Exhibit 10.28
INTEGRATED MARKETING
AGREEMENT
THIS AGREEMENT (“Agreement”) is entered into as of the
16th day of October, 2001, by and between Deere & Company, a
Delaware corporation (“Deere”), and Hitachi
Construction Machinery Co., Ltd., a Japan corporation
(“Hitachi”).
RECITALS
A.
On May 16, 1988, Deere and Hitachi (collectively “the
Parties”) entered into a Joint Venture Agreement (“J V
Agreement”) to establish a facility in North America for the
manufacture and distribution of excavators, mining equipment,
attachments, components and repair parts (the
“Products”) of the types designed and manufactured by
Deere in the United States and by Hitachi in Japan.
B.
Pursuant to the J V Agreement, the Parties formed a close
corporation under the General Corporation Law of Delaware known as
Deere-Hitachi Construction Machinery Corporation
(“Deere-Hitachi”), and since its formation
Deere-Hitachi has carried on the business contemplated by the J V
Agreement.
C.
The geographic territory for the distribution of the Products
produced under the JV Agreement was defined as: North America,
Central America and South America (the
“Territory”).
D.
Marketing of Deere-branded Products produced under the J V
Agreement has been and continues to be the responsibility of Deere
& Company or one of its subsidiaries (for purposes of this
Agreement, John Deere Construction and Forestry
Company)(“JDCFC”); marketing of Hitachi-branded
Products has been and continues to be the responsibility of Hitachi
Construction Machinery (America) Corp. (“HCMA”) and
Hitachi Construction Machinery Canada Ltd. (“HCMC”),
both subsidiaries of Deere-Hitachi.
E.
Deere and Hitachi are now desirous of implementing operational
efficiencies in the marketing of the Products within the Territory
which will address market share declines in both their distribution
channels, allow for greater flexibility in responding to economic
conditions, and enable the Parties to compete effectively with
larger integrated manufacturers of excavators, as well as certain
mining equipment, including mining excavators, shovels and
trucks.
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COVENANTS
IN CONSIDERATION of the premises and the mutual covenants of the
Parties set forth herein, the Parties hereto agree as
follows:
ARTICLE I
Reorganization of Product Marketing within the
Territory
1.1
Integration of Marketing Organizations . Deere and
Hitachi shall cause the integration of the marketing functions of
HCMA, HCMC and JDCFC into a single operating unit responsible for
the distribution of products within North America, Central America
and South America. Integration shall include the dissolution of
HCMA and HCMC and the transfer of their assets to Deere-Hitachi.
The parties shall act in good faith and take such actions as are
necessary to effectuate the dissolution, transfer of assets and
integration of their marketing organizations.
1.2
Operations following Integration . Following the
integration of HCMA and HCMC into Deere-Hitachi as provided in
Section 1.1, JDCFC shall assume sole responsibility for the
distribution of Products within the Territory. It is the intent of
the Parties that JDCFC shall function as, and perform the types of
services following the Integration as HCMA, HCMC and JDCFC
separately performed prior to the Integration. The integration
shall commence as soon as practicable after the execution of this
Agreement, but no later than 1 January 2002 and be completed by 31
December 2002.
1.3
Purposes . The Parties agree that integration of their
respective marketing organizations will result in substantial cost
reductions through the sharing of common marketing and product
support systems, consolidation of facilities, as well as realize
synergies through a common parts distribution system. The purpose
of this integration, therefore, is to implement operational
efficiencies in the distribution of the Products within the
Territory, to address market share declines in both their
distribution channels, achieve greater flexibility in responding to
economic conditions, and to enable the Parties to compete
effectively with larger integrated manufacturers of excavators, as
well as mining equipment, including mining excavators, shovels and
trucks.
It is the mutual understanding
between the Parties that this Agreement will be accomplished by
maintaining and expanding the total business in the
Territory.
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ARTICLE II
Consolidation of Facilities
2.1
Houston, Toronto and Vancouver . The Houston, Toronto
and Vancouver facilities will be closed, and the activities
conducted at such facilities shall be assumed by JDCFC at
facilities operated by JDCFC. The Parties agree that upon closure
of these operations Deere-Hitachi will take the necessary steps to
terminate the Toronto and Vancouver leases, and to close the
Houston facility.
2.2
Staffing . As the Houston, Toronto and Vancouver
operations are closed, the management of JDCFC will determine which
of the employees at these facilities will be retained as employees
of the integrated organization. The Parties also agree that Hitachi
will designate a senior manager who will be appointed to a position
within the JDCFC marketing organization, with responsibility for
the Hitachi division of JDCFC, and reporting to JDCFC’s
Director of North American Operations. Hitachi will also designate
an additional senior manager to serve on the Quality Council of
JDCFC and reporting directly to the President of JDCFC. JDCFC shall
have the right to approve both senior managers designated by
Hitachi, provided that such approval is not unreasonably withheld.
Additional Hitachi personnel will be assigned to JDCFC to support
the integrated excavator and mining business as determined by JDCFC
Management.
ARTICLE III
Expansion of Products
3.1
Mining Equipment . The Parties agree that mining
equipment, described as rigid frame haul trucks, shovels and
excavators greater than 100 metric tons (MT), currently being
distributed in the Territory by Deere-Hitachi will be distributed
by JDCFC pursuant to the terms of a separate Distribution and
Consignment Agreement substantially in the form attached hereto as
Exhibit A.
3.2
Euclid Trucks . Euclid-Hitachi Heavy Equipment, Ltd.
(“Euclid-Hitachi currently distributes a rigid frame haul
truck for use in mining, under the Euclid-Hitachi brand name. The
Parties agree that this product will be distributed by
Deere-Hitachi and they shall cause Deere-Hitachi to enter into a
Distribution and Supply Agreement with Euclid-Hitachi for this
purpose substantially in the form attached hereto as Exhibit B.
Deere -Hitachi will also supply the Euclid-Hitachi brand rigid
frame haul truck to JDCFC for distribution
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through the integrated distribution organization
pursuant to a separate Distribution and Consignment Agreement
substantially in the form attached hereto as Exhibit C.
3.3
Growth Potential . The Parties acknowledge the
importance of supporting the growth and profitability related to
the distribution of mining products, and will work toward
maintaining and improving the distribution of that product line by
adding other complimentary products which may be necessary to grow
the business.
3.4
Protection Against Marketing Losses . The Parties
agree that operating losses associated with the distribution of
excavators > 100 MT, shove
