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JOHN DEERE
CONSTRUCTION
DEALER AGREEMENTS
FOR RDO CONSTRUCTION
EQUIPMENT CO. IN ARIZONA
TEXAS AND MINNESOTA
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DEFINED TERMS
For purposes of this Agreement, the following terms shall be defined as follows:
Absorption The percentage of Dealer's fixed
expenses and interest covered by
Dealer's parts and service department
contribution margin. JDCEC will specify
the method used to measure Absorption in
bulletins issued from time to time to
JDCEC Dealers.
Affiliates (1) each of the Key Persons, (2) their
spouses and children, (3) each guarantor
of Dealer, (4) any other person or
entity that holds, directly or
indirectly, a 10% or greater interest in
Dealer, and (5) any entity owned 10% or
more, directly or indirectly,
individually or in combination, by (a)
Dealer, (b) a Key Person, (c) their
spouses or children, (d) a guarantor of
Dealer, or (e) any other person or
entity that holds, directly or
indirectly, a 10% or greater interest in
Dealer.
Agreement This agreement.
AOR An area of responsibility assigned to a
JDCEC Dealer under a JDCEC dealer
agreement.
Conditions of Sale JDCEC's published Construction Dealer
Conditions of Sale, as in effect from
time to time.
Core Product Group Any group of products that JDCEC may
designate from time to time as a core
product group.
Customer Satisfaction The extent to which Dealer fulfills
the needs and expectations of customers
in Dealer's AOR. JDCEC will specify the
method used to measure Customer
Satisfaction in bulletins issued from
time to time to JDCEC Dealers.
Dealer The dealer identified in this Agreement.
Dealer's AOR The area of responsibility assigned to
Dealer under this Agreement.
Dispute Any dispute, controversy, or claim
between Dealer or an Affiliate and
JDCEC, Deere Credit, Inc., or ERS,
whether based on contract, tort,
statute, or other legal theory.
ERS Equipment Remarketing Services, a
division of Deere Marketing Services,
Inc.
Equity The Dealer's equity to assets
percentage, determined by JDCEC based
upon the most recent fiscal year-end
audited financial statement designated
by JDCEC pursuant to Section 1.j., with
adjustments, if any, as provided in
Section 1.j., and
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calculated as of the end of the fiscal
year covered by such financial
statement.
Equity Performance Standard The equity to assets percentage
performance standard specified by JDCEC
from time to time in JDCEC dealer
bulletins for JDCEC Dealers generally.
Financial Information System JDCEC's Financial Information System (or
successor system).
Goods Whole Goods and Parts, as well as
certain JDM products that JDCEC may
offer for sale to Dealer.
JDCEC John Deere Construction Equipment
Company.
JDCEC Dealer An authorized JDCEC dealer.
JDCEC Warranties The JDCEC warranties (including, in
some cases, extended warranties)
applicable to the sale and, in some
cases, to the lease or rental of
various types of Goods.
JDCEC's Affiliates Deere & Company, its divisions, and
its subsidiaries, whether direct or
indirect.
JDM John Deere Merchandise.
John Deere Network The network of computers,
communications equipment, computer
networking equipment, computer software,
application software, and data used by
JDCEC for the purpose of gathering and
communicating information and conducting
business.
Key Persons The persons and entities listed in
Exhibit 4.
Manual JDCEC's published Service Administration
Manual (or successor document), as in
effect from time to time.
Market Share The market penetration achieved
for Goods, or a subset thereof (e.g.
Core Products, models, Parts), in
Dealer's AOR during a specified time
period. JDCEC will specify the method
used to measure Market Share in
bulletins issued from time to time to
JDCEC Dealers.
Meaningful Progress A level of improvement for each
Performance Criterion for the first
12-month period covered by the Dealer's
annual JDCEC-approved business plan,
which level of improvement shall be as
agreed upon between Dealer and JDCEC
each year, in connection with the
preparation of Dealer's annual business
plan. If in any year Dealer and JDCEC do
not reach agreement upon Meaningful
Progress with respect to a particular
Performance Criterion, JDCEC will
determine in its sole discretion what
will constitute Meaningful Progress for
that Performance Criterion for the year.
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Minimum Equity Level The minimum equity to assets percentage
level specified by JDCEC from time to
time in JDCEC Dealer bulletins for JDCEC
Dealers generally.
Parts (1) the products indicated by a check
mark in Section B of Exhibit 2 and (2)
attachments and parts available from
JDCEC for the Whole Goods.
Performance Criteria Market Share, Absorption, Customer
Satisfaction, and Equity, as well as
other criteria specified by JDCEC
from time to time in JDCEC Dealer
bulletins for JDCEC Dealers generally.
Performance Standard A level of performance (for a
particular Performance Criterion)
specified by JDCEC from time to time in
JDCEC Dealer bulletins for JDCEC Dealers
generally.
Service Information System JDCEC's Service Information System (or
successor system).
Terms Schedule JDCEC's published U.S. Construction
Dealer Terms Schedule, as in effect from
time to time.
Trademarks The trademarks owned by JDCEC or any of
JDCEC's Affiliates.
Used Goods Whole Goods that do not have any SECURE
Standard Warranty remaining.
Whole Goods (1) the products indicated by a
check mark in Section A of Exhibit 2,
(2) their predecessors, and (3) their
JDCEC-designated successors.
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JOHN DEERE CONSTRUCTION EQUIPMENT COMPANY
AUTHORIZED CONSTRUCTION DEALER AGREEMENT
The Dealer identified below hereby applies to JDCEC for appointment as a JDCEC
Dealer for the area of responsibility designated in Exhibit 1. Dealer agrees
that the relationship between Dealer and JDCEC will be governed by the Terms of
Appointment set forth in this Agreement. When it executes this Agreement, JDCEC
accepts the Dealer's application and agrees to be bound by the Terms of
Appointment. This Agreement shall be effective upon execution by JDCEC and shall
as of that date supersede any prior John Deere Dealer Agreement between the
parties hereto (including without limitation any prior John Deere Industrial
Dealer Agreement between Dealer and John Deere Industrial Equipment Company).
Dealer (Firm Name): RDO Construction Equipment Co.
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Address: 2649 North 29th Avenue, Phoenix, AZ 85009
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X Corporation
--
__ C
__ S
__ Limited Liability Company By: /s/ Ronald D. Offutt
__ Partnership -----------------------------------
__ General
__ Limited Title: CEO
__ Proprietorship -------------------------------
__ Other: (Authorized officer, owner, or
--------------------- partner)
Date: 12/28/00
--------------------------------
Signatures of Other
-----------------------------------------------------
Partners, Owners, or
-----------------------------------------------------
Shareholders:
-----------------------------------------------------
Signatures /s/ Ronald D. Offutt
-----------------------------------------------------
of Guarantors:
-----------------------------------------------------
-----------------------------------------------------
Accepted:
John Deere Construction By: /s/ executed
------------------------------------
Equipment Company Title: Manager, Finance Operations
------------------------------------
Moline, IL 61265 Date: 12/28/2000
------------------------------------
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JOHN DEERE CONSTRUCTION EQUIPMENT COMPANY
AUTHORIZED CONSTRUCTION DEALER AGREEMENT
The Dealer identified below hereby applies to JDCEC for appointment as a JDCEC
Dealer for the area of responsibility designated in Exhibit 1. Dealer agrees
that the relationship between Dealer and JDCEC will be governed by the Terms of
Appointment set forth in this Agreement. When it executes this Agreement, JDCEC
accepts the Dealer's application and agrees to be bound by the Terms of
Appointment. This Agreement shall be effective upon execution by JDCEC and shall
as of that date supersede any prior John Deere Dealer Agreement between the
parties hereto (including without limitation any prior John Deere Industrial
Dealer Agreement between Dealer and John Deere Industrial Equipment Company).
Dealer (Firm Name): RDO Construction Equipment Co.
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Address: 3230 East Airport Freeway, Irving, TX 75062-4909
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X Corporation
--
__ C
__ S
__ Limited Liability Company By: /s/ Ronald D. Offutt
__ Partnership ----------------------------------
__ General
__ Limited Title: CEO
__ Proprietorship -------------------------------
__ Other: (Authorized officer, owner, or
--------------------- partner)
Date: 12/28/00
--------------------------------
Signatures of Other
-----------------------------------------------------
Partners, Owners, or
-----------------------------------------------------
Shareholders:
-----------------------------------------------------
Signatures /s/ Ronald D. Offutt
-----------------------------------------------------
of Guarantors:
-----------------------------------------------------
-----------------------------------------------------
Accepted:
John Deere Construction By: /s/ executed
------------------------------------
Equipment Company Title: Manager, Finance Operations
------------------------------------
Moline, IL 61265 Date: 12/28/2000
------------------------------------
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JOHN DEERE CONSTRUCTION EQUIPMENT COMPANY
AUTHORIZED CONSTRUCTION DEALER AGREEMENT
The Dealer identified below hereby applies to JDCEC for appointment as a JDCEC
Dealer for the area of responsibility designated in Exhibit 1. Dealer agrees
that the relationship between Dealer and JDCEC will be governed by the Terms of
Appointment set forth in this Agreement. When it executes this Agreement, JDCEC
accepts the Dealer's application and agrees to be bound by the Terms of
Appointment. This Agreement shall be effective upon execution by JDCEC and shall
as of that date supersede any prior John Deere Dealer Agreement between the
parties hereto (including without limitation any prior John Deere Industrial
Dealer Agreement between Dealer and John Deere Industrial Equipment Company).
Dealer (Firm Name): RDO Construction Equipment Co.
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Address: 12500 Dupont Avenue South, Burnsville, MN 55337-1604
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X Corporation
--
__ C
__ S
__ Limited Liability Company By: /s/ Ronald D. Offutt
__ Partnership ----------------------------------
__ General
__ Limited Title: CEO
__ Proprietorship -------------------------------
__ Other: (Authorized officer, owner, or
--------------------- partner)
Date: 12/28/00
--------------------------------
Signatures of Other
-----------------------------------------------------
Partners, Owners, or
-----------------------------------------------------
Shareholders:
-----------------------------------------------------
Signatures /s/ Ronald D. Offutt
-----------------------------------------------------
of Guarantors:
-----------------------------------------------------
-----------------------------------------------------
Accepted:
John Deere Construction By: /s/ executed
------------------------------------
Equipment Company Title: Manager, Finance Operations
------------------------------------
Moline, IL 61265 Date: 12/28/2000
------------------------------------
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TERMS OF APPOINTMENT
Preamble
JDCEC and Dealer acknowledge that the ultimate objective to which each party
will strive is the satisfaction of the customer. Satisfaction of customers
results from providing quality products and excellent product support and
otherwise exceeding customers' needs and expectations. JDCEC relies on Dealer to
promote aggressively the sale, lease, and rental of Goods in Dealer's AOR and to
provide a level of service and support of Goods that exceeds customers' needs
and expectations. The environment necessary for achieving the mutual objectives
of Dealer and JDCEC is enhanced by a relationship between JDCEC and Dealer that
is based on cooperation, mutual respect, and a commitment to continuous
improvement.
The Terms of Appointment set forth in this Agreement are necessary to ensure
that:
- the Goods are actively and aggressively promoted by Dealer for sale, lease,
and rental to customers and prospective customers in Dealer's AOR in order
to achieve the Market Share Performance Standards;
- the Goods are supported by Dealer in a prompt and effective manner in order
to achieve a high level of customer acceptance; and
- customers' needs are anticipated and met faster, better, and more
consistently by Dealer than they are by the competition.
Dealer and JDCEC agree as follows:
1. Provisions of Appointment
During the period of Dealer's appointment as a JDCEC Dealer, the following
provisions shall apply:
a) Dealer's AOR
In authorizing Dealer to distribute Goods, JDCEC is relying on Dealer to
effectively market Goods against competing products in Dealer's AOR
and to enhance the reputation JDCEC and its dealer organization have
developed over many years. Achieving a high degree of customer
satisfaction in Dealer's AOR requires that Dealer concentrate its
efforts in Dealer's AOR.
i) Dealer is assigned Dealer's AOR for the purpose of marketing,
servicing, and supporting Goods. Dealer's AOR is not an
exclusive territory. JDCEC and others may market, service, and
support Goods in Dealer's AOR. Without limiting the foregoing,
JDCEC may sell, loan, lease, or rent Goods, without restriction
or limitation, to any person or entity, including without
limitation:
a) federal, state, and local governments;
b) accounts classified by JDCEC as direct or national accounts;
c) purchasers for export;
d) educational institutions;
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e) competitors of JDCEC;
f) equipment manufacturers; and
g) employees of JDCEC.
ii) JDCEC may assign all or any portion of Dealer's AOR to other
persons or entities for the purpose of marketing, servicing, and
supporting products other than Goods. Such an assignment may
include Parts.
iii) Dealer will concentrate its efforts in Dealer's AOR.
iv) JDCEC shall have no obligation to support, through its programs
or other forms of dealer support, activities of Dealer outside
Dealer's AOR, and JDCEC may exclude activities of Dealer outside
Dealer's AOR from JDCEC's programs and other forms of dealer
support.
v) Whenever a sale, lease, or rental of Whole Goods by Dealer is
subject to JDCEC's AOR service fee policy, as in effect from
time to time, Dealer will pay a service fee in accordance with
the terms of JDCEC's service fee bulletin in effect when the
sale, lease, or rental occurs.
b) Locations; Other Product Lines
The authorized Dealer locations specified in Exhibit 3 are necessary to
ensure (1) superior product support, (2) aggressive sales, leasing,
and rental coverage of Dealer's AOR, and (3) a high degree of
customer satisfaction. Locations may need to be added, relocated, or
discontinued in the future to meet changing market needs.
i) Dealer will maintain JDCEC dealership operations at each
location listed in Exhibit 3 for the purposes specified in
Exhibit 3. Dealer will not open any new Dealer location,
relocate or discontinue a Dealer location, or change the
purposes of a Dealer location without obtaining JDCEC's prior
written approval. Dealer and Affiliates will not, either
directly or indirectly, establish, maintain, or operate at any
other location a place of business of any kind where (or from
which) any Goods are displayed, sold, leased, rented, or
serviced.
ii) Neither Dealer nor any Affiliate will sell, lease, or rent parts
or whole goods that compete with JDCEC's products. Dealer will
separate, in a manner acceptable to JDCEC, other business
activities and/or product lines from Dealer's JDCEC dealership
operations if, in JDCEC's sole discretion, such activities
and/or product lines are likely to detract from Dealer's
representation of JDCEC's products. Dealer and Affiliates will
not open any new location or relocate a location where Dealer or
an Affiliate engages in the sale, lease, rental, or servicing of
construction, utility, or forestry equipment (or parts for such
equipment) other than Goods, or in a related business, without
obtaining JDCEC's prior written approval.
iii) To ensure compliance with this Section 1.b., Dealer and
Affiliates will permit JDCEC to inspect, during normal business
hours, all locations of Dealer and any
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Affiliate engaged in the sale, lease, rental, or servicing of
equipment or vehicles (or parts for equipment or vehicles), or
in a related business.
c) Dealer's Business Plans and Promotional Efforts; Achievement of
Meaningful Progress and the Performance Standards
The reputation and mutual success of JDCEC and JDCEC Dealers depend to a
large degree upon how effectively each JDCEC Dealer conducts its
operations.
i) Each year, by the date specified by JDCEC, Dealer will submit
and secure JDCEC's approval of a business plan covering one or,
if requested by JDCEC, more years and containing, for each year
covered by the plan:
a) an objective for each Performance Criterion that
represents, at a minimum, Meaningful Progress for the
Performance Criterion;
b) action plans designed to achieve the Performance Criteria
objectives specified in the plan and, within a reasonable
period of time, the Performance Standards; and
c) such other elements as JDCEC may request of JDCEC
Dealers generally.
Dealer may base its business plan on the calendar year or on Dealer's
fiscal year, provided all periods are covered by a Dealer
business plan approved by JDCEC.
ii) Dealer will actively and aggressively promote the sale, lease,
and rental of Whole Goods. Dealer's compliance with this
commitment will be evaluated based on performance in Dealer's
AOR and not on performance outside Dealer's AOR.
Dealer will maintain:
a) highly qualified management and sales personnel;
b) sales training and personnel development programs;
c) inventories of Whole Goods and related attachments
available for demonstration, sale, lease, and rental;
and
d) sales facilities
that in each case are sufficient to achieve the Performance Criteria
objectives contained in Dealer's JDCEC-approved business plans
and, within a reasonable period of time, the Performance
Standards.
iii) Dealer will actively and aggressively promote the sale of Parts
and services. Dealer's compliance with this commitment will be
evaluated based on performance in Dealer's AOR and not on
performance outside Dealer's AOR.
Dealer will maintain:
a) highly qualified parts and service personnel;
b) parts sales and service training and personnel development
programs;
c) inventories of Parts;
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d) service equipment, field service vehicles, and tools; and
e) parts and service facilities
that in each case are sufficient to achieve the Performance Criteria
objectives contained in Dealer's JDCEC-approved business plans
and, within a reasonable period of time, the Performance
Standards.
iv) Dealer will achieve Meaningful Progress with respect to each
Performance Criterion in each fiscal or calendar year (whichever
is used as the basis for Dealer's JDCEC-approved business
plans). In addition, Dealer will, within a reasonable period of
time, achieve the Performance Standards. Dealer's compliance
with these commitments will be evaluated based on performance in
Dealer's AOR and not on performance outside Dealer's AOR.
d) Preparation of Goods, Warranty, and Post-Delivery Service
i) The Manual and/or bulletins issued from time to time by JDCEC
designate the JDCEC Warranties. In making sales, leases, and
rentals of Goods, Dealer will follow instructions contained in
the Manual and JDCEC's bulletins and will complete with true and
accurate information the retail purchase orders, delivery
receipts, lease agreements, and other forms specified therein.
Dealer will be solely responsible for any warranties given by
Dealer that exceed the applicable JDCEC Warranty, if any, and
for any liability in cases where Dealer has failed to use the
forms prescribed by JDCEC in the manner specified by JDCEC.
ii) To ensure the proper operation of Goods, Dealer will properly
assemble and prepare all Goods sold, leased, or rented by Dealer
and will perform such inspections, adjustments, and service
prior to delivery to users as are required in the Manual. Dealer
will instruct users in the proper use and maintenance of Goods
and will furnish each user with the appropriate operator's
manuals furnished by JDCEC. Dealer will also perform the
post-delivery inspections and adjustments prescribed for Goods
in the Manual.
iii) Dealer is authorized to and will perform prompt and effective
warranty service on Goods in Dealer's AOR for which JDCEC
becomes obligated pursuant to a JDCEC Warranty, including
without limitation Goods not sold, leased, or rented by Dealer,
if presented with proper evidence that the Goods are entitled to
warranty service under a JDCEC Warranty.
iv) Dealer will perform prompt and effective non-warranty service on
Goods in Dealer's AOR, including without limitation Goods not
sold, leased, or rented by Dealer.
v) Dealer will perform product improvement programs that JDCEC may
from time to time require for Goods in Dealer's AOR, including
without limitation Goods not sold, leased, or rented by Dealer.
Dealer will complete such programs as expeditiously as possible,
and in any event within the time frame specified by JDCEC.
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vi) Dealer will perform warranty service and product improvement
programs in the manner and for the compensation specified in the
Manual in effect at the time the service or program is
performed. Dealer will notify JDCEC of all warranty and product
improvement program claims in accordance with the Manual.
e) Sales to Re-sellers
Dealer will not sell Goods to any person or entity that re-sells or
intends to re-sell such Goods, provided, however, that this Section
1.e. shall not prevent Dealer from:
i) selling Parts to a person or entity in Dealer's AOR that uses
such Parts in providing repair or maintenance services in
Dealer's AOR for products owned by others;
ii) selling Used Goods to a person or entity that is engaged in the
business of selling used equipment;
iii) selling Goods to ERS;
iv) selling Goods to another JDCEC Dealer;
v) selling Goods to a person or entity that is primarily engaged in
the business of renting equipment to end users.
f) Equity
i) Dealer will maintain its Equity at a level sufficient to achieve
Dealer's commitments under this Agreement, which shall be not
less than the Minimum Equity Level.
ii) Dealer will not pay any dividends, effect any stock repurchase,
repay or otherwise discharge its indebtedness for any loans from
its owners, or make any other distributions to owners if
Dealer's Equity is below the Equity Performance Standard or
would fall below the Equity Performance Standard as a result of
such action. If Dealer is a subchapter S corporation or similar
entity, Dealer may make a distribution to a shareholder, without
regard to the preceding sentence, in an amount equal to the
income tax owed by the shareholder as a result of Dealer's
dealership operations.
iii) Dealer will not make any acquisitions or initiate new business
activities if Dealer's Equity is below the Equity Performance
Standard or would fall below the Equity Performance Standard as
a result of such action.
If the financial statement of another entity or a combination of
entities is used for the purpose of calculating Dealer's Equity,
Section 1.f.i. will apply to that entity or combination as well as to
Dealer.
g) JDCEC's Acceptance of Orders
JDCEC will accept orders placed by Dealer for Goods that JDCEC
contemplates will be shipped during the period of Dealer's
appointment as a JDCEC Dealer. JDCEC shall have no liability for
delay, failure, or refusal to accept Dealer's orders or to ship Goods
to Dealer if the delay, failure, or refusal results from:
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i) capacity constraints, demand in excess of available supply,
labor strikes or lockouts; or
ii) a default under a security agreement between Dealer and JDCEC;
or
iii) termination of Dealer's appointment; or
iv) any cause beyond JDCEC's control; or
v) JDCEC's determination, in its sole discretion, that:
a) Dealer's financial condition does not justify the
extension of additional credit or the addition of
inventory; or
b) limitations in Dealer's market potential, marketing
capabilities, or product support capabilities for the
particular Goods involved are likely to lead to customer
dissatisfaction with the Goods or excessive warranty
expense; or
c) Dealer has consistently failed to perform its obligations
under this Agreement; or
d) Dealer's inventory of Goods is excessive or with
additional shipments would become excessive, or shipment
would result in larger JDCEC Dealer inventories than JDCEC
is willing to finance; or
e) shipment would result in larger JDCEC Dealer inventories
than warranted based on expected market demand.
All orders, sales, and shipments will be governed by the Conditions of
Sale in effect at the time the order is placed.
h) Availability of JDCEC Programs
i) JDCEC will make available to Dealer finance plans, lease plans,
floor plans, and parts return programs (and other similar
financing or inventory management plans or programs) comparable
to such plans and programs that JDCEC makes available to JDCEC
Dealers generally. Such plans and programs may contain
conditions for eligibility, and such plans and programs may have
varying terms depending on certain dealer financial or
performance criteria or market conditions.
ii) JDCEC may make available to any JDCEC Dealer marketing programs
that JDCEC deems necessary to compete in the AOR assigned to
that JDCEC Dealer without obligating JDCEC to make similar
programs available to any other JDCEC Dealer or to JDCEC Dealers
generally.
i) Changes in Dealer Ownership or Business Structure
Any change in the ownership, management, or business structure of Dealer
could have serious negative consequences for Dealer and JDCEC. JDCEC
considers the Key Persons to be particularly vital to Dealer and to a
successful working relationship between JDCEC and Dealer.
i) No change in the ownership or business structure of Dealer or
any Key Person will occur unless JDCEC has given its prior
written approval of such change. No event
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that would eliminate or materially alter the ownership interest
in or relationship to Dealer, or the role in Dealer's affairs,
of any Key Person will occur unless JDCEC has given its prior
written approval of such event.
ii) Dealer will execute such agreements or other documents as JDCEC
may deem necessary to preserve JDCEC's rights under this
Agreement or any other agreement between Dealer and JDCEC in
light of a change or proposed change in Dealer's ownership,
management, or business structure.
iii) If Dealer wishes to sell its business or substantially all of
the assets of its business (excluding Dealer's JDCEC Dealer
appointment and this Agreement, which are not transferable by
Dealer), Dealer will notify JDCEC before the beginning of any
discussions or negotiations pertaining to the proposed sale.
After giving such notice, Dealer may enter into negotiations to
sell its business or assets (excluding Dealer's JDCEC Dealer
appointment and this Agreement) to a third party. JDCEC retains
at all times the right to decide, in its sole discretion,
whether to appoint any third party as a JDCEC Dealer for
Dealer's AOR, for any portion thereof, or for any other area.
For purposes of this Agreement, a change in business structure shall
include, without limitation, a change in the legal form of Dealer
(e.g. from partnership to corporation); a change in the legal form of
any Key Person or of any entity that holds, directly or indirectly, a
10% or greater interest in Dealer; a merger or consolidation involving
Dealer; the creation of a subsidiary, partnership, or other legal
entity by Dealer; and any other change that may affect any right or
obligation under this Agreement or any other agreement between Dealer
and JDCEC.
j) Financial Statements
Dealer will provide to JDCEC annual financial statements for Dealer,
for any entity or combination of entities that JDCEC may designate
pursuant to the next paragraph, and for such Affiliates as JDCEC may
from time to time request within 100 days after Dealer's fiscal
year-end (or, for another entity or combination of entities, or for an
Affiliate, within 100 days after such entity, combination, or
Affiliate's fiscal year-end). Such financial statements shall have
been prepared in accordance with generally accepted accounting
principles and audited by an independent certified public accountant
approved by JDCEC, which approval shall not be unreasonably withheld.
Dealer also will provide to JDCEC financial statements, prepared in
accordance with the Financial Information System, for each calendar
month by the end of the following month. Dealer also will provide such
other financial data of Dealer and Affiliates as JDCEC may from time
to time request.
JDCEC will, in its sole discretion:
i) designate, before the beginning of each of Dealer's fiscal
years, the particular entity or combination of entities whose
financial statements JDCEC will use to determine Dealer's
Equity for purposes of Sections 1.f. and 2.c.ii., provided,
however, that JDCEC may amend its designation for a particular
fiscal year if
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Dealer, the designated entity or combination, or an Affiliate
undergoes a change in ownership or business structure prior to
the end of that fiscal year; and
ii) describe in the Terms Schedule the adjustments to the
financial statement data that JDCEC may make in determining
Dealer's Equity. The adjustments JDCEC may make in determining
Equity from a particular financial statement shall be those
described in the Terms Schedule in effect on the date that
financial statement is received in JDCEC's Finance Department
offices in Moline, Illinois.
2. Termination of Dealer's Appointment
a) Termination by Mutual Consent
Dealer's appointment may be terminated by the mutual consent
of Dealer and JDCEC, evidenced by a writing signed by Dealer
and JDCEC, with the effective date of such termination to be
as mutually agreed upon in writing.
b) Termination by Dealer
Dealer may terminate its appointment for any reason upon at
least 180 days' prior written notice to JDCEC.
c) Termination by JDCEC
i) JDCEC may terminate Dealer's appointment, upon at
least 180 days' prior written notice to Dealer, in
the event:
a) Dealer fails to achieve Meaningful Progress
with respect to a Performance Criterion in
any fiscal or calendar year (whichever is
used as the basis for Dealer's
JDCEC-approved business plans); or
b) Dealer or any Affiliate fails to comply with
any material provision of this Agreement.
JDCEC may exercise its termination right under this
Section 2.c.i. with respect to all or any portion of
Dealer's AOR, and with respect to all or any portion
of the Goods, as JDCEC may determine in its sole
discretion.
JDCEC may exercise its termination right under this
Section 2.c.i. without regard to the performance of
other JDCEC Dealers or to the circumstances under
which JDCEC has terminated or refrained from
terminating the appointment of other JDCEC Dealers.
ii) JDCEC may terminate Dealer's appointment, upon at
least 120 days' prior written notice to Dealer, if
JDCEC determines that Dealer's Equity is less than
the Minimum Equity Level. JDCEC will give Dealer
written notice of termination under this section
2.c.ii. within 45 days after the financial statement
involved is received at JDCEC's Finance Department
offices in Moline, Illinois. If Dealer provided the
financial statement to JDCEC within the time required
by Section 1.j., Dealer will have the right to
increase its Equity to the Minimum Equity Level,
during the 120-day notice period, through the
addition of new capital in a form acceptable to
15
<PAGE>
JDCEC; if Dealer does increase its Equity to the
Minimum Equity Level in this manner within such
120-day period, the notice of termination given under
this Section 2.c.ii. shall become null and void.
JDCEC's prior written approval will be required if
Dealer wishes to increase its Equity to the Minimum
Equity Level in whole or in part by any other means,
including without limitation reducing its asset
levels or through earnings retained during the
120-day notice period. If dealer did not provide the
financial statement involved to JDCEC within the time
required by Section 1.j., Dealer will be deemed to
have waived any right to increase its Equity to the
Minimum Equity Level.
iii) JDCEC may terminate Dealer's appointment, upon at
least 365 days' prior written notice to Dealer, if
JDCEC determines, in JDCEC's sole discretion, that
Dealer's AOR does not justify the continuation of a
JDCEC Dealer assigned only Dealer's AOR. If Dealer's
appointment is terminated under this Section
2.c.iii., Dealer shall have, for a period of three
years commencing with the effective date of
termination, a right of first refusal to be
re-appointed as a JDCEC Dealer for Dealer's AOR if in
that period JDCEC determines that Dealer's AOR does
justify a JDCEC Dealer assigned only Dealer's AOR.
However, such right of first refusal shall terminate
upon a breach by Dealer of any agreement with JDCEC
or any of JDCEC's Affiliates, or if Dealer would not
satisfy the Equity Performance Standard at the time
of reappointment.
iv) JDCEC may terminate Dealer's appointment, effective
immediately, by giving written notice of termination
to Dealer at any time after the happening of any of
the following:
a) the death, incapacity, or dissolution of any
Key Person;
b) a default under any security agreement
between Dealer and JDCEC;
c) any noncompliance with Section 1.b., Section
1.c.i., Section 1.i.i., or Section 1.j.;
d) Dealer defrauds anyone, including without
limitation JDCEC, or misrepresents any
material fact in any communication with or
submission to JDCEC;
e) the cancellation, discontinuance, or
revocation of a guaranty or letter of credit
applicable to Dealer indebtedness, or a
failure to modify the amount of such a
guaranty or letter of credit when and as
requested by JDCEC or Deere Credit, Inc.;
f) Dealer substantially closes the dealership
business;
g) Dealer intentionally fails to comply with
any applicable federal, state, or local law,
regulation, or ordinance relating to the
operation of the dealership; or
16
<PAGE>
h) Dealer attempts to assign its right or
obligations under this Agreement.
3. Effect of Termination of Appointment
Termination of Dealer's appointment hereunder means that the
obligations and duties of the parties under Section 1 no longer apply,
and that JDCEC may decline to fill accepted orders placed before such
termination. Orders from Dealer that JDCEC contemplates will be shipped
after the effective date of termination may be accepted in JDCEC's sole
discretion. Such orders will be subject to the Conditions of Sale in
effect at the time the order is placed or to such other conditions that
JDCEC may prescribe. Submission or acceptance of orders and shipment or
acceptance of Goods does not have the effect of renewing or reinstating
the obligations of Section 1 and shall not be construed as an extension
or renewal of Dealer's appointment or as a rescission of any notice of
termination. If Dealer's appointment is terminated, neither Dealer,
Affiliates, or JDCEC shall be entitled to any compensation or
reimbursement for loss of prospective profits, anticipated sales, or
other losses occasioned by the termination, except as provided in this
Agreement.
4. Repurchase of Goods on Termination
Upon termination of Dealer's appointment, JDCEC will buy and Dealer
will sell (or, with respect to JDM products, may sell subject to
Section 4.c.), free and clear of all liens and encumbrances, the
following Goods, provided they were originally purchased by Dealer from
JDCEC (or from another JDCEC Dealer with the written approval of JDCEC)
and are listed in JDCEC's published price list in effect on the
effective date of termination of Dealer's appointment, according to the
following terms:
a) All unsold current Whole Goods and attachments in Dealer's
possession that are new, unused, complete, and in good
condition. The prices to be paid for such items will be the
invoice prices (but not more than current JDCEC Dealer prices)
plus freight from the factory to Dealer's location, less any
discounts from invoice price that have been allowed, and less
any reduction in value that may be required due to
deterioration.
b) All unsold current Parts in Dealer's possession that are new,
unused, complete, in good condition, and re-salable as new
without repackaging or reconditioning. The prices to be paid
for such items will be JDCEC's then-current wholesale price,
as listed in the John Deere Parts Price List in effect on the
effective date of termination, less a discount of:
i) 15% on items listed as returnable under JDCEC's
then-current parts return policy; and
ii) 50% on all other items.
c) Such unsold current JDM products in Dealer's possession that Dealer
may elect to sell to JDCEC and that are new, unused, complete, in
good condition, and re-salable as new without repackaging or
reconditioning. JDCEC shall have no obligation to repurchase such
products unless Dealer furnishes JDCEC with a list of the products
that it wishes to
17
<PAGE>
sell to JDCEC within thirty days after the effective date of the
termination of Dealer's appointment. The price to be paid for such
products will be the then-current wholesale price, as listed in the
JDM Price List in effect on the effective date of termination, less a
discount of:
i) 50% on products identified by an asterisk in the JDM Price List;
ii) 15% on items listed as returnable under JDCEC's then-current
parts return policy; and
iii) 25% on all other JDM products.
At the written request of JDCEC, Dealer will, at Dealer's expense, list, tag,
pack, load, and transport all repurchased Goods to the nearest location
regularly maintained by JDCEC for the storage of such Goods (or to such
closer location as may be designated by JDCEC) or pay for the cost of
transportation to such location. The risk of loss shall be on Dealer until
the vehicle transporting such Goods reaches the designated destination.
Should Dealer fail to fulfill the above obligation within 60 days after
JDCEC has requested that it do so, JDCEC or its designee may enter
Dealer's premises, perform these duties, and charge Dealer's account for
any expenses incurred in so doing.
Amounts payable to Dealer under this Section 4 will not be paid until Dealer has
complied with all applicable laws governing bulk transfers of inventory.
JDCEC shall be relieved of its obligations under this Section 4 if a default
occurs or has occurred under any security agreement between Dealer and
JDCEC, and JDCEC elects to exercise its rights under such security
agreement to take possession of the Goods.
JDCEC shall be relieved of its obligations under this Section 4 if Dealer has
defrauded JDCEC or if Dealer misrepresents a material fact pertaining to
the repurchase of Goods in any communication with or submission to JDCEC.
5. Resolution of Disputes
Although Dealer and JDCEC are entering into this Agreement in a spirit of
cooperation and mutual respect, it is possible that Disputes may arise.
Dealer, Affiliates (including without limitation guarantors of Dealer),
JDCEC, Deere Credit, Inc., and ERS agree that any Dispute shall be finally
resolved by binding arbitration pursuant to the terms set forth in Exhibit
5. The duty to arbitrate shall extend to any officer, employee,
shareholder, principal, agent, partner, trustee (in bankruptcy or
otherwise), or subsidiary of Dealer or an Affiliate as to any Dispute that
is subject to this Section 5.
6. Computer System
a) During the period of Dealer's appointment, Dealer will, at Dealer's
expense:
i) install and maintain in good working order a computerized
business system that is compatible with, and in communication
with, the John Deere Network;
ii) maintain the hardware and software necessary to supply
electronically to JDCEC (a) monthly trial balance information in
accordance with the Financial Information System; (b) product
delivery and warranty claim information in accordance with the
18
<PAGE>
Service Information System; and (c) such other information as
JDCEC may from time to time request Dealer to submit
electronically;
iii) conform to any modifications made to the John Deere Network
(provided JDCEC gives Dealer at least 60 days' prior notice of
the modification);
iv) input into the John Deere Network, in accordance with JDCEC's
instructions, such information as Deere may from time to time
request, and furnish such computer files and reports as JDCEC may
from time to time request; and
v) pay all costs associated with Dealer's use of the John Deere
Network, as well as all costs incurred in obtaining and
maintaining Dealer's computerized business system and in
communicating with the John Deere Network.
b) Dealer will keep confidential any information contained in the John
Deere Network and not use such information for purposes unrelated to
Dealer's dealership appointment hereunder.
c) JDCEC shall not be liable for any losses incurred by Dealer in
connection with Dealer's computerized business system or the John
Deere Network.
7. Amendment of Agreement
This Agreement cannot be altered or amended, or any of its provisions waived,
on behalf of JDCEC except in a writing signed by a duly authorized officer
of JDCEC. Dealer and JDCEC recognize that this Agreement does not have an
expiration date. Because market and business practices and conditions are
likely to change with the passage of time and such changes or other
circumstances could necessitate a change in this Agreement, JDCEC may
amend these Terms of Appointment at any time, without the consent of
Dealer, if the same amendment is made to the Terms of Appointment of all
other JDCEC Dealers whose dealer agreements are in the form of this
Agreement and may be amended in this manner pursuant to applicable law.
Any such amendment shall be made by issuance of a JDCEC Dealer bulletin or
other written notice to such JDCEC Dealers and shall be effective on the
date specified in the bulletin or other written notice, which date shall
be at least 120 days following the date of such bulletin or other written
notice.
8. Use of Trademarks, Names, and Signs
JDCEC grants Dealer the non-exclusive right to use the Trademarks (including
without limitation the JOHN DEERE trademark, the trademark comprising a
leaping deer design within a frame, and the trademark comprising the
leaping deer design and JOHN DEERE within a frame), during the period of
Dealer's appointment, in connection with the advertising and sale of Goods
bearing one or more of the Trademarks, and in connection with the
providing of services by Dealer relating to the sale or servicing of Goods
identified by the Trademarks. Such use of the Trademarks shall be in a
manner and form approved by JDCEC. Dealer agrees not to use any of the
Trademarks as part of Dealer's corporate or business name and to cease all
use of the Trademarks if Dealer ceases to be a JDCEC Dealer, including
without limitation the removal of all signs and distinctive identification
from Dealer's premises and vehicles that might associate Dealer with
JDCEC. Dealer also agrees not to sell or distribute any goods bearing any
of the Trademarks, unless the goods
19
<PAGE>
originated from JDCEC, JDCEC's Affiliates, or licensees authorized to use
the Trademarks on the goods. Dealer also agrees not to use the Trademarks
to promote goods not originating from JDCEC, JDCEC's Affiliates, or their
licensees.
9. Assignment
This Agreement shall be binding upon and inure to the benefit of the successors
and assigns of JDCEC and, to the extent the terms hereof bind or benefit
Deere Credit, Inc. or ERS, their respective successors and assigns.
Dealer's rights and obligations under this Agreement may not be assigned
or transferred. Any attempt by Dealer to assign its rights or obligations
under this Agreement shall be null and void.
10. Changes in or Discontinuance of Goods
a) JDCEC may, at any time and without notice, make changes in or
discontinue any Goods without incurring any liability.
b) This Agreement extends only to Goods. JDCEC reserves the right to
offer any other products to selected JDCEC Dealers or others under
existing or separate new agreements. As new products, other than
those designated by JDCEC as direct successors of Goods, are
developed, acquired, or marketed by JDCEC, they may or may not be
added to the Goods covered under this Agreement.
11. Dealer Guaranty
To the extent requested by JDCEC, Key Persons, Affiliates, and other partners
in, or owners of, Dealer have executed or concurrently herewith will
execute in favor of JDCEC one or more guaranties of Dealer's indebtedness
to JDCEC. Dealer will obtain, and Key Persons, Affiliates, and other
partners in, or owners of, Dealer will execute, such additional guaranties
and amendments and additions to guaranties as JDCEC may from time to time
request.
For purposes of this Section 11 and Section 12, JDCEC shall include Deere
Credit, Inc. in addition to John Deere Construction Equipment Company.
12. Security in Goods
Dealer has executed or concurrently herewith will execute in favor of JDCEC one
or more security agreements covering Dealer's inventory of Goods and
certain other items. Dealer will execute such additional security
agreements and financing statements, and amendments and additions thereto
or to existing instruments, as JDCEC may from time to time request, in
order that JDCEC may have at all times a first lien on Goods and other
collateral securing Dealer's indebtedness to JDCEC.
13. Relationship of the Parties
a) Dealer acknowledges that it is an independent retail merchant who
purchases Goods for resale for the principal benefit of Dealer.
Dealer further acknowledges and agrees that it is an independent
contractor. In performing service work Dealer assumes full
responsibility for such work. Dealer also acknowledges and agrees
that it is not an employee, agent, representative, franchisee,
partner, or joint venturer of or with JDCEC, has not paid and will
not pay a franchise fee to JDCEC, and is free to operate its
20
<PAGE>
business in accordance with its independent business judgment,
provided that such operation is in accordance with this Agreement
and any other agreement between Dealer and JDCEC. Dealer has no
authority to bind JDCEC by representations, statements, agreements,
conduct, or in any manner whatsoever. JDCEC shall not be liable for
any debts, accounts, obligations, or other liabilities of Dealer,
its agents, employees, or representatives. It is expressly
recognized that no fiduciary relationship exists between the
parties.
b) Except as provided in Sections 5, 9, and 17, this Agreement is not
enforceable by any third party and is not intended to benefit, or
convey any rights to, anyone other than Dealer and JDCEC.
c) Dealer obtains no rights by virtue of this Agreement or its
dealership appointment to acquire additional dealerships or to obtain
additional dealership appointments or AOR assignments from JDCEC.
14. Use of Price Lists, Catalogs, and Manuals
The Manual and any price lists, catalogs, and service manual pages furnished
to Dealer by JDCEC must be kept in good condition and returned to JDCEC
upon termination by either party of Dealer's appointment. If such items
have been purchased by Dealer, JDCEC will repurchase them for the price
paid. Dealer will not disclose, directly or indirectly, the contents of
such price lists, catalogs, and service manual pages to a person or entity
that is a competitor of JDCEC or Dealer.
15. Advertising Material; Mailing Lists
During the period of Dealer's appointment:
a) JDCEC will furnish to Dealer, in quantities deemed appropriate by JDCEC
for Dealer's AOR, promotional materials and printed advertising matter
that JDCEC prepares for use by other JDCEC Dealers in connection with
the sale, lease, rental, or servicing of Goods and that JDCEC deems
appropriate for Dealer's AOR; and
b) Dealer will (i) create, maintain, and keep current a list of the names
and addresses of all purchasers and prospective purchasers of Goods in
Dealer's AOR, (ii) provide JDCEC with the current list, and (iii)
promptly notify JDCEC of all changes to the list.
The list contemplated by Section 15.b. shall be the sole property of
JDCEC. JDCEC may use the list at any time for any purpose it deems
appropriate, provided, however, that JDCEC will advise Dealer in advance
of any use it makes of the list (other than for the purpose of sending
Dealer's direct mail solicitations to purchasers and prospective
purchasers on the list) during the period of Dealer's appointment. Dealer
will reimburse JDCEC for handling and postage expenses for all direct
mailings made at Dealer's request to prospective purchasers in Dealer's
AOR.
16. No Waiver
The failure of JDCEC to take any action or require full and strict compliance
with any provision of this Agreement or any provision of any agreement
with other JDCEC Dealers shall not affect JDCEC's right to take any action
or require full and strict compliance at any time
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<PAGE>
prior or subsequent thereto and shall not constitute a waiver of a breach
of the provision or nullify the effectiveness of such provision.
17. Limitation on Damages; Jury Waiver; Time to Initiate Proceedings
a) No party to a Dispute shall be entitled to an award of multiple,
punitive, or exemplary damages, or any damages excluded by, or in
excess of any damage limitation expressed in, this Agreement.
b) Dealer, Affiliates (including without limitation guarantors of
Dealer), JDCEC, Deere Credit, Inc., and ERS each hereby knowingly,
voluntarily, and intentionally waive any right he, she, or it may
have to a trial by jury in respect of any litigation pertaining to
any Dispute, and each agrees not to request a jury in any such
litigation.
c) No party to a Dispute may commence litigation or arbitration
proceedings with respect to such Dispute more than one year after
that party's cause of action accrues.
18. Notices
In addition to other available means of giving notice, notices required or
permitted under this Agreement (including without limitation notices in
connection with any arbitration under Section 5) may be given to the
person indicated on Exhibit 6, by personal delivery or by certified U.S.
mail, Federal Express or other reputable overnight delivery service, or
facsimile to the address or facsimile number indicated on Exhibit 6.
Notices given by personal delivery shall be deemed given when delivered.
Notices given by certified U.S. mail, reputable overnight delivery
service, or facsimile shall be deemed given when sent.
19. Governing Law
This Agreement shall be governed by and construed in accordance with the laws
of the State of Illinois applicable to agreements made and performed
entirely within Illinois and without regard to Illinois' conflict of laws
rules.
20. Severability
Any provision of this Agreement or portion thereof that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability
without invalidating the remainder of the provision or the remaining
provisions of this Agreement and without affecting the validity or
enforceability of such provision in any other jurisdiction. Any provision
herein found to be prohibited or unenforceable in a jurisdiction shall, by
agreement of the parties hereto, be replaced for such jurisdiction by a
provision that ensures that the economic and/or business objectives of the
prohibited or unenforceable provision are preserved insofar as it is
possible to do so under the applicable law in such jurisdiction.
21. Payments on Termination
If Dealer's appointment hereunder is terminated, all indebtedness of Dealer
to JDCEC which does not become due prior to the effective date of the
termination will be due and payable as of the effective date of the
termination. JDCEC may pay any sums owing to Dealer on termination
(including without limitation any sums owing to Dealer for repurchased
Goods) in cash or by giving Dealer credit to be applied to any
indebtedness then owed by Dealer to
22
<PAGE>
JDCEC or to any of JDCEC's Affiliates, regardless of whether such
indebtedness is then due and payable.
22. Survival
The termination of Dealer's appointment shall not affect any rights or
obligations that have accrued hereunder as of the effective date of such
termination. Such termination also shall not affect any rights or
obligations, except those expressly limited to the period of Dealer's
appointment, under Sections 3, 4, 5, 6.b., 7, 8, 9, 10, 11, 12, 13, 14,
15, 16, 17, 18, 19, 20, 21, 22, and 23, which rights and obligations,
except those expressly limited to the period of Dealer's appointment,
shall survive termination of Dealer's appointment.
23. Entire Agreement
This Agreement is and shall be deemed to be the complete and final expression
of the agreement between the parties as to the subject matters contained
herein. This Agreement supersedes all previous dealer agreements and
representations between the parties. It is acknowledged and agreed by
Dealer and JDCEC that no promise or representation not contained herein
(including without limitation Exhibit 7) was an inducement to either party
or was relied on by either party in entering into this Agreement. Any
prior or contemporaneous promises, agreements, or representations, whether
oral, written, or created through custom, usage, or course of dealing,
except for those listed on Exhibit 7, are also superseded by this
Agreement. Dealer understands that, except as provided in Section 7, no
agent or employee of JDCEC has authority to vary or add to the provisions
of this Agreement, or to make any representation altering or going beyond
the terms of this Agreement.
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<PAGE>
EXHIBIT 1 (ARIZONA)
DEALER'S AOR
Dealer's Area of Responsibility shall consist of the following counties:
State of ARIZONA
Counties:
Apache
Cochise
Coconino
Gila
Graham
Greenlee
La Paz
Maricopa
Mohave
Navajo
Pima
Pinal
Santa Cruz
Yavapai
Yuma
State of CALIFORNIA
Counties:
Imperial
Riverside
San Bernardino
San Diego
24
<PAGE>
EXHIBIT 1 (TEXAS)
DEALER'S AOR
Dealer's Area of Responsibility shall consist of the following counties:
State of TEXAS
Counties:
Atascosa Kendall
Bandera Kerr
Bastrop Kimball
Bell Kinney
Bexar LaSalle
Bosque Lampasas
Burleson Lavaca
Burnet Lee
Caldwell Leon
Collin Limestone
Comal Llano
Cooke Mason
Coryell Maverick
Dallas McLennan
Denton McMullen
DeWitt Medina
Dimmit Milam
Edwards Mills
Ellis Montague
Erath Nayarro
Falls Palo Pinto
Fannin Parker
Fayette Real
Freestone Robertson
Frio Rockwall
Gillespie San Saba
Gonzales Somervell
Grayson Tarrant
Guadalupe Travis
Hamilton Uvalde
Hays Washington
Hill Webb
Hood Williamson
Hunt Wilson
Jack Wise
Johnson Young
Karnes Zavala
Kaufman
25
<PAGE>
EXHIBIT 1 (BURNSVILLE)
DEALER'S AOR
Dealer's Area of Responsibility shall consist of the following counties:
State of IOWA Nobles Fallon Cavalier
Norman Fergus Dickey
Counties: Olmstead Gallatin Divide
Otter Tail Garfield Dunn
Lyon Pennington Glacier Eddy
Pipestone Golden Valley Emmons
Polk Hill Foster
State of MINNESOTA Pope Judith Basin Golden Valley
Ramsey Liberty Grand Forks
Counties: Red Lake Madison Grant
Redwood McCone Griggs
Anoka Renville Meagher Hettinger
Benton Rice Musselshell Kidder
Big Stone Rock Park Lamoure
Blue Earth Scott Petroleum Logan
Brown Sherburne Phillips McHenry
Carver Sibley Pondera McIntosh
Chippewa Stearns Powder River McKenzie
Chisago Steele Prairie McLean
Clay Stevens Richland Mercer
Cottonwood Swift Roosevelt Morton
Dakota Todd Rosebud Mountrail
Dodge Traverse Sheridan Nelson
Douglas Wabasha Stillwater Oliver
Faribault Waseca Sweet Grass Pembina
Fillmore Washington Teton Pierce
Freeborn Watonwan Toole Ramsey
Goodhue Wilkin Treasure Ransom
Grant Winona Valley Renville
Hennepin Wright Wheatland Richland
Houston Yellow Medicine Wibaux Rolette
Isanti Yellowstone Sargent
Jackson Sheridan
Kanabee State of MONTANA Sioux
Kandiyohi State of NORTH DAKOTA Slope
Kittson Counties: Stark
Lac Qui Parle Counties: Steele
Le Sueur Beaverhead Stutsman
Lincoln Big Horn Adams Towner
Lyon Blaine Barnes Traill
Marshall Broadwater Benson Walsh
Martin Carbon Billings Ward
McLeod Carter Bottineau Wells
Meeker Cascade Bowman Williams
Mille Lacs Chouteau Burke
Morrison Custer Burleigh
Mower Daniels Cass
Murray Dawson
Nicollet
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<PAGE>
State of SOUTH DAKOTA Davison Jerauld Sanborn
Day Jones Shannon
Counties: Deuel Kingsbury Spink
Dewey Lake Stanley
Aurora Douglas Lawrence Sully
Beadle Edmunds Lincoln Todd Tripp
Bennett Fall River Lyman Turner
Bon Homme Faulk Marshall Walworth
Brookings Grant McCook Yankton
Brown Gregory McPherson Ziebach
Brule Haakon Meade
Buffalo Hamlin Mellette
Butte Hand Miner State of WYOMING
Campbell Hanson Minnehaha
Charles Mix Harding Moody Counties:
Clark Hughes Pennington
Codington Hutchinson Perkins Crook
Corson Hyde Potter Weston
Custer Jackson Roberts
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<PAGE>
EXHIBIT 2
A. WHOLE GOODS
<TABLE>
<CAPTION>
Backhoes Crawlers 4WD Loaders Excavators Motor Graders
<S> <C> <C> <C> <C>
/X/ 300 /X/ 450 /X/ 244 /X/ 190 /X/ 570
/X/ 310 /X/ 455 /X/ 344 /X/ 290 /X/ 670
/X/ 315 /X/ 550 /X/ 444 /X/ 490 /X/ 672
/X/ 410 /X/ 555 /X/ 544 /X/ 590 /X/ 770
/X/ 510 /X/ 650 /X/ 624 /X/ 595 /X/ 772
/X/ 710 /X/ 750 /X/ 644 /X/ 200
/X/ 850 /X/ 744 /X/ 690
/X/ 790
/X/ 792
/X/ 892
/X/ 992
<CAPTION>
Skidders Feller Bunchers Scrapers Forklifts Landscape Loaders
<S> <C> <C> <C> <C>
/X/ 540 /X/ 643 /X/ 762 /X/ 485 /X/ 210
/X/ 548 /X/ 653 /X/ 862 /X/ 486
/X/ 640 /X/ 843 /X/ 488
/X/ 648
/X/ 740
/X/ 748
</TABLE>
B. PARTS
COMPETITIVE PARTS
<TABLE>
<S> <C> <C> <C>
/X/ Bucket Teeth /X/ Engine Parts /X/ Filters /X/ Undercarriage Products
/X/ Cutting Edges /X/ All-Makes Parts /X/ Oil /X/ Re-manufactured Components
</TABLE>
28
<PAGE>
EXHIBIT 3 (ARIZONA)
LOCATIONS
Address Purpose/Store Type
------- -------------------
2649 North 29th Avenue, Phoenix, AZ 85009 /X/ Whole Goods
-------------------------------------------------- /X/ Parts
/X/ Service
/ / Other _____________
5500 E. Penstock, Flagstaff, AZ 86004 /X/ Whole Goods
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
3241 Tower Road, Prescott, AZ 86305-6708 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
3300 East Michigan Street, Tucson, AZ 85714 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
3050 East Highway 95, Yuma, AZ 85365 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
3275 Highway 86, Imperial, CA 92251 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
13625 Danielson Street, Poway, CA 92064-6829 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
20 Iowa Avenue, Riverside, CA 92507 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
29
<PAGE>
EXHIBIT 3 (TEXAS)
LOCATIONS
Address Purpose/Store Type
------- -------------------
3230 E. Airport Freeway, Irving, TX 75062-4909 /X/ Whole Goods
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
9024 NW Highway 287, Ft. Worth, TX 76177 /X/ Whole Goods
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
IH-35 South at EM2113, Hewitt, TX 76643 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
Highway 359 East, Laredo, TX 78043-9531 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
8000 Blue Goose Road, Manor, TX 78653-9722 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
5400 North IH 35, San Antonio, TX 78218-5100 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
30
<PAGE>
EXHIBIT 3 (BURNSVILLE)
LOCATIONS
Address Purpose/Store Type
------- -------------------
12500 Dupont Avenue S., Burnsville, MN 55337-1604 /X/ Whole Goods
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
1740 E. College Drive, Marshall, MN 56258-2653 /X/ Whole Goods
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
1910 Lor Ray Drive, North Mankato, MN 56003-1229 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
1328 60th Avenue NW, Rochester, MN 55901 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
6700 Highway 10 NW, Sauk Rapids, MN 56379 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
2000 Industrial Drive, Bismarck, ND 58502 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
4320 Main Avenue, Fargo, ND 58103-1003 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
6565 Gateway Drive, Grand Forks, ND 58203-1003 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
31
<PAGE>
Locations (cont'd)
Address Purpose/Store Type
------- -------------------
Highway 83 South, Minot, ND 58701 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
3901 East Highway 12, Aberdeen, SD 57402 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
1540 Deadwood Avenue, Rapid City, SD 57702-0164 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
2801 N. Louise Avenue, Sioux Falls, SD 57107-0164 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
5221 Midland Road, Billings, MT 59107-0164 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
4900 Tri Hill Frontage Rd., Great Falls, MT 59404-4937 /X/ Whole Goods Sales
------------------------------------------------------ /X/ Parts
/X/ Service
/ / Other _____________
32
<PAGE>
EXHIBIT 4
KEY PERSONS
<TABLE>
<CAPTION>
RELATIONSHIP TO DEALER/
NAME OWNERSHIP INTEREST ROLE IN DEALER'S AFFAIRS
---- ------------------ ------------------------
<S> <C> <C>
Ronald D. Offutt Shareholder of Dealer Chairman
Gary L. Weihs N/A COO
Allan F. Knoll N/A Secretary of Parent
Christi J. Offutt N/A Sr. Vice President
RDO Equipment Company Parent of Dealer Parent of Dealer
</TABLE>
33
<PAGE>
EXHIBIT 5
DISPUTE RESOLUTION
1. If the parties to a Dispute agree, the Dispute will be submitted to
non-binding mediation.
2. If the parties to a Dispute do not agree to mediation of the Dispute, or
if mediation does not resolve the Dispute, the Dispute shall be finally
resolved by binding arbitration in accordance with the arbitration rules
of JAMS/Endispute, as amended by this Exhibit. The party seeking
arbitration shall submit a written notice of arbitration to the other
party and to JAMS/Endispute. The arbitration shall be held at such
location as required by applicable law or, if no location is required by
applicable law, at Chicago, Illinois or such other city as the parties to
the Dispute may agree in writing. The arbitration shall be held before a
panel of three arbitrators each of whom is affiliated with JAMS/Endispute
and is part of the pool of arbitrators selected by JAMS/Endispute as
available to arbitrate Disputes. Each arbitrator in the pool shall:
a) be a current or former practicing attorney or former judge;
b) have at least fifteen years experience in litigation, arbitration,
and/or mediation of commercial disputes;
c) have prior experience as an arbitrator (through award) of at least
three manufacturer/dealer or franchisor/franchisee disputes; and
d) be recommended as a commercial arbitrator by at least two major
manufacturers or franchisors and at least two dealers or franchisees.
The arbitration panel shall consist of one arbitrator from the pool
designated by Dealer, one arbitrator from the pool designated by JDCEC,
and a third arbitrator from the pool designated by the other two
arbitrators, which person shall be the Chairperson of the arbitration
panel. A decision and award joined by at least two members of the
arbitration panel shall constitute the award and shall be binding on the
parties. The arbitration panel shall provide reasons for their decision
and award, which shall be final and binding and may be entered by any
court having jurisdiction thereof.
3. Except as provided herein, any action or decision joined by two
arbitrators from the arbitration panel shall constitute the action of the
arbitration panel. The arbitration panel may consider and grant
dispositive motions, including without limitation motions to dismiss or
for summary judgment. In order to prevent irreparable harm, the
arbitration panel may consider and grant requests for temporary or
permanent injunctive relief or other equitable relief.
4. Unless contrary to applicable law, this Agreement shall be interpreted in
accordance with and the arbitration panel shall apply and be bound to
follow the substantive laws of the State of Illinois. Where there is a
conflict between the terms of this Agreement and the laws of the State of
Illinois, the terms of this Agreement shall control.
34
<PAGE>
5. Each party shall bear its costs associated with the arbitration, including
its attorneys' fees, and the parties shall share equally the fees and
expenses of JAMS/Endispute and the arbitrators', provided, however, that
if court proceedings to stay litigation, compel arbitration, or enforce
the award are necessary, the party who unsuccessfully opposes such
proceedings shall pay all associated costs, expenses, and attorneys' fees
that are reasonably incurred by the other party.
6. The Chairperson of the arbitration panel shall decide all matters relating
to discovery as well as all procedural or non-dispositive matters that
shall come before the arbitration panel. Subject to privileges recognized
under applicable law, the Chairperson shall require such discovery as is
necessary for the parties to be adequately prepared for the arbitration.
Discovery may include the exchange of documents, depositions,
interrogatories, and the exchange of exhibits, expert reports, and witness
lists.
7. The parties, witnesses, and arbitrator shall not disclose the contents or
results of the arbitration without the prior written consent of all
parties to the Dispute, except to the extent necessary to enforce the
award or as necessary for financial and tax reporting purposes.
8. Notwithstanding anything to the contrary in this Exhibit 5 or Section 5,
in the event of an alleged violation of a party's intellectual property
rights, that party may seek temporary injunctive relief from any court of
competent jurisdiction pending appointment of the arbitrator. The party
requesting such relief shall also promptly file a notice of arbitration
and a request that the arbitrator provide temporary relief. Such actions
shall not constitute a waiver of the party's rights or a breach of the
party's obligations under this Exhibit 5 and Section 5. Any temporary
injunctive relief entered by a court shall continue in effect only until
the arbitration panel has issued a decision on temporary relief.
9. Notwithstanding anything to the contrary in this Exhibit 5 or Section 5,
JDCEC and Deere Credit, Inc. may seek judicial remedies, such as (but not
limited to) attachment, replevin, and garnishment, deemed necessary by
JDCEC or Deere Credit, Inc. in its sole discretion for the enforcement of
JDCEC's or Deere Credit, Inc.'s rights regarding any security for
indebtedness of Dealer, and such action by JDCEC or Deere Credit, Inc.
shall not constitute a waiver of JDCEC's or Deere Credit, Inc.'s rights or
a breach of JDCEC's or Deere Credit, Inc.'s obligations under this Exhibit
5 and Section 5.
35
<PAGE>
EXHIBIT 6
Notices
To Dealer or Affiliates:
RDO Construction Equipment Co.
---------------------------------------
2829 S. University Drive
---------------------------------------
Fargo, ND 58103-6029
---------------------------------------
facsimile: (701) 239-8787
---------------------------------------
To JDCEC, Deere Credit, Inc., or ERS:
1515 5th Avenue
---------------------------------------
Moline, IL 61265
---------------------------------------
---------------------------------------
facsimile: (309) 748-0123
---------------------------------------
Dealer or JDCEC may amend the addressee, address, or facsimile number indicated
for its group on this Exhibit 6 by giving written notice of such amendment to
the other party, provided, however, that no more than one addressee, address,
and facsimile number may be indicated at any given time.
36
<PAGE>
EXHIBIT 7
PROMISES AND REPRESENTATIONS
RDO Construction Equipment Co. ("Dealer"), RDO Equipment Co, ("RDO"), Ronald D.
Offutt ("Offutt") and JDCEC agree that the following are the only promises,
agreements, or representations, oral, written, or created through custom, usage,
or course of dealing, not contained elsewhere in the Dealer Agreement to which
this Exhibit 7 is appended (the "Agreement") and that were an inducement to or
relied upon by any party hereto in entering into the Agreement or that were made
prior to or contemporaneous with this Agreement and are not superseded by the
Agreement:
1. If after the date (the Acceptance Date) on which JDCEC executes the Dealer
Agreement to which this Exhibit 7 is appended (the Agreement), JDCEC
revises its U.S. John Deere Construction Equipment Dealer Agreement form
and uses the form as revised for the appointment of new U.S. JDCEC Dealers
generally (or in re-contracting with existing U.S. JDCEC Dealers
generally), JDCEC will make the same revision to the Agreement so long as
the revision in question is not inconsistent with any other agreement which
JDCEC may hereafter enter into with Dealer but not with JDCEC Dealers
generally.
2. In lieu of Dealer's covenant, under Section 1.i.i. of the Agreement to
which this Exhibit 7 is appended (the "Agreement"), that no change in the
ownership of Dealer will occur unless JDCEC has given its prior written
approval of such change, Dealer and Offutt covenant as follows:
a. During Offutt's lifetime, Offutt will (1) own Dealer common stock
representing at least 30% of the combined voting power of Dealer's
outstanding securities ordinarily having the right to vote at elections
of directors and (2) own Dealer common stock representing at least 30% of
Dealer's shareholders' equity.
b. "No "person" or "group" (as such terms are used in Section 13(d) of the
Securities and Exchange Act of 1934, as amended and the rules and
regulations promulgated thereunder)
<PAGE>
other than Offutt and Offutt's legal representatives and heirs who
receive Offutt's Dealer stock pursuant to Offutt's estate plan, including
any trust as to which Offutt retained voting control over such shares of
Dealer stock until his death, alone or in combination with the Associates
(as defined below) of such person or group, will have or acquire
ownership (including without limitation beneficial ownership, as
determined under SEC rule 13d-3) or control of more than 20% of the
combined voting power of Dealer's outstanding securities or 20% of
Dealer's shareholders' equity, without JDCEC's prior written approval.
For purposes of this Section 2.b., "Associate" shall mean, with respect
to any person or entity, (1) a corporation or organization of which such
person or entity is a director, officer or partner or is, directly or
indirectly, the beneficial owner of 10 percent or more of any class of
equity securities, (2) each other person or entity that directly or
indirectly controls, is controlled by, or is under common control with
such person or entity, (3) any trust, custodial account or other estate
as to which such person or entity serves as trustee or in a similar
fiduciary capacity, and (4) any relative or spouse of such person, or any
relative of such spouse, who has the same home as such person or who is a
director, officer or partner of such person of entity. For purposes of
this definition, "control" of a person or entity shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of
voting securities, by contract or otherwise."
c. Offutt will not, as part of any private transaction, make a written offer
or sell any shares of any class of stock of Dealer to a person or entity
without prior written approval by JDCEC, provided that, in the event that
Offutt enters into discussion for the sale of any of his shares, he shall
advise JDCEC of the person or persons with whom such discussions are
being undertaken. Offutt's receipt of solicitations from or exploratory
conversations with third parties concerning the sale of any of his shares
shall not constitute a "discussion" for purposes of this Section 2.c.
However, Offutt may:
(1) sell any of his shares in Dealer in broker's transactions, to market
makers as contemplated by SEC Rule 144, or in an underwritten public
offering; or
2
<PAGE>
(2) permit the exercise of Dealer stock options granted by Offutt to
Paul T. Horn and Allan F. Knoll prior to 1 October 1996
as long as the sale or exercise of options does not result in a
noncompliance with Section 2.a. or Section 2.b. above.
d. Dealer will not, as part of any private transaction, offer or sell any
shares of any class of stock of Dealer to a person or entity without
prior written approval by JDCEC. However, Dealer may sell any Dealer
shares in an underwritten public offering or in connection with stock
options for employees of Dealer, as long as (1) for sales occurring
during Offutt's lifetime, the sale does not result in a noncompliance
with Section 2.a. above, (2) for sales occurring from Offutt's death
forward, the sale does not result in a Change in Control (as defined
below), and (3) for sales occurring at any time, the sale does not result
in a noncompliance with Section 2.b. above.
e. Dealer will promptly advise JDCEC whenever Dealer becomes aware that a
shareholder owns or controls 5% or more of the outstanding shares of any
class of stock of Dealer.
f. From Offutt's death forward, no Change in Control will occur unless JDCEC
has given its prior written approval of such Change in Control. Dealer
will give JDCEC written notice immediately following any Change in
Control. In addition, Dealer will give JDCEC advance written notice of
any Change in Control which Dealer reasonably may anticipate; such
advance written notice will be given when Dealer first determines that a
Change in Control is reasonably likely to occur and shall describe in
detail the transaction giving rise to such Change in Control, including
identification of all persons and entities involved therein. JDCEC shall
have the right to disapprove any Change in Control in its sole
discretion.
g. For purposes of this Exhibit 7,
(1) "Change in Control" means the occurrence of any of the following:
3
<PAGE>
(a) Continuity Directors cease for any reason to constitute at
least a majority of Dealer's board of directors;
b) the appointment (whether as a result of a new hire, promotion,
reassignment, or otherwise), without JDCEC's prior approval, of
a new Chairman, Chief Executive Officer, President, Chief
Financial Officer, or Chief Operating Officer of Dealer, or of
a new Executive Vice-President of Dealer's Construction
Equipment Division or a new Regional Vice-President for any of
Dealer's regional construction equipment operations ("CESBUs").
(2) "Continuity Director" means any individual who is a member of
Dealer's board of directors at the time of Offutt's death, while he
or she is a member of the board, and any individual who
subsequently becomes a member of Dealer's board whose election or
nomination for election to the board was approved by a vote of at
least a majority of the Dealer directors who are Continuity
Directors (either by a specific vote or by approval of the proxy
statement of Dealer in which such individual is named as a nominee
for director without objection to such nomination).
3. In lieu of JDCEC's right, under Section 2.c.iv.c. of the Agreement, to
terminate Dealer's appointment in the event a change occurs in the ownership
of Dealer without JDCEC's prior written approval, JDCEC will have the right
to terminate Dealer's appointment, effective immediately, in the event of
any noncompliance with Section 2 of this Exhibit 7.
4. JDCEC will not exercise its right, under Section 2.c.iv.a. of the Agreement,
to terminate Dealer's appointment, effective immediately, upon the death of
Offutt if all of the following conditions are satisfied at the time of
Offutt's death:
a. Dealer has in place an ownership succession plan that has been approved
in writing by JDCEC.
4
<PAGE>
b. Neither Dealer nor Offutt has breached any obligation under the Agreement
(including this Exhibit 7) or any other agreement with JDCEC, and no
grounds for termination of Dealer's appointment exist under any agreement
between Dealer and JDCEC.
c. Dealer's Chairman, Chief Executive Officer, President, Chief Financial
Officer, and Chief Operating Officer, the Executive Vice-President of
Dealer's Construction Equipment Division, and the Regional
Vice-Presidents for Dealer's Construction Equipment SBUs ("CESBUs") are
acceptable to JDCEC in its sole discretion, and will continue to manage
Dealer after the death of Offutt or be replaced by persons acceptable to
JDCEC.
JDCEC may at its sole discretion evaluate compliance with the conditions set
forth in this Section 4.
5. a. Dealer shall request and obtain written approval from JDCEC prior to
discussing (directly or indirectly) with any JDCEC Dealer a possible
purchase of a dealership that would add to Dealer's AOR or constitute a
new AOR for Dealer or an Affiliate. If Dealer fails to request such
approval from JDCEC, Dealer agrees to indemnify and hold JDCEC harmless
from and against any claim (including costs and reasonable attorney's
fees) asserted by such other JDCEC dealer against JDCEC by reason of
JDCEC's failure to approve the acquisition of such other JDCEC dealer by
Dealer. JDCEC, in its sole discretion, shall have the right to reject
such a request. JDCEC will consider, in its sole discretion, requests
made by Dealer for the assignment of additional AORs to Dealer (not to
exceed the Market Potential Limitation, as defined in Section 5 .b.
below). JDCEC, in its sole discretion, shall have the right to
disapprove additions to Dealer's AOR and to refuse assignment of a new
AOR to Dealer or an Affiliate. In exercising its sole discretion under
this Agreement JDCEC may consider its own business interests and the
interests of other dealers without considering the interests of Dealer
or any other particular dealer. JDCEC shall have no liability to Dealer
for the exercise of its discretion in this manner, and no trier of fact
in any judicial or arbitration proceeding shall substitute its judgment
for the business judgment so exercised by JDCEC. In the event that
Dealer, at the level of division management staff or higher, receives
any inquiries concerning the purchase of a JDCEC dealership that would
add to Dealer's
5
<PAGE>
AOR or constitute a new AOR for Dealer or an Affiliate, Dealer shall
notify JDCEC within five business days and shall obtain written approval
from JDCEC before having any further contact with the prospective seller
or its agent concerning the purchase of a JDCEC dealership, other than
to notify the prospective seller or its agent that Dealer must contact
JDCEC before having further discussions.
b. The aggregate market potential for JDCEC's products in the AORs
presently and hereafter assigned by JDCEC to Dealer in North America,
with the market potential of each such AOR measured as of the 12-month
period ending January 1997, will not exceed 7,169 units (9.9% of the
total market potential for JDCEC's products in North America, with such
total market potential measured as of the 12-month period ending January
1997) or such other limitation, but not less than 9.9%, as determined by
JDCEC in its sole discretion (the "Market Potential Limitation").
6. Without prior consent of JDCEC, Dealer will not guarantee or otherwise be
liable for any debt or other obligation of any Affiliate, provided,
however, that this sentence shall not apply to financing arrangements
arising from the procurement, from Dealer's dealerships by an Affiliate, of
goods and services offered to the public by Dealer in the ordinary course
of Dealer's business. In order to submit a request to JDCEC, Dealer must
make such a request in writing from the Manager, Finance Operations at
JDCEC's offices in Moline, IL. A response shall be provided by JDCEC within
20 business days of receipt of a written request. All transactions between
Dealer and Affiliates will be conducted on an arms-length basis, on
reasonable commercial terms. Dealer will maintain its assets separately
from the assets of Affiliates, and Dealer's assets (and records relating
thereto) will not be commingled with those of any Affiliate. Furthermore,
Dealer will maintain clear records of its bank accounts and credit
facilities in order clearly identify the cash assets of Dealer and
Affiliates.
7. a. The provisions of this Section 7.a. shall apply in lieu Section 1.f.
of the Agreement.
(1) Dealer will maintain its Equity at a level sufficient to achieve
Dealer's commitments under the Agreement, which shall not be
less than the Minimum
6
<PAGE>
Equity Level. As of the date of JDCEC's acceptance of the
Agreement, the Minimum Equity Level is 25% and the Equity
Performance Standard is 30%. In addition, Dealer's parent, RDO,
shall maintain a Minimum Equity Level of 25%.
(2) Neither Dealer nor RDO will pay any dividends, effect any stock
repurchase, repay or otherwise discharge its indebtedness for
any Subordinated Loans , or make any other distributions to
owners if Dealer's Equity is below 30% or would fall below 30%
as a result of such action or if RDO's Equity is below 25% or
would fall below 25% as a result of such action.
(3) Dealer will not make any acquisitions or initiate new business
activities if:
(a) Dealer's Equity (including Subordinated Loans as defined in
7.(a)(3)(c) below) is less than the Equity Performance
Standard or would fall below the Equity Performance Standard
as a result of such action or if RDO's Equity is less than 25%
or would fall below 25% as a result of such action; or,
(b) Dealer's Tangible Net Worth Ratio (defined as stockholders'
equity plus Subordinated Loans less goodwill, related-party
receivables, leasehold improvements, purchased customer lists,
and other intangibles, divided by total assets less goodwill,
related-party receivables, leasehold improvements, purchased
customer lists, and other intangibles) is less than 20% or
RDO's Tangible Net Worth Ratio is less than 20%.
(c) Subordinated Loans are defined as loans that are subordinated
in priority to any and all indebtedness of Dealer to Deere and
subject to the terms and conditions of a Loan Subordination
Agreement in a form acceptable to JDCEC, in its sole
discretion.
As of the date of JDCEC's acceptance of the Agreement, the
Equity Performance Standard is 30%.
7
<PAGE>
b. The provisions of this Section 7.b. shall apply In lieu Section 2.c.ii.
of the Agreement.
JDCEC may terminate Dealer's appointment, upon at least 120 days' prior
written notice to Dealer, if JDCEC determines that Dealer's or RDO's
Equity is less than the minimum required under Section 7.a.(1) of this
Exhibit 7. JDCEC will give Dealer written notice of termination under
this Section 7.b. within 45 days after the financial statements on
which JDCEC's determination is based are received at JDCEC's Finance
Department offices in Moline, Illinois. If Dealer provided the
financial statements to JDCEC within the time required by Section 8.a.
of this Exhibit 7, Dealer or RDO will have the right to increase its
Equity to the required minimum level during the 120-day notice period,
through the addition of new capital in a form acceptable to JDCEC; if
Dealer or RDO does increase its Equity to the required minimum level in
this manner within such 120-day period, the notice of termination given
under this Section 7.b. shall become null and void. JDCEC's prior
written approval will be required if Dealer or RDO wishes to increase
its Equity to the required minimum level in whole or in part by any
other means, including without limitation reducing asset levels or
through earnings retained during the 120-day notice period. If Dealer
and/or RDO do not provide the financial statements involved to JDCEC
within the time required by Section 8.a., Dealer will be deemed to have
waived any right to increase its Equity or RDO's Equity to the required
minimum level. If JDCEC shall not give written notice within the time
required by this section 7(b), JDCEC shall be deemed to have waived any
right to terminate Dealer appointment under this clause for the time
period reported.
8. a. Effective with Dealer's fiscal quarter ending January 31, 2001, and
thereafter, Dealer will provide to JDCEC's Finance Department in
Moline, a complete set of consolidated financial statements of RDO,
Dealer and its subsidiaries, along with a supplementary information
section. This supplementary information section is to be comprised of a
Consolidating Balance Sheet, Consolidating Statement of Income, and
Consolidating Statement of Cash Flows. This section is to contain, at a
minimum, separate financial information for Dealer, for each one of
Dealer's and RDO's subsidiaries, as well as an inter-company
elimination column and financial information for the consolidated group
8
<PAGE>
of Dealer, RDO and their subsidiaries. These consolidating financial
statements are to be prepared in accordance with generally accepted
accounting principles.
For each fiscal quarter-end that coincides with Dealer's and RDO's
fiscal year-end, the consolidated financial statements will be audited
by Dealer's and RDO's independent certified public accountants, and the
supplementary information section will be subjected to the auditing
procedures of Dealer's and RDO's independent auditors; these materials
will be submitted to JDCEC's Finance Department within 100 days after
Dealer's and RDO's fiscal year-end. For each other fiscal quarter-end,
the consolidated financial statements and supplementary information
section will be prepared by RDO's Chief Financial Officer in
conjunction with the preparation of RDO's quarterly report to the
Securities and Exchange Commission, but need not be independently
audited; these materials will be submitted to JDCEC's Finance
Department within 15 days after Dealer files its Form 10-Q for the
quarter with the Securities and Exchange Commission.
b. In lieu of the definition set forth in the "Defined Terms" section of
the Agreement, "Equity" shall, for purposes of the Agreement (including
this Exhibit 7), mean the Dealer's or RDO's equity-to assets
percentage, determined by JDCEC based upon the most recent fiscal
quarter-end financial statements submitted to JDCEC pursuant to Section
8. a. of this Exhibit 7, with adjustments, if any, as provided in the
Terms Schedule, and calculated as of the end of the fiscal quarter
covered by such financial statements. Whenever referred to in this
Exhibit 7, Dealer's or RDO's Tangible Net Worth Ratio is as determined
by JDCEC, in accordance with the description set forth in Section 7.a.
of this Exhibit 7, based upon the most recent fiscal quarter-end
financial statements submitted to JDCEC pursuant to Section 8.a. of
this Exhibit 7, and calculated as of the end of the fiscal quarter
covered by such financial statements.
9. Notwithstanding Section 11 of the Agreement, any Key Person or
Affiliate may refuse to execute a guaranty if requested to do so by
JDCEC, provided, however, that JDCEC may terminate Dealer's
appointment, effective immediately, by giving written notice of
termination to Dealer at any time after such a refusal. However, JDCEC
cannot
9
<PAGE>
terminate Dealer's appointment under the provisions of this Section 9,
following a refusal by a Key Person or Affiliate to execute a guaranty
requested by JDCEC, if all of the following conditions are satisfied
when JDCEC's request is made:
a. Dealer's Equity is equal to or exceeds 30%and RDO's Equity is
equal to or exceeds 25%;
b. Dealer's Tangible Net Worth Ratio is equal to or exceeds 25%
and RDO's Tangible Net Worth Ratio is equal to or exceeds 20%.
A Key Person or Affiliate requested by JDCEC to execute a guaranty
shall have the right to provide a letter of credit, in favor of JDCEC
and such other beneficiaries as JDCEC may direct, in lieu of such
guaranty, provided such letter of credit is issued by a bank
satisfactory to JDCEC, in a form satisfactory to JDCEC, and for an
amount satisfactory to JDCEC in its sole discretion, provided that
such amount shall not be greater than the amount necessary to remedy
any noncompliance with the condition set forth in part a. of this
Section 9, and provided further that JDCEC cannot terminate Dealer's
appointment under the provisions of this Section 9, following a
refusal by a Key Person or Affiliate to provide a letter of credit in
lieu of a guaranty requested by JDCEC, if all of the conditions set
forth in parts a., and b. of this Section 9. are satisfied when
JDCEC's request is made.
10. Any rent-to-rent business operated by Dealer or an Affiliate at a location
outside Dealer's AOR will not utilize any JDCEC products at that location
other than such JDCEC products as it may acquire from the JDCEC dealer
whose AOR includes such location.
11. Dealer, Offutt, and JDCEC will maintain the confidentiality of one
another's confidential information which is not otherwise available to the
public, unless and then only to the extent disclosure is required by law
(including without limitation applicable securities laws and regulations)
or as a result of legal process; provided however, that dealer may disclose
such information to attorneys, accountants or other professionals who have
a need to know and first agree to make no further disclosure. Nothing in
this Section 11. shall prohibit the
10
<PAGE>
exchange of information between Dealer and Offutt, or the exchange of
information between JDCEC and JDCEC's Affiliates other than Nortrax or
any dealer in which JDCEC or its affiliates have an ownership interest.
12. Notwithstanding Section 1.b.ii. of the Agreement, it shall not be a
noncompliance with that Section, or grounds for termination of Dealer's
appointment under Section 2.c.iv.c. of the Agreement, if Dealer continues
the distribution in Minnesota and North Dakota, in a business separated, in
a manner acceptable to JDCEC, from Dealer's JDCEC dealership locations, of
the Vermeer product line carried by Dealer in Minnesota and North Dakota as
of 1 September 1999, if in the future JDCEC offers a product that competes
with a Vermeer product carried by Dealer in Minnesota and North Dakota on 1
September 1999.
13. JDCEC may terminate Dealer's appointment, effective immediately, by giving
written notice to Dealer at any time after any noncompliance with Section
3., 5.a. (in the event that Dealer obtains a letter of intent or written
agreement to acquire another JDCEC dealer without prior written approval
from JDCEC), 7.a.(1), 7.a.(2), 7.a.(3), 8.a., or 10. of this Exhibit 7.
14. Any grounds for termination of Dealer's appointment under the Agreement
(including this Exhibit 7) or any other agreement between Dealer and JDCEC
will be sufficient grounds for termination for the purposes of any
applicable statute requiring grounds (or certain grounds) or good cause for
termination, regardless of the terminology used in such statute to describe
the grounds or good cause required thereunder.
15. Except as otherwise expressly stated in this Exhibit 7, the termination
rights provided for JDCEC in this Exhibit 7 are in addition to, and shall
in no way affect or limit, the termination rights of JDCEC under the
Agreement.
16. In lieu of Dealer's right of termination under Section 2.b. of the
Agreement, Dealer may terminate its appointment for any reason upon 120
days prior written notice to JDCEC.
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17. JDCEC shall have input with respect to the selection and removal of
Dealer's Chairman, Chief Executive Officer, President, Chief Financial
Officer, and Chief Operating Officer, the Executive Vice-President of
Dealer's Construction Equipment Division, and the Regional Vice-Presidents
for Dealer's CESBUs.
18. Without limiting the generality of Section 23 of the Agreement, the
agreements dated 1 October 1996 and 5 November 1996 between Dealer, JDCEC
and John Deere Company - A Division of Deere & Company (the "1996
Agreements"), as they relate to the relationship between Dealer and JDCEC,
will not survive the signing of the Agreement. However, nothing in the
Agreement (including this Exhibit 7) shall affect the 1996 Agreements as
they relate to the relationship between Dealer and John Deere Company - A
Division of Deere & Company.
19. The parties, their Affiliates and other persons listed in section 5 of the
Agreement may raise in mediation or arbitration in connection with a
Dispute hereunder, (a) any claim or other right they may have under any
substantive federal law and (b) to the extent that application of Illinois
substantive law would be prohibited by in violation of, or contrary to the
applicable substantive law of another state, any claim or other right they
may have under the applicable substantive law of such other state.
20. a. John Deere Construction Equipment Dealer Security Agreement between
JDCEC and Dealer.
b. John Deere Construction Equipment Sales and Service Center Agreements
between JDCEC and Dealer for the locations listed in Exhibit 3 to the
Agreement, with the exception of the main location in Burnsville, MN
c. John Deere Construction Equipment Dealer Finance Agreement between
JDCEC and Dealer.
d. John Deere Construction Equipment Dealer Leasing Agreement between
Deere Credit, Inc. and Dealer.
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e. John Deere Dealer Sign Identification Agreements between Deere Credit,
Inc. and Dealer for the locations listed in Exhibit 3 to the Agreement.
f. John Deere Construction Equipment Dealer Assignment of Rental
Agreements executed by Dealer.
g. Indemnification Agreement dated December 8, 1999 between JDCEC and
Dealer.
h. Letter dated July 31, 1999 from David P. Werning to Paul Horn.
i. Letter dated 13 January 2000 pertaining to the Dealer's Montana AOR
from Domenic G. Ruccolo to Paul Horn.
j. John Deere Construction Equipment Dealer Agreement between JDCEC and
Dealer for Dealer's location in Irving, TX (the "Irving Agreement"),
and the related agreements listed in the Irving Agreement's Exhibit 7.
k. John Deere Construction Equipment Dealer Agreement between JDCEC and
Dealer for Dealer's location in Phoenix, AZ (the "Phoenix Agreement"),
and the related agreements listed in the Phoenix Agreement's Exhibit 7.
l. John Deere Construction Equipment Company Special Products Dealer
Agreement(s) dated 6 March, 2000.
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RDO Construction Equipment Co. John Deere Construction Equipment Company
By: /s/ Ronald D. Offutt By: /s/ executed
----------------------------- --------------------------------------
its: CEO its: Manager, Finance Operations
----------------------------- --------------------------------------
RDO Equipment Co.
By: /s/ Ronald D. Offutt
-----------------------------
its: CEO
-----------------------------
/s/ Ronald D. Offutt
---------------------------------
Ronald D. Offutt
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