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                                                                   Exhibit 10.18

                           EARLY RETIREMENT AGREEMENT
                           --------------------------

         This Early Retirement Agreement is between Ferdinand F. Korndorf, an
individual, and Deere & Company, a Delaware corporation (the "Company").

         WHEREAS, Mr. Korndorf has requested through the use of his deferred,
accrued, newly earned, and unused vacation, to conclude his active employment
beginning 01 August 2001 and thereafter to retire, effective 28 February 2002,
under the terms and conditions of the John Deere Pension Plan for Salaried
Employees, the undersigned parties have agreed to settle any actual or potential
dispute now and forever with respect to Mr. Korndorf's employment or election to
retire.

         NOW THEREFORE, in consideration for the promises above and the
covenants and undertakings expressed below and those expressed in the
Non-Competition Agreement executed contemporaneously and attached and
incorporated by reference herein, the undersigned parties agree as follows:

         1.   In consideration for:

         (A)  cash payment. The payment of $1,139,010.00 as a lump sum payment
              ------------
              (less applicable withholdings) on 1 March 2002;

         (B)  insurance benefits. The continuation of health, accident, and life
              ------------------
              insurance benefits, at the employee-contributory rate through 31
              August 2004 (as provided under and subject to the terms,
              conditions, restrictions, and limitations of the applicable
              benefit plans), said employee-contributory payments to be made by
              Mr. Korndorf to the Company by the first calendar day of each of
              the 30 months;

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           (C)      Performance Bonus. The continuation of eligibility for
                    -----------------
                    payment of a Performance Bonus, if such a Bonus is paid for
                    fiscal year 2001, and on a prorated basis through 28
                    February 2002 if one is paid for fiscal year 2002, and
                    thereafter from 01 March 2002 through 31 August 2004
                    calculated and paid on a prorated basis at the higher of the
                    target percentage rate of 70% of current base salary or
                    actual award for each of those years, payable in January
                    following the close of each fiscal year 2002, 2003 and 2004
                    in accordance with the plan's terms and conditions;

           (D)      long term incentive award. Eligibility for the December 2001
                    -------------------------
                    long term incentive award delivered at Mr. Korndorf's choice
                    as either (a) stock options equal to eight times current
                    annual base salary divided by the share price on the date of
                    grant or (b) a lump sum cash payment equal to the
                    Black-Scholes value of the same number of stock options as
                    in (a) above, with a default to choice (a) unless Mr.
                    Korndorf's notification of his choice being (b) is delivered
                    in writing or via e-mail to the Company on or before 05
                    December 2001, and with a lump sum cash payment, if elected,
                    delivered to Mr. Korndorf on 15 January 2002;

           (E)      relocation allowance. Payment of expenses for the sale of
                    --------------------
                    Mr. Korndorf's residence located at 6075 Shadowbrook Drive,
                    Bettendorf, Iowa and for the costs associated with
                    relocation, including, purchase, if necessary, by the
                    Company of said residence, movement of

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               household goods to a new primary residence more than fifty miles
               outside the Quad Cities metropolitan area, for the time period
               beginning 01 August 2001 and ending on 31 August 2004, for
               relocation within the continental United States, unless
               re-employment occurs during that period and Mr. Korndorf's new
               employer provides the same relocation benefits, in which case,
               this provision becomes null and void. Mr. Korndorf shall provide
               the Company a summary of the relocation benefits provided by such
               new employer;

        (F)    executive career continuation. Career continuation services,
               -----------------------------
               including coverage of reasonable and necessary travel expenses to
               and from Chicago for that purpose, for up to twelve months from
               the date on which Mr. Korndorf shall engage such services, but in
               no event commencing later than 1 March 2002;

        (G)    life insurance benefits. Payment upon Mr. Korndorf's death
               -----------------------
               between 28 February 2002 and 31 August 2009, of a supplemental
               amount equal to $715,608.00, representing the difference between
               his retirement life insurance benefit and two times his present
               base annual salary, unless re-employment occurs during that
               period and Mr. Korndorf's new employer provides the same level of
               coverage, in which case this provision becomes null and void. Mr.
               Korndorf shall provide the Company a summary of the life
               insurance benefits coverage provided by such new employer. Said
               payment to be made to Mr. Korndorf's beneficiaries designated
               herein as follows: to

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               Bernadette Korndorf, his wife, as his primary beneficiary
               ("Beneficiary"), unless she should predecease him, in which case
               to his then living descendents, per stirpes, as his contingent
               beneficiaries, with the foregoing designation of beneficiaries
               remaining subject to change upon written notice by Mr. Korndorf
               to the Company;

       (H)     restricted stock. Eligibility, in accordance with the terms and
               ----------------
               conditions of the applicable Committee on Compensation of the
               Board of Directors Resolution, for the December 1998 retention
               grant of 11,528 shares of restricted stock vesting in December
               2001 and on a prorated basis through 28 February 2002, the
               retention grant of 11,528 shares of stock vesting in December
               2002, forfeiture of the remaining portion of the grant vesting in
               December 2002 and all of the grant vesting in December 2003
               unless the forfeiture is otherwise reversed by the Committee on
               Compensation during the September 2001 meeting, in line with the
               agreement between Mr. Korndorf and Mr. Robert Lane, Chief
               Executive Officer of the Company, for review and consideration of
               Mr. Korndorf's request for waiver of the retention requirements
               set forth by the Committee at the time of the grant, said
               agreement being memorialized in the correspondence from Robert
               Lane to Mr. Korndorf, a true and accurate copy of said
               correspondence being attached to this Agreement and incorporated
               herein by reference;

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       (I)     company equipment loan program. Eligibility for continued
               ------------------------------
               participation in the John Deere Executive Equipment Loan Program
               through 31 August 2004, at which point the loaned equipment in
               Mr. Korndorf's possession will be returned to the Company, unless
               Mr. Korndorf chooses to purchase the equipment under the same
               terms as those offered other participants in the Program at the
               time of their retirement, which is at a predetermined discount
               based on the age of said equipment at the time of purchase.
               Should Mr. Korndorf sell his Apple River Lake residence, where he
               utilizes the loaned equipment, prior to 31 August 2004, such
               equipment will be returned to the Company at that time, with the
               same purchase provision;

       (J)     use of Company computer equipment. At the Company's sole
               ---------------------------------
               election, through 28 February 2002, continued use of Company
               computer equipment, currently in Mr. Korndorf's possession, and
               access to Company e-mail, at which time both access shall cease
               and the aforementioned property shall be returned to the Company.
               A listing of said Company equipment applying to this provision is
               attached to this Agreement and incorporated herein by reference,
               and;

       (K)     miscellaneous. The other items set forth in this Agreement; Mr.
               -------------
               Korndorf, his heirs, representatives, successors, and assigns
               hereby fully and forever release and discharge the Company, its
               subsidiary and affiliated companies, and their respective
               officers,

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                        directors, employees, successors and assigns from any
                        and all demands, claims, charges, or suits, known or
                        unknown, which he, his heirs, representatives,
                        successors, or assigns have or may have against the
                        Company, its subsidiary or affiliated companies, their
                        respective officers, directors, employees, successors or
                        assigns relating in any manner whatsoever to Mr.
                        Korndorf's employment or election to retire, regardless
                        of what the claims are based upon and whether such
                        claims arise or could arise under common law, contract,
                        tort, the labor laws or employment discrimination laws,
                        such as Title VII of the Civil Rights Act of 1964, the
                        Americans with Disabilities Act, the Age Discrimination
                        in Employment Act, the Illinois Civil Rights Act, ERISA,
                        or under any other statute, rule, ordinance, or
                        administrative regulation, whether of federal, state or
                        local origin.

                        This provision means that Mr. Korndorf, his heirs,
                        representatives, successors and assigns agree not to
                        file a claim, charge, or lawsuit against the Company,
                        its subsidiary or affiliated companies, or their
                        respective officers, directors, employees, successors,
                        or assigns as a result of his employment or election to
                        retire from employment with the Company.

               2.   The Company, its subsidiary and affiliated companies, and
                    their respective officers, directors, employees, successors
                    and assigns, hereby fully and forever release and discharge
                    Mr. Korndorf, his heirs, representatives, successors, and
                    assigns from any and all demands,

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                  claims,  charges, or suits, known or unknown, which the
                  Company, its subsidiary and affiliated companies, and their
                  respective officers, directors, employees, successors and
                  assigns have or may have against Mr. Korndorf, his heirs,
                  representatives, successors and assigns relating in any
                  manner whatsoever to Mr. Korndorf's employment or election
                  to retire, regardless of what the claims are based upon and
                  whether such claims arise or could arise under common law,
                  contract, tort, or under any other statute, rule, ordinance,
                  or administrative regulation, whether of federal, state or
                  local origin. The Company further agrees to indemnify Mr.
                  Korndorf in the future for any claim arising out of his
                  employment by the Company to the same extent that it would
                  have indemnified him during his employment.

         3.       Neither the Company nor Mr. Korndorf is prohibited from filing
                  a claim, charge, or lawsuit for rights or claims that arise or
                  occur after the date this document is signed by the parties,
                  including but not limited to, claims to enforce any of the
                  terms of this Agreement.

         4.       Nothing contained in this Agreement shall bar Mr. Korndorf
                  from pursuing any claim, charge or lawsuit relating to any
                  employee and/or retirement benefits of the Company referred to
                  in this Agreement or to which he is otherwise entitled,
                  including, but not limited to, claims arising under ERISA.

         5.       Mr. Korndorf agrees to return within eight (8) days of
                  signing this Agreement all of the following property now in
                  his possession and

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                  belonging to the Company: including Company Identification
                  and building access card, the Company-issued American
                  Express Corporate card, AT&T Corporate card, Company-issued
                  cell phone, executive garage door opener and Company
                  documents (other than communiques and benefit plan documents
                  provided to employees). Company property listed in the
                  section 1 (J) attachment shall be returned under the terms
                  of the language in that provision.

         6.       Mr. Korndorf agrees that he will not use or give to others,
                  any trade secrets or confidential information belonging to the
                  Company or others with whom the Company does business.
                  Examples of what may be considered as trade secrets or
                  confidential information are designs, processes, systems,
                  computer programs, writing, research and development
                  information, financial data and marketing strategies. This
                  provision is not intended and shall not be construed so as to
                  prevent Mr. Korndorf from seeking and obtaining gainful
                  employment so long as such employment does not violate the
                  Non-Competition Agreement executed by Mr. Korndorf
                  contemporaneous with this Agreement.

                  Mr. Korndorf, and his agents and representatives, agree not
                  to make or publish in any public medium any disparaging
                  allegations, remarks, or statements about the Company, its
                  subsidiary and/or affiliated companies, their respective
                  products or services, or their current or former officers,
                  directors, or employees. Likewise, the Company, its agents
                  and representatives, agree not to make or publish in any
                  public medium any

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               disparaging allegations, remarks, or statements about Mr.
               Korndorf. Neither party shall be prohibited from making truthful
               statements when required by a court or other regulatory body of
               competent jurisdiction. Reference statements made by the Company,
               its agents or representatives to prospective employers of Mr.
               Korndorf shall be consistent with Company policy regarding former
               employees, which is restricted to confirming dates of employment,
               last position and title held and in the case of retirees,
               retirement.

       8.      For a period of two (2) years following the date of his
               retirement, Mr. Korndorf, and his agents and representatives,
               agree not to solicit, hire, or attempt to hire any employee of
               the Company, its subsidiary or affiliated companies (hereinafter,
               collectively, "employee(s) of the Company"), nor interfere with
               or attempt to interfere with the employment relationship between
               the Company and any employee(s) of the Company, nor cause any
               employee(s) of the Company to quit, resign, or leave their
               employment with the Company for any reason or purpose whatsoever,
               except in those instances in which the application for employment
               by or recruitment of employee(s) of the Company by an employer of
               Mr. Korndorf's shall be initiated without his involvement.
               Nothing in this Agreement shall bar Mr. Korndorf from providing
               personal references for employee(s) of the Company.

       9.      The parties agree that any violation of this Agreement by Mr.
               Korndorf or by any agent or representative of his shall
               constitute a material breach

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               and will cause irreparable damage to the Company and that it
               would be exceedingly difficult, if not impossible, to ascertain
               with certainty the monetary damages the Company would suffer as a
               result of such breach. Therefore, if a violation occurs, Mr.
               Korndorf shall be liable for liquidated damages in the amount of
               $10,000 for each such breach. The Company shall be entitled to
               injunctive relief to restrain Mr. Korndorf or anyone acting on
               his behalf from violating this Agreement.

          10.  In the event that it shall become necessary for either the
               Company or Mr. Korndorf to pursue legal action to enforce the
               terms of this Agreement or a dispute arises with respect to an
               alleged breach or the interpretation of any of the terms of this
               Agreement, the prevailing party in any such litigation shall be
               entitled to recover from the non-prevailing party all costs of
               the litigation, including the prevailing party's reasonable
               attorney's fees incurred in prosecuting or defending the
               litigation.

          11.  The parties agree that the terms of this Agreement shall remain
               confidential and shall not be disclosed by either party without
               the express written consent of the other party. This does not
               prevent Mr. Korndorf, however from disclosing the terms and
               conditions of the Agreement to his immediate family, legal
               counsel, tax preparers, financial institutions (including, but
               not limited, to lenders) or accountants; provided, however, that
               such persons agree to be bound by the confidentiality provisions
               of this Agreement. It shall not be a violation of this Agreement
               for a party to reveal the terms of this Agreement if required to
               do so by legal process,

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               rule or regulation. Nor shall it be a violation of this Agreement
               for a party to reveal the terms of this Agreement by order of any
               court or government agency or instrumentality thereof or in an
               action either to enforce the terms of this Agreement or to
               recover damages for the breach or violation of a provision or
               terms of this Agreement.

          12.  Mr. Korndorf acknowledges and agrees that he has read and fully
               understands and appreciates the legal consequences of executing
               this Agreement; that he was given a copy of this Agreement and
               afforded a reasonable period of time to consider this Agreement
               before signing it; that he has consulted with legal counsel of
               his own choice, or at least has had ample opportunity to do so,
               before signing this Agreement; and that the Company has suggested
               that he consult such legal counsel before executing this
               Agreement.

          13.  Mr. Korndorf understands that he may change his mind and may
               revoke this Agreement for a period of eight (8) days following
               the day he signs it. Revocation must be in writing and mailed,
               hand-delivered or e-mailed to the Company to the attention of:
               Sherri Martin, Manager, Human Resources, Deere & Company, One
               John Deere Place, Moline, IL 61265-8098. This Agreement may not
               be enforced until after the revocation period has expired. Return
               of Company property and required contact on Mr. Korndorf's part
               as noted in this agreement are also to be with Sherri Martin and
               her successors and assignees.

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          14.  Should Mr. Korndorf die before 31 August 2004, all benefits and
               provisions provided to Mr. Korndorf in this Agreement shall
               transfer to his designated Beneficiary herein, with the exception
               of the prorated, short-term, Bonus payment as specified in
               Section 1 (C), which shall be payable to his designated
               Beneficiary through 31 January 2005. Mr. Korndorf agrees to
               maintain all beneficiary designations under the applicable
               benefit plans consistent with the current designated beneficiary
               and/or any modified beneficiary designation (s) under this
               agreement.

          15.  Provisions of the Equity Incentive Plan, Premium Priced Options,
               the Savings and Investment Plan, Voluntary Deferred Compensation,
               and other normal retirement benefits not specified within this
               Agreement, are summarized in the Attachment to this Agreement,
               which is incorporated herein by reference. Copies of the
               foregoing plan and benefits documentation have been previously
               provided to Mr. Korndorf for his review prior to execution of
               this Agreement.

          16.  This Agreement, including the three (3) attachments hereto and
               incorporated herein by reference ((1) the letter of agreement
               from Robert Lane to Mr. Korndorf referenced in section 1(H),
               above, (2) the list of Company equipment referenced in section
               1(J), above, and (3) the summary of retirement benefits,
               referenced in section 15, above) contains all of the terms and
               conditions agreed upon, and supersedes all other agreements, oral
               or otherwise, regarding the subject matters set forth in this
               Agreement. If any part of this Agreement other than Section 1 is

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               deemed invalid or unenforceable, if shall be considered severed
               and deleted from this Agreement entirely without affecting any of
               the other terms and conditions of this Agreement, which shall
               remain in full force and effect as written. Section 1 shall at
               all times be considered an essential provision of this Agreement
               in all respects.

         IN WITNESS WHEREOF, the parties have knowingly and voluntarily executed
this Agreement on the date so indicated.

                                          DEERE & COMPANY

 /s/ Ferdinand F. Korndorf
----------------------------              By /s/ Mertroe B. Hornbuckle
     Ferdinand F. Korndorf                   -----------------------------------
                                          Print Name Mertroe B. Hornbuckle
                                                     ---------------------------
                                          Title Vice President, Human Resources
                                                --------------------------------
Date August 10, 2001                      Date August 10, 2001
     -----------------------                   ---------------------------------

THE COMPANY SUGGESTS THAT YOU CONSULT WITH AN ATTORNEY OF YOUR OWN CHOICE BEFORE
SIGNING THIS EARLY RETIREMENT AGREEMENT AND RELEASE.

                                       13

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                  Attachment to the Early Retirement Agreement

                              Ferdinand F. Korndorf

Based on your election to retire effective 28 February 2002 and defer
commencement of your pension benefit until age 55, 31 August 2004, the following
summary information pertaining to your retirement benefits is provided:

Pension Benefits

Your pension benefits have been calculated and are presented below. As
indicated, you are entitled to pension payments from three Plans. The John Deere
Pension Plan for Salaried Employees is a qualified plan with limitations on
benefits as required by the Internal Revenue Code. The John Deere Senior
Supplementary Pension Benefit Plan is an unfunded plan providing the "excess
benefits" limited in the qualified plan. The John Deere Supplemental Pension
Benefit Plan is another unfunded plan providing additional benefits based on
your years of service as an executive and on your incentive compensation. Full
surviving spouse coverage is provided under all three Plans. You may choose to
receive the Supplemental and/or Supplementary Pension Plan benefits in a lump
sum, in which case survivor coverage for Bernadette Korndorf would be limited to
your pension benefit from the qualified plan. The value of survivor benefits
provided under the Supplemental and Supplementary Pension Plans will be included
in the lump sum payment, assuming you choose the Reduced Level benefit option on
the date you elect to begin receiving retirement payments.

The following is an estimate of your monthly payments you will receive from the
John Deere Pension Plan for Salaried Employees; the Supplementary and
Supplemental benefit plans deferred to your age 55.

Qualified Plan Reduced for 55% Surviving Spouse benefits:  $4,848.00

Supplementary Plan Reduced for 55% Surviving Spouse benefits:  $6,759.46 or an
estimated Lump Sum present value of $1,187,327.34

Supplemental Plan Reduced for 55% Surviving Spouse benefits:  $1,353.64 or an
estimated Lump Sum present value of $237,772.51

Payment of a Performance Bonus award in December 2001 and any prorated
Performance Bonus earned through February 2002 will be credited to your career
average earnings and may increase the payment from the Supplemental Plan shown
above. Additionally, any changes in IRS limitations and interest rates can
impact the lump sum values shown above.

Should you not wish to defer receipt of your pension until 31 August 2004, the
following benefits are payable beginning 1 March 2002:

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Attachment to the Early Retirement Agreement
Ferdinand F. Korndorf
Page 2


Qualified Plan Reduced for 55% Surviving Spouse benefits:  $4,012.00

Supplementary Plan Reduced for 55% Surviving Spouse benefits:  $6,176.66 or an
estimated Lump Sum present value of $1,124,260.69

No Supplemental Plan benefits are payable since you do not meet the early
retirement eligibility requirement under the Contemporary Option. For this same
reason, Performance Bonus payments will not affect any pension benefit.

Medicare FICA Tax

Benefits payable from the Supplemental and Supplementary Pension Plans are
subject to 1.45% Medicare FICA Tax. The tax due on the Supplementary and
Supplemental Plan lump sum payments are due at retirement or when you elect to
receive payment, whichever is later, whether or not you choose to take the
payments in lump sum or as an annuity.

Equity Incentive Plan

Effective with your retirement, the grant made in 1998 will be reduced pro-rata
based on the time elapsed in the performance period and continue without
modification. The pro-rated grant will then vest or be forfeited at the end of
the performance period based on company performance in accordance with the terms
of the Plan, including bonus award eligibility. The number of shares is as
follows:

         Grant Date              Original Grant                   Reduced Grant
         ----------              --------------                   -------------
            1998                 13,012 Shares                    10,843 Shares


Premium Priced Options

Effective with your retirement, the grants made in 1997 and 1998 will continue
without modification. If the 50% premium is not achieved in the first five
years, the options will vest on 10 December 2002 and 9 December 2003,
respectively and expire three months later.

If the 50% premium is achieved in the first five years, the performance cycle
continues in retirement and the above options will become exercisable until
expiration five years

<PAGE>

Attachment to the Early Retirement Agreement
Ferdinand F. Korndorf
Page 3

subsequent to your 28 February 2002 retirement, on 28 February 2007. Vested
shares have the shorter of five years or the remaining period to expiration at
retirement.

Stock Option Grant for Fiscal 2002

You will receive (a) the maximum grant of stock options equal to eight times
current annual base salary divided by the share price on the date of grant, or
(b) you may elect a payment equal to the Black-Scholes value of the same number
of stock options as in (a) above to be delivered in a lump sum cash payment on
15 January 2002. You must advise the Company of your choice of the lump sum cash
payment by 5 December 2001, or you will receive the stock options.

Restricted Stock

You will remain eligible, in accordance with the terms and conditions of the
applicable Committee on Compensation of the Board of Directors Resolution, for
the December 1998 retention grant of 11,528 restricted shares vesting in
December 2001, and on a prorated basis through 28 February 2002, for the
retention grant of 11,528 shares vesting in December 2002. As of your
retirement, forfeiture of the remaining portion of the grant vesting in December
2002 and all of the grant vesting in December 2003 will occur unless the
forfeiture is otherwise reversed by the Committee on Compensation during the
September 2001 meeting, in line with the agreement between Mr. Korndorf and Mr.
Robert Lane, Chief Executive Officer of the Company, for review and
consideration of Mr. Korndorf's request for waiver of the retention requirements
set forth by the Committee at the time of the grant.

Voluntary Deferred Compensation

Compensation and Performance Bonus deferred under the Voluntary Deferred
Compensation program will be paid based on your irrevocable elections as a
result of your retirement.

<PAGE>

Attachment to the Early Retirement Agreement
Ferdinand F. Korndorf
Page 4

Savings and Investment Plan

Contributions to your Savings and Investment Plan will terminate as of 28
February 2002. You may retain your account balance until such time as you elect
to take a distribution. You must begin taking a "minimum required distribution"
(MRD) no later than 30 April following the year in which you reach age 70-1/2.
You will be notified by Fidelity Investments when your MRD is due and the
necessary documents will be mailed to you. Information on other SIP distribution
options is available by calling the John Deere Savings Plan Service Center at
1-800-354-3427.

Stock Transactions When You Have Material Undisclosed Information

As a reminder, the Securities and Exchange Commission prohibitions against
purchasing or selling Deere stock (including shares acquired through benefit
plans) or advising or influencing others to do so when you are aware of material
undisclosed information continue to apply following your active employment and
retirement. Any current or former insider aware of information that would affect
a decision to buy or sell stock that is not generally available to the public
must abstain from trading until the information is disclosed. The prohibition
will continue until you are no longer aware of material undisclosed information
and it applies to all Deere stock owned or controlled by you, members of your
family living with you and by entities which you or a member of your immediate
family control.