EXHIBIT 10.7
DEERE & COMPANY
1986 JOHN DEERE
STOCK OPTION PLAN
[LOGO]
2
1. PURPOSE - The purpose of the Plan (Plan) is to increase personal
participation in the continued growth and financial success of Deere & Company
(Company) and its subsidiaries (the Company and its subsidiaries being sometimes
collectively called Deere corporations) by certain key employees holding higher
executive, administrative or professional positions.
2. ADMINISTRATION - The Plan shall be administered by and under the
direction of a Board Committee on Compensation (Committee), whose
interpretations of its terms and provisions shall be final and conclusive. The
Committee shall consist of three or more directors of the Company, none of whom
shall be eligible, nor at any time beginning one year prior to appointment to
the Committee shall have been eligible, to receive an option, stock appreciation
right or stock of the Company under the Plan or any other employee plan of the
Company.
3. GRANT OF OPTIONS AND STOCK APPRECIATION RIGHTS - The Committee
may from time to time on or prior to December 31, 1990 grant to key employees
(including employees who are directors or officers of the Company or both)
options to purchase common stock of the Company (sometimes called options)
exercisable at an option price fixed by the Committee but not less than the fair
market value of the shares on the date of grant.
The options and stock appreciation rights granted hereunder may be
either one or both of two series of options:
(i) "A" OPTIONS - "A" options are intended to be incentive stock
options under Section 422A of the Internal Revenue Code of 1954, as amended
(the Code). In addition to the other provisions of the Plan, "A" options
will also be subject to the following:
An "A" option may not be exercised while the optionee holds an
outstanding "incentive stock option" (as that term is defined in
Section 422A of the Code) which was granted under this or any other
plan of the Company prior to the option.
(ii) "B" OPTIONS - All other options shall be deemed to be "B"
options and are intended to be non-statutory options not subject to Section
422A of the Code.
The Committee may also grant stock appreciation rights in connection
with any option under this Plan but not separately, either concurrently with the
grant of option or
3
subsequently, subject to such terms, conditions, limitations and restrictions as
may be attached to a particular stock appreciation right upon grant, exercisable
in lieu of exercise of all or part of the related option, without payment to the
Company, to receive (i) a number of shares equal in value (determined at the
date of exercise) to the amount by which the fair market value at the date of
exercise of the option shares for which the stock appreciation right is
exercised exceeds the option exercise price of such shares, or (ii) cash in the
amount of such value or (iii) a combination of both. The fair market value of a
fractional interest in a share shall be satisfied by payment of cash.
All references to stock options under the Plan shall be construed to
include such stock appreciation rights, if any, as may be granted in connection
with a particular option.
The aggregate amount of fair market value (the fair market value of
a share of the common stock of the Company on the date of grant times the
number of shares optioned under the grant) of "A" options (incentive stock
options, as that term is defined in Section 422A of the Internal Revenue
Code) which any employee may be granted in any calendar year under this Plan
(and any other incentive stock option plan which the Company or its
subsidiaries may have) shall not exceed $100,000 plus any unused limit
carryover calculated in accordance with Section 422(c)(4) of the Internal
Revenue Code.
4. NUMBER OF SHARES - The aggregate number of shares for which
options and stock appreciation rights may be granted under the Plan shall not
exceed 3,900,000, subject to adjustment as provided in Section 8. To the extent
of an exercise of a stock appreciation right, the related option shall be
deemed, for purposes of the Plan, to have been exercised for the entire number
of option shares as to which the stock appreciation right is exercised. Shares
for which options and stock appreciation rights are no longer exercisable as a
result of expiration, termination or cancellation shall be available for
subsequent grants.
Shares delivered upon exercise of options or stock appreciation rights
may be either authorized but unissued shares, or treasury shares, or both, and
all shares issued under the Plan shall be fully paid and non-assessable.
5. DURATION AND EXERCISE - The term of each option and stock
appreciation right shall be determined by the Committee, but shall not extend
later than ten years after
4
the date of grant of the option, and in the case of a stock appreciation right,
in no event later than the date of expiration of the related option.
An option or stock appreciation right granted under this Plan shall
not be exercisable until one year from date of grant. Subject to any
conditions, limitations or restrictions included therein at time of grant, an
option or stock appreciation right shall thereafter be exercisable for the full
amount or any part thereof from time to time during its term. An option or
stock appreciation right may be exercised by delivering written notice to the
Company to the attention of the Committee at the principal executive office of
the Company, or at such other office as the Company may designate, accompanied
by payment in cash or in shares of the Company at their fair market value on the
date of exercise or both in full for any shares purchased by exercise of the
option, except that the Committee may provide in the terms of the option that if
an optionee who is not an officer subject to Section 16 of the Securities
Exchange Act of 1934 states at the time of exercise that he desires to have the
Company arrange to promptly resell on his behalf the stock being purchased
through the exercise, a temporary, unsecured, interest-free loan will be
advanced for the exercise by the Company or such other party as the Company may
approve, to be reimbursed out of the proceeds of the sale.
Whenever an amount is required to be withheld by the Company under
applicable income tax laws or under the Federal Insurance Contributions Act
in connection with the exercise of an option, the optionee may satisfy this
obligation in whole or in part by electing (the Election) to have the Company
withhold shares having a value equal to the amount required to be withheld.
The value of each withheld share shall be the fair market value on the date
that the amount of tax to be withheld shall be determined (Tax Date). Each
Election is irrevocable and must be made prior to the Tax Date. The Committee
may disapprove of any election or may suspend or terminate the right to make
Elections.
If the optionee is, or at any time within a period of less than the
preceding six months was, a director or an officer of the Company then (1) no
Election shall be effective for a Tax Date which occurs within six months of the
grant of the option, and (2) the Election must be made either six months prior
to the Tax Date or must be made during a period beginning on the third business
day and ending on the twelfth business day following the date of the first
release for publication of each quarterly or annual summary statements of sales
and earnings of the Company.
5
6. NON-TRANSFERABILITY - No option or stock appreciation right shall
be transferable by the holder otherwise than by will or the laws of descent and
distribution, and each option or stock appreciation right shall be exercisable
during the holder's lifetime only by him or her. Except as permitted by the
preceding sentence, no option or stock appreciation right shall be transferred,
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) or be subject to execution, attachment, or similar process. Upon any
attempt to so transfer, assign, pledge, hypothecate or otherwise dispose of, or
subject to execution, attachment or similar process, any option, stock
appreciation right, or any right thereunder, contrary to the provisions hereof,
the option or stock appreciation right shall immediately become null and void.
7. TERMINATION OF EMPLOYMENT - If the employment of the holder of an
option or stock appreciation right by the Deere corporations should be
terminated for any reason other than for death, or for disability or retirement
pursuant to applicable disability or retirement plans of the Deere corporations,
such holder's options, stock appreciation rights or both shall expire, and all
rights to acquire shares or cash or both pursuant thereto shall terminate
immediately.
In the event of termination of employment because of death, the option
or stock appreciation right may be exercised by the heirs, legatees or legal
representatives of the holder, as the case may be, within twelve months after
such death. Such exercise shall be upon the same terms at the time of exercise
as would have been available to the original holder, had he or she remained in
the continuous employ of the Company, except that such heirs, legatees or legal
representatives may exercise any option or stock appreciation right held at the
date of such holder's death without regard to the one-year holding period set
forth in Section 5 above.
In the event of termination of employment of the holder of an option
because of disability or full retirement pursuant to applicable disability or
retirement plans of the Deere corporations, an option or stock appreciation
right may be exercised by such holder, within five years after such termination,
to the same extent and upon the same terms (including, among other things, the
holding period requirement set forth in Section 5 above) at the time of exercise
as would have been available had such holder remained in the continuous employ
of the Company. In the event of the death of a holder of an option who has
retired
6
prior to the expiration of the five year period specified in the preceding
sentence, any option or stock appreciation right held at death by such holder
may be exercised by the holder's heirs, legatees or legal representatives,
as the case may be (without regard to the holding period requirement set
forth in Section 5 above) within one year after death or within five years of
retirement, whichever is later, but only if and to the extent the option
would have been exercisable by the retired holder of the option at the date
of death.
Nothing contained in the Plan, or in any option or stock appreciation
right granted pursuant to the Plan, shall confer upon any employee any right
to continuance of employment, nor interfere in any way with the right of the
employing Deere corporation to terminate the employment of such employee at
any time.
8. ADJUSTMENT OF SHARES - In case of a dividend in, or a split-up or
combination of, common stock of the Company, the number of shares issuable
pursuant to the Plan and the number of shares covered by outstanding options
and stock appreciation rights granted under the Plan shall be adjusted
proportionately without change in the aggregate exercise price or the
aggregate cash receivable. In case of a merger or consolidation of the
Company with another corporation, a reorganization of the Company, a
reclassification of the common stock of the Company, a spin-off of a
significant asset, or other changes in the capitalization of the Company,
appropriate provision shall be made for the protection and continuation of
any outstanding options or stock appreciation rights by either (i) the
substitution, on an equitable basis, of appropriate stock or other securities
to which holders of common stock of the Company will be entitled pursuant to
such transaction or succession of such transactions, or (ii) by appropriate
adjustment in the number of shares issuable pursuant to the Plan and the
number of shares and purchase price thereof covered by outstanding options or
stock appreciation rights, as deemed appropriate by the Committee.
9. LISTING AND REGISTRATION OF SHARES - Each option and stock
appreciation right shall be subject to the requirement that, if at any time
that the Committee determines, in its discretion, that the listing,
registration or qualification of the shares subject thereto upon any
securities exchange or under any federal or state law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the delivery of shares thereunder, the
option or stock appreciation right may not be exercised in whole or in part
7
unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Committee.
10. DEFINITIONS - For purposes of the Plan the following definitions
shall apply:
FAIR MARKET VALUE is the mean between the reported high and low prices
of sales of the common stock of the Company as reported by the Consolidated
Tape Association or a successor thereto on the relevant date, or, if there
were no such reported sales, on the last preceding day on which there were
sales.
SUBSIDIARY has the same meaning as expressed in Section 425(f) of the
Internal Revenue Code of 1954.
An EMPLOYEE is a person who is in the employment of a Deere corporation
and on a salary payroll.
11. AMENDMENT OF PLAN - The Committee or the Board of Directors may
amend or discontinue the Plan at any time. However, no such amendment or
discontinuance shall, (a) without the consent of the holder, change or impair
any outstanding option or stock appreciation right previously granted, (b)
except as provided in Section 8, increase the maximum number of shares for
which options or stock appreciation rights may be granted under the Plan, (c)
reduce the exercise price of the option or stock appreciation right below
fair market value at date of grant, (d) extend the periods during which
options or stock appreciation rights may be granted or exercised, or (e)
shorten the minimum period before which options or stock appreciation rights
may be exercised.
12. EFFECTIVE DATE - The Plan shall be effective when it has been
approved by the affirmative vote of the holders of a majority of the shares
of common stock of the Company present, or represented, and entitled to vote
at a meeting of stockholders.