EXHIBIT 10.6
▇▇▇▇ DEERE
AGRICULTURAL DEALER
FINANCE AGREEMENT
Dealer RDO Equipment Co.
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Town Casselton
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State North Dakota
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[LOGO]
APPLICATION
To: ▇▇▇▇ Deere Company - A Division of Deere & Company
▇▇▇▇ ▇▇▇▇ ▇▇.
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▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇
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Gentlemen:
I (the undersigned Dealer, whether an individual, partnership, or
corporation) wish to participate in the ▇▇▇▇ Deere Finance Plan for the
installment financing of retail sales of Agricultural Equipment as outlined in
the Terms and Conditions appearing on succeeding pages of this booklet.
This Application shall be effective on 1 August 1983, or as of the date it
is executed by me, whichever is later.
I understand that by signing this Application I do not obligate myself to
send installment contracts to you for credit to my account, but that if I do
send you eligible contracts for such credit, their acceptance will be governed
by the Terms and Conditions. I accept the obligations stated in the Terms and
Conditions as to all contracts I may send you hereafter. If you are presently
holding contracts or leases previously assigned to you by me, collection thereof
and all related charges to my reserve or other accounts will be as provided in
the Terms and Conditions in effect on the date such contracts were accepted.
I understand that you may accept or reject at your discretion any contracts
submitted by me, or may discontinue further acceptances at any time.
I agree that if you notify me of amendments to the Terms and Conditions,
such amendments will apply to any contracts I may send you after receiving such
notice without the execution by me of a new Application or other instrument
specifically adopting those amendments, but the Terms and Conditions applicable
to contracts submitted by me before notice of such amendment cannot be changed
without my consent.
When a written assignment or endorsement is required on a contract sent to
you for credit to my account, the failure on my part to execute such assignment
or endorsement shall not prevent such assignment or endorsement from being
effective, and I hereby authorize any of your employees designated by you to
execute such assignment or endorsement on my behalf.
If my signature as "Secured Party" is required on any Financing Statement
submitted with a contract or if my signature as "Seller" is required on a
Purchase Order submitted with a contract and such document has not been signed
by me, I hereby authorize any of your employees designated by you to sign such
Statement or Purchase Order on my behalf. Further, your acceptance of this
Application shall constitute authorization for me or my employees to sign
Financing Statements on your behalf as "Secured Party" where such a signature is
required as a condition of filing such Financing Statements.
Sincerely yours,
RDO Equipment Co.
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By ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Pres.
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Date 1/3/94
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Application accepted:
Date 15 Feb 1994
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▇▇▇▇ Deere Company
By ▇▇ ▇▇▇▇▇
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▇▇▇▇ DEERE FINANCE PLAN
TERMS AND CONDITIONS
SECTION 1 --
ACCEPTANCE AND CREDIT
1.1 Customers' installment obligations submitted for credit under the ▇▇▇▇
Deere Finance Plan (hereafter called "contracts") must meet the
requirements set out in the ▇▇▇▇ Deere Retail Finance Manual or
supplemental bulletins thereto (hereafter called "Manual"). The Terms and
Conditions of this Agreement shall not apply, and the term "contracts"
shall not apply, to customers' installment obligations resulting from the
sale of Consumer Products unless such Consumer Products are part of the
same contract with items eligible for financing under the ▇▇▇▇ Deere
Finance Plan for Agricultural Equipment. Unless otherwise specified
herein, the term "contract" shall include Retail Installment Sale Contracts
and Loan Contracts. The term "debtor" shall mean the Purchaser under a
Retail Installment Sale Contract and the Borrower under a Loan Contract.
1.2 If the Company accepts the contract for credit, the Dealer and the debtor
will be notified. All installment payments will be made directly to the
Company.
1.3 Contracts will include finance charge, computed as prescribed in the
Manual. If the contract includes more finance charge than provided in the
Manual, the excess will be endorsed as a credit to the debtor on the last
maturing installment. If the contract includes less finance charge than
provided in the Manual, the Company may accept it but the Dealer will be
charged for the shortage.
1.4 By submitting a contract for credit, the Dealer makes the following
representations and promises:
1.4.1 That the contract is genuine and that the debtor is of legal age.
1.4.2 That the contract and other documents submitted therewith accurately
reflect the transaction with respect to the selling price, down
payment, trade-in, trade-in allowance and other items shown thereon.
1.4.3 That the Dealer has not knowingly misrepresented any other
information respecting the contract or the transaction, and knows of
no misstatements or untruths in any financial or other information
furnished by the debtor.
1.4.4 That, at the time the contract (except contracts covering repair and
overhaul work) is sent to the Company, there are no liens or
encumbrances on the equipment superior to the lien of the contract
and that there are no liens or encumbrances on any equipment taken
in trade as part of the transaction. If the regular down payment
requirement is reduced because equipment already in the debtor's
possession is made subject to a security agreement or chattel
mortgage in favor of the Company (see Manual for examples of the use
of equity in such equipment), the Dealer warrants that there are no
liens or encumbrances on such equipment superior to that granted by
such Security Agreement or Chattel Mortgage.
1.4.5 If the debtor resides in a state which has enacted the Uniform
Commercial Code, that the Dealer has filed a Financing Statement
with the appropriate filing officer or officers within the period of
time necessary to assure priority over purchasers from and other
creditors of the debtor; and, for sales of equipment that are
classified under the law as "inventory", that all perfected secured
parties of record have received proper notice prior to the delivery
of the equipment.
If the debtor resides in the state of Louisiana, that the Dealer has
filed a Notice of Security Interest with the appropriate filing
officer as soon as possible after the contract is executed by the
debtor.
1.4.6 That no part of the down payment was advanced by the Dealer. It
shall not be considered a violation of this section, however, if the
Dealer collects the down payment according to the Dealer's normal
accounts
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receivable procedure within the 30-day billing cycle that follows
the date of sale.
1.4.7 That the contract is not subject to any defense, offset or
counterclaim.
If any representation or promise is untrue, the Company shall at any time
have the right to require the Dealer to purchase the contract and pay the
Company the unpaid balance thereon including any accrued interest and
earned finance charge, and the Dealer hereby promises to pay such amount on
demand. Upon payment of such amount by the Dealer, the Dealer shall
succeed to all the rights of the Company under the contract and the Company
shall assign the contract to the Dealer. At the option of the Company, the
contract may be delivered to the Dealer prior to payment by him of such
amount, but the Dealer grants the Company a security interest in the
contract and any equipment subject to such contract to secure such payment.
Any knowing misrepresentation concerning a contract or the related
transaction shall be deemed to be a falsification of a contract and
therefore a default under the Security Agreement or Chattel Mortgage
between the Dealer and the Company and will give the Company the right, at
its option, to either immediately cancel the Dealer's appointment as a ▇▇▇▇
Deere Authorized Agricultural Dealer or to suspend all of the Dealer's
participation privileges in the ▇▇▇▇ Deere Finance Plan.
1.5 If a contract with an amount financed of $1500 or more is accepted by the
Company, the balance remaining after deducting the finance charge will be
credited to the Dealer as follows:
1.5.1 1% of the face amount of the contract (including the finance charge)
will be credited to the Dealer's reserve account described in
Section 2.
1.5.2 Occasionally, the Company may conclude that a debtor does not
qualify for credit in the full amount of the contract, but may be
willing to accept the contract for partial credit. If the Dealer
wishes to submit the contract on this basis, the excess will be
credited to the Dealer's contingent earnings account described in
Section 1.7.
1.5.3 The remainder (called the "net credit value") of the contract will
be credited to the Dealer's regular statement as provided in Section
1.5.4 or 1.5.5.
1.5.4 If the contract is a Loan Contract financing equipment on which an
amount is owed to the Company by the Dealer (called the "Dealer's
debt") and the net credit value is equal to or less than the
Dealer's debt, the debtor's obligation under the contract will be
accepted in substitution for the Dealer's debt to the extent of the
net credit value and any amount of the Dealer's debt remaining will
be due in accordance with the Company's Agricultural Dealers Terms
Schedule. If the net credit value of such a contract exceeds the
Dealer's debt, that portion of the obligation equal to the Dealer's
debt will be accepted in substitution for the Dealer's debt and the
excess will be used to offset other currently due indebtedness of
the Dealer to the Company. If such excess net credit value exceeds
such other indebtedness, the amount not required to offset such
other indebtedness will be credited to the Dealer's account or, upon
request by the Dealer, will be paid to the Dealer in cash.
1.5.5 If the contract is a Loan Contract on equipment on which no amount
is owed to the Company, or is a Retail Installment Sale Contract,
the net credit value will be used to offset currently due
indebtedness of the Dealer to the Company. If the net credit value
exceeds such indebtedness, the excess will be credited to the
Dealer's account or, upon request by the Dealer, will be paid to the
Dealer in cash.
1.6 If a contract with an amount financed of less that $1500 is accepted by the
Company, the balance remaining after deducting the finance charge will be
credited to the Dealer's account and used to offset currently due
indebtedness of the Dealer to the Company. If the net credit to the
account exceeds such indebtedness, the excess will be credited to the
Dealer's account or, upon request by the Dealer, will be paid to the
Dealer in cash.
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1.7 The amount credited to the contingent earnings account when a particular
contract was accepted will be paid to the Dealer when the net credit value
of the contract has been recovered by the Company or at such earlier time
as the Company agreed to at the time the contract was accepted. If a loss
is sustained with respect to a particular contract, the amount in the
contingent earnings account resulting from that contract will be used to
reduce the amount of loss charged to the reserve account. Interest will be
accrued on amounts credited to the contingent earnings account at the rate
of 8% per annum and paid to the Dealer at the time such amounts are paid to
him.
1.8 Occasionally, the Company may conclude, with respect to a contract with
an amount financed of $1500 or more, that a debtor does not qualify under
the Company's credit standards and, in such cases, the Company may require
the Dealer to execute an agreement to purchase the contract in the event of
default by the debtor as a condition to accepting the contract.
SECTION 2 --
DEALER'S RESERVE
2.1 When a contract is accepted by the Company under Section 1.5, 1% of its
face amount will be credited to the Dealer's reserve account. The reserve
account will also be credited with interest at 8% per annum on the average
of the month-end balances for each 12-month period ending 31 December,
unless the Company, by bulletin to the Dealer, specifies a different
percentage for reserves attributable to contracts with debtors residing in
states with financing rate limitations. In addition, the activity bonus
described in Section 5 will be credited to the reserve account as of the
close of business on 31 December each year.
2.2 If, at 31 December, the Dealer's reserve (including interest accrued
thereon and any activity bonus earned by the Dealer) exceeds 3% of the
balance then outstanding on all contracts accepted from the Dealer, the
reserve will be adjusted to 3% of such balance and the excess will be
applied to currently due indebtedness of the Dealer to the Company or to
any other company affiliated with the Company. Any part of such excess
which remains after all currently due indebtedness of the Dealer has been
satisfied will be paid to the Dealer in cash. No adjustment will be made
which reduces the reserve account below $1000. If the Dealer wishes to do
so, he may forego the adjustment to which he is entitled as of a particular
31 December. In such event, no adjustment will be made until the
succeeding 31 December at which time the adjustment the Dealer is then
entitled to will be determined in the regular manner.
2.3 If any contract with an amount financed of $1500 or more (excluding
contracts which are the subject of an agreement to purchase under Section
1.8 and contracts for repair and overhaul work) accepted from the Dealer is
not collected in full, the loss will be charged to the reserve account,
together with expenses incurred by the Company in repossessing and
disposing of equipment, the cost of discharging any mechanic's or other
lien on the equipment where necessary to obtain possession or realize on
the collateral, and legal expenses incurred either in getting possession of
equipment, foreclosing the security interest therein or attempting to
collect any deficiency or balance owing (all of which may be referred to
herein as "repossession costs"). If, on any 31 December, total losses
charged against the Dealer's reserve account during the preceding 12 months
exceed the total amount credited to the reserve account during the period
(including interest accrued thereon and any activity bonus earned by the
Dealer) plus any balance as of the close of business 31 December of the
previous year, an adjustment will be made in the reserve account whereby
such excess losses will be written off and absorbed by the Company.
2.4 If, at 31 December, the period of the Dealer's latest appointment as an
Authorized Dealer has been canceled or has expired, no adjustment will be
made in the reserve account until any one of the following events has
occurred:
2.4.1 A new Authorized Dealer Agreement is executed, in which event the
adjustments described in Sections 2.2 and 2.3 will be made as of the
previous 31 December.
2.4.2 At 31 December the reserve account balance exceeds the outstanding
balance on
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all contracts accepted from the Dealer, plus 10% of such balance, in
which event the reserve account will be adjusted to that amount and
the excess will be paid or credited to the Dealer as the Company may
elect.
2.4.3 All contracts accepted from the Dealer have been liquidated in full,
in which event any credit balance remaining in the reserve account
(including interest accrued to date) will be applied first against
the Dealer's indebtedness to the Company or to any other company
affiliated with the Company, and any remainder paid to the Dealer in
cash.
SECTION 3 --
COLLECTION AND LOSSES -- CONTRACTS WITH AN AMOUNT FINANCED OF $1500 OR MORE
3.1 The Dealer will render friendly assistance in the collection of contracts,
and will store repossessed equipment when requested by the Company, all
without charge or expense to the Company.
3.2 In the event of default in any contract with an amount financed of $1500 or
more, except contracts which are the subject of an agreement to purchase
under Section 1.8 or are for repair and overhaul work, the Company will
take whatever steps for enforcement, collection, securing, renewing,
extending or compromising the contract it believes will be in the best
interests of the Dealer and the Company. If losses occur, the procedure
for determining the charge to the reserve account will be as follows:
3.2.1 Before repossessing the equipment, bringing suit or compromising a
contract, the Company will ordinarily (but is not obligated to)
notify the Dealer, whereupon the Dealer may purchase the contract
for the unpaid balance including any interest accrued, and earned
finance charge.
3.2.2 After the equipment has been repossessed, the Company will
ordinarily (but is not obligated to) offer to sell all its rights in
the contract including its rights in the equipment, to the Dealer
for the unpaid balance therein including earned interests and
finance charges plus any repossession costs incurred by the Company.
If the Dealer accepts the contract, he assumes full responsibility
for observing any applicable rules of law as to the disposition of
the equipment and the application of proceeds of such disposition,
and will hold the Company harmless from any and all expense or
liability to the debtor or other person arising out of alleged
improper disposition of the equipment or application of proceeds.
3.2.3 If there has been no purchase of the equipment and the contract
under Section 3.2.2, the Company will establish a fair value on the
equipment as quickly as possible. This determination will be by
public or private sale where the Company deems it necessary and
worthwhile to have such a sale because of legal requirements or in
order to preserve rights against the debtor. Where such sale is not
deemed necessary or worthwhile, the Company will fix the value of
the equipment by its own appraisal.
If the value established for the equipment is less than the
balance unpaid on the contract, including earned interest and finance
charges, plus any repossession costs incurred by the Company, the
difference will be considered a loss and charged to the reserve
account. Where the Company has fixed the value of the repossessed
equipment by its own appraisal and later sells the equipment for a
price lower or higher than the appraised value fixed by it, the loss
or profit will be borne by the Company.
3.2.4 If, after establishing a value on the equipment and balancing the
probable cost of further action against the debtor against the
likelihood of actually receiving further collections thereby, the
Company concludes that further action is in the best interests of
the Company and the Dealer, it will so notify the Dealer and proceed
with such action. Charges and credits to the reserve account
arising out of such further action will be as follow:
(1) If the further action is completed in the same calendar year for
which the reserve
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account was charged with the loss, the reserve account will be
credited with the amount of any recovery and debited with the amount
of any expense directly attributable to such action.
(2) If the action is completed in a year following the calendar year
in which the loss was charged to the reserve account, the reserve
account will be credited or debited for recoveries and the expenses
thereof if there was not a negative balance in the reserve account
at the end of the calendar year during which the loss was charged to
the reserve account.
(3) If there was a negative balance in the reserve account at the
end of the calendar year during which the loss was charged, there
shall be no debit or credit to the reserve account as a result of
further action take by the Company except that if the net recovery
(total amount recovered less costs and expenses) exceeds such
negative balance, the amount of such excess shall be credited to the
reserve account.
3.2.5 If, after establishing a value on the equipment a loss has been
charged to the reserve account, the Company may notify the Dealer
that it intends to take further action against the debtor. If the
Company does not notify the Dealer that it intends to take further
action against the debtor, the Company will promptly assign to the
Dealer or allow the Dealer to assert in its stead any rights which
remain against the debtor.
3.2.6 If the equipment has been destroyed or if for other reason
repossession is impossible or, in the Company's judgment, not
worthwhile, the loss shall be deemed to occur when the Company
notifies the Dealer that it has made such efforts to collect from
the debtor as it believes to be worthwhile under the circumstances
and assigns to the Dealer all rights against the debtor, or has made
a compromise settlement with the debtor. In such event the charge
to the reserve account shall be the cost of any legal action taken
by the Company, together with legal fees, plus the balance remaining
unpaid on the contract, including accrued interest but less unearned
finance charges.
3.4 It is recognized that judgments may differ as to what procedures may best
minimize loss when a debtor fails to pay and what steps it is worthwhile to
take in the circumstances. For this reason if the Dealer fails to
repurchase the contract after receiving the notice in Section 3.2.1 or the
offer in Section 3.2.2, such failure shall constitute final and irrevocable
ratification and approval by him of any and all actions which the Company
has taken in attempting to make collection, or which the Company may elect
to take thereafter. The Dealer's ratification includes but is not limited
to any prior or subsequent act by which the right to ▇▇▇ the debtor for a
deficiency is waived, barred or simply not exercised, or by which the
Company enters into a compromise settlement with the debtor.
SECTION 4 --
COLLECTION AND LOSSES -- CONTRACTS WITH AN AMOUNT FINANCED OF LESS THAN $1500,
REPAIR AND OVERHAUL CONTRACTS AND CONTRACTS SUBJECT TO A PURCHASE AGREEMENT
4.1 In the event of default in any contract with an amount financed of less
than $1500, repair and overhaul contracts and contracts which the dealer
has agreed to purchase under Section 1.8, the Company shall at any time
thereafter have the right to require the Dealer to pay the Company the
unpaid balance thereon including any accrued interest and earned finance
charges, and the Dealer hereby promises to pay such amount on demand. Upon
payment of such amount by the Dealer, the Dealer shall succeed to all the
rights of the Company under the contract and the Company shall assign the
contract to the Dealer. At the option of the Company, the contract may be
delivered to the Dealer prior to payment by him of such amount, but the
dealer grants the Company a security interest in the contract and any
equipment subject to such contract to secure such payment.
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4.2 The procedure in handling such contracts shall be as follows:
4.2.1 The Company will ordinarily (but is not obligated to) notify the
Dealer after a contract has been in default thirty days. If the
payment plus past-due interest is not made before the contract has
been in default sixty days, the Company will ordinarily exercise its
right to require the Dealer to pay as provided in Section 4.1, and
will ordinarily assign the contract to the Dealer at that time.
4.2.2 At any time prior to the delivery of the contract to the Dealer, and
whether before or after the debtor's default, the Company may, but
shall not be obligated to, endeavor to realize on the contract and
to that end may take whatever steps for enforcing, collecting,
securing, renewing, extending, or compromising the contract and the
security therefor which it deems worthwhile. The Dealer's
indebtedness under Section 4.1 shall be reduced by any amounts
realized by such action by the Company and shall be increased by any
expense incurred by the Company in enforcing security interests in
the equipment or attempting, after default, to collect any
deficiency or balance owing.
4.2.3 The Dealer's indebtedness under 4.1 and 4.2.2 shall not be
discharged or reduced because of the extension, renewal, or
compromise of a contract or other action taken by the Company
pursuant to 4.2.2, or because of any delay in exercising the right
to require the Dealer to pay pursuant to 4.1.
SECTION 5 --
DEALER'S ACTIVITY BONUS
The Company may, upon occasion, offer to pay the Dealer an activity bonus on
contracts accepted by the Company. When such activity bonus is offered, the
Company will issue a bulletin detailing the amount and computation of activity
bonus.
SECTION 6 --
COMPANY'S SECURITY INTEREST
The Dealer hereby grants the Company a security interest in the reserve account
described in Section 2 and the contingent earnings account described in Section
1.7 to secure all indebtedness which is now owed by the Dealer to the Company,
and all additional indebtedness hereafter incurred by the Dealer to the Company,
whether pursuant to an Authorized Dealer Agreement, the Company's Conditions of
Sale, or otherwise, and whether evidenced by notes, open accounts, or otherwise.
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