EXHIBIT 10.12

 

JOHN DEERE SUPPLEMENTAL PENSION BENEFIT PLAN

 

AMENDED: 1 November 198

 

AMENDED: 24 February 1988

 

AMENDED: 28 February 1990

 

AMENDED: 27 February 1991

 

AMENDED: 29 May 1991

 

AMENDED: 26 August 1992

 

AMENDED: 09 December 1992

 

AMENDED: May 1993 – Effective: 01 July 1993

 

AMENDED: 08 December 1993 – Effective: 01 July 1993

 

AMENDED: 07 December 1994

 

AMENDED: May 1995 – Effective: 01 January 1995

 

AMENDED: 13 December 1995 – Effective: 01 January 1995

 

AMENDED: 04 December 1996 – Effective: 01 January 1997

 

AMENDED: 07 January 1998 – Effective: 01 January 1998

 

AMENDED: 26 May 1999 - Effective: 26 May 1999

 

AMENDED: 19 July 1999 - Effective: 01 July 1999

 

AMENDED: 06 August 1999 – Effective: 01 August 1999

 

AMENDED: 02 November 1999 – Effective: 01 November 1999

 

AMENDED: 31 July 2000 –Effective: 01Jan 2000 (Item (1&2) 01 Apr 2000 (Item (3)

(See Resolution for Item explanation)

 

AMENDED: 29 January 2002 - Effective: 01 January 2002

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JOHN DEERE SUPPLEMENTAL PENSION BENEFIT PLAN

 

TABLE OF CONTENTS

 

Section

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   Page

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I.    PURPOSE AND ESTABLISHMENT           1.1    Establishment and Amendment of
the Plan    1      1.2    Purpose    1      1.3    Cost of Benefits    1     
1.4    Application of Plan    1      1.5    Administration and Termination    1
     1.6    Nonencumbrance of Benefits    2      1.7    Employment Rights    2  
   1.8    Severability    2      1.9    Applicable Law    2 II.    DEFINITIONS
          2.1    Definitions    3      2.2    Gender and Number    6 III.   
SUPPLEMENTAL PENSION BENEFIT           3.1    Eligibility    7      3.2   
Amount    7      3.3    Limitations    8      3.4    Reduction for Early
Retirement under Contemporary Option    8      3.5    Commencement and Duration
   8      3.6    Death Prior to Receipt of Lump Sum    9      3.7    Qualified
Domestic Relations Order    10 IV.    DISABILITY BENEFIT           4.1   
Eligibility    11      4.2    Amount    11      4.3    Commencement and Duration
   11 V.    CHANGE IN CONTROL OF COMPANY           5.1    Eligibility    12     
5.2    Change in Control of the Company    12      5.3    Cause    13      5.4
   Good Reason    13      5.5    Amount    14      5.6    Commencement and
Duration    14      5.7    Deere & Company Severance Protection    14

 

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Section

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VI.    SURVIVOR BENEFITS           6.1    Death of an active Participant or a
Participant on Permanent & Total Disability    15      6.2    Death of a Retired
Participant    15      6.3    Commencement and Duration    16      6.4   
Survivor Benefit Election After Retirement    16 VII.    FINANCING OF BENEFITS
          7.1    Contractual Obligation    18      7.2    Unsecured General
Creditor    18      7.3    Funding    18      7.4    Vesting    18      7.5   
Administration    18      7.6    Expenses    18      7.7    Indemnification and
Exculpation    19      7.8    Effect on Other Benefit Plans    19      7.9   
Tax Liability    19 EXHIBIT I    20

 

 

 

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JOHN DEERE SUPPLEMENTAL PENSION BENEFIT PLAN

 

Section 1. Purpose and Establishment

 

1.1 Establishment and Amendment of the Plan. Deere & Company (the “Company”)
established and presently maintains the John Deere Supplemental Pension Benefit
Plan (the “Plan”), an unfunded supplemental retirement plan for the benefit of
its eligible employees, on 1 November 1978. Said plan is hereby further amended
and restated as set forth herein effective as of 1 January 1997.

 

1.2 Purpose. The purpose of this Plan is to promote the mutual interests of
Deere & Company and its Officers and Executives.

 

1.3 Cost of Benefits. Cost of providing benefits under the Plan will be borne by
the Company.

 

1.4 Application of Plan. The provisions of this Plan as set forth herein are
applicable only to the employees of the Company in current employment on or
after 1 November 1987, except as specifically provided herein. Except as so
provided, any person who was covered under the Plan as in effect on 31 October
1987 and who was entitled to benefits under the provisions of the Plan shall
continue to be entitled to the same amount of benefits without change under this
Plan. Any person covered under the Plan as in effect 1 November 1987 who is age
55 or above on 1 November 1987 shall be entitled to the larger of the benefit
amount in Section 3.2 below or the benefit provided under the John Deere
Supplemental Pension Benefit Plan effective prior to 1 November 1987.

 

1.5 Administration and Termination. The Plan is administered by and shall be
interpreted by the Company. The Board of Directors of the Company or the Pension
Plan Oversight Committee of the Board may at any time amend or modify this Plan
in their sole discretion. In addition, the Deere & Company Compensation
Committee shall have the authority to approve all amendments or modifications
that:

 

  a. in the Compensation Committee’s judgment are procedural, technical or
administrative, but do not result in changes in the control and management of
the Plan assets; or

 

  b. in the Compensation Committee’s judgment are necessary or advisable to
comply with any changes in the laws or regulations applicable to the Plan; or

 

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  c. in the Compensation Committee’s judgment are necessary or advisable to
implement provisions conforming to a collective bargaining agreement which has
been approved by the Board of Directors; or

 

  d. in the Compensation Committee’s judgment will not result in changes to
benefit levels exceeding $5 million dollars per amendment or modification during
the first full fiscal year that such changes are effective for the Plan; or

 

  e. are the subject of a specific delegation of authority from the Board of
Directors.

 

Provided, however, that this Plan shall not be amended or modified so as to
reduce or diminish the benefit then currently being paid to any employee or
surviving spouse of any former employee without such person’s consent. The power
to terminate this Plan shall be reserved to the Board of Directors of Deere &
Company. The procedure for amendment or modification of the Plan by either the
Board of Directors, or, to the extent so authorized, the Pension Plan Oversight
Committee, as the case may be, shall consist of: the lawful adoption of a
written amendment or modification to the Plan by majority vote at a validly held
meeting or by unanimous written consent, followed by the filing of such duly
adopted amendment or modification by the Secretary with the official records of
the Company.

 

1.6 Nonencumbrance of Benefits. Except as provided in Article VIII, Section 8 of
the John Deere Pension Plan for Salaried Employees, no employee, retired
employee, or other beneficiary hereunder shall have any right to assign,
alienate, pledge, hypothecate, anticipate, or in any way create a lien upon any
part of this Plan, nor shall the interest of any beneficiary or any
distributions due or accruing to such beneficiary be liable in any way for the
debts, defaults, or obligations of such beneficiary, whether such obligations
arise out of contract or tort, or out of duty to pay alimony or to support
dependents, or otherwise.

 

1.7 Employment Rights. Establishment of this Plan shall not be construed to give
any Participant the right to be retained by the Company or to any benefits not
specifically provided by the Plan.

 

1.8 Severability. In the event any provision of the Plan shall be held invalid
or illegal for any reason, any invalidity or illegality shall not affect the
remaining parts of the Plan, but the Plan shall be construed and enforced as if
the invalid or illegal provision had never been inserted, and the Company shall
have the privilege and opportunity to correct and remedy such questions of
invalidity or illegality by amendment as provided in the Plan.

 

1.9 Applicable Law. This Plan is fully exempt from Titles II, III, and IV of
ERISA. The Plan shall be governed and construed in accordance with Title I of
ERISA and the laws of the State of Illinois.

 

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Section 2. Definitions

 

2.1 Definitions. Whenever used in this Plan, it is intended that the following
terms have the meanings set forth below:

 

  (a) “Average Pensionable Pay” of the Traditional Pension Option means the
average for each year of the following:

 

  (1) all straight-time salary payments, plus the larger of (i) or (ii) through
31 December 2000 and as of 1 January 2001 plus the larger of (i) or (iii) below:

 

  (i) the amounts paid under the John Deere Profit Sharing Plan and the John
Deere Short-Term Incentive Plan prior to 1991 plus the sum of the bonuses paid
under the John Deere Performance Bonus Plan for Salaried Employees, the John
Deere Health Care,Inc. Annual Performance Award Plan or the John Deere Credit
Company Profit Sharing Plan.

 

  (ii) the amount paid prior to 1989 under the John Deere Long-Term Incentive
Plan, the John Deere Restricted Stock Plan through 1998, or after 1998 the
Pro-rated Yearly Vesting Amount under the John Deere Equity Incentive Plan.

 

  (iii) the target amount under the John Deere Performance Bonus Plan for
Salaried Employees, the John Deere Health, Inc. Annual Performance Award Plan or
the John Deere Credit Company Profit Sharing Plan.

 

  (2) The annual average of such amounts shall be based on the five (5) highest
years, not necessarily consecutive, during the ten (10) years immediately
preceding the earliest of the Participant’s retirement, total and permanent
disability, or death. The greater of any such short or long-term awards as
defined in 2.1(a)(1)(i) or (ii) above paid or vested during the twelve months
immediately following the Participant’s retirement, shall be substituted for the
lowest such annual short or long-term bonus award used to calculate Average
Pensionable Pay, if the result would be a higher pension benefit. All amounts
used in calculating the Average Pensionable Pay will be determined before the
effect of any salary or bonus deferral or reduction resulting from an election
by the Employee under any Company sponsored plan or program, but excluding any
matching and/or growth factor, Company contribution, and/or flexible credits
provided by the Company under any such plan or program.

 

  (b) “Average Monthly Pensionable Pay” means the Average Pensionable Pay
divided by twelve (12).

 

  (c) “Board” means the Board of Directors of the Company.

 

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  (d.1) Career Average Pay of the Contemporary Pension Option means the
following for those Officers listed in Exhibit 1:

 

  (1) The highest five calendar years of the last ten not necessarily
consecutive as of 31 December 1996 plus the greater of short-term bonus or
long-term incentive pay received in each of those years as defined in section
2.1(a)(1)(i) or (ii) above.

 

plus

 

  (2) Base pay and short-term bonuses as defined in Section 2.1(a)(1)(i) above
paid beginning 1 January 1997 and thereafter (excluding any long-term incentives
as defined in section 2.1(a)(1)(ii) above).

 

The amounts of all salary, short-term bonus, or other pay received as described
in (1) and (2) above will be divided by the number of pay periods in which base
pay was received to determine the Career Average Pay.

 

  (d.2) “Career Average Pay” of the Contemporary Pension Option means the
following for newly eligible Participants effective the latter of 1 January 1997
or entering Base Salary Grade 13 or above:

 

  (1) The highest five consecutive of the last ten anniversary years or the last
60 months of straight time pay if higher as of 31 December 1996 for Participants
with five or more years of continuous employment.

 

plus

 

  (2) Restorable short-term performance bonuses earned and paid during the years
1992-1996 credited at the rate of 1/120th for each pay period of continuous
employment beginning 1 January 1997. Short-term performance bonuses are defined
in 2.1(a)(1)(i) of this Plan.

 

plus

 

  (3) All straight time pay plus short-term performance bonuses paid on or after
1 January 1997 (excluding any long-term incentives such as stock options).

 

The amounts of salary and bonus derived from (d.2)(1) plus (2) plus (3) above
are divided by the number of pay periods in which base pay was received to
determine the career average pay. This amount multiplied times 2 transforms
career average pay to a monthly equivalent.

 

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  (e) “Company” means Deere & Company, a Delaware corporation.

 

  (f) “Contemporary Pension Option” means the benefit provided to Officers
Listed in Exhibit 1 who elect the Contemporary Pension Option on or before 15
November 1996, and all other Executives who become Participants on or after 1
January 1997.

 

  (g) “Disability” shall have the same meaning as under the Qualified Retirement
Plan or John Deere Long Term Disability Plan for Salaried Employees

 

  (h) “Executive” means an employee base salary grade 13 or above who on 1
January 1997 is a non-officer, or an employee who attains base salary grade 13
or above after 1 January 1997.

 

  (i) “Officer” means employees listed in Exhibit I and by way of their election
under the John Deere Pension Plan for Salaried Employees may choose between this
Traditional or Contemporary Supplemental Plan option.

 

  (j) “Non-officer” means any employee of the Company who is not an elected
officer and does not hold one of the elected positions listed in (i) above.

 

  (k) “Participant” means an Officer as defined in (i) above who has served in
such capacity for 36 months or Salary Grade 13 and above Executives who are
eligible for participation under the Contemporary Supplemental Plan option on
the latter of 1 January 1997 or attainment of base Salary Grade 13.

 

  (l) “Plan Year” means the 12-month period beginning each November 1.

 

  (m) “Pro-rated Yearly Vesting Amount under the John Deere Equity Incentive
Plan” means for the purposes of calculating a long term incentive amount under
Section 2.1 (a) (1) (ii) of this Plan is one-quarter of each bi-annual EIP Grant
allocated to each year following the Grant date multiplied times the Grant
Price. In the event an EIP Grant vests and bonus shares are payable during the
12 months immediately following a Participant’s retirement, the actual value of
the Grant will be redetermined and allocated equally in one-quarter increments
to each of the years following the Grant date which were used to calculate
Average Pensionable Pay, if the result would be a higher pension benefit.

 

  (n) “Qualified Retirement Plan” means the John Deere Pension Plan for Salaried
Employees which is a qualified plan under Section 401(a) of the Internal Revenue
Code. Provisions under this Plan shall in no way alter provisions under the
Qualified Retirement Plan.

 

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  o) “Retirement Benefit” shall be a single-life annuity or lump sum amount as
provided under Section 3 subject to provisions of Section 5.

 

  (p) “Section 162(m) Participant” means a participant who is the CEO or the
four highest paid Executives, as reported in the proxy, who is employed on the
last day of the fiscal year.

 

  q) “Service” shall have the same meaning in this Plan as “service credit” in
the Qualified Retirement Plan. Service credit for benefit purposes in this plan
for those Executives not listed in Exhibit I will begin on the latter of 1
January 1997 or attainment of base salary grade 13 or above whichever is later.

 

  (r) “Surviving Spouse” shall mean the legally married spouse of a deceased
participant.

 

  (s) “Traditional Pension Option” means the benefit under this Plan for
Officers who (1) are listed in Exhibit 1, and (2) are or become Participants,
and (3) who elect the Traditional Pension Option on or before 15 November 1996.

 

2.2 Gender and Number. Except when otherwise indicated by the context, any
masculine term used herein shall also include the feminine, and the singular
shall also include the plural.

 

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Section 3. Supplemental Pension Benefit

 

3.1 Eligibility. A Participant shall be eligible for benefits under the
provisions of this Plan who has attained age 60 under the Traditional Pension
Option or age 55 under the Contemporary Pension Option or at any age if eligible
to retire on 1 January 1997 and retires under the provisions of the Qualified
Retirement Plan.

 

3.2 Amount. Upon termination and election to retire pursuant to 3.1 above, the
Participant shall be entitled to a monthly Retirement Benefit as follows:

 

  (1) Traditional Pension Option equals (a) plus (b) below:

 

  (a) 2% of average monthly pensionable pay for each year of service as an
Officer.

 

  (b) 1 1/2% of average monthly pensionable pay for each year of service as a
non-Officer.

 

or

 

  (2) Contemporary Pension Option equals (a) plus (b) below:

 

  (a) 2% of career average pay for each year of service as an Officer or
Participant.

 

  (b) 1 1/2% of career average pay for each year of service as a non-Officer
prior to the latter of 1 January 1997 or attainment of base salary grade 13 or
above, whichever is later.

 

This amount shall be subject to any reductions for

 

  (1) Early retirement under the Contemporary Pension Option as provided in
Section 3.4 of this plan.

 

  (2) Any formula used to calculate the reduction in the retiree’s monthly
benefit under the Qualified Retirement Plan.

 

  (3) Survivor benefits described in Section 6.

 

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  (4) Provisions shown in Section 3.3 which follows and shall be further reduced
by the sum of

 

  (i) the benefit earned under the Qualified Retirement Plan and

 

  (ii) the benefit provided under the John Deere Supplementary Pension Plan.

 

3.3 Limitations.

 

  (a) The total monthly Retirement Benefit paid under the Traditional Pension
Option of this Plan, the Qualified Retirement Plan and the John Deere
Supplementary Pension Plan may not exceed 66- 2/3% of the Average Monthly
Pensionable Pay. If such number is exceeded the amount payable under this Plan
shall be reduced.

 

  (b) That part of the retired employee’s monthly benefit which is based on
service credit prior to 1 July 1993 (1 January 1994 for employees of John Deere
Credit Company, John Deere Health Care, Inc. and John Deere Insurance Group)
shall be reduced by  1/2% for each full year in excess of 10 years that the
spouse is younger than the employee.

 

3.4 Reduction for Early Retirement under Contemporary Pension Option. The amount
determined in 3.2 above shall be reduced  1/3% per month from the unreduced full
benefit age provided in the Contemporary Pension Option of the Qualified
Retirement Plan as of the date benefits commence.

 

3.5 Commencement and Duration. Payment of monthly retirement benefits provided
under this Plan shall commence on the first day of any calendar month following
the date of retirement as elected under the Qualified Retirement Plan. Benefit
payments will be made on the first day of each calendar month thereafter. The
last payment will be made the first day of the calendar month in which the
Participant dies, subject to the provisions of Section 5.

 

Alternatively, the Participant may elect to receive a lump sum payment for all
or a portion (in 10% increments from 10% to 90%) of the Retirement Benefits
payable under this Plan including the 55% joint and survivor annuity equal to
11% of the supplemental benefit payable, adjusted for service accrued through 30
June 1993, or 31 December 1993 in the case of employees of John Deere Credit
Company, John Deere Health Care, Inc., or John Deere Insurance Group. Written
notice of the Participant’s election to receive a lump sum payment shall be
irrevocable, and must be received by the Company within the twelve (12) months
prior to payment, but in no event subsequent to the Participant’s date of
retirement. The lump sum payment shall be made to Participant twelve (12) months
after receipt of notice by the Company but in no event prior to the
Participant’s retirement.

 

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Notwithstanding the above, a Section 162(m) Participant whose retirement date
coincides with the Company’s fiscal year-end date will not be paid the
previously elected lump-sum payment until he is no longer a Section 162(m)
Participant.

 

Effective beginning 1 January 2002 and thereafter, the lump sum will be
calculated using an interest rate assumption equal to the average yield in
September of the preceding Plan Year on 30-year Treasury Constant Maturities (as
published in October by the Internal Revenue Service) and the mortality table
shall be based upon a fixed blend of 50% male mortality rates and 50% female
mortality rates from the Group Annuity Reserving Table (“GAR”) , as set forth in
Revenue Ruling 2001-62, in effect at the beginning of the plan year in which
payment is made. The age used in the calculation will be the age of the
Participant or, in the case of Participant’s death, the surviving spouse’s age
on the date payment is made.

 

Monthly retirement benefits will be redetermined as soon as practicable and
increased benefits paid retroactive to the Participant’s date of retirement for:

 

  (a) any eligible long or short-term bonus paid after retirement replacing an
earlier bonus award used to calculate average pensionable pay under the
Traditional Pension Option

 

     or

 

  (b) any eligible short-term bonus paid after retirement added to career
average earnings used to calculate pension benefits under the Contemporary
Pension Option.

 

3.6 Death Prior to Receipt of Lump Sum. If an active Participant or a
Participant on Permanent and Total Disability dies after receipt of notice by
the Company pursuant to Section 3.5 of Participant’s irrevocable election to
receive a lump sum payment, but before the expiration of twelve (12) months
after receipt by the Company of such election, a Surviving Spouse of the
Participant who is eligible for a survivor benefit under Section 6 will receive
a lump sum survivor’s benefit under Section 6.1 of this Plan. The 55% surviving
spouse lump sum benefit will be payable no earlier than twelve (12) months
following receipt of notice by the Company of the deceased Participant’s
irrevocable election but not before the first day of the month following
eligibility for a surviving spouse benefit under the Qualified Retirement Plan.

 

If a retired Participant or a Participant on Permanent and Total Disability
subsequently retires under Normal Retirement and dies after receipt of notice by
the Company pursuant to Section 3.5 of Participant’s irrevocable election to
receive a lump sum payment, but before the expiration of twelve (12) months
after receipt by the Company of such election, a Surviving Spouse of the
Participant who is eligible for a survivor benefit under Section 6 will receive
the Participant’s full lump sum benefit under Section 3.5 of this Plan in lieu
of Surviving Spouse

 

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benefits under Section 6. In the event the retired Participant is unmarried at
the date of death or the Surviving Spouse of the deceased Participant is not
eligible for survivor benefits under Section 6, the Participant’s full lump sum
benefit will be paid to the deceased Participant’s estate. The lump sum benefit
will be payable no earlier than twelve (12) months following receipt of notice
by the Company of the deceased Participant’s irrevocable election.

 

3.7 Qualified Domestic Relations Order

 

Distribution is prohibited under the Plan prior to the Participant’s retirement
and, in the event of a Qualified Domestic Relations Order, the Alternate Payee
must take distribution as a single lump sum payment within 180 days following
the Participant’s retirement under the Plan.

 

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Section 4. Disability Benefit

 

4.1 Eligibility. An employee who qualifies for a total and permanent disability
benefit in accordance with the provisions of the Qualified Retirement Plan or
John Deere Long Term Disability Plan for Salaried Employees shall be entitled to
a benefit under this Plan upon retirement under a normal retirement under the
Qualified Retirement Plan.

 

4.2 Amount. The amount shall be determined in accordance with 3.2 except that
service as an Officer shall be determined for the period of time prior to total
and permanent disability as defined in the Qualified Retirement Plan or John
Deere Long Term Disability Plan for Salaried Employees.

 

4.3 Commencement and Duration. In the event of Disability, the payment method
shall be the same as that elected pursuant to Section 3.5 of this Plan. In the
event of Disability, payments of Retirement Benefits provided under this section
shall be made or commence on the same date as Retirement Benefits commence under
the normal Retirement Provisions under the Qualified Retirement Plan.

 

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Section 5. Change in Control of Company

 

5.1 Eligibility. If a Change in Control of the Company (as defined in 5.2 below)
shall have occurred, and a participant who has not attained age 60 ceases to be
an employee of the Company, such participant shall be eligible for benefits
under the provisions of this plan notwithstanding his age at the time of such
cessation of employment, unless such cessation of employment is (i) by the
Company for “Cause” (as defined in 5.3 below), or (ii) by the participant for
other than Good Reason (as defined in 5.4 below). If the participant’s cessation
of employment is by reason of Death or Permanent Disability, the participant’s
rights under this Plan shall be governed by Section 4 and 6 of this Plan,
despite the occurrence of a change in control.

 

5.2. Change in Control of the Company. A change in control of the Company shall
mean a change in control of a nature that would be required to be reported in
response to Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as now or hereafter amended (the “Exchange Act”), whether
or not the Company is then subject to such reporting requirement; provided,
that, without limitation, such a Change in Control shall be deemed to have
occurred if:

 

  (i) any “person” (as defined in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes the “beneficial owner” (as defined in Rule 13(d-3) under the
Exchange Act), directly or indirectly, of securities of the Company representing
thirty percent (30%) or more of the combined voting power of the Company’s then
outstanding securities;

 

  (ii) during any period of two (2) consecutive years (not including any period
prior to December 9, 1987) there shall cease to be a majority of the Board
comprised as follows: individuals who at the beginning of such period constitute
the Board and any new director(s) whose election by the Board or nomination for
election by the Company’s stockholders was approved by a vote of at least
two-thirds ( 2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved; or

 

  (iii) the shareholders of the Company approve a merger or consolidation of the
Company with any other company, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 80% of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation.

 

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  (iv) the shareholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of all or
substantially all the Company’s assets.

 

5.3 Cause. Termination of employment by the Company for “Cause” shall mean
termination pursuant to notice of termination setting out the reason for
termination upon (i) the willful and continued failure by the participant to
substantially perform his duties with the Company after a specific, written
demand is developed; (ii) the willful engaging by the participant in conduct
which is demonstrably and materially injurious to the Company, monetarily or
otherwise or (iii) the participant’s conviction of a felony which impairs the
participant’s ability substantially to perform his duties with the Company.

 

An act, or failure to act, shall be deemed “willful” if it is done, or omitted
to be done, not in good faith and without reasonable belief that the action or
omission was in the best interest of the Company.

 

5.4 Good Reason. “Good Reason” shall mean the occurrence, without the
participant’s express written consent, within 24 months following a Change in
Control of the Company, of any one or more of the following:

 

  (i) the assignment to the participant of duties materially inconsistent with
the participant’s duties, responsibilities and status prior to the Change in
Control or a material reduction or alteration in the scope of the participant’s
responsibilities from those in effect prior to the Change in Control;

 

  (ii) a reduction by the Company in the participant’s base salary or profit
sharing award as in effect prior to the Change in Control;

 

  (iii) the Company requiring the participant to be based at a location in
excess of twenty-five (25) miles from the location where the participant is
currently based;

 

  (iv) the failure by the Company or any successor to the Company to continue in
effect any other Pension Plans, or its Profit Sharing Plan for Salaried
Employees, Short-Term Incentive Bonus Plan, Deferred Compensation Plan,
Long-Term Incentive Plan, the John Deere Stock Option Plan or any other of the
Company’s employee benefit plans, policies, practices or arrangements applying
to the participant or the failure by the Company to continue the participant’s
participation therein on substantially the same basis, both in terms of the
amount of benefits provided and the level of his or her participation relative
to other participants, as existed prior to the Change in Control;

 

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If Good Reason exists, the participant’s right to terminate his or her
employment pursuant to this Subsection shall not be affected by temporary or
subsequent incapacity due to physical or mental illness. Continued employment
shall not constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason hereunder. Retirement at less than “normal
retirement age” as defined in the John Deere Pension Plan for Salaried Employees
constitutes a “termination” for purposes of this Subsection.

 

5.5 Amount. The amount of the benefit payable under this section shall be
determined in accordance with Section 3.2.

 

5.6 Commencement and Duration. Retirement Benefits provided under this section
shall be made in a lump sum on the first day of the calendar month following the
date the Participant ceases employment with the Company, except as noted in
Section 3.5. Calculation of the lump sum payment shall be made in accordance
with the terms set forth in Section 3.5

 

5.7 Deere & Company Severance Protection Agreement

 

The change in control of Company provisions shown above do not apply in the
event a Participant has received and executed a personal Severance Protection
Agreement issued by Deere & Company. In order for the Severance Protection
Agreement to apply in lieu of the provisions shown in Section 5 above the
Agreement must be effective as shown in Article I. Establishment, Term and
Purpose of the Deere & Company Severance Protection Agreement.

 

14

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Section 6. Survivor Benefits

 

6.1 In the event of the death of an active Participant or a Participant on
Permanent and Total Disability, notwithstanding Section 3.1 of this Plan, the
surviving spouse shall be eligible for a monthly survivor benefit provided the
Participant:

 

  (a) was married and eligible to retire on the date of death under early or
normal retirement provisions of the Qualified Retirement Plan or

 

  (b) had been married for at least one year prior to death and was on Total and
Permanent Disability as provided in the Qualified Retirement Plan or

 

  (c) was married for at least one year prior to death and Participant had
elected the Contemporary Pension Option and was vested under the Qualified
Retirement Plan or

 

  (d) was married for at least one year prior to death and the Participant
elected the Traditional Pension Option and had three years or more of service as
an Officer. The benefit will be reduced  1/3% of 1% for each month the Officer
would have been under age 60 at the date this surviving spouse benefit
commences.

 

The surviving spouse benefit under this Plan for a Participant who died prior to
retirement as specified in 6.1 will be in the same proportion of the
Participant’s benefit under Section 3 of this Plan as the surviving spouse
benefit under the Qualified Retirement Plan bears to the Participant’s benefit
under Article IV, Section 1 of the Qualified Retirement Plan. The surviving
spouse benefit will be payable as a monthly annuity or as a lump sum as of the
first of the month following eligibility for a surviving spouse benefit under
the Qualified Retirement Plan.

 

6.2 Death of a Retired Participant. The surviving spouse shall be eligible for a
monthly survivor benefit provided:

 

  (a) the Participant is eligible for a retirement benefit under this Plan and

 

  (b) the Participant had not received the lump sum payment provided under
Section 3.5 of this Plan and

 

  (c) the surviving spouse and Participant were either:

 

  (1) continuously married before the Participant’s early or normal retirement
or

 

15

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  (2) the Participant had elected a surviving spouse benefit under section 6.4
below.

 

The survivor benefit option elected by the retired Participant under Article IV,
Section 1 of the Qualified Retirement Plan shall apply to the survivor benefit
payable under this Plan. Any formula used to calculate the reduction in the
retiree’s monthly benefit under the Qualified Retirement Plan shall also apply
under this Plan.

 

6.3 Commencement and Duration. Payment of monthly death benefits provided under
this section shall commence on the same date that surviving spouse benefits
commence under the Qualified Retirement Plan. The last payment will be made on
the first day of the month of the Surviving Spouse’s death.

 

6.4 Survivor Benefit Election After Retirement. A Participant who retired and is
receiving benefits under this Plan, for whom no survivor benefit is in effect,
may elect a survivor benefit by filing a written application with the Company
provided:

 

  (1) The Participant was not married at retirement and has subsequently
married, or

 

  (2) The Participant has had a Survivor Benefit provision in effect and has
remarried, and

 

  (3) The Participant had not received a lump sum payment provided in Section
3.5 of this Plan.

 

The Survivor Benefit under this paragraph and any applicable reduction to the
retired Participant’s benefit shall be effective with respect to benefits
falling due for months commencing with the first day of the month following the
month in which the Company receives an application, but in no event before the
first day of the month following the month in which the retired Participant has
been married to the designated spouse for one year.

 

On or after 1 July 1999, if the Company is notified of a designated spouse
following the first day of the month in which the retired employee has been
married to the designated spouse for one year, retroactive reductions and
benefit adjustments will be made to the retired Participant’s pension benefit or
the survivor’s benefit, in the event of a retired Participant’s death for such
late notice. These retroactive reductions will become payable for the period of
time based on the date the survivor benefit would have become effective (the
first day of the month following the month in which the retired Participant had
been married to the designated spouse for one year).

 

Any surviving spouse benefit election by the retired Participant under Article
IV, Section 1 of the Qualified Retirement Plan shall apply to the survivor
benefit payable under this Plan. Any formula used to calculate the reduction in
the retired Participant’s monthly benefit under the Qualified Retirement Plan
and Sections 3.2, 3.3, and 3.4 of this Plan will also apply.

 

16

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Section 7. Financing of Benefits

 

7.1 Contractual Obligation. It is intended that the Company is under a
contractual obligation to make the payments under this Plan when due. No
benefits under this Plan shall be financed through a trust fund or insurance
contracts or otherwise. Benefits shall be paid out of the general funds of the
Company.

 

7.2 Unsecured General Creditor. Neither the Participant nor the Surviving Spouse
shall have any interest whatsoever in any specific asset of the Company on
account of any benefits provided under this Plan. The Participant’s (or
Surviving Spouse’s) right to receive benefit payments under this Plan shall be
no greater than the right of any unsecured general creditor of the Company.

 

7.3 Funding. All amounts paid under this Plan shall be paid in cash from the
general assets of the Company. Such amounts shall be reflected on the accounting
records of the Company, but shall not be construed to create, or require the
creation of, a trust, custodial or escrow account. No Participant shall have any
right, title or interest whatever in or to any investment reserves, accounts or
funds that the Company may purchase, establish or accumulate to aid in providing
the benefits under this Plan. Nothing contained in this Plan, and no action
taken pursuant to its provisions, shall create a trust or fiduciary relationship
of any kind between the Company and a Participant or any other person. Neither
shall an employee acquire any interest greater than that of an unsecured
creditor.

 

7.4 Vesting. Benefits under this Plan shall become nonforfeitable at the earlier
of disability, or retirement under the Traditional Pension Option of the
Qualified Retirement Plan after reaching age 60 or after five years of service
credit and termination of employment or retirement under the Qualified
Retirement Plan Contemporary Pension Option. Notwithstanding the preceding
sentence, a Participant or his beneficiary shall have no right to benefits
hereunder if the Company determines that he engaged in a willful, deliberate or
gross act of commission or omission which is substantially injurious to the
finances or reputation of the Company.

 

7.5 Administration. This Plan shall be administered by the Company which shall
have, to the extent appropriate, the same powers, rights, duties and obligations
with respect to this Plan as it does with respect to the Qualified Retirement
Plan; provided, however, that the determination of the Company as to any
questions arising under this Plan, including questions of construction and
interpretation shall be final, binding, and conclusive upon all persons.

 

7.6 Expenses. The expenses of administering the Plan shall be borne by the
Company.

 

18

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7.7 Indemnification and Exculpation. The agents, officers, directors, and
employees of the Company and its affiliates shall be indemnified and held
harmless by the Company against and from any and all loss, cost, liability, or
expenses that may be imposed upon or reasonably incurred by them in connection
with or resulting from any claim, action, suit, or proceeding to which they may
be a party or in which they may be involved by reason of any action taken or
failure to act under this Plan and against and from any and all amounts paid by
them in settlement (with the Company’s written approval) or paid by them in
satisfaction of a judgment in any such action, suit, or proceeding. The
foregoing provision shall not be applicable to any person if the loss, cost,
liability, or expense is due to such person’s gross negligence of willful
misconduct.

 

7.8 Effect on Other Benefit Plans. Amounts credited or paid under this Plan
shall not be considered to be compensation for the purposes of a qualified
pension plan or any other benefit plan maintained by the Company. The treatment
of such amounts under other employee benefit plans shall be pursuant to the
provisions of such plans.

 

7.9 Tax Liability. The Company may withhold from any payment of benefits
hereunder any taxes required to be withheld and such sum as the Company may
reasonably estimate to be necessary to cover any taxes for which the Company may
be liable and which may be assessed with regard to such payment.

 

19

--------------------------------------------------------------------------------

EXHIBIT I

 

    

  TITLES AS OF

1 NOVEMBER 1996

--------------------------------------------------------------------------------

  

OFFICER SINCE

--------------------------------------------------------------------------------

Hans W. Becherer

   Chairman & COO & CEO   

26 Apr 1977

Bernard L. Hardiek

   President, Worldwide Ag. Equipment Division   

26 Aug 1987

(Retired)

Ferdinand F. Korndorf

   President, Worldwide Commercial & Consumer Equipment Division   

23 Sep 1991

John K. Lawson

   Sr. VP, Engineering, Information & Technology   

27 Feb 1985

Eugene L. Schotanus

   Executive VP Financial Services   

29 Jan 1974

(Retired)

Joseph W. England

   Sr. VP, Worldwide Parts & Corp. Administration   

29 Jan 1974

(Retired)

Pierre E. Leroy

   President, Worldwide Industrial Equipment Div.   

12 Dec 1985

Michael S. Plunkett

   Sr., VP, Engineering, Technology & HR   

29 Jan 1980

(Retired)

Frank S. Cottrell

   VP, General Counsel & Corporate Secretary   

26 Aug 1987

Robert W. Lane

   Sr. VP & CFO   

16 Jan 1996

John S. Gault

   former VP, Engr., Info, & Tech. GM, Harvester   

01 Jan 1994

Glen D. Gustafson

   former Comptroller Dir., Bus. Planning   

28 Jul 1981

(Retired)

Robert W. Porter

   Sr. VP, North American Ag. Marketing   

16 Nov 1994

(Retired)

 

20

--------------------------------------------------------------------------------

EXHIBIT I (continued)

 

    

  TITLES AS OF

1 NOVEMBER 1996

--------------------------------------------------------------------------------

  

OFFICER SINCE

--------------------------------------------------------------------------------

Adel A. Zakaria

   Sr. VP, Worldwide Ag Engr. & Mfg.   

01 Apr 1992

James D. White

   Sr. VP, Manufacturing   

26 Aug 1987

Mark C. Rostvold

  

Sr. VP, Worldwide

Commercial & Consumer Equip. Division

  

26 Aug 1987

(Retired)

Dennis E. Hoffmann

  

President

John Deere Insurance

  

05 Dec 1990

(Retired)

Michael P. Orr

  

President

John Deere Credit Company

  

05 Dec 1990

Richard J. VanBell

  

President

John Deere Health Care

  

16 Jan 1994

(Retired)

 

21