JOHN DEERE SUPPLEMENTAL PENSION BENEFIT PLAN
AS AMENDED 1 NOVEMBER 1987
AND FURTHER AMENDED:
24 FEBRUARY 1988
28 FEBRUARY 1990
27 FEBRUARY 1991
29 MAY 1991
26 AUGUST 1992
09 DECEMBER 1992
AMENDED MAY 1993 - EFFECTIVE 1 JULY 1993
AMENDED 8 DECEMBER 1993 - EFFECTIVE 1 JULY 1993
AMENDED 7 DECEMBER 1994
AMENDED MAY 1995 - EFFECTIVE 1 JANUARY 1995
AMENDED 13 DECEMBER 1995 - EFFECTIVE 1 JANUARY 1995
AMENDED 4 DECEMBER 1996 - EFFECTIVE 1 JANUARY 1997
AMENDED 07 JANUARY 1998 - EFFECTIVE 01 JANUARY 1998
AMENDED 26 MAY 1999 - EFFECTIVE 26 MAY 1999
AMENDED 19 JULY 1999 - EFFECTIVE 1 JULY 1999
AMENDED 6 AUGUST 1999 - EFFECTIVE 1 AUGUST 1999
AMENDED - 02 NOVEMBER 1999 - EFFECTIVE 01 NOVEMBER 1999
AMENDED 31 July 2000 -EFFECTIVE 1 Jan 2000 (Item(1&2)-1 Apr 2000 (Item (3)
(See Resolution for Item explanation)
JOHN DEERE SUPPLEMENTAL PENSION BENEFIT PLAN
TABLE OF CONTENTS
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Section 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 3
1.7 Employment Rights 3
1.8 Severability 3
1.9 Applicable Law 3
II. DEFINITIONS
2.1 Definitions 4
2.2 Gender and Number 7
III. SUPPLEMENTAL PENSION BENEFIT
3.1 Eligibility 8
3.2 Amount 8
3.3 Limitations 9
3.4 Reduction for Early Retirement under Contemporary Option 9
3.5 Commencement and Duration 9
3.6 Death Prior to Receipt of Lump Sum 10
3.7 Qualified Domestic Relations Order 11
IV. DISABILITY BENEFIT
4.1 Eligibility 12
4.2 Amount 12
4.3 Commencement and Duration 12
V. CHANGE IN CONTROL OF COMPANY
5.1 Eligibility 13
5.2 Change in Control of the Company 13
5.3 Cause 14
5.4 Good Reason 14
5.5 Amount 15
5.6 Commencement and Duration 15
5.7 Deere & Company Severance Protection 15
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Section Page
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VI. SURVIVOR BENEFITS
6.1 Death of an active Participant or a Participant
on Permanent & Total Disability 16
6.2 Death of a Retired Participant 16
6.3 Commencement and Duration 17
6.4 Survivor Benefit Election After Retirement 17
VII. FINANCING OF BENEFITS
7.1 Contractual Obligation 19
7.2 Unsecured General Creditor 19
7.3 Funding 19
7.4 Vesting 19
7.5 Administration 19
7.6 Expenses 19
7.7 Indemnification and Exculpation 20
7.8 Effect on Other Benefit Plans 20
7.9 Tax Liability 20
EXHIBIT I 21
ii
JOHN DEERE SUPPLEMENTAL PENSION BENEFIT PLAN
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Section 1. Purpose and Establishment
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1.1 Establishment and Amendment of the Plan. Deere & Company (the "Company")
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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
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Deere & Company and its Officers and Executives.
1.3 Cost of Benefits. Cost of providing benefits under the Plan will be borne
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by the Company.
1.4 Application of Plan. The provisions of this Plan as set forth herein are
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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
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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
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
1.6 Nonencumbrance of Benefits. Except as provided in Article VIII, Section 8
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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
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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
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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
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ERISA. The Plan shall be governed and construed in accordance with Title I
of ERISA and the laws of the State of Illinois.
Section 2. Definitions
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2.1 Definitions. Whenever used in this Plan, it is intended that the following
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terms have the meanings set forth below:
(a) "Average Pensionable Pay" of the Traditional Pension Option means the
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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)
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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
2
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
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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
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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.
(e) "Company" means Deere & Company, a Delaware corporation.
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3
(f) "Contemporary Pension Option" means the benefit provided to Officers
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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
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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
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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
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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
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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
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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.
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(m) "Pro-rated Yearly Vesting Amount under the John Deere Equity Incentive
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Plan" means for the purposes of calculating a long term incentive
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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.
(o) "Retirement Benefit" shall be a single-life annuity or lump sum amount
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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
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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"
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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
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participant.
(s) "Traditional Pension Option" means the benefit under this Plan for
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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.
4
2.2 Gender and Number. Except when otherwise indicated by the context, any
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masculine term used herein shall also include the feminine, and the
singular shall also include the plural.
Section 3. Supplemental Pension Benefit
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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
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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.
(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.
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(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.
5
(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
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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.
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 for Plan Years beginning 1 November 1999 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 GAM, as set
forth in Revenue Ruling 95-6, 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)
6
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 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.
Section 4. Disability Benefit
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4.1 Eligibility. An employee who qualifies for a total and permanent disability
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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
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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.
Section 5. Change in Control of Company
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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:
7
(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.
(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
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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
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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;
8
(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;
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
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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.
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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.
9
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
(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).
10
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.
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.
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.
11
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.
12
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
Ferdinand F. Korndorf President, Worldwide Commercial & 23 Sep 1991
Consumer Equipment Division
John K. Lawson Sr. VP, Engineering, 27 Feb 1985
Information & Technology
Eugene L. Schotanus Executive VP Financial Services 29 Jan 1974 (Retired)
Joseph W. England Sr. VP, Worldwide Parts & Corp. Administration 29 Jan 1974
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
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 & 26 Aug 1987
Consumer Equip. Division
Dennis E. Hoffmann President 05 Dec 1990
John Deere Insurance (Retired)
Michael P. Orr President 05 Dec 1990
John Deere Credit Company
Richard J. VanBell President 16 Jan 1994
John Deere Health Care (Retired)
13