Document:

Exhibit 10.17

 

JOHN
DEERE

 

ERISA
SUPPLEMENTARY PENSION BENEFIT PLAN

 

 

AS
AMENDED AND RESTATED EFFECTIVE:   1 NOVEMBER 1992

 

AS
AMENDED 8 DECEMBER 1993:  EFFECTIVE
1 JULY 1993

 

AS
AMENDED:  7 DECEMBER 1994

 

AS
AMENDED MAY 1995 - EFFECTIVE 1 JANUARY 1995

 

AS
AMENDED 4 DECEMBER 1996 - EFFECTIVE 1 JANUARY 1997

 

AS
AMENDED 26 MAY 1999 – EFFECTIVE 26 MAY 1999

 

AS
AMENDED 19 JULY 1999 – EFFECTIVE 1 JULY 1999

 

AS
AMENDED 12 JANUARY 2000 - EFFECTIVE 1 JANUARY 2000

 

AS
AMENDED 31 July 2000-EFFECTIVE 1 January 2000

 

AMENDED:
29 JANUARY 2002 - EFFECTIVE: 1 JANUARY 2002

 

 

121

 

JOHN
DEERE

 

ERISA
SUPPLEMENTARY PENSION BENEFIT PLAN

 

TABLE OF
CONTENTS

 

	
  Article

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  I.

  	
  ESTABLISHMENT, PURPOSE AND
  CONSTRUCTION

  	
   

  
	
   

  	
   

  
	
   

  	
  1.1

  	
  Establishment

  	
  123

  
	
   

  	
  1.2

  	
  Purpose

  	
  123

  
	
   

  	
  1.3

  	
  Effective Date and Plan
  Year

  	
  123

  
	
   

  	
  1.4

  	
  Application of Plan

  	
  124

  
	
   

  	
  1.5

  	
  Construction

  	
  124

  
	
   

  	
   

  	
   

  
	
  II.

  	
  PARTICIPATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Eligibility to
  Participate

  	
  125

  
	
   

  	
  2.2

  	
  Effect of Transfer

  	
  125

  
	
   

  	
   

  	
   

  
	
  III.

  	
  SUPPLEMENTARY BENEFITS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Eligibility for Benefit

  	
  126

  
	
   

  	
  3.2

  	
  Amount of Benefit

  	
  126

  
	
   

  	
  3.3

  	
  Form of Payment
  and Commencement Date

  	
  126

  
	
   

  	
  3.4

  	
  Death Prior to Receipt
  of Lump Sum

  	
  127

  
	
   

  	
  3.5

  	
  Qualified Domestic
  Relations Order

  	
  127

  
	
   

  	
   

  	
   

  
	
  IV.

  	
  ADMINISTRATION OF PLAN

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Administration

  	
  128

  
	
   

  	
  4.2

  	
  Amendment, Modification
  or Termination

  	
  128

  
	
   

  	
   

  	
   

  
	
  V.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Employment Rights

  	
  130

  
	
   

  	
  5.2

  	
  Applicable Law

  	
  130

  
	
   

  	
  5.3

  	
  Non-Alienation

  	
  130

  
	
   

  	
  5.4

  	
  Withholding of Taxes

  	
  130

  
	
   

  	
  5.5

  	
  Funding and Rights
  Against Assets

  	
  130

  
	
   

  	
  5.6

  	
  Effect on Other Benefit
  Plans

  	
  130

  
							

 

 

122

 

JOHN
DEERE ERISA SUPPLEMENTARY

PENSION
BENEFIT PLAN

 

(AS AMENDED AND
RESTATED EFFECTIVE 1 November 1992)

 

Article I.  Establishment, Purpose and Construction

 

1.1                                 Establishment.  Effective 1 November 1985, Deere &
Company established the John Deere Supplementary Pension Benefit Plan (the “Former
Plan”) for the benefit of the salaried employees on its United States payroll
and the salaried employees of its United States subsidiaries or affiliates that
chose to adopt the John Deere Pension Plan for Salaried Employees (“Salaried
Pension Plan”).  Deere & Company
and its United States subsidiaries and affiliates that have adopted the
Salaried Pension Plan (jointly the “Company”) are also deemed to have adopted
the Former Plan.  The Company amended and
restated the Former Plan, and divided it into two separate plans, effective 1 November 1992.
This John Deere ERISA Supplementary Pension Benefit Plan (the “Plan”) is one of
the two plans which replaced the Former Plan.

 

1.2                                 Purpose.  The Company
maintains a defined benefit pension plan, known as the Salaried Pension Plan,
which is intended to be a qualified defined benefit pension plan which meets
the requirements of section 401(a) of the Internal Revenue Code of
1986 (“Code”).  Section 415 of the
Code limits the benefit which may be paid under a qualified defined benefit
pension plan.  This Plan is intended to
provide benefits which, when combined with the benefit actually payable under
the Salaried Pension Plan, are reasonably comparable to the benefits which
participants in the Salaried Pension Plan would have received under such plan
if there were no limitations imposed by section 415 of the Code.  This Plan is intended to qualify as an unfunded
“excess benefit plan,” as defined in section 3(36) of the Employee
Retirement Income Security Act of 1974 (“ERISA”).

 

1.3                                 Effective
Date and Plan Year.  This Plan shall
be effective 1 November 1992. 
Participants in the Former Plan who were receiving benefits under the
Former Plan as of 31 October 1992, and who are eligible employees as
defined in section 2.1 below, shall receive the same benefit payments
under this Plan as they were receiving under the Former Plan as of 31 October 1992.  Participants in the Former Plan who were not
receiving benefits as of 31 October 1992, and

 

 

123

 

who are eligible
employees as defined in section 2.1 below, shall have no further rights
under the Former Plan, but shall be entitled to supplementary pension benefits,
if any, only under the terms of this Plan. 
The Plan Year shall be the twelve-month period beginning on 1 November of
each year and ending on 31 October of the following year.

 

1.4                                 Application
of Plan.  The terms of this Plan are
applicable only to eligible employees as described in Section 2.1 below
who (i) become eligible to receive benefit payments hereunder on or after
1 November 1992, or (ii) were receiving benefit payments under the
Former Plan as of 31 October 1992.

 

1.5                                 Construction.  Unless the context clearly indicates
otherwise or unless specifically defined herein, all operative terms used in
this Plan shall have the meanings specified in the Salaried Pension Plan, and
words in the masculine gender shall be deemed to include the feminine and
neuter genders and the singular shall be deemed to include the plural and vice
versa.

 

124

 

Article II.  Participation

 

2.1                                 Eligibility
to Participate.  Any employee
participating in the Salaried Pension Plan (or a surviving spouse of such
employee) whose retirement benefit upon termination from employment or death
under such plan is reduced by application of Article I, Section 14,
of the Salaried Pension Plan (or any other provision of the Salaried Pension
Plan which limits benefits under such plan as required by Section 415 of
the Code) and who is not a participant in the John Deere Senior Supplementary
Pension Benefit Plan shall be eligible to participate in this Plan.

 

2.2                                 Effect
of Transfer.  Any employee who is a
participant in this Plan and who becomes eligible to participate in the John
Deere Senior Supplementary Pension Benefit Plan shall cease to be a participant
in this Plan upon becoming a participant in the John Deere Senior Supplementary
Pension Benefit Plan.

 

125

 

Article III.  Supplementary Benefits

 

3.1                                 Eligibility
for Benefit.  An eligible employee
shall be entitled to a benefit under this Plan in the event that such eligible
employee’s employment with the Company terminates by reason of death or
retirement, including deferred vested retirement, under the terms of the
Salaried Pension Plan.

 

3.2                                 Amount
of Benefit.  The amount of the
supplementary benefit payable under this Plan shall be the amount by which (A) exceeds
(B) where:

 

(A)            equals the amount of
an employee’s monthly pension benefit or survivor benefit payable under the
terms of the Salaried Pension Plan as in effect on the date of the employee’s
termination, retirement or death, but determined without regard to any
limitation on such benefit imposed in order to comply with the limitation on
benefits contained in section 415 of the Code; and

 

(B)              equals such employee’s
actual monthly pension benefit or survivor benefit payable under the Salaried
Pension Plan as in effect on the date of such employee’s termination,
retirement or death.

 

The determinations of the
amount of (A) and (B) above shall be made using a straight life
annuity form.

 

3.3                                 Form of
Payment and Commencement Date. The supplementary benefit payable under this
Plan shall be payable in the same manner and form as the benefit paid to or
with respect to an employee under the Salaried Pension Plan, and shall
automatically commence on or about the same date as payments under the Salaried
Pension Plan.  Such benefits payable
under this Plan shall continue as long as benefits are payable under the
Salaried Pension Plan,

 

Alternatively, the
participant may elect to receive a lump sum payment for all or a portion (in
10% increments from 10% to 90%) of the Retirement benefits payable under this
Plan including the 55% joint and survivor annuity equal to 11% of the
supplementary benefit payable, adjusted for service accrued through 30 June 1993,
or 31 December 1993 in the case of employees of John Deere Credit Company,
John Deere Health Care, Inc., or John Deere Insurance Group.  Written notice of the participant’s election
to receive a lump sum payment shall be irrevocable, and must be received by the
Company within the twelve (12) months prior to payment, but in no event
subsequent to the participant’s date of retirement.  The lump sum payment shall be made to
participant twelve (12) months after receipt of notice by the Company but in no
event prior to the participant’s retirement.

 

126

 

Effective beginning 1 January 2002
and threrafter, the lump sum will be calculated using an interest rate
assumption equal to the average yield in September of the preceding Plan
Year on 30-year Treasury Constant Maturities (as published in October by
the Internal Revenue Service) and the mortality table shall be based upon a
fixed blend of 50% male mortality rates and 50% female mortality rates from the
Group Annuity Reserving Table (“GAR”), as set forth in Revenue Ruling  2001-62, in effect at the beginning of the
plan year in which payment is made.  The
age used in the calculation will be the age of the Participant or, in the case
of Participant’s death, the surviving spouse’s age on the date payment is made.

 

3.4                                 Death
Prior to Receipt of Lump Sum

 

If an active Participant
or a Participant on Permanent and Total Disability dies after receipt of notice
by the company pursuant to Section 3.3 of Participant’s irrevocable
election to receive a lump sum payment, but before the expiration of twelve
(12) months after receipt by the company of such election, a Surviving Spouse
of the Participant who is eligible for a survivor benefit under the Qualified
Retirement Plan will receive a lump sum survivor’s benefit under this
Plan.  The 55% surviving spouse lump sum
benefit will be payable no earlier than twelve (12) months following receipt of
notice by the company of the deceased Participant’s irrevocable election but
not before the first day of the month following eligibility for a surviving
spouse benefit under the Qualified Retirement Plan.

 

If a retired Participant
or a Participant on Permanent and Total Disability subsequently retires under
Normal Retirement and dies after receipt of notice by the company pursuant to Section 3.3
of Participant’s irrevocable election to receive a lump sum payment, but before
the expiration of twelve (12) months after receipt by the Company of such
election, a Surviving Spouse of the Participant who is eligible for a survivor
benefit under the Qualified Retirement Plan will receive the Participant’s full
lump sum benefit under Section 3.3 of this Plan.  In the event the retired Participant is
unmarried at the date of death or the Surviving Spouse of the deceased
Participant is not eligible for survivor benefits under the Qualified
Retirement Plan, the Participant’s full lump sum benefit will be paid to the
deceased Participant’s estate.  The lump
sum benefit will be payable no earlier than twelve (12) months following
receipt of notice by the Company of the deceased Participant’s irrevocable
election.

 

3.5                                 Qualified
Domestic Relations Order

 

Distribution is
prohibited under the Plan prior to the Participant’s retirement and, in the
event of a Qualified Domestic Relations Order, the Alternate Payee must take
distribution as a single lump sum payment within 180 days following the Participant’s
retirement under the Plan.

 

127

 

Article IV.  Administration of Plan

 

4.1                                 Administration.  This Plan shall be administered by the
Company (the “Administrator”). The Administrator shall have the power to
construe and interpret this Plan, decide questions of eligibility and determine
the amount, manner and time of payment of any benefits hereunder.  All determinations of the Administrator shall
be final, binding and conclusive on all persons.

 

4.2                                 Amendment,
Modification or Termination.  The
Board of Directors of the Company, or, the Pension Plan Oversight Committee of
the Board may at any time amend or modify this Plan in their sole
discretion.  In addition, the Deere &
Company Compensation Committee shall have the authority to approve all
amendments or modifications that:

 

a.                                       in the Compensation Committee’s judgment are procedural,
technical or administrative, but do not result in changes in the control and
management of the Plan assets; or

 

b.                                      in
the Compensation Committee’s judgment are necessary or advisable to comply with
any changes in the laws or regulations applicable to the Plan; or

 

c.                                       in
the Compensation Committee’s judgment are necessary or advisable to implement
provisions conforming to a collective bargaining agreement which has been
approved by the Board of Directors; or

 

d.                                      in
the Compensation Committee’s judgment will not result in changes to benefit
levels exceeding $5 million dollars per amendment or modification during the
first full fiscal year that such changes are effective for the Plan; or

 

e.                                       are
the subject of a specific delegation of authority from the Board of Directors.

 

Provided, however, that
this Plan shall not be amended or modified so as to reduce or diminish the
benefit then currently being paid to any employee or surviving spouse of any
former employee without such person’s consent. 
The power to terminate this Plan shall be reserved to the Board of
Directors of Deere & Company. 
The procedure for amendment or modification of the Plan by either the
Board of Directors, or, to the extent so authorized, the Pension Plan Oversight
Committee, as the case may be, shall consist of:  the lawful adoption of a written amendment or
modification to the Plan by majority vote at a validly held meeting or by
unanimous written consent, followed by the filing of such duly adopted
amendment or modification by the Secretary with the official records of

 

128

 

the Company.  If a subsidiary or affiliate of Deere &
Company that has adopted this Plan ceases to be a subsidiary or affiliate, the
participation in this Plan by the employees of such subsidiary or affiliate
shall terminate, and no employees of such former affiliate or subsidiary shall
accrue or be entitled to a benefit under this Plan on and after the date such
company ceases to be a subsidiary or affiliate of Deere & Company
(other than former employees who were receiving benefit payments as of such
date).

 

129

 

Article V.  Miscellaneous

 

5.1                                 Employment
Rights.  Nothing under this Plan
shall be construed to give any employee the right to continue in employment
with the Company or to any benefits not specifically provided herein.

 

5.2                                 Applicable
Law.  This Plan, to the extent it is
not exempt therefrom, shall be governed and construed in accordance with the
applicable provisions of ERISA.  To the
extent not governed by ERISA, this Plan shall be governed and construed in
accordance with the laws of the State of Illinois, exclusive of conflict laws.

 

5.3                                 Non-Alienation.  Except as provided in Article VIII, Section 8
of the John Deere Pension Plan for Salaried Employees no right or benefit under
this Plan shall be subject to anticipation, alienation, sale, assignment,
pledge, encumbrance or charge and any attempt to anticipate, alienate, sell,
assign, pledge, encumber or charge the same shall be null and void.  No right or benefit under this Plan shall in
any manner be liable for or subject to the debts, contracts, liabilities or
torts of the person entitled to such benefits except for such claims as may be
made by the Company.

 

5.4                                 Withholding
of Taxes.  The Company, or its
designee, may withhold from any payment of benefits under this Plan any income,
employment or other taxes required to be withheld, including any taxes for
which the Company or its designee may be liable with respect to the payment of
such benefits.

 

5.5                                 Funding
and Rights Against Assets.  The
Company shall make all payments due under the Plan in cash from its general
assets and benefits payable under the Plan shall not be funded through the use
of a trust, insurance contracts or otherwise. 
All expenses of administering this Plan shall also be borne by the
Company.  Neither participating
employees, nor their surviving spouses, shall have any interest whatsoever in
any specific assets of the Company on account of any benefits payable under
this Plan and their rights to receive such benefits shall be no greater than
the rights of any other unsecured creditor of the Company.

 

5.6                                 Effect
on Other Benefit Plans.  Amounts
credited or payable under this Plan shall not be considered compensation for
purposes of any qualified retirement plan maintained by the Company.  The treatment of such amounts under any other
plan of the Company shall be determined under the provisions of such Plan.

 

130

 

The John Deere ERISA Supplementary Pension Benefit
Plan, amended and restated as of 1 November 1992, with amendments through
1 January 2002 is further amended, effective as of the dates indicated, by
adding the following Article VI immediately following Article V
thereof.

 

“Article VI.  409A Amendments

 

Notwithstanding
anything in the Plan to the contrary, effective as of the dates indicated, the
Plan is amended as set forth in this Article VI in order to avoid adverse
or unintended tax consequences to Participants under Section 409A of the
Code and the applicable rules and regulations thereunder (“Section 409A”).  The provisions of this Article VI shall
apply to that portion of a Participant’s benefit that is not both earned and
vested under the Plan as of 31 December 2004 (the “409A Benefit”)
and shall supersede the other provisions of the Plan to the extent necessary to
eliminate inconsistencies between this Article VI and such other
provisions.  References to Sections are references
to sections in the Plan, unless otherwise provided.

 

6.1.                              Distribution Elections.

 

(a)                                  Retirement Eligible and Separated in 2006. 
Effective as of 1 December 2005, a Participant who is or will be
retirement eligible as provided under the terms of the John Deere Pension Plan
for Salaried Employees (“Retirement Eligible”) as of 31 December 2006
shall be permitted to irrevocably elect to receive payment of his 409A Benefit
in the form of an annuity or a single lump sum; provided that such
Participant (i) makes such election by 31 December 2005 in accordance
with procedures established by the Company and (ii) incurs a separation
from service as defined under Section 409A (“Separation from Service”)
on or after 1 December 2005 and on or before 31 December 2006.  Payment of the 409A Benefit pursuant to this Section 6.1(a) shall
be paid or commence to be paid six months and one day after the Participant’s
Separation from Service.

 

(b)                                 Retirement Eligible and Separated in 2005. 
Effective as of 1 January 2005, a Participant who incurs a
Separation from Service in calendar year 2005 shall be permitted to irrevocably
elect to receive payment of his 409A Benefit in the form of an annuity or a
single lump sum; provided that the Participant makes such election in
accordance with procedures established by the Company and by no later than 31 December 2005.  Payment of the 409A Benefit pursuant to this Section 6.1(b) shall
(A) if paid in the form of an annuity, commence to be paid upon the
Participant’s Separation from Service, or (B) if paid in the form of a
single lump sum, be paid upon the Participant’s Separation from Service.

 

131

 

(c)                                  Form of Annuity.

 

(i)            Effective as 1 January 2005, the 409A
Benefit of a Participant who is Retirement Eligible as described in Section 6.1(a) or
Section 6.1(b) may be paid in the form of a single life annuity or a
joint and survivor annuity; provided, however, that if a
Participant elects an annuity under the Plan, such Participant shall receive
the same form of annuity as elected by the Participant prior to his Separation
from Service under the John Deere Pension Plan for Salaried Employees, without
regard to the social security level income option.

 

(ii)           Effective as of 1 January 2006, the 409A Benefit of a Participant
who elects an annuity pursuant to Section 6.1(a), but who fails to elect a
form of annuity under the John Deere Pension Plan for Salaried Employees prior
to his Separation from Service, shall receive a single life annuity.

 

(d)                                 All
Other Participants; Default Form of Payment.

 

(i)            The  409A
Benefit of a Participant who incurs a Separation from Service on or after 1 January 2006
and is not described in Section 6.1(a), 6.1(b) or Section 6.2
shall be distributed in the form of a single lump sum payment six months and
one day after the Participant’s Separation from Service, regardless of any
prior election.

 

(ii)           Effective as of 1 January 2006, the 409A
Benefit of a Participant described in Section 6.1(a) who fails to
make an election pursuant to Section 6.1(a) shall receive his Benefit
in the form and at the time specified in Section 6.1(d)(i).

 

6.2.                              Death.  Effective as of 1 January 2006, the 409A
Benefit of any Participant who dies (i) prior to his Separation from
Service or (ii) while on Long-Term Disability shall be paid as soon as
administratively feasible to the Surviving Spouse (if any) of such Participant
in the form of a single lump sum.

 

6.3.                              Disability.  Effective as of 1 January 2006, a
Participant on Long Term Disability shall receive a distribution of his 409A
Benefit in a single lump sum on his 65th

 

132

 

birthday.

 

6.4                                 Additional
Requirements of Section 409A. 
Notwithstanding anything in this Article 6 to the contrary,
effective as of 1 January 2005 (unless otherwise provided):

 

(a)                                  Timing of
Distributions.  Distribution of a Participant’s
409A Benefit shall be made as soon as administratively feasible after the date
set forth in this Article 6 applicable to such distribution, and,
effective as of 1 October 2005, no later than the time required by Section 409A.

 

(b)                                 Timing of Elections.  Except as otherwise provided in Section 6.4(c),
to the extent that any Participant makes a payment election on or prior to 31 December 2005
with respect to all or a portion of his 409A Benefit (to the extent previously
deferred), such election shall be permitted and deemed to be pursuant to
Q&A 19(c) of Notice 2005-1 promulgated by the U.S.
Treasury Department and the Internal Revenue Service.

 

(c)                                  Termination of
Participation.  To the extent that any
Participant receives in the 2005 calendar year a distribution of all, or any
portion, of his 409A Benefit, such distribution shall be deemed a whole or
partial (as the case may be) termination of such Participant’s 409A Benefit in
accordance with Q&A 20(a) of Notice 2005-1 promulgated by the U.S.
Treasury Department and the Internal Revenue Service.

 

(d)                                 Six-Month Delay.  Distribution of a Participant’s 409A Benefit
shall be made in accordance with the provisions of Section 409A and, to
the extent that such payments are issued in connection with a Participant’s
Separation from Service for any reason other than death, such payments
shall be delayed for six months and one day to the extent the Administrator
determines that such delay is necessary to avoid the imposition on any
Participant of additional taxes or interest under Section 409A.

 

(e)                                  Amendments and
Modifications.  With respect to a Participant’s
409A Benefit, the Vice President, Human Resources and any successor thereof
shall have the unilateral right to amend or modify the Plan, any Participant
elections under the Plan and the time and manner of any payment of benefits
under the Plan in accordance with Section 409A, in each case, without the
consent of any employee or Participant, to the extent that the Vice President,
Human Resources and any successor thereof deems such action to be necessary or
advisable to avoid the imposition on any Participant of an additional tax or
interest under Section 409A.  Any
determinations of the Vice President, Human Resources or the successor thereof
pursuant to this Section 6.4(e) shall be final, conclusive and
binding on all parties.”

 

133Exhibit
10.26

 

DEERE & COMPANY

HITACHI CONSTRUCTION MACHINERY CO., LTD.

JOINT VENTURE AGREEMENT

 

                This agreement
(the “Agreement”) is made and entered into this 16th day of May, 1988 by and
between Deere & Company, a Delaware corporation (“Deere”), and Hitachi
Construction Machinery Co., Ltd., a Japanese corporation (“Hitachi”).

 

Recitals

 

                Deere and Hitachi
are parties to an agreement dated February 19, 1983 that provides for the
distribution by Deere of Hitachi manufactured excavators under the Deere trademark
on an exclusive basis in certain size ranges below 33 metric tons. Hitachi has
developed a dealer organization in North America that distributes excavators
and shovels under the Hitachi trademark, with particular emphasis on excavators
and shovels over 33 metric tons in size. Deere and Hitachi are now desirous of
entering into a joint venture arrangement for the manufacturing and
distribution of excavators which will create manufacturing and marketing
efficiencies, provide greater flexibility in responding to changing economic
conditions, enable the parties to compete effectively with larger integrated
manufacturers of excavators and maximize sales of excavators in North, Central
and South America (the “Territory”) through the expansion of the product lines
currently being distributed under the Deere and Hitachi trademarks and
tradenames.

 

 

134

 

Covenants

 

                In consideration
of the premises and the mutual covenants of the parties set forth herein, the parties
hereto agree as follows:

 

ARTICLE I

Organization of the Company

 

                l.1            Formation.  Deere and Hitachi shall cause to be organized
a close corporation (the “Company”) under the General Corporation Law of
Delaware. The Certificate of Incorporation and Bylaws of the Company shall be
in the forms attached hereto as Exhibits A and B, respectively.

 

                1.2           Name.  The name of the Company shall be Deere-Hitachi
Construction Machinery Corporation.

 

                1.3           Purposes.  The purposes of the Company shall be to (a)
establish a facility in North America for the manufacture of excavators,
components and repair parts thereof of the types designed and manufactured by
Deere in the United States and by Hitachi in Japan; (b) manufacture all or part
of such excavators at the facility; (c) expand the product lines of excavators
currently being marketed under the Deere and Hitachi tradenames and trademarks;
(d) distribute excavators and service parts manufactured or purchased by the
Company on an exclusive basis in the Territory; and (e) engage in any other
lawful act or activity as provided for by the Certificate of Incorporation and
Bylaws of the Company.

 

                1.4           Authorized Capital.  As set forth in Exhibit A hereto, the initial
authorized capital of the Company shall consist of 1,000 shares of common
stock, no par value (the “Shares”).

 

                1.5.          Initial Stock Subscription and Use
of Funds.  (a) Each of Deere and
Hitachi (the “Shareholders”) shall subscribe to 500 Shares and pay to the
Company therefor the sum of approximately $15.75 million in immediately
available funds, or as otherwise agreed by the parties and the board of
directors of the Company except that (i) Deere may pay part of its subscription
by the

 

135

transfer to the Company of certain machinery and equipment as listed
and described on Exhibit C hereto, which for this purpose shall be valued at
net book value as of the Closing based on financial statements of Deere which
shall be audited in accordance with generally accepted accounting principles
applied on a consistent basis and (ii) Hitachi may pay part of its subscription
by the transfer to the Company of (A) 70% (1,750,000 shares) of the issued and
outstanding shares of Hitachi Construction Machinery (America) Corporation (“HCMA”)
which for this purpose shall be valued at net book value as of the Closing
based on financial statements of HCMA which shall be audited in accordance with
generally accepted accounting principles applied on a consistent basis and (B)
1,999 of the issued and outstanding shares of Marubeni Construction Machinery
Canada, Ltd. ("MCMC"), which for this purpose shall be valued at net
book value as of the Closing based on financial statements of MCMC which shall
be audited in accordance with generally accepted accounting principles applied
on a consistent basis.

 

                (b)           The Company may purchase from certain
companies affiliated with Hitachi or Deere, and Hitachi or Deere shall cause
such companies to sell to the Company the machinery and equipment listed and
described on Exhibit D, the prices of which shall not include any engineering
or technical fees added by the parties.

 

                1.6           Transfer of Shares.  Neither Shareholder shall sell, assign,
transfer or otherwise dispose of or encumber, by sale, gift, pledge or
otherwise any of its Shares without the prior written consent of the other
Shareholder. Notwithstanding the foregoing, a Shareholder may sell, transfer or
assign its Shares to a wholly-owned subsidiary of the Shareholder, provided
that such subsidiary agrees in writing to be bound by this Section 1.6 as
though it were a Shareholder and shall take no actions which are contrary to
the terms of this Agreement. Each share

 

136

certificate issued by the Company shall bear the following legend:

 

The shares evidenced by
this certificate were issued the pursuant to a certain Joint Venture Agreement
dated May 16th, 1988 (the “Agreement”) by and between Deere & Company and
Hitachi Construction Machinery Co., Ltd. The Agreement restricts the sale,
assignment, transfer or other disposition, or the encumbrance by sale, gift,
pledge or otherwise of such shares and any such sale, assignment transfer or
other disposition or encumbrance may be made only in accordance with the terms and
conditions thereof.

 

ARTICLE II

Closing

 

                2.1           Time and Place of Closing.  The Closing of the payment for the subscriptions
referred to in Section 1.5 and the execution of the other agreements referred
to in Section 3.1(c) (the “Closing”) shall take place at the offices of Deere
at 10:00 a. m., local time on May 31, 1988, or at such other time, date or
place as the parties hereto may mutually agree.

 

                2.2           Authorizations, Approvals or
Consents.  Each of Deere and Hitachi
shall use its best efforts to obtain, prior to the date set forth in Section
2.1 for the Closing, any authorization, approval, consent or review from or by governmental
authorities, third parties, or the respective boards of directors of the parties
that may be necessary or advisable to carry out the transactions contemplated
by this Agreement and the exhibits hereto. In no event shall the Closing take
place prior to the obtaining or completion of all such authorizations,
approvals, consents or reviews.

 

                2.3           Organization of the Company and
Stock Subscriptions.  Prior to the
Closing, each of Deere and Hitachi shall have taken the action set forth in
Section 1.1 of this Agreement.

 

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ARTICLE III

Shareholder Voting

 

                3.1           Agreement to Vote.  Each Shareholder shall vote its Shares, use its
best efforts to cause members of the board of directors of the Company (the “Board
of Directors”) designated by such Shareholder pursuant to Section 4.1 of this Agreement
to cast their votes, to effectuate the following matters:

 

                (a)  the election of an eight-member Board of
Directors in accordance with the provisions of Section 4.1 of this Agreement;

 

                (b)  the adoption of Bylaws of the Company in the
form attached hereto as Exhibit B; and

 

                (c)  the taking of all such action by the Company
as is necessary to (i) adopt, ratify and implement all provisions of this
Agreement; and (ii) enter into a Manufacturing License Agreement, a Name and
Trademark Agreement and a Supply Agreement with each of Deere and Hitachi in
the forms attached hereto as Exhibits E, F, G, H, I, and J respectively;. and a
Supply Agreement with Deere in the form attached hereto as Exhibit K.

 

                3.2           Meetings of Shareholders.  Annual and special meetings of the
shareholders of the Company shall be called and held in accordance with the
Bylaws of the Company. The Bylaws shall provide that at any meeting of the
shareholders of the Company, the holders of two-thirds of the capital stock
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum for the transaction of business.

 

                3.3           Matters Requiring Shareholder
Approval.  The only matters presented
for vote of the shareholders of the Company shall be those required by the
General Corporation Law of Delaware to be voted on by the shareholders and such
other matters as may be agreed upon by the parties; provided that none of the
following matters shall be authorized unless it has been

 

138

approved by the affirmative vote of the holders of at least two-thirds
of the voting stock of the Company outstanding on the record date for the
meeting (or at the time of the meeting if no record date is fixed):

 

                (a)  any amendment to the Certificate of Incorporation
of the Company;

 

                (b)  the merger or consolidation of the Company
with another entity including any subsidiary of the Company;

 

                (c)   the
voluntary bankruptcy, liquidation or dissolution of the Company;

 

                (d)  the increase, decrease or any other change in
the authorized capital stock of the Company; and 

 

                (e)  the transfer of substantially all of the
assets of the Company or of any of its subsidiaries to any person or entity.

 

ARTICLE IV

Board of Directors

 

                4.1           Responsibility and Composition.
 The Board of Directors shall be
responsible for the overall management of the business and affairs of the
Company and each of its subsidiaries. The Board of Directors shall consist of
eight members, four of whom may be designated by Deere (one of whom shall be
the President of the Company) and four of whom may be designated by Hitachi.
Each of Deere and Hitachi shall have the right to approve or reject the
director candidates designated by the other, provided that neither party will
unreasonably withhold its approval of any such candidate. In the event that a
vacancy on the Board of Directors is caused by the death, resignation or
removal of a director prior to the end of such director’s term of office, the
Board of Directors shall elect a successor director designated by the
Shareholder who had designated the prior occupant of the vacant board seat
(subject to the same right of approval or rejection in Deere or Hitachi).
Either party may, from time to time, elect to change a director

 

 

139

or directors which it has designated, and the Board of Directors shall
take such action as may be necessary to effectuate such change (subject to the
same right of approval or rejection in Deere or Hitachi).

 

                4.2           Meetings of the Board of Directors.
 Annual, regular and special meetings of
the Board of Directors shall be called and held in accordance with the Bylaws
of the Company. At any meeting of the Board of Directors, three directors shall
constitute a quorum for the transaction of business, provided such quorum shall
include at least one director who was designated by Hitachi and at least one
director who was designated by Deere.

 

                4.3           Matters Requiring Special Approval.
 Notwithstanding any other provision in
this Agreement to the contrary, any action of the Company or any of its
subsidiaries with respect to any of the following matters shall require the
approval of at least one director designated by Hitachi and at least one
director designated by Deere:

 

                (a)  the approval of annual financial statements
and policies relating to the investment or allocation of surplus funds and
creation of reserve accounts;

 

                (b)  the approval of annual business, strategic,
and manufacturing plans and annual capital budgets;

 

                (c)  the making of any investment in the equity or
debt securities of another corporation or in any partnership or other
enterprise (other than temporary investment of cash in money market
instruments);

 

                (d)  the formation, dissolution, merger or
consolidation of any subsidiary of the Company; 

 

                (e)  the making of any material capital expenditure
not otherwise provided for in an annual business plan or annual capital budget
that has been approved by the Board of Directors pursuant to this Section 4.3;

 

140

                (f)  the extension of any material credit,
including the lending of funds by the Company, to another person or entity
other than in the ordinary course of the business of the Company or to a
wholly-owned subsidiary of the Company;

 

                (g)  the establishment or closure of any place of
business of the Company that would be (at the time of establishment) or is
(immediately prior to the time of proposed closure) a material part of the
business of the Company;

 

                (h)  the merger or consolidation of the Company
with another entity including any subsidiary of the Company;

 

                (i)  the voluntary bankruptcy, liquidation or
dissolution of the Company;

 

                (j)  the declaration or payment of any dividends;

 

                (k)  the issuance of any equity security, including
but not limited to any warrant, stock option or convertible debt, to any person
or entity;

 

                (1)  the transfer of any material asset of the
Company or of any of its subsidiaries other than in the ordinary course of
business to any Shareholder or to any other person or entity;

 

                (m)  the addition of any product line other than
excavators and components thereof or the elimination of any product line;

 

                (n)  the amendment to the range of models offered
to Deere or Hitachi dealers as set forth on Exhibit N; and

 

                (o)  any amendment to the Bylaws of the Company.

 

                4.4           Election of Officers.  The Board of Directors shall elect officers
consisting of a President, Vice-President for Administration, Vice-President
for Manufacturing, Vice-President for Deere Marketing, Vice-President for
Hitachi Marketing, Vice-President for International Relations and such other
officers as provided for in the By-Laws. Deere shall be entitled to nominate
the President, the Vice President for Administration, and Vice President for
Deere Marketing. Hitachi shall be entitled to nominate the Vice President for

 

141

Manufacturing, the Vice President for Hitachi Marketing, and the Vice
President for International Relations.

 

                Each of Deere and
Hitachi shall have the right to approve or reject the officer candidates
nominated by the other, provided that neither party will unreasonably withhold
its approval of any such candidate. The candidates so nominated and approved
from time to time shall be elected by the Board of Directors. Either party may,
from time to time, elect to change an officer or officers which it has
nominated, and the Board of Directors shall take such action as may be
necessary to effectuate such change (subject to the same right of approval or
rejection in Deere or Hitachi).

 

                4.5           Subsidiaries.  The Company shall take such action as is
necessary to cause the Boards of Directors of HCMA and MCMC and any other
subsidiary of the Company to consist of the President and the Vice Presidents
of the Company unless otherwise agreed by the parties.  Hitachi shall be entitled to nominate the
Presidents of HCMA and MCMC and Deere shall have the right to approve or reject
any such candidate provided that Deere will not unreasonably withhold its
approval of any such candidate.

 

ARTICLE V

Accounting and Financial Policies

 

                5.1           Books and Records.  The Company shall maintain books and records
in accordance with United States generally accepted accounting principles
applied on a consistent basis. Such books and records shall be maintained on
the accrual method of accounting and shall otherwise comply with the applicable
legal requirements and be adequate to permit the filing of tax returns by the
Company. Either Shareholder or a representative designated by it shall at all
times have the right to inspect and examine the books and records of the
Company at its

 

142

headquarter’s office during normal business hours of its operations.

 

                5.2           Financial Reports.  Within 90 days after the end of the fiscal
year, the Company shall cause to be prepared and distributed to each
Shareholder audited financial statements of the Company as of the end of and
for such year, all of which shall be prepared in accordance with generally
accepted accounting principles applied on a consistent basis.

 

                5.3           Fiscal Year.  The fiscal year of the Company shall end on
December 31st.

 

                5.4           Appointment of Auditors.  The Company shall retain a firm of
independent public accountants appointed by the Board of Directors.

 

                5.5           Financial Policies and Dividends.
 All of the financial policies of the
Company, including, but not limited to, the declaration of dividends,
compensation and bonus policies for personnel, investment or allocation of
surplus funds, and creation of reserve accounts, shall be established by the
Board of Directors.

 

ARTICLE VI

Representations and Warranties of Hitachi

 

                In order to induce
Deere to enter into this Agreement and to consummate the transactions
contemplated hereby, Hitachi makes the following representations and warranties:

 

                6.1           Organization, Power and Authority.
Hitachi is a corporation duly organized and legally existing in good standing
under the laws of Japan and has full corporate power and authority necessary to
enter into this Agreement and to carry out all of the agreements and
transactions contemplated hereby.

 

                6.2           Due Authorization and Absence of
Breach.  The execution, delivery and
performance of this Agreement and each of the other agreements contemplated
hereby, and the consummation of the transactions contemplated hereby have been

 

143

duly authorized by all necessary corporate action of Hitachi. This
Agreement has been duly executed and delivered by Hitachi and is a valid and binding
obligation of Hitachi, enforceable in accordance with its terms. Neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (a) conflict with or violate any
provisions of (i) the charter of Hitachi, (ii) any law, ordinance or
regulation, or (iii) any decree or order of any court or administrative or
other governmental body which is either applicable to, binding upon or
enforceable against Hitachi; (b) result in any breach of or default under any mortgage,
contract, agreement, indenture, trust, or other instrument which is either
binding upon or enforceable against Hitachi; or (c) violate any legally
protected right of any individual or entity or give to any individual or entity
a right or claim against Deere.

 

                6.3           Accuracy of Information Furnished
by Hitachi.  To the knowledge of
Hitachi, no representation, statement or information made or furnished by
Hitachi in this Agreement and the other information and statements previously
furnished in writing by Hitachi, contains any untrue statement of a material
fact or omits any material fact necessary to make the information contained
therein not misleading. All assets to be contributed by Hitachi to the Company
and all assets and liabilities of HCMA and MCMC shall be subject to audit in
accordance with United States generally accepted accounting principles prior to
the Closing by a certified independent auditor designated by Deere.

 

                6.4           Litigation.  There is no action, suit, proceeding or
investigation pending or, to the knowledge of Hitachi, threatened or
contemplated which questions the legality, validity or propriety of the
agreements or transactions contemplated by this Agreement.

 

144

 

 

                6.5           Hitachi Subsidiaries. Hitachi
makes the representations and warranties relating to HCMA and MCMC as set forth
on Exhibit L.

 

ARTICLE VII

Representations and
Warranties of Deere

 

                In order to induce
Hitachi to enter into this Agreement and to consummate the transactions
contemplated hereby, Deere makes the following representation and warranties:

 

                7.1           Organization, Power and Authority.  Deere is a corporation duly organized and
validly existing under the laws of the State of Delaware, with full corporate
power and authority to enter into this Agreement and to carry out all of the
agreements and transactions contemplated hereby.

 

                7.2           Due Authorization and Absence of
Breach. The execution, delivery and performance of this Agreement and each
of the other agreements contemplated hereby have been duly authorized by all
necessary corporate action of Deere. This Agreement has been duly executed and
delivered by Deere and is a valid and binding obligation of Deere, enforceable
in accordance with its terms. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will:
(a) conflict with or violate any provision of (i) the charter of
Deere, (ii) any law, ordinance or regulation, or (iii) any decree or
order of any court or administrative or other governmental body which is either
applicable to, binding upon or enforceable against Deere; (b) result in
any breach of or default under any mortgage, contract, agreement, indenture,
trust or other instrument which is either binding upon or enforceable against
Deere; or (c) violate any legally protected right of any individual or
entity or give to any individual or entity a right or claim against Hitachi.

 

                7.3           Accuracy of Information Furnished
by Deere. To the knowledge of Deere, no representation, statement or
information

 

 

145

 

made or furnished by Deere in this Agreement and the other information
and statements previously furnished in writing by Deere, contains any untrue
statement of a material fact or omits any material fact necessary to make the
information contained therein not misleading. All assets to be contributed by
Deere to the Company shall be subject to audit in accordance with United States
generally accepted accounting principles prior to the Closing by a certified
independent auditor designated by Hitachi.

 

                7.4           Litigation. There is no
action, suit, proceeding or investigation pending or, to the knowledge of
Deere, threatened or contemplated which questions the legality, validity or
propriety of the agreements or transactions contemplated by this Agreement.

 

                7.5           Good Title to Assets Contributed.
Deere has good and marketable title to the assets set forth on Exhibit C,
free and clear of all liens, claims, encumbrances, equities or interests of
every kind, nature and description whatsoever.

 

ARTICLE VIII

Other Agreements

 

                8.1           Exclusivity. Except as
otherwise agreed in writing, from and after the Closing, neither Deere nor
Hitachi nor any of their respective affiliates shall, (1) distribute
excavators (including service parts and components therefor) in the Territory,
(2) distribute any other product which is either manufactured or
distributed by the Company (including service parts and components therefor) in
the Territory, (3) license any third party to manufacture excavators
(including service parts and components therefor) for distribution in the
Territory, or (4) license any third party to manufacture any other product
which is either manufactured or distributed by the Company (including service
parts and components therefor) for distribution in the Territory, except in
accordance with the

 

146

 

terms and conditions of this Agreement and the exhibits attached
hereto. To the extent that it is necessary to manufacture excavators or
components locally to preserve distribution in any country, Hitachi and Deere
shall meet and mutually decide on any appropriate action or actions to be taken
by each party to best preserve the distribution of the products under this
Agreement. Hitachi shall use its best efforts to preserve the exclusivity of
the Company in the Territory with respect to the products which are the subject
of this Agreement, including service parts and components therefor. As an
exception to the foregoing exclusivity provision, Hitachi shall have the right
to honor its obligations under agreements with dealers in Central or South
America, as listed on Exhibit M, which predate the closing date as set forth
in Section 2.1. However, it is further agreed that Hitachi shall
terminate, or seek to transfer to the Company, upon the approval of the
Company, such dealer agreements at the earliest possible legal opportunity.
After discussions with Deere and Hitachi, the Company shall evaluate and select
the most appropriate distribution systems in Central and South America. Such
evaluations may include such matters as financial and legal aspects, past and
current sales records, cancellation fee, ability of handling both medium and
large excavators, service, and related issues. The Company also will evaluate
both Deere and Hitachi dealers in each country of Central and South America.
The objective of the Company shall be to create a more efficient distribution
system for Hitachi and Deere branded machines. Hitachi shall take appropriate
steps to ensure that any interim shipments in Central and South America are for
consumption within the respective dealer’s area of responsibility and are
reasonably related to the dealer’s market potential and domestic machine
population. It is the intention of the parties to resolve all such dealer
relationships with the objective of establishing the Company as the exclusive
distributor of excavators or any other product which is either

 

147

 

manufactured or distributed by the Company (including service parts and
components for such excavators or other products), in the Territory. As a
further exception, Deere and Hitachi shall have the right to manufacture and
distribute in the Territory excavators in the mini-excavator class (i.e.,
typically below 6 metric tons with pivot boom configuration).

 

                8.2           Confidentiality. In connection
with the operations of the Company, the parties hereto may make available to
the Company certain information designated in writing to be confidential (“Confidential
Information”). Except as otherwise provided in this Agreement or the exhibits
hereto, all such Confidential Information shall be treated by the Company as
confidential and shall not be disclosed to anyone except to those persons
having a legitimate business need for such information and subject to the
provisions set forth herein. Such Confidential Information shall be and remain
at all times the property of the party providing such Confidential Information
and neither the Company, nor any of its subsidiaries nor any director, officer
or employee of the Company or any of its subsidiaries shall have the right to
disclose such Confidential Information to (i) the other party (ii) any
affiliate of such other party or (iii) any director, officer, employee,
agent or representative of such other party or any of its affiliates. In
particular such Confidential Information shall under no circumstances be deemed
to be a property right or asset of the Company to which any party or its
affiliate is entitled by virtue of its ownership interest in the Company or
otherwise. Each party and its affiliates shall not, without the prior written
consent of the party providing Confidential Information, disclose any
Confidential Information to any third party except as otherwise required by law
or government regulation. In the event Confidential Information is furnished by
the Company to a third party, the Company shall first require the third party
to enter into a written agreement preserving the

 

148

 

confidentiality of such Confidential Information and limiting its
disclosure to persons who have a legitimate business need for such Confidential
Information.

 

                8.3           Indemnification.

 

                                (a)           Each party to this Agreement shall
defend, indemnify and hold harmless the other party and the Company from and
against any material claim, liability, demand, loss, damage, judgment or other
obligation or right of action which may arise as a result of:

 

                                                (i)            breach of this Agreement by the indemnifying
party;

 

                                                (ii)           misrepresentation by the indemnifying
party to third parties;

 

                                                (iii)          anything done or omitted to be done
through the gross negligence or willful misconduct of the indemnifying party or
of its officers, directors, employees or agents; or

 

                                                (iv)          any action by any of the indemnifying
parties, officers, directors, employees or agents (which are not individuals
holding positions of employment in the Company) which action has not been
authorized by the Board of Directors of the Company or which binds the Company
beyond the scope of this Agreement.

 

                                (b)           Hitachi shall defend, indemnify and
hold harmless Deere and the Company from and against any material claim,
liability, demand, loss, damage, judgment or other obligation or right of
action arising from acts or omissions of HCMA and MCMC occurring prior to the
Closing. Such indemnification shall include, but not be limited to, the
following:

 

                                                (i)            obligations to dealers or
distributors arising from contractual relationships in existence prior to the
Closing;

 

                                                (ii)           obligations related to sales
promotion and allowances prior to Closing unless adequately accrued on the books
of HCMA and MCMC at Closing;

 

149

 

                                                (iii)          liabilities resulting from the sale of
products prior to Closing unless adequately accrued on the book of HCMA and
MCMC at Closing including, but not limited to, (A) warranty expenses and
administration (such administration to be handled in the same manner and under
the same terms as it was prior to Closing), (B) product liability claims
and litigation, (C) product recalls and (D) uncollectible
receivables; and

 

                                                (iv)          prior service, pension and insurance
benefit liabilities for employees transferred to the Company unless adequately
accrued on the books of HCMA and MCMC at Closing.

 

                                (c)           Each party shall use its best efforts
to cause the members of the Board of Directors designated by each such party,
pursuant to Section 4.1 of this Agreement, to cause the Company to defend,
indemnify and hold harmless Deere and Hitachi from and against any material
claim, liability, demand, loss, damage, judgment or other obligation or right
of action which may arise as a result of any act or omission of the Company or
any of its subsidiaries occurring subsequent to the Closing.

 

                                (d)           In the event that either party shall
become obligated to indemnify the other party under this Section 8.3, the
parties shall meet to decide how to best satisfy such obligation, taking into
account the facts and circumstances giving rise to such obligation and the
magnitude of such obligation.

 

                8.4           Improvements, Inventions and
Know-How. Except as provided in the Manufacturing License Agreements
attached hereto as Exhibits E and F, (a) any and all improvements,
inventions and know-how, patentable or unpatentable, which may be developed by
the Company during the term of this Agreement shall be the property of the
Company. Each party hereto shall use its best efforts to cause the members of
the Board of Directors designated by such party, pursuant to Section 4.1
of this Agreement, to cause the Company to grant a non-exclusive royalty free
license, to each of Deere and Hitachi to make, use or sell

 

150

 

any an all such improvements, inventions and know-how, and (b) nothing
herein shall grant to either Deere or Hitachi any rights to proprietary
technology owned by the other party.

 

                8.5           Financial Protection. It is
the intent of the parties to financially structure the Company in such a
fashion that neither Hitachi nor Deere shall be financially disadvantaged by
the creation of the Company. Transfer pricing between the parties and the
Company shall take into account the marketing and product support expenses
incurred by either party on behalf of the products sold to and distributed by
the Company together with the income properly attributable thereto. This intent
shall not be construed as requiring frequent changes in transfer price
relationships to preserve perfect equality; rather, such transfer price
relationships shall be adjusted only when material and nontransitory inequities
are determined to result from the then current transfer price relationships. In
that event, the parties shall meet to negotiate proper adjustments and changes.
The parties agree to review and consider the need for changes in transfer price
relationships at least annually.

 

                8.6           Sources of Components and Parts.
With the exception of the incorporation of Deere engines into all Deere-branded
excavators models, the Company shall only use the designs and specifications
supplied by Deere for the Model 690 and successor models, and the designs
and specifications supplied by Hitachi for all remaining models, provided
however that the Company shall have the right where cost effective to purchase
components and parts for such excavators from third party sources so long as
those components and parts meet or exceed the required designs and
specifications of Deere or Hitachi, as determined by Deere or Hitachi,
respectively.

 

                8.7           Primary Marketing Objective.
The parties agree that the primary marketing objectives of the Company shall
be:

 

                (a)           to maximize the sales of excavators
under both the Deere and Hitachi tradenames and trademarks; to simultaneously

 

151

 

expand the range of models offered to Deere or Hitachi dealers as set
forth on Exhibit N; and to maintain and strengthen existing dealer
networks.

 

                (b)           to identify and develop opportunities
for greater distribution efficiencies for both Hitachi and Deere-branded
machines through the use of integrated support, administrative, and promotional
efforts. Such efficiencies will be implemented in a fashion that minimizes
potentially disruptive effects at the dealer level for both Deere and Hitachi
dealers. It is contemplated that such efficiencies will eventually include the merger
of HCMA and MCMC, and the incorporation of the excavator business of Deere into
the Company, subject to Section 4.3(h) of this Agreement.

 

                8.8           Formation Expenses. Except as
they may otherwise agree, each party shall bear its own expenses incurred in
connection with the formation of the joint venture.

 

                8.9           Liabilities Retained by the
Parties. All material existing liabilities of the parties as of the
Closing, including all material contingent liabilities arising from acts or
omissions of the parties occurring prior to the Closing, shall be retained by the
parties. Such liabilities shall include, but not be limited to, the following:

 

                (a)           obligations to dealers or
distributors arising from contractual relationships in existence prior to the
Closing;

 

                (b)           obligations related to sales
promotion and allowances; 

 

                (c)           costs of transferring Deere and
Hitachi employees to the Company, including all incentives and moving expenses;

 

                (d)           liabilities resulting from the sale
of products prior to the Closing, including but not limited to

 

                                (i)            warranty expense and administration,

 

                                (ii)           product liability claims and
litigation,

 

                                (iii)          product recalls, and

 

                                (iv)          uncollectible receivables; and

 

152

 

                (e)           prior service, pension and insurance
benefit liabilities for employees transferred to the Company.

 

                8.10         Operating Losses. In the event
the Company sustains, or is projected to sustain, operating losses which
threaten its continued viability, the parties agree to discuss and consider the
adoption of appropriate measures to return the Company to a sound financial
base. Such measures shall include, but not be limited to, the following:

 

                                (a)           the revision of transfer prices for
goods sold by the parties to the Company,

 

                                (b)           the contribution by the parties in
equal amounts of additional operating capital, and

 

                                (c)           the review of total distribution
costs.

 

                If, despite the
good faith efforts of the parties, such operating losses continue, the parties
may agree to terminate the Agreement.

 

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 this Agreement.

 

                9.2           Termination. Each of Deere and
Hitachi shall have the right to terminate this Agreement upon the happening of
any of the following events:

 

                (a)           the breach of any material provision
of this Agreement or any of the other agreements attached hereto as exhibits by
the other party that is not cured within 90 days (or such other period or may
be established by mutual agreement of the parties) after receipt of written
notice of such breach given by the non-breaching party;

 

                (b)           the filing by or against the other
party of any voluntary or involuntary petition in bankruptcy for corporate

 

153

 

reorganization or any similar relief, the appointment of a receiver for
the other party or its property, a general assignment by the other party for the
benefit of its creditors, the inability admitted by the other party in writing
to pay its debts as they mature, or the liquidation of the other party;

 

                (c)           the performance of this Agreement by
the other party is precluded or constrained by causes beyond the control of
such party, including without limitation fire, storm, flood, earthquake,
explosion, accident, acts of public enemies, war, rebellion, insurrection,
labor disputes or shortages, transportation embargo, or failure or delays in
transportation, inability to secure raw materials, acts of God, or acts of
governmental authority or agency thereof; or

 

                (d)           a change in control of either Deere
or Hitachi. For purposes of this Section 9.2(d) and Section 9.4 below
a “change in control” shall mean a change of nature that would be required to
be reported, by a reporting company, in response to Item 5(f) of Schedule 14A
of Regulation 14A promulgated under the Securities Exchange Act of 1934
(the “Exchange Act”); provided that, without limitation, a change in control of
a party shall be deemed to have occurred if (i) any person (as such term
is used in Sections 13(d) and 14(d) of the Exchange Act), other than the
party or any person who on the date hereof is a director or officer of the
party, becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of that party representing
30% or more of the combined voting power of the party’s then outstanding
securities, or (ii) during any period of two consecutive years during the
term of this Agreement, individuals who at the beginning of such period
constitute the Board of that party, cease for any reason to constitute at least
a majority thereof, unless the election of each director who was not a director
at the beginning of such period has been approved in advance by

 

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directors representing at least two-thirds of the directors then in
office who were directors at the beginning of the period.

 

                9.3           Liquidation and Dissolution.
In the event that this Agreement is terminated pursuant to Section 9.2
above, the parties shall take such action as is necessary to cause the Board of
Directors to adopt a plan of liquidation and dissolution of the Company (the “Plan”).
The Plan shall include the return to each shareholder of any Confidential
Information provided by such shareholder to the Company and the transfer and
assignment by the Company of its interest in any and all inventions, know-how
and improvements, patentable or unpatentable, developed by the Company during
the term of this Agreement, to the shareholders to be held jointly. The Plan
also shall provide that the proceeds of liquidation be applied and distributed
in the following order of priority:

 

                (a)           to the payment of all of the Company’s
liabilities;

 

                (b)           to the setting up of any reserves
that the Board of Directors deems reasonably necessary to provide funds for any
contingent or unforeseen obligations or liabilities of the Company. At the
expiration of such period of time as the Board of Directors deems advisable,
the balance of such reserves shall be distributed as provided in subsection (c)
below; and

 

                (c)           to the shareholders in proportion to
their respective shareholdings.

 

                The Company may
sell any asset of the Company to any shareholder. Any expenses incurred in the
liquidation shall be expenses of the Company.

 

                9.4           Products. In the event that
this Agreement is terminated for any reason other than because of a material
breach of this Agreement by Deere, Hitachi shall (a) for a period of five years
following the date of such termination sell to Deere at Deere’s request, the
same or substantially the same Deere branded products that the Company
purchased from Hitachi or manufactured under the terms of this Agreement prior
to its

 

155

 

termination and (b) for a period of fifteen years following the date of
such termination maintain manufacturing capabilities for the purpose of
providing Deere with a reasonable stock of service parts for products sold to
Deere. Hitachi shall make such sales to Deere on substantially the same terms
and conditions set forth in the Supply Agreement attached hereto as Exhibit J,
as amended to accommodate an OEM supply arrangement between Hitachi and Deere.
Hitachi’s obligations to make such sales to Deere shall terminate upon the
happening of (a) the filing by Deere of any voluntary petition in
bankruptcy for corporate reorganization or any similar relief and thereafter
Deere is unable to provide adequate assurance of its ability to pay for
products sold to it by Hitachi as such debts mature and (b) any change in
control of Deere that involves any entity which, or person who, is a direct
competitor of Hitachi in the manufacture and sale of excavators.

 

                For the purposes
of this Section 9.4, the term “change in control” shall have the meaning
ascribed to it in Section 9.2(d) above.

 

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 designated by such party
pursuant to Section 4.1 of this Agreement, to cause the Company to agree
to be bound by all of the terms and conditions of this Agreement as though it
were a party hereto.

 

                10.2         Entire Agreement. This
instrument and the exhibits attached hereto supersede all prior understandings
and agreements of the parties with respect thereto. Any reference

 

156

 

herein to this Agreement shall be deemed to include the exhibits
attached hereto.

 

                10.3         Amendment and Modification. The
parties hereto may amend, 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         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.

 

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

 

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

 

                10.8         Notices. Any notice, request,
information or other document to be given hereunder to any of the parties by
any other party shall be in writing and sent by certified or registered mail,
return receipt requested, or sent by telex or facsimile transmission, as
follows:

 

157

 

If to Deere, addressed to:

                                Deere
& Company

                                John
Deere Road

                                Moline,
IL 61265

 

If to Hitachi, addressed to:

                                Hitachi
Construction Machinery Co., Ltd.

                                Nippon
Bldg. No. 6-2, 2-Chome

                                Ohtemachi,
Chiyodo-Ku

                                Tokyo 100, Japan

 

Any party may change the address to which notices hereunder are to be
sent to it by giving written notice of such change of address in the manner
herein provided for giving notice. Any notice given by telex or facsimile
transmission shall be deemed to have been given on the date it is sent or the
next business day if the date it is sent is not a business day, and any other
authorized notice shall be deemed to have been given five (5) business
days after the date it is sent.

 

                10.9         Further Assurances. Each of the
parties hereto shall execute and deliver any and all additional papers,
documents and other assurances, and shall do any and all acts and things
reasonably necessary in connection with the performance of its obligations
hereunder to carry out the intent of the parties hereto.

 

                10.10       Arbitration.

 

                                (a)           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 Commercial Arbitration Rules of
the International Chamber of Commerce and judgment upon the

 

158

 

award rendered may be entered in any court having jurisdiction thereof.
Such arbitration shall be conducted by three arbitrators, one selected by each
of Deere and Hitachi, and the two arbitrators so selected choosing a third (or,
failing agreement on the third, the International Chamber of Commerce choosing
a third). Any arbitration shall occur in Paris, France.

 

                                (b)           Each of Deere and Hitachi hereby
expressly submits itself generally and unconditionally to the personal jurisdiction
of any United States or state court which sits in the State of Illinois which
would have jurisdiction over the subject matter of an action to enforce an
arbitration award provided, however, that neither party shall be deemed to have
submitted to such jurisdiction unless or until it has been provided with actual
notice of the pending of proceedings in such court and given adequate
opportunity to appear.

 

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

 

                IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed as
of the day and year first above written.

 

	
   

  	
  DEERE & COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Thomas A. Gildehaus

  	
   

  
	
   

  	
   

  	
  THOMAS A. GILDEHAUS, EXECUTIVE VICE-PRESIDENT

  
	
   

  	
   

  	
   

  
	
   

  	
  HITACHI CONSTRUCTION MACHINERY, CO. LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ H. Okada

  	
   

  
	
   

  	
   

  	
  HAJIME OKADA, PRESIDENT

  
					

 

159

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