Item 1.01 Entry into a Material Definitive Agreement
Second Amended and Restated Polaris Acceptance Joint Venture Agreement
On August 1, 2019, Polaris Inc., a Minnesota corporation (the “Company”) and Wells Fargo Commercial Distribution Finance, LLC (“CDF”), entered into a Second Amended and Restated Joint Venture Agreement (the “Second Amended and Restated Joint Venture Agreement”). The Second Amended and Restated Joint Venture Agreement amends and restates in its entirety that certain Amended and Restated Joint Venture Agreement dated as of February 28, 2011, as amended (the “Prior Agreement”).
The joint venture will continue to be conducted through Polaris Acceptance, an Illinois general partnership (“Polaris Acceptance”), established between the Company’s direct subsidiary, Polaris Acceptance Inc., and CDF’s direct subsidiary, CDF Joint Ventures, LLC. (collectively the “Partners”). Each of the Partners continues to hold a 50% partnership interest in Polaris Acceptance.
As with the Prior Agreement, under the Second Amended and Restated Joint Venture Agreement, Polaris Acceptance will provide commercial inventory financing for (i) sales of certain products manufactured or distributed by the Company or any of its affiliates to dealers and distributors in the United States; (ii) domestic sales of products manufactured and/or distributed from time to time by manufacturers and distributors other than the Company or its affiliates to dealers and distributors of the Company or its affiliates; (iii) domestic purchases (or trade-ins) of used products manufactured and/or distributed from time to time by manufacturers and distributors other than Polaris and/or any of their affiliates and (iv) such other businesses in such other geographic areas as the parties may subsequently agree; provided, that the Polaris Acceptance’s management committee, as to clauses (ii) - (iv), has unanimously approved the financing of such sales or other businesses.
The Second Amended and Restated Joint Venture Agreement reflects the extension of the term of the partnership until February 28, 2027, which may be extended for additional five-year terms, upon proper notice and agreement of the partners. As with the Prior Agreement, the term of the partnership is subject to unlimited automatic one-year extensions, unless proper notice is given by one partner to the other of its intention not to extend the then current term. The Second Amended and Restated Joint Venture Agreement also contains customary representations, warranties, and other agreements by the parties, including confidentiality obligations and indemnification rights and obligations, that are unchanged in any material respect from those contained in the Prior Agreement.
The Company will continue to account for its investment in Polaris Acceptance under the equity method of accounting.
Third Amended and Restated Polaris Acceptance Partnership Agreement
On August 1, 2019, and in connection with the Second Amended and Restated Joint Venture Agreement, the Partners entered into the Third Amended and Restated Partnership Agreement (the “Third Amended and Restated Partnership Agreement”).
The Third Amended and Restated Partnership Agreement amends and restates in its entirety the Second Amended and Restated Partnership Agreement dated as of June 1, 2014, as amended (the “Prior Partnership Agreement”). As with the Prior Partnership Agreement, the Third Amended and Restated Partnership Agreement provides for the ownership and operation of the Polaris Acceptance commercial finance business and related finance businesses supporting (i) sales of certain products manufactured or distributed by the Company or any of its affiliates to dealers and distributors in the United States; (ii) domestic sales of products manufactured and/or distributed from time to time by manufacturers and distributors other than the Company or its affiliates to dealers and distributors of the Company or its affiliates; (iii) domestic purchases (or trade-ins) of used products manufactured and/or distributed from time to time by manufacturers and distributors other than Polaris and/or any of their affiliates (iv) such other businesses in such other geographic areas as the parties may subsequently agree; provided, that Polaris Acceptance’s management committee, as to clauses (ii) - (iv), has unanimously approved the financing of such sales or other businesses.
The foregoing descriptions of the Second Amended and Restated Joint Venture Agreement and the Third Amended and Restated Partnership Agreement do not purport to be complete and are qualified in their entirety by reference to the complete text of such documents, which are filed as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 8-K, and incorporated herein by reference.