EXHIBIT 10.3
AGREEMENT CONCERNING INDUSTRIAL RETAIL NOTES
Xxxx Deere Industrial Equipment Company, ("Sales Company"), its successors
and assigns; and
Xxxx Deere Capital Corporation ("Capital Corporation") its successors and
assigns;
agree as follows:
SECTION 1. RETAIL FINANCE
To stimulate retail sales of its industrial equipment and to induce the
Capital Corporation to provide a "Finance Plan" for retail purchases of its
industrial equipment, the Sales Company agrees to provide financing to retail
purchasers. The Capital Corporation agrees to provide and administratively
support a Finance Plan for the Sales Company. The Finance Plan shall be made
up of finance agreements between dealers and the Sales Company (which the
Sales Company hereby agrees to execute with dealers from time to time as the
Capital Corporation deems necessary), retail terms and bulletins
supplementary thereto, and retail finance manuals. The Capital Corporation
shall advise and assist the Sales Company in complying with all applicable
federal and state laws and regulations applicable to retail financing. The
Capital Corporation further agrees that it will purchase from the Sales
Company all retail installment sale and loan contracts (collectively "Retail
Notes") entered into by the Sales Company pursuant to and in compliance with
the Finance Plan. This Agreement shall apply to the terms and conditions of
the sale of Retail Notes from the Sales Company to the Capital Corporation.
SECTION 2. SALES AND PURCHASES OF RETAIL NOTES
2.1 ACCEPTANCE. A sale of any Retail Note shall not be completed
until the Retail Note is received and accepted by the Capital
Corporation at its office in Reno, Nevada, as evidenced by a credit
memorandum issued by the Capital Corporation to the Sales Company.
Sales of Retail Notes to the Capital Corporation need not be
evidenced by endorsements on the Retail Notes. If the Capital
Corporation shall so request, the Sales Company will endorse Retail
Notes and perform all other acts and execute all other instruments
which the Capital Corporation shall deem desirable or proper to
further evidence or perfect the sale. The sales of such Retail Notes
shall be without recourse against the Sales Company.
2.2 CONVEYANCE OF RETAIL NOTES. Each sale of Retail Notes shall
convey to the Capital Corporation all right, title and interest in
and to the Retail Notes sold (including the security interests
described therein) as well as the
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proceeds of collection thereof. Such conveyance shall be free and
clear of the claims of any and all third parties.
2.3 PURCHASE PRICE. The purchase price of any Retail Note accepted
by the Capital Corporation shall consist of an "Immediately Due
Portion" and a portion payable in installments ("Installment
Portion"). (On an exception basis, the Sales Company and the Capital
Corporation may agree that the Installment Portion will not be paid
on certain Retail Notes.) The Immediately Due Portion shall be the
face amount of the Retail Note less both the finance charge and any
separately stated insurance premiums. The Installment Portion, which
is intended to compensate the Sales Company for origination of
receivables, shall be a percentage of finance income earned on Retail
Notes owned by the Capital Corporation, pursuant to the following
table:
BASE RATE* IN EFFECT ON THE PERCENTAGE OF FINANCE
FIRST DAY OF EACH CALENDAR MONTH INCOME EARNED
-------------------------------- ----------------------
7.5% or less 2.9%
7.6% to 8% 2.8%
8.1% to 8.5% 2.7%
8.6% to 9% 2.6%
9.1% to 9.5% 2.5%
9.6% to 10% 2.4%
10.1% to 10.5% 2.3%
10.6% to 11% 2.2%
11.1% to 11.5% 2.1%
11.6% to 12% 2.0%
12.1% to 12.5% 1.9%
12.6% to 13% 1.8%
13.1% to 13.5% 1.7%
13.6% to 14% 1.6%
14.1% to 14.5% 1.5%
14.6% and over 1.4%
*The "Base Rate" is the "Citibank base rate" (the annual
percentage rate of interest announced publicly from time to
time by Citibank, N.A. in New York, New York as the base rate
it uses in determining the rate of interest it charges on
loans).
2.4 PAYMENT TO DEERE & COMPANY, CORPORATE. For their convenience,
the Sales Company and the Capital Corporation request and direct that
until further notice all monies payable by one party to another
pursuant to this Agreement shall be paid to, and all non-cash
adjustments and other
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transactions pursuant to this Agreement shall be reported to Deere &
Company, Corporate, to be recorded in the Deere & Company, Corporate,
net account for the account of the other party, subject to monthly
settlement pursuant to agreement between or among the parties, and such
payments and reports shall constitute fulfillment of such party's
obligation of payment or accounting. For purposes of this Agreement,
"Deere & Company, Corporate" shall mean Deere & Company's corporate,
administrative office as opposed to Deere & Company's branch offices.
2.5 TIME OF PAYMENT. The Immediately Due Portion shall be payable to
the Sales Company upon acceptance by the Capital Corporation under
Section 2.1., and the Installment Portion shall be payable to the Sales
Company when it is earned by the Capital Corporation. Both Portions
shall be paid on a monthly basis.
SECTION 3. STANDARDS FOR RETAIL NOTES
In consideration of the Capital Corporation's agreement to purchase all such
Retail Notes, the Sales Company agrees to finance retail purchases if each
Retail Note complies with the following requirements:
3.1 FINANCE PLAN TERMS. Each Retail Note will comply with all
requirements prescribed by the Capital Corporation in the Finance Plan
which are in effect on the date of execution of the Retail Note.
3.2 CREDIT STANDARDS. Each retail buyer/borrower will meet the credit
standards prescribed by the Capital Corporation from time to time.
3.3 FORMS. Each Retail Note will be on either a Retail Installment
Sale Contract or Loan Contract form approved by the Capital Corporation
and appropriate to the type and location of the transaction.
3.4 SECURITY. Each Retail Note and all other documents needed to
perfect a lien or security interest in the equipment which is the
subject of a Retail Note will comply with the requirements as to
acknowledgement, affidavits, suitability for filing of record, and any
other requirements prescribed by the applicable state law. All
necessary steps will have been or will be taken to perfect a valid
purchase money security interest or, in certain circumstances, a
non-purchase money, first position security interest in the equipment
which is the subject of a Retail Note.
The Capital Corporation shall take all steps necessary to ensure that each
Retail Note complies with these requirements.
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If the Sales Company finances retail purchases on notes that do not comply
with the above requirements, the Capital Corporation shall not be obligated
to purchase those notes.
SECTION 4. COLLECTION
The Sales Company agrees to render assistance to the Capital Corporation when
needed in connection with litigation, repossession or other collection
activities. Such assistance shall include, but not be limited to, bringing
suit in the name of the Sales Company against any retail customer or dealer
when necessary. The costs of any such litigation shall be borne by the
Capital Corporation. The Capital Corporation may elect to assign a Retail
Note to the Sales Company if such an assignment becomes necessary to collect
the balance of the Retail Note. If the Capital Corporation does elect to
assign a Retail Note for this purpose, the Sales Company agrees to accept the
assignment.
SECTION 5. RESERVES AND LOSSES
5.1 DEALERS' RESERVES AND CONTINGENT EARNINGS. The Finance Plan may
provide for the withholding by the Sales Company of certain types of
reserves for each dealer, such as the Dealer Reserve and the Contingent
Earnings (collectively, "Reserves") as described in the Finance Plan.
The Capital Corporation shall maintain the Reserves and assume all the
obligations to dealers on such Reserves and other obligations
pertaining thereto. The Sales Company hereby assigns to the Capital
Corporation its security interests in the Reserves maintained pursuant
to the Finance Plan. The Reserves shall be used, as described in the
Finance Plan, to offset losses on Retail Notes and expenses incurred in
collecting or attempting to collect Retail Notes purchased by the
Capital Corporation.
5.2 CLAIMS FOR BREACH OF WARRANTY. Independently of the other
provisions in this Section 5, the Sales Company will reimburse the
Capital Corporation for any losses which occur because Retail Notes are
compromised, reduced or written off as a result of meritorious claims
by debtors that the equipment for which the Retail Notes were given was
defective or in violation of applicable warranties.
SECTION 6. INSURANCE
The Capital Corporation is entitled to the benefit of any insurance proceeds
payable to the Sales Company in its capacity as creditor on any Retail Note.
The Sales Company agrees to assist the Capital Corporation in preparing
proofs of loss and settling claims with insurance carriers.
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SECTION 7. WAIVER OF FINANCE CHARGES
The Finance Plan may provide for the waiver of finance charges ("Waiver") or a
reduction of the normal rate ("Low Rate") on Retail Notes under certain
circumstances.
In consideration of the purchase of any such Retail Notes by the Capital
Corporation, the Sales Company shall, upon the sale to the Capital Corporation
of a Retail Note as to which a Waiver or Low Rate is in effect, pay the Capital
Corporation an amount sufficient to reimburse the Capital Corporation for its
costs and provide the Capital Corporation a competitive and agreed to rate of
return on its investment in the Retail Note.
SECTION 8. DEFAULT
8.1 EVENTS OF DEFAULT-SALES COMPANY. The Sales Company shall be in
default hereunder if any of the following occurs: (a) the Sales Company
fails to comply with (i) any of the following obligations for more than 10
days after receipt of written demand for compliance: the execution of
finance agreements with dealers in Section 1; the assistance with the
collection of Retail Notes in Section 4; or the obligations with respect to
insurance proceeds in Section 6; (ii) any other obligation of the Sales
Company under this Agreement for 30 days after receipt of written demand
for compliance; (b) the Sales Company (or any affiliated company or
companies with which the Sales Company's accounts are consolidated for
purposes of an annual report to shareholders of such company or affiliate,
excluding affiliated companies whose assets represent less than 5% of the
total assets consolidated with those of Deere & Company for purposes of
such annual report) becomes insolvent, makes an assignment for the benefit
of creditors, institutes or has instituted against it proceedings under any
bankruptcy or insolvency law, or has a significant portion of its stock in
trade or of its other assets levied upon or attached; (c) the Sales Company
sells or closes out its business or any significant part thereof; (d) the
Capital Corporation deems itself insecure in doing business with the Sales
Company; (e) the Sales Company breaches any material agreement between it
and the Capital Corporation relating to this Agreement.
8.2 CAPITAL CORPORATION REMEDIES FOR DEFAULT. If the Sales Company shall
be in default hereunder at any time, the Capital Corporation may, in
addition to exercising the rights to which it is entitled in the absence of
default, charge the Sales Company with costs of collection on the Retail
Notes affected by the breach.
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8.3 EVENTS OF DEFAULT-CAPITAL CORPORATION. The Capital Corporation shall
be in default hereunder if any of the following occurs: (a) the Capital
Corporation fails to comply with (i) any of the following obligations for
more than 10 days after receipt of written demand for compliance: the
provision or support of a Finance Plan in Section 1; the purchase from the
Sales Company of all retail installment sale and loan contracts in Section
1; the payment to the Sales Company in Section 2; the assurance that each
Retail Note complies with the Standards for Retail Notes in Section 3; and
(ii) any other obligation of the Capital Corporation under this Agreement
for 30 days after receipt of written demand for compliance; (b) the Capital
Corporation sells or closes out its business or any significant part
thereof; (c) the Sales Company deems itself insecure in doing business with
the Capital Corporation; (d) the Capital Corporation breaches any material
agreement between it and the Sales Company relating to this Agreement.
8.4 SALES COMPANY REMEDIES FOR DEFAULT. If the Capital Corporation shall
be in default hereunder at any time, the Sales Company may, in addition to
exercising the rights to which it is entitled in the absence of default,
charge the Capital Corporation with any of their damages incurred and
proximately caused by such breach.
SECTION 9. EFFECTIVE DATE AND SCOPE
This Agreement shall take effect upon execution by all the parties and shall
supersede all previous agreements between or among the parties concerning sale
of Retail Notes. The handling of Retail Notes purchased by the Capital
Corporation under such previous agreements shall be governed by the terms
hereof.
SECTION 10. TERMINATION
This Agreement may be terminated upon 30 days' notice by any party to the
others, but such termination shall not affect the duties of the parties with
respect to Retail Notes sold to the Capital Corporation before the effective
date of such termination.
SECTION 11. MAILING OF NOTICES
Without limitation or invalidation of any other method of giving notice, if any
notice hereunder be deposited in the United States Mail in an envelope certified
or registered with postage pre-paid and addressed to any party at its principal
place of business, such deposit shall be conclusively deemed to constitute the
giving of such notice.
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SECTION 12. JOINDER
One or more other subsidiaries of Deere & Company may become parties to this
Agreement and entitled to the rights and subject to the obligations of a Sales
Company under this Agreement upon the execution and delivery by each such
subsidiary and the Capital Corporation of a Joinder Agreement.
SECTION 13. GOVERNING LAW
This Agreement shall be interpreted and construed in accordance with the laws of
the State of Illinois.
SECTION 14. CONSTRUCTION
The parties mean for this Agreement to be construed broadly to give effect to
their intent.
Dated as of May 11, 1993.
XXXX DEERE CAPITAL CORPORATION
By: /s/ X.X. Xxx
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Title: President
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XXXX DEERE INDUSTRIAL
EQUIPMENT COMPANY
By: /s/ Xxxxxx X. Xxxxxx
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Title: Vice President
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AMENDMENT TO
AGREEMENT CONCERNING INDUSTRIAL RETAIL NOTES
Xxxx Deere Construction Equipment Company ("Sales Company"), its successors and
assigns; and Xxxx Deere Capital Corporation ("Capital Corporation") its
successors and assigns; agree as follows:
SECTION 1.
Section 2.3 of the AGREEMENT CONCERNING INDUSTRIAL RETAIL NOTES dated 11 May
1993, is hereby deleted and replaced by the following.
2.3 PURCHASE PRICE. The purchase price of any Retail Note accepted by the
Capital Corporation shall be the face amount of the Retail Note less both the
finance charge and any separately stated insurance premiums.
SECTION 2.
Section 2.5 of the AGREEMENT CONCERNING INDUSTRIAL RETAIL NOTES dated 11 May
1993, is hereby deleted and replaced by the following.
2.5 TIME OF PAYMENT. The purchase price shall be payable to the Sales Company
upon acceptance by the Capital Corporation under Section 2.1.
SECTION 3.
The parties mean for this Amendment to be construed broadly to give effect to
their intent.
SECTION 4.
This Amendment shall be effective as of 1 November 1994.
Dated as of 14 July 1997.
XXXX DEERE CONSTRUCTION XXXX DEERE CAPITAL
EQUIPMENT COMPANY CORPORATION
By: /s/ Xxx X. Xxxxx By: /s/ Xxx X. Xxxxxxx
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Title: Director, Customer Support Title: Senior Vice President
and Commercial Operations
