-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, CXB7vyF6+MK9ecwYrotkg0Awnn+1rGuK2z3Nn9rfaYh/i7aBv0CEYZ2P1iRXEgvC KEQJeapuOi0M/JrcT1SDlA== 0000912057-94-000161.txt : 19940131 0000912057-94-000161.hdr.sgml : 19940131 ACCESSION NUMBER: 0000912057-94-000161 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19931031 FILED AS OF DATE: 19940128 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEERE JOHN CAPITAL CORP CENTRAL INDEX KEY: 0000027673 STANDARD INDUSTRIAL CLASSIFICATION: 6159 IRS NUMBER: 362386361 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 001-06458 FILM NUMBER: 94503491 BUSINESS ADDRESS: STREET 1: FIRST INTERSTATE BANK BLDG STREET 2: 1 E FIRST ST STE 600 CITY: RENO STATE: NV ZIP: 89501 BUSINESS PHONE: 7027865527 MAIL ADDRESS: STREET 1: JOHN DEERE RD CITY: MOLINE STATE: IL ZIP: 61265 FORMER COMPANY: FORMER CONFORMED NAME: DEERE JOHN CREDIT CO DATE OF NAME CHANGE: 19890130 10-K 1 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 10-K ---------------- ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED OCTOBER 31, 1993 Commission file number 1-6458 JOHN DEERE CAPITAL CORPORATION (Exact name of registrant as specified in its charter) Delaware 36-2386361 (State of incorporation) (IRS Employer Identification No.) Suite 600, First Interstate Bank Bldg., 1 East First Street, Reno, Nevada 89501 (702) 786-5527 (Address of principal executive offices) (Zip Code) (Telephone Number) SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT Title of each class Name of each exchange on which registered 9.35% Subordinated Debentures Due 2003 New York Stock Exchange 6% Notes Due 1995 New York Stock Exchange 7.20% Notes Due 1997 New York Stock Exchange 9-5/8% Subordinated Notes Due 1998 New York Stock Exchange 8-5/8% Subordinated Debentures Due 2019 New York Stock Exchange 5% Notes Due 1995 New York Stock Exchange 4-5/8% Notes Due 1996 New York Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No___ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /X/ At January 1, 1994, 2,500 shares of common stock, without par value, of the registrant were outstanding, all of which were owned by John Deere Credit Company. The registrant meets the conditions set forth in General Instruction J(1)(a) and (b) of Form 10-K and is therefore filing this Form with certain reduced disclosures as permitted by Instruction J(2). _____________________________________________________________________________ Page 1 of 322 pages. Index to Exhibits Page 48. PART I ITEM 1. BUSINESS. THE COMPANY The principal business of John Deere Capital Corporation (Capital Corporation) is the purchasing and financing of retail installment sales and loan contracts (retail notes) from the equipment sales branches in the United States operated by Deere & Company and its wholly-owned subsidiaries (collectively called John Deere). These notes are acquired by the sales branches through John Deere retail dealers in the United States and originate in connection with retail sales by dealers of new John Deere agricultural equipment, industrial equipment and lawn and grounds care equipment, as well as used equipment. The Capital Corporation and its subsidiaries also purchase and finance retail notes unrelated to John Deere equipment, representing primarily recreational vehicle and recreational marine product notes acquired from independent dealers of those products and from marine mortgage service companies (recreational product retail notes). The Capital Corporation and its subsidiaries also lease John Deere equipment to retail customers, finance and service unsecured revolving charge accounts acquired from merchants in the agricultural, lawn and grounds care and marine retail markets, and provide wholesale financing for recreational vehicles and John Deere engine inventories held by dealers of those products. The Capital Corporation and its subsidiaries: Deere Credit, Inc., Farm Plan Corporation, Deere Credit Services, Inc. and John Deere Receivables, Inc. are collectively called the Company. John Deere Credit Company, a wholly-owned finance holding subsidiary of Deere & Company, is the parent of the Capital Corporation. Retail notes, revolving charge accounts, financing leases and wholesale notes receivable are collectively called "Receivables." Receivables and operating leases are collectively called "Receivables and Leases." The Capital Corporation was incorporated under the laws of Delaware and commenced operations in 1958. At January 1, 1994, the Company had 852 full- and part-time employees. BUSINESS OF JOHN DEERE John Deere's operations are categorized into five business segments: John Deere's worldwide AGRICULTURAL EQUIPMENT segment manufactures and distributes a full range of equipment used in commercial farming -- including tractors; tillage, soil preparation, planting and harvesting machinery; and crop handling equipment. John Deere's worldwide INDUSTRIAL EQUIPMENT segment manufactures and distributes a broad range of machines used in construction, earthmoving and forestry -- including backhoe loaders; crawler dozers and loaders; four-wheel-drive 1 loaders; scrapers; motor graders; excavators; and log skidders. This segment also includes the manufacture and distribution of engines and drivetrain components for the original equipment manufacturer (OEM) market. John Deere's worldwide LAWN AND GROUNDS CARE EQUIPMENT segment manufactures and distributes equipment for commercial and residential uses - including small tractors for lawn, garden and utility purposes; riding and walk-behind mowers; golf course equipment; utility transport vehicles; snowblowers; and other outdoor power products. The products produced by the equipment segments are marketed primarily through independent retail dealer networks. The CREDIT segment includes the operations of the Company (described herein), the Company's parent, John Deere Credit Company, and John Deere Finance Limited, which primarily purchases and finances retail notes from John Deere's equipment sales branches in Canada. The INSURANCE AND HEALTH CARE segment issues policies in the United States and Canada primarily for: a general line of property and casualty insurance to John Deere and non-Deere dealers and to the general public; group life and group accident and health insurance for employees of participating John Deere dealers; group life and group accident and health insurance for employees of John Deere; life and annuity products to the general public and credit physical damage insurance in connection with certain retail sales of John Deere products financed by the credit subsidiaries. This segment also provides health management programs and related administrative services in the United States to corporate customers and employees of John Deere. John Deere's total worldwide net sales and revenues in 1993 and 1992, which include net sales of agricultural equipment, industrial equipment and lawn and grounds care equipment and revenues from credit, insurance and health care operations, were as follows: total net sales and revenues, $7.8 billion and $7.0 billion; total sales of equipment, $6.5 billion and $5.7 billion; agricultural equipment sales, $4.1 billion and $3.8 billion; industrial equipment sales, $1.3 billion and $1.0 billion; and lawn and grounds care equipment sales, $1.1 billion and $.9 billion, respectively. John Deere believes that its worldwide sales of agricultural equipment during recent years have been greater than those of any other business enterprise. It also believes that it is an important provider of most of the types of industrial equipment that it markets and a leader in some size ranges. John Deere also believes that it is the largest manufacturer of lawn and garden tractors and provides the broadest line of grounds care equipment in North America. John Deere's 1993 worldwide income before the effects of special items (accounting changes, restructuring charges and the new United States tax law) was $286 million compared with $37 million in 1992. Additional information concerning the special items is presented in the Deere & Company Annual Report on Form 10-K for the fiscal year ended October 31, 1993. John Deere's improved 1993 results were mainly attributable to North American equipment operations. Sales and production volumes in 2 North America were higher this year in response to increased retail demand. Price realization also improved in all of John Deere's North American equipment businesses compared with 1992 as sales incentive cost levels were significantly lower. Also, North American productivity continued to improve during 1993. Additionally, income of John Deere's financial services subsidiaries was significantly higher in 1993 compared with 1992. After the effects of restructuring charges, the incremental expenses from the accounting changes and the tax rate change, John Deere's worldwide income in 1993 was $184 million. John Deere incurred a worldwide net loss in 1993 of $921 million after all of the special items, including the cumulative effect of the accounting changes. North American agricultural economic conditions were generally more favorable in 1993 than in 1992. Although flooding and excessively wet conditions in certain areas of the Midwest and drought conditions in parts of the Southeast resulted in an estimated 31 percent decrease in corn production and a 16 percent decline in soybean production in 1993, United States farm net cash income is expected to achieve a record level in 1993. The lower production caused grain prices to rise above 1992 levels. Livestock producers enjoyed favorable prices and profit margins during 1993 and farmers boosted their cash flow by selling inventories accumulated from record corn and soybean yields in 1992. Additionally, direct government payments to farmers are expected to increase in 1993, aiding farmers most heavily impacted by this year's flooding. Uncertainties over the passage of a new investment tax credit were resolved in 1993 as the anticipated tax credit was not included in the final tax legislation. Consequently, many United States farmers who had delayed making purchases in 1992 bought equipment this year. Sales in Canada were boosted by a special 13-month investment tax credit in effect from December 1992 to December 1993. As a result of these developments, North American retail sales of John Deere agricultural equipment were considerably higher in 1993 compared with last year. The North American general economy continued its slow expansion in 1993. In the United States, housing starts increased about five percent during the year with second-half strength overcoming a very sluggish first half. Real public construction was up slightly from the previous year's level while nonresidential construction was flat. However, the cumulative effects of the rebound in economic activity were felt in 1993, as housing starts were up more than 25 percent from their 1991 level and real public construction was nine percent larger. North American retail sales of industrial and construction machinery for both the industry and John Deere rose significantly in 1993. Consumer spending for durable goods rose briskly in 1993, and North American retail sales of John Deere lawn and grounds care equipment increased significantly. Sales were also supported by favorable moisture conditions over most areas throughout the prime selling season. However, dry conditions did emerge in portions of the Southeast and Northeast which impeded some late season buying activity. Industry retail sales of agricultural equipment in overseas markets in general remained relatively weak during 1993. However, overseas retail sales of John Deere agricultural equipment were higher in 1993 than in 1992, reflecting good acceptance of John Deere's new tractors and combines. Despite recessionary conditions prevailing in most European markets and in Japan, overseas retail sales of John Deere lawn and 3 grounds care equipment continued to expand in 1993. Overseas industrial and construction equipment markets were relatively flat in 1993 compared with 1992. RELATIONSHIPS OF THE COMPANY WITH JOHN DEERE The operations and results of the Company are affected by its relationships with John Deere, including, among other things, the terms on which the Company acquires Receivables and Leases and borrows funds from John Deere, the reimbursement for waiver and low-rate finance programs from John Deere and the payment to John Deere for various expenses applicable to the Company's operations. In addition, the Capital Corporation and John Deere have joint access to all of the Capital Corporation's bank lines of credit. The Company's acquisition of Receivables and Leases is largely dependent upon the level of retail sales and leases of John Deere products. The level of John Deere retail sales and leases is responsive to a variety of economic, financial, climatic and other factors which influence demand for its products. Since 1986, the Company has also been providing retail sales financing through dealers of certain unrelated manufacturers of recreational vehicles and recreational marine products. The net balance of recreational product retail notes outstanding under these arrangements at October 31, 1993 totaled $804 million. The Company bears all of the credit risk (net of recovery from withholdings from certain John Deere dealers and Farm Plan merchants) associated with its holding of Receivables and Leases, and performs all servicing and collection functions. The Company compensates John Deere for originating retail notes and leases on John Deere products or through John Deere dealers. John Deere is also reimbursed for staff and other administrative services at estimated cost, and for credit lines provided to the Company based on utilization of those lines. The terms of retail notes and the basis on which the Company acquires retail notes from John Deere are governed by agreements with the sales branches, terminable by either the sales branches or the Company on 30 days notice. As provided in these agreements, the Company sets its terms and conditions for purchasing the retail notes from the sales branches. Under these agreements, the sales branches are not obligated to sell retail notes to the Company, and the Company is obligated to purchase retail notes from the sales branches only if the notes comply with the terms and conditions set by the Company. The terms of retail notes and the basis on which the sales branches acquire retail notes from the dealers are governed by agreements with the independent John Deere dealers, terminable at will by either the dealers or the sales branches. In acquiring the retail notes from dealers, the terms and conditions, as set forth in agreements with the dealers, conform with the terms and conditions adopted by the Company in determining the acceptability of retail notes to be purchased from the sales branches. The dealers are not obligated to send retail notes to the sales branches, and the sales branches are not obligated to accept retail notes from the dealers. In practice, retail notes are acquired from dealers only if the terms of the notes and the creditworthiness of the customers are 4 acceptable to the Company for purchase of the notes from the sales branches. The Company acts on behalf of both itself and the sales branches in determining the acceptability of the notes and in acquiring acceptable notes from dealers. The terms of leases, and the basis on which the Company enters into such leases with retail customers through John Deere dealers, are governed by agreements between dealers and the Company. Leases are accepted based on the lessees' creditworthiness, the anticipated residual values of the equipment and the intended uses of the equipment. Deere & Company has expressed an intention of conducting its business with the Company on such terms that the Company's consolidated ratio of earnings before fixed charges to fixed charges will not be less than 1.05 to 1 for any fiscal quarter. For 1993, the ratio was 1.99 to 1 (excluding the effects of accounting changes) and for 1992, it was 1.74 to 1. For additional information concerning these accounting changes, see note 1 to the consolidated financial statements. This arrangement is not intended to make Deere & Company responsible for the payment of obligations of the Company. DESCRIPTION OF RECEIVABLES AND LEASES Receivables and Leases arise mainly from the retail sale or lease (including the sale to John Deere dealers for rental to users) of John Deere products, used equipment accepted in trade for them, and equipment of unrelated manufacturers, and also include revolving charge accounts receivable and wholesale notes receivable. The great majority derive from retail sales and leases of agricultural equipment, industrial equipment and lawn and grounds care equipment sold by John Deere dealers. The Company also offers financing to recreational product customers through the secured retail financing of recreational vehicles and recreational marine products. The Company also offers Farm Plan revolving charge accounts which are used primarily by agri-businesses to finance customer purchases, as well as credit cards which are used primarily by retail customers to finance purchases of John Deere lawn and grounds care equipment and marine equipment. Retail notes provide for retention by John Deere or the Company of security interests under certain statutes, including the Uniform Commercial Code or comparable state statutes, certain Federal statutes, and state motor vehicle laws. See notes 1 and 2 to the consolidated financial statements. Recreational product retail notes conform to industry standards different from those for John Deere retail notes and often have smaller down payments and longer repayment terms. In addition, the volumes, margins, and collectibility of recreational product retail notes are affected by different economic, marketing and competitive factors and cycles, such as fluctuations in fuel prices and recreational spending patterns, than those affecting retail notes arising from the sale of John Deere equipment. Recreational product retail notes are acquired from more than 1,400 recreational vehicle dealers throughout the United States, representing a variety of manufacturers, and from approximately 900 marine product dealers. Receivables and Leases are eligible for acceptance if they conform to prescribed finance and lease plan terms. Guidelines relating to down payments and contract terms 5 on retail notes and leases are described in note 2 to the consolidated financial statements. The John Deere Credit Revolving Plan is used primarily by retail customers of John Deere dealers to finance purchases of John Deere lawn and grounds care equipment. Additionally, through its Farm Plan credit product, the Company finances revolving charge accounts offered by approximately 2,100 participating agri-businesses in the 48 contiguous states to their retail customers for the purchase of goods and services. Farm Plan account holders consist mainly of farmers purchasing equipment parts and service at implement dealerships. Farm Plan revolving charge accounts are also used by customers patronizing other agribusinesses, including farm supply, feed and seed, parts supply, bulk fuel, building supply and veterinarians. John Deere Marine Finance is used by the Company's marine customers to finance the purchase of marine related products. See notes 1 and 2 to the consolidated financial statements under "Revolving Charge Accounts Receivable." The Company finances recreational vehicle inventories and John Deere engines for approximately 300 dealers. A portion of the wholesale financing provided by the Company is with dealers from whom it also purchases recreational product retail notes. See notes 1 and 2 to the consolidated financial statements under "Wholesale Receivables." The Company requires that theft and physical damage insurance be carried on all equipment leased or securing retail notes. The customer may, at his own expense, have the Company purchase this insurance or obtain it from other sources. Theft and physical damage insurance is also required on wholesale notes and can be purchased through the Company or from other sources. If the customer elects to purchase theft and physical damage insurance through the Company, the Company purchases it from insurance subsidiaries of Deere & Company. Insurance is not required for revolving charge accounts. In some circumstances, Receivables and Leases may be accepted and acquired even though they do not conform in all respects to the established guidelines. Acceptability and servicing of retail notes, wholesale notes and leases, according to the finance plans and retail terms, including any waiver of conformity with such plans and terms, is determined by Company personnel. Officers of the Company are responsible for reviewing the performance of the Company in accepting and collecting retail notes, wholesale notes and leases. The Company normally makes all routine collections, compromises, settlements and repossessions on Receivables and Leases. FINANCE RATES ON RETAIL NOTES As of October 31, 1993, approximately 57 percent of the net dollar value of retail notes held by the Company bore a variable finance rate. Recreational product retail notes are primarily fixed-rate notes. A portion of the finance income earned by the Company arises from retail sales of John Deere equipment sold in advance of the season of use or in other sales promotions 6 by John Deere on which finance charges are waived by John Deere for a period from the date of sale to a specified subsequent date. Some low-rate financing programs are also offered by John Deere. The Company receives compensation from John Deere approximately equal to the normal net finance charge on retail notes for periods during which finance charges have been waived or reduced. The portions of the Company's finance income earned that were received from John Deere on retail notes containing waiver of finance charges or reduced rates was 19 percent in 1993 and 17 percent in 1992. RECEIVABLES AND LEASES ACQUIRED AND HELD Receivable and Lease acquisitions during the fiscal years ended and amounts held at October 31, 1993 and 1992 were as follows in millions of dollars:
Fiscal Year Balance at Acquisitions October 31 -------------- --------------- 1993 1992 1993 1992 ---- ---- ---- ---- Retail Notes (1) Agricultural equipment $1,526.8 $1,559.2 $1,546.8 $2,085.2 Industrial equipment 317.8 273.6 271.2 360.4 Lawn and grounds care equipment 89.7 123.8 169.5 193.2 Recreational products 201.8 250.8 804.2 870.3 ------- ------- ------- ------- Total 2,136.1 2,207.4 2,791.7 3,509.1 Revolving charge accounts (1) 763.5 619.5 331.1 268.0 Financing and Operating Leases (2) 145.0 79.0 204.2 170.5 Wholesale Notes (1) 296.0 275.6 109.6 111.9 -------- -------- -------- -------- Total Receivables and Leases $3,340.6 $3,181.5 $3,436.6 $4,059.5 -------- -------- -------- -------- -------- -------- -------- -------- (1) "Amount" as used here means the approximate principal value financed. (2) "Amount" as used here represents the cost of equipment financed on both financing and operating leases.
John Deere equipment note acquisitions were slightly lower in the current year due primarily to a larger volume of cash purchases by John Deere customers and a more competitive agricultural financing environment. Lower acquisitions of agricultural and lawn and grounds care equipment notes were partially offset by higher acquisitions of industrial equipment notes. Acquisitions of recreational product retail notes were 20 percent lower in the current year due to a more competitive market for recreational product financing. 7 The Company's business is somewhat seasonal, with overall acquisitions of credit receivables traditionally higher in the second half of the fiscal year than in the first half, and overall collections of credit receivables traditionally somewhat higher in the first six months than in the last half of the fiscal year. From time to time, the Capital Corporation sells retail notes to other financial institutions and in the public market. The Capital Corporation received net proceeds from such sales of John Deere retail notes of $1.143 billion in 1993 and $683 million in 1992. The net unpaid balance of all retail notes previously sold was $1.394 billion at October 31, 1993 and $688 million at October 31, 1992. For additional information on the terms, conditions, recourse and accounting for such sales, see note 2 to the consolidated financial statements. AVERAGE ORIGINAL TERM AND AVERAGE LIFE OF RETAIL NOTES AND LEASES The following table shows the estimated average original term in months (based on dollar amounts) for retail notes and leases acquired by the Company during 1993 and 1992:
Average Original Term --------------------- 1993 1992 ---- ---- Retail Notes 67 68 New Equipment: Agricultural 55 55 Industrial 43 40 Lawn and grounds care 44 43 Recreational products 152 151 Used Equipment: Agricultural 52 51 Industrial 37 36 Lawn and grounds care 45 44 Recreational products 161 170 Leases 42 42
8 Because of prepayments, the average actual life of retail notes is considerably shorter than the average original term. The following table shows the estimated average life in months (based on dollar amounts) for John Deere retail notes and leases liquidated in 1993 and 1992:
Average Life in Months ---------------------- 1993 1992 ---- ---- Retail Notes (1) 28 28 Agricultural 25 24 Industrial 29 28 Lawn and grounds care 31 31 Recreational products (2) 46 47 Leases (3) 47 48 (1) Includes new and used equipment. (2) Estimated based on industry averages due to limited experience with the recreational product portfolio. (3) The average lives of leases liquidated in 1993 and 1992 were longer than the average original terms of leases acquired during 1993 and 1992 due to longer average original terms during prior years.
DEPOSITS WITHHELD ON RECEIVABLES AND LEASES Generally, the Company has limited recourse against certain John Deere dealers on retail notes and leases and against certain Farm Plan merchants on revolving charge account balances acquired from or through those dealers and merchants. For these John Deere dealers and Farm Plan merchants, separate withholding accounts are maintained by the Company. The total amount of deposits withheld from John Deere dealers and Farm Plan merchants totaled $104.9 million and $100.7 million at October 31, 1993 and 1992, respectively. Of this amount, deposits withheld from Farm Plan merchants totaled $.4 million at October 31, 1993 and $ .8 million at October 31, 1992. Credit losses are charged against these withheld deposits. To the extent that a loss cannot be absorbed by the deposit withheld from the dealer or merchant from which the retail note, lease or Farm Plan account was acquired, it is charged against the Company's allowance for credit losses. Beginning in January 1992, all industrial equipment retail notes have been accepted on a non-recourse basis, and the withholding of dealer deposits on those notes ceased. See note 1 to the consolidated financial statements. The Company does not withhold deposits on recreational product retail notes, credit card receivables, or wholesale notes acquired. However, an 9 allowance for credit losses has been established by the Company in an amount considered to be appropriate in relation to the Receivables and Leases outstanding. In addition, for wholesale notes relating to recreational vehicles, there are agreements with the recreational vehicle manufacturers for the repurchase of new inventories held by dealers. For additional information on credit losses and deposits withheld on Receivables and Leases, see note 3 to the consolidated financial statements. DELINQUENCIES AND LOSSES RETAIL NOTES. The following table shows unpaid installments 60 days or more past due on retail notes held by the Company and the total unpaid balances on the retail notes with such delinquencies, on the basis of retail note terms in effect at the indicated dates, in millions of dollars and as a percentage of retail notes at face value held by the Company at such dates:
Installments Past Due 60 Balances on Which Any Installment Days or More is Past Due 60 Days or More ------------------------ --------------------------------- Percent of Percent of Face Value Face Value of Retail of Retail Notes Notes October 31 Amount Outstanding Amount Outstanding - ---------- ------ ----------- ------ ----------- 1993 $ 6.8 0.19% $ 42.3 1.16% 1992 7.0 0.15 55.6 1.23 1991 17.5 0.35 108.0 2.15
The following table shows losses on retail notes in millions of dollars (after charges to withheld dealer deposits) and as a percentage of retail notes liquidated:
Percentage of Retail Year Ended October 31 Amount Notes Liquidated - --------------------- ------ -------------------- 1993 $19.3 0.83% 1992 33.8 1.06 1991 41.3 1.52
The decrease in losses in 1993 and 1992 related mainly to lower write-offs of recreational product retail notes, primarily as a result of the development and use of more selective credit criteria over the past few years, and lower write-offs of John Deere industrial equipment retail notes. The losses incurred in 1991 related primarily to recreational product retail notes, resulting from recessionary pressures and lower resale values of repossessed equipment. Write-offs of recreational product retail notes totaled $16.9 million in 1993 compared with $24.2 million in 1992 and $33.3 million in 1991. 10 REVOLVING CHARGE ACCOUNTS. The following table shows revolving charge account payments 60 days or more past due in millions of dollars and as a percentage of total revolving charge accounts receivable:
Payments Past Due 60 Days or More --------------------------------------- Percent of Total Revolving October 31 Amount Charge Accounts Receivable - ---------- ------ --------------------------- 1993 $5.3 1.6% 1992 6.4 2.4 1991 8.5 3.5
The following table shows losses on revolving charge accounts in millions of dollars and as a percentage of revolving charge amounts liquidated:
Percent of Revolving Year Ended October 31 Amount Charge Amounts Liquidated - --------------------- ------ ------------------------- 1993 $3.3 0.5% 1992 6.0 1.0 1991 8.4 1.6
Losses declined in 1993 and 1992 for both Farm Plan and the John Deere Credit Revolving Plan reflecting improvements in the Company's overall collection procedures and improved economic conditions. The losses incurred in 1991 were due primarily to general recessionary conditions in the economy. LEASES. The following table shows finance and operating lease payments 60 days or more past due in millions of dollars and as a percent of the total lease payments receivable:
Payments Past Due 60 Days or More -------------------------------------- Percent of Total Lease October 31 Amount Payments Receivable - --------------------- ------ ------------------------- 1993 $ .5 0.3% 1992 1.2 0.8 1991 1.0 0.5
11 The following table shows losses absorbed by the Company, in millions of dollars and as a percent of total lease proceeds, on terminated financing and operating leases (after charges to withheld dealer deposits). Total lease proceeds include collections from regularly scheduled lease payments and proceeds from the disposal of equipment.
Percent of Total Year Ended October 31 Amount Lease Proceeds - --------------------- ------ ---------------- 1993 $1.2 1.1% 1992 2.7 2.3 1991 3.9 3.3
The decline in 1993 losses resulted from improvements in the Company's overall collection procedures and improved economic conditions. The decline in 1992 losses resulted from a more seasoned and smaller lease portfolio. The losses incurred in 1991 related primarily to the overall recessionary environment. WHOLESALE NOTES. The following table shows wholesale note payments 60 days or more past due in millions of dollars and as a percentage of wholesale notes receivable:
Payments Past Due 60 Days or More ------------------------------------ Percent of Wholesale October 31 Amount Notes Receivable - ---------- ------ --------------------- 1993 $0.1 0.1% 1992 0.0 0.0 1991 0.1 0.1
The following table shows wholesale note losses in millions of dollars and as a percentage of wholesale note amounts liquidated:
Percent of Wholesale Year Ended October 31 Amount Note Amounts Liquidated - --------------------- ------- ------------------------- 1993 $2.3 0.8% 1992 1.2 0.5 1991 2.9 1.5
The losses in 1993 and 1991 resulted primarily from relatively large losses incurred with two recreational vehicle dealers, one in each of those years. 12 COMPETITION The businesses in which the Company is engaged are highly competitive. The Company competes for customers based upon customer service and finance rates (or time-price differentials) charged. The proportion of John Deere equipment retail sales and leases financed by the Company is influenced by conditions prevailing in the agricultural equipment, industrial equipment and lawn and grounds care equipment industries, in the financial markets, and in business generally. A significant portion of such retail sales during 1993 were financed by the Company. A substantial part of the retail sales and leases eligible for financing by the Company is financed by others, including banks and other finance and leasing companies. The Company attempts to emphasize convenient service to retail customers and to offer terms desired in its specialized markets such as seasonal installment schedules of repayment and rental. The Company's sales and loan finance rates, time-price differentials and lease rental rates are believed to be in the range of those of sales finance and leasing companies generally, although not as low as those of some banks and other lenders and lessors. REGULATION In a number of states, the maximum finance rate or time-price differential on retail notes is limited by state law. The present state limitations have not, thus far, significantly limited the Company's variable-rate finance charges, which are determined in relation to a base rate quoted by a bank, nor the fixed-rate finance charges established by the Company. However, if interest rate levels should increase, maximum state rates or time-price differentials could affect the Company by preventing the variable rates on outstanding variable-rate retail notes from increasing above the maximum state rate or time-price differential, and/or by limiting the fixed rates or time-price differentials on new notes. In some states, the Company may be able to qualify new retail notes for a higher maximum limit by using retail installment sales contracts (rather than loan contracts) or by using fixed-rate rather than variable-rate contracts. In addition to rate regulation, various state and federal laws and regulations apply to some Receivables and Leases, principally retail notes for goods sold for personal, family or household use and to Farm Plan and John Deere revolving charge accounts receivable for such goods. To date, such laws and regulations have not had a significant, adverse effect on the Company. ITEM 2. PROPERTIES. The Company's properties principally consist of office equipment and leased office space in Reno, Nevada; West Des Moines, Iowa; Moline, Illinois; Madison, Wisconsin; and Ft. Lauderdale, Florida. 13 ITEM 3. LEGAL PROCEEDINGS. The Company is subject to various unresolved legal actions which arise in the normal course of its business. The most prevalent of such actions relates to state and federal regulations concerning retail credit. There are various claims and pending actions against the Company with respect to commercial and consumer financing matters. These matters include lawsuits pending in federal and state courts in Texas alleging that certain of the Company's retail finance contracts for recreational vehicles and boats violate certain technical provisions of Texas consumer credit statutes dealing with maximum rates, licensing and disclosures. The plaintiffs in Texas claim they are entitled to common law and statutory damages and penalties. On November 6, 1992, the federal District Court certified a federal class action under Rule 23(b)(3) of the Federal Rules of Civil Procedure in an action brought by Russell Durrett, individually and on behalf of others, against John Deere Company (filed in state court on February 19, 1992 and removed on February 26, 1992 to the United States District Court for the Northern District of Texas, Dallas Division). On October 12, 1993, in a case named DEERE CREDIT, INC. V. SHIRLEY Y. MORGAN, ET AL., filed February 20, 1992, the 281st District Court for Harris County, Texas, certified a class under Rules 42(b)(1)(A), 42(b)(1)(B) and 42(b)(2) of the Texas Rules of Civil Procedure, of all persons who opt out of the federal class action. The Company believes that it has substantial defenses and intends to defend the actions vigorously. Although it is not possible to predict the outcome of these unresolved legal actions, and the amounts of claimed damages and penalties are large, the Company believes that these unresolved legal actions will not have a material adverse effect on its consolidated financial position. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Omitted pursuant to instruction J(2). PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. All of the Capital Corporation's common stock is owned by John Deere Credit Company, a finance holding company that is wholly-owned by Deere & Company. In 1993, the Capital Corporation paid a cash dividend to John Deere Credit Company of $82 million, which in turn paid an $82 million cash dividend to Deere & Company. Similarly during 1992, the Capital Corporation paid a $70 million dividend. During the first quarter of 1994, the Capital Corporation declared and paid a dividend of $150 million to John Deere Credit Company, which in turn declared and paid a dividend of $150 million to Deere & Company. 14 ITEM 6. SELECTED FINANCIAL DATA. Omitted pursuant to instruction J(2). ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS 1993 COMPARED WITH 1992 Total acquisitions of Receivables and Leases by the Company increased five percent during 1993 compared with acquisitions in 1992. The higher acquisitions this year resulted from an increased volume of John Deere leases, revolving charge accounts and wholesale receivables, which more than offset lower acquisitions of retail notes. Receivables and Leases held by the Company at October 31, 1993 totaled $3.437 billion compared with $4.060 billion one year ago. This decrease resulted from sales of retail notes during 1993. Receivables and Leases administered, which include retail notes previously sold but still administered, amounted to $4.873 billion at the end of 1993 compared with $4.796 billion at October 31, 1992. During 1993, net retail notes (face value less unearned finance income) acquired by the Company decreased three percent compared with 1992. Net retail note acquisitions totaled $2.136 billion during 1993 compared with 1992 acquisitions of $2.207 billion. Acquisitions of recreational product retail notes accounted for nine percent of total note acquisitions in 1993 and 11 percent in 1992. Net retail note acquisitions from John Deere decreased by $22 million in 1993, due primarily to a larger volume of cash purchases by John Deere customers and a more competitive agricultural financing environment. Lower acquisitions of agricultural and lawn and grounds care equipment notes were partially offset by higher acquisitions of industrial equipment notes. Note acquisitions in 1993 from John Deere continued to represent a significant proportion of the total United States retail sales of John Deere equipment. Net acquisitions of recreational product retail notes, representing primarily recreational vehicle and recreational marine product notes acquired from independent dealers of several unrelated manufacturers, were $202 million in 1993 compared with $251 million in 1992. This decline was due mainly to a more competitive market for recreational product financing and more selective acquisition criteria. At October 31, 1993, the net amount of retail notes held by the Company was $2.792 billion compared to $3.509 billion last year. Included in these amounts were recreational product notes of $804 million in 1993 and $870 million in 1992. The net balance of John Deere retail notes decreased from $2.639 billion at October 31, 1992 to $1.988 billion at the end of 1993, even though net retail 15 notes acquired exceeded collections. This decrease resulted primarily from the sale of retail notes during 1993. The Company periodically sells retail notes as one of several funding techniques. In 1993 and in 1992, the Company received net proceeds of $1.143 billion and $455 million, respectively, from the sale of retail notes to limited-purpose business trusts which utilized the notes as collateral for the issuance of asset backed securities to the public. During 1992, the Company also sold retail notes to other financial institutions receiving proceeds of $228 million. The net balance of retail notes administered by the Company, which include retail notes previously sold, amounted to $4.185 billion at 31 October 1993, compared with $4.197 billion at 31 October 1992. The net balance of retail notes previously sold was $1.394 billion at October 31, 1993 compared with $688 million at October 31, 1992. Additional sales of retail notes are expected to be made in the future. On October 31, 1993, the Company was contingently liable for recourse in the maximum amount of $108 million on retail notes sold. Retail notes bearing variable finance rates totaled 57 percent of the total retail note portfolio at October 31, 1993 compared with 54 percent one year earlier. The Company actively manages the increased interest rate risk posed by fixed-rate retail notes through the issuance of fixed-rate borrowings and the use of financial instruments such as interest rate swaps and interest rate caps. See "Capital Resources and Liquidity" on pages 22 through 24. At the end of fiscal 1993, revolving charge accounts receivable totaled $331 million, an increase of 24 percent compared with $268 million at October 31, 1992. The balance at October 31, 1993 included $147 million of John Deere Credit Revolving Plan receivables (including a small balance of marine finance receivables) and $184 million of Farm Plan receivables compared with $114 million and $154 million, respectively, at October 31, 1992. The John Deere Credit Revolving Plan, which was introduced in 1993, contains terms that increase the maximum amount financed, offer more attractive financing conditions and provide more flexible payment terms. Revolving charge account acquisitions increased 23 percent in 1993 compared with last year. The portfolio of net financing leases totaled $85 million at both October 31, 1993 and October 31, 1992. The net investment in operating leases was $119 million and $85 million at the end of 1993 and 1992, respectively. Overall, lease acquisitions increased 84 percent in 1993 primarily due to a new lease program applicable to some models of John Deere tractors. In addition, $19 million of municipal leases were sold to Deere & Company during 1993 compared with $21 million sold last year. At October 31, 1993, the net unpaid balance of leases sold to John Deere was $43 million compared with $48 million at October 31, 1992. Wholesale notes on recreational vehicle and John Deere engine inventories totaled $110 million at October 31, 1993 compared with $112 million at October 31, 1992. Total Receivable and Lease amounts 60 days or more past due were $12.7 million at October 31, 1993 compared with $14.6 million at October 31, 1992. 16 These past-due amounts represented .30 percent of the face value of Receivables and Leases held at October 31, 1993 and .29 percent at October 31, 1992. The total face amount of retail notes held with any installment 60 days or more past due was $42.3 million at October 31, 1993 compared with $55.6 million one year earlier. The amount of retail note installments 60 days or more past due was $7.0 million at both October 31, 1993 and October 31, 1992. These past-due installments represented .19 percent of the unpaid face value of retail notes at October 31, 1993 and .15 percent at October 31, 1992. The total balance of revolving charge accounts receivable 60 days or more past due was $5.3 million at October 31, 1993 compared with $6.4 million at October 31, 1992. These past due amounts represented 1.6 and 2.4 percent of the revolving charge accounts receivable held at each of those respective dates. The total balance of financing and operating lease payments 60 days or more past due was $0.5 million at October 31, 1993 compared with $1.2 million at October 31, 1992. These past-due installments represented .3 percent of the total lease payments receivable at October 31, 1993 and .8 percent at October 31, 1992. At October 31, 1993, the Company's allowance for credit losses, totaled $77 million and represented 2.3 percent of the total net Receivables and Leases financed compared with $83 million and 2.0 percent, respectively, one year earlier. Deposits withheld from dealers and merchants, which are available for potential credit losses, totaled $105 million at October 31, 1993 compared with $101 million one year earlier. The Capital Corporation's consolidated income for the fiscal year ended October 31, 1993, before the cumulative effect of adopting new accounting standards related to postretirement and postemployment benefits, was $111.0 million compared with 1992 net income of $95.0 million. The ratio of earnings before fixed charges to fixed charges was 1.99 to 1 (excluding the effects of accounting changes) for 1993 compared with 1.74 to 1 last year. The improvement in net income resulted primarily from higher securitization and servicing fee income from retail notes previously sold, lower credit losses, higher financing margins, and increased gains from the sale of retail notes, which more than offset the effects of a lower balance of Receivables and Leases financed. Net income totaled $107.2 million in 1993, including the cumulative effect of adopting FASB Statement No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, and FASB Statement No. 112, Employers' Accounting for Postemployment Benefits. Total revenues decreased one percent during 1993 to $466 million compared with $471 million in 1992. The average balance of total net Receivables and Leases financed was seven percent lower in 1993 compared with last year due primarily to the sale of receivables during 1993. Revenues were also affected by the lower level of interest rates and the corresponding lower finance charges earned in 1993 compared with last year. These decreases in revenues were partially offset by higher securitization and servicing fee income from retail notes previously sold. However, borrowing rates were also lower this year resulting in the slightly improved financing margins. The lower borrowing rates and decrease 17 in average borrowings this year resulted in an 11 percent decrease in interest expense, which totalled $168 million in 1993 compared with $189 million last year. Average borrowings were $3.127 billion in 1993, a seven percent decline from last year's average borrowings of $3.379 billion. The weighted average annual interest rate incurred on all interest-bearing borrowings this year declined to 5.1 percent from 5.4 percent in 1992. Finance income earned on retail notes was $314 million this year compared with $356 million in 1992, a decrease of 12 percent. The average balance of the net retail note portfolio financed during 1993 was 10 percent lower than during 1992. Revenues earned on revolving charge accounts amounted to $54 million in 1993, a 14 percent increase over revenues of $47 million earned during 1992. This increase was primarily due to a 20 percent increase in the average balance of Farm Plan receivables financed and a 15 percent increase in the average balance of John Deere Credit Revolving Plan receivables financed in 1993 compared with 1992. The average net investment in financing and operating leases decreased by two percent in 1993 compared with 1992. However, total lease revenues increased eight percent to $39.6 million in 1993 compared with $36.8 million in 1992. Lease revenues were favorably affected in 1993 by a significant increase in rentals earned on operating leases. The net gain on retail notes sold totaled $15.6 million during 1993 compared with $8.5 million for 1992. The Company received proceeds from the sale of retail notes in the amount of $1.143 billion during 1993 and $683 million in 1992. Securitization and servicing fee income totaled $22.3 million in 1993 compared with $1.1 million during 1992. Securitization and servicing fee income relates to retail notes sold to limited-purpose business trusts and includes the amortization of present value receivable amounts from the trusts established at the time of sale and reimbursed administrative expenses received from the trusts. The amount of securitization and servicing fee income was small in 1992 because the first retail note sale to a trust occurred near the end of that year. Administrative and operating expenses increased 18 percent to $75 million in 1993 compared with $63 million in 1992. These expenses increased primarily due to higher employment costs and legal expenses. The Company incurred additional costs associated with efforts relating to future growth and improving the quality of the portfolio. The provision for credit losses declined to $28 million in 1993 from $48 million last year mainly as a result of improved credit experience resulting in lower Receivable and Lease write-offs. The decline in write-offs related particularly to recreational product retail notes and John Deere industrial equipment retail notes. 18 ACCOUNTING CHANGES In the fourth quarter of 1993, the Company adopted FASB Statement No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, effective November 1, 1992. Prior quarters of 1993 were restated as required by this Statement. This Statement generally requires the accrual of retiree health care and other postretirement benefits during employees' years of active service. The Company elected to recognize the pretax transition obligation of $5.4 million ($3.6 million net of deferred income taxes) as a one-time charge to earnings in the current year. This obligation represents the portion of future retiree benefit costs related to service already rendered by both active and retired employees up to November 1, 1992. The 1993 postretirement benefits expense and related disclosures have been determined according to the provisions of FASB Statement No. 106. For years prior to 1993, postretirement benefits were generally included in costs as covered expenses were actually incurred. The adoption of FASB Statement No. 106 resulted in an incremental pretax expense of $.2 million compared with the expense determined under the previous accounting principle. This increase in the current year expense is in addition to the previously mentioned one-time charge relating to the transition obligation. In the fourth quarter of 1993, the Company also adopted FASB Statement No. 112, Employers' Accounting for Postemployment Benefits, effective November 1, 1992. This Statement requires the accrual of certain benefits provided to former or inactive employees after employment but before retirement during employees' years of active service. The Company previously accrued certain disability related benefits when the disability occurred. Results for the first quarter of 1993 were restated for the cumulative pretax charge resulting from this change in accounting as of November 1, 1992 which totaled $.3 million ($.2 million net of deferred income taxes). The adoption of FASB Statement No. 112 had an immaterial effect on 1993 expenses. 1992 COMPARED WITH 1991 Total acquisitions of Receivables and Leases by the Company decreased three percent during 1992 compared with acquisitions in 1991. Receivables and Leases held by the Company at October 31, 1992 totaled $4.060 billion compared with $4.398 billion one year ago. This decrease resulted from sales of retail notes during 1992. Receivables and Leases administered, which include retail notes previously sold but still administered, amounted to $4.796 billion at the end of 1992 compared with $4.693 billion at October 31, 1991. During 1992, the volume of net retail notes acquired by the Company decreased eight percent compared with 1991. Net retail note acquisitions totaled $2.207 billion during 1992 compared with 1991 acquisitions of $2.400 billion. Acquisitions of recreational product retail notes accounted for 11 percent of total note acquisitions in 1992 and 13 percent in 1991. 19 Net retail note acquisitions from John Deere decreased by $142 million in 1992, due primarily to a decrease in retail sales of John Deere agricultural equipment. Acquisitions of industrial equipment retail notes also were lower in 1992 while lawn and grounds care equipment note acquisitions were significantly higher due mainly to finance waiver programs on lawn and garden tractors. Note acquisitions in 1992 from John Deere continued to represent a significant proportion of the total United States retail sales of John Deere equipment. Net acquisitions of recreational product retail notes were $251 million in 1992 compared with $301 million in 1991. This decline was due mainly to a more competitive financing environment and the development of more selective retail note acquisition criteria by the Company over the past few years. At October 31, 1992, 1991 and 1990, the net amount of retail notes held by the Company was $3.509 billion, $3.854 billion and $3.074 billion, respectively. Included in these amounts were non-Deere notes of $870 million, $888 million and $773 million at those respective dates. The net balance of John Deere retail notes decreased from $2.966 billion at October 31, 1991 to $2.639 billion at the end of 1992. John Deere retail notes totaled $2.301 billion at the end of 1990. The decrease in 1992 resulted primarily from the sale of retail notes. During 1992, the Company sold retail notes to other financial institutions and the public, receiving net proceeds of $683 million. Notes were not sold in 1991. At October 31, 1992, 1991 and 1990, the net unpaid balance of retail notes sold was $688 million, $242 million and $521 million, respectively. Additional sales of retail notes are expected to be made in the future. Retail notes bearing variable finance rates totaled 54 percent of the total retail note portfolio at October 31, 1992 compared with 56 percent one year earlier. Revolving charge accounts receivable totaled $268 million at October 31, 1992 compared with $240 million one year earlier. The increase in the outstanding balance at October 31, 1992 was due mainly to an increase in Farm Plan volume. The October 31, 1992 balance of revolving charge accounts receivable includes $114 million of credit card receivables and $154 million of Farm Plan receivables, compared with $112 million and $128 million, respectively, at October 31, 1991. At October 31, 1992, the net investment in financing and operating leases on John Deere equipment was $170 million compared with $213 million at October 31, 1991. Lease acquisitions declined 27 percent in 1992 compared with 1991 due to a decrease in agricultural lease activity and competitive pressures. Lease liquidations during 1992 exceeded acquisitions, as the high lease acceptances of several years ago continued to mature. Also, $21 million net value of municipal leases were sold to John Deere during 1992 compared with $27 million sold in 1991. At October 31, 1992, the net unpaid balance of leases sold to John Deere was $48 million compared with $53 million at October 31, 1991. 20 Wholesale notes receivable totaled $112 million at October 31, 1992 compared with $91 million at October 31, 1991, as wholesale note acquisitions increased 37 percent in 1992. Total Receivable and Lease amounts 60 days or more past due were $14.6 million at October 31, 1992 compared with $27.1 million at October 31, 1991. These past due amounts represented .29 percent of the face value of Receivables and Leases held at October 31, 1992 and .49 percent at October 31, 1991. The total face amount of retail notes held with any installment 60 days or more past due was $55.6 million at October 31, 1992 compared with $108.0 million one year earlier. The amount of retail note installments 60 days or more past due was $7.0 million at October 31, 1992, a decrease of 60 percent compared with $17.5 million at October 31, 1991. These past-due installments represented .15 percent of the unpaid face value of retail notes held at October 31, 1992 and .35 percent at October 31, 1991. The total balance of revolving charge accounts receivable 60 days or more past due was $6.4 million at October 31, 1992 compared with $8.5 million at October 31, 1991. These past due amounts represented 2.4 and 3.5 percent of the revolving charge accounts receivable held at each of those respective dates. The total balance of financing and operating lease payments 60 days or more past due was $1.2 million at October 31, 1992 compared with $1.0 million at October 31, 1991. These past-due installments represented .8 percent of the total lease payments receivable at October 31, 1992 and .5 percent at October 31, 1991. At October 31, 1992, the Company's allowance for credit losses totaled $83 million and represented 2.0 percent of the total net Receivables and Leases financed compared with $78 million and 1.8 percent at October 31, 1991. Deposits withheld from dealers and merchants amounted to $101 million at October 31, 1992 compared with $99 million one year earlier. Net income in 1992 totaled $95.0 million, an increase of 30 percent compared with 1991 income of $73.0 million. The ratio of earnings before fixed charges to fixed charges was 1.74 to 1 for 1992 compared with 1.48 to 1 in 1991. The improvement in net income in 1992 resulted primarily from a higher average volume of Receivables and Leases financed and improved credit loss experience. Results in 1992 also benefited from after-tax income of $5.6 million from sales of retail notes. The average balance of total net Receivables and Leases financed was seven percent higher in 1992 compared with 1991, although the year-end balance was lower due to the sale of a substantial amount of retail notes in October 1992. However, total revenues decreased three percent to $471 million in 1992 compared with $487 million in 1991, as the average yield earned on the portfolio was lower this year. While revenues were affected by the lower level of interest rates and correspondingly lower finance charges earned in 1992 compared with last year, borrowing costs were also lower this year. Interest expense totaled $189 million in 1992, a decrease of 17 percent compared with $228 million in 1991. Total 21 average borrowings were $3.379 billion in 1992, an 11 percent increase over fiscal year 1991 average borrowings of $3.053 billion. The weighted average interest rate incurred on all interest-bearing borrowings during 1992 declined to 5.4 percent from 7.2 percent in 1991. Finance income earned on retail notes was $356 million this year compared with $383 million in 1991, a decrease of seven percent. The average balance of the net retail note portfolio financed during 1992 was seven percent higher than during 1991. Revenues earned on revolving charge accounts amounted to $47 million in 1992, an 11 percent increase over revenues of $43 million earned during 1991. This increase was primarily due to a 17 percent increase in the average balance of Farm Plan receivables financed and a 10 percent increase in the average balance of credit card receivables financed in 1992 compared with 1991. The average net investment in financing and operating leases decreased by 13 percent in 1992 compared with 1991. In addition, total lease revenues decreased slightly to $36.8 million in 1992 compared with $36.9 million in 1991. Lease revenues were favorably affected in 1992 by a significant increase in rentals earned on operating leases. Administrative and operating expenses for 1992 were $63 million, an increase of eight percent compared with $59 million for 1991. These expenses increased primarily due to the costs associated with the larger average portfolio financed. The provision for credit losses decreased to $48 million in 1992 from $66 million in 1991 mainly as a result of improved credit experience resulting in lower Receivable and Lease write-offs. The most significant decline in write-offs related to recreational product notes, resulting primarily from more selective note acquisition criteria used by the Company. Write-offs of recreational product notes totaled $24.2 million in 1992 compared with $33.3 million in 1991. CAPITAL RESOURCES AND LIQUIDITY The Company relies on its ability to raise substantial amounts of funds to finance its Receivable and Lease portfolios. The Company's primary sources of funds for this purpose are a combination of borrowings and equity capital. Additionally, the Company periodically sells substantial amounts of retail notes in the public market. The Company's ability to obtain funds is affected by its debt ratings, which are closely related to the outlook for and the financial condition of Deere & Company, and the nature and availability of support facilities, such as its lines of credit. For information regarding Deere & Company and its business, see Exhibit 99.1. The Company's ability to meet its debt obligations is supported in a number of ways as described below. All commercial paper issued is backed by bank credit lines. The assets of the Company are self-liquidating in nature. A strong 22 equity position is available to absorb unusual losses on these assets. Liquidity is also provided by the Company's ability to sell or "securitize" these assets. Asset-liability risk is also actively managed to minimize exposure to interest rate fluctuations. The Company's business is somewhat seasonal, with overall acquisitions of Receivables and Leases traditionally higher in the second half of the fiscal year than in the first half, and overall collections of Receivables and Leases traditionally somewhat higher in the first six months than in the last half of the fiscal year. The Company's cash flows from operating activities were $157 million in 1993. See "Statement of Consolidated Cash Flows" on page 34. Net cash provided by investing activities totaled $477 million in 1993, primarily due to net proceeds of $1.143 billion received from the securitization and sale of receivables in the public market, which was partially offset by funds used for Receivable and Lease acquisitions which exceeded collections by $698 million in 1993. Collections of receivables in 1993 were slightly lower than last year, due primarily to the lower retail note portfolio financed in 1993. The aggregate cash provided by operating and investing activities was used for financing activities and a $74 million increase in cash and cash equivalents. Cash used for financing activities totaled $561 million in 1993, representing a net decrease in outside borrowings of $853 million and the payment of an $82 million dividend to Deere & Company which were partially offset by a $374 million increase in payables to Deere & Company. Over the past three years, operating activities have provided $453 million in cash. Proceeds from the sale of receivables and an increase in payables to Deere & Company provided $1.893 and $423 million, respectively, during the same period. These amounts were used mainly to fund Receivable and Lease acquisitions which exceeded collections by $2.101 billion, a decrease of $438 million in net outside borrowings, $202 million in dividends and an increase in cash and cash equivalents of $67 million. In common with other large finance and credit companies, the Company actively manages the relationship of the types and amounts of its funding sources to its Receivable and Lease portfolios in an effort to diminish risk due to interest rate and currency fluctuations, while responding to favorable competitive and financing opportunities. Accordingly, from time to time, the Company enters into interest rate swap and interest rate cap agreements to hedge its interest rate exposure in amounts corresponding to a portion of its borrowings. See notes 4 and 5 to the consolidated financial statements for further details. The credit and market risks under these agreements are not considered to be significant. Total indebtedness amounted to $2.777 billion at October 31, 1993 compared with $3.256 billion at October 31, 1992. Total short-term indebtedness amounted to $1.299 billion at October 31, 1993 compared with $2.017 billion at October 31, 1992. See note 4 to the consolidated financial statements. Total long-term indebtedness amounted to $1.478 billion at October 31, 1993 and $1.239 billion at October 31, 1992. See note 5 to the consolidated financial statements. The 23 decrease in total indebtedness at October 31, 1993 compared with October 31, 1992 was due primarily to the decline in Receivables and Leases financed. The ratio of total interest-bearing debt to stockholder's equity was 3.8 to 1 and 4.6 to 1 at October 31, 1993 and October 31, 1992, respectively. In 1993, the Company issued $150 million of 5% notes due in 1995 and $200 million of 4-5/8% notes due in 1996. The Company also retired $150 million of 7.40% notes due in 1993, $125 million of 9.0% debentures due in 1993 and $47 million of 7-1/2% debentures due in 1998. In November 1993, the Capital Corporation announced that on January 4, 1994 it will redeem the $40 million balance of outstanding 9.35% subordinated debentures due 2003. Additional information on these borrowings is included in the discussion of "Long-Term Borrowings" on page 41. During 1993, the Capital Corporation issued $337 million and retired $176 million of medium-term notes. At October 31, 1993, $737 million of medium-term notes were outstanding having original maturity dates of between one and seven years and interest rates that ranged from 3.4 percent to 9.5 percent. At October 31, 1993, the Capital Corporation and Deere & Company, jointly, had unsecured lines of credit with various banks in North America and overseas totaling $3.025 billion. Included in the total credit lines were three long-term credit agreement commitments totaling $3.016 billion. At October 31, 1993, $2.265 billion of the lines of credit were unused. For the purpose of computing unused credit lines, the aggregate of total short-term borrowings, excluding the current portion of long-term borrowings, of the Capital Corporation, Deere & Company, John Deere Limited (Canada) and John Deere Finance Limited (Canada) were considered to constitute utilization. Annual facility fees on the credit agreements are paid by Deere & Company and a portion is charged to the Capital Corporation based on utilization. In 1993, the Capital Corporation paid a dividend of $82 million to John Deere Credit Company, which, in turn, paid an $82 million dividend to Deere & Company. During the first quarter of 1994, the Capital Corporation declared and paid a dividend of $150 million to John Deere Credit Company, which in turn declared and paid a dividend of $150 million to Deere & Company. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. See accompanying table of contents of financial statements. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. 24 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Omitted pursuant to instruction J(2). ITEM 11. EXECUTIVE COMPENSATION. Omitted pursuant to instruction J(2). ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Omitted pursuant to instruction J(2). ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Omitted pursuant to instruction J(2). 25 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a) (1) Financial Statements (2) Financial Statement Schedules See the table of contents to financial statements and schedules immediately preceding the financial statements and schedules to consolidated financial statements. (3) Exhibits See the index to exhibits immediately preceding the exhibits filed with this report. (b) Reports on Form 8-K Current Report on Form 8-K dated August 24, 1993 (Items 5 and 7). Current Report on Form 8-K dated August 4, 1993 (Items 5 and 7). 26 (THIS PAGE INTENTIONALLY LEFT BLANK) 27 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. JOHN DEERE CAPITAL CORPORATION By: /s/ Hans W. Becherer ---------------------- Hans W. Becherer, Chairman Date: 24 January 1994 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. Signature Title Date ----------- ----- ---- /s/ Hans W. Becherer Director, Chairman and Principal ) -------------------- Executive Officer ) Hans W. Becherer ) ) /s/ J. Michael Dunn Director ) -------------------- ) J. Michael Dunn ) ) /s/ J. W. England Director, Vice President and ) ------------------- Principal Accounting Officer ) J. W. England ) ) /s/ B. L. Hardiek Director ) ------------------- ) B. L. Hardiek ) ) /s/ B. C. Harpole Director ) ------------------- ) B. C. Harpole ) ) /s/ D. E. Hoffmann Director ) ------------------- ) D. E. Hoffmann ) ) /s/ J. K. Lawson Director ) 24 January 1994 ------------------- J. K. Lawson 28 /s/ Pierre E. Leroy Director ) - -------------------- ) Pierre E. Leroy ) ) /s/ M. P. Orr Director and President ) - -------------------- ) M. P. Orr ) ) /s/ E. L. Schotanus Director, Vice President and ) 24 January 1994 - -------------------- Principal Financial Officer ) E. L. Schotanus ) ) /s/ D. H. Stowe, Jr. Director ) - -------------------- ) D. H. Stowe, Jr. ) ) /s/ S. E. Warren Director ) - -------------------- ) S. E. Warren ) 29 [LOGO] INDEPENDENT AUDITORS' REPORT John Deere Capital Corporation: We have audited the accompanying consolidated balance sheets of John Deere Capital Corporation and subsidiaries as of October 31, 1993 and 1992 and the related statements of consolidated income and retained earnings and of consolidated cash flows for each of the three years in the period ended October 31, 1993. Our audits also included the financial statement schedules listed in the Table of Contents on page 31. These financial statements and financial statement schedules are the responsibility of the company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of John Deere Capital Corporation and subsidiaries at October 31, 1993 and 1992 and the results of their operations and their cash flows for each of the three years in the period ended October 31, 1993 in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein. As discussed in Note 1 to the consolidated financial statements, effective November 1, 1992 the company changed its method of accounting for postretirement benefits other than pensions. DELOITTE & TOUCHE December 10, 1993 [LOGO] 30 TABLE OF CONTENTS FINANCIAL STATEMENTS: Page ---- John Deere Capital Corporation and Subsidiaries (consolidated): Statement of Consolidated Income and Retained Earnings for the Years Ended October 31, 1993, 1992 and 1991...............32 Consolidated Balance Sheet, October 31, 1993 and 1992...........33 Statement of Consolidated Cash Flows for the Years Ended October 31, 1993, 1992 and 1991...............................34 Notes to Consolidated Financial Statements......................35 FINANCIAL STATEMENT SCHEDULES: Schedule VIII - Valuation and Qualifying Accounts for the Years Ended October 31, 1993, 1992 and 1991...................46 Schedule IX - Short-term Borrowings for the Years Ended October 31, 1993, 1992 and 1991...............................47 SCHEDULES OMITTED The following schedules are omitted because of the absence of the conditions under which they are required: I, II, III, IV, V, VI, VII, X, XI, XII, XIII and XIV. 31 STATEMENT OF CONSOLIDATED INCOME AND RETAINED EARNINGS
- -------------------------------------------------------------------------------- John Deere Capital Corporation and Subsidiaries For the Year Ended October 31 - -------------------------------------------------------------------------------- (In millions of dollars) 1993 1992 1991 - -------------------------------------------------------------------------------- REVENUES: - -------------------------------------------------------------------------------- Finance income earned on retail notes $ 314.2 $ 356.3 $ 383.5 - -------------------------------------------------------------------------------- Revolving charge account income 53.8 47.3 42.8 - -------------------------------------------------------------------------------- Lease revenues 39.6 36.8 36.9 - -------------------------------------------------------------------------------- Finance income earned on wholesale notes 10.3 9.5 9.3 - -------------------------------------------------------------------------------- Net gain on retail notes sold 15.6 8.5 2.6 - -------------------------------------------------------------------------------- Interest income from short-term investments 6.2 7.2 7.7 - -------------------------------------------------------------------------------- Securitization and servicing fee income 22.3 1.1 - -------------------------------------------------------------------------------- Interest income from Deere & Company .9 1.0 .8 - -------------------------------------------------------------------------------- Other income 3.1 3.2 3.5 - -------------------------------------------------------------------------------- Total revenues 466.0 470.9 487.1 - -------------------------------------------------------------------------------- EXPENSES: - -------------------------------------------------------------------------------- Interest Expense: - -------------------------------------------------------------------------------- On obligations to others 165.8 189.2 228.0 - -------------------------------------------------------------------------------- On notes payable to Deere & Company 2.0 .1 .3 - -------------------------------------------------------------------------------- Total interest expense 167.8 189.3 228.3 - -------------------------------------------------------------------------------- OPERATING EXPENSES: - -------------------------------------------------------------------------------- Administrative and operating expenses 74.5 63.2 58.7 - -------------------------------------------------------------------------------- Provision for credit losses 28.1 48.5 66.2 - -------------------------------------------------------------------------------- Insurance expense 2.7 1.5 - -------------------------------------------------------------------------------- Fees paid to Deere & Company 7.1 8.3 9.1 - -------------------------------------------------------------------------------- Depreciation of equipment on operating leases 19.2 16.0 12.5 - -------------------------------------------------------------------------------- Total operating expenses 128.9 138.7 148.0 - -------------------------------------------------------------------------------- Total expenses 296.7 328.0 376.3 - -------------------------------------------------------------------------------- Income before Income Taxes and Changes in Accounting 169.3 142.9 110.8 - -------------------------------------------------------------------------------- Provision for Income Taxes 58.3 47.9 37.8 - -------------------------------------------------------------------------------- Income before Changes in Accounting 111.0 95.0 73.0 - -------------------------------------------------------------------------------- Changes in Accounting (3.8) - -------------------------------------------------------------------------------- Net Income $ 107.2 $ 95.0 $ 73.0 - -------------------------------------------------------------------------------- Cash Dividends Paid (82.0) (70.0) (50.0) - -------------------------------------------------------------------------------- Retained Earnings at Beginning of the Year 601.1 576.1 553.1 - -------------------------------------------------------------------------------- Retained Earnings at End of the Year $ 626.3 $ 601.1 $ 576.1 - -------------------------------------------------------------------------------- Ratio of Earnings to Fixed Charges 1.99* 1.74 1.48 - -------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements on pages 35 to 45 are an integral part of this statement. *Excludes effect of accounting changes. - --------------------------------------------------------------------------------
32 CONSOLIDATED BALANCE SHEET
- -------------------------------------------------------------------------------- John Deere Capital Corporation and Subsidiaries October 31 - -------------------------------------------------------------------------------- (In millions of dollars) 1993 1992 - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Cash and Cash Equivalents $ 165.2 $ 91.1 - -------------------------------------------------------------------------------- Receivables and Leases: - -------------------------------------------------------------------------------- Retail notes 2,791.7 3,509.1 - -------------------------------------------------------------------------------- Revolving charge accounts 331.1 268.0 - -------------------------------------------------------------------------------- Financing leases 84.9 85.4 - -------------------------------------------------------------------------------- Wholesale notes 109.6 111.9 - -------------------------------------------------------------------------------- Total receivables 3,317.3 3,974.4 - -------------------------------------------------------------------------------- Equipment on operating leases 119.3 85.1 - -------------------------------------------------------------------------------- Total receivables and leases 3,436.6 4,059.5 - -------------------------------------------------------------------------------- Allowance for credit losses (77.5) (83.0) - -------------------------------------------------------------------------------- Total receivables and leases-net 3,359.1 3,976.5 - -------------------------------------------------------------------------------- Other Receivables 182.8 87.5 - -------------------------------------------------------------------------------- Other Assets 46.4 49.6 - -------------------------------------------------------------------------------- TOTAL $3,753.5 $4,204.7 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDER'S EQUITY - -------------------------------------------------------------------------------- Short-Term Borrowings: - -------------------------------------------------------------------------------- Commercial paper $ 454.0 $1,486.7 - -------------------------------------------------------------------------------- Deere & Company 439.5 65.7 - -------------------------------------------------------------------------------- Current maturities of long-term borrowings 405.2 464.4 - -------------------------------------------------------------------------------- Total short-term borrowings 1,298.7 2,016.8 - -------------------------------------------------------------------------------- Accounts Payable and Accrued Liabilities: - -------------------------------------------------------------------------------- Accrued interest on notes and debentures 41.1 39.4 - -------------------------------------------------------------------------------- Other payables 79.4 91.3 - -------------------------------------------------------------------------------- Total accounts payable and accrued liabilities 120.5 130.7 - -------------------------------------------------------------------------------- Deposits Withheld from Dealers and Merchants 104.9 100.7 - -------------------------------------------------------------------------------- Long-Term Borrowings: - -------------------------------------------------------------------------------- Notes and debentures 1,178.2 893.9 - -------------------------------------------------------------------------------- Subordinated debt 300.0 345.0 - -------------------------------------------------------------------------------- Total long-term borrowings 1,478.2 1,238.9 - -------------------------------------------------------------------------------- Retirement Benefit Accruals and Other Liabilities 12.1 3.7 - -------------------------------------------------------------------------------- Stockholder's Equity: - -------------------------------------------------------------------------------- Common stock, without par value (authorized, - -------------------------------------------------------------------------------- issued and outstanding-2,500 shares - -------------------------------------------------------------------------------- owned by John Deere Credit Company) 112.8 112.8 - -------------------------------------------------------------------------------- Retained earnings 626.3 601.1 - -------------------------------------------------------------------------------- Total stockholder's equity 739.1 713.9 - -------------------------------------------------------------------------------- TOTAL $3,753.5 $4,204.7 - -------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements on pages 35 to 45 are an integral part of this statement. - --------------------------------------------------------------------------------
33 STATEMENT OF CONSOLIDATED CASH FLOWS
- ------------------------------------------------------------------------------------------- John Deere Capital Corporation and Subsidiaries For the Year Ended October 31 - ------------------------------------------------------------------------------------------- (In millions of dollars) 1993 1992 1991 - ------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: - ------------------------------------------------------------------------------------------- Net income $ 107.2 $ 95.0 $ 73.0 - ------------------------------------------------------------------------------------------- Adjustments to reconcile net income to net cash - ------------------------------------------------------------------------------------------- provided by operator activities: - ------------------------------------------------------------------------------------------- Changes in accounting, cumulative net adjustment 3.8 - ------------------------------------------------------------------------------------------- Provision for credit losses 28.1 48.5 66.2 - ------------------------------------------------------------------------------------------- Provision for depreciation 21.0 17.9 14.3 - ------------------------------------------------------------------------------------------- Deferred income taxes 3.8 (4.8) (14.5) - ------------------------------------------------------------------------------------------- Other (6.6) (1.4) 1.5 - ------------------------------------------------------------------------------------------- Net cash provided by operating activities 157.3 155.2 140.5 - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: - ------------------------------------------------------------------------------------------- Cost of receivables and leases acquired (3,340.6) (3,180.4) (3,248.7) - ------------------------------------------------------------------------------------------- Collections of receivables 2,642.5 2,708.0 2,318.7 - ------------------------------------------------------------------------------------------- Proceeds from sales of receivables 1,161.7 703.6 27.4 - ------------------------------------------------------------------------------------------- Other 13.9 14.7 10.2 - ------------------------------------------------------------------------------------------- Net cash provided by (used for) investing activities 477.5 245.9 (892.4) - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: - ------------------------------------------------------------------------------------------- Increase (decrease) in notes payable to others (1,032.7) (615.1) 310.3 - ------------------------------------------------------------------------------------------- Change in receivable/payable with Deere & Company 373.9 (39.5) 88.5 - ------------------------------------------------------------------------------------------- Proceeds from issuance of long-term borrowings 687.0 522.7 426.2 - ------------------------------------------------------------------------------------------- Principal payments on long-term borrowings (506.9) (227.5) (1.9) - ------------------------------------------------------------------------------------------- Dividends paid (82.0) (70.0) (50.0) - ------------------------------------------------------------------------------------------- Net cash provided by (used for) financing activities (560.7) (429.4) 773.1 - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 74.1 (28.3) 21.2 - ------------------------------------------------------------------------------------------- Cash and cash equivalents at beginning of year 91.1 119.4 98.2 - ------------------------------------------------------------------------------------------- Cash and cash equivalents at end of year $ 165.2 $ 91.1 $ 119.4 - ------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements on pages 35 to 45 are an integral part of this statement. - -------------------------------------------------------------------------------------------
34 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CORPORATE ORGANIZATION John Deere Capital Corporation (Capital Corporation) is a wholly-owned subsidiary of John Deere Credit Company, a finance holding company which is wholly-owned by Deere & Company. The Capital Corporation and its subsidiaries, Deere Credit Services, Inc. (DCS), Farm Plan Corporation (FPC), Deere Credit, Inc. (DCI), and John Deere Receivables, Inc. (JDRI), are collectively called the Company. Deere & Company with its other wholly-owned subsidiaries are collectively called John Deere. Retail notes, revolving charge accounts, financing leases and wholesale notes receivable are collectively called "receivables." Receivables and operating leases are collectively called "receivables and leases." The risk of credit losses applicable to John Deere retail notes and leases, net of recovery from withholdings from John Deere dealers, is borne by the Company. John Deere is compensated by the Company at a rate of 2.9 percent or less of the finance income earned, depending on prevailing bank interest rate levels, for originating retail notes on John Deere products. John Deere is reimbursed by the Company for staff support and other administrative services at estimated cost, and for credit lines provided by Deere & Company based on utilization of the lines. John Deere is compensated for originating leases on John Deere products and is reimbursed for staff support in a manner similar to the procedures for retail notes. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the financial statements of the Capital Corporation and its subsidiaries, all of which are wholly-owned. ACCOUNTING CHANGES In the fourth quarter of 1993, the Company adopted FASB Statement No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, effective November 1, 1992. Prior quarters of 1993 were restated as required by this Statement. This Statement generally requires the accrual of retiree health care and other postretirement benefits during employees' years of active service. The Company elected to recognize the pretax transition obligation of $5.4 million ($3.6 million net of deferred income taxes) as a one-time charge to earnings in the current year. This obligation represents the portion of future retiree benefit costs related to service already rendered by both active and retired employees up to November 1, 1992. The 1993 postretirement benefits expense and related disclosures have been determined according to the provisions of FASB Statement No. 106. For years prior to 1993, postretirement benefits were generally included in costs as covered expenses were actually incurred. The adoption of FASB Statement No. 106 resulted in an incremental pretax expense of $.2 million compared with the expense determined under the previous accounting principle. This increase in the current year expense is in addition to the previously mentioned one-time charge relating to the transition obligation. In the fourth quarter of 1993, the Company adopted FASB Statement No. 112, Employers' Accounting for Postemployment Benefits, effective November 1, 1992. This Statement requires the accrual of certain benefits provided to former or inactive employees after employment but before retirement during employees' years of active service. The Company previously accrued certain disability related benefits when the disability occurred. Results for the first quarter of 1993 were restated for the cumulative pretax charge resulting from this change in accounting as of November 1, 1992 which totaled $.3 million ($.2 million net of deferred income taxes). The adoption of FASB Statement No. 112 had an immaterial effect on 1993 expenses. In the fourth quarter of 1993, the Company adopted FASB Statement No. 107, Disclosures about Fair Values of Financial Instruments. Disclosures of the fair values of financial instruments which do not approximate the carrying values in the financial statements are included in the appropriate financial statement notes. Fair values of other financial instruments approximate the carrying amounts because of the short maturities or current market interest rates of those instruments. In the second quarter of 1992, the Company adopted FASB Statement No. 109, Accounting for Income Taxes. See note 10 for further information. RETAIL NOTES RECEIVABLE The Company purchases and finances retail notes from John Deere's agricultural equipment, industrial equipment and lawn and grounds care equipment sales branches in the United States. The notes are acquired by the sales branches through John Deere retail dealers and principally originate in connection with retail sales by dealers of new John Deere equipment and used equipment. The Company also purchases and finances retail 35 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS notes unrelated to John Deere equipment, representing primarily recreational vehicle and recreational marine product notes acquired from independent dealers of those products and from marine mortgage service companies (recreational product retail notes). Finance income included in the face amount of retail notes is amortized into income over the lives of the notes on the effective-yield basis. Unearned finance income on variable-rate notes is adjusted monthly based on fluctuations in the base rate of a specified bank. Costs incurred in the acquisition of retail notes are deferred and amortized into income over the expected lives of the notes on the effective-yield basis. A portion of the finance income earned by the Company arises from retail sales of John Deere equipment sold in advance of the season of use or in other sales promotions by John Deere on which finance charges are waived by John Deere for a period from the date of sale to a specified subsequent date. Some low-rate financing programs are also offered by John Deere. The Company receives compensation from John Deere approximately equal to the normal net finance charge on retail notes for periods during which finance charges have been waived or reduced. The portions of the Company's finance income earned that were received from John Deere on retail notes containing waiver of finance charges or reduced rates were 19 percent in 1993, 17 percent in 1992 and 20 percent in 1991. A deposit equal to one percent of the face amount of John Deere agricultural and lawn and grounds care equipment retail notes originating from each dealer is withheld from that dealer and recorded by the Company. Any subsequent retail note losses are charged against the withheld deposits. To the extent that a loss on a retail note cannot be absorbed by deposits withheld from the dealer from which the retail note was acquired, it is charged against the Company's allowance for credit losses. At the end of each calendar year, the balance of each dealer's withholding account in excess of a specified percent (currently 3 percent) of the total balance outstanding on retail notes originating with that dealer is remitted to the dealer, and any negative balance in the dealer withholding account is written off and absorbed by the Company's allowance for credit losses. All John Deere industrial equipment retail notes are currently acquired on a non-recourse basis and there is no withholding of dealer deposits on those notes. This procedure originated in January 1992. Industrial notes acquired prior to January 1992 remain subject to the agricultural and lawn and grounds care equipment procedures, noted in the above paragraph, until the notes are paid in full, or the withholding accounts are depleted. Because of this change, the allowance for credit losses was increased to compensate for the additional credit risk. The Company does not withhold deposits on recreational product retail notes. The Company requires that theft and physical damage insurance be carried on all equipment leased or securing retail notes. The customer may, at his own expense, have the Company purchase this insurance or obtain it from other sources. Theft and physical damage insurance is also required on wholesale notes and can be purchased through the Company or from other sources. Insurance is not required on revolving charge accounts. Generally, when an account becomes 120 days delinquent, accrual of finance income is suspended, the collateral is repossessed or the account is designated for litigation, and the estimated uncollectible amount, after charging the dealer's withholding account, if any, is written off to the allowance for credit losses. REVOLVING CHARGE ACCOUNTS RECEIVABLE Revolving charge account income is generated primarily by two revolving credit products: Farm Plan and the John Deere Credit Revolving Plan. Farm Plan is primarily used by agri-businesses to finance customer purchases, such as parts and service labor, which would otherwise be carried by the merchants as accounts receivable. Farm Plan income includes a discount paid by merchants for the purchase of customer accounts and finance charges paid by customers on their outstanding revolving charge account balances. Merchant recourse and a merchant reserve are established on some receivables purchased. The John Deere Credit Revolving Plan is used primarily by retail customers of John Deere dealers to finance lawn and grounds care equipment. Income includes a discount paid by dealers on most transactions and finance charges paid by customers on their outstanding account balances. Accrual of revolving charge account income is suspended generally when an account becomes 120 days delinquent. Accounts are deemed to be uncollectible and written off to the allowance for credit losses when delinquency reaches 180 days for a Farm Plan account and 150 days for John Deere Credit Revolving Plan accounts. 36 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DIRECT FINANCING LEASES AND EQUIPMENT ON OPERATING LEASES The Company leases John Deere agricultural equipment, industrial equipment and lawn and grounds care equipment directly to retail customers. At the time of accepting a lease that qualifies as a direct financing lease under FASB Statement No. 13, the Company records the gross amount of lease payments receivable, estimated residual value of the leased equipment for non-purchase option leases and unearned lease income. The unearned lease income is equal to the excess of the gross lease receivable plus the estimated residual value over the cost of the equipment. The unearned lease income is recognized as revenue over the lease term on the effective-yield method. Leases that do not meet the criteria for direct financing leases as outlined by FASB Statement No. 13 are accounted for as operating leases. Rental payments applicable to equipment on operating leases are recorded as income on a straight-line method over the lease terms. Operating lease assets are recorded at cost and depreciated on a straight-line method over the terms of the leases. Lease acquisition costs are accounted for in a manner similar to the procedures for retail notes. Deposits withheld from John Deere dealers and related losses on leases are handled in a manner similar to the procedures for retail notes. In addition, a lease payment discount program, allowing reduced payments over the term of the lease, is administered in a manner similar to finance waiver on retail notes. Equipment returned to the Company upon termination of leases and held for subsequent sale or lease is recorded at the estimated wholesale market value of the equipment. Generally, when an account becomes 120 days delinquent, accrual of lease revenue is suspended, the equipment is repossessed or the account is designated for litigation and the estimated uncollectible amount, after charging the dealer's withholding account, if any, is written off to the allowance for credit losses. WHOLESALE RECEIVABLES The Company finances recreational vehicle inventory and John Deere engines held by dealers of those products. Wholesale finance income is recognized monthly based on the daily balance of wholesale receivables outstanding and the applicable effective interest rate. Interest rates vary with a prevailing bank base rate, the type of equipment financed and the balance outstanding. Wholesale receivables are secured by the recreational vehicle and engine inventories financed. Although amounts are not withheld from dealers to cover uncollectible receivables, there are repurchase agreements with manufacturers for new inventories held by dealers. Generally, when an account becomes 60 days delinquent, accrual of finance income is suspended, the collateral is repossessed and the estimated uncollectible amount is written off to the allowance for credit losses. OTHER RECEIVABLES During 1993 and 1992, the Company sold retail notes to limited-purpose business trusts, which utilized the notes as collateral for the issuance of asset backed securities to the public. At the time of the sales, "other receivables" from the trusts were recorded at net present value. The receivables relate to deposits made pursuant to recourse provisions and other payments to be received under the sales agreements. The receivables will be amortized to their value at maturity using the interest method. The Company is also compensated by the trusts for certain expenses incurred in the administration of these receivables. Securitization and servicing fee income includes both the amortization of the above receivables and reimbursed administrative expenses. CONCENTRATION OF CREDIT RISK Receivables and leases have significant concentrations of credit risk in the agricultural, industrial, lawn and grounds care, and recreational product business sectors as shown in note 2, "Receivables and Leases." On a geographic basis, there is not a disproportionate concentration of credit risk in any area of the United States. The Company retains as collateral a security interest in the equipment associated with receivables and leases other than revolving charge accounts. RECLASSIFICATIONS Certain amounts for 1991 and 1992 have been reclassified to conform with 1993 financial statement presentations. 37 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 RECEIVABLES AND LEASES RETAIL NOTES RECEIVABLE Retail notes receivable by product category at October 31 in millions of dollars follow:
1993 1992 - --------------------------------------------------------------------------- Agricultural equipment--new $ 993.1 $1,350.2 - --------------------------------------------------------------------------- Agricultural equipment--used 840.0 1,092.4 - --------------------------------------------------------------------------- Industrial equipment--new 233.1 319.7 - --------------------------------------------------------------------------- Industrial equipment--used 71.8 85.3 - --------------------------------------------------------------------------- Lawn and grounds care equipment--new 175.1 203.2 - --------------------------------------------------------------------------- Lawn and grounds care equipment--used 22.2 23.8 - --------------------------------------------------------------------------- Recreational Products 1,303.1 1,446.5 - --------------------------------------------------------------------------- Total 3,638.4 4,521.1 - --------------------------------------------------------------------------- Unearned finance income: - --------------------------------------------------------------------------- John Deere (347.7) (435.8) - --------------------------------------------------------------------------- Recreational Products (499.0) (576.2) - --------------------------------------------------------------------------- Total (846.7) (1,012.0) - --------------------------------------------------------------------------- Retail notes receivable--net $2,791.7 $3,509.1 - --------------------------------------------------------------------------- Retail note installments at October 31 are scheduled as follows in millions of dollars: 1993 1992 - --------------------------------------------------------------------------- Due in: - --------------------------------------------------------------------------- 0-12 months $ 871.5 $1,180.1 - --------------------------------------------------------------------------- 13-24 months 750.9 985.9 - --------------------------------------------------------------------------- 25-36 months 618.2 776.1 - --------------------------------------------------------------------------- 37-48 months 462.6 547.6 - --------------------------------------------------------------------------- 49-60 months 308.8 335.5 - --------------------------------------------------------------------------- 61-72 months 162.6 165.0 - --------------------------------------------------------------------------- Over 72 months 463.8 530.9 - --------------------------------------------------------------------------- Total $3,638.4 $4,521.1 - --------------------------------------------------------------------------- Company guidelines relating to down payment requirements and maximum contract terms on retail notes are generally as follows: Down Contract Payment Terms - --------------------------------------------------------------------------- Agricultural equipment, new and used: - --------------------------------------------------------------------------- Seasonal payments 30% 7 crop years - --------------------------------------------------------------------------- Monthly payments 20% 84 months - --------------------------------------------------------------------------- Industrial equipment: - --------------------------------------------------------------------------- New 20% 48-60 months - --------------------------------------------------------------------------- Used 20% 36 months - --------------------------------------------------------------------------- Lawn and grounds care equipment, - --------------------------------------------------------------------------- new and used: - --------------------------------------------------------------------------- Personal use 10% 72 months - --------------------------------------------------------------------------- Commercial use 20% 72 months - --------------------------------------------------------------------------- Recreational Products: - --------------------------------------------------------------------------- New 20% 180 months - --------------------------------------------------------------------------- Used 20% 144 months - ---------------------------------------------------------------------------
During 1993, the average effective yield on retail notes held by the Company was approximately 9.8 percent compared with 10.1 percent in 1992. Retail notes acquired by the Company during the year ended October 31, 1993 had an estimated average original term (based on dollar amounts) of 67 months. During 1992 and 1991, the estimated average original term was 68 and 66 months, respectively. Historically, because of prepayments, the average actual life of retail notes has been considerably shorter than the average original term. During 1993, the Company received net proceeds of $1.143 billion from the sale of retail notes to limited-purpose business trusts, which utilized the notes as collateral for the issuance of asset backed securities to the public. During 1992, the Company received net proceeds of $683 million from the sale of retail notes. At October 31, 1993 and 1992, the net balance of all retail notes previously sold by the Company was $1.394 billion and $688 million, respectively. Additional sales of retail notes are expected to be made in the future. The Company recognizes any gain or loss at the time of the sale of retail notes. The sale price of retail notes sold to financial institutions is subject to subsequent monthly adjustments to reflect changes in short-term interest rates and variations in timing between actual and anticipated collections. The Company acts as agent for the buyers in collection and administration of all the notes it has sold and was contingently liable for recourse in the maximum amount of $108 million and $67 million at October 31, 1993 and 1992, respectively. All retail notes sold are collateralized by security agreements on the related machinery sold to the customers. There is a minimal amount of market risk due to monthly adjustments to the sale price of a small portion of the retail notes. There is no anticipated credit risk related to the nonperformance by the counterparties. REVOLVING CHARGE ACCOUNTS RECEIVABLE Revolving charge accounts receivable at October 31, 1993 totaled $331 million compared with $268 million at October 31, 1992. Account holders may pay the account balance in full at any time, or make payments over a number of months according to a payment schedule. A minimum amount is due each month from customers selecting the revolving payment option. FINANCING LEASES RECEIVABLE Financing leases receivable by product category at October 38 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 31 are as follows in millions of dollars:
1993 1992 - --------------------------------------------------------------------------- Agricultural equipment $ 68.5 $ 71.8 - --------------------------------------------------------------------------- Industrial equipment 23.8 18.1 - --------------------------------------------------------------------------- Lawn and grounds care equipment 4.9 5.8 - --------------------------------------------------------------------------- Total 97.2 95.7 - --------------------------------------------------------------------------- Estimated residual values 2.3 3.1 - --------------------------------------------------------------------------- Unearned finance income (14.6) (13.4) - --------------------------------------------------------------------------- Financing leases receivable--net $ 84.9 $ 85.4 - ---------------------------------------------------------------------------
Residual values represent the amounts estimated to be recoverable at maturity from disposition of the leased equipment under non-purchase option financing leases. Initial lease terms for financing leases range from 12 months to 72 months. Payments on financing leases receivable at October 31 are scheduled as follows in millions of dollars:
1993 1992 - --------------------------------------------------------------------------- Due in: - --------------------------------------------------------------------------- 0-12 months $ 35.4 $ 62.2 - --------------------------------------------------------------------------- 13-24 months 25.9 18.5 - --------------------------------------------------------------------------- 25-36 months 18.3 10.1 - --------------------------------------------------------------------------- 37-48 months 11.1 4.1 - --------------------------------------------------------------------------- Over 48 months 6.5 .8 - --------------------------------------------------------------------------- Total $ 97.2 $ 95.7 - ---------------------------------------------------------------------------
The Company sold $19 million of municipal leases to Deere & Company in 1993 compared with $21 million in 1992. At October 31, 1993, the net balance of leases sold was $43 million compared with $48 million at October 31, 1992. Additional sales of leases may be made in the future. WHOLESALE RECEIVABLES Wholesale receivables at October 31, 1993 totaled $110 million compared with $112 million at October 31, 1992. Maturities range from 12 to 24 months, with scheduled principal reductions from invoice date to maturity. EQUIPMENT ON OPERATING LEASES The cost of equipment on operating leases by product category at October 31 follows in millions of dollars:
1993 1992 - --------------------------------------------------------------------------- Agricultural equipment $ 102.4 $ 63.0 - --------------------------------------------------------------------------- Industrial equipment 49.1 48.1 - --------------------------------------------------------------------------- Lawn and grounds care equipment 1.6 1.6 - --------------------------------------------------------------------------- Total 153.1 112.7 - --------------------------------------------------------------------------- Accumulated depreciation (33.8) (27.6) - --------------------------------------------------------------------------- Equipment on operating leases--net $ 119.3 $ 85.1 - ---------------------------------------------------------------------------
Initial lease terms for equipment on operating leases range from 12 months to 72 months. Rental payments for equipment on operating leases at October 31 are scheduled as follows in millions of dollars:
1993 1992 - --------------------------------------------------------------------------- Due in: - --------------------------------------------------------------------------- 0-12 months $ 27.0 $ 20.0 - --------------------------------------------------------------------------- 13-24 months 17.7 14.0 - --------------------------------------------------------------------------- 25-36 months 4.9 7.3 - --------------------------------------------------------------------------- 37-48 months 1.6 2.3 - --------------------------------------------------------------------------- Over 48 months .2 .2 - --------------------------------------------------------------------------- Total $ 51.4 $ 43.8 - ---------------------------------------------------------------------------
FAIR VALUE At October 31, 1993, the estimated fair value of total net receivables and leases was $3.516 billion compared with the carrying value of $3.436 billion. The fair values of fixed-rate retail notes and financing leases were based on the discounted values of their related cash flows at current market interest rates. The fair values of variable-rate retail notes, revolving charge accounts and wholesale notes approximate the carrying amounts. NOTE 3 ALLOWANCE FOR CREDIT LOSSES Allowances for credit losses on receivables and leases are maintained in amounts considered to be appropriate in relation to the receivables and leases outstanding based on estimated collectibility and collection experience. An analysis of the allowance for credit losses on total receivables and losses follows in millions of dollars:
1993 1992 1991 - --------------------------------------------------------------------------- Balance, beginning - --------------------------------------------------------------------------- of the year $ 83.0 $ 78.2 $ 68.5 - --------------------------------------------------------------------------- Provision charged to - --------------------------------------------------------------------------- operations 28.1 48.5 66.2 - --------------------------------------------------------------------------- Amounts written off (26.1) (43.7) (56.5) - --------------------------------------------------------------------------- Transfers related to - --------------------------------------------------------------------------- retail note sales (7.5) - --------------------------------------------------------------------------- Balance, end of the year $ 77.5 $ 83.0 $ 78.2 - ---------------------------------------------------------------------------
The allowance for credit losses represented 2.3 percent, 2.0 percent and 1.8 percent of receivables and leases outstanding at October 31, 1993, 1992 and 1991, respectively. In addition, the Company had $105 million, $101 million and $99 million at October 31, 1993, 1992 and 1991, respectively, of deposits withheld from John Deere dealers and Farm Plan merchants available for certain potential credit losses originating from those dealers and merchants. The lower provisions in 1993 and 1992 resulted from a decrease in write-offs of uncollectible receivables and leases, particularly recreational product retail notes. The decrease in write-offs of recreational product notes resulted primarily from the development of more selective recreational product retail note acquisition criteria by the Company over the past few years and improved collection effectiveness. 39 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 SHORT-TERM BORROWINGS On October 31, 1993, short-term borrowings were $1.299 billion, $454 million of which was commercial paper. Short-term borrowings were $2.017 billion one year ago, $1.487 billion of which was commercial paper. Original maturities of commercial paper outstanding on October 31, 1993 ranged up to 244 days. The weighted average remaining term of commercial paper outstanding on October 31, 1993 was approximately 71 days. The Capital Corporation's short-term debt also includes amounts borrowed from Deere & Company, which totaled $439.5 million at October 31, 1993. The Capital Corporation pays a market rate of interest to Deere & Company based on the average outstanding borrowings each month. The weighted average interest rates on all short-term borrowings, excluding current maturities of long-term borrowings, for 1993, 1992 and 1991 were 4.0 percent, 5.0 percent and 6.9 percent, respectively. At October 31, 1993, the Capital Corporation and Deere & Company, jointly, had unsecured lines of credit with various banks in North America and overseas totaling $3.025 billion. Included in the total credit lines are three long-term credit agreements expiring on various dates through March 1996 for an aggregate maximum amount of $3.016 billion. At October 31, 1993, $2.265 billion of the lines of credit were unused. For the purpose of computing unused credit lines, the aggregate of total short-term borrowings, excluding the current portion of long-term borrowings, of the Capital Corporation, Deere & Company, John Deere Limited (Canada) and John Deere Finance Limited (Canada) were considered to constitute utilization. Annual facility fees on the credit agreements are paid by Deere & Company and charged to the Capital Corporation based on utilization. At October 31, 1993, the Capital Corporation had no borrowings outstanding under the credit agreements. These agreements require the Capital Corporation to maintain its consolidated ratio of earnings before fixed charges to fixed charges at no less than 1.05 to 1 for each fiscal quarter. In addition, the Capital Corporation's ratio of senior debt to total stockholder's equity plus subordinated debt may not be more than 8 to 1 at the end of any fiscal quarter. For purposes of these calculations, "earnings" consist of income before income taxes to which are added fixed charges. "Fixed charges" consist of interest on indebtedness, amortization of debt discount and expense, an estimated amount of rental expense under capitalized leases which is deemed to be representative of the interest factor and rental expense under operating leases. "Senior debt" consists of the Company's total interest-bearing obligations, excluding subordinated debt, but including borrowings from Deere & Company. The Company's ratio of earnings to fixed charges was 1.99 to 1 (excluding the effect of the accounting changes), 1.74 to 1 and 1.48 to 1 in 1993, 1992 and 1991, respectively. The Company's ratio of senior debt to total stockholder's equity plus subordinated debt was 2.2 to 1 at October 31, 1993 compared with 2.7 to 1 at October 31, 1992. In common with other large finance and credit companies, the Company actively manages the relationship of the types and amounts of its funding sources to its receivable and lease portfolios in an effort to diminish risk due to interest rate and currency fluctuations, while responding to favorable competitive and financing opportunities. Accordingly, from time to time, the Company has entered into interest rate swap and interest rate cap agreements to hedge its interest rate exposure in amounts corresponding to a portion of its short-term borrowings. At October 31, 1993 and 1992, the total notional principal amounts of interest rate swap agreements were $510 million and $150 million having rates of 3.6 to 9.6 percent terminating in up to 28 months and 14 months, respectively. The total notional principal amounts of interest rate cap agreements at October 31, 1993 and 1992 were $44 million and $105 million having capped rates of 8.0 percent to 9.0 percent terminating in up to 15 months and 28 months, respectively. The differential to be paid or received on all swap and cap agreements is accrued as interest rates change and is recognized over the lives of the agreements. The credit and market risk under these agreements is not considered to be significant. The estimated fair value and carrying value of these interest rate swap and cap agreements were not significant at October 31, 1993. 40 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 LONG-TERM BORROWINGS Long-term borrowings of the Capital Corporation at October 31 consisted of the following in millions of dollars:
1993 1992 - -------------------------------------------------------------------------------- Senior Debt: - -------------------------------------------------------------------------------- Medium-term notes due 1994-2000: - -------------------------------------------------------------------------------- Average interest rate of 5.9% as - -------------------------------------------------------------------------------- of year end 1993 and 6.7% as of - -------------------------------------------------------------------------------- year end 1992 $ 382.0 $ 400.1 - -------------------------------------------------------------------------------- 5% Debenture due 1995 150.0 - -------------------------------------------------------------------------------- 4-5/8% Debenture due 1996 200.0 - -------------------------------------------------------------------------------- 6.0% Notes due 1995: - -------------------------------------------------------------------------------- Swapped to variable interest rate - -------------------------------------------------------------------------------- of 3.1% as of year end 1993 - -------------------------------------------------------------------------------- and 3.6% as of year end 1992 100.0 100.0 - -------------------------------------------------------------------------------- 11-5/8% Notes due 1995: - -------------------------------------------------------------------------------- Swapped to variable interest rate - -------------------------------------------------------------------------------- of 3.2% as of year end 1993 and - -------------------------------------------------------------------------------- 3.3% as of year end 1992 150.0 150.0 - -------------------------------------------------------------------------------- 7.2% Debenture due 1997 100.0 100.0 - -------------------------------------------------------------------------------- 7.5% Debenture due 1998 47.5 - -------------------------------------------------------------------------------- 5% Swiss Franc Bonds due 1999: - -------------------------------------------------------------------------------- Swapped to variable interest rate - -------------------------------------------------------------------------------- of 3.7% as of year end 1993 and - -------------------------------------------------------------------------------- 3.8% as of year end 1992 97.5 97.5 - -------------------------------------------------------------------------------- Total 1,179.5 895.1 - -------------------------------------------------------------------------------- Less unamortized debt discount 1.3 1.2 - -------------------------------------------------------------------------------- Net Senior Debt 1,178.2 893.9 - -------------------------------------------------------------------------------- Subordinated Debt: - -------------------------------------------------------------------------------- 9-5/8% Subordinated Notes due 1998: - -------------------------------------------------------------------------------- Swapped to variable interest rate - -------------------------------------------------------------------------------- of 3.8% as of year end 1993 and - -------------------------------------------------------------------------------- 3.9% as of year end 1992 150.0 150.0 - -------------------------------------------------------------------------------- 9.35% Subordinated Debentures - -------------------------------------------------------------------------------- due 2003 45.0 - -------------------------------------------------------------------------------- 8-5/8% Subordinated Debentures - -------------------------------------------------------------------------------- due 2019: Swapped to variable - -------------------------------------------------------------------------------- interest rate of 3.2% as of - -------------------------------------------------------------------------------- year end 1993 and 3.2% as of - -------------------------------------------------------------------------------- year end 1992 150.0 150.0 - -------------------------------------------------------------------------------- Total Subordinated Debt 300.0 345.0 - -------------------------------------------------------------------------------- Total $1,478.2 $1,238.9 - --------------------------------------------------------------------------------
In 1993, the Capital Corporation issued $150 million of 5% notes due in 1995 and $200 million of 4-5/8% notes due in 1996. The Capital Corporation also retired $150 million of 7.4% notes due in 1993, $125 million of 9.0% debentures due in 1993 and $47 million of 7-1/2% debentures due in 1998. During 1993, the Capital Corporation issued $337 million and retired $176 million of medium-term notes. In November 1993, the Capital Corporation announced that on January 4, 1994 it will redeem the $40 million balance of outstanding 9.35% subordinated debentures due 2003. The Capital Corporation has entered into interest rate swap agreements with independent parties that change the effective rate of interest on certain long-term borrowings to a variable rate based on specified United States commercial paper rate indices. The table reflects the effective year-end variable interest rates relating to these swap agreements. The notional principal amounts and maturity dates of these swap agreements are the same as the principal amounts and maturities of the related borrowings. In addition, the Capital Corporation has interest rate swap agreements corresponding to a portion of its fixed rate long-term borrowings. At October 31, 1993, the total notional principal amount of these interest rate swap agreements was $347 million, having variable rates of 3.4 percent to 3.8 percent, terminating in up to 40 months. The Capital Corporation also has interest rate swap and cap agreements associated with medium-term notes. The table reflects the interest rates relating to these swap and cap agreements. At October 31, 1993 and 1992, the total notional principal amounts of these swap agreements were $138 million and $110 million, terminating in up to 42 months and 54 months, respectively. At October 31, 1993 and 1992, the total notional principal amounts of these cap agreements were $25 million and $125 million, terminating in up to 22 months and 34 months, respectively. A Swiss franc to United States dollar currency swap agreement is also associated with the Swiss franc bonds in the table. The credit and market risk under these agreements is not considered to be significant. At October 31, 1993, the total estimated fair value of the Company's total long-term borrowings was $1.496 billion. The corresponding carrying amount of total long-term borrowings was $1.478 billion. Fair values of long-term borrowings with fixed rates were based on a discounted cash flow model. Fair values of long-term borrowings, which have been swapped to current variable interest rates, approximate their carrying amounts. The estimated fair value and carrying value of the Company's interest rate swap and cap agreements associated with medium-term notes were not significant at October 31, 1993. The approximate amounts of long-term borrowings maturing and sinking fund payments required in each of the next five years, in millions of dollars, are as follows: 1994-$405, 1995-$633, 1996-$262, 1997-$309, 1998-$11. 41 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6 FIXED CHARGE COVERAGE Deere & Company has expressed an intention of conducting its business with the Company on such terms that the Company's consolidated ratio of earnings before fixed charges to fixed charges will not be less than 1.05 to 1 for each fiscal quarter. Financial support was not provided in 1993, 1992 or 1991, as the ratios were 1.99 to 1 (excluding the effect of the accounting changes), 1.74 to 1, and 1.48 to 1, respectively. This arrangement is not intended to make Deere & Company responsible for the payment of obligations of the Company. NOTE 7 COMMON STOCK All of the Company's common stock is owned by John Deere Credit Company, a wholly-owned finance holding subsidiary of Deere & Company. No shares of common stock of the Company were reserved for officers or employees or for options, warrants, conversions or other rights at October 31, 1993 or 1992. NOTE 8 DIVIDENDS In October 1993, the Capital Corporation paid a cash dividend to John Deere Credit Company of $82 million, which in turn paid an $82 million cash dividend to Deere & Company. Similarly, during 1992, the Capital Corporation paid a $70 million dividend. During the first quarter of 1994, the Capital Corporation declared and paid a dividend of $150 million to John Deere Credit Company, which in turn declared and paid a dividend of $150 million to Deere & Company. NOTE 9 PENSION AND OTHER RETIREMENT BENEFITS The Company participates in the Deere & Company salaried pension plan, which is a defined benefit plan in which benefits are based primarily on years of service and employees' compensation near retirement. This plan is funded according to the 1974 Employee Retirement Income Security Act (ERISA) and income tax regulations. Plan assets consist primarily of common stocks, common trust funds, government securities and corporate debt securities. Pension expense is actuarially determined based on the Company's employees included in the plan. The Company's pension expense amounted to $1.5 million in 1993, $1.0 million in 1992 and was negligible in prior years. Further disclosure for the plan is included in the Deere & Company 1993 annual report pension note. During the fourth quarter of 1993, the Company adopted FASB Statement No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, effective November 1, 1992. Additional information is presented in the "Summary of Significant Accounting Policies" on page 35, and the "Quarterly Data (unaudited)" on page 45. The Company generally provides defined benefit health care and life insurance plans for retired employees. Health care and life insurance benefits expense is actuarially determined based on the Company's employees included in the plans and amounted to $.6 million in 1993. The 1992 and 1991 expenses were negligible as determined under the previous accounting principle. 42 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 10 INCOME TAXES TAXES ON INCOME AND INCOME TAX CREDITS The taxable income of the Company is included in the consolidated United States income tax return of Deere & Company. Provisions for income taxes are made generally as if the Capital Corporation and each of its subsidiaries filed separate income tax returns. DEFERRED INCOME TAXES In 1992, the Company adopted FASB Statement No. 109, Accounting for Income Taxes. There was no cumulative effect of adoption or current effect on continuing operations mainly because the Company had previously adopted FASB Statement No. 96, Accounting for Income Taxes, in 1988. Deferred income taxes arise because there are certain items that are treated differently for financial accounting than for income tax reporting purposes. An analysis of deferred income tax assets and liabilities at October 31 in millions of dollars follows:
1993 1992 ----------------------------------------------------- Deferred Deferred Deferred Deferred Tax Tax Tax Tax Assets Liabilities Assets Liabilities - ---------------------------------------------------------------------------------------------------------- Allowance for credit losses $27.1 $28.2 - ---------------------------------------------------------------------------------------------------------- Deferred lease income $4.1 $2.6 - ---------------------------------------------------------------------------------------------------------- Deferred retail note - ---------------------------------------------------------------------------------------------------------- finance income 1.5 .2 - ---------------------------------------------------------------------------------------------------------- Accrual for retirement and - ---------------------------------------------------------------------------------------------------------- postemployment benefits 2.1 - ---------------------------------------------------------------------------------------------------------- Miscellaneous accruals and other .4 .1 .5 - ---------------------------------------------------------------------------------------------------------- Total deferred income tax - ---------------------------------------------------------------------------------------------------------- assets and liabilities $29.2 $6.0 $28.3 $3.3 - ----------------------------------------------------------------------------------------------------------
The provision for income taxes consisted of the following in millions of dollars:
1993 1992 1991 - ------------------------------------------------------------------------------------------- Current $ 54.5 $ 52.7 $ 52.3 - ------------------------------------------------------------------------------------------- Deferred 3.8 (4.8) (14.5) - ------------------------------------------------------------------------------------------- Total provision for - ------------------------------------------------------------------------------------------- income taxes $ 58.3 $ 47.9 $ 37.8 - -------------------------------------------------------------------------------------------
The Omnibus Budget Reconciliation Act of 1993, which enacted an increase in the United States federal statutory income tax rate effective January 1, 1993, was signed into law during the fourth quarter of 1993. In accordance with FASB Statement No. 109, Accounting for Income Taxes, deferred tax assets and liabilities as of the enactment date were revalued during the fourth quarter of 1993 using the new rate of 35 percent. This resulted in a credit of $.7 million to the provision for income taxes. EFFECTIVE INCOME TAX PROVISION A comparison of the statutory and effective income tax provisions of the Company and reasons for related differences follow in millions of dollars:
1993 1992 1991 - ------------------------------------------------------------------------------------------ United States federal income tax - ------------------------------------------------------------------------------------------ provision at a statutory rate - ------------------------------------------------------------------------------------------ of 34.83 percent in 1993 - ------------------------------------------------------------------------------------------ and 34 percent - ------------------------------------------------------------------------------------------ in 1992 and 1991 $ 59.0 $ 48.6 $ 37.7 - ------------------------------------------------------------------------------------------ Municipal lease income - ------------------------------------------------------------------------------------------ not taxable (.3) (.2) (.3) - ------------------------------------------------------------------------------------------ Effect of statutory tax rate - ------------------------------------------------------------------------------------------ change on deferred taxes (.7) - ------------------------------------------------------------------------------------------ Other adjustments--net .3 (.5) .4 - ------------------------------------------------------------------------------------------ Total provision for - ------------------------------------------------------------------------------------------ income taxes $ 58.3 $ 47.9 $ 37.8 - ------------------------------------------------------------------------------------------
43 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 11 CASH FLOW INFORMATION For purposes of the statement of consolidated cash flows, the Company considers investments with original maturities of three months or less to be cash equivalents. Substantially all of the Company's short-term borrowings mature within three months or less. Cash payments by the Company for interest incurred on borrowings in 1993, 1992 and 1991 were $134.8 million, $172.6 million and $215.9 million, respectively. Cash payments for income taxes during these same periods were $54.9 million, $53.0 million and $53.3 million, respectively. NOTE 12 LEGAL PROCEEDINGS The Company is subject to various unresolved legal actions which arise in the normal course of its business. The most prevalent of such actions relates to state and federal regulations concerning retail credit. There are various claims and pending actions against the Company with respect to commercial and consumer financing matters. These matters include lawsuits pending in federal and state courts in Texas alleging that certain of the Company's retail finance contracts for recreational vehicles and boats violate certain technical provisions of Texas consumer credit statutes dealing with maximum rates, licensing and disclosures. The plaintiffs in Texas claim they are entitled to common law and statutory damages and penalties. On November 6, 1992 the federal District Court certified a federal class action under Rule 23 (b) (3) of the Federal Rules of Civil Procedure in an action brought by Russell Durrett, individually and on behalf of others, against John Deere Company (filed in state court on February 19, 1992 and removed on February 26, 1992 to the United States District Court for the Northern District of Texas, Dallas Division). On October 12, 1993, in a case named DEERE CREDIT, INC. V. SHIRLEY Y. MORGAN, ET AL., filed February 20, 1992, the 281st District Court for Harris County, Texas, certified a class under Rules 42 (b) (1) (A), 42 (b) (1) (B) and 42 (b) (2) of the Texas Rules of Civil Procedure, of all persons who opt out of the federal class action. The Company believes that it has substantial defenses and intends to defend the actions vigorously. Although it is not possible to predict the outcome of these unresolved legal actions, and the amounts of claimed damages and penalties are large, the Company believes that these unresolved legal actions will not have a material adverse effect on its consolidated financial position. 44 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 13 QUARTERLY DATA (UNAUDITED) Supplemental consolidated quarterly information for the Company follows in millions of dollars:
First Second Third Fourth Fiscal Quarter Quarter Quarter Quarter Year - -------------------------------------------------------------------------------- 1993: - -------------------------------------------------------------------------------- Revenues $115.1 $116.7 $114.4 $119.8 $466.0 - -------------------------------------------------------------------------------- Interest expense 43.6 42.8 40.7 40.7 167.8 - -------------------------------------------------------------------------------- Operating expenses (1) 30.1 33.3 30.4 35.1 128.9 - -------------------------------------------------------------------------------- Income taxes 14.0 13.8 14.7 15.8 58.3 - -------------------------------------------------------------------------------- Income before changes in accounting (1) 27.4 26.8 28.6 28.2 111.0 - -------------------------------------------------------------------------------- Changes in accounting (1) 3.8 3.8 - -------------------------------------------------------------------------------- Net income 23.6 26.8 28.6 28.2 107.2 - -------------------------------------------------------------------------------- 1992: - -------------------------------------------------------------------------------- Revenues $117.5 $116.8 $120.0 $116.6 $470.9 - -------------------------------------------------------------------------------- Interest expense 53.2 46.7 45.9 43.5 189.3 - -------------------------------------------------------------------------------- Operating expenses 33.1 34.7 31.4 39.5 138.7 - -------------------------------------------------------------------------------- Income taxes 10.6 11.6 14.9 10.8 47.9 - -------------------------------------------------------------------------------- Net income 20.6 23.8 27.8 22.8 95.0 - -------------------------------------------------------------------------------- (1) In the fourth quarter of 1993, the Company adopted FASB Statement Nos. 106 and 112 relating to postretirement and postemployment benefits, effective November 1, 1992. Accordingly, results for the first quarter of 1993 were restated for the cumulative after-tax effect of these changes in accounting as of November 1, 1992, which totaled $3.8 million. Previously reported income before changes in accounting for the first three quarters of 1993 were also restated to reflect incremental pretax postretirement benefits expense of $.2 million ($.1 million after income taxes) compared with expense under the previous accounting principles. The fourth quarter of 1993 also included an incremental pretax increase in the postretirement and postemployment benefits expense of $.1 million compared with expense under the previous accounting principles. Additional information relating to the adoption of FASB Statement Nos. 106 and 112 is presented in the "Summary of Significant Accounting Policies" on page 35.
45 Schedule VIII JOHN DEERE CAPITAL CORPORATION AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED OCTOBER 31, 1993, 1992 AND 1991 (in thousands of dollars)
- -------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------- COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E -------- -------- -------- -------- -------- ADDITIONS DEDUCTIONS ------------------------- ------------------------------------- BALANCE AT CHARGED TO CHARGED TO BEGINNING COSTS AND OTHER ACCOUNTS BALANCE AT DESCRIPTION OF YEAR EXPENSES -EXPLAIN DESCRIPTION AMOUNT END OF YEAR - -------------------------------------------------------------------------------------------------------------------------------- Year Ended October 31, 1993: Reserve deducted from the asset to which it applies- Credit losses Transfers related to retail note sales $7,511 Uncollectible receivables $26,094 $77,486 --------- --------- Total $83,002 $28,089 Total Deductions $33,605 $77,486 --------- --------- --------- --------- --------- --------- --------- --------- Year ended October 31, 1992: Reserve deducted from the asset to which it applies- Credit losses Total $78,159 $48,497 Uncollectible receivables $43,654 $83,002 --------- --------- --------- --------- --------- --------- --------- --------- Year ended October 31, 1991: Reserve deducted from the asset to which it applies- Credit losses Total $68,480 $66,210 $56,531 $78,159 --------- --------- Uncollectible receivables --------- --------- --------- --------- --------- ---------
46 Schedule IX SHORT-TERM BORROWINGS FOR THE YEARS ENDED OCTOBER 31, 1993, 1992 AND 1991 (in thousands of dollars) - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------- COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F -------- -------- -------- -------- -------- -------- MAXIMUM AMOUNT AVE AMOUNT WEIGHTED AVE OUTSTANDING OUTSTANDING INTEREST RATE BALANCE AT END WEIGHTED AVE DURING DURING DURING CATEGORY OF AGGREGATE SHORT-TERM BORROWINGS OF PERIOD INTEREST RATE THE PERIOD THE PERIOD THE PERIOD - -------------------------------------------------------------------------------------------------------------------------------- (1) (2) (3) Year Ended October 31, 1993: Demand notes payable to Deere & Company $439,540 3.2% $439,540 $58,821 3.5% Payable to holders of commercial paper (4) 454,009 3.4% 1,477,078 1,119,574 3.4% ------------ ------------ Total short-term borrowings $893,549 3.3% $1,477,078 $1,178,395 3.4% ------------ ------------ ------------ ------------ Year ended October 31, 1992: Demand notes payable to Deere & Company $65,661 3.9% $65,661 $7,181 4.4% Payable to holders of commercial paper (4) 1,486,673 3.4% 2,011,756 $1,850,245 4.3% ------------ ------------ Total short-term borrowings $1,552,334 3.4% $2,011,756 $1,857,426 4.3% ------------ ------------ ------------ ------------ Year ended October 31, 1991: Demand notes payable to Deere & Company $105,223 5.5% $105,223 $19,487 6.7% Payable to holders of commercial paper (4) 2,101,804 5.9% 2,101,804 1,866,667 6.9% ------------ ------------ Total short-term borrowings $2,207,027 5.9% $2,207,027 $1,186,154 6.9% ------------ ------------ ------------ ------------ - -------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------- (1) Maximum amount outstanding at end of any month during the fiscal year. (2) Average amount outstanding during the period is computed by dividing the total of daily outstanding principal balances by the number of days in the fiscal year. (3) Weighted average interest rates were computed by dividing interest expense for the year (excluding commitment fees) by the average daily principal balance outstanding. When commitment fees are included in the computation of the weighted average interest rate the adjusted rates are 3.6 percent, 4.4 percent and 7.0 percent for 1993, 1992, and 1991 respectively. (4) Commercial paper is issued with varying interest rates and with varying maturities up to a maximum of 270 days.
47 INDEX TO EXHIBITS Page No. ------- 3.1 Certificate of Incorporation, as amended 50 3.2 By-laws, as amended 57 4.1 Credit agreements among registrant, Deere & Company, various financial institutions, and Chemical Bank and Deutsche Bank, as Managing Agents, dated as of December 15, 1993. 64 4.2 Revolving evergreen facility linked credit agreement among registrant, Deere & Company and a number of banks dated as of March 26, 1993 (Exhibit 4.2 to Form 10-Q of the registrant for the quarter ended April 30, 1993*). 4.3 Form of certificate for common stock (Exhibit 4.3 to Form 10-Q of the registrant for the quarter ended April 30, 1993*) 4.4 Indenture dated as of February 15, 1991 between registrant and Citibank, N.A., as Trustee (Exhibit 4.5 to Form 10-Q of the registrant for the quarter ended April 30, 1993*). Certain instruments relating to long-term debt constituting less than 10% of the registrant's total assets, are not filed as exhibits herewith pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. The registrant will file copies of such instruments upon request of the Commission. 9. Not applicable. 10.1 Agreement dated May 11, 1993 between registrant and Deere & Company concerning agricultural retail notes (Exhibit 10.1 to Form 10-Q of registrant for the quarter ended April 30, 1993*). 10.2 Agreement dated May 11, 1993 between registrant and Deere & Company concerning lawn and grounds care retail notes (Exhibit 10.2 to Form 10-Q of the registrant for the quarter ended April 30, 1993*). 10.3 Agreement dated May 11, 1993 between registrant and John Deere Industrial Equipment Company concerning industrial retail notes (Exhibit 10.3 to Form 10-Q of the registrant for the quarter ended April 30, 1993*). 48 10.4 Agreement dated January 26, 1983 between registrant and Deere & Company relating to agreements with United States sales branches on retail notes (Exhibit 10.4 to Form 10-Q of the registrant for the quarter ended April 30, 1993*). 10.5 Insurance policy no. CL-001 of Sierra General Life Insurance Company providing insurance on lives of purchasers of certain equipment financed with receivables (Exhibit 10.5 to Form 10-Q of the registrant for the quarter ended April 30, 1993*). 11. Not applicable. 12. Statement of computation of the ratio of earnings before fixed charges to fixed charges for each of the five years in the period ended October 31, 1993. 321 13. Not applicable 16. Not applicable 18. Not applicable 21. Omitted pursuant to instruction J(2) 22. Not applicable 23. Consent of Deloitte & Touche 322 24. Not applicable 27. Not applicable 28. Not applicable 99.1 Parts I and II of the Deere & Company Form 10-K for the fiscal year ended October 31, 1993.* - ----------------------------- * Incorporated by reference. Copies of these exhibits are available from the Company upon request. 49 EX-3 2 EXHIBIT 3.1 EXHIBIT 3.1 CERTIFICATE OF INCORPORATION OF JOHN DEERE CAPITAL CORPORATION (As Adopted July 18, 1958) (As Amended effective June 18, 1993) FIRST. The name of the corporation is JOHN DEERE CAPITAL CORPORATION SECOND. Its principal office in the State of Delaware is located at No. 100 West Tenth Street, in the City of Wilmington, County of New Castle. The name and address of its resident agent is The Corporation Trust Company, No. 100 West Tenth Street, Wilmington 99, Delaware. THIRD. The nature of the business, or objects or purposes to be transacted, promoted or carried on are: (a) To carry on the business of a finance company, and to perform any acts and engage in any activities or functions generally performed or engaged in by finance companies, and nothing in subsequent paragraphs of this Certificate of Incorporation shall limit the generality of this statement. (b) To purchase or otherwise acquire, sell, hypothecate or otherwise dispose of, and generally to trade and deal in: (i) Obligations and contracts of all kinds, however arising, whether of persons, partnerships, associations, corporations or other entities, whether secured or unsecured, whether or not evidenced by a written instrument, whether payable in installments or otherwise, and whether fixed or determined in amount or otherwise; (ii) Bills of lading, warehouse receipts and other documents representing goods or any interest in goods; 2 (iii) Mortgages, liens, trust receipts and any other interests in property, real or personal, tangible or intangible. (c) To make loans to any person, partnership, association, corporation or other enterprise, either with or without security. (d) To acquire, and pay for in cash, property, stock, bonds or other securities of the corporation or otherwise, the good will, rights, assets and property, and to undertake or assume the whole or any part of the obligations or liabilities, of any person, partnership, association, corporation or other enterprise. (e) To acquire, hold, guarantee, sell, mortgage, pledge or otherwise dispose of or deal in any of the shares or other interests in, or obligations of, any person, partnership, association, corporation or other enterprise, public or private, regardless of the nature of the business in which such person, partnership, association, corporation or other enterprise is or may be engaged. (f) To borrow or raise moneys for any of the objects or purposes of the corporation and, from time to time without limit as to amount, to issue, sell, pledge or otherwise dispose of appropriate instruments to evidence such indebtedness, and to secure the payment thereof by mortgage or other lien upon the whole or any part of the property of the corporation, whether at the time owned or thereafter acquired. (g) To issue stock, bonds, debentures, or other securities convertible into stock of any class or other securities of any kind of the corporation or bearing warrants or other evidence of optional rights to purchase or subscribe to stock of any class or other securities of any kind of the corporation. (h) To purchase, hold, sell and transfer the shares of its own capital stock; provided it shall not use its funds or property for the purchase of its own shares of capital stock when such use would cause any impairment of its capital except as otherwise permitted by law, and provided further that shares of its own capital stock belonging to it shall not be voted upon directly or indirectly. (i) To make any guaranty respecting stocks, dividends, securities, indebtedness, interest, contracts, or other obligations of any person, 3 partnership, association, corporation or other enterprise. (j) To hold, purchase, mortgage, sell and convey real and personal property, both tangible and intangible, either within or without the State of Delaware. (k) To carry on any business whatsoever which the corporation may deem proper or convenient in connection with any of the foregoing purposes or otherwise, or which may be calculated, directly or indirectly, to promote the interests of the corporation or to enhance the value of its property; to conduct its business in the State of Delaware, in other states, in the District of Columbia, in the territories and colonies of the United States, and in foreign countries; and to have and to exercise all the powers conferred by the laws of Delaware upon corporations formed under the act pursuant to and under which the corporation is formed. The objects and purposes specified in the foregoing clauses shall, except where otherwise expressed, be in nowise limited or restricted by reference to, or inference from, the terms of any other clause in this Certificate of Incorporation, but the objects and purposes specified in each of the foregoing clauses of this article shall be regarded as independent objects and purposes. FOURTH. The total number of shares of all classes of stock which the Corporation shall have authority to issue is 10,002,500 shares, consisting of 2,500 shares of Common Stock without par value ("Common Stock") and 10,000,000 shares of Preferred Stock, par value $1.00 per share ("Preferred Stock"). FIFTH. The Board of Directors (or a Committee delegated by the Board) shall have authority be resolution to issue the shares of Preferred Stock from time to time on such terms as it may determine and to divide the Preferred Stock into one or more series and, in connection with the creation of any such series, to determine and fix by the resolution or resolutions providing for the issuance of shares thereof: (a) the distinctive designation of such series, the number of shares which shall constitute such series, which number may be increased or decreased (but not below the number of shares then outstanding) from time to time by action of the Board of Directors, and the stated value thereof, if different from the par value thereof; (b) the dividend rate, the times of payment of dividends on the shares of such series, whether dividends shall be cumulative, and, if so, 4 from what date or dates, and the preference or relation which such dividends will bear to the dividends payable on any shares of stock of any other class or any other series of this class; (c) the price or prices at which, and the terms and conditions on which, the shares of such series may be redeemed; (d) whether or not the shares of such series shall be entitled to the benefit of a retirement or sinking fund to be applied to the purchase or redemption of such shares and, if so entitled, the amount of such fund and the terms and provisions relative to the operation thereof; (e) whether or not the shares of such series shall be convertible into, or exchangeable for, any other shares of stock of the corporation or any other securities and, if so convertible or exchangeable, the conversion price or prices, or the rates of exchange, and any adjustments thereof, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange; (f) the rights of the shares of such series in the event of voluntary or involuntary liquidation, dissolution or winding up, or upon any distribution of the assets, of the corporation; (g) whether or not the shares of such series shall have priority over or parity with or be junior to the shares of any other class or series in any respect, or shall be entitled to the benefit of limitations restricting (i) the creation of indebtedness of the corporation, (ii) the issuance of shares of any other class or series having priority over or being on a parity with the shares of such series in any respect, or (iii) the payment of dividends on, the making of other distributions in respect of, or the purchase or redemption of shares of any other class or series on a parity with or ranking junior to the shares of such series as to dividends or assets, and the terms of any such restrictions, or any other restriction with respect to shares of any other class or series on a parity with or ranking junior to the shares of such series in any respect; (h) whether such series shall have voting rights, in addition to any voting rights provided by law and, if so, the terms of such voting rights, which may be general or limited; and (i) any other powers, designations, preferences and relative, 5 participating, optional, or other special rights of such series, and the qualifications, limitations or restrictions thereof, to the full extent now or hereafter permitted by law. The powers, designations, preferences and relative, participating, optional and other special rights of each series of Preferred Stock, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding. All shares of any one series of Preferred Stock shall be identical in all respects with all other shares of such series, except that shares of any one series issued at different times may differ as to the dates from which dividends thereon shall be cumulative. SIXTH. The minimum amount of capital with which the corporation will commence business is one thousand dollars ($1,000). SEVENTH. The names and places of residence of the incorporators are as follows: Name Residence ---- --------- H. K. Webb Wilmington, Delaware H. C. Broadt Wilmington, Delaware L. H. Herman Wilmington, Delaware EIGHTH. The corporation is to have perpetual existence. NINTH. The private property of the stockholders shall not be subject to the payment of corporate debts to any extent whatever. TENTH. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: To make, alter or repeal the bylaws of the corporation; To authorize and cause to be executed mortgages and other liens upon the real and personal property of the corporation; To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created; 6 By resolution passed by a majority of the whole board, to designate one or more committees, each committee to consist of two or more of the directors of the corporation, which, to the extent provided in the resolution or in the bylaws of the corporation, shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be stated in the bylaws of the corporation or as may be determined from time to time by resolution adopted by the board of directors; When and as authorized by the affirmative vote of the holders of a majority of the stock issued and outstanding having voting power given at a stockholders' meeting duly called for that purpose, or when authorized by the written consent of the holders of a majority of the voting stock issued and outstanding, to sell, lease, or exchange all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may be in whole or in part shares of stock in or other securities of any other corporation or corporations, or both, as the board of directors shall deem expedient and for the best interests of the corporation. ELEVENTH. No contract or other transaction between this corporation and any other entity or person (including directors, officers and stockholders of this corporation) and no act of this corporation shall be invalidated or rendered voidable solely by reason of the fact that any of the directors, officers or stockholders of this corporation are pecuniarily or otherwise interested in such contract, transaction or act of the corporation, individually or as directors, trustees, partners, officers, or holders of equivalent positions in such entity or person, or by reason of a pecuniary or other interest in such entity or person; and any director of this corporation who is so interested may be counted in determining the existence of a quorum at any meeting of the board of directors of this corporation which shall authorize any such contract, transaction or act and may vote at any such meeting to authorize any such contract, transaction or act. TWELFTH. The board of directors, by the affirmative vote of a majority of the whole board, and irrespective of any personal interest of its members, shall have authority to provide reasonable compensation of all directors for services, ordinary or extraordinary, to the corporation as directors, officers or otherwise. THIRTEENTH. Any person made a party to any action, suit or proceeding, whether civil, criminal, administrative or other, by reason of the fact that he, 7 or his testator or intestate, is or was a director, officer or employee of the corporation or of any other enterprise which he, or his testator or intestate, served as such at the request of the corporation, shall be indemnified by the corporation against the reasonable expenses actually and necessarily incurred by him in connection with the defense of such action, suit or proceeding, and against amounts paid by him (other than to the corporation or such other enterprise) in reasonable settlement of any such action, suit or proceeding, where it is in the interest of the corporation that such settlement be made, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such director, officer or employee is liable for negligence or misconduct in the performance of duty, or in the event of settlement, where it shall appear that such person is guilty of negligence or misconduct in the performance of duty. The foregoing right of indemnification shall not be deemed exclusive of any other right to which those indemnified may be entitled, under any bylaw, agreement, vote of stockholders, or otherwise. FOURTEENTH. Meetings of stockholders and directors may be held outside the State of Delaware, if the bylaws so provide. The books and records of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware. Elections of directors need not be by ballot unless the bylaws of the corporation shall so provide. FIFTEENTH. The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. ***** EX-3 3 EXHIBIT 3.2 EXHIBIT 3.2 BYLAWS OF JOHN DEERE CAPITAL CORPORATION (As Amended August 27, 1993) ARTICLE I - IDENTIFICATION SECTION 1. NAME. The name of the Company is John Deere Capital Corporation (hereinafter referred to as the "Company"). SECTION 2. OFFICES. The principal office of the Company in Delaware shall be at 1209 Orange Street, in the City of Wilmington, County of New Castle, State of Delaware. The Company may maintain, change or discontinue its other offices, including its principal business office in the City of Reno, State of Nevada, and may have such other offices both within and without the State of Delaware as its business may require. SECTION 3. SEAL. The seal of the Company shall be circular in form and mounted upon a metal die, suitable for impressing the same upon paper. It shall have inscribed thereon the name of the Company, the words "Corporate Seal" and the word "Delaware." SECTION 4. FISCAL YEAR. The fiscal year of the Company shall begin on the first day of November in each calendar year and end on the last day of October in the following calendar year. ARTICLE II - THE STOCKHOLDERS SECTION 1. PLACE OF MEETINGS. Annual meetings of the stockholders for the election of directors and meetings of the stockholders for any other purpose may be held at such place within the State of Delaware or elsewhere as may be specified by the Chairman, the President or the Board of Directors. SECTION 2. ANNUAL MEETING. The annual meeting of the stockholders, at which they shall elect directors by voice vote or otherwise and by plurality vote and may transact such other business as may properly be brought before the meeting, shall be held at three forty-five o'clock in the afternoon, local time, on the Tuesday before the last Wednesday in February of each year, if such day is not a legal holiday, and if a legal holiday, then on the first following day that it not a legal holiday. The time and place of such meeting shall not be changed within sixty days before such meeting. SECTION 3. SPECIAL MEETINGS. Special meetings of the stockholders may be called by the Chairman, the President or the Board of Directors, and shall be called by the Chairman, the President or the Secretary at the request in writing of stockholders owning 2 not less than twenty percent of the shares entitled to vote at a meeting. Such request shall state the purpose or purposes of the proposed meeting. SECTION 4. NOTICE OF MEETINGS. Notice of each meeting of stockholders, stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered at least ten days before the date of the meeting, either personally or by mail, by or at the direction of the President or the Secretary to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the stockholder at his address as it appears on the stock transfer books of the Company, with postage thereon prepaid. Notice of any meeting of stockholders may be waived in writing signed by the stockholder entitled to such notice, whether before or after the time of such meeting, and shall be equivalent to the giving of such notice. SECTION 5. QUORUM. The holders of a majority of the shares entitled to vote at any meeting of stockholders, present in person or by proxy, shall constitute a quorum at such meeting except as otherwise provided by statute. If, however, such quorum shall not be present at a meeting of the stockholders, the holders of a majority of the shares entitled to vote, present in person or by proxy, may adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally called. Whenever a quorum shall be present at any meeting, all matters shall be decided by vote of the holders of a majority of the shares present, unless otherwise provided by statute or, in the case of election of directors, by these Bylaws. SECTION 6. ORGANIZATION. The Chairman of the Company or, in the event of his absence or inability to act, the President or in the event of the absence or inability to act of both, a Director present, acting in such order of priority as shall be designated by the Chairman, shall preside as chairman at each meeting of the stockholders. The Secretary of the Company shall act as secretary of each meeting of the stockholders. In the event of his absence or inability to act, the chairman of the meeting shall appoint a person who need not be a stockholder to act as secretary of the meeting. SECTION 7. ACTION WITHOUT A MEETING. Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken in connection with any corporate action by any provisions of the statutes or of the certificate of incorporation, the meeting and vote of stockholders may be dispensed with, if all the stockholders who would have been entitled to vote upon the action if such meeting were held, shall consent in writing to such corporate action being taken. 3 ARTICLE III - THE BOARD OF DIRECTORS SECTION 1. NUMBER AND QUALIFICATIONS. The business and affairs of the Company shall be managed by a Board of thirteen directors who need not be residents of the State of Delaware or stockholders of the Company. The number of directors may be increased or decreased from time to time by amendment of the Bylaws, provided no decrease shall have the effect of shortening the term of any incumbent director. SECTION 2. ELECTION. Directors shall be elected at the annual meeting of the stockholders, except as provided in Section 3 of this Article, and each director elected shall hold office during the term for which he is elected and until his successor is elected and qualified. SECTION 3. VACANCIES. Any vacancies occurring in the Board of Directors and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the remaining directors though less than a quorum of the Board of Directors, and the directors so chosen shall hold office until the next annual election of directors and until their successors are elected by the stockholders and are qualified. SECTION 4. REGULAR MEETINGS. Regular meetings of the Board of Directors may be held without notice at such time and at such place either within or without the State of Delaware as shall from time to time be determined by the Board. SECTION 5. SPECIAL MEETINGS. Special meetings of the Board of Directors may be held upon notice by letter, telegram, cable or radiogram, delivered for transmission not later than during the day immediately preceding the day for such meeting, or by word of mouth, telephone or radiophone received not later than during the second day immediately preceding the day for such meeting, upon call of the Chairman, the President, or upon call by the Chairman, the President or the Secretary at the request in writing of one-third of the directors then in office, at the principal business office of the Company, or at any other place either within or without the State of Delaware approved by the Board of Directors, the Chairman or the President. Notice of any special meeting of the Board of Directors may be waived in writing signed by the person or persons entitled to such notice, whether before or after the time of such meeting, and shall be equivalent to the giving of such notice. Attendance of a director at such meeting shall constitute a waiver of notice thereof, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because such meeting is not lawfully convened. Neither the business to be transacted at, nor the purpose of, any special meeting of the Board of Directors need be specified in the notice, or waiver of notice, of such meeting. 4 SECTION 6. QUORUM. One-third of the number of directors fixed by the Bylaws (but in no event less than two) shall constitute a quorum for the transaction of business. The act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors except as otherwise provided by statute or these Bylaws. During an emergency period following a national catastrophe, due to enemy attack, a majority of the surviving members of the Board of Directors who have not been rendered incapable of acting as the result of physical or mental incapacity or the difficulty of transportation to the place of the meeting shall constitute a quorum for the purpose of filling vacancies in the Board of Directors and among the elected officers of the Company. SECTION 7. ORGANIZATION. The Chairman or, in the event of his absence or inability to act, the President or, in the event of the absence or inability to act of both the Chairman and the President, another director present, acting in such order of priority as shall be designated by the Chairman, shall act as chairman of each meeting of the Board of Directors. SECTION 8. ACTIONS BY WRITTEN CONSENT. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if prior to such action a written consent thereto is signed by all members of the Board or of such committee as the case may be, and such written consent is filed with the minutes of proceedings of the Board or such committee. SECTION 9. INTEREST OF DIRECTORS IN TRANSACTIONS. No contract or other transaction between this Company and any other entity or person (including directors, officers and stockholders of this Company) and no act of this Company shall be invalidated or rendered voidable solely by reason of the fact that any of the directors, officers or stockholders of this Company are pecuniarily or otherwise interested in such contract, transaction or act of the Company, individually or as directors, trustees, partners, officers or holders of equivalent positions in such entity or person, or by reason of a pecuniary or other interest in such entity or person; and any director of this Company who is so interested may be counted in determining the existence of a quorum at any meeting of the Board of Directors which shall authorize any such contract, transaction or act and may vote at any such meeting to authorize any such contract, transaction or act. SECTION 10. COMMITTEES OF DIRECTORS. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of two or more of the directors of the Company, which, to the extent provided in the resolution, shall have any may exercise the powers of the Board of Directors in the management of the business and affairs of the Company and may authorize the seal of the Company to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. The committees shall 5 keep regular minutes of their proceedings and report the same to the Board of Directors when required. ARTICLE IV - THE OFFICERS SECTION 1. NUMBER AND QUALIFICATIONS. The principal officers of the Company shall consist of a Chairman, a President, one or more Vice Presidents, a Secretary and a Treasurer; and the Company may have such other officers and assistant officers as may be deemed necessary by the Board of Directors. Any number of offices may be held by the same person. SECTION 2. GENERAL DUTIES. All officers of the Company shall have such authority and perform such duties in the management of the Company as may be provided by or delegated in accordance with these Bylaws, or as may be determined by resolution of the Board of Directors not inconsistent with these Bylaws. All agents and employees of the Company not appointed by the Board of Directors may be appointed by THE CHAIRMAN, the President or by persons authorized by either of them to do so, to serve for such time and to have such duties as the appointing authority may determine from time to time. SECTION 3. ELECTION AND TERM OF OFFICE. The officers shall be elected annually by the Board of Directors at its regular meeting held on the Friday following the last Wednesday in February of each year. Each officer shall hold office for one year and until his successor is elected and qualified, or until he shall have resigned or shall have been removed in the manner provided in Section 4. SECTION 4. REMOVAL. Any officer may be removed by the Board of Directors whenever in its judgment the interests of the Company will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person removed. Election of an officer shall not of itself create contract rights. SECTION 5. RESIGNATIONS. Any officer may resign at any time by giving written notice to the Board of Directors, the Chairman or to the President. Such resignation shall take effect at the time specified therein and, unless specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 6. VACANCIES. A vacancy in any office shall be filled by the Board of Directors. SECTION 7. CHAIRMAN. The Chairman shall be the chief executive officer of the Company. He shall have power to execute in the name of the Company all bonds, contracts, other obligations and property conveyances which are duly authorized, and he shall have all the powers and perform all duties devolving upon him by law and as head of the Company. He may call special meetings of the stockholders and of the Board of 6 Directors. From time to time he shall bring to the attention of the Board of Directors such information or recommendations concerning the business and affairs of the Company as he may deem necessary or appropriate. When present, he shall preside at all meetings of the stockholders and the Board of Directors. SECTION 8. PRESIDENT. The President shall have such powers and perform such duties as the Board of Directors may from time to time prescribe or as the chief executive officer may from time to time delegate to him. In the absence or inability to act of the Chairman, the President shall perform the duties of the Chairman. SECTION 9. VICE PRESIDENTS. Each Vice President shall have such powers and perform such duties as the Board of Directors may from time to time prescribe or as the Chairman or the President may from time to time delegate to him. In the absence or inability to act of the President, his duties shall be performed by a Vice President designated by the Chairman of the Board of Directors. SECTION 10. SECRETARY. The Secretary shall act as Secretary of all meetings of the stockholders and the Board of Directors, and of committees of the Board of Directors. He shall prepare and keep, or cause to be kept in books provided for the purpose, minutes of all meetings of the stockholders and the Board of Directors; shall see that all notices are fully given in accordance with the provisions of these Bylaws and as required by law; shall be custodian of the records and of the seal of the Company and see that the seal is affixed to all documents the execution of which on behalf of the Company under its seal is duly authorized; and in general, he shall perform all duties incident to the office of Secretary and as required by law and such other duties as may be assigned to him from time to time by the Board of Directors, the Chairman or by the President. Each Assistant Secretary (if one or more Assistant Secretaries be elected) shall assist the Secretary in his duties and shall perform such other duties as the Board of Directors may prescribe from time to time, or the Chairman, the President or the Secretary may delegate to him from time to time. In the event of the absence or inability to act of the Secretary, his duties shall be performed by an Assistant Secretary. SECTION 11. TREASURER. The Treasurer shall have charge and custody of, and be responsible for, all moneys, notes and securities in the possession of the Company, and deposit all funds in the name of the Company in such banks, trust companies or other depositories as he may select; shall receive, and give receipts for, moneys due and payable to the Company from any source whatsoever; and in general, he shall perform all the duties incident to the office of Treasurer and as required by law and such other duties as may be assigned to him from time to time by the Board of Directors, the Chairman or by the President. Each Assistant Treasurer (if one or more Assistant Treasurers be elected) shall assist the Treasurer in his duties and shall perform such other duties as the Board of Directors 7 may prescribe from time to time, or the Chairman, the President or the Treasurer may delegate to him from time to time. In the event of the absence or inability to act of the Treasurer, his duties shall be performed by an Assistant Treasurer. ARTICLE V - ACTS WITH RESPECT TO SECURITIES OWNED SECTION 1. ENDORSEMENT OF SECURITIES. Subject always to the specific directions of the Board of Directors, any security or securities owned by the Company (including re-acquired shares of capital stock of the Company) may, for sale or transfer, be endorsed in the name of the Company by the Chairman, the President or a Vice President, and may be attested by the Secretary or an Assistant Secretary either with or without affixing thereto the corporate seal. SECTION 2. VOTING OF SHARES OWNED. Subject always to the specific directions of the Board of Directors, any share or shares of stock issued by any other corporation and owned or controlled by the Company may be voted at any stockholders' meeting of such other corporation by the Chairman, the President of the Company if either be present at such meeting, or in his absence by any Vice President of the Company who may be present at such meeting. Whenever, in the judgment of the Chairman, the President or a Vice President, it is desirable for the Company to execute a proxy or give a stockholder's consent in respect to any share or shares of stock issued by any other corporation and owned or controlled by the Company, such proxy or consent shall be executed in the name of the Company by the Chairman, the President or a Vice President of the Company and shall be attested by the Secretary or an Assistant Secretary of the Company under the corporate seal without necessity of any further authorization of the Board of Directors. Any person or persons designated in the manner above stated as the proxy or proxies of the Company shall have full right, power and authority to vote the share or shares of stock issued by such other corporation and owned or controlled by the Company. ARTICLE VI - OTHER PROVISIONS SECTION 1. CERTIFICATES OF STOCK. Certificates to evidence ownership of stock of the Company shall be issued in such form as the Board of Directors shall from time to time approve. SECTION 2. LOANS. No loan shall be made to any director or officer of the Company, and no loan shall be made to anyone secured by shares of the Company's capital stock. SECTION 3. AMENDMENTS. These Bylaws may be altered or repealed either by the Board of Directors or by the holders of the issued and outstanding voting stock of the Company. ***** EX-4 4 EXHIBIT 4.1 EXHIBIT 4.1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DEERE & COMPANY JOHN DEERE CAPITAL CORPORATION $1,675,000,000 CREDIT AGREEMENT Dated as December 15, 1993 CHEMICAL BANK, an Administrative Agent and as a Managing Agent DEUTSCHE BANK AG CHICAGO BRANCH, as Auction Agent and as a Managing Agent - -------------------------------------------------------------------------------- and - -------------------------------------------------------------------------------- DEERE & COMPANY JOHN DEERE CAPITAL CORPORATION $825,000,000 CREDIT AGREEMENT Dated as of December 15, 1993 CHEMICAL BANK, as Administrative Agent and as a Managing Agent DEUTSCHE BANK AG CHICAGO BRANCH, as Auction Agent and as a Managing Agent - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- [CONFORMED COPY] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DEERE & COMPANY JOHN DEERE CAPITAL CORPORATION ------------------ $1,675,000,000 CREDIT AGREEMENT Dated as of December 15, 1993 ------------------ CHEMICAL BANK, as Administrative Agent and as a Managing Agent DEUTSCHE BANK AG CHICAGO BRANCH, as Auction Agent and as a Managing Agent - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF CONTENTS Page ---- SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . 1 1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . 1 1.2 Other Definitional Provisions. . . . . . . . . . . . 14 SECTION 2. THE COMMITTED RATE LOANS; THE BID LOANS; THE NEGOTIATED RATE LOANS; AMOUNT AND TERMS. . . . . . . 15 2.1 The Committed Rate Loans . . . . . . . . . . . . . . 15 2.2 The Bid Loans; the Negotiated Rate Loans . . . . . . 16 2.3 Loan Accounts . . . . . . . . . . . . . . . . . . . 21 2.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . 21 2.5 Termination or Reduction of Commitments; Cancellation of Capital Corporation as Borrower . . . . . . . . . . . . . . . . . . . . . 22 2.6 Optional Prepayments . . . . . . . . . . . . . . . . 23 2.7 Minimum Amount of Certain Loans . . . . . . . . . . 23 2.8 Committed Rate Loan Interest Rate and Payment Dates . . . . . . . . . . . . . . . . . . . . . . 23 2.9 Conversion and Continuation Options . . . . . . . . 24 2.10 Computation of Interest and Fees . . . . . . . . . . 25 2.11 Inability to Determine Interest Rate . . . . . . . . 26 2.12 Pro Rata Treatment and Payments . . . . . . . . . . 27 2.13 Requirements of Law . . . . . . . . . . . . . . . . 30 2.14 Indemnity . . . . . . . . . . . . . . . . . . . . . 33 2.15 Non-Receipt of Funds by the Administrative Agent . . . . . . . . . . . . . . . . . . . . . . 34 2.16 Extension of Termination Date . . . . . . . . . . . 34 2.17 Foreign Taxes . . . . . . . . . . . . . . . . . . . 35 2.18 Confirmations . . . . . . . . . . . . . . . . . . . 38 2.19 Replacement of Cancelled Banks . . . . . . . . . . . 38 SECTION 3. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . 38 3.1 Financial Condition . . . . . . . . . . . . . . . . 38 3.2 Corporate Existence . . . . . . . . . . . . . . . . 39 3.3 Corporate Power; Authorization; Enforceable Obligations . . . . . . . . . . . . . . . . . . . 39 3.4 No Legal Bar . . . . . . . . . . . . . . . . . . . . 39 3.5 No Material Litigation . . . . . . . . . . . . . . . 40 3.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . 40 3.7 Margin Regulations . . . . . . . . . . . . . . . . . 40 3.8 Pari Passu Ranking . . . . . . . . . . . . . . . . . 40 3.9 No Defaults . . . . . . . . . . . . . . . . . . . . 40 3.10 Use of Proceeds . . . . . . . . . . . . . . . . . . 41 -i- Page ---- SECTION 4. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . 41 4.1 Conditions to Initial Loan . . . . . . . . . . . . . 41 4.2 Conditions to All Loans . . . . . . . . . . . . . . 42 SECTION 5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . 43 5.1 Financial Statements . . . . . . . . . . . . . . . . 43 5.2 Certificates; Other Information . . . . . . . . . . 43 5.3 Company Indenture Documents . . . . . . . . . . . . 44 5.4 Capital Corporation Indenture Documents . . . . . . 44 5.5 Notice of Default . . . . . . . . . . . . . . . . . 44 5.6 Ownership of Capital Corporation Stock . . . . . . . 44 5.7 Employee Benefit Plans . . . . . . . . . . . . . . . 44 SECTION 6. NEGATIVE COVENANTS OF THE COMPANY . . . . . . . . 44 6.1 Company May Consolidate, etc., Only on Certain Terms . . . . . . . . . . . . . . . . . . . . . . 45 6.2 Limitation on Liens . . . . . . . . . . . . . . . . 45 6.3 Limitations on Sale and Lease-back Transactions . . . . . . . . . . . . . . . . . . . 49 6.4 Consolidated Tangible Net Worth . . . . . . . . . . 50 SECTION 7. NEGATIVE COVENANTS OF THE CAPITAL CORPORATION . . . . . . . . . . . . . . . . . . . . 50 7.1 Fixed Charges Ratio . . . . . . . . . . . . . . . . 50 7.2 Consolidated Senior Debt to Consolidated Capital Base . . . . . . . . . . . . . . . . . . . . 50 7.3 Limitation on Liens . . . . . . . . . . . . . . . . 50 7.4 Consolidation; Merger . . . . . . . . . . . . . . . 52 SECTION 8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . 53 SECTION 9. THE AGENTS. . . . . . . . . . . . . . . . . . . . 55 9.1 Appointment . . . . . . . . . . . . . . . . . . . . 55 9.2 Delegation of Duties . . . . . . . . . . . . . . . . 56 9.3 Exculpatory Provisions . . . . . . . . . . . . . . . 56 9.4 Reliance by Agents . . . . . . . . . . . . . . . . . 56 9.5 Notice of Default . . . . . . . . . . . . . . . . . 57 9.6 Non-Reliance on Agents and Other Banks . . . . . . . 57 9.7 Indemnification . . . . . . . . . . . . . . . . . . 58 9.8 Agents in their Individual Capacities . . . . . . . 58 9.9 Successor Agents . . . . . . . . . . . . . . . . . . 58 -ii- Page ---- SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . 59 10.1 Amendments and Waivers . . . . . . . . . . . . . . . 59 10.2 Notices . . . . . . . . . . . . . . . . . . . . . . 60 10.3 No Waiver; Cumulative Remedies . . . . . . . . . . . 61 10.4 Payment of Expenses and Taxes . . . . . . . . . . . 61 10.5 Successors and Assigns; Participations; Purchasing Banks . . . . . . . . . . . . . . . . . 63 10.6 Adjustments . . . . . . . . . . . . . . . . . . . . 68 10.7 Confidentiality . . . . . . . . . . . . . . . . . . 68 10.8 Counterparts . . . . . . . . . . . . . . . . . . . . 69 10.9 Governing Law . . . . . . . . . . . . . . . . . . . 69 10.10 Consent to Jurisdiction and Service of Process . . . . . . . . . . . . . . . . . . . . . 70 SCHEDULES: Schedule I Terms of Subordination Schedule II Commitments Schedule III Addresses for Notices EXHIBITS: Exhibit A Form of Borrowing Notice Exhibit B Form of Bid Loan Request Exhibit C Form of Bid Loan Offer Exhibit D Form of Bid Loan Confirmation Exhibit E Form of Loan Assignment Exhibit F Form of Commitment Transfer Supplement Exhibit G Form of Opinion of General Counsel to the Borrowers Exhibit H Form of Opinion of Special New York Counsel to the Borrowers Exhibit I Form of Extension Request Exhibit J Form of Form 1001 Tax Letter Exhibit K Form of Form 4224 Tax Letter Exhibit L Form of Agreement Exhibit M Form of Promissory Note -iii- CREDIT AGREEMENT, dated as of December 15, 1993, among DEERE & COMPANY, a Delaware corporation (the "COMPANY"), JOHN DEERE CAPITAL CORPORATION, a Delaware corporation (the "CAPITAL CORPORATION"), the several financial institutions parties hereto (collectively, the "BANKS", and individually, a "BANK"), CHEMICAL BANK, a New York banking corporation, as administrative agent for the Banks hereunder (in such capacity, the "ADMINISTRATIVE AGENT"), DEUTSCHE BANK AG CHICAGO BRANCH, an Illinois state licensed branch of a German banking corporation, as auction agent for the Banks hereunder (in such capacity, the "AUCTION AGENT"), CHEMICAL BANK and DEUTSCHE BANK AG CHICAGO BRANCH, as managing agents (together, the "MANAGING AGENTS"), and the co-agents identified on the signature pages hereof (collectively, the "CO- AGENTS"). The parties hereto hereby agree as follows: SECTION 1. DEFINITIONS 1.1 DEFINED TERMS. As used in this Agreement, the following terms have the following meanings: "ABR": at any particular date, the higher of (a) the rate of interest per annum publicly announced by Chemical for such date as its prime rate in effect at its principal office in New York City and (b) .5% per annum above the rate set forth for such date or, if such date is not a Business Day, the next preceding Business Day, opposite the caption "Federal Funds (Effective)" in the weekly statistical release designated as "H.15(519)" (or any successor publication) published by the Board of Governors of the Federal Reserve System. The prime rate is not intended to be the lowest rate of interest charged by Chemical in connection with extensions of credit to debtors. "ABR LOANS": Committed Rate Loans at such time as they are made and/or being maintained at a rate of interest based upon the ABR. "ABSOLUTE RATE BID LOAN": any Bid Loan made pursuant to an Absolute Rate Bid Loan Request. "ABSOLUTE RATE BID LOAN REQUEST": any Bid Loan Request requesting the Banks to offer to make Bid Loans at an absolute rate (as opposed to a rate composed of the Applicable Index Rate PLUS (or MINUS) a margin). "ADMINISTRATIVE AGENT": as defined in the preamble hereto. "AGENT": the Administrative Agent or the Auction Agent, as the context shall require; together, the "AGENTS". 2 "AGREEMENT": this Credit Agreement, as amended, supplemented or modified from time to time. "APPLICABLE INDEX RATE": in respect of any Bid Loan requested pursuant to an Index Rate Bid Loan Request, the Eurodollar Rate applicable to the Interest Period for such Bid Loan. "APPLICABLE MARGIN": for each Type of Committed Rate Loan the rate per annum set forth below:
ABR Eurodollar C/D Rate Loans Loans Loans ------- ---------- -------- 0% .25% .375%
"ASSESSMENT RATE": with respect to each day during each Interest Period for a C/D Rate Loan, the net annual assessment rate in effect two Business Days prior to the first day of such Interest Period which is payable by a member of the Bank Insurance Fund classified as well capitalized and within supervisory subgroup "A" (or a comparable successor assessment risk classification) within the meaning of 12 C.F.R. SECTION 327.3(d) (or any successor provision) to the Federal Deposit Insurance Corporation (or any successor) for such Corporation's (or such successor's) insuring time deposits at offices of such institution in the United States. "ATTRIBUTABLE DEBT": as defined in subsection 6.2(b)(ii). "AUCTION AGENT": as defined in the preamble hereto. "AVAILABLE COMMITMENT": as to any Bank, at a particular time, an amount equal to the difference between (a) the amount of such Bank's Commitment at such time and (b) the aggregate unpaid principal amount at such time of all Loans made by such Bank; collectively, as to all the Banks, the "AVAILABLE COMMITMENTS". "BANK" and "BANKS": as defined in the preamble hereto. "BASE RATE": with respect to each day during each Interest Period for a C/D Rate Loan, (a) the rate determined by the Administrative Agent to be the rate set forth in H.15(519) (published by the Federal Reserve Bank of New York) for such Interest Period under the caption "CDs (Secondary Market)", or, if on the first day of such Interest Period such rate for such Interest Period is not yet published in H.15(519), the rate for such Interest Period will be the rate determined by the Administrative Agent to be the rate set forth in Composite 3:30 P.M. 3 Quotations for U.S. Government Securities (published by the Federal Reserve Bank of New York) for that day in respect of such Interest Period under the caption "Certificates of Deposit" or (b), if on the first day of such Interest Period, the appropriate rate for such Interest Period is not yet published in either H.15(519) or Composite 3:30 P.M. Quotations for U.S. Government Securities, the rate for such Interest Period will be the arithmetic average (rounded upward to the nearest 1/100 of 1%) of the respective rates notified to the Administrative Agent by the Reference Banks as the rates per annum bid at 10:00 A.M. (New York City time) (or as soon thereafter as practicable) on the first day of such Interest Period by a total of three certificate of deposit dealers located in New York City and of recognized standing selected by each Reference Bank for the purchase at face value from such Reference Bank of its certificates of deposit in an amount comparable to the C/D Rate Loan of such Reference Bank to which such Interest Period applies and having a maturity comparable to such Interest Period. "BENEFITTED BANK": as defined in subsection 10.6. "BID LOAN": each loan (other than Negotiated Rate Loans) made pursuant to subsection 2.2; the aggregate amount advanced by a Bid Loan Bank pursuant to subsection 2.2 on each Borrowing Date shall constitute one Bid Loan, or more than one Bid Loan if so specified by the relevant Loan Assignee in its request for promissory notes pursuant to subsection 10.5(c). "BID LOAN BANKS": the collective reference to each Bank designated from time to time as a Bid Loan Bank by a Borrower (for purposes of Bid Loans to such Borrower) by written notice to the Auction Agent and the Administrative Agent and which has not been removed as a Bid Loan Bank by such Borrower by written notice to the Auction Agent and the Administrative Agent (each of which notices the Auction Agent shall transmit to each such affected Bank). "BID LOAN CONFIRMATION": each confirmation by the Company or the Capital Corporation of its acceptance of Bid Loan Offers, which Bid Loan Confirmation shall be substantially in the form of Exhibit D and shall be delivered to the Auction Agent by facsimile transmission or by telephone, immediately confirmed by facsimile transmission. "BID LOAN OFFER": each offer by a Bid Loan Bank to make Bid Loans pursuant to a Bid Loan Request, which Bid Loan Offer shall contain the information specified in Exhibit C, and shall be delivered to the Auction Agent by facsimile transmission or by telephone, immediately confirmed by facsimile transmission. 4 "BID LOAN REQUEST": each request by a Borrower for Bid Loan Banks to submit bids to make Bid Loans, which shall contain the information in respect of such requested Bid Loans specified in Exhibit B and shall be delivered to the Auction Agent by facsimile transmission or by telephone, immediately confirmed by facsimile transmission. "BORROWER": the Company or the Capital Corporation; collectively, the "BORROWERS". "BORROWING DATE": in respect of any Loan, the date such Loan is made. "BUSINESS DAY": a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close. "CANCELLED BANK": any Bank that has the whole or any part of its Commitment cancelled under subsection 2.13(a), (b) or (c), subsection 2.16(c) or subsection 2.17(b) or the Commitment of which has expired under subsection 2.16(a). "CAPITAL CORPORATION": as defined in the preamble hereto. "C/D RATE": with respect to each day during the Interest Period for a C/D Rate Loan, a rate per annum equal to the following determined for such day: Base Rate ------------------------- + Assessment Rate 1.00 - Reserve Percentage "C/D RATE LOANS": Committed Rate Loans at such time as they are made and/or being maintained at a rate of interest based upon a C/D Rate. "CHEMICAL": Chemical Bank, a New York banking corporation. "CLOSING DATE": the date on which each of the conditions precedent specified in subsection 4.1 shall have been satisfied (or compliance therewith shall have been waived by the Required Banks hereunder). "CO-AGENT": as defined in the preamble hereto. "CODE": the Internal Revenue Code of 1986, as amended from time to time. "COMMITMENT": as to any Bank, the amount set opposite such Bank's name on Schedule II, as such amount may be reduced as provided herein; collectively, as to all the Banks, the "COMMITMENTS". 5 "COMMITMENT PERCENTAGE": as to any Bank at any time, the percentage which such Bank's Commitment at such time constitutes of all the Commitments at such time; collectively, as to all the Banks, the "COMMITMENT PERCENTAGES". "COMMITMENT PERIOD": the period from and including the Closing Date to but not including the Termination Date or such earlier date on which the Commitments shall terminate as provided herein. "COMMITMENT TRANSFER SUPPLEMENT": a Commitment Transfer Supplement, substantially in the form of Exhibit F. "COMMITTED RATE LOANS": each loan made pursuant to subsection 2.1. "COMMONLY CONTROLLED ENTITY": in relation to a Borrower, an entity, whether or not incorporated, which is under common control with such Borrower within the meaning of Section 414(b) or (c) of the Code. "COMPANY": as defined in the preamble hereto. "CONSOLIDATED CAPITAL BASE": at a particular time for the Capital Corporation and its consolidated Subsidiaries, the sum of (a) the amount shown opposite the item "Total stockholder's equity" on the consolidated balance sheet of the Capital Corporation and its consolidated Subsidiaries PLUS (b) the principal amounts outstanding under the 9.35% Subordinated Debentures due 2003, the 8-5/8% Subordinated Debentures due 2019 and the 9-5/8% Subordinated Notes due 1998 of the Capital Corporation (in each case so long as the subordination terms thereof continue to be as favorable to the Administrative Agent and the Banks as in existence on the Closing Date) and all indebtedness of the Capital Corporation and its consolidated Subsidiaries for borrowed money subordinated (on terms no less favorable to the Administrative Agent and the Banks than the terms of subordination set forth on Schedule I) to the indebtedness which may be incurred hereunder by the Capital Corporation, PROVIDED that the sum of clauses (a) and (b) hereof as at the end of a fiscal quarter of the Capital Corporation and its consolidated Subsidiaries (including the last quarter of a fiscal year of the Capital Corporation and its consolidated Subsidiaries) shall be determined by reference to the publicly available consolidated balance sheet of the Capital Corporation and its consolidated Subsidiaries as at the end of such fiscal quarter and after such adjustments, if any, as may be required so that the sum of the amounts referred to in clauses (a) and (b) is determined in accordance with GAAP. 6 "CONSOLIDATED NET WORTH": as defined in subsection 6.2(b)(ii). "CONSOLIDATED SENIOR DEBT": at a particular time for the Capital Corporation and its consolidated Subsidiaries, indebtedness for borrowed money other than the 9.35% Subordinated Debentures due 2003, the 8-5/8% Subordinated Debentures due 2019 and the 9-5/8% Subordinated Notes due 1998 of the Capital Corporation (in each case so long as the subordination terms thereof continue to be as favorable to the Administrative Agent and the Banks as such terms in existence on the Closing Date) and any such indebtedness that is subordinated, on terms no less favorable to the Administrative Agent and the Banks than the terms of subordination set forth on Schedule I, to the indebtedness which may be incurred hereunder by the Capital Corporation, PROVIDED that the amount of such indebtedness for borrowed money (other than such subordinated indebtedness) as at the end of a fiscal quarter of the Capital Corporation and its consolidated Subsidiaries (including the last quarter of a fiscal year of the Capital Corporation and its consolidated Subsidiaries) shall be determined by reference to the publicly available consolidated balance sheet of the Capital Corporation and its consolidated Subsidiaries as at the end of such fiscal quarter and after such adjustments, if any, as may be required so that such amount is determined in accordance with GAAP. "CONSOLIDATED TANGIBLE NET WORTH": at a particular time for a Borrower and its consolidated Subsidiaries, the excess of the amount shown opposite the item "Total stockholder's equity" on the consolidated balance sheet of such Borrower and its consolidated Subsidiaries over the aggregate amount shown on such balance sheet for any intangible assets, including, without limitation, goodwill, franchises, licenses, patents, trademarks, trade-names, copyrights, service marks and brand names, PROVIDED that such excess amount shall be determined (a) with respect to the Company and its consolidated Subsidiaries as at the end of any of their fiscal quarters (including the last quarter of any of their fiscal years), by reference to the publicly available consolidated balance sheet of the Company and its consolidated Subsidiaries as at the end of such fiscal quarter and (b) with respect to the Capital Corporation and its consolidated Subsidiaries as at the end of any of their fiscal quarters (including the last quarter of any of their fiscal years), by reference to the publicly available consolidated balance sheet of the Capital Corporation and its consolidated Subsidiaries as at the end of such fiscal quarter, in each such case after such adjustments, if any, as may be required so that such excess is determined in accordance with GAAP. 7 "CONTRACTUAL OBLIGATION": as to any Person, any provision of any security issued by such Person or of any agreement, instrument or undertaking to which such Person is a party or by which it or any of its property is bound. "DEAL YEAR": as defined in subsection 2.16(c). "DEBT": as defined in subsection 6.2. "DEFAULT": any of the events specified in Section 8, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition, event or act has been satisfied. "DOLLARS" and "$": dollars in lawful currency of the United States of America. "DOMESTIC DOLLAR LOANS": the collective reference to C/D Rate Loans and ABR Loans. "ERISA": the Employee Retirement Income Security Act of 1974, as amended from time to time. "EURODOLLAR LOANS": Committed Rate Loans at such time as they are made and/or being maintained at a rate of interest based upon a Eurodollar Rate. "EURODOLLAR RATE": with respect to each day during each Interest Period for a Eurodollar Loan and for each Index Rate Bid Loan, (a) the rate determined by the Administrative Agent to be the arithmetic mean of the offered rates for deposits in Dollars for a period of such Interest Period which appear on the Reuters Screen LIBO Page as of 11:00 a.m., London time, on the date that is two Working Days prior to the beginning of such Interest Period or (b) if fewer than two offered rates appear, the rate in respect of such Interest Period will be the rate per annum equal to the average (rounded upwards, if necessary, to the nearest whole multiple of one sixteenth of one percent) of the respective rates notified to the Administrative Agent by the Reference Banks as the rate at which such Reference Bank is offered Dollar deposits two Working Days prior to the beginning of such Interest Period in the interbank eurodollar market where the eurodollar and foreign currency and exchange operations in respect of its Eurodollar Loans are customarily conducted at or about 10:00 a.m., New York City time, for delivery on the first day of such Interest Period for the number of days comprised therein and in an amount (i) in the case of Eurodollar Loans, comparable to the amount of the Eurodollar Loan of such Reference Bank to be outstanding during such Interest Period and (ii) in the case of an Index Rate Bid Loan by any Bank, equal to the principal amount of all Index Rate Bid Loans to which such Interest Period applies. 8 "EVENT OF DEFAULT": any of the events specified in Section 8, PROVIDED that any requirement for the giving of notice, the lapse of time, or both, or any other condition, event or act has been satisfied. "EXTENSION REQUEST": each request by the Borrowers made pursuant to subsection 2.16 for the Banks to extend this Agreement, which shall contain the information in respect of such extension specified in Exhibit I and shall be delivered to the Administrative Agent in writing. "FIXED CHARGES": for any particular period for the Capital Corporation and its consolidated Subsidiaries, all of the Capital Corporation's and its consolidated Subsidiaries' consolidated interest on indebtedness for borrowed money, amortization of discounts of indebtedness for borrowed money, the portion of rentals under financing leases deemed to represent interest and rentals under operating leases, PROVIDED that such amounts for a fiscal quarter of the Capital Corporation and its consolidated Subsidiaries (including the last quarter of a fiscal year of the Capital Corporation and its consolidated Subsidiaries) shall be determined by reference to the publicly available consolidated statement of income of the Capital Corporation and its consolidated Subsidiaries for or covering such fiscal quarter and after such adjustments, if any, as may be required so that such amounts are determined in accordance with GAAP. "FOREIGN TAXES": as defined in subsection 2.17(a). "GAAP": generally accepted accounting principles in the United States of America as applied in the preparation of financial statements of the Company or the Capital Corporation, respectively, as of the fiscal year ended October 31, 1992. "GOVERNMENTAL AUTHORITY": any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "IMPORTANT PROPERTY": (a) any manufacturing plant, including land, all buildings and other improvements thereon, and all manufacturing machinery and equipment located therein, owned and used by the Company or a Restricted Subsidiary primarily for the manufacture of products to be sold by the Company or such Restricted Subsidiary, (b) the executive office and administrative building of the Company in Moline, Illinois, and (c) research and development facilities, including land and buildings and other improvements thereon and research and development machinery and equipment located therein, in each 9 case, owned and used by the Company or a Restricted Subsidiary; except in any case property of which the aggregate fair value as determined by the Board of Directors of the Company does not at the time exceed 1% of Consolidated Net Worth, as shown on the audited consolidated balance sheet contained in the latest annual report to stockholders of the Company. "INDENTURE": the Indenture dated February 1, 1991 between the Company and Continental Bank, National Association, as Trustee. "INDEX RATE BID LOAN": any Bid Loan made at an interest rate based upon the Applicable Index Rate. "INDEX RATE BID LOAN REQUEST": any Bid Loan Request requesting the Banks to offer to make Index Rate Bid Loans at an interest rate equal to the Applicable Index Rate PLUS (or MINUS) a margin. "INTEREST PAYMENT DATE": (a) as to any ABR Loan, the last Business Day of each March, June, September and December, commencing on the first of such days to occur after such ABR Loan is made or a C/D Rate Loan or a Eurodollar Loan is converted to an ABR Loan and (b) as to any Eurodollar Loan or C/D Rate Loan, the last day of each Interest Period applicable thereto, PROVIDED that as to any Eurodollar Loan in respect of which a Borrower has selected an Interest Period of six months and any C/D Rate Loan in respect of which a Borrower has selected an Interest Period of 180 days, interest shall also be paid on the day which is three months or 90 days, as the case may be, after the beginning of such Interest Period. "INTEREST PERIOD": (a) with respect to any Eurodollar Loan, the period commencing on the Borrowing Date, the date any ABR Loan or C/D Rate Loan is converted to a Eurodollar Loan or the date any Eurodollar Loan is continued as a Eurodollar Loan, as the case may be, with respect to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by a Borrower in its notice of borrowing as provided in subsection 2.1(c); (b) with respect to any C/D Rate Loan, the period commencing on the Borrowing Date, the date any ABR Loan or Eurodollar Loan is converted to a C/D Rate Loan or the date any C/D Rate Loan is continued as a C/D Rate Loan, as the case may be, with respect to such C/D Rate Loan and ending 30, 90 or 180 days thereafter, as selected by a Borrower in its notice of borrowing as provided in subsection 2.1(c); (c) with respect to any Bid Loan, the period commencing on the Borrowing Date with respect to such Bid Loan and ending on the date not less than seven days nor more than 10 six months thereafter, as specified by a Borrower in its Bid Loan Request as provided in subsection 2.2(b); and (d) with respect to any Negotiated Rate Loan, the period or periods commencing on the Borrowing Date with respect to such Negotiated Rate Loan or the last day of any Interest Period with respect thereto and ending on the dates as shall be mutually agreed upon between the relevant Borrower and the relevant Bank; PROVIDED THAT, all of the foregoing provisions relating to Interest Periods are subject to the following: (i) if any Interest Period pertaining to a Eurodollar Loan or an Index Rate Bid Loan would otherwise end on a day which is not a Working Day, that Interest Period shall be extended to the next succeeding Working Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Working Day; (ii) if any Interest Period pertaining to an ABR Loan, a C/D Rate Loan or an Absolute Rate Bid Loan would otherwise end on a day which is not a Business Day, that Interest Period shall be extended to the next succeeding Business Day; (iii) any Interest Period pertaining to a Eurodollar Loan having an Interest Period of one, two, three or six months or an Index Rate Bid Loan having an Interest Period of one, two, three, four, five or six months, that begins on the last Working Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Working Day of a calendar month; (iv) Interest Periods shall be deemed available only if the Required Banks shall not have advised the Administrative Agent that the C/D Rate or the Eurodollar Rate, as the case may be, determined by the Administrative Agent on the basis of the applicable quotes will not adequately and fairly reflect the cost to such Banks of maintaining or funding their Committed Rate Loans bearing interest based on the C/D Rate or the Eurodollar Rate, as the case may be, determined for such Interest Period. The Administrative Agent shall notify the Borrowers and each Bank promptly after having been advised by the Required Banks that a C/D Rate or Eurodollar Rate will not so adequately and fairly reflect such Banks' costs as aforesaid. If a requested Interest Period shall be unavailable in 11 accordance with the foregoing sentence, the proposed Borrower may (A) in accordance with the provisions (including any requirements for notification) of subsection 2.1 request, at its option, that the requested Committed Rate Loans be made or maintained as C/D Rate Loans, if applicable, or ABR Loans or (B) withdraw the request for such Committed Rate Loans for which the Interest Period was unavailable by giving notice of such election to the Administrative Agent in accordance with subsection 2.11; PROVIDED, that if the Administrative Agent does not receive any notice hereunder, such Borrower shall be deemed to have requested ABR Loans; and (v) no Interest Periods shall end after the last day of the Commitment Period. "LOANS": the collective reference to the Committed Rate Loans, the Bid Loans and the Negotiated Rate Loans. "LOAN ACCOUNT": as defined in subsection 2.3; collectively, the "LOAN ACCOUNTS". "LOAN ASSIGNEES": as defined in subsection 10.5(c). "LOAN ASSIGNMENT": a Loan Assignment, substantially in the form of Exhibit E. "MAJORITY BANKS": at any particular time, Banks having Commitment Percentages aggregating more than fifty percent. "MANAGING AGENTS: as defined in the preamble hereto. "MARGIN STOCK": as defined in Regulation U of the Board of Governors of the Federal Reserve System. "MORTGAGE": as defined in subsection 6.2. "NEGOTIATED RATE LOAN": each Loan made to a Borrower by a Bank pursuant to a Negotiated Rate Loan Request in such principal amount, for such number of Interest Periods (subject to the proviso to the definition of "Interest Period" in this subsection 1.1) and having such interest rate(s) and repayment terms as shall, in each case, be mutually agreed upon between such Borrower and such Bank. "NEGOTIATED RATE LOAN REQUEST": each request by a Borrower for a Bank to make Negotiated Rate Loans, which shall be delivered to such Bank in writing, by facsimile transmission, or by telephone, immediately confirmed in writing, and which shall specify the amount to be borrowed and the proposed Borrowing Date. 12 "NET EARNINGS AVAILABLE FOR FIXED CHARGES": for any particular period for the Capital Corporation and its consolidated Subsidiaries, consolidated net earnings of the Capital Corporation and such Subsidiaries for such period without deduction of Fixed Charges and without deduction of federal, state or other income taxes, PROVIDED that such net earnings for a fiscal quarter of the Capital Corporation and its consolidated Subsidiaries (including the last quarter of a fiscal year of the Capital Corporation and its consolidated Subsidiaries) shall be determined by reference to the publicly available statement of income of the Capital Corporation and its consolidated Subsidiaries for or covering such fiscal quarter and after such adjustments, if any, as may be required so that such net earnings are determined in accordance with GAAP, except that earned investment tax credits may be included as revenue in the consolidated income statement of the Capital Corporation and its consolidated Subsidiaries, rather than as an offset against the provision for income taxes. "OBJECTING BANKS": as defined in subsection 2.16(a). "PARTICIPANTS": as defined in subsection 10.5(b). "PERSON": an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature, PROVIDED that for purposes of Section 8(h), Person shall also include two or more entities acting as a syndicate or any other group for the purpose of acquiring, holding or disposing of securities of the Company. "PLAN": any pension plan which is covered by Title IV of ERISA and in respect of which either Borrower or a Commonly Controlled Entity is an "employer" as defined in Section 3(5) of ERISA. "PURCHASING BANKS": as defined in subsection 10.5(d). "REFERENCE BANKS": Chemical, Deutsche Bank AG and Morgan Guaranty Trust Company of New York. "REGISTER": as defined in subsection 10.5(e). "REPORT PERIOD": as defined in subsection 2.18. "REPORTABLE EVENT": any of the events set forth in Section 4043(b) of ERISA or the regulations thereunder. "REQUIRED BANKS": at a particular time, Banks having Commitment Percentages aggregating at least 66-2/3%, PROVIDED that as used in subsection 2.16, "Required Banks" means with respect to any Extension Request, at a particular 13 time after the Termination Date has been extended pursuant to such subsection, Banks (a) which are not Objecting Banks with respect to any previous Extension Request and (b) which have Commitment Percentages aggregating at least 66-2/3% of the aggregate Commitment Percentages of such non-Objecting Banks. "REQUIREMENT OF LAW": as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation, or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. "RESERVES": as defined in subsection 2.13(c). "RESERVE PERCENTAGE": for any day during the Interest Period for a C/D Rate Loan, that percentage (expressed as a decimal) which is in effect on the first day of such Interest Period, as prescribed by the Board of Governors of the Federal Reserve System (or any successor), for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding one billion Dollars in respect of new non-personal time deposits in Dollars in New York City having a maturity comparable to the Interest Period for the relevant C/D Rate Loans and in an amount of $100,000 or more. "RESPONSIBLE OFFICER": of a Borrower, the Chairman, the President, any Executive, Senior or other Vice President, the Treasurer and any Assistant Treasurer of such Borrower. "RESTRICTED MARGIN STOCK": any Margin Stock, the sale, pledge or other disposition of which by the Company or any of its Subsidiaries is in any way restricted by an arrangement with any Bank or any affiliate thereof to the extent that the value thereof (determined in accordance with Regulation U of the Board of Governors of the Federal Reserve System) does not exceed 25% of the value (determined in accordance with such Regulation U) of all the assets subject to such restriction. "RESTRICTED SUBSIDIARY": any Subsidiary of the Company incorporated in the United States of America or Canada (a) which is engaged in, or whose principal assets consist of property used by the Company or any Restricted Subsidiary in, the manufacture of products within the United States of America or Canada or in the sale of products principally to customers located in the United States of America or Canada except any corporation which is a retail dealer in which the 14 Company has, directly or indirectly, an investment, or (b) which the Company shall designate as a Restricted Subsidiary in an officers' certificate signed by two Responsible Officers and delivered to the Administrative Agent. "SALE AND LEASE-BACK TRANSACTION": as defined in subsection 6.3. "SIGNIFICANT SUBSIDIARY": of a Borrower, any Subsidiary of such Borrower the assets, revenues or net worth of which is, at the time of determination, equal to or greater than ten percent of the assets, revenues or net worth, respectively, of such Borrower at such time. "SUBSIDIARY": of a Person, a corporation or other entity of which securities or other ownership interests having ordinary voting power (other than securities or other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other Persons performing similar functions are at the time directly or indirectly owned by such Person or one or more Subsidiaries of such Person, or by such Person and one or more Subsidiaries of such Person. "TERMINATION DATE": December 15, 1998 or such later date as shall be determined pursuant to the provisions of subsection 2.16 with respect to non-Objecting Banks. "TRANSFEREES": as defined in subsection 10.5(g). "TRANSFER EFFECTIVE DATE": as defined in each Commitment Transfer Supplement and each Loan Assignment. "TYPE": as to any Committed Rate Loan, its nature as an ABR Loan, Eurodollar Loan or C/D Rate Loan. "WORKING DAY": any day on which dealings in foreign currencies and exchange between banks may be carried on in London, England and New York, New York. 1.2 OTHER DEFINITIONAL PROVISIONS. (a) All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto. (b) As used herein and in any certificate or other document made or delivered pursuant hereto, accounting terms relating to either Borrower and its Subsidiaries not defined in subsection 1.1, and accounting terms partly defined in subsection 1.1 to the extent not defined, shall have the respective meanings given to them under GAAP. (c) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer 15 to this Agreement as a whole and not to any particular provision of this Agreement, and Section, subsection, Schedule and Exhibit references are to this Agreement unless otherwise specified. (d) Unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of the relevant Borrower. SECTION 2. THE COMMITTED RATE LOANS; THE BID LOANS; THE NEGOTIATED RATE LOANS; AMOUNT AND TERMS 2.1 THE COMMITTED RATE LOANS. (a) During the Commitment Period, subject to the terms and conditions hereof, each Bank severally agrees to make loans (individually, a "COMMITTED RATE LOAN") to either Borrower from time to time in an aggregate principal amount for both Borrowers at any one time outstanding not to exceed such Bank's Commitment minus the aggregate principal amount of Bid Loans and Negotiated Rate Loans made by such Bank at such time outstanding unless such Bank shall have notified the Administrative Agent in writing that it agrees to make such Committed Rate Loans in an aggregate principal amount for both Borrowers at any one time outstanding not to exceed such Bank's Commitment minus the portion of the aggregate principal amount of the Bid Loans and Negotiated Rate Loans made by such Bank at such time outstanding specified in such notice, PROVIDED, HOWEVER, that the aggregate principal amount of Loans at any time outstanding shall not exceed the aggregate amount of the Commitments at such time. During the Commitment Period, either Borrower may use the Commitments by borrowing, repaying and reborrowing, all in accordance with the terms and conditions hereof. (b) The Committed Rate Loans may be either (i) Eurodollar Loans, (ii) ABR Loans, (iii) C/D Rate Loans or (iv) a combination thereof as determined by the relevant Borrower. (c) Either Borrower may borrow Committed Rate Loans on any Working Day, if the borrowing is of Eurodollar Loans, or on any Business Day, if the borrowing is of C/D Rate Loans or ABR Loans; PROVIDED, HOWEVER, that a Responsible Officer of such Borrower shall give the Administrative Agent irrevocable notice thereof (which notice must be received by the Administrative Agent (i) prior to 12:00 Noon, New York City time, three Working Days prior to the requested Borrowing Date, in the case of Eurodollar Loans, (ii) prior to 12:00 Noon, New York City time, two Business Days prior to the requested Borrowing Date in the case of C/D Rate Loans, (iii) except as provided in clause (iv) hereof, prior to 12:00 Noon, New York City time, one Business Day prior to the requested Borrowing Date, in the case of ABR Loans and (iv) prior to 11:00 A.M., New York City time, on the requested Borrowing Date in the case of ABR Loans up to an aggregate principal amount for both Borrowers not to exceed 25% 16 of the Commitments on such Borrowing Date). Each such notice shall be given in writing or by facsimile transmission substantially in the form of Exhibit A (with appropriate insertions) or shall be given by telephone (specifying the information set forth in Exhibit A) promptly confirmed by notice given in writing or by facsimile transmission substantially in the form of Exhibit A (with appropriate insertions). On the day of receipt of any such notice from either Borrower, the Administrative Agent shall promptly notify each Bank thereof. Subject to paragraph (e) below, each Bank will make the amount of its share of each borrowing available to the Administrative Agent for the account of such Borrower at the office of the Administrative Agent set forth in subsection 10.2 at 11:00 A.M. (or 2:00 P.M., in the case of ABR Loans requested pursuant to clause (iv) above), New York City time, on the Borrowing Date requested by such Borrower in funds immediately available to the Administrative Agent as the Administrative Agent may direct. The proceeds of all such Committed Rate Loans will be made available promptly to such Borrower by the Administrative Agent at the office of the Administrative Agent specified in subsection 10.2 by crediting the account of such Borrower on the books of such office of the Administrative Agent with the aggregate of the amount made available to the Administrative Agent by the Banks and in like funds as received by the Administrative Agent. (d) All Committed Rate Loans made to each Borrower shall be repaid in full by such Borrower on or before the Termination Date. 2.2 THE BID LOANS; THE NEGOTIATED RATE LOANS. (a) Either Borrower may borrow Bid Loans or Negotiated Rate Loans from time to time on any Business Day (in the case of Bid Loans made pursuant to an Absolute Rate Bid Loan Request), any Working Day (in the case of Bid Loans made pursuant to an Index Rate Bid Loan Request) or, in the case of Negotiated Rate Loans, on such days as shall be mutually agreed upon between the relevant Borrower and the applicable Bank, in each case during the Commitment Period and in the manner set forth in this subsection 2.2 and in amounts such that the aggregate principal amount of Loans at any time outstanding shall not exceed the aggregate amount of the Commitments at such time. Notwithstanding any other provision of this Agreement, the aggregate principal amount of the outstanding Bid Loans and/or Negotiated Rate Loans made by any Bank may at any time (but shall not be required to) exceed the Commitment of such Bank so long as the aggregate principal amount of the Loans outstanding by all Banks does not exceed the aggregate amount of the Commitments at such time. (b)(i) Either Borrower shall request Bid Loans or Negotiated Rate Loans by delivering (A) in the case of an Index Rate Bid Loan, a Bid Loan Request to the Auction Agent, c/o Deutsche Bank AG New York Branch, 31 West 52nd Street, New York, New York 10019, Attention: Loan Syndications, Telephone: (212) 474-7041, Facsimile: (212) 474-7048, not later than 12:00 Noon 17 (New York City time) four Working Days prior to the proposed Borrowing Date, (B) in the case of an Absolute Rate Bid Loan, a Bid Loan Request to the Auction Agent at the address set forth in clause (A) of this subsection 2.2(b)(i) not later than 10:00 A.M. (New York City time) one Business Day prior to the proposed Borrowing Date or (C) in the case of a Negotiated Rate Loan, a Negotiated Rate Loan Request to any Bank at such time as the applicable Borrower and the applicable Bank shall agree. Each Bid Loan Request may solicit bids for Bid Loans in an aggregate principal amount of $25,000,000 or an integral multiple of $5,000,000 in excess thereof and for not more than three alternative Interest Periods for such Bid Loans. The Auction Agent shall promptly notify each Bid Loan Bank and the Administrative Agent by facsimile transmission or by telephone, immediately confirmed by facsimile transmission, of the contents of each Bid Loan Request received by it. (ii) In the case of an Index Rate Bid Loan Request, upon receipt of notice from the Auction Agent of the contents of such Bid Loan Request, any Bid Loan Bank that elects, in its sole discretion, to do so, shall irrevocably offer to make one or more Bid Loans at the Applicable Index Rate plus or minus a margin for each such Bid Loan determined by such Bid Loan Bank, in its sole discretion. Any such irrevocable offer shall be made by delivering a Bid Loan Offer to the Auction Agent at the address set forth in clause (i)(A) above before 10:30 A.M. (New York City time) three Working Days before the proposed Borrowing Date, setting forth the maximum amount of Bid Loans for each Interest Period, and the aggregate maximum amount for all Interest Periods, which such Bank would be willing to make and the margin above or below the Applicable Index Rate at which such Bid Loan Bank is willing to make each such Bid Loan. The Auction Agent shall advise the relevant Borrower before 11:00 A.M. (New York City time) three Working Days before the proposed Borrowing Date of the contents of each such Bid Loan Offer received by it. If the Auction Agent in its capacity as a Bid Loan Bank shall, in its sole discretion, elect to make any such offer, it shall advise such Borrower of the contents of its Bid Loan Offer before 10:15 A.M. (New York City time) three Working Days before the proposed Borrowing Date. (iii) In the case of an Absolute Rate Bid Loan Request, upon receipt of notice from the Auction Agent of the contents of such Bid Loan Request, any Bid Loan Bank that elects, in its sole discretion, to do so, shall irrevocably offer to make one or more Bid Loans at a rate or rates of interest for each such Bid Loan determined by such Bid Loan Bank in its sole discretion. Any such irrevocable offer shall be made by delivering a Bid Loan Offer to the Auction Agent at the address set forth in clause (i)(A) of this subsection 2.2(b) before 9:30 A.M. (New York City time) on the proposed Borrowing Date, setting forth the maximum amount of Bid Loans for each Interest Period, and the aggregate maximum amount for all Interest Periods, which such Bid Loan Bank would be willing to make and the rate or rates 18 of interest at which such Bid Loan Bank is willing to make each such Bid Loan. The Auction Agent shall advise the relevant Borrower before 10:00 A.M. (New York City time) on the proposed Borrowing Date of the contents of each such Bid Loan Offer received by it. If the Auction Agent in its capacity as a Bid Loan Bank shall, in its sole discretion, elect to make any such offer, it shall advise such Borrower of the contents of its Bid Loan Offer before 9:15 A.M. (New York City time) on the proposed Borrowing Date. (iv) The relevant Borrower shall before 11:30 A.M. (New York City time) three Working Days before the proposed Borrowing Date (in the case of Bid Loans requested by an Index Rate Bid Loan Request) and before 10:30 A.M. (New York City time) on the proposed Borrowing Date (in the case of Bid Loans requested by an Absolute Rate Bid Loan Request) either, in its absolute discretion: (A) cancel such Bid Loan Request by giving the Auction Agent telephone notice to that effect, or (B) accept one or more of the offers made by any Bid Loan Bank or Bid Loan Banks pursuant to clause (ii) or clause (iii) of this subsection 2.2(b), as the case may be, by giving telephone notice to the Auction Agent (immediately confirmed by delivery to the Auction Agent at the address set forth in clause (i)(A) of this subsection 2.2(b) of a Bid Loan Confirmation) of the amount of Bid Loans for each relevant Interest Period to be made by each Bid Loan Bank (which amount shall be equal to or less than the maximum amount for such Interest Period specified in the Bid Loan Offer of such Bid Loan Bank, and for all Interest Periods included in such Bid Loan Offer shall be equal to or less than the aggregate maximum amount specified in such Bid Loan Offer for all such Interest Periods) and reject any remaining offers made by Bid Loan Banks pursuant to clause (ii) or clause (iii) above, as the case may be; PROVIDED, HOWEVER, that (x) such Borrower may not accept offers for Bid Loans for any Interest Period in an aggregate principal amount in excess of the maximum principal amount requested for such Interest Period in the related Bid Loan Request, (y) if such Borrower accepts any such offers, it must accept offers strictly based upon pricing for such relevant Interest Period and upon no other criteria whatsoever and (z) if two or more Bid Loan Banks submit offers for any Interest Period at identical pricing and such Borrower accepts any of such offers but does not wish to borrow the total amount offered by such Bid Loan Banks with such identical pricing, such Borrower shall accept offers from all of such Bid Loan Banks in amounts allocated among them PRO RATA according to the amounts offered by such Bid Loan Banks (or as nearly PRO RATA as shall be practicable, after giving effect to the requirement that Bid Loans made by a Bid Loan Bank on a Borrowing Date for each relevant Interest 19 Period shall be in a principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof, it being agreed that to the extent that it is not possible to make allocations in accordance with the provisions of this clause (z) such allocations shall be made in accordance with the instructions of such Borrower, it being understood that in no event shall any Bank be obligated to make any Bid Loan in a principal amount less than $5,000,000). (v) If such Borrower notifies the Auction Agent that a Bid Loan Request is cancelled pursuant to clause (iv)(A) of this subsection 2.2(b), the Auction Agent shall give prompt telephone notice thereof to the Bid Loan Banks and the Administrative Agent, and the Bid Loans requested thereby shall not be made. (vi) (A) If such Borrower accepts pursuant to clause (iv)(B) of this subsection 2.2(b) one or more of the offers made by any Bid Loan Bank or Bid Loan Banks pursuant to a Bid Loan Request, the Auction Agent shall promptly notify by telephone the Administrative Agent and each Bid Loan Bank which has made such an offer of the aggregate amount of such Bid Loans to be made on such Borrowing Date for each Interest Period and of the acceptance or rejection of any offers to make such Bid Loans made by such Bid Loan Bank. Each Bid Loan Bank which is to make a Bid Loan pursuant to a Bid Loan Request shall, before 12:00 Noon (New York City time) on the Borrowing Date specified in the Bid Loan Request applicable thereto, make available to the Administrative Agent at its office set forth in subsection 10.2 the amount of Bid Loans to be made by such Bid Loan Bank, in immediately available funds. The Administrative Agent will make such funds available to such Borrower as soon as practicable on such date at the Administrative Agent's aforesaid address. (B) If such Borrower and any Bank agree to the terms of a Negotiated Rate Loan to be made on a Borrowing Date pursuant to a Negotiated Rate Loan Request, such Borrower and such Bank shall promptly notify by telephone the Administrative Agent of the aggregate amount of Negotiated Rate Loans to be made on such Borrowing Date and the respective Interest Periods therefor. Each Bank which is to make a Negotiated Rate Loan shall, at such time, on such Borrowing Date and at such location as shall be mutually agreed upon between such Borrower and such Bank, make avail- able to such Borrower the amount of Negotiated Rate Loans to be made by such Bank, in immediately available funds. (C) As soon as practicable after each Borrowing Date for Bid Loans and Negotiated Rate Loans, the Administrative Agent shall notify each Bank of the aggregate amount of Bid Loans or Negotiated Rate Loans advanced pursuant to a Bid Loan Request or Negotiated Rate Loan Request on such Borrowing Date and the respective Interest Periods therefor. 20 (c) Within the limits and on the conditions set forth in this subsection 2.2, each Borrower may from time to time borrow under this subsection 2.2, repay pursuant to paragraph (d) below, and reborrow under this subsection 2.2. (d) Each Borrower shall repay to the Administrative Agent for the account of each Bid Loan Bank (or the Loan Assignee in respect thereof, as the case may be) which has made a Bid Loan to such Borrower on the last day of the Interest Period for each Bid Loan (such Interest Period being that specified by such Borrower for repayment of such Bid Loan in the related Bid Loan Request) the then unpaid principal amount of such Bid Loan. Each Borrower shall repay to each Bank which has made a Negotiated Rate Loan to such Borrower (or the Loan Assignee in respect thereof, as the case may be) the principal thereof as agreed by such Borrower and such Bank. (e) Each Borrower shall pay interest on the unpaid principal amount of each Bid Loan and each Negotiated Rate Loan borrowed by such Borrower from the applicable Borrowing Date to the stated maturity date thereof, in the case of a Bid Loan, at the rate of interest determined pursuant to paragraph (b) of this subsection 2.2, and, in the case of a Negotiated Rate Loan, as agreed by such Borrower and the relevant Bank (calculated on the basis of a 360 day year for actual days elapsed), payable on the interest payment date or dates (i) specified by such Borrower for such Bid Loan in the related Bid Loan Request and (ii) mutually agreed upon between such Borrower and such Bank in the case of Negotiated Rate Loans, PROVIDED that as to any Bid Loan in respect of which the stated maturity date is more than three months after such Borrowing Date, interest shall also be paid on the day which occurs three months after such Borrowing Date. If all or a portion of the principal amount of any Bid Loan shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue principal amount shall, without limiting any rights of any Bank under this Agreement, bear interest from the date on which such payment was due at a rate per annum which is 1% above the rate which would otherwise be applicable to such Bid Loan until the scheduled maturity date with respect thereto and for each day thereafter at a rate per annum which is 1% above the ABR until paid in full (as well after as before judgment). If all or any portion of the principal amount of any Negotiated Rate Loan shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue principal amount shall, without limiting any rights of any Bank under this Agreement, bear interest from the date on which such payment was due at a rate per annum as shall be mutually agreed upon between the relevant Borrower and the relevant Bank. (f) After the first Bid Loan Request has been given hereunder, no Bid Loan Request or Negotiated Rate Loan Request shall be given until at least one Business Day, in the case of an Absolute Rate Bid Loan Request, or one Working Day, in the case 21 of an Index Rate Bid Loan Request, after the earliest to occur of (i) the Borrowing Dates with respect to all prior Bid Loan Requests made pursuant to subsection 2.2(b)(i), (ii) the date on which all Bid Loan Banks have failed to submit Bid Loan Offers with respect to any Bid Loan Requests within the time specified in subsection 2.2(b)(ii) or (iii), as the case may be, and (iii) the date on which the relevant Borrower has cancelled all prior Bid Loan Requests pursuant to subsection 2.2(b)(iv). 2.3 LOAN ACCOUNTS. Each Bank, with respect to its Committed Rate Loans, Bid Loans and Negotiated Rate Loans, and the Administrative Agent, with respect to all Committed Rate Loans and Bid Loans, shall open and maintain in the name of each Borrower loan accounts (as to each Bank, its "LOAN ACCOUNT" applicable to such Borrower) on its books and records setting forth the amounts of principal, interest and other sums paid and payable by such Borrower from time to time hereunder in respect of such Loans, and the obligation of such Borrower to pay or repay, as the case may be, such amounts to such Bank shall be evidenced by such Bank's Loan Account. In case of any dispute, action or proceeding relating to any Committed Rate Loan, Bid Loan or Negotiated Rate Loan, the entries in such records shall constitute PRIMA FACIE evidence of the accuracy of the information set forth therein. In case of discrepancy between the entries in the Administrative Agent's books and records and any Bank's, the entries in the Administrative Agent's books and records shall constitute PRIMA FACIE evidence of the accuracy of the information set forth therein. 2.4 FEES. (a) The Company and the Capital Corporation jointly and severally agree to pay to the Administrative Agent for the account of each Bank a facility fee from and including the Closing Date to and including the last day of the Commitment Period, computed at a rate of .125% per annum on the average daily amount of the Commitment of such Bank in effect during the period for which payment is made, payable quarterly in arrears on the first Business Day of each January, April, July and October of each year and on the Termination Date or such earlier date as the Commitments shall terminate as provided herein, commencing on the first of such dates to occur after the date hereof. (b) The Company and the Capital Corporation jointly and severally agree to pay to the Auction Agent for its own account all fees set forth in the letter agreement dated November 23, 1993 from the Auction Agent to the Borrowers. (c) The Company and the Capital Corporation jointly and severally agree to pay to the Administrative Agent for its own account all fees set forth in the letter agreement dated November 18, 1993 from the Administrative Agent to the Borrowers. 22 2.5 TERMINATION OR REDUCTION OF COMMITMENTS; CANCELLATION OF CAPITAL CORPORATION AS BORROWER. (a) The Borrowers, acting jointly, shall have the right, upon not less than five Business Days' notice to the Administrative Agent, to terminate the Commitments or, from time to time, reduce the amount of the Commitments, provided that (i) any such reduction shall be accompanied by prepayment of Loans made hereunder in accordance with subsection 2.6, together with accrued interest on the amount so prepaid to the date of such prepayment, to the extent, if any, that the amount of such Loans then outstanding exceeds the amount of the Commitments as then reduced, and (ii) any such termination of the Commitments shall be accompanied by prepayment in full of the Loans then outstanding hereunder in accordance with subsection 2.6, and any termination of a Bank's Commitment pursuant to subsection 2.13, 2.16 or 2.17 shall, with respect to each affected Loan, on the last day of the applicable Interest Period therefor or, if earlier, on such earlier date as shall be notified by the Borrowers, be accompanied by prepayment in full of such Loan, together with, in each case, accrued interest thereon to the date of such prepayment, the payment of any unpaid facility fee then accrued hereunder, and the payment of any amounts then payable pursuant to subsections 2.13, 2.14, 2.15 and 2.17. Upon receipt of such notice from the Borrowers the Administrative Agent shall promptly notify each Bank thereof. Any reduction of the Commitments pursuant to this subsection 2.5 shall be in an amount not less than $25,000,000, and shall be an amount which is a whole multiple of $5,000,000, and shall reduce permanently the amount of the Commitments then in effect. (b) The Company may cancel the ability of the Capital Corporation to borrow hereunder upon not less than five Business Days' notice to the Administrative Agent. Upon receipt of such notice from the Company the Administrative Agent shall promptly notify each Bank thereof. On the first day following receipt of such notice, on which all Loans to the Capital Corporation and all interest thereon shall have been paid in full, and notwithstanding any other provision of this Agreement, (i) the Capital Corporation shall cease to be a party hereto or to have any right or obligation hereunder, (ii) rights and obligations expressed herein to be, in effect, of either the Company or the Capital Corporation or of both of them, but not any such rights and obligations expressed herein to be of the Capital Corporation only, shall be deemed to be rights and obligations of the Company only and (iii) the Banks shall cease to have any right or obligation hereunder which depends or is contingent upon any action, condition or performance, or the absence thereof, whether past or present, of the Capital Corporation other than any action, condition or performance, or the absence thereof, of the Capital Corporation in its capacity as a Subsidiary, Significant Subsidiary or Restricted Subsidiary hereunder; PROVIDED, HOWEVER, that the obligation of the Capital Corporation to make any payment pursuant to subsection 2.13, 2.14, 2.15 or 2.17 which arises prior to the cancellation of the ability of the Capital 23 Corporation to borrow hereunder shall survive the cancellation of the ability of the Capital Corporation to borrow hereunder. 2.6 OPTIONAL PREPAYMENTS. Either Borrower may at any time and from time to time prepay its Committed Rate Loans in whole or in part, without premium or penalty, but subject to the provisions of subsection 2.14, upon at least three Business Days' irrevocable notice, in the case of Eurodollar Loans, two Business Days' irrevocable notice in the case of C/D Rate Loans, or one Business Day's irrevocable notice in the case of ABR Loans, in each case to the Administrative Agent, specifying the date and amount of prepayment and whether the prepayment is of its Eurodollar Loans, ABR Loans, C/D Rate Loans, or a combination thereof, and if of a combination thereof the amount of prepayment allocable to each. Upon receipt of such notice the Administrative Agent shall promptly notify each Bank thereof. If such notice is given, the Borrower delivering such notice shall make such prepayment, and the payment of the amount specified in such notice shall be due and payable, on the date specified therein, together with accrued interest to such date on the amount prepaid and any amounts payable pursuant to subsections 2.14 and 2.15. Except as provided in the immediately following sentence, partial prepayments shall be in an aggregate principal amount of $5,000,000, or a whole multiple thereof; PROVIDED, HOWEVER, that after giving effect thereto, the aggregate principal amount of all Committed Rate Loans made on the same Borrowing Date shall not be less than $25,000,000. Anything contained in this subsection 2.6 to the contrary notwithstanding, partial prepayments of a Cancelled Bank's Loans in connection with the termination under subsection 2.13(a), (b) or (c), 2.16(c) or 2.17(b) of such Cancelled Bank's Commitment (in whole or in part) shall be in an amount equal to the principal amount of the Loans of such Bank being prepaid, notwithstanding the amount thereof, and shall be permitted notwithstanding the provisions of the foregoing proviso. Either Borrower may prepay Negotiated Rate Loans or Bid Loans on such terms as shall be mutually agreed upon between the relevant Borrower and the relevant Bank. 2.7 MINIMUM AMOUNT OF CERTAIN LOANS. All borrowings, payments and, except as set forth in the penultimate sentence of subsection 2.6 hereof, prepayments in respect of Committed Rate Loans shall be in such amounts and be made pursuant to such elections that, after giving effect thereto, (a) the aggregate principal amount of Committed Rate Loans made on any Borrowing Date shall not be less than $25,000,000 or a whole multiple of $5,000,000 in excess thereof and (b) the aggregate principal amount of Committed Rate Loans of any Type with the same Interest Period made on any Borrowing Date shall not be less than $10,000,000 or a whole multiple of $1,000,000 in excess thereof. 2.8 COMMITTED RATE LOAN INTEREST RATE AND PAYMENT DATES. (a) The Eurodollar Loans shall bear interest for the period from the date thereof until the stated maturity thereof on 24 the unpaid principal amount thereof at a rate per annum equal to the Eurodollar Rate determined for the Interest Period therefor plus the Applicable Margin. (b) The ABR Loans shall bear interest for each day during the period from the date thereof until the payment in full thereof on the unpaid principal amount thereof at a fluctuating rate per annum equal to the ABR for such day plus the Applicable Margin. (c) The C/D Rate Loans shall bear interest for the period from the date thereof until the stated maturity thereof on the unpaid principal amount thereof at a rate per annum equal to the C/D Rate determined for the Interest Period therefor plus the Applicable Margin. (d) If all or a portion of the principal amount of any of the Committed Rate Loans shall not be paid when due (whether at the stated maturity, by acceleration or otherwise) such overdue principal amount of such Committed Rate Loan (i) shall bear interest at a rate per annum which is 1% above the rate which would otherwise be applicable pursuant to subsection 2.8(a), (b) or (c), as the case may be, from the date when such principal amount is due until the date on which such amount is paid in full and (ii) shall, if such Committed Rate Loan is a Eurodollar Loan or C/D Rate Loan, be converted to an ABR Loan at the end of the Interest Period applicable thereto. (e) Interest shall be payable in arrears on each Interest Payment Date. 2.9 CONVERSION AND CONTINUATION OPTIONS. (a) The relevant Borrower may elect from time to time to convert Committed Rate Loans of one Type into Committed Rate Loans of another Type by giving to the Administrative Agent irrevocable notice of such conversion by the earliest time that they would have been required to give notice under subsection 2.1(c) if they had been borrowing Committed Rate Loans of each such Type on the conversion date specified in such notice, PROVIDED that any such conversion of Eurodollar Loans or C/D Rate Loans may only be made on the last day of an Interest Period with respect thereto. Any such notice of conversion to Eurodollar Loans or C/D Rate Loans shall specify the length of the initial Interest Period or Interest Periods therefor. Upon receipt of any such notice the Administrative Agent shall promptly notify each Bank thereof. If the last day of the then current Interest Period with respect to C/D Rate Loans that are to be converted to Eurodollar Loans is not a Working Day, such conversion shall be made on the next succeeding Working Day, and during the period from such last day to such succeeding Working Day such Loans shall bear interest as if they were ABR Loans. All or any part of outstanding Eurodollar Loans, ABR Loans and C/D Rate Loans may be converted as provided herein, PROVIDED that no Loan may be converted into a 25 Eurodollar Loan or a C/D Rate Loan after the date that is one month or 30 days, respectively, prior to the Termination Date. (b) Any Eurodollar Loans or C/D Rate Loans may be continued as such upon the expiration of the then current Interest Period with respect thereto by the relevant Borrower giving notice to the Administrative Agent, such notice to be given by the time it would have been required to give notice under subection 2.1(c) if it had been borrowing Eurodollar Loans or C/D Rate Loans, as the case may be, on the last day of the then expiring Interest Period therefor, of the length of the next Interest Period to be applicable to such Loans, PROVIDED that no Eurodollar Loan or C/D Rate Loan may be continued as such after the date that is one month or 30 days, respectively, prior to the Termination Date. 2.10 COMPUTATION OF INTEREST AND FEES. (a) Facility fees and interest in respect of ABR Loans based upon clause (a) of the definition of ABR shall be calculated on the basis of a 365 (or 366 as the case may be) day year for the actual days elapsed (including the first day and excluding the last day). Interest in respect of Eurodollar Loans, C/D Rate Loans, Bid Loans and ABR Loans based upon clause (b) of the definition of ABR shall be calculated on the basis of a 360 day year for the actual days elapsed (including the first day and excluding the last day). The Administrative Agent shall promptly notify the Borrowers and the Banks of each determination of a Eurodollar Rate and of a C/D Rate. Any change in the interest rate on a Committed Rate Loan resulting from a change in the ABR shall become effective as of the opening of business on the day on which such change in the ABR shall become effective. The Administrative Agent shall promptly notify the Borrowers and the Banks of the effective date and the amount of each such change. (b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrowers and the Banks in the absence of manifest error. The Administrative Agent shall, at the request of a Borrower, deliver to such Borrower a statement showing the quotations given by the Reference Banks and the computations used by the Administrative Agent in determining any interest rate. (c) If any Reference Bank's Commitment shall terminate (otherwise than on termination of all the Commitments) or, as the case may be, its Loans are assigned, prepaid or repaid for any reason whatsoever, such Reference Bank shall thereupon cease to be a Reference Bank, and the Administrative Agent (after consultation with the Banks and with the consent of the Borrowers) shall, by notice to the Borrowers and the Banks, designate a sufficient number of other Banks as Reference Banks so that there shall at all times be at least three Reference Banks. 26 (d) Each Reference Bank shall use its best efforts to furnish quotations of rates to the Administrative Agent as contemplated hereby. If any of the Reference Banks shall be unable or otherwise fails to supply such rates to the Administrative Agent upon its request, the rate of interest shall be determined on the basis of the quotations of the remaining Reference Banks or Reference Bank. 2.11 INABILITY TO DETERMINE INTEREST RATE. (a) In the event that the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Borrowers) that by reason of circumstances affecting the interbank eurodollar market generally, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for any requested Interest Period with respect to Committed Rate Loans that a Borrower has requested be made as, continued as or converted into Eurodollar Loans, the Administrative Agent shall promptly give notice of such determination to such Borrower and the Banks prior to the first day of the requested Interest Period for such Eurodollar Loans. If such notice is given, such Borrower may (i) in accordance with the provisions of subsections 2.1 or 2.9, as the case may be, (including any requirements for notification) request that the affected Loans be made as, continued as or converted into, as the case may be, C/D Rate Loans or ABR Loans, or (ii) in the case of Loans requested to be made on the first day of such Interest Period, withdraw the notice given under subsections 2.1 or 2.9, as the case may be, by giving telephonic notice to the Administrative Agent, no later than 10:00 A.M. (New York City time) on the applicable Borrowing Date, confirmed in writing no later than one Business Day after such telephonic notice is given; PROVIDED that, if the Administrative Agent does not receive any notice permitted from the relevant Borrower hereunder, such Borrower shall be deemed to have requested that the affected Loans be made as, continued as or converted into, as the case may be, ABR Loans. Until the notice given pursuant to the first sentence of this paragraph has been withdrawn by the Administrative Agent, no further Loans shall be made as, continued as or converted into, as the case may be, Eurodollar Loans. (b) In the event that the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Borrowers) that by reason of circumstances affecting the domestic certificate of deposit market generally, adequate and reasonable means do not exist for ascertaining the C/D Rate for any requested Interest Period with respect to Committed Rate Loans that a Borrower has requested be made as, continued as or converted into, C/D Rate Loans, the Administrative Agent shall promptly give notice of such determination to such Borrower and the Banks on or prior to the first day of the requested Interest Period for such C/D Rate Loans. If such notice is given, such Borrower may (i) in accordance with the provisions of subsections 2.1 or 2.9, as the case may be, (including any requirements for notification) 27 request that the affected Loans be made as, continued as or converted into, as the case may be, ABR Loans, or (ii) in the case of Loans requested to be made on the first day of such Interest Period, withdraw the notice given under subsections 2.1 or 2.9, as the case may be, by giving telephonic notice to the Administrative Agent, no later than the later of 10:00 A.M. (New York City time) on the applicable Borrowing Date and one hour after receipt by such Borrower of the notice referred to in the preceding sentence, confirmed in writing no later than one Business Day after such telephonic notice is given; PROVIDED that, if the Administrative Agent does not receive any notice permitted from the relevant Borrower hereunder, such Borrower shall be deemed to have requested that the affected Loans be made as, continued as or converted into, as the case may be, ABR Loans. Until the notice given pursuant to the first sentence of this paragraph has been withdrawn by the Administrative Agent, no further Loans shall be made as, continued as or converted into, as the case may be, C/D Rate Loans. (c) In the event that the Auction Agent shall have determined (which determination shall be conclusive and binding upon the Borrowers) that by reason of circumstances affecting the interbank eurodollar market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for any Interest Period with respect to a proposed Bid Loan to be made pursuant to an Index Rate Bid Loan Request, the Auction Agent shall forthwith give notice of such determination to the relevant Borrower and the Bid Loan Banks at least two Business Days prior to the proposed Borrowing Date, and such Bid Loans shall not be made on such Borrowing Date. Until any such notice has been withdrawn by the Auction Agent, no further Index Rate Bid Loan Requests shall be submitted by either Borrower. 2.12 PRO RATA TREATMENT AND PAYMENTS. (a) All payments (including prepayments), to be made by the Borrowers on account of principal, interest and fees shall be made without defense, set-off or counterclaim and shall be made, in the case of fees and principal of, and interest on, Loans (other than Negotiated Rate Loans) at the Administrative Agent's office specified in subsection 10.2, in each case in lawful money of the United States of America and in immediately available funds not later than 11:00 A.M. (New York City time) on the date due. The Administrative Agent shall distribute such payments to the Banks entitled thereto on the day of receipt in like funds as received, PROVIDED that the Administrative Agent shall have received such payments not later than 11:00 A.M. (New York City time). If the Administrative Agent shall distribute such payments to the Banks entitled thereto on a date after the date on which such payments were received prior to 11:00 A.M. (New York City time), the Administrative Agent shall pay to each such Bank on demand an amount equal to the product of (i) the daily average Federal funds rate during such period as quoted by the Administrative Agent, TIMES (ii) the amount of such Bank's PRO RATA share of such payment, TIMES (iii) a fraction the numerator of which is 28 the number of days that elapse from and including such date of receipt of payment by the Administrative Agent to but excluding the date on which such Bank's PRO RATA share of such payment shall have become immediately available to such Bank and the denominator of which is 360. All payments (including prepayments) to be made by the Borrowers on account of principal, interest and fees relating to Negotiated Rate Loans shall be made to the Bank with respect thereto on such terms, at such address and at such time as shall be mutually agreed upon between the relevant Borrower and the relevant Bank in lawful money of the United States of America on the date due. (b) Each borrowing by the Borrowers of Committed Rate Loans shall be made PRO RATA among the Banks according to their respective Available Commitments, PROVIDED, HOWEVER, that for the purposes hereof, each Bank's Available Commitment shall be increased by the amount that such Bank has agreed to make Committed Rate Loans in excess of its Available Commitment pursuant to the terms of subsection 2.1(a), and, except as provided in subsections 2.13, 2.16 and 2.17, each reduction of the Commitments shall be made PRO RATA among the Banks according to the respective Commitment Percentages. Each payment by the Borrowers under this Agreement or of any Loan (other than Negotiated Rate Loans) shall be applied, FIRST, to any fees then due and owing pursuant to subsection 2.4, SECOND, to interest then due and owing in respect of the Loans (other than Negotiated Rate Loans) and THIRD, to principal then due and owing hereunder (other than principal due and owing under Negotiated Rate Loans) and under the Loans (other than Negotiated Rate Loans). Each payment made by the Borrowers under this Agreement relating to a Negotiated Rate Loan to the Bank with respect thereto shall be applied, FIRST, to interest then due and owing in respect of such Negotiated Rate Loan and SECOND, to principal then due and owing hereunder with respect to such Negotiated Rate Loan and under such Negotiated Rate Loan. Each payment (other than prepayments) by either Borrower on account of principal of and interest on the Loans shall be made for the account of each Bank PRO RATA according to the respective amounts due and owing to such Bank. Each prepayment by a Borrower on account of principal of the Loans (other than Negotiated Rate Loans) shall be applied, FIRST, to such of its Committed Rate Loan borrowings as such Borrower may designate (to be applied PRO RATA among the Banks in accordance with each Bank's share of such borrowing), and, SECOND, after all Committed Rate Loans shall have been paid in full, to all of its Absolute Rate Bid Loans or Index Rate Bid Loans made on the same Borrowing Date with the same Interest Period as such Borrower may designate, PRO RATA according to the respective amounts outstanding; PROVIDED, HOWEVER, that prepayments made pursuant to subsection 2.13(a), (b) or (c), 2.16(c) or 2.17(b) shall be applied in accordance with such subsection. (c) If any payment hereunder (other than payments on the Eurodollar Loans and Index Rate Bid Loans) becomes due and 29 payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day. If any payment on a Eurodollar Loan or Index Rate Bid Loan becomes due and payable on a day other than a Working Day, the maturity thereof shall be extended to the next succeeding Working Day unless the result of such extension would be to extend such payment into another calendar month in which event such payment shall be made on the immediately preceding Working Day. With respect to any extension of the payment of principal pursuant to this subsection 2.12(c), interest thereon shall be payable at the then applicable rate during such extension. (d) Unless the Administrative Agent shall have been notified in writing by any Bank prior to the date of the Committed Rate Loan, Committed Rate Loans, Bid Loan or Bid Loans to be made by such Bank (which notice shall be effective upon receipt) that such Bank will not make its PRO RATA share of the amount of the requested borrowing on such date available to the Administrative Agent, the Administrative Agent may assume that such Bank has made such amount available to it on such date and the Administrative Agent may, in reliance upon such assumption, make available to the relevant Borrower a corresponding amount. If a Bank shall make such amount available to the Administrative Agent on a date after such Borrowing Date, such Bank shall pay to the Administrative Agent on demand an amount equal to the product of (i) the daily average Federal funds rate during such period as quoted by the Administrative Agent, TIMES (ii) the amount of such Bank's PRO RATA share of such borrowing, TIMES (iii) a fraction the numerator of which is the number of days that elapse from and including such Borrowing Date to but excluding the date on which such Bank's PRO RATA share of such borrowing shall have become immediately available to the Administrative Agent and the denominator of which is 360. A certificate of the Administrative Agent submitted to any Bank with respect to any amounts owing under this subsection 2.12(d) shall be conclusive, absent manifest error. If such Bank's PRO RATA share is not in fact made available to the Administrative Agent by such Bank within three Business Days of such Borrowing Date, the Administrative Agent shall be entitled to recover such amount, on demand, from the relevant Borrower with interest thereon at the rate equal to the product of (i) during the period from and including such Borrowing Date to the Business Day next following the date of such demand, the daily average Federal funds rate quoted by the Administrative Agent, TIMES a fraction the numerator of which is the number of days that elapse from and including such Borrowing Date to but excluding the Business Day next following the date of such demand and the denominator of which is 360 and (ii) thereafter, the interest rate or rates applicable to the Loan or Loans funded by the Administrative Agent on behalf of such Bank on the Borrowing Date, TIMES a fraction the numerator of which is the number of days which elapse from and including the Business Day next following the date of such demand to but excluding the date such amount is recovered by the Administrative Agent from such Borrower and the denominator of which is 360. In the event 30 any Bank's PRO RATA share of a borrowing is not made available to the Administrative Agent in accordance with this paragraph within three Business Days of the applicable Borrowing Date (i) such Bank shall, during the period from such Borrowing Date to the date such Bank makes its PRO RATA share of the applicable borrowing available, not accrue and shall not be entitled to receive any facility fee under subsection 2.4 and (ii) either Borrower may exercise or pursue any other rights, remedies, powers and privileges against such Bank as are provided by law or by contract. 2.13 REQUIREMENTS OF LAW. (a) If any Bank shall determine that by reason of (i) the introduction after the date hereof of any applicable law, regulation or guideline or any change after the date hereof in any applicable law, regulation or guideline (including the phasing-in of a provision of any applicable law, regulation or guideline) or in the interpretation thereof by any governmental or other regulatory authority charged with the administration thereof or court of competent jurisdiction and/or (ii) compliance by such Bank with any requirement adopted after the date hereof of or directive adopted after the date hereof from any central bank or other fiscal, monetary or other regulatory authority (whether or not having the force of law), there shall be any increase in the cost of such Bank of maintaining or giving effect to its obligations with respect to Committed Rate Loans under this Agreement or maintaining its Commitment with respect to Committed Rate Loans or making or maintaining any C/D Rate Loans or Eurodollar Loans or any reduction in any amount receivable by such Bank in respect of C/D Rate Loans or Eurodollar Loans under this Agreement, notwithstanding the reasonable efforts (such reasonable efforts not to result in the incurrence of additional costs or expenses) of such Bank to mitigate such increase or reduction, then the relevant Borrower shall from time to time on receipt (whenever occurring) of a certificate from such Bank (which shall be executed by an officer thereof and a copy of which shall be delivered to the Administrative Agent) pay to such Bank such amounts as are stated therein to be required to indemnify such Bank against such increased costs or reduction; PROVIDED, HOWEVER, that if such Borrower becomes obligated to pay any Bank any additional amount pursuant to this subsection 2.13(a), such Borrower shall have the right, so long as no Event of Default has occurred and is then continuing, upon giving notice to the Administrative Agent and such Bank in accordance with subsection 2.6, to prepay in full the Loans of any such Bank, together with accrued interest thereon, any amounts payable to such Bank pursuant to subsections 2.13, 2.14, 2.15 and 2.17 and any accrued and unpaid facility fee or other amount payable to such Bank hereunder and/or, upon giving not less than three Business Days' notice to any such Bank and the Administrative Agent, to cancel the whole or part of the Commitment of any such Bank; PROVIDED, FURTHER, that such Borrower shall not be obligated to pay any Bank any additional amount pursuant to this subsection 2.13(a)(A) which constitutes a present or future income, stamp or other tax, 31 levy, impost, duty, charge, fee, deduction or withholding referred to in subsection 2.17(a) or (B) as a result of any law, rule, guideline, regulation, request or directive regarding capital adequacy referred to in subsection 2.13(b). The certificate of such Bank as to the amount of such increased costs or reduction shall set forth in reasonable detail the computation of such increased costs or reduction, and shall be binding and conclusive in the absence of manifest error. Amounts payable pursuant to this subsection 2.13(a) shall not include amounts which the relevant Borrower is obligated to pay pursuant to the definition of "C/D Rate" or subsection 2.13(c). A Bank which demands indemnification hereunder as a result of an increased cost or reduction referred to herein shall deliver the certificate referred to above to the relevant Borrower demanding indemnification no later than the later of (y) the thirtieth day immediately following each payment or realization by such Bank of such increased cost or reduction (and such certificate shall certify that the amounts set forth therein were paid or realized within such thirty-day period) and (z) the thirtieth day immediately following such Bank's knowledge of the incurrence or realization by such Bank of such increased cost or reduction (and such certificate shall so certify). (b) In the event that any Bank shall have determined that the adoption after the date hereof of any law, rule, guideline or regulation regarding capital adequacy, or any change after the date hereof in any existing or future law, rule, guideline or regulation regarding capital adequacy (excluding, however, the phasing-in of any existing law, rule, regulation or guideline regarding capital adequacy) or in the interpretation or application thereof or compliance by such Bank or any corporation controlling such Bank with any request or directive made or adopted after the date hereof regarding capital adequacy (whether or not having the force of law) from any central bank or Governmental Authority, does or shall have the effect of reducing the rate of return on such Bank's or such corporation's capital as a consequence of its obligations hereunder to a level below that which such Bank or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Bank's or such corporation's policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, within 30 days after receipt (whenever occurring) of a certificate from such Bank (which shall be executed by an officer thereof and a copy of which shall be delivered to the Administrative Agent), the Borrowers jointly and severally agree to pay to such Bank such additional amounts as are stated therein to be required to compensate it for such reduction; PROVIDED, HOWEVER, that if such Borrower becomes obligated to pay any Bank any additional amount pursuant to this subsection 2.13(b), such Borrower shall have the right, so long as no Event of Default has occurred and is then continuing, upon giving notice to the Administrative Agent and such Bank in accordance with subsection 2.6, to prepay in full the Loans of any such Bank, together with accrued interest thereon, any 32 amounts payable pursuant to subsections 2.13, 2.14, 2.15 and 2.17 and any accrued and unpaid facility fee or other amounts payable to it hereunder and/or, upon giving not less than three Business Days' notice to any such Bank and the Administrative Agent, to cancel the whole or part of the Commitment of any such Bank. The certificate of such Bank as to the amount of such reduction shall set forth in reasonable detail the computation of such reduction, and shall be binding and conclusive in the absence of manifest error. A Bank which demands indemnification hereunder as a result of a reduction referred to herein shall deliver the certificate referred to above to the relevant Borrower demanding indemnification no later than the later of (i) the thirtieth day immediately following each realization by such Bank of such reduction (and such certificate shall certify that the amounts set forth therein were realized within such thirty-day period) and (ii) the thirtieth day immediately following such Bank's knowledge of the realization by such Bank of such reduction (and such certificate shall so certify). (c) Each Borrower shall pay to each Bank that delivers a certificate to such Borrower in accordance with the second and third following sentences such amounts as shall be necessary to reimburse such Bank for the costs (determined in accordance with the immediately following sentence), if any, incurred by such Bank, as a result of the application to such Bank during any period on which there are outstanding Eurodollar Loans advanced by such Bank to such Borrower of basic, supplemental, marginal and emergency reserves under any regulations of the Board of Governors of the Federal Reserve System or other Governmental Authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as "Eurocurrency liabilities" in Regulation D of such Board) maintained by a member bank of such System (any such reserves dealing with reserve requirements prescribed for eurocurrency funding being referred to as "RESERVES"), such amount to be set forth in a certificate of such Bank delivered to the relevant Borrower; PROVIDED, HOWEVER, that if a Bank gives to a Borrower the written notice contemplated by the proviso set forth in the second following sentence, such Borrower shall have the right, so long as no Event of Default has occurred and is then continuing, upon giving notice to the Administrative Agent and such Bank in accordance with subsection 2.6, to prepay in full the Loans of such Bank, together with accrued interest thereon, any amounts payable pursuant to subsections 2.13, 2.14, 2.15 and 2.17 and any accrued and unpaid facility fee or other amounts payable to it hereunder and/or upon giving not less than three Working Days' notice to any such Bank and the Administrative Agent, to cancel the whole or part of the Commitment of any such Bank. Amounts certified by a Bank hereunder for any period shall represent such Bank's calculation or, if an accurate calculation is impracticable, reasonable estimate (using such reasonable means of allocation as such Bank shall determine) of the actual costs, if any, theretofore incurred by such Bank as a result of the application of Reserves 33 to Eurocurrency liabilities (as referred to in Regulation D referred to above) of such Bank in an amount equal to such Bank's Eurodollar Loans during such period and in any event shall not exceed the amount obtainable utilizing the maximum Reserves prescribed by the Board of Governors of the Federal Reserve System or other Governmental Authority having jurisdiction with respect thereto for such period. Such payment shall be made within fifteen days after receipt by the relevant Borrower of a certificate, signed by an officer of the Bank delivering such certificate, specifying the period (prior to the date of such certificate) during which the cost set forth therein was incurred by such Bank and stating (i) that such amount represents the actual cost, or, if an accurate calculation of such cost is impracticable stating that such amount represents such Bank's reasonable estimate of the actual cost, incurred by such Bank during such period as a result of the application of Reserves to Eurocurrency liabilities of such Bank in an amount equal to such Bank's Eurodollar Loans during such period and specified in such certificate and (ii) that the amount set forth therein does not in any event exceed the amount obtainable utilizing the maximum Reserves prescribed for such period by the Board of Governors of the Federal Reserve System or such other Governmental Authority having jurisdiction with respect thereto; PROVIDED that the obligation of the Borrowers to pay any amounts pursuant to this subsection 2.13(c) shall apply only in the case of those Banks that give to the relevant Borrower and the Administrative Agent, no later than 3:00 P.M. (New York City time) on the day that is two Working Days prior to the applicable Borrowing Date therefor, a written notice stating that such Bank intends to demand reimbursement pursuant hereto. A Bank which demands reimbursement of Reserve costs hereunder on account of a Eurodollar Loan made by such Bank shall deliver the certificate referred to in the preceding sentence to the relevant Borrower setting forth the items specified in clauses (i) and (ii) of the preceding sentence no later than the thirtieth day immediately following the last day of the Interest Period applicable to such Eurodollar Loan. (d) The obligations of the parties under this subsection 2.13 shall survive termination of this Agreement and payment of the Loans. 2.14 INDEMNITY. Each Borrower agrees to indemnify each Bank and to hold such Bank harmless from any loss or expense which such Bank may sustain or incur as a consequence of (a) default by such Borrower in payment of the principal amount of or interest on any Loan by such Bank, including, but not limited to, any such loss or expense arising from interest or fees payable by such Bank to lenders of funds obtained by it in order to maintain its Loans hereunder, (b) default by such Borrower in making a borrowing after such Borrower has given a notice in accordance with subsection 2.1 or 2.2, (c) default by such Borrower in making any prepayment after such Borrower has given a notice in accordance with subsection 2.5 or 2.6 or (d) the making by such 34 Borrower of a prepayment of a Committed Rate Loan other than an ABR Loan, a Bid Loan or, to the extent agreed to by the relevant Borrower and the relevant Bank with respect to a Negotiated Rate Loan, a Negotiated Rate Loan on a day which is not the last day of an Interest Period with respect thereto (with respect to Committed Rate Loans) or the maturity date therefor (with respect to Bid Loans) or any agreed date (with respect to Negotiated Rate Loans), including, but not limited to, any such loss or expense arising from interest or fees payable by such Bank to lenders of funds obtained by it in order to maintain its Loans hereunder. This covenant shall survive termination of this Agreement and payment of the outstanding Loans. A certificate as to any amount payable pursuant to the foregoing shall be submitted by such Bank (and executed by an officer thereof) to the relevant Borrower, setting forth the computation of such amounts in reasonable detail, and shall be conclusive in the absence of manifest error. 2.15 NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT. With respect to all Loans except Negotiated Rate Loans, unless the Administrative Agent shall have been notified by the relevant Borrower prior to the date on which any payment is due from it hereunder (which notice shall be effective upon receipt) that such Borrower does not intend to make such payment, the Administrative Agent may assume that such Borrower has made such payment when due, and the Administrative Agent may in reliance upon such assumption (but shall not be required to) make available to each Bank on such payment date an amount equal to the portion of such assumed payment to which such Bank is entitled hereunder, and if such Borrower has not in fact made such payment to the Administrative Agent, such Bank shall, on demand, repay to the Administrative Agent the amount made available to such Bank together with interest thereon in respect of each day during the period commencing on the date such amount was made available to such Bank and ending on (but excluding) the date such Bank repays such amount to the Administrative Agent, at a rate per annum equal to the Administrative Agent's cost of obtaining overnight funds in the federal funds market in New York on each such day. A certificate of the Administrative Agent submitted to the relevant Bank with respect to any amount owing under this subsection 2.15 shall be conclusive absent manifest error. 2.16 EXTENSION OF TERMINATION DATE. (a) No later than one year prior to the Termination Date then in effect, provided that no Event of Default shall have occurred and be continuing, the Borrowers may request an extension of such Termination Date by submitting to the Administrative Agent an Extension Request containing the information in respect of such extension specified in Exhibit I, which the Administrative Agent shall promptly furnish to each Bank. If the Required Banks shall approve in writing the extension of the Termination Date requested in such Extension Request, the Termination Date shall automatically and without any further action by any Person be extended for the period specified in such Extension Request; 35 PROVIDED that (i) each extension pursuant to this subsection 2.16 shall be for a maximum of one year, (ii) after giving effect to any extension, the Termination Date shall not be more than five years after the date of such extension and (iii) the Commitment of any Bank which does not consent in writing to such extension within 30 days of its receipt of such Extension Request (an "OBJECTING BANK") shall, unless earlier terminated in accordance with this Agreement, expire on the Termination Date in effect on the date of such Extension Request. If, within 30 days of their receipt of an Extension Request, the Required Banks shall not approve in writing the extension of the Termination Date requested in such Extension Request, the Termination Date shall not be extended pursuant to such Extension Request. The Administrative Agent shall promptly notify (y) the Banks and the Borrowers of any extension of the Termination Date pursuant to this subsection 2.16 and (z) the Borrowers and any other Bank of any Bank which becomes an Objecting Bank. (b) Any Objecting Bank the Commitment of which shall expire prior to any extended Termination Date shall, subject to subsection 2.16(c), have its Committed Rate Loans prepaid in full by the applicable Borrower(s) on such expiration date, together with accrued interest thereon, and shall have any accrued and unpaid facility fee or other amount payable to it hereunder paid on the first date to occur following such expiration date on which the fees referred to in subsection 2.4(a) are payable to the non-Objecting Banks or, if such fees shall be so payable on such expiration date, such unpaid facility fee and other amount shall be paid on such expiration date. (c) The Borrowers shall have the right, so long as no Event of Default has occurred and is then continuing, upon giving notice to the Administrative Agent and an Objecting Bank in accordance with subsection 2.6, to prepay in full the Committed Rate Loans of such Objecting Bank, together with accrued interest thereon, any amounts payable pursuant to subsections 2.13, 2.14, 2.15 and 2.17 and any accrued and unpaid facility fee or other amounts payable to it hereunder and/or, upon giving not less than three Working Days' notice to such Objecting Bank and the Administrative Agent, to cancel the whole or part of the Commitment of such Objecting Bank, PROVIDED that during the period from the Closing Date through December 14, 1994 and, commencing December 15, 1994, during each one-year period thereafter to and including the Termination Date (each, a "DEAL YEAR"), the aggregate Commitments of Banks which are terminated pursuant to this subsection 2.16(c) and are not replaced during such Deal Year pursuant to subsection 2.19 shall not exceed 33- 1/3% of the aggregate Commitments in effect on the first day of such Deal Year of Banks which were not Objecting Banks on such first day. 2.17 FOREIGN TAXES. (a) All payments made under this Agreement shall be made without set-off or counterclaim and free and clear of, and without reduction for or on account of, any 36 present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions, withholdings or restrictions or conditions of any nature whatsoever, now or hereafter imposed, levied, collected, withheld or assessed by any country (or by any political subdivision or taxing authority thereof or therein) from or through which any amount is paid under this Agreement excluding, in the case of each Bank, (i) income and franchise taxes (including, without limitation, branch taxes imposed by the United States or similar taxes imposed by a political subdivision or taxing authority thereof or therein but excluding, in the case of any Bank not organized under the laws of the United States, any taxes imposed by the United States by means of withholding at the source), (ii) in the case of any Bank not organized under the laws of the United States, any taxes imposed by the United States by means of withholding at the source unless such Bank has provided the Company, the Capital Corporation and the Administrative Agent with the documents it is required to provide to them under subsection 2.17(c) and (iii) taxes that would not have been imposed on such Bank but for the existence of a connection between such Bank and the jurisdiction imposing such taxes (other than a connection arising principally by virtue of this Agreement) (such non-excluded taxes being called "FOREIGN TAXES"). If any Foreign Taxes are required to be withheld from any amounts so payable to any Bank hereunder, the amounts so payable to such Bank shall be increased to the extent necessary to yield to such Bank (after payment of all Foreign Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement. Whenever any Foreign Taxes are payable by the Company or the Capital Corporation, as the case may be, as promptly as possible thereafter the Company or the Capital Corporation, as the case may be, shall send to the Administrative Agent, for the account of the affected Bank, a certified copy of the original official receipt, if any, received by the Company or the Capital Corporation, as the case may be, showing payment thereof. If the Company or the Capital Corporation, as the case may be, fails to pay any Foreign Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent, for the account of the affected Banks, the required receipts or other required documentary evidence, the Company or the Capital Corporation, as the case may be, shall indemnify such Banks for any incremental taxes, interest or penalties that may become payable by such Banks as a result of any such failure. (b) If a Borrower is required by this subsection 2.17 to make a payment to or in respect of any Bank, such Borrower shall have the right, so long as no Event of Default has occurred and is then continuing, upon giving notice to the Administrative Agent and such Bank in accordance with subsection 2.6, to prepay in full the Loans of such Bank, together with accrued interest thereon, any amounts payable pursuant to subsections 2.13, 2.14, 2.15 and 2.17 and any accrued and unpaid facility fee or other amounts payable to it hereunder and/or on giving not less than three Business Days' notice to any such Bank and the 37 Administrative Agent, to cancel the whole or part of the Commitment of such Bank. (c) At least two Business Days prior to the first Borrowing Date or, if such date does not occur within thirty days after the Closing Date, by the end of such thirty-day period, each Bank agrees that it will deliver to each Borrower and the Administrative Agent (i) either (A) a statement that it is incorporated under the laws of the United States or a state thereof or (B) if it is not so incorporated, a letter in duplicate in the form of Exhibit J or Exhibit K, as appropriate, and two duly completed copies of United States Internal Revenue Service Form 4224 or 1001 or successor applicable form, as the case may be, certifying in each case that such Bank is entitled to receive payment under this Agreement without deduction or withholding of any United States Federal income taxes, and (ii) Internal Revenue Service Form W-8 or W-9, or successor applicable form, as the case may be, to establish an exemption from United States backup withholding tax. Each Bank agrees (for the benefit of the Administrative Agent and the Borrowers) to provide the Administrative Agent and the Borrowers a new letter and Form 4224 or 1001 and Form W-8 or W-9, or successor applicable form or other manner of certification, on or before the date that any such letter or form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent letter or form previously delivered by it, certifying in the case of a Form 1001 or 4224 that such Bank is entitled to receive payments under this Agreement without deduction or withholding of any United States Federal income tax, and in the case of a Form W-8 or W-9 establishing exemption from United States backup withholding tax. The Administrative Agent shall not be responsible for obtaining such documentation from any Bank other than Chemical. (d) The Company and the Capital Corporation shall not be required to make payments on account of United States withholding taxes to any Bank under the second sentence of subsection 2.17(a) to the extent that such taxes could have been avoided had such Bank complied with a reasonable request by the Company, the Capital Corporation or the Administrative Agent for the forms or documents referred to in subsection 2.17(c). (e) To the extent that, as determined by any Bank in its sole discretion and without any obligation to disclose its tax records, Foreign Taxes have been irrevocably utilized by such Bank (either as credits or deductions) to reduce its tax liabilities and such utilization is consistent with its overall tax policies, such Bank shall pay to the Company or the Capital Corporation, as the case may be, an amount equal to such reduction obtained to the extent of such increased amounts paid by the Company or the Capital Corporation to such Bank as aforesaid. 38 (f) The obligations of the parties under this subsection 2.17 shall survive termination of this Agreement and payment of the Loans. 2.18 CONFIRMATIONS. The Administrative Agent shall, within 15 days following the last day of each calendar quarter (each such period being a "REPORT PERIOD"), furnish to the Borrowers a written account with respect to all amounts outstanding under the Loan Accounts as at the last day of such Report Period, including an accounting setting forth, for such Report Period the amounts of principal, interest and other sums paid and payable hereunder. The Borrowers shall, within 15 days following receipt of such written account, notify the Administrative Agent of any discrepancies between such written account and the Borrowers' records or, if no such discrepancies exist, furnish written confirmation to the Administrative Agent of the accuracy of such written account. Upon any Bank's request, the Administrative Agent shall furnish to each Bank a copy of such written account together with the Borrowers' response thereto. 2.19 REPLACEMENT OF CANCELLED BANKS. The Borrowers may designate one or more financial institutions to act as a Bank hereunder in place of any Cancelled Bank, and upon the Borrowers, each such financial institution and the Administrative Agent executing a writing substantially in the form of Exhibit L, such financial institution shall become and be a Bank hereunder with all the rights and obligations it would have had if it had been named on the signature pages hereof, and having for all such financial institutions an aggregate Commitment no greater than the whole, or such cancelled part, of the Commitment of the Cancelled Bank in place of which such financial institutions were designated; PROVIDED, HOWEVER, that all rights and obligations of such Cancelled Bank relating to the Loans made by such Cancelled Bank that are outstanding on the date of such cancellation shall be the rights and obligations of such Cancelled Bank and not of any such financial institution. The Administrative Agent shall execute any such writing presented to it and shall notify the Banks of the execution thereof, the name of the financial institution executing such writing and the amount of its Commitment. SECTION 3. REPRESENTATIONS AND WARRANTIES Each Borrower hereby represents and warrants to the Administrative Agent and to each Bank that: 3.1 FINANCIAL CONDITION. The consolidated balance sheet of such Borrower and its consolidated Subsidiaries as at October 31, 1992 and the related consolidated statements of income and of cash flow for the fiscal year then ended (including the related schedules and notes) reported on by Deloitte & Touche, copies of which have heretofore been furnished to each 39 Bank, fairly present the consolidated financial condition of such Borrower and its consolidated Subsidiaries as at such date, and the consolidated results of their operations and changes in financial position for the fiscal year then ended. The condensed unaudited consolidated balance sheet of such Borrower and its consolidated Subsidiaries as at July 31, 1993 and the related unaudited consolidated statement of income for the nine-month period ended on such date, certified by a Responsible Officer, copies of which have heretofore been furnished to each Bank, present fairly the consolidated financial condition of such Borrower and its consolidated Subsidiaries as at such date, and the consolidated results of their operations for the nine-month period then ended (subject to normal year-end audit adjustments). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with generally accepted accounting principles in the United States of America applied consistently throughout the periods involved (except as approved by such accountants or Responsible Officer, as the case may be, and as disclosed therein). 3.2 CORPORATE EXISTENCE. Such Borrower is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority to own its properties and to conduct the business in which it is currently engaged. 3.3 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Such Borrower has the corporate power and authority and the legal right to execute, deliver and perform this Agreement and to borrow hereunder and has taken all necessary corporate action to authorize its borrowings on the terms and conditions of this Agreement and to authorize its execution, delivery and performance of this Agreement. No consent or authorization of, filing with, or other act by or in respect of any Governmental Authority, is required in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of this Agreement other than any such consents, authorizations, filings or acts as have been obtained, taken or made and are in full force and effect. This Agreement has been duly executed and delivered on behalf of such Borrower, and this Agreement constitutes a legal, valid and binding obligation of such Borrower enforceable against such Borrower in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equity principles (whether enforcement is sought by proceedings in equity or at law). 3.4 NO LEGAL BAR. The execution, delivery and performance of this Agreement, the borrowings hereunder and the use of the proceeds thereof, will not violate any Requirement of Law or any Contractual Obligation of such Borrower, and will not result in, or require, the creation or imposition of any lien on 40 any of its properties or revenues pursuant to any Requirement of Law or Contractual Obligation. 3.5 NO MATERIAL LITIGATION. No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of such Borrower, threatened by or against such Borrower or any of its Subsidiaries or against any of its or their respective properties or revenues except actions, suits or proceedings which will not materially adversely affect the ability of such Borrower to perform its obligations hereunder. All of the defaults, if any, of such Borrower or any of its Subsidiaries with respect to any order of any Governmental Authority do not, and will not collectively, have a material adverse effect on the business, operations, property or financial or other condition of such Borrower and its Subsidiaries taken as a whole. 3.6 TAXES. Each of such Borrower and its Subsidiaries has filed or caused to be filed all tax returns which, to the knowledge of such Borrower, are required to be filed (except where the failure to file such tax returns would not have a material adverse effect on the business, operations, property or financial or other condition of such Borrower and its Subsidiaries taken as a whole), and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than assessments, taxes, fees and other charges the amount or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of such Borrower or its Subsidiaries, as the case may be). 3.7 MARGIN REGULATIONS. No part of the proceeds of any Loan hereunder will be used for any purpose which violates the provisions of Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect. 3.8 PARI PASSU RANKING. The indebtedness of such Borrower under its Loans and all other amounts due hereunder ranks at least pari passu with all present and future unsecured senior indebtedness of such Borrower (other than indebtedness preferred by law). 3.9 NO DEFAULTS. No "Event of Default" or similar event, or event which, with the lapse of time or the giving of notice, or both, would constitute such an Event or event, has occurred and is continuing hereunder or under any material bond, debenture, note or other evidence of indebtedness, or in any material mortgage, deed of trust, indenture or loan agreement, of such Borrower. 41 3.10 USE OF PROCEEDS. The proceeds of the Loans will be used by such Borrower for its general corporate purposes, which shall include, but shall not be limited to, any purchase or other acquisition of all or a portion of the debt or stock or other evidences of ownership of such Borrower or the assets or stock or other evidences of ownership of any other Person or Persons. SECTION 4. CONDITIONS PRECEDENT 4.1 CONDITIONS TO INITIAL LOAN. The obligation of each Bank to make its initial Loan hereunder is subject to the satisfaction of the following conditions precedent: (a) COUNTERPARTS. The Administrative Agent shall have received counterparts hereof, executed by all of the parties hereto. (b) RESOLUTIONS. The Administrative Agent shall have received, with a counterpart for each Bank, resolutions, certified by the Secretary or an Assistant Secretary of each Borrower, in form and substance satisfactory to the Administrative Agent, adopted by the Board of Directors of such Borrower authorizing the execution of this Agreement and the performance of its obligations hereunder and any borrowings hereunder from time to time. (c) LEGAL OPINIONS. The Administrative Agent shall have received, with a counterpart for each Bank, an opinion of Frank S. Cottrell, Esq., or his successor, as general counsel, or an associate general counsel, for each of the Borrowers, dated the Closing Date and addressed to the Agents and the Banks, substantially in the form of Exhibit G, and an opinion of Shearman & Sterling, special counsel to the Borrowers, dated the Closing Date and addressed to the Agents and the Banks, substantially in the form of Exhibit H. Such opinions shall also cover such other matters incident to the transactions contemplated by this Agreement as the Administrative Agent shall reasonably require. (d) INCUMBENCY CERTIFICATE. The Administrative Agent shall have received, with a counterpart for each Bank, a certificate of the Secretary or an Assistant Secretary of each Borrower certifying the names and true signatures of the officers of such Borrower authorized to sign this Agreement, together with evidence of the incumbency of such Secretary or Assistant Secretary. (e) EXISTING AGREEMENT. The commitment of each financial institution to make loans to the Borrowers pursuant to (i) the Credit Agreement, dated as of November 30, 1989, among the Company, the Capital Corporation, the financial institution parties thereto and Chemical Bank (as 42 successor by merger to Manufacturers Hanover Trust Company), as agent, and (ii) the Multi-Country Multi-Option Financing Facility, dated December 15, 1989, among the Company, the Capital Corporation, certain other Subsidiaries of the Company, the financial institution parties thereto and Deutsche Bank Luxembourg S.A., as agent, shall have been terminated in full and the outstanding principal amount of the indebtedness thereunder and all other amounts owing to any bank thereunder shall have been repaid or paid by the Borrowers. (f) FEES. The Administrative Agent shall have received, for the accounts of the Banks and the Administrative Agent, and the Auction Agent shall have received, for the account of the Auction Agent, all accrued fees and expenses owing hereunder or in connection herewith to the Banks and the Agents to be received on the Closing Date. (g) ADDITIONAL MATTERS. All other documents which the Administrative Agent may reasonably request in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory in form and substance to the Administrative Agent and its counsel. 4.2 CONDITIONS TO ALL LOANS. The obligation of each Bank to make any Loan (which shall include the initial Loan to be made by it hereunder) to be made by it hereunder is subject to the satisfaction of the following conditions precedent: (a) REPRESENTATIONS AND WARRANTIES. The representations and warranties made by the Borrowers herein or which are contained in any certificate, document or financial or other statement furnished by either Borrower at any time hereunder or in connection herewith (other than any representations and warranties which by the terms of such certificate, document or financial or other statement do not survive the execution of this Agreement) shall be correct on and as of the date of such Loan as if made on and as of such date except as such representations and warranties expressly relate to an earlier date. (b) NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the Loans to be made on such date and the application of the proceeds thereof. (c) ADDITIONAL CONDITIONS TO BID LOANS. If such Loan is made pursuant to subsection 2.2, all conditions set forth in subsection 2.2(f) shall have been satisfied. Each acceptance by either Borrower of a Loan shall constitute a representation and warranty by the relevant Borrower as of the date of such Loan that the applicable conditions in 43 clauses (a), (b) and (c) of this subsection 4.2 have been satisfied. SECTION 5. AFFIRMATIVE COVENANTS Each of the Borrowers (except as otherwise specified) hereby agrees that, so long as there is any obligation by any Bank to make Loans hereunder, any Loan of such Borrower remains outstanding and unpaid or any other amount is owing by such Borrower to any Bank or either Agent hereunder (unless the Required Banks shall otherwise consent in writing): 5.1 FINANCIAL STATEMENTS. Such Borrower shall furnish to each Bank: (a) as soon as available, but in any event within 120 days after the end of each fiscal year of such Borrower, a copy of the consolidated balance sheet of such Borrower and its consolidated Subsidiaries as at the end of such year and the related consolidated statements of income and of cash flow for such year, reported on by Deloitte & Touche or other independent certified public accountants of nationally recognized standing; and (b) as soon as available, but in any event not later than 60 days after the end of each of the first three quarterly periods of each fiscal year of such Borrower, the condensed unaudited consolidated balance sheet of such Borrower and its consolidated Subsidiaries as at the end of each such quarter and the related unaudited consolidated statement of income of such Borrower and its consolidated Subsidiaries for such quarterly period and the portion of the fiscal year through such date, certified by a Responsible Officer (subject to normal year-end audit adjustments); all such financial statements to present fairly the consolidated financial condition of such Borrower and to be prepared in accordance with generally accepted accounting principles in the United States of America applied consistently throughout the periods reflected therein (except as approved by such accountants or officer, as the case may be, and disclosed therein). 5.2 CERTIFICATES; OTHER INFORMATION. Such Borrower shall furnish to each Bank: (a) concurrently with the delivery of the financial statements referred to in subsections 5.1(a) and (b) above, a certificate of a Responsible Officer stating that (i) he has no knowledge of the occurrence and continuance of any Default or Event of Default except as specified in such certificate, in which case such certificate shall contain a description thereof and a statement of the steps, if any, 44 which such Borrower is taking, or proposes to take, to cure the same and (ii) the financial statements delivered pursuant to subsection 5.1 would not be different if prepared in accordance with GAAP except as specified in such certificate; and (b) promptly, such additional financial and other information as any Bank may from time to time reasonably request. 5.3 COMPANY INDENTURE DOCUMENTS. The Company shall, contemporaneously with the delivery thereof to the Trustee, furnish to each Bank a copy of any information, document or report required to be filed with the Trustee pursuant to Section 7.03 of the Indenture. 5.4 CAPITAL CORPORATION INDENTURE DOCUMENTS. The Capital Corporation shall, contemporaneously with the delivery thereof to the Trustee, furnish to each Bank a copy of any information, document or report required to be filed with the Trustee pursuant to Section 7.03 of the Indenture dated February 1, 1991, between the Capital Corporation and The Bank of New York, as Trustee. 5.5 NOTICE OF DEFAULT. Such Borrower shall promptly give notice to the Administrative Agent of the occurrence of any Default or Event of Default, which notice shall be given in writing as soon as possible, and in any event within 10 days after a Responsible Officer obtains knowledge of such occurrence, with a description of the steps being taken to remedy the same (provided that such Borrower shall not be obligated to give notice of any Default or Event of Default which is remedied prior to or within 10 days after a Responsible Officer of such Borrower first acquires such knowledge). 5.6 OWNERSHIP OF CAPITAL CORPORATION STOCK. The Company shall continue to own, directly or through one or more wholly-owned Subsidiaries, free and clear of any lien or other encumbrance, 51% of the voting stock of the Capital Corporation; PROVIDED, HOWEVER, that the Capital Corporation may merge or consolidate with, or sell or convey substantially all of its assets to, the Company as provided in subsection 7.4. 5.7 EMPLOYEE BENEFIT PLANS. The Company shall maintain, and cause each of its Subsidiaries to maintain, each Plan as to which it may have liability, in compliance with all applicable requirements of law and regulations. SECTION 6. NEGATIVE COVENANTS OF THE COMPANY The Company hereby agrees that, so long as there is any obligation by any Bank to make Loans hereunder, any Loan remains outstanding and unpaid or any other amount is owing to either 45 Agent or any Bank hereunder, it shall not, nor in the case of subsections 6.2 and 6.3 shall it permit any Restricted Subsidiary to (unless the Required Banks shall otherwise consent in writing): 6.1 COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. Consolidate with or merge with or into any other corporation or convey or transfer its properties and assets substantially as an entirety to any Person, unless: (a) either the Company shall be the continuing corporation, or the corporation (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer the properties and assets of the Company substantially as an entirety shall expressly assume, by an assumption agreement, executed and delivered to the Administrative Agent, in form satisfactory to the Required Banks, the due and punctual payment of the principal of and interest on the Loans to the Company and the performance of every covenant of this Agreement on the part of the Company to be performed or observed; (b) immediately after giving effect to such transaction, no Default or Event of Default, shall have happened and be continuing; (c) if as a result thereof any property or assets of the Company or a Restricted Subsidiary would become subject to any Mortgage not permitted by (i) through (xii) of subsection 6.2(a) or subsection 6.2(b), compliance shall be effected with the first clause of subsection 6.2(a); and (d) the Company and the successor Person have delivered to the Administrative Agent an officers' certificate signed by two Responsible Officers stating that such consolidation, merger, conveyance or transfer and such assumption agreement comply with this subsection 6.1 and that all conditions precedent herein provided for relating to such transaction have been complied with. 6.2 LIMITATION ON LIENS. (a) Issue, incur, assume or guarantee any debt (hereinafter in this subsection referred to as "DEBT") secured by any mortgage, security interest, pledge, lien or other encumbrance (hereinafter called "MORTGAGE" or "MORTGAGES") upon any Important Property of the Company or of a Restricted Subsidiary, or upon any shares of stock or indebtedness issued or incurred by any Restricted Subsidiary (whether such Important Property, shares of stock or indebtedness is now owned or hereafter acquired) without in any such case effectively providing, concurrently with the issuance, incurrence, assumption or guaranty of any such Debt, that the Loans and all other amounts hereunder (together with, if the Company shall so determine, any other indebtedness of or guaranty 46 by the Company or such Restricted Subsidiary ranking equally with the Loans then existing or thereafter created) shall be secured equally and ratably with or prior to such Debt; PROVIDED, HOWEVER, that the foregoing restrictions shall not apply to: (i) Mortgages on any property acquired, constructed or improved by the Company or any Restricted Subsidiary after the date of this Agreement which are created or assumed contemporaneously with, or within 120 days after, such acquisition, construction or improvement to secure or provide for the payment of all or any part of the purchase price of such property or the cost of such construction or improvement incurred after the date of this Agreement, or (in addition to Mortgages contemplated by clauses (ii), (iii) and (iv) below) Mortgages on any property existing at the time of acquisition thereof; PROVIDED that such Mortgages shall not apply to any Important Property theretofore owned by the Company or any Restricted Subsidiary other than, in the case of any such construction or improvement, any theretofore unimproved real property on which the property so constructed, or the improvement, is located; (ii) Mortgages on any property, shares of stock, or indebtedness existing at the time of acquisition thereof from a corporation which is consolidated with or merged into, or substantially all of the assets of which are acquired by, the Company or a Restricted Subsidiary; (iii) Mortgages on property of a corporation existing at the time such corporation becomes a Restricted Subsidiary; (iv) Mortgages to secure Debt of a Restricted Subsidiary to the Company or to another Restricted Subsidiary; (v) Mortgages in favor of the United States of America or any State thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State thereof, to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any indebtedness incurred for the purpose of financing all or any part of the purchase price or the cost of constructing or improving the property subject to such Mortgages and Mortgages given to secure indebtedness incurred in connection with the financing of construction of pollution control facilities, the interest on which indebtedness is exempt from income taxes under the Code; (vi) any deposit or pledge of assets (1) with any surety company or clerk of any court, or in escrow, as collateral in connection with, or in lieu of, any bond on 47 appeal from any judgment or decree against the Company or a Restricted Subsidiary, or in connection with other proceedings or actions at law or in equity by or against the Company or a Restricted Subsidiary, or (2) as security for the performance of any contract or undertaking not directly related to the borrowing of money or the securing of indebtedness, if made in the ordinary course of business, or (3) with any governmental agency, which deposit or pledge is required or permitted to qualify the Company or a Restricted Subsidiary to conduct business, to maintain self-insurance, or to obtain the benefits of any law pertaining to worker's compensation, unemployment insurance, old age pensions, social security, or similar matters, or (4) made in the ordinary course of business to obtain the release of mechanics', workmen's, repairmen's, warehousemen's or similar liens, or the release of property in the possession of a common carrier; (vii) Mortgages existing on property acquired by the Company or a Restricted Subsidiary through the exercise of rights arising out of defaults on receivables acquired in the ordinary course of business; (viii) judgment liens, so long as the finality of such judgment is being contested in good faith and execution thereon is stayed; (ix) Mortgages for the sole purpose of extending, renewing or replacing in whole or in part Debt secured by any Mortgage referred to in the foregoing clauses (i) to (viii), inclusive, or in this clause (ix), PROVIDED, HOWEVER, that the principal amount of Debt secured thereby shall not exceed the principal amount of Debt so secured at the time of such extension, renewal or replacement, and that such extension, renewal or replacement shall be limited to all or a part of the property which secured the Mortgage so extended, renewed or replaced (plus improvements on such property); (x) liens for taxes or assessments or governmental charges or levies not yet due or delinquent, or which can thereafter be paid without penalty, or which are being contested in good faith by appropriate proceedings; landlord's liens on property held under lease; and any other liens of a nature similar to those hereinabove described in this clause (x) which do not, in the opinion of the Company, materially impair the use of such property in the operation of the business of the Company or a Restricted Subsidiary or the value of such property for the purposes of such business; (xi) Mortgages on Margin Stock owned by the Company and its Restricted Subsidiaries to the extent such Margin Stock so Mortgaged exceeds 25% of the fair market value of 48 the sum of the Important Property of the Company and the Restricted Subsidiaries plus the shares of stock (including Margin Stock) and indebtedness issued or incurred by the Restricted Subsidiaries; and (xii) Mortgages on any Important Property of, or any shares of stock or indebtedness issued or incurred by, any Restricted Subsidiary organized under the laws of Canada. (b) (i) The provisions of subsection 6.2(a) shall not apply to the issuance, incurrence, assumption or guarantee by the Company or any Restricted Subsidiary of Debt secured by a Mortgage which would otherwise be subject to the foregoing restrictions up to an aggregate amount which, together with the sum of (A) all other Debt issued or incurred by the Company and its Restricted Subsidiaries secured by Mortgages (other than Mortgages permitted by subsection 6.2(a)) which would otherwise be subject to the foregoing restrictions and (B) the Attributable Debt in respect of Sale and Lease-back Transactions in existence at such time (other than Sale and Lease-back Transactions which, if the Attributable Debt in respect of such Sale and Lease-back had been a Mortgage, would have been permitted by clause (i) of subsection 6.2(a) and other than Sale and Lease-back Transactions the proceeds of which have been applied in accordance with subsection 6.3(b)) does not at the time exceed 5% of Consolidated Net Worth, as shown on the audited consolidated balance sheet contained in the latest annual report to stockholders of the Company. (ii) For purposes of subsection 6.2(b)(i) above, the term "CONSOLIDATED NET WORTH" shall mean the aggregate of capital and surplus of the Company and its consolidated Subsidiaries, less minority interests in Subsidiaries, determined in accordance with GAAP; and the term "ATTRIBUTABLE DEBT" shall mean, as of any particular time, the present value, discounted at a rate per annum equal to the interest rate set forth in the form of Debenture set forth in the Indenture, compounded semi-annually, of the obligation of a lessee for rental payments during the remaining term of any lease (including any period for which such lease has been extended or may, at the option of the lessor, be extended); the net amount of rent required to be paid for any such period shall be the total amount of the rent payable by the lessee with respect to such period, but may exclude amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, water rates and similar charges; and, in the case of any lease which is terminable by the lessee upon the payment of a penalty, such net amount shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated. (c) If, upon any consolidation or merger of any Restricted Subsidiary with or into any other corporation, or upon any consolidation or merger of any other corporation with or into 49 the Company or any Restricted Subsidiary or upon any sale or conveyance of the property of any Restricted Subsidiary as an entirety or substantially as an entirety to any other Person, or upon any acquisition by the Company or any Restricted Subsidiary by purchase or otherwise of all or any part of the property of any other Person, any Important Property theretofore owned by the Company or such Restricted Subsidiary would thereupon become subject to any Mortgage not permitted by the terms of subsection (a) or (b) of this subsection 6.2, the Company, prior to such consolidation, merger, sale or conveyance, or acquisition, will, or will cause such Restricted Subsidiary to, secure payment of the principal of and interest on the Loans (equally and ratably with or prior to any other indebtedness of the Company or such Subsidiary then entitled thereto) by a direct lien on all such property prior to all liens other than any liens theretofore existing thereon by an assumption agreement or otherwise. (d) If at any time the Company or any Restricted Subsidiary shall issue, incur, assume or guarantee any Debt secured by any Mortgage not permitted by this subsection 6.2, to which the covenant in subsection 6.2(a) is applicable, the Company will promptly deliver to the Administrative Agent (with counterparts for each Bank): (i) an officers' certificate signed by two Responsible Officers stating that the covenant of the Company contained in subsections (a) or (c) of this subsection 6.2 has been complied with; and (ii) An opinion of counsel satisfactory to the Administrative Agent to the effect that such covenant has been complied with, and that any instruments executed by the Company in the performance of such covenant comply with the requirements of such covenant. 6.3 LIMITATIONS ON SALE AND LEASE-BACK TRANSACTIONS. Enter into any arrangement with any Person providing for the leasing to the Company or any Restricted Subsidiary of any Important Property owned or hereafter acquired by the Company or such Restricted Subsidiary (except for temporary leases for a term, including any renewal thereof, of not more than three years and except for leases between the Company and a Restricted Subsidiary or between Restricted Subsidiaries), which Important Property has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person (herein referred to as a "SALE AND LEASE-BACK TRANSACTION") unless the net proceeds of such sale are at least equal to the fair value (as determined by the Board of Directors) of such property and either (a) the Company or such Restricted Subsidiary would be entitled, pursuant to the provisions of (1) subsection 6.2(a)(i) or (2) subsection 6.2(b), to incur Debt secured by a Mortgage on the Important Property to be leased without equally and ratably securing the Loans, or (b) the Company shall, and in any such case the Company covenants that it will, within 120 days of the effective date of 50 any such arrangement, apply an amount equal to the fair value (as so determined) of such property to the reduction of the Commitments (to be accompanied by prepayment of the Loans in accordance with subsection 2.6 to the extent that the principal amount thereof outstanding prior to such prepayment would exceed the Commitments as so reduced) or to the payment or other retirement of funded debt for money borrowed, incurred or assumed by the Company which ranks senior to or PARI PASSU with the Loans or of funded debt for money borrowed, incurred or assumed by any Restricted Subsidiary (other than, in either case, funded debt owned by the Company or any Restricted Subsidiary). For this purpose, funded debt means any Debt which by its terms matures at or is extendable or renewable at the sole option of the obligor without requiring the consent of the obligee to a date more than twelve months after the date of the creation of such Debt. 6.4 CONSOLIDATED TANGIBLE NET WORTH. Permit Consolidated Tangible Net Worth as at the end of any fiscal quarter of the Company and its consolidated Subsidiaries (including the last quarter of any fiscal year of the Company and its consolidated Subsidiaries) to be less than $1,600,000,000. SECTION 7. NEGATIVE COVENANTS OF THE CAPITAL CORPORATION The Capital Corporation hereby agrees that, so long as there is any obligation by any Bank to make Loans to the Capital Corporation hereunder, any Loan of the Capital Corporation remains outstanding and unpaid or any other amount is owing by the Capital Corporation to any Bank or either Agent hereunder, the Capital Corporation shall not, nor in the case of the agreements set forth in subsection 7.3 shall it permit any of its Subsidiaries to, directly or indirectly (unless the Required Banks shall otherwise consent in writing): 7.1 FIXED CHARGES RATIO. Permit the ratio of Net Earnings Available for Fixed Charges to Fixed Charges for any fiscal quarter of the Capital Corporation and its consolidated Subsidiaries (including the last quarter of any fiscal year of the Capital Corporation and its consolidated Subsidiaries) to be less than 1.05 to 1. 7.2 CONSOLIDATED SENIOR DEBT TO CONSOLIDATED CAPITAL BASE. Permit the ratio of Consolidated Senior Debt to Consolidated Capital Base as at the end of any fiscal quarter of the Capital Corporation and its consolidated Subsidiaries (including the end of any fiscal year of the Capital Corporation and its consolidated Subsidiaries) to be more than 8 to 1. 7.3 LIMITATION ON LIENS. Issue, incur, assume or guarantee any Debt secured by any Mortgage upon any of its property or assets, or any of the property or assets of any of its Subsidiaries (whether any such property or assets is now 51 owned or hereafter acquired) without in any such case effectively providing, concurrently with the issuance, incurrence, assumption or guaranty of any such Debt, that the Loans and all other amounts hereunder (together with, if the Capital Corporation shall so determine, any other indebtedness of or guaranty by such Borrower or such Subsidiary ranking equally with the Loans then existing or thereafter created) shall be secured equally and ratably with or prior to such Debt; PROVIDED, HOWEVER, that the foregoing restrictions shall not apply to: (a) Mortgages on fixed assets or other physical properties hereafter acquired to secure all or part of the purchase price thereof or the acquiring hereafter of such assets or properties subject to any existing lien or charge securing indebtedness (whether or not assumed); (b) easements, liens, franchises or other minor encumbrances on or over any real property which do not materially detract from the value of such property or its use in the business of the Capital Corporation or a Subsidiary of the Capital Corporation; (c) any deposit or pledge of assets (i) with any surety company or clerk of any court, or in escrow, as collateral in connection with or in lieu of, any bond on appeal from any judgment or decree against the Capital Corporation or a Subsidiary of the Capital Corporation, or in connection with other proceedings or actions at law or in equity by or against the Capital Corporation or a Subsidiary of the Capital Corporation or (ii) as security for the performance of any contract or undertaking not directly or indirectly related to the borrowing of money or the securing of indebtedness, if made in the ordinary course of business, or (iii) with any governmental agency, which deposit or pledge is required or permitted to qualify the Capital Corporation or a Subsidiary of the Capital Corporation to conduct business, to maintain self-insurance, or to obtain the benefits of any law pertaining to workmen's compensation, unemployment insurance, old age pensions, social security, or similar matters, or (iv) made in the ordinary course of business to obtain the release of mechanics', workmen's, repairmen's, warehousemen's or similar liens, or the release of property in the possession of a common carrier; (d) Mortgages by a Subsidiary as security for indebtedness owed to the Capital Corporation; (e) liens for taxes and governmental charges not yet due or contested by appropriate proceedings in good faith; (f) Mortgages existing on property acquired by the Capital Corporation or a Subsidiary of the Capital Corporation through the exercise of rights arising out of defaults on receivables acquired in the ordinary course of business; 52 (g) judgment liens, so long as the finality of such judgment is being contested in good faith and execution thereon is stayed; (h) any Mortgage (other than directly or indirectly to secure borrowed money) if, after giving effect thereto, the aggregate principal sums secured by pledges or liens otherwise within the restrictions in clauses (a) through (h) of this subsection 7.3 do not exceed $500,000; (i) any transaction characterized as a sale of receivables (retail or wholesale) but reflected as secured indebtedness on a balance sheet in conformity with generally accepted accounting principles in the United States of America; and (j) Mortgages on Margin Stock owned by the Capital Corporation and its Subsidiaries to the extent such Margin Stock exceeds 25% of the fair market value of property and assets of the Capital Corporation and its Subsidiaries (including Margin Stock). 7.4 CONSOLIDATION; MERGER. Merge or consolidate with, or sell or convey (other than a conveyance by way of lease) all or substantially all of its assets to, any other corporation, unless (a) the Capital Corporation shall be the surviving corporation in the case of a merger or the surviving, resulting or transferee corporation (the "SUCCESSOR CORPORATION") shall be a corporation organized under the laws of the United States or any State thereof or the District of Columbia and shall expressly assume the due and punctual performance of all of the agreements, covenants and obligations of the Capital Corporation under this Agreement by supplemental agreement satisfactory to the Administrative Agent and executed and delivered to the Administrative Agent by the successor corporation and (b) the Capital Corporation or such successor corporation, as the case may be, shall not, immediately after such merger, consolidation, sale or conveyance, be in default in the performance of any such agreements, covenants or obligations; PROVIDED, HOWEVER, that the Capital Corporation may merge or consolidate with, or sell or convey substantially all of its assets to, the Company, if (i) the Company is the successor corporation (as defined above) and (ii) subclause (b) above is complied with. Upon any such merger, consolidation, sale or conveyance, the successor corporation shall succeed to and be substituted for, and may exercise every right and power of and shall be subject to all the obligations of, the Capital Corporation under this Agreement, with the same effect as if the successor corporation had been named as the Capital Corporation herein and therein. 53 SECTION 8. EVENTS OF DEFAULT Upon the occurrence and during the continuance of any of the following events: (a) Either Borrower shall fail to pay any principal of any Loan when due in accordance with the terms hereof or to pay any interest on any Loan, in each case within two Business Days after any such amount becomes due in accordance with the terms hereof or shall fail to pay any other amount payable hereunder within five Business Days after any such other amount becomes due in accordance with the terms thereof or hereof; or (b) Any representation or warranty made or pursuant to subsection 4.2 deemed made by either Borrower herein or which is contained in any material certificate, material document or material financial statement or other material statement furnished at any time under or in connection with this Agreement shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or (c) The Company shall default in the observance or performance of any agreement contained in subsections 5.6, 6.1 or 6.4, or the Capital Corporation shall default in the observance or performance of any agreement contained in subsections 7.1, 7.2 or 7.4; or (d) Either Borrower shall default in the observance or performance of any agreement contained in this Agreement (other than those agreements referred to above in this Section 8), and such default shall continue unremedied for a period of 30 days after written notice thereof shall have been given to such Borrower by the Administrative Agent or any of the Banks through the Administrative Agent; or (e) (i) Either Borrower or any of its Significant Subsidiaries shall default in any payment of principal of or interest on any indebtedness for borrowed money (other than the Loans) in a principal amount in excess of $15,000,000 in the aggregate, or any interest or premium thereon, when due (whether at scheduled maturity or by required prepayment, acceleration, demand or otherwise) and such failure shall continue beyond the period of grace, if any, provided in the instrument or agreement under which such indebtedness was created; or (ii) any other default (other than any default arising solely out of either Borrower's, or any of its Significant Subsidiaries', violation of any arrangement with any Bank, or any affiliate of any Bank, in any way restricting such Borrower's, or such Significant Subsidiary's, right or ability to sell, pledge or otherwise dispose of Margin Stock other than Restricted Margin Stock), or any other event that with notice or the lapse of time, or 54 both, would constitute such a default, under any agreement or instrument relating to any such indebtedness for borrowed money (other than the Loans), shall occur and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such default or event is to accelerate the maturity of such indebtedness; or (iii) any such indebtedness shall, by reason of default, be declared to be due and payable, or required to be prepaid, prior to the stated maturity thereof (unless such indebtedness is declared due and payable, or required to be prepaid, solely by reason of either Borrower's, or any of its Significant Subsidiaries', violation of any arrangement with any Bank, or any affiliate of any Bank, in any way restricting such Borrower's, or such Significant Subsidiary's, right or ability to sell, pledge or otherwise dispose of Margin Stock other than Restricted Margin Stock); or (f) (i) Either Borrower or any of its Significant Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its assets, or such Borrower or any of its Significant Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against either Borrower or any of its Significant Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 90 days; or (g) Any action is undertaken to terminate any Plan as to which either Borrower, or any Subsidiary of either Borrower, may have liability, or any such Plan is terminated or such Borrower or Subsidiary withdraws from such Plan, or any Reportable Event as to any such Plan shall occur, and there shall exist a deficiency in the assets available to satisfy the benefits guaranteeable under ERISA with respect to such Plan, in the aggregate for all such Plans with respect to which any of the foregoing shall have occurred in the immediately preceding 12 consecutive months, of more than 25% of the Consolidated Tangible Net Worth of such Borrower; or (h) Any Person shall own beneficially, directly or indirectly, 30% or more of the common stock of the Company; 55 or any Person shall have the power, direct or indirect, to vote securities having 30% or more of the ordinary voting power for the election of directors of the Company or shall own beneficially, directly or indirectly, securities having such power, PROVIDED that there shall not be included among the securities as to which any such Person has such power to vote or which such Person so owns securities owned by such Person as nominee for the direct or indirect beneficial owner thereof or securities as to which such power to vote arises by virtue of proxies solicited by the management of the Company; then, and in any such event, (a) if such event is an Event of Default specified in paragraph (f) above, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the Loans shall immediately become due and payable, and (b) if such event is any Event of Default specified in paragraphs (a) or (e), then with the consent of the Majority Banks, the Administrative Agent may, or upon the request of the Majority Banks, the Administrative Agent shall, or if such Event is an Event of Default specified in paragraphs (b), (c), (d), (g) or (h), then with the consent of the Required Banks, the Administrative Agent may, or upon the request of the Required Banks, the Administrative Agent shall, take either or both of the following actions: (i) by notice to the Borrowers, declare the Commitments to be terminated forthwith, whereupon the Commitments shall immediately terminate; and (ii) by notice of default to the Borrowers, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement to be due and payable forthwith, whereupon the same shall immediately become due and payable. Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived with respect to this Agreement. SECTION 9. THE AGENTS 9.1 APPOINTMENT. (a) Each Bank hereby irrevocably designates and appoints Chemical as the Administrative Agent of such Bank under this Agreement, and each Bank hereby irrevocably authorizes Chemical, as the Administrative Agent for such Bank, to take such action on its behalf under the provisions of this Agreement and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Bank, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Administrative Agent. 56 (b) Each Bank hereby irrevocably designates and appoints Deutsche Bank AG as the Auction Agent of such Bank under this Agreement, and each Bank hereby irrevocably authorizes Deutsche Bank AG, as the Auction Agent for such Bank, to take such action on its behalf under the provisions of this Agreement and to exercise such powers and perform such duties as are expressly delegated to the Auction Agent by the terms of this Agreement, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Auction Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Bank, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Auction Agent. (c) Notwithstanding anything to the contrary contained in this Agreement, the parties hereto hereby agree that no Managing Agent or Co-Agent shall have any rights, duties or responsibilities in its capacity as a Managing Agent or a Co- Agent, as the case may be, and that no Managing Agent or Co-Agent shall have the authority to take any action hereunder in its capacity as such. 9.2 DELEGATION OF DUTIES. Each Agent may execute any of its duties under this Agreement by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Each Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care. 9.3 EXCULPATORY PROVISIONS. Neither Agent nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable to any Bank for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement (except for its or such Person's own gross negligence or wilful misconduct), or (ii) responsible in any manner to any of the Banks for any recitals, statements, representations or warranties made by the Borrowers or any officer thereof contained in this Agreement or in any certificate, report, statement or other document referred to or provided for in, or received by any Agent under or in connection with, this Agreement or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or for any failure of the Borrowers to perform their obligations hereunder. Neither Agent shall be under any obligation to any Bank to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement, or to inspect the properties, books or records of the Borrowers. 9.4 RELIANCE BY AGENTS. Each Agent shall be entitled to rely, and shall be fully protected in relying, upon any Loan, writing, resolution, notice, consent, certificate, affidavit, 57 letter, cablegram, telegram, facsimile, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrowers), independent accountants and other experts selected by such Agent. Each Agent may deem and treat the payee of any Loan as the owner thereof for all purposes except as provided in subsections 10.5(c) and 10.5(d). Each Agent shall be fully justified in failing or refusing to take any discretionary action under this Agreement unless it shall first receive such advice or concurrence of the Required Banks as it deems appropriate or it shall first be indemnified to its satisfaction by the Banks against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Each Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of the Required Banks, or all of the Banks (if the consent of all of the Banks is required), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Banks. 9.5 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received notice from a Bank or either Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Banks. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Majority Banks or the Required Banks, as applicable; PROVIDED that, unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Banks. 9.6 NON-RELIANCE ON AGENTS AND OTHER BANKS. Each Bank expressly acknowledges that neither Agent nor any of its respective officers, directors, employees, agents, attorneys-in- fact or affiliates has made any representations or warranties to it and that no act by such Agent hereinafter taken, including any review of the affairs of the Borrowers, shall be deemed to constitute any representation or warranty by such Agent to any Bank. Each Bank represents to each Agent that it has, independently and without reliance upon such Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of each Borrower and made its own decision to make its Loans hereunder and enter into this 58 Agreement. Each Bank also represents that it will, independently and without reliance upon each Agent or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrowers. Except for notices, reports and other documents expressly required to be furnished to the Banks by either Agent hereunder, such Agent shall not have any duty or responsibility to provide any Bank with any credit or other information concerning the business, operations, property, financial and other condition or creditworthiness of either Borrower which may come into the possession of such Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates. 9.7 INDEMNIFICATION. The Banks agree to indemnify each Agent in its capacity as such (to the extent not reimbursed by the Borrowers and without limiting the obligation of the Borrowers to do so), ratably (as reasonably determined by the Administrative Agent), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including without limitation at any time following the payment of the Loans) be imposed on, incurred by or asserted against such Agent in any way relating to or arising out of this Agreement, or any documents contemplated by or referred to herein or the transactions contemplated hereby or any action taken or omitted by such Agent under or in connection with any of the foregoing; PROVIDED that no Bank shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from such Agent's gross negligence or wilful misconduct. The agreements in this subsection 9.7 shall survive the payment of the Loans and all other amounts payable hereunder. 9.8 AGENTS IN THEIR INDIVIDUAL CAPACITIES. Each Agent and its respective affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrowers as though such Agent were not an Agent hereunder. With respect to its Loans made by it, each Agent shall have the same rights and powers under this Agreement as any Bank and may exercise the same as though it were not an Agent, and the terms "Bank" and "Banks" shall include the Administrative Agent and the Auction Agent in their respective individual capacity. 9.9 SUCCESSOR AGENTS. Each Agent may resign as Agent upon 30 days' notice thereof to the Borrowers and the Banks. If any Agent shall resign as Agent under this Agreement, then the Required Banks shall appoint from among the Banks a successor agent for the Banks which successor agent shall be approved by the Borrowers, whereupon such successor agent shall succeed to 59 the rights, powers and duties of the Administrative Agent or the Auction Agent, as the case may be, and the term "Administrative Agent" or "Auction Agent", as the case may be, shall mean such successor agent effective upon its appointment, and the former Agent's rights, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such former Agent or any of the parties to this Agreement. After any retiring Agent's resignation hereunder as Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. SECTION 10. MISCELLANEOUS 10.1 AMENDMENTS AND WAIVERS. With the written consent of the Required Banks, the Administrative Agent and the Borrowers may, from time to time, enter into written amendments, supplements or modifications hereto for the purpose of adding any provisions to this Agreement or changing in any manner the rights of the Banks or of the Borrowers hereunder, and with the consent of the Required Banks the Administrative Agent on behalf of the Banks may execute and deliver to the Borrowers a written instrument waiving, on such terms and conditions as the Administrative Agent may specify in such instrument, any of the requirements of this Agreement or any Default or Event of Default and its consequences; PROVIDED, HOWEVER, that no such waiver, amendment, supplement or modification shall (a) extend the maturity of any Loan, or reduce the rate or extend the time of payment of interest thereon, or reduce the principal amount thereof, or reduce the rate of any fee payable hereunder or extend the time of payment thereof, in each case, without the written consent of (i) with respect to any such change to any Committed Rate Loan, each Bank and (ii) with respect to any such change to any Bid Loan, the Bank which made such Bid Loan, or (b) change the amount of any Bank's Commitment or the terms of its obligation to make Loans hereunder or amend, modify or waive any provision of this subsection 10.1 or reduce the percentage specified in the definition of Majority Banks or Required Banks, or consent to the assignment or transfer by either Borrower of any of its rights and obligations under this Agreement, in each case without the written consent of each Bank, or (c) amend, modify or waive any provision of Section 9 without the written consent of the then Administrative Agent and Auction Agent, or (d) extend the Termination Date with respect to any Bank without the written consent of such Bank. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Banks and shall be binding upon the Borrowers, the Banks and the Agents. In the case of any waiver, the Borrowers, the Banks and the Agents shall be restored to their former position and rights hereunder, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. Anything 60 contained in the foregoing to the contrary notwithstanding, the relevant Borrower and the relevant Bank with respect to a Negotiated Rate Loan may, from time to time, enter into amendments, supplements or modifications for the purpose of adding any provisions to such Negotiated Rate Loans or changing in any manner the rights of such Bank and such Borrower thereunder and such Bank may waive any of the requirements of such Negotiated Rate Loan; PROVIDED, HOWEVER, that such Borrower and such Bank shall notify the Administrative Agent in writing of any extension of the maturity of such Negotiated Rate Loan or reduction of the principal amount thereof; PROVIDED, FURTHER, that such Borrower and such Bank shall not extend the maturity of such Negotiated Rate Loan beyond the last day of the Commitment Period. 10.2 NOTICES. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing, by facsimile transmission, by telephone confirmed in writing or by telegraph and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or when deposited in the mail, air postage prepaid, or, in the case of facsimile transmission, when received, or, in the case of telegraphic notice, when delivered to the telegraph company or department, addressed as follows in the case of the Borrowers, the Administrative Agent and the Auction Agent, and as set forth on Schedule III in the case of the other parties hereto, or to such address or other address as may be hereafter notified by the respective parties hereto: The Borrowers: The Company: Deere & Company John Deere Road Moline, Illinois 61265 Attention: Treasurer Telephone: 309-765-4423 Facsimile: 309-765-5021 The Capital Corporation: John Deere Capital Corporation First National Bank Building 1 East First Street Reno, Nevada 89501 Attention: Manager Telephone: 702-786-5527 Facsimile: 702-786-4145 with a copy to: Deere & Company John Deere Road Moline, Illinois 61265 Attention: Treasurer Facsimile: 309-765-5021 61 The Administrative Agent: Chemical Bank 270 Park Avenue New York, New York 10017 Attention: John J. Huber, III Telephone: 212-270-1402 Facsimile: 212-270-2625 The Auction Agent: Deutsche Bank AG Chicago Branch c/o Deutsche Bank AG New York Branch 31 West 52nd Street New York, New York 10019 Attention: Loan Syndications Telephone: 212-474-7041 Facsimile: 212-474-7048 provided that any notice, request or demand to or upon the Administrative Agent, the Auction Agent or the Banks pursuant to subsections 2.1, 2.2, 2.5, 2.6, 2.9, 2.11 and 9.9 shall not be effective until received (including receipt by telephone if permitted hereby). 10.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay in exercising, on the part of either Borrower, the Administrative Agent, the Auction Agent or any Bank, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 10.4 PAYMENT OF EXPENSES AND TAXES. (a) The Company agrees (i) to pay or reimburse the Administrative Agent for all its out-of-pocket costs and expenses incurred in connection with the preparation and execution of, and any amendment, supplement or modification to, this Agreement and any other documents prepared in connection herewith, and the consummation of the transactions contemplated hereby and thereby in such manner and in such amounts as shall be agreed to in writing by the Company and the Administrative Agent, (ii) to pay or reimburse the Administrative Agent for the reasonable fees and disbursements of counsel to the Administrative Agent incurred in connection with the preparation and execution of, and any amendment, supplement, modification to, this Agreement and other documents prepared in connection herewith, and the consummation of the transaction contemplated hereby and thereby, and (iii) to pay or reimburse each Bank, the Administrative Agent and the Auction Agent for all its out-of-pocket costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement and any such other documents, including, without limitation, fees and disbursements of counsel to the 62 Administrative Agent and the Auction Agent and one counsel representing the Banks. (b) The Borrowers agree jointly and severally to indemnify and hold harmless the Administrative Agent, the Auction Agent and each Bank against any and all losses, claims, damages and liabilities (other than in connection with actions, suits and proceedings by any of the Banks against any of the other Banks), joint or several, to which they or any of them may become subject insofar as such losses, claims, damages and liabilities arise out of, relate to or are based on this Agreement (including the responsibilities, duties and obligations of the Banks hereunder and their agreement to make Loans hereunder) in connection with any acquisition or proposed acquisition of any securities or assets by a Borrower or any of its Subsidiaries, and shall reimburse each such indemnified party for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such loss, claim, damage or liability, subject to the following paragraph. This indemnity agreement shall be in addition to any liability which either Borrower may otherwise have. (c) Promptly after receipt by an indemnified party under subsection 10.4(b) of written notice of any loss, claim, damage or liability in respect of which indemnity may be sought by it hereunder, such indemnified party will, if a claim is to be made against the Borrowers, notify the Borrowers thereof in writing; but the omission so to notify the Borrowers will not relieve the Borrowers from any liability (otherwise than under this subsection 10.4) which they may have to any indemnified party except as may be required or provided otherwise than under this subsection 10.4. Thereafter, the indemnified party and the Borrowers shall consult, to the extent appropriate, with a view to minimizing the cost to the Borrowers of their obligations hereunder. In case any indemnified party receives written notice of any loss, claim, damage or liability in respect of which indemnity may be sought hereunder by it and it notifies the Borrowers thereof, the Borrowers will be entitled to participate therein and, to the extent that they may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof, with counsel reasonably satisfactory at all times to such indemnified party; PROVIDED, HOWEVER, that (i) if the parties against whom any loss, claim, damage or liability arises include both the indemnified party and a Borrower or any Subsidiary of a Borrower and the indemnified party shall have reasonably concluded that there may be legal defenses available to it or other indemnified parties which are different from or additional to those available to a Borrower or any Subsidiary of a Borrower and may conflict therewith, the indemnified party or parties shall have the right to select one separate counsel for such indemnified party or parties to assume such legal defenses and to otherwise participate in the defense of such loss, claim, damage or liability on behalf of such indemnified party or 63 parties and (ii) if any loss, claim, damage or liability arises out of actions brought by or for the benefit of a Borrower or any Subsidiary of a Borrower, the indemnified party or parties shall have the right to select their counsel and to assume and direct the defense thereof and neither Borrower shall be entitled to participate therein or assume the defense thereof. Upon receipt of notice from the Borrowers to such indemnified party of their election so to assume the defense of such loss, claim, damage or liability and approval by the indemnified party of counsel, the Borrowers shall not be liable to such indemnified party under this subsection 10.4 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the proviso to the next preceding sentence, (ii) the Borrowers shall not have employed and continued to employ counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action or (iii) the Borrowers shall have authorized the employment of counsel for the indemnified party at the expense of the Borrowers. (d) Notwithstanding any other provision contained in this subsection 10.4, (i) the Borrowers shall not be liable for any settlement, compromise or consent to the entry of any order adjudicating or otherwise disposing of any loss, claim, damage or liability effected without their consent and (ii) after the Borrowers have assumed the defense of any loss, claim, damage or liability under the preceding paragraph with respect to any Bank, they will not settle, compromise or consent to entry of any order adjudicating or otherwise disposing thereof (1) if such settlement, compromise or order involves the payment of money damages, except if the Borrowers agree with such Bank to pay such money damages, and, if not simultaneously paid, to furnish such Bank with satisfactory evidence of their ability to pay such money damages, and (2) if such settlement, compromise or order involves any relief against such Bank, other than the payment of money damages, except with the prior written consent of such Bank. (e) The agreements in this subsection 10.4 shall survive repayment of the Loans and all other amounts payable hereunder. 10.5 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; PURCHASING BANKS. (a) This Agreement shall be binding upon and inure to the benefit of the Borrowers, the Banks, the Administrative Agent, the Auction Agent and their respective successors and assigns, EXCEPT THAT the Borrowers may not assign or transfer any of their rights or obligations under this Agreement without the prior written consent of each Bank. (b) Any Bank may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time sell to one or more banks or other financial 64 institutions ("PARTICIPANTS") participating interests in the Loans, Commitments and other interest of such Bank hereunder. In the event of any such sale by a Bank of participating interests to a Participant, such Bank's obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Bank shall remain solely responsible for the performance thereof, such Bank shall remain the holder of any such Loan for all purposes under this Agreement, and the Borrowers, the Administrative Agent and the Auction Agent shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement. (c) Any Bank may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time assign to one or more banks or other financial institutions ("LOAN ASSIGNEES") any Bid Loan or Negotiated Rate Loan or portion thereof owing to such Bank, pursuant to a Loan Assignment executed by the assignor Bank and the Loan Assignee. Upon such execution, from and after the Transfer Effective Date specified in such Loan Assignment, the Loan Assignee shall, to the extent of the assignment provided for in such Loan Assignment and to the extent permitted by applicable law, be deemed to have the same rights and benefits with respect to such Bid Loans and Negotiated Rate Loans and the same obligation to share pursuant to subsection 10.6 as it would have had if it were a Bank hereunder; PROVIDED, that unless such Loan Assignment shall otherwise specify and a copy of such Loan Assignment shall have been delivered to the Administrative Agent for its acceptance and recording in the Register in accordance with subsection 10.5(f), the assignor Bank shall act as collection agent for the Loan Assignee, and in the case of Bid Loans, the Administrative Agent shall pay all amounts received from the relevant Borrower which are allocable to the assigned Bid Loan directly to the assignor Bank without any further liability to the relevant Loan Assignee, and, in the case of Negotiated Rate Loans, the relevant Borrower shall pay all amounts due under the assigned Negotiated Rate Loan directly to the assignor Bank without any further liability to the Loan Assignee. At the request of any Loan Assignee, on or promptly after the Transfer Effective Date specified in such Loan Assignment, the relevant Borrower, at its own expense, shall execute and deliver to the Loan Assignee a promissory note with respect to the Bid Loans or Negotiated Rate Loans to the order of such Loan Assignee in an amount equal to the Bid Loan or Negotiated Rate Loan assigned. Such note shall be dated the Borrowing Date in respect of such Bid Loan or Negotiated Rate Loan and shall otherwise be in the form of Exhibit M hereto; PROVIDED, HOWEVER, that such Borrower shall not be required to execute and deliver more than an aggregate of two notes with respect to the Bid Loans of any Bank with the same Interest Period at any time outstanding. The Loan Assignee shall not, by virtue of such Loan Assignment, become a party to this Agreement or have any rights to consent to or refrain from consenting to any amendment, waiver or other modification of any provision of this Agreement or any related document; PROVIDED, that (i) the 65 assignor Bank and the Loan Assignee may, in their discretion, agree between themselves upon the manner in which the assignor Bank will exercise its rights under this Agreement and any related document, and (ii) if a copy of such Loan Assignment shall have been delivered to the Administrative Agent for its acceptance and recording in the Register in accordance with subsection 10.5(f), neither the principal amount of, the interest rate on, nor the maturity date of any Bid Loan or Negotiated Rate Loan assigned to a Loan Assignee will be modified without written consent of such Loan Assignee. (d) Any Bank may, in the ordinary course of its commercial banking business and in accordance with applicable law, with the consent of the Borrowers, sell to any Bank or any affiliate thereof and to one or more additional banks or other financial institutions ("PURCHASING BANKS"), portions (subject to the last sentence of this subsection 10.5(d)) of its rights and obligations under this Agreement, pursuant to a Commitment Transfer Supplement, executed by such Purchasing Bank and such transferor Bank (and, in the case of a Purchasing Bank that is not then a Bank or an affiliate thereof, by the Borrowers and the Administrative Agent), and delivered to the Administrative Agent for its acceptance and recording in the Register. Upon such execution, delivery, acceptance and recording, from and after the Transfer Effective Date specified in such Commitment Transfer Supplement, (i) the Purchasing Bank thereunder shall be a party hereto and, to the extent provided in such Commitment Transfer Supplement, have the rights and obligations of a Bank hereunder with a Commitment as set forth therein, and (ii) the transferor Bank thereunder shall cease to have rights and obligations under this Agreement to which the Purchasing Bank has succeeded (and, in the case of a Commitment Transfer Supplement covering all or the remaining portion of a transferor Bank's rights and obligations under this Agreement, such transferor Bank shall cease to be a party hereto). Such Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Bank and the resulting adjustment of Commitment Percentages arising from the purchase by such Purchasing Bank of a portion of the rights and obligations of such transferor Bank under this Agreement. On or promptly after the Transfer Effective Date specified in such Commitment Transfer Supplement, the Purchasing Bank and the Administrative Agent, on behalf of such Purchasing Bank, shall open and maintain in the name of each Borrower a Loan Account with respect to such Purchasing Bank's Committed Rate Loans and Bid Loans to such Borrower. Anything contained in this Agreement to the contrary notwithstanding, no Bank may sell any portion of its rights and obligations under this subsection 10.5(d) to any bank or financial institution if after giving effect to such sale the Commitment of either of the selling and purchasing institutions would be less than $5,000,000. 66 (e) The Administrative Agent shall maintain at its address referred to in subsection 10.2 a copy of each Loan Assignment and each Commitment Transfer Supplement delivered to it and a register (the "REGISTER") for the recordation of (i) the names and addresses of the Banks and the Commitment of, and principal amount of the Loans (other than Negotiated Rate Loans) owing to, each Bank from time to time, and (ii) with respect to each Loan Assignment delivered to the Administrative Agent, the name and address of the Loan Assignee and the principal amount of each Bid Loan owing to such Loan Assignee. The entries in the Register shall constitute PRIMA FACIE evidence of the accuracy of the information so recorded, and the Borrowers, the Administrative Agent and the Banks may treat each Person whose name is recorded in the Register as the owner of the Loan recorded therein for all purposes of this Agreement. The Register shall be available for inspection by the Company or any Bank or Loan Assignee at any reasonable time and from time to time upon reasonable prior notice. (f) Upon its receipt of a Loan Assignment executed by an assignor Bank and a Loan Assignee, together with payment to the Administrative Agent (by the assignor Bank or the Loan Assignee, as agreed between them) of a registration and processing fee of $2,500, the Administrative Agent shall (i) accept such Loan Assignment, (ii) record the information contained therein in the Register and (iii) give prompt notice of such acceptance and recordation to the assignor Bank, the Loan Assignee and the Borrowers. Upon its receipt of a Commitment Transfer Supplement executed by a transferor Bank and a Purchasing Bank (and, in the case of a Purchasing Bank that is not then a Bank or an affiliate thereof, by the Borrowers and the Administrative Agent) together with payment to the Administrative Agent (by the transferor Bank or the Purchasing Bank, as agreed between them) of a registration and processing fee of $2,500 for each Purchasing Bank listed in such Commitment Transfer Supplement, the Administrative Agent shall (A) accept such Commitment Transfer Supplement, (B) record the information contained therein in the Register and (C) give prompt notice of such acceptance and recordation to the Banks and the Borrowers. (g) The Company authorizes each Bank to disclose to any Participant, Loan Assignee or Purchasing Bank (each, a "TRANSFEREE") and any prospective Transferee any and all financial information in such Bank's possession concerning the Borrowers and their Subsidiaries which has been delivered to such Bank by or on behalf of the Borrowers pursuant to this Agreement or in connection with such Bank's credit evaluation of the Borrowers and their Subsidiaries prior to becoming a party to this Agreement, PROVIDED that with respect to confidential data or information described in subsection 10.7, such confidential data may be disclosed only to (i) a Purchasing Bank and/or (ii) any other Transferee or prospective Transferee with the Borrowers' prior written consent, which consent shall not be unreasonably withheld with respect to prospective Participants, 67 Participants, prospective Loan Assignees and Loan Assignees; PROVIDED, HOWEVER, that such Bank shall not disclose any such confidential data or information pursuant to this subsection 10.5(g) unless (i) it has notified the Purchasing Bank or other Transferee or potential Transferee that such data or information are confidential, such notification to be in writing if such data or information are disclosed in writing and orally if such data or information are disclosed orally, and (ii) such Purchasing Bank, Transferee or potential Transferee has agreed in writing to be bound by the provisions of subsection 10.7. (h) If, pursuant to this subsection, any loan participation or series of loan participations is sold or any interest in this Agreement is transferred to any Transferee, the transferor Bank shall cause such Transferee, concurrently with the effectiveness of such transfer or the first transfer to occur in a series of transfers between such transferor Bank and such Transferee, (i) to represent to the transferor Bank (for the benefit of the transferor Bank, the Administrative Agent and the Borrowers) either (A) that it is incorporated under the laws of the United States or a state thereof or (B) that under applicable law and treaties no taxes will be required to be withheld by the Administrative Agent, the Borrowers or the transferor Bank with respect to any payments to be made to such Transferee in respect of the Loans, (ii) to furnish to the transferor Bank, the Administrative Agent and the Borrowers (A) either (I) a statement that it is incorporated under the laws of the United States or a state thereof or (II) if it is not so incorporated, a letter in duplicate in the form of Exhibit J or Exhibit K, as appropriate, and two duly completed copies of United States Internal Revenue Service Form 4224 or 1001 or successor applicable form, as the case may be, certifying in each case that such Transferee is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, and (B) an Internal Revenue Service Form W-8 or W-9, or successor applicable form, as the case may be, to establish an exemption from United States backup withholding tax, and (iii) to agree (for the benefit of the transferor Bank, the Administrative Agent and the Borrowers) to provide the transferor Bank, the Administrative Agent and the Borrowers a new Form 4224 or 1001 and Form W-8 or W-9, or successor applicable form or other manner of certification, on or before the date that any such letter or form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent letter and form previously delivered by it, certifying in the case of a Form 1001 or 4224 that such Transferee is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income tax, and in the case of a Form W-8 or W-9 establishing exemption from United States backup withholding tax. The Administrative Agent shall not be responsible for obtaining such documentation except from its own Transferees. 68 (i) Nothing in this subsection 10.5 shall prohibit any Bank from pledging or assigning its Loans to any Federal Reserve Bank in accordance with applicable law. 10.6 ADJUSTMENTS. If any Bank other than a Cancelled Bank (a "BENEFITTED BANK") shall at any time receive any payment of all or part of its Committed Rate Loans, or interest thereon or facility fee in respect thereof, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set- off, pursuant to events or proceedings of the nature referred to in clause (e) of Section 8, or otherwise) in a greater proportion than any such payment to and collateral received by any other Bank, if any, in respect of such other Bank's Committed Rate Loans, or interest thereon, such benefitted Bank shall purchase for cash from the other Banks such portion of each such other Bank's Committed Rate Loans, or shall provide such other Banks with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefitted Bank to share the excess payment or benefits of such collateral or proceeds ratably with each of the Banks; PROVIDED, HOWEVER, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefitted Bank, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. The Borrowers agree that each Bank so purchasing a portion of another Bank's Committed Rate Loans may exercise all rights of payment (including, without limitation, rights of set-off) with respect to such portion as fully as if such Bank were the direct holder of such portion. 10.7 CONFIDENTIALITY. (a) Each of the Administrative Agent, the Auction Agent and the Banks shall, subject as hereinafter provided, keep confidential from any third party any data or information received by them from the Borrowers pursuant to this Agreement which, if provided in writing, is designated in writing as such, and if provided orally, is designated orally as such by the Borrowers except: (i) any such data or information as is or becomes publicly available or generally known otherwise than as a result of any breach of the provisions of this subsection 10.7; (ii) as required by law, rule, regulation or official direction; (iii) as may be necessary to protect as against the Borrowers or either of them the interests of the Banks or any of them under this Agreement; (iv) to the extent permitted under subsection 10.5; and (v) to the attorneys, accountants and regulators of such Banks, and to each other Bank. 69 (b) Each of the Administrative Agent, the Auction Agent and the Banks shall use their reasonable efforts to ensure that any confidential data or information received by them from the Borrowers pursuant to this Agreement which is disclosed to employees of the Administrative Agent, the Auction Agent and the Banks (as the case may be) is so disclosed only to the extent necessary for purpose of the administration of this Agreement and, in all cases, on the condition that such information and data shall be kept confidential except for such purpose. (c) The provisions of this subsection 10.7 shall survive the payment in full of all amounts payable hereunder and the termination of this Agreement. 10.8 COUNTERPARTS. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrowers and the Administrative Agent. 10.9 GOVERNING LAW. This Agreement and the rights and obligations of the parties under this Agreement shall be governed by, and construed and interpreted in accordance with, the law of the State of New York. 70 10.10 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. All judicial proceedings brought against the Borrowers with respect to this Agreement may be brought in any state or federal court of competent jurisdiction in the State of New York, and, by execution and delivery of this Agreement, the Borrowers accept, for themselves and in connection with their properties, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts and irrevocably agree to be bound by any final judgment rendered thereby in connection with this Agreement from which no appeal has been taken or is available. The Borrowers irrevocably agree that all process in any such proceedings in any such court may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to them at their addresses set forth in subsection 10.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto, such service being hereby acknowledged by the Borrowers to be effective and binding service in every respect. Each of the Borrowers, the Administrative Agent, the Auction Agent and the Banks irrevocably waives any objection, including without limitation, any objection to the laying of venue or based on the grounds of forum non conveniens which it may now or hereafter have to the bringing of any such action or proceeding in any such jurisdiction. Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of the Administrative Agent, the Auction Agent or any Bank to bring proceedings against the Borrowers in the courts of any other jurisdiction. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. DEERE & COMPANY Attested by: /s/ Michael A. Harring By: /s/ Nathan J. Jones - --------------------------- ------------------------------- Title: Assistant Secretary Title: Assistant Treasurer JOHN DEERE CAPITAL CORPORATION Attested by: /s/ Michael A. Harring By: /s/ Nathan J. Jones - --------------------------- ------------------------------- Title: Assistant Secretary Title: Assistant Treasurer 71 CHEMICAL BANK, as Administrative Agent, as a Managing Agent and as a Bank By: /s/ Jeffrey A. Marcks -------------------------------- Title: Managing Director DEUTSCHE BANK AG CHICAGO BRANCH, as Auction Agent and as a Managing Agent By: /s/ Dirk A. Quayle -------------------------------- Title: Corp. Fin. Director By: /s/ Thomas L. Newberry -------------------------------- Title: Vice President DEUTSCHE BANK AG CHICAGO AND/OR CAYMAN ISLAND BRANCHES, as a Managing Agent and as a Bank By: /s/ Dirk A. Quayle ------------------------------- Title: Corp. Fin. Director By: /s/ Thomas L. Newberry ------------------------------- Title: Vice President BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Co-Agent and as a Bank By: /s/ Patricia DelGrande ------------------------------- Title: Vice President 72 THE BANK OF NEW YORK, as a Co-Agent and as a Bank By: /s/ Charlotte Sohn -------------------------------- Title: Assistant Vice President BANQUE NATIONALE DE PARIS CHICAGO BRANCH, as a Co-Agent and as a Bank By: /s/ Alain Benard -------------------------------- Title: Executive Vice President THE CHASE MANHATTAN BANK N.A., as a Co-Agent and as a Bank By: /s/ Robert P. Jankowitz -------------------------------- Title: Managing Director MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as a Co-Agent and as a Bank By: /s/ William J. Stevenson -------------------------------- Title: Vice President SOCIETE GENERALE, as a Co-Agent and as a Bank By: /s/ Eric E.O. Siebert, Jr. -------------------------------- Title: Vice President THE BANK OF NOVA SCOTIA By: /s/ F.C.H. Ashby -------------------------------- Title: Senior Manager Loan Operations 73 CIBC INC. By: /s/ Stephanie E. Johnson -------------------------------- Title: Vice President COMMERZBANK AKTIENGESELLSCHAFT, GRAND CAYMAN BRANCH By: /s/ Paul F. Karlin -------------------------------- Title: Assistant Cashier CREDIT SUISSE By: /s/ Charles R. Shaw -------------------------------- Title: Member of Senior Management By: /s/ Kristinn R. Kristinsson -------------------------------- Title: Associate THE FIRST NATIONAL BANK OF CHICAGO By: /s/ Michael W. McCorkle -------------------------------- Title: Vice President THE FUJI BANK, LIMITED By: /s/ Peter L. Chinnici -------------------------------- Title: Joint General Manager 74 THE LONG-TERM CREDIT BANK OF JAPAN, LTD. CHICAGO BRANCH By: /s/ Richard E. Stahl -------------------------------- Title: Senior Vice President MELLON BANK, N.A. By: /s/ Jeffrey M. Anderson -------------------------------- Title: Vice President NBD BANK, N.A. By: /s/ Timothy M. Monahan -------------------------------- Title: Second Vice President NATIONSBANK OF TEXAS, N.A. By: /s/ Ellis E. Moseley -------------------------------- Title: Senior Vice President ROYAL BANK OF CANADA By: /s/ G. David Cole -------------------------------- Title: Senior Manager TORONTO DOMINION (TEXAS), INC. By: /s/ James J. McCarthy -------------------------------- Title: Director 75 UNION BANK OF SWITZERLAND, CHICAGO BRANCH By: /s/ Robert H. Riley III -------------------------------- Title: Vice President By: /s/ Martin Frey -------------------------------- Title: Assistant Treasurer WACHOVIA BANK OF GEORGIA, N.A. By: /s/ Edward D. Ridenhour -------------------------------- Title: Senior Vice President SCHEDULE I TERMS OF SUBORDINATION "SENIOR INDEBTEDNESS" means the principal of (and premium, if any) and unpaid interest on (a) indebtedness of John Deere Capital Corporation (the "Capital Corporation") (including indebtedness of others guaranteed by the Capital Corporation), other than the indebtedness evidenced by the Securities [such term to be defined as the debt to be issued under the indenture or agreement to which this Schedule relates], the 9.35% Subordinated Debentures due 2003, the 8-5/8% Subordinated Debentures due 2019 and the 9-5/8% Subordinated Notes due 1998 of the Capital Corporation, whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed, for money borrowed, unless in the instrument creating or evidencing the same or pursuant to which the same is outstanding it is provided that such indebtedness is not senior or prior in right of payment to the Securities, and (b) renewals, extensions, modifications and refundings of any such indebtedness. SUBORDINATION Section 1. AGREEMENT TO SUBORDINATE. The Capital Corporation, for itself, its successors and assigns, covenants and agrees, and each holder of Securities, by such holder's acceptance thereof, likewise covenants and agrees, that the payment of the principal of (and premium, if any) and interest on each and all of the Securities is hereby expressly subordinated, to the extent and in the manner hereinafter set forth, in right of payment to the prior payment in full of all Senior Indebtedness. Section 2. DISTRIBUTION ON DISSOLUTION, LIQUIDATION AND REORGANIZATION; SUBROGATION OF SECURITIES. Upon any distribution of assets of the Capital Corporation upon any dissolution, winding up, liquidation or reorganization of the Capital Corporation, whether in bankruptcy, insolvency, reorganization or receivership proceedings or upon an assignment for the benefit of creditors or any other marshalling of the assets and liabilities of the Capital Corporation or otherwise (subject to the power of a court of competent jurisdiction to make other equitable provisions reflecting the rights conferred in this Agreement upon the Senior Indebtedness and the holders thereof with respect to the Securities by a lawful plan of reorganization under applicable bankruptcy law), 2 (a) the holders of Senior Indebtedness shall be entitled to receive payment in full of the principal thereof (and premium if any) and the interest due on the Senior Indebtedness before the holders of the Securities are entitled to receive any payment upon the principal of (or premium, if any) or interest on indebtedness evidenced by the Securities; and (b) any payment or distribution of assets of the Capital Corporation of any kind or character, whether in cash, property or securities, to which the holders of the Securities or any trustee therefor would be entitled except for the provisions of this Article shall be paid by the liquidating trustee or agent or other person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, ratably according to the aggregate amounts remaining unpaid on account of the principal of (and premium, if any) and interest on the Senior Indebtedness held or represented by each holder of Senior Indebtedness, to the extent necessary to make payment in full of all Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness; and (c) in the event that, notwithstanding the foregoing, any payment or distribution of assets of the Capital Corporation of any kind or character, whether in cash, property or securities, shall be received by any trustee for the holders of the Securities or the holders of the Securities before all Senior Indebtedness is paid in full, such payment or distribution shall be paid over, upon written notice to any trustee for the holders of the Securities, to the holders of Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, ratably as aforesaid, for application to the payment of all Senior Indebtedness remaining unpaid until all such Senior Indebtedness shall have been paid in full, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness. Subject to the payment in full of all Senior Indebtedness, the holders of the Securities shall be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions of cash, property or securities of the Capital Corporation applicable to Senior Indebtedness until the principal of (and premium, if any) and interest on the Securities shall be paid in full and no such payments or distributions to the holders of the Securities of cash, property or securities otherwise distributable to the holders of Senior Indebtedness shall, as 3 between the Capital Corporation, its creditors other than the holders of Senior Indebtedness, and the holders of the Securities, be deemed to be a payment by the Capital Corporation to or on account of the Securities. It is understood that the provisions of this Article are, and are intended, solely for the purpose of defining the relative rights of the holders of the Securities, on the one hand, and the holders of Senior Indebtedness, on the other hand. Nothing contained in this Article or elsewhere in this Agreement or in the Securities is intended to or shall impair, as between the Capital Corporation, its creditors other than the holders of Senior Indebtedness, and the holders of the Securities, the obligation of the Capital Corporation, which is unconditional and absolute, to pay to the holders of the Securities the principal of (and premium, if any) and interest on the Securities as and when the same shall become due and payable in accordance with their terms, or to affect the relative rights of the holders of the Securities and creditors of the Capital Corporation other than the holders of Senior Indebtedness, nor shall anything herein or in the instruments or other evidence of the Securities prevent any trustee for the holders of the Securities or the holder of any Securities from exercising all remedies otherwise permitted by applicable law upon default under this Agreement or such instrument or other evidence, subject to the rights, if any, under this Article of the holders of Senior Indebtedness in respect of cash, property or securities of the Capital Corporation received upon the exercise of any such remedy. Section 3. NO PAYMENT ON SECURITIES IN EVENT OF NON- PAYMENT WHEN DUE OF SENIOR INDEBTEDNESS. No payment by the Capital Corporation on account of principal (or premium, if any), sinking funds, or interest on the Securities shall be made unless full payment of amounts then due for principal, premium, if any, sinking funds and interest on Senior Indebtedness has been made or duly provided for in money or money's worth. SCHEDULE II COMMITMENTS
Bank Commitment - ---- ---------- Chemical Bank $134,000,000 Deutsche Bank AG Chicago and/or Cayman Island Branches 134,000,000 Bank of America National Trust and Savings Association 93,800,000 The Bank of New York 93,800,000 Banque Nationale de Paris Chicago Branch 93,800,000 The Chase Manhattan Bank N.A. 93,800,000 Morgan Guaranty Trust Company of New York 93,800,000 Societe Generale 93,800,000 The Bank of Nova Scotia 60,300,000 CIBC Inc. 60,300,000 Commerzbank Aktiengesellschaft, Grand Cayman Branch 60,300,000 Credit Suisse 60,300,000 The First National Bank of Chicago 60,300,000 The Fuji Bank, Limited 60,300,000 The Long-Term Credit Bank of Japan, Ltd., Chicago Branch 60,300,000 Mellon Bank, N.A. 60,300,000 NBD Bank, N.A. 60,300,000 NationsBank of Texas, N.A. 60,300,000 Royal Bank of Canada 60,300,000 Toronto Dominion (Texas), Inc. 60,300,000 Union Bank of Switzerland, Chicago Branch 60,300,000 Wachovia Bank of Georgia, N.A. 60,300,000 ---------- Total $1,675,000,000 -------------- --------------
SCHEDULE III ADDRESSES FOR NOTICES CHEMICAL BANK 270 Park Avenue New York, New York 10017 Attention: John J. Huber, III Telephone: (212) 270-1402 Facsimile: (212) 270-2625 DEUTSCHE BANK AG Suite 4350 227 West Monroe Street Chicago, Illinois 60606 Attention: Dirk A. Quayle Telephone: (312) 578-4108 Facsimile: (312) 578-4111 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION 4th Floor 1850 Gateway Boulevard Concord, California 94520 Attention: Sandy Schwartzkopf Telephone: (510) 675-7762 Facsimile: (510) 675-7531 THE BANK OF NEW YORK Central Division - 19th Floor One Wall Street New York, New York 10286 Attention: Charlotte Sohn Telephone: (212) 635-1147 Facsimile: (212) 635-1208/09 BANQUE NATIONALE DE PARIS CHICAGO BRANCH 5th Floor 209 South LaSalle Street Chicago, Illinois 60604 Attention: Chris Howatt Telephone: (312) 977-1383 Facsimile: (312) 977-1380 2 THE CHASE MANHATTAN BANK N.A. One Chase Manhattan Plaza New York, New York 10081 Attention: Barbara Hail Don Stewart Telephone: (212) 552-5407 (Barbara) (212) 552-2662 (Don) Facsimile: (212) 552-6731 MORGAN GUARANTY TRUST COMPANY OF NEW YORK 60 Wall Street New York, New York 10260 Attention: Kit C. Wong Telephone: (212) 648-7340 Facsimile: (212) 648-5336 SOCIETE GENERALE Suite 3400 181 West Madison Street Chicago, Illinois 60602 Attention: Eric E.O. Siebert Donna L. Benson Telephone: (312) 578-5003 (Eric) (312) 578-5112 (Donna) Facsimile: (312) 578-5099 THE BANK OF NOVA SCOTIA Suite 2700 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Attention: Claude Ashby Telephone: (404) 877-1500 Facsimile: (404) 888-8998 CIBC INC. Suite 2300 200 West Madison Street Chicago, Illinois 60606 Attention: Stephanie Johnson Telephone: (312) 750-8725 Facsimile: (312) 726-8884 with a copy to: 3 CIBC INC. Two Paces West Suite 1200 2727 Paces Ferry road Atlanta, Georgia 30339 Attention: Carrie Modica Telephone: (404) 319-4816 Facsimile: (404) 319-4950 COMMERZBANK AKTIENGESELLSCHAFT, GRAND CAYMAN BRANCH c/o Chicago Branch Suite 5800 311 South Wacker Drive Chicago, Illinois 60606 Attention: Anthony Giraldi Telephone: (312) 435-1000 Facsimile: (312) 435-1486 CREDIT SUISSE 41st Floor 12 East 49th Street New York, New York 10017 Attention: Hazel Leslie Telephone: (212) 238-5218 Facsimile: (212) 238-5246 THE FIRST NATIONAL BANK OF CHICAGO Suite 0324 One First National Plaza Chicago, Illinois 60670 Attention: Michael McCorkle Telephone: (312) 732-3568 Facsimile: (312) 732-5296 THE FUJI BANK, LIMITED c/o Chicago Branch Suite 2000 225 West Wacker Drive Chicago, Illinois 60606 Attention: Richard J. Dunning Telephone: (312) 621-9485 Facsimile: (312) 621-0539 4 THE LONG-TERM CREDIT BANK OF JAPAN, LTD. CHICAGO BRANCH Suite 800 190 South LaSalle Street Chicago, Illinois 60603 Attention: Richard E. Stahl Telephone: (312) 704-5453 Facsimile: (312) 704-8505 MELLON BANK, N.A. Suite 2600 55 West Monroe Street Chicago, Illinois 60603 Attention: Jeffrey Anderson Telephone: (312) 357-3405 Facsimile: (312) 357-3414 NBD BANK, N.A. 611 Woodward Avenue Detroit, Michigan 48224 Attention: Timothy Monahan Telephone: (313) 225-2762 Facsimile: (313) 225-167117 NATIONSBANK OF TEXAS, N.A. 67th Floor 901 Main Street Dallas, Texas 75202-3707 Attention: Ellis Mosely Telephone: (214) 508-0913 Facsimile: (214) 508-0980 ROYAL BANK OF CANADA New York Branch c/o New York Operations Center Pierrepont Plaza 300 Cadman Plaza West Brooklyn, New York 11201-2701 Attention: Manager, Loans Administration Telephone: (212) 858-7168 Facsimile: (718) 522-6292/3 with a copy to: 5 ROYAL BANK OF CANADA Suite 2300 33 North Dearborn Chicago, Illinois 60602 Attention: G. David Cole Telephone: (312) 372-4404 Facsimile: (312) 782-3429 TORONTO DOMINION (TEXAS),INC. c/o The Toronto-Dominion Bank Suite 5430 70 West Madison Street Chicago, Illinois 60602 Attention: David Lewing Telephone: (312) 977-2105 Facsimile: (312) 782-6337 UNION BANK OF SWITZERLAND, CHICAGO BRANCH 30 South Wacker Drive Chicago, Illinois 60606 Attention: Martin A. Frey Telephone: (312) 993-5476 Facsimile: (312) 993-5530 WACHOVIA BANK OF GEORGIA, N.A. INC. c/o Wachovia Corporate Services, Inc. Suite 1740 55 West Monroe Street Chicago, Illinois 60603 Attention: Scott D. Bjelde Telephone: (312) 853-0191 Facsimile: (312) 853-0693 EXHIBIT A [FORM OF BORROWING NOTICE] ___________, _____ Chemical Bank as Administrative Agent under the Credit Agreement referred to below 270 Park Avenue New York, New York 10017 Gentlemen: Pursuant to subsection 2.1(c) of the $1,675,000,000 Credit Agreement, dated as of December 15, 1993, among DEERE & COMPANY, JOHN DEERE CAPITAL CORPORATION, the Banks parties thereto, CHEMICAL BANK, as Administrative Agent, DEUTSCHE BANK AG CHICAGO BRANCH, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein (as the same may be amended, supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"), the undersigned hereby requests that the following Committed Rate Loans be made on __________, ____ as follows: (1). Total Amount of Committed Rate Loans.......................... $ ---------- (2). Amount of (1) to be allocated to Eurodollar Loans............... $ ---------- (3). Amount of (1) to be allocated to C/D Rate Loans................. $ ---------- (4). Amount of (1) to be allocated to ABR Loans..................... $ ---------- (5A). Interest Periods and amounts to be allocated thereto in respect of Eurodollar Loans (amounts must total (2)): (i) one month................ $ ---------- (ii) two months............... $ ---------- (iii) three months............. $ ---------- (iv) six months............... $ ---------- Total Eurodollar Loans.......... $ ----------
A-2 (5B). Interest Periods and amounts to be allocated thereto in respect of C/D Rate Loans (amounts must total (3)): (i) 30 days.................. $ ---------- (ii) 60 days.................. $ ---------- (iii) 90 days.................. $ ---------- (iv) 180 days................. $ ---------- Total C/D Rate Loans........... $ ----------
NOTE: THE AMOUNT APPEARING IN LINE (1) ABOVE MUST BE AT LEAST EQUAL TO $25,000,000 AND IN A WHOLE MULTIPLE OF $5,000,000 AND THE AMOUNTS APPEARING IN EACH OTHER LINE ABOVE MUST BE AT LEAST EQUAL TO $10,000,000 AND IN A WHOLE MULTIPLE OF $1,000,000. Terms defined in the Credit Agreement shall have the same meanings when used herein. Very truly yours, [DEERE & COMPANY] [JOHN DEERE CAPITAL CORPORATION] By: ---------------------------- Title: EXHIBIT B [FORM OF BID LOAN REQUEST] _______________, _____ Deutsche Bank AG Chicago Branch, as Auction Agent under the Credit Agreement referred to below c/o Deutsche Bank AG New York Branch 31 West 52nd Street New York, New York 10019 Dear Sirs: Reference is made to the $1,675,000,000 Credit Agreement, dated as of December 15, 1993, among DEERE & COMPANY, JOHN DEERE CAPITAL CORPORATION, the Banks parties thereto, CHEMICAL BANK, as Administrative Agent, DEUTSCHE BANK AG CHICAGO BRANCH, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein (as the same may be amended, supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"). Terms defined in the Credit Agreement are used herein as therein defined. This is an [Index Rate] [Absolute Rate] Bid Loan Request pursuant to subsection 2.2 of the Credit Agreement requesting quotes for the following Bid Loans: Aggregate Principal Amount $ $ $ ------- ------- ------- Borrowing Date ------- ------- ------- Interest Period ------- ------- ------- Maturity Date ------- ------- ------- Interest Payment Dates ------- ------- ------- Interest Rate Basis 360 day year
B-2 NOTE: THE AGGREGATE PRINCIPAL AMOUNTS APPEARING ABOVE MUST BE IN THE AGGREGATE AT LEAST EQUAL TO $25,000,000 AND IN A WHOLE MULTIPLE OF $5,000,000. Very truly yours, [DEERE & COMPANY] [JOHN DEERE CAPITAL CORPORATION] By:____________________________ Title: - --------------------- Note: Pursuant to the Credit Agreement, a Bid Loan Request may be transmitted by facsimile transmission, or by telephone, immediately confirmed by facsimile transmission. In any case, a Bid Loan Request shall contain the information specified in the second paragraph of this form. EXHIBIT C [FORM OF BID LOAN OFFER] _______________, _____ Deutsche Bank AG Chicago Branch, as Auction Agent under the Credit Agreement referred to below c/o Deutsche Bank AG New York Branch 31 West 52nd Street New York, New York 10019 Dear Sirs: Reference is made to the $1,675,000,000 Credit Agreement, dated as of December 15, 1993, among DEERE & COMPANY, JOHN DEERE CAPITAL CORPORATION, the Banks parties thereto, CHEMICAL BANK, as Administrative Agent, DEUTSCHE BANK AG CHICAGO BRANCH, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein (as the same may be amended, supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"). Terms defined in the Credit Agreement are used herein as therein defined. In accordance with subsection 2.2 of the Credit Agreement, the undersigned Bid Loan Bank offers to make Bid Loans thereunder in the following amounts with the following maturity dates: Borrowing Date: _______, 19___ Aggregate Maximum Amount: $_______
Maturity Date 1: ___: Maturity Date 2:___: Maturity Date 3:___: - ---------------- ---------------- ---------------- Maximum Amount $___ Maximum Amount $___ Maximum Amount $___ Rate*___ Amount $___ Rate*___ Amount $___ Rate*___ Amount $___ Rate*___ Amount $___ Rate*___ Amount $___ Rate*___ Amount $___
Very truly yours, [NAME OF BID LOAN BANK] By:_________________________ Name: Title: Telephone: Facsimile: * If Index Rate Bid Loan, insert percentage above or below Eurodollar Rate. EXHIBIT D [FORM OF BID LOAN CONFIRMATION] ________________, _____ Deutsche Bank AG Chicago Branch, as Auction Agent under the Credit Agreement referred to below c/o Deutsche Bank AG New York Branch 31 West 52nd Street New York, New York 10019 Dear Sirs: Reference is made to the $1,675,000,000 Credit Agreement, dated as of December 15, 1993, among DEERE & COMPANY, JOHN DEERE CAPITAL CORPORATION, the Banks parties thereto, CHEMICAL BANK, as Administrative Agent, DEUTSCHE BANK AG CHICAGO BRANCH, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein (as the same may be amended, supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"). Terms defined in the Credit Agreement are used herein as therein defined. In accordance with subsection 2.2 of the Credit Agreement, the undersigned accepts and confirms the offers by Bid Loan Bank(s) to make Bid Loans to the undersigned on _________, ____ [Borrowing Date] under said subsection 2.2 in the (respective) amount(s) set forth on the attached list of Bid Loans offered. Very truly yours, [DEERE & COMPANY] [JOHN DEERE CAPITAL CORPORATION] By:____________________________ Title: [Borrower to attach Bid Loan Offer list prepared by Auction Agent with accepted amount entered by the Borrower to right of each Bid Loan Offer]. EXHIBIT E [FORM OF LOAN ASSIGNMENT] LOAN ASSIGNMENT LOAN ASSIGNMENT, dated as of the date set forth in Item 1 of Schedule I hereto, among the Assignor Bank set forth in Item 2 of Schedule I hereto (the "ASSIGNOR BANK"), the Loan Assignee set forth in Item 3 of Schedule I hereto (the "LOAN ASSIGNEE"), and CHEMICAL BANK, as administrative agent for the Banks under the Credit Agreement described below (in such capacity, the "ADMINISTRATIVE AGENT"). W I T N E S S E T H : WHEREAS, this Loan Assignment is being executed and delivered in accordance with subsection 10.5(c) of the $1,675,000,000 Credit Agreement, dated as of December 15, 1993 among DEERE & COMPANY (the "COMPANY"), JOHN DEERE CAPITAL CORPORATION (the "CAPITAL CORPORATION"), the Assignor Bank and the other Banks party thereto, the Administrative Agent, DEUTSCHE BANK AG CHICAGO BRANCH, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein (as from time to time amended, supplemented or otherwise modified in accordance with the terms thereof, the "CREDIT AGREEMENT"; terms defined therein being used herein as therein defined); and WHEREAS, the Assignor Bank has advanced to [the Company] [the Capital Corporation] the Bid Loan or Negotiated Rate Loan or portion thereof described in Item 5 of Schedule I hereto (the "LOAN"), and the Assignor Bank is assigning the Loan to the Loan Assignee pursuant to this Loan Assignment; NOW, THEREFORE, the parties hereto hereby agree as follows: 1. The Assignor Bank acknowledges receipt from the Loan Assignee of an amount equal to the purchase price, as agreed between the Assignor Bank and the Loan Assignee, of the outstanding principal amount of, and accrued interest on, the Loan. The Assignor Bank hereby irrevocably sells, assigns and transfers to the Loan Assignee without recourse, representation or warranty, and the Loan Assignee hereby irrevocably purchases, takes and acquires from the Assignor E-2 Bank, the Loan, together with all instruments, documents and collateral security pertaining thereto. 2. (a) From and after the date set forth in Item 4 of Schedule I hereto (the "TRANSFER EFFECTIVE DATE"), principal and interest that would otherwise be payable to or for the account of the Assignor Bank pursuant to the Loan shall, instead, be payable to or for the account of the Loan Assignee, whether such amounts have accrued prior to the Transfer Effective Date or accrue subsequent to the Transfer Effective Date. (b) If Item 6 of Schedule I hereto contains payment instructions for the Loan Assignee and if the Loan Assignee delivers a copy of this Loan Assignment to the Administrative Agent in accordance with subsection 10.5(f) of the Credit Agreement at least 5 Business Days prior to the due date of any payment to the Loan Assignee, the Loan Assignee hereby instructs the Administrative Agent to pay all such amounts payable to it pursuant to the provision of subparagraph (a) of this paragraph 2, in accordance with such payment instructions. If Item 6 of Schedule I hereto does not contain payment instructions for the Loan Assignee (or a copy hereof is not delivered to the Administrative Agent as aforesaid), the Assignor Bank and the Loan Assignee agree that, notwithstanding the provisions of subparagraph (a) of this paragraph 2, the Assignor Bank is hereby appointed by the Loan Assignee as its collection agent to receive from the Administrative Agent, for and on behalf of and for the account of the Loan Assignee, all amounts payable to or for the account of the Loan Assignee under the Loan; the Assignor Bank will immediately pay over to the Loan Assignee any such amounts received by it, in like funds as received. 3. Each of the parties to this Loan Assignment agrees that at any time and from time to time upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this Loan Assignment. 4. By executing and delivering this Loan Assignment, the Assignor Bank and the Loan Assignee confirm to and agree with each other and the Administrative Agent and the Banks as follows: (i) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned hereby free and clear of any adverse claim, the Assignor Bank makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto; (ii) the Assignor Bank makes no E-3 representation or warranty and assumes no responsibility with respect to the financial condition of the Company or the Capital Corporation or the performance or observance by the Company or the Capital Corporation of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant hereto; (iii) the Loan Assignee confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in subsection 3.1 (unless financial statements referred to in subsection 5.1(a) have become available), the financial statements delivered pursuant to subsection 5.1, if any, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Loan Assignment; (iv) the Loan Assignee will, independently and without reliance upon the Administrative Agent, the Assignor Bank or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in respect of the Credit Agreement; and (v) the Loan Assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto, all in accordance with Section 9 of the Credit Agreement. 5. The Loan Assignee represents that it is organized under the laws of______________. If the Loan Assignee is organized under the laws of any jurisdiction other than the United States or any State thereof, the Loan Assignee (i) represents to the Assignor Bank (for the benefit of the Assignor Bank, the Administrative Agent and [the Company] [the Capital Corporation]) that under applicable law and treaties no taxes will be required to be withheld by the Administrative Agent, [the Company] [the Capital Corporation] or the Assignor Bank with respect to any payments to be made to the Loan Assignee in respect of the Loan, (ii) will furnish to the Assignor Bank, the Administrative Agent and [the Company] [the Capital Corporation], on or prior to the Transfer Effective Date, a letter in duplicate in the form of Exhibit J or Exhibit K, as appropriate, to the Credit Agreement and two duly completed copies of either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein the Loan Assignee claims entitlement to complete exemption from U.S. federal withholding tax on all interest payments under the Loan), (iii) will furnish to the Assignor Bank, the Administrative Agent and [the Company] [the Capital Corporation], on or prior to the Transfer Effective Date either U.S. Internal Revenue Service Form W-8 or U.S. Internal Revenue Service Form W-9 (wherein the Loan Assignee claims entitlement to complete exemption from U.S. federal backup withholding tax on all interest payments under the Loan) and (iv) agrees (for the benefit of the Assignor Bank, the Administrative Agent E-4 and [the Company] [the Capital Corporation]) to provide the Assignor Bank, the Administrative Agent and [the Company] [the Capital Corporation] a new Form 4224 or Form 1001 and Form W-8 or W-9 or successor applicable form or other manner of certification on or before the expiration or obsolescence of, or after the occurrence of any event requiring a change in, any previously delivered letter or form and comparable statements in accordance with applicable U.S. laws and regulations and amendments duly executed and completed by the Loan Assignee, and comply from time to time with all applicable U.S. laws and regulations with regard to such withholding tax exemption and such backup withholding tax exemption. 6. The Loan Assignee agrees to be bound by subsection 10.7 of the Credit Agreement relating to confidentiality. 7. This Loan Assignment shall be governed by, and construed and interpreted in accordance with, the law of the State of New York. IN WITNESS WHEREOF, the parties hereto have caused this Loan Assignment to be executed by their respective duly authorized officers on Schedule I hereto as of the date set forth in Item 1 of Schedule I hereto. SCHEDULE I TO LOAN ASSIGNMENT Item 1 (Date of Loan Assignment): [Insert date of Loan Assignment] Item 2 (Assignor Bank): [Insert name of Assignor Bank] Item 3 (Loan Assignee): [Insert name, address, telephone and telex numbers and name of contact party of Loan Assignee] Item 4 (Transfer Effective Date): [Insert Transfer Effective Date] [To be a date not less than five business days after date of Loan Assignment] Item 5 (Description of Loan): a. Borrowing Date and Maturity Date of Bid Loan or Negotiated Rate Loan: b. Principal Amount of Loan: Item 6 (Payment Instructions): [Complete only if payments are to be made by Administrative Agent to Loan Assignee rather than to Assignor Bank as collection agent for Loan Assignee; leave blank if Assignor Bank is to act as such collection agent] Item 7 (Signatures):
____________________, as Assignor Bank By:_______________________ Title: 2 ____________________, as Loan Assignee By:_______________________ Title: ACCEPTED FOR RECORDATION IN REGISTER: CHEMICAL BANK, as Administrative Agent By:________________________ Title: EXHIBIT F [FORM OF COMMITMENT TRANSFER SUPPLEMENT] COMMITMENT TRANSFER SUPPLEMENT COMMITMENT TRANSFER SUPPLEMENT, dated as of the date set forth in Item 1 of Schedule I hereto, among the Transferor Bank set forth in Item 2 of Schedule I hereto (the "TRANSFEROR BANK"), each Purchasing Bank set forth in Item 3 of Schedule I hereto (each, a "PURCHASING BANK"), DEERE & COMPANY, a Delaware corporation (the "COMPANY"), JOHN DEERE CAPITAL CORPORATION, a Delaware corporation (the "CAPITAL CORPORATION"), and CHEMICAL BANK, as administrative agent for the Banks under the Credit Agreement described below (in such capacity, the "ADMINISTRATIVE AGENT"). W I T N E S S E T H : WHEREAS, this Commitment Transfer Supplement is being executed and delivered in accordance with subsection 10.5(d) of the $1,675,000,000 Credit Agreement, dated as of December 15, 1993, among the Company, the Capital Corporation, the Transferor Bank and the other Banks party thereto, the Administrative Agent, Deutsche Bank AG Chicago Branch, as Auction Agent the Managing Agents named therein and the Co-Agents named therein (as from time to time amended, supplemented or otherwise modified in accordance with the terms thereof, the "CREDIT AGREEMENT"; terms defined therein being used herein as therein defined); WHEREAS, each Purchasing Bank (if it is not already a Bank party to the Credit Agreement) wishes to become a Bank party to the Credit Agreement; and WHEREAS, the Transferor Bank is selling and assigning to each Purchasing Bank, rights, obligations and commitments under the Credit Agreement; NOW, THEREFORE, the parties hereto hereby agree as follows: 1. From and after the Transfer Effective Date set forth in Item 4 of Schedule I hereto (the "TRANSFER EFFECTIVE DATE"), each Purchasing Bank shall be a Bank party to the Credit Agreement for all purposes thereof. F-2 2. The Transferor Bank acknowledges receipt from each Purchasing Bank of an amount equal to the purchase price, as agreed between the Transferor Bank and such Purchasing Bank (the "PURCHASE PRICE"), of the portion being purchased by such Purchasing Bank (such Purchasing Bank's "PURCHASED PERCENTAGE") of the outstanding Committed Rate Loans and other amounts owing to the Transferor Bank under the Credit Agreement (other than any Bid Loans and Negotiated Rate Loans owing to the Transferor Bank). The Transferor Bank hereby irrevocably sells, assigns and transfers to each Purchasing Bank, without recourse, representation or warranty, and each Purchasing Bank hereby irrevocably purchases, takes and assumes from the Transferor Bank, such Purchasing Bank's Purchased Percentage of the Commitments and the presently outstanding Committed Rate Loans and other amounts owing to the Transferor Bank under the Credit Agreement (other than any Bid Loans and Negotiated Rate Loans owing to the Transferor Bank) together with all instruments, documents and collateral security pertaining thereto. 3. The Transferor Bank has made arrangements with each Purchasing Bank with respect to (i) the portion, if any, to be paid, and the date or dates for payment, by the Transferor Bank to such Purchasing Bank of any fees heretofore received by the Transferor Bank pursuant to the Credit Agreement prior to the Transfer Effective Date and (ii) the portion, if any, to be paid, and the date or dates for payment, by such Purchasing Bank to the Transferor Bank of fees or interest received by such Purchasing Bank pursuant to the Credit Agreement from and after the Transfer Effective Date. 4. (a) From and after the Transfer Effective Date, principal, interest, fees and other amounts that would otherwise be payable to or for the account of the Transferor Bank pursuant to the Credit Agreement and the Committed Rate Loans (other than any Bid Loans and Negotiated Rate Loans owing to the Transferor Bank) shall, instead, be payable to or for the account of the Transferor Bank and the Purchasing Banks, as the case may be, in accordance with their respective interests as reflected in this Commitment Transfer Supplement, whether such amounts have accrued prior to the Transfer Effective Date or accrue subsequent to the Transfer Effective Date. (b) The Transferor Bank and each Purchasing Bank hereby agree and instruct the Administrative Agent that, notwithstanding the provisions of subparagraph (a) of this paragraph 4, on each date hereafter on which interest or fees are payable under the Credit Agreement and the Committed Rate Loans in respect of any period (an "ACCRUAL PERIOD") ending on or prior to the Transfer Effective Date, any such interest or fees payable to the Purchasing Bank on account of such Accrual Period in respect of its interests as reflected in F-3 this Commitment Transfer Supplement shall be paid over to the Transferor Bank (and, if such interest or fees are not paid in full when due, the payment over to the Transferor Bank shall be ratable), and the Transferor Bank and such Purchasing Bank will make appropriate arrangements for the payment to such Purchasing Bank of the portion thereof owing to it to reflect the amount, if any, included in the Purchase Price for interest and fees in respect of any Accrual Period. 5. On or promptly after the Transfer Effective Date specified in this Commitment Transfer Supplement, the Purchasing Bank and the Administrative Agent, on behalf of such Purchasing Bank, shall open and maintain in the name of each Borrower a Loan Account with respect to such Purchasing Bank's Committed Rate Loans and Bid Loans to such Borrower. 6. Concurrently with the execution and delivery hereof, the Administrative Agent will, at the expense of the Transferor Bank, provide to each Purchasing Bank (if it is not already a Bank party to the Credit Agreement) conformed copies of all documents delivered to the Administrative Agent on the Closing Date in satisfaction of the conditions precedent set forth in the Credit Agreement. 7. Each of the parties to this Commitment Transfer Supplement agrees that at any time and from time to time upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this Commitment Transfer Supplement. 8. By executing and delivering this Commitment Transfer Supplement, the Transferor Bank and each Purchasing Bank confirm to and agree with each other and the Administrative Agent and the Banks as follows: (i) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned hereby free and clear of any adverse claim, the Transferor Bank makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, the Committed Rate Loans or any other instrument or document furnished pursuant thereto; (ii) the Transferor Bank makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Company or the Capital Corporation or the performance or observance by the Company or the Capital Corporation of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant hereto; (iii) each Purchasing Bank confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in subsection 3.1, the financial statements F-4 delivered pursuant to subsection 5.1, if any, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Commitment Transfer Supplement; (iv) each Purchasing Bank will, independently and without reliance upon the Administrative Agent, the Transferor Bank or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (v) each Purchasing Bank appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto, all in accordance with Section 9 of the Credit Agreement; and (vi) each Purchasing Bank agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Bank. 9. The Purchasing Bank represents that it is organized under the laws of _____________. If the Purchasing Bank is organized under the laws of any jurisdiction other than the United States or any State thereof, the Purchasing Bank (i) represents to the Transferor Bank (for the benefit of the Transferor Bank, the Administrative Agent and the Borrowers) that under applicable law and treaties no taxes will be required to be withheld by the Administrative Agent, the Borrowers or the Transferor Bank with respect to any payments to be made to the Purchasing Bank in respect of the Loans, (ii) will furnish to the Transferor Bank, the Administrative Agent and the Borrowers, on or prior to the Transfer Effective Date, a letter in duplicate in the form of Exhibit J or Exhibit K, as appropriate, to the Credit Agreement and two duly completed copies of either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein the Purchasing Bank claims entitlement to complete exemption from U.S. federal withholding tax on all interest payments under the Loan), (iii) will furnish to the Transferor Bank, the Administrative Agent and the Borrowers, on or prior to the Transfer Effective Date either U.S. Internal Revenue Service Form W-8 or U.S. Internal Revenue Service Form W-9 (wherein the Purchasing Bank claims entitlement to complete exemption from U.S. federal backup withholding tax on all interest payments under the Loan) and (iv) agrees (for the benefit of the Transferor Bank, the Administrative Agent and the Borrowers), to provide the Transferor Bank, the Administrative Agent and the Borrowers a new Form 4224 or Form 1001 and Form W-8 or W- 9 or successor applicable form or other manner of certification on or before the expiration or obsolescence of, or after the occurrence of any event requiring a change in, any previously delivered letter or form and comparable statements in accordance with applicable U.S. laws and F-5 regulations and amendments duly executed and completed by the Purchasing Bank, and comply from time to time with all applicable U.S. laws and regulations with regard to such withholding tax exemption and such backup withholding tax exemption. 10. The Purchasing Bank agrees to be bound by subsection 10.7 of the Credit Agreement relating to confidentiality. 11. Schedule II hereto sets forth the revised Commitments and Commitment Percentages of the Transferor Bank and each Purchasing Bank as well as administrative information with respect to each Purchasing Bank. 12. This Commitment Transfer Supplement shall be governed by, and construed and interpreted in accordance with, the law of the State of New York. IN WITNESS WHEREOF, the parties hereto have caused this Commitment Transfer Supplement to be executed by their respective duly authorized officers on Schedule I hereto as of the date set forth in Item 1 of Schedule I hereto. SCHEDULE I TO COMMITMENT TRANSFER SUPPLEMENT COMPLETION OF INFORMATION AND SIGNATURES FOR COMMITMENT TRANSFER SUPPLEMENT Item 1 (Date of Commitment [Insert date of Commitment Transfer Supplement): Transfer Supplement] Item 2 (Transferor Bank): [Insert name of Transferor Bank] Item 3 (Purchasing Bank[s]): [Insert name[s] of Purchasing Bank[s]] Item 4 (Transfer Effective [Insert Transfer Effective Date): Date] [To be a date not less than five business days after date of Commitment Transfer Supplement] Item 5 (Signatures of Parties to Commitment Transfer Supplement): ____________________, as Transferor Bank By:_______________________ Title: ____________________, as a Purchasing Bank By:_______________________ Title: ____________________, as a Purchasing Bank By:_______________________ Title:
2 CONSENTED TO AND ACKNOWLEDGED: DEERE & COMPANY By:_______________________ JOHN DEERE CAPITAL CORPORATION By:_______________________ Title: ACCEPTED FOR RECORDATION IN REGISTER: CHEMICAL BANK, as Administrative Agent By:______________________ Title: SCHEDULE II TO COMMITMENT TRANSFER SUPPLEMENT LIST OF LENDING OFFICES, ADDRESSES FOR NOTICES AND COMMITMENT AMOUNTS [Name of Transferor Bank] REVISED COMMITMENT AMOUNTS: $_______ REVISED COMMITMENT PERCENTAGE: _______ [Name of Purchasing Bank] NEW COMMITMENT AMOUNTS: $_______ ADDRESS FOR NOTICES: NEW COMMITMENT PERCENTAGE: _______ ___________________ ___________________ ___________________ Attn: _____________ Telephone: __________________ Facsimile: __________________ [Name of Purchasing Bank] NEW COMMITMENT AMOUNTS: $_______ ADDRESS FOR NOTICES: ___________________ NEW COMMITMENT PERCENTAGE: _______ ___________________ ___________________ Attn: _____________ Telephone: ____________________ Facsimile: ____________________ EXHIBIT G [FORM OF OPINION OF GENERAL COUNSEL TO THE BORROWERS] To each of the Banks parties to the Credit Agreement referred to below, to Chemical Bank, as Administrative Agent, and Deutsche Bank AG Chicago Branch, as Auction Agent DEERE & COMPANY AND JOHN DEERE CAPITAL CORPORATION Gentlemen: This opinion is furnished to you pursuant to subsection 4.1(c) of the $1,675,000,000 Credit Agreement, dated as of December 15, 1993 (the "Credit Agreement"), among Deere & Company (the "Company"), John Deere Capital Corporation (the "Capital Corporation", the Company and the Capital Corporation being referred to herein individually as a "Borrower" and collectively as the "Borrowers"), the Banks parties thereto, Chemical Bank, as Administrative Agent, Deutsche Bank AG Chicago Branch, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein. Terms defined in the Credit Agreement are used herein as therein defined. As General Counsel to the Borrowers, I am familiar with the corporate history and organization of each Borrower and of its Subsidiaries and the proceedings relating to the authorization, execution and delivery by each Borrower of the Credit Agreement. In that connection I have examined: 1. The Credit Agreement; 2. The documents furnished by each of the Borrowers pursuant to Section 4 of the Credit Agreement; 3. The Certificates of Incorporation of the Borrowers and all amendments thereto (the "Charters"); 4. The bylaws of the Borrowers and all amendments thereto (the "Bylaws"); and G-2 5. Certificates of the Secretary of State of Delaware, each dated a recent date, attesting to the continued corporate existence and good standing of the Borrowers in that State. In addition, I have reviewed such of the corporate proceedings of the Borrowers, and have examined such documents, corporate records, and other instruments relating to the organization of the Borrowers and their respective Subsidiaries and such other agreements and instruments to which the Borrowers and their respective Subsidiaries are parties, as I have deemed necessary for the purpose of this opinion. I have assumed the due execution and delivery, pursuant to due authorization, of the Credit Agreement by the Banks, the Administrative Agent, the Auction Agent and the Managing Agents, and the authenticity of all documents submitted to me as originals and the conformity to the original documents of all documents submitted to me as certified, conformed or photostatic copies. I am qualified to practice law in the State of Illinois and do not purport to be an expert on, and do not express any opinion herein concerning, any laws other than the laws of the State of Illinois, the General Corporation Law of the State of Delaware and the Federal laws of the United States. Based upon the foregoing and upon such investigation as I have deemed necessary, I am of the following opinion: 1. Each Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the corporate power and authority to carry on its business as now being conducted and to own its properties. 2. The execution, delivery and performance by each Borrower of the Credit Agreement are within such Borrower's corporate powers, have been duly authorized by all necessary corporate action, and (i) do not contravene, or constitute a default under the Charter or the Bylaws of such Borrower, any judgment, law, rule or regulation applicable to such Borrower, or any Contractual Obligation by which such Borrower is bound or (ii) result in the creation of any lien, charge or encumbrance upon any of its property or assets. The Credit Agreement has been duly executed and delivered on behalf of each Borrower. G-3 3. No authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by each Borrower of the Credit Agreement. 4. There is no pending or, to the best of my knowledge, threatened action or proceeding against either Borrower or any of its Subsidiaries before any court, governmental agency or arbitrator which is likely to have a materially adverse effect upon the financial condition or operations of such Borrower and its Subsidiaries taken as a whole. I am aware that Shearman & Sterling will rely upon the opinions set forth in paragraphs 1, 2, and 3 of this opinion in rendering their opinion furnished pursuant to Section 4.1(c) of the Credit Agreement and consent thereto. Very truly yours, Frank S. Cottrell EXHIBIT H [FORM OF OPINION OF SPECIAL NEW YORK COUNSEL TO THE BORROWERS] To each of the Banks parties to the Credit Agreement referred to below, to Chemical Bank, as Administrative Agent, and Deutsche Bank AG Chicago Branch, as Auction Agent DEERE & COMPANY JOHN DEERE CAPITAL CORPORATION Ladies and Gentlemen: This opinion is furnished to you pursuant to subsection 4.1(c) of the $1,675,000,000 Credit Agreement, dated as of December 15, 1993 (the "Credit Agreement"), among Deere & Company (the "Company"), John Deere Capital Corporation (the "Capital Corporation", the Company and the Capital Corporation being referred to herein individually as a "Borrower" and collectively as the "Borrowers"), the Banks parties thereto, Chemical Bank, as Administrative Agent, Deutsche Bank AG Chicago Branch, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein. Terms defined in the Credit Agreement are used herein as therein defined. We have acted as special New York counsel for the Borrowers in connection with the preparation, execution and delivery of the Credit Agreement. In that connection we have examined: (1) the Credit Agreement; and (2) the documents furnished by each of the Borrowers pursuant to Section 4 of the Credit Agreement. We have assumed the due execution and delivery, pursuant to due authorization, of the Credit Agreement by the Banks, the Administrative Agent, the Auction Agent and the Managing Agents, the authenticity of all documents submitted to us as originals and the conformity to the original documents of all documents submitted to us as certified, H-2 conformed or photostatic copies. We have also assumed that the Banks, the Administrative Agent and the Auction Agent will perform the Credit Agreement reasonably and in good faith and will act reasonably and in good faith in taking action, exercising discretion and making determinations thereunder. We have also assumed that no Bid Loan or Negotiated Rate Loan made in an amount of less than $2,500,000 will bear interest at a rate greater than 25% per annum. We are qualified to practice law in the State of New York. We do not express any opinion herein concerning any laws other than the laws of the State of New York and the Federal laws of the United States. To the extent our opinions expressed below involve conclusions as to matters set forth in paragraph 1, 2 or 3 of the opinion of Frank S. Cottrell, General Counsel to the Borrowers, a copy of which is attached hereto, we have, with your permission, relied on such opinion. Based upon the foregoing and upon such investigation as we have deemed necessary, we are of the opinion that the Credit Agreement constitutes the legal, valid and binding obligation of each Borrower enforceable against such Borrower in accordance with its terms, except as such enforceability may be subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors' rights generally and to the effect of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Very truly yours, EXHIBIT I [FORM OF EXTENSION REQUEST] _______________, _____ Chemical Bank, as Administrative Agent 270 Park Avenue New York, New York 10017 Attention: _________________________ Dear Sirs: Reference is made to the $1,675,000,000 Credit Agreement, dated as of December 15, 1993 among Deere & Company, John Deere Capital Corporation, the Banks parties thereto, Chemical Bank, as Administrative Agent, Deutsche Bank AG Chicago Branch, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein (as the same may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement are used herein as therein defined. I-2 This is an Extension Request pursuant to subsection 2.16 of the Credit Agreement requesting an extension of the Termination Date to [requested Termination Date]. Please transmit a copy of this Extension Request to each of the Banks. Very truly yours, DEERE & COMPANY By:_____________________ Title: JOHN DEERE CAPITAL CORPORATION By:_____________________ Title: EXHIBIT J [FORM OF TAX LETTER] [To be sent in DUPLICATE and accompanied by TWO executed copies of Form 1001 of the Internal Revenue Service] [Bank's Letterhead] ________________, _____ Deere & Company John Deere Road Moline, Illinois 61265 Attention: Treasurer John Deere Capital Corporation First National Bank Building 1 East First Street Reno, Nevada 89501 Attention: Manager Re: $1,675,000,000 Credit Agreement dated as of December 15, 1993 with Deere & Company and John Deere Capital Corporation ------------------------------------------ Dear Sirs: In connection with the $1,675,000,000 Credit Agreement, dated as of December 15, 1993, among Deere & Company, John Deere Capital Corporation, the Banks parties thereto, Chemical Bank, as Administrative Agent, Deutsche Bank AG Chicago Branch, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein, we hereby represent and warrant that [name of Bank, address] is a [name of Country] corporation and is currently exempt from any U.S. federal withholding tax on payments to it from U.S. sources by virtue of compliance with the provisions of the Income Tax Convention between the United States and [name of Country] signed [date], [as amended]. Our fiscal year is the twelve months ending [_______________]. J-2 The undersigned (a) is a corporation organized under the laws of [_______________] whose registered business is managed or controlled in [_______________], (b) [does not have a permanent establishment or fixed base in the United States] [does have a permanent establishment or fixed base in the United States but the above Agreement is not effectively connected with such permanent establishment or fixed base], (c) is not exempt from tax on the income in [______________] and (d) is the beneficial owner of the income. We enclose herewith two copies of From 1001 of the U.S. Internal Revenue Service. Yours faithfully, [NAME OF BANK] By:_____________________________ Title: cc: Chemical Bank, as Administrative Agent EXHIBIT K [FORM OF TAX LETTER] [To be sent in DUPLICATE and accompanied by TWO executed copies of Form 4224 of the Internal Revenue Service] [Bank's Letterhead] ____________, _____ Deere & Company John Deere Road Moline, Illinois 61265 Attention: Treasurer John Deere Capital Corporation First National Bank Building Reno, Nevada 89501 Attention: Manager Re: $1,675,000,000 Credit Agreement dated as of December 15, 1993 with Deere & Company and John Deere Capital Corporation ----------------------------------------- Dear Sirs: In connection with the above $1,675,000,000 Credit Agreement, dated as of December 15, 1993, among Deere & Company, John Deere Capital Corporation, the Banks parties thereto, Chemical Bank, as Administrative Agent, Deutsche Bank AG Chicago Branch, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein, we hereby represent and warrant that [name of Bank, address] is a corporation and is entitled to exemption from U.S. federal withholding tax on payments to it under the Agreement by virtue of Section 1441(c)(1) of the Internal Revenue Code of the United States of America and Treasury Regulation Section 1.1441-4(a) thereunder. K-2 We enclose herewith two copies of Form 4224 of the U.S. Internal Revenue Service. Yours faithfully, [NAME OF BANK] By_____________________________ Title: cc: Chemical Bank, as Administrative Agent EXHIBIT L [FORM OF AGREEMENT] THIS AGREEMENT, dated as of __________, _____ ("AGREEMENT"), among Deere & Company (the "COMPANY"), John Deere Capital Corporation (the "CAPITAL CORPORATION"), ____________ ("NEW BANK") and Chemical Bank, as Administrative Agent for the Existing Banks referred to below. W I T N E S S E T H : WHEREAS, the Company, the Capital Corporation, the several financial institutions parties thereto (the "EXISTING BANKS") Chemical Bank, as Administrative Agent, Deutsche Bank AG Chicago Branch, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein are parties to a $1,675,000,000 Credit Agreement, dated as of December 15, 1993 (as the same may have been or may hereafter be amended, supplemented or otherwise modified, the "CREDIT AGREEMENT"; terms defined therein being used herein as therein defined); WHEREAS, subsection 2.19 of the Credit Agreement provides that one or more financial institutions (which may be Existing Banks) may be added as a "Bank" or "Banks" for purposes of the Credit Agreement upon the cancellation of all or a portion of the Commitments pursuant to subsection 2.13(a), (b) or (c), 2.16(c) or 2.17(b) of the Credit Agreement or the expiration of all or a portion of the Commitments pursuant to subsection 2.16(b) of the Credit Agreement and the execution of an agreement in substantially the form of this Agreement; WHEREAS, the Borrowers have cancelled or there have expired an aggregate principal amount of Commitments equal to $___________ which have not heretofore been replaced (the "CANCELLED COMMITMENTS"; the Banks that are maintaining or have maintained the Cancelled Commitments being collectively referred to as "CANCELLED BANKS"); such Cancelled Commitments being on the date hereof, or on the date of notice of cancellation hereof having been, utilized as follows:
Last day of Principal Amount Interest Period ---------------- --------------- I UNUSED PORTION N/A
L-2
Last day of Principal Amount Interest Period ---------------- --------------- II COMMITTED RATE LOANS C/D Rate Loans 1 2 3 Eurodollar Loans 1 2 3 ABR Loans N/A III BID LOANS 1 2 3 IV NEGOTIATED RATE LOANS 1 2 3
WHEREAS, the cancellation of the Cancelled Commitments is effective in accordance with the Credit Agreement; and WHEREAS, [the Borrowers desire the New Bank to become, and the New Bank is agreeable, to becoming, a "Bank" for purposes of the Credit Agreement] [the New Bank is an Existing Bank and the Borrowers desire the New Bank to L-3 increase, and the New Bank is agreeable to increasing, its Commitment]* on the terms contained herein. NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto agree as follows: 1. BENEFITS OF AGREEMENT. The Borrowers, the Administrative Agent and the New Bank hereby [agree that on and as of the date hereof the New Bank shall be] [confirm that the New Bank is] a "Bank" for all purposes and shall [continue to] be bound by and entitled to the benefits of the Credit Agreement [as if the New Bank had been named on the signature pages thereof], PROVIDED that the New Bank shall not assume and shall, except as herein provided, have no obligations in respect of any Loans outstanding on the date hereof and made by any [Existing Bank.] [Cancelled Bank.]* 2. COMMITMENT OF NEW BANK. The Borrowers, the Administrative Agent and the New Bank hereby agree that on and as of the dates set forth below the New Bank shall replace, as specified herein, ___% (such percentage being referred to as the New Bank's "Percentage") of each utilization of the Cancelled Commitments [set forth in the third recital hereof] [set forth under the caption "Committed Rate Loans"] and that the aggregate Commitment of the New Bank shall on and as of the date hereof be $__________**. In connection therewith, the Borrowers, the Administrative Agent and the New Bank hereby agree as follows***: (i) for purposes of determining such New Bank's pro rata share of each Committed Rate Loan borrowing advanced on or after the date hereof such Bank's Commitment shall be equal to $[SAME AS ABOVE]; (ii) the unused and available portion of such New Bank's Commitment shall be deemed utilized by its Percentage of the Committed Rate Loans made by the Cancelled Banks and listed in the third recital hereof. In furtherance thereof, the unused and available portion of such New Bank's Commitment shall, on the earlier of _____________________ * As appropriate for New or Existing Banks. ** Insert amount equal to sum of New Bank's existing Commitment, if any, plus New Bank's Percentage of Cancelled Commitments. *** The following clauses (ii)-(iii) may be altered to reflect the agreements among the Cancelled Bank, the New Bank and the Borrowers provided such agreements do not adversely affect any Existing Bank or the Administrative Agent. L-4 (x) the last day of each Interest Period specified for each outstanding Committed Rate Loan in the third recital hereof (and the payment in full to the Cancelled Banks of the principal thereof and accrued interest thereon) and (y) the prepayment of the principal of such Loans together with accrued interest thereon, automatically and without any further action by any party increase by an amount equal to the New Bank's Percentage of such Loan; and (iii) [(A)] [concurrently with the execution hereof the New Bank shall disburse to each Borrower in immediately available funds such amount as shall be necessary so that the ratio which each Bank's outstanding ABR Loans bears to all of the outstanding ABR Loans equals the ratio which each Bank's Commitment (determined, for the New Bank, in accordance with clause (i) above) bears to all of the Commitments (determined, for the New Bank, in accordance with the immediately foregoing parenthetical);] [(B)] [on the last day of each Interest Period for each outstanding Eurodollar Loan and C/D Rate Loan, automatically and without any further action by either Borrower, the New Bank shall disburse to each Borrower in immediately available funds such amounts as shall be necessary so that the ratio which each Bank's outstanding Eurodollar Loans and C/D Rate Loans, bears to all of the outstanding Eurodollar Loans and C/D Rate Loans respectively, equals the ratio which each Bank's Commitment (determined, for the New Bank, in accordance with clause (i) hereof) bears to all of the Commitments (determined, for the New Bank, in accordance with the immediately foregoing parenthetical);] [(C)] [Funding of outstanding Bid Loans of Cancelled Banks]* [(D)] [Funding of outstanding Negotiated Rate Loans of Cancelled Banks].* 3. REPRESENTATION AND WARRANTY OF BORROWERS. The Borrowers hereby represent and warrant that after giving effect to the provisions of paragraph 2 hereof the aggregate principal amount of the Commitments of all Banks (including, without limitation, the Commitment of the New Bank but excluding the cancelled or expired portion of the Commitments of the Cancelled Banks) under the Credit Agreement do not exceed the aggregate principal amount of the Commitments in effect immediately prior to the cancellation referred to in the third recital hereof. ____________________ * To be completed upon agreement of Borrowers and New Bank. L-5 4. CONFIDENTIALITY. The New Bank agrees to [continue to] be bound by the provisions of subsection 10.7 of the Credit Agreement. [5. TAXES. The New Bank (i) represents to the Administrative Agent and the Borrowers that [it is incorporated under the laws of the United States or a state thereof][under applicable law and treaties no taxes will be required to be withheld by the Administrative Agent or the Borrowers with respect to any payments to be made to such New Bank in respect of the Loans], (ii) represents that it has furnished to the Administrative Agent and the Borrowers (A) [a statement that it is incorporated under the laws of the United States or a state thereof][a letter in duplicate in the form of Exhibit [J][K] to the Credit Agreement and two duly completed copies of United States Internal Revenue Service Form [4224][1001][successor applicable form], certifying that such New Bank is entitled to receive payments under the Credit Agreement without deduction or withholding of any United States federal income taxes], and (B) [an Internal Revenue Service Form [W-8][W-9]] [successor applicable form] to establish an exemption from United States backup withholding tax, and (iii) agrees to provide the Administrative Agent and the Borrowers a new Form [4224][1001] and Form [W-8][W-9], or successor applicable form or other manner of certification, on or before the date that any such letter or form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent letter and form previously delivered by it, certifying in the case of a Form [1001][4224] that it is entitled to receive payments under the Credit Agreement without deduction or withholding of any United States federal income tax, and in the case of a Form [W-8][W-9] establishing exemption from United States backup withholding tax.]* [5][6]. MISCELLANEOUS. (a) This Agreement may be executed by the parties hereto in separate counterparts and all of the counterparts taken together shall constitute one and the same instrument and shall be effective only upon receipt by the Administrative Agent of all of the counterparts. (b) This Agreement shall be governed by, and construed and interpreted in accordance with, the law of the State of New York. - --------------------- * Use for non-Existing Banks. L-6 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of the day and year first above written. DEERE & COMPANY By:______________________ Title: JOHN DEERE CAPITAL CORPORATION By:______________________ Title: [NAME OF NEW BANK] By:______________________ Title: [Address] Telephone: Facsimile: CHEMICAL BANK, as Administrative Agent By:______________________ Title: EXHIBIT M [FORM OF BID LOAN OR NEGOTIATED RATE LOAN NOTE] PROMISSORY NOTE $__________ New York, New York ___________ __, _____ FOR VALUE RECEIVED, the undersigned, [DEERE & COMPANY] [JOHN DEERE CAPITAL CORPORATION], a Delaware corporation (the "BORROWER"), hereby promises to pay on [insert maturity date or dates] to the order of ________________ (the "BANK") at the office of [Chemical Bank located at 270 Park Avenue, New York, New York 10017 -- for Bid Loan Note] [Name and address of Bank -- for Negotiated Rate Loan Note], in lawful money of the United States of America and in immediately available funds, the principal sum of ______________DOLLARS ($____________). The undersigned further agrees to pay interest in like money at such office on the unpaid principal amount hereof from time to time from the date hereof [at the rate of ___% per annum -- for Bid Loan Note] [specify rate for Negotiated Rate Loan Note] (calculated on the basis of a year of 360 days and actual days elapsed) until the due date hereof (whether at the stated maturity, by acceleration, or otherwise) and thereafter at the rates determined or agreed in accordance with subsection 2.2(e) of the $1,675,000,000 Credit Agreement, dated as of December 15, 1993 (the "CREDIT AGREEMENT"), among the Borrower, [Deere & Company] [John Deere Capital Corporation], the Bank, the other financial institutions parties thereto, Chemical Bank, as Administrative Agent, Deutsche Bank AG Chicago Branch, as Auction Agent, the Managing Agents named therein and the Co- Agents named therein. Interest shall be payable on _______________. This Note may be prepaid pursuant to the provisions of subsection 2.6 of the Credit Agreement. This Note is one of the [Bid] [Negotiated Rate Loan] Notes referred to in, is subject to and is entitled to the benefits of, the Credit Agreement, which Credit Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the occurrence of any one or more of the Events of Default specified in the Credit Agreement. M-2 Terms defined in the Credit Agreement are used herein with their defined meanings unless otherwise defined herein. This Note shall be governed by, and construed and interpreted in accordance with, the law of the State of New York. [DEERE & COMPANY] [JOHN DEERE CAPITAL CORPORATION] By:_________________________ Title: [CONFORMED COPY] - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- DEERE & COMPANY JOHN DEERE CAPITAL CORPORATION ------------------ $825,000,000 CREDIT AGREEMENT Dated as of December 15, 1993 ------------------ CHEMICAL BANK, as Administrative Agent and as a Managing Agent DEUTSCHE BANK AG CHICAGO BRANCH, as Auction Agent and as a Managing Agent - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- TABLE OF CONTENTS Page ---- SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . 1 1.1 Defined Terms . . . . . . . . . . . . . . . . . 1 1.2 Other Definitional Provisions . . . . . . . . . 15 SECTION 2. THE COMMITTED RATE LOANS; THE BID LOANS; THE NEGOTIATED RATE LOANS; AMOUNT AND TERMS . . . . . . . . . . . . . . 15 2.1 The Committed Rate Loans . . . . . . . . . . . 15 2.2 The Bid Loans; the Negotiated Rate Loans . . . 17 2.3 Loan Accounts . . . . . . . . . . . . . . . . . 21 2.4 Fees . . . . . . . . . . . . . . . . . . . . . 22 2.5 Termination or Reduction of Commitments; Cancellation of Capital Corporation as Borrower . . . . . . . . . . . . . . . . . . 22 2.6 Optional Prepayments . . . . . . . . . . . . . 23 2.7 Minimum Amount of Certain Loans . . . . . . . . 24 2.8 Committed Rate Loan Interest Rate and Payment Dates . . . . . . . . . . . . . . . . 24 2.9 Conversion and Continuation Options . . . . . . 25 2.10 Computation of Interest and Fees . . . . . . . 26 2.11 Inability to Determine Interest Rate . . . . . 27 2.12 Pro Rata Treatment and Payments . . . . . . . . 28 2.13 Requirements of Law . . . . . . . . . . . . . . 31 2.14 Indemnity . . . . . . . . . . . . . . . . . . . 34 2.15 Non-Receipt of Funds by the Administrative Agent . . . . . . . . . . . . . . . . . . . . 35 2.16 Extension of Termination Date . . . . . . . . . 35 2.17 Foreign Taxes . . . . . . . . . . . . . . . . . 36 2.18 Confirmations . . . . . . . . . . . . . . . . . 38 2.19 Replacement of Cancelled Banks . . . . . . . . 39 SECTION 3. REPRESENTATIONS AND WARRANTIES . . . . . . . . 39 3.1 Financial Condition . . . . . . . . . . . . . . 39 3.2 Corporate Existence . . . . . . . . . . . . . . 40 3.3 Corporate Power; Authorization; Enforceable Obligations . . . . . . . . . . . 40 3.4 No Legal Bar . . . . . . . . . . . . . . . . . 40 3.5 No Material Litigation . . . . . . . . . . . . 40 3.6 Taxes . . . . . . . . . . . . . . . . . . . . . 41 3.7 Margin Regulations . . . . . . . . . . . . . . 41 3.8 Pari Passu Ranking . . . . . . . . . . . . . . 41 3.9 No Defaults . . . . . . . . . . . . . . . . . . 41 3.10 Use of Proceeds . . . . . . . . . . . . . . . . 41 -i- Page ---- SECTION 4. CONDITIONS PRECEDENT . . . . . . . . . . . . . 42 4.1 Conditions to Initial Loan . . . . . . . . . . 42 4.2 Conditions to All Loans . . . . . . . . . . . . 43 SECTION 5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . 43 5.1 Financial Statements . . . . . . . . . . . . . 44 5.2 Certificates; Other Information . . . . . . . . 44 5.3 Company Indenture Documents . . . . . . . . . . 45 5.4 Capital Corporation Indenture Documents . . . . 45 5.5 Notice of Default . . . . . . . . . . . . . . . 45 5.6 Ownership of Capital Corporation Stock . . . . 45 5.7 Employee Benefit Plans . . . . . . . . . . . . 45 SECTION 6. NEGATIVE COVENANTS OF THE COMPANY . . . . . . . 45 6.1 Company May Consolidate, etc., Only on Certain Terms . . . . . . . . . . . . . . . . 46 6.2 Limitation on Liens . . . . . . . . . . . . . . 46 6.3 Limitations on Sale and Lease-back Transactions . . . . . . . . . . . . . . . . 50 6.4 Consolidated Tangible Net Worth . . . . . . . . 51 SECTION 7. NEGATIVE COVENANTS OF THE CAPITAL CORPORATION . . . . . . . . . . . . . . . . . 51 7.1 Fixed Charges Ratio . . . . . . . . . . . . . . 51 7.2 Consolidated Senior Debt to Consolidated Capital Base . . . . . . . . . . . . . . . . 51 7.3 Limitation on Liens . . . . . . . . . . . . . . 51 7.4 Consolidation; Merger . . . . . . . . . . . . . 53 SECTION 8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . 53 SECTION 9. THE AGENTS . . . . . . . . . . . . . . . . . . 56 9.1 Appointment . . . . . . . . . . . . . . . . . . 56 9.2 Delegation of Duties . . . . . . . . . . . . . 57 9.3 Exculpatory Provisions . . . . . . . . . . . . 57 9.4 Reliance by Agents . . . . . . . . . . . . . . 57 9.5 Notice of Default . . . . . . . . . . . . . . . 58 9.6 Non-Reliance on Agents and Other Banks . . . . 58 9.7 Indemnification . . . . . . . . . . . . . . . . 59 9.8 Agents in their Individual Capacities . . . . . 59 9.9 Successor Agents . . . . . . . . . . . . . . . 59 SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . 60 10.1 Amendments and Waivers . . . . . . . . . . . . 60 10.2 Notices . . . . . . . . . . . . . . . . . . . . 61 10.3 No Waiver; Cumulative Remedies . . . . . . . . 62 -ii- Page ---- 10.4 Payment of Expenses and Taxes . . . . . . . . . 62 10.5 Successors and Assigns; Participations; Purchasing Banks . . . . . . . . . . . . . . 64 10.6 Adjustments . . . . . . . . . . . . . . . . . . 68 10.7 Confidentiality . . . . . . . . . . . . . . . . 69 10.8 Counterparts . . . . . . . . . . . . . . . . . 70 10.9 Governing Law . . . . . . . . . . . . . . . . . 70 10.10 Consent to Jurisdiction and Service of Process . . . . . . . . . . . . . . . . . . . 71 -iii- SCHEDULES: Schedule I Terms of Subordination Schedule II Commitments Schedule III Addresses for Notices EXHIBITS: Exhibit A Form of Borrowing Notice Exhibit B Form of Bid Loan Request Exhibit C Form of Bid Loan Offer Exhibit D Form of Bid Loan Confirmation Exhibit E Form of Loan Assignment Exhibit F Form of Commitment Transfer Supplement Exhibit G Form of Opinion of General Counsel to the Borrowers Exhibit H Form of Opinion of Special New York Counsel to the Borrowers Exhibit I Form of Extension Request Exhibit J Form of Form 1001 Tax Letter Exhibit K Form of Form 4224 Tax Letter Exhibit L Form of Agreement Exhibit M Form of Promissory Note -iv- CREDIT AGREEMENT, dated as of December 15, 1993, among DEERE & COMPANY, a Delaware corporation (the "COMPANY"), JOHN DEERE CAPITAL CORPORATION, a Delaware corporation (the "CAPITAL CORPORATION"), the several financial institutions parties hereto (collectively, the "BANKS", and individually, a "BANK"), CHEMICAL BANK, a New York banking corporation, as administrative agent for the Banks hereunder (in such capacity, the "ADMINISTRATIVE AGENT"), DEUTSCHE BANK AG CHICAGO BRANCH, an Illinois state licensed branch of a German banking corporation, as auction agent for the Banks hereunder (in such capacity, the "AUCTION AGENT"), CHEMICAL BANK and DEUTSCHE BANK AG CHICAGO BRANCH, as managing agents (together, the "MANAGING AGENTS"), and the co-agents identified on the signature pages hereof (collectively, the "CO- AGENTS"). The parties hereto hereby agree as follows: SECTION 1. DEFINITIONS 1.1 DEFINED TERMS. As used in this Agreement, the following terms have the following meanings: "ABR": at any particular date, the higher of (a) the rate of interest per annum publicly announced by Chemical for such date as its prime rate in effect at its principal office in New York City and (b) .5% per annum above the rate set forth for such date or, if such date is not a Business Day, the next preceding Business Day, opposite the caption "Federal Funds (Effective)" in the weekly statistical release designated as "H.15(519)" (or any successor publication) published by the Board of Governors of the Federal Reserve System. The prime rate is not intended to be the lowest rate of interest charged by Chemical in connection with extensions of credit to debtors. "ABR LOANS": Committed Rate Loans at such time as they are made and/or being maintained at a rate of interest based upon the ABR. "ABSOLUTE RATE BID LOAN": any Bid Loan made pursuant to an Absolute Rate Bid Loan Request. "ABSOLUTE RATE BID LOAN REQUEST": any Bid Loan Request requesting the Banks to offer to make Bid Loans at an absolute rate (as opposed to a rate composed of the Applicable Index Rate PLUS (or MINUS) a margin). "ADMINISTRATIVE AGENT": as defined in the preamble hereto. "AGENT": the Administrative Agent or the Auction Agent, as the context shall require; together, the "AGENTS". 2 "AGREEMENT": this Credit Agreement, as amended, supplemented or modified from time to time. "APPLICABLE INDEX RATE": in respect of any Bid Loan requested pursuant to an Index Rate Bid Loan Request, the Eurodollar Rate applicable to the Interest Period for such Bid Loan. "APPLICABLE MARGIN": for each Type of Committed Rate Loan the rate per annum set forth below:
ABR Eurodollar C/D Rate Loans Loans Loans ----- ---------- -------- 0% .25% .375%
"ASSESSMENT RATE": with respect to each day during each Interest Period for a C/D Rate Loan, the net annual assessment rate in effect two Business Days prior to the first day of such Interest Period which is payable by a member of the Bank Insurance Fund classified as well capitalized and within supervisory subgroup "A" (or a comparable successor assessment risk classification) within the meaning of 12 C.F.R. SECTION 327.3(d) (or any successor provision) to the Federal Deposit Insurance Corporation (or any successor) for such Corporation's (or such successor's) insuring time deposits at offices of such institution in the United States. "ATTRIBUTABLE DEBT": as defined in subsection 6.2(b)(ii). "AUCTION AGENT": as defined in the preamble hereto. "AVAILABLE COMMITMENT": as to any Bank, at a particular time, an amount equal to the difference between (a) the amount of such Bank's Commitment at such time and (b) the aggregate unpaid principal amount at such time of all Loans made by such Bank; collectively, as to all the Banks, the "AVAILABLE COMMITMENTS". "BANK" and "BANKS": as defined in the preamble hereto. "BASE RATE": with respect to each day during each Interest Period for a C/D Rate Loan, (a) the rate determined by the Administrative Agent to be the rate set forth in H.15(519) (published by the Federal Reserve Bank of New York) for such Interest Period under the caption "CDs (Secondary Market)", or, if on the first day of such Interest Period such rate for such Interest Period is not yet published in H.15(519), the rate for such Interest Period will be the rate determined by the Administrative Agent to be the rate set forth in Composite 3:30 P.M. 3 Quotations for U.S. Government Securities (published by the Federal Reserve Bank of New York) for that day in respect of such Interest Period under the caption "Certificates of Deposit" or (b), if on the first day of such Interest Period, the appropriate rate for such Interest Period is not yet published in either H.15(519) or Composite 3:30 P.M. Quotations for U.S. Government Securities, the rate for such Interest Period will be the arithmetic average (rounded upward to the nearest 1/100 of 1%) of the respective rates notified to the Administrative Agent by the Reference Banks as the rates per annum bid at 10:00 A.M. (New York City time) (or as soon thereafter as practicable) on the first day of such Interest Period by a total of three certificate of deposit dealers located in New York City and of recognized standing selected by each Reference Bank for the purchase at face value from such Reference Bank of its certificates of deposit in an amount comparable to the C/D Rate Loan of such Reference Bank to which such Interest Period applies and having a maturity comparable to such Interest Period. "BENEFITTED BANK": as defined in subsection 10.6. "BID LOAN": each loan (other than Negotiated Rate Loans) made pursuant to subsection 2.2; the aggregate amount advanced by a Bid Loan Bank pursuant to subsection 2.2 on each Borrowing Date shall constitute one Bid Loan, or more than one Bid Loan if so specified by the relevant Loan Assignee in its request for promissory notes pursuant to subsection 10.5(c). "BID LOAN BANKS": the collective reference to each Bank designated from time to time as a Bid Loan Bank by a Borrower (for purposes of Bid Loans to such Borrower) by written notice to the Auction Agent and the Administrative Agent and which has not been removed as a Bid Loan Bank by such Borrower by written notice to the Auction Agent and the Administrative Agent (each of which notices the Auction Agent shall transmit to each such affected Bank). "BID LOAN CONFIRMATION": each confirmation by the Company or the Capital Corporation of its acceptance of Bid Loan Offers, which Bid Loan Confirmation shall be substantially in the form of Exhibit D and shall be delivered to the Auction Agent by facsimile transmission or by telephone, immediately confirmed by facsimile transmission. "BID LOAN OFFER": each offer by a Bid Loan Bank to make Bid Loans pursuant to a Bid Loan Request, which Bid Loan Offer shall contain the information specified in Exhibit C, and shall be delivered to the Auction Agent by facsimile transmission or by telephone, immediately confirmed by facsimile transmission. 4 "BID LOAN REQUEST": each request by a Borrower for Bid Loan Banks to submit bids to make Bid Loans, which shall contain the information in respect of such requested Bid Loans specified in Exhibit B and shall be delivered to the Auction Agent by facsimile transmission or by telephone, immediately confirmed by facsimile transmission. "BORROWER": the Company or the Capital Corporation; collectively, the "BORROWERS". "BORROWING DATE": in respect of any Loan, the date such Loan is made. "BUSINESS DAY": a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close. "CANCELLED BANK": any Bank that has the whole or any part of its Commitment cancelled under subsection 2.13(a), (b) or (c), subsection 2.16(c) or subsection 2.17(b) or the Commitment of which has expired under subsection 2.16(a). "CAPITAL CORPORATION": as defined in the preamble hereto. "C/D RATE": with respect to each day during the Interest Period for a C/D Rate Loan, a rate per annum equal to the following determined for such day: Base Rate ------------------------- + Assessment Rate 1.00 - Reserve Percentage "C/D RATE LOANS": Committed Rate Loans at such time as they are made and/or being maintained at a rate of interest based upon a C/D Rate. "CHEMICAL": Chemical Bank, a New York banking corporation. "CLOSING DATE": the date on which each of the conditions precedent specified in subsection 4.1 shall have been satisfied (or compliance therewith shall have been waived by the Required Banks hereunder). "CO-AGENT": as defined in the preamble hereto. "CODE": the Internal Revenue Code of 1986, as amended from time to time. "COMMITMENT": as to any Bank, the amount set opposite such Bank's name on Schedule II, as such amount may be reduced as provided herein; collectively, as to all the Banks, the "COMMITMENTS". 5 "COMMITMENT EXPIRATION DATE": as defined in subsection 2.16(a). "COMMITMENT PERCENTAGE": as to any Bank at any time, the percentage which such Bank's Commitment at such time constitutes of all the Commitments at such time; collectively, as to all the Banks, the "COMMITMENT PERCENTAGES". "COMMITMENT PERIOD": the period from and including the Closing Date to but not including the Termination Date or such earlier date on which the Commitments shall terminate as provided herein. "COMMITMENT TRANSFER SUPPLEMENT": a Commitment Transfer Supplement, substantially in the form of Exhibit F. "COMMITTED RATE LOANS": each loan made pursuant to subsection 2.1. "COMMONLY CONTROLLED ENTITY": in relation to a Borrower, an entity, whether or not incorporated, which is under common control with such Borrower within the meaning of Section 414(b) or (c) of the Code. "COMPANY": as defined in the preamble hereto. "CONSOLIDATED CAPITAL BASE": at a particular time for the Capital Corporation and its consolidated Subsidiaries, the sum of (a) the amount shown opposite the item "Total stockholder's equity" on the consolidated balance sheet of the Capital Corporation and its consolidated Subsidiaries PLUS (b) the principal amounts outstanding under the 9.35% Subordinated Debentures due 2003, the 8-5/8% Subordinated Debentures due 2019 and the 9-5/8% Subordinated Notes due 1998 of the Capital Corporation (in each case so long as the subordination terms thereof continue to be as favorable to the Administrative Agent and the Banks as in existence on the Closing Date) and all indebtedness of the Capital Corporation and its consolidated Subsidiaries for borrowed money subordinated (on terms no less favorable to the Administrative Agent and the Banks than the terms of subordination set forth on Schedule I) to the indebtedness which may be incurred hereunder by the Capital Corporation, PROVIDED that the sum of clauses (a) and (b) hereof as at the end of a fiscal quarter of the Capital Corporation and its consolidated Subsidiaries (including the last quarter of a fiscal year of the Capital Corporation and its consolidated Subsidiaries) shall be determined by reference to the publicly available consolidated balance sheet of the Capital Corporation and its consolidated Subsidiaries as at the end of such fiscal quarter and after such adjustments, if any, as may be required so that the sum of the amounts 6 referred to in clauses (a) and (b) is determined in accordance with GAAP. "CONSOLIDATED NET WORTH": as defined in subsection 6.2(b)(ii). "CONSOLIDATED SENIOR DEBT": at a particular time for the Capital Corporation and its consolidated Subsidiaries, indebtedness for borrowed money other than the 9.35% Subordinated Debentures due 2003, the 8-5/8% Subordinated Debentures due 2019 and the 9-5/8% Subordinated Notes due 1998 of the Capital Corporation (in each case so long as the subordination terms thereof continue to be as favorable to the Administrative Agent and the Banks as such terms in existence on the Closing Date) and any such indebtedness that is subordinated, on terms no less favorable to the Administrative Agent and the Banks than the terms of subordination set forth on Schedule I, to the indebtedness which may be incurred hereunder by the Capital Corporation, PROVIDED that the amount of such indebtedness for borrowed money (other than such subordinated indebtedness) as at the end of a fiscal quarter of the Capital Corporation and its consolidated Subsidiaries (including the last quarter of a fiscal year of the Capital Corporation and its consolidated Subsidiaries) shall be determined by reference to the publicly available consolidated balance sheet of the Capital Corporation and its consolidated Subsidiaries as at the end of such fiscal quarter and after such adjustments, if any, as may be required so that such amount is determined in accordance with GAAP. "CONSOLIDATED TANGIBLE NET WORTH": at a particular time for a Borrower and its consolidated Subsidiaries, the excess of the amount shown opposite the item "Total stockholder's equity" on the consolidated balance sheet of such Borrower and its consolidated Subsidiaries over the aggregate amount shown on such balance sheet for any intangible assets, including, without limitation, goodwill, franchises, licenses, patents, trademarks, trade-names, copyrights, service marks and brand names, PROVIDED that such excess amount shall be determined (a) with respect to the Company and its consolidated Subsidiaries as at the end of any of their fiscal quarters (including the last quarter of any of their fiscal years), by reference to the publicly available consolidated balance sheet of the Company and its consolidated Subsidiaries as at the end of such fiscal quarter and (b) with respect to the Capital Corporation and its consolidated Subsidiaries as at the end of any of their fiscal quarters (including the last quarter of any of their fiscal years), by reference to the publicly available consolidated balance sheet of the Capital Corporation and its consolidated Subsidiaries as at the end of such fiscal quarter, in each such case after such adjustments, if any, 7 as may be required so that such excess is determined in accordance with GAAP. "CONTRACTUAL OBLIGATION": as to any Person, any provision of any security issued by such Person or of any agreement, instrument or undertaking to which such Person is a party or by which it or any of its property is bound. "DEBT": as defined in subsection 6.2. "DEFAULT": any of the events specified in Section 8, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition, event or act has been satisfied. "DOLLARS" and "$": dollars in lawful currency of the United States of America. "DOMESTIC DOLLAR LOANS": the collective reference to C/D Rate Loans and ABR Loans. "ERISA": the Employee Retirement Income Security Act of 1974, as amended from time to time. "EURODOLLAR LOANS": Committed Rate Loans at such time as they are made and/or being maintained at a rate of interest based upon a Eurodollar Rate. "EURODOLLAR RATE": with respect to each day during each Interest Period for a Eurodollar Loan and for each Index Rate Bid Loan, (a) the rate determined by the Administrative Agent to be the arithmetic mean of the offered rates for deposits in Dollars for a period of such Interest Period which appear on the Reuters Screen LIBO Page as of 11:00 a.m., London time, on the date that is two Working Days prior to the beginning of such Interest Period or (b) if fewer than two offered rates appear, the rate in respect of such Interest Period will be the rate per annum equal to the average (rounded upwards, if necessary, to the nearest whole multiple of one sixteenth of one percent) of the respective rates notified to the Administrative Agent by the Reference Banks as the rate at which such Reference Bank is offered Dollar deposits two Working Days prior to the beginning of such Interest Period in the interbank eurodollar market where the eurodollar and foreign currency and exchange operations in respect of its Eurodollar Loans are customarily conducted at or about 10:00 a.m., New York City time, for delivery on the first day of such Interest Period for the number of days comprised therein and in an amount (i) in the case of Eurodollar Loans, comparable to the amount of the Eurodollar Loan of such Reference Bank to be outstanding during such Interest Period and (ii) in the case of an Index Rate Bid Loan by any Bank, equal to the 8 principal amount of all Index Rate Bid Loans to which such Interest Period applies. "EVENT OF DEFAULT": any of the events specified in Section 8, PROVIDED that any requirement for the giving of notice, the lapse of time, or both, or any other condition, event or act has been satisfied. "EXTENSION REQUEST": each request by the Borrowers made pursuant to subsection 2.16 for the Banks to extend this Agreement, which shall contain the information in respect of such extension specified in Exhibit I and shall be delivered to the Administrative Agent in writing. "FIXED CHARGES": for any particular period for the Capital Corporation and its consolidated Subsidiaries, all of the Capital Corporation's and its consolidated Subsidiaries' consolidated interest on indebtedness for borrowed money, amortization of discounts of indebtedness for borrowed money, the portion of rentals under financing leases deemed to represent interest and rentals under operating leases, PROVIDED that such amounts for a fiscal quarter of the Capital Corporation and its consolidated Subsidiaries (including the last quarter of a fiscal year of the Capital Corporation and its consolidated Subsidiaries) shall be determined by reference to the publicly available consolidated statement of income of the Capital Corporation and its consolidated Subsidiaries for or covering such fiscal quarter and after such adjustments, if any, as may be required so that such amounts are determined in accordance with GAAP. "FOREIGN TAXES": as defined in subsection 2.17(a). "GAAP": generally accepted accounting principles in the United States of America as applied in the preparation of financial statements of the Company or the Capital Corporation, respectively, as of the fiscal year ended October 31, 1992. "GOVERNMENTAL AUTHORITY": any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "IMPORTANT PROPERTY": (a) any manufacturing plant, including land, all buildings and other improvements thereon, and all manufacturing machinery and equipment located therein, owned and used by the Company or a Restricted Subsidiary primarily for the manufacture of products to be sold by the Company or such Restricted Subsidiary, (b) the executive office and administrative building of the Company in Moline, Illinois, and (c) 9 research and development facilities, including land and buildings and other improvements thereon and research and development machinery and equipment located therein, in each case, owned and used by the Company or a Restricted Subsidiary; except in any case property of which the aggregate fair value as determined by the Board of Directors of the Company does not at the time exceed 1% of Consolidated Net Worth, as shown on the audited consolidated balance sheet contained in the latest annual report to stockholders of the Company. "INDENTURE": the Indenture dated February 1, 1991 between the Company and Continental Bank, National Association, as Trustee. "INDEX RATE BID LOAN": any Bid Loan made at an interest rate based upon the Applicable Index Rate. "INDEX RATE BID LOAN REQUEST": any Bid Loan Request requesting the Banks to offer to make Index Rate Bid Loans at an interest rate equal to the Applicable Index Rate PLUS (or MINUS) a margin. "INTEREST PAYMENT DATE": (a) as to any ABR Loan, the last Business Day of each March, June, September and December, commencing on the first of such days to occur after such ABR Loan is made or a C/D Rate Loan or a Eurodollar Loan is converted to an ABR Loan and (b) as to any Eurodollar Loan or C/D Rate Loan, the last day of each Interest Period applicable thereto, PROVIDED that as to any Eurodollar Loan in respect of which a Borrower has selected an Interest Period of six months and any C/D Rate Loan in respect of which a Borrower has selected an Interest Period of 180 days, interest shall also be paid on the day which is three months or 90 days, as the case may be, after the beginning of such Interest Period. "INTEREST PERIOD": (a) with respect to any Eurodollar Loan, the period commencing on the Borrowing Date, the date any ABR Loan or C/D Rate Loan is converted to a Eurodollar Loan or the date any Eurodollar Loan is continued as a Eurodollar Loan, as the case may be, with respect to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by a Borrower in its notice of borrowing as provided in subsection 2.1(c); (b) with respect to any C/D Rate Loan, the period commencing on the Borrowing Date, the date any ABR Loan or Eurodollar Loan is converted to a C/D Rate Loan or the date any C/D Rate Loan is continued as a C/D Rate Loan, as the case may be, with respect to such C/D Rate Loan and ending 30, 90 or 180 days thereafter, as selected by a Borrower in its notice of borrowing as provided in subsection 2.1(c); 10 (c) with respect to any Bid Loan, the period commencing on the Borrowing Date with respect to such Bid Loan and ending on the date not less than seven days nor more than six months thereafter, as specified by a Borrower in its Bid Loan Request as provided in subsection 2.2(b); and (d) with respect to any Negotiated Rate Loan, the period or periods commencing on the Borrowing Date with respect to such Negotiated Rate Loan or the last day of any Interest Period with respect thereto and ending on the dates as shall be mutually agreed upon between the relevant Borrower and the relevant Bank; PROVIDED THAT, all of the foregoing provisions relating to Interest Periods are subject to the following: (i) if any Interest Period pertaining to a Eurodollar Loan or an Index Rate Bid Loan would otherwise end on a day which is not a Working Day, that Interest Period shall be extended to the next succeeding Working Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Working Day; (ii) if any Interest Period pertaining to an ABR Loan, a C/D Rate Loan or an Absolute Rate Bid Loan would otherwise end on a day which is not a Business Day, that Interest Period shall be extended to the next succeeding Business Day; (iii) any Interest Period pertaining to a Eurodollar Loan having an Interest Period of one, two, three or six months or an Index Rate Bid Loan having an Interest Period of one, two, three, four, five or six months, that begins on the last Working Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Working Day of a calendar month; (iv) Interest Periods shall be deemed available only if the Required Banks shall not have advised the Administrative Agent that the C/D Rate or the Eurodollar Rate, as the case may be, determined by the Administrative Agent on the basis of the applicable quotes will not adequately and fairly reflect the cost to such Banks of maintaining or funding their Committed Rate Loans bearing interest based on the C/D Rate or the Eurodollar Rate, as the case may be, determined for such Interest Period. The Administrative Agent shall notify the Borrowers and each Bank promptly after having been advised by the Required Banks that a C/D 11 Rate or Eurodollar Rate will not so adequately and fairly reflect such Banks' costs as aforesaid. If a requested Interest Period shall be unavailable in accordance with the foregoing sentence, the proposed Borrower may (A) in accordance with the provisions (including any requirements for notification) of subsection 2.1 request, at its option, that the requested Committed Rate Loans be made or maintained as C/D Rate Loans, if applicable, or ABR Loans or (B) withdraw the request for such Committed Rate Loans for which the Interest Period was unavailable by giving notice of such election to the Administrative Agent in accordance with subsection 2.11; PROVIDED, that if the Administrative Agent does not receive any notice hereunder, such Borrower shall be deemed to have requested ABR Loans; (v) with respect to Loans made by an Objecting Bank, no Interest Periods with respect to such Loans shall end after the second anniversary of such Objecting Bank's Commitment Expiration Date; and (vi) no Interest Periods shall end after the second anniversary of the Termination Date. "LOANS": the collective reference to the Committed Rate Loans, the Bid Loans and the Negotiated Rate Loans. "LOAN ACCOUNT": as defined in subsection 2.3; collectively, the "LOAN ACCOUNTS". "LOAN ASSIGNEES": as defined in subsection 10.5(c). "LOAN ASSIGNMENT": a Loan Assignment, substantially in the form of Exhibit E. "MAJORITY BANKS": at any particular time, Banks having Commitment Percentages aggregating more than fifty percent; PROVIDED that at any time after the Commitment Expiration Date with respect to any Objecting Bank, "MAJORITY BANKS" means Banks whose Exposure aggregates more than fifty percent of the aggregate Exposure of all the Banks. For purposes of this definition, the "EXPOSURE" of (x) an Objecting Bank at any time shall be the aggregate outstanding principal amount of its Loans and (y) any other Bank at any time shall be the Commitment of such Bank. "MANAGING AGENTS": as defined in the preamble hereto. "MARGIN STOCK": as defined in Regulation U of the Board of Governors of the Federal Reserve System. "MORTGAGE": as defined in subsection 6.2. 12 "NEGOTIATED RATE LOAN": each Loan made to a Borrower by a Bank pursuant to a Negotiated Rate Loan Request in such principal amount, for such number of Interest Periods (subject to the proviso to the definition of "Interest Period" in this subsection 1.1) and having such interest rate(s) and repayment terms as shall, in each case, be mutually agreed upon between such Borrower and such Bank. "NEGOTIATED RATE LOAN REQUEST": each request by a Borrower for a Bank to make Negotiated Rate Loans, which shall be delivered to such Bank in writing, by facsimile transmission, or by telephone, immediately confirmed in writing, and which shall specify the amount to be borrowed and the proposed Borrowing Date. "NET EARNINGS AVAILABLE FOR FIXED CHARGES": for any particular period for the Capital Corporation and its consolidated Subsidiaries, consolidated net earnings of the Capital Corporation and such Subsidiaries for such period without deduction of Fixed Charges and without deduction of federal, state or other income taxes, PROVIDED that such net earnings for a fiscal quarter of the Capital Corporation and its consolidated Subsidiaries (including the last quarter of a fiscal year of the Capital Corporation and its consolidated Subsidiaries) shall be determined by reference to the publicly available statement of income of the Capital Corporation and its consolidated Subsidiaries for or covering such fiscal quarter and after such adjustments, if any, as may be required so that such net earnings are determined in accordance with GAAP, except that earned investment tax credits may be included as revenue in the consolidated income statement of the Capital Corporation and its consolidated Subsidiaries, rather than as an offset against the provision for income taxes. "OBJECTING BANKS": as defined in subsection 2.16(a). "PARTICIPANTS": as defined in subsection 10.5(b). "PERSON": an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature, PROVIDED that for purposes of Section 8(h), Person shall also include two or more entities acting as a syndicate or any other group for the purpose of acquiring, holding or disposing of securities of the Company. "PLAN": any pension plan which is covered by Title IV of ERISA and in respect of which either Borrower or a Commonly Controlled Entity is an "employer" as defined in Section 3(5) of ERISA. "PURCHASING BANKS": as defined in subsection 10.5(d). 13 "REFERENCE BANKS": Chemical, Deutsche Bank AG and Morgan Guaranty Trust Company of New York. "REGISTER": as defined in subsection 10.5(e). "REPORT PERIOD": as defined in subsection 2.18. "REPORTABLE EVENT": any of the events set forth in Section 4043(b) of ERISA or the regulations thereunder. "REQUIRED BANKS": at a particular time, Banks having Commitment Percentages aggregating at least 66-2/3%; PROVIDED that (a) as used in subsection 2.16, "Required Banks" means with respect to any Extension Request, at a particular time after the Termination Date has been extended pursuant to such subsection, Banks (i) which are not Objecting Banks with respect to any previous Extension Request and (ii) which have Commitment Percentages aggregating at least 66-2/3% of the aggregate Commitment Percentages of such non-Objecting Banks and (b) as used in any provision other than subsection 2.16 at any time after the Commitment Expiration Date with respect to any Objecting Bank, "REQUIRED BANKS" means Banks whose Exposure aggregates at least 66-2/3% of the aggregate Exposure of all the Banks. For purposes of this definition, the "EXPOSURE" of (x) an Objecting Bank at any time shall be the aggregate outstanding principal amount of its Loans and (y) any other Bank at any time shall be the Commitment of such Bank. "REQUIREMENT OF LAW": as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation, or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. "RESERVES": as defined in subsection 2.13(c). "RESERVE PERCENTAGE": for any day during the Interest Period for a C/D Rate Loan, that percentage (expressed as a decimal) which is in effect on the first day of such Interest Period, as prescribed by the Board of Governors of the Federal Reserve System (or any successor), for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding one billion Dollars in respect of new non-personal time deposits in Dollars in New York City having a maturity comparable to the Interest Period for the relevant C/D Rate Loans and in an amount of $100,000 or more. 14 "RESPONSIBLE OFFICER": of a Borrower, the Chairman, the President, any Executive, Senior or other Vice President, the Treasurer and any Assistant Treasurer of such Borrower. "RESTRICTED MARGIN STOCK": any Margin Stock, the sale, pledge or other disposition of which by the Company or any of its Subsidiaries is in any way restricted by an arrangement with any Bank or any affiliate thereof to the extent that the value thereof (determined in accordance with Regulation U of the Board of Governors of the Federal Reserve System) does not exceed 25% of the value (determined in accordance with such Regulation U) of all the assets subject to such restriction. "RESTRICTED SUBSIDIARY": any Subsidiary of the Company incorporated in the United States of America or Canada (a) which is engaged in, or whose principal assets consist of property used by the Company or any Restricted Subsidiary in, the manufacture of products within the United States of America or Canada or in the sale of products principally to customers located in the United States of America or Canada except any corporation which is a retail dealer in which the Company has, directly or indirectly, an investment, or (b) which the Company shall designate as a Restricted Subsidiary in an officers' certificate signed by two Responsible Officers and delivered to the Administrative Agent. "SALE AND LEASE-BACK TRANSACTION": as defined in subsection 6.3. "SIGNIFICANT SUBSIDIARY": of a Borrower, any Subsidiary of such Borrower the assets, revenues or net worth of which is, at the time of determination, equal to or greater than ten percent of the assets, revenues or net worth, respectively, of such Borrower at such time. "SUBSIDIARY": of a Person, a corporation or other entity of which securities or other ownership interests having ordinary voting power (other than securities or other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other Persons performing similar functions are at the time directly or indirectly owned by such Person or one or more Subsidiaries of such Person, or by such Person and one or more Subsidiaries of such Person. "TERMINATION DATE": the date which is 364 days after the Closing Date or such later date as shall be determined pursuant to the provisions of subsection 2.16 with respect to non-Objecting Banks. "TRANSFEREES": as defined in subsection 10.5(g). 15 "TRANSFER EFFECTIVE DATE": as defined in each Commitment Transfer Supplement and each Loan Assignment. "TYPE": as to any Committed Rate Loan, its nature as an ABR Loan, Eurodollar Loan or C/D Rate Loan. "WORKING DAY": any day on which dealings in foreign currencies and exchange between banks may be carried on in London, England and New York, New York. 1.2 OTHER DEFINITIONAL PROVISIONS. (a) All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto. (b) As used herein and in any certificate or other document made or delivered pursuant hereto, accounting terms relating to either Borrower and its Subsidiaries not defined in subsection 1.1, and accounting terms partly defined in subsection 1.1 to the extent not defined, shall have the respective meanings given to them under GAAP. (c) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, subsection, Schedule and Exhibit references are to this Agreement unless otherwise specified. (d) Unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of the relevant Borrower. SECTION 2. THE COMMITTED RATE LOANS; THE BID LOANS; THE NEGOTIATED RATE LOANS; AMOUNT AND TERMS 2.1 THE COMMITTED RATE LOANS. (a) During the Commitment Period, subject to the terms and conditions hereof, each Bank severally agrees to make loans (individually, a "COMMITTED RATE LOAN") to either Borrower from time to time in an aggregate principal amount for both Borrowers at any one time outstanding not to exceed such Bank's Commitment minus the aggregate principal amount of Bid Loans and Negotiated Rate Loans made by such Bank at such time outstanding unless such Bank shall have notified the Administrative Agent in writing that it agrees to make such Committed Rate Loans in an aggregate principal amount for both Borrowers at any one time outstanding not to exceed such Bank's Commitment minus the portion of the aggregate principal amount of the Bid Loans and Negotiated Rate Loans made by such Bank at such time outstanding specified in such notice, PROVIDED, HOWEVER, that the aggregate principal amount of Loans made by non-Objecting Banks at any time outstanding shall not exceed the aggregate amount of the Commitments at such time. 16 During the Commitment Period, either Borrower may use the Commitments by borrowing, repaying and reborrowing, all in accordance with the terms and conditions hereof. (b) The Committed Rate Loans may be either (i) Eurodollar Loans, (ii) ABR Loans, (iii) C/D Rate Loans or (iv) a combination thereof as determined by the relevant Borrower. (c) Either Borrower may borrow Committed Rate Loans on any Working Day, if the borrowing is of Eurodollar Loans, or on any Business Day, if the borrowing is of C/D Rate Loans or ABR Loans; PROVIDED, HOWEVER, that a Responsible Officer of such Borrower shall give the Administrative Agent irrevocable notice thereof (which notice must be received by the Administrative Agent (i) prior to 12:00 Noon, New York City time, three Working Days prior to the requested Borrowing Date, in the case of Eurodollar Loans, (ii) prior to 12:00 Noon, New York City time, two Business Days prior to the requested Borrowing Date in the case of C/D Rate Loans, (iii) except as provided in clause (iv) hereof, prior to 12:00 Noon, New York City time, one Business Day prior to the requested Borrowing Date, in the case of ABR Loans and (iv) prior to 11:00 A.M., New York City time, on the requested Borrowing Date in the case of ABR Loans up to an aggregate principal amount for both Borrowers not to exceed 25% of the Commitments on such Borrowing Date). Each such notice shall be given in writing or by facsimile transmission substantially in the form of Exhibit A (with appropriate insertions) or shall be given by telephone (specifying the information set forth in Exhibit A) promptly confirmed by notice given in writing or by facsimile transmission substantially in the form of Exhibit A (with appropriate insertions). On the day of receipt of any such notice from either Borrower, the Administrative Agent shall promptly notify each Bank thereof. Subject to paragraph (e) below, each Bank will make the amount of its share of each borrowing available to the Administrative Agent for the account of such Borrower at the office of the Administrative Agent set forth in subsection 10.2 at 11:00 A.M. (or 2:00 P.M., in the case of ABR Loans requested pursuant to clause (iv) above), New York City time, on the Borrowing Date requested by such Borrower in funds immediately available to the Administrative Agent as the Administrative Agent may direct. The proceeds of all such Committed Rate Loans will be made available promptly to such Borrower by the Administrative Agent at the office of the Administrative Agent specified in subsection 10.2 by crediting the account of such Borrower on the books of such office of the Administrative Agent with the aggregate of the amount made available to the Administrative Agent by the Banks and in like funds as received by the Administrative Agent. (d) All Committed Rate Loans made to each Borrower shall be repaid in full by such Borrower on or before the second anniversary of the Termination Date; PROVIDED, that Committed Rate Loans made by Objecting Banks shall be repaid as provided in subsection 2.16(b). 17 2.2 THE BID LOANS; THE NEGOTIATED RATE LOANS. (a) Either Borrower may borrow Bid Loans or Negotiated Rate Loans from time to time on any Business Day (in the case of Bid Loans made pursuant to an Absolute Rate Bid Loan Request), any Working Day (in the case of Bid Loans made pursuant to an Index Rate Bid Loan Request) or, in the case of Negotiated Rate Loans, on such days as shall be mutually agreed upon between the relevant Borrower and the applicable Bank, in each case during the Commitment Period and in the manner set forth in this subsection 2.2 and in amounts such that the aggregate principal amount of Loans at any time outstanding shall not exceed the aggregate amount of the Commitments at such time. Notwithstanding any other provision of this Agreement, the aggregate principal amount of the outstanding Bid Loans and/or Negotiated Rate Loans made by any Bank may at any time (but shall not be required to) exceed the Commitment of such Bank so long as the aggregate principal amount of the Loans outstanding by all Banks does not exceed the aggregate amount of the Commitments at such time. (b)(i) Either Borrower shall request Bid Loans or Negotiated Rate Loans by delivering (A) in the case of an Index Rate Bid Loan, a Bid Loan Request to the Auction Agent, c/o Deutsche Bank AG New York Branch, 31 West 52nd Street, New York, New York 10019, Attention: Loan Syndications, Telephone: (212) 474-7041, Facsimile: (212) 474-7048, not later than 12:00 Noon (New York City time) four Working Days prior to the proposed Borrowing Date, (B) in the case of an Absolute Rate Bid Loan, a Bid Loan Request to the Auction Agent at the address set forth in clause (A) of this subsection 2.2(b)(i) not later than 10:00 A.M. (New York City time) one Business Day prior to the proposed Borrowing Date or (C) in the case of a Negotiated Rate Loan, a Negotiated Rate Loan Request to any Bank at such time as the applicable Borrower and the applicable Bank shall agree. Each Bid Loan Request may solicit bids for Bid Loans in an aggregate principal amount of $25,000,000 or an integral multiple of $5,000,000 in excess thereof and for not more than three alternative Interest Periods for such Bid Loans. The Auction Agent shall promptly notify each Bid Loan Bank and the Administrative Agent by facsimile transmission or by telephone, immediately confirmed by facsimile transmission, of the contents of each Bid Loan Request received by it. (ii) In the case of an Index Rate Bid Loan Request, upon receipt of notice from the Auction Agent of the contents of such Bid Loan Request, any Bid Loan Bank that elects, in its sole discretion, to do so, shall irrevocably offer to make one or more Bid Loans at the Applicable Index Rate plus or minus a margin for each such Bid Loan determined by such Bid Loan Bank, in its sole discretion. Any such irrevocable offer shall be made by delivering a Bid Loan Offer to the Auction Agent at the address set forth in clause (i)(A) above before 10:30 A.M. (New York City time) three Working Days before the proposed Borrowing Date, setting forth the maximum amount of Bid Loans for each Interest Period, and the aggregate maximum amount for all Interest 18 Periods, which such Bank would be willing to make and the margin above or below the Applicable Index Rate at which such Bid Loan Bank is willing to make each such Bid Loan. The Auction Agent shall advise the relevant Borrower before 11:00 A.M. (New York City time) three Working Days before the proposed Borrowing Date of the contents of each such Bid Loan Offer received by it. If the Auction Agent in its capacity as a Bid Loan Bank shall, in its sole discretion, elect to make any such offer, it shall advise such Borrower of the contents of its Bid Loan Offer before 10:15 A.M. (New York City time) three Working Days before the proposed Borrowing Date. (iii) In the case of an Absolute Rate Bid Loan Request, upon receipt of notice from the Auction Agent of the contents of such Bid Loan Request, any Bid Loan Bank that elects, in its sole discretion, to do so, shall irrevocably offer to make one or more Bid Loans at a rate or rates of interest for each such Bid Loan determined by such Bid Loan Bank in its sole discretion. Any such irrevocable offer shall be made by delivering a Bid Loan Offer to the Auction Agent at the address set forth in clause (i)(A) of this subsection 2.2(b) before 9:30 A.M. (New York City time) on the proposed Borrowing Date, setting forth the maximum amount of Bid Loans for each Interest Period, and the aggregate maximum amount for all Interest Periods, which such Bid Loan Bank would be willing to make and the rate or rates of interest at which such Bid Loan Bank is willing to make each such Bid Loan. The Auction Agent shall advise the relevant Borrower before 10:00 A.M. (New York City time) on the proposed Borrowing Date of the contents of each such Bid Loan Offer received by it. If the Auction Agent in its capacity as a Bid Loan Bank shall, in its sole discretion, elect to make any such offer, it shall advise such Borrower of the contents of its Bid Loan Offer before 9:15 A.M. (New York City time) on the proposed Borrowing Date. (iv) The relevant Borrower shall before 11:30 A.M. (New York City time) three Working Days before the proposed Borrowing Date (in the case of Bid Loans requested by an Index Rate Bid Loan Request) and before 10:30 A.M. (New York City time) on the proposed Borrowing Date (in the case of Bid Loans requested by an Absolute Rate Bid Loan Request) either, in its absolute discretion: (A) cancel such Bid Loan Request by giving the Auction Agent telephone notice to that effect, or (B) accept one or more of the offers made by any Bid Loan Bank or Bid Loan Banks pursuant to clause (ii) or clause (iii) of this subsection 2.2(b), as the case may be, by giving telephone notice to the Auction Agent (immediately confirmed by delivery to the Auction Agent at the address set forth in clause (i)(A) of this subsection 2.2(b) of a Bid Loan Confirmation) of the amount of Bid Loans for each relevant Interest Period to be made by each Bid Loan Bank 19 (which amount shall be equal to or less than the maximum amount for such Interest Period specified in the Bid Loan Offer of such Bid Loan Bank, and for all Interest Periods included in such Bid Loan Offer shall be equal to or less than the aggregate maximum amount specified in such Bid Loan Offer for all such Interest Periods) and reject any remaining offers made by Bid Loan Banks pursuant to clause (ii) or clause (iii) above, as the case may be; PROVIDED, HOWEVER, that (x) such Borrower may not accept offers for Bid Loans for any Interest Period in an aggregate principal amount in excess of the maximum principal amount requested for such Interest Period in the related Bid Loan Request, (y) if such Borrower accepts any such offers, it must accept offers strictly based upon pricing for such relevant Interest Period and upon no other criteria whatsoever and (z) if two or more Bid Loan Banks submit offers for any Interest Period at identical pricing and such Borrower accepts any of such offers but does not wish to borrow the total amount offered by such Bid Loan Banks with such identical pricing, such Borrower shall accept offers from all of such Bid Loan Banks in amounts allocated among them PRO RATA according to the amounts offered by such Bid Loan Banks (or as nearly PRO RATA as shall be practicable, after giving effect to the requirement that Bid Loans made by a Bid Loan Bank on a Borrowing Date for each relevant Interest Period shall be in a principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof, it being agreed that to the extent that it is not possible to make allocations in accordance with the provisions of this clause (z) such allocations shall be made in accordance with the instructions of such Borrower, it being understood that in no event shall any Bank be obligated to make any Bid Loan in a principal amount less than $5,000,000). (v) If such Borrower notifies the Auction Agent that a Bid Loan Request is cancelled pursuant to clause (iv)(A) of this subsection 2.2(b), the Auction Agent shall give prompt telephone notice thereof to the Bid Loan Banks and the Administrative Agent, and the Bid Loans requested thereby shall not be made. (vi) (A) If such Borrower accepts pursuant to clause (iv)(B) of this subsection 2.2(b) one or more of the offers made by any Bid Loan Bank or Bid Loan Banks pursuant to a Bid Loan Request, the Auction Agent shall promptly notify by telephone the Administrative Agent and each Bid Loan Bank which has made such an offer of the aggregate amount of such Bid Loans to be made on such Borrowing Date for each Interest Period and of the acceptance or rejection of any offers to make such Bid Loans made by such Bid Loan Bank. Each Bid Loan Bank which is to make a Bid Loan pursuant to a Bid Loan Request shall, before 12:00 Noon (New York City time) on the Borrowing Date specified in the Bid Loan Request applicable thereto, make available to the Administrative Agent at its office set forth in subsection 20 10.2 the amount of Bid Loans to be made by such Bid Loan Bank, in immediately available funds. The Administrative Agent will make such funds available to such Borrower as soon as practicable on such date at the Administrative Agent's aforesaid address. (B) If such Borrower and any Bank agree to the terms of a Negotiated Rate Loan to be made on a Borrowing Date pursuant to a Negotiated Rate Loan Request, such Borrower and such Bank shall promptly notify by telephone the Administrative Agent of the aggregate amount of Negotiated Rate Loans to be made on such Borrowing Date and the respective Interest Periods therefor. Each Bank which is to make a Negotiated Rate Loan shall, at such time, on such Borrowing Date and at such location as shall be mutually agreed upon between such Borrower and such Bank, make avail- able to such Borrower the amount of Negotiated Rate Loans to be made by such Bank, in immediately available funds. (C) As soon as practicable after each Borrowing Date for Bid Loans and Negotiated Rate Loans, the Administrative Agent shall notify each Bank of the aggregate amount of Bid Loans or Negotiated Rate Loans advanced pursuant to a Bid Loan Request or Negotiated Rate Loan Request on such Borrowing Date and the respective Interest Periods therefor. (c) Within the limits and on the conditions set forth in this subsection 2.2, each Borrower may from time to time borrow under this subsection 2.2, repay pursuant to paragraph (d) below, and reborrow under this subsection 2.2. (d) Each Borrower shall repay to the Administrative Agent for the account of each Bid Loan Bank (or the Loan Assignee in respect thereof, as the case may be) which has made a Bid Loan to such Borrower on the last day of the Interest Period for each Bid Loan (such Interest Period being that specified by such Borrower for repayment of such Bid Loan in the related Bid Loan Request) the then unpaid principal amount of such Bid Loan. Each Borrower shall repay to each Bank which has made a Negotiated Rate Loan to such Borrower (or the Loan Assignee in respect thereof, as the case may be) the principal thereof as agreed by such Borrower and such Bank. (e) Each Borrower shall pay interest on the unpaid principal amount of each Bid Loan and each Negotiated Rate Loan borrowed by such Borrower from the applicable Borrowing Date to the stated maturity date thereof, in the case of a Bid Loan, at the rate of interest determined pursuant to paragraph (b) of this subsection 2.2, and, in the case of a Negotiated Rate Loan, as agreed by such Borrower and the relevant Bank (calculated on the basis of a 360 day year for actual days elapsed), payable on the interest payment date or dates (i) specified by such Borrower for such Bid Loan in the related Bid Loan Request and (ii) mutually agreed upon between such Borrower and such Bank in the case of 21 Negotiated Rate Loans, PROVIDED that as to any Bid Loan in respect of which the stated maturity date is more than three months after such Borrowing Date, interest shall also be paid on the day which occurs three months after such Borrowing Date. If all or a portion of the principal amount of any Bid Loan shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue principal amount shall, without limiting any rights of any Bank under this Agreement, bear interest from the date on which such payment was due at a rate per annum which is 1% above the rate which would otherwise be applicable to such Bid Loan until the scheduled maturity date with respect thereto and for each day thereafter at a rate per annum which is 1% above the ABR until paid in full (as well after as before judgment). If all or any portion of the principal amount of any Negotiated Rate Loan shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue principal amount shall, without limiting any rights of any Bank under this Agreement, bear interest from the date on which such payment was due at a rate per annum as shall be mutually agreed upon between the relevant Borrower and the relevant Bank. (f) After the first Bid Loan Request has been given hereunder, no Bid Loan Request or Negotiated Rate Loan Request shall be given until at least one Business Day, in the case of an Absolute Rate Bid Loan Request, or one Working Day, in the case of an Index Rate Bid Loan Request, after the earliest to occur of (i) the Borrowing Dates with respect to all prior Bid Loan Requests made pursuant to subsection 2.2(b)(i), (ii) the date on which all Bid Loan Banks have failed to submit Bid Loan Offers with respect to any Bid Loan Requests within the time specified in subsection 2.2(b)(ii) or (iii), as the case may be, and (iii) the date on which the relevant Borrower has cancelled all prior Bid Loan Requests pursuant to subsection 2.2(b)(iv). 2.3 LOAN ACCOUNTS. Each Bank, with respect to its Committed Rate Loans, Bid Loans and Negotiated Rate Loans, and the Administrative Agent, with respect to all Committed Rate Loans and Bid Loans, shall open and maintain in the name of each Borrower loan accounts (as to each Bank, its "LOAN ACCOUNT" applicable to such Borrower) on its books and records setting forth the amounts of principal, interest and other sums paid and payable by such Borrower from time to time hereunder in respect of such Loans, and the obligation of such Borrower to pay or repay, as the case may be, such amounts to such Bank shall be evidenced by such Bank's Loan Account. In case of any dispute, action or proceeding relating to any Committed Rate Loan, Bid Loan or Negotiated Rate Loan, the entries in such records shall constitute PRIMA FACIE evidence of the accuracy of the information set forth therein. In case of discrepancy between the entries in the Administrative Agent's books and records and any Bank's, the entries in the Administrative Agent's books and records shall constitute PRIMA FACIE evidence of the accuracy of the information set forth therein. 22 2.4 FEES. (a) The Company and the Capital Corporation jointly and severally agree to pay to the Administrative Agent for the account of each Bank a facility fee (i) from and including the Closing Date to but excluding the Termination Date, computed at a rate of .08% per annum on the average daily amount of the Commitment of such Bank in effect during the period for which payment is made and (ii) from and including the Termination Date to but excluding the second anniversary of the Termination Date (or such other date on which the Commitments shall be terminated and all Loans repaid in full), computed at a rate of .125% per annum on the amount of the Loans outstanding of such Bank, in each case, payable quarterly in arrears on the first Business Day of each January, April, July and October of each year, on the Termination Date or such earlier date on which the Commitments shall terminate as provided herein, and on the second anniversary of the Termination Date or such earlier date on which the Loans are repaid in full, commencing on the first of such dates to occur after the date hereof. Notwithstanding the provisions of clause (i) of the immediately preceding sentence, if at any time there are outstanding Loans owing to any Objecting Bank after the Commitment Expiration Date with respect to such Objecting Bank, (x) the facility fee payable to such Objecting Bank in respect of the period after such Commitment Expiration Date shall be computed at the rate of .125% per annum on the outstanding amount of Loans of such Objecting Bank and (y) the facility fee payable to any Bank other than an Objecting Bank in respect of the period in which any Loans are outstanding to Objecting Banks shall be computed at the rate of (x) .125% on the outstanding amount of Loans of such Bank and (y) .08% on the amount, if any, by which the Commitment of such Bank exceeds the outstanding amount of Loans of such Bank. (b) The Company and the Capital Corporation jointly and severally agree to pay to the Auction Agent for its own account all fees set forth in the letter agreement dated November 23, 1993 from the Auction Agent to the Borrowers. (c) The Company and the Capital Corporation jointly and severally agree to pay to the Administrative Agent for its own account all fees set forth in the letter agreement dated November 18, 1993 from the Administrative Agent to the Borrowers. 2.5 TERMINATION OR REDUCTION OF COMMITMENTS; CANCELLATION OF CAPITAL CORPORATION AS BORROWER. (a) The Borrowers, acting jointly, shall have the right, upon not less than five Business Days' notice to the Administrative Agent, to terminate the Commitments or, from time to time, reduce the amount of the Commitments, provided that (i) any such reduction shall be accompanied by prepayment of Loans made hereunder in accordance with subsection 2.6, together with accrued interest on the amount so prepaid to the date of such prepayment, to the extent, if any, that the amount of such Loans then outstanding exceeds the amount of the Commitments as then reduced, and (ii) any such termination of the Commitments shall be accompanied by 23 prepayment in full of the Loans then outstanding hereunder in accordance with subsection 2.6, and any termination of a Bank's Commitment pursuant to subsection 2.13, 2.16 or 2.17 shall, with respect to each affected Loan, on the last day of the applicable Interest Period therefor or, if earlier, on such earlier date as shall be notified by the Borrowers, be accompanied by prepayment in full of such Loan, together with, in each case, accrued interest thereon to the date of such prepayment, the payment of any unpaid facility fee then accrued hereunder, and the payment of any amounts then payable pursuant to subsections 2.13, 2.14, 2.15 and 2.17. Upon receipt of such notice from the Borrowers the Administrative Agent shall promptly notify each Bank thereof. Any reduction of the Commitments pursuant to this subsection 2.5 shall be in an amount not less than $25,000,000, and shall be an amount which is a whole multiple of $5,000,000, and shall reduce permanently the amount of the Commitments then in effect. (b) The Company may cancel the ability of the Capital Corporation to borrow hereunder upon not less than five Business Days' notice to the Administrative Agent. Upon receipt of such notice from the Company the Administrative Agent shall promptly notify each Bank thereof. On the first day following receipt of such notice, on which all Loans to the Capital Corporation and all interest thereon shall have been paid in full, and notwithstanding any other provision of this Agreement, (i) the Capital Corporation shall cease to be a party hereto or to have any right or obligation hereunder, (ii) rights and obligations expressed herein to be, in effect, of either the Company or the Capital Corporation or of both of them, but not any such rights and obligations expressed herein to be of the Capital Corporation only, shall be deemed to be rights and obligations of the Company only and (iii) the Banks shall cease to have any right or obligation hereunder which depends or is contingent upon any action, condition or performance, or the absence thereof, whether past or present, of the Capital Corporation other than any action, condition or performance, or the absence thereof, of the Capital Corporation in its capacity as a Subsidiary, Significant Subsidiary or Restricted Subsidiary hereunder; PROVIDED, HOWEVER, that the obligation of the Capital Corporation to make any payment pursuant to subsection 2.13, 2.14, 2.15 or 2.17 which arises prior to the cancellation of the ability of the Capital Corporation to borrow hereunder shall survive the cancellation of the ability of the Capital Corporation to borrow hereunder. 2.6 OPTIONAL PREPAYMENTS. Either Borrower may at any time and from time to time prepay its Committed Rate Loans in whole or in part, without premium or penalty, but subject to the provisions of subsection 2.14, upon at least three Business Days' irrevocable notice, in the case of Eurodollar Loans, two Business Days' irrevocable notice in the case of C/D Rate Loans, or one Business Day's irrevocable notice in the case of ABR Loans, in each case to the Administrative Agent, specifying the date and amount of prepayment and whether the prepayment is of its Eurodollar Loans, ABR Loans, C/D Rate Loans, or a combination 24 thereof, and if of a combination thereof the amount of prepayment allocable to each. Upon receipt of such notice the Administrative Agent shall promptly notify each Bank thereof. If such notice is given, the Borrower delivering such notice shall make such prepayment, and the payment of the amount specified in such notice shall be due and payable, on the date specified therein, together with accrued interest to such date on the amount prepaid and any amounts payable pursuant to subsections 2.14 and 2.15. Except as provided in the immediately following sentence, partial prepayments shall be in an aggregate principal amount of $5,000,000, or a whole multiple thereof; PROVIDED, HOWEVER, that after giving effect thereto, the aggregate principal amount of all Committed Rate Loans made on the same Borrowing Date shall not be less than $25,000,000. Anything contained in this subsection 2.6 to the contrary notwithstanding, partial prepayments of a Cancelled Bank's Loans in connection with the termination under subsection 2.13(a), (b) or (c), 2.16(c) or 2.17(b) of such Cancelled Bank's Commitment (in whole or in part) shall be in an amount equal to the principal amount of the Loans of such Bank being prepaid, notwithstanding the amount thereof, and shall be permitted notwithstanding the provisions of the foregoing proviso. Either Borrower may prepay Negotiated Rate Loans or Bid Loans on such terms as shall be mutually agreed upon between the relevant Borrower and the relevant Bank. 2.7 MINIMUM AMOUNT OF CERTAIN LOANS. All borrowings, payments and, except as set forth in the penultimate sentence of subsection 2.6 hereof, prepayments in respect of Committed Rate Loans shall be in such amounts and be made pursuant to such elections that, after giving effect thereto, (a) the aggregate principal amount of Committed Rate Loans made on any Borrowing Date shall not be less than $25,000,000 or a whole multiple of $5,000,000 in excess thereof and (b) the aggregate principal amount of Committed Rate Loans of any Type with the same Interest Period made on any Borrowing Date shall not be less than $10,000,000 or a whole multiple of $1,000,000 in excess thereof. 2.8 COMMITTED RATE LOAN INTEREST RATE AND PAYMENT DATES. (a) The Eurodollar Loans shall bear interest for the period from the date thereof until the stated maturity thereof on the unpaid principal amount thereof at a rate per annum equal to the Eurodollar Rate determined for the Interest Period therefor plus the Applicable Margin. (b) The ABR Loans shall bear interest for each day during the period from the date thereof until the payment in full thereof on the unpaid principal amount thereof at a fluctuating rate per annum equal to the ABR for such day plus the Applicable Margin. (c) The C/D Rate Loans shall bear interest for the period from the date thereof until the stated maturity thereof on the unpaid principal amount thereof at a rate per annum equal to 25 the C/D Rate determined for the Interest Period therefor plus the Applicable Margin. (d) If all or a portion of the principal amount of any of the Committed Rate Loans shall not be paid when due (whether at the stated maturity, by acceleration or otherwise) such overdue principal amount of such Committed Rate Loan (i) shall bear interest at a rate per annum which is 1% above the rate which would otherwise be applicable pursuant to subsection 2.8(a), (b) or (c), as the case may be, from the date when such principal amount is due until the date on which such amount is paid in full and (ii) shall, if such Committed Rate Loan is a Eurodollar Loan or C/D Rate Loan, be converted to an ABR Loan at the end of the Interest Period applicable thereto. (e) Interest shall be payable in arrears on each Interest Payment Date. 2.9 CONVERSION AND CONTINUATION OPTIONS. (a) The relevant Borrower may elect from time to time to convert Committed Rate Loans of one Type into Committed Rate Loans of another Type by giving to the Administrative Agent irrevocable notice of such conversion by the earliest time that they would have been required to give notice under subsection 2.1(c) if they had been borrowing Committed Rate Loans of each such Type on the conversion date specified in such notice, PROVIDED that any such conversion of Eurodollar Loans or C/D Rate Loans may only be made on the last day of an Interest Period with respect thereto. Any such notice of conversion to Eurodollar Loans or C/D Rate Loans shall specify the length of the initial Interest Period or Interest Periods therefor. Upon receipt of any such notice the Administrative Agent shall promptly notify each Bank thereof. If the last day of the then current Interest Period with respect to C/D Rate Loans that are to be converted to Eurodollar Loans is not a Working Day, such conversion shall be made on the next succeeding Working Day, and during the period from such last day to such succeeding Working Day such Loans shall bear interest as if they were ABR Loans. All or any part of outstanding Eurodollar Loans, ABR Loans and C/D Rate Loans may be converted as provided herein, PROVIDED that no Loan may be converted into a Eurodollar Loan or a C/D Rate Loan after the date that is one month or 30 days, respectively, prior to (i) in the case of a Loan made by an Objecting Bank, the second anniversary of such Objecting Bank's Commitment Expiration Date, and (ii) in the case of all other Loans, the second anniversary of the Termination Date. (b) Any Eurodollar Loans or C/D Rate Loans may be continued as such upon the expiration of the then current Interest Period with respect thereto by the relevant Borrower giving notice to the Administrative Agent, such notice to be given by the time it would have been required to give notice under subsection 2.1(c) if it had been borrowing Eurodollar Loans or C/D Rate Loans, as the case may be, on the last day of the 26 then expiring Interest Period therefor, of the length of the next Interest Period to be applicable to such Loans, PROVIDED that no Eurodollar Loan or C/D Rate Loan may be continued as such after the date that is one month or 30 days, respectively, prior to (i) in the case of a Loan made by an Objecting Bank, the second anniversary of such Objecting Bank's Commitment Expiration Date, and (ii) in the case of all other Loans, the second anniversary of the Termination Date. 2.10 COMPUTATION OF INTEREST AND FEES. (a) Facility fees and interest in respect of ABR Loans based upon clause (a) of the definition of ABR shall be calculated on the basis of a 365 (or 366 as the case may be) day year for the actual days elapsed (including the first day and excluding the last day). Interest in respect of Eurodollar Loans, C/D Rate Loans, Bid Loans and ABR Loans based upon clause (b) of the definition of ABR shall be calculated on the basis of a 360 day year for the actual days elapsed (including the first day and excluding the last day). The Administrative Agent shall promptly notify the Borrowers and the Banks of each determination of a Eurodollar Rate and of a C/D Rate. Any change in the interest rate on a Committed Rate Loan resulting from a change in the ABR shall become effective as of the opening of business on the day on which such change in the ABR shall become effective. The Administrative Agent shall promptly notify the Borrowers and the Banks of the effective date and the amount of each such change. (b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrowers and the Banks in the absence of manifest error. The Administrative Agent shall, at the request of a Borrower, deliver to such Borrower a statement showing the quotations given by the Reference Banks and the computations used by the Administrative Agent in determining any interest rate. (c) If any Reference Bank's Commitment shall terminate (otherwise than on termination of all the Commitments) or, as the case may be, its Loans are assigned, prepaid or repaid for any reason whatsoever, such Reference Bank shall thereupon cease to be a Reference Bank, and the Administrative Agent (after consultation with the Banks and with the consent of the Borrowers) shall, by notice to the Borrowers and the Banks, designate a sufficient number of other Banks as Reference Banks so that there shall at all times be at least three Reference Banks. (d) Each Reference Bank shall use its best efforts to furnish quotations of rates to the Administrative Agent as contemplated hereby. If any of the Reference Banks shall be unable or otherwise fails to supply such rates to the Administrative Agent upon its request, the rate of interest shall be determined on the basis of the quotations of the remaining Reference Banks or Reference Bank. 27 2.11 INABILITY TO DETERMINE INTEREST RATE. (a) In the event that the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Borrowers) that by reason of circumstances affecting the interbank eurodollar market generally, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for any requested Interest Period with respect to Committed Rate Loans that a Borrower has requested be made as, continued as or converted into Eurodollar Loans, the Administrative Agent shall promptly give notice of such determination to such Borrower and the Banks prior to the first day of the requested Interest Period for such Eurodollar Loans. If such notice is given, such Borrower may (i) in accordance with the provisions of subsections 2.1 or 2.9, as the case may be, (including any requirements for notification) request that the affected Loans be made as, continued as or converted into, as the case may be, C/D Rate Loans or ABR Loans, or (ii) in the case of Loans requested to be made on the first day of such Interest Period, withdraw the notice given under subsections 2.1 or 2.9, as the case may be, by giving telephonic notice to the Administrative Agent, no later than 10:00 A.M. (New York City time) on the applicable Borrowing Date, confirmed in writing no later than one Business Day after such telephonic notice is given; PROVIDED that, if the Administrative Agent does not receive any notice permitted from the relevant Borrower hereunder, such Borrower shall be deemed to have requested that the affected Loans be made as, continued as or converted into, as the case may be, ABR Loans. Until the notice given pursuant to the first sentence of this paragraph has been withdrawn by the Administrative Agent, no further Loans shall be made as, continued as or converted into, as the case may be, Eurodollar Loans. (b) In the event that the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Borrowers) that by reason of circumstances affecting the domestic certificate of deposit market generally, adequate and reasonable means do not exist for ascertaining the C/D Rate for any requested Interest Period with respect to Committed Rate Loans that a Borrower has requested be made as, continued as or converted into, C/D Rate Loans, the Administrative Agent shall promptly give notice of such determination to such Borrower and the Banks on or prior to the first day of the requested Interest Period for such C/D Rate Loans. If such notice is given, such Borrower may (i) in accordance with the provisions of subsections 2.1 or 2.9, as the case may be, (including any requirements for notification) request that the affected Loans be made as, continued as or converted into, as the case may be, ABR Loans, or (ii) in the case of Loans requested to be made on the first day of such Interest Period, withdraw the notice given under subsections 2.1 or 2.9, as the case may be, by giving telephonic notice to the Administrative Agent, no later than the later of 10:00 A.M. (New York City time) on the applicable Borrowing Date and one hour after receipt by such Borrower of the notice referred to in the 28 preceding sentence, confirmed in writing no later than one Business Day after such telephonic notice is given; PROVIDED that, if the Administrative Agent does not receive any notice permitted from the relevant Borrower hereunder, such Borrower shall be deemed to have requested that the affected Loans be made as, continued as or converted into, as the case may be, ABR Loans. Until the notice given pursuant to the first sentence of this paragraph has been withdrawn by the Administrative Agent, no further Loans shall be made as, continued as or converted into, as the case may be, C/D Rate Loans. (c) In the event that the Auction Agent shall have determined (which determination shall be conclusive and binding upon the Borrowers) that by reason of circumstances affecting the interbank eurodollar market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for any Interest Period with respect to a proposed Bid Loan to be made pursuant to an Index Rate Bid Loan Request, the Auction Agent shall forthwith give notice of such determination to the relevant Borrower and the Bid Loan Banks at least two Business Days prior to the proposed Borrowing Date, and such Bid Loans shall not be made on such Borrowing Date. Until any such notice has been withdrawn by the Auction Agent, no further Index Rate Bid Loan Requests shall be submitted by either Borrower. 2.12 PRO RATA TREATMENT AND PAYMENTS. (a) All payments (including prepayments), to be made by the Borrowers on account of principal, interest and fees shall be made without defense, set-off or counterclaim and shall be made, in the case of fees and principal of, and interest on, Loans (other than Negotiated Rate Loans) at the Administrative Agent's office specified in subsection 10.2, in each case in lawful money of the United States of America and in immediately available funds not later than 11:00 A.M. (New York City time) on the date due. The Administrative Agent shall distribute such payments to the Banks entitled thereto on the day of receipt in like funds as received, PROVIDED that the Administrative Agent shall have received such payments not later than 11:00 A.M. (New York City time). If the Administrative Agent shall distribute such payments to the Banks entitled thereto on a date after the date on which such payments were received prior to 11:00 A.M. (New York City time), the Administrative Agent shall pay to each such Bank on demand an amount equal to the product of (i) the daily average Federal funds rate during such period as quoted by the Administrative Agent, TIMES (ii) the amount of such Bank's PRO RATA share of such payment, TIMES (iii) a fraction the numerator of which is the number of days that elapse from and including such date of receipt of payment by the Administrative Agent to but excluding the date on which such Bank's PRO RATA share of such payment shall have become immediately available to such Bank and the denominator of which is 360. All payments (including prepayments) to be made by the Borrowers on account of principal, interest and fees relating to Negotiated Rate Loans shall be made to the Bank with respect thereto on such terms, at such address 29 and at such time as shall be mutually agreed upon between the relevant Borrower and the relevant Bank in lawful money of the United States of America on the date due. (b) Each borrowing by the Borrowers of Committed Rate Loans shall be made PRO RATA among the Banks according to their respective Available Commitments, PROVIDED, HOWEVER, that for the purposes hereof, each Bank's Available Commitment shall be increased by the amount that such Bank has agreed to make Committed Rate Loans in excess of its Available Commitment pursuant to the terms of subsection 2.1(a), and, except as provided in subsections 2.13, 2.16 and 2.17, each reduction of the Commitments shall be made PRO RATA among the Banks according to the respective Commitment Percentages. Each payment by the Borrowers under this Agreement or of any Loan (other than Negotiated Rate Loans) shall be applied, FIRST, to any fees then due and owing pursuant to subsection 2.4, SECOND, to interest then due and owing in respect of the Loans (other than Negotiated Rate Loans) and THIRD, to principal then due and owing hereunder (other than principal due and owing under Negotiated Rate Loans) and under the Loans (other than Negotiated Rate Loans). Each payment made by the Borrowers under this Agreement relating to a Negotiated Rate Loan to the Bank with respect thereto shall be applied, FIRST, to interest then due and owing in respect of such Negotiated Rate Loan and SECOND, to principal then due and owing hereunder with respect to such Negotiated Rate Loan and under such Negotiated Rate Loan. Each payment (other than prepayments) by either Borrower on account of principal of and interest on the Loans shall be made for the account of each Bank PRO RATA according to the respective amounts due and owing to such Bank. Each prepayment by a Borrower on account of principal of the Loans (other than Negotiated Rate Loans) shall be applied, FIRST, to such of its Committed Rate Loan borrowings as such Borrower may designate (to be applied PRO RATA among the Banks in accordance with each Bank's share of such borrowing), PROVIDED, HOWEVER, that any such prepayment made after the Commitment Expiration Date for an Objecting Bank the Committed Rate Loans of which have not been paid in full shall be applied PRO RATA among the Banks in accordance with the principal amount of the Committed Rate Loans of the Banks at the time of such prepayment, and, SECOND, after all Committed Rate Loans shall have been paid in full, to all of its Absolute Rate Bid Loans or Index Rate Bid Loans made on the same Borrowing Date with the same Interest Period as such Borrower may designate, PRO RATA according to the respective amounts outstanding; PROVIDED, HOWEVER, that prepayments made pursuant to subsection 2.13(a), (b) or (c), 2.16(c) or 2.17(b) shall be applied in accordance with such subsection. (c) If any payment hereunder (other than payments on the Eurodollar Loans and Index Rate Bid Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day. If any payment on a Eurodollar Loan or Index Rate Bid Loan becomes due and payable 30 on a day other than a Working Day, the maturity thereof shall be extended to the next succeeding Working Day unless the result of such extension would be to extend such payment into another calendar month in which event such payment shall be made on the immediately preceding Working Day. With respect to any extension of the payment of principal pursuant to this subsection 2.12(c), interest thereon shall be payable at the then applicable rate during such extension. (d) Unless the Administrative Agent shall have been notified in writing by any Bank prior to the date of the Committed Rate Loan, Committed Rate Loans, Bid Loan or Bid Loans to be made by such Bank (which notice shall be effective upon receipt) that such Bank will not make its PRO RATA share of the amount of the requested borrowing on such date available to the Administrative Agent, the Administrative Agent may assume that such Bank has made such amount available to it on such date and the Administrative Agent may, in reliance upon such assumption, make available to the relevant Borrower a corresponding amount. If a Bank shall make such amount available to the Administrative Agent on a date after such Borrowing Date, such Bank shall pay to the Administrative Agent on demand an amount equal to the product of (i) the daily average Federal funds rate during such period as quoted by the Administrative Agent, TIMES (ii) the amount of such Bank's PRO RATA share of such borrowing, TIMES (iii) a fraction the numerator of which is the number of days that elapse from and including such Borrowing Date to but excluding the date on which such Bank's PRO RATA share of such borrowing shall have become immediately available to the Administrative Agent and the denominator of which is 360. A certificate of the Administrative Agent submitted to any Bank with respect to any amounts owing under this subsection 2.12(d) shall be conclusive, absent manifest error. If such Bank's PRO RATA share is not in fact made available to the Administrative Agent by such Bank within three Business Days of such Borrowing Date, the Administrative Agent shall be entitled to recover such amount, on demand, from the relevant Borrower with interest thereon at the rate equal to the product of (i) during the period from and including such Borrowing Date to the Business Day next following the date of such demand, the daily average Federal funds rate quoted by the Administrative Agent, TIMES a fraction the numerator of which is the number of days that elapse from and including such Borrowing Date to but excluding the Business Day next following the date of such demand and the denominator of which is 360 and (ii) thereafter, the interest rate or rates applicable to the Loan or Loans funded by the Administrative Agent on behalf of such Bank on the Borrowing Date, TIMES a fraction the numerator of which is the number of days which elapse from and including the Business Day next following the date of such demand to but excluding the date such amount is recovered by the Administrative Agent from such Borrower and the denominator of which is 360. In the event any Bank's PRO RATA share of a borrowing is not made available to the Administrative Agent in accordance with this paragraph within three Business Days of the applicable Borrowing Date (i) such 31 Bank shall, during the period from such Borrowing Date to the date such Bank makes its PRO RATA share of the applicable borrowing available, not accrue and shall not be entitled to receive any facility fee under subsection 2.4 and (ii) either Borrower may exercise or pursue any other rights, remedies, powers and privileges against such Bank as are provided by law or by contract. 2.13 REQUIREMENTS OF LAW. (a) If any Bank shall determine that by reason of (i) the introduction after the date hereof of any applicable law, regulation or guideline or any change after the date hereof in any applicable law, regulation or guideline (including the phasing-in of a provision of any applicable law, regulation or guideline) or in the interpretation thereof by any governmental or other regulatory authority charged with the administration thereof or court of competent jurisdiction and/or (ii) compliance by such Bank with any requirement adopted after the date hereof of or directive adopted after the date hereof from any central bank or other fiscal, monetary or other regulatory authority (whether or not having the force of law), there shall be any increase in the cost of such Bank of maintaining or giving effect to its obligations with respect to Committed Rate Loans under this Agreement or maintaining its Commitment with respect to Committed Rate Loans or making or maintaining any C/D Rate Loans or Eurodollar Loans or any reduction in any amount receivable by such Bank in respect of C/D Rate Loans or Eurodollar Loans under this Agreement, notwithstanding the reasonable efforts (such reasonable efforts not to result in the incurrence of additional costs or expenses) of such Bank to mitigate such increase or reduction, then the relevant Borrower shall from time to time on receipt (whenever occurring) of a certificate from such Bank (which shall be executed by an officer thereof and a copy of which shall be delivered to the Administrative Agent) pay to such Bank such amounts as are stated therein to be required to indemnify such Bank against such increased costs or reduction; PROVIDED, HOWEVER, that if such Borrower becomes obligated to pay any Bank any additional amount pursuant to this subsection 2.13(a), such Borrower shall have the right, so long as no Event of Default has occurred and is then continuing, upon giving notice to the Administrative Agent and such Bank in accordance with subsection 2.6, to prepay in full the Loans of any such Bank, together with accrued interest thereon, any amounts payable to such Bank pursuant to subsections 2.13, 2.14, 2.15 and 2.17 and any accrued and unpaid facility fee or other amount payable to such Bank hereunder and/or, upon giving not less than three Business Days' notice to any such Bank and the Administrative Agent, to cancel the whole or part of the Commitment of any such Bank; PROVIDED, FURTHER, that such Borrower shall not be obligated to pay any Bank any additional amount pursuant to this subsection 2.13(a)(A) which constitutes a present or future income, stamp or other tax, levy, impost, duty, charge, fee, deduction or withholding referred to in subsection 2.17(a) or (B) as a result of any law, rule, guideline, regulation, request or directive regarding 32 capital adequacy referred to in subsection 2.13(b). The certificate of such Bank as to the amount of such increased costs or reduction shall set forth in reasonable detail the computation of such increased costs or reduction, and shall be binding and conclusive in the absence of manifest error. Amounts payable pursuant to this subsection 2.13(a) shall not include amounts which the relevant Borrower is obligated to pay pursuant to the definition of "C/D Rate" or subsection 2.13(c). A Bank which demands indemnification hereunder as a result of an increased cost or reduction referred to herein shall deliver the certificate referred to above to the relevant Borrower demanding indemnification no later than the later of (y) the thirtieth day immediately following each payment or realization by such Bank of such increased cost or reduction (and such certificate shall certify that the amounts set forth therein were paid or realized within such thirty-day period) and (z) the thirtieth day immediately following such Bank's knowledge of the incurrence or realization by such Bank of such increased cost or reduction (and such certificate shall so certify). (b) In the event that any Bank shall have determined that the adoption after the date hereof of any law, rule, guideline or regulation regarding capital adequacy, or any change after the date hereof in any existing or future law, rule, guideline or regulation regarding capital adequacy (excluding, however, the phasing-in of any existing law, rule, regulation or guideline regarding capital adequacy) or in the interpretation or application thereof or compliance by such Bank or any corporation controlling such Bank with any request or directive made or adopted after the date hereof regarding capital adequacy (whether or not having the force of law) from any central bank or Governmental Authority, does or shall have the effect of reducing the rate of return on such Bank's or such corporation's capital as a consequence of its obligations hereunder to a level below that which such Bank or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Bank's or such corporation's policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, within 30 days after receipt (whenever occurring) of a certificate from such Bank (which shall be executed by an officer thereof and a copy of which shall be delivered to the Administrative Agent), the Borrowers jointly and severally agree to pay to such Bank such additional amounts as are stated therein to be required to compensate it for such reduction; PROVIDED, HOWEVER, that if such Borrower becomes obligated to pay any Bank any additional amount pursuant to this subsection 2.13(b), such Borrower shall have the right, so long as no Event of Default has occurred and is then continuing, upon giving notice to the Administrative Agent and such Bank in accordance with subsection 2.6, to prepay in full the Loans of any such Bank, together with accrued interest thereon, any amounts payable pursuant to subsections 2.13, 2.14, 2.15 and 2.17 and any accrued and unpaid facility fee or other amounts payable to it hereunder and/or, upon giving not less than three Business 33 Days' notice to any such Bank and the Administrative Agent, to cancel the whole or part of the Commitment of any such Bank. The certificate of such Bank as to the amount of such reduction shall set forth in reasonable detail the computation of such reduction, and shall be binding and conclusive in the absence of manifest error. A Bank which demands indemnification hereunder as a result of a reduction referred to herein shall deliver the certificate referred to above to the relevant Borrower demanding indemnification no later than the later of (i) the thirtieth day immediately following each realization by such Bank of such reduction (and such certificate shall certify that the amounts set forth therein were realized within such thirty-day period) and (ii) the thirtieth day immediately following such Bank's knowledge of the realization by such Bank of such reduction (and such certificate shall so certify). (c) Each Borrower shall pay to each Bank that delivers a certificate to such Borrower in accordance with the second and third following sentences such amounts as shall be necessary to reimburse such Bank for the costs (determined in accordance with the immediately following sentence), if any, incurred by such Bank, as a result of the application to such Bank during any period on which there are outstanding Eurodollar Loans advanced by such Bank to such Borrower of basic, supplemental, marginal and emergency reserves under any regulations of the Board of Governors of the Federal Reserve System or other Governmental Authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as "Eurocurrency liabilities" in Regulation D of such Board) maintained by a member bank of such System (any such reserves dealing with reserve requirements prescribed for eurocurrency funding being referred to as "RESERVES"), such amount to be set forth in a certificate of such Bank delivered to the relevant Borrower; PROVIDED, HOWEVER, that if a Bank gives to a Borrower the written notice contemplated by the proviso set forth in the second following sentence, such Borrower shall have the right, so long as no Event of Default has occurred and is then continuing, upon giving notice to the Administrative Agent and such Bank in accordance with subsection 2.6, to prepay in full the Loans of such Bank, together with accrued interest thereon, any amounts payable pursuant to subsections 2.13, 2.14, 2.15 and 2.17 and any accrued and unpaid facility fee or other amounts payable to it hereunder and/or upon giving not less than three Working Days' notice to any such Bank and the Administrative Agent, to cancel the whole or part of the Commitment of any such Bank. Amounts certified by a Bank hereunder for any period shall represent such Bank's calculation or, if an accurate calculation is impracticable, reasonable estimate (using such reasonable means of allocation as such Bank shall determine) of the actual costs, if any, theretofore incurred by such Bank as a result of the application of Reserves to Eurocurrency liabilities (as referred to in Regulation D referred to above) of such Bank in an amount equal to such Bank's Eurodollar Loans during such period and in any event shall not 34 exceed the amount obtainable utilizing the maximum Reserves prescribed by the Board of Governors of the Federal Reserve System or other Governmental Authority having jurisdiction with respect thereto for such period. Such payment shall be made within fifteen days after receipt by the relevant Borrower of a certificate, signed by an officer of the Bank delivering such certificate, specifying the period (prior to the date of such certificate) during which the cost set forth therein was incurred by such Bank and stating (i) that such amount represents the actual cost, or, if an accurate calculation of such cost is impracticable stating that such amount represents such Bank's reasonable estimate of the actual cost, incurred by such Bank during such period as a result of the application of Reserves to Eurocurrency liabilities of such Bank in an amount equal to such Bank's Eurodollar Loans during such period and specified in such certificate and (ii) that the amount set forth therein does not in any event exceed the amount obtainable utilizing the maximum Reserves prescribed for such period by the Board of Governors of the Federal Reserve System or such other Governmental Authority having jurisdiction with respect thereto; PROVIDED that the obligation of the Borrowers to pay any amounts pursuant to this subsection 2.13(c) shall apply only in the case of those Banks that give to the relevant Borrower and the Administrative Agent, no later than 3:00 P.M. (New York City time) on the day that is two Working Days prior to the applicable Borrowing Date therefor, a written notice stating that such Bank intends to demand reimbursement pursuant hereto. A Bank which demands reimbursement of Reserve costs hereunder on account of a Eurodollar Loan made by such Bank shall deliver the certificate referred to in the preceding sentence to the relevant Borrower setting forth the items specified in clauses (i) and (ii) of the preceding sentence no later than the thirtieth day immediately following the last day of the Interest Period applicable to such Eurodollar Loan. (d) The obligations of the parties under this subsection 2.13 shall survive termination of this Agreement and payment of the Loans. 2.14 INDEMNITY. Each Borrower agrees to indemnify each Bank and to hold such Bank harmless from any loss or expense which such Bank may sustain or incur as a consequence of (a) default by such Borrower in payment of the principal amount of or interest on any Loan by such Bank, including, but not limited to, any such loss or expense arising from interest or fees payable by such Bank to lenders of funds obtained by it in order to maintain its Loans hereunder, (b) default by such Borrower in making a borrowing after such Borrower has given a notice in accordance with subsection 2.1 or 2.2, (c) default by such Borrower in making any prepayment after such Borrower has given a notice in accordance with subsection 2.5 or 2.6 or (d) the making by such Borrower of a prepayment of a Committed Rate Loan other than an ABR Loan, a Bid Loan or, to the extent agreed to by the relevant Borrower and the relevant Bank with respect to a Negotiated Rate 35 Loan, a Negotiated Rate Loan on a day which is not the last day of an Interest Period with respect thereto (with respect to Committed Rate Loans) or the maturity date therefor (with respect to Bid Loans) or any agreed date (with respect to Negotiated Rate Loans), including, but not limited to, any such loss or expense arising from interest or fees payable by such Bank to lenders of funds obtained by it in order to maintain its Loans hereunder. This covenant shall survive termination of this Agreement and payment of the outstanding Loans. A certificate as to any amount payable pursuant to the foregoing shall be submitted by such Bank (and executed by an officer thereof) to the relevant Borrower, setting forth the computation of such amounts in reasonable detail, and shall be conclusive in the absence of manifest error. 2.15 NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT. With respect to all Loans except Negotiated Rate Loans, unless the Administrative Agent shall have been notified by the relevant Borrower prior to the date on which any payment is due from it hereunder (which notice shall be effective upon receipt) that such Borrower does not intend to make such payment, the Administrative Agent may assume that such Borrower has made such payment when due, and the Administrative Agent may in reliance upon such assumption (but shall not be required to) make available to each Bank on such payment date an amount equal to the portion of such assumed payment to which such Bank is entitled hereunder, and if such Borrower has not in fact made such payment to the Administrative Agent, such Bank shall, on demand, repay to the Administrative Agent the amount made available to such Bank together with interest thereon in respect of each day during the period commencing on the date such amount was made available to such Bank and ending on (but excluding) the date such Bank repays such amount to the Administrative Agent, at a rate per annum equal to the Administrative Agent's cost of obtaining overnight funds in the federal funds market in New York on each such day. A certificate of the Administrative Agent submitted to the relevant Bank with respect to any amount owing under this subsection 2.15 shall be conclusive absent manifest error. 2.16 EXTENSION OF TERMINATION DATE. (a) Not less than 60 days and not more than 90 days prior to the Termination Date then in effect, provided that no Event of Default shall have occurred and be continuing, the Borrowers may request an extension of such Termination Date by submitting to the Administrative Agent an Extension Request containing the information in respect of such extension specified in Exhibit I, which the Administrative Agent shall promptly furnish to each Bank. Each Bank shall, not less than 30 days and not more than 60 days prior to the Termination Date then in effect, notify the Borrowers and the Administrative Agent of its election to extend or not extend the Termination Date as requested in such Extension Request. Notwithstanding any provision of this Agreement to the contrary, any notice by any Bank of its willingness to extend the Termination Date shall be revocable by such Bank in its sole and 36 absolute discretion at any time prior to the date which is 30 days prior to the Termination Date then in effect. If the Required Banks shall approve in writing the extension of the Termination Date requested in such Extension Request, the Termination Date shall automatically and without any further action by any Person be extended for the period specified in such Extension Request; PROVIDED that (i) each extension pursuant to this subsection 2.16 shall be for a maximum of 364 days and (ii) the Commitment of any Bank which does not consent in writing to such extension within 30 days of its receipt of such Extension Request (an "OBJECTING BANK") shall, unless earlier terminated in accordance with this Agreement, expire on the Termination Date in effect on the date of such Extension Request (such Termination Date, if any, referred to as the "COMMITMENT EXPIRATION DATE" with respect to such Objecting Bank). If, within 30 days of their receipt of an Extension Request, the Required Banks shall not approve in writing the extension of the Termination Date requested in such Extension Request, the Termination Date shall not be extended pursuant to such Extension Request. The Administrative Agent shall promptly notify (y) the Banks and the Borrowers of any extension of the Termination Date pursuant to this subsection 2.16 and (z) the Borrowers and any other Bank of any Bank which becomes an Objecting Bank. (b) Committed Rate Loans owing to any Objecting Bank on the Commitment Expiration Date with respect to such Bank shall be repaid in full on or before the date which is two years after such Commitment Expiration Date. (c) The Borrowers shall have the right, so long as no Event of Default has occurred and is then continuing, upon giving notice to the Administrative Agent and the Objecting Banks in accordance with subsection 2.6, to prepay in full the Committed Rate Loans of the Objecting Banks, together with accrued interest thereon, any amounts payable pursuant to subsections 2.13, 2.14, 2.15 and 2.17 and any accrued and unpaid facility fee or other amounts payable to it hereunder and/or, upon giving not less than three Working Days' notice to the Objecting Banks and the Administrative Agent, to cancel the whole or part of the Commitments of the Objecting Banks. 2.17 FOREIGN TAXES. (a) All payments made under this Agreement shall be made without set-off or counterclaim and free and clear of, and without reduction for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions, withholdings or restrictions or conditions of any nature whatsoever, now or hereafter imposed, levied, collected, withheld or assessed by any country (or by any political subdivision or taxing authority thereof or therein) from or through which any amount is paid under this Agreement excluding, in the case of each Bank, (i) income and franchise taxes (including, without limitation, branch taxes imposed by the United States or similar taxes imposed by a political subdivision or taxing authority thereof or therein but excluding, in the case 37 of any Bank not organized under the laws of the United States, any taxes imposed by the United States by means of withholding at the source), (ii) in the case of any Bank not organized under the laws of the United States, any taxes imposed by the United States by means of withholding at the source unless such Bank has provided the Company, the Capital Corporation and the Administrative Agent with the documents it is required to provide to them under subsection 2.17(c) and (iii) taxes that would not have been imposed on such Bank but for the existence of a connection between such Bank and the jurisdiction imposing such taxes (other than a connection arising principally by virtue of this Agreement) (such non-excluded taxes being called "FOREIGN TAXES"). If any Foreign Taxes are required to be withheld from any amounts so payable to any Bank hereunder, the amounts so payable to such Bank shall be increased to the extent necessary to yield to such Bank (after payment of all Foreign Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement. Whenever any Foreign Taxes are payable by the Company or the Capital Corporation, as the case may be, as promptly as possible thereafter the Company or the Capital Corporation, as the case may be, shall send to the Administrative Agent, for the account of the affected Bank, a certified copy of the original official receipt, if any, received by the Company or the Capital Corporation, as the case may be, showing payment thereof. If the Company or the Capital Corporation, as the case may be, fails to pay any Foreign Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent, for the account of the affected Banks, the required receipts or other required documentary evidence, the Company or the Capital Corporation, as the case may be, shall indemnify such Banks for any incremental taxes, interest or penalties that may become payable by such Banks as a result of any such failure. (b) If a Borrower is required by this subsection 2.17 to make a payment to or in respect of any Bank, such Borrower shall have the right, so long as no Event of Default has occurred and is then continuing, upon giving notice to the Administrative Agent and such Bank in accordance with subsection 2.6, to prepay in full the Loans of such Bank, together with accrued interest thereon, any amounts payable pursuant to subsections 2.13, 2.14, 2.15 and 2.17 and any accrued and unpaid facility fee or other amounts payable to it hereunder and/or on giving not less than three Business Days' notice to any such Bank and the Administrative Agent, to cancel the whole or part of the Commitment of such Bank. (c) At least two Business Days prior to the first Borrowing Date or, if such date does not occur within thirty days after the Closing Date, by the end of such thirty-day period, each Bank agrees that it will deliver to each Borrower and the Administrative Agent (i) either (A) a statement that it is incorporated under the laws of the United States or a state thereof or (B) if it is not so incorporated, a letter in 38 duplicate in the form of Exhibit J or Exhibit K, as appropriate, and two duly completed copies of United States Internal Revenue Service Form 4224 or 1001 or successor applicable form, as the case may be, certifying in each case that such Bank is entitled to receive payment under this Agreement without deduction or withholding of any United States Federal income taxes, and (ii) Internal Revenue Service Form W-8 or W-9, or successor applicable form, as the case may be, to establish an exemption from United States backup withholding tax. Each Bank agrees (for the benefit of the Administrative Agent and the Borrowers) to provide the Administrative Agent and the Borrowers a new letter and Form 4224 or 1001 and Form W-8 or W-9, or successor applicable form or other manner of certification, on or before the date that any such letter or form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent letter or form previously delivered by it, certifying in the case of a Form 1001 or 4224 that such Bank is entitled to receive payments under this Agreement without deduction or withholding of any United States Federal income tax, and in the case of a Form W-8 or W-9 establishing exemption from United States backup withholding tax. The Administrative Agent shall not be responsible for obtaining such documentation from any Bank other than Chemical. (d) The Company and the Capital Corporation shall not be required to make payments on account of United States withholding taxes to any Bank under the second sentence of subsection 2.17(a) to the extent that such taxes could have been avoided had such Bank complied with a reasonable request by the Company, the Capital Corporation or the Administrative Agent for the forms or documents referred to in subsection 2.17(c). (e) To the extent that, as determined by any Bank in its sole discretion and without any obligation to disclose its tax records, Foreign Taxes have been irrevocably utilized by such Bank (either as credits or deductions) to reduce its tax liabilities and such utilization is consistent with its overall tax policies, such Bank shall pay to the Company or the Capital Corporation, as the case may be, an amount equal to such reduction obtained to the extent of such increased amounts paid by the Company or the Capital Corporation to such Bank as aforesaid. (f) The obligations of the parties under this subsection 2.17 shall survive termination of this Agreement and payment of the Loans. 2.18 CONFIRMATIONS. The Administrative Agent shall, within 15 days following the last day of each calendar quarter (each such period being a "REPORT PERIOD"), furnish to the Borrowers a written account with respect to all amounts outstanding under the Loan Accounts as at the last day of such Report Period, including an accounting setting forth, for such Report Period the amounts of principal, interest and other sums 39 paid and payable hereunder. The Borrowers shall, within 15 days following receipt of such written account, notify the Administrative Agent of any discrepancies between such written account and the Borrowers' records or, if no such discrepancies exist, furnish written confirmation to the Administrative Agent of the accuracy of such written account. Upon any Bank's request, the Administrative Agent shall furnish to each Bank a copy of such written account together with the Borrowers' response thereto. 2.19 REPLACEMENT OF CANCELLED BANKS. The Borrowers may designate one or more financial institutions to act as a Bank hereunder in place of any Cancelled Bank, and upon the Borrowers, each such financial institution and the Administrative Agent executing a writing substantially in the form of Exhibit L, such financial institution shall become and be a Bank hereunder with all the rights and obligations it would have had if it had been named on the signature pages hereof, and having for all such financial institutions an aggregate Commitment no greater than the whole, or such cancelled part, of the Commitment of the Cancelled Bank in place of which such financial institutions were designated; PROVIDED, HOWEVER, that all rights and obligations of such Cancelled Bank relating to the Loans made by such Cancelled Bank that are outstanding on the date of such cancellation shall be the rights and obligations of such Cancelled Bank and not of any such financial institution. The Administrative Agent shall execute any such writing presented to it and shall notify the Banks of the execution thereof, the name of the financial institution executing such writing and the amount of its Commitment. SECTION 3. REPRESENTATIONS AND WARRANTIES Each Borrower hereby represents and warrants to the Administrative Agent and to each Bank that: 3.1 FINANCIAL CONDITION. The consolidated balance sheet of such Borrower and its consolidated Subsidiaries as at October 31, 1992 and the related consolidated statements of income and of cash flow for the fiscal year then ended (including the related schedules and notes) reported on by Deloitte & Touche, copies of which have heretofore been furnished to each Bank, fairly present the consolidated financial condition of such Borrower and its consolidated Subsidiaries as at such date, and the consolidated results of their operations and changes in financial position for the fiscal year then ended. The condensed unaudited consolidated balance sheet of such Borrower and its consolidated Subsidiaries as at July 31, 1993 and the related unaudited consolidated statement of income for the nine-month period ended on such date, certified by a Responsible Officer, copies of which have heretofore been furnished to each Bank, present fairly the consolidated financial condition of such Borrower and its consolidated Subsidiaries as at such date, and 40 the consolidated results of their operations for the nine-month period then ended (subject to normal year-end audit adjustments). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with generally accepted accounting principles in the United States of America applied consistently throughout the periods involved (except as approved by such accountants or Responsible Officer, as the case may be, and as disclosed therein). 3.2 CORPORATE EXISTENCE. Such Borrower is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority to own its properties and to conduct the business in which it is currently engaged. 3.3 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Such Borrower has the corporate power and authority and the legal right to execute, deliver and perform this Agreement and to borrow hereunder and has taken all necessary corporate action to authorize its borrowings on the terms and conditions of this Agreement and to authorize its execution, delivery and performance of this Agreement. No consent or authorization of, filing with, or other act by or in respect of any Governmental Authority, is required in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of this Agreement other than any such consents, authorizations, filings or acts as have been obtained, taken or made and are in full force and effect. This Agreement has been duly executed and delivered on behalf of such Borrower, and this Agreement constitutes a legal, valid and binding obligation of such Borrower enforceable against such Borrower in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equity principles (whether enforcement is sought by proceedings in equity or at law). 3.4 NO LEGAL BAR. The execution, delivery and performance of this Agreement, the borrowings hereunder and the use of the proceeds thereof, will not violate any Requirement of Law or any Contractual Obligation of such Borrower, and will not result in, or require, the creation or imposition of any lien on any of its properties or revenues pursuant to any Requirement of Law or Contractual Obligation. 3.5 NO MATERIAL LITIGATION. No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of such Borrower, threatened by or against such Borrower or any of its Subsidiaries or against any of its or their respective properties or revenues except actions, suits or proceedings which will not materially adversely affect the ability of such Borrower to perform its obligations hereunder. All of the defaults, if any, 41 of such Borrower or any of its Subsidiaries with respect to any order of any Governmental Authority do not, and will not collectively, have a material adverse effect on the business, operations, property or financial or other condition of such Borrower and its Subsidiaries taken as a whole. 3.6 TAXES. Each of such Borrower and its Subsidiaries has filed or caused to be filed all tax returns which, to the knowledge of such Borrower, are required to be filed (except where the failure to file such tax returns would not have a material adverse effect on the business, operations, property or financial or other condition of such Borrower and its Subsidiaries taken as a whole), and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than assessments, taxes, fees and other charges the amount or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of such Borrower or its Subsidiaries, as the case may be). 3.7 MARGIN REGULATIONS. No part of the proceeds of any Loan hereunder will be used for any purpose which violates the provisions of Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect. 3.8 PARI PASSU RANKING. The indebtedness of such Borrower under its Loans and all other amounts due hereunder ranks at least pari passu with all present and future unsecured senior indebtedness of such Borrower (other than indebtedness preferred by law). 3.9 NO DEFAULTS. No "Event of Default" or similar event, or event which, with the lapse of time or the giving of notice, or both, would constitute such an Event or event, has occurred and is continuing hereunder or under any material bond, debenture, note or other evidence of indebtedness, or in any material mortgage, deed of trust, indenture or loan agreement, of such Borrower. 3.10 USE OF PROCEEDS. The proceeds of the Loans will be used by such Borrower for its general corporate purposes, which shall include, but shall not be limited to, any purchase or other acquisition of all or a portion of the debt or stock or other evidences of ownership of such Borrower or the assets or stock or other evidences of ownership of any other Person or Persons. 42 SECTION 4. CONDITIONS PRECEDENT 4.1 CONDITIONS TO INITIAL LOAN. The obligation of each Bank to make its initial Loan hereunder is subject to the satisfaction of the following conditions precedent: (a) COUNTERPARTS. The Administrative Agent shall have received counterparts hereof, executed by all of the parties hereto. (b) RESOLUTIONS. The Administrative Agent shall have received, with a counterpart for each Bank, resolutions, certified by the Secretary or an Assistant Secretary of each Borrower, in form and substance satisfactory to the Administrative Agent, adopted by the Board of Directors of such Borrower authorizing the execution of this Agreement and the performance of its obligations hereunder and any borrowings hereunder from time to time. (c) LEGAL OPINIONS. The Administrative Agent shall have received, with a counterpart for each Bank, an opinion of Frank S. Cottrell, Esq., or his successor, as general counsel, or an associate general counsel, for each of the Borrowers, dated the Closing Date and addressed to the Agents and the Banks, substantially in the form of Exhibit G, and an opinion of Shearman & Sterling, special counsel to the Borrowers, dated the Closing Date and addressed to the Agents and the Banks, substantially in the form of Exhibit H. Such opinions shall also cover such other matters incident to the transactions contemplated by this Agreement as the Administrative Agent shall reasonably require. (d) INCUMBENCY CERTIFICATE. The Administrative Agent shall have received, with a counterpart for each Bank, a certificate of the Secretary or an Assistant Secretary of each Borrower certifying the names and true signatures of the officers of such Borrower authorized to sign this Agreement, together with evidence of the incumbency of such Secretary or Assistant Secretary. (e) EXISTING AGREEMENT. The commitment of each financial institution to make loans to the Borrowers pursuant to (i) the Credit Agreement, dated as of November 30, 1989, among the Company, the Capital Corporation, the financial institution parties thereto and Chemical Bank (as successor by merger to Manufacturers Hanover Trust Company), as agent, and (ii) the Multi-Country Multi-Option Financing Facility, dated December 15, 1989, among the Company, the Capital Corporation, certain other Subsidiaries of the Company, the financial institution parties thereto and Deutsche Bank Luxembourg S.A., as agent, shall have been terminated in full and the outstanding principal amount of the indebtedness thereunder and all other amounts owing to 43 any bank thereunder shall have been repaid or paid by the Borrowers. (f) FEES. The Administrative Agent shall have received, for the accounts of the Banks and the Administrative Agent, and the Auction Agent shall have received, for the account of the Auction Agent, all accrued fees and expenses owing hereunder or in connection herewith to the Banks and the Agents to be received on the Closing Date. (g) ADDITIONAL MATTERS. All other documents which the Administrative Agent may reasonably request in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory in form and substance to the Administrative Agent and its counsel. 4.2 CONDITIONS TO ALL LOANS. The obligation of each Bank to make any Loan (which shall include the initial Loan to be made by it hereunder) to be made by it hereunder is subject to the satisfaction of the following conditions precedent: (a) REPRESENTATIONS AND WARRANTIES. The representations and warranties made by the Borrowers herein or which are contained in any certificate, document or financial or other statement furnished by either Borrower at any time hereunder or in connection herewith (other than any representations and warranties which by the terms of such certificate, document or financial or other statement do not survive the execution of this Agreement) shall be correct on and as of the date of such Loan as if made on and as of such date except as such representations and warranties expressly relate to an earlier date. (b) NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the Loans to be made on such date and the application of the proceeds thereof. (c) ADDITIONAL CONDITIONS TO BID LOANS. If such Loan is made pursuant to subsection 2.2, all conditions set forth in subsection 2.2(f) shall have been satisfied. Each acceptance by either Borrower of a Loan shall constitute a representation and warranty by the relevant Borrower as of the date of such Loan that the applicable conditions in clauses (a), (b) and (c) of this subsection 4.2 have been satisfied. SECTION 5. AFFIRMATIVE COVENANTS Each of the Borrowers (except as otherwise specified) hereby agrees that, so long as there is any obligation by any 44 Bank to make Loans hereunder, any Loan of such Borrower remains outstanding and unpaid or any other amount is owing by such Borrower to any Bank or the Administrative Agent hereunder (unless the Required Banks shall otherwise consent in writing): 5.1 FINANCIAL STATEMENTS. Such Borrower shall furnish to each Bank: (a) as soon as available, but in any event within 120 days after the end of each fiscal year of such Borrower, a copy of the consolidated balance sheet of such Borrower and its consolidated Subsidiaries as at the end of such year and the related consolidated statements of income and of cash flow for such year, reported on by Deloitte & Touche or other independent certified public accountants of nationally recognized standing; and (b) as soon as available, but in any event not later than 60 days after the end of each of the first three quarterly periods of each fiscal year of such Borrower, the condensed unaudited consolidated balance sheet of such Borrower and its consolidated Subsidiaries as at the end of each such quarter and the related unaudited consolidated statement of income of such Borrower and its consolidated Subsidiaries for such quarterly period and the portion of the fiscal year through such date, certified by a Responsible Officer (subject to normal year-end audit adjustments); all such financial statements to present fairly the consolidated financial condition of such Borrower and to be prepared in accordance with generally accepted accounting principles in the United States of America applied consistently throughout the periods reflected therein (except as approved by such accountants or officer, as the case may be, and disclosed therein). 5.2 CERTIFICATES; OTHER INFORMATION. Such Borrower shall furnish to each Bank: (a) concurrently with the delivery of the financial statements referred to in subsections 5.1(a) and (b) above, a certificate of a Responsible Officer stating that (i) he has no knowledge of the occurrence and continuance of any Default or Event of Default except as specified in such certificate, in which case such certificate shall contain a description thereof and a statement of the steps, if any, which such Borrower is taking, or proposes to take, to cure the same and (ii) the financial statements delivered pursuant to subsection 5.1 would not be different if prepared in accordance with GAAP except as specified in such certificate; and 45 (b) promptly, such additional financial and other information as any Bank may from time to time reasonably request. 5.3 COMPANY INDENTURE DOCUMENTS. The Company shall, contemporaneously with the delivery thereof to the Trustee, furnish to each Bank a copy of any information, document or report required to be filed with the Trustee pursuant to Section 7.03 of the Indenture. 5.4 CAPITAL CORPORATION INDENTURE DOCUMENTS. The Capital Corporation shall, contemporaneously with the delivery thereof to the Trustee, furnish to each Bank a copy of any information, document or report required to be filed with the Trustee pursuant to Section 7.03 of the Indenture dated February 1, 1991, between the Capital Corporation and The Bank of New York, as Trustee. 5.5 NOTICE OF DEFAULT. Such Borrower shall promptly give notice to the Administrative Agent of the occurrence of any Default or Event of Default, which notice shall be given in writing as soon as possible, and in any event within 10 days after a Responsible Officer obtains knowledge of such occurrence, with a description of the steps being taken to remedy the same (provided that such Borrower shall not be obligated to give notice of any Default or Event of Default which is remedied prior to or within 10 days after a Responsible Officer of such Borrower first acquires such knowledge). 5.6 OWNERSHIP OF CAPITAL CORPORATION STOCK. The Company shall continue to own, directly or through one or more wholly-owned Subsidiaries, free and clear of any lien or other encumbrance, 51% of the voting stock of the Capital Corporation; PROVIDED, HOWEVER, that the Capital Corporation may merge or consolidate with, or sell or convey substantially all of its assets to, the Company as provided in subsection 7.4. 5.7 EMPLOYEE BENEFIT PLANS. The Company shall maintain, and cause each of its Subsidiaries to maintain, each Plan as to which it may have liability, in compliance with all applicable requirements of law and regulations. SECTION 6. NEGATIVE COVENANTS OF THE COMPANY The Company hereby agrees that, so long as there is any obligation by any Bank to make Loans hereunder, any Loan remains outstanding and unpaid or any other amount is owing to either Agent or any Bank hereunder, it shall not, nor in the case of subsections 6.2 and 6.3 shall it permit any Restricted Subsidiary to (unless the Required Banks shall otherwise consent in writing): 46 6.1 COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. Consolidate with or merge with or into any other corporation or convey or transfer its properties and assets substantially as an entirety to any Person, unless: (a) either the Company shall be the continuing corporation, or the corporation (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer the properties and assets of the Company substantially as an entirety shall expressly assume, by an assumption agreement, executed and delivered to the Administrative Agent, in form satisfactory to the Required Banks, the due and punctual payment of the principal of and interest on the Loans to the Company and the performance of every covenant of this Agreement on the part of the Company to be performed or observed; (b) immediately after giving effect to such transaction, no Default or Event of Default, shall have happened and be continuing; (c) if as a result thereof any property or assets of the Company or a Restricted Subsidiary would become subject to any Mortgage not permitted by (i) through (xii) of subsection 6.2(a) or subsection 6.2(b), compliance shall be effected with the first clause of subsection 6.2(a); and (d) the Company and the successor Person have delivered to the Administrative Agent an officers' certificate signed by two Responsible Officers stating that such consolidation, merger, conveyance or transfer and such assumption agreement comply with this subsection 6.1 and that all conditions precedent herein provided for relating to such transaction have been complied with. 6.2 LIMITATION ON LIENS. (a) Issue, incur, assume or guarantee any debt (hereinafter in this subsection referred to as "DEBT") secured by any mortgage, security interest, pledge, lien or other encumbrance (hereinafter called "MORTGAGE" or "MORTGAGES") upon any Important Property of the Company or of a Restricted Subsidiary, or upon any shares of stock or indebtedness issued or incurred by any Restricted Subsidiary (whether such Important Property, shares of stock or indebtedness is now owned or hereafter acquired) without in any such case effectively providing, concurrently with the issuance, incurrence, assumption or guaranty of any such Debt, that the Loans and all other amounts hereunder (together with, if the Company shall so determine, any other indebtedness of or guaranty by the Company or such Restricted Subsidiary ranking equally with the Loans then existing or thereafter created) shall be secured equally and ratably with or prior to such Debt; PROVIDED, HOWEVER, that the foregoing restrictions shall not apply to: 47 (i) Mortgages on any property acquired, constructed or improved by the Company or any Restricted Subsidiary after the date of this Agreement which are created or assumed contemporaneously with, or within 120 days after, such acquisition, construction or improvement to secure or provide for the payment of all or any part of the purchase price of such property or the cost of such construction or improvement incurred after the date of this Agreement, or (in addition to Mortgages contemplated by clauses (ii), (iii) and (iv) below) Mortgages on any property existing at the time of acquisition thereof; PROVIDED that such Mortgages shall not apply to any Important Property theretofore owned by the Company or any Restricted Subsidiary other than, in the case of any such construction or improvement, any theretofore unimproved real property on which the property so constructed, or the improvement, is located; (ii) Mortgages on any property, shares of stock, or indebtedness existing at the time of acquisition thereof from a corporation which is consolidated with or merged into, or substantially all of the assets of which are acquired by, the Company or a Restricted Subsidiary; (iii) Mortgages on property of a corporation existing at the time such corporation becomes a Restricted Subsidiary; (iv) Mortgages to secure Debt of a Restricted Subsidiary to the Company or to another Restricted Subsidiary; (v) Mortgages in favor of the United States of America or any State thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State thereof, to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any indebtedness incurred for the purpose of financing all or any part of the purchase price or the cost of constructing or improving the property subject to such Mortgages and Mortgages given to secure indebtedness incurred in connection with the financing of construction of pollution control facilities, the interest on which indebtedness is exempt from income taxes under the Code; (vi) any deposit or pledge of assets (1) with any surety company or clerk of any court, or in escrow, as collateral in connection with, or in lieu of, any bond on appeal from any judgment or decree against the Company or a Restricted Subsidiary, or in connection with other proceedings or actions at law or in equity by or against the Company or a Restricted Subsidiary, or (2) as security for the performance of any contract or undertaking not directly 48 related to the borrowing of money or the securing of indebtedness, if made in the ordinary course of business, or (3) with any governmental agency, which deposit or pledge is required or permitted to qualify the Company or a Restricted Subsidiary to conduct business, to maintain self-insurance, or to obtain the benefits of any law pertaining to worker's compensation, unemployment insurance, old age pensions, social security, or similar matters, or (4) made in the ordinary course of business to obtain the release of mechanics', workmen's, repairmen's, warehousemen's or similar liens, or the release of property in the possession of a common carrier; (vii) Mortgages existing on property acquired by the Company or a Restricted Subsidiary through the exercise of rights arising out of defaults on receivables acquired in the ordinary course of business; (viii) judgment liens, so long as the finality of such judgment is being contested in good faith and execution thereon is stayed; (ix) Mortgages for the sole purpose of extending, renewing or replacing in whole or in part Debt secured by any Mortgage referred to in the foregoing clauses (i) to (viii), inclusive, or in this clause (ix), PROVIDED, HOWEVER, that the principal amount of Debt secured thereby shall not exceed the principal amount of Debt so secured at the time of such extension, renewal or replacement, and that such extension, renewal or replacement shall be limited to all or a part of the property which secured the Mortgage so extended, renewed or replaced (plus improvements on such property); (x) liens for taxes or assessments or governmental charges or levies not yet due or delinquent, or which can thereafter be paid without penalty, or which are being contested in good faith by appropriate proceedings; landlord's liens on property held under lease; and any other liens of a nature similar to those hereinabove described in this clause (x) which do not, in the opinion of the Company, materially impair the use of such property in the operation of the business of the Company or a Restricted Subsidiary or the value of such property for the purposes of such business; (xi) Mortgages on Margin Stock owned by the Company and its Restricted Subsidiaries to the extent such Margin Stock so Mortgaged exceeds 25% of the fair market value of the sum of the Important Property of the Company and the Restricted Subsidiaries plus the shares of stock (including Margin Stock) and indebtedness issued or incurred by the Restricted Subsidiaries; and 49 (xii) Mortgages on any Important Property of, or any shares of stock or indebtedness issued or incurred by, any Restricted Subsidiary organized under the laws of Canada. (b) (i) The provisions of subsection 6.2(a) shall not apply to the issuance, incurrence, assumption or guarantee by the Company or any Restricted Subsidiary of Debt secured by a Mortgage which would otherwise be subject to the foregoing restrictions up to an aggregate amount which, together with the sum of (A) all other Debt issued or incurred by the Company and its Restricted Subsidiaries secured by Mortgages (other than Mortgages permitted by subsection 6.2(a)) which would otherwise be subject to the foregoing restrictions and (B) the Attributable Debt in respect of Sale and Lease-back Transactions in existence at such time (other than Sale and Lease-back Transactions which, if the Attributable Debt in respect of such Sale and Lease-back had been a Mortgage, would have been permitted by clause (i) of subsection 6.2(a) and other than Sale and Lease-back Transactions the proceeds of which have been applied in accordance with subsection 6.3(b)) does not at the time exceed 5% of Consolidated Net Worth, as shown on the audited consolidated balance sheet contained in the latest annual report to stockholders of the Company. (ii) For purposes of subsection 6.2(b)(i) above, the term "CONSOLIDATED NET WORTH" shall mean the aggregate of capital and surplus of the Company and its consolidated Subsidiaries, less minority interests in Subsidiaries, determined in accordance with GAAP; and the term "ATTRIBUTABLE DEBT" shall mean, as of any particular time, the present value, discounted at a rate per annum equal to the interest rate set forth in the form of Debenture set forth in the Indenture, compounded semi-annually, of the obligation of a lessee for rental payments during the remaining term of any lease (including any period for which such lease has been extended or may, at the option of the lessor, be extended); the net amount of rent required to be paid for any such period shall be the total amount of the rent payable by the lessee with respect to such period, but may exclude amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, water rates and similar charges; and, in the case of any lease which is terminable by the lessee upon the payment of a penalty, such net amount shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated. (c) If, upon any consolidation or merger of any Restricted Subsidiary with or into any other corporation, or upon any consolidation or merger of any other corporation with or into the Company or any Restricted Subsidiary or upon any sale or conveyance of the property of any Restricted Subsidiary as an entirety or substantially as an entirety to any other Person, or upon any acquisition by the Company or any Restricted Subsidiary by purchase or otherwise of all or any part of the property of 50 any other Person, any Important Property theretofore owned by the Company or such Restricted Subsidiary would thereupon become subject to any Mortgage not permitted by the terms of subsection (a) or (b) of this subsection 6.2, the Company, prior to such consolidation, merger, sale or conveyance, or acquisition, will, or will cause such Restricted Subsidiary to, secure payment of the principal of and interest on the Loans (equally and ratably with or prior to any other indebtedness of the Company or such Subsidiary then entitled thereto) by a direct lien on all such property prior to all liens other than any liens theretofore existing thereon by an assumption agreement or otherwise. (d) If at any time the Company or any Restricted Subsidiary shall issue, incur, assume or guarantee any Debt secured by any Mortgage not permitted by this subsection 6.2, to which the covenant in subsection 6.2(a) is applicable, the Company will promptly deliver to the Administrative Agent (with counterparts for each Bank): (i) an officers' certificate signed by two Responsible Officers stating that the covenant of the Company contained in subsections (a) or (c) of this subsection 6.2 has been complied with; and (ii) An opinion of counsel satisfactory to the Administrative Agent to the effect that such covenant has been complied with, and that any instruments executed by the Company in the performance of such covenant comply with the requirements of such covenant. 6.3 LIMITATIONS ON SALE AND LEASE-BACK TRANSACTIONS. Enter into any arrangement with any Person providing for the leasing to the Company or any Restricted Subsidiary of any Important Property owned or hereafter acquired by the Company or such Restricted Subsidiary (except for temporary leases for a term, including any renewal thereof, of not more than three years and except for leases between the Company and a Restricted Subsidiary or between Restricted Subsidiaries), which Important Property has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person (herein referred to as a "SALE AND LEASE-BACK TRANSACTION") unless the net proceeds of such sale are at least equal to the fair value (as determined by the Board of Directors) of such property and either (a) the Company or such Restricted Subsidiary would be entitled, pursuant to the provisions of (1) subsection 6.2(a)(i) or (2) subsection 6.2(b), to incur Debt secured by a Mortgage on the Important Property to be leased without equally and ratably securing the Loans, or (b) the Company shall, and in any such case the Company covenants that it will, within 120 days of the effective date of any such arrangement, apply an amount equal to the fair value (as so determined) of such property to the reduction of the Commitments (to be accompanied by prepayment of the Loans in accordance with subsection 2.6 to the extent that the principal amount thereof outstanding prior to such prepayment would exceed 51 the Commitments as so reduced) or to the payment or other retirement of funded debt for money borrowed, incurred or assumed by the Company which ranks senior to or PARI PASSU with the Loans or of funded debt for money borrowed, incurred or assumed by any Restricted Subsidiary (other than, in either case, funded debt owned by the Company or any Restricted Subsidiary). For this purpose, funded debt means any Debt which by its terms matures at or is extendable or renewable at the sole option of the obligor without requiring the consent of the obligee to a date more than twelve months after the date of the creation of such Debt. 6.4 CONSOLIDATED TANGIBLE NET WORTH. Permit Consolidated Tangible Net Worth as at the end of any fiscal quarter of the Company and its consolidated Subsidiaries (including the last quarter of any fiscal year of the Company and its consolidated Subsidiaries) to be less than $1,600,000,000. SECTION 7. NEGATIVE COVENANTS OF THE CAPITAL CORPORATION The Capital Corporation hereby agrees that, so long as there is any obligation by any Bank to make Loans to the Capital Corporation hereunder, any Loan of the Capital Corporation remains outstanding and unpaid or any other amount is owing by the Capital Corporation to any Bank or either Agent hereunder, the Capital Corporation shall not, nor in the case of the agreements set forth in subsection 7.3 shall it permit any of its Subsidiaries to, directly or indirectly (unless the Required Banks shall otherwise consent in writing): 7.1 FIXED CHARGES RATIO. Permit the ratio of Net Earnings Available for Fixed Charges to Fixed Charges for any fiscal quarter of the Capital Corporation and its consolidated Subsidiaries (including the last quarter of any fiscal year of the Capital Corporation and its consolidated Subsidiaries) to be less than 1.05 to 1. 7.2 CONSOLIDATED SENIOR DEBT TO CONSOLIDATED CAPITAL BASE. Permit the ratio of Consolidated Senior Debt to Consolidated Capital Base as at the end of any fiscal quarter of the Capital Corporation and its consolidated Subsidiaries (including the end of any fiscal year of the Capital Corporation and its consolidated Subsidiaries) to be more than 8 to 1. 7.3 LIMITATION ON LIENS. Issue, incur, assume or guarantee any Debt secured by any Mortgage upon any of its property or assets, or any of the property or assets of any of its Subsidiaries (whether any such property or assets is now owned or hereafter acquired) without in any such case effectively providing, concurrently with the issuance, incurrence, assumption or guaranty of any such Debt, that the Loans and all other amounts hereunder (together with, if the Capital Corporation shall so determine, any other indebtedness of or guaranty by such 52 Borrower or such Subsidiary ranking equally with the Loans then existing or thereafter created) shall be secured equally and ratably with or prior to such Debt; PROVIDED, HOWEVER, that the foregoing restrictions shall not apply to: (a) Mortgages on fixed assets or other physical properties hereafter acquired to secure all or part of the purchase price thereof or the acquiring hereafter of such assets or properties subject to any existing lien or charge securing indebtedness (whether or not assumed); (b) easements, liens, franchises or other minor encumbrances on or over any real property which do not materially detract from the value of such property or its use in the business of the Capital Corporation or a Subsidiary of the Capital Corporation; (c) any deposit or pledge of assets (i) with any surety company or clerk of any court, or in escrow, as collateral in connection with or in lieu of, any bond on appeal from any judgment or decree against the Capital Corporation or a Subsidiary of the Capital Corporation, or in connection with other proceedings or actions at law or in equity by or against the Capital Corporation or a Subsidiary of the Capital Corporation or (ii) as security for the performance of any contract or undertaking not directly or indirectly related to the borrowing of money or the securing of indebtedness, if made in the ordinary course of business, or (iii) with any governmental agency, which deposit or pledge is required or permitted to qualify the Capital Corporation or a Subsidiary of the Capital Corporation to conduct business, to maintain self-insurance, or to obtain the benefits of any law pertaining to workmen's compensation, unemployment insurance, old age pensions, social security, or similar matters, or (iv) made in the ordinary course of business to obtain the release of mechanics', workmen's, repairmen's, warehousemen's or similar liens, or the release of property in the possession of a common carrier; (d) Mortgages by a Subsidiary as security for indebtedness owed to the Capital Corporation; (e) liens for taxes and governmental charges not yet due or contested by appropriate proceedings in good faith; (f) Mortgages existing on property acquired by the Capital Corporation or a Subsidiary of the Capital Corporation through the exercise of rights arising out of defaults on receivables acquired in the ordinary course of business; (g) judgment liens, so long as the finality of such judgment is being contested in good faith and execution thereon is stayed; 53 (h) any Mortgage (other than directly or indirectly to secure borrowed money) if, after giving effect thereto, the aggregate principal sums secured by pledges or liens otherwise within the restrictions in clauses (a) through (h) of this subsection 7.3 do not exceed $500,000; (i) any transaction characterized as a sale of receivables (retail or wholesale) but reflected as secured indebtedness on a balance sheet in conformity with generally accepted accounting principles in the United States of America; and (j) Mortgages on Margin Stock owned by the Capital Corporation and its Subsidiaries to the extent such Margin Stock exceeds 25% of the fair market value of property and assets of the Capital Corporation and its Subsidiaries (including Margin Stock). 7.4 CONSOLIDATION; MERGER. Merge or consolidate with, or sell or convey (other than a conveyance by way of lease) all or substantially all of its assets to, any other corporation, unless (a) the Capital Corporation shall be the surviving corporation in the case of a merger or the surviving, resulting or transferee corporation (the "SUCCESSOR CORPORATION") shall be a corporation organized under the laws of the United States or any State thereof or the District of Columbia and shall expressly assume the due and punctual performance of all of the agreements, covenants and obligations of the Capital Corporation under this Agreement by supplemental agreement satisfactory to the Administrative Agent and executed and delivered to the Administrative Agent by the successor corporation and (b) the Capital Corporation or such successor corporation, as the case may be, shall not, immediately after such merger, consolidation, sale or conveyance, be in default in the performance of any such agreements, covenants or obligations; PROVIDED, HOWEVER, that the Capital Corporation may merge or consolidate with, or sell or convey substantially all of its assets to, the Company, if (i) the Company is the successor corporation (as defined above) and (ii) subclause (b) above is complied with. Upon any such merger, consolidation, sale or conveyance, the successor corporation shall succeed to and be substituted for, and may exercise every right and power of and shall be subject to all the obligations of, the Capital Corporation under this Agreement, with the same effect as if the successor corporation had been named as the Capital Corporation herein and therein. SECTION 8. EVENTS OF DEFAULT Upon the occurrence and during the continuance of any of the following events: (a) Either Borrower shall fail to pay any principal of any Loan when due in accordance with the terms hereof or to 54 pay any interest on any Loan, in each case within two Business Days after any such amount becomes due in accordance with the terms hereof or shall fail to pay any other amount payable hereunder within five Business Days after any such other amount becomes due in accordance with the terms thereof or hereof; or (b) Any representation or warranty made or pursuant to subsection 4.2 deemed made by either Borrower herein or which is contained in any material certificate, material document or material financial statement or other material statement furnished at any time under or in connection with this Agreement shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or (c) The Company shall default in the observance or performance of any agreement contained in subsections 5.6, 6.1 or 6.4, or the Capital Corporation shall default in the observance or performance of any agreement contained in subsections 7.1, 7.2 or 7.4; or (d) Either Borrower shall default in the observance or performance of any agreement contained in this Agreement (other than those agreements referred to above in this Section 8), and such default shall continue unremedied for a period of 30 days after written notice thereof shall have been given to such Borrower by the Administrative Agent or any of the Banks through the Administrative Agent; or (e) (i) Either Borrower or any of its Significant Subsidiaries shall default in any payment of principal of or interest on any indebtedness for borrowed money (other than the Loans) in a principal amount in excess of $15,000,000 in the aggregate, or any interest or premium thereon, when due (whether at scheduled maturity or by required prepayment, acceleration, demand or otherwise) and such failure shall continue beyond the period of grace, if any, provided in the instrument or agreement under which such indebtedness was created; or (ii) any other default (other than any default arising solely out of either Borrower's, or any of its Significant Subsidiaries', violation of any arrangement with any Bank, or any affiliate of any Bank, in any way restricting such Borrower's, or such Significant Subsidiary's, right or ability to sell, pledge or otherwise dispose of Margin Stock other than Restricted Margin Stock), or any other event that with notice or the lapse of time, or both, would constitute such a default, under any agreement or instrument relating to any such indebtedness for borrowed money (other than the Loans), shall occur and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such default or event is to accelerate the maturity of such indebtedness; or (iii) any such indebtedness shall, by reason of default, be 55 declared to be due and payable, or required to be prepaid, prior to the stated maturity thereof (unless such indebtedness is declared due and payable, or required to be prepaid, solely by reason of either Borrower's, or any of its Significant Subsidiaries', violation of any arrangement with any Bank, or any affiliate of any Bank, in any way restricting such Borrower's, or such Significant Subsidiary's, right or ability to sell, pledge or otherwise dispose of Margin Stock other than Restricted Margin Stock); or (f) (i) Either Borrower or any of its Significant Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its assets, or such Borrower or any of its Significant Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against either Borrower or any of its Significant Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 90 days; or (g) Any action is undertaken to terminate any Plan as to which either Borrower, or any Subsidiary of either Borrower, may have liability, or any such Plan is terminated or such Borrower or Subsidiary withdraws from such Plan, or any Reportable Event as to any such Plan shall occur, and there shall exist a deficiency in the assets available to satisfy the benefits guaranteeable under ERISA with respect to such Plan, in the aggregate for all such Plans with respect to which any of the foregoing shall have occurred in the immediately preceding 12 consecutive months, of more than 25% of the Consolidated Tangible Net Worth of such Borrower; or (h) Any Person shall own beneficially, directly or indirectly, 30% or more of the common stock of the Company; or any Person shall have the power, direct or indirect, to vote securities having 30% or more of the ordinary voting power for the election of directors of the Company or shall own beneficially, directly or indirectly, securities having such power, PROVIDED that there shall not be included among the securities as to which any such Person has such power to vote or which such Person so owns securities owned by such 56 Person as nominee for the direct or indirect beneficial owner thereof or securities as to which such power to vote arises by virtue of proxies solicited by the management of the Company; then, and in any such event, (a) if such event is an Event of Default specified in paragraph (f) above, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the Loans shall immediately become due and payable, and (b) if such event is any Event of Default specified in paragraphs (a) or (e), then with the consent of the Majority Banks, the Administrative Agent may, or upon the request of the Majority Banks, the Administrative Agent shall, or if such Event is an Event of Default specified in paragraphs (b), (c), (d), (g) or (h), then with the consent of the Required Banks, the Administrative Agent may, or upon the request of the Required Banks, the Administrative Agent shall, take either or both of the following actions: (i) by notice to the Borrowers, declare the Commitments to be terminated forthwith, whereupon the Commitments shall immediately terminate; and (ii) by notice of default to the Borrowers, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement to be due and payable forthwith, whereupon the same shall immediately become due and payable. Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived with respect to this Agreement. SECTION 9. THE AGENTS 9.1 APPOINTMENT. (a) Each Bank hereby irrevocably designates and appoints Chemical as the Administrative Agent of such Bank under this Agreement, and each Bank hereby irrevocably authorizes Chemical, as the Administrative Agent for such Bank, to take such action on its behalf under the provisions of this Agreement and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Bank, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Administrative Agent. (b) Each Bank hereby irrevocably designates and appoints Deutsche Bank AG as the Auction Agent of such Bank under this Agreement, and each Bank hereby irrevocably authorizes Deutsche Bank AG, as the Auction Agent for such Bank, to take such action on its behalf under the provisions of this Agreement and to exercise such powers and perform such duties as are 57 expressly delegated to the Auction Agent by the terms of this Agreement, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Auction Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Bank, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Auction Agent. (c) Notwithstanding anything to the contrary contained in this Agreement, the parties hereto hereby agree that no Managing Agent or Co-Agent shall have any rights, duties or responsibilities in its capacity as a Managing Agent or a Co- Agent, as the case may be, and that no Managing Agent or Co-Agent shall have the authority to take any action hereunder in its capacity as such. 9.2 DELEGATION OF DUTIES. Each Agent may execute any of its duties under this Agreement by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Each Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care. 9.3 EXCULPATORY PROVISIONS. Neither Agent nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable to any Bank for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement (except for its or such Person's own gross negligence or wilful misconduct), or (ii) responsible in any manner to any of the Banks for any recitals, statements, representations or warranties made by the Borrowers or any officer thereof contained in this Agreement or in any certificate, report, statement or other document referred to or provided for in, or received by any Agent under or in connection with, this Agreement or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or for any failure of the Borrowers to perform their obligations hereunder. Neither Agent shall be under any obligation to any Bank to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement, or to inspect the properties, books or records of the Borrowers. 9.4 RELIANCE BY AGENTS. Each Agent shall be entitled to rely, and shall be fully protected in relying, upon any Loan, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, facsimile, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrowers), independent accountants and other 58 experts selected by such Agent. Each Agent may deem and treat the payee of any Loan as the owner thereof for all purposes except as provided in subsections 10.5(c) and 10.5(d). Each Agent shall be fully justified in failing or refusing to take any discretionary action under this Agreement unless it shall first receive such advice or concurrence of the Required Banks as it deems appropriate or it shall first be indemnified to its satisfaction by the Banks against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Each Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of the Required Banks, or all of the Banks (if the consent of all of the Banks is required), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Banks. 9.5 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received notice from a Bank or either Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Banks. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Majority Banks or the Required Banks, as applicable; PROVIDED that, unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Banks. 9.6 NON-RELIANCE ON AGENTS AND OTHER BANKS. Each Bank expressly acknowledges that neither Agent nor any of its respective officers, directors, employees, agents, attorneys-in- fact or affiliates has made any representations or warranties to it and that no act by such Agent hereinafter taken, including any review of the affairs of the Borrowers, shall be deemed to constitute any representation or warranty by such Agent to any Bank. Each Bank represents to each Agent that it has, independently and without reliance upon such Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of each Borrower and made its own decision to make its Loans hereunder and enter into this Agreement. Each Bank also represents that it will, independently and without reliance upon each Agent or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement, and to make such investigation as it deems necessary 59 to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrowers. Except for notices, reports and other documents expressly required to be furnished to the Banks by either Agent hereunder, such Agent shall not have any duty or responsibility to provide any Bank with any credit or other information concerning the business, operations, property, financial and other condition or creditworthiness of either Borrower which may come into the possession of such Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates. 9.7 INDEMNIFICATION. The Banks agree to indemnify each Agent in its capacity as such (to the extent not reimbursed by the Borrowers and without limiting the obligation of the Borrowers to do so), ratably (as reasonably determined by the Administrative Agent), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including without limitation at any time following the payment of the Loans) be imposed on, incurred by or asserted against such Agent in any way relating to or arising out of this Agreement, or any documents contemplated by or referred to herein or the transactions contemplated hereby or any action taken or omitted by such Agent under or in connection with any of the foregoing; PROVIDED that no Bank shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from such Agent's gross negligence or wilful misconduct. The agreements in this subsection 9.7 shall survive the payment of the Loans and all other amounts payable hereunder. 9.8 AGENTS IN THEIR INDIVIDUAL CAPACITIES. Each Agent and its respective affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrowers as though such Agent were not an Agent hereunder. With respect to its Loans made by it, each Agent shall have the same rights and powers under this Agreement as any Bank and may exercise the same as though it were not an Agent, and the terms "Bank" and "Banks" shall include the Administrative Agent and the Auction Agent in their respective individual capacity. 9.9 SUCCESSOR AGENTS. Each Agent may resign as Agent upon 30 days' notice thereof to the Borrowers and the Banks. If any Agent shall resign as Agent under this Agreement, then the Required Banks shall appoint from among the Banks a successor agent for the Banks which successor agent shall be approved by the Borrowers, whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent or the Auction Agent, as the case may be, and the term "Administrative Agent" or "Auction Agent", as the case may be, shall mean such successor agent effective upon its appointment, and the former Agent's rights, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such 60 former Agent or any of the parties to this Agreement. After any retiring Agent's resignation hereunder as Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. SECTION 10. MISCELLANEOUS 10.1 AMENDMENTS AND WAIVERS. With the written consent of the Required Banks, the Administrative Agent and the Borrowers may, from time to time, enter into written amendments, supplements or modifications hereto for the purpose of adding any provisions to this Agreement or changing in any manner the rights of the Banks or of the Borrowers hereunder, and with the consent of the Required Banks the Administrative Agent on behalf of the Banks may execute and deliver to the Borrowers a written instrument waiving, on such terms and conditions as the Administrative Agent may specify in such instrument, any of the requirements of this Agreement or any Default or Event of Default and its consequences; PROVIDED, HOWEVER, that no such waiver, amendment, supplement or modification shall (a) extend the maturity of any Loan, or reduce the rate or extend the time of payment of interest thereon, or reduce the principal amount thereof, or reduce the rate of any fee payable hereunder or extend the time of payment thereof, in each case, without the written consent of (i) with respect to any such change to any Committed Rate Loan, each Bank and (ii) with respect to any such change to any Bid Loan, the Bank which made such Bid Loan, or (b) change the amount of any Bank's Commitment or the terms of its obligation to make Loans hereunder or amend, modify or waive any provision of this subsection 10.1 or reduce the percentage specified in the definition of Majority Banks or Required Banks, or consent to the assignment or transfer by either Borrower of any of its rights and obligations under this Agreement, in each case without the written consent of each Bank, or (c) amend, modify or waive any provision of Section 9 without the written consent of the then Administrative Agent and Auction Agent, or (d) extend the Termination Date with respect to any Bank without the written consent of such Bank. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Banks and shall be binding upon the Borrowers, the Banks and the Agents. In the case of any waiver, the Borrowers, the Banks and the Agents shall be restored to their former position and rights hereunder, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. Anything contained in the foregoing to the contrary notwithstanding, the relevant Borrower and the relevant Bank with respect to a Negotiated Rate Loan may, from time to time, enter into amendments, supplements or modifications for the purpose of adding any provisions to such Negotiated Rate Loans or changing in any manner the rights of such Bank and such Borrower 61 thereunder and such Bank may waive any of the requirements of such Negotiated Rate Loan; PROVIDED, HOWEVER, that such Borrower and such Bank shall notify the Administrative Agent in writing of any extension of the maturity of such Negotiated Rate Loan or reduction of the principal amount thereof; PROVIDED, FURTHER, that such Borrower and such Bank shall not extend the maturity of such Negotiated Rate Loan beyond the last day of the Commitment Period. 10.2 NOTICES. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing, by facsimile transmission, by telephone confirmed in writing or by telegraph and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or when deposited in the mail, air postage prepaid, or, in the case of facsimile transmission, when received, or, in the case of telegraphic notice, when delivered to the telegraph company or department, addressed as follows in the case of the Borrowers, the Administrative Agent and the Auction Agent, and as set forth on Schedule III in the case of the other parties hereto, or to such address or other address as may be hereafter notified by the respective parties hereto: The Borrowers: The Company: Deere & Company John Deere Road Moline, Illinois 61265 Attention: Treasurer Telephone: 309-765-4423 Facsimile: 309-765-5021 The Capital Corporation: John Deere Capital Corporation First National Bank Building 1 East First Street Reno, Nevada 89501 Attention: Manager Telephone: 702-786-5527 Facsimile: 702-786-4145 with a copy to: Deere & Company John Deere Road Moline, Illinois 61265 Attention: Treasurer Facsimile: 309-765-5021 The Administrative Agent: Chemical Bank 270 Park Avenue New York, New York 10017 Attention: John J. Huber, III Telephone: 212-270-1402 Facsimile: 212-270-2625 62 The Auction Agent: Deutsche Bank AG Chicago Branch c/o Deutsche Bank AG New York Branch 31 West 52nd Street New York, New York 10019 Attention: Loan Syndications Telephone: 212-474-7041 Facsimile: 212-474-7048 provided that any notice, request or demand to or upon the Administrative Agent, the Auction Agent or the Banks pursuant to subsections 2.1, 2.2, 2.5, 2.6, 2.9, 2.11 and 9.9 shall not be effective until received (including receipt by telephone if permitted hereby). 10.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay in exercising, on the part of either Borrower, the Administrative Agent, the Auction Agent or any Bank, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 10.4 PAYMENT OF EXPENSES AND TAXES. (a) The Company agrees (i) to pay or reimburse the Administrative Agent for all its out-of-pocket costs and expenses incurred in connection with the preparation and execution of, and any amendment, supplement or modification to, this Agreement and any other documents prepared in connection herewith, and the consummation of the transactions contemplated hereby and thereby in such manner and in such amounts as shall be agreed to in writing by the Company and the Administrative Agent, (ii) to pay or reimburse the Administrative Agent for the reasonable fees and disbursements of counsel to the Administrative Agent incurred in connection with the preparation and execution of, and any amendment, supplement, modification to, this Agreement and other documents prepared in connection herewith, and the consummation of the transaction contemplated hereby and thereby, and (iii) to pay or reimburse each Bank, the Administrative Agent and the Auction Agent for all its out-of-pocket costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement and any such other documents, including, without limitation, fees and disbursements of counsel to the Administrative Agent and the Auction Agent and one counsel representing the Banks. (b) The Borrowers agree jointly and severally to indemnify and hold harmless the Administrative Agent, the Auction Agent and each Bank against any and all losses, claims, damages and liabilities (other than in connection with actions, suits and proceedings by any of the Banks against any of the other Banks), 63 joint or several, to which they or any of them may become subject insofar as such losses, claims, damages and liabilities arise out of, relate to or are based on this Agreement (including the responsibilities, duties and obligations of the Banks hereunder and their agreement to make Loans hereunder) in connection with any acquisition or proposed acquisition of any securities or assets by a Borrower or any of its Subsidiaries, and shall reimburse each such indemnified party for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such loss, claim, damage or liability, subject to the following paragraph. This indemnity agreement shall be in addition to any liability which either Borrower may otherwise have. (c) Promptly after receipt by an indemnified party under subsection 10.4(b) of written notice of any loss, claim, damage or liability in respect of which indemnity may be sought by it hereunder, such indemnified party will, if a claim is to be made against the Borrowers, notify the Borrowers thereof in writing; but the omission so to notify the Borrowers will not relieve the Borrowers from any liability (otherwise than under this subsection 10.4) which they may have to any indemnified party except as may be required or provided otherwise than under this subsection 10.4. Thereafter, the indemnified party and the Borrowers shall consult, to the extent appropriate, with a view to minimizing the cost to the Borrowers of their obligations hereunder. In case any indemnified party receives written notice of any loss, claim, damage or liability in respect of which indemnity may be sought hereunder by it and it notifies the Borrowers thereof, the Borrowers will be entitled to participate therein and, to the extent that they may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof, with counsel reasonably satisfactory at all times to such indemnified party; PROVIDED, HOWEVER, that (i) if the parties against whom any loss, claim, damage or liability arises include both the indemnified party and a Borrower or any Subsidiary of a Borrower and the indemnified party shall have reasonably concluded that there may be legal defenses available to it or other indemnified parties which are different from or additional to those available to a Borrower or any Subsidiary of a Borrower and may conflict therewith, the indemnified party or parties shall have the right to select one separate counsel for such indemnified party or parties to assume such legal defenses and to otherwise participate in the defense of such loss, claim, damage or liability on behalf of such indemnified party or parties and (ii) if any loss, claim, damage or liability arises out of actions brought by or for the benefit of a Borrower or any Subsidiary of a Borrower, the indemnified party or parties shall have the right to select their counsel and to assume and direct the defense thereof and neither Borrower shall be entitled to participate therein or assume the defense thereof. Upon receipt of notice from the Borrowers to such indemnified party of their election so to assume the defense of such loss, claim, damage or 64 liability and approval by the indemnified party of counsel, the Borrowers shall not be liable to such indemnified party under this subsection 10.4 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the proviso to the next preceding sentence, (ii) the Borrowers shall not have employed and continued to employ counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action or (iii) the Borrowers shall have authorized the employment of counsel for the indemnified party at the expense of the Borrowers. (d) Notwithstanding any other provision contained in this subsection 10.4, (i) the Borrowers shall not be liable for any settlement, compromise or consent to the entry of any order adjudicating or otherwise disposing of any loss, claim, damage or liability effected without their consent and (ii) after the Borrowers have assumed the defense of any loss, claim, damage or liability under the preceding paragraph with respect to any Bank, they will not settle, compromise or consent to entry of any order adjudicating or otherwise disposing thereof (1) if such settlement, compromise or order involves the payment of money damages, except if the Borrowers agree with such Bank to pay such money damages, and, if not simultaneously paid, to furnish such Bank with satisfactory evidence of their ability to pay such money damages, and (2) if such settlement, compromise or order involves any relief against such Bank, other than the payment of money damages, except with the prior written consent of such Bank. (e) The agreements in this subsection 10.4 shall survive repayment of the Loans and all other amounts payable hereunder. 10.5 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; PURCHASING BANKS. (a) This Agreement shall be binding upon and inure to the benefit of the Borrowers, the Banks, the Administrative Agent, the Auction Agent and their respective successors and assigns, EXCEPT THAT the Borrowers may not assign or transfer any of their rights or obligations under this Agreement without the prior written consent of each Bank. (b) Any Bank may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time sell to one or more banks or other financial institutions ("PARTICIPANTS") participating interests in the Loans, Commitments and other interest of such Bank hereunder. In the event of any such sale by a Bank of participating interests to a Participant, such Bank's obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Bank shall remain solely responsible for the performance thereof, such Bank shall remain the holder of any such Loan for all purposes under this Agreement, and the Borrowers, the 65 Administrative Agent and the Auction Agent shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement. (c) Any Bank may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time assign to one or more banks or other financial institutions ("LOAN ASSIGNEES") any Bid Loan or Negotiated Rate Loan or portion thereof owing to such Bank, pursuant to a Loan Assignment executed by the assignor Bank and the Loan Assignee. Upon such execution, from and after the Transfer Effective Date specified in such Loan Assignment, the Loan Assignee shall, to the extent of the assignment provided for in such Loan Assignment and to the extent permitted by applicable law, be deemed to have the same rights and benefits with respect to such Bid Loans and Negotiated Rate Loans and the same obligation to share pursuant to subsection 10.6 as it would have had if it were a Bank hereunder; PROVIDED, that unless such Loan Assignment shall otherwise specify and a copy of such Loan Assignment shall have been delivered to the Administrative Agent for its acceptance and recording in the Register in accordance with subsection 10.5(f), the assignor Bank shall act as collection agent for the Loan Assignee, and in the case of Bid Loans, the Administrative Agent shall pay all amounts received from the relevant Borrower which are allocable to the assigned Bid Loan directly to the assignor Bank without any further liability to the relevant Loan Assignee, and, in the case of Negotiated Rate Loans, the relevant Borrower shall pay all amounts due under the assigned Negotiated Rate Loan directly to the assignor Bank without any further liability to the Loan Assignee. At the request of any Loan Assignee, on or promptly after the Transfer Effective Date specified in such Loan Assignment, the relevant Borrower, at its own expense, shall execute and deliver to the Loan Assignee a promissory note with respect to the Bid Loans or Negotiated Rate Loans to the order of such Loan Assignee in an amount equal to the Bid Loan or Negotiated Rate Loan assigned. Such note shall be dated the Borrowing Date in respect of such Bid Loan or Negotiated Rate Loan and shall otherwise be in the form of Exhibit M hereto; PROVIDED, HOWEVER, that such Borrower shall not be required to execute and deliver more than an aggregate of two notes with respect to the Bid Loans of any Bank with the same Interest Period at any time outstanding. The Loan Assignee shall not, by virtue of such Loan Assignment, become a party to this Agreement or have any rights to consent to or refrain from consenting to any amendment, waiver or other modification of any provision of this Agreement or any related document; PROVIDED, that (i) the assignor Bank and the Loan Assignee may, in their discretion, agree between themselves upon the manner in which the assignor Bank will exercise its rights under this Agreement and any related document, and (ii) if a copy of such Loan Assignment shall have been delivered to the Administrative Agent for its acceptance and recording in the Register in accordance with subsection 10.5(f), neither the principal amount of, the interest rate on, nor the maturity date of any Bid Loan or Negotiated Rate 66 Loan assigned to a Loan Assignee will be modified without written consent of such Loan Assignee. (d) Any Bank may, in the ordinary course of its commercial banking business and in accordance with applicable law, with the consent of the Borrowers, sell to any Bank or any affiliate thereof and to one or more additional banks or other financial institutions ("PURCHASING BANKS"), portions (subject to the last sentence of this subsection 10.5(d)) of its rights and obligations under this Agreement, pursuant to a Commitment Transfer Supplement, executed by such Purchasing Bank and such transferor Bank (and, in the case of a Purchasing Bank that is not then a Bank or an affiliate thereof, by the Borrowers and the Administrative Agent), and delivered to the Administrative Agent for its acceptance and recording in the Register. Upon such execution, delivery, acceptance and recording, from and after the Transfer Effective Date specified in such Commitment Transfer Supplement, (i) the Purchasing Bank thereunder shall be a party hereto and, to the extent provided in such Commitment Transfer Supplement, have the rights and obligations of a Bank hereunder with a Commitment as set forth therein, and (ii) the transferor Bank thereunder shall cease to have rights and obligations under this Agreement to which the Purchasing Bank has succeeded (and, in the case of a Commitment Transfer Supplement covering all or the remaining portion of a transferor Bank's rights and obligations under this Agreement, such transferor Bank shall cease to be a party hereto). Such Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Bank and the resulting adjustment of Commitment Percentages arising from the purchase by such Purchasing Bank of a portion of the rights and obligations of such transferor Bank under this Agreement. On or promptly after the Transfer Effective Date specified in such Commitment Transfer Supplement, the Purchasing Bank and the Administrative Agent, on behalf of such Purchasing Bank, shall open and maintain in the name of each Borrower a Loan Account with respect to such Purchasing Bank's Committed Rate Loans and Bid Loans to such Borrower. Anything contained in this Agreement to the contrary notwithstanding, no Bank may sell any portion of its rights and obligations under this subsection 10.5(d) to any bank or financial institution if after giving effect to such sale the Commitment of either of the selling and purchasing institutions would be less than $5,000,000. (e) The Administrative Agent shall maintain at its address referred to in subsection 10.2 a copy of each Loan Assignment and each Commitment Transfer Supplement delivered to it and a register (the "REGISTER") for the recordation of (i) the names and addresses of the Banks and the Commitment of, and principal amount of the Loans (other than Negotiated Rate Loans) owing to, each Bank from time to time, and (ii) with respect to each Loan Assignment delivered to the Administrative Agent, the name and address of the Loan Assignee and the principal amount of 67 each Bid Loan owing to such Loan Assignee. The entries in the Register shall constitute PRIMA FACIE evidence of the accuracy of the information so recorded, and the Borrowers, the Administrative Agent and the Banks may treat each Person whose name is recorded in the Register as the owner of the Loan recorded therein for all purposes of this Agreement. The Register shall be available for inspection by the Company or any Bank or Loan Assignee at any reasonable time and from time to time upon reasonable prior notice. (f) Upon its receipt of a Loan Assignment executed by an assignor Bank and a Loan Assignee, together with payment to the Administrative Agent (by the assignor Bank or the Loan Assignee, as agreed between them) of a registration and processing fee of $2,500, the Administrative Agent shall (i) accept such Loan Assignment, (ii) record the information contained therein in the Register and (iii) give prompt notice of such acceptance and recordation to the assignor Bank, the Loan Assignee and the Borrowers. Upon its receipt of a Commitment Transfer Supplement executed by a transferor Bank and a Purchasing Bank (and, in the case of a Purchasing Bank that is not then a Bank or an affiliate thereof, by the Borrowers and the Administrative Agent) together with payment to the Administrative Agent (by the transferor Bank or the Purchasing Bank, as agreed between them) of a registration and processing fee of $2,500 for each Purchasing Bank listed in such Commitment Transfer Supplement, the Administrative Agent shall (A) accept such Commitment Transfer Supplement, (B) record the information contained therein in the Register and (C) give prompt notice of such acceptance and recordation to the Banks and the Borrowers. (g) The Company authorizes each Bank to disclose to any Participant, Loan Assignee or Purchasing Bank (each, a "TRANSFEREE") and any prospective Transferee any and all financial information in such Bank's possession concerning the Borrowers and their Subsidiaries which has been delivered to such Bank by or on behalf of the Borrowers pursuant to this Agreement or in connection with such Bank's credit evaluation of the Borrowers and their Subsidiaries prior to becoming a party to this Agreement, PROVIDED that with respect to confidential data or information described in subsection 10.7, such confidential data may be disclosed only to (i) a Purchasing Bank and/or (ii) any other Transferee or prospective Transferee with the Borrowers' prior written consent, which consent shall not be unreasonably withheld with respect to prospective Participants, Participants, prospective Loan Assignees and Loan Assignees; PROVIDED, HOWEVER, that such Bank shall not disclose any such confidential data or information pursuant to this subsection 10.5(g) unless (i) it has notified the Purchasing Bank or other Transferee or potential Transferee that such data or information are confidential, such notification to be in writing if such data or information are disclosed in writing and orally if such data or information are disclosed orally, and (ii) such Purchasing 68 Bank, Transferee or potential Transferee has agreed in writing to be bound by the provisions of subsection 10.7. (h) If, pursuant to this subsection, any loan participation or series of loan participations is sold or any interest in this Agreement is transferred to any Transferee, the transferor Bank shall cause such Transferee, concurrently with the effectiveness of such transfer or the first transfer to occur in a series of transfers between such transferor Bank and such Transferee, (i) to represent to the transferor Bank (for the benefit of the transferor Bank, the Administrative Agent and the Borrowers) either (A) that it is incorporated under the laws of the United States or a state thereof or (B) that under applicable law and treaties no taxes will be required to be withheld by the Administrative Agent, the Borrowers or the transferor Bank with respect to any payments to be made to such Transferee in respect of the Loans, (ii) to furnish to the transferor Bank, the Administrative Agent and the Borrowers (A) either (I) a statement that it is incorporated under the laws of the United States or a state thereof or (II) if it is not so incorporated, a letter in duplicate in the form of Exhibit J or Exhibit K, as appropriate, and two duly completed copies of United States Internal Revenue Service Form 4224 or 1001 or successor applicable form, as the case may be, certifying in each case that such Transferee is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, and (B) an Internal Revenue Service Form W-8 or W-9, or successor applicable form, as the case may be, to establish an exemption from United States backup withholding tax, and (iii) to agree (for the benefit of the transferor Bank, the Administrative Agent and the Borrowers) to provide the transferor Bank, the Administrative Agent and the Borrowers a new Form 4224 or 1001 and Form W-8 or W-9, or successor applicable form or other manner of certification, on or before the date that any such letter or form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent letter and form previously delivered by it, certifying in the case of a Form 1001 or 4224 that such Transferee is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income tax, and in the case of a Form W-8 or W-9 establishing exemption from United States backup withholding tax. The Administrative Agent shall not be responsible for obtaining such documentation except from its own Transferees. (i) Nothing in this subsection 10.5 shall prohibit any Bank from pledging or assigning its Loans to any Federal Reserve Bank in accordance with applicable law. 10.6 ADJUSTMENTS. If any Bank other than a Cancelled Bank (a "BENEFITTED BANK") shall at any time receive any payment of all or part of its Committed Rate Loans, or interest thereon or facility fee in respect thereof, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set- 69 off, pursuant to events or proceedings of the nature referred to in clause (e) of Section 8, or otherwise) in a greater proportion than any such payment to and collateral received by any other Bank, if any, in respect of such other Bank's Committed Rate Loans, or interest thereon, such benefitted Bank shall purchase for cash from the other Banks such portion of each such other Bank's Committed Rate Loans, or shall provide such other Banks with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefitted Bank to share the excess payment or benefits of such collateral or proceeds ratably with each of the Banks; PROVIDED, HOWEVER, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefitted Bank, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. The Borrowers agree that each Bank so purchasing a portion of another Bank's Committed Rate Loans may exercise all rights of payment (including, without limitation, rights of set-off) with respect to such portion as fully as if such Bank were the direct holder of such portion. 10.7 CONFIDENTIALITY. (a) Each of the Administrative Agent, the Auction Agent and the Banks shall, subject as hereinafter provided, keep confidential from any third party any data or information received by them from the Borrowers pursuant to this Agreement which, if provided in writing, is designated in writing as such, and if provided orally, is designated orally as such by the Borrowers except: (i) any such data or information as is or becomes publicly available or generally known otherwise than as a result of any breach of the provisions of this subsection 10.7; (ii) as required by law, rule, regulation or official direction; (iii) as may be necessary to protect as against the Borrowers or either of them the interests of the Banks or any of them under this Agreement; (iv) to the extent permitted under subsection 10.5; and (v) to the attorneys, accountants and regulators of such Banks, and to each other Bank. (b) Each of the Administrative Agent, the Auction Agent and the Banks shall use their reasonable efforts to ensure that any confidential data or information received by them from the Borrowers pursuant to this Agreement which is disclosed to employees of the Administrative Agent, the Auction Agent and the Banks (as the case may be) is so disclosed only to the extent necessary for purpose of the administration of this Agreement 70 and, in all cases, on the condition that such information and data shall be kept confidential except for such purpose. (c) The provisions of this subsection 10.7 shall survive the payment in full of all amounts payable hereunder and the termination of this Agreement. 10.8 COUNTERPARTS. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrowers and the Administrative Agent. 10.9 GOVERNING LAW. This Agreement and the rights and obligations of the parties under this Agreement shall be governed by, and construed and interpreted in accordance with, the law of the State of New York. 71 10.10 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. All judicial proceedings brought against the Borrowers with respect to this Agreement may be brought in any state or federal court of competent jurisdiction in the State of New York, and, by execution and delivery of this Agreement, the Borrowers accept, for themselves and in connection with their properties, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts and irrevocably agree to be bound by any final judgment rendered thereby in connection with this Agreement from which no appeal has been taken or is available. The Borrowers irrevocably agree that all process in any such proceedings in any such court may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to them at their addresses set forth in subsection 10.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto, such service being hereby acknowledged by the Borrowers to be effective and binding service in every respect. Each of the Borrowers, the Administrative Agent, the Auction Agent and the Banks irrevocably waives any objection, including without limitation, any objection to the laying of venue or based on the grounds of forum non conveniens which it may now or hereafter have to the bringing of any such action or proceeding in any such jurisdiction. Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of the Administrative Agent, the Auction Agent or any Bank to bring proceedings against the Borrowers in the courts of any other jurisdiction. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. DEERE & COMPANY Attested by: /s/ Michael A. Harring By: /s/ Nathan J. Jones - --------------------------- -------------------------------- Title: Assistant Secretary Title: Assistant Treasurer JOHN DEERE CAPITAL CORPORATION Attested by: /s/ Michael A. Harring By: /s/ Nathan J. Jones - --------------------------- -------------------------------- Title: Assistant Secretary Title: Assistant Treasurer 72 CHEMICAL BANK, as Administrative Agent, as a Managing Agent and as a Bank By: /s/ Jeffrey A. Marcks -------------------------------- Title: Managing Director DEUTSCHE BANK AG CHICAGO BRANCH, as Auction Agent and as a Managing Agent By: /s/ Dirk A. Quayle -------------------------------- Title: Corp. Fin. Director By: /s/ Thomas L. Newberry -------------------------------- Title: Vice President DEUTSCHE BANK AG CHICAGO AND/OR CAYMAN ISLAND BRANCHES, as a Managing Agent and as a Bank By: /s/ Dirk A. Quayle ------------------------------- Title: Corp. Fin. Director By: /s/ Thomas L. Newberry ------------------------------- Title: Vice President BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Co-Agent and as a Bank By: /s/ Patricia DelGrande ------------------------------- Title: Vice President 73 THE BANK OF NEW YORK, as a Co-Agent and as a Bank By: /s/ Charlotte Sohn -------------------------------- Title: Assistant Vice President BANQUE NATIONALE DE PARIS CHICAGO BRANCH, as a Co-Agent and as a Bank By: /s/ Alain Benard -------------------------------- Title: Executive Vice President THE CHASE MANHATTAN BANK N.A., as a Co-Agent and as a Bank By: /s/ Robert P. Jankowitz -------------------------------- Title: Managing Director MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as a Co-Agent and as a Bank By: /s/ William J. Stevenson -------------------------------- Title: Vice President SOCIETE GENERALE, as a Co-Agent and as a Bank By: /s/ Eric E.O. Siebert, Jr. -------------------------------- Title: Vice President THE BANK OF NOVA SCOTIA By: /s/ F.C.H. Ashby -------------------------------- Title: Senior Manager Loan Operations 74 CIBC INC. By: /s/ Stephanie E. Johnson -------------------------------- Title: Vice President COMMERZBANK AKTIENGESELLSCHAFT, GRAND CAYMAN BRANCH By: /s/ Paul F. Karlin -------------------------------- Title: Assistant Cashier CREDIT SUISSE By: /s/ Charles R. Shaw -------------------------------- Title: Member of Senior Management By: /s/ Kristinn R. Kristinsson -------------------------------- Title: Associate THE FIRST NATIONAL BANK OF CHICAGO By: /s/ Michael W. McCorkle -------------------------------- Title: Vice President THE FUJI BANK, LIMITED By: /s/ Peter L. Chinnici -------------------------------- Title: Joint General Manager 75 THE LONG-TERM CREDIT BANK OF JAPAN, LTD. CHICAGO BRANCH By: /s/ Richard E. Stahl -------------------------------- Title: Senior Vice President MELLON BANK, N.A. By: /s/ Jeffrey M. Anderson -------------------------------- Title: Vice President NBD BANK, N.A. By: /s/ Timothy M. Monahan -------------------------------- Title: Second Vice President NATIONSBANK OF TEXAS, N.A. By: /s/ Ellis E. Moseley -------------------------------- Title: Senior Vice President ROYAL BANK OF CANADA By: /s/ G. David Cole -------------------------------- Title: Senior Manager TORONTO DOMINION (TEXAS), INC. By: /s/ James J. McCarthy -------------------------------- Title: Director 76 UNION BANK OF SWITZERLAND, CHICAGO BRANCH By: /s/ Robert H. Riley III -------------------------------- Title: Vice President By: /s/ Martin Frey -------------------------------- Title: Assistant Treasurer WACHOVIA BANK OF GEORGIA, N.A. By: /s/ Edward D. Ridenhour -------------------------------- Title: Senior Vice President SCHEDULE I TERMS OF SUBORDINATION "SENIOR INDEBTEDNESS" means the principal of (and premium, if any) and unpaid interest on (a) indebtedness of John Deere Capital Corporation (the "Capital Corporation") (including indebtedness of others guaranteed by the Capital Corporation), other than the indebtedness evidenced by the Securities [such term to be defined as the debt to be issued under the indenture or agreement to which this Schedule relates], the 9.35% Subordinated Debentures due 2003, the 8-5/8% Subordinated Debentures due 2019 and the 9-5/8% Subordinated Notes due 1998 of the Capital Corporation, whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed, for money borrowed, unless in the instrument creating or evidencing the same or pursuant to which the same is outstanding it is provided that such indebtedness is not senior or prior in right of payment to the Securities, and (b) renewals, extensions, modifications and refundings of any such indebtedness. SUBORDINATION Section 1. AGREEMENT TO SUBORDINATE. The Capital Corporation, for itself, its successors and assigns, covenants and agrees, and each holder of Securities, by such holder's acceptance thereof, likewise covenants and agrees, that the payment of the principal of (and premium, if any) and interest on each and all of the Securities is hereby expressly subordinated, to the extent and in the manner hereinafter set forth, in right of payment to the prior payment in full of all Senior Indebtedness. Section 2. DISTRIBUTION ON DISSOLUTION, LIQUIDATION AND REORGANIZATION; SUBROGATION OF SECURITIES. Upon any distribution of assets of the Capital Corporation upon any dissolution, winding up, liquidation or reorganization of the Capital Corporation, whether in bankruptcy, insolvency, reorganization or receivership proceedings or upon an assignment for the benefit of creditors or any other marshalling of the assets and liabilities of the Capital Corporation or otherwise (subject to the power of a court of competent jurisdiction to make other equitable provisions reflecting the rights conferred in this Agreement upon the Senior Indebtedness and the holders thereof with respect to the Securities by a lawful plan of reorganization under applicable bankruptcy law), 2 (a) the holders of Senior Indebtedness shall be entitled to receive payment in full of the principal thereof (and premium if any) and the interest due on the Senior Indebtedness before the holders of the Securities are entitled to receive any payment upon the principal of (or premium, if any) or interest on indebtedness evidenced by the Securities; and (b) any payment or distribution of assets of the Capital Corporation of any kind or character, whether in cash, property or securities, to which the holders of the Securities or any trustee therefor would be entitled except for the provisions of this Article shall be paid by the liquidating trustee or agent or other person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, ratably according to the aggregate amounts remaining unpaid on account of the principal of (and premium, if any) and interest on the Senior Indebtedness held or represented by each holder of Senior Indebtedness, to the extent necessary to make payment in full of all Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness; and (c) in the event that, notwithstanding the foregoing, any payment or distribution of assets of the Capital Corporation of any kind or character, whether in cash, property or securities, shall be received by any trustee for the holders of the Securities or the holders of the Securities before all Senior Indebtedness is paid in full, such payment or distribution shall be paid over, upon written notice to any trustee for the holders of the Securities, to the holders of Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, ratably as aforesaid, for application to the payment of all Senior Indebtedness remaining unpaid until all such Senior Indebtedness shall have been paid in full, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness. Subject to the payment in full of all Senior Indebtedness, the holders of the Securities shall be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions of cash, property or securities of the Capital Corporation applicable to Senior Indebtedness until the principal of (and premium, if any) and interest on the Securities shall be paid in full and no such payments or distributions to the holders of the Securities of cash, property or securities otherwise distributable to the holders of Senior Indebtedness shall, as 3 between the Capital Corporation, its creditors other than the holders of Senior Indebtedness, and the holders of the Securities, be deemed to be a payment by the Capital Corporation to or on account of the Securities. It is understood that the provisions of this Article are, and are intended, solely for the purpose of defining the relative rights of the holders of the Securities, on the one hand, and the holders of Senior Indebtedness, on the other hand. Nothing contained in this Article or elsewhere in this Agreement or in the Securities is intended to or shall impair, as between the Capital Corporation, its creditors other than the holders of Senior Indebtedness, and the holders of the Securities, the obligation of the Capital Corporation, which is unconditional and absolute, to pay to the holders of the Securities the principal of (and premium, if any) and interest on the Securities as and when the same shall become due and payable in accordance with their terms, or to affect the relative rights of the holders of the Securities and creditors of the Capital Corporation other than the holders of Senior Indebtedness, nor shall anything herein or in the instruments or other evidence of the Securities prevent any trustee for the holders of the Securities or the holder of any Securities from exercising all remedies otherwise permitted by applicable law upon default under this Agreement or such instrument or other evidence, subject to the rights, if any, under this Article of the holders of Senior Indebtedness in respect of cash, property or securities of the Capital Corporation received upon the exercise of any such remedy. Section 3. NO PAYMENT ON SECURITIES IN EVENT OF NON- PAYMENT WHEN DUE OF SENIOR INDEBTEDNESS. No payment by the Capital Corporation on account of principal (or premium, if any), sinking funds, or interest on the Securities shall be made unless full payment of amounts then due for principal, premium, if any, sinking funds and interest on Senior Indebtedness has been made or duly provided for in money or money's worth. SCHEDULE II COMMITMENTS
Bank Commitment - ---- ---------- Chemical Bank $66,000,000 Deutsche Bank AG Chicago and/or Cayman Island Branches 66,000,000 Bank of America National Trust and Savings Association 46,200,000 The Bank of New York 46,200,000 Banque Nationale de Paris Chicago Branch 46,200,000 The Chase Manhattan Bank N.A. 46,200,000 Morgan Guaranty Trust Company of New York 46,200,000 Societe Generale 46,200,000 The Bank of Nova Scotia 29,700,000 CIBC Inc. 29,700,000 Commerzbank Aktiengesellschaft, Grand Cayman Branch 29,700,000 Credit Suisse 29,700,000 The First National Bank of Chicago 29,700,000 The Fuji Bank, Limited 29,700,000 The Long-Term Credit Bank of Japan, Ltd., Chicago Branch 29,700,000 Mellon Bank, N.A. 29,700,000 NBD Bank, N.A. 29,700,000 NationsBank of Texas, N.A. 29,700,000 Royal Bank of Canada 29,700,000 Toronto Dominion (Texas), Inc. 29,700,000 Union Bank of Switzerland, Chicago Branch 29,700,000 Wachovia Bank of Georgia, N.A. 29,700,000 ---------- Total $825,000,000 ------------ ------------
SCHEDULE III ADDRESSES FOR NOTICES CHEMICAL BANK 270 Park Avenue New York, New York 10017 Attention: John J. Huber, III Telephone: (212) 270-1402 Facsimile: (212) 270-2625 DEUTSCHE BANK AG Suite 4350 227 West Monroe Street Chicago, Illinois 60606 Attention: Dirk A. Quayle Telephone: (312) 578-4108 Facsimile: (312) 578-4111 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION 4th Floor 1850 Gateway Boulevard Concord, California 94520 Attention: Sandy Schwartzkopf Telephone: (510) 675-7762 Facsimile: (510) 675-7531 THE BANK OF NEW YORK Central Division - 19th Floor One Wall Street New York, New York 10286 Attention: Charlotte Sohn Telephone: (212) 635-1147 Facsimile: (212) 635-1208/09 BANQUE NATIONALE DE PARIS CHICAGO BRANCH 5th Floor 209 South LaSalle Street Chicago, Illinois 60604 Attention: Chris Howatt Telephone: (312) 977-1383 Facsimile: (312) 977-1380 2 THE CHASE MANHATTAN BANK N.A. One Chase Manhattan Plaza New York, New York 10081 Attention: Barbara Hail Don Stewart Telephone: (212) 552-5407 (Barbara) (212) 552-2662 (Don) Facsimile: (212) 552-6731 MORGAN GUARANTY TRUST COMPANY OF NEW YORK 60 Wall Street New York, New York 10260 Attention: Kit C. Wong Telephone: (212) 648-7340 Facsimile: (212) 648-5336 SOCIETE GENERALE Suite 3400 181 West Madison Street Chicago, Illinois 60602 Attention: Eric E.O. Siebert Donna L. Benson Telephone: (312) 578-5003 (Eric) (312) 578-5112 (Donna) Facsimile: (312) 578-5099 THE BANK OF NOVA SCOTIA Suite 2700 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Attention: Claude Ashby Telephone: (404) 877-1500 Facsimile: (404) 888-8998 CIBC INC. Suite 2300 200 West Madison Street Chicago, Illinois 60606 Attention: Stephanie Johnson Telephone: (312) 750-8725 Facsimile: (312) 726-8884 with a copy to: 3 CIBC INC. Two Paces West Suite 1200 2727 Paces Ferry road Atlanta, Georgia 30339 Attention: Carrie Modica Telephone: (404) 319-4816 Facsimile: (404) 319-4950 COMMERZBANK AKTIENGESELLSCHAFT, GRAND CAYMAN BRANCH c/o Chicago Branch Suite 5800 311 South Wacker Drive Chicago, Illinois 60606 Attention: Anthony Giraldi Telephone: (312) 435-1000 Facsimile: (312) 435-1486 CREDIT SUISSE 41st Floor 12 East 49th Street New York, New York 10017 Attention: Hazel Leslie Telephone: (212) 238-5218 Facsimile: (212) 238-5246 THE FIRST NATIONAL BANK OF CHICAGO Suite 0324 One First National Plaza Chicago, Illinois 60670 Attention: Michael McCorkle Telephone: (312) 732-3568 Facsimile: (312) 732-5296 THE FUJI BANK, LIMITED c/o Chicago Branch Suite 2000 225 West Wacker Drive Chicago, Illinois 60606 Attention: Richard J. Dunning Telephone: (312) 621-9485 Facsimile: (312) 621-0539 4 THE LONG-TERM CREDIT BANK OF JAPAN, LTD. CHICAGO BRANCH Suite 800 190 South LaSalle Street Chicago, Illinois 60603 Attention: Richard E. Stahl Telephone: (312) 704-5453 Facsimile: (312) 704-8505 MELLON BANK, N.A. Suite 2600 55 West Monroe Street Chicago, Illinois 60603 Attention: Jeffrey Anderson Telephone: (312) 357-3405 Facsimile: (312) 357-3414 NBD BANK, N.A. 611 Woodward Avenue Detroit, Michigan 48224 Attention: Timothy Monahan Telephone: (313) 225-2762 Facsimile: (313) 225-167117 NATIONSBANK OF TEXAS, N.A. 67th Floor 901 Main Street Dallas, Texas 75202-3707 Attention: Ellis Mosely Telephone: (214) 508-0913 Facsimile: (214) 508-0980 ROYAL BANK OF CANADA NEW YORK BRANCH c/o New York Operations Center Pierrepont Plaza 300 Cadman Plaza West Brooklyn, New York 11201-2701 Attention: Manager, Loans Administration Telephone: (212) 858-7168 Facsimile: (718) 522-6292/3 with a copy to: 5 ROYAL BANK OF CANADA Suite 2300 33 North Dearborn Chicago, Illinois 60602 Attention: G. David Cole Telephone: (312) 372-4404 Facsimile: (312) 782-3429 TORONTO DOMINION (TEXAS),INC. c/o The Toronto-Dominion Bank Suite 5430 70 West Madison Street Chicago, Illinois 60602 Attention: David Lewing Telephone: (312) 977-2105 Facsimile: (312) 782-6337 UNION BANK OF SWITZERLAND, CHICAGO BRANCH 30 South Wacker Drive Chicago, Illinois 60606 Attention: Martin A. Frey Telephone: (312) 993-5476 Facsimile: (312) 993-5530 WACHOVIA BANK OF GEORGIA, N.A. INC. c/o Wachovia Corporate Services, Inc. Suite 1740 55 West Monroe Street Chicago, Illinois 60603 Attention: Scott D. Bjelde Telephone: (312) 853-0191 Facsimile: (312) 853-0693 EXHIBIT A [FORM OF BORROWING NOTICE] , ----------- ---- Chemical Bank as Administrative Agent under the Credit Agreement referred to below 270 Park Avenue New York, New York 10017 Gentlemen: Pursuant to subsection 2.1(c) of the $825,000,000 Credit Agreement, dated as of December 15, 1993, among DEERE & COMPANY, JOHN DEERE CAPITAL CORPORATION, the Banks parties thereto, CHEMICAL BANK, as Administrative Agent, DEUTSCHE BANK AG CHICAGO BRANCH, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein (as the same may be amended, supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"), the undersigned hereby requests that the following Committed Rate Loans be made on __________, ____ as follows: (1). Total Amount of Committed Rate Loans.......................... $ ---------- (2). Amount of (1) to be allocated to Eurodollar Loans............... $ ---------- (3). Amount of (1) to be allocated to C/D Rate Loans................. $ ---------- (4). Amount of (1) to be allocated to ABR Loans..................... $ ---------- (5A). Interest Periods and amounts to be allocated thereto in respect of Eurodollar Loans (amounts must total (2)): (i) one month................ $ ---------- (ii) two months............... $ ---------- (iii) three months............. $ ---------- (iv) six months............... $ ---------- Total Eurodollar Loans.......... $ ---------- A-2 (5B). Interest Periods and amounts to be allocated thereto in respect of C/D Rate Loans (amounts must total (3)): (i) 30 days.................. $ ---------- (ii) 60 days.................. $ ---------- (iii) 90 days.................. $ ---------- (iv) 180 days................. $ ---------- Total C/D Rate Loans........... $ ---------- NOTE: THE AMOUNT APPEARING IN LINE (1) ABOVE MUST BE AT LEAST EQUAL TO $25,000,000 AND IN A WHOLE MULTIPLE OF $5,000,000 AND THE AMOUNTS APPEARING IN EACH OTHER LINE ABOVE MUST BE AT LEAST EQUAL TO $10,000,000 AND IN A WHOLE MULTIPLE OF $1,000,000. Terms defined in the Credit Agreement shall have the same meanings when used herein. Very truly yours, [DEERE & COMPANY] [JOHN DEERE CAPITAL CORPORATION] By: ---------------------------- Title: EXHIBIT B [FORM OF BID LOAN REQUEST] , --------- ---- Deutsche Bank AG Chicago Branch, as Auction Agent under the Credit Agreement referred to below c/o Deutsche Bank AG New York Branch 31 West 52nd Street New York, New York 10019 Dear Sirs: Reference is made to the $825,000,000 Credit Agreement, dated as of December 15, 1993, among DEERE & COMPANY, JOHN DEERE CAPITAL CORPORATION, the Banks parties thereto, CHEMICAL BANK, as Administrative Agent, DEUTSCHE BANK AG CHICAGO BRANCH, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein (as the same may be amended, supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"). Terms defined in the Credit Agreement are used herein as therein defined. This is an [Index Rate] [Absolute Rate] Bid Loan Request pursuant to subsection 2.2 of the Credit Agreement requesting quotes for the following Bid Loans: Aggregate Principal Amount $ $ $ ------- ------- ------- Borrowing Date ------- ------- ------- Interest Period ------- ------- ------- Maturity Date ------- ------- ------- Interest Payment Dates ------- ------- ------- Interest Rate Basis 360 day year B-2 NOTE: THE AGGREGATE PRINCIPAL AMOUNTS APPEARING ABOVE MUST BE IN THE AGGREGATE AT LEAST EQUAL TO $25,000,000 AND IN A WHOLE MULTIPLE OF $5,000,000. Very truly yours, [DEERE & COMPANY] [JOHN DEERE CAPITAL CORPORATION] By: ---------------------------- Title: - -------------------- Note: Pursuant to the Credit Agreement, a Bid Loan Request may be transmitted by facsimile transmission, or by telephone, immediately confirmed by facsimile transmission. In any case, a Bid Loan Request shall contain the information specified in the second paragraph of this form. EXHIBIT C [FORM OF BID LOAN OFFER] , --------- ---- Deutsche Bank AG Chicago Branch, as Auction Agent under the Credit Agreement referred to below c/o Deutsche Bank AG New York Branch 31 West 52nd Street New York, New York 10019 Dear Sirs: Reference is made to the $825,000,000 Credit Agreement, dated as of December 15, 1993, among DEERE & COMPANY, JOHN DEERE CAPITAL CORPORATION, the Banks parties thereto, CHEMICAL BANK, as Administrative Agent, DEUTSCHE BANK AG CHICAGO BRANCH, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein (as the same may be amended, supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"). Terms defined in the Credit Agreement are used herein as therein defined. In accordance with subsection 2.2 of the Credit Agreement, the undersigned Bid Loan Bank offers to make Bid Loans thereunder in the following amounts with the following maturity dates: Borrowing Date: , 19 ------- -- Aggregate Maximum Amount: $ -------
Maturity Date 1: : Maturity Date 2: : Maturity Date 3: : --------------- --- --------------- --- --------------- --- Maximum Amount $ Maximum Amount $ Maximum Amount $ --- --- --- Rate* Amount $ Rate* Amount $ Rate* Amount $ -- --- -- --- -- --- Rate* Amount $ Rate* Amount $ Rate* Amount $ -- --- -- --- -- ---
Very truly yours, [NAME OF BID LOAN BANK] By: -------------------------- Name: Title: Telephone: Facsimile: * If Index Rate Bid Loan, insert percentage above or below Eurodollar Rate. EXHIBIT D [FORM OF BID LOAN CONFIRMATION] , --------- ---- Deutsche Bank AG Chicago Branch, as Auction Agent under the Credit Agreement referred to below c/o Deutsche Bank AG New York Branch 31 West 52nd Street New York, New York 10019 Dear Sirs: Reference is made to the $825,000,000 Credit Agreement, dated as of December 15, 1993, among DEERE & COMPANY, JOHN DEERE CAPITAL CORPORATION, the Banks parties thereto, CHEMICAL BANK, as Administrative Agent, DEUTSCHE BANK AG CHICAGO BRANCH, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein (as the same may be amended, supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"). Terms defined in the Credit Agreement are used herein as therein defined. In accordance with subsection 2.2 of the Credit Agreement, the undersigned accepts and confirms the offers by Bid Loan Bank(s) to make Bid Loans to the undersigned on ________ , ____ [Borrowing Date] under said subsection 2.2 in the (respective) amount(s) set forth on the attached list of Bid Loans offered. Very truly yours, [DEERE & COMPANY] [JOHN DEERE CAPITAL CORPORATION] By: ----------------------------- Title: [Borrower to attach Bid Loan Offer list prepared by Auction Agent with accepted amount entered by the Borrower to right of each Bid Loan Offer]. EXHIBIT E [FORM OF LOAN ASSIGNMENT] LOAN ASSIGNMENT LOAN ASSIGNMENT, dated as of the date set forth in Item 1 of Schedule I hereto, among the Assignor Bank set forth in Item 2 of Schedule I hereto (the "ASSIGNOR BANK"), the Loan Assignee set forth in Item 3 of Schedule I hereto (the "LOAN ASSIGNEE"), and CHEMICAL BANK, as administrative agent for the Banks under the Credit Agreement described below (in such capacity, the "ADMINISTRATIVE AGENT"). W I T N E S S E T H : WHEREAS, this Loan Assignment is being executed and delivered in accordance with subsection 10.5(c) of the $825,000,000 Credit Agreement, dated as of December 15, 1993 among DEERE & COMPANY (the "COMPANY"), JOHN DEERE CAPITAL CORPORATION (the "CAPITAL CORPORATION"), the Assignor Bank and the other Banks party thereto, the Administrative Agent, DEUTSCHE BANK AG CHICAGO BRANCH, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein (as from time to time amended, supplemented or otherwise modified in accordance with the terms thereof, the "CREDIT AGREEMENT"; terms defined therein being used herein as therein defined); and WHEREAS, the Assignor Bank has advanced to [the Company] [the Capital Corporation] the Bid Loan or Negotiated Rate Loan or portion thereof described in Item 5 of Schedule I hereto (the "LOAN"), and the Assignor Bank is assigning the Loan to the Loan Assignee pursuant to this Loan Assignment; NOW, THEREFORE, the parties hereto hereby agree as follows: 1. The Assignor Bank acknowledges receipt from the Loan Assignee of an amount equal to the purchase price, as agreed between the Assignor Bank and the Loan Assignee, of the outstanding principal amount of, and accrued interest on, the Loan. The Assignor Bank hereby irrevocably sells, assigns and transfers to the Loan Assignee without recourse, representation or warranty, and the Loan Assignee hereby irrevocably purchases, takes and acquires from the Assignor E-2 Bank, the Loan, together with all instruments, documents and collateral security pertaining thereto. 2. (a) From and after the date set forth in Item 4 of Schedule I hereto (the "TRANSFER EFFECTIVE DATE"), principal and interest that would otherwise be payable to or for the account of the Assignor Bank pursuant to the Loan shall, instead, be payable to or for the account of the Loan Assignee, whether such amounts have accrued prior to the Transfer Effective Date or accrue subsequent to the Transfer Effective Date. (b) If Item 6 of Schedule I hereto contains payment instructions for the Loan Assignee and if the Loan Assignee delivers a copy of this Loan Assignment to the Administrative Agent in accordance with subsection 10.5(f) of the Credit Agreement at least 5 Business Days prior to the due date of any payment to the Loan Assignee, the Loan Assignee hereby instructs the Administrative Agent to pay all such amounts payable to it pursuant to the provision of subparagraph (a) of this paragraph 2, in accordance with such payment instructions. If Item 6 of Schedule I hereto does not contain payment instructions for the Loan Assignee (or a copy hereof is not delivered to the Administrative Agent as aforesaid), the Assignor Bank and the Loan Assignee agree that, notwithstanding the provisions of subparagraph (a) of this paragraph 2, the Assignor Bank is hereby appointed by the Loan Assignee as its collection agent to receive from the Administrative Agent, for and on behalf of and for the account of the Loan Assignee, all amounts payable to or for the account of the Loan Assignee under the Loan; the Assignor Bank will immediately pay over to the Loan Assignee any such amounts received by it, in like funds as received. 3. Each of the parties to this Loan Assignment agrees that at any time and from time to time upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this Loan Assignment. 4. By executing and delivering this Loan Assignment, the Assignor Bank and the Loan Assignee confirm to and agree with each other and the Administrative Agent and the Banks as follows: (i) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned hereby free and clear of any adverse claim, the Assignor Bank makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto; (ii) the Assignor Bank makes no E-3 representation or warranty and assumes no responsibility with respect to the financial condition of the Company or the Capital Corporation or the performance or observance by the Company or the Capital Corporation of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant hereto; (iii) the Loan Assignee confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in subsection 3.1 (unless financial statements referred to in subsection 5.1(a) have become available), the financial statements delivered pursuant to subsection 5.1, if any, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Loan Assignment; (iv) the Loan Assignee will, independently and without reliance upon the Administrative Agent, the Assignor Bank or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in respect of the Credit Agreement; and (v) the Loan Assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto, all in accordance with Section 9 of the Credit Agreement. 5. The Loan Assignee represents that it is organized under the laws of _____________ . If the Loan Assignee is organized under the laws of any jurisdiction other than the United States or any State thereof, the Loan Assignee (i) represents to the Assignor Bank (for the benefit of the Assignor Bank, the Administrative Agent and [the Company] [the Capital Corporation]) that under applicable law and treaties no taxes will be required to be withheld by the Administrative Agent, [the Company] [the Capital Corporation] or the Assignor Bank with respect to any payments to be made to the Loan Assignee in respect of the Loan, (ii) will furnish to the Assignor Bank, the Administrative Agent and [the Company] [the Capital Corporation], on or prior to the Transfer Effective Date, a letter in duplicate in the form of Exhibit J or Exhibit K, as appropriate, to the Credit Agreement and two duly completed copies of either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein the Loan Assignee claims entitlement to complete exemption from U.S. federal withholding tax on all interest payments under the Loan), (iii) will furnish to the Assignor Bank, the Administrative Agent and [the Company] [the Capital Corporation], on or prior to the Transfer Effective Date either U.S. Internal Revenue Service Form W-8 or U.S. Internal Revenue Service Form W-9 (wherein the Loan Assignee claims entitlement to complete exemption from U.S. federal backup withholding tax on all interest payments under the Loan) and (iv) agrees (for the benefit of the Assignor Bank, the Administrative Agent E-4 and [the Company] [the Capital Corporation]) to provide the Assignor Bank, the Administrative Agent and [the Company] [the Capital Corporation] a new Form 4224 or Form 1001 and Form W-8 or W-9 or successor applicable form or other manner of certification on or before the expiration or obsolescence of, or after the occurrence of any event requiring a change in, any previously delivered letter or form and comparable statements in accordance with applicable U.S. laws and regulations and amendments duly executed and completed by the Loan Assignee, and comply from time to time with all applicable U.S. laws and regulations with regard to such withholding tax exemption and such backup withholding tax exemption. 6. The Loan Assignee agrees to be bound by subsection 10.7 of the Credit Agreement relating to confidentiality. 7. This Loan Assignment shall be governed by, and construed and interpreted in accordance with, the law of the State of New York. IN WITNESS WHEREOF, the parties hereto have caused this Loan Assignment to be executed by their respective duly authorized officers on Schedule I hereto as of the date set forth in Item 1 of Schedule I hereto. SCHEDULE I TO LOAN ASSIGNMENT Item 1 (Date of Loan Assignment): [Insert date of Loan Assignment] Item 2 (Assignor Bank): [Insert name of Assignor Bank] Item 3 (Loan Assignee): [Insert name, address, telephone and telex numbers and name of contact party of Loan Assignee] Item 4 (Transfer Effective Date): [Insert Transfer Effective Date] [To be a date not less than five business days after date of Loan Assignment] Item 5 (Description of Loan): a. Borrowing Date and Maturity Date of Bid Loan or Negotiated Rate Loan: b. Principal Amount of Loan: Item 6 (Payment Instructions): [Complete only if payments are to be made by Administrative Agent to Loan Assignee rather than to Assignor Bank as collection agent for Loan Assignee; leave blank if Assignor Bank is to act as such collection agent] Item 7 (Signatures): , as -------------------- Assignor Bank By: ---------------------- Title: 2 , as ------------------- Loan Assignee By: ----------------------- Title: ACCEPTED FOR RECORDATION IN REGISTER: CHEMICAL BANK, as Administrative Agent By: ----------------------- Title: EXHIBIT F [FORM OF COMMITMENT TRANSFER SUPPLEMENT] COMMITMENT TRANSFER SUPPLEMENT COMMITMENT TRANSFER SUPPLEMENT, dated as of the date set forth in Item 1 of Schedule I hereto, among the Transferor Bank set forth in Item 2 of Schedule I hereto (the "TRANSFEROR BANK"), each Purchasing Bank set forth in Item 3 of Schedule I hereto (each, a "PURCHASING BANK"), DEERE & COMPANY, a Delaware corporation (the "COMPANY"), JOHN DEERE CAPITAL CORPORATION, a Delaware corporation (the "CAPITAL CORPORATION"), and CHEMICAL BANK, as administrative agent for the Banks under the Credit Agreement described below (in such capacity, the "ADMINISTRATIVE AGENT"). W I T N E S S E T H : WHEREAS, this Commitment Transfer Supplement is being executed and delivered in accordance with subsection 10.5(d) of the $825,000,000 Credit Agreement, dated as of December 15, 1993, among the Company, the Capital Corporation, the Transferor Bank and the other Banks party thereto, the Administrative Agent, Deutsche Bank AG Chicago Branch, as Auction Agent the Managing Agents named therein and the Co-Agents named therein (as from time to time amended, supplemented or otherwise modified in accordance with the terms thereof, the "CREDIT AGREEMENT"; terms defined therein being used herein as therein defined); WHEREAS, each Purchasing Bank (if it is not already a Bank party to the Credit Agreement) wishes to become a Bank party to the Credit Agreement; and WHEREAS, the Transferor Bank is selling and assigning to each Purchasing Bank, rights, obligations and commitments under the Credit Agreement; NOW, THEREFORE, the parties hereto hereby agree as follows: 1. From and after the Transfer Effective Date set forth in Item 4 of Schedule I hereto (the "TRANSFER EFFECTIVE DATE"), each Purchasing Bank shall be a Bank party to the Credit Agreement for all purposes thereof. F-2 2. The Transferor Bank acknowledges receipt from each Purchasing Bank of an amount equal to the purchase price, as agreed between the Transferor Bank and such Purchasing Bank (the "PURCHASE PRICE"), of the portion being purchased by such Purchasing Bank (such Purchasing Bank's "PURCHASED PERCENTAGE") of the outstanding Committed Rate Loans and other amounts owing to the Transferor Bank under the Credit Agreement (other than any Bid Loans and Negotiated Rate Loans owing to the Transferor Bank). The Transferor Bank hereby irrevocably sells, assigns and transfers to each Purchasing Bank, without recourse, representation or warranty, and each Purchasing Bank hereby irrevocably purchases, takes and assumes from the Transferor Bank, such Purchasing Bank's Purchased Percentage of the Commitments and the presently outstanding Committed Rate Loans and other amounts owing to the Transferor Bank under the Credit Agreement (other than any Bid Loans and Negotiated Rate Loans owing to the Transferor Bank) together with all instruments, documents and collateral security pertaining thereto. 3. The Transferor Bank has made arrangements with each Purchasing Bank with respect to (i) the portion, if any, to be paid, and the date or dates for payment, by the Transferor Bank to such Purchasing Bank of any fees heretofore received by the Transferor Bank pursuant to the Credit Agreement prior to the Transfer Effective Date and (ii) the portion, if any, to be paid, and the date or dates for payment, by such Purchasing Bank to the Transferor Bank of fees or interest received by such Purchasing Bank pursuant to the Credit Agreement from and after the Transfer Effective Date. 4. (a) From and after the Transfer Effective Date, principal, interest, fees and other amounts that would otherwise be payable to or for the account of the Transferor Bank pursuant to the Credit Agreement and the Committed Rate Loans (other than any Bid Loans and Negotiated Rate Loans owing to the Transferor Bank) shall, instead, be payable to or for the account of the Transferor Bank and the Purchasing Banks, as the case may be, in accordance with their respective interests as reflected in this Commitment Transfer Supplement, whether such amounts have accrued prior to the Transfer Effective Date or accrue subsequent to the Transfer Effective Date. (b) The Transferor Bank and each Purchasing Bank hereby agree and instruct the Administrative Agent that, notwithstanding the provisions of subparagraph (a) of this paragraph 4, on each date hereafter on which interest or fees are payable under the Credit Agreement and the Committed Rate Loans in respect of any period (an "ACCRUAL PERIOD") ending on or prior to the Transfer Effective Date, any such interest or fees payable to the Purchasing Bank on account of such Accrual Period in respect of its interests as reflected in F-3 this Commitment Transfer Supplement shall be paid over to the Transferor Bank (and, if such interest or fees are not paid in full when due, the payment over to the Transferor Bank shall be ratable), and the Transferor Bank and such Purchasing Bank will make appropriate arrangements for the payment to such Purchasing Bank of the portion thereof owing to it to reflect the amount, if any, included in the Purchase Price for interest and fees in respect of any Accrual Period. 5. On or promptly after the Transfer Effective Date specified in this Commitment Transfer Supplement, the Purchasing Bank and the Administrative Agent, on behalf of such Purchasing Bank, shall open and maintain in the name of each Borrower a Loan Account with respect to such Purchasing Bank's Committed Rate Loans and Bid Loans to such Borrower. 6. Concurrently with the execution and delivery hereof, the Administrative Agent will, at the expense of the Transferor Bank, provide to each Purchasing Bank (if it is not already a Bank party to the Credit Agreement) conformed copies of all documents delivered to the Administrative Agent on the Closing Date in satisfaction of the conditions precedent set forth in the Credit Agreement. 7. Each of the parties to this Commitment Transfer Supplement agrees that at any time and from time to time upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this Commitment Transfer Supplement. 8. By executing and delivering this Commitment Transfer Supplement, the Transferor Bank and each Purchasing Bank confirm to and agree with each other and the Administrative Agent and the Banks as follows: (i) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned hereby free and clear of any adverse claim, the Transferor Bank makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, the Committed Rate Loans or any other instrument or document furnished pursuant thereto; (ii) the Transferor Bank makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Company or the Capital Corporation or the performance or observance by the Company or the Capital Corporation of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant hereto; (iii) each Purchasing Bank confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in subsection 3.1, the financial statements F-4 delivered pursuant to subsection 5.1, if any, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Commitment Transfer Supplement; (iv) each Purchasing Bank will, independently and without reliance upon the Administrative Agent, the Transferor Bank or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (v) each Purchasing Bank appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto, all in accordance with Section 9 of the Credit Agreement; and (vi) each Purchasing Bank agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Bank. 9. The Purchasing Bank represents that it is organized under the laws of ____________ . If the Purchasing Bank is organized under the laws of any jurisdiction other than the United States or any State thereof, the Purchasing Bank (i) represents to the Transferor Bank (for the benefit of the Transferor Bank, the Administrative Agent and the Borrowers) that under applicable law and treaties no taxes will be required to be withheld by the Administrative Agent, the Borrowers or the Transferor Bank with respect to any payments to be made to the Purchasing Bank in respect of the Loans, (ii) will furnish to the Transferor Bank, the Administrative Agent and the Borrowers, on or prior to the Transfer Effective Date, a letter in duplicate in the form of Exhibit J or Exhibit K, as appropriate, to the Credit Agreement and two duly completed copies of either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein the Purchasing Bank claims entitlement to complete exemption from U.S. federal withholding tax on all interest payments under the Loan), (iii) will furnish to the Transferor Bank, the Administrative Agent and the Borrowers, on or prior to the Transfer Effective Date either U.S. Internal Revenue Service Form W-8 or U.S. Internal Revenue Service Form W-9 (wherein the Purchasing Bank claims entitlement to complete exemption from U.S. federal backup withholding tax on all interest payments under the Loan) and (iv) agrees (for the benefit of the Transferor Bank, the Administrative Agent and the Borrowers), to provide the Transferor Bank, the Administrative Agent and the Borrowers a new Form 4224 or Form 1001 and Form W-8 or W- 9 or successor applicable form or other manner of certification on or before the expiration or obsolescence of, or after the occurrence of any event requiring a change in, any previously delivered letter or form and comparable statements in accordance with applicable U.S. laws and F-5 regulations and amendments duly executed and completed by the Purchasing Bank, and comply from time to time with all applicable U.S. laws and regulations with regard to such withholding tax exemption and such backup withholding tax exemption. 10. The Purchasing Bank agrees to be bound by subsection 10.7 of the Credit Agreement relating to confidentiality. 11. Schedule II hereto sets forth the revised Commitments and Commitment Percentages of the Transferor Bank and each Purchasing Bank as well as administrative information with respect to each Purchasing Bank. 12. This Commitment Transfer Supplement shall be governed by, and construed and interpreted in accordance with, the law of the State of New York. IN WITNESS WHEREOF, the parties hereto have caused this Commitment Transfer Supplement to be executed by their respective duly authorized officers on Schedule I hereto as of the date set forth in Item 1 of Schedule I hereto. SCHEDULE I TO COMMITMENT TRANSFER SUPPLEMENT COMPLETION OF INFORMATION AND SIGNATURES FOR COMMITMENT TRANSFER SUPPLEMENT Item 1 (Date of Commitment [Insert date of Commitment Transfer Supplement): Transfer Supplement] Item 2 (Transferor Bank): [Insert name of Transferor Bank] Item 3 (Purchasing Bank[s]): [Insert name[s] of Purchasing Bank[s]] Item 4 (Transfer Effective [Insert Transfer Effective Date): Date] [To be a date not less than five business days after date of Commitment Transfer Supplement] Item 5 (Signatures of Parties to Commitment Transfer Supplement): , -------------------- as Transferor Bank By: ----------------------- Title: , -------------------- as a Purchasing Bank By: ----------------------- Title: , -------------------- as a Purchasing Bank By: ----------------------- Title: 2 CONSENTED TO AND ACKNOWLEDGED: DEERE & COMPANY By: ---------------------- JOHN DEERE CAPITAL CORPORATION By: ---------------------- Title: ACCEPTED FOR RECORDATION IN REGISTER: CHEMICAL BANK, as Administrative Agent By: ---------------------- Title: SCHEDULE II TO COMMITMENT TRANSFER SUPPLEMENT LIST OF LENDING OFFICES, ADDRESSES FOR NOTICES AND COMMITMENT AMOUNTS [Name of Transferor Bank] REVISED COMMITMENT AMOUNTS: $ ----------- REVISED COMMITMENT PERCENTAGE: ----------- [Name of Purchasing Bank] NEW COMMITMENT AMOUNTS: $ ----------- ADDRESS FOR NOTICES: NEW COMMITMENT PERCENTAGE: ----------- - ------------------- - ------------------- - ------------------- Attn: ------------ Telephone: ----------------- Facsimile: ----------------- [Name of Purchasing Bank] NEW COMMITMENT AMOUNTS: $ ----------- ADDRESS FOR NOTICES: NEW COMMITMENT PERCENTAGE: ----------- - ------------------- - ------------------- Attn: ------------ Telephone: ------------------- Facsimile: ------------------- EXHIBIT G [FORM OF OPINION OF GENERAL COUNSEL TO THE BORROWERS] To each of the Banks parties to the Credit Agreement referred to below, to Chemical Bank, as Administrative Agent, and Deutsche Bank AG Chicago Branch, as Auction Agent DEERE & COMPANY AND JOHN DEERE CAPITAL CORPORATION Gentlemen: This opinion is furnished to you pursuant to subsection 4.1(c) of the $825,000,000 Credit Agreement, dated as of December 15, 1993 (the "Credit Agreement"), among Deere & Company (the "Company"), John Deere Capital Corporation (the "Capital Corporation", the Company and the Capital Corporation being referred to herein individually as a "Borrower" and collectively as the "Borrowers"), the Banks parties thereto, Chemical Bank, as Administrative Agent, Deutsche Bank AG Chicago Branch, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein. Terms defined in the Credit Agreement are used herein as therein defined. As General Counsel to the Borrowers, I am familiar with the corporate history and organization of each Borrower and of its Subsidiaries and the proceedings relating to the authorization, execution and delivery by each Borrower of the Credit Agreement. In that connection I have examined: 1. The Credit Agreement; 2. The documents furnished by each of the Borrowers pursuant to Section 4 of the Credit Agreement; 3. The Certificates of Incorporation of the Borrowers and all amendments thereto (the "Charters"); 4. The bylaws of the Borrowers and all amendments thereto (the "Bylaws"); and G-2 5. Certificates of the Secretary of State of Delaware, each dated a recent date, attesting to the continued corporate existence and good standing of the Borrowers in that State. In addition, I have reviewed such of the corporate proceedings of the Borrowers, and have examined such documents, corporate records, and other instruments relating to the organization of the Borrowers and their respective Subsidiaries and such other agreements and instruments to which the Borrowers and their respective Subsidiaries are parties, as I have deemed necessary for the purpose of this opinion. I have assumed the due execution and delivery, pursuant to due authorization, of the Credit Agreement by the Banks, the Administrative Agent, the Auction Agent and the Managing Agents, and the authenticity of all documents submitted to me as originals and the conformity to the original documents of all documents submitted to me as certified, conformed or photostatic copies. I am qualified to practice law in the State of Illinois and do not purport to be an expert on, and do not express any opinion herein concerning, any laws other than the laws of the State of Illinois, the General Corporation Law of the State of Delaware and the Federal laws of the United States. Based upon the foregoing and upon such investigation as I have deemed necessary, I am of the following opinion: 1. Each Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the corporate power and authority to carry on its business as now being conducted and to own its properties. 2. The execution, delivery and performance by each Borrower of the Credit Agreement are within such Borrower's corporate powers, have been duly authorized by all necessary corporate action, and (i) do not contravene, or constitute a default under the Charter or the Bylaws of such Borrower, any judgment, law, rule or regulation applicable to such Borrower, or any Contractual Obligation by which such Borrower is bound or (ii) result in the creation of any lien, charge or encumbrance upon any of its property or assets. The Credit Agreement has been duly executed and delivered on behalf of each Borrower. G-3 3. No authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by each Borrower of the Credit Agreement. 4. There is no pending or, to the best of my knowledge, threatened action or proceeding against either Borrower or any of its Subsidiaries before any court, governmental agency or arbitrator which is likely to have a materially adverse effect upon the financial condition or operations of such Borrower and its Subsidiaries taken as a whole. I am aware that Shearman & Sterling will rely upon the opinions set forth in paragraphs 1, 2, and 3 of this opinion in rendering their opinion furnished pursuant to Section 4.1(c) of the Credit Agreement and consent thereto. Very truly yours, Frank S. Cottrell EXHIBIT H [FORM OF OPINION OF SPECIAL NEW YORK COUNSEL TO THE BORROWERS] To each of the Banks parties to the Credit Agreement referred to below, to Chemical Bank, as Administrative Agent, and Deutsche Bank AG Chicago Branch, as Auction Agent DEERE & COMPANY JOHN DEERE CAPITAL CORPORATION Ladies and Gentlemen: This opinion is furnished to you pursuant to subsection 4.1(c) of the $825,000,000 Credit Agreement, dated as of December 15, 1993 (the "Credit Agreement"), among Deere & Company (the "Company"), John Deere Capital Corporation (the "Capital Corporation", the Company and the Capital Corporation being referred to herein individually as a "Borrower" and collectively as the "Borrowers"), the Banks parties thereto, Chemical Bank, as Administrative Agent, Deutsche Bank AG Chicago Branch, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein. Terms defined in the Credit Agreement are used herein as therein defined. We have acted as special New York counsel for the Borrowers in connection with the preparation, execution and delivery of the Credit Agreement. In that connection we have examined: (1) the Credit Agreement; and (2) the documents furnished by each of the Borrowers pursuant to Section 4 of the Credit Agreement. We have assumed the due execution and delivery, pursuant to due authorization, of the Credit Agreement by the Banks, the Administrative Agent, the Auction Agent and the Managing Agents, the authenticity of all documents submitted to us as originals and the conformity to the original documents of all documents submitted to us as certified, H-2 conformed or photostatic copies. We have also assumed that the Banks, the Administrative Agent and the Auction Agent will perform the Credit Agreement reasonably and in good faith and will act reasonably and in good faith in taking action, exercising discretion and making determinations thereunder. We have also assumed that no Bid Loan or Negotiated Rate Loan made in an amount of less than $2,500,000 will bear interest at a rate greater than 25% per annum. We are qualified to practice law in the State of New York. We do not express any opinion herein concerning any laws other than the laws of the State of New York and the Federal laws of the United States. To the extent our opinions expressed below involve conclusions as to matters set forth in paragraph 1, 2 or 3 of the opinion of Frank S. Cottrell, General Counsel to the Borrowers, a copy of which is attached hereto, we have, with your permission, relied on such opinion. Based upon the foregoing and upon such investigation as we have deemed necessary, we are of the opinion that the Credit Agreement constitutes the legal, valid and binding obligation of each Borrower enforceable against such Borrower in accordance with its terms, except as such enforceability may be subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors' rights generally and to the effect of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Very truly yours, EXHIBIT I [FORM OF EXTENSION REQUEST] _______________, ____ Chemical Bank, as Administrative Agent 270 Park Avenue New York, New York 10017 Attention: ------------------ Dear Sirs: Reference is made to the $825,000,000 Credit Agreement, dated as of December 15, 1993 among Deere & Company, John Deere Capital Corporation, the Banks parties thereto, Chemical Bank, as Administrative Agent, Deutsche Bank AG Chicago Branch, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein (as the same may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement are used herein as therein defined. This is an Extension Request pursuant to subsection 2.16 of the Credit Agreement requesting an extension of the I-2 Termination Date to [requested Termination Date]. Please transmit a copy of this Extension Request to each of the Banks. Very truly yours, DEERE & COMPANY By:_____________________ Title: JOHN DEERE CAPITAL CORPORATION By:_____________________ Title: EXHIBIT J [FORM OF TAX LETTER] [To be sent in DUPLICATE and accompanied by TWO executed copies of Form 1001 of the Internal Revenue Service] [Bank's Letterhead] , ------------- ----- Deere & Company John Deere Road Moline, Illinois 61265 Attention: Treasurer John Deere Capital Corporation First National Bank Building 1 East First Street Reno, Nevada 89501 Attention: Manager Re: $825,000,000 Credit Agreement dated as of December 15, 1993 with Deere & Company and John Deere Capital Corporation ------------------------------------------ Dear Sirs: In connection with the $825,000,000 Credit Agreement, dated as of December 15, 1993, among Deere & Company, John Deere Capital Corporation, the Banks parties thereto, Chemical Bank, as Administrative Agent, Deutsche Bank AG Chicago Branch, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein, we hereby represent and warrant that [name of Bank, address] is a [name of Country] corporation and is currently exempt from any U.S. federal withholding tax on payments to it from U.S. sources by virtue of compliance with the provisions of the Income Tax Convention between the United States and [name of Country] signed [date], [as amended]. Our fiscal year is the twelve months ending [_______________]. J-2 The undersigned (a) is a corporation organized under the laws of [_______________] whose registered business is managed or controlled in [_______________], (b) [does not have a permanent establishment or fixed base in the United States] [does have a permanent establishment or fixed base in the United States but the above Agreement is not effectively connected with such permanent establishment or fixed base], (c) is not exempt from tax on the income in [_______________] and (d) is the beneficial owner of the income. We enclose herewith two copies of From 1001 of the U.S. Internal Revenue Service. Yours faithfully, [NAME OF BANK] By: ------------------------- Title: cc: Chemical Bank, as Administrative Agent EXHIBIT K [FORM OF TAX LETTER] [To be sent in DUPLICATE and accompanied by TWO executed copies of Form 4224 of the Internal Revenue Service] [Bank's Letterhead] ____________, ____ Deere & Company John Deere Road Moline, Illinois 61265 Attention: Treasurer John Deere Capital Corporation First National Bank Building Reno, Nevada 89501 Attention: Manager Re: $825,000,000 Credit Agreement dated as of December 15, 1993 with Deere & Company and John Deere Capital Corporation ----------------------------------------- Dear Sirs: In connection with the above $825,000,000 Credit Agreement, dated as of December 15, 1993, among Deere & Company, John Deere Capital Corporation, the Banks parties thereto, Chemical Bank, as Administrative Agent, Deutsche Bank AG Chicago Branch, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein, we hereby represent and warrant that [name of Bank, address] is a corporation and is entitled to exemption from U.S. federal withholding tax on payments to it under the Agreement by virtue of Section 1441(c)(1) of the Internal Revenue Code of the United States of America and Treasury Regulation Section 1.1441-4(a) thereunder. K-2 We enclose herewith two copies of Form 4224 of the U.S. Internal Revenue Service. Yours faithfully, [NAME OF BANK] By ------------------------ Title: cc: Chemical Bank, as Administrative Agent EXHIBIT L [FORM OF AGREEMENT] THIS AGREEMENT, dated as of__________ , ____ ("AGREEMENT"), among Deere & Company (the "COMPANY"), John Deere Capital Corporation (the "CAPITAL CORPORATION"), ____________ ("NEW BANK") and Chemical Bank, as Administrative Agent for the Existing Banks referred to below. W I T N E S S E T H : WHEREAS, the Company, the Capital Corporation, the several financial institutions parties thereto (the "EXISTING BANKS") Chemical Bank, as Administrative Agent, Deutsche Bank AG Chicago Branch, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein are parties to a $825,000,000 Credit Agreement, dated as of December 15, 1993 (as the same may have been or may hereafter be amended, supplemented or otherwise modified, the "CREDIT AGREEMENT"; terms defined therein being used herein as therein defined); WHEREAS, subsection 2.19 of the Credit Agreement provides that one or more financial institutions (which may be Existing Banks) may be added as a "Bank" or "Banks" for purposes of the Credit Agreement upon the cancellation of all or a portion of the Commitments pursuant to subsection 2.13(a), (b) or (c), 2.16(c) or 2.17(b) of the Credit Agreement or the expiration of all or a portion of the Commitments pursuant to subsection 2.16(b) of the Credit Agreement and the execution of an agreement in substantially the form of this Agreement; WHEREAS, the Borrowers have cancelled or there have expired an aggregate principal amount of Commitments equal to $___________ which have not heretofore been replaced (the "CANCELLED COMMITMENTS"; the Banks that are maintaining or have maintained the Cancelled Commitments being collectively referred to as "CANCELLED BANKS"); such Cancelled Commitments being on the date hereof, or on the date of notice of cancellation hereof having been, utilized as follows:
Last day of Principal Amount Interest Period --------------- --------------- I UNUSED PORTION N/A
L-2
Last day of Pincipal Amount Interest Period --------------- --------------- II COMMITTED RATE LOANS C/D Rate Loans 1 2 3 Eurodollar Loans 1 2 3 ABR Loans N/A III BID LOANS 1 2 3 IV NEGOTIATED RATE LOANS 1 2 3
WHEREAS, the cancellation of the Cancelled Commitments is effective in accordance with the Credit Agreement; and WHEREAS, [the Borrowers desire the New Bank to become, and the New Bank is agreeable, to becoming, a "Bank" for purposes of the Credit Agreement] [the New Bank is an Existing Bank and the Borrowers desire the New Bank to L-3 increase, and the New Bank is agreeable to increasing, its Commitment]* on the terms contained herein. NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto agree as follows: 1. BENEFITS OF AGREEMENT. The Borrowers, the Administrative Agent and the New Bank hereby [agree that on and as of the date hereof the New Bank shall be] [confirm that the New Bank is] a "Bank" for all purposes and shall [continue to] be bound by and entitled to the benefits of the Credit Agreement [as if the New Bank had been named on the signature pages thereof], PROVIDED that the New Bank shall not assume and shall, except as herein provided, have no obligations in respect of any Loans outstanding on the date hereof and made by any [Existing Bank.] [Cancelled Bank.]* 2. COMMITMENT OF NEW BANK. The Borrowers, the Administrative Agent and the New Bank hereby agree that on and as of the dates set forth below the New Bank shall replace, as specified herein, ____% (such percentage being referred to as the New Bank's "Percentage") of each utilization of the Cancelled Commitments [set forth in the third recital hereof] [set forth under the caption "Committed Rate Loans"] and that the aggregate Commitment of the New Bank shall on and as of the date hereof be $_________ **. In connection therewith, the Borrowers, the Administrative Agent and the New Bank hereby agree as follows***: (i) for purposes of determining such New Bank's pro rata share of each Committed Rate Loan borrowing advanced on or after the date hereof such Bank's Commitment shall be equal to $[SAME AS ABOVE]; (ii) the unused and available portion of such New Bank's Commitment shall be deemed utilized by its Percentage of the Committed Rate Loans made by the Cancelled Banks and listed in the third recital hereof. In furtherance thereof, the unused and available portion of such New Bank's Commitment shall, on the earlier of - ----------------- * As appropriate for New or Existing Banks. ** Insert amount equal to sum of New Bank's existing Commitment, if any, plus New Bank's Percentage of Cancelled Commitments. *** The following clauses (ii)-(iii) may be altered to reflect the agreements among the Cancelled Bank, the New Bank and the Borrowers provided such agreements do not adversely affect any Existing Bank or the Administrative Agent. L-4 (x) the last day of each Interest Period specified for each outstanding Committed Rate Loan in the third recital hereof (and the payment in full to the Cancelled Banks of the principal thereof and accrued interest thereon) and (y) the prepayment of the principal of such Loans together with accrued interest thereon, automatically and without any further action by any party increase by an amount equal to the New Bank's Percentage of such Loan; and (iii) [(A)] [concurrently with the execution hereof the New Bank shall disburse to each Borrower in immediately available funds such amount as shall be necessary so that the ratio which each Bank's outstanding ABR Loans bears to all of the outstanding ABR Loans equals the ratio which each Bank's Commitment (determined, for the New Bank, in accordance with clause (i) above) bears to all of the Commitments (determined, for the New Bank, in accordance with the immediately foregoing parenthetical);] [(B)] [on the last day of each Interest Period for each outstanding Eurodollar Loan and C/D Rate Loan, automatically and without any further action by either Borrower, the New Bank shall disburse to each Borrower in immediately available funds such amounts as shall be necessary so that the ratio which each Bank's outstanding Eurodollar Loans and C/D Rate Loans, bears to all of the outstanding Eurodollar Loans and C/D Rate Loans respectively, equals the ratio which each Bank's Commitment (determined, for the New Bank, in accordance with clause (i) hereof) bears to all of the Commitments (determined, for the New Bank, in accordance with the immediately foregoing parenthetical);] [(C)] [Funding of outstanding Bid Loans of Cancelled Banks]* [(D)] [Funding of outstanding Negotiated Rate Loans of Cancelled Banks].* 3. REPRESENTATION AND WARRANTY OF BORROWERS. The Borrowers hereby represent and warrant that after giving effect to the provisions of paragraph 2 hereof the aggregate principal amount of the Commitments of all Banks (including, without limitation, the Commitment of the New Bank but excluding the cancelled or expired portion of the Commitments of the Cancelled Banks) under the Credit Agreement do not exceed the aggregate principal amount of the Commitments in effect immediately prior to the cancellation referred to in the third recital hereof. - --------------------- * To be completed upon agreement of Borrowers and New Bank. L-5 4. CONFIDENTIALITY. The New Bank agrees to [continue to] be bound by the provisions of subsection 10.7 of the Credit Agreement. [5. TAXES. The New Bank (i) represents to the Administrative Agent and the Borrowers that [it is incorporated under the laws of the United States or a state thereof][under applicable law and treaties no taxes will be required to be withheld by the Administrative Agent or the Borrowers with respect to any payments to be made to such New Bank in respect of the Loans], (ii) represents that it has furnished to the Administrative Agent and the Borrowers (A) [a statement that it is incorporated under the laws of the United States or a state thereof][a letter in duplicate in the form of Exhibit [J][K] to the Credit Agreement and two duly completed copies of United States Internal Revenue Service Form [4224][1001][successor applicable form], certifying that such New Bank is entitled to receive payments under the Credit Agreement without deduction or withholding of any United States federal income taxes], and (B) [an Internal Revenue Service Form [W-8][W-9]] [successor applicable form] to establish an exemption from United States backup withholding tax, and (iii) agrees to provide the Administrative Agent and the Borrowers a new Form [4224][1001] and Form [W-8][W-9], or successor applicable form or other manner of certification, on or before the date that any such letter or form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent letter and form previously delivered by it, certifying in the case of a Form [1001][4224] that it is entitled to receive payments under the Credit Agreement without deduction or withholding of any United States federal income tax, and in the case of a Form [W-8][W-9] establishing exemption from United States backup withholding tax.]* [5][6]. MISCELLANEOUS. (a) This Agreement may be executed by the parties hereto in separate counterparts and all of the counterparts taken together shall constitute one and the same instrument and shall be effective only upon receipt by the Administrative Agent of all of the counterparts. (b) This Agreement shall be governed by, and construed and interpreted in accordance with, the law of the State of New York. - ------------------ * Use for non-Existing Banks. L-6 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of the day and year first above written. DEERE & COMPANY By: --------------------- Title: JOHN DEERE CAPITAL CORPORATION By: --------------------- Title: [NAME OF NEW BANK] By: --------------------- Title: [Address] Telephone: Facsimile: CHEMICAL BANK, as Administrative Agent By: --------------------- Title: EXHIBIT M [FORM OF BID LOAN OR NEGOTIATED RATE LOAN NOTE] PROMISSORY NOTE $__________ New York, New York ___________ __, ____ FOR VALUE RECEIVED, the undersigned, [DEERE & COMPANY] [JOHN DEERE CAPITAL CORPORATION], a Delaware corporation (the "BORROWER"), hereby promises to pay on [insert maturity date or dates] to the order of ________________ (the "BANK") at the office of [Chemical Bank located at 270 Park Avenue, New York, New York 10017 -- for Bid Loan Note] [Name and address of Bank -- for Negotiated Rate Loan Note], in lawful money of the United States of America and in immediately available funds, the principal sum of ______________DOLLARS ($____________). The undersigned further agrees to pay interest in like money at such office on the unpaid principal amount hereof from time to time from the date hereof [at the rate of ___% per annum -- for Bid Loan Note] [specify rate for Negotiated Rate Loan Note] (calculated on the basis of a year of 360 days and actual days elapsed) until the due date hereof (whether at the stated maturity, by acceleration, or otherwise) and thereafter at the rates determined or agreed in accordance with subsection 2.2(e) of the $825,000,000 Credit Agreement, dated as of December 15, 1993 (the "CREDIT AGREEMENT"), among the Borrower, [Deere & Company] [John Deere Capital Corporation], the Bank, the other financial institutions parties thereto, Chemical Bank, as Administrative Agent, Deutsche Bank AG Chicago Branch, as Auction Agent, the Managing Agents named therein and the Co-Agents named therein. Interest shall be payable on _______________. This Note may be prepaid pursuant to the provisions of subsection 2.6 of the Credit Agreement. This Note is one of the [Bid] [Negotiated Rate Loan] Notes referred to in, is subject to and is entitled to the benefits of, the Credit Agreement, which Credit Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the occurrence of any one or more of the Events of Default specified in the Credit Agreement. M-2 Terms defined in the Credit Agreement are used herein with their defined meanings unless otherwise defined herein. This Note shall be governed by, and construed and interpreted in accordance with, the law of the State of New York. [DEERE & COMPANY] [JOHN DEERE CAPITAL CORPORATION] By:_________________________ Title: EX-12 5 EXHIBIT 12 EXHIBIT 12 JOHN DEERE CAPITAL CORPORATION AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (IN THOUSANDS OF DOLLARS)
YEAR ENDED 31 OCTOBER ----------------------------------------------------- 1993 1992 1991 1990 1989 -------- --------- -------- ------- --------- EARNINGS: INCOME BEFORE INCOME TAXES AND CHANGES IN ACCOUNTING $ 169,339 $ 142,920 $ 110,820 $ 99,366 $ 99,971 FIXED CHARGES 170,226 191,930 230,901 216,985 214,038 --------- --------- --------- -------- -------- TOTAL EARNINGS $ 339,565 $ 334,850 $ 341,721 $ 316,351 $ 314,009 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- FIXED CHARGES: INTEREST EXPENSE $ 167,787 $ 189,288 $ 228,308 $ 214,707 $ 212,144 RENT EXPENSE 2,439 2,642 2,593 2,278 1,894 --------- --------- -------- --------- --------- TOTAL FIXED CHARGES $ 170,226 $ 191,930 $ 230,901 $ 216,985 $ 214,038 --------- --------- -------- --------- --------- --------- --------- -------- --------- --------- RATIO OF EARNINGS TO FIXED CHARGES * 1.99 1.74 1.48 1.46 1.47 -------- --------- -------- ------- -------- -------- --------- -------- ------- -------- - ---------- "Earnings" consist of income before income taxes, changes in accounting and fixed charges. "Fixed charges" consist of interest on indebtedness, amortization of debt discount and expense, and estimated amount of rental expense under capitalized leases which is deemed to be representative of the interest factor and rental expense under operating leases. * The Company has not issued preferred stock, therefore, the ratios of earnings to combined fixed charges and preferred stock dividends are the same as the ratios presented above.
EX-23 6 EXHIBIT 23 EXHIBIT 23 [LOGO] INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statements No. 33- 48123, 33-66082, 33-46514, and 33-65088 of John Deere Capital Corporation on Form S-3 of our report dated December 10, 1993, appearing in this Annual Report on Form 10-K of John Deere Capital Corporation for the year ended October 31, 1993. DELOITTE & TOUCHE January 24, 1994 -----END PRIVACY-ENHANCED MESSAGE-----