Securities Law & Instruments

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications - issuer to distribute medium term notes- medium term notes fully and unconditionally guaranteed - issuerexempt from the requirement that financial statements be reconciledto Canadian GAAP and that auditor's report be accompanied bystatement of auditor, subject to conditions - issuer exemptfrom certain continuous disclosure requirements, including materialchange requirements, proxy requirements, insider reporting requirements,annual financial statement requirements, and interim financialstatement requirements, subject to conditions - issuer exemptfrom certain prospectus disclosure and eligibility requirements,subject to conditions - issuer exempt from requirement to filea current annual information form in Ontario, Quebec and Saskatchewan,subject to conditions.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 80(b)(iii), 88(2)(b), and 121(2)(a)(ii).

Applicable Ontario Rules

Rule 51-501 AIF and MD&A.

National Instrument 44-101 Short Form ProspectusDistributions (2000) 23 OSCB (Supp) 867.

National Instrument 44-102 Shelf Distributions(2000) 23 OSCB (Supp) 985.

National Instrument 71-101 MultijurisdictionalDisclosure System.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

ALBERTA, BRITISH COLUMBIA,MANITOBA,

NEW BRUNSWICK, NEWFOUNDLANDAND LABRADOR,

NOVA SCOTIA, ONTARIO, PRINCEEDWARD ISLAND,

QUEBEC AND SASKATCHEWAN

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

JOHN DEERE CREDIT INC. AND

JOHN DEERE CAPITAL CORPORATION

 

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof Alberta, British Columbia, Manitoba, New Brunswick, Newfoundlandand Labrador, Nova Scotia, Ontario, Prince Edward Island, Quebecand Saskatchewan (the "Jurisdictions") has receivedan application from John Deere Credit Inc. ("JDCI")and John Deere Capital Corporation ("JDCC", and togetherwith JDCI, the "Applicants") for decisions under thesecurities legislation of the Jurisdictions (the "Legislation")that the Applicants, as applicable, be exempted from the followingrequirements contained in the Legislation:

(a) the requirements in National Instrument44-101 ("NI 44-101") and National Instrument 44-102("NI 44-102") that a person or company guaranteeingnon-convertible debt issued by an issuer be a reporting issuerwith a 12-month reporting history in a Canadian province orterritory and have a current annual information form (the"Eligibility Requirement") in order to permit JDCIto issue non-convertible debt securities, in particular mediumterm notes, with an approved rating (as defined in NI 44-101)which will be fully and unconditionally guaranteed by JDCC;

(b) the requirement pursuant to NI 44-101to reconcile financial statements included in a prospectusand prepared in accordance with generally accepted accountingprinciples of a foreign jurisdiction to Canadian GAAP (the"Canadian GAAP Reconciliation Requirement");

(c) the requirement pursuant to NI 44-101to provide, where financial statements included in a prospectusare audited in accordance with generally accepted auditingstandards ("GAAS") of a foreign jurisdiction, astatement by the auditor (a) disclosing any material differencesin the form and content of the auditor's report as comparedto a Canadian auditor's report; and (B) confirming that theauditing standards of the foreign jurisdiction are substantiallyequivalent to Canadian GAAS (the "Canadian GAAS ReconciliationRequirement", and together with the Canadian GAAP ReconciliationRequirement, the "Reconciliation Requirements");

(d) the requirement in NI 44-101 and underthe Legislation of Ontario, Quebec and Saskatchewan that JDCIhave a current annual information form (an "AIF")and file renewal AIFs with the Decision Makers (the "AIFRequirements");

(e) the requirement that JDCI file with theDecision Makers and send to its securityholders annual auditedcomparative financial statements and an annual report, whereapplicable (the "Annual Financial Statements Requirements");

(f) the requirement that JDCI file with theDecision Makers and send to its securityholders, where applicable,interim unaudited financial statements (the "InterimFinancial Statements Requirements");

(g) the requirement that JDCI file with theDecision Makers and send to its securityholders, where applicable,annual and interim MD&A (the "MD&A Requirements");

(h) the requirement that JDCI issue and filewith the Decision Makers press releases, and file with theDecision Makers material change reports (together, the "MaterialChange Requirements");

(i) the requirement that JDCI comply withthe proxy and proxy solicitation requirements under the Legislation,including filing with the Decision Makers and, if applicable,sending to securityholders, an information circular or reportin lieu thereof (the "Proxy Requirements");

(j) the requirement that the insiders of JDCI(the "Insiders") file insider reports with the DecisionMakers (the "Insider Reporting Requirements"); and

(k) the requirement that a short form prospectusinclude the information set forth in item 12.1(1) and items12.2(1) to 12.2(4) of Form 44-101F3 (the "ProspectusDisclosure Requirements");

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this application;

AND WHEREAS, unless otherwise defined,the terms herein have the meanings set out in National Instrument14-101 Definitions;

AND WHEREAS the Applicants have representedto the Decision Makers that:

1. JDCI primarily finances sales and leasesby John Deere dealers of new and used agricultural, commercialand consumer, and construction and forestry equipment.

2. JDCI is the result of the amalgamationunder the Canada Business Corporations Act on October28, 1996 of Canadian Equipment Finance Corporation and JohnDeere Finance Limited. JDCI is an indirect, wholly-owned subsidiaryof Deere & Company ("Deere"), a reporting companyunder the Securities Exchange Act of 1934, as amended(the "1934 Act").

3. JDCI became a reporting issuer or the equivalentin the Jurisdictions by virtue of it filing a short form shelfprospectus dated July 22, 1999 with the Decision Makers inconnection with the establishment in Canada of a medium termnote program (the "1999 MTN Program") under theprovisions of former National Policy Statement No. 47 andformer National Policy Statement No. 44. JDCI "renewed"the 1999 MTN Program on August 2, 2001 (the "2001 MTNProgram") pursuant to a short form shelf prospectus datedJuly 31, 2001.

4. JDCC was incorporated under the laws ofDelaware on June 18, 1958, and is not a reporting issuer orthe equivalent in any of the Jurisdictions. JDCC is an indirect,wholly-owned subsidiary of Deere. Deere is party to an agreementwith JDCC pursuant to which Deere has agreed to continue toown at least 51% of the voting shares of capital stock ofJDCC. JDCC and its subsidiaries (collectively, "JohnDeere Capital") provide and administer financing forretail purchases of new equipment manufactured by Deere'sagricultural equipment, commercial and consumer equipment,and construction and forestry divisions and used equipmenttaken in trade for this equipment. John Deere Capital purchasesretail installment sales and loan contracts (retail notes)from Deere and its subsidiaries (collectively, "JohnDeere"). John Deere acquires these retail notes throughJohn Deere retail dealers. John Deere Capital also purchasesand finances a limited amount of non-Deere retail notes andcontinues to service a small portfolio of recreational productsand other retail notes. In addition, John Deere Capital leasesJohn Deere equipment and a limited amount of non-Deere equipmentto retail customers (financing and operating leases). JohnDeere Capital also finances and services revolving chargeaccounts, in most cases acquired from and offered throughmerchants in the agricultural, commercial and consumer, andconstruction and forestry markets (revolving charge accounts).Further, John Deere Capital finances and services operatingloans, in most cases acquired from and offered through farminput providers, and provides insured international exportfinancing generally involving John Deere products (operatingloans). John Deere Capital also provides wholesale financingfor inventories of John Deere engines and John Deere agricultural,commercial and consumer and construction and forestry equipmentowned by dealers of those products (wholesale receivables).In addition, John Deere Capital purchases and administersa significant portion of the trade receivables originatedby John Deere, which are included in wholesale receivables.9

5. JDCC has been a reporting company underthe 1934 Act since at least 1961. JDCC has filed annual reportson Form 10-K and quarterly reports on Form 10-Q since it firstbecame a reporting company, in accordance with the filingobligations set out in sections 13 and 15(d) of the 1934 Act.JDCC has filed with the United States Securities and ExchangeCommission (the "SEC") all filings required to bemade with the SEC under the 1934 Act during the last 12 months.

6. Pursuant to each of the 1999 MTN Programand the 2001 MTN Program, JDCI was entitled to issue up toCdn.$1,000,000,000 (or the equivalent thereof in lawful moneyof the United States of America) of non-convertible mediumterm notes which were fully and unconditionally guaranteedby Deere in respect of the payment of principal, premium (ifany), interest and certain other amounts that could becomedue under the notes. As at July 31, 2003, JDCI had issuedand outstanding under the 1999 MTN Program a total of Cdn.$150,000,000in principal amount of notes and under the 2001 MTN Programa total of Cdn.$990,000,000 in principal amount of notes (collectively,the "Existing Notes"). JDCI and Deere will continueto satisfy the conditions of the 1999 decision document andthe 2001 decision document (the "2001 Decision Document")previously obtained in connection with the 1999 MTN Programand the 2001 MTN Program, respectively, except to the extentthat such conditions are amended by this decision document,so long as the Existing Notes remain outstanding.

7. As at July 31, 2003, JDCC and its consolidatedsubsidiaries had approximately US$6,841.8 million in seniorlong-term debt outstanding (excluding current maturities).JDCC's senior long-term debt is rated "A-" by Standard& Poor's, "A3" by Moody's Investors Serviceand "A" by Fitch Investors Service.

8. JDCI proposes to file a short form shelfprospectus in each of the Jurisdictions pursuant to NationalInstrument 44-101 ("NI 44-101") and National Instrument44-102 ("NI 44-102", and together with NI 44-101,the "Shelf Requirements") in order to issue mediumterm notes in an aggregate principal amount of up to Cdn.$1,000,000,000(or the equivalent thereof in lawful money of the United Statesof America) (the "Proposed Offering") and may inthe future file additional short form shelf prospectuses ineach of the Jurisdictions in respect of the issuance by JDCIof additional medium term notes from time to time (the "FutureOfferings" and together with the Proposed Offering, the"Offerings" and each an "Offering"). Allmedium term notes issued by JDCI pursuant to the ProposedOffering and Future Offerings (collectively, the "Notes")will have an approved rating (as defined in NI 44-101) andwill be rated by a recognized security evaluation agency inone of the categories determined by the Commission des valeursmobilières du Québec (an "Approved Rating").

9. In connection with the Proposed Offeringand any Future Offerings:

(a) each short form shelf prospectus ofJDCI will be prepared pursuant to the Shelf Requirements,with the disclosure required by:

(i) item 12.1 of Form 44-101F3 of NI 44-101("Form 44-101F3") being addressed by incorporatingby reference in each prospectus:

(A) the most recent annual report onForm 10-K of JDCC filed with the SEC (including theexhibit setting out the "Computation of ratio ofearnings to fixed charges");

(B) all quarterly reports on Form 10-Qand current reports on Form 8-K of JDCC filed with theSEC in respect of the financial year following the yearthat is the subject of JDCC's most recently filed annualreport on Form 10-K (including exhibits setting outthe "Computation of ratio of earnings to fixedcharges");

(C) in respect of the prospectus filedin connection with the Proposed Offering only, the auditedannual financial statements of JDCI for the fiscal yearsended October 31, 2002 and 2001 and the unaudited interimfinancial statements of JDCI for the three months endedJanuary 31, 2003, the six months ended April 30, 2003and the nine months ended July 31, 2003; and

(D) in respect of a prospectus filedin connection with any Future Offering:

(I) the annual comparative selectedfinancial information (the "Annual Selected FinancialInformation") derived from the audited annualfinancial statements of JDCI for its most recentlycompleted financial year and the financial year immediatelypreceding such financial year, prepared in accordancewith generally accepted accounting principles in Canada("Canadian GAAP"), accompanied by a specifiedprocedures report of the auditors to JDCI, which shalldefine and include at least the following line items(or such other line items that provide substantiallysimilar disclosure): 1) total revenues; (2) net income;(3) net investment in financing contracts and equipmenton operating leases, together with a descriptive noteon the dollar amount of the allowance for impairedfinancial contracts; (4) total assets; (5) short-termborrowings; (6) long-term borrowings (which shallinclude the Notes); (7) accounts payable and otherliabilities; and (8) total shareholder's equity; and

(II) the interim comparative selectedfinancial information (the "Interim SelectedFinancial Information") derived from the unauditedinterim financial statements of JDCI for its mostrecently completed interim period and the correspondinginterim period in the previous financial year, preparedin accordance with Canadian GAAP, which shall defineand include at least the line items set out abovein paragraph 9(a)(i)(D)(I) (or such other line itemsthat provide substantially similar disclosure);

(ii) item 12.2 of Form 44-101F3 beingaddressed by incorporating by reference in each shortform shelf prospectus of JDCI the following documentsfiled with the SEC or the Decision Makers, as applicable,subsequent to the date of the particular prospectus butprior to the termination of the particular Offering:

(A) any annual reports on Form 10-Kof JDCC filed with the SEC (including exhibits settingout the "Computation of ratio of earnings to fixedcharges");

(B) any quarterly reports on Form 10-Qand current reports on Form 8-K of JDCC filed with theSEC (including exhibits setting out the "Computationof ratio of earnings to fixed charges");

(C) the Annual Selected Financial Informationreferred to above in paragraph 9(a)(i)(D)(I);

(D) the Interim Selected Financial Informationreferred to above in paragraph 9(a)(i)(D)(II); and

(E) any material change reports filedby JDCI; and

(iii) item 7 of Form 44-101F3 (earningscoverage ratios) and section 8.4 of NI 44-102 (requirementto update earnings coverage ratios) being addressed inrespect of JDCC by disclosure with respect to JDCC inaccordance with United States requirements;

(b) JDCC will fully and unconditionallyguarantee payment of the principal, premium (if any), interestand certain other amounts that could become payable underany provisions of the trust indenture relating to the particularNotes;

(c) any Notes issued by JDCI pursuant toany Offering will have an Approved Rating;

(d) JDCC will sign each short form shelfprospectus of JDCI as credit supporter;

(e) each short form shelf prospectus ofJDCI will include, directly or indirectly, all materialdisclosure regarding JDCI and JDCC;

(f) JDCC will undertake to file with theDecision Makers, in electronic format through SEDAR (asdefined in National Instrument 13-101) under JDCI's SEDARprofile, all documents that it files under sections 13 and15(d) of the 1934 Act until such time as the Notes are nolonger outstanding;

(g) the consolidated annual and interimfinancial statements of JDCC that will be included or incorporatedby reference in any short form shelf prospectus of JDCIwill be prepared in conformity with generally accepted accountingprinciples in the United States that the SEC has identifiedas having substantial authoritative support, as supplementedby Regulation S-X and Regulation S-B under the 1934 Act("US GAAP"), and, in the case of the audited consolidatedannual financial statements, such financial statements willbe audited in accordance with generally accepted auditingstandards in the United States, as supplemented by the SEC'srules on auditor independence ("US GAAS"); and

(h) JDCC satisfies the criteria set forthin paragraph 3.1 of NI 71-101 (or any applicable successorprovision or instrument) and is eligible to use the multi-jurisdictionaldisclosure system ("MJDS") described therein (orany successor instrument) for the purpose of distributingapproved rating non-convertible debt in Canada based oncompliance with United States prospectus requirements withcertain additional Canadian disclosure.

AND WHEREAS under the System this MRRSDecision Document evidences the decision of each Decision Maker(collectively, the "Decision");

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers ineach of Ontario, Québec and Saskatchewan is that, inconnection with any Offering (which, for greater certainty,includes the Proposed Offering and any Future Offerings), theAIF Requirements shall not apply to JDCI provided that (i) JDCCcomplies with the AIF Requirements of NI 44-101 as if it isthe issuer by filing an AIF in the form of JDCC's most recentlyfiled Form 10-K (as filed under the 1934 Act); and (ii) JDCIand JDCC comply with all of the conditions of each of the Decisionsbelow.

September 29, 2003.

"Charlie MacCready"

AND THE FURTHER DECISION of the DecisionMakers under the Legislation is that the Applicants be exemptfrom the Eligibility Requirement and the Reconciliation Requirementsin connection with any Offering (which, for greater certainty,includes the Proposed Offering and any Future Offerings) providedthat:

(a) each of JDCI and JDCC complies with paragraph9 above;

(b) JDCI complies with all of the filing requirementsand procedures set out in NI 44-101 except as varied by theDecision or as permitted by NI 44-102;

(c) the consolidated annual and interim financialstatements of JDCC that will be included or incorporated byreference in any short form shelf prospectus of JDCI willbe prepared in conformity with US GAAP, and, in the case ofthe audited consolidated annual financial statements, suchfinancial statements will be audited in accordance with USGAAS;

(d) Deere remains the direct or indirect beneficialowner of (i) 100% of the issued and outstanding voting sharesof JDCI and (ii) at least 51% of the issued and outstandingvoting shares of JDCC; and

(e) JDCC continues to satisfy the criteriaset forth in paragraph 3.1 of NI 71-101 (or any applicablesuccessor provision or instrument) and remains eligible touse the MJDS described therein (or any successor instrument)for the purpose of distributing approved rating non-convertibledebt in Canada based on compliance with United States prospectusrequirements with certain additional Canadian disclosure.

September 29, 2003.

"Charlie MacCready"

AND THE FURTHER DECISION of the DecisionMakers under the Legislation is that, commencing as of the datehereof, the Prospectus Disclosure Requirements shall not applyto any short form shelf prospectus filed by JDCI in connectionwith any Offering (which, for greater certainty, includes theProposed Offering and any Future Offerings), provided that eachof JDCI and JDCC complies with paragraph 9 above.

September 29, 2003.

"Charlie MacCready"

AND THE FURTHER DECISION of the DecisionMakers (other than the Decision Maker in Prince Edward Island)under the Legislation is that, in connection with any Offering(which, for greater certainty, includes the Proposed Offeringand any Future Offerings):

A. the Annual Financial Statements Requirementsshall not apply to JDCI provided that (i) JDCI files, in electronicformat, the Annual Selected Financial Information, accompaniedby a specified procedures report of the auditors to JDCI,in accordance with paragraph 9(a)(i)(D)(I) above, commencingfor the fiscal year ended October 31, 2003; (ii) JDCC fileswith the Decision Makers, in electronic format through SEDARunder JDCI's SEDAR profile, the annual reports on Form 10-Kfiled by JDCC with the SEC, on the same day on which theyare filed with the SEC, or as soon as practicable thereafter;and (iii) the documents referred to in (ii) above are providedto holders of Notes whose last address as shown on the booksof JDCI is in Canada, in the manner, at the time and onlyif required by applicable United States law to be sent toJDCC debt holders;

B. the Interim Financial Statements Requirementsshall not apply to JDCI provided that (i) JDCI files, in electronicformat, the Interim Selected Financial Information in accordancewith paragraph 9(a)(i)(D)(II) above, commencing for the interimperiod ended January 31, 2004; (ii) JDCC files with the DecisionMakers, in electronic format through SEDAR under JDCI's SEDARprofile, each of the quarterly reports on Form 10-Q filedby JDCC with the SEC, on the same day on which they are filedwith the SEC, or as soon as practicable thereafter; and (iii)the documents referred to in (ii) above are provided to holdersof Notes whose last address as shown on the books of JDCIis in Canada, in the manner, at the time and only if requiredby applicable United States law to be sent to JDCC debt holders;

C. the MD&A Requirements shall not applyto JDCI, provided that (i) JDCC files with the Decision Makers,in electronic format through SEDAR under JDCI's SEDAR profile,the documents referred to in paragraphs A(ii) and (B)(ii)above, on the same day on which they are filed with the SEC,or as soon as practicable thereafter; and (ii) such documentsare provided to holders of Notes whose last address as shownon the books of JDCI is in Canada, in the manner, at the timeand only if required by applicable United States law to besent to JDCC debt holders;

D. the Material Change Requirements shallnot apply to JDCI, provided that (i) JDCI files with the DecisionMakers, in electronic format through SEDAR under JDCI's SEDARprofile, each of the mandatory current reports on Form 8-Kfiled by JDCC with the SEC, on the same day on which theyare filed with the SEC, or as soon as practicable thereafter;(ii) JDCC forthwith issues in each Jurisdiction and JDCI fileswith the Decision Makers, any press release that disclosesmaterial information and which is required to be issued inconnection with the mandatory Form 8-K requirements applicableto JDCC; and (iii) if there is a material change in respectof the business, operations or capital of JDCI that is nota material change in respect of JDCC, JDCI will comply withthe requirements of the Legislation to issue a press releaseand file a material change report notwithstanding that thechange may not be a material change in respect of JDCC;

E. the Proxy Requirements shall not applyto JDCI, provided that (i) JDCC complies with the requirementsof the 1934 Act and the rules and regulations made thereunderrelating to proxy statements, proxies and proxy solicitationsin connection with any meetings of its noteholders (if any);(ii) JDCC files with the Decision Makers, in electronic formatthrough SEDAR under JDCI's SEDAR profile, materials relatingto the meeting filed by it with the SEC, on the same day onwhich they are filed with the SEC, or as soon as practicablethereafter; and (iii) such documents are provided to holdersof Notes whose last address as shown on the books of JDCIis in Canada, in the manner, at the time and only if requiredby applicable United States law to be sent to JDCC debt holders;and

F. the Insider Reporting Requirements shallnot apply to Insiders of JDCI, provided that each insider(as defined in the Legislation) files with the SEC on a timelybasis the reports, if any, required to be filed with the SECpursuant to section 16(a) of the 1934 Act and the rules andregulations thereunder.

provided that (for A. through F.):

(a) JDCI does not issue additional securitiesother than the Notes, debt securities ranking pari passuto the Notes, short-term promissory notes guaranteed by JDCCor Deere (the "Short Term Notes"), medium term notesguaranteed by JDCC or Deere issued pursuant to the Deere Euromedium term note programme (the "Euro MTN Programme"),any debentures issued in connection with the security grantedby JDCI to the holders of the Notes or of the Existing Notesor debt ranking pari passu with the Notes, and thosesecurities currently issued and outstanding, other than toDeere or to direct or indirect subsidiaries of Deere;

(b) if debt securities ranking pari passuwith the Notes are hereinafter issued by JDCI (other than(i) to Deere or to direct or indirect subsidiaries of Deere,(ii) any Short Term Notes that may be considered to rank paripassu with the Notes, or (iii) any medium term notes (the"Euro Notes") issued pursuant to the Euro MTN Programmethat may be considered to rank pari passu with theNotes, provided that reasonable precautions and restrictionsare implemented by JDCI, the relevant dealers and other participantsin the distribution to ensure that such Euro Notes are notdistributed, or redistributed, into Canada or to Canadianresidents and that such Euro Notes come to rest outside Canada),JDCC shall fully and unconditionally guarantee such debt securitiesas to the payments required to be made by JDCI to holdersof such debt securities;

(c) each of JDCI and JDCC complies with paragraph9 above;

(d) JDCI and Deere continue to satisfy theconditions of the 2001 Decision Document, except to the extentthat such conditions are amended by the Decision, so longas the Existing Notes remain outstanding;

(e) the Notes maintain an Approved Rating;

(f) Deere remains the direct or indirect beneficialowner of securities (i) 100% of the issued and outstandingvoting securities of JDCI and (ii) at least 51% of the issuedand outstanding voting securities of JDCC;

(g) JDCC maintains a class of securities registeredpursuant to section 12(b) or 12(g) of the 1934 Act or is requiredto file reports under section 15(d) of the 1934 Act;

(h) JDCC continues to satisfy the criteriaset forth in paragraph 3.1 of NI 71-101 (or any applicablesuccessor provision or instrument) and remains eligible touse the MJDS described therein (or any successor instrument)for the purpose of distributing approved rating non-convertibledebt in Canada based on compliance with United States prospectusrequirements with certain additional Canadian disclosure;and

(i) all filing fees that would otherwise bepayable by JDCI in connection with the Annual Financial StatementsRequirements, the Interim Financial Statements Requirementsand the Material Change Requirements, or in connection withJDCI's participation as a reporting issuer in any Jurisdiction,are paid.

September 29, 2003.

"R.W. Davis"
"H. Lorne Morphy"