Exhibit 10.28


 


INTEGRATED MARKETING AGREEMENT


 


                THIS AGREEMENT (“Agreement”)
is entered into as of the 16th day of October, 2001, by and between Deere &
Company, a Delaware corporation (“Deere”), and Hitachi Construction Machinery
Co., Ltd., a Japan corporation (“Hitachi”).


 


RECITALS


 


                A.            On May 16, 1988, Deere and Hitachi
(collectively “the Parties”) entered into a Joint Venture Agreement (“J V
Agreement”) to establish a facility in North America for the manufacture and
distribution of excavators, mining equipment, attachments, components and
repair parts (the “Products”) of the types designed and manufactured by Deere
in the United States and by Hitachi in Japan.


 


                B.            Pursuant to the J V Agreement, the
Parties formed a close corporation under the General Corporation Law of
Delaware known as Deere-Hitachi Construction Machinery Corporation (“Deere-Hitachi”),
and since its formation Deere-Hitachi has carried on the business contemplated
by the J V Agreement.


 


                C.            The geographic territory for the
distribution of the Products produced under the JV Agreement was defined as:
North America, Central America and South America (the “Territory”).


 


                D.            Marketing of Deere-branded Products
produced under the J V Agreement has been and continues to be the
responsibility of Deere & Company or one of its subsidiaries (for purposes
of this Agreement, John Deere Construction and Forestry Company)(“JDCFC”);
marketing of Hitachi-branded Products has been and continues to be the
responsibility of Hitachi Construction Machinery (America) Corp. (“HCMA”) and
Hitachi Construction Machinery Canada Ltd. (“HCMC”), both subsidiaries of
Deere-Hitachi.


 


                E.             Deere and Hitachi are now desirous
of implementing operational efficiencies in the marketing of the Products
within the Territory which will address market share declines in both their
distribution channels, allow for greater flexibility in responding to economic
conditions, and enable the Parties to compete effectively with larger
integrated manufacturers of excavators, as well as certain mining equipment,
including mining excavators, shovels and trucks.


 


 


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COVENANTS


 


                IN CONSIDERATION
of the premises and the mutual covenants of the Parties set forth herein, the
Parties hereto agree as follows:


 


ARTICLE I



Reorganization of Product Marketing within the Territory


 


                1.1           Integration of Marketing
Organizations.  Deere and Hitachi
shall cause the integration of the marketing functions of HCMA, HCMC and JDCFC
into a single operating unit responsible for the distribution of products
within North America, Central America and South America. Integration shall
include the dissolution of HCMA and HCMC and the transfer of their assets to
Deere-Hitachi. The parties shall act in good faith and take such actions as are
necessary to effectuate the dissolution, transfer of assets and integration of
their marketing organizations.


 


                1.2           Operations following Integration.
 Following the integration of HCMA and
HCMC into Deere-Hitachi as provided in Section 1.1, JDCFC shall assume sole
responsibility for the distribution of Products within the Territory. It is the
intent of the Parties that JDCFC shall function as, and perform the types of
services following the Integration as HCMA, HCMC and JDCFC separately performed
prior to the Integration. The integration shall commence as soon as practicable
after the execution of this Agreement, but no later than 1 January 2002 and be
completed by 31 December 2002.


 


                1.3           Purposes.  The Parties agree that integration of their
respective marketing organizations will result in substantial cost reductions
through the sharing of common marketing and product support systems,
consolidation of facilities, as well as realize synergies through a common
parts distribution system. The purpose of this integration, therefore, is to
implement operational efficiencies in the distribution of the Products within
the Territory, to address market share declines in both their distribution
channels, achieve greater flexibility in responding to economic conditions, and
to enable the Parties to compete effectively with larger integrated
manufacturers of excavators, as well as mining equipment, including mining
excavators, shovels and trucks.


 


It is the mutual understanding between the Parties
that this Agreement will be accomplished by maintaining and expanding the total
business in the Territory.


 


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ARTICLE II



Consolidation of Facilities


 


                2.1           Houston, Toronto and Vancouver.
 The Houston, Toronto and Vancouver
facilities will be closed, and the activities conducted at such facilities
shall be assumed by JDCFC at facilities operated by JDCFC. The Parties agree
that upon closure of these operations Deere-Hitachi will take the necessary
steps to terminate the Toronto and Vancouver leases, and to close the Houston
facility.


 


                2.2           Staffing.  As the Houston, Toronto and Vancouver
operations are closed, the management of JDCFC will determine which of the
employees at these facilities will be retained as employees of the integrated
organization. The Parties also agree that Hitachi will designate a senior
manager who will be appointed to a position within the JDCFC marketing
organization, with responsibility for the Hitachi division of JDCFC, and
reporting to JDCFC’s Director of North American Operations. Hitachi will also
designate an additional senior manager to serve on the Quality Council of JDCFC
and reporting directly to the President of JDCFC. JDCFC shall have the right to
approve both senior managers designated by Hitachi, provided that such approval
is not unreasonably withheld. Additional Hitachi personnel will be assigned to
JDCFC to support the integrated excavator and mining business as determined by JDCFC
Management.


 


ARTICLE III



Expansion of Products


 


                3.1           Mining Equipment.  The Parties agree that mining equipment,
described as rigid frame haul trucks, shovels and excavators greater than 100
metric tons (MT), currently being distributed in the Territory by Deere-Hitachi
will be distributed by JDCFC pursuant to the terms of a separate Distribution
and Consignment Agreement substantially in the form attached hereto as Exhibit
A.


 


                3.2           Euclid Trucks.  Euclid-Hitachi Heavy Equipment, Ltd. (“Euclid-Hitachi
currently distributes a rigid frame haul truck for use in mining, under the
Euclid-Hitachi brand name. The Parties agree that this product will be
distributed by Deere-Hitachi and they shall cause Deere-Hitachi to enter into a
Distribution and Supply Agreement with Euclid-Hitachi for this purpose substantially
in the form attached hereto as Exhibit B. Deere -Hitachi will also supply the
Euclid-Hitachi brand rigid frame haul truck to JDCFC for distribution


 


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through the integrated distribution organization pursuant to a separate
Distribution and Consignment Agreement substantially in the form attached
hereto as Exhibit C.


 


                3.3           Growth Potential.  The Parties acknowledge the importance of supporting
the growth and profitability related to the distribution of mining products,
and will work toward maintaining and improving the distribution of that product
line by adding other complimentary products which may be necessary to grow the
business.


 


                3.4           Protection Against Marketing
Losses.  The Parties agree that operating
losses associated with the distribution of excavators > 100 MT, shovels,
rigid frame haul trucks together with components, attachments and repair parts
for such excavators, shovels and haul trucks (“Mining Products”) shall not be
charged against the Integrated Marketing Organization. Accordingly, any such
losses shall be charged to Hitachi, and not to the Integrated Marketing
Organization in arriving at the Parties’ profit sharing under this Agreement.


 


ARTICLE IV



Distribution of Product


 


                4.1           Dealer Network.  The Parties agree that to accomplish the
objectives of an integrated marketing organization it will be necessary to move
toward a single unified distribution system comprised of the best qualified
retail dealers from both organizations. This will be accomplished by appointing
the existing qualified Deere dealer or the qualified consolidating Hitachi
dealer to represent a unified product line (possible examples: Wajax, Burress,
Rudd, AIS, Formula, Ahern, CMI Alaska, Arnold, Elliot & Franz, Howell,
Peco, Romco, Trax GA, or Trax AL). JDCFC will consult with Hitachi in selecting
dealers, provided, however, that JDCFC shall have the right to make final
decisions in such dealer selections. Dealer selections will be made in a manner
that supports a long-term unified distribution channel.


 


                4.2           Timing.  Existing open areas will be rationalized
immediately following the execution of this Agreement. However, to allow for a
smooth transition, the evaluation and unification of the distribution channel
will be completed within a period of three (3) years from the date of this
Agreement.


 


                4.3           Business Plan.  The Parties recognize the importance of
proceeding expeditiously toward accomplishing the purposes of the integrated
marketing organization and agree to develop a 5-year business plan for the


 


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organization, and to use their best efforts in achieving the plan.


 


ARTICLE V



Litigation


 


                5.1           Product Litigation.  The procedures for resolving claims and conducting
the defense of litigation involving excavators below 100 MT distributed by the
integrated marketing organization, as well as the payment of the related costs,
shall be those set forth in the Product Liability Sharing Agreement
between the Parties dated August 16, 1993.


 


                5.2           Other Litigation.  The procedures for resolving claims and
conducting the defense of all litigation other than product litigation shall be
those set forth in the Product Liability Sharing
Agreement between the Parties dated August 16, 1993, provided,
however, that all the related costs of product claims and lawsuits involving or
related to excavators greater than 100 MT, mining shovels and mining trucks
shall be the sole responsibility of and paid by Hitachi. All other litigation costs
related to or arising out of implementing this Agreement, including the payment
of claims, lawsuits, attorneys and consultants’ and related fees, shall be
treated as integration expenses and shared by the Parties in the same
proportion as the sharing of profits and/or losses of the integrated marketing
organization.


 


ARTICLE VI



Sharing the Profits of Integration


 


                6.1           General Rule.  The profits derived from distributing Product
within the Territory for periods beginning on or after January 1, 2002, shall
be shared as follows: Deere 60%; Hitachi 40%. The Parties agree that profits
from the integrated of Products shall be determined in accordance with
Generally Accepted Accounting Principles (“GAPP”). The Parties further agree to
distribute such profits in accordance with a methodology preferred by Hitachi,
taking into account the method most beneficial to both Parties.


 


                6.2           Pricing.  The Parties agree that beginning January 1,
2002, all Products (whole goods, components, attachments and service parts), purchased
by all Deere affiliated companies, including Deere-Hitachi, from Hitachi for
distribution within the Territory will be sold to such Deere affiliates at the
prices and in accordance with the terms of the pertinent Supply Agreement


 


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between Hitachi and the Deere affiliate, including, but not limited to
the Supply Agreement with Deere-Hitachi dated May 16, 1988, as amended; the
Component Supply Agreement with Industrias John Deere S.V. de C.V., dated April
28, 1995, as amended; and the Supply Agreement with Industrias John Deere S.A.
de C.V., dated May 1, 1996, as amended. The Parties further agree that all
agreements between Hitachi and Deere affiliates will be amended to carry into
effect the pricing provisions of this IMA.


 


                6.6           Cost Reduction.  The Parties agree that to maintain and improve
competitiveness in the Territory certain cost reduction initiatives must be
implemented for whole goods, components and attachments, and agree that
beginning January 1, 2002, Hitachi shall reduce the costs of whole goods,
components and attachments in accordance with the Supply Agreement between
Hitachi and Deere-Hitachi dated May 16, 1988, as amended.


 


ARTICLE VII



Organization Structure


 


                7.1           Corporate Governance.  HCMA and HCMC will cease their corporate
existence upon Integration of the Parties’ marketing organizations, and their
functions will be absorbed by JDCFC. The corporate structure and governance of
Deere-Hitachi will continue as set forth in the Parties’ J V Agreement dated
May 16, 1988, as amended. The corporate structure and governance of JDCFC will
not be affected by this Agreement except that Hitachi senior managers and
employees shall be appointed to support the integrated operations in accordance
with Section 2.2.


 


ARTICLE VIII



Branding of Products


 


                8.1           Both Deere-branded and
Hitachi-branded Products are currently being marketed through the distribution
channels of HCMA, HCMC and JDCFC. The Parties agree that during the transition
to a unified marketing organization, both brands will continue to be
distributed. However, after unification of their respective marketing
organizations, the Parties agree to evaluate the desirability of adopting a
common excavator product brand (possible example: Deere-Hitachi), except that
mining products will continue to be distributed under the Hitachi brand,
indefinitely.


 


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ARTICLE IX



Term and Termination


 


                9.1           Term.  This Agreement shall become effective as of
the date hereof and shall continue in full force and effect for an indefinite
term hereafter unless terminated in accordance with the provisions of the
Parties’ J V Agreement dated May 16, 1988.


 


                9.2           Termination.  Each of Deere and Hitachi shall have the right
to terminate this Agreement upon the happening of any of the events enumerated
in Section 9.2 of the J V Agreement dated May 16, 1988, provided however,
that this Agreement may not be terminated unless the J V Agreement is also
terminated.


 


                9.3           Liquidation and Dissolution.  In the event that this Agreement is
terminated, the Parties agree that they shall take such action as is necessary
to cause the Board of Directors of Deere-Hitachi to adopt a plan of liquidation
and dissolution of the J V, including all operations contemplated under this
Agreement, all in accordance with the terms of Article IX of the J V Agreement.


 


ARTICLE X



Miscellaneous


 


                10.1         Binding Effect.  This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns.
Each party hereto shall use its best efforts to cause the members of the Board
of Directors of Deere-Hitachi to cause Deere-Hitachi to agree to be bound by
all of the terms and conditions of this Agreement, as well as any ancillary
agreements required to give it effect, as though it were a party hereto and
thereto.


 


                10.2         Entire Agreement.  This instrument and the exhibits attached
hereto supersede all prior understandings and agreements of the Parties with
respect thereto, and shall operate as additions to their J V Agreement dated
May 16, 1988.


 


                10.3         Amendment and Modification.  The Parties hereto may amend,


 


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modify and supplement this Agreement in such manner as may be agreed
upon by them in writing.


 


                10.4         Governing Law.  This Agreement is executed in English, which
shall be the controlling text and this Agreement and all related agreements
(unless otherwise agreed) shall be governed by and construed in accordance with
the laws of the State of Illinois applicable to contracts made and to be
performed therein.


 


                10.5         Required Approvals.  The actions contemplated by this Agreement
will be implemented only after any and all necessary reviews, consents or
approvals are completed or obtained from the appropriate governmental
authorities, if any.


 


                10.6         Execution in Counterpart.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original.


 


                10.7         Headings.  The descriptive headings in this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.


 


                10.8         Severability.  If any term, restriction or covenant of this
Agreement is deemed illegal or unenforceable under the laws of the State of
Illinois (or any other law deemed by a court of competent jurisdiction to be
controlling), or if any application of any term, restriction or covenant of
this Agreement to any person or circumstance is deemed illegal or
unenforceable, the Parties shall in good faith negotiate changes to the
unenforceable term, restriction or covenant so that the original intent of such
term, restriction or covenant is preserved insofar as is permissible by law.


 


                10.9         Notices.  Any notice, request, information or other
document given hereunder to any of the parties by any other party shall be in
writing and sent to those persons identified, and in accordance with the terms
of Section 10.8 of the Parties J V Agreement dated as of May 16, 1988.


 


                10.10       Arbitration.  Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, which is unresolved within
90 days (or such other period as may be established by mutual agreement of the
Parties) of first written notification by either party, shall be settled by
binding arbitration in accordance with the terms of the Parties’ J V Agreement
dated as of May 16, 1988.


 


                10.11       Assignment.  Neither Hitachi nor Deere shall assign its
rights or obligations pursuant to this Agreement except with the prior written
consent of


 


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the other party.


 


                10.12       Reaffirmation of J V Agreement.  The provisions of this Agreement shall
constitute additions to the Parties’ J V Agreement dated May 16, 1988, and
except as modified by this Agreement, the J V Agreement shall remain in full
force and effect.


 


                10.13       Amendments to Supply Agreements.  Amendment to the Supply Agreement between
Hitachi and Deere-Hitachi dated May 16, 1988, is attached hereto as Exhibit D,
and Amendment to the Supply Agreement between Deere and Deere-Hitachi dated May
16, 1988, is attached hereto as Exhibit E.


 


                IN WITNESS
WHEREOF, the Parties have executed this Agreement on the day and year first
above written.


 


	
  DEERE & COMPANY

  
	
   

  
	
  By:

  	
  /s/ Pierre E. Leroy

  	
   

  
	
   

  	
  Name: 

  	
  Pierre E. Leroy

  
	
   

  	
  Title:

  	
  President, Worldwide Construction Equipment

  
	
   

  	
   

  	
  Division & Deere Power Systems Group

  
	
   

  	
   

  
	
  HITACHI CONSTRUCTION MACHINERY CO., LTD

  
	
   

  
	
  By:

  	
  /s/ Ryuichi Seguchi

  	
   

  
	
   

  	
  Name:

  	
  Ryuichi Seguchi

  
	
   

  	
  Title:

  	
  President & CEO

  
				



 


 


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