XXXX DEERE CONSTRUCTION EQUIPMENT COMPANY
000 00XX XXXXXX, XXXXXX, XXXXXXXX 00000-1390
XXX X. XXXXX
Director, Customer Support
& Commercial Operations
14 July 1997
Xxx X. Xxxxxxx
Senior Vice President,
Commercial & Consumer Lending Division
U.S. & Canada
Dear Xxx:
This will document the agreement between Xxxx Deere Construction
Equipment Company (JDCEC) and Xxxx Deere Capital Corporation
(JDCC) with regard to the various matters addressed below.
Essential to the arrangement being documented will be
continuation of the interaction, open communication, and spirit
of cooperation which have characterized the parties' relationship
in the past.
1. JDCC Recourse to JDCEC for Losses on Wholesale and Retail
Financing and/or Leasing
JDCC will have no recourse to JDCEC for losses JDCC sustains
in connection with JDCC's retail financing and/or leasing, except
to the limited extent such recourse is specifically allowed under
section 5.2 of the parties' 11 May 1993 Agreement Concerning
Industrial Retail Notes (as amended 14 July 1997). JDCC will have
no recourse to JDCEC for losses JDCC sustains in connection with
JDCC's wholesale financing and/or leasing, except to the limited
extent such recourse is specifically allowed under sections 2, 5,
6, and 9 of this letter. Any additional exceptions, whether for
wholesale or retail financing and/or leasing, will require the
advance written approval of JDCEC's Manager, Finance, and JDCEC's
Controller.
2. Inventory Verification
JDCC will conduct verifications of dealer inventories, which
will include JDCEC collateral, when and as requested by JDCEC.
JDCEC may conduct its own verifications, which, if conducted,
will include JDCC collateral. For each verification, each party
will be responsible for the actual cost of verification
attributable to its own collateral. JDCC and JDCEC will confer
and agree on a method for allocating verification costs between
them, which will be subject to future changes by further
agreement of the parties.
Verifications will be conducted in accordance with the
Inventory Verification Procedures dated 29 August 1996 (as
amended from time to time by agreement of the parties), unless
the parties agree in writing to the use of other procedures.
The party conducting an inventory verification will be
responsible for any loss which the other party sustains on an
extension of credit to the dealer and which is directly
attributable to a failure, by the verifying party, to follow
inventory verification procedures agreed upon by the parties.
3. Administrative Support by JDCEC
JDCEC will process JDCC's dealer charges and credits using
JDCEC's standard dealer billing and payment system. For this
service, JDCC will pay JDCEC a monthly fee in an amount to be
agreed upon by the parties. The amount of this fee will be
subject to annual review and renegotiation by the parties.
In the event a dealer fails to make full and timely payment
of the Amount Due Now appearing on its Xxxx Deere Statement of
Account, JDCEC may reverse all JDCC-originated charges included
in the Amount Due Now, provided JDCEC reverses all JDCC-
originated credits (excluding any note or lease credits issued to
the dealer by JDCC in connection with the disposition, by the
dealer, of JDCEC's collateral, to the extent of the amount owed
by the dealer to JDCEC for that collateral) included in
calculating the Amount Due Now. Such a reversal will be for the
sole purpose of allocating charges and credits between JDCC and
JDCEC, and will not appear on the statement of the dealer
involved. The dealer will remain fully liable for all
indebtedness owed to either party.
4. Provisional Credits
JDCC will be responsible for any loss sustained by JDCEC in
connection with a provisional credit which is taken by a dealer
and not charged back to the dealer within 15 days (or such lesser
number of days as the parties may agree upon in writing) after it
was taken. Further, for each provisional credit for which JDCC is
at risk by virtue of the preceding sentence, JDCC will pay JDCEC
interest, at the prime rate (as defined in JDCEC's Dealer Terms
Schedule, as amended from time to time by JDCEC), for:
(1) the period beginning on the sixteenth day after the
credit was taken and continuing to, but not including, the first
day for which JDCEC charges the dealer involved past-due interest
on account of the credit, and
(2) any periods thereafter for which JDCEC charges the
dealer involved past-due interest on account of the credit but
does not collect such interest from the dealer.
5. Subordination Agreements
All requests for subordination affecting both JDCEC and JDCC
collateral will be processed by JDCEC, in consultation with JDCC.
Any subordination agreement affecting both JDCEC and JDCC
collateral must be executed by JDCEC.
JDCC and JDCEC will confer and agree on procedures for
processing requests for subordination. After such agreement is
concluded, JDCEC will be responsible for any loss which JDCC
sustains on an extension of credit to a dealer and which is
directly attributable to a failure, by JDCEC, to consult with
JDCC, in accordance with such procedures, regarding a request for
subordination affecting both JDCEC and JDCC collateral.
6. Financing Statement Filings
All financing statement filings concerning JDCEC's dealers
will be processed by JDCEC and indicate JDCEC's Moline address.
JDCC and JDCEC will confer and agree on a collateral description
to be used in such filings.
If approved by counsel for the parties, JDCEC will:
(1) mend the existing JDCEC "blanket" dealer filings to
conform to the agreed-upon collateral description, and
(2) allow the existing JDCC "blanket" dealer filings to
lapse.
As JDCEC receives purchase money security interest
notifications from other creditors of dealers, it will provide
JDCC with a copy of each notification that pertains to a dealer
then financed by JDCC.
JDCC and JDCEC will confer and agree on procedures for
transitioning from the current "dual filing" arrangement to the
"single filing" arrangement agreed upon in this letter. Once the
transition is completed, JDCEC will be responsible for any loss
which JDCC sustains on an extension of credit to a dealer and
which is directly attributable to:
(1) an error or omission committed by JDCEC, following the
transition, in filing or continuing a dealer financing statement
(unless the particular act or omission is approved in advance by
JDCC), or
(2) a failure, by JDCEC, to provide copies of purchase money
security interest notifications as agreed in this letter.
7. Equipment Remarketing Services Fees and Expenses
For each sale which Equipment Remarketing Services (ERS)
conducts on JDCC's behalf, JDCC will pay ERS a commission equal
to 4% of the sale price and reimburse any direct, reasonable
expenses incurred by ERS in connection with the equipment sold.
The amount of this commission will be subject to annual review
and renegotiation by the parties.
8. Repossession of Dealer Collateral
Each party will notify the other before repossessing any
dealer assets. If one party proceeds with a repossession of
dealer assets, it may take possession of the other's collateral,
but will have no obligation to do so. If the repossessing party
does take possession of the other party's collateral, it will
hold that collateral until disposal instructions are received
from the other party, and each party will be responsible for the
actual costs of repossession and storage attributable to its own
collateral.
Each party will have the prerogative and responsibility to
dispose of its own collateral, unless the parties agree otherwise
following the repossession. Any such agreement will include an
allocation of costs and potential risks (such as the risk of a
challenge to the manner of disposition) acceptable to both
parties.
Each party may apply the entire proceeds of its collateral to
the indebtedness owed it by the dealer involved before sharing
any of the proceeds with the other party. However, to the extent
permitted by law, any credit balance remaining after application
of collateral proceeds to the indebtedness owed to one party will
be applied to the indebtedness of the dealer involved to the
other party.
9. Approval of JDCC Repossessions by JDCEC
JDCC will seek JDCEC's approval before proceeding with a
repossession of dealer assets, and JDCC will not proceed with a
planned repossession of dealer assets if JDCEC disapproves the
repossession in writing. If a dealer is in default under its
agreements with JDCC and JDCC desires to conduct a repossession,
but does not do so due to JDCEC's disapproval, JDCEC will be
responsible for any loss which JDCC sustains on its extension of
credit to the dealer as a result of diminution in the value, or
sale out of trust, of the collateral JDCC would have repossessed,
but only to the extent the diminution in value or conversion of
sale proceeds occurs during the period beginning when JDCEC
disapproves JDCC's planned repossession and ending:
(1) when JDCC makes a new advance to the dealer involved,
(2) when the dealer has cured its default with JDCC and has
remained current thereafter with both JDCC and JDCEC for three
consecutive months, or
(3) upon such other date or event as JDCC and JDCEC may
agree upon in writing, whichever occurs first.
10. 11 May 1993 Agreement Concerning Industrial Retail Notes
The parties' 11 May 1993 Agreement Concerning Industrial
Retail Notes (as amended 14 July 1997) shall continue in full
force and effect.
Please acknowledge your agreement to the foregoing by signing in
the space provided below and return this letter to me. A
duplicate original is enclosed for your files.
XXXX DEERE CONSTRUCTION EQUIPMENT COMPANY
By: /s/ Xxx X. Xxxxx
--------------------------
Xxx X. Xxxxx
Director, Customer Support
and Commercial Operations
Acknowledged and agreed to:
XXXX DEERE CAPITAL CORPORATION
By: /s/ Xxx X. Xxxxxxx
--------------------------
Xxx X. Xxxxxxx
Senior Vice-President
Date: 29 July 1997
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
----------------------- ---------------------
Xxx X. Xxxxx Xxx X. Xxxxxxx
Title: Director, Customer Support Title: Senior Vice President
and Commercial Operations
