10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2005

Commission file no: 1-4121

DEERE & COMPANY

Delaware	36-2382580
(State of incorporation)	(IRS employer identification no.)

One John Deere Place

Moline, Illinois 61265

(Address of principal executive offices)

Telephone Number:  (309) 765-8000

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    ý    No    o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

Yes    ý    No    o

At January 31, 2005, 246,505,065 shares of common stock, $1 par value, of the registrant were outstanding.

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

DEERE & COMPANY
STATEMENT OF CONSOLIDATED INCOME
For the Three Months Ended January 31, 2005 and 2004
(In millions of dollars and shares except per share amounts) Unaudited

	2005			2004
Net Sales and Revenues
Net sales	$	3,526.5		$	2,911.6
Finance and interest income	325.6			294.7
Health care premiums and fees	188.9			181.4
Other income	86.1			96.1
Total	4,127.1			3,483.8
Costs and Expenses
Cost of sales	2,765.9			2,294.5
Research and development expenses	149.3			138.2
Selling, administrative and general expenses	461.9			417.7
Interest expense	167.1			147.4
Health care claims and costs	152.1			150.6
Other operating expenses	85.3			73.2
Total	3,781.6			3,221.6
Income of Consolidated Group Before Income Taxes	345.5			262.2
Provision for income taxes	119.8			92.6
Income of Consolidated Group	225.7			169.6
Equity in Income (Loss) of Unconsolidated Affiliates
Credit	.2			.2
Other	(3.1		)	1.0
Total	(2.9		)	1.2
Net Income	$	222.8		$	170.8
Per Share:
Net income - basic	$	.90		$	.70
Net income - diluted	$	.89		$	.68
Average Shares Outstanding:
Basic	247.1			245.4
Diluted	251.0			251.9

See Notes to Interim Financial Statements.

2

DEERE & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions of dollars) Unaudited

	January 31 2005			October 31 2004			January 31 2004
Assets
Cash and cash equivalents	$	2,865.5		$	3,181.1		$	4,087.8
Marketable securities	263.5			246.7			262.8
Receivables from unconsolidated affiliates	20.1			17.6			23.8
Trade accounts and notes receivable - net	3,131.7			3,206.9			2,837.8
Financing receivables - net	11,352.3			11,232.6			9,396.9
Other receivables	364.4			663.0			352.1
Equipment on operating leases - net	1,232.3			1,296.9			1,289.5
Inventories	2,802.0			1,999.1			2,169.8
Property and equipment - net	2,159.9			2,161.6			2,098.6
Investments in unconsolidated affiliates	103.7			106.9			113.7
Goodwill	984.5			973.6			938.2
Other intangible assets - net	21.4			21.7			256.0
Prepaid pension costs	2,491.1			2,493.1			62.3
Other assets	481.8			515.4			566.4
Deferred income taxes	551.2			528.1			1,517.1
Deferred charges	122.7			109.7			115.6
Total Assets	$	28,948.1		$	28,754.0		$	26,088.4
Liabilities and Stockholders’ Equity
Short-term borrowings	$	3,971.8		$	3,457.5		$	3,458.1
Payables to unconsolidated affiliates	124.4			142.3			122.8
Accounts payable and accrued expenses	3,614.4			3,973.6			3,021.2
Health care claims and reserves	133.6			135.9			111.3
Accrued taxes	186.6			179.2			218.6
Deferred income taxes	62.6			62.6			30.1
Long-term borrowings	10,954.7			11,090.4			10,746.7
Retirement benefit accruals and other liabilities	3,401.9			3,319.7			4,095.1
Total liabilities	22,450.0			22,361.2			21,803.9
Common stock, $1 par value (issued shares at January 31, 2005 – 268,215,602)	2,043.5			2,043.5			1,990.6
Common stock in treasury	(1,099.0		)	(1,040.4		)	(997.5		)
Unamortized restricted stock compensation	(27.3		)	(12.7		)	(17.8		)
Retained earnings	5,583.7			5,445.1			4,446.2
Total	6,500.9			6,435.5			5,421.5
Accumulated other comprehensive income (loss)	(2.8		)	(42.7		)	(1,137.0		)
Stockholders’ equity	6,498.1			6,392.8			4,284.5
Total Liabilities and Stockholders’ Equity	$	28,948.1		$	28,754.0		$	26,088.4

See Notes to Interim Financial Statements.

3

DEERE & COMPANY
STATEMENT OF CONSOLIDATED CASH FLOWS
For the Three Months Ended January 31, 2005 and 2004
(In millions of dollars) Unaudited

	2005			2004
Cash Flows from Operating Activities
Net income	$	222.8		$	170.8
Adjustments to reconcile net income to net cash used for operating activities:
Provision (credit) for doubtful receivables	(2.7		)	12.1
Provision for depreciation and amortization	160.3			159.9
Undistributed earnings of unconsolidated affiliates	3.4			(.6		)
Credit for deferred income taxes	(24.3		)	(1.2		)
Changes in assets and liabilities:
Trade, notes and financing receivables related to sales of equipment	192.0			(50.2		)
Inventories	(810.1		)	(580.5		)
Accounts payable and accrued expenses	(390.2		)	(67.7		)
Retirement benefit accruals/prepaid pension costs	77.7			92.1
Other	165.4			65.7
Net cash used for operating activities	(405.7		)	(199.6		)
Cash Flows from Investing Activities
Collections of financing receivables	2,098.1			2,206.2
Proceeds from sales of financing receivables	33.9			696.0
Proceeds from maturities and sales of marketable securities	19.1			10.8
Proceeds from sales of equipment on operating leases	91.5			114.9
Proceeds from sales of businesses				74.5
Cost of financing receivables acquired	(2,204.1		)	(2,322.8		)
Purchases of marketable securities	(37.2		)	(33.5		)
Purchases of property and equipment	(81.2		)	(53.7		)
Cost of operating leases acquired	(58.9		)	(41.6		)
Acquisitions of businesses, net of cash acquired	(6.1		)	(108.6		)
Increase in receivables from unconsolidated affiliates				(14.9		)
Other	19.0			(2.3		)
Net cash provided by (used for) investing activities	(125.9		)	525.0
Cash Flows from Financing Activities
Increase (decrease) in short-term borrowings	12.4			(438.2		)
Proceeds from long-term borrowings	379.5			267.5
Principal payments on long-term borrowings	(27.8		)	(532.5		)
Proceeds from issuance of common stock	71.0			133.2
Repurchases of common stock	(162.3		)	(.2		)
Dividends paid	(69.3		)	(53.4		)
Other	(.1		)	(.1		)
Net cash provided by (used for) financing activities	203.4			(623.7		)
Effect of Exchange Rate Changes on Cash	12.6			1.6
Net Decrease in Cash and Cash Equivalents	(315.6		)	(296.7		)
Cash and Cash Equivalents at Beginning of Period	3,181.1			4,384.5
Cash and Cash Equivalents at End of Period	$	2,865.5		$	4,087.8

See Notes to Interim Financial Statements (Reclassifications in Note 1).

4

Notes to Interim Financial Statements (Unaudited)

(1)The consolidated financial statements of Deere & Company and consolidated subsidiaries have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the U.S. have been condensed or omitted as permitted by such rules and regulations.  All adjustments, consisting of normal recurring adjustments, have been included.  Management believes that the disclosures are adequate to present fairly the financial position, results of operations and cash flows at the dates and for the periods presented.  It is suggested that these interim financial statements be read in conjunction with the financial statements and the notes thereto appearing in Part II., Item 5. of this report.  Results for interim periods are not necessarily indicative of those to be expected for the fiscal year.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and related disclosures.  Actual results could differ from those estimates.

Certain amounts for prior years have been reclassified to conform with 2005 financial statement presentations.

Certain information in the Statement of Consolidated Cash Flows as shown in the following table has been reclassified for the three months ended January 31, 2004.  This reclassification is related to concerns raised by the staff of the U.S. Securities and Exchange Commission.  Previously, the Company reported an increase in cash flow from operating activities when a trade receivable was settled by a dealer through financing received from the Company’s credit operations.  The Company also reported an increase in cash flow from operating activities when equipment that had been in the Company’s inventory was transferred to the credit operations and financed as an operating lease with a customer.  The financing receivable or operating lease issued by the credit operations for these transactions was reported as a corresponding cash outflow from investing activities.  There was no cash received by the Company on a consolidated basis at that time.  These offsetting intercompany cash flows have been eliminated in the Statement of Consolidated Cash Flows to properly reflect consolidated operating and investing activities.  Subsequent cash inflows from the collections or sales of these financing receivables were reclassified from investing to operating activities in order to properly classify cash receipts from the sale of inventory as operating activities.  The Supplemental Consolidating Data Statement of Cash Flows in Note 15 for the Equipment Operations and the Financial Services operations on a stand-alone basis has not changed.

All cash flows from the changes in trade accounts and notes receivable are classified as operating activities in the Statement of Consolidated Cash Flows as these receivables arise from the sale of equipment to the Company’s customers.  Cash flows from financing receivables that are related to the sale of equipment to the Company’s customers are also included in operating activities.  The remaining financing receivables are related to the financing of equipment sold by an independent dealer and are included in investing activities.

The Company had non-cash operating and investing activities not included in the Statement of Consolidated Cash Flows for the transfer of inventory to equipment under operating leases of approximately $33 million and $34 million in the first three months of 2005 and 2004, respectively.

5

Reconciliations of the reclassifications in the Statement of Consolidated Cash Flows for the three months ended January 31, 2004 in millions of dollars are as follows:

Cash Flows from Operating Activities
Net cash used for operating activities
Previous	$	(226.4	)
Reclassification	26.8
Revised	$	(199.6	)
Cash Flows from Investing Activities
Collections of financing receivables
Previous	$	2,822.6
Reclassification	(616.4		)
Revised	$	2,206.2
Cost of financing receivables acquired
Previous	$	(2,867.0	)
Reclassification	544.2
Revised	$	(2,322.8	)
Cost of operating leases acquired
Previous	$	(87.0	)
Reclassification	45.4
Revised	$	(41.6	)
Net cash provided by investing activities
Previous	$	551.8
Reclassification	(26.8		)
Revised	$	525.0

(2)The information in the notes and related commentary are presented in a format which includes data grouped as follows:

Equipment Operations - Includes the Company’s agricultural equipment, commercial and consumer equipment and construction and forestry operations with Financial Services reflected on the equity basis.

Financial Services - Includes the Company’s credit, health care and certain miscellaneous service operations.

Consolidated - Represents the consolidation of the Equipment Operations and Financial Services.  References to “Deere & Company” or “the Company” refer to the entire enterprise.

6

(3)An analysis of the Company’s retained earnings in millions of dollars follows:

	Three Months Ended January 31
	2005			2004
Balance, beginning of period	$	5,445.1		$	4,329.5
Net income	222.8			170.8
Dividends declared	(69.1		)	(54.1		)
Other adjustments	(15.1		)
Balance, end of period	$	5,583.7		$	4,446.2

(4)The Company currently uses the intrinsic value method to account for stock-based employee compensation in its financial statements (see Note 13 for future adoption of the fair value method).  The pro forma net income and net income per share, as if the fair value method in Financial Accounting Standards Board (FASB) Statement No. 123 had been used to account for stock-based compensation, with dollars in millions except per share amounts, were as follows:

	Three Months Ended January 31
	2005			2004
Net income as reported	$	222.8		$	170.8
Add:
Stock-based employee compensation costs, net of tax, included in net income	2.0			1.2
Less:
Stock-based employee compensation costs, net of tax, as if fair value method had been applied	(9.3		)	(7.9		)
Pro forma net income	$	215.5		$	164.1
Net income per share:
As reported - basic	$	.90		$	.70
Pro forma - basic	.87			.67
As reported - diluted	.89			.68
Pro forma - diluted	.86			.65

7

In December 2004, the Company granted options to employees for the purchase of 3.8 million shares of common stock at an exercise price of $69.37 per share and a binomial lattice model fair value of $19.97 per share.  At January 31, 2005, options for 20.3 million shares were outstanding at option prices in a range of $32.53 to $69.37 per share and a weighted-average exercise price of $50.96 per share.  In December 2004, the Company also granted .3 million of restricted stock units with a fair value of $69.37 per share.  At January 31, 2005, a total of 5.4 million shares remained available for the granting of future options and restricted stock units.

(5)Most inventories owned by Deere & Company and its U.S. equipment subsidiaries are valued at cost on the “last-in, first-out” (LIFO) method.  If all of the Company’s inventories had been valued on a “first-in, first-out” (FIFO) method, estimated inventories by major classification in millions of dollars would have been as follows:

	January 31 2005			October 31 2004		January 31 2004
Raw materials and supplies	$		719	$	589	$	563
Work-in-process	519			408		420
Finished goods and parts	2,568			2,004		2,134
Total FIFO value	3,806			3,001		3,117
Less adjustment to LIFO basis	1,004			1,002		947
Inventories	$	2,802		$	1,999	$	2,170

(6)Contingencies

The Company generally determines its total warranty liability by applying historical claims rate experience to the estimated amount of equipment that has been sold and still under warranty (based on dealer inventories and retail sales).  The historical claims rate is primarily determined by a review of five-year claims costs and current quality developments.

A reconciliation of the changes in the warranty liability in millions of dollars follows:

	Three Months Ended January 31
	2005			2004
Balance, beginning of period	$	458		$	389
Payments	(93		)	(81		)
Accruals for warranties	93			89
Balance, end of period	$	458		$	397

8

The Company has guarantees for certain recourse obligations on financing receivables that it has sold.  If the receivables sold are not collected, the Company would be required to cover those losses up to the amount of its recourse obligation.  At January 31, 2005, the maximum amount of exposure to losses under these agreements was $174 million.  The estimated risk associated with sold receivables totaled $20 million at January 31, 2005.  This risk of loss is recognized primarily in the retained interests on the Company’s balance sheet related to these sold receivables.  The retained interests are related to assets held by special purpose entities (SPEs).  At January 31, 2005, the assets of these SPEs related to the Company’s securitization and sale of retail notes totaled approximately $2,955 million.  The Company may recover a portion of any required payments incurred under these agreements from the repossession of the equipment collateralizing the receivables.  At January 31, 2005, the maximum remaining term of the receivables guaranteed was approximately six years.

At January 31, 2005, the Company had guaranteed approximately $40 million of residual value for two operating leases related to an administrative and a manufacturing building.  The Company is obligated at the end of each lease term to pay to the lessor any reduction in market value of the leased property up to the guaranteed residual value.  The Company recognizes the expense for these future estimated lease payments over the lives of the operating leases and had accrued expenses of $9 million related to these agreements at January 31, 2005.  The leases have terms expiring from 2006 to 2007.

At January 31, 2005, the Company had approximately $100 million of guarantees issued primarily to overseas banks related to third-party receivables for the retail financing of John Deere equipment.  The Company may recover a portion of any required payments incurred under these agreements from repossession of the equipment collateralizing the receivables.  At January 31, 2005, the Company had accrued losses of approximately $1 million under these agreements.  The maximum remaining term of the receivables guaranteed at January 31, 2005 was approximately seven years.

The Company had pledged assets of $17 million, outside the U.S., as collateral for borrowings, and $17 million of restricted investments related to conducting the health care business in various states at January 31, 2005.

The Company also had other miscellaneous contingent liabilities totaling approximately $35 million at January 31, 2005, for which it believes the probability for payment is primarily remote.

John Deere B.V., located in the Netherlands, is a consolidated indirect wholly-owned finance subsidiary of the Company.  The debt securities of John Deere B.V., including those that are registered with the U.S. Securities and Exchange Commission, are fully and unconditionally guaranteed by the Company.  These registered debt securities totaled $250 million at January 31, 2005 and are included on the consolidated balance sheet.

(7)Dividends declared and paid on a per share basis were as follows:

	Three Months Ended January 31
	2005		2004
Dividends declared	$	.28	$	.22
Dividends paid	$	.28	$	.22

9

(8)Worldwide net sales and revenues, operating profit and identifiable assets by segment in millions of dollars follow:

	Three Months Ended January 31
							%
	2005			2004			Change
Net sales and revenues:
Agricultural equipment *	$	2,010		$	1,596		+26
Commercial and consumer equipment	523			570			-8
Construction and forestry	993			746			+33
Total net sales **	3,526			2,912			+21
Credit revenues *	331			316			+5
Other revenues	270			256			+5
Total net sales and revenues **	$	4,127		$	3,484		+18
Operating profit: ***
Agricultural equipment	$	163		$	85		+92
Commercial and consumer equipment	(2		)	20
Construction and forestry	101			93			+9
Credit	126			117			+8
Other	10			6			+67
Total operating profit **	398			321			+24
Interest, corporate expenses - net and income taxes	(175		)	(150		)	+17
Net income	$	223		$	171		+30
Identifiable assets:
Agricultural equipment	$	3,552		$	3,026		+17
Commercial and consumer equipment	1,564			1,501			+4
Construction and forestry	2,048			1,843			+11
Credit	16,020			14,262			+12
Other	399			378			+6
Corporate	5,365			5,078			+6
Total assets	$	28,948		$	26,088		+11

*                   Additional intersegment sales and revenues
	Agricultural equipment sales	$	22	$	17	+29
	Construction and forestry sales	3		2		+50
	Credit revenues	49		48		+2
**Includes equipment operations outside the U.S. and Canada as follows:
	Net sales	$	1,124	$	914	+23
	Operating profit	111		108		+3
***Operating profit is income before external interest expense, certain foreign exchange gains and losses, income taxes and certain corporate expenses.  However, operating profit of the credit segment includes the effect of interest expense and foreign exchange gains or losses.

10

(9)A reconciliation of basic and diluted net income per share in millions, except per share amounts, follows:

	Three Months Ended January 31
	2005		2004
Net income	$	222.8	$	170.8
Average shares outstanding	247.1		245.4
Basic net income per share	$	.90	$	.70
Average shares outstanding	247.1		245.4
Effect of dilutive stock options	3.9		6.5
Total potential shares outstanding	251.0		251.9
Diluted net income per share	$	.89	$	.68

All stock options outstanding were included in the above computation during the first three months of 2005 and 2004.

(10)Comprehensive income, which includes all changes in the Company’s equity during the period except transactions with stockholders, was as follows in millions of dollars:

	Three Months Ended January 31
	2005			2004
Net income	$	222.8		$	170.8
Other comprehensive income (loss), net of tax:
Change in cumulative translation adjustment	34.4			22.7
Unrealized gain (loss) on investments	(.7		)	7.2
Unrealized gain on derivatives	6.2			1.1
Comprehensive income	$	262.7		$	201.8

(11)The Company is subject to various unresolved legal actions which arise in the normal course of its business, the most prevalent of which relate to product liability (including asbestos-related liability), retail credit, software licensing, patent and trademark matters.  Although it is not possible to predict with certainty the outcome of these unresolved legal actions or the range of possible loss, the Company believes these unresolved legal actions will not have a material effect on its financial statements.

11

(12)The Company has several defined benefit pension plans covering its U.S. employees and employees in certain foreign countries.  The Company also has several defined benefit health care and life insurance plans for retired employees in the U.S. and Canada.

The components of net periodic pension cost consisted of the following in millions of dollars:

	Three Months Ended January 31
	2005			2004
Service cost	$	37		$	34
Interest cost	112			112
Expected return on plan assets	(170		)	(143		)
Amortization of actuarial loss	28			14
Amortization of prior service cost	11			10
Net cost	$	18		$	27

The components of other net periodic postretirement benefits cost (health care and life insurance) consisted of the following in millions of dollars:

	Three Months Ended January 31
	2005			2004
Service cost	$	28		$	29
Interest cost	76			79
Expected return on plan assets	(16		)	(13		)
Amortization of actuarial loss	85			77
Amortization of prior service credit	(34		)	(26		)
Net cost	$	139		$	146

During the first quarter of 2005, the Company contributed approximately $8 million to its pension plans and $73 million to its other postretirement benefit plans.  The Company presently anticipates contributing an additional $182 million to its pension plans and $617 million to its other postretirement benefit plans in the remainder of fiscal year 2005.  These contributions include payments from Company funds to either increase plan assets or make direct payments to plan participants.

(13)New accounting standards to be adopted are as follows:

In December 2004, the FASB issued Statement No. 123 (revised 2004), Share-Based Payment.  This Statement eliminated the alternative of accounting for share-based compensation under Accounting Principles Board (APB) Opinion No. 25.  The revised standard generally requires the recognition of the cost of employee services for share-based compensation based on the grant date fair value of the equity or liability instruments issued.  The effective date is the beginning of the fourth fiscal quarter of 2005.  The expected impact of the adoption on the Company’s net income in the fourth quarter of 2005 will be an expense of approximately $10 million after-tax.

12

In November 2004, the FASB issued Statement No. 151, Inventory Costs an amendment of ARB No. 43, Chapter 4.  This Statement clarifies that abnormal amounts of idle facility expense, freight, handling costs and wasted materials (spoilage) should be recognized as current-period charges.  It also requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities.  The effective date is the beginning of fiscal year 2006.  In December 2004, the FASB issued Statement No. 152, Accounting for Real Estate Time-Sharing Transactions an amendment of FASB Statements No. 66 and 67.  This Statement requires real estate time-sharing transactions to be accounted for as nonretail land sales and the effective date is the beginning of fiscal year 2006.  In December 2004, the FASB issued Statement No. 153, Exchanges of Nonmonetary Assets an amendment of APB Opinion No. 29.  This Statement eliminates the exception to fair value accounting for nonmonetary exchanges of similar productive assets and replaces it with an exception for nonmonetary exchanges that do not have commercial substance.  Commercial substance is defined as a transaction that is expected to significantly change future cash flows as a result of the exchange.  The effective date is the beginning of the fourth fiscal quarter of 2005.  The adoption of these Statements is not expected to have a material effect on the Company’s financial position or net income.

(14)On October 22, 2004, the American Jobs Creation Act of 2004 (the Act) was signed into law.  The Act introduces a special one-time dividends received deduction on the repatriation of certain foreign earnings to a U.S. taxpayer (repatriation provision), provided certain criteria are met.  The deduction would be 85 percent of certain foreign earnings that are repatriated in either an enterprise’s last tax year that began before the enactment date (the Company’s 2004 fiscal tax year), or the first tax year that begins during the one-year period beginning on the date of enactment (the Company’s 2005 fiscal tax year).  At this time, the Company is still evaluating the amounts that may qualify under the law and the foreign earnings that may be repatriated.  The Company expects to complete the evaluation by the end of its fiscal third quarter.  No amounts related to the repatriation deduction under the act have been recognized in the Company’s income tax expense at this time.

13

(15) SUPPLEMENTAL CONSOLIDATING DATA
STATEMENT OF INCOME
For the Three Months Ended January 31, 2005 and 2004

(In millions of dollars) Unaudited

	EQUIPMENT OPERATIONS*				FINANCIAL SERVICES
	2005		2004		2005		2004
Net Sales and Revenues
Net sales	$	3,526.5	$	2,911.6
Finance and interest income	29.0		18.4		$	357.2	$	328.8
Health care premiums and fees					193.7		186.0
Other income	72.2		68.1		25.9		38.2
Total	3,627.7		2,998.1		576.8		553.0
Costs and Expenses
Cost of sales	2,769.8		2,298.2
Research and development expenses	149.3		138.2
Selling, administrative and general expenses	367.2		312.6		96.6		107.0
Interest expense	56.8		53.1		124.7		102.1
Interest compensation to Financial Services	46.2		44.7
Health care claims and costs					152.1		150.6
Other operating expenses	28.5		11.3		67.8		71.1
Total	3,417.8		2,858.1		441.2		430.8
Income of Consolidated Group Before Income Taxes	209.9		140.0		135.6		122.2
Provision for income taxes	72.0		49.7		47.7		42.9
Income of Consolidated Group	137.9		90.3		87.9		79.3
Equity in Income of Unconsolidated Subsidiaries and Affiliates
Credit	81.6		76.4		.2		.2
Other	3.3		4.1
Total	84.9		80.5		.2		.2
Net Income	$	222.8	$	170.8	$	88.1	$	79.5

* Deere & Company with Financial Services on the equity basis.

The supplemental consolidating data is presented for informational purposes. Transactions between the “Equipment Operations” and “Financial Services” have been eliminated to arrive at the consolidated financial statements.

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SUPPLEMENTAL CONSOLIDATING DATA

CONDENSED BALANCE SHEET
(In millions of dollars) Unaudited

	EQUIPMENT OPERATIONS *									FINANCIAL SERVICES
	January 31 2005			October 31 2004			January 31 2004			January 31 2005		October 31 2004		January 31 2004
Assets
Cash and cash equivalents	$	2,541.4		$	2,915.1		$	3,450.1		$	324.1	$	266.0	$	637.7
Cash equivalents deposited with unconsolidated subsidiaries	90.2			224.4			280.3
Cash and cash equivalents	2,631.6			3,139.5			3,730.4			324.1		266.0		637.7
Marketable securities										263.5		246.7		262.8
Receivables from unconsolidated subsidiaries and affiliates	1,316.1			1,469.5			361.6			3.3		.7
Trade accounts and notes receivable - net	704.2			781.5			666.3			2,797.1		2,765.8		2,519.7
Financing receivables - net	41.3			64.7			61.3			11,311.0		11,167.9		9,335.6
Other receivables	223.6			498.4			134.6			140.8		164.6		217.5
Equipment on operating leases - net	5.6			8.9			11.5			1,226.7		1,288.0		1,277.9
Inventories	2,802.0			1,999.1			2,169.8
Property and equipment - net	2,111.4			2,112.3			2,067.1			48.5		49.4		31.5
Investments in unconsolidated subsidiaries and affiliates	2,260.9			2,250.2			2,373.6			4.2		4.1		4.0
Goodwill	984.5			973.6			938.1							.2
Other intangible assets - net	21.3			21.6			255.7					.1		.2
Prepaid pension costs	2,473.8			2,474.5			61.7			17.3		18.6		.6
Other assets	222.7			206.2			238.3			259.1		309.1		328.1
Deferred income taxes	676.5			656.7			1,625.3							2.1
Deferred charges	100.4			86.8			95.0			23.4		23.7		21.9
Total Assets	$	16,575.9		$	16,743.5		$	14,790.3		$	16,419.0	$	16,304.7	$	14,639.8
Liabilities and Stockholders’ Equity
Short-term borrowings	$	311.7		$	311.9		$	642.6		$	3,660.1	$	3,145.6	$	2,815.5
Payables to unconsolidated subsidiaries and affiliates	127.7			142.8			122.8			1,386.3		1,676.3		618.1
Accounts payable and accrued expenses	3,385.7			3,683.8			2,738.9			599.4		631.0		631.7
Health care claims and reserves										133.6		135.9		111.3
Accrued taxes	153.7			162.0			191.7			32.9		17.2		26.9
Deferred income taxes	11.5			35.9			5.1			176.5		155.3		135.3
Long-term borrowings	2,722.4			2,728.5			2,754.7			8,232.3		8,361.9		7,992.0
Retirement benefit accruals and other liabilities	3,365.1			3,285.8			4,050.0			36.7		33.9		45.1
Total liabilities	10,077.8			10,350.7			10,505.8			14,257.8		14,157.1		12,375.9
Common Stock, $1 par value (issued shares at January 31, 2005 – 268,215,602)	2,043.5			2,043.5			1,990.6			976.8		974.1		968.6
Common stock in treasury	(1,099.0		)	(1,040.4		)	(997.5		)
Unamortized restricted stock compensation	(27.3		)	(12.7		)	(17.8		)
Retained earnings	5,583.7			5,445.1			4,446.2			1,141.6		1,142.7		1,286.9
Total	6,500.9			6,435.5			5,421.5			2,118.4		2,116.8		2,255.5
Accumulated other comprehensive income (loss)	(2.8		)	(42.7		)	(1,137.0		)	42.8		30.8		8.4
Stockholders’ equity	6,498.1			6,392.8			4,284.5			2,161.2		2,147.6		2,263.9
Total Liabilities and Stockholders’ Equity	$	16,575.9		$	16,743.5		$	14,790.3		$	16,419.0	$	16,304.7	$	14,639.8

* Deere & Company with Financial Services on the equity basis.

The supplemental consolidating data is presented for informational purposes.  Transactions between the “Equipment Operations” and “Financial Services” have been eliminated to arrive at the consolidated financial statements.

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SUPPLEMENTAL CONSOLIDATING DATA
STATEMENT OF CASH FLOWS
For the Three Months Ended January 31, 2005 and 2004
(In millions of dollars) Unaudited

	EQUIPMENT OPERATIONS*						FINANCIAL SERVICES
	2005			2004			2005			2004
Cash Flows from Operating Activities
Net income	$	222.8		$	170.8		$	88.1		$	79.5
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Provision (credit) for doubtful receivables	3.0			1.2			(5.6		)	10.9
Provision for depreciation and amortization	98.8			94.4			72.5			73.8
Undistributed earnings of unconsolidated subsidiaries and affiliates	4.8			(9.7		)	(.2		)	(.1		)
Provision (credit) for deferred income taxes	(43.8		)	1.4			19.5			(2.5		)
Changes in assets and liabilities:
Receivables	105.5			72.5			19.6			(28.9		)
Inventories	(777.3		)	(546.9		)
Accounts payable and accrued expenses	(320.8		)	(19.6		)	(39.7		)	(5.5		)
Other	254.1			90.6			(11.1		)	65.2
Net cash provided by (used for) operating activities	(452.9		)	(145.3		)	143.1			192.4
Cash Flows from Investing Activities
Collections of receivables	14.9			28.4			5,731.3			4,904.9
Proceeds from sales of financing receivables							57.8			696.0
Proceeds from maturities and sales of marketable securities							19.1			10.8
Proceeds from sales of equipment on operating leases	2.7						88.8			114.9
Proceeds from sales of businesses				74.5
Cost of receivables acquired	(.1		)	(11.5		)	(5,838.3		)	(5,174.4		)
Purchases of marketable securities							(37.2		)	(33.5		)
Purchases of property and equipment	(80.6		)	(53.2		)	(.6		)	(.5		)
Cost of operating leases acquired							(103.1		)	(87.0		)
Acquisitions of businesses, net of cash acquired	(6.1		)	(108.6		)
Decrease in receivables with unconsolidated affiliates										274.3
Other	12.0			4.2			4.2			(6.4		)
Net cash provided by (used for) investing activities	(57.2		)	(66.2		)	(78.0		)	699.1
Cash Flows from Financing Activities
Increase (decrease) in short-term borrowings	(2.0		)	65.5			14.4			(503.7		)
Change in intercompany receivables/payables	153.9			(481.0		)	(288.2		)	198.9
Proceeds from long-term borrowings	1.1			.6			378.5			266.9
Principal payments on long-term borrowings	(2.2		)	(4.1		)	(25.6		)	(528.5		)
Proceeds from issuance of common stock	71.0			133.2
Repurchases of common stock	(162.3		)	(.2		)
Dividends paid	(69.3		)	(53.4		)	(89.2		)	(70.3		)
Other	(.2		)				2.7
Net cash used for financing activities	(10.0		)	(339.4		)	(7.4		)	(636.7		)
Effect of Exchange Rate Changes on Cash	12.2			(6.1		)	.4			7.7
Net Increase (Decrease) in Cash and Cash Equivalents	(507.9		)	(557.0		)	58.1			262.5
Cash and Cash Equivalents at Beginning of Period	3,139.5			4,287.4			266.0			375.2
Cash and Cash Equivalents at End of Period	$	2,631.6		$	3,730.4		$	324.1		$	637.7

* Deere & Company with Financial Services on the equity basis.

The supplemental consolidating data is presented for informational purposes. Transactions between the “Equipment Operations” and “Financial Services” have been eliminated to arrive at the consolidated financial statements.

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Item 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Overview

The Company’s Equipment Operations primarily generate revenues and cash from the sale of equipment to John Deere dealers and distributors.  The Equipment Operations manufacture and distribute a full line of agricultural equipment; a variety of commercial and consumer equipment; and a broad range of equipment for construction and forestry.  The Company’s Financial Services primarily provide credit services and managed health care plans.  The credit operations primarily finance sales and leases of equipment by John Deere dealers and trade receivables purchased from the Equipment Operations.  The health care operations provide managed health care services for the Company and certain outside customers.  The information in the following discussion is presented in a format that includes information grouped as the Equipment Operations, Financial Services and consolidated.  The Company also views its operations as consisting of two geographic areas, the U.S. and Canada, and outside the U.S. and Canada.

The Company’s businesses are currently affected by the following key trends and economic conditions.  In the U.S., the livestock and dairy sectors are expected to remain in solid condition in 2005, while government payments largely offset the effect of lower commodity prices.  As a result, U.S. farm cash receipts for 2005 are forecast to remain near the record level of 2004.  The Company’s agricultural equipment sales were up 26 percent for the first quarter of 2005 and are forecast to be up approximately 7 to 9 percent in 2005, excluding the impact of exchange rates.  Currency is expected to add approximately three percentage points to these sales for the year.  The Company’s commercial and consumer equipment sales decreased 8 percent in the first quarter of 2005 and are expected to increase approximately 4 to 6 percent for the year due to new models of compact tractors and utility vehicles, as well as an expanded market position in commercial mowing equipment.  Construction and forestry markets are receiving continued support from favorable U.S. economic conditions and fleet replenishment.  In addition, global forestry markets are expected to experience modest growth.  The Company’s construction and forestry sales increased 33 percent in the first quarter of 2005 and are forecast to increase 10 to 12 percent in 2005.  The Company’s Financial Services operations are expected to report net income of approximately $305 million for the year.

Items of concern include the availability and price of raw materials, including steel and rubber, which have an impact on results of the Company’s Equipment Operations.  To date, Company factories have been able to secure adequate supplies of such materials, though prices have risen.  In addition, producing engines that continue to meet high performance standards, yet also comply with increasingly stringent emissions regulations is one of the Company’s major priorities.  In this regard, the Company is making and intends to continue to make the financial and technical investment needed to produce engines in conformance with the U.S. Environmental Protection Agency Tier 3 and Tier 4 emissions rules for off-road diesel engines.  There is also uncertainty concerning the impact of Asian rust on the U.S. soybean crop and soybean production practices in the U.S.

The Company’s pattern of consistent product investment has allowed customers to appreciate the value in its advanced new models of equipment.  Steps to achieve more flexibility in manufacturing and order fulfillment have also played a role in the Company’s improved results.  Positive customer response and the expanding market position on a global basis should position the Company for another year of strong performance in 2005.

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2005 Compared with 2004

Deere & Company’s net income for the first quarter was $222.8 million, or $.89 per share, compared with net income for the same period last year of $170.8 million, or $.68 per share.

Worldwide net sales and revenues grew 18 percent to $4,127 million for the first quarter, compared with $3,484 million for the same period a year ago.  Net sales of the Equipment Operations increased to $3,526 million for the first quarter, compared to $2,912 million last year.  The Company’s equipment sales in the U.S. and Canada rose 20 percent for the first quarter.  Outside the U.S. and Canada, net sales increased by 16 percent, excluding currency translation, and by 23 percent on a reported basis.

The Company’s Equipment Operations reported operating profit of $262 million for the first quarter, compared with $198 million for the same period last year.  The improvement was primarily due to increased shipments, efficiencies related to stronger production volumes, and improved price realization.  Partially offsetting these factors were higher raw material costs.  Excluding last year’s gain on the sale of a construction equipment rental company, equipment operating profit rose 56 percent on a 21 percent increase in sales.  The Equipment Operations had net income of $137.9 million for the quarter, compared with $90.3 million last year.  The same factors mentioned above affected these results.

Business Segment Results

•Agricultural Equipment.  Segment sales increased 26 percent for the current quarter.  The sales increase was mainly due to higher shipments, reflecting continued strong retail demand, as well as improved price realization and the impact of currency translation.  Operating profit nearly doubled to $163 million, compared with $85 million last year.  The operating profit improvement was primarily driven by higher worldwide sales and efficiencies related to stronger production volumes.  Improved price realization offset a significant portion of an increase in raw material costs.

•Commercial and Consumer Equipment.  Sales declined 8 percent for the first quarter as the segment further aligned shipments and production levels with seasonal demand.  The lower shipments and production volumes contributed to an operating loss of $2 million for the quarter versus operating profit of $20 million last year.  Having a positive impact for the quarter was improved price realization, which mostly offset an increase in raw material costs.

•Construction and Forestry.  Segment sales rose 33 percent for the first quarter reflecting strong activity at the retail level.  Operating profit improved to $101 million, compared with $93 million for the same quarter a year ago.  Excluding last year’s $30 million pretax gain from the sale of an equipment rental company, operating profit improved 60 percent.  The first-quarter 2005 operating profit increase was mainly a result of higher sales and efficiencies related to stronger production volumes.  Improved price realization mostly offset higher raw material costs.

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•Credit.  The credit segment had an operating profit of $126 million for the first quarter, compared with $117 million last year.  The increase was primarily due to a lower provision for credit losses related to a high quality loan portfolio, and growth in the portfolio.  Last year, the credit operations benefited from gains on retail notes that were sold during the first quarter of 2004.  Total revenues of the credit operations, including intercompany revenues, increased 4 percent to $379 million in the current quarter from $364 million in the first quarter of 2004.  The average balance of receivables and leases financed was 12 percent higher in the first quarter, compared with the same period last year.  Interest expense increased 22 percent in the current quarter, compared with last year, as a result of higher average borrowings and borrowing rates.  The credit operations’ consolidated ratio of earnings to fixed charges was 2.10 to 1 for the first quarter this year, compared with 2.14 to 1 in the same period last year.

•Other.  The other segment, which consists primarily of the health care operations, had an operating profit of $10 million for the first quarter, compared with $6 million last year.  The increase was primarily attributable to improved underwriting margins.

The cost of sales to net sales ratio for the first quarter of 2005 was 78.4 percent, compared to 78.8 percent in the same period last year.  The decrease was primarily due to manufacturing efficiencies related to higher production and sales, and improved price realization, partially offset by increased raw material costs and a higher employee performance bonus provision.

Finance and interest income and interest expense increased this year due to growth in the credit operations portfolio and higher financing rates.  Other income decreased in the current quarter primarily due to gains on retail notes sold during the first quarter of last year.  Selling, administrative and general expenses were higher in 2005 primarily due to the acquisition and consolidation of Nortrax, Inc., Nortrax Investments, Inc. and Ontrac Holdings, Inc. (collectively called Nortrax), a higher employee performance bonus provision and foreign currency exchange rate effects.  Other operating expenses increased, primarily as a result of the consolidation of Nortrax and an increase in service expenses.

Market Conditions and Outlook

Excluding the impact of currency translation, Company equipment sales are expected to increase by 6 to 8 percent for fiscal year 2005 and by 9 to 11 percent for the second quarter of 2005, compared to the same periods last year.  Currency is forecast to add about two percentage points to sales for both periods.  Production levels are expected to be down slightly for the year but up 3 to 5 percent for the second quarter.  Net income is forecast to be around $1.5 billion for the full year and in the range of $500 million to $525 million for the quarter.

•Agricultural Equipment.  In the U.S., the livestock and dairy sectors are expected to remain in solid condition in 2005, while government payments largely offset the effect of lower commodity prices.  As a result, U.S. farm cash receipts for the year are forecast to remain near the record level of 2004.  Given these conditions, the Company now expects industry retail sales in the U.S. and Canada to be up 5 to 10 percent for fiscal year 2005 in comparison with the positive levels of last year.

In other parts of the world, industry retail sales in Western Europe are forecast to be flat to down 5 percent for the year.  Farmers in the region benefited from a good fall harvest and are expected to see 2005 income in line with last year.  In South America, industry sales are forecast to be down 20 to 30 percent as a result of the combination of a weaker U.S. dollar and lower commodity prices, as well as increased input costs.

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Based on these factors and market conditions, worldwide sales of the Company’s agricultural equipment are forecast to be up 7 to 9 percent for the year, excluding the impact of exchange rates.  Currency is expected to add about three percentage points to the Company’s agricultural equipment sales for the year.

•Commercial and Consumer Equipment.  Sales of the Company’s commercial and consumer equipment are expected to increase 4 to 6 percent for the year with help from new models of compact tractors and utility vehicles, as well as an expanded market position in commercial mowing equipment.

•Construction and Forestry.  Markets for construction equipment are receiving continued support from favorable U.S. economic conditions and fleet replenishment by contractors and rental companies.  In addition, global forestry markets are expected to experience modest growth for the year.  In this environment, the Company’s sales of construction and forestry equipment are forecast to rise by 10 to 12 percent for fiscal year 2005.

•Financial Services.  The outlook for the Company’s Financial Services operations is largely unchanged.  Net income for the year is expected to be about $305 million, which is slightly higher than the previous forecast due to a further improvement in the Company’s credit portfolio quality.

Safe Harbor Statement

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:  Statements herein that relate to future operating periods are subject to important risks and uncertainties that could cause actual results to differ materially.  Some of these risks and uncertainties could affect particular lines of business, while others could affect all of the Company’s businesses.

Forward-looking statements involve certain factors that are subject to change, including, for the Company’s agricultural equipment segment, the many interrelated factors that affect farmers’ confidence.  These factors include worldwide demand for agricultural products, the level, complexity and distribution of government farm programs (and international reaction to such programs), world grain stocks, the growth of non-food uses for some crops, prices of commodities and livestock, crop production expenses (most notably fuel and fertilizer costs), weather and soil conditions, real estate values, available acreage for farming, the land ownership policies of various governments, animal diseases (including bovine spongiform encephalopathy, commonly known as “mad cow” disease), crop pests and diseases (including Asian rust), harvest yields, availability of transport for crops and the level of farm product exports (including concerns about genetically modified organisms).

Factors affecting the outlook for the Company’s commercial and consumer equipment segment include general economic conditions in these markets, consumer confidence, consumer borrowing patterns, consumer purchasing preferences, housing starts, spending by municipalities and golf courses, and weather conditions.  Sales of commercial and consumer equipment during the spring are also affected by the severity and timing of weather patterns.

The number of housing starts, interest rates and consumer spending patterns are especially important to sales of the Company’s construction equipment.  The levels of public and non-residential construction also impact the results of the Company’s construction and forestry segment.  Prices for pulp, lumber and structural panels are important to sales of forestry equipment.

All of the Company’s businesses and its reported results are affected by general economic conditions in and the political stability of the global markets in which the Company operates; production and technological difficulties, including capacity and supply constraints of, and prices for, commodities such as steel and

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rubber; oil and energy prices and supplies; the availability and cost of freight; monetary and fiscal policies of various countries; wars and other international conflicts and the threat thereof; actions by the U.S. Federal Reserve Board and other central banks; actions by the U.S. Securities and Exchange Commission; actions by environmental regulatory agencies, including those related to engine emissions and the risk of global warming; actions by other regulatory bodies, actions by rating agencies; capital market disruptions; investor sentiment; inflation and deflation rates, interest rate levels and foreign currency exchange rates; customer borrowing and repayment practices, and the number of customer loan delinquencies and defaults; actions of competitors in the various industries in which the Company competes, particularly price discounting; dealer practices, especially as to levels of new and used field inventories; labor relations; changes to accounting standards; the effects of terrorism and the response thereto; and legislation affecting the sectors in which the Company operates.  Company results are also affected by changes in market values of investment assets and the level of interest rates, which impact postretirement benefit costs, and significant changes in health care costs.

The Company’s outlook is based upon assumptions relating to the factors described above, which are sometimes based upon estimates and data prepared by government agencies.  Such estimates and data are often revised.  The Company, however, undertakes no obligation to update or revise its outlook, whether as a result of new developments or otherwise.  Further information concerning the Company and its businesses, including factors that potentially could materially affect the Company’s financial results, is included in the Company’s most recent annual report on Form 10-K and other filings with the Securities and Exchange Commission.

Critical Accounting Policies

See the Company’s critical accounting policies discussed in the Management’s Discussion and Analysis of the most recent annual report filed on Form 10-K.  There have been no material changes to these policies.

CAPITAL RESOURCES AND LIQUIDITY

The discussion of capital resources and liquidity has been organized to review separately, where appropriate, the Company’s Equipment Operations, Financial Services operations and the consolidated totals.

Certain information in the Statement of Consolidated Cash Flows (Unaudited) has been reclassified for the three months ended January 31, 2004 to eliminate the effects of non-cash transactions.  See Note 1 to the Interim Financial Statements for further discussion and quantification of the reclassification.  The Supplemental Consolidating Data Statement of Cash Flows in Note 15 for the Equipment Operations and the Financial Services operations on a stand-alone basis has not changed.

Equipment Operations

The Company’s equipment businesses are capital intensive and are subject to large seasonal variations in financing requirements for inventories and certain receivables from dealers.  The Equipment Operations sell most of their trade receivables to the Company’s credit operations.  As a result, the seasonal variations in financing requirements of the Equipment Operations have decreased.  To the extent necessary, funds provided from operations are supplemented by external financing sources.

Negative cash flows from operating activities in the first three months of 2005 of $453 million resulted primarily from an increase in inventories and a decrease in accounts payable and accrued expenses.  Partially offsetting these operating cash outflows were positive cash flows from net income, a decrease in taxes receivable and a decrease in trade receivables.  The resulting net cash requirement for operating

21

activities, repurchases of common stock, purchases of property and equipment and payment of dividends were provided primarily from a decrease in cash and cash equivalents, a decrease in receivables from Financial Services and issuances of common stock (which were the result of the exercise of stock options).

In the first three months of 2004, negative cash flows from operating activities of $145 million resulted primarily from an increase in inventories and a decrease in accounts payable and accrued expenses.  Partially offsetting these operating cash outflows were positive cash flows from net income, a decrease in taxes receivable and an increase in retirement benefit accruals.  The resulting net cash requirement for operating activities, an increase in receivables from Financial Services, acquisitions of businesses, payment of dividends and purchases of property and equipment were provided primarily from a decrease in cash and cash equivalents, issuances of common stock (which were the result of the exercise of stock options), proceeds from sales of businesses and borrowings.

Trade receivables held by the Equipment Operations decreased $77 million during the first quarter and increased $38 million from a year ago.  The Equipment Operations sell a significant portion of their trade receivables to the credit operations.  See the following consolidated discussion of trade receivables.

Inventories increased by $803 million during the first three months, primarily reflecting a seasonal increase in the first quarter.  Inventories increased $632 million, compared to a year ago primarily due to the increase in sales, the consolidation of Ontrac Holdings, Inc. and foreign currency exchange rate effects.  Most of these inventories are valued on the last-in, first-out (LIFO) method.  The ratios of inventories on a first-in, first-out (FIFO) basis, which approximates current cost, to the last 12 months’ cost of sales were 27 percent at January 31, 2005, compared to 22 percent at October 31, 2004 and 28 percent at January 31, 2004.

Total interest-bearing debt of the Equipment Operations was $3,034 million at January 31, 2005, compared with $3,040 million at the end of fiscal year 2004 and $3,397 million at January 31, 2004.  The ratios of debt to total capital (total interest-bearing debt and stockholders’ equity) were 32 percent, 32 percent and 44 percent at January 31, 2005, October 31, 2004 and January 31, 2004, respectively.

Financial Services

The Financial Services’ credit operations rely on their ability to raise substantial amounts of funds to finance their receivable and lease portfolios.  Their primary sources of funds for this purpose are a combination of borrowings and equity capital.  Additionally, the credit operations have periodically sold substantial amounts of retail notes.

During the first quarter of 2005, the cash provided by operating activities was used for investing activities, financing activities and an increase in cash and cash equivalents.  Cash provided by Financial Services operating activities was $143 million in the current quarter.  Cash used for investing activities totaled $78 million in the first three months of 2005, primarily due to the cost of receivables acquired exceeding collections of receivables.  Cash used for financing activities totaled $7 million in the current quarter, resulting primarily from a decrease in payables to the Equipment Operations and dividends paid to the Equipment Operations, partially offset by an increase in long-term and short-term borrowings.  Cash and cash equivalents increased $58 million.

In the first quarter of 2004, the aggregate cash provided by operating and investing activities was used primarily to decrease borrowings.  Cash provided by Financial Services operating activities was $192 million in the first quarter of 2004.  Cash provided by investing activities totaled $699 million in the first three months of 2004, primarily due to collections of receivables and the sales of retail notes exceeding the cost of receivables acquired.  Cash used for financing activities totaled $637 million in the first quarter of 2004, resulting primarily from a decrease in short-term and long-term external borrowings and dividends

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paid to the Equipment Operations, partially offset by an increase in payables to the Equipment Operations.  Cash and cash equivalents also increased $263 million.

Receivables and leases held by the credit operations consist of retail notes originating in connection with retail sales of new and used equipment by dealers of John Deere products, retail notes from non-Deere equipment customers, trade receivables, wholesale note receivables, revolving charge accounts, operating loans, insured international export financing generally involving John Deere products, and financing and operating leases.  During the first quarter of 2005 and the past 12 months, these receivables and leases increased $113 million and $2,202 million, respectively, due to the cost of receivables and leases acquired exceeding the collections and sales of retail notes.  Total acquisitions of receivables and leases were 13 percent higher in the first three months of 2005, compared with the same period last year.  Acquisition volumes of wholesale notes, trade receivables, leases, retail notes and revolving charge accounts were all higher in the first three months of 2005, compared to the same period last year.  Total receivables and leases administered by the credit operations, which include receivables previously sold, amounted to $18,230 million at January 31, 2005, compared with $18,620 million at October 31, 2004 and $16,260 million at January 31, 2004.  At January 31, 2005, the unpaid balance of all receivables previously sold was $2,895 million, compared with $3,398 million at October 31, 2004 and $3,127 million at January 31, 2004.

Total external interest-bearing debt of the credit operations was $11,892 million at January 31, 2005, compared with $11,508 million at the end of fiscal year 2004 and $10,808 million at January 31, 2004.  Total external borrowings increased during the first three months of 2005 and the past 12 months, generally corresponding with the level of the receivable and lease portfolio, the level of cash and cash equivalents and the change in payables owed to the Equipment Operations.  The credit operations’ ratio of interest-bearing debt to stockholder’s equity was 6.5 to 1 at January 31, 2005, compared with 6.4 to 1 at October 31, 2004 and 5.3 to 1 at January 31, 2004.

During the first quarter of 2005, the credit operations issued $379 million of long-term borrowings, which were primarily medium-term notes.

Consolidated

Sources of liquidity for the Company include cash and short-term investments, funds from operations, the issuance of commercial paper and term debt, the securitization and sale of retail notes, and committed and uncommitted, unsecured, bank lines of credit.

Because of the multiple funding sources that have been and continue to be available to the Company, the Company expects to have sufficient sources of liquidity to meet its ongoing funding needs.  The Company’s commercial paper outstanding at January 31, 2005, October 31, 2004 and January 31, 2004 was approximately $1.9 billion, $1.9 billion and $1.7 billion, respectively, while the total cash and short-term investment position was approximately $2.9 billion, $3.2 billion and $4.1 billion, respectively.  The Company has for many years accessed diverse funding sources, including short-term and long-term unsecured debt capital markets in the U.S., Canada, Europe and Australia, as well as public and private securitization markets in the U.S. and Canada.

The Company maintains unsecured lines of credit with various banks.  Some of the lines are available to both the Equipment Operations and certain credit operations.  Worldwide lines of credit totaled $3,312 million at January 31, 2005, $906 million of which were unused.  For the purpose of computing unused credit lines, commercial paper and short-term bank borrowings, excluding the current portion of long-term borrowings, were considered to constitute utilization.  Included in the total credit lines at January 31, 2005 was a long-term facility agreement totaling $1,250 million, expiring in February 2009.

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In February 2005, the Company replaced its existing short-term $1,250 million revolving credit facility agreement, which was included in the worldwide lines of credit discussed above and expired in February 2005, with a $625 million short-term credit facility agreement, expiring in February 2006, and a $625 million long-term credit facility agreement, expiring in February 2010.  This long-term agreement is in addition to the $1,250 million long-term agreement discussed above, expiring in February 2009.

The credit agreements require the Equipment Operations to maintain a ratio of total debt to total capital (total debt and stockholders’ equity) of 65 percent or less at the end of each fiscal quarter.  At January 31, 2005, the ratio was 32 percent.  Under this provision, the Company’s excess equity capacity and retained earnings balance free of restriction at January 31, 2005 was $4,864 million.  Alternatively under this provision, the Equipment Operations had the capacity to incur debt of $9,034 million at January 31, 2005.

To access public debt capital markets, the Company relies on credit rating agencies to assign short-term and long-term credit ratings to the Company’s securities as an indicator of credit quality for fixed income investors.  A security rating is not a recommendation by the rating agency to buy, sell or hold Company securities.  A credit rating agency may change or withdraw Company ratings based on its assessment of the Company’s current and future ability to meet interest and principal repayment obligations.  Lower credit ratings generally result in higher borrowing costs and reduced access to debt capital markets.

The senior long-term and short-term debt ratings and outlook currently assigned to unsecured Company securities by the rating agencies engaged by the Company are as follows:

	Senior Long-Term	Short-Term	Outlook
Moody’s Investors Service, Inc.	A3	Prime-2	Stable
Standard & Poor’s	A-	A-2	Stable

Trade accounts and notes receivable result mainly from sales to dealers of equipment that is being carried in their inventories.  Trade receivables decreased $75 million during the first three months of 2005.  These receivables increased $294 million, compared to a year ago, primarily due to the increase in sales and the effects of foreign exchange.  The ratios of worldwide trade accounts and notes receivable to the last 12 months’ net sales were 17 percent at January 31, 2005, compared to 18 percent at October 31, 2004 and 20 percent at January 31, 2004.  Agricultural equipment trade receivables increased $198 million, commercial and consumer equipment receivables increased $7 million and construction and forestry receivables increased $89 million, compared to a year ago.  The percentage of total worldwide trade receivables outstanding for periods exceeding 12 months was 2 percent, 2 percent and 4 percent at January 31, 2005, October 31, 2004 and January 31, 2004, respectively.

Stockholders’ equity was $6,498 million at January 31, 2005, compared with $6,393 million at October 31, 2004 and $4,285 million at January 31, 2004.  The increase of $105 million during the first quarter of 2005 resulted primarily from net income of $223 million, which was partially offset by dividends declared of $69 million and an increase in treasury stock of $59 million,

The Board of Directors at its meeting on February 23, 2005 increased the quarterly dividend from $.28 per share to $.31 per share, payable May 2, 2005, to stockholders of record on March 31, 2005.

Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See the Company’s most recent annual report filed on Form 10-K (Item 7A).  There has been no material change in this information.

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Item 4.CONTROLS AND PROCEDURES

The Company’s principal executive officer and its principal financial officer have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (“the Act”)) were effective as of January 31, 2005, based on the evaluation of these controls and procedures required by Rule 13a-15(b) or 15d-15(b) of the Act.

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PART II.  OTHER INFORMATION

Item 1.Legal Proceedings

See Note 11 to the Interim Financial Statements.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

The Company’s purchases of its common stock during the first quarter of 2005 were as follows:

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs (1)
	(thousands)			(thousands)	(millions)
Nov 1 to Nov 30					$	1,000
Dec 1 to Dec 31	1,108	$	72.13	1,108	920
Jan 1 to Jan 31	1,159	71.11		1,159	838
Total	2,267			2,267

1.During the first quarter of 2005, the Company had one active share purchase plan that was publicly announced in December 2004 (Plan) to purchase up to $1 billion of its common stock.

Item 3.Defaults Upon Senior Securities

None

Item 4.Submission of Matters to a Vote of Security Holders

None

Item 5.Other Information

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MANAGEMENT’S DISCUSSION AND ANALYSIS

RESULTS OF OPERATIONS FOR THE YEARS ENDED OCTOBER 31, 2004, 2003 AND 2002

OVERVIEW

Organization

The company’s Equipment Operations primarily generate revenues and cash from the sale of equipment to John Deere dealers and distributors. The Equipment Operations manufacture and distribute a full line of agricultural equipment; a variety of commercial and consumer equipment; and a broad range of equipment for construction and forestry. The company’s Financial Services primarily provide credit services and managed health care plans. The credit operations primarily finance sales and leases of equipment by John Deere dealers and trade receivables purchased from the Equipment Operations. The health care operations provide managed health care services for the company and certain outside customers. The information in the following discussion is presented in a format that includes information grouped as the Equipment Operations, Financial Services and consolidated. The company also views its operations as consisting of two geographic areas, the U.S. and Canada, and outside the U.S. and Canada.

Trends and Economic Conditions

The company’s businesses are currently affected by the following key trends and economic conditions. Farmers are benefiting from record production of corn and soybeans, strong livestock and dairy sectors, and government payments that are expected to increase substantially in 2005. As a result, U.S. farm cash receipts are forecast to be about the same in 2005 as the record level in 2004. The company’s agricultural equipment sales were up 31 percent for 2004 and are forecast to be up approximately 2 to 5 percent in 2005. The company’s commercial and consumer equipment sales increased 16 percent in 2004 and are expected to increase approximately 2 to 5 percent in 2005 due to new products and higher sales of commercial mowing equipment. Construction and forestry markets are expected to be supported in 2005 by moderate economic growth, relatively low interest rates and a favorable level of housing starts. The company’s construction and forestry sales increased 54 percent in 2004 and are forecast to increase 6 to 9 percent in 2005. Although the credit operations are expected to benefit from further growth in the loan portfolio, net income for 2005 is forecast to be down due to increased leverage in the portfolio. The credit operations are expected to report net income of approximately $280 million for the year. The health care operations expect net income to increase to about $15 million for 2005 as a result of an improved underwriting margin.

Items of concern include the availability and price of raw materials, including steel and rubber, which have an impact on results of the company’s Equipment Operations. To date, company factories have been able to secure adequate supplies of such materials though prices have risen. In addition, producing engines that continue to meet high performance standards, yet also comply with increasingly stringent emissions regulations, is one of the company’s major priorities. In this regard, the company is making and intends to continue to make the financial and technical investment needed to produce engines in conformance with the U.S. Environmental Protection Agency Tier 3 and Tier 4 emissions rules for off-road diesel engines.

Stronger market conditions, combined with a focus on building a better business, have been responsible for much of the company’s success this year. The company’s asset management efforts are continuing to yield positive results, especially in light of the strong increase in sales. Beyond the ongoing impact of the company’s business improvement efforts, a positive customer response to the company’s products is expected to continue driving performance in 2005.

2004 COMPARED WITH 2003

CONSOLIDATED RESULTS

Worldwide net income in 2004 was $1,406 million, or $5.56 per share diluted ($5.69 basic), compared with $643 million, or $2.64 per share diluted ($2.68 basic), in 2003. Net sales and revenues increased 29 percent to $19,986 million in 2004, compared with $15,535 million in 2003. Net sales of the Equipment Operations increased 32 percent in 2004 to $17,673 million from $13,349 million last year. Net sales increased primarily due to higher shipments. Net sales in the U.S. and Canada rose 33 percent in 2004. Outside the U.S. and Canada, net sales increased by 20 percent for the year, excluding currency translation, and by 30 percent on a reported basis.

Worldwide Equipment Operations, which exclude the Financial Services operations, had an operating profit of $1,905 million in 2004, compared with $708 million in 2003. Operating profit increased primarily due to increased shipments and price realization. The increase in operating profit was partially offset by a larger provision for employee bonuses and higher raw material costs. The larger provision for bonuses was driven by the strong performance in the Equipment Operations.

The Equipment Operations’ net income was $1,097 million in 2004, compared with $305 million in 2003. The same operating factors mentioned above affected these results. In addition, this year’s results benefited from a lower effective tax rate and a decrease in interest expense.

Net income of the company’s Financial Services operations in 2004 was $309 million, compared with $330 million in 2003. The decrease was primarily due to higher administrative costs, lower credit margins and increased medical claims costs. Additional information is presented in the following discussion of the credit and “Other” operations.

The cost of sales to net sales ratio for 2004 was 76.8 percent, compared to 80.5 percent last year. The decrease in the ratio was primarily due to manufacturing efficiencies related to higher production and sales, and improved price realization. Partially offsetting these factors were the higher employee performance bonus provision and increased costs for raw material, such as steel and rubber.

Finance and interest income decreased this year primarily due to a decrease in rental income on operating leases and lower average finance rates. Health care premiums and fees increased, compared to last year, primarily due to higher insured enrollment, while health care claims and costs increased primarily due to higher medical costs and an increase in enrollment. Other income

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increased this year primarily due to service income related to Nortrax, Inc., Nortrax Investments, Inc. and Ontrac Holdings, Inc. (collectively called Nortrax), which were consolidated in 2004, and a gain from the sale of the company’s 49 percent ownership in Sunstate Equipment Co., LLC, an equipment rental company. Selling, administrative and general expenses were higher this year primarily due to a higher employee performance bonus provision, the consolidation of Nortrax and foreign currency exchange rate effects. Other operating expenses increased primarily as a result of the consolidation of Nortrax and an increase in service expense.

The company has several defined benefit pension plans and defined benefit health care and life insurance plans. The company’s postretirement benefit costs for these plans in 2004 were $596 million, compared to $593 million in 2003. The long-term expected return on plan assets, which is reflected in these costs, was an expected gain of 8.5 percent in both years, or $671 million in 2004, compared to $597 million in 2003. The actual return on postretirement benefit plan assets was a gain of $654 million in 2004, compared to a gain of $1,050 million in 2003. In 2005, the long-term expected return will continue to be 8.5 percent. The total unrecognized losses related to the postretirement benefit plans at October 31, 2004 and 2003 were $5,149 million and $4,794 million, respectively. The company expects the increase in postretirement benefit costs in 2005 to be approximately $40 million pretax, compared with 2004, caused by amortization of unrecognized losses primarily as a result of a decrease in the discount rate assumption and prior years’ asset losses. The company makes any required contributions to the postretirement benefit plan assets under applicable regulations and voluntary contributions from time to time based on the company’s liquidity and ability to make tax-deductible contributions. Total company contributions to the plans were $1,852 million in 2004 and $745 million in 2003, which include direct benefit payments for unfunded plans. These contributions also included voluntary contributions to the U.S. postretirement benefit plan assets of $1,551 million in 2004 and $475 million in 2003. Total company contributions in 2005 are expected to be approximately $810 million, including voluntary contributions to U.S. postretirement plan assets of approximately $500 million. See the following discussion of “Critical Accounting Policies” for postretirement benefit obligations.

BUSINESS SEGMENT AND GEOGRAPHIC AREA RESULTS

The following discussion relates to operating results by reportable segment and geographic area. Operating profit is income before external interest expense, certain foreign exchange gains or losses, income taxes and corporate expenses. However, operating profit of the credit segment includes the effect of interest expense and foreign exchange gains or losses.

Beginning in fiscal 2004, the special technologies group’s results were transferred from the “Other” segment to the agricultural equipment segment due to changes in internal reporting. As a result, the 2003 and 2002 results for the agricultural equipment and “Other” segment were restated for net sales of $41 million and $54 million and operating losses of $8 million and $42 million, respectively, related to the special technologies group. This had no effect on total net sales and operating profit. The “Other” segment now represents primarily the health care operations along with certain miscellaneous service operations added in 2004.

Worldwide Agricultural Equipment Operations

The agricultural equipment segment had an operating profit of $1,072 million in 2004, compared with $329 million in 2003. Net sales increased 31 percent this year primarily due to higher shipments, reflecting strong retail demand, as well as the translation effect of exchange rates and improved price realization. The operating profit improvement was primarily due to higher worldwide sales, efficiencies related to stronger production volumes, and improved price realization. Offsetting these factors were the higher provision for performance bonuses and increased raw material costs.

Worldwide Commercial and Consumer Equipment Operations

The commercial and consumer equipment segment had an operating profit of $246 million, compared with $227 million in 2003. Net sales increased 16 percent for the year primarily due to higher volumes. The improved operating profit was primarily due to higher sales and production volumes. Partially offsetting these factors were an increase in the performance bonus provision in addition to higher costs for freight and raw materials.

Worldwide Construction and Forestry Operations

The construction and forestry segment had an operating profit of $587 million in 2004, compared with $152 million in 2003. Sales increased 54 percent for the year. The increase in sales was primarily due to higher volumes. The operating profit improvement was primarily due to higher sales, efficiencies related to stronger production volumes, and improved price realization. Partially offsetting these factors were a larger performance bonus provision and higher raw material costs. The results also included a $30 million pretax gain from the sale of an equipment rental company.

Worldwide Credit Operations

The operating profit of the credit operations was $466 million in 2004, compared with $474 million in 2003. Operating profit in 2004 was lower than last year due primarily to higher administrative costs, partly related to a higher provision for performance bonuses in connection with the overall company profitability, and lower margins. Partially offsetting these factors was a lower provision for credit losses, reflecting solid portfolio quality. Total revenues of the credit operations decreased 4 percent in 2004, primarily reflecting lower rental income from operating leases related to the lower level of leases, and lower average finance rates. The average balance of receivables and leases financed was 2 percent higher in 2004, compared with 2003. A decrease in funding rates in 2004 resulted in a 3 percent decrease in interest expense, compared with 2003. The credit operations’ ratio of earnings to fixed charges was 2.12 to 1 in 2004, compared to 2.07 to 1 in 2003.

Worldwide Other Operations

The company’s other operations,which consisted primarily of the health care operations, had an operating profit of $5 million in 2004, compared with $30 million last year. The decrease was primarily due to increased medical claims costs and a higher performance bonus provision related to overall company profitability.

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Equipment Operations in U.S. and Canada

The equipment operations in the U.S. and Canada had an operating profit of $1,284 million in 2004, compared with $386 million in 2003. The increase was primarily due to higher sales, efficiencies related to stronger production volumes and improved price realization. Partially offsetting these items was a higher provision for performance bonuses and increased raw material costs. Sales increased primarily due to higher shipments, reflecting strong retail demand, as well as improved price realization. Sales increased 33 percent in 2004 while the physical volume of sales increased 30 percent, compared to 2003.

Equipment Operations outside U.S. and Canada

The equipment operations outside the U.S. and Canada had an operating profit of $621 million in 2004, compared with $322 million in 2003. The increase was primarily due to higher sales and production volumes of agricultural equipment. Partially offsetting these factors were higher expenses related to stronger foreign exchange rates and an increased provision for performance bonuses. Sales increased mainly from higher volumes, as well as the effect of stronger foreign exchange rates and improvements in price realization. Sales were 30 percent higher than last year, while the physical volume of sales increased 16 percent in 2004, compared with 2003.

MARKET CONDITIONS AND OUTLOOK

Please see Part I., Item 2 of this report on Form 10-Q.

SAFE HARBOR STATEMENT

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Statements under “Market Conditions and Outlook,” and other statements herein that relate to future operating periods are subject to important risks and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties could affect particular lines of business, while others could affect all of the company’s businesses.

Forward looking statements involve certain factors that are subject to change, including for the company’s agricultural equipment segment the many interrelated factors that affect farmers’ confidence, including worldwide demand for agricultural products, world grain stocks, the growth of non-food uses for some crops, prices realized for commodities and livestock, crop production expenses (most notably fuel and fertilizer costs), weather and soil conditions, real estate values, available acreage for farming, the land ownership policies of various governments, the level, complexity and distribution of government farm programs, international reaction to such programs, animal diseases (including bovine spongiform encephalopathy, commonly known as “mad cow” disease), crop pests and diseases (including Asian rust), harvest yields, availability of transport for crops and the level of farm product exports (including concerns about genetically modified organisms).

Factors affecting the outlook for the company’s commercial and consumer equipment segment include general economic conditions in these markets, consumer confidence, consumer borrowing patterns, consumer purchasing preferences, housing starts, spending on behalf of municipalities and golf courses, and weather conditions.

The number of housing starts, interest rates and consumer spending patterns are especially important to sales of the company’s construction equipment. The levels of public and non-residential construction also impact the results of the company’s construction and forestry segment. Prices for pulp, lumber and structural panels are important to sales of forestry equipment.

All of the company’s businesses and its reported results are affected by general economic conditions in and the political stability of global markets in which the company operates; production and technological difficulties, including capacity and supply constraints, and prices, including supply commodities such as steel and rubber; oil and energy prices and supplies; the availability and cost of freight; monetary and fiscal policies

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of various countries, wars and other international conflicts and the threat thereof; actions by the U.S. Federal Reserve Board and other central banks; actions by the U.S. Securities and Exchange Commission; actions by environmental regulatory agencies, including those related to engine emissions and the risk of global warming; actions by other regulatory bodies; actions by rating agencies; capital market disruptions; investor sentiment; inflation and deflation rates, interest rate levels and currency exchange rates; customer borrowing and repayment practices, and the number of customer loan delinquencies and defaults; actions of competitors in the various industries in which the company competes, particularly price discounting; dealer practices especially as to levels of new and used field inventories; labor relations; changes to accounting standards; the effects of terrorism and the response thereto; and legislation affecting the sectors in which the company operates. Company results are also affected by changes in market values of investment assets and the level of interest rates, which impact postretirement benefit costs, and significant changes in health care costs.

The company’s outlook is based upon assumptions relating to the factors described above, which are sometimes based upon estimates and data prepared by government agencies. Such estimates and data are often revised. The company, however, undertakes no obligation to update or revise its outlook, whether as a result of new developments or otherwise. Further information concerning the company and its businesses, including factors that potentially could materially affect the company’s financial results, is included in other filings with the Securities and Exchange Commission.

2003 COMPARED WITH 2002

CONSOLIDATED RESULTS

Worldwide net income in 2003 was $643 million, or $2.64 per share diluted ($2.68 basic), compared with $319 million, or $1.33 per share diluted ($1.34 basic), in 2002. The success of new products and ongoing efforts to manage costs and asset intensity were evident in the results for 2003. Improved market conditions also contributed to the stronger performance of the company’s construction and forestry and commercial and consumer equipment segments. Additionally, as a result of disciplined asset management, trade receivables ended 2003 at their lowest level in more than a decade.

Net sales and revenues increased 11 percent to $15,535 million in 2003, compared with $13,947 million in 2002. Net sales of the Equipment Operations increased 14 percent in 2003 to $13,349 million from $11,703 million in 2002. Net sales increased primarily due to higher physical volumes of commercial and consumer equipment and construction and forestry equipment. In addition, the increase was due to the translation effect of stronger foreign currency exchange rates and improved price realization. Net sales outside the U.S. and Canada increased 17 percent in 2003. Excluding the impact of changes in currency exchange rates, these sales were up 5 percent for 2003.

Worldwide Equipment Operations, which exclude the Financial Services operations, had an operating profit of $708 million in 2003, compared with $401 million in 2002. Operating profit increased primarily due to improved price realization and a higher physical volume of sales. Partially offsetting these factors were an increase in postretirement benefit costs of $306 million in 2003. The results in 2002 were negatively affected by the costs of closing certain facilities and higher costs associated with the company’s minority investments in Nortrax. During 2004, the company acquired a majority interest in Nortrax and it was consolidated.

The Equipment Operations’ net income was $305 million in 2003, compared with $78 million in 2002. The same operating factors mentioned above affected these results. In addition, results for 2002 were negatively impacted by a higher effective tax rate.

Net income of the company’s Financial Services operations in 2003 was $330 million, compared with $262 million in 2002. The increase was primarily due to lower loan losses, growth in the portfolio and the absence of losses from Argentina related to the peso devaluation in 2002. Additional information is presented in the following discussion of the credit operations.

The cost of sales to net sales ratio for 2003 was 80.5 percent, compared to 82.0 percent in 2002. The decrease in the ratio was primarily due to improved price realization, higher production volumes, the discontinuance of the amortization of goodwill, and costs in 2002 from closing certain facilities along with higher costs related to Nortrax. These improvements were partially offset by higher postretirement benefit costs in 2003.

Finance and interest income decreased in 2003 primarily due to a decrease in rental income on operating leases caused by a lower level of leases. Health care premiums and fees and related health care claims and costs increased, compared to 2002, primarily due to higher enrollment. Other income decreased in 2003 primarily related to a lower volume of retail notes sold. Research and development costs increased in 2003 due to the higher level of new product development and exchange rate fluctuations. Selling, administrative and general expenses were higher in 2003 primarily due to higher expenses for employee postretirement benefits, exchange rate fluctuations and increased promotional and support costs for new products. Other operating expenses decreased primarily as a result of lower depreciation on operating leases in 2003 due to a lower level of leases, and the absence of losses in 2002 from the Argentine operations related to the peso devaluation. Equity income (loss) of unconsolidated affiliates improved in 2003 primarily due to the results of the Deere-Hitachi Construction Machinery Corporation and Nortrax.

The company’s postretirement benefit costs in 2003 were $593 million, compared to $279 million in 2002. The long-term expected return on plan assets, which is reflected in these costs, was an expected gain of 8.5 percent, or $597 million, in 2003, compared to 9.7 percent, or $663 million, in 2002. The actual return on postretirement benefit plan assets was a gain of $1,050 million in 2003, compared to a loss of $522 million in 2002. The total unrecognized losses related to the postretirement benefit plans at October 31, 2003 was $4,794 million. Total company contributions to the plans were $745 million in 2003 and $228 million in 2002, which include direct benefit payments for unfunded plans. The contributions in 2003 included a $475 million voluntary contribution to the U.S. postretirement benefit plan assets. No voluntary contribution was made in 2002.

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See the following discussion of “Critical Accounting Policies” for postretirement benefit obligations.

The annual pretax increase in earnings and cash flows from the restructurings in 2001 and 2002 have been approximately $100 million as expected. The restructurings primarily have reduced cost of sales by approximately $300 million and selling, administrative and general expenses by $30 million, partially offset by a reduction in sales of $230 million.

BUSINESS SEGMENT RESULTS

The agriculture equipment and the “Other” segment discussed below were restated in 2003 and 2002 for the transfer of the special technologies group from the “Other” segment to the agricultural equipment segment (see previous segment discussion for “2004 Compared with 2003”).

Worldwide Agricultural Equipment Operations

The agricultural equipment segment had an operating profit of $329 million in 2003, compared with $397 million in 2002. Net sales increased 9 percent in 2003 due to the translation effect of stronger exchange rates and improved price realization. The production volumes and physical volume of sales were approximately equal to 2002. The lower operating profit was primarily due to higher postretirement benefit costs of $216 million, higher compensation to the credit operations for financing trade receivables and one-time labor agreement ratification costs. Offsetting these factors was the impact of improved price realization.

Worldwide Commercial and Consumer Equipment Operations

The commercial and consumer equipment segment had an operating profit of $227 million in 2003, compared with $79 million in 2002. Net sales increased 19 percent in 2003, primarily due to strong retail demand for recently introduced products and the impact of expanded distribution channels. The improved operating profit was primarily due to higher sales and production volumes. Partially offsetting these factors were higher promotional and support costs related to new products, as well as higher postretirement benefit costs of $31 million. Results in 2002 were also negatively affected by restructuring costs related to the closure of certain facilities.

Worldwide Construction and Forestry Operations

The construction and forestry segment had an operating profit of $152 million in 2003, compared with an operating loss of $75 million in 2002. Sales increased 24 percent in 2003. The increase was primarily due to higher physical volumes, reflecting improved retail activity. The operating profit improvement was primarily due to higher sales and production volumes. Improved price realization also had a favorable impact on the results for 2003. Partially offsetting these factors were higher postretirement benefit costs of $59 million. The results in 2002 were negatively affected by higher costs related to the company’s investment in Nortrax and the costs for a factory closing.

Worldwide Credit Operations

The operating profit of the credit operations was $474 million in 2003, compared with $386 million in 2002. Operating profit in 2003 was higher than in 2002 due primarily to lower loan losses, growth in the portfolio and the absence of losses in Argentina related to the peso devaluation, partially offset by narrower financing spreads, lower gains from a lower volume of retail note sales and higher selling, administrative and general expenses. Total revenues of the credit operations decreased 2 percent in 2003, primarily reflecting lower rental income from operating leases related to the lower level of leases, and a decrease in gains on a lower volume of retail note sales. The average balance of receivables and leases financed was 12 percent higher in 2003, compared with 2002, primarily due to the increased level of trade receivables. A decrease in financing rates, primarily offset by an increase in average borrowings in 2003, resulted in a 1 percent decrease in interest expense, compared with 2002. The credit operations’ ratio of earnings to fixed charges was 2.07 to 1 in 2003, compared to 1.85 to 1 in 2002.

Worldwide Other Operations

The company’s other operations, which consisted of the health care operations, had an operating profit of $30 million in 2003 and 2002.

FASB STATEMENT NO. 142

In 2003, the company adopted FASB Statement No. 142, Goodwill and Other Intangible Assets. In accordance with this Statement, the company did not amortize goodwill related to new acquisitions made after June 30, 2001 and discontinued amortizing goodwill for prior acquisitions as of November 1, 2002. Based on the new standard, goodwill will be written down only for impairments. In 2002, the company had goodwill amortization of $58 million pretax ($53 million after-tax).

CAPITAL RESOURCES AND LIQUIDITY

The discussion of capital resources and liquidity has been organized to review separately, where appropriate, the company’s Equipment Operations, Financial Services operations and the consolidated totals.

Certain information in the Statement of Consolidated Cash Flows has been reclassified for the years ended 2004, 2003 and 2002 to eliminate the effects of non-cash transactions. See Note 1 to the Consolidated Financial Statements for further discussion and quantification of the reclassification. The Supplemental Consolidating Data Statement of Cash Flows in Note 29 for the Equipment Operations and the Financial Services operations on a stand-alone basis has not changed.

EQUIPMENT OPERATIONS

The company’s equipment businesses are capital intensive and are subject to large seasonal variations in financing requirements for inventories and certain receivables from dealers. The Equipment Operations sell most of their trade receivables to the company’s credit operations. As a result, the seasonal variations in financing requirements of the Equipment Operations have decreased. To the extent necessary, funds provided from operations are supplemented by external financing sources.

Cash provided by operating activities during 2004 was $1,383 million primarily due to net income adjusted for non-cash provisions, and an increase in accounts payable and accrued expenses, which were partially offset by a cash outflow for voluntary contributions to U.S. employee postretirement benefit plans of $1,551 million ($475 million last year) along with an increase in inventories and trade receivables. The operating cash flows, a decrease in cash and cash equivalents of $1,148 million, the proceeds from the issuance of common stock of $251 million (which were the result of the exercise of stock options) and proceeds from sales of businesses of $90 million were used primarily to increase receivables from Financial Services by $1,656 million,

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fund purchases of property and equipment of $346 million, decrease borrowings by $320 million, pay dividends to stockholders of $247 million, acquire businesses for $193 million and repurchase common stock for $193 million.

Over the last three years, operating activities have provided an aggregate of $3,974 million in cash. In addition, proceeds from the issuance of common stock were $473 million and the sales of businesses were $166 million. The aggregate amount of these cash flows was used mainly to increase receivables from Financial Services by $1,576 million, fund purchases of property and equipment of $1,004 million, stockholders’ dividends of $666 million, acquisitions of businesses for $213 million and repurchases of common stock for $195 million. Cash and cash equivalents also increased $1,041 million over the three-year period.

Trade receivables held by the Equipment Operations increased by $135 million during 2004. During this time period, the Equipment Operations sold most of its trade receivables to the credit operations (see following consolidated discussion).

Inventories increased by $633 million in 2004. Most of these inventories are valued on the last-in, first-out (LIFO) method. The ratios of inventories on a first-in, first-out (FIFO) basis, which approximates current cost, to fiscal year cost of sales were 22 percent at October 31, 2004, and 2003.

Total interest-bearing debt of the Equipment Operations was $3,040 million at the end of 2004, compared with $3,304 million at the end of 2003 and $3,387 million at the end of 2002. The ratio of total debt to total capital (total interest-bearing debt and stockholders’ equity) at the end of 2004, 2003 and 2002 was 32 percent, 45 percent and 52 percent, respectively.

During 2004, the Equipment Operations retired $250 million of 6.55% notes and other long-term borrowings of $17 million.

Capital expenditures for the Equipment Operations in 2005 are estimated to be approximately $480 million.

FINANCIAL SERVICES

The Financial Services’ credit operations rely on their ability to raise substantial amounts of funds to finance their receivable and lease portfolios. Their primary sources of funds for this purpose are a combination of borrowings and equity capital. Additionally, the credit operations periodically sell substantial amounts of retail notes.

Cash flows from the company’s Financial Services operating activities were $653 million in 2004. Cash provided by financing activities totaled $664 million in 2004, representing a $1,264 million increase in borrowings from the Equipment Operations and a $134 million increase in long-term borrowings, partially offset by a $293 million decrease in short-term borrowings and the payment of $444 million of dividends to the Equipment Operations. The cash provided by operating and financing activities was used primarily to increase receivables. Cash used by investing activities totaled $1,437 million in 2004, primarily due to receivable acquisitions exceeding collections by $3,849 million, partially offset by sales of receivables of $2,334 million. Cash and cash equivalents also decreased $109 million.

Over the last three years, the Financial Services operating activities have provided $2,118 million in cash. In addition, the sale of receivables of $7,242 million, an increase in borrowings of $752 million and the sale of equipment on operating leases of $1,452 million have provided cash inflows. These amounts have been used mainly to fund receivable and lease acquisitions, which exceeded collections by $10,857 million, and dividends to the Equipment Operations of $1,092 million. Cash and cash equivalents also decreased $309 million over the three-year period.

Receivables and leases increased by $1,662 million in 2004, compared with 2003. Acquisition volumes of receivables and leases increased 26 percent in 2004, compared with 2003. The volumes of trade receivables, leases, wholesale notes, retail notes, operating loans and revolving charge accounts increased approximately 37 percent, 23 percent, 22 percent, 17 percent, 16 percent and 10 percent, respectively. The credit operations also sold retail notes receiving proceeds of $2,334 million during 2004, compared with $1,941 million in 2003. At October 31, 2004 and 2003, net receivables and leases administered, which include receivables and leases previously sold but still administered, were $18,620 million and $16,476 million, respectively.

Trade receivables held by the credit operations increased by $487 million in 2004 (see following consolidated discussion).

Total external interest-bearing debt of the credit operations was $11,508 million at the end of 2004, compared with $11,447 million at the end of 2003 and $10,001 million at the end of 2002. Total external borrowings have increased generally corresponding with the level of the receivable and lease portfolio, the level of cash and cash equivalents and the change in payables owed to the Equipment Operations. The credit subsidiaries’ ratio of total interest-bearing debt to total stockholder’s equity was 6.4 to 1 at the end of 2004 and 5.6 to 1 at the end of 2003 and 2002.

During 2004, the credit operations redeemed $150 million of 8-5/8% subordinated debentures due August 2019. The redemption price was equal to the par value plus accrued interest. The credit operations also issued $2,179 million and retired $1,895 million of other long-term borrowings during the year, which were primarily medium-term notes.

CONSOLIDATED

Sources of liquidity for the company include cash and short-term investments, funds from operations, the issuance of commercial paper and term debt, the securitization and sale of retail notes, and committed and uncommitted, unsecured, bank lines of credit.

Because of the multiple funding sources that have been and continue to be available to the company, the company expects to have sufficient sources of liquidity to meet its funding needs. The company’s worldwide commercial paper outstanding at October 31, 2004 and 2003 was approximately $1.9 billion and $2.1 billion, respectively, while the total cash and cash equivalents position was $3.2 billion and $4.4 billion, respectively. The company has for many years accessed diverse funding sources, including short-term and long-term unsecured debt capital markets in the U.S., Canada, Europe and Australia, as well as public and private securitization markets in the U.S. and Canada.

The company also has access to unsecured bank lines of credit with various U.S. and foreign banks. Some of the lines are available to both Deere & Company and John Deere Capital Corporation. Worldwide lines of credit totaled $3,190 million at October 31, 2004, $900 million of which were unused. For the purpose of computing unused credit lines, commercial paper and

33

short-term bank borrowings, excluding the current portion of long-term borrowings, were considered to constitute utilization. Included in the total credit lines at October 31, 2004 was a long-term credit facility agreement totaling $1,250 million, expiring in February 2009.

The credit agreement requires the Equipment Operations to maintain a ratio of total debt to total capital (total debt and stockholders’ equity) of 65 percent or less at the end of each fiscal quarter. At October 31, 2004, the ratio was 32 percent. Under this provision, the company’s excess equity capacity and retained earnings balance free of restriction at October 31, 2004 was $4,756 million. Alternatively under this provision, the Equipment Operations had the capacity to incur additional debt of $8,832 million at October 31, 2004.

To access public debt capital markets, the company relies on credit rating agencies to assign short-term and long-term credit ratings to the company’s securities as an indicator of credit quality for fixed income investors. A security rating is not a recommendation by the rating agency to buy, sell or hold company securities. A credit rating agency may change or withdraw company ratings based on its assessment of the company’s current and future ability to meet interest and principal repayment obligations. Lower credit ratings generally result in higher borrowing costs and reduced access to debt capital markets.

The senior long-term and short-term debt ratings and outlook currently assigned to company securities by the rating agencies engaged by the company are as follows:

	Senior Long-Term	Short-Term	Outlook
Moody’s Investors Service, Inc.	A3	Prime-2	Stable
Standard & Poor’s	A-	A-2	Stable

Trade accounts and notes receivable primarily arise from sales of goods to dealers. Trade receivables increased by $588 million in 2004. The ratios of trade accounts and notes receivable at October 31 to fiscal year net sales were 18 percent in 2004, compared with 20 percent in 2003. Total worldwide agricultural equipment trade receivables increased $127 million, commercial and consumer equipment receivables increased $110 million and construction and forestry receivables increased $351 million. The collection period for trade receivables averages less than 12 months. The percentage of trade receivables outstanding for a period exceeding 12 months was 2 percent at October 31, 2004, compared with 11 percent at October 31, 2003.

Stockholders’ equity was $6,393 million at October 31, 2004, compared with $4,002 million at October 31, 2003. The increase of $2,391 million resulted primarily from net income of $1,406 million, a decrease in the minimum pension liability adjustment of $1,021 million and a decrease in treasury stock of $101 million, partially offset by dividends declared of $262 million.

OFF-BALANCE SHEET ARRANGEMENTS

The company’s credit operations periodically securitize and sell retail notes to special purpose entities (SPEs) in securitizations of retail notes. The credit operations use these SPEs in a manner consistent with conventional practices in the securitization industry to isolate the retail notes for the benefit of securitization investors. The use of the SPEs enables these operations to access the highly liquid and efficient securitization markets for the sales of these types of financial assets. The amounts of funding from securitizations reflects such factors as capital market accessibility, relative costs of funding sources and assets available for securitization. Based on an assessment of these and other factors, the company received $2,269 million of funding and recognized pretax gains of $48 million related to these securitizations during 2004. The company’s total exposure to recourse provisions related to securitized retail notes was $218 million and the total assets held by the SPEs related to securitizations were $3,441 million at October 31, 2004.

At October 31, 2004, the company had guaranteed approximately $40 million of residual values for two operating leases related to an administrative and a manufacturing building. The company is obligated at the end of each lease term to pay to the lessor any reduction in market value of the leased property up to the guaranteed residual value. The company recognizes the expense for these future estimated lease payments over the terms of the operating leases and had accrued expenses of $9 million related to these agreements at October 31, 2004. The leases have terms expiring in 2006 and 2007.

At October 31, 2004, the company had approximately $95 million of guarantees issued primarily to banks outside the U.S. related to third-party receivables for the retail financing of John Deere equipment. The company may recover a portion of any required payments incurred under these agreements from repossession of the equipment collateralizing the receivables. At October 31, 2004, the company had accrued losses of approximately $1 million under these agreements. The maximum remaining term of the receivables guaranteed at October 31, 2004 was approximately six years.

AGGREGATE CONTRACTUAL OBLIGATIONS

Most of the company’s contractual obligations to make payments to third parties are debt obligations. In addition, the company has off-balance sheet obligations for the purchases of raw materials and services along with agreements for future lease payments. The payment schedule for these contractual obligations in millions of dollars is as follows:

	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Total debt*
Equipment Operations	$	2,958	$	312	$	281	$	8	$	2,357
Financial Services	11,265		3,146		4,393		1,541		2,185
Total	14,223		3,458		4,674		1,549		4,542
Purchase obligations	2,306		2,274		32
Operating leases	367		75		130		59		103
Capital leases	12		2		3		2		5
Contractual obligations	$	16,908	$	5,809	$	4,839	$	1,610	$	4,650

*Principal payments.

34

CRITICAL ACCOUNTING POLICIES

The preparation of the company’s consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect reported amounts of assets, liabilities, revenues and expenses. Changes in these estimates and assumptions could have a significant effect on the financial statements. The accounting policies below are those management believes are the most critical to the preparation of the company’s financial statements and require the most difficult, subjective or complex judgments. The company’s other accounting policies are described in the Notes to the Consolidated Financial Statements.

Sales Incentives

At the time a sale to a dealer is recognized, the company records an estimate of the future sales incentive costs for allowances and financing programs that will be due when the dealer sells the equipment to a retail customer. The estimate is based on historical data, announced incentive programs, field inventory levels and settlement volumes. The final cost of these programs and the amount of accrual required for a specific sale is fully determined when the dealer sells the equipment to the retail customer. This is due to numerous programs available at any particular time and new programs that may be announced after the company records the sale. Changes in the mix and types of programs affect these estimates, which are reviewed quarterly.

The sales incentive accruals at October 31, 2004, 2003 and 2002 were $540 million, $444 million and $584 million, respectively. The total incentive accruals recorded at the end of 2004 increased compared to the end of 2003 primarily due to an increase in the sales volume discounts to dealers related to the increase in sales in 2004. In 2003, the sales incentive accruals recorded at year-end decreased, compared to 2002 year-end, primarily due to the volume discounts for the agricultural equipment segment being paid quarterly beginning in 2003 versus annually in 2002.

The estimation of the sales incentive accrual is impacted by many assumptions. One of the key assumptions is the historical percentage of sales incentive costs to settlements from dealers. Over the last five fiscal years, this percent has varied by approximately plus or minus .5 percent, compared to the average sales incentive costs to settlements percentage during that period. Holding other assumptions constant, if this loss experience percentage were to increase or decrease .5 percent, the sales incentive accrual at October 31, 2004 would increase or decrease by approximately $25 million.

Product Warranties

At the time a sale to a dealer is recognized, the company records the estimated future warranty costs. The company generally determines its total warranty liability by applying historical claims rate experience to the estimated amount of equipment that has been sold and is still under warranty based on dealer inventories and retail sales. The historical claims rate is primarily determined by a review of five-year claims costs and current quality developments. Variances in claims experience and the type of warranty programs affect these estimates, which are reviewed quarterly.

The product warranty accruals at October 31, 2004, 2003 and 2002 were $458 million, $389 million and $332 million, respectively. The increases in 2004 and 2003 were primarily due to the increases in sales volume.

Estimates used to determine the product warranty accruals are significantly affected by the historical percentage of warranty claims costs to sales. Over the last five fiscal years, this loss experience percent has varied by approximately plus or minus .15 percent, compared to the average warranty costs to sales percentage during that period. Holding other assumptions constant, if this estimated loss experience percentage were to increase or decrease .15 percent, the warranty accrual at October 31, 2004 would increase or decrease by approximately $30 million.

Postretirement Benefit Obligations

Pension obligations and other postretirement employee benefit (OPEB) obligations are based on various assumptions used by the company’s actuaries in calculating these amounts. These assumptions include discount rates, health care cost trend rates, expected return on plan assets, compensation increases, retirement rates, mortality rates and other factors. Actual results that differ from the assumptions and changes in assumptions affect future expenses and obligations.

The total net pension and OPEB liabilities recognized at October 31, 2004, 2003 and 2002 were $729 million, $3,804 million and $3,660 million, respectively. The decrease in the total net liabilities recognized at October 31, 2004 is primarily due to the decrease in the minimum pension liability related to the increase in pension plan assets. The increase in plan assets was a result of voluntary company contributions and the return on plan assets.

The effect of hypothetical changes to selected assumptions on the company’s major U. S retirement benefit plans would be as follows in millions of dollars:

		October 31, 2004						2005
		Increase			Increase			Increase
	Percentage	(Decrease)			(Decrease)			(Decrease)
Assumptions	Change	PBO/APBO*			Equity**			Expense
Pension
Discount rate***	+/-.5	$	(389)/417		$	0/(2,436	)	$	(34)/34
Expected return on assets	+/-.5							(39)/39
OPEB
Discount rate***	+/-.5	(353)/394						(52)/57
Health care cost trend rate***	+/-1.0	716/(630		)				170/(148		)

*Projected benefit obligation (PBO) for pension plans and accumulated postretirement benefit obligation (APBO) for OPEB plans.

**Pretax minimum pension liability adjustment.

***Pretax impact on service cost, interest cost and amortization of gains or losses.

Allowance for Credit Losses

The allowance for credit losses represents an estimate of the losses expected from the company’s receivable portfolio. The level of the allowance is based on many quantitative and qualitative factors, including historical loss experience by product category, portfolio duration, delinquency trends, economic conditions and credit risk quality. The adequacy of the allowance is assessed quarterly.

35

Different assumptions or changes in economic conditions would result in changes to the allowance for credit losses and the provision for credit losses.

The total allowance for credit losses at October 31, 2004, 2003 and 2002 was $201 million, $207 million and $182 million, respectively. The decrease in 2004 was primarily due to improved credit quality and delinquency trends. The increase in 2003 was primarily due to the increase in receivables.

The assumptions used in evaluating the company’s exposure to credit losses involve estimates and significant judgment. The historical loss experience on the receivable portfolios represents one of the key assumptions involved in determining the allowance for credit losses. Over the last five fiscal years, the average loss experience has fluctuated between 2 basis points and 15 basis points in any given fiscal year over the applicable prior period. Holding other estimates constant, a 5 basis point increase or decrease in estimated loss experience on the receivable portfolios would result in an increase or decrease of approximately $7 million to the allowance for credit losses at October 31, 2004.

Operating Lease Residual Values

The carrying value of equipment on operating leases is affected by the estimated fair values of the equipment at the end of the lease (residual values). Upon termination of the lease, the equipment is either purchased by the lessee or sold to a third party, in which case the company may record a gain or a loss for the difference between the estimated residual value and the sales price. The residual values are dependent on current economic conditions and are reviewed quarterly. Changes in residual value assumptions would affect the amount of depreciation expense and the amount of investment in equipment on operating leases.

The total operating lease residual values at October 31, 2004, 2003 and 2002 were $803 million, $913 million and $1,092 million, respectively. The decreases in 2004 and 2003 were primarily due to the decreases in the level of operating leases.

Estimates used in determining end of lease market values for equipment on operating leases significantly impact the amount and timing of depreciation expense. If future market values for this equipment were to decrease 5 percent from the company’s present estimates, the total impact would be to increase the company’s depreciation on equipment on operating leases by approximately $40 million. This amount would be charged to depreciation expense during the remaining lease terms such that the net investment in operating leases at the end of the lease terms would be equal to the revised residual values. Initial lease terms generally range from three to five years.

FINANCIAL INSTRUMENT RISK INFORMATION

The company is naturally exposed to various interest rate and foreign currency risks. As a result, the company enters into derivative transactions to manage certain of these exposures that arise in the normal course of business and not for the purpose of creating speculative positions or trading. The company’s credit operations manage the relationship of the types and amounts of their funding sources to their receivable and lease portfolio in an effort to diminish risk due to interest rate and foreign currency fluctuations, while responding to favorable financing opportunities. Accordingly, from time to time, these operations enter into interest rate swap agreements to manage their interest rate exposure. The company also has foreign currency exposures at some of its foreign and domestic operations related to buying, selling and financing in currencies other than the local currencies. The company has entered into agreements related to the management of these currency transaction risks. The credit risk under these interest rate and foreign currency agreements is not considered to be significant.

Interest Rate Risk

Quarterly, the company uses a combination of cash flow models to assess the sensitivity of its financial instruments with interest rate exposure to changes in market interest rates. The models calculate the effect of adjusting interest rates as follows. Cash flows for financing receivables are discounted at the current prevailing rate for each receivable portfolio. Cash flows for borrowings are discounted at the treasury yield curve plus a market credit spread for similarly rated borrowers. Cash flows for interest rate swaps are projected and discounted using forecasted rates from the swap yield curve at the repricing dates. The net loss in these financial instruments’ fair values which would be caused by decreasing the interest rates by 10 percent from the market rates at October 31, 2004 and 2003 would have been approximately $42 million and $56 million, respectively.

Foreign Currency Risk

In the Equipment Operations, it is the company’s practice to hedge significant currency exposures. Worldwide foreign currency exposures are reviewed quarterly. Based on the Equipment Operations anticipated and committed foreign currency cash inflows and outflows for the next twelve months and the foreign currency derivatives at year end, the company estimates that a hypothetical 10 percent weakening of the U.S. dollar relative to all other currencies through 2005 would decrease the 2005 expected net cash inflows by $18 million. At last year end, a hypothetical 10 percent strengthening of the U.S. dollar under similar assumptions and calculations indicated a potential $65 million adverse effect on the 2004 net cash inflows.

In the Financial Services operations, the company’s policy is to hedge the foreign currency risk if the currency of the borrowings does not match the currency of the receivable portfolio. As a result, a hypothetical 10 percent adverse change in the value of the U.S. dollar relative to all other foreign currencies would not have a material effect on the Financial Services cash flows.

36

DEERE & COMPANY

STATEMENT OF CONSOLIDATED INCOME

For the Years Ended October 31, 2004, 2003 and 2002

(In millions of dollars except per share amounts)

	2004		2003		2002
Net Sales and Revenues
Net sales	$	17,673.0	$	13,349.1	$	11,702.8
Finance and interest income	1,195.7		1,275.6		1,339.2
Health care premiums and fees	766.2		664.5		636.0
Other income	351.2		245.4		269.0
Total	19,986.1		15,534.6		13,947.0
Costs and Expenses
Cost of sales	13,567.5		10,752.7		9,593.4
Research and development expenses	611.6		577.3		527.8
Selling, administrative and general expenses	2,117.4		1,744.2		1,657.3
Interest expense	592.1		628.5		637.1
Health care claims and costs	650.3		536.1		518.4
Other operating expenses	333.5		324.5		410.3
Total	17,872.4		14,563.3		13,344.3
Income of Consolidated Group before Income Taxes	2,113.7		971.3		602.7
Provision for income taxes	708.5		336.9		258.3
Income of Consolidated Group	1,405.2		634.4		344.4
Equity in Income (Loss) of Unconsolidated Affiliates
Credit	.6		.2		(3.8		)
Other	.3		8.5		(21.4		)
Total	.9		8.7		(25.2		)
Net Income	$	1,406.1	$	643.1	$	319.2
Per Share Data
Net income – basic	$	5.69	$	2.68	$	1.34
Net income – diluted	$	5.56	$	2.64	$	1.33
Dividends declared	$	1.06	$	.88	$	.88

The notes to consolidated financial statements are an integral part of this statement.

37

DEERE & COMPANY

CONSOLIDATED BALANCE SHEET

As of October 31, 2004 and 2003

(In millions of dollars except per share amounts)

	2004			2003
ASSETS
Cash and cash equivalents	$	3,181.1		$	4,384.5
Marketable securities	246.7			231.8
Receivables from unconsolidated affiliates	17.6			303.2
Trade accounts and notes receivable - net	3,206.9			2,619.3
Financing receivables - net	11,232.6			9,974.2
Other receivables	663.0			428.3
Equipment on operating leases - net	1,296.9			1,381.9
Inventories	1,999.1			1,366.1
Property and equipment - net	2,161.6			2,075.6
Investments in unconsolidated affiliates	106.9			195.5
Goodwill	973.6			872.1
Other intangible assets - net	21.7			252.9
Prepaid pension costs	2,493.1			62.6
Other assets	515.4			534.3
Deferred income taxes	528.1			1,476.1
Deferred charges	109.7			99.6
Total Assets	$	28,754.0		$	26,258.0
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Short-term borrowings	$	3,457.5		$	4,347.2
Payables to unconsolidated affiliates	142.3			87.8
Accounts payable and accrued expenses	3,973.6			3,105.5
Health care claims and reserves	135.9			94.1
Accrued taxes	179.2			226.5
Deferred income taxes	62.6			30.7
Long-term borrowings	11,090.4			10,404.2
Retirement benefit accruals and other liabilities	3,319.7			3,959.9
Total liabilities	22,361.2			22,255.9
STOCKHOLDERS’ EQUITY
Common stock, $1 par value (authorized – 600,000,000 shares; issued – 268,215,602 shares in 2004 and 2003), at stated value	2,043.5			1,987.8
Common stock in treasury, 21,356,458 shares in 2004 and 24,694,170 shares in 2003, at cost	(1,040.4		)	(1,141.4		)
Unamortized restricted stock compensation	(12.7		)	(5.8		)
Retained earnings	5,445.1			4,329.5
Total	6,435.5			5,170.1
Minimum pension liability adjustment	(57.2		)	(1,078.0		)
Cumulative translation adjustment	9.1			(79.2		)
Unrealized loss on derivatives	(6.4		)	(22.4		)
Unrealized gain on investments.	11.8			11.6
Accumulated other comprehensive income (loss)	(42.7		)	(1,168.0		)
Total stockholders’ equity	6,392.8			4,002.1
Total Liabilities and Stockholders’ Equity	$	28,754.0		$	26,258.0

The notes to consolidated financial statements are an integral part of this statement.

38

DEERE & COMPANY

STATEMENT OF CONSOLIDATED CASH FLOWS

For the Years Ended October 31, 2004, 2003 and 2002

(In millions of dollars)

	2004			2003			2002
Cash Flows from Operating Activities
Net income	$	1,406.1		$	643.1		$	319.2
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for doubtful receivables	51.4			106.8			160.7
Provision for depreciation and amortization	621.0			631.4			725.3
Undistributed earnings of unconsolidated affiliates	20.7			(5.5		)	22.7
Provision (credit) for deferred income taxes	385.0			33.1			(1.2		)
Changes in assets and liabilities:
Trade, notes and financing receivables related to sales of equipment	(863.7		)	497.9			12.0
Inventories	(501.3		)	(72.8		)	(30.2		)
Accounts payable and accrued expenses	872.7			(184.9		)	144.0
Retirement benefit accruals/prepaid pension costs	(1,245.7		)	(175.9		)	59.3
Other	(250.1		)	163.3			157.5
Net cash provided by operating activities	496.1			1,636.5			1,569.3
Cash Flows from Investing Activities
Collections of financing receivables	7,611.6			6,844.0			5,212.2
Proceeds from sales of financing receivables	2,206.8			1,704.0			2,967.8
Proceeds from maturities and sales of marketable securities	66.7			76.4			75.4
Proceeds from sales of equipment on operating leases	444.4			514.5			495.2
Proceeds from sales of businesses	90.6			22.5			53.5
Cost of financing receivables acquired	(10,493.5		)	(9,421.8		)	(8,034.3		)
Purchases of marketable securities	(79.6		)	(118.2		)	(87.8		)
Purchases of property and equipment	(363.8		)	(309.6		)	(358.7		)
Cost of operating leases acquired	(290.6		)	(258.9		)	(325.1		)
Acquisitions of businesses, net of cash acquired	(192.9		)	(10.6		)	(19.0		)
Decrease (increase) in receivables from unconsolidated affiliates	(68.7		)	(6.8		)	14.8
Other	(.1		)	(32.4		)	1.0
Net cash used for investing activities	(1,069.1		)	(996.9		)	(5.0		)
Cash Flows from Financing Activities
Increase (decrease) in short-term borrowings	(356.0		)	126.9			(1,413.2		)
Proceeds from long-term borrowings	2,189.5			3,312.9			4,573.7
Principal payments on long-term borrowings	(2,312.7		)	(2,542.7		)	(2,771.0		)
Proceeds from issuance of common stock	250.8			174.5			48.0
Repurchases of common stock	(193.1		)	(.4		)	(1.2		)
Dividends paid	(246.6		)	(210.5		)	(208.9		)
Other	(.4		)	(1.8		)	(1.5		)
Net cash provided by (used for) financing activities	(668.5		)	858.9			225.9
Effect of Exchange Rate Changes on Cash	38.1			71.1			(5.3		)
Net Increase (Decrease) in Cash and Cash Equivalents	(1,203.4		)	1,569.6			1,784.9
Cash and Cash Equivalents at Beginning of Year	4,384.5			2,814.9			1,030.0
Cash and Cash Equivalents at End of Year	$	3,181.1		$	4,384.5		$	2,814.9

The notes to consolidated financial statements are an integral part of this statement. (See reclassifications in Note 1.)

39

DEERE & COMPANY

STATEMENT OF CHANGES IN CONSOLIDATED STOCKHOLDERS’ EQUITY

For the Years Ended October 31, 2002, 2003 and 2004

(In millions of dollars)

	Total Equity			Common Stock		Treasury Stock			Unamortized Restricted Stock			Retained Earnings			Other Comprehensive Income (Loss)
Balance October 31, 2001	$	3,992.2		$	1,948.6	$	(1,405.5	)	$	(16.8	)	$	3,834.8		$	(368.9	)
Comprehensive income (loss)
Net income	319.2											319.2
Other comprehensive income (loss)
Minimum pension liability adjustment	(1,015.9		)												(1,015.9		)
Cumulative translation adjustment	(7.6		)												(7.6		)
Unrealized gain on derivatives	25.0														25.0
Unrealized gain on investments	1.0														1.0
Total comprehensive income (loss)	(678.3		)
Repurchases of common stock	(1.2		)			(1.2		)
Treasury shares reissued	84.5					84.5
Dividends declared	(209.3		)									(209.3		)
Other stockholder transactions	(24.7		)	8.4					(1.0		)	(32.1		)
Balance October 31, 2002	3,163.2			1,957.0		(1,322.2		)	(17.8		)	3,912.6			(1,366.4		)
Comprehensive income
Net income	643.1											643.1
Other comprehensive income (loss)
Minimum pension liability adjustment	(45.9		)												(45.9		)
Cumulative translation adjustment	213.9														213.9
Unrealized gain on derivatives	24.6														24.6
Unrealized gain on investments	5.8														5.8
Total comprehensive income	841.5
Repurchases of common stock	(.4		)			(.4		)
Treasury shares reissued	181.2					181.2
Dividends declared	(211.2		)									(211.2		)
Other stockholder transactions	27.8			30.8					12.0			(15.0		)
Balance October 31, 2003	4,002.1			1,987.8		(1,141.4		)	(5.8		)	4,329.5			(1,168.0		)
Comprehensive income
Net income	1,406.1											1,406.1
Other comprehensive income
Minimum pension liability adjustment	1,020.8														1,020.8
Cumulative translation adjustment	88.3														88.3
Unrealized gain on derivatives	16.0														16.0
Unrealized gain on investments	.2														.2
Total comprehensive income	2,531.4
Repurchases of common stock	(193.1		)			(193.1		)
Treasury shares reissued	294.1					294.1
Dividends declared	(262.2		)									(262.2		)
Other stockholder transactions	20.5			55.7					(6.9		)	(28.3		)
Balance October 31, 2004	$	6,392.8		$	2,043.5	$	(1,040.4	)	$	(12.7	)	$	5,445.1		$	(42.7	)

The notes to consolidated financial statements are an integral part of this statement.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following are significant accounting policies in addition to those included in other notes to the consolidated financial statements.

Principles of Consolidation

The consolidated financial statements represent the consolidation of all companies in which Deere & Company has a controlling interest. Deere & Company records its investment in each unconsolidated affiliated company (generally 20 to 50 percent ownership) at its related equity in the net assets of such affiliate. Other investments (less than 20 percent ownership) are recorded at cost. Consolidated retained earnings at October 31, 2004 include undistributed earnings of the unconsolidated affiliates of $10 million. Dividends from unconsolidated affiliates were $22 million in 2004, $3 million in 2003 and $2 million in 2002 (see Note 6).

Special purpose entities (SPEs) related to the sale and securitization of financing receivables, which are also variable interest entities (VIEs), are not consolidated since the company does not control these entities, and they either meet the requirements of qualified special purpose entities, or the company is not the primary beneficiary. In addition, the specified assets in these VIEs related to the company’s securitizations are not the only source of payment for specified liabilities or other interests of these VIEs and, therefore, do not require consolidation (see Note 10).

Certain amounts for prior years have been reclassified to conform with 2004 financial statement presentations.

Structure of Operations

Certain information in the notes and related commentary are presented in a format which includes data grouped as follows:

Equipment Operations — Includes the company’s agricultural equipment, commercial and consumer equipment and construction and forestry operations with Financial Services reflected on the equity basis. The special technologies operations were combined with the agricultural equipment operations in 2004 (see Note 27).

Financial Services — Includes the company’s credit, health care and certain miscellaneous service operations, which were added in 2004.

Consolidated — Represents the consolidation of the Equipment Operations and Financial Services. References to “Deere & Company” or “the company” refer to the entire enterprise.

Cash Flow Reclassifications

Certain information in the Statement of Consolidated Cash Flows as shown in the following table has been reclassified for the years ended 2004, 2003 and 2002. This reclassification is related to concerns raised by the staff of the U.S. Securities and Exchange Commission. Previously, the company reported an increase in cash flow from operating activities when a trade receivable was settled by a dealer through financing received from the company's credit operations. The company also reported an increase in cash flow from operating activities when equipment that had been in the company's inventory was transferred to the credit operations and financed as an operating lease with a customer. The financing receivable or operating lease issued by the credit operations for these transactions was reported as a corresponding cash outflow from investing activities. There was no cash received by the company on a consolidated basis at that time. These offsetting intercompany cash flows have been eliminated in the Statement of Consolidated Cash Flows to properly reflect consolidated operating and investing activities. Subsequent cash inflows from the collections or sales of these financing receivables were reclassified from investing to operating activities in order to properly classify cash receipts from the sale of inventory as operating activities. The Supplemental Consolidating Data Statement of Cash Flows in Note 29 for the Equipment Operations and the Financial Services operations on a stand-alone basis has not changed. See Note 26 for further cash flow information.

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Reconciliations of the reclassifications in the Statement of Consolidated Cash Flows for the years ended October 31 in millions of dollars were as follows:

	2004			2003			2002
Cash Flows from Operating Activities
Net cash provided by operating activities
Previous	$	1,162.5		$	1,535.7		$	1,878.3
Reclassification	(666.4		)	100.8			(309.0		)
Revised	$	496.1		$	1,636.5		$	1,569.3
Cash Flow from Investing Activities
Collections of financing receivables
Previous	$	10,233.6		$	9,077.6		$	6,987.0
Reclassification	(2,622.0		)	(2,233.6		)	(1,774.8		)
Revised	$	7,611.6		$	6,844.0		$	5,212.2
Proceeds from sales of financing receivables
Previous	$	2,333.6		$	1,941.0		$	2,967.8
Reclassification	(126.8		)	(237.0		)
Revised	$	2,206.8		$	1,704.0		$	2,967.8
Cost of financing receivables acquired
Previous	$	(13,628.2	)	$	(11,576.8	)	$	(9,955.3	)
Reclassification	3,134.7			2,155.0			1,921.0
Revised	$	(10,493.5	)	$	(9,421.8	)	$	(8,034.3	)
Cost of operating leases acquired
Previous	$	(571.1	)	$	(473.7	)	$	(487.9	)
Reclassification	280.5			214.8			162.8
Revised	$	(290.6	)	$	(258.9	)	$	(325.1	)
Net cash used for investing activities
Previous	$	(1,735.5	)	$	(896.1	)	$	(314.0	)
Reclassification	666.4			(100.8		)	309.0
Revised	$	(1,069.1	)	$	(996.9	)	$	(5.0	)

Use of Estimates in Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts and related disclosures. Actual results could differ from those estimates.

Revenue Recognition

Sales of equipment and service parts are recorded when title and all risk of ownership are transferred to the independent dealer based on the agreement in effect with the dealer. In the U.S. and most international locations, this transfer occurs when goods are shipped to the dealer. In Canada and some other international locations, certain goods are shipped to dealers on a consignment basis under which title and risk of ownership are not transferred to the dealer. Accordingly, sales are not recorded until a retail customer has purchased the goods. In all cases, when a sale is recorded by the company, no significant uncertainty exists surrounding the purchaser’s obligation to pay. No right of return exists on sales of equipment. Service parts returns are estimable and accrued at the time a sale is recognized. The company makes appropriate provisions based on experience for costs such as doubtful receivables, sales incentives and product warranty.

Financing revenue is recorded over the terms of the related receivables using the interest method. Income from operating leases is recognized on a straight-line basis over the scheduled lease terms. Health care premiums and fees are recognized as earned over the terms of the policies or contracts.

Sales Incentives

At the time a sale to a dealer is recognized, the company records an estimate of the future sales incentive costs for allowances and financing programs that will be due when the dealer sells the equipment to a retail customer. The estimate is based on historical data, announced incentive programs, field inventory levels and settlement volumes.

Product Warranties

At the time a sale to a dealer is recognized, the company records the estimated future warranty costs. These costs are usually estimated based on historical warranty claims (see Note 20).

Sales of Receivables

Certain financing receivables are periodically sold to SPEs in securitization transactions (see Note 10). Gains or losses from these sales are recognized in the period of sale based on the relative fair value of the portion sold and the portion allocated to retained interests. The retained interests are recorded at fair value estimated by discounting future cash flows. Changes in these fair values are recorded after-tax as a component of other comprehensive income, which is recorded directly in stockholders’ equity until realized.

Depreciation and Amortization

Property and equipment, capitalized software and other intangible assets are depreciated over their estimated useful lives using the straight-line method. Equipment on operating leases is depreciated over the terms of the leases using the straight-line method. Property and equipment expenditures for new and revised products, increased capacity and the replacement or major renewal of significant items are capitalized. Expenditures for maintenance, repairs and minor renewals are generally charged to expense as incurred.

Impairment of Long-Lived Assets and Goodwill

The company evaluates the carrying value of long-lived assets (including property and equipment, goodwill and other intangible assets) when events and circumstances warrant such a review. Goodwill is also reviewed for impairment by reporting unit annually (see Note 15). If the carrying value of the long-lived asset is considered impaired, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the asset.

Health Care Claims and Reserves

Health care claims and reserves include liabilities for unpaid claims based on estimated costs of settling the claims using past experience adjusted for current trends.

Foreign Currency Translation

The functional currencies for most of the company’s foreign operations are their respective local currencies. The assets and liabilities of these operations are translated into U.S. dollars at

42

the end of the period exchange rates, and the revenues and expenses are translated at weighted-average rates for the period. The gains or losses from these translations are included in other comprehensive income, which is part of stockholders’ equity. Gains or losses from transactions denominated in a currency other than the functional currency of the subsidiary involved and foreign exchange forward contracts and options are included in net income. The total foreign exchange pretax net loss for 2004, 2003 and 2002 was $26 million, $6 million and $36 million, respectively.

Stock-Based Compensation

The company has retained the intrinsic value method of accounting for its plans in accordance with Accounting Principles Board (APB) Opinion No. 25. No compensation expense for stock options was recognized under this method since the options’ exercise prices were not less than the market prices of the stock at the dates the options were awarded (see Note 22). The stock-based compensation expense recognized in earnings relates to restricted stock awards. For disclosure purposes under Financial Accounting Standards Board (FASB) Statement No. 123, Accounting for Stock-Based Compensation, the Black-Scholes option pricing model was used to calculate the “fair values” of stock options on the date the options were awarded. Based on this model, the weighted-average fair values of stock options awarded during 2004, 2003 and 2002 with the exercise price equal to the market price were $12.40, $9.55 and $11.42 per option, respectively.

Pro forma net income and net income per share, as if the fair value method in FASB Statement No. 123 had been used for stock-based compensation, and the assumptions used were as follows with dollars in millions except per share amounts:

	2004			2003			2002
Net income as reported	$	1,406		$	643		$	319
Add:
Stock-based employee compensation costs, net of tax, included in net income	5			3			2
Less:
Stock-based employee compensation costs, net of tax, as if fair value method had been applied	(31		)	(32		)	(37		)
Pro forma net income	$	1,380		$	614		$	284
Net income per share:
As reported – basic	$	5.69		$	2.68		$	1.34
Pro forma – basic	$	5.58		$	2.56		$	1.19
As reported – diluted	$	5.56		$	2.64		$	1.33
Pro forma – diluted	$	5.47		$	2.53		$	1.19
Black-Scholes assumptions*
Risk-free interest rate	2.6		%	2.4		%	3.6		%
Dividend yield	1.4		%	1.9		%	2.1		%
Stock volatility	27.8		%	29.8		%	36.0		%
Expected option life in years	3.2			3.4			3.7

*Weighted-averages

New Accounting Standard to be Adopted

On December 16, 2004, the FASB issued Statement No. 123 (revised 2004), Share-Based Payment.  This standard eliminated the alternative of accounting for share-based compensation using APB Opinion No. 25.  The revised standard generally requires the recognition of the cost of employee services based on the grant date fair value of equity or liability instruments issued.  The effective date for the company is the beginning of the fourth fiscal quarter of 2005.  The impact of the adoption on the company’s financial position or net income has not been determined.

New Accounting Standards Adopted

In 2004, the company adopted FASB Interpretation (FIN) No. 46 (revised December 2003), Consolidation of Variable Interest Entities, which addresses the consolidation and related disclosures of these entities by business enterprises. These are entities in which either the equity investment at risk is not sufficient to absorb the probable losses without additional subordinated financial support from other parties, or the investors with equity at risk lack certain essential characteristics of a controlling interest. Under the Interpretation, the company must consolidate any variable interest entities (VIEs) in which the company holds variable interests and the company is deemed the primary beneficiary. As disclosed in Note 10, the company’s credit operations hold retained interests in certain special purpose entities (SPEs) related to the securitization and sale of their retail notes. These SPEs are defined as VIEs. Under the Interpretation, most of the company’ retained interests are not deemed variable interests because they are interests in a VIE’s specified assets with a fair value that is less than half the fair value of the VIE’s total assets. In addition, these specified assets are not the only source of payment for specified liabilities or other interests of these VIE’s and, therefore, do not require consolidation under the Interpretation. The company’s remaining retained interests are with qualified special purpose entities (QSPEs) as defined by FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, which are exempt from consolidation. The adoption of this standard did not require the consolidation of any SPEs related to securitizations. The effect of the adoption for other VIEs did not have a material effect on the company’s financial position or net income.

In 2004, the company also adopted FASB Statement No. 132 (revised 2003), Employers’ Disclosures about Pensions and Other Postretirement Benefits, an amendment of FASB Statements No. 87, 88 and 106. This Statement added certain disclosure requirements for the major categories of plan assets, the accumulated pension benefit obligations, the measurement date used, the benefits expected to be paid to plan participants during the next ten years, the employer’s contributions expected to be paid to the plans during the next fiscal year, and interim disclosure of the components of the benefit costs along with any revisions to the contributions expected to be paid to the plans for the current fiscal year. This Statement required additional disclosure only and had no effect on the company’s financial position or net income (see Note 3).

In December 2003, the U.S. Congress passed and the President signed into law the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (Act). The Act includes a prescription drug benefit under Medicare Part D as well as a federal subsidy beginning in 2006. This subsidy will be paid to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent (as defined in the Act) to Medicare Part D. The company believes its retiree health and accident plan is at least actuarially equivalent to Medicare Part D and eligible for the federal subsidy. The subsidy will be based on approximately 28 percent of an individual beneficiary’s annual prescription drug costs between $250 and $5,000. The company elected to defer the recognition of the effects of the Act on the financial statements until final authoritative guidance on the

43

subsidy was issued by the FASB. The final guidance under FASB Staff Position (FSP) Financial Accounting Standards (FAS) 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003, was issued May 19, 2004. The company adopted the guidance on a prospective basis in the third quarter of 2004. Treating the future subsidy under the Act as an actuarial experience gain, as required by the guidance, decreased the accumulated postretirement benefit obligation at the beginning of the third quarter by approximately $410 million. The subsidy also decreased the net periodic postretirement benefit cost for the last half of 2004 by approximately $42 million.

Acquisitions and Dispositions

The following acquisitions and dispositions were made which did not materially affect the company’s financial statements. In December 2003 and March 2004, the company exercised call options purchasing an additional 59 percent ownership interest in Nortrax, Inc. for $151 million, increasing its ownership interest to 100 percent, which included approximately $110 million for previously accrued costs related to the call option amount, approximately $30 million for goodwill and the remainder for identifiable net assets. In March 2004, the company exercised a call option purchasing an additional 60 percent ownership interest in Nortrax Investments, Inc. for $16 million, increasing its ownership interest to 100 percent, which included approximately $10 million for previously accrued costs related to the call option amount, approximately $2 million for goodwill and the remainder for identifiable net assets. In August 2004, the company exercised a call option purchasing an additional 66 percent of Ontrac Holdings, Inc. for $19 million, increasing its ownership to 100 percent, which included approximately $11 million for goodwill and the remainder for identifiable net assets. The goodwill generated in these acquisitions was the result of the future cash flows and related fair values of the entities acquired exceeding the fair values of the entities’ identifiable assets and liabilities. Nortrax, Inc. was consolidated at the end of December 2003, Nortrax Investments, Inc. was consolidated at the end of March 2004 and Ontrac Holdings, Inc. was consolidated at the end of August 2004, due to majority ownership interests. These entities also included approximately $30 million of existing goodwill, which was also included on the company’s balance sheet when they were consolidated. None of the goodwill is deductible for tax purposes. The other intangibles purchased with these entities were not material. All the entities described above, which are collectively called Nortrax, are included in the construction and forestry segment of the company’s operations and are involved in the ownership and development of several construction equipment dealer locations. The total values assigned to major assets and liabilities of the Nortrax entities related to the portion of additional ownership acquired during 2004 were approximately $175 million for inventories, $35 million for trade receivables, $43 million for goodwill, $25 million for property and equipment, $25 million for other assets, $215 million for payables to the company and $25 million of other liabilities. The pro forma results of the company’s operations as if these acquisitions had occurred at the beginning of the fiscal year would not differ materially from reported results.

In November 2003, the company sold its 49 percent minority ownership in Sunstate Equipment Co., LLC, which was a rental equipment company included in the construction and forestry operations on the equity accounting basis. The gain on the sale was approximately $30 million pretax, recorded in other income, and $22 million after-tax. The equity income included in the financial statements for the periods presented was not material.

2. SPECIAL ITEMS

In 2001 and 2002, the company announced certain actions aimed at increasing efficiency and reducing costs. As a result, the company recognized asset write-downs and liabilities related to these costs. Following are descriptions of these actions and tables of the write-downs and liabilities related to the restructuring charges as they affected the financial statements during 2002, 2003 and 2004. There have been no material revisions to any of these restructuring plans. The annual pretax increase in earnings and cash flows have been approximately $100 million as expected. The restructurings primarily have reduced cost of sales by approximately $300 million and selling, administrative and general expenses by $30 million, partially offset by a reduction in sales of $230 million.

2002 Restructuring Charges

The expense (income) and liabilities for restructuring items at October 31 in millions of dollars and the number of employees to be terminated were as follows:

	Liabilities 2001		Expense (Income)			Payments			Liabilities 2002
Property and equipment write-downs			$	29
Inventory write-downs			5
Total write-downs			34
Termination benefits	$	24	12			$	(25	)	$	11
Contract terminations	27		12			(21		)	18
Warranties and product returns	16		(8		)	(7		)	1
Other costs	7		8			(3		)	12
Total accruals	$	74	24			$	(56	)	$	42
Total			$	58	*
	2001		Additions			Terminated			2002
Employees to be terminated	1,000		900			(1700		)	200

*In addition to these charges, the company recognized $11 million of other restructuring costs as incurred for a total of $69 million restructuring costs. The restructuring costs of $69 million have been reduced by $14 million for adjustments ($10 million cost of sales and $4 million selling, administrative and general expenses) due to changes in prior-year estimates as described below. Early-retirement programs also totaled $3 million in 2002 for a total of $72 million of special items.

The costs for restructuring items in 2002 totaled $69 million consisting of $68 million of cost of sales and $1 million of other expenses, as discussed below. The beginning balances shown above relate to special items in 2001 for exiting the hand-held consumer products business included in the commercial and consumer equipment segment and a restructuring to reduce manufacturing and marketing costs in the construction and forestry segment.

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In 2002, the company’s commercial and consumer equipment segment announced plans to close facilities in Williamsburg, Virginia and Jeffersonville, Indiana and streamline operations at Horicon, Wisconsin. As a result of these actions, a cost of $38 million was recognized, partially offset by $14 million for adjustments related to exiting the hand-held consumer products business in 2001. The net restructuring cost of $24 million consisted of property and equipment write-downs of $6 million, inventory write-downs of $1 million, contract terminations of $8 million, termination benefits of $3 million for approximately 200 employees and other costs of $6 million.

In 2002, the construction and forestry segment announced plans to close the Loudon, Tennessee factory and relocate the skid-steer loader production to its Dubuque, Iowa facility. Primarily as a result of this closure, a total cost of $27 million was recognized consisting of property and equipment write-downs of $14 million, inventory write-downs of $1 million, contract terminations of $4 million, termination benefits of $4 million for approximately 400 employees and other costs of $4 million.

In 2002, the company’s agricultural equipment segment recognized $12 million of impairment and reorganization costs primarily in its Argentina operations consisting of property and equipment write-downs of $8 million, inventory write-downs of $2 million, termination benefits of $1 million for approximately 100 employees and other costs of $1 million. The company’s special technologies group, which is included in the agricultural equipment segment (see Note 27), recognized $9 million of costs primarily related to the closure of a facility in Springfield, Illinois and the restructuring of Agris Corporation. These costs consisted of termination benefits of $4 million for approximately 200 employees, property and equipment write-downs of $1 million, inventory write-downs of $1 million and other costs of $3 million.

2003 Restructuring Charges

The income and liabilities for restructuring items at October 31 in millions of dollars and the number of employees to be terminated were as follows:

	Liabilities 2002		Adjustment Income**			Payments			Liabilities 2003
Termination benefits	$	11	$	(1	)	$	(10	)
Contract terminations	18		(3		)	(1		)	$	14
Warranties and product returns	1		(1		)
Other costs	12		(2		)	(8		)	2
Total	$	42	$	(7	)*	$	(19	)	$	16
	2002		Additions			Terminated			2003
Employees to be terminated	200					(200		)

*In addition to these accrual adjustments, the company recognized $2 million of other restructuring costs as incurred related to these actions for a net total $5 million of restructuring income.

**These are adjustments of prior year accruals due to changes in estimates.

The income from restructuring items in 2003 totaled $5 million consisting of credits of $2 million to cost of sales and $3 million to selling, administrative and general expenses. The beginning balances shown above relate to special items shown in the previous table for 2002.

2004 Restructuring Charges

The income and liabilities for restructuring items at October 31 in millions of dollars were as follows:

	Liabilities 2003		Adjustment Income*			Payments			Liabilities 2004
Contract terminations	$	14	$	(2	)	$	(12	)	$
Other costs	2		(1		)	(1		)
Total	$	16	$	(3	)	$	(13	)	$

*These are adjustments of prior year accruals due to changes in estimates.

The income from restructuring items in 2004 totaled $3 million consisting of a credit to cost of sales. The beginning balances shown above relate to special items shown in the previous table for 2003.

3. PENSION AND OTHER POSTRETIREMENT BENEFITS

The company has several defined benefit pension plans covering its U.S. employees and employees in certain foreign countries. The company also has several defined benefit health care and life insurance plans for retired employees in the U.S. and Canada. The company uses an October 31 measurement date for these plans.

The worldwide components of net periodic pension cost and the assumptions related to the cost consisted of the following in millions of dollars and in percents:

	2004			2003			2002
Pensions
Service cost	$	130		$	111		$	107
Interest cost	454			450			448
Expected return on plan assets	(619		)	(558		)	(619		)
Amortization of actuarial loss	49			40			2
Amortization of prior service cost	41			40			30
Amortization of net transition asset							(1		)
Special early-retirement benefits	3						3
Settlements/curtailments							6
Net cost (income)	$	58		$	83		$	(24	)
Weighted-average assumptions
Discount rates	6.0		%	6.7		%	7.2		%
Rate of compensation increase	3.9		%	3.9		%	3.9		%
Expected long-term rates of return	8.5		%	8.5		%	9.7		%

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The worldwide components of net periodic postretirement benefits cost and the assumptions related to the cost consisted of the following in millions of dollars and in percents:

	2004			2003			2002
Health care and life insurance
Service cost	$	99		$	88		$	83
Interest cost	314			287			224
Expected returns on plan assets	(52		)	(39		)	(44		)
Amortization of actuarial loss	304			176			46
Amortization of prior service cost	(129		)	(2		)	(6		)
Special early-retirement benefits	2
Net cost	$	538		$	510		$	303
Weighted-average assumptions
Discount rates	6.1		%	6.8		%	7.2		%
Expected long-term rates of return	8.5		%	8.5		%	9.7		%

The following is the percentage allocation for the total pension and health care plan assets (similar for both plans) at October 31:

	Allocation Percent
	2004		2003
Equity securities	56	%	61	%
Debt securities	25		21
Real estate	4		4
Other	15		14

The primary investment objective is to maximize the growth of the pension and health care plan assets to meet the projected obligations to the beneficiaries over a long period of time, and to do so in a manner that is consistent with the company’s earnings strength and risk tolerance. Asset allocation policy is the most important decision in managing the assets and it is reviewed regularly. The asset allocation policy considers the company’s financial strength and long-term asset class risk/return expectations since the obligations are long-term in nature. The target allocations are approximately 60 percent for equity securities, 20 percent for debt securities, 4 percent for real estate and 16 percent for other. The assets are well diversified and are managed by professional investment firms as well as by investment professionals who are company employees.

The expected long-term rate of return on plan assets reflects management’s expectations of long-term average rates of return on funds invested to provide for benefits included in the projected benefit obligations. The expected return is based on the outlook for inflation, fixed income returns and equity returns, while also considering historical returns, asset allocation and investment strategy. Although not a guarantee of future results, the average annual return of the company’s U.S. pension fund was 11 percent during the past ten years and 12 percent during the past 20 years. The discount rate assumption is based on investment yields available on AA rated long-term corporate bonds.

The company expects to contribute approximately $130 million to its pension plans and approximately $680 million to its health care and life insurance plans in 2005, which include direct benefit payments on unfunded plans. These expected contributions also include voluntary contributions to the U.S. pension plans of approximately $100 million and the health care plans of approximately $400 million during 2005.

46

A worldwide reconciliation of the funded status of the benefit plans and the assumptions related to the obligations at October 3l in millions of dollars follows:

	Pensions						Health Care and Life Insurance
	2004			2003			2004			2003
Change in benefit obligations
Beginning of year balance	$	(7,790	)	$	(6,840	)	$	(5,408	)	$	(4,108	)
Service cost	(130		)	(111		)	(99		)	(88		)
Interest cost	(454		)	(450		)	(314		)	(287		)
Actuarial loss	(474		)	(534		)	(209		)	(1,578		)
Amendments	(3		)	(190		)	92			424
Benefits paid	516			484			260			238
Special early-retirement benefits	(3		)				(2		)
Foreign exchange and other	(65		)	(149		)	(10		)	(9		)
End of year balance	(8,403		)	(7,790		)	(5,690		)	(5,408		)
Change in plan assets (fair value)
Beginning of year balance	5,987			5,024			577			410
Actual return on plan assets	594			958			60			92
Employer contribution	1,548			432			304			313
Benefits paid	(516		)	(484		)	(260		)	(238		)
Foreign exchange and other	22			57			5
End of year balance	7,635			5,987			686			577
Plan obligation more than plan assets	(768		)	(1,803		)	(5,004		)	(4,831		)
Unrecognized actuarial loss	2,551			2,094			2,768			2,869
Unrecognized prior service (credit) cost	217			254			(387		)	(423		)
Net amount recognized	2,000			545			(2,623		)	(2,385		)
Minimum pension liability adjustment	(106		)	(1,964		)
Net asset (liability) recognized	$	1,894		$	(1,419	)	$	(2,623	)	$	(2,385	)
Amounts recognized in balance sheet
Prepaid benefit cost	$	2,493		$	63
Accrued benefit liability	(599		)	(1,482		)	$	(2,623	)	$	(2,385	)
Intangible asset	18			250
Accumulated pretax charge to other comprehensive income	88			1,714
Net amount recognized	$	2,000		$	545		$	(2,623	)	$	(2,385	)
Weighted-average assumptions
Discount rates	5.5		%	6.0		%	5.5		%	6.0		%
Rate of compensation increase	3.9		%	3.9		%

The annual rates of increase in the per capita cost of covered health care benefits (the health care cost trend rates) used to determine benefit obligations at October 31, 2004 were assumed to be 9.0 percent for 2005 graded down evenly to 5.0 percent for 2009 and all future years. The obligations at October 31, 2003 assumed 10.0 percent for 2004 graded down evenly to 5.0 percent for 2009. An increase of one percentage point in the assumed health care cost trend rate would increase the accumulated postretirement benefit obligations at October 31, 2004 by $724 million and the aggregate of service and interest cost component of net periodic postretirement benefits cost for the year by $66 million. A decrease of one percentage point would decrease the obligations by $636 million and the cost by $56 million.

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The benefits expected to be paid from the benefit plans, which reflect expected future years of service, and the Medicare subsidy expected to be received are as follows in millions of dollars.

	Pensions		Health Care and Life Insurance		Health Care Subsidy Receipts*
2005	$	520	$	277
2006	531		296		$	(10	)
2007	535		314		(12		)
2008	543		330		(12		)
2009	542		343		(12		)
2010 to 2014	2,910		1,929		(62		)

*See Note 1 for Medicare subsidy.

The total accumulated benefit obligations for all pension plans at October 31, 2004 and 2003 was $7,954 million and $7,390 million, respectively.

The accumulated benefit obligations and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were $732 million and $141 million, respectively, at October 31, 2004 and $7,186 million and $5,745 million, respectively, at October 31, 2003.  The projected benefit obligations and fair value of plan assets for pension plans with projected benefit obligations in excess of plan assets were $4,725 million and $3,773 million, respectively, at October 31, 2004 and $7,569 million and $5,745 million, respectively, at October 31, 2003.

The minimum pension liability adjustment recorded by the company was $106 million and $1,964 million as of October 31, 2004 and 2003, respectively. The decrease in the adjustment, compared to last year, was a result of an increase in the fair value of plan assets due to voluntary company contributions and the return on plan assets during 2004.

See Note 23 for defined contribution plans related to employee investment and savings.

4. INCOME TAXES

The provision for income taxes by taxing jurisdiction and by significant component consisted of the following in millions of dollars:

	2004		2003			2002
Current:
U.S.:
Federal	$	109	$	96		$	145
State	5		4			1
Foreign	206		200			109
Total current	320		300			255
Deferred:
U.S.:
Federal	306		59			6
State	37		3			2
Foreign	46		(25		)	(5		)
Total deferred	389		37			3
Provision for income taxes	$	709	$	337		$	258

Based upon location of the company’s operations, the consolidated income before income taxes in the U.S. in 2004, 2003 and 2002 was $1,253 million, $428 million and $327 million, respectively, and in foreign countries was $861 million, $543 million and $276 million, respectively. Certain foreign operations are branches of Deere & Company and are, therefore, subject to U.S., as well as foreign income tax regulations. The pretax income by location and the preceding analysis of the income tax provision by taxing jurisdiction are, therefore, not directly related.

A comparison of the statutory and effective income tax provision and reasons for related differences in millions of dollars follow:

	2004			2003			2002
U.S. federal income tax provision at a statutory rate of 35 percent	$	740		$	340		$	211
Increase (decrease) resulting from:
State and local income taxes, net of federal income tax benefit	27			4			2
Taxes on foreign activities	(21		)	(4		)	(1		)
Goodwill amortization							10
Nondeductible costs and other-net	(37		)	(3		)	36
Provision for income taxes	$	709		$	337		$	258

At October 31, 2004, accumulated earnings in certain subsidiaries outside the U.S. totaled $556 million for which no provision for U.S. income taxes or foreign withholding taxes has been made, because it is expected that such earnings will be reinvested overseas indefinitely. Determination of the amount of unrecognized deferred tax liability on these unremitted earnings is not practical.

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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 the deferred income tax assets and liabilities at October 31 in millions of dollars follows:

	2004				2003
	Deferred Tax Assets		Deferred Tax Liabilities		Deferred Tax Assets		Deferred Tax Liabilities
Postretirement benefit accruals	$	1,017			$	911
Prepaid pension costs			$	778			$	215
Accrual for sales allowances	304				266
Tax over book depreciation			263				215
Deferred lease income			159				169
Accrual for employee benefits	126				60
Allowance for credit losses	79				79
Tax loss and tax credit carryforwards	55				37
Undistributed foreign earnings			44				20
Intercompany profit in inventory	36				21
Minimum pension liability adjustment	30				636
Other items	122		60		103		49
Deferred income tax assets and liabilities	$	1,769	$	1,304	$	2,113	$	668

Deere & Company files a consolidated federal income tax return in the U.S., which includes the wholly-owned Financial Services subsidiaries. These subsidiaries account for income taxes generally as if they filed separate income tax returns.

At October 31, 2004, certain tax loss and tax credit carryforwards for $55 million were available with $35 million expiring from 2007 through 2022 and $20 million with an unlimited expiration date.

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5. OTHER INCOME AND OTHER OPERATING EXPENSES

The major components of other income and other operating expenses consisted of the following in millions of dollars:

	2004		2003		2002
Other income
Gains from sales of retail notes and leases*	$	50	$	54	$	81
Securitization and servicing fee income	58		55		50
Revenues from services	103		45		51
Investment income	12		11		12
Other**	128		80		75
Total	$	351	$	245	$	269
Other operating expenses
Depreciation of equipment on operating leases	$	239	$	273	$	316
Cost of services	55		20		31
Other***	39		32		63
Total	$	333	$	325	$	410

*Includes securitizations and other sales of retail notes and leases.

**Includes gain from the sale of Sunstate Equipment Co., LLC in 2004 (see Note 1).

***Includes Argentine peso devaluation losses in 2002.

6. UNCONSOLIDATED AFFILIATED COMPANIES

Unconsolidated affiliated companies are companies in which Deere & Company generally owns 20 percent to 50 percent of the outstanding voting shares. Deere & Company does not control these companies and accounts for its investments in them on the equity basis. The investments in these companies primarily consist of Deere-Hitachi Construction Machinery Corporation (50 percent ownership), Bell Equipment Limited (32 percent ownership) and A&I Products (36 percent ownership). During 2004, the company increased its minority ownership in Nortrax, Inc., Nortrax Investments, Inc. and Ontrac Holdings, Inc. to 100 percent, at which time they were consolidated, and the company sold its minority ownership in Sunstate Equipment Co., LLC (see Note 1). The unconsolidated affiliated companies primarily manufacture or market equipment. Deere & Company’s share of the income of these companies is reported in the consolidated income statement under “Equity in Income (Loss) of Unconsolidated Affiliates.” The investment in these companies is reported in the consolidated balance sheet under “Investments in Unconsolidated Affiliates.”

Combined financial information of the unconsolidated affiliated companies in millions of dollars is as follows:

Operations	2004		2003		2002
Sales	$	1,798	$	1,929	$	1,605
Net income (loss)	2		23		(38		)
Deere & Company’s equity in net income (loss)	1		9		(25		)

Financial Position	2004		2003
Total assets	$	839	$	1,297
Total external borrowings	173		384
Total net assets	253		445
Deere & Company’s share of the net assets	107		196

7. MARKETABLE SECURITIES

Marketable securities are currently held by the health care subsidiaries. All marketable securities are classified as available-for-sale, with unrealized gains and losses shown as a component of stockholders’ equity. Realized gains or losses from the sales of marketable securities are based on the specific identification method.

The amortized cost and fair value of marketable securities at October 31 in millions of dollars follow:

	Amortized Cost or Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
2004
Equity securities	$	25	$	3			$	28
U.S. government debt securities	73		2		$	1	74
Corporate debt securities	72		2				74
Mortgage-backed debt securities	70		1				71
Marketable securities	$	240	$	8	$	1	$	247
2003
Equity securities	$	25	$	3	$	1	$	27
U.S. government debt securities	62		2				64
Corporate debt securities	81		4		1		84
Mortgage-backed debt securities	57		1		1		57
Marketable securities	$	225	$	10	$	3	$	232

The contractual maturities of debt securities at October 31, 2004 in millions of dollars follow:

	Amortized Cost		Fair Value
Due in one year or less	$	9	$	9
Due after one through five years	63		66
Due after five through 10 years	67		68
Due after 10 years	76		76
Debt securities	$	215	$	219

Actual maturities may differ from contractual maturities because some securities may be called or prepaid. Proceeds from the sales of available-for-sale securities were $34 million in 2004, $20 million in 2003 and $34 million in 2002. Realized gains and losses,unrealized gains and losses, and the increase (decrease) in the net unrealized gains or losses were not significant in those years. The unrealized losses at October 31, 2004 were primarily the result of an increase in interest rates affecting the fair value of certain debt securities. The company has the ability and intent to hold these investments for a recovery of the cost.

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8. TRADE ACCOUNTS AND NOTES RECEIVABLE

Trade accounts and notes receivable at October 31 consisted of the following in millions of dollars:

	2004		2003
Trade accounts and notes:
Agricultural	$	1,838	$	1,711	*
Commercial and consumer	793		683
Construction and forestry	576		225
Trade accounts and notes receivable–net	$	3,207	$	2,619

*Restated to include special technologies group (see Note 27).

At October 31, 2004 and 2003, dealer notes included in the previous table were $411 million and $428 million, and the allowance for doubtful trade receivables was $56 million and $58 million, respectively.

The Equipment Operations sell a significant portion of newly originated trade receivables to the credit operations and provide compensation to the credit operations at market rates of interest for these receivables.

Trade accounts and notes receivable primarily arise from sales of goods to dealers. Under the terms of the sales to dealers, interest is charged to dealers on outstanding balances, from the earlier of the date when goods are sold to retail customers by the dealer or the expiration of certain interest-free periods granted at the time of the sale to the dealer, until payment is received by the company. Dealers cannot cancel purchases after the equipment is shipped and are responsible for payment even if the equipment is not sold to retail customers. The interest-free periods are determined based on the type of equipment sold and the time of year of the sale. These periods range from one to 12 months for most equipment. Interest-free periods may not be extended. Interest charged may not be forgiven and interest rates, which exceed the prime rate, are set based on market factors. The company evaluates and assesses dealers on an ongoing basis as to their credit worthiness and generally retains a security interest in the goods associated with these trade receivables. The company is obligated to repurchase goods sold to a dealer upon cancellation or termination of the dealer’s contract for such causes as change in ownership, closeout of the business or default. The company may also in certain circumstances repurchase goods sold to a dealer in order to satisfy a request for goods from another dealer.

Trade accounts and notes receivable have significant concentrations of credit risk in the agricultural, commercial and consumer, and construction and forestry sectors as shown in the previous table. On a geographic basis, there is not a disproportionate concentration of credit risk in any area.

9. FINANCING RECEIVABLES

Financing receivables at October 31 consisted of the following in millions of dollars:

	2004		2003
Retail notes:
Equipment:
Agricultural	$	5,713	$	4,995
Commercial and consumer	1,161		1,092
Construction and forestry	1,749		1,515
Recreational products	75		114
Total	8,698		7,716
Wholesale notes	941		828
Revolving charge accounts	1,513		1,164
Financing leases (direct and sales-type)	803		759
Operating loans	380		543
Total financing receivables	12,335		11,010
Less:
Unearned finance income:
Equipment notes	834		755
Recreational product notes	22		34
Financing leases	101		98
Total	957		887
Allowance for doubtful receivables	145		149
Financing receivables – net	$	11,233	$	9,974

Financing receivables have significant concentrations of credit risk in the agricultural, commercial and consumer, and construction and forestry sectors as shown in the previous table. On a geographic basis, there is not a disproportionate concentration of credit risk in any area. The company retains as collateral a security interest in the equipment associated with retail notes, wholesale notes and financing leases.

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Financing receivables at October 31 related to the company's sales of equipment (see Note 26) that were included in the table above were as follows in millions of dollars:

	2004		2003
Retail notes*:
Equipment:
Agricultural	$	731	$	591
Commercial and consumer	68		63
Construction and forestry	378		219
Total	1,177		873
Wholesale notes	941		828
Sales-type leases	355		271
Total	2,473		1,972
Less:
Unearned finance income:
Equipment notes	128		103
Financing leases	39		31
Total	167		134
Financing receivables related to the company's sales of equipment	$	2,306	$	1,838

*These retail notes generally arise from sales of equipment by company-owned dealers or through direct sales.

Financing receivable installments, including unearned finance income, at October 31 are scheduled as follows in millions of dollars:

	2004		2003
Due in months:
0 – 12	$	5,939	$	5,282
13 – 24	2,486		2,194
25 – 36	1,822		1,602
37 – 48	1,131		1,101
49 – 60	729		607
Thereafter	228		224
Total	$	12,335	$	11,010

The maximum terms for retail notes are generally eight years for agricultural equipment, six years for commercial and consumer equipment and five years for construction and forestry equipment. The maximum term for financing leases is generally five years, while the average term for wholesale notes is 12 months.

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At October 31, 2004 and 2003, the unpaid balances of retail notes and leases previously sold by the credit operations were $3,398 million and $2,916 million, respectively. The retail notes sold are collateralized by security interests in the related equipment sold to customers. At October 31, 2004 and 2003, worldwide financing receivables administered, which include financing receivables and leases previously sold but still administered, totaled $14,631 million and $12,890 million, respectively.

Total financing receivable amounts 60 days or more past due were $41 million at October 31, 2004, compared with $51 million at October 31, 2003. These past-due amounts represented .36 percent of the receivables financed at October 31, 2004 and .50 percent at October 31, 2003. The allowance for doubtful financing receivables represented 1.28 percent and 1.47 percent of financing receivables outstanding at October 31, 2004 and 2003, respectively. In addition, at October 31, 2004 and 2003, the company’s credit operations had $184 million and $175 million, respectively, of deposits withheld from dealers and merchants available for potential credit losses. An analysis of the allowance for doubtful financing receivables follows in millions of dollars:

	2004			2003			2002
Balance, beginning of the year	$	149		$	136		$	126
Provision charged to operations	43			84			156
Amounts written off	(37		)	(56		)	(128		)
Other changes primarily related to transfers for retail note sales	(10		)	(15		)	(18		)
Balance, end of the year	$	145		$	149		$	136

10. SALE AND SECURITIZATION OF FINANCING RECEIVABLES

The company periodically sells receivables to special purpose entities (SPEs) in securitizations of retail notes. It retains interest-only strips, servicing rights, and in some cases, reserve accounts and subordinated certificates, all of which are retained interests in the securitized receivables. The retained interests are carried at estimated fair value in “Other receivables” or “Other assets” on the balance sheet. Gains or losses on sales of the receivables depend in part on the previous carrying amount of the financial assets involved in the transfer, allocated between the assets sold and the retained interests based on their relative fair values at the date of transfer. The company generally estimates fair values based on the present value of future expected cash flows using management’s key assumptions as discussed below. The company retains the rights to certain future cash flows and in the U.S. transactions receives annual servicing fees approximating 1 percent of the outstanding balance. No significant balances for servicing assets or liabilities exist because the benefits received for servicing are offset by the costs of providing the servicing. The company’s maximum exposure under recourse provisions related to securitizations at October 31, 2004 and 2003 was $218 million and $236 million, respectively. The recourse provisions include the fair value of the retained interests and all other recourse obligations contractually specified in the securitization agreements. The company does not record the other recourse obligations as liabilities as they are contingent liabilities that are remote at this time. Except for this exposure, the investors and securitization trusts have no recourse to the company for failure of debtors to pay when due. The company’s retained interests are subordinate to investors’ interests, and their values are subject to certain key assumptions as shown below. The total assets of the unconsolidated SPEs related to securitizations at October 31, 2004 and 2003 were $3,441 million and $2,964 million, respectively.

Pretax gains in millions of dollars on retail notes securitized and key assumptions used to initially determine the fair value of the retained interests were as follows:

	2004			2003			2002
Pretax gains	$	48		$	50		$	71
Weighted-average maturities in months	20			21			19
Average annual prepayment rates	20		%	19		%	22		%
Average expected annual credit losses	.38		%	.42		%	.42		%
Discount rates on retained interests and subordinate tranches	13		%	13		%	13		%

Cash flows received from securitization trusts in millions of dollars were as follows:

	2004		2003		2002
Proceeds from new securitizations	$	2,269	$	1,891	$	2,870
Servicing fees received	30		24		28
Other cash flows received	66		49		103

Components of retained interests in securitization of retail notes at October 31 in millions of dollars follow:

	2004		2003
Interest only strips	$	70	$	104
Reserve accounts held for benefit of securitization entities	43		30
Subordinated certificates	16		12
Retained interests	$	129	$	146

The total retained interests, weighted-average life, weighted-average current key economic assumptions and the sensitivity analysis showing the hypothetical effects on the retained interests from immediate 10 percent and 20 percent adverse changes in those assumptions with dollars in millions were as follows:

	2004			2003
Retail note securitizations
Carrying amount/fair value of retained interests	$	129		$	146
Weighted-average life (in months)	16			16
Prepayment speed assumption (annual rate)	20		%	20		%
Impact on fair value of 10% adverse change	$	1.8		$	1.9
Impact on fair value of 20% adverse change	$	3.6		$	3.8
Expected credit losses (annual rate)	.40		%	.40		%
Impact on fair value of 10% adverse change	$	2.0		$	1.8
Impact on fair value of 20% adverse change	$	4.0		$	3.6
Residual cash flows discount rate (annual)	13		%	13		%
Impact on fair value of 10% adverse change	$	3.6		$	3.6
Impact on fair value of 20% adverse change	$	7.1		$	7.0

These sensitivities are hypothetical changes in fair value and cannot be extrapolated because the relationship of the changes in assumption to the changes in fair value may not be linear.

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Also, the effect of a variation in a particular assumption is calculated without changing any other assumption, whereas changes in one factor may result in changes in another. Accordingly, no assurance can be given that actual results would be consistent with the results of these estimates.

Principal balances of owned, securitized and total managed retail notes; past due amounts; and credit losses (net of recoveries) as of and for the years ended October 31, in millions of dollars follow:

	Principal Outstanding		Principal 60 Days or More Past Due		Net Credit Losses
2004
Owned	$	7,648	$	20	$	9
Securitized	3,215		10		5
Managed	$	10,863	$	30	$	14
2003
Owned	$	6,759	$	30	$	27
Securitized	2,752		12		11
Managed	$	9,511	$	42	$	38

The amount of actual and projected future credit losses as a percent of the original balance of retail notes securitized (expected static pool losses) were as follows:

	Retail Notes Securitized In
	2004		2003		2002
Actual and Projected Losses (%) as of October 31:
2004	.59	%	.49	%	.50	%
2003			.67	%	.53	%
2002					.61	%

11. OTHER RECEIVABLES

Other receivables at October 31 consisted of the following in millions of dollars:

	2004		2003
Taxes receivable	$	424	$	176
Receivables relating to securitizations	113		134
Other	126		118
Other receivables	$	663	$	428

The credit operations’ receivables related to securitizations are equal to the present value of payments to be received for certain retained interests and deposits made with other entities for recourse provisions under the retail note sales agreements.

12. EQUIPMENT ON OPERATING LEASES

Operating leases arise primarily from the leasing of John Deere equipment to retail customers. Initial lease terms generally range from 36 to 60 months. Net equipment on operating leases totaled $1,297 million and $1,382 million at October 31, 2004 and 2003, respectively. The equipment is depreciated on a straight-line basis over the terms of the leases. The accumulated depreciation on this equipment was $468 million and $535 million at October 31, 2004 and 2003, respectively. The corresponding depreciation expense was $239 million in 2004, $273 million in 2003 and $316 million in 2002.

Future payments to be received on operating leases totaled $676 million at October 31, 2004 and are scheduled as follows in millions of dollars: 2005 – $284, 2006 – $199, 2007 – $114, 2008 – $59 and 2009 – $20.

13. INVENTORIES

Most inventories owned by Deere & Company and its United States equipment subsidiaries are valued at cost, on the “last-in, first-out” (LIFO) basis. Remaining inventories are generally valued at the lower of cost, on the “first-in, first-out” (FIFO) basis, or market. The value of gross inventories on the LIFO basis represented 61 percent and 67 percent of worldwide gross inventories at FIFO value on October 31, 2004 and 2003, respectively. If all inventories had been valued on a FIFO basis, estimated inventories by major classification at October 31 in millions of dollars would have been as follows:

	2004		2003
Raw materials and supplies	$	589	$	496
Work-in-process	408		388
Finished machines and parts	2,004		1,432
Total FIFO value	3,001		2,316
Less adjustment to LIFO value	1,002		950
Inventories	$	1,999	$	1,366

14. PROPERTY AND DEPRECIATION

A summary of property and equipment at October 31 in millions of dollars follows:

	Average Useful Lives (Years)	2004		2003
Land		$	79	$	68
Buildings and building equipment	26	1,464		1,366
Machinery and equipment	10	2,870		2,705
Dies, patterns, tools, etc	7	987		932
All other	5	626		671
Construction in progress		156		92
Total at cost		6,182		5,834
Less accumulated depreciation		4,020		3,758
Property and equipment – net		$	2,162	$	2,076

Leased property under capital leases amounting to $13 million and $19 million at October 31, 2004 and 2003, respectively, is included in property and equipment.

Property and equipment is stated at cost less accumulated depreciation. Property and equipment additions in 2004, 2003 and 2002 were $365 million, $320 million and $358 million and depreciation was $342 million, $319 million and $310 million, respectively.

Capitalized software is stated at cost less accumulated amortization and the estimated useful life is three years. The amounts of total capitalized software costs, including purchased and internally developed software, classified as “Other Assets” at October 31, 2004 and 2003 were $315 million and $276 million, less accumulated amortization of $240 million and $207 million, respectively. Amortization of these software costs was $38 million, in 2004, 2003 and 2002.

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The cost of compliance with foreseeable environmental requirements has been accrued and did not have a material effect on the company’s financial position or results of operations.

15. GOODWILL AND OTHER INTANGIBLE ASSETS-NET

Upon the adoption of FASB Statement No. 142, Goodwill and Other Intangible Assets, at the beginning of fiscal year 2003, goodwill was no longer amortized and will be written down in the future only for impairments. Goodwill is reviewed for impairment by reporting unit based on fair values annually or as events and circumstances change.

Pro forma net income and net income per share, excluding goodwill amortization, were as follows with dollars in millions except per share amounts:

	2004		2003		2002
Net income as reported	$	1,406	$	643	$	319
Goodwill amortization, net of tax					53
Pro forma net income	$	1,406	$	643	$	372
Basic net income per share:
Net income as reported	$	5.69	$	2.68	$	1.34
Goodwill amortization, net of tax					.22
Pro forma net income	$	5.69	$	2.68	$	1.56
Diluted net income per share:
Net income as reported	$	5.56	$	2.64	$	1.33
Goodwill amortization, net of tax					.22
Pro forma net income	$	5.56	$	2.64	$	1.55

The amounts of goodwill by operating segment were as follows in millions of dollars:

	2004*		2003
Agricultural equipment	$	101	$	94	**
Commercial and consumer equipment	299		305
Construction and forestry	574		473
Total goodwill	$	974	$	872

*The change in goodwill between years for construction and forestry was primarily due to $73 million goodwill from the additional acquisition and consolidation of Nortrax (see Note 1). The remaining changes are due to fluctuations in foreign currency exchange rates.

**Restated to include special technologies group (see Note 27).

The components of other intangible assets are as follows in millions of dollars:

	2004			2003
Amortized intangible assets:
Gross patents, licenses and other	$	12		$	9
Accumulated amortization	(8		)	(6		)
Net patents, licenses and other	4			3
Unamortized intangible assets:
Intangible asset related to minimum pension liability	18			250
Total other intangible assets-net	$	22		$	253

Other intangible assets, excluding the intangible pension asset, are stated at cost less accumulated amortization and are being amortized over 17 years or less on the straight-line basis. The intangible pension asset is remeasured and adjusted annually.  The decrease in the intangible pension asset is a result of the decrease in the minimum pension liability due primarily to voluntary company contributions to the pension plan and the return on plan assets. The amortization of other intangible assets is not significant.

16. SHORT-TERM BORROWINGS

Short-term borrowings at October 31 consisted of the following in millions of dollars:

	2004		2003
Equipment Operations
Commercial paper	$	258	$	279
Notes payable to banks	19		35
Long-term borrowings due within one year	35		263
Total	312		577
Financial Services
Commercial paper	1,629		1,836
Notes payable to banks	32		66
Long-term borrowings due within one year	1,485		1,868
Total	3,146		3,770
Short-term borrowings	$	3,458	$	4,347

The weighted-average interest rates on total short-term borrowings, excluding current maturities of long-term borrowings, at October 31, 2004 and 2003 were 2.8 percent and 2.3 percent, respectively. All of the Financial Services’ short-term borrowings represent obligations of the credit subsidiaries.

Unsecured lines of credit available from U.S. and foreign banks were $3,190 million at October 31, 2004. Some of these credit lines are available to both Deere & Company and John Deere Capital Corporation. At October 31, 2004, $900 million of these worldwide lines of credit were unused. For the purpose of computing the unused credit lines, commercial paper and short-term bank borrowings, excluding the current maturities of long-term borrowings, were considered to constitute utilization.

Included in the above lines of credit is a long-term credit facility agreement expiring in February 2009 for $1,250 million. The agreement is mutually extendable and the annual facility fee is not significant. The credit agreement has various requirements of John Deere Capital Corporation, including the maintenance of its consolidated ratio of earnings to fixed charges at not less than 1.05 to 1 for each fiscal quarter and the ratio of senior debt to total stockholder’s equity plus subordinated debt at not more than 8 to 1 at the end of any fiscal quarter. The credit agreement also requires the Equipment Operations to maintain a ratio of total debt to total capital (total debt and stockholders’ equity) of 65 percent or less at the end of each fiscal quarter according to accounting principles generally accepted in the U.S. in effect at October 31, 2003. At October 31, 2004, the ratio was 32 percent. Under this provision, the company’s excess equity capacity and retained earnings balance free of restriction at October 31, 2004 was $4,756 million. Alternatively under this provision, the Equipment Operations had the capacity to incur additional debt of $8,832 million at October 31, 2004. All the requirements of the credit agreement have been met during the periods included in the financial statements.

55

Deere & Company has an agreement with John Deere Capital Corporation (Capital Corporation) pursuant to which it has agreed to continue to own at least 51 percent of the voting shares of capital stock of the Capital Corporation and to maintain the Capital Corporation’s consolidated tangible net worth at not less than $50 million. This agreement also obligates Deere & Company to make income maintenance payments to the Capital Corporation such that its consolidated ratio of earnings before fixed charges to fixed charges is not less than 1.05 to 1  for any fiscal quarter. Deere & Company’s obligations to make payments to the Capital Corporation under the agreement are independent of whether the Capital Corporation is in default on its indebtedness, obligations or other liabilities. Further, the company’s obligations under the agreement are not measured by the amount of the Capital Corporation’s indebtedness, obligations or other liabilities. Deere & Company’s obligations to make payments under this agreement are expressly stated not to be a guaranty of any specific indebtedness, obligation or liability of the Capital Corporation and are enforceable only by or in the name of the Capital Corporation. No payments were required under this agreement during the periods included in the financial statements.

17. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses at October 31 consisted of the following in millions of dollars:

	2004			2003
Equipment Operations
Accounts payable:
Trade payables	$	1,246		$	912
Dividends payable	69			53
Other	62			58
Accrued expenses:
Employee benefits	719			349
Product warranties	458			389
Dealer sales program discounts	287			261
Dealer sales volume discounts	224			137
Other	619			613
Total	3,684			2,772
Financial Services
Accounts payable:
Deposits withheld from dealers and merchants	184			175
Other	239			234
Accrued expenses:
Interest payable	85			79
Other	123			153
Total	631			641
Eliminations	341		*	307		*
Accounts payable and accrued expenses	$	3,974		$	3,106

*Trade receivable valuation accounts (primarily dealer sales program discounts)  which are reclassified as accrued expenses by the Equipment Operations as a result of trade receivables sold to Financial Services.

18. LONG-TERM BORROWINGS

Long-term borrowings at October 31 consisted of the following in millions of dollars:

	2004			2003
Equipment Operations**
Notes and debentures:
Medium-term notes due 2006:
Average interest rates of 9.2% – 2004 and 9.6% – 2003	$	20		$	45
5-7/8% U.S. dollar notes due 2006: ($250 principal) Swapped $170 to Euro at average variable interest rates of 3.1% – 2004, 2.7% – 2003	250		*	257		*
7.85% debentures due 2010	500			500
6.95% notes due 2014: ($700 principal) Swapped to variable interest rates of 3.1% – 2004, 2.1% – 2003	786		*	771		*
8.95% debentures due 2019	200			200
8-1/2% debentures due 2022	200			200
6.55% debentures due 2028	200			200
8.10% debentures due 2030	250			250
7.125% notes due 2031	300			300
Other notes	22			4
Total	2,728			2,727
Financial Services**
Notes and debentures:
Medium-term notes due 2005 – 2009: (principal $3,443 - 2004, $2,696 - 2003) Average interest rates of 3.9% – 2004, 3.4% – 2003	3,459		*	2,714		*
5.125% debentures due in 2006: ($600 principal) Swapped $300 to variable interest rates of 2.7% – 2004, 1.8% – 2003	620		*	632		*
4.5% notes due 2007: ($500 principal) Swapped $300 in 2004 and $450 in 2003 to variable interest rates of 2.4% – 2004, 1.8% – 2003	510		*	511		*
3.90% notes due 2008: ($850 principal) Swapped $525 in 2004 and $650 in 2003 to variable interest rates of 2.6% – 2004, 1.7% – 2003	850		*	851		*
6% notes due 2009: ($300 principal) Swapped to variable interest rates of 1.9% – 2004, 1.4% – 2003	327		*	329		*
7% notes due 2012: ($1,500 principal) Swapped $1,225 to variable interest rates of 2.9% – 2004, 2.1% – 2003	1,674		*	1,665		*
5.10% debentures due 2013: ($650 principal) Swapped to variable interest rates of 2.7% – 2004, 1.8% – 2003	658		*	641		*
Other notes	264			184
Total notes and debentures	8,362			7,527
Subordinated debt:
8-5/8% subordinated debentures due 2019***				150
Total	8,362			7,677
Long-term borrowings	$	11,090		$	10,404

*Includes fair value adjustments related to interest rate swaps.

**All interest rates are as of year end.

***Redeemed during 2004.

56

All of the Financial Services’ long-term borrowings represent obligations of the credit subsidiaries.

The approximate amounts of the Equipment Operations’ long-term borrowings maturing in each of the next five years in millions of dollars are as follows: 2005 – $35, 2006 – $277, 2007 – $4, 2008 – $2 and 2009 – $6. The approximate amounts of the credit subsidiaries’ long-term borrowings maturing in each of the next five years in millions of dollars are as follows: 2005 – $1,485, 2006 – $2,766, 2007 – $1,627, 2008 – $1,011 and 2009 – $530.

19. LEASES

At October 31, 2004, future minimum lease payments under capital leases amounted to $12 million as follows: 2005 – $2, 2006 – $2, 2007 – $1, 2008 – $1, 2009 – $1 and later years $5. Total rental expense for operating leases was $102 million in 2004, $98 million in 2003 and $95 million in 2002. At October 31, 2004, future minimum lease payments under operating leases amounted to $367 million as follows: 2005 – $75, 2006 – $67, 2007 – $63, 2008 – $32, 2009 – $27 and later years $103. See Note 20 for operating leases with residual value guarantees.

20. CONTINGENCIES AND COMMITMENTS

The company generally determines its total warranty liability by applying historical claims rate experience to the estimated amount of equipment that has been sold and is still under warranty based on dealer inventories and retail sales. The historical claims rate is primarily determined by a review of five-year claims costs and current quality developments.

A reconciliation of the changes in the warranty liability in millions of dollars follows:

	Warranty Liability
	2004			2003
Beginning of year balance	$	389		$	332
Payments	(378		)	(321		)
Accruals for warranties	447			378
End of year balance	$	458		$	389

The company has guaranteed certain recourse obligations on financing receivables that it has sold. If the receivables sold are not collected, the company would be required to cover those losses up to the amount of its recourse obligation. At October 31, 2004, the maximum amount of exposure to losses under these agreements was $218 million. The estimated credit risk associated with sold receivables totaled $23 million at October 31, 2004.  This risk of loss is recognized primarily in the retained interests (see Note 10).  The company may recover a portion of any required payments incurred under these agreements from the repossession of the equipment collateralizing the receivables. At October 31, 2004, the maximum remaining term of the receivables guaranteed was approximately six years.

At October 31, 2004, the company had guaranteed approximately $40 million of residual values for two operating leases related to an administrative and a manufacturing building. The company is obligated at the end of each lease term to pay to the lessor any reduction in market value of the leased property up to the guaranteed residual value. The company recognizes the expense for these future estimated lease payments over the terms of the operating leases and had accrued expenses of $9 million related to these agreements at October 31, 2004. The leases have terms expiring in 2006 and 2007.

At October 31, 2004, the company had approximately $95 million of guarantees issued primarily to overseas banks related to third-party receivables for the retail financing of John Deere equipment. The company may recover a portion of any required payments incurred under these agreements from repossession of the equipment collateralizing the receivables. At October 31, 2004, the company had accrued losses of approximately $1 million under these agreements. The maximum remaining term of the receivables guaranteed at October 31, 2004 was approximately six years.

The company had pledged assets of $16 million, outside the U.S., as collateral for borrowings, and $15 million of restricted investments related to conducting the health care business in various states at October 31, 2004.

The company also had other miscellaneous contingent liabilities totaling approximately $30 million at October 31, 2004, for which it believes the probability for payment is remote.

John Deere B.V., located in the Netherlands, is a consolidated indirect wholly-owned finance subsidiary of the company. The debt securities of John Deere B.V., including those which are registered with the U.S. Securities and Exchange Commission, are fully and unconditionally guaranteed by the company. These registered debt securities totaled $250 million at October 31, 2004 and are included on the consolidated balance sheet.

The company is subject to various unresolved legal actions which arise in the normal course of its business, the most prevalent of which relate to product liability (including asbestos related liability), retail credit, software licensing, patent and trademark matters. Although it is not possible to predict with certainty the outcome of these unresolved legal actions or the range of possible loss, the company believes these unresolved legal actions will not have a material effect on its financial statements.

21. CAPITAL STOCK

Changes in the common stock account in millions were as follows:

	Number of Shares Issued	Amount
Balance at October 31, 2001	268.2	$	1,949
Other		8
Balance at October 31, 2002	268.2	1,957
Other		31
Balance at October 31, 2003	268.2	1,988
Other		56
Balance at October 31, 2004	268.2	$	2,044

The number of common shares the company is authorized to issue is 600 million and the number of authorized preferred shares, none of which has been issued, is 9 million.

57

A reconciliation of basic and diluted net income per share follows in millions, except per share amounts:

	2004		2003		2002
Net income	$	1,406.1	$	643.1	$	319.2
Average shares outstanding	247.2		240.2		238.2
Basic net income per share	$	5.69	$	2.68	$	1.34
Average shares outstanding	247.2		240.2		238.2
Effect of dilutive stock options	5.9		3.1		2.7
Total potential shares outstanding	253.1		243.3		240.9
Diluted net income per share	$	5.56	$	2.64	$	1.33

Out of the total stock options outstanding during 2002, options to purchase 2.8 million shares were excluded from the above diluted per share computation because the options’ exercise prices were greater than the average market price of the company’s common stock during the related periods. All stock options outstanding were included in the computation during 2004 and 2003.

22. STOCK OPTION AND RESTRICTED STOCK AWARDS

The company issues stock options and restricted stock to key employees under plans approved by stockholders. Restricted stock is also issued to nonemployee directors under a plan approved by stockholders. Options are generally awarded with the exercise price equal to the market price and become exercisable in one to three years after grant. Options generally expire 10 years after the date of grant. According to these plans at October 31, 2004, the company is authorized to grant an additional 9.4 million shares related to stock options or restricted stock.

During the last three fiscal years, shares under option in millions were as follows:

	2004				2003				2002
			Exercise				Exercise				Exercise
	Shares		Price*		Shares		Price*		Shares		Price*
Outstanding at beginning of year	21.2		$	42.57	22.9		$	41.58	20.5		$	40.56
Granted – at market	3.3		61.64		3.9		45.80		4.3		42.30
Exercised	(6.2	)	41.42		(4.8	)	36.30		(1.6	)	30.35
Expired or forfeited	(.1	)	47.55		(.8	)	68.68		(.3	)	41.82
Outstanding at end of year	18.2		46.40		21.2		42.57		22.9		41.58
Exercisable at end of year	11.3		42.67		13.1		41.80		12.9		39.28

*Weighted-averages

Options outstanding and exercisable in millions at October 31, 2004 were as follows:

	Options Outstanding				Options Exercisable
		Remaining
Range of		Contractual	Exercise			Exercise
Exercise Prices	Shares	Life (yrs)*	Price*		Shares	Price*
$21.02 – $34.13	1.4	3.33	$	31.99	1.4	$	31.99
$36.37 – $41.47	2.4	5.08	41.30		2.4	41.30
$42.07 – $47.36	10.0	6.92	43.50		6.3	42.90
$50.97 – $61.64	4.4	7.55	60.02		1.2	55.81
Total	18.2				11.3

*Weighted-averages

In 2004, 2003, and 2002, the company granted 241,860, 196,294 and 12,711 shares of restricted stock with weighted-average fair values of $61.83, $45.29 and $48.43 per share, respectively. The total compensation expense for the restricted stock plans, which is being amortized over the restricted periods, was $8 million, $4 million and $2 million in 2004, 2003 and 2002, respectively.

23. EMPLOYEE INVESTMENT AND SAVINGS PLANS

The company has defined contribution plans related to employee investment and savings plans primarily in the U.S. Company contributions and costs under these plans were $43 million in 2004, $25 million in 2003 and $21 million in 2002.

24. OTHER COMPREHENSIVE INCOME ITEMS

Other comprehensive income items under FASB Statement No. 130, Reporting Comprehensive Income, are transactions recorded in stockholders’ equity during the year, excluding net income and transactions with stockholders. Following are the items included in other comprehensive income (loss) and the related tax effects in millions of dollars:

	Before			Tax			After
	Tax			(Expense)			Tax
	Amount			Credit			Amount
2002
Minimum pension liability adjustment	$	(1,620	)	$	604		$	(1,016	)
Cumulative translation adjustment	(8		)				(8		)
Unrealized gain (loss) on derivatives:
Hedging loss	(61		)	21			(40		)
Reclassification of realized loss to net income	99			(34		)	65
Net unrealized gain	38			(13		)	25
Unrealized holding gain and net gain on investments*	2			(1		)	1
Total other comprehensive loss	$	(1,588	)	$	590		$	(998	)

58

	Before			Tax			After
	Tax			(Expense)			Tax
	Amount			Credit			Amount
2003
Minimum pension liability adjustment	$	(72	)	$	26		$	(46	)
Cumulative translation adjustment	210			4			214
Unrealized gain (loss) on derivatives:
Hedging loss	(41		)	14			(27		)
Reclassification of realized loss to net income	79			(27		)	52
Net unrealized gain	38			(13		)	25
Unrealized holding gain and net gain on investments*	9			(3		)	6
Total other comprehensive income	$	185		$	14		$	199
2004
Minimum pension liability adjustment	$	1,627		$	(606	)	$	1,021
Cumulative translation adjustment	86			2			88
Unrealized gain (loss) on derivatives:
Hedging loss	(19		)	7			(12		)
Reclassification of realized loss to net income	44			(16		)	28
Net unrealized gain	25			(9		)	16
Unrealized gain on investments:
Holding gain	3			(1		)	2
Reclassification of realized gain to net income	(3		)	1			(2		)
Net unrealized gain
Total other comprehensive income	$	1,738		$	(613	)	$	1,125

*Reclassification of realized gains or losses to net income were not material.

25. FINANCIAL INSTRUMENTS

The fair values of financial instruments which do not approximate the carrying values in the financial statements at October 31 in millions of dollars follow:

	2004				2003
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Financing receivables	$	11,233	$	11,173	$	9,974	$	9,994
Long-term borrowings
Equipment Operations	$	2,728	$	3,149	$	2,727	$	3,109
Financial Services	8,362		8,770		7,677		7,687
Total	$	11,090	$	11,919	$	10,404	$	10,796

Fair Value Estimates

Fair values of the long-term financing receivables with fixed rates were based on the discounted values of their related cash flows at current market interest rates. The fair values of the remaining financing receivables approximated the carrying amounts.

Fair values of long-term borrowings with fixed rates were based on the discounted values of their related cash flows at current market interest rates. Certain long-term borrowings have been swapped to current variable interest rates. The carrying values of these long-term borrowings include adjustments related to fair value hedges.

Derivatives

It is the company’s policy that derivative transactions are executed only to manage exposures arising in the normal course of business and not for the purpose of creating speculative positions or trading. The company’s credit operations manage the relationship of the types and amounts of their funding sources to their receivable and lease portfolio in an effort to diminish risk due to interest rate and foreign currency fluctuations, while responding to favorable financing opportunities. The company also has foreign currency exposures at some of its foreign and domestic operations related to buying, selling and financing in currencies other than the local currencies.

Interest Rate Swaps

The company enters into interest rate swap agreements primarily to more closely match the fixed or floating interest rates of the credit operations’ borrowings to those of the assets being funded.

Certain interest rate swaps were designated as hedges of future cash flows from commercial paper and variable interest rate borrowings. The effective portion of the fair value gains or losses on these cash flow hedges are recorded in other comprehensive income and subsequently reclassified into interest expense as payments are accrued and the swaps approach maturity. These amounts offset the effects of interest rate changes on the related borrowings. The amount of the loss recorded in other comprehensive income at October 31, 2004 that is expected to be reclassified to earnings in the next 12 months if interest rates remain unchanged is approximately $5 million after-tax. These swaps mature in up to 43 months.

Certain interest rate swaps were designated as fair value hedges of fixed-rate, long-term borrowings. The effective portion of the fair value gains or losses on these swaps were offset by fair value adjustments in the underlying borrowings.

Any ineffective portions of the gains or losses on all cash flow and fair value interest rate swaps designated as hedges were recognized immediately in interest expense and were not material. The amounts of gains or losses reclassified from unrealized in other comprehensive income to realized in earnings as a result of the discontinuance of cash flow hedges were not material. There were no components of cash flow or fair value hedges that were excluded from the assessment of effectiveness.

The company has certain interest rate swap agreements that are not designated as hedges under FASB Statement No. 133 and the fair value gains or losses are recognized directly in earnings. These instruments relate to swaps that are used to facilitate certain borrowings.

Foreign Exchange Forward Contracts, Swaps and Options

The company has entered into foreign exchange forward contracts, swaps and purchased options in order to manage the currency exposure of certain receivables, liabilities, borrowings and expected inventory purchases. These derivatives were not designated as hedges under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. The fair value gains or losses from these foreign currency derivatives are recognized directly in earnings, generally offsetting the foreign exchange gains or losses on the exposures being managed.

59

The company has designated cross currency interest rate swaps as fair value hedges of certain long-term borrowings. The effective portion of the fair value gains or losses on these swaps are offset by fair value adjustments in the underlying borrowings and the ineffectiveness was not material. The company has also designated foreign exchange forward contracts and currency swaps as cash flow hedges of long-term borrowings. The effective portion of the fair value gains or losses on these forward contracts and swaps is recorded in other comprehensive income and subsequently reclassified into earnings as payments are accrued and these instruments approach maturity. This offsets the exchange rate effects on the borrowing being hedged and the ineffectiveness was not material.

26. 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, excluding the current maturities of long-term borrowings, mature within three months or less.

The Equipment Operations sell most of their trade receivables to Financial Services. These intercompany cash flows are eliminated in the consolidated cash flows.

All cash flows from the changes in trade accounts and notes receivable (see Note 8) are classified as operating activities in the Statement of Consolidated Cash Flows as these receivables arise from the sale of equipment to the company’s customers. Cash flows from financing receivables (see Note 9) that are related to the sale of equipment to the company’s customers are also included in operating activities. The remaining financing receivables are related to the financing of equipment sold by an independent dealer and are included in investing activities.

The company had non-cash operating and investing activities not included in the Statement of Consolidated Cash Flows for the transfer of inventory to equipment under operating leases of approximately $208 million, $157 million and $116 million in 2004, 2003 and 2002, respectively.

Cash payments for interest and income taxes consisted of the following in millions of dollars:

	2004			2003			2002
Interest:
Equipment Operations*	$	357		$	354		$	312
Financial Services	395			416			413
Intercompany eliminations*	(241		)	(226		)	(187		)
Consolidated	$	511		$	544		$	538
Income taxes:
Equipment Operations	$	395		$	74		$	188
Financial Services	167			152			131
Intercompany eliminations	(138		)	(142		)	(118		)
Consolidated	$	424		$	84		$	201

*Includes interest compensation to Financial Services for financing trade receivables.

27. SEGMENT AND GEOGRAPHIC AREA DATA FOR THE YEARS ENDED OCTOBER 31, 2004, 2003 AND 2002

The company’s operations are organized and reported in four major business segments described as follows:

The agricultural equipment segment manufactures and distributes a full line of farm equipment and related service parts – including tractors; combine, cotton and sugarcane harvesters; tillage, seeding and soil preparation machinery; sprayers; hay and forage equipment; material handling equipment; and integrated agricultural management systems technology. In 2004, the special technologies group’s results were transferred from the “Other” segment to the agricultural equipment segment due to changes in internal reporting. The following information for the agricultural segment has been restated for this change in 2003 and 2002.

The commercial and consumer equipment segment manufactures and distributes equipment, products and service parts for commercial and residential uses – including small tractors for lawn, garden, commercial and utility purposes; walk-behind mowers; golf course equipment; utility vehicles (including those commonly referred to as all-terrain vehicles, or “ATVs”); landscape products and irrigation equipment; and other outdoor power products.

The construction and forestry segment manufactures, distributes to dealers and sells at retail a broad range of machines and service parts used in construction, earthmoving, material handling and timber harvesting – including backhoe loaders; crawler dozers and loaders; four-wheel-drive loaders; excavators; motor graders; articulated dump trucks; landscape loaders; skid-steer loaders; and log skidders, feller bunchers, log loaders, log forwarders, log harvesters and related attachments.

The products and services produced by the equipment segments are marketed primarily through independent retail dealer networks and major retail outlets.

The credit segment primarily finances sales and leases by John Deere dealers of new and used agricultural, commercial and consumer, and construction and forestry equipment. In addition, it provides wholesale financing to dealers of the foregoing equipment, provides operating loans, finances retail revolving charge accounts and plans to offer certain crop risk mitigation products.

Certain operations do not meet the materiality threshold of FASB Statement No. 131, Disclosures about Segments of an Enterprise and Related Information, and have been grouped together as an “Other” segment. In 2004, the special technologies group’s results, which were previously included in the “Other” segment, were transferred to the agricultural equipment segment due to changes in internal reporting. The information for the “Other” segment was restated for this change in 2003 and 2002 and, as a result, consists of only the health care operations in those years. In 2004, the “Other” segment information primarily consists of the health care operations, as well as certain miscellaneous service operations added in 2004.

Corporate assets are primarily the Equipment Operations’ prepaid pension costs, deferred income tax assets, other receivables and cash and cash equivalents as disclosed in Note 29, net of certain intercompany eliminations.

Because of integrated manufacturing operations and common administrative and marketing support, a substantial number of allocations must be made to determine operating segment and geographic area data. Intersegment sales and revenues represent sales of components and finance charges which are generally based on market prices.

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Information relating to operations by operating segment in millions of dollars follows. In addition to the following unaffiliated sales and revenues by segment, intersegment sales and revenues in 2004, 2003 and 2002 were as follows: agricultural equipment net sales of $88 million, $61 million and $54 million, construction and forestry net sales of $11 million, $9 million and none, and credit revenues of $216 million, $209 million and $167 million, respectively.

OPERATING SEGMENTS

	2004		2003			2002
Net sales and revenues
Unaffiliated customers:
Agricultural equipment net sales	$	9,717	$	7,390	**	$	6,792	**
Commercial and consumer equipment net sales	3,742		3,231			2,712
Construction and forestry net sales	4,214		2,728			2,199
Total net sales	17,673		13,349			11,703
Credit revenues	1,276		1,347			1,426
Other revenues	1,037		839			818
Total	$	19,986	$	15,535		$	13,947

**See following ** note.

Operating profit (loss)*

Agricultural equipment	$	1,072		$	329	**	$	397	**
Commercial and consumer equipment	246			227			79
Construction and forestry	587			152			(75		)
Credit***	466			474			386
Other***	5			30		**	30		**
Total operating profit	2,376			1,212			817
Interest income	64			59			66
Interest expense	(205		)	(217		)	(223		)
Foreign exchange loss from equipment operations’ financing activities	(10		)	(12		)	(17		)
Corporate expenses – net	(111		)	(62		)	(66		)
Income taxes	(708		)	(337		)	(258		)
Total	(970		)	(569		)	(498		)
Net income	$	1,406		$	643		$	319

*In 2004 and 2003, there was no goodwill amortization and the costs or income for special items were not material. In 2002, the operating profit (loss) of the agricultural equipment, commercial and consumer equipment and construction and forestry segments included pretax goodwill amortization of $27 million, $14 million and $17 million, respectively, for a total of $58 million. In 2002, operating profit (loss) of the agricultural equipment, commercial and consumer equipment and construction and forestry segments included expense for special items of $21 million, $24 million and $27 million, respectively, for a total of $72 million (see Note 2).

**Years 2003 and 2002 were restated for sales of $41 million and $54 million, operating losses of $8 million and $42 million and identifiable assets of $67 million and $73 million, respectively, for the transfer of the special technologies group’s results from the “Other” segment to the agricultural equipment segment. Other insignificant restatements of the agricultural equipment segment information related to this transfer were also made.

***Operating profit of the credit business segment includes the effect of interest expense, which is the largest element of its operating costs, and foreign exchange gains or losses. Operating profit of the “Other” segment includes health care investment income.

OPERATING SEGMENTS

	2004			2003			2002
Interest income*
Agricultural equipment	$	6		$	6		$	7
Commercial and consumer equipment	5			4			5
Construction and forestry	8			8			7
Credit**	992			1,000			948
Corporate	64			59			66
Intercompany**	(241		)	(226		)	(187		)
Total	$	834		$	851		$	846

*Does not include finance rental income for equipment on operating leases.

**Includes interest income from Equipment Operations for financing trade receivables.

Interest expense

Agricultural equipment*	$	127		$	133		$	94
Commercial and consumer equipment*	54			48			46
Construction and forestry*	24			19			18
Credit	423			437			443
Corporate	205			218			223
Intercompany*	(241		)	(226		)	(187		)
Total	$	592		$	629		$	637

*Includes interest compensation to credit operations for financing trade receivables.

Depreciation* and amortization expense

Agricultural equipment	$	225	$	213	$	232
Commercial and consumer equipment	73		69		81
Construction and forestry	65		60		82
Credit	250		281		322
Other	8		8		8
Total	$	621	$	631	$	725

*Includes depreciation for equipment on operating leases.

Equity in income (loss) of unconsolidated affiliates

Agricultural equipment	$	2		$	(2	)	$	(10	)
Commercial and consumer equipment	(2		)	(1		)
Construction and forestry				12			(11		)
Credit	1						(4		)
Total	$	1		$	9		$	(25	)

Identifiable operating assets

Agricultural equipment	$	3,145	$	2,778	**	$	2,948	**
Commercial and consumer equipment	1,330		1,295			1,324
Construction and forestry	1,970		1,461			1,423
Credit	15,937		14,714			13,671
Other	368		321		**	283		**
Corporate	6,004		5,689			4,119
Total	$	28,754	$	26,258		$	23,768

**See previous ** note in the operating profit information.

61

OPERATING SEGMENTS

	2004		2003		2002
Capital additions
Agricultural equipment	$	246	$	205	$	233
Commercial and consumer equipment	64		71		62
Construction and forestry	37		38		59
Credit	4		4		3
Other	14		2		1
Total	$	365	$	320	$	358

Investment in unconsolidated affiliates

Agricultural equipment	$	18	$	19	$	22
Commercial and consumer equipment	4		6		6
Construction and forestry	81		167		145
Credit	4		3		7
Other			1		1
Total	$	107	$	196	$	181

The company views and has historically disclosed its operations as consisting of two geographic areas, the U.S. and Canada, and outside the U.S. and Canada, shown below in millions of dollars. Operating income for these areas has been disclosed in addition to the requirements under FASB Statement No. 131. No individual foreign country’s net sales and revenues were material for disclosure purposes.

GEOGRAPHIC AREAS

	2004		2003		2002
Net sales and revenues
Unaffiliated customers:
U.S. and Canada:
Equipment Operations net sales (91%)*	$	12,332	$	9,249	$	8,199
Financial Services revenues (88%)*	1,845		1,861		1,950
Total	14,177		11,110		10,149
Outside U.S. and Canada:
Equipment Operations net sales	5,340		4,100		3,504
Financial Services revenues	214		165		127
Total	5,554		4,265		3,631
Other revenues	255		160		167
Total	$	19,986	$	15,535	$	13,947

*The percentages indicate the approximate proportion of each amount that relates to the U.S. only and are based upon a three-year average for 2004, 2003 and 2002.

Operating profit
U.S. and Canada:
Equipment Operations	$	1,284	$	386	$	170
Financial Services	418		469		410
Total	1,702		855		580
Outside U.S. and Canada:
Equipment Operations	621		322		231
Financial Services	53		35		6
Total	674		357		237
Total	$	2,376	$	1,212	$	817

GEOGRAPHIC AREAS

	2004		2003		2002
Property and equipment
U.S.	$	1,328	$	1,297	$	1,285
Germany	276		241		192
Mexico	200		215		217
Other countries	358		323		304
Total	$	2,162	$	2,076	$	1,998

28. SUPPLEMENTAL INFORMATION (UNAUDITED)

Quarterly information with respect to net sales and revenues and earnings is shown in the following schedule. Such information is shown in millions of dollars except for per share amounts.

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
2004
Net sales and revenues	$	3,484	$	5,877	$	5,418	$	5,207
Income before income taxes	262		742		585		525
Net income	171		477		401		357
Net income per share – basic	.70		1.93		1.61		1.44
Net income per share – diluted	.68		1.88		1.58		1.41
Dividends declared per share	.22		.28		.28		.28
Dividends paid per share	.22		.22		.28		.28
2003
Net sales and revenues	$	2,794	$	4,400	$	4,402	$	3,939
Income before income taxes	106		398		370		97
Net income	68		257		247		71
Net income per share – basic	.28		1.08		1.03		.29
Net income per share – diluted	.28		1.07		1.02		.27
Dividends declared per share	.22		.22		.22		.22
Dividends paid per share	.22		.22		.22		.22

Net income per share for each quarter must be computed independently. As a result, their sum may not equal the total net income per share for the year.

Common stock per share sales prices from New York Stock Exchange composite transactions quotations follow:

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
2004 Market price
High	$	67.41	$	74.93	$	70.49	$	65.95
Low	$	59.20	$	60.00	$	60.60	$	56.72
2003 Market price
High	$	51.60	$	43.80	$	49.96	$	60.75
Low	$	41.30	$	37.56	$	42.45	$	48.25

At October 31, 2004, there were 30,091 holders of record of the company’s $1 par value common stock.

Dividend and Other Events

A quarterly cash dividend of $.28 per share was declared at the board of directors’ meeting held on December 1, 2004, payable on February 1, 2005.

On December 1, 2004, the company’s board of directors authorized the repurchase of up to $1 billion of company common stock. Repurchases of company common stock under this plan will be made from time to time, at the company’s discretion, in the open market or through privately negotiated transactions.

62

29.          SUPPLEMENTAL CONSOLIDATING DATA

INCOME STATEMENT

For the Years Ended October 31, 2004, 2003 and 2002

(In millions of dollars)

	EQUIPMENT OPERATIONS*							FINANCIAL SERVICES
	2004		2003		2002			2004		2003		2002
Net Sales and Revenues
Net sales	$	17,673.0	$	13,349.1	$	11,702.8
Finance and interest income	83.2		77.6		85.6			$	1,353.7	$	1,424.0	$	1,440.6
Health care premiums and fees								784.8		683.1		654.2
Other income	236.1		145.3		146.0			154.3		145.3		167.3
Total	17,992.3		13,572.0		11,934.4			2,292.8		2,252.4		2,262.1
Costs and Expenses
Cost of sales	13,582.3		10,767.5		9,608.1
Research and development expenses	611.6		577.3		527.8
Selling, administrative and general expenses	1,647.6		1,284.7		1,153.5			477.1		466.3		510.2
Interest expense	205.0		217.6		222.9			423.3		437.2		443.1
Interest compensation to Financial Services	205.1		199.6		158.1
Health care claims and costs								650.3		536.1		518.4
Other operating expenses	97.7		57.8		81.4			271.4		309.0		370.3
Total	16,349.3		13,104.5		11,751.8			1,822.1		1,748.6		1,842.0
Income of Consolidated Group before
Income Taxes	1,643.0		467.5		182.6			470.7		503.8		420.1
Provision for income taxes	546.4		162.4		104.2			162.1		174.5		154.1
Income of Consolidated Group	1,096.6		305.1		78.4			308.6		329.3		266.0
Equity in Income (Loss) of Unconsolidated Subsidiaries and Affiliates
Credit	306.2		310.5		243.0			.6		.2		(3.8		)
Other	3.3		27.5		(2.2		)			.2
Total	309.5		338.0		240.8			.6		.4		(3.8		)
Net Income	$	1,406.1	$	643.1	$	319.2		$	309.2	$	329.7	$	262.2

*Deere & Company with Financial Services on the equity basis.

The supplemental consolidating data is presented for informational purposes. The “Equipment Operations” (Deere & Company with Financial Services on the Equity Basis) reflect the basis of consolidation described in Note 1 to the consolidated financial statements. The consolidated group data in the “Equipment Operations” income statement reflect the results of the agricultural equipment, commercial and consumer equipment and construction and forestry operations. The supplemental “Financial Services” data represent primarily Deere & Company’s credit and health care operations. Transactions between the “Equipment Operations” and “Financial Services” have been eliminated to arrive at the consolidated financial statements.

63

BALANCE SHEET

As of October 31, 2004 and 2003

(In millions of dollars except per share amounts)

	EQUIPMENT OPERATIONS*				FINANCIAL SERVICES
	2004		2003		2004		2003
ASSETS
Cash and cash equivalents	$2,915.1		$4,009.3		$266.0		$375.2
Cash equivalents deposited with unconsolidated subsidiaries	224.4		278.1
Cash and cash equivalents	3,139.5		4,287.4		266.0		375.2
Marketable securities					246.7		231.8
Receivables from unconsolidated subsidiaries and affiliates	1,469.5		178.8		.7		274.3
Trade accounts and notes receivable - net	781.5		646.1		2,765.8		2,279.1
Financing receivables - net	64.7		63.5		11,167.9		9,910.7
Other receivables	498.4		236.6		164.6		191.7
Equipment on operating leases - net	8.9		11.9		1,288.0		1,369.9
Inventories	1,999.1		1,366.1
Property and equipment - net	2,112.3		2,042.9		49.4		32.7
Investments in unconsolidated subsidiaries and affiliates	2,250.2		2,431.2		4.1		3.8
Goodwill	973.6		871.9				.2
Other intangible assets - net	21.6		252.6		.1		.2
Prepaid pension costs	2,474.5		62.0		18.6		.6
Other assets	206.2		195.0		309.1		339.4
Deferred income taxes	656.7		1,590.8				3.2
Deferred charges	86.8		78.4		23.7		22.1
Total Assets	$16,743.5		$14,315.2		$16,304.7		$15,034.9
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Short-term borrowings	$311.9		$577.0		$3,145.6		$3,770.2
Payables to unconsolidated subsidiaries and affiliates	142.8		96.7		1,676.3		419.4
Accounts payable and accrued expenses	3,683.8		2,771.5		631.0		640.7
Health care claims and reserves					135.9		94.1
Accrued taxes	162.0		209.9		17.2		16.6
Deferred income taxes	35.9		11.5		155.3		137.2
Long-term borrowings	2,728.5		2,727.5		8,361.9		7,676.7
Retirement benefit accruals and other liabilities	3,285.8		3,919.0		33.9		40.8
Total liabilities	10,350.7		10,313.1		14,157.1		12,795.7
STOCKHOLDERS’ EQUITY
Common stock, $1 par value (authorized – 600,000,000 shares; issued – 268,215,602 shares in 2004 and 2003), at stated value	2,043.5		1,987.8		974.1		968.6
Common stock in treasury, 21,356,458 shares in 2004 and 24,694,170 shares in 2003, at cost	(1,040.4	)	(1,141.4	)
Unamortized restricted stock compensation	(12.7	)	(5.8	)
Retained earnings	5,445.1		4,329.5		1,142.7		1,277.7
Total	6,435.5		5,170.1		2,116.8		2,246.3
Minimum pension liability adjustment	(57.2	)	(1,078.0	)
Cumulative translation adjustment	9.1		(79.2	)	24.3		1.5
Unrealized loss on derivatives	(6.4	)	(22.4	)	(5.3	)	(20.2	)
Unrealized gain on investments	11.8		11.6		11.8		11.6
Accumulated other comprehensive income (loss)	(42.7	)	(1,168.0	)	30.8		(7.1	)
Total stockholders’ equity	6,392.8		4,002.1		2,147.6		2,239.2
Total Liabilities and Stockholders’ Equity	$16,743.5		$14,315.2		$16,304.7		$15,034.9

*Deere & Company with Financial Services on the equity basis.

The supplemental consolidating data is presented for informational purposes. The “Equipment Operations” (Deere & Company with Financial Services on the Equity Basis) reflect the basis of consolidation described in Note 1 to the consolidated financial statements. The supplemental “Financial Services” data represent primarily Deere & Company’s credit and health care operations. Transactions between the “Equipment Operations” and “Financial Services” have been eliminated to arrive at the consolidated financial statements.

64

STATEMENT OF CASH FLOWS

For the Years Ended October 31, 2004, 2003 and 2002

(In millions of dollars)

	EQUIPMENT OPERATIONS*									FINANCIAL SERVICES
	2004			2003			2002			2004			2003			2002
Cash Flows from Operating Activities
Net income	$	1,406.1		$	643.1		$	319.2		$	309.2		$	329.7		$	262.2
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for doubtful receivables	9.3			17.9			6.5			42.1			88.9			154.2
Provision for depreciation and amortization	362.7			341.6			394.8			291.7			329.0			366.3
Undistributed earnings of unconsolidated subsidiaries and affiliates	156.2			(86.9		)	156.2			(.5		)	(.4		)	3.8
Provision (credit) for deferred income taxes	374.4			19.8			(19.2		)	10.6			13.3			18.0
Changes in assets and liabilities:
Receivables	(112.9		)	338.6			116.7			35.6			(42.5		)	(3.8		)
Inventories	(293.6		)	84.1			85.8
Accounts payable and accrued expenses	916.0			(162.0		)	107.9			(9.0		)	(29.6		)	(4.2		)
Other**	(1,435.0		)	7.1			219.9			(26.3		)	5.9			(26.3		)
Net cash provided by operating activities	1,383.2			1,203.3			1,387.8			653.4			694.3			770.2
Cash Flows from Investing Activities
Collections of receivables	37.0			11.5			8.7			24,015.1			19,396.3			14,992.3
Proceeds from sales of financing receivables										2,333.6			1,941.0			2,967.8
Proceeds from maturities and sales of marketable securities										66.7			76.4			75.4
Proceeds from sales of equipment on operating leases	.8			.1			1.6			443.6			514.4			493.6
Proceeds from sales of businesses	90.4			22.5			53.5			.2
Cost of receivables acquired	(17.3		)	(4.2		)	(27.4		)	(27,864.3		)	(22,011.5		)	(17,861.4		)
Purchases of marketable securities										(79.5		)	(118.2		)	(87.8		)
Purchases of property and equipment	(345.9		)	(303.4		)	(354.5		)	(18.0		)	(6.2		)	(4.2		)
Cost of operating leases acquired				(2.8		)	(6.1		)	(571.1		)	(470.9		)	(481.8		)
Acquisitions of businesses, net of cash acquired	(192.9		)	(10.6		)	(9.3		)							(9.7		)
Decrease (increase) in receivables from unconsolidated affiliates										274.3			(14.5		)	54.1
Other	34.4			9.4			80.3			(37.2		)	(39.3		)	(79.5		)
Net cash provided by (used for) investing activities	(393.5		)	(277.5		)	(253.2		)	(1,436.6		)	(732.5		)	58.8
Cash Flows from Financing Activities
Increase (decrease) in short-term borrowings	(63.3		)	(123.2		)	(304.6		)	(292.8		)	250.1			(1,108.6		)
Change in intercompany receivables/payables	(1,656.1		)	50.5			29.6			1,264.3			(563.2		)	(882.0		)
Proceeds from long-term borrowings	10.9			9.1			708.3			2,178.7			3,303.8			3,865.4
Principal payments on long-term borrowings	(267.4		)	(19.0		)	(75.9		)	(2,045.2		)	(2,523.7		)	(2,695.1		)
Proceeds from issuance of common stock	250.8			174.5			48.0
Repurchases of common stock	(193.1		)	(.4		)	(1.2		)
Dividends paid	(246.6		)	(210.5		)	(208.9		)	(444.2		)	(247.9		)	(399.5		)
Other	(.4		)	(1.8		)	(1.5		)	2.7
Net cash provided by (used for) financing activities	(2,165.2		)	(120.8		)	193.8			663.5			219.1			(1,219.8		)
Effect of Exchange Rate Changes on Cash	27.6			53.1			2.3			10.5			18.0			(7.6		)
Net Increase (Decrease) in Cash and Cash Equivalents	(1,147.9		)	858.1			1,330.7			(109.2		)	198.9			(398.4		)
Cash and Cash Equivalents at Beginning of Year	4,287.4			3,429.3			2,098.6			375.2			176.3			574.7
Cash and Cash Equivalents at End of Year	$	3,139.5		$	4,287.4		$	3,429.3		$	266.0		$	375.2		$	176.3

*Deere & Company with Financial Services on the equity basis.

**Primarily related to pension and other postretirement benefits in 2004.

The supplemental consolidating data is presented for informational purposes. The “Equipment Operations” (Deere & Company with Financial Services on the Equity Basis) reflect the basis of consolidation described in Note 1 to the consolidated financial statements. The supplemental “Financial Services” data represent primarily Deere & Company’s credit and health care operations. Transactions between the “Equipment Operations” and “Financial Services” have been eliminated to arrive at the consolidated financial statements.

65

DEERE & COMPANY

SELECTED FINANCIAL DATA

(Dollars in millions except per share amounts)

	2004			2003			2002			2001			2000			1999			1998			1997			1996			1995
Net sales and revenues	$	19,986		$	15,535		$	13,947		$	13,293		$	13,137		$	11,751		$	13,822		$	12,791		$	11,229		$	10,291
Net sales	17,673			13,349			11,703			11,077			11,169			9,701			11,926			11,082			9,640			8,830
Finance and interest income	1,196			1,276			1,339			1,445			1,321			1,104			1,007			867			763			660
Research and development expenses	612			577			528			590			542			458			445			412			370			327
Selling, administrative and general expenses	2,117			1,744			1,657			1,717			1,505			1,362			1,309			1,321			1,147			1,001
Interest expense	592			629			637			766			677			557			519			422			402			393
Income (loss) before goodwill amortization	1,406			643			372			(13		)	526			264			1,036			978			828			713
Goodwill amortization – after-tax							53			51			40			25			15			18			11			7
Net income (loss)	1,406			643			319			(64		)	486			239			1,021			960			817			706
Return on net sales	8.0		%	4.8		%	2.7		%	(.6		) %	4.3		%	2.5		%	8.6		%	8.7		%	8.5		%	8.0		%
Return on beginning stockholders’ equity	35.1		%	20.3		%	8.0		%	(1.5		) %	11.9		%	5.9		%	24.6		%	27.0		%	26.5		%	27.6		%
Income (loss) per share before goodwill amortization – basic	$	5.69		$	2.68		$	1.56		$	(.05	)	$	2.24		$	1.14		$	4.26		$	3.85		$	3.18		$	2.74
Net income (loss) per share – basic	5.69			2.68			1.34			(.27		)	2.07			1.03			4.20			3.78			3.14			2.71
Net income (loss) per share – diluted	5.56			2.64			1.33			(.27		)	2.06			1.02			4.16			3.74			3.11			2.69
Dividends declared per share	1.06			.88			.88			.88			.88			.88			.88			.80			.80			.75
Dividends paid per share	1.00			.88			.88			.88			.88			.88			.86			.80			.80			.73 1/3
Average number of common shares outstanding (in millions)   - basic	247.2			240.2			238.2			235.0			234.3			232.9			243.3			253.7			260.5			260.5
- diluted	253.1			243.3			240.9			236.8			236.0			234.4			245.7			256.6			263.2			262.5
Total assets	$	28,754		$	26,258		$	23,768		$	22,663		$	20,469		$	17,578		$	18,002		$	16,320		$	14,653		$	13,847
Trade accounts and notes receivable – net	3,207			2,619			2,734			2,923			3,169			3,251			4,059			3,334			3,153			3,260
Financing receivables – net	11,233			9,974			9,068			9,199			8,276			6,743			6,333			6,405			5,912			5,345
Equipment on operating leases – net	1,297			1,382			1,609			1,939			1,954			1,655			1,209			775			430			259
Inventories	1,999			1,366			1,372			1,506			1,553			1,294			1,287			1,073			829			721
Property and equipment – net	2,162			2,076			1,998			2,052			1,912			1,782			1,700			1,524			1,352			1,336
Short-term borrowings:
Equipment Operations	312			577			398			773			928			642			1,512			171			223			396
Financial Services	3,146			3,770			4,039			5,425			4,831			3,846			3,810			3,604			2,921			2,744
Total	3,458			4,347			4,437			6,198			5,759			4,488			5,322			3,775			3,144			3,140
Long-term borrowings:
Equipment Operations	2,728			2,727			2,989			2,210			1,718			1,036			553			540			626			703
Financial Services	8,362			7,677			5,961			4,351			3,046			2,770			2,239			2,083			1,799			1,473
Total	11,090			10,404			8,950			6,561			4,764			3,806			2,792			2,623			2,425			2,176
Total stockholders’ equity	6,393			4,002			3,163			3,992			4,302			4,094			4,080			4,147			3,557			3,085
Book value per share	$	25.90		$	16.43		$	13.24		$	16.82		$	18.34		$	17.51		$	17.56		$	16.57		$	13.83		$	11.78
Capital expenditures	$	364		$	313		$	358		$	495		$	419		$	308		$	438		$	492		$	277		$	263
Number of employees (at year end)	46,465			43,221			43,051			45,069			43,670			38,726			37,002			34,420			33,919			33,375

66

[Letterhead]

Deloitte & Touche LLP

Two Prudential Plaza

180 North Stetson Avenue

Chicago, Illinois  60601

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Deere & Company:

We have audited the accompanying consolidated balance sheets of Deere & Company and subsidiaries as of October 31, 2004 and 2003 and the related statements of consolidated income, changes in consolidated stockholders’ equity and consolidated cash flows for each of the three years in the period ended October 31, 2004.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on the financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 Deere & Company and subsidiaries at October 31, 2004 and 2003 and the results of their operations and their cash flows for each of the three years in the period ended October 31, 2004 in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 15 to the financial statements, effective November 1, 2002, the Company changed its method of accounting for goodwill and other intangible assets to conform to Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets.

DELOITTE & TOUCHE LLP

Chicago, Illinois

December 17, 2004

(March 9, 2005 as to the cash flow reclassification described in Notes 1, 9, and 26)

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Item 6.Exhibits

See the index to exhibits immediately preceding the exhibits filed with this report.

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.

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SIGNATURES

Pursuant to the requirements 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.

		DEERE & COMPANY
Date:	March 14, 2005	By:	/s/ Nathan J. Jones
			Nathan J. Jones Senior Vice President, Principal Financial Officer and Principal Accounting Officer

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INDEX TO EXHIBITS

Number
2	Not applicable
3.1	Certificate of Incorporation, as amended (Exhibit 3.2 to Form 10-K of registrant for the year ended October 31, 1999, Securities and Exchange Commission File Number 1-4121*)
3.2	Bylaws, as amended (Exhibit 3 to Form 8-K of registrant dated February 23, 2005*)
4.1	Five-Year Credit Agreement among registrant, John Deere Capital Corporation, various financial institutions, JPMorgan Chase Bank N.A. as administrative agent, Citibank N.A. and Credit Suisse First Boston as documentation agents, Merrill Lynch Bank USA as co-documentation agent, and Bank of America, N.A. and Deutsche Bank AG, New York Branch as syndication agents, et al, dated as of February 15, 2005.
4.2	364-Day Credit Agreement among registrant, John Deere Capital Corporation, various financial institutions, JPMorgan Chase Bank N.A. as administrative agent, Citibank N.A. and Credit Suisse First Boston as documentation agents, Merrill Lynch Bank USA as co-documentation agent, and Bank of America, N.A. and Deutsche Bank AG, New York Branch as syndication agents, et al, dated as of February 15, 2005.
10.1	Form of John Deere Restricted Stock Unit Grant
10.2	John Deere Performance Bonus Plan (Appendix A to Notice and Proxy Statement of registrant for the annual stockholder meeting on February 23, 2005*)
11	Not applicable
12	Computation of ratio of earnings to fixed charges
15	Not applicable
18	Not applicable
19	Not applicable
22	Not applicable
23	Consent of Deloitte & Touche LLP
24	Not applicable
31.1	Rule 13a-14(a)/15d-14(a) Certification
31.2	Rule 13a-14(a)/15d-14(a) Certification
32	Section 1350 Certifications

* Incorporated by reference

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EX-4.1

Exhibit 4.1

EXECUTION VERSION

DEERE & COMPANY

JOHN DEERE CAPITAL CORPORATION

$625,000,000

FIVE-YEAR

CREDIT AGREEMENT

Dated as of February 15, 2005

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

CITIBANK, N.A.,
as a Documentation Agent

CREDIT SUISSE FIRST BOSTON,
as a Documentation Agent

MERRILL LYNCH BANK USA,
as Co-Documentation Agent

BANK OF AMERICA, N.A.,

as a Syndication Agent

DEUTSCHE BANK AG NEW YORK BRANCH,

as a Syndication Agent

J.P. MORGAN SECURITIES INC.,

as Lead Arranger and Bookrunner

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TABLE OF CONTENTS

SECTION 1.		DEFINITIONS
	1.1	Defined Terms
	1.2	Other Definitional Provisions
SECTION 2.		THE COMMITTED RATE LOANS; THE BID LOANS; THE NEGOTIATED RATE LOANS; AMOUNT AND TERMS
	2.1	The Committed Rate Loans
	2.2	The Bid Loans; the Negotiated Rate Loans
	2.3	Loan Accounts
	2.4	Fees
	2.5	Termination or Reduction of Commitments; Cancellation of Capital Corporation as Borrower
	2.6	Optional Prepayments
	2.7	Minimum Amount of Certain Loans
	2.8	Committed Rate Loan Interest Rate and Payment Dates
	2.9	Conversion and Continuation Options
	2.10	Computation of Interest and Fees
	2.11	Inability to Determine Interest Rate
	2.12	Pro Rata Treatment and Payments
	2.13	Requirements of Law
	2.14	Indemnity
	2.15	Non-Receipt of Funds by the Administrative Agent
	2.16	Extension of Termination Date
	2.17	Foreign Taxes
	2.18	Confirmations
	2.19	Replacement of Cancelled Banks
	2.20	Commitment Increases
SECTION 3.		REPRESENTATIONS AND WARRANTIES
	3.1	Financial Condition
	3.2	Corporate Existence
	3.3	Corporate Power; Authorization; Enforceable Obligations
	3.4	No Legal Bar
	3.5	No Material Litigation
	3.6	Taxes
	3.7	Margin Regulations
	3.8	Pari Passu Ranking
	3.9	No Defaults
	3.10	Use of Proceeds
SECTION 4.		CONDITIONS PRECEDENT
	4.1	Conditions to Initial Loan
	4.2	Conditions to All Loans

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SECTION 5.		AFFIRMATIVE COVENANTS
	5.1	Financial Statements
	5.2	Certificates; Other Information
	5.3	Company Indenture Documents
	5.4	Capital Corporation Indenture Documents
	5.5	Notice of Default
	5.6	Ownership of Capital Corporation Stock
	5.7	Employee Benefit Plans
SECTION 6.		NEGATIVE COVENANTS OF THE COMPANY
	6.1	Company May Consolidate, etc., Only on Certain Terms
	6.2	Limitation on Liens
	6.3	Limitations on Sale and Lease-back Transactions
	6.4	Equipment Operations Debt
SECTION 7.		NEGATIVE COVENANTS OF THE CAPITAL CORPORATION
	7.1	Fixed Charges Ratio
	7.2	Consolidated Senior Debt to Consolidated Capital Base
	7.3	Limitation on Liens
	7.4	Consolidation; Merger
SECTION 8.		EVENTS OF DEFAULT
SECTION 9.		THE AGENTS
	9.1	Appointment
	9.2	Delegation of Duties
	9.3	Exculpatory Provisions
	9.4	Reliance by Agents
	9.5	Notice of Default
	9.6	Non-Reliance on Agents and Other Banks
	9.7	Indemnification
	9.8	Agents in their Individual Capacities
	9.9	Successor Agents
SECTION 10.		MISCELLANEOUS
	10.1	Amendments and Waivers
	10.2	Notices
	10.3	No Waiver; Cumulative Remedies
	10.4	Payment of Expenses and Taxes
	10.5	Successors and Assigns; Participations; Purchasing Banks
	10.6	Adjustments
	10.7	Confidentiality
	10.8	Counterparts
	10.9	GOVERNING LAW
	10.10	Consent to Jurisdiction and Service of Process
	10.11	USA Patriot Act

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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 Company
Exhibit H	Form of Opinion of Special New York Counsel to the Borrowers
Exhibit I	Form of Extension Request
Exhibit J	Form of Form W-8BEN Tax Letter
Exhibit K	Form of Form W-8ECI Tax Letter
Exhibit L	Form of Agreement
Exhibit M	Form of Promissory Note
Exhibit N	Form of New Bank Supplement
Exhibit O	Form of Commitment Increase Supplement

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CREDIT AGREEMENT, dated as of February 15, 2005, among (a) DEERE & COMPANY, a Delaware corporation (the “Company”), (b) JOHN DEERE CAPITAL CORPORATION, a Delaware corporation (the “Capital Corporation”), (c) the several financial institutions parties hereto (collectively, the “Banks”, and individually, a “Bank”), (d) JPMORGAN CHASE BANK, N.A., as administrative agent hereunder (in such capacity, together with its successors and permitted assigns, the “Administrative Agent”), (e) CITIBANK, N.A. and CREDIT SUISSE FIRST BOSTON, as documentation agents hereunder (in such capacity, the “Documentation Agents”), (f) MERRILL LYNCH BANK USA, as co-documentation agent hereunder (in such capacity, the “Co-Documentation Agent”), and (g) BANK OF AMERICA, N.A. and DEUTSCHE BANK AG NEW YORK BRANCH, as syndication agents hereunder (in such capacity, the “Syndication Agents”).

The parties hereto hereby agree as follows:

SECTION 1.DEFINITIONS

1.1Defined 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 JPMorgan Chase Bank, N.A. for such date as its prime rate in effect at its principal office in New York City and (b) 0.5% 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 or, if such rate is not so published for such date, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal Funds dealers of recognized standing selected by it.  The prime rate is not intended to be the lowest rate of interest charged by JPMorgan Chase Bank, N.A. 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).

“Act”:  as defined in subsection 10.11.

“Administrative Agent”:  as defined in the preamble hereto.

“Agent”:  the Administrative Agent, a Syndication Agent, a Documentation Agent or the Co-Documentation Agent, as the context shall require; together, the “Agents”.

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“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 (a) ABR Loans, 0% per annum:

(b) for Eurodollar Loans, the rate per annum set forth below in the column corresponding to the Prevailing Rating of the Company:

Greater than or equal to A+/A1		A/A2		A-/A3		BBB+/Baa1		BBB/Baa2		Lower than BBB/Baa2
0.160	%	0.175	%	0.215	%	0.350	%	0.500	%	0.600	%

“Attributable Debt”:  as defined in subsection 6.2(b)(ii).

“Bank” and “Banks”:  as defined in the preamble hereto.

“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 Administrative Agent and which has not been removed as a Bid Loan Bank by such Borrower by written notice to the Administrative Agent (each of which notices the Administrative 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 Administrative 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 Administrative Agent by facsimile transmission or by telephone, immediately confirmed by facsimile transmission.

“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 Administrative Agent by

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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.

“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 Majority Banks hereunder).

“Code”:  the Internal Revenue Code of 1986, as amended from time to time.

“Co-Documentation Agent”:  as defined in the preamble hereto.

“Commitment”:  as to any Bank, the amount set opposite such Bank’s name on Schedule II or in any assignment pursuant to which such Bank becomes a party hereto with respect to any interest purchased therein, as such amount may be modified as provided herein; collectively, as to all the Banks, the “Commitments”.

“Commitment Expiration Date”:  as defined in subsection 2.16(a).

“Commitment Increase Notice”:  as defined in subsection 2.20(a).

“Commitment Increase Supplement”:  as defined in subsection 2.20(c).

“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.

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“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 Stockholders’ Equity” on the consolidated balance sheet of the Capital Corporation and its consolidated Subsidiaries plus (b) 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.

“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 any indebtedness for borrowed money 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.  Notwithstanding the foregoing, indebtedness for borrowed money in respect of any Securitization Indebtedness shall be deemed not included in Consolidated Senior Debt.

“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.

“Credit Rating”:  as to any Person, the rating assigned to the relevant long term senior unsecured (and non-credit enhanced) Debt obligations of such Person by Moody’s or S&P.

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“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.

“Documentation Agents”:  as defined in the preamble hereto.

“Dollars” and “$”:  dollars in lawful currency of the United States of America.

“Equipment Operations”:  those business segments of the Company and its consolidated Subsidiaries that are primarily engaged in the manufacture and distribution of equipment, parts and related attachments.

“Equipment Operations Debt”:  at a particular time, the sum of short-term and long-term indebtedness for borrowed money that is or would be shown on a balance sheet of Equipment Operations (with Financial Services reflected only on an equity basis), which balance sheet was or would be prepared on the basis of the most recent publicly available consolidated balance sheet of the Company and its consolidated Subsidiaries 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).

“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

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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.

“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.

“Exposure”:  (a) with respect to an Objecting Bank at any time, the aggregate outstanding principal amount of its Loans and (b) with respect to any other Bank at any time, the Commitment of such Bank.

“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.

“Facility Fee Rate”:  the rate per annum set forth below in the column corresponding to the Prevailing Rating of the Company:

Greater than or equal to A+/A1		A/A2		A-/A3		BBB+/Baa1		BBB/Baa2		Lower than BBB/Baa2
0.065	%	0.075	%	0.085	%	0.100	%	0.125	%	0.150	%

“Financial Services”:  the businesses of the Company (including the credit and health care businesses) that are not primarily engaged in Equipment Operations.

“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, notwithstanding the foregoing, consolidated interest on Securitization Indebtedness and amortization of Securitization Indebtedness shall be deemed not included in Fixed Charges; provided, further, that such amounts (but not any amounts constituting consolidated interest on, or amortization of, Securitization Indebtedness) 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, 2004.

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“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.

“Hedging Transaction”:  any swap transaction, interest rate protection agreement (including any interest rate swap, interest “cap” or “collar” or any other interest rate hedging device entered into by the Capital Corporation or one or more of its Subsidiaries), option agreement, short or long position in equity or debt instruments, commodities, futures and forward transactions, outperformance agreement or other similar transaction, agreement or arrangement entered into by the Capital Corporation or one or more of its Subsidiaries.

“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 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.

“Increasing Bank”:  as defined in subsection 2.20(c).

“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 Eurodollar Loan is converted to an ABR Loan and (b) as to any Eurodollar 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, interest shall also be paid on the day which is three months 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 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

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thereafter, as selected by a Borrower in its notice of borrowing, conversion or continuance as provided in subsection 2.1(c) or 2.9;

(b) 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

(c) 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 a Negotiated 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 Eurodollar Rate 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 Eurodollar Rate 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 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 ABR Loans or (B) withdraw the request for such

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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 such Objecting Bank’s Commitment Expiration Date; and

(vi)no Interest Period shall end after the Termination Date.

“JPMorgan Chase Bank, N.A.”:  JPMorgan Chase Bank, N.A., a national association.

“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.

“Loans”:  the collective reference to the Committed Rate Loans, the Bid Loans and the Negotiated Rate Loans.

“Majority Banks”:  at any particular time, Banks having Commitment Percentages aggregating more than fifty percent; provided that (a) at any time after the termination of all the Commitments, “Majority Banks” shall mean Banks holding Loans aggregating more than fifty percent in principal amount of all outstanding Loans and (b) at any time after the Commitment Expiration Date with respect to any Objecting Bank (but prior to the termination of all the Commitments), “Majority Banks” shall mean Banks whose Exposure aggregates more than fifty percent of the aggregate Exposure of all the Banks.

“Margin Stock”:  as defined in Regulation U of the Board of Governors of the Federal Reserve System.

“Moody’s”:  Moody’s Investor Service, Inc.

“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.

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“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.

“New Bank”:  as defined in subsection 2.20(b).

“New Bank Supplement”:  as defined in subsection 2.20(b).

“Notes”:  the collective reference to any promissory note evidencing Loans.

“Objecting Banks”:  as defined in subsection 2.16(a).

“Offered Increase Amount”:  as defined in subsection 2.20(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.

“Prevailing Rating”:  at any date of determination, the higher of (x) the Credit Rating of the Company assigned by S&P and (y) the Credit Rating of the Company assigned by Moody’s.

“Purchasing Banks”:  as defined in subsection 10.5(d).

“Re-Allocation Date”:  as defined in subsection 2.20(e).

“Reference Banks”:  JPMorgan Chase Bank, N.A., Bank of America, N.A. and Deutsche Bank AG New York Branch.

“Register”:  as defined in subsection 10.5(e).

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“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) at any time after the termination of all the Commitments, “Required Banks” means Banks holding Loans aggregating at least 66-2/3% in principal amount of all outstanding Loans, (b)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 (c) as used in any provision other than subsection 2.16 at any time after the Commitment Expiration Date with respect to any Objecting Bank (but prior to the termination of all the Commitments), “Required Banks” means Banks whose Exposure aggregates at least 66-2/3% of the aggregate Exposure of all the 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).

“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 of the Company and delivered to the Administrative Agent.

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“S&P”:  Standard and Poor’s Ratings Services, a division of The McGraw-Hill Companies.

“Sale and Lease-back Transaction”:  as defined in subsection 6.3.

“Securitization Indebtedness”:  shall mean the aggregate outstanding indebtedness for borrowed money, owner trust certificates (however classified) or credit enhancements incurred in connection with transactions involving (i) the sale, transfer or other disposition of receivables or leases (retail or wholesale) by the Capital Corporation or any of its Subsidiaries and (ii) the issuance of commercial paper, medium term notes or any other form of financing by any structured bankruptcy-remote Subsidiary of the Capital Corporation or any related conduit lender (such transactions, “Securitizations”), provided, that the aggregate outstanding credit enhancements in the form of cash or letter(s) of credit provided by the Capital Corporation or any of its Subsidiaries (other than any structured bankruptcy-remote Subsidiary) in excess of 10% of the aggregate outstanding indebtedness for borrowed money and owner trust certificates (however classified) incurred in connection with such Securitizations shall not be deemed for the purposes of this Agreement to be Securitization Indebtedness, but shall be deemed for purposes of Section 7.2 to be Consolidated Senior Debt.

“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.

“Syndication Agents”:  as defined in the preamble hereto.

“Termination Date”:  the fifth anniversary of 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.

“Total Stockholders’ Equity”:  at a particular time, the total stockholders’ equity, exclusive of adjustments resulting from any accumulated other comprehensive income, that is reflected on the most recent publicly available consolidated balance sheet of the Company and its consolidated Subsidiaries 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).

“Transferees”:  as defined in subsection 10.5(g).

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“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 or Eurodollar Loan.

“Utilization Fee”:  as defined in subsection 2.4(b).

“Utilization Percentage”:  on any day, the percentage equivalent of a fraction (a) the numerator of which is the aggregate outstanding principal amount of the Loans and (b) the denominator of which is the aggregate Commitments (or, on any day after termination of the Commitments, the aggregate Commitments in effect immediately preceding such termination).

“Working Day”:  any Business Day on which dealings in foreign currencies and exchange between banks may be carried on in London, England and New York, New York.

1.2Other 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

2.1The 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.  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 or (iii) a combination thereof as determined by the relevant Borrower.

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(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 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) except as provided in clause (iii) hereof below, 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 (iii) 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.  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 (iii) 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; provided, that Committed Rate Loans made by Objecting Banks shall be repaid as provided in subsection 2.16(b).

2.2The 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 outstanding principal amount of all Loans does not at any time exceed the aggregate amount of the Commitments.

(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 Administrative

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Agent, c/o JPMorgan Chase Bank, N.A., 1111 Fannin Street, 10^th Floor, Houston, Texas 77002, Attention:  Danette Espinoza, Telephone:  (713) 750-2102, Facsimile:  (713) 750-2782, 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 Administrative 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 Administrative Agent shall promptly notify each Bid Loan Bank 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 Administrative 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 Administrative 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 Administrative 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 Administrative 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 Administrative 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 Administrative 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 Administrative 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 Administrative 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.

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(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 Administrative 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 Administrative Agent (immediately confirmed by delivery to the Administrative 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 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 Administrative Agent that a Bid Loan Request is cancelled pursuant to clause (iv)(A) of this subsection 2.2(b), the Administrative Agent shall give prompt telephone notice thereof to the Bid Loan Banks, 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 Administrative Agent shall promptly notify by telephone each Bid Loan Bank which has made such an offer of the aggregate amount of such Bid Loans to be made on

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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 available 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 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

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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).

2.3Loan 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.

2.4Fees.  (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 date on which the Commitment of such Bank terminates hereunder, computed at a per annum rate equal to the Facility Fee Rate on the average daily amount of the Commitment of such Bank in effect during the period for which payment is made and (ii) thereafter until all Committed Rate Loans of such Bank are paid in full, computed at a per annum rate equal to the Facility Fee Rate on the average daily amount of such Committed Rate Loans outstanding, in each case, 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 on which the Commitments shall terminate as provided herein, commencing in April, 2005.

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(b)The Company and the Capital Corporation jointly and severally agree to pay to the Administrative Agent for the account of each Bank a utilization fee (a “Utilization Fee”) at a rate per annum equal to 0.10% on the daily amount of such Bank’s outstanding Committed Rate Loans for each day on which the Utilization Percentage exceeds 50%.  Such Utilization Fees shall be payable quarterly in arrears on the first Business Day of each of January, April, July and October of each year and on the Termination Date or such earlier date on which the Commitments shall terminate as provided herein, commencing in April, 2005.

(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 January 12, 2005 from J.P. Morgan Securities Inc. and JPMorgan Chase Bank, N.A. to the Borrowers.

(d)The Company and the Capital Corporation jointly and severally agree to pay to the Administrative Agent for its own account all other fees payable to the Administrative Agent as the Borrowers and the Administrative Agent shall mutually agree from time to time.

2.5Termination 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 Committed Rate Loans hereunder, together with accrued interest on the amount so prepaid to the date of such prepayment, to the extent, if any, that the aggregate outstanding principal amount of all Loans 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

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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.

2.6Optional 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 Working Days’ irrevocable notice, in the case of Eurodollar 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, 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.

2.7Minimum Amount of Certain Loans.  All borrowings, conversions, continuations, payments and, except as set forth in the penultimate sentence of subsection 2.6, 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 shall not be less than $10,000,000 or a whole multiple of $1,000,000 in excess thereof.

2.8Committed 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.

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(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)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) or  (b) 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, be converted to an ABR Loan at the end of the Interest Period applicable thereto.

(d)Interest shall be payable in arrears on each Interest Payment Date.

2.9Conversion 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 may only be made on the last day of an Interest Period with respect thereto.  Any such notice of conversion to Eurodollar 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.  All or any part of outstanding Eurodollar Loans and ABR Loans may be converted as provided herein, provided that no Loan may be converted into a Eurodollar Loan after the date that is one month prior to (i) in the case of a Loan made by an Objecting Bank, such Objecting Bank’s Commitment Expiration Date, and (ii) in the case of all Loans, the Termination Date.

(b)Any Eurodollar 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 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 may be continued as such after the date that is one month prior to (i) in the case of a Loan made by an Objecting Bank, such Objecting Bank’s Commitment Expiration Date, and (ii) in the case of all Loans, the Termination Date.  Upon receipt of any such notice, the Administrative Agent shall promptly notify each Bank thereof.

2.10Computation of Interest and Fees.  (a)  Facility fees, Utilization 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, 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.  Any change in the interest rate on a

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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.

2.11Inability 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 subsection 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 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.

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(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 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 Administrative 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 Administrative Agent, no further Index Rate Bid Loan Requests shall be submitted by either Borrower.

2.12Pro 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 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 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)(i)  Each borrowing by the Borrowers of Committed Rate Loans and each payment of principal in respect of Committed Rate Loans (subject to the provisions of subsection 2.20(e)) shall be made in accordance with the following requirements:

(A)All borrowings of Committed Rate Loans and all principal payments in respect of such Loans, shall be made pro rata according to the respective Commitments of the Banks.

(B)As provided in clause (b)(ii) below, if any principal payment is made in respect of any Loans (other than Negotiated Rate Loans) on any day on which principal amounts are due and owing in respect of any Loans (other than Negotiated Rate Loans), such principal payment shall be applied to the Banks pro rata according to the respective amounts of principal due and owing to the Banks under this Agreement.

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(ii)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 their 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 voluntary prepayments made when no principal payments are due and owing hereunder) by either Borrower on account of principal of and interest on the Loans (other than Negotiated Rate Loans) shall be made for the account of each Bank pro rata according to the respective amounts of principal and interest due and owing to such Bank under this Agreement.  Subject to the requirements of clause (i) of this paragraph (b), each payment 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, provided, however, that if any such payment is made after the Commitment Expiration Date for any Objecting Banks to which Committed Rate Loans remain outstanding, such Objecting Banks shall receive, pro rata, the portion of such payment that bears the same ratio to the aggregate outstanding principal amount of Committed Rate Loans owing to all Objecting Banks as the portion of such prepayment applied to the Committed Rate Loans of the other Banks bears to the aggregate outstanding principal amount of Committed Rate Loans owing to such other Banks, 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 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

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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 as 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 such 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 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.

2.13Requirements 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 any court of competent jurisdiction and/or (ii) compliance by such Bank with any requirement adopted after the date hereof 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 Eurodollar Loans or any reduction in any amount receivable by such Bank in respect of 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

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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 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 capital adequacy referred to in subsection 2.13(b).  A 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.  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 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

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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.  A 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 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 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, which certificate shall be binding and conclusive in the absence of demonstrable error, 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

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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.

2.14Indemnity.  Each Borrower agrees to indemnify each Bank and to hold each 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, conversion or continuance after such Borrower has given a notice in accordance with subsection 2.1, 2.2 or 2.9, (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 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.

2.15Non-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

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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.

2.16Extension 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, within 30 days of their receipt of an Extension Request, 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 one year, (ii) after giving effect to any extension, the Termination Date shall not be more than five years after the date such extension is approved by the Required Banks 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 (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 an 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 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

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Objecting Banks and the Administrative Agent, to cancel the whole or part of the Commitments of the Objecting Banks, provided that during the period from the Closing Date through February 14, 2006 and, commencing February 15, 2006, 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.

2.17Foreign 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 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

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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 duplicate in the form of Exhibit J or Exhibit K, as appropriate, and two duly completed copies of United States Internal Revenue Service Form W-8BEN or W-8ECI 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-8BEN, 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 W-8BEN or W-8ECI, 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 W-8BEN or W-8ECI 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-8BEN establishing exemption from United States backup withholding tax.  The Administrative Agent shall not be responsible for obtaining such documentation from any Bank other than JPMorgan Chase Bank, N.A.

(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.

2.18Confirmations.  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

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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.

2.19Replacement 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.

2.20Commitment Increases.  (a)  At any time after the Closing Date, provided that no Event of Default shall have occurred and be continuing, the Borrowers may request an increase of the aggregate Commitments by notice to the Administrative Agent in writing of the amount (the “Offered Increase Amount”) of such proposed increase (such notice, a “Commitment Increase Notice”).  Any such Commitment Increase Notice must offer each Bank the opportunity to subscribe for its pro rata share of the increased Commitments; provided, however, the Borrowers may, with the consent of the Administrative Agent (which consent shall not be unreasonably withheld or delayed), without offering to each Bank the opportunity to subscribe for its pro rata share of the increased Commitments, offer to any bank or other financial institution that is not an existing Bank the opportunity to provide a new Commitment pursuant to paragraph (b) below if the aggregate amount of all Commitments made hereunder pursuant to this proviso which will be in effect when such new Commitment becomes effective does not exceed $375,000,000 subject to subsection 2.20(f).  If any portion of the increased Commitments offered to the Banks as contemplated in the immediately preceding sentence is not subscribed for by the Banks, the Borrowers may, with the consent of the Administrative Agent as to any bank or financial institution that is not at such time a Bank (which consent shall not be unreasonably withheld or delayed), offer to any existing Bank or to one or more additional banks or financial institutions the opportunity to provide all or a portion of such unsubscribed portion of the increased Commitments pursuant to paragraph (b) below.

(b)Any additional bank or financial institution that the Borrowers select to offer the opportunity to provide any portion of the increased Commitments, and that elects to become a party to this Agreement and provide a Commitment, shall execute a New Bank Supplement with the Borrowers and the Administrative Agent, substantially in the form of Exhibit N (a “New Bank Supplement”), whereupon such bank or financial institution (a “New Bank”) shall become a Bank for all purposes and to the same extent as if originally a party hereto and shall be bound

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by and entitled to the benefits of this Agreement, and Schedule II shall be deemed to be amended to add the name and Commitment of such New Bank, provided that the Commitment of any such New Bank shall be in an amount not less than $10,000,000.

(c)Any Bank that accepts an offer to it by the Borrowers to increase its Commitment pursuant to this subsection 2.20 shall, in each case, execute a Commitment Increase Supplement with the Borrowers and the Administrative Agent, substantially in the form of Exhibit O (a “Commitment Increase Supplement”), whereupon such Bank (an “Increasing Bank”) shall be bound by and entitled to the benefits of this Agreement with respect to the full amount of its Commitment as so increased, and Schedule II shall be deemed to be amended to so increase the Commitment of such Bank.

(d)The effectiveness of any New Bank Supplement or Commitment Increase Supplement shall be contingent upon receipt by the Administrative Agent of such corporate resolutions of the Borrowers and legal opinions of counsel to the Borrowers as the Administrative Agent shall reasonably request with respect thereto.

(e)(i)  Except as otherwise provided in subparagraphs (ii) and (iii) of this paragraph (e), if any bank or financial institution becomes a New Bank pursuant to subsection 2.20(b) or any Bank’s Commitment is increased pursuant to subsection 2.20(c), additional Committed Rate Loans made on or after the date of the effectiveness thereof (the “Re-Allocation Date”) shall be made in accordance with the pro rata provisions of subsection 2.12(b) based on the Commitment Percentages in effect on and after such Re-Allocation Date (except to the extent that any such pro rata borrowings would result in any Bank making an aggregate principal amount of Committed Rate Loans in excess of its Commitment, in which case such excess amount will be allocated to, and made by, the relevant New Banks and Increasing Banks to the extent of, and in accordance with the pro rata provisions of subsection 2.12(b) based on, their respective Commitments).  On each Re-Allocation Date, the Administrative Agent shall deliver such amended Schedule II and a notice to each Bank of the adjusted Commitment Percentages after giving effect to any increase in the aggregate Commitments made pursuant to this subsection 2.20 on such Re-Allocation Date.

(ii)In the event that on any such Re-Allocation Date there is an unpaid principal amount of ABR Loans, the applicable Borrower shall make prepayments thereof and one or both Borrowers shall make borrowings of ABR Loans and/or Eurodollar Loans, as the applicable Borrower shall determine, so that, after giving effect thereto, the ABR Loans and Eurodollar Loans outstanding are held as nearly as may be in accordance with the pro rata provisions of subsection 2.12(b) based on such new Commitment Percentages.

(iii)In the event that on any such Re-Allocation Date there is an unpaid principal amount of Eurodollar Loans, such Eurodollar Loans shall remain outstanding with the respective holders thereof until the expiration of their respective Interest Periods (unless the applicable Borrower elects to prepay any thereof in accordance with the applicable provisions of this Agreement), and on the last day of the respective Interest Periods the applicable Borrower shall make prepayments thereof and one or both Borrowers shall make borrowings of ABR Loans and/or Eurodollar Loans so that, after giving effect thereto, the ABR Loans and Eurodollar

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Loans outstanding are held as nearly as may be in accordance with the pro rata provisions of subsection 2.12(b) based on such new Commitment Percentages.

(f)Notwithstanding anything to the contrary in this subsection 2.20, (i) in no event shall any transaction effected pursuant to this subsection 2.20 cause the aggregate Commitments to exceed $1,000,000,000, (ii) the Commitment of an individual Bank shall not, as a result of providing a new Commitment or of increasing its existing Commitment pursuant to this subsection 2.20, exceed 15% of the aggregate Commitments on any Re-Allocation Date and (iii) no Bank shall have any obligation to increase its Commitment unless it agrees to do so in its sole discretion.

(g)The Borrowers, at their own expense, shall execute and deliver to the Administrative Agent in exchange for the surrendered Notes of any Bank, if any, new Notes to the order of such Bank, if requested, in an amount equal to the Commitment of such Bank after giving effect to any increase in such Bank’s Commitment.

SECTION 3.REPRESENTATIONS AND WARRANTIES

Each Borrower hereby represents and warrants to the Administrative Agent and to each Bank that:

3.1Financial Condition.  The consolidated balance sheet of such Borrower and its consolidated Subsidiaries as at October 31, 2004 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 LLP, 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.  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).

3.2Corporate 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.

3.3Corporate 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

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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).

3.4No 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.

3.5No 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.

3.6Taxes.  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).

3.7Margin 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.

3.8Pari 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).

3.9No 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 of Default or similar event, has occurred and is continuing hereunder or under any material bond, debenture, note or other evidence of indebtedness (other than any bond, debenture, note or other evidence

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of Securitization Indebtedness, for which no representation is hereby given), or in any material mortgage, deed of trust, indenture or loan agreement (other than any mortgage, deed of trust or loan agreement in respect of Securitization Indebtedness, for which no representation is hereby given), of such Borrower.

3.10Use 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

4.1Conditions 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 James R. Jenkins, Esq., or his successor as General Counsel of the Company, or an associate general counsel of the Company, 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 LLP, 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)Termination of Existing Credit Agreements.  The Administrative Agent shall have received evidence satisfactory to it that the commitment of each financial institution to make loans pursuant to the $1,250,000,000 364-Day Credit Agreement, dated as of February 17, 2004, as supplemented, among the Borrowers, the lenders parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents, shall have

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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)The Administrative Agent shall have received concurrently with the execution of this Agreement, with a counterpart for each Bank, a certificate of a Responsible Officer for each Borrower dated the date of this Agreement certifying that since October 31, 2004, at the date of such certificate there has been no material adverse change in the business, property, operations, condition (financial or otherwise) or prospects of such Borrower and its Subsidiaries, taken as a whole.

(g)Fees.  The Administrative Agent shall have received, for the accounts of the Banks and the Administrative Agent, and each Agent shall have received, for the account of such 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.

(h)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.

4.2Conditions to All Loans.  The obligation of each Bank to make any Loan (which shall include the initial Loan to be made by it hereunder but shall not include any Loan made pursuant to subsection 2.20(e)(ii) or (iii) if, after the making of such Loan and the application of the proceeds thereof, the aggregate outstanding principal amount of the Committed Rate Loans would not be increased) to be made by it hereunder on any Borrowing Date 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.

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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 to it hereunder, any Loan of such Borrower remains outstanding and unpaid or any other amount is owing by such Borrower to any Bank or any Agent hereunder (unless the Majority Banks shall otherwise consent in writing):

5.1Financial 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 LLP 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 of such Borrower (subject to normal year-end audit adjustments);

all such financial statements to present fairly the consolidated financial condition and results of operations of such Borrower and its consolidated Subsidiaries 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).  Such Borrower shall be deemed to have furnished such financial statements to each Bank when they are filed with the Securities and Exchange Commission and posted on its EDGAR system.

5.2Certificates; Other Information.  Such Borrower shall furnish to the Administrative Agent, and the Administrative Agent shall make available to each Bank:

(a)within 10 days of the delivery of the financial statements referred to in subsections 5.1(a) and (b) above (or, if such financial statements are filed with the Securities and Exchange Commission and posted on its EDGAR system, within 10 days of the posting of such financial statements on the EDGAR system), a certificate of a Responsible Officer of such Borrower 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 materially 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.

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5.3Company 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 dated October 1, 1998 between the Company and JPMorgan Chase Bank, N.A. (as successor to JPMorgan Chase Bank, formerly known as The Chase Manhattan Bank (National Association)), as trustee.

5.4Capital 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 March 15, 1997, between the Capital Corporation and The Bank of New York, as trustee.

5.5Notice 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 of such Borrower 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).  Upon receipt of any such notice, the Administrative Agent shall promptly notify each Bank thereof.

5.6Ownership 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.

5.7Employee 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 any 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 Majority Banks shall otherwise consent in writing):

6.1Company 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

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delivered to the Administrative Agent, in form satisfactory to the Majority 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 of the Company 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.

6.2Limitation 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, 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:

(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;

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(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 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

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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

(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), 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 Company’s 8-1/2% Debentures Due 2022, 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

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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 of the Company stating that the covenant of the Company contained in paragraph (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.

6.3Limitations 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 the Company or such Restricted Subsidiary, as applicable) 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 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

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requiring the consent of the obligee to a date more than twelve months after the date of the creation of such Debt.

6.4Equipment Operations Debt.  Permit Equipment Operations Debt 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 exceed 65% of the sum, at the end of each such fiscal quarter, of (i) Equipment Operations Debt plus (ii) Total Stockholders’ Equity.

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 any 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 Majority Banks shall otherwise consent in writing):

7.1Fixed 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.

7.2Consolidated 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.

7.3Limitation 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 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

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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;

(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 Mortgage securing Securitization Indebtedness;

(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); and

(k)cash collateral provided to any counterparty of the Capital Corporation or to any Subsidiary of the Capital Corporation in connection with any Hedging Transaction.

7.4Consolidation; 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

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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 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 subsection 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 and any Securitization Indebtedness) in a principal amount in excess of $30,000,000 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

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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 for borrowed money 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 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 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)(1) if such event is any Event of Default

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specified in paragraph (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 (2) if such Event is an Event of Default specified in paragraph (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

9.1Appointment.  (a)  Each Bank hereby irrevocably designates and appoints JPMorgan Chase Bank, N.A. as the Administrative Agent of such Bank under this Agreement, and each Bank hereby irrevocably authorizes JPMorgan Chase Bank, N.A. 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.

(b)Notwithstanding anything to the contrary contained in this Agreement, the parties hereto hereby agree that neither the Syndication Agents, the Documentation Agents nor the Co-Documentation Agent shall have any rights, duties or responsibilities in such respective capacity nor shall any such Person have the authority to take any action hereunder in its capacity as such.

(c)Notwithstanding any provision to the contrary elsewhere in this Agreement, no Agent shall 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 any Agent.

9.2Delegation 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.

9.3Exculpatory Provisions.  Neither any 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,

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validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or for any failure of the Borrowers to perform their obligations hereunder.  No 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.

9.4Reliance 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 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 Majority 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 Majority Banks, the Required Banks or all of the Banks (if the consent of the Majority Banks, the Required Banks or all of the Banks, respectively, is required), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Banks.

9.5Notice of Default.  The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default 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, the Required Banks, or all 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.

9.6Non-Reliance on Agents and Other Banks.  Each Bank expressly acknowledges that neither any 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 hereafter 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

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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 any 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.

9.7Indemnification.  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 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.

9.8Agents 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 in its individual capacity.

9.9Successor 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 Majority 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 and the term “Administrative Agent” 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.

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SECTION 10.MISCELLANEOUS

10.1Amendments and Waivers.  With the written consent of the Majority 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 Majority 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 (other than in accordance with subsection 2.20), or amend, modify or waive the pro rata treatment and payment provisions of subsection 2.12(b), 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, if applicable, any other Agent affected by such amendment, modification or waiver, or (d) extend the Termination Date with respect to any Bank without the written consent of such Bank; and provided, further, however, that no such waiver, amendment, supplement or modification shall waive, amend, supplement or otherwise modify subsection 2.16 or Section 8(B)(2) without the written consent of the Required Banks.  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 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.

10.2Notices.  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

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deemed to have been duly given or made when delivered by hand, or when deposited in the mail, 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 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
	Attention: Treasurer
	One John Deere Place
	Moline, Illinois 61265
	Telephone: 309-765-4162
	Facsimile: 309-765-5021
The Capital Corporation:	John Deere Capital Corporation
	Attention: Manager
	First National Bank Building
	1 East First Street
	Reno, Nevada 89501
	Telephone: 775-786-5527
	Facsimile: 775-786-4145
with a copy to:	Deere & Company
	Attention: Treasurer
	One John Deere Place
	Moline, Illinois 61265
	Facsimile: 309-765-5021
The Administrative Agent:	JPMorgan Chase Bank, N.A.
	Attention: Randolph Cates
	270 Park Avenue
	New York, New York 10017
	Telephone: 212-270-8997
	Facsimile: 212-270-6637
with a copy to:	JPMorgan Chase Bank, N.A.
	Attention: Danette Espinoza
	1111 Fannin Street, 10th Floor
	Houston, Texas 77002
	Telephone: 713-750-2102
	Facsimile: 713-750-2782

provided that any notice, request or demand to or upon the Administrative Agent or the Banks pursuant to subsections 2.1, 2.2, 2.5, 2.6, 2.9, 2.11, 2.20 and 9.9 shall not be effective until received (including receipt by telephone if permitted hereby).

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10.3No Waiver; Cumulative Remedies.  No failure to exercise and no delay in exercising, on the part of either Borrower, the Administrative 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.

10.4Payment 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 and each 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 each Agent and one counsel representing the Banks.

(b)The Borrowers agree jointly and severally to indemnify and hold harmless each 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

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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 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.

10.5Successors and Assigns; Participations; Purchasing Banks.  (a)  This Agreement shall be binding upon and inure to the benefit of the Borrowers, the Banks, the Agents 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.

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(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 interests 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 and the Administrative 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; 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.  A 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 Loan assigned to a Loan Assignee will be modified without written consent of such Loan Assignee.

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(d)Any Bank may, in the ordinary course of its commercial banking business and in accordance with applicable law, sell to any Bank or any affiliate thereof and to one or more additional banks or other financial institutions (“Purchasing Banks”), all or portions (subject to the last sentence of this subsection 10.5(d)) of its rights (which rights may include such Bank’s rights in respect of Loans it has disbursed) and obligations under this Agreement, with the prior written consent (such consent not to be unreasonably withheld) of the Borrowers.  Such sale shall be made 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 with respect to the interest purchased 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 those 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 Commitments and 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 without the prior written consent of the Borrowers if, after giving effect to such sale or at the time of such sale, as the case may be, (i) the Commitment of either of the selling and purchasing institutions would be less than $5,000,000, (ii) the Purchasing Bank, together with all of its affiliates, would have a Commitment Percentage of more than 15% (or, if the Commitments shall have been terminated, such Purchasing Bank, together with all of its affiliates, would hold Loans aggregating to more than 15% in principal amount of all outstanding Loans), (iii) the Credit Rating of any Purchasing Bank shall be less than BBB+ from S&P or less than Baa1 from Moody’s or such Purchasing Bank shall have no Credit Rating or (iv) the Purchasing Bank is not a bank, insurance company, other financial institution or an Affiliate of any thereof that is engaged in making, purchasing, holding or investing in bank loans or similar extensions of credit in the ordinary course of its business.

(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

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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 $3,500, 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 $3,500 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 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

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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 W-8BEN or W-8ECI 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-8BEN, 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 W-8BEN or W-8ECI, 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 W-8BEN or W-8ECI 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-8BEN 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.

(j)The Borrowers, upon receipt of written notice from the relevant Bank, agree to issue Notes to any Bank requiring Notes to facilitate transactions of the type described in paragraph (i) above.

(k)Notwithstanding anything to the contrary contained herein, any Bank (a “Granting Bank”) may grant to a special purpose funding vehicle (an “SPC”), identified as such in writing from time to time by the Granting Bank to the Administrative Agent and the Company, the option to provide to the Borrowers all or any part of any Loan that such Granting Bank would otherwise be obligated to make to the Borrowers pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Loan, (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Bank shall be obligated to make such Loan pursuant to the terms hereof.  The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Bank to the same extent, and as if, such Loan were made by such Granting Bank.  Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Bank).  In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof.  In addition, notwithstanding anything to the contrary contained in this subsection 10.5(k) any SPC may (i) with notice to, but without the prior written consent of, the Company and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Granting Bank or to any financial institutions

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(consented to by the Company and Administrative Agent) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC.  This subsection 10.5(k) may not be amended without the written consent of the SPC.

10.6Adjustments.  Except as provided in subsection 2.12, if any 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 hereunder, 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, or facility fee hereunder, 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 such other 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.

10.7Confidentiality.  (a)  Each of the Agents 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 Agents 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 such Agent or Bank (as the case may be) is so

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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.

10.8Counterparts.  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.

10.9GOVERNING 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.

10.10Consent 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 Agents 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 any Agent or any Bank to bring proceedings against the Borrowers in the courts of any other jurisdiction.

10.11USA Patriot Act.

Each Bank hereby notifies the Borrowers that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrowers, which information includes the name and address of the Borrowers and other information that will allow such Bank to identify the Borrowers in accordance with the Act.

134

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written.

	DEERE & COMPANY
Attested by:
/s/ James H. Becht	By:	/s/ Michael J. Mack, Jr.
Title:		Title:
	JOHN DEERE CAPITAL CORPORATION
Attested by:
/s/ James H. Becht	By:	/s/ Michael J. Mack, Jr.
Title:		Title:

135

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent and as a Bank
By:	/s/ Randolph Cates
	Title:	RANDOLPH CATES
		VICE PRESIDENT

136

BANK OF AMERICA, N.A.,
as a Syndication Agent and as a Bank
By:	/s/ Jeffrey Armitage
	Title: Senior Vice President

137

CITIBANK, N.A.,
as a Documentation Agent
By:	/s/ [ILLEGIBLE]
	Title: Vice President
CITICORP USA
as a Bank
By:	/s/ John Coors
	Title: Director

138

CREDIT SUISSE FIRST BOSTON, acting through
its Cayman Islands Branch,
as a Documentation Agent and as a Bank
By:	/s/ Phillip Ho
	Title: Director
By:	/s/ Rianka Mohan
	Title: Associate

139

DEUTSCHE BANK AG NEW YORK BRANCH,
as a Syndication Agent and as a Bank
By:	/s/ Chris Howe
	Title:	Chris Howe
		Director
By:	/s/ Wolfgang Winter
	Title:	Wolfgang Winter
		Managing Director

140

MERRILL LYNCH BANK USA,
as Co-Documentation Agent and as a Bank
By:	/s/ Louis Alder
	Title: LOUIS ALDER, DIRECTOR

141

ROYAL BANK OF CANADA,
as a Bank
By:	/s/ Barton Lund
	Barton Lund
	Title:	Authorized Signatory

142

HSBC BANK USA, NATIONAL ASSOCIATION
as a Bank
By:	/s/ [ILLEGIBLE]
	Title: Managing Director

143

TORONTO DOMINION (TEXAS) LLC (as
successor in interest to Toronto Dominion (Texas),
Inc.), as a Bank
By:	/s/ Neva Nesbitt
	Title: Authorized Agent

144

BNP PARIBAS,
as a Bank
By:	/s/ Curt Price
	Title:	Managing Director
By:	/s/ Gaye Plunkett
	Title:	Vice President

145

MELLON BANK, N.A.,
as a Bank
By:	/s/ Robert J. Mitchell, Jr.
	Title: FIRST VICE PRESIDENT

146

BARCLAYS BANK PLC,
as a Bank
By:	/s/ Nicholas A. Bell
	Title:	NICHOLAS A. BELL
		DIRECTOR
	LOAN TRANSACTION MANAGEMENT

147

BANCO BILBAO VIZCAYA ARGENTARIA, S.A.,
as a Bank
By:	/s/ Philip A Paddack
	Title:	Philip A Paddack
		Senior Vice President
		and Branch Manager
By:	/s/ Anne-Maureen Sarfati
	Title:	Anne-Maureen Sarfati
		Vice President
		Global Corporate Banking

148

THE BANK OF NEW YORK,
as a Bank
By:	/s/ John M. Lokay
	Title:	JOHN M. LOKAY
		VICE PRESIDENT

149

WACHOVIA BANK, N.A.,
as a Bank
By:	/s/ Nathan Rantala
	Title:	Vice President

150

WELLS FARGO BANK, NATIONAL
ASSOCIATION,
as a Bank
By:	/s/ [ILLEGIBLE]
	Title:	V.P.
By:	/s/ [ILLEGIBLE]
	Title:	VP

151

BANCA NAZIONALE DEL LAVORO S.P.A.,
NEW YORK BRANCH,
as a Bank
By:	/s/ [ILLEGIBLE]
	Title:	Sr. Manager
By:	/s/ [ILLEGIBLE]
	Title:	SR. Manager

152

THE BANK OF TOKYO-MITSUBISHI, LTD.,
CHICAGO BRANCH,
as a Bank
By:	/s/ Shinichiro Munechika
	Title:	Shinichiro Munechika
		Deputy General Manager

153

FIFTH THIRD BANK,
as a Bank
By:	/s/ [ILLEGIBLE]
	Title:	Corporate Banking Officer

154

NORDEA BANK FINLAND PLC,
as a Bank
By:	/s/ Henrik M. Steffensen
	Title:	Henrik M. Steffensen
		First Vice President
By:	/s/ Gerald E. Chelius, Jr.
	Title:	Gerald E. Chelius, Jr.
		SVP Credit

155

U.S. BANK, NATIONAL ASSOCIATION,
as a Bank
By:	/s/ David Hirsch
	Title:	Vice President

156

WESTPAC BANKING CORPORATION,
as a Bank
By:	/s/ Robert F. Bosse
	Title:	Vice President

157

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] and [specify any other indebtedness of the Capital Corporation (including indebtedness of others guaranteed by the Capital Corporation)], provided that indebtedness of the Capital Corporation under the credit agreement to which these Terms of Subordination are attached may not be so specified, 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),

(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

158

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 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.

159

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.

160

SCHEDULE II

COMMITMENTS

Bank	Commitment
JPMorgan Chase Bank, N.A.	$	62,500,000
Bank of America, N.A.	$	53,750,000
Citicorp USA	$	53,750,000
Credit Suisse First Boston, acting through its Cayman Islands Branch	$	53,750,000
Deutsche Bank AG New York Branch	$	53,750,000
Merrill Lynch Bank USA	$	53,750,000
Royal Bank of Canada	$	43,750,000
HSBC Bank USA, National Association	$	37,500,000
Toronto Dominion (Texas) LLC (as successor in interest to Toronto Dominion (Texas), Inc.)	$	37,500,000
BNP Paribas	$	25,000,000
Mellon Bank, N.A.	$	25,000,000
Barclays Bank PLC	$	21,875,000
Banca Bilbao Vizcaya Argentaria, S.A.	$	18,750,000
The Bank of New York	$	18,750,000
Wachovia Bank, N.A.	$	18,750,000
Wells Fargo Bank, National Association	$	9,375,000
Banca Nazionale del Lavoro S.P.A., New York Branch	$	6,250,000
The Bank of Tokyo-Mitsubishi, Ltd., Chicago Branch	$	6,250,000
Fifth Third Bank	$	6,250,000
Nordea Bank Finland PLC	$	6,250,000
U.S. Bank, National Association	$	6,250,000
Westpac Banking Corporation	$	6,250,000
TOTAL	$	625,000,000

161

SCHEDULE III

ADDRESSES FOR NOTICES

JPMorgan Chase Bank, N.A.
Attention:  Randolph Cates
270 Park Avenue - 4th Floor
New York, New York 10017
Telephone:  (212) 270-8997
Facsimile:  (212) 270-6637

Bank of America, N.A.
Attention: Jeffrey Armitage
231 South LaSalle Street
Chicago, Illinois 60604
Telephone:  (312) 828-3898
Facsimile:  (312) 974-8811

Citicorp USA
Attention:  John Coons
233 South Wacker Drive
Sears Tower, Floor 86
Chicago, Illinois 60606
Telephone:  (312) 876-3270
Facsimile:  (312) 876-3290

Credit Suisse First Boston
Attention: Phillip Ho
Eleven Madison Avenue, 5^th Floor
New York, New York 10010
Telephone: (212) 325-5264
Facsimile:  (212) 325-8615

Deutsche Bank AG New York Branch
Attention:  Christopher Howe
60 Wall Street
New York, New York 10005
Telephone: (212) 250-8111
Facsimile: (212) 767-4420

162

Merrill Lynch Bank USA
Attention:  Dave Millett
15 W. South Temple, Suite 300
Salt Lake City, Utah 84101
Telephone: (801) 526-8312
Facsimile: (801) 933-8641

Royal Bank of Canada

Attention: Loans Administration
New York Branch
One Liberty Plaza, 3rd Floor
New York, New York 10006-1404
Telephone:  (212) 428-6338
Facsimile:  (212) 428-2372

with a copy to:

Attention: Barton Lund

One Liberty Plaza, 4^th Floor

New York, New York 10006-1404

Telephone:  (212) 428-6509

Facsimile:  (212) 428-6201

HSBC Bank USA, National Association
Attention: Sarah McClintock
452 Fifth Avenue, 5^th Floor
New York, New York 10018
Telephone: (212) 525-2485
Facsimile: (212) 525-2479

Toronto Dominion (Texas) LLC (as successor in interest to Toronto Dominion (Texas), Inc.)
Attention: Nicholas Iwanowycz
31 West 52^nd Street
New York, New York 10019
Telephone: (212) 827-7558
Facsimile: (212) 827-7232

BNP Paribas
Attention:  Frederick H. Moryl, Jr.
209 South LaSalle Street, Suite 500
Chicago, Illinois 60604
Telephone: (312) 977-2211
Facsimile: (312) 977-1380

163

Mellon Bank, N.A.
Attention: Richard Bouchard
522 William Penn Place
Room 1203
Pittsburgh, Pennsylvania 15259-003
Telephone: (412) 234-5767
Facsimile: (412) 209-6124

Banco Bilbao Vizcaya Argentaria, S.A.
Attention: Jay Levit
1345 Avenue of the Americas, 45^th Floor
New York, New York 10105
Telephone: (212) 728-1590
Facsimile: (212) 333-2904

The Bank of New York
Attention: John Lokay
One Wall Street, 21st Floor
New York, New York 10286
Telephone: (212) 635-1172
Facsimile: (212) 635-1970

Barclays Bank PLC
Attention: John Giannone
200 Park Avenue
New York, New York 10166
Telephone: (212) 412-3276
Facsimile: (212) 412-7511

Wachovia Bank, N.A.
Attention: Nathan Rantala
Mail Code: NC0760
301 S. College Street
Charlotte, North Carolina 28288
Telephone: (704) 383-0684
Facsimile:  (704) 383-1625

Banca Nazionale del Lavoro S.P.A., New York Branch
Attention: Francesco Di Mario
25 West 51^st Street
New York, New York 10019
Telephone: (212) 314-0239
Facsimile: (212) 765-2978

164

The Bank of Tokyo-Mitsubishi, Ltd., Chicago Branch
Attention: Diane Tkach
227 W. Monroe Street Suite 2300
Chicago, Illinois 60606
Telephone: (312) 696-4663
Facsimile: (312) 696-4535

Fifth Third Bank
Attention: Mike Mendenhall
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Telephone: (513) 534-6915
Facsimile: (513) 534-5947

Nordea Bank Finland Plc
Attention: Henrik Steffensen
437 Madison Avenue
New York, New York 10022
Telephone: (212) 318-9303
Facsimile: (212) 318-9318

U.S. Bank, National Association
Attention:  Barry P. Litwin
209 S. LaSalle Street
Chicago, Illinois 60604
Telephone: (312) 325-8888
Facsimile: (312) 325-8889

Wells Fargo Bank, National Association
Attention: Melissa Nachman
230 W. Monroe Street, Suite 2900
Chicago, Illinois 60606
Telephone: (312) 553-2353
Facsimile: (312) 553-4783

Westpac Banking Corporation
Attention: Tony Smith
575 Fifth Avenue, 39^th Floor
New York, New York 10017
Telephone: (212) 551-1814
Facsimile: (212) 551-1995

165

EXHIBIT A

[FORM OF BORROWING NOTICE]

                    , 200   

JPMorgan Chase Bank, N.A.,

as Administrative Agent under the

Credit Agreement referred to below

1111 Fannin Street, 10^th Floor

Houston, Texas 77002

Attention: Danette Espinoza

Ladies and Gentlemen:

Pursuant to subsection 2.1(c) of the $625,000,000 Five-Year Credit Agreement, dated as of February 15, 2005, among DEERE & COMPANY, JOHN DEERE CAPITAL CORPORATION, the Banks parties thereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent, CITIBANK, N.A. and CREDIT SUISSE FIRST BOSTON, as Documentation Agents, MERRILL LYNCH BANK USA, as Co-Documentation Agent, and BANK OF AMERICA, N.A. and DEUTSCHE BANK AG NEW YORK BRANCH, as Syndication Agents (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                   , 200    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 ABR Loans	$
(4)	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	$
	(v) six months	$
Total Eurodollar Loans		$

166

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:

167

EXHIBIT B

[FORM OF BID LOAN REQUEST]

                    , 200   

JPMorgan Chase Bank, N.A.,
as Administrative Agent under the Credit
Agreement referred to below
1111 Fannin Street, 10^th Floor
Houston, Texas 77002
Attention:  Danette Espinoza

Ladies and Gentlemen:

Reference is made to the $625,000,000 Five-Year Credit Agreement, dated as of February 15, 2005, among DEERE & COMPANY, JOHN DEERE CAPITAL CORPORATION, the Banks parties thereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent, CITIBANK, N.A. and CREDIT SUISSE FIRST BOSTON, as Documentation Agents, MERRILL LYNCH BANK USA, as Co-Documentation Agent, and BANK OF AMERICA, N.A. and DEUTSCHE BANK AG NEW YORK BRANCH, as Syndication Agents (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 Period
Interest Payment Dates
Interest Rate Basis	360 day year

168

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.

169

EXHIBIT C

[FORM OF BID LOAN OFFER]

                    , 200   

JPMorgan Chase Bank, N.A., as Administrative

Agent under the Credit Agreement referred to below

1111 Fannin Street, 10^th Floor

Houston, Texas 77002

Attention: Danette Espinoza

Ladies and Gentlemen:

Reference is made to the $625,000,000 Five-Year Credit Agreement, dated as of February 15, 2005, among DEERE & COMPANY, JOHN DEERE CAPITAL CORPORATION, the Banks parties thereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent, CITIBANK, N.A. and CREDIT SUISSE FIRST BOSTON, as Documentation Agents, MERRILL LYNCH BANK USA, as Co-Documentation Agent, and BANK OF AMERICA, N.A. and DEUTSCHE BANK AG NEW YORK BRANCH, as Syndication Agents (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:                                , 200   

Aggregate Maximum Amount:  $                 

170

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.

171

EXHIBIT D

[FORM OF BID LOAN CONFIRMATION]

                    , 200   

JPMorgan Chase Bank, N.A., as Administrative Agent

under the Credit Agreement referred to below

1111 Fannin Street, 10^th Floor

Houston, Texas 77002

Attention: Danette Espinoza

Ladies and Gentlemen:

Reference is made to the $625,000,000 Five-Year Credit Agreement, dated as of February 15, 2005, among DEERE & COMPANY, JOHN DEERE CAPITAL CORPORATION, the Banks parties thereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent, CITIBANK, N.A. and CREDIT SUISSE FIRST BOSTON, as Documentation Agents, MERRILL LYNCH BANK USA, as Co-Documentation Agent, and BANK OF AMERICA, N.A. and DEUTSCHE BANK AG NEW YORK BRANCH, as Syndication Agents (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                     , 200    [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 Administrative Agent with accepted amount entered by the Borrower to right of each Bid Loan Offer].

172

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 JPMORGAN CHASE BANK, N.A., 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 $625,000,000 Five-Year Credit Agreement, dated as of February 15, 2005 among DEERE & COMPANY (the “Company”), JOHN DEERE CAPITAL CORPORATION (the “Capital Corporation”), the Banks parties thereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent, CITIBANK, N.A. and CREDIT SUISSE FIRST BOSTON, as Documentation Agents, MERRILL LYNCH BANK USA, as Co-Documentation, and BANK OF AMERICA, N.A. and DEUTSCHE BANK AG NEW YORK BRANCH, as Syndication Agents (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 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.

(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

173

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 any other instrument or document furnished pursuant thereto 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 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 thereto; (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 of the Credit Agreement (unless financial statements referred to in subsection 5.1(a) of the Credit Agreement have become available), the financial statements delivered pursuant to subsection 5.1 of the Credit Agreement, 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.  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

174

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 W-8BEN or U.S. Internal Revenue Service Form W-8ECI (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 U.S. Internal Revenue Service Form W-8BEN (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 and [the Company] [the Capital Corporation]) to provide the Assignor Bank, the Administrative Agent and [the Company] [the Capital Corporation] a new Form W-8BEN or Form W-8ECI 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.

175

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:	[ 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:
		, as
Loan Assignee
By:
	Title:

176

ACCEPTED FOR RECORDATION
IN REGISTER:
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
By:
	Title:

177

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 JPMORGAN CHASE BANK, N.A., 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 $625,000,000 Five-Year Credit Agreement, dated as of February 15, 2005, among the Company, the Capital Corporation, the Transferor Bank and the other Banks party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, and Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents (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 with respect to the interest purchased hereunder.

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 Commitment of such Transferor Bank and/or 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

178

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 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

179

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 any other instrument or document furnished pursuant thereto 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 thereto; (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 of the Credit Agreement, the financial statements delivered pursuant to subsection 5.1 of the Credit Agreement, 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 with respect to the interest purchased hereunder.

9.  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 W-8BEN or U.S. Internal Revenue Service Form W-8ECI (wherein the Purchasing Bank claims entitlement to complete exemption from U.S. federal withholding tax on all interest payments in respect of the Loans), (iii) will furnish to the Transferor Bank, the Administrative Agent and the Borrowers, on or prior to the Transfer Effective Date U.S. Internal Revenue Service Form W-8BEN (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

180

Transferor Bank, the Administrative Agent and the Borrowers), to provide the Transferor Bank, the Administrative Agent and the Borrowers a new Form W-8BEN or Form W-8ECI 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 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.  After giving effect to the transfers contemplated hereby, Schedule II to the Credit Agreement shall be deemed to be amended by Schedule II hereto to show the revised Commitment of the Transferor Bank and 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.

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SCHEDULE I
TO
COMMITMENT
TRANSFER
SUPPLEMENT

COMPLETION OF INFORMATION AND
SIGNATURES FOR COMMITMENT
TRANSFER SUPPLEMENT

Item 1	(Date of Commitment) Transfer Supplement:	[Insert date of Commitment 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 Date):	[Insert Transfer Effective 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:

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CONSENTED TO AND ACKNOWLEDGED:
[DEERE & COMPANY
By:
	Title:
JOHN DEERE CAPITAL CORPORATION
By:
	Title:]*
ACCEPTED FOR RECORDATION
IN REGISTER:
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
By:
	Title:

*To the extent such consent is required by Section 10.5 of the Credit Agreement.

183

SCHEDULE II
TO COMMITMENT
TRANSFER
 SUPPLEMENT

LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AMOUNTS

[Name of Transferor Bank]	Revised Commitment Amount:	$
	Revised Commitment Percentage:
[Name of Purchasing Bank]	New Commitment Amount:	$
Address for Notices:	New Commitment Percentage:
Attn:
Telephone:
Facsimile:
[Name of Purchasing Bank]	New Commitment Amount:	$
Address for Notices:	New Commitment Percentage:
Attn:
Telephone:
Facsimile:

184

EXHIBIT G

[FORM OF OPINION OF GENERAL COUNSEL TO THE COMPANY]

[Closing Date]

To each of the Banks parties to
the Credit Agreement referred to
below and to JPMorgan Chase
Bank, N.A., as Administrative Agent

Deere & Company and
John Deere Capital Corporation

Ladies and Gentlemen:

This opinion is furnished to you pursuant to subsection 4.1(c) of the $625,000,000 Five-Year Credit Agreement dated as of February 15, 2005 (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, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, and Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents.  Terms defined in the Credit Agreement are used herein as therein defined.

I am General Counsel of the Company and have acted as counsel for the Capital Corporation in this matter.  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 or caused to 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

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.

185

In addition, I have reviewed or caused to have reviewed such of the corporate proceedings of the Borrowers, and have examined or caused to 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 consider necessary as a basis for the opinions hereinafter expressed.  I have assumed the due execution and delivery, pursuant to due authorization, of the Credit Agreement by the Banks, the Administrative Agent, the Syndication Agents, the Documentation Agents and the Co-Documentation Agent, 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 the State of Michigan 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 and the State of Michigan, 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 do not (i) 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.

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.

186

Very truly yours,

James R. Jenkins

187

EXHIBIT H

[FORM OF OPINION OF SPECIAL NEW YORK COUNSEL
TO THE BORROWERS]

[Closing Date]

To each of the Banks parties to the
Credit Agreement referred to below and
to JPMorgan Chase Bank, N.A., as
Administrative Agent

Deere & Company
John Deere Capital Corporation

Ladies and Gentlemen:

We have acted as New York counsel to Deere & Company, a Delaware corporation (the “Company”) and John Deere Capital Corporation, a Delaware corporation (the “Capital Corporation”, the Company and the Capital Corporation being referred to herein as the “Borrowers”), in connection with the $625,000,000 Five-Year Credit Agreement, dated as of February 15, 2005 (the “Credit Agreement”), among the Banks parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, and Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents.  Unless otherwise defined herein, terms defined in the Credit Agreement are used herein as therein defined.

In that connection, we have reviewed an execution copy of the Credit Agreement.  We have also reviewed originals or copies of such other records of the Borrowers, certificates of officers of the Borrowers and agreements and other documents, as we have deemed necessary as a basis for the opinions expressed below.

In our review of the Credit Agreement and other documents, we have assumed:

(A)The genuineness of all signatures.

(B)The authenticity of the originals of the documents submitted to us.

(C)The conformity to authentic originals of any documents submitted to us as copies.

(D)That the Credit Agreement is the legal, valid and binding obligation of each party thereto, other than the Borrowers, enforceable against each such party in accordance with its terms.

(E)That:

188

(1)Each Borrower is an entity duly organized and validly existing under the laws of the jurisdiction of its organization.

(2)Each Borrower has full power to execute, deliver and perform, and has duly executed and delivered, the Credit Agreement.

(3)The execution, delivery and performance by each Borrower of the Credit Agreement have been duly authorized by all necessary action (corporate or otherwise) and do not:

(a)contravene its  certificate or articles of incorporation, by-laws or other organizational documents;

(b)except with respect to Generally Applicable Law, violate any law, rule or regulation applicable to it; or

(c)result in any conflict with or breach of any agreement or document binding on it of which any addressee hereof has knowledge, has received notice or has reason to know.

(4)Except with respect to Generally Applicable Law, no authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or (to the extent the same is required under any agreement or document binding on it of which an addressee hereof has knowledge, has received notice or has reason to know) any other third party is required for the due execution, delivery or performance by either Borrower of the Credit Agreement or, if any such authorization, approval, action, notice or filing is required, it has been duly obtained, taken, given or made and is in full force and effect.

We have not independently established the validity of the foregoing assumptions.

“Generally Applicable Law” means the federal law of the United States of America, and the law of the State of New York (including the rules or regulations promulgated thereunder or pursuant thereto) that a New York lawyer exercising customary professional diligence would reasonably be expected to recognize as being applicable to either Borrower or the Credit Agreement.  Without limiting the generality of the foregoing definition of Generally Applicable Law, the term “Generally Applicable Law” does not include any law, rule or regulation that is applicable to a Borrower or the Credit Agreement solely because such law, rule or regulation is part of a regulatory regime applicable to the specific assets or business of any party to the Credit Agreement or any of its affiliates due to the specific assets or business of such party or such affiliate.

Based upon the foregoing and upon such other investigation as we have deemed necessary and subject to the qualifications set forth below, we are of the opinion that the Credit Agreement is the legal, valid and binding obligation of each Borrower, enforceable against each Borrower in accordance with its terms.

189

Our opinion expressed above is subject to the following qualifications:

(a)Our opinion is subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally (including without limitation all laws relating to fraudulent transfers).

(b)Our opinion is subject to the effect of general principles of equity, including without limitation concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law).

(c)We express no opinion with respect to the enforceability of indemnification provisions, or of release or exculpation provisions, contained in the Credit Agreement to the extent that enforcement thereof is contrary to public policy regarding the indemnification against or release or exculpation of criminal violations, intentional harm or violations of securities laws.

(d)Our opinion with respect to the provisions of the Credit Agreement whereby the parties submit to the jurisdiction of the courts of the United States of America located in the State of New York, is subject to the limitations of 28 U.S.C. §§ 1331 and 1332 on subject matter jurisdiction of the Federal courts.

(e)In connection with the provisions of the Credit Agreement which relate to forum selection of the courts of the United States located in the State of New York (including, without limitation, any waiver of any objection to venue or any objection that a court is an inconvenient forum), we note such court’s discretion to transfer an action from one Federal court to another under 28 U.S.C. § 1404(a) or to dismiss an action under the common law doctrine of forum non conveniens.

(f)We express no opinion with respect to any Bid Loan or Negotiated Rate Loan made in an amount of less than $2,500,000 that bears interest at a rate greater than 25% per annum.

(g)Our opinion is limited to Generally Applicable Law.

A copy of this opinion letter may be delivered by any of you to any person that becomes a Bank in accordance with the provisions of the Credit Agreement.  Any such person may rely on the opinions expressed above as if this opinion letter were addressed and delivered to such person on the date hereof.

This opinion letter is rendered to you in connection with the transactions contemplated by the Credit Agreement.  This opinion letter may not be relied upon by you or any person entitled to rely on this opinion pursuant to the preceding paragraph for any other purpose without our prior written consent.

This opinion letter speaks only as of the date hereof.  We expressly disclaim any responsibility to advise you of any development or circumstance of any kind, including any change of law or fact, that may occur after the date of this opinion letter even though such

190

development or circumstance may affect the legal analysis, a legal conclusion or any other matter set forth in or relating to this opinion letter.

Very truly yours,

SHEARMAN & STERLING LLP

191

EXHIBIT I

[FORM OF EXTENSION REQUEST]

                                  , 200  

JPMorgan Chase Bank, N.A.,
as Administrative Agent
1111 Fannin, 10^th Floor
Houston, Texas 77002
Attention:  Danette Espinoza

Ladies and Gentlemen:

Reference is made to the $625,000,000 Five-Year Credit Agreement, dated as of February 15, 2005, among Deere & Company, John Deere Capital Corporation, the Banks parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, and Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents (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.

192

This is an Extension Request pursuant to subsection 2.16 of the Credit Agreement requesting an extension of the Termination Date to [INSERT 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:

193

EXHIBIT J

[FORM OF W-8BEN TAX LETTER]

[To be sent in DUPLICATE and accompanied
by TWO executed copies of Form W-8BEN of
the Internal Revenue Service]

[Bank’s Letterhead]

                            , 200  

Deere & Company
One John Deere Place
Moline, Illinois  61265
Attention:  Treasurer

John Deere Capital Corporation
First National Bank Building
1 East First Street
Reno, Nevada  89501
Attention:  Manager

Re:$625,000,000 Five-Year Credit Agreement
dated as of February 15, 2005 with Deere &
Company and John Deere Capital Corporation

Ladies and Gentlemen:

In connection with the $625,000,000 Five-Year Credit Agreement, dated as of February 15, 2005, among Deere & Company, John Deere Capital Corporation, the Banks parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, and Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents, 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 [                              ].

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.

194

We enclose herewith two copies of Form W-8BEN of the U.S. Internal Revenue Service.

Yours faithfully,
[NAME OF BANK]
By:
	Title:

cc:JPMorgan Chase Bank, N.A., as Administrative Agent

195

EXHIBIT K

[FORM OF W-8ECI TAX LETTER]

[To be sent in DUPLICATE and accompanied
by TWO executed copies of Form W-8ECI of
the Internal Revenue Service]

[Bank’s Letterhead]

                       , 200  

Deere & Company
One John Deere Place
Moline, Illinois  61265
Attention:  Treasurer

John Deere Capital Corporation
First National Bank Building
1 East First Street
Reno, Nevada  89501
Attention:  Manager

Re:$625,000,000 Five-Year Credit Agreement
dated as of February 15, 2005 with Deere &
Company and John Deere Capital Corporation

Ladies and Gentlemen:

In connection with the above $625,000,000 Five-Year Credit Agreement, dated as of February 15, 2005, among Deere & Company, John Deere Capital Corporation, the Banks parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, and Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents, 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.

196

We enclose herewith two copies of Form W-8ECI of the U.S. Internal Revenue Service.

Yours faithfully,
[NAME OF BANK]
By:
	Title:

cc:JPMorgan Chase Bank, N.A., as Administrative Agent

197

EXHIBIT L

[FORM OF AGREEMENT]

THIS AGREEMENT, dated as of           , 200   (“Agreement”), among Deere & Company (the “Company”), John Deere Capital Corporation (the “Capital Corporation”),                   (“New Bank”) and JPMorgan Chase Bank, N.A., 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”), JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, and Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents are parties to the $625,000,000 Five-Year Credit Agreement, dated as of February 15, 2005 (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:

Principal Amount		Last day of Interest Period
I	Unused Portion	N/A
II	Committed Rate Loans
Eurodollar Loans
	1
	2
	3

198

	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 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

*As appropriate for New or Existing Banks.

199

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 (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, 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, bears to all of the outstanding Eurodollar Loans, 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

**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.

*To be completed upon agreement of Borrowers and New Bank.

200

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.

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 [W-8BEN] [W-8ECI] [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-8BEN] [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 [W-8BEN] and Form [W-8ECI], 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 [W-8BEN] [W-8ECI] 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-8BEN] 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.

201

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:
JPMORGAN CHASE BANK, N.A., as
Administrative Agent
By:
	Title:

202

EXHIBIT M

[FORM OF BID LOAN OR NEGOTIATED RATE LOAN NOTE]

PROMISSORY NOTE

$	New York, New York
	, 200

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 [JPMorgan Chase Bank, N.A. 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 $625,000,000 Five-Year Credit Agreement, dated as of February 15, 2005 (the “Credit Agreement”), among the Borrower, [Deere & Company] [John Deere Capital Corporation], the Bank, the other financial institutions parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, and Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents.  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.

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:

203

EXHIBIT N

FORM OF
NEW BANK SUPPLEMENT

SUPPLEMENT, dated                 , to the $625,000,000 Five-Year Credit Agreement (as in effect on the date hereof, the “Credit Agreement”) dated as of February 15, 2005, among Deere & Company (the “Company”), John Deere Capital Corporation, the banks and other financial institutions from time to time party thereto (each a “Bank,” and together, the “Banks”), JPMorgan Chase Bank, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”) for the Banks, Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, and Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents.  Unless the context otherwise requires, all capitalized terms used herein without definition shall have the meanings ascribed to them in the Credit Agreement.

W I T N E S S E T H:

WHEREAS, the Credit Agreement provides in subsection 2.20 thereof that any bank or financial institution, although not originally a party thereto, may become a party to the Credit Agreement in accordance with the terms thereof by executing and delivering to the Borrowers and the Administrative Agent a supplement to the Credit Agreement in substantially the form of this Supplement; and

WHEREAS, the undersigned was not an original party to the Credit Agreement but now desires to become a party thereto;

NOW, THEREFORE, the undersigned hereby agrees as follows:

The undersigned agrees to be bound by the provisions of the Credit Agreement and agrees that it shall, on the date this Supplement is accepted by the Borrowers and the Administrative Agent, become a Bank for all purposes of the Credit Agreement to the same extent as if originally a party thereto, with a Commitment of $                                .

The undersigned (a) represents and warrants that it is legally authorized to enter into this Supplement; (b) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements delivered pursuant to Section 5.1 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Supplement; (c) agrees that it has made and will, independently and without reliance upon any 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 decisions in taking or not taking action under the Credit Agreement or any instrument or document furnished pursuant hereto or thereto; (d) appoints and authorizes the Administrative Agent to take such action as administrative agent on its behalf and to exercise such powers and discretion under the Credit Agreement or any instrument or document furnished pursuant hereto or thereto as are delegated to the Administrative Agent by the terms thereof, together with such powers as are incidental thereto; and (e) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit

204

Agreement are required to be performed by it as a Bank including, without limitation, its obligation pursuant to subsection 2.17(c) of the Credit Agreement.

The undersigned’s address for notices for the purposes of the Credit Agreement is as follows:

Attention:

Fax:

205

IN WITNESS WHEREOF, the undersigned has caused this Supplement to be executed and delivered by a duly authorized officer on the date first above written.

				[NAME OF NEW BANK]
				By:
					Title:
Accepted this                day of
, 200
DEERE & COMPANY
By:
			Title:
JOHN DEERE CAPITAL CORPORATION
By:
		Title:
Accepted this             day of
, 200
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
By:
	Title:

206

EXHIBIT O

FORM OF
COMMITMENT INCREASE SUPPLEMENT

SUPPLEMENT, dated                    200   , to the $625,000,000 Five-Year Credit Agreement (as in effect on the date hereof, the “Credit Agreement”) dated as of February 15, 2005, among Deere & Company (the “Company”), John Deere Capital Corporation, the banks and other financial institutions from time to time party thereto (each a “Bank,” and together, the “Banks”), JPMorgan Chase Bank, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”), Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, and Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents.  Unless the context otherwise requires, all capitalized terms used herein without definition shall have the meanings ascribed to them in the Credit Agreement.

W I T N E S S E T H:

WHEREAS, pursuant to the provisions of subsection 2.20 of the Credit Agreement, the undersigned may increase the amount of its Commitment in accordance with the terms thereof by executing and delivering to the Borrowers and the Administrative Agent a supplement to the Credit Agreement in substantially the form of this Supplement; and

WHEREAS, the undersigned now desires to increase the amount of its Commitment under the Credit Agreement;

NOW THEREFORE, the undersigned hereby agrees as follows:

1.  The undersigned agrees, subject to the terms and conditions of the Credit Agreement, that on the date this Supplement is accepted by the Borrowers and the Administrative Agent it shall have its Commitment increased by $                        , thereby making the amount of its Commitment $                               .

IN WITNESS WHEREOF, the undersigned has caused this Supplement to be executed and delivered by a duly authorized officer on the date first above written.

[NAME OF BANK]
By:
	Title:

207

Accepted this            day of
, 200
DEERE & COMPANY
By:
	Title:
JOHN DEERE CAPITAL CORPORATION
By:
	Title:
Accepted this            day of
, 200
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
By:
	Title:

208

EX-4.2

Exhibit 4.2

DEERE & COMPANY

JOHN DEERE CAPITAL CORPORATION

$625,000,000

364-DAY

CREDIT AGREEMENT

Dated as of February 15, 2005

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

CITIBANK, N.A.,

as a Documentation Agent

CREDIT SUISSE FIRST BOSTON,

as a Documentation Agent

MERRILL LYNCH BANK USA,
as Co-Documentation Agent

BANK OF AMERICA, N.A.,

as a Syndication Agent

DEUTSCHE BANK AG NEW YORK BRANCH,

as a Syndication Agent

J.P. MORGAN SECURITIES INC.,

as Lead Arranger and Bookrunner

209

TABLE OF CONTENTS

SECTION 1	DEFINITIONS
1.1.	Defined Terms
1.2.	Other Definitional Provisions
SECTION 2	THE COMMITTED RATE LOANS; THE BID LOANS; THE NEGOTIATED RATE LOANS; AMOUNT AND TERMS
2.1.	The Committed Rate Loans
2.2.	The Bid Loans; the Negotiated Rate Loans
2.3.	Loan Accounts
2.4.	Fees
2.5.	Termination or Reduction of Commitments; Cancellation of Capital Corporation as Borrower
2.6.	Optional Prepayments
2.7.	Minimum Amount of Certain Loans
2.8.	Committed Rate Loan Interest Rate and Payment Dates
2.9.	Conversion and Continuation Options
2.10.	Computation of Interest and Fees
2.11.	Inability to Determine Interest Rate
2.12.	Pro Rata Treatment and Payments
2.13.	Requirements of Law
2.14.	Indemnity
2.15.	Non-Receipt of Funds by the Administrative Agent
2.16.	Extension of Termination Date
2.17.	Foreign Taxes
2.18.	Confirmations
2.19.	Replacement of Cancelled Banks
2.20.	Commitment Increases
SECTION 3	REPRESENTATIONS AND WARRANTIES
3.1.	Financial Condition
3.2.	Corporate Existence
3.3.	Corporate Power; Authorization; Enforceable Obligations
3.4.	No Legal Bar
3.5.	No Material Litigation
3.6.	Taxes
3.7.	Margin Regulations
3.8.	Pari Passu Ranking
3.9.	No Defaults
3.10.	Use of Proceeds
SECTION 4	CONDITIONS PRECEDENT
4.1.	Conditions to Initial Loan
4.2.	Conditions to All Loans

210

SECTION 5	AFFIRMATIVE COVENANTS
5.1.	Financial Statements
5.2.	Certificates; Other Information
5.3.	Company Indenture Documents
5.4.	Capital Corporation Indenture Documents
5.5.	Notice of Default
5.6.	Ownership of Capital Corporation Stock
5.7.	Employee Benefit Plans
SECTION 6	NEGATIVE COVENANTS OF THE COMPANY
6.1.	Company May Consolidate, etc., Only on Certain Terms
6.2.	Limitation on Liens
6.3.	Limitations on Sale and Lease-back Transactions
6.4.	Equipment Operations Debt
SECTION 7	NEGATIVE COVENANTS OF THE CAPITAL CORPORATION
7.1.	Fixed Charges Ratio
7.2.	Consolidated Senior Debt to Consolidated Capital Base
7.3.	Limitation on Liens
7.4.	Consolidation; Merger
SECTION 8	EVENTS OF DEFAULT
SECTION 9	THE AGENTS
9.1.	Appointment
9.2.	Delegation of Duties
9.3.	Exculpatory Provisions
9.4.	Reliance by Agents
9.5.	Notice of Default
9.6.	Non-Reliance on Agents and Other Banks
9.7.	Indemnification
9.8.	Agents in their Individual Capacities
9.9.	Successor Agents
SECTION 10	MISCELLANEOUS
10.1.	Amendments and Waivers
10.2.	Notices
10.3.	No Waiver; Cumulative Remedies
10.4.	Payment of Expenses and Taxes
10.5.	Successors and Assigns; Participations; Purchasing Banks
10.6.	Adjustments
10.7.	Confidentiality
10.8.	Counterparts
10.9.	GOVERNING LAW
10.10.	Consent to Jurisdiction and Service of Process
10.11.	USA PATRIOT Act

211

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 Company
Exhibit H	Form of Opinion of Special New York Counsel to the Borrowers
Exhibit I	Form of Extension Request
Exhibit J	Form of Form W-8BEN Tax Letter
Exhibit K	Form of Form W-8ECI Tax Letter
Exhibit L	Form of Agreement
Exhibit M	Form of Promissory Note
Exhibit N	Form of New Bank Supplement
Exhibit O	Form of Commitment Increase Supplement

212

CREDIT AGREEMENT, dated as of February 15, 2005, among (a) DEERE & COMPANY, a Delaware corporation (the “Company”), (b) JOHN DEERE CAPITAL CORPORATION, a Delaware corporation (the “Capital Corporation”), (c) the several financial institutions parties hereto (collectively, the “Banks”, and individually, a “Bank”), (d) JPMORGAN CHASE BANK, N.A., as administrative agent hereunder (in such capacity, together with its successors and permitted assigns, the “Administrative Agent”), (e) CITIBANK, N.A. and CREDIT SUISSE FIRST BOSTON, as documentation agents hereunder (in such capacity, the “Documentation Agents”), (f) MERRILL LYNCH BANK USA, as co-documentation agent hereunder (in such capacity, the “Co-Documentation Agent”), and (g) BANK OF AMERICA, N.A. and DEUTSCHE BANK AG NEW YORK BRANCH, as syndication agents hereunder (in such capacity, the “Syndication Agents”).

The parties hereto hereby agree as follows:

SECTION 1DEFINITIONS

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 JPMorgan Chase Bank, N.A. for such date as its prime rate in effect at its principal office in New York City and (b) 0.5% 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 or, if such rate is not so published for such date, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal Funds dealers of recognized standing selected by it.  The prime rate is not intended to be the lowest rate of interest charged by JPMorgan Chase Bank, N.A. 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).

“Act”: as defined in subsection 10.11.

“Administrative Agent”:  as defined in the preamble hereto.

“Agent”:  the Administrative Agent, a Syndication Agent, a Documentation Agent or the Co-Documentation Agent, as the context shall require; together, the “Agents”.

213

“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 Loans	Eurodollar Loans
0%	0.235%

; provided that, the rate per annum for any Eurodollar Loans shall be increased by 0.10% for the period of time that any Committed Rate Loans remain outstanding after the Termination Date.

“Attributable Debt”:  as defined in subsection 6.2(b)(ii).

“Bank” and “Banks”:  as defined in the preamble hereto.

“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 Administrative Agent and which has not been removed as a Bid Loan Bank by such Borrower by written notice to the Administrative Agent (each of which notices the Administrative 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 Administrative 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 Administrative Agent by facsimile transmission or by telephone, immediately confirmed by facsimile transmission.

214

“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 Administrative 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.

“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 Majority Banks hereunder).

“Code”:  the Internal Revenue Code of 1986, as amended from time to time.

“Co-Documentation Agent”:  as defined in the preamble hereto.

“Commitment”:  as to any Bank, the amount set opposite such Bank’s name on Schedule II or in any assignment pursuant to which such Bank becomes a party hereto with respect to any interest purchased therein, as such amount may be modified as provided herein; collectively, as to all the Banks, the “Commitments”.

“Commitment Expiration Date”:  as defined in subsection 2.16(a).

“Commitment Increase Notice”:  as defined in subsection 2.20(a).

“Commitment Increase Supplement”:  as defined in subsection 2.20(c).

“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.

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“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 Stockholders’ Equity” on the consolidated balance sheet of the Capital Corporation and its consolidated Subsidiaries plus (b) 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.

“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 any indebtedness for borrowed money 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. Notwithstanding the foregoing, indebtedness for borrowed money in respect of any Securitization Indebtedness shall be deemed not included in Consolidated Senior Debt.

“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.

“Credit Rating”: as to any Person, the rating assigned to the relevant long term senior unsecured (and non-credit enhanced) Debt obligations of such Person by Moody’s or S&P.

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“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.

“Documentation Agents”:  as defined in the preamble hereto.

“Dollars” and “$”:  dollars in lawful currency of the United States of America.

“Equipment Operations”:  those business segments of the Company and its consolidated Subsidiaries that are primarily engaged in the manufacture and distribution of equipment, parts and related attachments.

“Equipment Operations Debt”:  at a particular time, the sum of short-term and long-term indebtedness for borrowed money that is or would be shown on a balance sheet of Equipment Operations (with Financial Services reflected only on an equity basis), which balance sheet was or would be prepared on the basis of the most recent publicly available consolidated balance sheet of the Company and its consolidated Subsidiaries 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).

“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.

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“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.

“Exposure”:  (a) with respect to an Objecting Bank at any time, the aggregate outstanding principal amount of its Loans and (b) with respect to any other Bank at any time, the Commitment of such Bank.

“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.

“Facility Fee Rate”: 0.065%.

“Financial Services”:  the businesses of the Company (including the credit and health care businesses) that are not primarily engaged in Equipment Operations.

“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, notwithstanding the foregoing, consolidated interest on Securitization Indebtedness and amortization of Securitization Indebtedness shall be deemed not included in Fixed Charges; provided, further, that such amounts (but not any amounts constituting consolidated interest on, or amortization of, Securitization Indebtedness) 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, 2004.

“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.

“Hedging Transaction”:  any swap transaction, interest rate protection agreement (including any interest rate swap, interest “cap” or “collar” or any other interest rate hedging device entered into by the Capital Corporation or one or more of its Subsidiaries), option agreement, short or long position in equity or debt instruments,

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commodities, futures and forward transactions, outperformance agreement or other similar transaction, agreement or arrangement entered into by the Capital Corporation or one or more of its Subsidiaries.

“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 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.

“Increasing Bank”:  as defined in subsection 2.20(c).

“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 Eurodollar Loan is converted to an ABR Loan and (b) as to any Eurodollar 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, interest shall also be paid on the day which is three months 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 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, conversion or continuance as provided in subsection 2.1(c) or 2.9;

(b)           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

(c)           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

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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 a Negotiated 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 Eurodollar Rate 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 Eurodollar Rate 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 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 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 first anniversary of such Objecting Bank’s Commitment Expiration Date; and

(vi)          no Interest Period shall end after the first anniversary of the Termination Date.

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“JPMorgan Chase Bank, N.A.”:  JPMorgan Chase Bank, N.A., a national association.

“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.

“Loans”:  the collective reference to the Committed Rate Loans, the Bid Loans and the Negotiated Rate Loans.

“Majority Banks”:  at any particular time, Banks having Commitment Percentages aggregating more than fifty percent; provided that (a) at any time after the termination of all the Commitments, “Majority Banks” shall mean Banks holding Loans aggregating more than fifty percent in principal amount of all outstanding Loans and (b) at any time after the Commitment Expiration Date with respect to any Objecting Bank (but prior to the termination of all the Commitments), “Majority Banks” shall mean Banks whose Exposure aggregates more than fifty percent of the aggregate Exposure of all the Banks.

“Margin Stock”:  as defined in Regulation U of the Board of Governors of the Federal Reserve System.

“Moody’s”:  Moody’s Investor Service, Inc.

“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.

“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

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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.

“New Bank”:  as defined in subsection 2.20(b).

“New Bank Supplement”:  as defined in subsection 2.20(b).

“Notes”:  the collective reference to any promissory note evidencing Loans.

“Objecting Banks”:  as defined in subsection 2.16(a).

“Offered Increase Amount”:  as defined in subsection 2.20(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).

“Re-Allocation Date”:  as defined in subsection 2.20(e).

“Reference Banks”:  JPMorgan Chase Bank, N.A., Bank of America, N.A. and Deutsche Bank AG New York Branch.

“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) at any time after the termination of all the Commitments, “Required Banks” means Banks holding Loans aggregating at least 66-2/3% in principal amount of all outstanding Loans, (b) 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 (c) as used in any provision other than

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subsection 2.16 at any time after the Commitment Expiration Date with respect to any Objecting Bank (but prior to the termination of all the Commitments), “Required Banks” means Banks whose Exposure aggregates at least 66-2/3% of the aggregate Exposure of all the 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).

“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 of the Company and delivered to the Administrative Agent.

“S&P”:  Standard and Poor’s Ratings Services, a division of The McGraw-Hill Companies.

“Sale and Lease-back Transaction”:  as defined in subsection 6.3.

“Securitization Indebtedness”:  shall mean the aggregate outstanding indebtedness for borrowed money, owner trust certificates (however classified) or credit enhancements incurred in connection with transactions involving (i) the sale, transfer or other disposition of receivables or leases (retail or wholesale) by the Capital Corporation or any of its Subsidiaries and (ii) the issuance of commercial paper, medium term notes or any other form of financing by any structured bankruptcy-remote Subsidiary of the Capital Corporation or any related conduit lender (such transactions, “Securitizations”), provided, that the aggregate outstanding credit enhancements in the form of cash or letter(s) of credit provided by the Capital Corporation or any of its Subsidiaries (other than any

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structured bankruptcy-remote Subsidiary) in excess of 10% of the aggregate outstanding indebtedness for borrowed money and owner trust certificates (however classified) incurred in connection with such Securitizations shall not be deemed for the purposes of this Agreement to be Securitization Indebtedness, but shall be deemed for purposes of Section 7.2 to be Consolidated Senior Debt.

“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.

“Syndication Agents”:  as defined in the preamble hereto.

“Termination Date”:  the date which is 364 days after the date of this Agreement or such later date as shall be determined pursuant to the provisions of subsection 2.16 with respect to non-Objecting Banks.

“Total Stockholders’ Equity”:  at a particular time, the total stockholders’ equity, exclusive of adjustments resulting from any accumulated other comprehensive income, that is reflected on the most recent publicly available consolidated balance sheet of the Company and its consolidated Subsidiaries 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).

“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 or Eurodollar Loan.

“Utilization Fee”:  as defined in subsection 2.4(b).

“Utilization Percentage”:  on any day, the percentage equivalent of a fraction (a) the numerator of which is the aggregate outstanding principal amount of the Loans and (b) the denominator of which is the aggregate Commitments (or, on any day after termination of the Commitments, the aggregate Commitments in effect immediately preceding such termination).

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“Working Day”:  any Business 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 2THE 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.  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 or (iii) 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 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) except as provided in clause (iii) hereof below, 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 (iii) 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

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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.  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 (iii) 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 first anniversary of the Termination Date; provided, that Committed Rate Loans made by Objecting Banks shall be repaid as provided in subsection 2.16(b).

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 outstanding principal amount of all Loans does not at any time exceed the aggregate amount of the Commitments.

(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 Administrative Agent, c/o JPMorgan Chase Bank, N.A., 1111 Fannin Street, 10^th Floor, Houston, Texas 77002, Attention:  Danette Espinoza, Telephone:  (713) 750-2102, Facsimile:  (713) 750-2782, 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 Administrative 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 Administrative Agent shall promptly notify each Bid Loan Bank by facsimile

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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 Administrative 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 Administrative 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 Administrative 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 Administrative 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 Administrative 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 Administrative 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 Administrative 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 Administrative 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 Administrative 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 Administrative Agent (immediately confirmed by

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delivery to the Administrative 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 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 Administrative Agent that a Bid Loan Request is cancelled pursuant to clause (iv)(A) of this subsection 2.2(b), the Administrative Agent shall give prompt telephone notice thereof to the Bid Loan Banks, 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 Administrative Agent shall promptly notify by telephone 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

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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 available 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 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

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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.

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 date on which the Commitment of such Bank terminates hereunder, computed at a per annum rate equal to the Facility Fee Rate on the average daily amount of the Commitment of such Bank in effect during the period for which payment is made and (ii) thereafter until all Committed Rate Loans of such Bank are paid in full, computed at a per annum rate equal to the Facility Fee Rate on the average daily amount of such Committed Rate Loans outstanding, 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 first anniversary of the Termination Date or such earlier date on which the Loans are repaid in full, commencing in April, 2005.

(b)           The Company and the Capital Corporation jointly and severally agree to pay to the Administrative Agent for the account of each Bank a utilization fee (a “Utilization Fee”) at a rate per annum equal to 0.10% on the daily amount of such Bank’s outstanding Committed Rate Loans for each day on which the Utilization Percentage exceeds 50%.  Such Utilization Fees shall be payable quarterly in arrears on the first Business Day of each of 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 first anniversary of the

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Termination Date or such earlier date on which the Loans are repaid in full, commencing in April, 2005.

(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 January 12, 2005 from J.P. Morgan Securities Inc. and JPMorgan Chase Bank, N.A. to the Borrowers.

(d)           The Company and the Capital Corporation jointly and severally agree to pay to the Administrative Agent for its own account all other fees payable to the Administrative Agent as the Borrowers and the Administrative Agent shall mutually agree from time to time.

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 Committed Rate Loans hereunder, together with accrued interest on the amount so prepaid to the date of such prepayment, to the extent, if any, that the aggregate outstanding principal amount of all Loans 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,

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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 Working Days’ irrevocable notice, in the case of Eurodollar 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, 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, conversions, continuations, payments and, except as set forth in the penultimate sentence of subsection 2.6, 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 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)           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)

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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) or (b) 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, be converted to an ABR Loan at the end of the Interest Period applicable thereto.

(d)           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 may only be made on the last day of an Interest Period with respect thereto.  Any such notice of conversion to Eurodollar 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.  All or any part of outstanding Eurodollar Loans and ABR Loans may be converted as provided herein, provided that no Loan may be converted into a Eurodollar Loan after the date that is one month prior to (i) in the case of a Loan made by an Objecting Bank, the first anniversary of such Objecting Bank’s Commitment Expiration Date, and (ii) in the case of all Loans, the first anniversary of the Termination Date.

(b)           Any Eurodollar 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 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 may be continued as such after the date that is one month prior to (i) in the case of a Loan made by an Objecting Bank, the first anniversary of such Objecting Bank’s Commitment Expiration Date, and (ii) in the case of all Loans, the first anniversary of the Termination Date.  Upon receipt of any such notice, the Administrative Agent shall promptly notify each Bank thereof.

2.10.        Computation of Interest and Fees.  (a)  Facility fees, Utilization 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, 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.  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.

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(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.

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 subsection 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 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 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 Administrative Agent shall forthwith give notice of such determination to the relevant Borrower and the Bid Loan Banks at

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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 Administrative 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 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 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)           (i)  Each borrowing by the Borrowers of Committed Rate Loans and each payment of principal in respect of Committed Rate Loans (subject to the provisions of subsection 2.20(e)) shall be made in accordance with the following requirements:

(A)          All borrowings of Committed Rate Loans and all principal payments in respect of such Loans, shall be made pro rata according to the respective Commitments of the Banks.

(B)           As provided in clause (b)(ii) below, if any principal payment is made in respect of any Loans (other than Negotiated Rate Loans) on any day on which principal amounts are due and owing in respect of any Loans (other than Negotiated Rate Loans), such principal payment shall be applied to the Banks pro rata according to the respective amounts of principal due and owing to the Banks under this Agreement.

(ii)           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 their 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

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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 voluntary prepayments made when no principal payments are due and owing hereunder) by either Borrower on account of principal of and interest on the Loans (other than Negotiated Rate Loans) shall be made for the account of each Bank pro rata according to the respective amounts of principal and interest due and owing to such Bank under this Agreement.  Subject to the requirements of clause (i) of this paragraph (b), each payment 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, provided, however, that if any such payment is made after the Commitment Expiration Date for any Objecting Banks to which Committed Rate Loans remain outstanding, such Objecting Banks shall receive, pro rata, the portion of such payment that bears the same ratio to the aggregate outstanding principal amount of Committed Rate Loans owing to all Objecting Banks as the portion of such prepayment applied to the Committed Rate Loans of the other Banks bears to the aggregate outstanding principal amount of Committed Rate Loans owing to such other Banks, 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 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

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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 as 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 such 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 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 any court of competent jurisdiction and/or (ii) compliance by such Bank with any requirement adopted after the date hereof 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 Eurodollar Loans or any reduction in any amount receivable by such Bank in respect of 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 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

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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 capital adequacy referred to in subsection 2.13(b).  A 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.  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 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 Days’ notice to any such Bank and the Administrative Agent, to cancel the whole or part of the Commitment of any such Bank.  A 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

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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 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 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, which certificate shall be binding and conclusive in the absence of demonstrable error, 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

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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 each 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, conversion or continuance after such Borrower has given a notice in accordance with subsection 2.1, 2.2 or 2.9, (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 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

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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 absolute discretion at any time prior to the date which is 30 days prior to the Termination Date then in effect.  If any Bank shall fail to respond, such Bank shall be deemed to have elected not to extend.  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 not less than 30 days and not more than 60 days prior to the Termination Date then in effect (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, not less than 30 days and not more than 60 days prior to the Termination Date then in effect, the Required Banks shall not approve in writing the extension of the Termination Date requested in an 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 one year 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,

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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 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 W-8BEN or W-8ECI 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

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of any United States Federal income taxes, and (ii) Internal Revenue Service Form W-8BEN, 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 W-8BEN or W-8ECI, 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 W-8BEN or W-8ECI 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-8BEN establishing exemption from United States backup withholding tax.  The Administrative Agent shall not be responsible for obtaining such documentation from any Bank other than JPMorgan Chase Bank, N.A.

(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 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

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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.

2.20.Commitment Increases.  (a)  At any time after the Closing Date, provided that no Event of Default shall have occurred and be continuing, the Borrowers may request an increase of the aggregate Commitments by notice to the Administrative Agent in writing of the amount (the “Offered Increase Amount”) of such proposed increase (such notice, a “Commitment Increase Notice”).  Any such Commitment Increase Notice must offer each Bank the opportunity to subscribe for its pro rata share of the increased Commitments; provided, however, the Borrowers may, with the consent of the Administrative Agent (which consent shall not be unreasonably withheld or delayed), without offering to each Bank the opportunity to subscribe for its pro rata share of the increased Commitments, offer to any bank or other financial institution that is not an existing Bank the opportunity to provide a new Commitment pursuant to paragraph (b) below if the aggregate amount of all Commitments made hereunder pursuant to this proviso which will be in effect when such new Commitment becomes effective does not exceed $375,000,000 subject to subsection 2.20(f).  If any portion of the increased Commitments offered to the Banks as contemplated in the immediately preceding sentence is not subscribed for by the Banks, the Borrowers may, with the consent of the Administrative Agent as to any bank or financial institution that is not at such time a Bank (which consent shall not be unreasonably withheld or delayed), offer to any existing Bank or to one or more additional banks or financial institutions the opportunity to provide all or a portion of such unsubscribed portion of the increased Commitments pursuant to paragraph (b) below.

(b)Any additional bank or financial institution that the Borrowers select to offer the opportunity to provide any portion of the increased Commitments, and that elects to become a party to this Agreement and provide a Commitment, shall execute a New Bank Supplement with the Borrowers and the Administrative Agent, substantially in the form of Exhibit N (a “New Bank Supplement”), whereupon such bank or financial institution (a “New Bank”) shall become a Bank for all purposes and to the same extent as if originally a party hereto and shall be bound by and entitled to the benefits of this Agreement, and Schedule II shall be deemed to be amended to add the name and Commitment of such New Bank, provided that the Commitment of any such New Bank shall be in an amount not less than $10,000,000.

(c)Any Bank that accepts an offer to it by the Borrowers to increase its Commitment pursuant to this subsection 2.20 shall, in each case, execute a Commitment Increase Supplement with the Borrowers and the Administrative Agent, substantially in the form of Exhibit O (a “Commitment Increase Supplement”), whereupon such Bank (an “Increasing Bank”) shall be bound by and entitled to the benefits of this Agreement with respect to the full amount of its Commitment as so increased, and Schedule II shall be deemed to be amended to so increase the Commitment of such Bank.

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(d)The effectiveness of any New Bank Supplement or Commitment Increase Supplement shall be contingent upon receipt by the Administrative Agent of such corporate resolutions of the Borrowers and legal opinions of counsel to the Borrowers as the Administrative Agent shall reasonably request with respect thereto.

(e)(i)  Except as otherwise provided in subparagraphs (ii) and (iii) of this paragraph (e), if any bank or financial institution becomes a New Bank pursuant to subsection 2.20(b) or any Bank’s Commitment is increased pursuant to subsection 2.20(c), additional Committed Rate Loans made on or after the date of the effectiveness thereof (the “Re-Allocation Date”) shall be made in accordance with the pro rata provisions of subsection 2.12(b) based on the Commitment Percentages in effect on and after such Re-Allocation Date (except to the extent that any such pro rata borrowings would result in any Bank making an aggregate principal amount of Committed Rate Loans in excess of its Commitment, in which case such excess amount will be allocated to, and made by, the relevant New Banks and Increasing Banks to the extent of, and in accordance with the pro rata provisions of subsection 2.12(b) based on, their respective Commitments).  On each Re-Allocation Date, the Administrative Agent shall deliver such amended Schedule II and a notice to each Bank of the adjusted Commitment Percentages after giving effect to any increase in the aggregate Commitments made pursuant to this subsection 2.20 on such Re-Allocation Date.

(ii)In the event that on any such Re-Allocation Date there is an unpaid principal amount of ABR Loans, the applicable Borrower shall make prepayments thereof and one or both Borrowers shall make borrowings of ABR Loans and/or Eurodollar Loans, as the applicable Borrower shall determine, so that, after giving effect thereto, the ABR Loans and Eurodollar Loans outstanding are held as nearly as may be in accordance with the pro rata provisions of subsection 2.12(b) based on such new Commitment Percentages.

(iii)In the event that on any such Re-Allocation Date there is an unpaid principal amount of Eurodollar Loans, such Eurodollar Loans shall remain outstanding with the respective holders thereof until the expiration of their respective Interest Periods (unless the applicable Borrower elects to prepay any thereof in accordance with the applicable provisions of this Agreement), and on the last day of the respective Interest Periods the applicable Borrower shall make prepayments thereof and one or both Borrowers shall make borrowings of ABR Loans and/or Eurodollar Loans so that, after giving effect thereto, the ABR Loans and Eurodollar Loans outstanding are held as nearly as may be in accordance with the pro rata provisions of subsection 2.12(b) based on such new Commitment Percentages.

(f)Notwithstanding anything to the contrary in this subsection 2.20, (i) in no event shall any transaction effected pursuant to this subsection 2.20 cause the aggregate Commitments to exceed $1,000,000,000, (ii) the Commitment of an individual Bank shall not, as a result of providing a new Commitment or of increasing its existing Commitment pursuant to this subsection 2.20, exceed 15% of the aggregate Commitments on any Re-Allocation Date and (iii) no Bank shall have any obligation to increase its Commitment unless it agrees to do so in its sole discretion.

(g)The Borrowers, at their own expense, shall execute and deliver to the Administrative Agent in exchange for the surrendered Notes of any Bank, if any, new Notes to

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the order of such Bank, if requested, in an amount equal to the Commitment of such Bank after giving effect to any increase in such Bank’s Commitment.

SECTION 3REPRESENTATIONS 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, 2004 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 LLP, 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.  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.

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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 of Default or similar event, has occurred and is continuing hereunder or under any material bond, debenture, note or other evidence of indebtedness (other than any bond, debenture, note or other evidence of Securitization Indebtedness, for which no representation is hereby given), or in any material mortgage, deed of trust, indenture or loan agreement (other than any mortgage, deed of trust or loan agreement in respect of Securitization Indebtedness, for which no representation is hereby given), 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.

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SECTION 4CONDITIONS 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 James R. Jenkins, Esq., or his successor as General Counsel of the Company, or an associate general counsel of the Company, 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 LLP, 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)Termination of Existing Credit Agreements.  The Administrative Agent shall have received evidence satisfactory to it that the commitment of each financial institution to make loans pursuant to the $1,250,000,000 364-Day Credit Agreement, dated as of February 17, 2004, as supplemented, among the Borrowers, the lenders parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents, 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)The Administrative Agent shall have received concurrently with the execution of this Agreement, with a counterpart for each Bank, a certificate of a Responsible Officer for each Borrower dated the date of this Agreement certifying that since October 31, 2004, at the date of such certificate there has been no material adverse change in the business, property, operations, condition (financial or otherwise) or prospects of such Borrower and its Subsidiaries, taken as a whole.

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(g)Fees.  The Administrative Agent shall have received, for the accounts of the Banks and the Administrative Agent, and each Agent shall have received, for the account of such 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.

(h)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 but shall not include any Loan made pursuant to subsection 2.20(e)(ii) or (iii) if, after the making of such Loan and the application of the proceeds thereof, the aggregate outstanding principal amount of the Committed Rate Loans would not be increased) to be made by it hereunder on any Borrowing Date 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 5AFFIRMATIVE 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 to it hereunder, any Loan of such Borrower remains outstanding and unpaid or any other amount is owing by such Borrower to any Bank or any Agent hereunder (unless the Majority 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

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statements of income and of cash flow for such year, reported on by Deloitte & Touche LLP 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 of such Borrower (subject to normal year-end audit adjustments);

all such financial statements to present fairly the consolidated financial condition and results of operations of such Borrower and its consolidated Subsidiaries 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).  Such Borrower shall be deemed to have furnished such financial statements to each Bank when they are filed with the Securities and Exchange Commission and posted on its EDGAR system.

5.2.Certificates; Other Information.  Such Borrower shall furnish to the Administrative Agent, and the Administrative Agent shall make available to each Bank:

(a)within 10 days of the delivery of the financial statements referred to in subsections 5.1(a) and (b) above (or, if such financial statements are filed with the Securities and Exchange Commission and posted on its EDGAR system, within 10 days of the posting of such financial statements on the EDGAR system), a certificate of a Responsible Officer of such Borrower 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 materially 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 dated October 1, 1998 between the Company and JPMorgan Chase Bank, N.A. (as successor to JPMorgan Chase Bank, formerly known as The Chase Manhattan Bank (National Association)), as trustee.

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

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the Indenture dated March 15, 1997, 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 of such Borrower 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).  Upon receipt of any such notice, the Administrative Agent shall promptly notify each Bank thereof.

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 6NEGATIVE 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 any 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 Majority 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 Majority 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

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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 of the Company 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, 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:

(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

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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 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

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(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), 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 Company’s 8-1/2% Debentures Due 2022, 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 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.

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(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 of the Company stating that the covenant of the Company contained in paragraph (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 the Company or such Restricted Subsidiary, as applicable) 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 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.Equipment Operations Debt.  Permit Equipment Operations Debt 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 exceed 65% of the sum, at the end of each such fiscal quarter, of (i) Equipment Operations Debt plus (ii) Total Stockholders’ Equity.

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SECTION 7NEGATIVE 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 any 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 Majority 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 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

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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;

(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 Mortgage securing Securitization Indebtedness;

(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); and

(k)cash collateral provided to any counterparty of the Capital Corporation or to any Subsidiary of the Capital Corporation in connection with any Hedging Transaction.

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

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the same effect as if the successor corporation had been named as the Capital Corporation herein and therein.

SECTION 8EVENTS 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 subsection 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 and any Securitization Indebtedness) in a principal amount in excess of $30,000,000 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 for borrowed money shall, by reason of default, be declared to be due and

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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 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 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) (1) if such event is any Event of Default specified in paragraph (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 (2) if

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such Event is an Event of Default specified in paragraph (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 9THE AGENTS

9.1.Appointment.  (a)  Each Bank hereby irrevocably designates and appoints JPMorgan Chase Bank, N.A. as the Administrative Agent of such Bank under this Agreement, and each Bank hereby irrevocably authorizes JPMorgan Chase Bank, N.A. 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.

(b)Notwithstanding anything to the contrary contained in this Agreement, the parties hereto hereby agree that neither the Syndication Agents, the Documentation Agents nor the Co-Documentation Agent shall have any rights, duties or responsibilities in such respective capacity nor shall any such Person have the authority to take any action hereunder in its capacity as such.

(c)Notwithstanding any provision to the contrary elsewhere in this Agreement, no Agent shall 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 any Agent.

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 any 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.  No 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

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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 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 Majority 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 Majority Banks, the Required Banks or all of the Banks (if the consent of the Majority Banks, the Required Banks or all of the Banks, respectively, 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 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, the Required Banks, or all 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 any 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 hereafter 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 to inform itself as to the business, operations, property,

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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 any 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 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 in its 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 Majority 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 and the term “Administrative Agent” 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 10MISCELLANEOUS

10.1.Amendments and Waivers.  With the written consent of the Majority 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 Majority Banks the Administrative Agent on behalf of the

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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 (other than in accordance with subsection 2.20), or amend, modify or waive the pro rata treatment and payment provisions of subsection 2.12(b), 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, if applicable, any other Agent affected by such amendment, modification or waiver, or (d) extend the Termination Date with respect to any Bank without the written consent of such Bank; and provided, further, however, that no such waiver, amendment, supplement or modification shall waive, amend, supplement or otherwise modify subsection 2.16 or Section 8(B) (2) without the written consent of the Required Banks.  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 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, 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 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:

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The Borrowers:
The Company:	Deere & Company Attention: Treasurer One John Deere Place Moline, Illinois 61265 Telephone: 309-765-4162 Facsimile: 309-765-5021
The Capital Corporation:	John Deere Capital Corporation Attention: Manager First National Bank Building 1 East First Street Reno, Nevada 89501 Telephone: 775-786-5527 Facsimile: 775-786-4145
with a copy to:	Deere & Company Attention: Treasurer One John Deere Place Moline, Illinois 61265 Facsimile: 309-765-5021
The Administrative Agent:	JPMorgan Chase Bank, N.A. Attention: Randolph Cates 270 Park Avenue New York, New York 10017 Telephone: 212-270-8997 Facsimile: 212-270-6637
with a copy to:	JPMorgan Chase Bank, N.A. Attention: Danette Espinoza 1111 Fannin Street, 10th Floor Houston, Texas 77002 Telephone: 713-750-2102 Facsimile:713-750-2782

provided that any notice, request or demand to or upon the Administrative Agent or the Banks pursuant to subsections 2.1, 2.2, 2.5, 2.6, 2.9, 2.11, 2.20 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 or any Bank, any right,

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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 and each 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 each Agent and one counsel representing the Banks.

(b)The Borrowers agree jointly and severally to indemnify and hold harmless each 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

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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 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 Agents 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 interests

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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 and the Administrative 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; 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.  A 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 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, sell to any Bank or any affiliate thereof and to one or more additional banks or other financial institutions (“Purchasing Banks”), all or portions (subject to the last sentence of this subsection 10.5(d)) of its rights (which rights may include

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such Bank’s rights in respect of Loans it has disbursed) and obligations under this Agreement with the prior written consent (such consent not to be unreasonably withheld) of the Borrowers.  Such sale shall be made 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 with respect to the interest purchased 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 those 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 Commitments and 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 without the prior written consent of the Borrowers if, after giving effect to such sale or at the time of such sale, as the case may be, (i) the Commitment of either of the selling and purchasing institutions would be less than $5,000,000, (ii) the Purchasing Bank, together with all of its affiliates, would have a Commitment Percentage of more than 15% (or, if the Commitments shall have been terminated, such Purchasing Bank, together with all of its affiliates, would hold Loans aggregating to more than 15% in principal amount of all outstanding Loans), (iii) the Credit Rating of any Purchasing Bank shall be less than BBB+ from S&P or less than Baa1 from Moody’s or such Purchasing Bank shall have no Credit Rating or (iv) the Purchasing Bank is not a bank, insurance company, other financial institution or an Affiliate of any thereof that is engaged in making, purchasing, holding or investing in bank loans or similar extensions of credit in the ordinary course of its business.

(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

268

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 $3,500, 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 $3,500 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 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

269

duly completed copies of United States Internal Revenue Service Form W-8BEN or W-8ECI 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-8BEN, 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 W-8BEN or W-8ECI, 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 W-8BEN or W-8ECI 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-8BEN 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.

(j)The Borrowers, upon receipt of written notice from the relevant Bank, agree to issue Notes to any Bank requiring Notes to facilitate transactions of the type described in paragraph (i) above.

(k)Notwithstanding anything to the contrary contained herein, any Bank (a “Granting Bank”) may grant to a special purpose funding vehicle (an “SPC”), identified as such in writing from time to time by the Granting Bank to the Administrative Agent and the Company, the option to provide to the Borrowers all or any part of any Loan that such Granting Bank would otherwise be obligated to make to the Borrowers pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Loan, (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Bank shall be obligated to make such Loan pursuant to the terms hereof.  The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Bank to the same extent, and as if, such Loan were made by such Granting Bank.  Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Bank).  In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof.  In addition, notwithstanding anything to the contrary contained in this subsection 10.5(k) any SPC may (i) with notice to, but without the prior written consent of, the Company and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Granting Bank or to any financial institutions (consented to by the Company and Administrative Agent) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating

270

agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC.  This subsection 10.5(k) may not be amended without the written consent of the SPC.

10.6.Adjustments.  Except as provided in subsection 2.12, if any 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 hereunder, 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, or facility fee hereunder, 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 such other 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 Agents 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 Agents 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 such Agent or Bank (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.

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(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.

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 Agents 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 any Agent or any Bank to bring proceedings against the Borrowers in the courts of any other jurisdiction.

10.11.USA PATRIOT Act.

Each Bank hereby notifies the Borrowers that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrowers, which information includes the name and address of the Borrowers and other information that will allow such Bank to identify the Borrowers in accordance with the Act.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written.

Attested by:	DEERE & COMPANY
/s/ James H. Becht
Title:	By:	/s/ Michael J. Mack, Jr.
		Title:
Attested by:	JOHN DEERE CAPITAL CORPORATION
/s/ James H. Becht
Title:	By:	/s/ Michael J. Mack, Jr.
		Title:

273

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent and as a Bank
By:	/s/ Randolph Cates
	Title:  RANDOLPH CATES
		VICE PRESIDENT

274

BANK OF AMERICA, N.A.,
as a Syndication Agent and as a Bank
By:	/s/ Jeffrey Armitage
	Title:	Senior Vice President

275

CITIBANK, N.A.,
as a Documentation Agent
By:	/s/ [ILLEGIBLE]
	Title:	Vice President
CITICORP USA,
as a Bank
By:	/s/ John Coors
	Title:	Director

276

CREDIT SUISSE FIRST BOSTON, acting through
its Cayman Islands Branch,
as a Documentation Agent and as a Bank
By:	/s/ Phillip Ho
	Title:	Director
By:	/s/ Rianka Mohan
	Title:	Associate

277

DEUTSCHE BANK AG NEW YORK BRANCH,
as a Syndication Agent and as a Bank
By:	/s/ Chris Howe
	Title:	Chris Howe
		Director
By:	/s/ Wolfgang Winter
	Title:	Wolfgang Winter
		Managing Director

278

MERRILL LYNCH BANK USA,
as Co-Documentation Agent and as a Bank
By:	/s/ Louis Alder
	Title:	LOUIS ALDER, DIRECTOR

279

ROYAL BANK OF CANADA,
as a Bank
By:	/s/ Barton Lund
	Barton Lund
	Title:	Authorized Signatory

280

HSBC BANK USA, NATIONAL ASSOCIATION
as a Bank
By:	/s/ [ILLEGIBLE]
	Title:	Managing Director

281

TORONTO DOMINION (TEXAS) LLC (as
successor in interest to Toronto Dominion (Texas),
Inc.), as a Bank
By:	/s/ Neva Nesbitt
	Title:	AUTHORIZED AGENT

282

BNP PARIBAS,
as a Bank
By:	/s/ Curt Price
	Title:	Managing Director
By:	/s/ Gaye Plunkett
	Title:	Vice President

283

MELLON BANK, N.A.,
as a Bank
By:	/s/ Robert J. Mitchell, Jr.
	Title:	FIRST VICE PRESIDENT

284

BARCLAYS BANK PLC,
as a Bank
By:	/s/ Nicholas A. Bell
	Title:	NICHOLAS A. BELL
		DIRECTOR
		LOAN TRANSACTION MANAGEMENT

285

BANCO BILBAO VIZCAYA ARGENTARIA, S.A.,
as a Bank
By:	/s/ Philip A. Paddook
	Title:	Philip A. Paddook
		Senior Vice President
		and Branch Manager
By:	/s/ Anne-Maureen Sarfati
	Title:	Anne-Maureen Sarfati
		Vice President
		Global Corporate Banking

286

THE BANK OF NEW YORK,
as a Bank
By:	/s/ John M. Lokay, JR.
	Title:	JOHN M. LOKAY, JR.
		VICE PRESIDENT

287

WACHOVIA BANK, N.A.,
as a Bank
By:	/s/ Nathan Rantala
	Title:	Vice President

288

WELLS FARGO BANK, NATIONAL
ASSOCIATION,
as a Bank
By:	/s/ [ILLEGIBLE]
	Title:	V.P.
By:	/s/ [ILLEGIBLE]
	Title:	V.P.

289

BANCA NAZIONALE DEL LAVORO S.P.A.,
NEW YORK BRANCH,
as a Bank
By:	/s/ [ILLEGIBLE]
	Title:	Sr. Manager
By:	/s/ [ILLEGIBLE]
	Title:	SR. MANAGER

290

THE BANK OF TOKYO-MITSUBISHI, LTD.,
CHICAGO BRANCH,
as a Bank
By:	/s/ Shinichiro Munechika
	Title:	Shinichiro Munechika
		Deputy General Manager

291

FIFTH THIRD BANK,
as a Bank
By:	/s/ [ILLEGIBLE]
	Title:	Corporate Banking Officer

292

NORDEA BANK FINLAND PLC,
as a Bank
By:		/s/ Henrik M. Steffensen
	Title:		Henrik M. Steffensen
			First Vice President
By:		/s/ Gerald E. Chellus, Jr.
		Title:	Gerald E. Chellus, Jr.
			SVP Credit

293

U.S. BANK, NATIONAL ASSOCIATION,
as a Bank
By:	/s/ David Hirsch
	Title:	Vice President

294

WESTPAC BANKING CORPORATION,
as a Bank
By:	/s/ Robert F. Bosse
	Title:	Vice President

295

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] and [specify any other indebtedness of the Capital Corporation (including indebtedness of others guaranteed by the Capital Corporation)], provided that indebtedness of the Capital Corporation under the credit agreement to which these Terms of Subordination are attached may not be so specified, 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),

(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

296

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 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.

297

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.

298

SCHEDULE II

COMMITMENTS

Bank	Commitment
JPMorgan Chase Bank, N.A.	$	62,500,000
Bank of America, N.A.	$	53,750,000
Citicorp USA	$	53,750,000
Credit Suisse First Boston, acting through its Cayman Islands Branch	$	53,750,000
Deutsche Bank AG New York Branch	$	53,750,000
Merrill Lynch Bank USA	$	53,750,000
Royal Bank of Canada	$	43,750,000
HSBC Bank USA, National Association	$	37,500,000
Toronto Dominion (Texas) LLC (as successor in interest to Toronto Dominion (Texas), Inc.)	$	37,500,000
BNP Paribas	$	25,000,000
Mellon Bank, N.A.	$	25,000,000
Barclays Bank PLC	$	21,875,000
Banca Bilbao Vizcaya Argentaria, S.A.	$	18,750,000
The Bank of New York	$	18,750,000
Wachovia Bank, N.A.	$	18,750,000
Wells Fargo Bank, National Association	$	9,375,000
Banca Nazionale del Lavoro S.P.A., New York Branch	$	6,250,000
The Bank of Tokyo-Mitsubishi, Ltd., Chicago Branch	$	6,250,000
Fifth Third Bank	$	6,250,000
Nordea Bank Finland PLC	$	6,250,000
U.S. Bank, National Association	$	6,250,000
Westpac Banking Corporation	$	6,250,000
TOTAL	$	625,000,000

299

SCHEDULE III

ADDRESSES FOR NOTICES

JPMorgan Chase Bank, N.A.
Attention:  Randolph Cates
270 Park Avenue - 4th Floor
New York, New York 10017
Telephone:  (212) 270-8997
Facsimile:  (212) 270-6637

Bank of America, N.A.
Attention: Jeffrey Armitage
231 South LaSalle Street
Chicago, Illinois 60604
Telephone:  (312) 828-3898
Facsimile:  (312) 974-8811

Citicorp USA
Attention:  John Coons
233 South Wacker Drive
Sears Tower, Floor 86
Chicago, Illinois 60606
Telephone:  (312) 876-3270
Facsimile:  (312) 876-3290

Credit Suisse First Boston
Attention: Phillip Ho
Eleven Madison Avenue, 5^th Floor
New York, New York 10010
Telephone: (212) 325-5264
Facsimile:  (212) 325-8615

Deutsche Bank AG New York Branch
Attention:  Christopher Howe
60 Wall Street
New York, New York 10005
Telephone: (212) 250-8111
Facsimile: (212) 767-4420

300

Merrill Lynch Bank USA
Attention:  Dave Millett
15 W. South Temple, Suite 300
Salt Lake City, Utah 84101
Telephone: (801) 526-8312
Facsimile: (801) 933-8641

Royal Bank of Canada

Attention: Loans Administration
New York Branch
One Liberty Plaza, 3rd Floor
New York, New York 10006-1404
Telephone:  (212) 428-6338
Facsimile:  (212) 428-2372

with a copy to:

Attention: Barton Lund

One Liberty Plaza, 4^th Floor

New York, New York 10006-1404

Telephone:  (212) 428-6509

Facsimile:  (212) 428-6201

HSBC Bank USA, National Association
Attention: Sarah McClintock
452 Fifth Avenue, 5^th Floor
New York, New York 10018
Telephone: (212) 525-2485
Facsimile: (212) 525-2479

Toronto Dominion (Texas) LLC (as successor in interest to Toronto Dominion (Texas), Inc.)
Attention: Nicholas Iwanowycz
31 West 52^nd Street
New York, New York 10019
Telephone: (212) 827-7558
Facsimile: (212) 827-7232

BNP Paribas
Attention:  Frederick H. Moryl, Jr.
209 South LaSalle Street, Suite 500
Chicago, Illinois 60604
Telephone: (312) 977-2211
Facsimile: (312) 977-1380

301

Mellon Bank, N.A.
Attention: Richard Bouchard
522 William Penn Place
Room 1203
Pittsburgh, Pennsylvania 15259-003
Telephone: (412) 234-5767
Facsimile: (412) 209-6124

Banco Bilbao Vizcaya Argentaria, S.A.
Attention: Jay Levit
1345 Avenue of the Americas, 45^th Floor
New York, New York 10105
Telephone: (212) 728-1590
Facsimile: (212) 333-2904

The Bank of New York
Attention: John Lokay
One Wall Street, 21st Floor
New York, New York 10286
Telephone: (212) 635-1172
Facsimile: (212) 635-1970

Barclays Bank PLC
Attention: John Giannone
200 Park Avenue
New York, New York 10166
Telephone: (212) 412-3276
Facsimile: (212) 412-7511

Wachovia Bank, N.A.
Attention: Nathan Rantala
Mail Code: NC0760
301 S. College Street
Charlotte, North Carolina 28288
Telephone: (704) 383-0684
Facsimile:  (704) 383-1625

Banca Nazionale del Lavoro S.P.A., New York Branch
Attention: Francesco Di Mario
25 West 51^st Street
New York, New York 10019
Telephone: (212) 314-0239
Facsimile: (212) 765-2978

302

The Bank of Tokyo-Mitsubishi, Ltd., Chicago Branch
Attention: Diane Tkach
227 W. Monroe Street Suite 2300
Chicago, Illinois 60606
Telephone: (312) 696-4663
Facsimile: (312) 696-4535

Fifth Third Bank
Attention: Mike Mendenhall
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Telephone: (513) 534-6915
Facsimile: (513) 534-5947

Nordea Bank Finland Plc
Attention: Henrik Steffensen
437 Madison Avenue
New York, New York 10022
Telephone: (212) 318-9303
Facsimile: (212) 318-9318

U.S. Bank, National Association
Attention:  Barry P. Litwin
209 S. LaSalle Street
Chicago, Illinois 60604
Telephone: (312) 325-8888
Facsimile: (312) 325-8889

Wells Fargo Bank, National Association
Attention: Melissa Nachman
230 W. Monroe Street, Suite 2900
Chicago, Illinois 60606
Telephone: (312) 553-2353
Facsimile: (312) 553-4783

Westpac Banking Corporation
Attention: Tony Smith
575 Fifth Avenue, 39^th Floor
New York, New York 10017
Telephone: (212) 551-1814
Facsimile: (212) 551-1995

303

EXHIBIT A

[FORM OF BORROWING NOTICE]

         , 200    

JPMorgan Chase Bank, N.A.,
  as Administrative Agent under the
Credit Agreement referred to below
1111 Fannin Street, 10^th Floor
Houston, Texas 77002
Attention:  Danette Espinoza

Ladies and Gentlemen:

Pursuant to subsection 2.1(c) of the $625,000,000 364-Day Credit Agreement, dated as of February 15, 2005, among DEERE & COMPANY, JOHN DEERE CAPITAL CORPORATION, the Banks parties thereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent, CITIBANK, N.A. and CREDIT SUISSE FIRST BOSTON, as Documentation Agents, MERRILL LYNCH BANK USA, as Co-Documentation Agent, and BANK OF AMERICA, N.A. and DEUTSCHE BANK AG NEW YORK BRANCH, as Syndication Agents (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               , 200     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 ABR Loans		$
(4)  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	$

304

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:

305

EXHIBIT B

[FORM OF BID LOAN REQUEST]

         , 200    

JPMorgan Chase Bank, N.A.,

as Administrative Agent under the Credit

Agreement referred to below

1111 Fannin Street, 10^th Floor
Houston, Texas 77002
Attention:  Danette Espinoza

Ladies and Gentlemen:

Reference is made to the $625,000,000 364-Day Credit Agreement, dated as of February 15, 2005, among DEERE & COMPANY, JOHN DEERE CAPITAL CORPORATION, the Banks parties thereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent, CITIBANK, N.A. and CREDIT SUISSE FIRST BOSTON, as Documentation Agents, MERRILL LYNCH BANK USA, as Co-Documentation Agent, and BANK OF AMERICA, N.A. and DEUTSCHE BANK AG NEW YORK BRANCH, as Syndication Agents (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 Period
Interest Payment Dates
Interest Rate Basis	360 day year
	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.

306

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.

307

EXHIBIT C

[FORM OF BID LOAN OFFER]

         , 200    

JPMorgan Chase Bank, N.A., as Administrative

Agent under the Credit Agreement

referred to below

1111 Fannin Street, 10^th Floor

Houston, Texas 77002
Attention:  Danette Espinoza

Ladies and Gentlemen:

Reference is made to the $625,000,000 364-Day Credit Agreement, dated as of February 15, 2005, among DEERE & COMPANY, JOHN DEERE CAPITAL CORPORATION, the Banks parties thereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent, CITIBANK, N.A. and CREDIT SUISSE FIRST BOSTON, as Documentation Agents, MERRILL LYNCH BANK USA, as Co-Documentation Agent, and BANK OF AMERICA, N.A. and DEUTSCHE BANK AG NEW YORK BRANCH, as Syndication Agents (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:                      , 200   

Aggregate Maximum Amount:  $              

308

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.

309

EXHIBIT D

[FORM OF BID LOAN CONFIRMATION]

         , 200    

JPMorgan Chase Bank, N.A., as Administrative Agent

under the Credit Agreement referred

to below

1111 Fannin Street, 10^th Floor
Houston, Texas 77002
Attention:  Danette Espinoza

Ladies and Gentlemen:

Reference is made to the $625,000,000 364-Day Credit Agreement, dated as of February 15, 2005, among DEERE & COMPANY, JOHN DEERE CAPITAL CORPORATION, the Banks parties thereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent, CITIBANK, N.A. and CREDIT SUISSE FIRST BOSTON, as Documentation Agents, MERRILL LYNCH BANK USA, as Co-Documentation Agent, and BANK OF AMERICA, N.A. and DEUTSCHE BANK AG NEW YORK BRANCH, as Syndication Agents (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                  , 200    [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 Administrative Agent with accepted amount entered by the Borrower to right of each Bid Loan Offer].

310

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 JPMORGAN CHASE BANK, N.A., 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 $625,000,000 364-Day Credit Agreement, dated as of February 15, 2005 among DEERE & COMPANY (the “Company”), JOHN DEERE CAPITAL CORPORATION (the “Capital Corporation”), the Banks parties thereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent, CITIBANK, N.A. and CREDIT SUISSE FIRST BOSTON, as Documentation Agents, MERRILL LYNCH BANK USA, as Co-Documentation Agent, and BANK OF AMERICA, N.A. and DEUTSCHE BANK AG NEW YORK BRANCH, as Syndication Agents (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 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.

(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

311

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 any other instrument or document furnished pursuant thereto 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 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 thereto; (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 of the Credit Agreement (unless financial statements referred to in subsection 5.1(a) of the Credit Agreement have become available), the financial statements delivered pursuant to subsection 5.1 of the Credit Agreement, 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.             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

312

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 W-8BEN or U.S. Internal Revenue Service Form W-8ECI (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 U.S. Internal Revenue Service Form W-8BEN (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 and [the Company] [the Capital Corporation]) to provide the Assignor Bank, the Administrative Agent and [the Company] [the Capital Corporation] a new Form W-8BEN or Form W-8ECI 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.

313

			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: b.             Principal Amount of Loan:	[ Bid Loan or Negotiated Rate 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:
		, as
Loan Assignee
By:
Title:

ACCEPTED FOR RECORDATION

   IN REGISTER:

JPMORGAN CHASE BANK, N.A., as
Administrative Agent

By:

Title:

314

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 JPMORGAN CHASE BANK, N.A., 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 $625,000,000 364-Day Credit Agreement, dated as of February 15, 2005, among the Company, the Capital Corporation, the Transferor Bank and the other Banks party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, and Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents (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 with respect to the interest purchased hereunder.

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 Commitment of such Transferor Bank and/or 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

315

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 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

316

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 any other instrument or document furnished pursuant thereto 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 thereto; (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 of the Credit Agreement, the financial statements delivered pursuant to subsection 5.1 of the Credit Agreement, 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 with respect to the interest purchased hereunder.

9.             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 W-8BEN or U.S. Internal Revenue Service Form W-8ECI (wherein the Purchasing Bank claims entitlement to complete exemption from U.S. federal withholding tax on all interest payments in respect of the Loans), (iii) will furnish to the Transferor Bank, the Administrative Agent and the Borrowers, on or prior to the Transfer Effective Date U.S. Internal Revenue Service Form W-8BEN (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,

317

the Administrative Agent and the Borrowers a new Form W-8BEN or Form W-8ECI 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 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.  After giving effect to the transfers contemplated hereby, Schedule II to the Credit Agreement shall be deemed to be amended by Schedule II hereto to show the revised Commitment of the Transferor Bank and 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.

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SCHEDULE I

TO

COMMITMENT

TRANSFER

SUPPLEMENT

COMPLETION OF INFORMATION AND
SIGNATURES FOR COMMITMENT
TRANSFER SUPPLEMENT

Item 1	(Date of Commitment Transfer Supplement):	[Insert date of Commitment 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 Date):	[Insert Transfer Effective 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:

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[CONSENTED TO AND ACKNOWLEDGED:

DEERE & COMPANY

By:

Title:

JOHN DEERE CAPITAL CORPORATION

By:

Title:](1)

ACCEPTED FOR RECORDATION

  IN REGISTER:

JPMORGAN CHASE BANK, N.A., as Administrative

  Agent

By:

Title:

(1)To the extent such consent is required by Section 10.5 of the Credit Agreement.

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SCHEDULE II

TO

COMMITMENT

TRANSFER

SUPPLEMENT

LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AMOUNTS

[Name of Transferor Bank]	Revised Commitment Amount:	$
	Revised Commitment Percentage:
[Name of Purchasing Bank]	New Commitment Amount:	$
Address for Notices:
	New Commitment Percentage:
Attn:
Telephone:
Facsimile:
[Name of Purchasing Bank]	New Commitment Amount:	$
Address for Notices:
	New Commitment Percentage:
Attn:
Telephone:
Facsimile:

321

EXHIBIT G

[FORM OF OPINION OF GENERAL COUNSEL TO THE COMPANY]

[Closing Date]

To each of the Banks parties to
the Credit Agreement referred to
below and to JPMorgan Chase
Bank, N.A. as Administrative Agent

Deere & Company and
John Deere Capital Corporation

Ladies and Gentlemen:

This opinion is furnished to you pursuant to subsection 4.1(c) of the $625,000,000 364-Day Credit Agreement dated as of February 15, 2005 (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, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, and Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents.  Terms defined in the Credit Agreement are used herein as therein defined.

I am General Counsel of the Company and have acted as counsel for the Capital Corporation in this matter.  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 or caused to 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

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.

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In addition, I have reviewed or caused to have reviewed such of the corporate proceedings of the Borrowers, and have examined or caused to 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 consider necessary as a basis for the opinions hereinafter expressed.  I have assumed the due execution and delivery, pursuant to due authorization, of the Credit Agreement by the Banks, the Administrative Agent, the Syndication Agents, the Documentation Agents and the Co-Documentation Agent, 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 the State of Michigan 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 and the State of Michigan, 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 do not (i) 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.

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.

323

Very truly yours,

James R. Jenkins

324

EXHIBIT H

[FORM OF OPINION OF SPECIAL NEW YORK COUNSEL
TO THE BORROWERS]

[Closing Date]

To each of the Banks parties to the
Credit Agreement referred to below and
to JPMorgan Chase Bank, N.A., as
Administrative Agent

Deere & Company
John Deere Capital Corporation

Ladies and Gentlemen:

We have acted as New York counsel to Deere & Company, a Delaware corporation (the “Company”) and John Deere Capital Corporation, a Delaware corporation (the “Capital Corporation”, the Company and the Capital Corporation being referred to herein as the “Borrowers”), in connection with the $625,000,000 364-Day Credit Agreement, dated as of February 15, 2005 (the “Credit Agreement”), among the Banks parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, and Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents.  Unless otherwise defined herein, terms defined in the Credit Agreement are used herein as therein defined.

In that connection, we have reviewed an execution copy of the Credit Agreement.  We have also reviewed originals or copies of such other records of the Borrowers, certificates of officers of the Borrowers and agreements and other documents, as we have deemed necessary as a basis for the opinions expressed below.

In our review of the Credit Agreement and other documents, we have assumed:

(A)          The genuineness of all signatures.

(B)           The authenticity of the originals of the documents submitted to us.

(C)           The conformity to authentic originals of any documents submitted to us as copies.

(D)          That the Credit Agreement is the legal, valid and binding obligation of each party thereto, other than the Borrowers, enforceable against each such party in accordance with its terms.

(E)           That:

325

(1)           Each Borrower is an entity duly organized and validly existing under the laws of the jurisdiction of its organization.

(2)           Each Borrower has full power to execute, deliver and perform, and has duly executed and delivered, the Credit Agreement.

(3)           The execution, delivery and performance by each Borrower of the Credit Agreement have been duly authorized by all necessary action (corporate or otherwise) and do not:

(a)           contravene its  certificate or articles of incorporation, by-laws or other organizational documents;

(b)           except with respect to Generally Applicable Law, violate any law, rule or regulation applicable to it; or

(c)           result in any conflict with or breach of any agreement or document binding on it of which any addressee hereof has knowledge, has received notice or has reason to know.

(4)           Except with respect to Generally Applicable Law, no authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or (to the extent the same is required under any agreement or document binding on it of which an addressee hereof has knowledge, has received notice or has reason to know) any other third party is required for the due execution, delivery or performance by either Borrower of the Credit Agreement or, if any such authorization, approval, action, notice or filing is required, it has been duly obtained, taken, given or made and is in full force and effect.

We have not independently established the validity of the foregoing assumptions.

“Generally Applicable Law” means the federal law of the United States of America, and the law of the State of New York (including the rules or regulations promulgated thereunder or pursuant thereto) that a New York lawyer exercising customary professional diligence would reasonably be expected to recognize as being applicable to either Borrower or the Credit Agreement.  Without limiting the generality of the foregoing definition of Generally Applicable Law, the term “Generally Applicable Law” does not include any law, rule or regulation that is applicable to a Borrower or the Credit Agreement solely because such law, rule or regulation is part of a regulatory regime applicable to the specific assets or business of any party to the Credit Agreement or any of its affiliates due to the specific assets or business of such party or such affiliate.

Based upon the foregoing and upon such other investigation as we have deemed necessary and subject to the qualifications set forth below, we are of the opinion that the Credit Agreement is the legal, valid and binding obligation of each Borrower, enforceable against each Borrower in accordance with its terms.

326

Our opinion expressed above is subject to the following qualifications:

(a)           Our opinion is subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally (including without limitation all laws relating to fraudulent transfers).

(b)           Our opinion is subject to the effect of general principles of equity, including without limitation concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law).

(c)           We express no opinion with respect to the enforceability of indemnification provisions, or of release or exculpation provisions, contained in the Credit Agreement to the extent that enforcement thereof is contrary to public policy regarding the indemnification against or release or exculpation of criminal violations, intentional harm or violations of securities laws.

(d)           Our opinion with respect to the provisions of the Credit Agreement whereby the parties submit to the jurisdiction of the courts of the United States of America located in the State of New York, is subject to the limitations of 28 U.S.C. §§ 1331 and 1332 on subject matter jurisdiction of the Federal courts.

(e)           In connection with the provisions of the Credit Agreement which relate to forum selection of the courts of the United States located in the State of New York (including, without limitation, any waiver of any objection to venue or any objection that a court is an inconvenient forum), we note such court’s discretion to transfer an action from one Federal court to another under 28 U.S.C. § 1404(a) or to dismiss an action under the common law doctrine of forum non conveniens.

(f)            We express no opinion with respect to any Bid Loan or Negotiated Rate Loan made in an amount of less than $2,500,000 that bears interest at a rate greater than 25% per annum.

(g)           Our opinion is limited to Generally Applicable Law.

A copy of this opinion letter may be delivered by any of you to any person that becomes a Bank in accordance with the provisions of the Credit Agreement.  Any such person may rely on the opinions expressed above as if this opinion letter were addressed and delivered to such person on the date hereof.

This opinion letter is rendered to you in connection with the transactions contemplated by the Credit Agreement.  This opinion letter may not be relied upon by you or any person entitled to rely on this opinion pursuant to the preceding paragraph for any other purpose without our prior written consent.

This opinion letter speaks only as of the date hereof.  We expressly disclaim any responsibility to advise you of any development or circumstance of any kind, including any change of law or fact, that may occur after the date of this opinion letter even though such

327

development or circumstance may affect the legal analysis, a legal conclusion or any other matter set forth in or relating to this opinion letter.

Very truly yours,

SHEARMAN & STERLING LLP

328

EXHIBIT I

[FORM OF EXTENSION REQUEST]

                         , 200    

JPMorgan Chase Bank, N.A.,
as Administrative Agent
1111 Fannin, 10^th Floor
Houston, Texas 77002
Attention:  Danette Espinoza

Ladies and Gentlemen:

Reference is made to the $625,000,000 364-Day Credit Agreement, dated as of February 15, 2005, among Deere & Company, John Deere Capital Corporation, the Banks parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, and Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents (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 Termination Date to [INSERT 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:

329

EXHIBIT J

[FORM OF W-8BEN TAX LETTER]

[To be sent in DUPLICATE and accompanied
by TWO executed copies of Form W-8BEN of
the Internal Revenue Service]

[Bank’s Letterhead]

               , 200   

Deere & Company
One John Deere Place
Moline, Illinois  61265
Attention:  Treasurer

John Deere Capital Corporation
First National Bank Building
1 East First Street
Reno, Nevada  89501
Attention:  Manager

Re:$625,000,000 364-Day Credit Agreement
dated as of February 15, 2005 with Deere &
Company and John Deere Capital Corporation

Ladies and Gentlemen:

In connection with the $625,000,000 364-Day Credit Agreement, dated as of February 15, 2005, among Deere & Company, John Deere Capital Corporation, the Banks parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, and Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents, 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                         ].

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.

330

We enclose herewith two copies of Form W-8BEN of the U.S. Internal Revenue Service.

Yours faithfully,

[NAME OF BANK]

By:

Title:

cc:  JPMorgan Chase Bank, N.A., as Administrative Agent

331

EXHIBIT K

[FORM OF W-8ECI TAX LETTER]

[To be sent in DUPLICATE and accompanied
by TWO executed copies of Form W-8ECI of
the Internal Revenue Service]

[Bank’s Letterhead]

               , 200   

Deere & Company
One John Deere Place
Moline, Illinois  61265
Attention:  Treasurer

John Deere Capital Corporation
First National Bank Building
1 East First Street
Reno, Nevada  89501
Attention:  Manager

Re:$625,000,000 364-Day Credit Agreement
dated as of February 15, 2005 with Deere &
Company and John Deere Capital Corporation

Ladies and Gentlemen:

In connection with the above $625,000,000 364-Day Credit Agreement, dated as of February 15, 2005, among Deere & Company, John Deere Capital Corporation, the Banks parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, and Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents, 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.

332

We enclose herewith two copies of Form W-8ECI of the U.S. Internal Revenue Service.

Yours faithfully,

[NAME OF BANK]

By:

Title:

cc:           JPMorgan Chase Bank, N.A., as Administrative Agent

333

EXHIBIT L

[FORM OF AGREEMENT]

THIS AGREEMENT, dated as of        , 200    (“Agreement”), among Deere & Company (the “Company”), John Deere Capital Corporation (the “Capital Corporation”),                    (“New Bank”) and JPMorgan Chase Bank, N.A., 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”), JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, and Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents are parties to the $625,000,000 364-Day Credit Agreement, dated as of February 15, 2005 (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:

Principal Amount	Last day of Interest Period
IUnused Portion	N/A
IICommitted Rate Loans
Eurodollar Loans
1
2
3

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ABR Loans	N/A
IIIBid Loans
1
2
3
IVNegotiated 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 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

*              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.

335

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 (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, 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, bears to all of the outstanding Eurodollar Loans, 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

***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.

*To be completed upon agreement of Borrowers and New Bank.

336

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.

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 [W-8BEN] [W-8ECI] [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-8BEN] [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 [W-8BEN] and Form [W-8ECI], 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 [W-8BEN] [W-8ECI] 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-8BEN] 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.

337

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:
JPMORGAN CHASE BANK, N.A., as
Administrative Agent
By:
	Title:

338

EXHIBIT M

[FORM OF BID LOAN OR NEGOTIATED RATE LOAN NOTE]

PROMISSORY NOTE

$	New York, New York
	, 200

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 [JPMorgan Chase Bank, N.A. 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 $625,000,000 364-Day Credit Agreement, dated as of February 15, 2005 (the “Credit Agreement”), among the Borrower, [Deere & Company] [John Deere Capital Corporation], the Bank, the other financial institutions parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, and Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents.  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.

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:

339

EXHIBIT N

FORM OF
NEW BANK SUPPLEMENT

SUPPLEMENT, dated                  , to the $625,000,000 364-Day Credit Agreement (as in effect on the date hereof, the “Credit Agreement”) dated as of February 15, 2005, among Deere & Company (the “Company”), John Deere Capital Corporation, the banks and other financial institutions from time to time party thereto (each a “Bank,” and together, the “Banks”), JPMorgan Chase Bank, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”) for the Banks, Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, and Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents.  Unless the context otherwise requires, all capitalized terms used herein without definition shall have the meanings ascribed to them in the Credit Agreement.

W I T N E S S E T H:

WHEREAS, the Credit Agreement provides in subsection 2.20 thereof that any bank or financial institution, although not originally a party thereto, may become a party to the Credit Agreement in accordance with the terms thereof by executing and delivering to the Borrowers and the Administrative Agent a supplement to the Credit Agreement in substantially the form of this Supplement; and

WHEREAS, the undersigned was not an original party to the Credit Agreement but now desires to become a party thereto;

NOW, THEREFORE, the undersigned hereby agrees as follows:

1.             The undersigned agrees to be bound by the provisions of the Credit Agreement and agrees that it shall, on the date this Supplement is accepted by the Borrowers and the Administrative Agent, become a Bank for all purposes of the Credit Agreement to the same extent as if originally a party thereto, with a Commitment of $                             .

2.             The undersigned (a) represents and warrants that it is legally authorized to enter into this Supplement; (b) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements delivered pursuant to Section 5.1 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Supplement; (c) agrees that it has made and will, independently and without reliance upon any 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 decisions in taking or not taking action under the Credit Agreement or any instrument or document furnished pursuant hereto or thereto; (d) appoints and authorizes the Administrative Agent to take such action as administrative agent on its behalf and to exercise such powers and discretion under the Credit Agreement or any instrument or document furnished pursuant hereto or thereto as are delegated to the Administrative Agent by the terms thereof, together with such powers as are incidental thereto; and (e) agrees that it will `be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the

340

terms of the Credit Agreement are required to be performed by it as a Bank including, without limitation, its obligation pursuant to subsection 2.17(c) of the Credit Agreement.

3.             The undersigned’s address for notices for the purposes of the Credit Agreement is as follows:

Attention:

Fax:

IN WITNESS WHEREOF, the undersigned has caused this Supplement to be executed and delivered by a duly authorized officer on the date first above written.

	[NAME OF NEW BANK]
	By:
	Title:
Accepted this            day of
, 200
DEERE & COMPANY
By:
Title:
JOHN DEERE CAPITAL CORPORATION
By:
Title:

341

Accepted this               day of

                                 , 200    

JPMORGAN CHASE BANK, N.A.,

  as Administrative Agent

By:

Title:

342

EXHIBIT O

FORM OF
COMMITMENT INCREASE SUPPLEMENT

SUPPLEMENT, dated               200   , to the $625,000,000 364-Day Credit Agreement (as in effect on the date hereof, the “Credit Agreement”) dated as of February 15, 2005, among Deere & Company (the “Company”), John Deere Capital Corporation, the banks and other financial institutions from time to time party thereto (each a “Bank,” and together, the “Banks”), JPMorgan Chase Bank, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”), Citibank, N.A. and Credit Suisse First Boston, as Documentation Agents, Merrill Lynch Bank USA, as Co-Documentation Agent, and Bank of America, N.A. and Deutsche Bank AG New York Branch, as Syndication Agents.  Unless the context otherwise requires, all capitalized terms used herein without definition shall have the meanings ascribed to them in the Credit Agreement.

W I T N E S S E T H:

WHEREAS, pursuant to the provisions of subsection 2.20 of the Credit Agreement, the undersigned may increase the amount of its Commitment in accordance with the terms thereof by executing and delivering to the Borrowers and the Administrative Agent a supplement to the Credit Agreement in substantially the form of this Supplement; and

WHEREAS, the undersigned now desires to increase the amount of its Commitment under the Credit Agreement;

NOW THEREFORE, the undersigned hereby agrees as follows:

1.             The undersigned agrees, subject to the terms and conditions of the Credit Agreement, that on the date this Supplement is accepted by the Borrowers and the Administrative Agent it shall have its Commitment increased by $                    , thereby making the amount of its Commitment $                      .

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IN WITNESS WHEREOF, the undersigned has caused this Supplement to be executed and delivered by a duly authorized officer on the date first above written.

				[NAME OF BANK]
				By:
				Title:
Accepted this            day of
, 200
DEERE & COMPANY
By:
	Title:
JOHN DEERE CAPITAL CORPORATION
By:
		Title:
Accepted this               day of
, 200
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
By:
			Title:

344

EX-10.1

EXHIBIT 10.1

[Date]

Participant Name

Address

City, State, Zip Code

Dear Name:

I am pleased to advise you that on [Date] (the “grant date”) you were awarded X,XXX Restricted Stock Units (RSU’s) pursuant to the John Deere Omnibus Equity and Incentive Plan (Plan). Since this letter agreement, together with the Plan, contains the terms of your grant you should read this letter carefully. Please note that your signature is required at the bottom of page four.

RSU’s are an element of total executive compensation designed as a long-term incentive to encourage ownership and focus thinking on stockholder value.

RSU’s are common stock equivalents and represent the right to receive an equivalent number of shares of Deere & Company (Company) $1 par common stock (Common Stock) if and when certain vesting and retention requirements, as detailed below, are satisfied.

Individual awards are determined by the Deere & Company Board of Directors Compensation Committee (Committee).

Your RSU’s are subject to the following provisions:

  (1)Restriction Period. Except as provided in paragraph (5) below, your RSU’s will vest on the third anniversary of the grant date.

In addition, you are required to hold your RSU’s until the earlier of:

(i) the fifth anniversary of the grant date; or

(ii) the first business day in the later of the January or July following your retirement or termination of employment.

When the vesting and retention restrictions on your RSU’s lapse, you will receive a certificate for the shares of common stock represented by your RSU’s (net of any shares withheld for taxes) and your RSU’s will terminate.

You may not sell, transfer, gift, pledge, assign or otherwise alienate the RSU’s while they are subject to the vesting or retention restrictions. Any attempt to do so contrary to the provisions hereof shall be null and void.

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  (2)Deferral Election. On or prior to the earlier of:

(i) the fourth anniversary of the date of grant of the RSU’s; or

(ii) the date that is twelve months prior to your retirement or termination of employment,

you may irrevocably elect to defer the delivery of the shares of Common Stock that would otherwise be due by virtue of the lapse of the retention restriction set forth in paragraph (1) above.  Any deferral election received after the earlier of the above dates shall be null and void and of no effect.

If such deferral election is made, the RSU’s will be converted to shares of Common Stock upon the earlier of:

(i) the tenth (or later, if elected) anniversary of the grant date; or

(ii) five years after the first business day in January following your retirement or termination of employment.

Making the deferral election will defer the conversion for five years (or possibly more, if elected) from the date the conversion would have occurred but for the election.  Deferral election forms may be obtained from and returned to Donna Goodwin, Executive Compensation Coordinator, Deere & Company.

The share certificate (net of any shares withheld for taxes) will be delivered to you as soon as practicable thereafter.  The RSU’s shall be retained by you and shall be non-transferable prior to conversion.

  (3)Voting Rights. You have no voting rights with respect to the RSU’s.

  (4)Dividends and Other Distributions. You are entitled to receive cash payments on the RSU’s equal to any cash dividends paid during the restriction period with respect to the corresponding number of shares of Common Stock. If any stock dividends are paid in shares of Common Stock during the restriction period, you will receive additional RSU’s equal to the number of Common Stock shares paid with respect to the corresponding number of shares of Common Stock.

  (5)Termination of Employment. If you terminate employment during the vesting period due to disability or retirement pursuant to the John Deere Pension Plan for Salaried Employees or any successor plan, subject to paragraph (5) below, the RSU’s will continue to vest over the three-year period from the date of grant.

If your employment terminates during the vesting period due to death, a prorated number of the RSU’s will vest based on the number of full months employed after the grant date divided by 36 months. The remaining unvested RSU’s will be forfeited. The retention restrictions will lapse on the first business day in January following your death at which time the vested RSUs shall be converted to shares of common stock notwithstanding any deferral election.

If your employment terminates for cause, or for any other reasons not specifically mentioned herein, all unvested RSU’s held by you at that time shall be forfeited by you.

346

The Committee may, at its sole discretion, waive any automatic forfeiture provisions or apply new restrictions to the RSU’s.  There shall be no acceleration of the lapse of restrictions or deferral of conversions of RSU’s except as permitted by Section 409A of the Internal Revenue Code or by regulations of the Secretary of the United States Treasury.

  (6)Non-Compete Condition. In the event that your employment terminates during the 36 month vesting period of the RSU’s with the consent of the Committee or by reason of retirement or disability, your rights to the continued vesting of the RSU’s shall be subject to the conditions that until the RSU’s vest, you shall (a) not engage, either directly or indirectly, in any manner or capacity as advisor, principal, agent, partner, officer, director, employee, member of any association or otherwise, in any business or activity which is at the time competitive with any business or activity conducted by the Company and (b) be available, except in the event of your death, at reasonable times for consultations (which shall not require substantial time or effort) at the request of the Company’s management with respect to phases of the business with which you were actively connected during employment, but such consultations shall not (except if your place of active service was outside of the United States) be required to be performed at any place or places outside of the United States of America or during usual vacation periods or periods of illness or other incapacity. In the event that either of the above conditions is not fulfilled, you shall forfeit all rights to any unvested RSU’s, held on the date of the breach of the condition. Any determination by the Committee, which shall act upon the recommendation of the Chairman, that you are, or have, engaged in a competitive business or activity as aforesaid or have not been available for consultations as aforesaid shall be conclusive.

  (7)Conformity with Plan. Your RSU’s award is issued pursuant to Section 5.1 (Other Awards) of the Plan and is intended to conform in all respects with the Plan. Inconsistencies between this letter and the Plan shall be resolved in accordance with the terms of the Plan. By executing and returning the enclosed copy of this letter, you agree to be bound by all the terms of the Plan and restrictions contained in this letter. All definitions stated in the Plan shall be fully applicable to this letter.

  (8)Amendment. This Agreement may be amended only by a writing executed by the Company and you that specifically states that it is amending this Agreement. Notwithstanding the foregoing, this Agreement may be amended solely by the Committee by a writing which specifically states that it is amending this Agreement, so long as a copy of such amendment is delivered to you, and provided that no such amendment adversely affecting your rights hereunder may be made without your written consent. Without limiting the foregoing, the Committee reserves the right to change, by written notice to you, the provisions of the RSU’s or this Agreement in any way it may deem necessary or advisable to carry out the purpose of the grant as a result of any change in applicable laws or regulations or any future law, regulation, ruling, or judicial decision, provided that any such change shall be applicable only to RSU’s which are then subject to restrictions as provided herein.

  (9)Severability. If all or any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid. Any part of this Agreement so declared to be unlawful or invalid shall, if possible, be construed in a manner that will give effect to the terms thereof to the fullest extent possible while remaining lawful and valid.

347

(10)No Employment Rights. Nothing herein confers any right or obligation on you to continue in the employ of the Company or any Subsidiary, nor shall this document affect in any way your right or the right of the Company or any Subsidiary, as the case may be, to terminate your employment at any time.

(11)Change of Control Events.  For purposes of Article VII of the Plan as it applies to the RSU’s awarded in this letter, notwithstanding the definitions in Article VII, a “Change of Control” and “Potential Change of Control” shall have the meanings assigned to “Change in Control Events” under Section 409A of the Internal Revenue Code and related regulations of the Secretary of the United States Treasury.  Article VII of the Plan shall be administered with respect to the RSU’s so that it complies in all respects with Section 409A and related regulations.

Please execute this letter in the space provided to confirm your understanding and acceptance of this letter agreement. You may make a photocopy for your records if you wish.

	DEERE & COMPANY
By:
	S. R. Allen
	President, Global Financial Services and
	Corporate Human Resources

The undersigned hereby acknowledges having read the Plan and this letter, and hereby agrees to be bound by all the provisions set forth in the Plan and this letter.

Participant Name

348

EX-12

EXHIBIT 12

DEERE & COMPANY AND CONSOLIDATED SUBSIDIARIES

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

	Three Months Ended January 31				Year Ended October 31
	2005		2004		2004		2003		2002		2001			2000
	(In thousands of dollars)
Earnings:
Income of consolidated group before income taxes	$	345,515	$	262,192	$	2,113,673	$	971,277	$	602,705	$	(24,757	)	$	777,507
Dividends received from unconsolidated affiliates	502		543		21,579		3,151		2,236		1,675			3,065
Fixed charges excluding capitalized interest	170,681		151,150		606,460		643,511		659,263		787,737			693,626
Total earnings	$	516,698	$	413,885	$	2,741,712	$	1,617,939	$	1,264,204	$	764,655		$	1,474,198
Fixed charges:
Interest expense of consolidated group including capitalized interest	$	167,288	$	147,409	$	592,802	$	628,647	$	637,571	$	766,254		$	677,424
Portion of rental charges deemed to be interest	3,592		3,761		14,368		15,044		22,145		22,030			17,122
Total fixed charges	$	170,880	$	151,170	$	607,170	$	643,691	$	659,716	$	788,284		$	694,546
Ratio of earnings to fixed charges*	3.02		2.74		4.52		2.51		1.92				**	2.12

The computation of the ratio of earnings to fixed charges is based on applicable amounts of the Company and its consolidated subsidiaries plus dividends received from unconsolidated affiliates. “Earnings” consist of income before income taxes, the cumulative effect of changes in accounting and fixed charges excluding capitalized interest. “Fixed charges” consist of interest on indebtedness, amortization of debt discount and expense, an estimated amount of rental expense that is deemed to be representative of the interest factor, and capitalized interest.

*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.

**For the year ended October 31, 2001, earnings available for fixed charges coverage were $24 million less than the amount required for a ratio of earnings to fixed charges of 1.0.

349

EX-23

EXHIBIT 23

[Letterhead]

Deloitte & Touche LLP

Two Prudential Plaza

180 North Stetson Avenue

Chicago, Illinois 60601

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 2-62630, 2-76637, 2-90384, 33-15949, 33-17990, 33-24397, 33-44294, 33-49740, 33-49742, 33-49762, 33-55551, 33-55549, 33-57897, 333-01477, 333-62665, 333-62669, 333-46790, and 333-103757 of Deere & Company and subsidiaries (“Deere & Company”) on Form S-8 and in Registration Statement No. 333-92134 of Deere & Company on Form S-3 of our report dated December 17, 2004, March 9, 2005, as to the cash flow reclassification described in Notes 1, 9, and 26 (which report on the consolidated financial statements expresses an unqualified opinion and includes an explanatory paragraph related to a change in the method of accounting for goodwill and other intangible assets to conform to Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, effective November 1, 2002) related to the financial statements of Deere & Company as of October 31, 2004 and 2003 and for each of the three years in the period ended October 31, 2004, appearing in Part II. Item 5. of the Quarterly Report on Form 10-Q of Deere & Company for the quarterly period ended January 31, 2005, and to the reference to us under the heading “Experts” in the Prospectuses, which are part of such Registration Statements.

/S/ DELOITTE & TOUCHE LLP

Chicago, Illinois

March 9, 2005

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, R. W. Lane, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of Deere & Company;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
		(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
		(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
		(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
		(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
		(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March 14, 2005	By:	/s/	R. W. Lane
				R. W. Lane
				Principal Executive Officer

351

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Nathan J. Jones, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of Deere & Company;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
		(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
		(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
		(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
		(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
		(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date:	March 14, 2005		By:	/s/ Nathan J. Jones
					Nathan J. Jones
					Principal Financial Officer

352

EX-32

EXHIBIT 32

STATEMENT PURSUANT TO

18 U.S.C. SECTION 1350

AS REQUIRED BY

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Deere & Company (the “Company”) on Form 10-Q for the period ending January 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certify that to the best of our knowledge:
	1.	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
	2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
March 14, 2005			/s/ R. W. Lane	Chairman, President and Chief Executive Officer
			R. W. Lane
March 14, 2005			/s/ Nathan J. Jones	Senior Vice President and Chief Financial Officer
			Nathan J. Jones
A signed original of this written statement required by Section 906 has been provided to Deere & Company and will be retained by Deere & Company and furnished to the Securities and Exchange Commission or its staff upon request.

353