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EXHIBIT 10.5
SHAREHOLDERS AGREEMENT dated 15 February 1995
between
(1) MASSEY FERGUSON GMBH, a company with registered office at Eschwege,
Germany (hereinafter referred to as: "MF")
and
(2) DE LAGE LANDEN LEASING GMBH, a company with registered office at
Dusseldorf, Germany (hereinafter referred to as: "DLL")
1. Introduction
1.1. DLL is (via De Lage Landen GmbH) a wholly-owned subsidiary of De Lage
Landen International B.V. with registered office at Eindhoven, itself
a 100% subsidiary of Cooperatieve Centrale Raiffeisen -
Boerenleenbank B.A. (Rabobank Nederland) with registered office at
Amsterdam.
1.2. MF is a wholly-owned subsidiary of Massey Ferguson Corporation, itself
a subsidiary of AGCO Corporation.
1.3. The parties hereto will work together in providing exclusive finance
programmes to Massey Ferguson dealers and Massey Ferguson endusers in
Germany.
1.4. The basis for this co-operation is a business plan a copy of which is
annexed hereto as Schedule 1.
The parties hereto enter into this shareholders agreement with a
firm commitment to each other to do all that they reasonably can to
ensure that the business plan's targets are achieved and if possible
surpassed.
1.5. The parties hereto intend to structure their co-operation on a basis
similar to that of the co-operation between Massey Ferguson and De Lage
Landen in the United Kingdom (Massey Ferguson Finance Ltd.) and France
(Massey Ferguson Finance France SNC).
1.6. In view of these intentions the parties hereto propose to incorporate
a German finance company under the legal form of a GmbH, in which DLL
will participate for 51% and MF for 49%.
1.7. The parties hereto have agreed to govern their relationship on the
terms and subject to the conditions hereinafter set out.
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2. Incorporation
2.1. The parties hereto shall take all necessary steps to procure the
incorporation of the finance company as soon as possible.
2.2. The company will be incorporated under the legal form of a
"Gesellschaft mit beschrankter Haftung" with articles of
association in the agreed terms in accordance with German law and the
provisions of this Shareholders Agreement.
2.3. The name of the company will be: Massey Ferguson Finanzierung G.m.b.H.
2.4. The company will have its registered office and principal place of
business at Eschwege.
3. Share capital
3.1. The issued share capital of the company upon incorporation shall be DM
5 million.
3.2. DLL shall own 51% of the issued share capital and MF shall own the
other 49%.
3.3 The capital will be increased as the business grows, provided that the
equity to balance sheet debt ratio of the company shall always
be a minimum of 8%. Unless agreed otherwise an increase of the capital
of the company shall always be in the proportion 51% DLL - 49% MF.
4. Objectives and territory of the company
4.1. The primary objectives of the company will be:
A. to provide finance facilities (e,g. loans, hire purchase) for:
(aa) products sold or otherwise dealt in by MF and/or its dealers
(bb) other products which do not compete as to specification and
price with those falling under subparagraph (aa) above
(cc) secondhand products which may compete with the products
referred to in subparagraph (aa) above
and to provide product related services (e.g. warranty and credit
insurance);
B. to provide wholesale financing (stock finance);
C. to carry on any associated business, approved by the Supervisory
Board;
D. to generate wherever possible synergetic effects on the business
of DLL, in so far as such activities do not endanger the main
objective as set forth in subclause A above.
4.2. The area covered by the company will be the whole of Germany,
including the former East Germany.
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5. Banking license
As soon as practicable after its incorporation the company will
apply for a banking license in accordance with the provisions of the
German banking regulations (Kreditwesengesetz), which covers the
activities of the company.
6. Management of the company
6.1. The day to day operation of the company shall be managed in accordance
with the parameters laid down from time to time by the Supervisory
Board (vide clause 6.3.) and the general principles of the business
plan.
6.2. The company will have two Managing Directors (Geschaftsfuhrer).
6.3. The company will have a Supervisory Board (Aufsichtsrat) who shall
determine the general policy of the company.
The Supervisory Board shall have four members, two of whom will be
appointed on the recommendation of DLL and the other two on the
recommendation of MF. Upon incorporation of the company the members
will be:
- on behalf of DLL: Mr Ph. Green and Mr R. Slaats
- on behalf of MF. Mr. D.I. Franklin and Mr. C. Perkins
One of the members appointed on the recommendation of MF will chair
the Supervisory Board.
The powers of the Supervisory Board will be specified in more detail
in the Articles of Association of the company. The voting rights will
be defined in such a way that the DLL representatives in the
Supervisory Board will have a casting vote.
7. Performance Targets
The parties hereto aim to realize a return on investment in the
company of minimum 15% per annum.
MF and DLL shall do all that they reasonably can to ensure that
this target will be achieved.
In view hereof the business plan will be revised from time to
time.
For the purpose of this agreement return on investment is
defined as Internal Return Capacity (IRC).
The IRC ratio calculates the profit realised over the normalised
own funds, being 8% of the risk adjusted assets and off balance sheet
transactions.
The numerator of the IRC ratio is the net profit resulting from
the profit and loss account, adjusted for interest income on the
surplus or shortage of equity as compared to the normalised own funds.
The denominator of the IRC ratio are the normalised own funds.
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8. Funding
8.1. In order to enable the company to attract funds at a competitive rate
DLL will:
- either fund the operation directly at cost of funds increased with
0.1% to cover handling costs or
- provide guarantees to the intent that the company shall be able to
make use of Rabobank's triple A credit rating to attract funds at
competitive rates.
For the avoidance of doubt it is stated, that it will be the sole
responsibility of the management of the company to negotiate such
rates.
8.2. Given the fact that DLL - being a wholly owned subsidiary of De Lage
Landen International B.V., itself a bank and a 100% subsidiary
of Rabobank Nederland - has a majority interest in the company and
assuming the company itself will show sufficient performance and
financial strength, after a couple of years DLL guarantees may no
longer be required.
8.3. The obligations of DLL to fund the operation of the company directly
or to provide guarantees to funding banks in accordance with
clause 8.1. shall cease to be of effect if in the reasonable opinion
of DLL either serious economical or political developments or any
regulations made by national or European governmental authorities or
other relevant authorities make the continued provision of funding or
the continued provision of guarantees impossible in practice.
9. Subsidies
9.1. MF will supply or procure the supply of subsidies or discounts to the
company from time to time in such a way, that the total finance
cost of the Massey Ferguson products will be competitive with the rates
of other financiers and/or dealers for similar products in the market.
9.2. MF shall adapt the subsidized exclusive finance programmes as an
integrated part of its marketing strategy.
9.3. MF undertakes with DLL that it will not supply or procure the supply
of such subsidies or discounts to any other body or person to
enable them to compete with or improve on the company rates during the
term of this agreement.
During the start-up period of the Company (estimated at 12
months maximum) MF and DLL acknowledge that other forms of subsidized
finance may be required in those areas where MV Finance is not yet
available.
10. Dividend policy
Unless decided otherwise, dividends shall be paid to the
shareholders if and to the extent only that the gearing ratio (the
equity to balance sheet debt ratio) at the end of the accounting year
in question is and remains equal to or more than 1:12.5.
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11. Trade mark licence
MF will permit or procure permission for the company to make
royalty-free use of the "Massey Ferguson" trade mark, the "MF" trade
mark and the triple triangle design.
12. Product failure
In the event that any product sold or otherwise dealt in by MF
is returned or rejected or is the subject of a substantiated complaint
by a dealer or a customer on the grounds that it is defective or is not
in all respects in conformity with the provisions of any contract
concerning it or any statutory requirement in respect of it, MF
undertakes to DLL that it shall indemnify the company against all
losses, damages or expenses resulting from such product failure.
13. Remarketing
In order to avoid or minimize any losses for the company MF undertakes
to do its utmost to remarket the new stock of equipment of a dealer
within the Massey Ferguson dealer network and within a reasonable
period of time, if such a dealer cannot meet his obligations towards
the company any longer.
14. Tax aspects
Parties will seek to structure their co-operation within the
framework of legal possibilities in such a manner that the tax burdens
will be minimized.
15. Internal/external auditors
15.1. The parties shall each be entitled to have the books of the company
examined by their internal auditors and to be supplied with all
relevant information as they may reasonably require to keep them
properly informed about the business of the company and generally to
protect their interests.
15.2. The external auditors of the company shall be such firm of chartered
accountants as the Supervisory Board shall determine.
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16. Other activities DLL
The parties hereto agree that the terms of this agreement do not
prevent DLL from providing leasing - or finance services in connection
with agriculture equipment other than through the company, provided
that DLL shall not actively promote such other services nor enter into
other joint venture or other co-operation arrangements for such
services, and provided that DLL in doing so will not compete with the
core business of the company.
17. Duration
17.1. Subject to clause 17.2. this agreement shall continue in full force
and effect until December 31st, 2000 and thereafter unless and
until terminated by one party serving on the other twelve months'
written notice of termination to expire on or at any time after
December 31st, 2000.
17.2. Notwithstanding the provisions of clause 17.1. either party shall be
entitled to terminate this agreement forthwith on the occurrence
of any of the following events:
- the other party is in material breach of its obligations under this
agreement and fails to remedy the same within a reasonable period
of time;
- the other party ceases or threatens to cease wholly or
substantially to carry on its business;
- the other party is or threatens to be insolvent (e.g. the other
party is declared bankrupt or applies for suspension of payment);
- the other party's conduct is such that the continuation of the
co-operation under this agreement can no longer reasonably be
asked.
17.3. If during the currency of this agreement the actual net results are
materially below the targets set out in clause 7 of this agreement and
in the (revised) business plan and if there is no reasonable prospect
that there will be a major improvement in the results in the
foreseeable future, then either party shall be entitled to terminate
this agreement by serving on the other twelve months' written notice
of termination to expire on or at any time after December 31st, 1996.
17.4. Following termination of this agreement its conditions shall continue
to bind the parties hereto to such extent and for so long as may be
necessary to give effect to the rights and obligations embodied
herein.
18. Consequences of termination
18.1. Upon the termination of this agreement howsoever caused the parties
shall discuss and agree what steps shall then be taken in respect of
the company.
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18.2. Without prejudice to the generality of clause 18.1. the parties
hereto agree that in the event that this agreement is terminated
by DLL pursuant to the provisions of clause 17.2. on the happening of
an event of default for which MF is responsible or in the event that
this agreement is terminated by either party pursuant to the provisions
of clause 17.3. then and in either such case and in recognition of its
financial interest in the company (by way of the provision of
guarantees and the procurement of overdraft facilities and loans as
well as its equity interest as a shareholder) DLL shall be entitled
(should DLL in its absolute discretion so decide) to assume control
over the day-to-day operations of the company.
19. Employees of the company
Except in those cases where the termination of this agreement
has been caused by serious breach of contract or other default of DLL
MF undertakes to DLL to use reasonable endeavours to ensure that all
employees of the company who were employed while DLL was a shareholder
are treated with all due consideration and that in those cases where
the company and/or its subsidiaries no longer require their services,
all reasonable endeavours will be made to find suitable alternative
employment for such employees.
20. Costs
20.1. All costs, legal fees and other expenses related to the preparation
and execution of this agreement shall be borne by the party who
incurred them. All costs, legal fees, registration fees and other
expenses incurred in the formation of the company shall be borne by the
company.
21. Governing law
21.1. The construction, validity and performance of this agreement shall be
governed in all respects by the laws of Germany.
21.2. The courts of Germany shall have exclusive jurisdiction to settle any
dispute which may arise between the parties in respect of the
construction, validity or performance of this agreement.
22. The terms of this agreement to prevail
In the event of any ambiguity or conflict arising between the
terms of this agreement and those of the articles of association of the
company, the terms of this agreement shall prevail as between the
parties.
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23. EC law restrictions
In case one or more clauses of this agreement prove to be in conflict
with EC legislation on competition (e.g. clause 85 and 86 of the EC
treaty), the parties hereto will construe their co-operation on an
alternative basis which will take into account all the essentials of
this agreement.
Dated: 15 February 1995
/s/ R.A.M. Slaats /s/ C.S.D. Lupton
Signed for and on behalf of Signed for and on behalf of
DE LAGE LANDEN LEASING GMBH MASSEY FERGUSON GMBH
by: R.A.M. Slaats by: /s/ C.S.D. Lupton
Geschaftsfuhrer