Collateral Sharing Agreement

EXHIBIT 10.20


COLLATERAL SHARING AGREEMENT


This COLLATERAL SHARING AGREEMENT, dated as of May 15, 2000 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "AGREEMENT"), is entered into by and among Bank One, NA ("BANK ONE"), having its principal office in Chicago, Illinois, formerly known as The First National Bank of Chicago, in its capacity as contractual representative (the "AGENT") for the "Lenders" under the Bank Credit Agreements (as defined below) listed on Annex I attached hereto (such Lenders, the "BANKS"), the Banks, the holder of the 2001 Notes (as defined below) listed on Annex II attached hereto (the "2001 NOTEHOLDER" and together with the 2005 Noteholder defined below, the "NOTEHOLDERS"), the holder of the 2005 Notes (as defined below) listed on Annex III attached hereto (the "2005 NOTEHOLDER"; the Banks, the 2001 Noteholder and the 2005 Noteholder, together with their respective successors and assigns, are herein sometimes collectively called the "LENDERS" and individually called a "LENDER"), and Bank One, in its capacity as contractual representative for the Lenders hereunder (the "COLLATERAL AGENT"). Capitalized terms used herein but not defined herein shall have the meanings set forth in the "Bank Credit Agreements", the "2001 Note Agreement", and the "2005 Note Agreement" (each as defined below).


RECITALS:


WHEREAS, Ag-Chem Equipment Co., Inc., a Minnesota corporation (herein called the "COMPANY"), the Banks listed as "Short-Term Lenders" on Annex I hereto, and the Agent have entered into that certain Short Term Revolving Credit Agreement dated as of June 4, 1999 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "SHORT-TERM BANK CREDIT AGREEMENT"), pursuant to which, among other things, the Short-Term Lenders have agreed to make certain advances to the Company (the "SHORT-TERM LOANS");


WHEREAS, the Company, Ag-Chem Equipment Canada, Ltd., Ag-Chem Europe, B.V. (Ag-Chem Europe, B.V., together with Ag-Chem Equipment Canada, Ltd., the "SUBSIDIARY BORROWERS"), the Banks listed as "Long-Term Lenders" on Annex II hereto, and the Agent have entered into that certain Third Amended and Restated Long Term Revolving Credit Agreement, dated as of June 4, 1999 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "LONG-TERM BANK CREDIT AGREEMENT", and together with the Short-Term Bank Credit Agreement, the "BANK CREDIT AGREEMENTS"), pursuant to which, among other things, the Long-Term Lenders have agreed to make certain advances to the Company and the Subsidiary Borrowers (the "LONG-TERM LOANS" and together with the Short-Term Loans, the "LOANS") and to issue letters of credit for the account of the Company (the "LETTERS OF CREDIT");


WHEREAS, the 2001 Noteholder is the holder of the Company's 6.83% Series A Senior Notes, with an initial aggregate principal amount of $15,000,000, due April 6, 2001 (the "2001 NOTES") issued pursuant to a Note Agreement, dated as of April 6, 1994, between the Company and the 2001 Noteholder (as the same may be amended, restated, supplemented or


otherwise modified from time to time, the "2001 NOTE AGREEMENT", and together with the 2005 Note Agreement defined below, the "NOTE AGREEMENTS");


WHEREAS, the 2005 Noteholder is the holder of the Company's 7.25% Series A Senior Notes, with an initial aggregate principal amount of $15,000,000, due April 6, 2005 (the "2005 NOTES" and together with the 2001 Notes, the "NOTES") issued pursuant to a Note Agreement, dated as of October 10, 1995, between the Company and the 2005 Noteholder (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "2005 NOTE AGREEMENT", and together with the 2001 Note Agreement, the 2001 Notes, the 2005 Notes, and the Bank Credit Agreements, the "LENDER DOCUMENTS");


WHEREAS, pursuant to the terms of the Collateral Documents, each of the Company, Ag-Chem Equipment Canada, Ltd. and the entities (the "GUARANTORS") set forth on Annex IV hereto that have guaranteed the repayment of all amounts due and payable under the Lender Documents, shall on the date hereof grant a security interest in certain of its assets to the Agent on behalf of the Lenders; and


WHEREAS, the Lenders desire to agree to the relative priority of the application of payments received pursuant to the terms of the Collateral Documents with respect to the Obligations (as defined below), and certain other rights and interests;


NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the Agent, the Lenders and the Collateral Agent hereby agree as follows:


1. Defined Terms. As used in this Agreement, the following terms shall have the following meanings:


"ACTIONABLE DEFAULT" means, under either Bank Credit Agreement or either Note Agreement, (a) an Event of Default (as defined therein) shall have occurred thereunder as a result of (i) the nonpayment of amounts owing thereunder, (ii) noncompliance with any financial covenant set forth therein, including, without limitation, those financial covenants set forth in Section 5.2 of each Bank Credit Agreement and in Section 7.1 of the 2005 Note Agreement , or (iii) the bankruptcy or insolvency of the Company or any of its affiliates, (b) a notice shall have been delivered to the Company and/or a Subsidiary Borrower by the Agent under either Bank Credit Agreement or a Noteholder under its respective Note Agreement indicating that an Event of Default (as defined therein) has occurred and is continuing and the Obligations due under such Agreement are immediately due and payable, or (c) a default shall have occurred under any Collateral Document or Guaranty and the Agent, the Collateral Agent, or a Lender, as applicable, shall have caused the amounts owing thereunder to become immediately due and payable.


"AGENT'S EXPENSES" means all of the fees, costs and expenses of the Collateral Agent (including, without limitation, the reasonable fees and disbursements of its counsel) (i) arising in connection with the preparation, execution, delivery, modification, restatement, amendment or termination of this Agreement and each Collateral Document, if not previously reimbursed, or the enforcement (whether in the context of a civil action, adversary proceeding, workout or otherwise) of any of the provisions hereof or thereof, or (ii) incurred or required to be


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advanced in connection with the sale or other disposition or the custody, preservation or protection of the Collateral pursuant to any Collateral Document and the exercise or enforcement of the Collateral Agent's rights under this Agreement and in and to the Collateral.


"COLLATERAL" means all property of the Company, Ag-Chem Equipment Canada, Ltd., or any Guarantor in which the Agent or the Collateral Agent shall have been granted a security interest or lien under any of the Collateral Documents.


"COLLATERAL ACCOUNT" means the collateral account established and maintained by the Collateral Agent pursuant to Section 8.


"COLLATERAL DOCUMENTS" means any and all security agreements, financing statements, and other similar instruments executed by the Company, Ag-Chem Equipment Canada, Ltd., or a Guarantor in favor of the Collateral Agent from time to time pursuant hereto, in each case as such agreements and instruments may be amended, modified, supplemented and/or restated, and together in each case with any other agreements, instruments and documents incidental thereto.


"DISTRIBUTION DATE" means the second business day in each calendar week, commencing with the first such business day following receipt by the Collateral Agent of a Notice of Actionable Default.


"GUARANTY" means any guaranty entered into by a Guarantor in favor of the Agent, the Collateral Agent, and/or any Lender guaranteeing the repayment of the Obligations due and payable under a Lender Document.


"L/C INTERESTS" means, with respect to any Bank constituting a Long-Term Lender, such Bank's direct or participation interests in all unpaid reimbursement obligations with respect to Letters of Credit and such Bank's direct obligations or risk participations with respect to undrawn amounts of all outstanding Letters of Credit, provided that the undrawn amounts of outstanding Letters of Credit shall be considered to have been reduced to the extent of any amount on deposit with the Agent at any time as provided in Section 9(b) hereof.


"NOTICE OF ACTIONABLE DEFAULT" means a written notice to the Collateral Agent from any Lender or Lenders stating that it is a "Notice of Actionable Default" hereunder and certifying that an Actionable Default has occurred and is continuing. A Notice of Actionable Default may be included in a written direction to the Collateral Agent from the Requisite Lenders pursuant to Section 5.


"NOTICE OF DEFAULT" means a written notice to the Collateral Agent from any Lender or Lenders stating that it is a "Notice of Default" hereunder and certifying that an Event of Default (as defined in either of the Bank Credit Agreements or either of the Note Agreements) has occurred and is continuing.


"OBLIGATIONS" means all of the monetary obligations owed by the Company, the Subsidiary Borrowers, and the Guarantors to the Lenders and the Agent under the Bank Credit


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Agreements, the Note Agreements, the Notes, the Guarantees, the Collateral Documents, and related agreements, documents, and instruments, including, without limitation, (1) the outstanding principal amount of, accrued and unpaid interest on, and any unpaid Make Whole Amount (as defined in the Note Agreements) or other breakage or prepayment indemnification due with respect to, the Loans and the Notes, (2) any unpaid reimbursement obligations with respect to any Letters of Credit, (3) any undrawn amounts of any outstanding Letters of Credit, and (4) any other unpaid amounts (including amounts in respect of fees, expenses, indemnification, hedging obligations permitted under the Bank Credit Agreements and reimbursement) due from the Company, the Subsidiary Borrowers and the Guarantors under any of the Note Agreements, Notes, Bank Credit Agreements, Guarantees or Collateral Documents; provided that the undrawn amounts of any outstanding Letters of Credit shall be considered to have been reduced to the extent of any amount on deposit with the Agent at any time as provided in Section 9(b) hereof.


"PRINCIPAL EXPOSURE" means, with respect to any Lender at any time (i) if such Lender is a Bank, the aggregate amount of such Lender's Commitments under each of the Bank Credit Agreements, or, if the Banks shall then have terminated the Commitments or if the Collateral Agent shall then have received a Notice of Actionable Default that shall not have been withdrawn, the sum of (x) the outstanding principal amount of such Lender's Loans and (y) the outstanding face and/or principal amount of such Lender's L/C Interests at such time, and (ii) if such Lender is a Noteholder, the outstanding principal amount of such Lender's Notes at such time.


"PRO RATA SHARE" means, with respect to any Lender at any time, a fraction (expressed as a percentage), the numerator of which is the amount of such Lender's Principal Exposure at such time, and the denominator of which is the aggregate amount of the Principal Exposure of all of the Lenders at such time.


"REQUISITE LENDERS" means, at any time, (i) with respect to the aggregate Pro Rata Shares of the Banks, such Banks whose Pro Rata Shares exceed fifty percent of such aggregate amount plus (ii) with respect to the aggregate Pro Rata Shares of the Noteholders, such Noteholders whose Pro Rata Shares exceed fifty percent of such aggregate amount.


2. Appointment; Nature of Relationship. Each of the Lenders hereby designates and appoints Bank One as its Collateral Agent under this Agreement and the Collateral Documents, and each of the Lenders hereby irrevocably authorizes the Collateral Agent to take such action on its behalf under the provisions of this Agreement and the Collateral Documents and to exercise such powers as are set forth herein or therein, together with such other powers as are incidental thereto. The Collateral Agent agrees to act as such on the express terms and conditions contained in this Agreement. Notwithstanding the use of the defined term "Collateral Agent," it is expressly understood and agreed that the Collateral Agent shall not have any fiduciary responsibilities to any Lender by reason of this Agreement and that the Collateral Agent is merely acting as the representative of the Lenders with only those duties as are expressly set forth in this Agreement and the Collateral Documents. In its capacity as the Lenders' contractual representative, the Collateral Agent (i) does not assume any fiduciary


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duties to any of the Lenders, (ii) is a "representative" of the Lenders within the meaning of Section 9-105 of the Uniform Commercial Code and (iii) is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the Collateral Documents. Each of the Lenders agrees to assert no claim against the Collateral Agent on any agency theory or any other theory of liability for breach of fiduciary duty, all of which claims each Lender waives.


3. Powers and Duties. The Collateral Agent shall have and may exercise such powers under the Collateral Documents as are specifically delegated to the Collateral Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto. The Collateral Agent shall have no implied duties to the Lenders, or any obligation to the Lenders to take any action hereunder or under any of the Collateral Documents, except any action specifically required by this Agreement or any of the Collateral Documents to be taken by the Collateral Agent or directed by the Requisite Lenders in accordance with the terms hereof. The Collateral Agent shall not take any action which is in conflict with any provisions of applicable law or of this Agreement or any Collateral Document.


4. Authorization to Execute Collateral Documents. If the Collateral Agent receives written notice from either the Agent or a Noteholder at any time or from time to time hereunder that Collateral Documents are required pursuant to the Bank Credit Agreements or the Note Agreements in connection with the grant of a security interest in and lien against the assets of the Company, Ag-Chem Equipment Canada, Ltd., and/or a Guarantor, the Collateral Agent is authorized to and shall execute and deliver such Collateral Documents as the Agent or such Noteholder shall direct requiring execution and delivery by it and is authorized to and shall accept delivery from the Company of such Collateral Documents as the Agent or the Noteholder shall direct which do not require execution by the Collateral Agent.


5. Direction by Requisite Lenders. Except as otherwise provided in this Section 5, the Collateral Agent shall take any action with respect to the Collateral and the Collateral Documents directed in writing by (and only as directed in writing by) the Requisite Lenders. Notwithstanding the foregoing, the Collateral Agent shall not be obligated to take any such action (i) which is in conflict with any provisions of applicable law or of this Agreement or any Collateral Document or (ii) with respect to which the Collateral Agent, in its opinion, shall not have been provided adequate security and indemnity against the costs, expenses and liabilities that may be incurred by it as a result of compliance with such direction. Under no circumstances shall the Collateral Agent be liable for following the written direction of the Requisite Lenders. In each instance in which the Requisite Lenders deliver a written direction to the Collateral Agent pursuant hereto, the Collateral Agent shall promptly send a copy of such written direction to each Lender that is not included in such Requisite Lenders.


6. Notice of Actionable Default. Any Lender or Lenders may give the Collateral Agent a Notice of Default or a Notice of Actionable Default in the manner provided in Section 32 and shall give a copy of such Notice of Default or Notice of Actionable Default to each of the other Lenders. If and only if the Collateral Agent shall have received a Notice of Actionable Default, the Collateral Agent shall, if directed in writing by the Requisite Lenders,


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exercise the rights and remedies provided in this Agreement and in any of the Collateral Documents.


7. Remedies. Each of the Lenders hereby irrevocably agrees that the Collateral Agent shall be authorized, after the occurrence of an Actionable Default and at the direction of the Requisite Lenders or incidental to any such direction, for the purpose of carrying out the terms of this Agreement and any of the Collateral Documents, to take any and all appropriate action and to execute any and all documents and instruments that may be necessary or desirable to accomplish the purposes hereof and thereof, including, without limiting the generality of the foregoing, to the extent permitted by applicable law, to do the following:


(i) to ask for, demand, sue for, collect, receive and
give acquittance for any and all moneys due or to become due
with respect to the Collateral (except that, without the
consent of all Lenders, the Collater ...