being at more appropriate levels. The 1995 cash flow was used primarily to repay $8.0 million of debt. Accounts Receivable: The Company's net accounts receivable decreased $3.3 million, or 5%, from $72.4 million at December 31, 1994 to $69.1 million at December 31, 1995. Gehl Agriculture accounts receivable at year-end 1995 decreased $8.3 million from a year earlier, while Gehl Construction accounts receivable increased $5.0 million over the same period. The Gehl Construction increase reflected growth in sales volume and unusually low international construction receivables at December 31, 1994. Finance Contracts Receivable: Finance contracts receivable increased $2.1 million to $7.7 million at December 31, 1995. The combined portfolio of owned and sold-but-serviced finance contracts receivable was $55.5 million at December 31, 1995 as compared to $57.7 million at year-end 1994. (See "Sales of Finance Contracts Receivable" following.) Capital Expenditures: ($ thousands) 1995 1994 1993 1992 1991 Capital expenditures $2,437 $2,505 $809 $1,473 $10,766 Depreciation $2,520 $2,692 $2,940 $3,093 $2,682 The Company expended $2.4 million for property, plant, and equipment in 1995. The majority of 1995 expenditures were incurred to upgrade and maintain machinery and equipment, to enhance capability, to improve productivity, and to improve product quality. At December 31, 1995, Gehl had no significant outstanding commitments for capital items. The Company plans to make approximately $4.0 million in capital expenditures in 1996. The Company believes its present facilities are sufficient to provide adequate capacity for its operations in 1996. Debt and Equity: ($ millions) - December 31 1995 1994 1993 1992 1991 Total Debt $46.9 $54.9 $72.8 $97.7 $103.0 Shareholders' Equity $55.7 $46.3 $40.9 $40.4 $58.2 % Total Debt to Total Capitalization 45.7% 54.2% 64.0% 70.7% 63.9% At December 31, 1995, shareholders' equity had increased $9.4 million to $55.7 million from $46.3 million a year earlier. By reducing its debt $8.0 million to $46.9 million, the Company lowered its capitalization ratio to 45.7% at December 31, 1995. Borrowing Arrangements (See also Note 5 of Notes to Consolidated Financial Statements): Effective December 1, 1995, the Company and its primary lender amended their Amended and Restated Loan and Security Agreement (the "Facility"). The revised agreement extended the term of this revolving loan Facility through December 31, 1998, lowered interest rates, and modified other terms and conditions. Total borrowing capacity remains at $75 million 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 loans denominated in U.S. dollars was lowered from .50% above the U.S. prime rate to 2.00% above the London Interbank Offered Rate for one-month deposits ("LIBOR"). In Canada, where the Company may borrow up to $6.5 million, the interest rate was lowered to 2.50% above Canadian one-month bankers' acceptance rates ("BA Rate") from 1.5% above the Canadian prime rate. Under the Facility the base LIBOR and BA Rate are adjusted weekly. The Facility has a net worth covenant and a debt to equity covenant which were not changed. The Company continues to operate within the requirements of these covenants. At December 31, 1995, the Company had unused borrowing capacity of $27.4 million under the Facility, versus $19.2 million a year earlier. Management believes the Facility provides sufficient borrowing capacity for the Company to finance its operations for the foreseeable future. The Company also has outstanding $8.4 million of 9% industrial development bonds ("IDB") with a 2010 final maturity; repayments commence in 2005. The IDB agreement has a net worth covenant and a debt to equity covenant; the Company continues to be in compliance with these 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, 1995, Gehl serviced $55.5 million of such contracts, of which $47.2 million were owned by third parties. Losses on finance contracts due to customer nonperformance were $365,000 in 1995 as compared to $570,000 in 1994. As a percentage of outstanding serviced contracts, the loss ratios were .7% and 1.0% in 1995 and 1994, respectively. The Company incurred $534,000 of costs in selling $31.4 million of its finance contracts in 1995, as compared to $1.1 million of costs in selling $34.4 million of such contracts in 1994. The costs arise primarily from the difference between the weighted average interest rate on the contracts being sold and the interest rate negotiated with the purchaser of the contracts. In 1995, the Company's cost of selling such contracts decreased $608,000 from 1994 due to reductions in: 1) the interest rates serving as the base for the sales of such contracts, and 2) the mark-ups above these interest rates negotiated with the various purchasers. The Company's costs of selling finance contracts were further offset by $142,000 of gains during 1995 on the sale of finance contracts made under several variable rate agreements entered into between June 1993 and February 1994. These gains were due to decreasing interest rates in the economy. Management believes the Company has sufficient capacity to meet its requirements to sell its finance contracts for the foreseeable future. Contingencies: The Company has received notification from the City of West Bend, Wisconsin that it may have some financial responsibility for environmental remediation at a landfill site in West Bend. The amount of the Company's potential obligation, if any, is not presently determinable. (For additional information on this site, see Note 11 of Notes to Consolidated Financial Statements). [Pages 14 through 23 of the Annual Report] GEHL COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS In Thousands, Except Share Data - December 31, 1995 1994 Assets Cash $ 3,266 $ 2,570 Accounts receivable - net 69,087 72,393 Finance contracts receivable - net 4,817 3,389 Inventories 23,320 21,452 Prepaid expenses and other assets 1,676 2,817 ________ ________ Total current assets 102,166 102,621 ________ ________ Property, plant and equipment - net 20,315 20,433 Finance contracts receivable - net, non-current 2,899 2,258 Other assets 8,118 5,715 ________ ________ Total assets $133,498 $131,027 ======== ======== Liabilities and Shareholders' Equity Current portion of long-term debt obligations $ 197 $ 180 Accounts payable 14,083 14,477 Accrued liabilities 15,281 14,053 ________ ________ Total current liabilities 29,561 28,710 ________ ________ Line of credit facility 37,848 45,879 Long-term debt obligations 8,818 8,821 Other long-term liabilities 1,592 1,334 ________ ________ Total long-term liabilities 48,258 56,034 ________ ________ Common stock, $.10 par value, 25,000,000 shares authorized, 6,216,765 and 6,169,523 shares outstanding at December 31, 1995 and 1994, respectively 622 617 Preferred stock, $.10 par value, 2,000,000 shares authorized, no shares issued -- -- Capital in excess of par 26,580 26,133 Retained earnings 28,477 19,533 ________ ________ Total shareholders' equity 55,679 46,283 ________ ________ Total liabilities and shareholders' equity $133,498 $131,027 ======== ======== Contingencies (Notes 2 and 11) The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME In Thousands, Except Per Share Data - Year Ended December 31, 1995 1994 1993 Net sales $153,452 $146,620 $137,218 Cost of goods sold 108,838 103,346 98,335 ________ ________ ________ Gross profit 44,614 43,274 38,883 Selling, general and administrative expenses 31,001 30,313 31,544 ________ ________ ________ Income from operations 13,613 12,961 7,339 Interest expense (5,733) (6,711) (8,364) Interest income 1,820 1,715 1,552 Other income (expense), net (537) (2,930) (161) ________ ________ ________ Income before income taxes 9,163 5,035 366 Provision for income taxes 150 --- 125 ________ ________ ________ Net income $ 9,013 $ 5,035 $ 241 ======== ======== ======== Net income per common share $ 1.44 $ .82 $ .04 ======== ======== ======== The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY In Thousands Capital In Common Excess of Retained Stock Par Earnings Total 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 Net income -- -- 9,013 9,013 Exercise of stock options 5 265 -- 270 Amortization of unearned compensation related to restricted stock grants -- 182 -- 182 Minimum liability adjustment -- -- (69) (69) ____ _______ _______ _______ Balance at December 31, 1995 $622 $26,580 $28,477 $55,679 ==== ======= ======= ======= 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, 1995 1994 1993 Cash Flows from Operating Activities Net income $ 9,013 $ 5,035 $ 241 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,865 3,767 4,191 (Gain) loss on sale of equipment (13) 8 (5) Cost of sales of finance contracts 534 1,142 294 Deferred income taxes (2,071) (900) -- Proceeds from sales of finance contracts 30,062 31,935 39,331 Increase (decrease) in cash due to changes in: Restricted cash -- -- 1,548 Accounts receivable - net 3,306 12,576 16,212 Finance contracts receivable - net (33,432) (33,241) (38,265) Inventories (1,868) 181 2,450 Refundable income taxes -- -- 2,422 Prepaid expenses and other assets 231 155 (462) Other assets 240 113 (164) Accounts payable (394) (1,307) (935) Accrued liabilities 1,228 58 (745) ________ ________ ________ Net cash provided by operating activities 9,701 19,522 26,113 ________ ________ ________ Cash Flows from Investing Activities Increase in unexpended plant construction fund (16) (7) (5) Proceeds from sale of equipment 47 42 28 Property, plant and equipment additions (2,437) (2,505) (809) Decrease (increase) in other assets 777 1,100 (998) Other 113 217 126 ________ ________ ________ Net cash (used for) investing activities (1,516) (1,153) (1,658) ________ ________ ________ Cash Flows from Financing Activities Increase (decrease) in other long-term obligations 14 (9,828) (20,965) Repayment of revolving credit loans (8,031) (8,100) (3,903) Increase in other long- term liabilities 258 536 113 Proceeds from issuance of common stock 270 135 123 ________ ________ ________ Net cash (used for) financing activities (7,489) (17,257) (24,632) ________ ________ ________ Net increase (decrease) in cash 696 1,112 (177) Cash, beginning of year 2,570 1,458 1,635 ________ ________ ________ Cash, end of year $ 3,266 $ 2,570 $ 1,458 ======== ======== ======== The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1995 Note 1 Significant Accounting Policies Consolidation: Gehl Company is engaged in the manufacture and distribution of equipment and machinery for the construction market, and in the manufacture and distribution of farm equipment and machinery primarily for the dairy, livestock and poultry agricultural sector. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: Hedlund Martin, Inc.; Gehl Power Products, Inc.; and Gehl International, Inc., a foreign sales corporation. All significant intercompany transactions and balances are eliminated. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions, in certain circumstances, that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Ultimate realization of assets and settlement of liabilities in the future could differ from those estimates. Revenue Recognition: Revenue is recorded upon the shipment of products to dealers and distributors; these dealers and distributors have no right of return, except as provided by law. Accounts Receivable: The Company provides financing for its dealers in both the construction and agricultural markets. The financing agreements provide for, in certain instances, interest-free periods which generally range from 4 to 12 months. Finance Contracts Receivable: The Company offers financing for its products to retail customers and to its dealers through its finance division. Finance contracts require periodic installments of principal and interest over periods of up to 60 months. Unearned interest is recognized over the life of the contracts using the sum of the digits method. Principal expected to be collected within twelve months of the balance sheet date is classified as a current asset; the remainder is classified as a non-current asset. Inventories: Inventories are valued at the lower of cost or market. Cost is determined by the last-in, first-out (LIFO) method for substantially all of the Company's inventories. Properties and Depreciation: Properties are stated at cost. When properties are sold or otherwise disposed of, cost and accumulated depreciation are removed from the respective accounts and any gain or loss is included in income. The Company provides for depreciation of assets generally using the straight-line method for financial reporting purposes and accelerated methods for income tax purposes. Expenditures which substantially increase value or extend asset lives are capitalized. Expenditures for maintenance and repairs are charged against income as incurred. Debt Issue Costs: Costs incurred in conjunction with incurrance 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 gains (losses) were $107,000, $(181,000) and $(124,000) in 1995, 1994 and 1993, respectively. Income Taxes: The Company follows the liability method in accounting for income taxes. The liability method provides that deferred tax assets and liabilities be recorded based on the difference between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. 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. Environmental Costs: Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and that do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the costs can be reasonably estimated. Research and Development Costs: Costs for research activities relating to product development and improvement are charged against income as incurred. Such costs amounted to approximately $1,363,000, $1,172,000 and $1,042,000 in 1995, 1994 and 1993, 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). Net Income Per Common Share: Net income per common share is computed by dividing net income by the weighted average number of common shares and, if applicable, common stock equivalents which would arise from the exercise of stock options and warrants. The weighted average number of shares used in the computations was 6,252,235, 6,174,476 and 6,097,472 for 1995, 1994 and 1993, respectively. Note 2 Accounts Receivable and Finance Contracts Receivable Accounts receivable and finance contracts receivable were comprised of the following (in thousands): December 31, 1995 1994 Accounts receivable $73,092 $76,737 Less allowances for: doubtful accounts (752) (639) returns and dealer discounts (3,253) (3,705) _______ _______ $69,087 $72,393 ======= ======= Finance contracts receivable $ 9,056 $ 6,556 Less: unearned interest (773) (405) allowance for doubtful accounts (567) (504) _______ _______ 7,716 5,647 Less: non-current portion (2,899) (2,258) _______ _______ Current portion $ 4,817 $ 3,389 ======= ======= The Company maintains a reserve for discontinued products. The allowance for returns and dealer discounts contains $1.3 million and $1.6 million to reflect the anticipated costs of retailing such products in dealer inventory at December 31, 1995 and 1994, respectively. The finance contracts receivable at December 31, 1995 have a weighted average interest rate of 9.1% 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. At December 31, 1995, $2.2 million of cash previously withheld by third party buyers was provided as additional collateral. The finance contracts require periodic installments of principal and interest over periods of up to 60 months; interest rates are based on market conditions. The Company has retained the servicing of 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 1995 and 1994 (in thousands): 1995 1994 Value of contracts sold - net of $4.3 million and $4.6 million, respectively, of unearned interest $31,363 $34,437 Cash received on sales of contracts 30,062 31,935 Cash withheld as additional collateral 767 1,360 _______ _______ Cost of sales of finance contracts $ 534 $ 1,142 ======= ======= Net receivables outstanding at December 31 relating to finance contracts sold $47,178 $51,593 ======= ======= 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, 1995 1994 Raw materials and supplies $ 4,151 $ 3,711 Work-in-process 9,893 10,252 Finished machines and parts 28,149 24,346 ________ ________ Total current cost value 42,193 38,309 Adjustment to LIFO basis (18,873) (16,857) ________ ________ $ 23,320 $ 21,452 ======== ======== The Company maintains a reserve for discontinued products. An inventory valuation adjustment of $625,000 and $800,000 was recorded to reflect the net realizable value of such products in inventory at December 31, 1995 and 1994, respectively. Note 4 Property, Plant and Equipment - Net Property, plant and equipment consisted of the following (in thousands): December 31, 1995 1994 Land $ 1,411 $ 1,411 Buildings 17,344 16,800 Machinery and equipment 27,014 25,675 Autos and trucks 418 461 Office furniture and fixtures 7,459 7,216 _________ _________ 53,646 51,563 Less: accumulated depreciation (33,331) (31,130) _________ _________ Property, plant and equipment - net $ 20,315 $ 20,433 ========= ========= Note 5 Debt Obligations A summary of the Company's debt obligations, and related current maturities, is as follows (in thousands): December 31, 1995 1994 Line of credit facility $37,848 $45,879 9.0% industrial development bonds 8,400 8,400 Other debt obligations 615 601 _______ _______ 46,863 54,880 Less: current portion (197) (180) _______ _______ Long-term debt obligations $46,666 $54,700 ======= ======= Effective December 1, 1995, 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 $6.5 million credit line are at 2.50% above Canadian one-month bankers' acceptance rates; the remainder of the borrowings are in U.S. dollars and are at 2.0% above the London Interbank Offered Rate for one-month deposits ("LIBOR"). Prior to the December 1, 1995 amendment, borrowings in Canadian denominated dollars were at 1.50% above the Canadian prime rate and the U.S. borrowings were at .5% above the U.S. prime rate. The term of the Facility was extended one additional year to December 31, 1998. Under the amended agreement, $25 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, 1995, the Company had unused borrowing capacity of approximately $27.4 million under the Facility. The Facility also includes financial covenants requiring the maintenance of a minimum tangible net worth level and a maximum debt to equity ratio. The 9% industrial development bonds are secured by the Company's Lebanon, Pennsylvania manufacturing facility and require principal repayment in six equal annual installments of $1.4 million commencing in 2005. The Company has established a debt reserve fund of approximately $506,000 until the first mandatory bond redemption period in 2003. The debt reserve fund was established with remaining funds in the trustee-controlled unexpended plant construction fund and interest subsequently earned. Financial covenants related to the industrial development bonds require the maintenance of a minimum tangible net worth level and a maximum debt to equity ratio. Annual maturities of debt obligations are as follows (in thousands): 1996 $197 1997 138 1998 37,998 1999 93 2000 37 Later years 8,400 ------- $46,863 Interest paid on total debt obligations was $5.9 million, $6.9 million and $8.4 million in 1995, 1994 and 1993, respectively. Note 6 Accrued Liabilities Accrued liabilities were comprised of the following (in thousands): December 31, 1995 1994 ---- ---- Accrued salaries and wages $ 3,033 $ 2,644 Dealer recourse deposits 2,222 2,192 Accrued warranty costs 1,815 1,872 Accrued product liability costs 3,025 2,134 Other 5,186 5,211 ----- ----- $15,281 $14,053 ======= ======= Note 7 Income Taxes The income tax provision (benefit) recorded for the years ended December 31, 1995, 1994 and 1993 consisted of the following (in thousands): December 31, Federal State and Total Foreign 1995 Current $ 2,303 $ 150 $ 2,453 Deferred (2,303) - (2,303) ________ ________ ________ Total $ - $ 150 $ 150 ======== ======== ======== 1994 Current $ 900 $ 78 $ 978 Deferred (900) (78) (978) ________ ________ ________ Total $ - $ - $ - ======== ======== ======== 1993 Current $ -- $ 125 $ 125 Deferred -- -- -- ________ ________ ________ Total $ -- $ 125 $ 125 ======== ======== ======== 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 1995, 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 and credit carryforwards. A reconciliation between the reported income tax provision and the federal statutory rate follows (as a percent of pre-tax income): Year Ended December 31, 1995 1994 1993 Federal statutory rate 34.0% 34.0% 34.0% Net operating loss utilized (34.0) (34.0) (34.0) State income taxes, net of Federal income tax effect 1.6 - 26.5 Other, net - - 7.5 _______ _______ _______ 1.6% - 34.0% ======= ======= ======= The Company's temporary differences and carryforwards which give rise to deferred tax assets and liabilities consisted of the following (in thousands): December 31, 1995 1994 Deferred Tax Assets: Accrued expenses and reserves $ 3,582 $ 2,983 Asset valuation reserves 2,240 2,739 Operating loss carryforwards 1,024 4,721 Tax credit carryforwards 3,584 1,783 Other 197 280 ________ ________ 10,627 12,506 Valuation allowance (2,649) (5,687) ________ ________ Deferred Tax Asset $ 7,978 $ 6,819 ======== ======== Deferred Tax Liabilities: Installment sales $ 2,718 $ 3,547 Property, plant and equipment 1,222 1,309 Prepaid pension asset 788 869 Other 278 194 ________ ________ Deferred Tax Liability $ 5,006 $ 5,919 ======== ======== During 1995, the Company recorded a deferred tax benefit of $2,303,000 based upon the estimated recoverability of its tax credit carryforwards as of December 31, 1995. During 1994, the Company recorded a deferred tax benefit of $900,000 based upon the estimated recoverability of its net operating loss carryforwards as of December 31, 1994. The Company recorded valuation allowances of $2.6 million and $5.7 million against deferred tax assets at December 31, 1995 and 1994, respectively. Cash paid (received) related to income taxes during 1995, 1994 and 1993 was $3,012,000, $61,000 and $(2,520,000), 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 (income) expense includes the following components (in thousands): Year Ended December 31, 1995 1994 1993 Service cost $ 411 $ 643 $ 486 Interest cost on projected benefit obligation 1,830 1,726 1,660 Actual (return) loss on plan assets (3,381) 4 (2,611) Net amortization and deferral 1,018 (2,260) 301 _______ _______ _______ Net periodic pension (income) expense $ (122) $ 113 $ (164) ======= ======= ======= The following schedule details (in thousands) the funded status of the plans. 1995 1994 1993 Actuarial present value of benefit obligation: Vested $21,982 $19,299 $20,567 Nonvested 1,690 1,607 1,732 _______ _______ _______ Accumulated benefit obligation 23,672 20,906 22,299 Effect of projected salary increases 1,186 1,316 1,769 _______ _______ _______ Total projected benefit obligation 24,858 22,222 24,068 Plan assets at fair value 23,670 21,754 23,152 _______ _______ _______ Plan assets less than projected benefit obligation (1,188) (468) (916) Unrecognized transitional asset (1,093) (1,579) (2,015) Prior service cost not yet recognized in net periodic pension cost 1,094 1,190 1,265 Unrecognized net loss 3,607 3,154 4,046 _______ _______ _______ Prepaid pension asset $ 2,420 $ 2,297 $ 2,380 ======= ======= ======= The projected benefit obligation was determined using assumed discount rates of 7.75% in 1995, 8.5% in 1994 and 7.5% in 1993, and assumed long-term rates of compensation increase of 4% in 1995, 1994 and 1993. The measurement dates used in the actuarial calculations were September 30 in 1995 and December 31 in 1994 and 1993. The annual long-term rate of return on plan assets was assumed to be 9.0% in 1995, 1994 and 1993. Plan assets consist principally of common stocks and fixed income investments. Funding for the plans equals or exceeds the minimum requirements of the Employee Retirement Income Security Act of 1974. In addition, the Company maintains an unfunded supplemental retirement benefit plan for certain management employees. The accumulated benefit obligation for this plan was $954,000 and $841,000 at December 31, 1995 and 1994, respectively, using a discount rate of 7.25% and 8.5%, respectively. The Company maintains a savings and profit sharing plan under Section 401(k) of the Internal Revenue Code which covers substantially all employees who have completed sixty (60) days of service with the Company. Effective July 1, 1995, the Company reinstated its policy of matching 25% of non-bargaining unit employee contributions to the plan not to exceed 6% of the employee's annual compensation. Vesting of Company contributions occurs at the rate of 20% per year. The contribution for the year ended December 31, 1995 approximated $58,000. 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 $212,000, $194,000 and $165,000 in connection with this plan for 1995, 1994 and 1993, 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 165. Net postretirement benefit expense included the following components (in thousands): Year Ended December 31, 1995 1994 1993 Service cost $47 $49 $19 Interest cost on projected benefit obligation 117 106 37 Net amortization and deferral 57 70 23 ---- ---- --- Net postretirement benefit expense $221 $225 $79 ==== ==== === The Company's postretirement benefit plans are not funded. The status of the Company's plans was as follows (in thousands): December 31, 1995 1994 Actuarial present value of accumulated postretirement benefit obligation $1,634 $1,355 Unrecognized transitional obligation (382) (405) Unrecognized net loss (887) (646) ------- ------- Accrued postretirement benefit liability $365 $304 ======= ======= The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligation at December 31, 1995 and 1994 was 12% decreasing to 6% over seven years. The discount rate used in determining the accumulated postretirement benefit obligation was 7.25% at December 31, 1995 and 8.5% at December 31, 1994. A one point percentage increase in the health care cost trend rate would increase the accumulated postretirement benefit obligation by approximately $234,000 and would increase the net postretirement benefit expense by approximately $32,000. Note 9 Shareholders' Equity 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 1994 and 1995: Shares Weighted Subject Average to Option Option Price 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 ========= ====== Outstanding, January 1, 1995 240,919 $ 6.58 Granted 170,500 7.31 Exercised (47,242) 5.71 Cancelled (8,505) 5.94 _________ ______ Outstanding, December 31, 1995 355,672 $7.06 ========= ====== Exercisable, December 31, 1995 145,788 $6.95 ========= ====== At December 31, 1995, 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 warrant agreement, was outstanding to a 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 $1,510,000, $1,606,000 and $2,093,000 in 1995, 1994 and 1993, respectively. The Company maintains non-cancellable operating leases for certain facilities and equipment. Future minimum lease payments under such leases at December 31, 1995, are as follows (in thousands): 1996 $958 1997 238 1998 98 1999 40 2000 20 ------ Total $1,354 ====== 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 notification from the City of West Bend, Wisconsin that it may have some financial responsibility with respect to the closure of a landfill site operated 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. Note 12 Segment Information The Company manufactures and distributes products into two industry segments. Gehl Construction is engaged in the manufacture and distribution of equipment and machinery for the construction market. As of December 31, 1995, 20% of the Company's accounts receivable were from customers in the construction market. 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, 1995, 80% of the Company's accounts receivable were from customers in the agricultural sector. Unallocated assets are cash, deferred income taxes and other nonallocable assets. Segments of business by industry are presented below (in thousands): Year Ended December 31, 1995 1994 1993 Net Sales Construction $ 64,381 $ 51,796 $ 43,287 Agriculture 89,071 94,824 93,931 ________ ________ ________ Consolidated $153,452 $146,620 $137,218 ======== ======== ======== Income from Operations Construction $ 13,164 $ 8,542 $ 1,830 Agriculture 449 4,419 5,509 ________ ________ ________ Consolidated $ 13,613 $ 12,961 $ 7,339 ======== ======== ======== Assets (Year-end) Construction $ 29,999 $ 24,029 $ 26,952 Agriculture 91,612 97,730 109,989 Unallocated 11,887 9,268 7,339 ________ ________ ________ Consolidated $133,498 $131,027 $144,280 ======== ======== ======== Depreciation/ Amortization Construction $ 921 $ 1,076 $ 1,377 Agriculture 1,883 2,273 2,421 Unallocated 61 418 393 ________ ________ ________ Consolidated $ 2,865 $ 3,767 $ 4,191 ======== ======== ======== Capital Expenditures Construction $ 655 $ 1,422 $ 45 Agriculture 1,782 1,083 764 ________ ________ ________ Consolidated $ 2,437 $ 2,505 $ 809 ======== ======== ======== Exports of U.S. produced products were approximately $28.0 million, $25.9 million and $28.1 million in 1995, 1994 and 1993, respectively. Note 13 Quarterly Financial Data (Unaudited) In Thousands, Except Per First Second Third Fourth Share Data -- Quarter Quarter Quarter Quarter Total 1995 Net sales $38,268 $42,730 $36,901 $35,553 $153,452 Gross profit 10,680 12,697 10,726 10,511 44,614 Net income 1,813 3,598 2,236 1,366 9,013 Net income per common share .29 .58 .36 .22 1.44 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 [FN] Due to the use of the weighted average shares outstanding each quarter for computing net income per share, the sum of the quarterly per share amounts does not equal the per share amount for the year. [/FN] [Page 24 of the Annual Report] GEHL COMPANY AND SUBSIDIARIES FIVE-YEAR FINANCIAL SUMMARY Dollars in Thousands, Except Per Share Data 1995 1994 1993 1992 1991 Summary of Operations Net sales $153,452 $146,620 $137,218 $129,694 $127,290 Gross profit 44,614 43,274 38,883 32,971 31,700 Income (loss) from operations 13,613 12,961 7,339 (6,866) (13,374) Interest expense 5,733 6,711 8,364 10,103 8,973 Income (loss) before income taxes 9,163 5,035 366 (18,150) (25,398) Net income (loss) 9,013 5,035 241 (17,900) (19,284) Financial Position at December 31 Current assets $102,166 $102,621 $114,355 $138,193 $163,824 Current liabilities 29,561 28,710 30,328 128,717 55,196 Working capital 72,605 73,911 84,027 9,476 108,628 Accounts receivable 69,087 72,393 84,969 101,181 112,561 Finance contracts receivable 7,716 5,647 6,847 9,793 12,433 Inventories 23,320 21,452 21,633 24,083 27,399 Property, plant and equipment, net 20,315 20,433 20,088 22,242 23,852 Total assets 133,498 131,027 144,280 170,225 199,701 Long-term debt 46,666 54,700 72,259 418 86,043 Total debt 46,863 54,880 72,808 97,676 102,958 Shareholders' equity 55,679 46,283 40,895 40,405 58,217 Common Share Summary Net income (loss) per share $1.44 $.82 $.04 $(3.05) $(3.29) Dividends per share -- -- -- -- .08 Book value per share 8.96 7.50 6.67 6.88 9.93 Shares outstanding at year-end 6,216,765 6,169,523 6,132,443 5,875,110 5,865,110 Other Financial Statistics Net cash provided by (used for) operating activities $9,701 $19,522 $26,113 $(162) $6,061 Capital expenditures 2,437 2,505 809 1,473 10,766 Depreciation 2,520 2,692 2,940 3,093 2,682 Current ratio 3.5 to 1 3.6 to 1 3.8 to 1 1.1 to 1 3.0 to 1 Percent total debt to total capitalization 45.7% 54.2% 64.0% 70.7% 63.9% Net income (loss) as a percent of net sales 5.9% 3.4% .2% (13.8%) (15.1%) After-tax return on average shareholders' equity 17.7% 11.6% .6% (36.3%) (28.3%) Employees at year-end 842 928 946 1,001 1,150 Common stock price range 9-5/8-6-1/4 8-1/2-5-3/8 7-3/8 - 3 6 - 2-1/4 9-3/4 - 3 [FN] Includes $2,325,000 ($.40 per share) extraordinary loss on extinguishment of debt, net of tax. [/FN] Investor Information Price Range Dividends 1995 1994 1995 1994 Stock Prices and Dividends First quarter $7-5/8 - 6-1/4 $7-3/4 - 5-3/8 $ -- $ -- Second quarter 9-3/8 - 6-7/8 6-3/4 - 5-1/2 -- -- Third quarter 9 5/8 - 7-3/4 7 - 5-3/8 -- -- Fourth quarter 8-1/4 - 6-5/8 8-1/2 - 5-1/2 -- -- ______________ ______________ ______________ ______________ Year $9-5/8 - 6-1/4 $8-1/2 - 5-3/8 $ -- $ -- ============== ============== ============== ============= [Page 25 of the Annual Report] Directors and Officers Board of Directors Fred M. Butler President and Chief Executive Officer, The Manitowoc Company (2) John W. Findley Retired Chairman, President, Chief Executive Officer and a Director, Findley Adhesives, 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) John W. Splude President and Chief Executive Officer, HK Systems, Inc. (*1) 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 (*) Chairman (1) Audit Committee (2) Compensation and Benefits Committee (3) Nominating Committee Information of Interest Annual Meeting All shareholders are invited to attend our annual meeting which will be held on Thursday, April 25, 1996, at 3:00 p.m. at the Cedar Theatre, Cedar Lake Campus, 5595 Hwy Z, West Bend, Wisconsin. Transfer Agent Shareholders with a change of address or related needs should contact: Firstar Trust Company 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 Stock MarketSM under the symbol GEHL. As of February 1, 1996, shareholders of record numbered 984. This number does not include shareholders who hold Gehl Company Stock in street name. Independent Accountants Price Waterhouse LLP Milwaukee, Wisconsin Investor Information The Company is replacing Quarterly Reports to Shareholders with an automated "News on Demand Service". The Company will not be mailing out Quarterly Reports to Shareholders in the future. By calling 1-800-882-2786, you will be able to request from a directory maintained by the Company a faxed copy of financial and other types of information about the Company to be sent directly to you. You may also order for mailing to you Forms 10-K and 10-Q and other available information by calling the same toll-free number. Additionally, copies of Gehl Company's Form 10-K for 1995, as well as other financial information about the Company, are available from: Michael J. Mulcahy Corporate Secretary Gehl Company 143 Water Street West Bend, Wisconsin 53095 414-334-9461 The Company anticipates making 1996 quarterly earnings announcements: First Quarter: Week ending, April 19, 1996 Second Quarter: Week ending, July 19, 1996 Third Quarter: Week ending, October 18, 1996 Fourth Quarter: Week ending, February 21, 1997 EX-23 14 Exhibit 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements listed below of Gehl Company of our report dated February 12, 1996 appearing on page 8 of the 1995 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 15 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 6, 1996 EX-27 15
5 This schedule contains summary financial information extracted from Gehl Company's consolidated balance sheet at December 31, 1995 and consolidated statements of income for the twelve month period ended December 31, 1995 and is qualified in its entirety by reference to such financial statements. 1000 12-MOS DEC-31-1995 JAN-1-1995 DEC-31-1995 3266 0 78476 4572 23320 102166 53646 33331 133498 29561 46666 622 0 0 55057 133498 153452 153452 108838 108838 0 0 5733 9163 150 9013 0 0 0 9013 1.44 0 Includes all non-current portion of debt obligations Not reported
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