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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-2516
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MONSANTO COMPANY
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 43-0420020
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
800 NORTH LINDBERGH BLVD., ST. LOUIS, MISSOURI 63167
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(314) 694-1000
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING TWELVE MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
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INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES
OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
<TABLE>
<CAPTION>
OUTSTANDING AT
CLASS JUNE 30, 1997
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<S> <C>
COMMON STOCK, $2 PAR VALUE 589,499,331 SHARES
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</TABLE>
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<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The Statement of Consolidated Income of Monsanto Company and subsidiaries
for the three months and six months ended June 30, 1997 and 1996, the Statement
of Consolidated Financial Position as of June 30, 1997 and December 31, 1996,
the Statement of Consolidated Cash Flow for the six months ended June 30, 1997
and 1996 and related Notes to Financial Statements follow. In the opinion of
management, these unaudited consolidated financial statements contain all
adjustments necessary to present fairly the financial position, results of
operations and cash flows for the interim periods reported.
Unless otherwise indicated by the context, "Monsanto" means Monsanto
Company and consolidated subsidiaries, and "the Company" means Monsanto
Company only.
<TABLE>
MONSANTO COMPANY AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED INCOME
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales........................................................ $2,852 $2,579 $5,426 $4,883
Cost of Goods Sold............................................... 1,406 1,296 2,727 2,483
------ ------ ------ ------
Gross Profit..................................................... 1,446 1,283 2,699 2,400
Marketing Expenses............................................... 379 382 704 709
Administrative Expenses.......................................... 202 170 387 366
Technological Expenses........................................... 275 188 495 346
Acquired In-Process Research and Development..................... 72 173
Amortization of Intangible Assets................................ 35 31 71 62
------ ------ ------ ------
Operating Income................................................. 483 512 869 917
Interest Expense................................................. (55) (51) (98) (91)
Interest Income.................................................. 12 14 23 25
Other Income (Expense)--Net...................................... 24 48 64 54
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Income Before Income Taxes....................................... 464 523 858 905
Income Taxes..................................................... 140 158 260 280
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Net Income....................................................... $ 324 $ 365 $ 598 $ 625
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Earnings per Share............................................... $ 0.54 $ 0.62 $ 0.99 $ 1.05
------ ------ ------ ------
Dividends per Share.............................................. $0.160 $0.150 $0.310 $0.288
------ ------ ------ ------
Weighted Average Number of Common and Common Equivalent Shares
(in millions).................................................. 606.5 597.6
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</TABLE>
1
<PAGE> 3
<TABLE>
MONSANTO COMPANY AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
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<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.............................................. $ 176 $ 166
Trade receivables, net of allowances of $93 in 1997 and $53 in 1996.... 2,884 1,930
Miscellaneous receivables and prepaid expenses......................... 552 382
Deferred income tax benefit............................................ 381 386
Inventories............................................................ 1,452 1,476
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Total Current Assets........................................... 5,445 4,340
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Property, Plant and Equipment.............................................. 7,790 7,588
Less Accumulated Depreciation.............................................. 4,650 4,575
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Net Property, Plant and Equipment...................................... 3,140 3,013
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Investments in Affiliates.................................................. 676 652
Intangible Assets, net of accumulated amortization of $884 in 1997 and $807
in 1996.................................................................. 2,257 2,165
Other Assets............................................................... 1,095 1,021
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Total Assets............................................................... $12,613 $11,191
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LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities:
Accounts payable....................................................... $ 794 $ 715
Accrued liabilities.................................................... 1,670 2,032
Short-term debt........................................................ 2,021 654
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Total Current Liabilities...................................... 4,485 3,401
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Long-Term Debt............................................................. 1,551 1,608
Deferred Income Taxes...................................................... 68 50
Postretirement Liabilities................................................. 1,545 1,508
Other Liabilities.......................................................... 875 934
Shareowners' Equity:
Common stock (authorized, 850,000,000 shares, par value $2)
Issued, 821,970,970 shares in 1997 and 1996........................ 1,644 1,644
Additional contributed capital..................................... 98 65
Treasury stock, at cost (232,471,639 shares in 1997 and 237,594,831
shares in 1996).................................................. (2,615) (2,661)
Reserve for ESOP debt retirement....................................... (166) (174)
Net unrealized investment holding gains................................ 13 11
Accumulated currency adjustment........................................ (97) 10
Reinvested earnings.................................................... 5,212 4,795
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Total Shareowners' Equity...................................... 4,089 3,690
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Total Liabilities and Shareowners' Equity.................................. $12,613 $11,191
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</TABLE>
2
<PAGE> 4
<TABLE>
MONSANTO COMPANY AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOW
(DOLLARS IN MILLIONS)
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
1997 1996
---- ----
<S> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents
Operating Activities:
Net income............................................................. $ 598 $ 625
Add income taxes....................................................... 260 280
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Income before income taxes............................................. 858 905
Adjustments to reconcile to Cash Provided by (Used in) Operations:
Income tax payments................................................ (72) (221)
Items that did not use (provide) cash:
Depreciation and amortization.................................. 294 284
Acquired in-process research and development................... 173
Other.......................................................... (14) 19
Working capital changes that provided (used) cash:
Accounts receivable............................................ (925) (866)
Inventories.................................................... 101 57
Accounts payable and accrued liabilities....................... (507) (111)
Other.......................................................... (183) (36)
Other items........................................................ (63) (102)
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Total Cash Used in Operations.............................................. (338) (71)
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Investing Activities:
Property, plant and equipment purchases................................ (337) (294)
Acquisition of seed companies.......................................... (227)
Acquisition and investment payments.................................... (356) (632)
Investment and property disposal proceeds.............................. 47 131
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Cash Used in Investing Activities.......................................... (873) (795)
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Financing Activities:
Net change in short-term financing..................................... 1,367 1,035
Long-term debt proceeds................................................ 8 129
Long-term debt reductions.............................................. (61) (159)
Treasury stock purchases............................................... (253)
Dividend payments...................................................... (182) (168)
Common stock issued under employee stock plans......................... 55 106
Other financing activities............................................. 34 76
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Cash Provided by Financing Activities...................................... 1,221 766
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Increase (Decrease) in Cash and Cash Equivalents........................... 10 (100)
Cash and Cash Equivalents:
Beginning of year...................................................... 166 297
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End of period.......................................................... $ 176 $ 197
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</TABLE>
The effect of exchange rate changes on cash and cash equivalents was not
material.
Cash payments for interest (net of amounts capitalized) were $91 million in
1997 and $100 million in 1996.
3
<PAGE> 5
MONSANTO COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS)
1. In the first quarter of 1997, Monsanto completed the acquisitions of the
Asgrow Agronomics ("Asgrow") seed business from Empresas La Moderna S. A. and
acquired the remaining interest in a Brazilian foundation seed company for a
combined purchase price of approximately $250 million. The acquisitions were
accounted for as purchases and, accordingly, the results of operations for
these companies were included in the Statement of Consolidated Income from the
dates of acquisition. The estimated fair value of assets acquired and
liabilities assumed totaled approximately $400 million and $150 million,
respectively. The purchase price allocations are based upon preliminary
assumptions and are subject to revision. Monsanto recorded an aftertax charge
of $63 million, or $0.10 per share, in the first quarter of 1997, principally
related to the write-off of acquired research from Asgrow. The amount of this
write-off was determined by an independent valuation. Management believes that
the technological feasibility of the acquired in-process technology has not
been established and that it has no alternative future uses. Accordingly, the
amounts allocated to in-process research and technology are required to be
expensed immediately under generally accepted accounting principles.
In May 1997, Monsanto completed its acquisition of the remaining shares of
Calgene, Inc. ("Calgene") that Monsanto did not already own for $8.00 per
share in cash, or approximately $254 million. The estimated fair value of the
assets acquired and liabilities assumed totaled approximately $310 million and
$56 million, respectively. The purchase price allocations are based upon
preliminary assumptions and are subject to revision. In conjunction with this
acquisition, Monsanto recorded a $72 million aftertax charge ($72 million
pretax), or $0.12 per share, in the second quarter of 1997 for acquired
in-process research and development. This charge was not tax effected because
the transaction was a stock acquisition rather than an asset purchase.
The amount of this write-off was determined by an independent valuation.
Management believes that the technological feasibility of the acquired
in-process technology has not been established and that it has no alternative
future uses. Accordingly, the amounts allocated to in-process research and
technology are required to be expensed immediately under generally accepted
accounting principles.
2. Effective January 1, 1997, Monsanto adopted the American Institute of
Certified Public Accountants' Statement of Position ("SOP") 96-1,
"Environmental Remediation Liabilities." SOP 96-1 establishes authoritative
guidance regarding the recognition, measurement and disclosure of environmental
remediation liabilities. The primary change in Monsanto's accounting principles
associated with the adoption of this SOP was an acceleration of the recognition
of certain environmental remediation liabilities at operating facilities. As a
result, Monsanto recorded an aftertax charge of $6 million, or $0.01 per share,
in the first quarter of 1997. Additional aftertax charges in the range of $15
million to $20 million are anticipated in 1997 as the criteria for recording
these liabilities are met.
3. Earnings per share were computed using the weighted average number of
common shares and common share equivalents outstanding each period (606,520,278
and 597,579,951 in 1997 and 1996, respectively). Common share equivalents
(19,544,947 and 17,752,303 in 1997 and 1996, respectively) consist of common
stock issuable upon exercise of outstanding stock options. Earnings per share
assuming full dilution were not significantly different from the primary
amounts.
4
<PAGE> 6
MONSANTO COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" ("FAS 128").
Under this new standard, the presentation of primary and fully diluted earnings
per share required by current standards is replaced by basic and diluted
earnings per share. Basic earnings per share measures operating performance
assuming no dilution from securities or contracts to issue common stock.
Diluted earnings per share measures operating performance giving effect to the
dilution that would occur when securities or contracts to issue common stock
are exercised or converted. This statement is effective for Monsanto for
financial statements issued after December 15, 1997. Pro forma earnings per
share computed under the provisions of FAS 128 would have been:
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------ ------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic earnings per share $0.55 $0.63 $1.02 $1.08
Diluted earnings per share $0.54 $0.62 $0.99 $1.05
</TABLE>
4. Components of inventories at June 30, 1997 and December 31, 1996 were as
follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
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<S> <C> <C>
Finished goods...................................... $ 836 $ 888
Goods in process.................................... 302 334
Raw materials and supplies.......................... 521 461
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Inventories, at FIFO cost........................... 1,659 1,683
Excess of FIFO over LIFO cost....................... (207) (207)
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Total........................................... $1,452 $1,476
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</TABLE>
5. Monsanto is a party to a number of lawsuits and claims, which it is
vigorously defending. Such matters arise out of the normal course of business
and relate to product liability, government regulation, including environmental
issues, and other issues. Certain of the lawsuits and claims seek damages in
very large amounts. While the results of litigation cannot be predicted with
certainty, management believes, based upon the advice of Company counsel, that
the final outcome of such litigation will not have a material adverse effect on
Monsanto's consolidated financial position, profitability or liquidity in any
one year, as applicable.
6. Segment data for the three months and six months ended June 30, 1997 and
1996 were as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
-----------------------------------------------------------
1997 1996
------------------------ ------------------------
OPERATING OPERATING
NET INCOME NET INCOME
SALES (LOSS) SALES (LOSS)
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<S> <C> <C> <C> <C>
Segment:
Agricultural Products.......................... $1,254 $322 $1,042 $367
Chemicals...................................... 799 120 769 77
Pharmaceuticals................................ 513 9 456 36
Food Ingredients............................... 286 50 312 52
Corporate...................................... (18) (20)
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Total.............................................. $2,852 $483 $2,579 $512
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</TABLE>
5
<PAGE> 7
MONSANTO COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-----------------------------------------------------------
1997 1996
------------------------ ------------------------
OPERATING OPERATING
NET INCOME NET INCOME
SALES (LOSS) SALES (LOSS)
----- --------- ----- ---------
<S> <C> <C> <C> <C>
Segment:
Agricultural Products.......................... $2,321 $546 $1,867 $639
Chemicals...................................... 1,531 201 1,505 141
Pharmaceuticals................................ 1,028 64 933 96
Food Ingredients............................... 546 93 578 77
Corporate...................................... (35) (36)
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Total.............................................. $5,426 $869 $4,883 $917
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</TABLE>
Financial information for the first six months of 1997 and 1996 should not
be annualized. Monsanto's sales and operating income are historically higher
during the first half of the year, primarily because of the concentration of
generally more profitable sales from the Agricultural Products segment in the
first half of the year.
7. In December 1996, the Company's board of directors approved in principle
a plan to spin off the Company's chemical operations ("Chemicals") to the
stockholders of the Company (the "Spinoff"). In the Spinoff, each of the
Company's stockholders will receive a pro rata share of the voting common stock
of Chemicals in a special dividend and Chemicals will become a separately
traded, publicly held company. The Spinoff is subject to several conditions,
including stockholder approval. A special meeting of the stockholders of the
Company will be held on August 18, 1997 to consider and vote on the proposal to
approve the Spinoff of Chemicals. In July 1997, the Company received a ruling
from the U.S. Internal Revenue Service that this transaction would generally be
free from U.S. federal income taxes. Upon receipt of approval by the
stockholders of the Company, Chemicals will be reported as discontinued
operations in the Monsanto financial statements and, accordingly, financial
statements for periods prior to the Spinoff will be restated.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Note 6 of the Notes to Financial Statements indicates operating results by
operating unit, including the concentration of the generally more profitable
sales of Agricultural Products in the first half of the year.
RESULTS OF OPERATIONS--SECOND QUARTER 1997 COMPARED WITH THE SECOND QUARTER
1996
Net income for the second quarter of 1997 was $324 million, or $0.54 per
share, compared with net income of $365 million, or $0.62 per share, in the
second quarter of last year. As further discussed in Note 1, second quarter
results for 1997 included an aftertax charge of $72 million, or $0.12 per
share, for acquired in-process research and development related to the
acquisition of the remaining shares of Calgene. Net sales of $2,852 million
were 11 percent higher than the comparable figure in 1996.
Net sales for Agricultural Products increased 20 percent versus sales for
the same period last year to $1,254 million. Net sales in the second quarter of
1997 benefited from higher sales volumes of the family of Roundup(R)
herbicides. The increased sales volumes reflected continued strong worldwide
demand, with significant volume gains in Latin America, Canada and Australia.
The sales increase was also driven by licensing revenues associated with sales
of Roundup Ready(R) soybeans and cotton, Bollgard(R) insect-protected cotton
and Yieldgard(R) corn. In addition, the sales increase also benefited from the
inclusion of Asgrow and Calgene sales. Monsanto acquired a controlling interest
in Calgene in November 1996. Prior to that time, Calgene was accounted for as
an equity affiliate and its results were not consolidated. Operating income for
the segment declined $45 million, or 12 percent, from the prior year.
6
<PAGE> 8
MONSANTO COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
However, as further discussed in Note 1, operating income included a $72
million pretax charge for acquired in-process research and development
associated with the acquisition of the remaining shares of Calgene. If this
charge was excluded, operating income in the second quarter of 1997 would have
increased 7 percent compared with operating income in the second quarter of
1996. The increase in operating income resulted primarily because of the effects
of higher sales volumes and lower manufacturing costs. The increase was
partially offset by higher biotechnology research and development spending.
Operating income for Chemicals during the quarter increased $43 million on
a 4 percent increase in sales when compared to operating income and sales in
the same period in 1996. This improved sales and operating income performance,
which is compared to a weak second quarter in 1996, was driven largely by
higher sales volumes for Saflex(R) plastic interlayer, higher overall selling
prices and lower manufacturing and other costs. The overall sales increase was
partially offset by lower sales volumes for fibers, principally because of
lower sales into the residential replacement carpet market.
Pharmaceutical net sales for the quarter increased 13 percent, or $57
million, over the second quarter of 1996 to $513 million. The increase in net
sales was primarily the result of higher sales volumes for key products.
Combined second quarter sales of Ambien(R), a short-term treatment for
insomnia, and Daypro(R) and Arthrotec(R) arthritis treatments increased 48
percent versus sales of these products in the second quarter of last year. The
sales increase was partially offset by lower sales volumes of verapamil
products. Operating income in the second quarter of 1997 of $9 million
decreased $27 million versus the second quarter of 1996. Operating income was
negatively affected by higher research and development spending as five new
product candidates have moved into the later, more expensive phase III clinical
trials. In addition, second quarter results in 1996 benefited from cost-sharing
alliance payments that were not repeated in the second quarter of 1997.
Food Ingredient net sales and operating income for the second quarter of
1997 declined 8 percent and 4 percent, respectively, when compared to net sales
and operating income for the same period last year. These declines were
primarily the result of lower sales volumes of aspartame and tabletop
sweeteners. The decrease in operating income was partially offset by the effect
of higher biogum sales volumes and cost reductions.
For Monsanto, technological expenses for the second quarter of 1997 were
higher than the comparable period in 1996, primarily because of the
aforementioned increases in research and development expenses in the
Agricultural Products and Pharmaceuticals segments. The increase in
administrative expenses for Monsanto in the second quarter of 1997 over those
in the second quarter of last year resulted, in part, because of the addition
of administrative expenses associated with Asgrow and Calgene. Expenses for
these businesses were not part of Monsanto's consolidated administrative
expense totals in 1996. "Other Income (Expense)--Net" for the second quarter
of 1997 reflects an increase in income from equity affiliates. However, the
quarter-to-quarter comparison was affected by a gain on the sale of certain
pharmaceutical assets that was recorded in the second quarter last year.
RESULTS OF OPERATIONS--FIRST SIX MONTHS 1997 COMPARED WITH FIRST SIX MONTHS
1996
Net income for the first six months of 1997 was $598 million, or $0.99 per
share, compared with net income of $625 million, or $1.05 per share, in the
first six months of last year. As further discussed in Notes 1 and 2, results
for the first six months of 1997 included aftertax charges totaling $141
million, or $0.23 per share. These charges were for acquired in-process
research and development, principally related to the Asgrow and Calgene
acquisitions, as well as the adoption of SOP 96-1. Net sales of $5,426 million
were 11 percent higher than the comparable figure in 1996.
Net sales for Agricultural Products increased 24 percent, or $454 million,
during the first six months of 1997 compared to the same period in 1996. The
increase in net sales in 1997 was primarily the result of higher worldwide
sales volumes of Roundup(R) herbicide. The sales increase also reflects higher
sales of crops developed through biotechnology including Roundup Ready(R)
soybeans, canola and cotton, Bollgard(R) insect-protected cotton and
Yieldgard(R) corn. In addition, the sales increase benefited from the inclusion
of Asgrow and Calgene sales. Monsanto acquired a controlling interest in
Calgene in November 1996. Prior to that time, Calgene was accounted for as an
equity affiliate, and its results were not consolidated. Operating income in
1997 decreased $93 million, or 15 percent,
7
<PAGE> 9
MONSANTO COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
compared with the results for the first six months of 1996. However, as further
described in Note 1, operating income includes $173 million of pretax charges
for acquired in-process research and development, primarily associated with the
acquisition of Asgrow and the remaining equity interest in Calgene. If these
charges were excluded, operating income in the first half of 1997 would have
increased $80 million, or 13 percent. In addition to the effect of higher sales
volumes, operating income benefited from lower manufacturing costs. These
positive factors were partially offset by higher marketing expenditures
associated with product launches and higher biotechnology research and
development spending.
Net sales for Chemicals increased $26 million for the six months ended June
30, 1997 compared with net sales in the same period in 1996. The sales increase
can be attributed primarily to higher sales volumes of Saflex(R) plastic
interlayer and the effects of overall higher selling prices. The sales increase
was partially offset by lower sales volumes for fibers, principally because of
lower sales into the residential replacement carpet market. Operating income
for the first six months of 1997 increased $60 million compared with operating
income in the same period last year. However, as further discussed in Note 2,
operating income includes $10 million of pretax charges associated with the
adoption of SOP 96-1 for environmental reserves at operating locations. If this
charge was excluded, operating income in the first quarter of 1997 would have
increased $70 million compared with a weak operating income performance in the
first half of 1996. The increase in operating income resulted principally from
the effects of higher sales, lower costs and improved manufacturing performance
for the fibers and Saflex(R) units.
Pharmaceuticals' net sales for the first half of 1997 increased $95 million
over net sales in the same period last year. These increases can be attributed
to higher sales volumes of Ambien(R), Daypro(R) and Arthrotec(R). In the first
six months of 1997, sales of these products increased 25 percent over sales for
the same period in 1996. The sales increase was partially offset by lower sales
volumes of verapamil products. Operating income for the first six months of
1997 declined $32 million compared to the first six months of 1996. Operating
income was negatively affected by higher research and development expenses
associated with new product candidates advancing to later and more expensive
phases of development. In addition, operating income in the first half of 1996
benefited from cost-sharing alliances.
Net sales for Food Ingredients decreased 6 percent in the first half of
1997 compared to the first half of 1996. Sales of tabletop sweeteners and
aspartame in the first six months of 1997 declined from the same period last
year, primarily because of lower sales volumes. These decreases were partially
offset by higher sales volumes of biogum products. Operating income for Food
Ingredients increased $16 million in the first half of 1997 compared with the
first six months of 1996 primarily because of lower operating expenses.
For Monsanto, technological expenses for the first half of 1997 were higher
than the comparable period in 1996, primarily because of the increase in
research and development expenses in the Agricultural Products and
Pharmaceuticals segments. The increase in "Other Income (Expense)--Net" for
the first six months of 1997 versus the same period last year was primarily the
result of higher earnings from equity affiliates. "Other Income
(Expense)--Net" for the first six months of 1996 included a gain on the sale
of certain pharmaceutical assets.
CHANGES IN FINANCIAL CONDITION--JUNE 30, 1997 COMPARED WITH DECEMBER 31, 1996
Working capital at June 30, 1997 increased to $960 million from $939
million at December 31, 1996, primarily because of a seasonal increase in trade
receivables, financed through an increase in short-term debt. The current ratio
was 1.2 at June 30, 1997 and 1.3 at year-end 1996. The percent of total debt to
total capitalization increased to 47 percent at June 30, 1997 versus 38 percent
at year-end 1996 primarily because of the increase in short-term debt. The
increase in "Net Property, Plant and Equipment" at June 30, 1997 resulted, in
part, because of the Asgrow acquisition.
Cash used in operations totaled a net $338 million in 1997, compared with
$71 million in 1996. The decrease in cash flow from operations resulted
primarily from higher seasonal working capital requirements for Agricultural
Products and significantly higher payouts associated with employee incentive
programs. The increased incentive payouts included the final payment of certain
deferred amounts related to the third year of a three-year incentive plan.
Investing activities in 1997 used $873 million, principally for the acquisition
of Asgrow and the remaining shares of Calgene that Monsanto did not already
own. The increase in short-term financing was primarily used to finance
acquisition activity and higher seasonal working capital levels for
Agricultural Products.
8
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 3. LEGAL PROCEEDINGS
The Company's Report on Form 10-K for the year ended December 31, 1996
described a number of lawsuits in which plaintiffs claim injuries resulting
from alleged exposure to substances present at or emanating from the Brio
Superfund site near Houston, Texas. Developments have occurred in the following
cases: (a) The Company is one of a number of defendants in 11 cases brought in
Harris County District Court or the United States District Court for the
Southern District of Texas on behalf of 960 plaintiffs who owned homes or lived
in subdivisions near the Brio Site or along Clear Creek downstream from the
site, attended school near the site or used nearby recreational baseball
fields. The Company has reached an agreement to settle the claims of 811
plaintiffs in six of these cases for $10 million. Court approval of the
settlements is required for 190 of these plaintiffs who are minors. In addition
the Company has reached an agreement in principle to settle the claims of 23
plaintiffs in another two of these cases for $165,000. The Company will
continue to vigorously defend the remaining actions.
The Company's Report on Form 10-K for the year ended December 31, 1996
described a number of lawsuits in which plaintiffs claim to have sustained
personal injuries or property damage as a result of the discharge of hazardous
substances, including polychlorinated biphenyls ("PCBs"), from its Anniston,
Alabama plant site. Developments have occurred in the following cases: (b) The
Company is a defendant in eight cases brought in Circuit Court in Calhoun
County, Circuit Court in St. Clair County, Circuit Court in Taladega County or
in U.S. District Court in the Northern District of Alabama on behalf of 1,641
individual plaintiffs who own or rent homes or own or operate businesses along
waterways near the plant or who live or attend churches near the plant. The
request for certification of a plaintiff class in one of the cases pending in
U.S. District Court has been withdrawn. The Company has been named as a
defendant in an additional action brought in Circuit Court in Shelby County,
Alabama on behalf of a purported class of owners, lessees and licensees of
property located on another waterway near the plant. Plaintiffs claim to have
suffered various personal injuries and fear future disease; they assert the
need for medical monitoring and claim to have suffered loss in the value of
their property. They seek compensatory and punitive damages in an unspecified
amount. (c) The Company had received notice of a potential Citizen Suit
pursuant to Resource Conservation and Recovery Act Section 7002(a)(1)(B). That
action has been filed in the U.S. District Court in the Northern District of
Alabama on behalf of four individuals who are plaintiffs in one of the suits
pending in Circuit Court in Calhoun County. Plaintiffs seek an order enjoining
the Company from continuing to handle improperly hazardous waste from the
Anniston plant, directing the Company immediately to remove all PCBs released
from the plant and granting plaintiffs their costs of suit, including
attorneys' and expert witness fees. The Company believes it has meritorious
defenses to all these matters, including lack of any physical injury or
property damage to plaintiffs, lack of any imminent or substantial endangerment
to health or the environment and lack of any negligent or other improper
conduct on the Company's part. The Company will continue to vigorously defend
these actions.
9
<PAGE> 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of stockholders on April 25, 1997, three
matters were submitted to a vote of stockholders.
1. The following directors were elected, each to hold office until the next
Annual Meeting or until a successor is elected and has qualified or until his
or her earlier death, resignation, or removal. Votes were cast as follows:
<TABLE>
<CAPTION>
VOTES
VOTES "WITHHOLD
NAME "FOR" AUTHORITY"
---- ----- ----------
<S> <C> <C>
Robert B. Shapiro................................ 507,773,059 5,971,152
Joan T. Bok...................................... 508,315,709 5,428,502
Robert M. Heyssel................................ 508,300,516 5,443,695
Michael Kantor................................... 496,008,394 17,735,817
Gwendolyn S. King................................ 508,426,578 5,317,633
Philip Leder..................................... 503,140,679 10,603,532
Howard M. Love................................... 508,065,983 5,678,228
Frank A. Metz, Jr................................ 508,485,692 5,258,519
Jacobus F. M. Peters............................. 508,476,569 5,267,642
Nicholas L. Reding............................... 508,658,305 5,085,906
John S. Reed..................................... 447,430,923 66,313,288
John E. Robson................................... 502,117,298 11,626,913
William D. Ruckelshaus........................... 508,483,189 5,261,022
John B. Slaughter................................ 508,559,822 5,184,389
</TABLE>
2. The appointment by the Board of Directors of Deloitte & Touche as
principal independent auditors for the year 1997 was ratified by the
stockholders. A total of 507,963,775 votes were cast in favor of ratification,
4,024,720 votes were cast against it, and 1,755,716 votes were counted as
abstentions.
3. A proposal by certain stockholders relating to a report on certain of
the Company's employment policies and practices was submitted to a vote of
stockholders. The Board recommended a vote against the proposal. A total of
41,776,509 votes were cast in favor of this proposal, a total of 389,273,501
votes were cast against it, 29,942,526 votes were counted as abstentions, and
52,751,675 votes were counted as broker non-votes.
Brokers were permitted to vote on the election of directors and
ratification of auditors in the absence of instructions from street-name
holders; therefore broker non-votes did not occur in those matters.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits--See the Exhibit Index at page 12 of this report.
(b) No reports on Form 8-K were filed by the Company during the quarter
ended June 30, 1997.
10
<PAGE> 12
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MONSANTO COMPANY
-------------------------------------
(Registrant)
MICHAEL R. HOGAN
-------------------------------------
Vice President and Controller
(On behalf of the Registrant and
as Principal Accounting Officer)
Date: August --, 1997
11
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
2 Omitted--Inapplicable
3(ii) Monsanto Company By-Laws as amended June 27, 1997
4 Omitted--Inapplicable
10 1. Monsanto Management Incentive Plan of 1984, as amended in 1987, 1988, 1989, April 1997 and July
1997
2. Searle Monsanto Stock Option Plan of 1986, as amended in 1988, 1989, 1990, 1991, 1995, April 1997
and July 1997
3. Monsanto Management Incentive Plan of 1988/I, as amended in 1988, 1989, 1991, 1992, April 1997 and
July 1997
4. Monsanto Management Incentive Plan of 1988/II, as amended in 1989, 1991, 1992, April 1997 and July
1997
5. Monsanto Management Incentive Plan of 1994, as amended in April 1997 and July 1997
6. Searle/Monsanto Stock Plan of 1994, as amended in 1995, April 1997 and July 1997
7. Monsanto Management Incentive Plan of 1996, as amended in April 1997 and July 1997
8. Amendment to Non-Employee Directors Stock Plan
11 Omitted--Inapplicable; see Note 3 of Notes to Financial Statements on pages 4 and 5.
15 Omitted--Inapplicable
18 Omitted--Inapplicable
19 Omitted--Inapplicable
22 Omitted--Inapplicable
23 Consent of Company Counsel
24 Omitted--Inapplicable
27 Financial Data Schedule
99 Computation of the Ratio of Earnings to Fixed Charges for Monsanto Company and Subsidiaries
</TABLE>
12
<PAGE> 1
Exhibit 3(ii)
MONSANTO COMPANY
BY-LAWS
As Amended June 27, 1997
OFFICES
-------
1. Registered
The name of the registered agent of the Company is The Corporation Trust
Company and the registered office of the Company shall be located in the
City of Wilmington, County of New Castle, State of Delaware.
2. Other
The Company shall have its General Offices in the County of St. Louis,
State of Missouri, and may also have offices at such other places both
within or without the State of Delaware as the Board of Directors
may from time to time designate or the business of the Company may
require.
STOCKHOLDERS' MEETINGS
----------------------
3. Annual Meeting
An annual meeting of stockholders shall be held on such day and at such
time as may be designated by the Board of Directors for the purpose of
electing Directors and for the transaction of such other business as
properly may come before such meeting. Any previously scheduled annual
meeting of the stockholders may be postponed by resolution of the Board
of Directors upon public notice given on or prior to the date previously
scheduled for such annual meeting of stockholders.
4. Business to be Conducted at Annual Meeting
(a) At an annual meeting of stockholders, only such business
<PAGE> 2
shall be conducted as shall have been brought before the meeting (i)
pursuant to the Company's notice of the meeting, (ii) by or at the
direction of the Board of Directors or (iii) by any stockholder of the
Company who is a stockholder of record at the time of giving of the
notice provided for in this By-Law, who shall be entitled to vote at
such meeting and who shall have complied with the notice procedures set
forth in this By-Law.
(b) For business to be properly brought before an annual meeting
by a stockholder pursuant to Section (a)(iii) of this By-Law, notice in
writing must be delivered or mailed to the Secretary and received at the
General Offices of the Company, not less than 60 days nor more than 90
days prior to the first anniversary of the preceding year's annual
meeting; provided, however, that in the event that the date of the
meeting is advanced by more than 30 days or delayed by more than 60 days
from such anniversary date, notice by the stockholder must be received
not earlier than the 90th day prior to such annual meeting and not later
than the close of business on the later of the 60th day prior to such
annual meeting or the tenth day following the day on which public
announcement of the date of the annual meeting is first made. Such
stockholder's notice shall set forth as to each matter the stockholder
proposes to bring before the annual meeting (i) a brief description of
the business to be brought before the annual meeting and the reasons for
conducting such business at such meeting; (ii) the name and address, as
they appear on the Company's books, of the stockholder proposing such
business, and the name and address of the beneficial owner, if any, on
whose behalf the proposal is made; (iii) the class and number of shares
of the Company's stock which are beneficially owned by the stockholder,
and by the beneficial owner, if any, on whose behalf the proposal is
made; and (iv) any material interest of the stockholder, and of the
beneficial owner, if any, on whose behalf the proposal is made, in such
business. For purposes of these By-Laws, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable news service or in a document
publicly filed by the Company with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(b) of the Exchange Act.
(c) Notwithstanding anything in these By-Laws to the
<PAGE> 3
contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this By-Law. The chairman of
the meeting may, if the facts warrant, determine that the business was not
properly brought before the meeting in accordance with the provisions of
this By-Law; and if the chairman should so determine, the chairman shall
so declare to the meeting, and any such business not properly brought
before the meeting shall not be transacted. Notwithstanding the
foregoing provisions of this By-Law, a stockholder shall also comply
with all applicable requirements of the Securities Exchange Act of 1934,
as amended, (the "Exchange Act") and the rules and regulations
thereunder with respect to the matters set forth in this By-Law. Nothing
in this By-Law shall be deemed to affect any rights of stockholders to
request inclusion of proposals in the Company's proxy statement pursuant
to Rule 14a-8 under the Exchange Act.
5. Special Meetings
Special meetings of stockholders for any proper purpose or purposes,
unless otherwise provided by the law of Delaware, may be called by the
Chairman of the Board or the President, or pursuant to resolution of the
Board of Directors. Business transacted at a special meeting of
stockholders shall be confined to the purpose or purposes of the meeting
as stated in the notice of the meeting. Any previously scheduled special
meeting of the stockholders may be postponed by resolution of the Board of
Directors upon notice by public announcement given on or prior to the date
previously scheduled for such special meeting of stockholders.
6. Place of Meetings
All meetings of stockholders shall be held at the General Offices
of the Company in the County of St. Louis, State of Missouri, unless
otherwise determined by resolution of the Board of Directors.
7. Notice of Meetings
Except as otherwise required by the law of Delaware, notice
<PAGE> 4
of each meeting of the stockholders, whether annual or special, shall, at
least ten days but not more than sixty days before the date of the
meeting, be given to each stockholder of record entitled to vote at the
meeting by mailing such notice in the United States mail, postage
prepaid, addressed to such stockholder at such stockholder's address as
the same appears on the records of the Company. Such notice shall state
the place, date and hour of the meeting, and in the case of a special
meeting, shall also state the purpose or purposes thereof.
8. Nominations of Directors
(a) Only persons who are nominated in accordance with the procedures
set forth in these By-Laws shall be eligible for election as
Directors. Nominations of persons for election to the Board of
Directors may be made at a meeting of stockholders (i) by or at the
direction of the Board of Directors or (ii) by any stockholder of the
Company who is a stockholder of record at the time of giving of the
notice provided for in this By-Law, who shall be entitled to vote for
the election of Directors at the meeting and who complies with the
notice procedures set forth in this By-Law.
(b) Nominations by stockholders shall be made pursuant to notice
in writing, delivered or mailed to the Secretary and received at the
General Offices of the Company (i) in the case of an annual meeting, not
less than 60 days nor more than 90 days prior to the first anniversary
of the preceding year's annual meeting, provided, however, that in the
event that the date of the meeting is advanced by more than 30 days or
delayed by more than 60 days from such anniversary date, notice by the
stockholder must be received not earlier than the 90th day prior to such
annual meeting and not later than the close of business on the later of
the 60th day prior to such annual meeting or the tenth day following the
day on which public announcement of the date of the meeting is first
made; or (ii) in the case of a special meeting at which directors are to
be elected, not earlier than the 90th day prior to such special meeting
and not later than the close of business on the later of the 60th day
prior to such special meeting or the tenth day following the day on
which public announcement of the date of the meeting and of the nominees
proposed by the Board of Directors to be elected at such
<PAGE> 5
meeting is first made. In the case of a special meeting of stockholders
at which Directors are to be elected, stockholders may nominate a person
or persons (as the case may be) for election only to such position(s) as
are specified in the Company's notice of meeting as being up for
election at such meeting. Such stockholder's notice shall set forth (i)
as to each person whom the stockholder proposes to nominate for election
or reelection as a Director, all information relating to such person
that would be required to be disclosed in solicitations of proxies for
election of Directors, or is otherwise required, in each case pursuant
to Regulation 14A under the Securities Exchange Act of 1934, as amended
(including such person's written consent to being named as a nominee and
to serving as a Director if elected); (ii) as to the stockholder giving
the notice, the name and address, as they appear on the Company's books,
of such stockholder and the class and number of shares of the Company's
stock which are beneficially owned by such stockholder; and (iii) as to
any beneficial owner on whose behalf the nomination is made, the name
and address of such person and the class and number of shares of the
Company's stock which are beneficially owned by such person. At the
request of the Board of Directors, any person nominated by the Board of
Directors for election as a Director shall furnish to the Secretary that
information required to be set forth in a stockholder's notice of
nomination which pertains to the nominee. Notwithstanding anything in
this By-Law to the contrary, in the event that the number of directors
to be elected to the Board of Directors of the Company is increased and
there is no public statement naming all the nominees for Director or
specifying the size of the increased Board of Directors made by the
Company at least 70 days prior to the first anniversary of the preceding
year's annual meeting, a stockholder's notice required by this By-Law
shall also be considered timely, but only with respect to nominees for
any new positions created by such increase, if it shall be delivered to
the Secretary at the General Offices of the Company not later than the
close of business on the 10th day following the day on which such public
announcement is first made by the Company.
(c) No person shall be eligible for election as a Director of the
Company unless nominated in accordance with the procedures set forth
in these By-Laws. The chairman of the
<PAGE> 6
meeting may, if the facts warrant, determine that a nomination was not
made in accordance with the procedures prescribed in this By-Law; and if
the chairman should so determine, the chairman shall so declare to the
meeting, and the defective nomination shall be disregarded.
Notwithstanding the foregoing provisions of this By-Law, a stockholder
shall also comply with all applicable requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder
with respect to the matters set forth in this By-Law.
9. List of Stockholders
(a) The Secretary of the Company shall prepare, at least ten days
before each meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and
showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten
days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is
to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected
by any stockholder who is present.
(b) The stock ledger of the Company shall be the only evidence as to
the identity of the stockholders entitled (i) to vote in person or by
proxy at any meeting of stockholders, or (ii) to exercise the rights in
accordance with Delaware law to examine the stock ledger, the list
required by this By-Law or the books and records of the Company.
10. Quorum
The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy,
shall constitute a quorum for the transaction of any business at all
meetings of the stockholders, except as otherwise provided by the law
of Delaware, by the Certificate of Incorporation or by these
<PAGE> 7
By-Laws. The stockholders present at any duly organized meeting may
continue to transact business until adjournment, notwithstanding the
withdrawal of sufficient stockholders to render the remaining stockholders
less than a quorum. Whether or not a quorum is present, either the
Chairman of the meeting or a majority of the stockholders entitled to vote
thereat, present in person or by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting. At such adjourned meeting at
which the requisite amount of voting stock shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally noticed.
11. Voting and Required Vote
Subject to the provisions of the Certificate of Incorporation, each
stockholder shall, at every meeting of stockholders, be entitled to
one vote for each share of capital stock held by such stockholder.
Subject to the provisions of the Certificate of Incorporation and
Delaware law, Directors shall be chosen by the vote of a plurality of
the shares present in person or represented by proxy at the meeting; and
all other questions shall be determined by the affirmative vote of the
majority of shares present in person or represented by proxy at the
meeting. Elections of Directors shall be by written ballot.
12. Proxies
Each stockholder entitled to vote at a meeting of stockholders may
authorize another person or persons to act for such stockholder by
proxy, provided the instrument authorizing such proxy to act shall
have been executed in writing in the manner prescribed by law. No
proxy shall be voted or acted upon after three years from its date,
unless the proxy provides for a longer period.
13. Inspectors of Election; Polls
<PAGE> 8
Before each meeting of stockholders, the Chairman of the Board or
another officer of the Company designated by resolution of the Board
of Directors shall appoint one or more inspectors of election for the
meeting and may appoint one or more inspectors to replace any inspector
unable to act. If any of the inspectors appointed shall fail to attend,
or refuse or be unable to serve, substitutes shall be appointed by the
Chairman of the meeting. Each inspector shall have such duties as are
provided by law, and shall take and sign an oath faithfully to execute
the duties of inspector with strict impartiality and according to the
best of such person's ability. The Chairman of the meeting shall fix
and announce at the meeting the date and time of the opening and closing
of the polls for each matter upon which the stockholders will vote at
the meeting.
14. Organization
The Chairman of the Board of Directors, or in the Chairman's absence, the
President, one of the Vice Chairmen of the Board, if any, in such order as
may be designated by the Chairman of the Board, in that order, or in the
absence of each of them, a chairman chosen by a majority of the Directors
present, shall act as chairman of the meetings of the stockholders. The
order of business and the procedure at any meeting of stockholders shall
be determined by the chairman of the meeting.
BOARD OF DIRECTORS
------------------
15. General Powers, Number, Term of Office
The business of the Company shall be managed under the direction
of its Board of Directors. The number of Directors which shall
constitute the whole Board shall be fixed, from time to time, by
resolutions adopted by the Board, but shall not be less than three
persons. Except as hereinafter provided, the Directors shall be elected
at the annual meeting of stockholders and each Director shall hold
office until such Director's successor is elected and qualified or until
such Director's earlier death, resignation or removal. Directors need
not be stockholders of the Company or residents of the State of
Delaware.
<PAGE> 9
16. Vacancies
Any vacancy in the office of Director, whether by reason of death,
resignation or removal from office, or resulting from an increase in
the authorized number of Directors, or otherwise, may be filled by the
affirmative vote of a majority of the Directors then in office, although
less than a quorum, or by a sole remaining Director. Each such Director
shall hold office until such Director's successor is elected and
qualified or until such Director's earlier death, resignation or
removal.
17. Regular Meetings
Following the annual meeting of stockholders, the first meeting of
each newly elected Board of Directors may be held, without notice, on
the same day and at the same place as such stockholders' meeting. The
Board of Directors by resolution may provide for the holding of regular
meetings and may fix the times and places at which such meetings shall
be held. Notice of regular meetings shall not be required provided that
whenever the time or place of regular meetings shall be fixed or
changed, notice of such action shall be given promptly to each director,
as provided in Section 19 below, who was not present at the meeting at
which such action was taken.
18. Special Meetings
Special meetings of the Board of Directors shall be held whenever called
by the Chairman of the Board of Directors or the President, or in the
absence of each of them, by any Vice Chairman of the Board, in such order
as may be designated by the Chairman of the Board, or by the Secretary at
the written request of a majority of the Directors.
19. Notices
Notice of any special meeting of the Board of Directors shall be
addressed to each Director at such Director's residence or business
address and shall be sent to such Director by mail, electronic mail,
telecopier, telegram or telex or telephoned or delivered to such
Director personally. If such notice is sent by mail, it shall be sent
not later than three
<PAGE> 10
days before the day on which the meeting is to be held. If such notice is
sent by electronic mail, telecopier, telegram or telex, it shall be sent
not later than 12 hours before the time at which the meeting is to be
held. If such notice is telephoned or delivered personally, it shall be
received not later than 12 hours before the time at which the meeting is
to be held. Such notice shall state the time, place and purpose or
purposes of the meeting.
20. Quorum
One-third of the total number of Directors constituting the whole Board,
but not less than two, shall constitute a quorum for the transaction of
business at any meeting of the Board of Directors, but if less than such
required number of Directors for a quorum is present at a meeting, a
majority of the Directors present may adjourn the meeting from time to
time without further notice. Except as otherwise specifically provided by
the law of Delaware, the Certificate of Incorporation or these By-Laws,
the act of a majority of the Directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors.
21. Organization
At each meeting of the Board of Directors, the Chairman of the Board or,
in the Chairman's absence, the President, or any Vice Chairman of the
Board in such order as may be designated by the Chairman of the Board, in
that order, or in the absence of each of them, a chairman chosen by a
majority of the Directors present, shall act as chairman of the meeting,
and the Secretary or, in the Secretary's absence, an Assistant Secretary
or any employee of the Company appointed by the chairman of the meeting,
shall act as secretary of the meeting.
22. Resignations
Any Director may resign at any time by giving written notice to
the Chairman of the Board, the President or the Secretary of the
Company. Such resignation shall take effect upon receipt thereof or
at any later time specified therein; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary
to make it effective.
<PAGE> 11
23. Action Without a Meeting
Unless otherwise restricted by the Certificate of Incorporation or
these By-Laws, any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee thereof may be
taken without a meeting if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board or committee.
24. Location of Books
Except as otherwise provided by resolution of the Board of Directors and
subject to the law of Delaware, the books of the Company may be kept at
the General Offices of the Company and at such other places as may be
necessary or convenient for the business of the Company.
25. Dividends
Subject to the provisions of the Certificate of Incorporation and the
law of Delaware, dividends upon the capital stock of the Company may
be declared by the Board of Directors at any regular or special meeting.
Dividends may be paid in cash, in property, or in shares of the
Company's capital stock.
26. Compensation of Directors
Directors shall receive such compensation and benefits as may be
determined by resolution of the Board for their services as members of
the Board and committees. Directors shall also be reimbursed for their
expenses of attending Board and committee meetings. Nothing contained
herein shall preclude any Director from serving the Company in any other
capacity and receiving compensation therefor.
27. Additional Powers
In addition to the powers and authorities by these By-Laws expressly
conferred upon it, the Board of Directors may exercise all such powers of
the Company and do all such lawful acts and things as are not by statute
or by the
<PAGE> 12
Certificate of Incorporation or by these By-Laws directed or required to
be exercised or done by the stockholders.
COMMITTEES OF DIRECTORS
-----------------------
28. Designation, Power, Alternate Members
The Board of Directors may, by resolution or resolutions passed by
a majority of the whole Board, designate an Executive Committee and one
or more additional committees, each committee to consist of two or more
of the Directors of the Company. Any such committee, to the extent
provided in said resolution or resolutions and subject to any
limitations provided by law, shall have and may exercise the powers of
the Board of Directors in the management of the business and affairs of
the Company. The Board of Directors may designate one or more Directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. If at a meeting of
any committee one or more of the members thereof is absent or
disqualified, and if either the Board of Directors has not so designated
any alternate member or members, or the number of absent or disqualified
members exceeds the number of alternate members who are present at such
meeting, then the member or members of such committee (including
alternates) present at any meeting and not disqualified from voting,
whether or not they constitute a quorum, may unanimously appoint another
Director to act at the meeting in the place of such absent or
disqualified member. The term of office of the members of each
committee shall be as fixed from time to time by the Board; provided,
however, that any committee member who ceases to be a member of the
Board shall automatically cease to be a committee member.
29. Quorum, Manner of Acting
At any meeting of a committee, the presence of one-third, but not
less than two, of its members then in office shall constitute a quorum
for the transaction of business; and the act of a majority of the
members present at a meeting at which a quorum is present shall be the
act of the committee. Each committee may provide for the holding of
regular meetings, make provision for the calling of special meetings
and, except as otherwise provided in these By-Laws or by
<PAGE> 13
resolution of the Board of Directors, make rules for the conduct of its
business.
30. Minutes
The committees shall keep minutes of their proceedings and report
the same to the Board of Directors when required; but failure to keep
such minutes shall not affect the validity of any acts of the committee
or committees.
ADVISORY DIRECTORS
------------------
31. Advisory Directors
The Board of Directors may, by resolution adopted by a majority of the
whole Board, appoint such number of senior executives of the Company
as Advisory Directors as the Board may from time to time determine.
The Advisory Directors shall have such advisory responsibilities as
the Chairman of the Board may designate and the term of office of
such Advisory Directors shall be as fixed by the Board.
OFFICERS
--------
32. Designation
The officers of the Company shall be a Chairman of the Board, and
a President, one of whom shall be designated by the Board of Directors
as the Chief Executive Officer, one or more Vice Presidents, a
Secretary, a Treasurer and a Controller. The Board of Directors may
also elect one or more Vice Chairmen of the Board, one or more Executive
Vice Presidents, Senior Vice Presidents, Group Vice Presidents, Deputy
and Assistant Secretaries, Deputy and Assistant Treasurers, Deputy and
Assistant Controllers and such other officers as it shall deem
necessary. Any number of offices may be held by the same person. The
Chairman of the Board of Directors, the President and the Vice Chairmen
of the Board shall be chosen from among the Directors.
33. Election and Term
At its first meeting after each annual meeting of stockholders,
the Board of Directors shall elect the officers
<PAGE> 14
of the Company and at any time thereafter the Board may elect additional
officers of the Company, and each such officer shall hold office until the
officer's successor is elected and qualified or until the officer's
earlier death, resignation or removal. Alternatively, at the last regular
meeting of the Board of Directors prior to an annual meeting of
stockholders, the Board of Directors may elect the officers of the
Company, contingent upon the election of the persons nominated to be
directors by the Board of Directors; and each such officer so elected
shall hold office until the officer's successor is elected and qualified
or until the officer's earlier death, resignation or removal.
34. Removal
Any officer shall be subject to removal or suspension at any time, for
or without cause, by the affirmative vote of a majority of the whole
Board of Directors.
35. Resignations
Any officer may resign at any time by giving written notice to the
Chairman of the Board, the President or to the Secretary. Such
resignation shall take effect upon receipt thereof or at any later
time specified therein; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make
it effective.
36. Vacancies
A vacancy in any office because of death, resignation, removal or
any other cause may be filled for the unexpired portion of the term
by the Board of Directors.
37. Compensation
The salaries of all vice presidents and higher ranking officers of the
Company shall be fixed by the Executive Compensation and Development
Committee of the Board of Directors.
38. Chairman of the Board
The Chairman of the Board shall preside at all meetings of
<PAGE> 15
the stockholders and of the Board of Directors, except as may be otherwise
required under the law of Delaware. The Chairman shall act in an advisory
capacity with respect to matters of policy and other matters of importance
pertaining to the affairs of the Company. The Chairman, alone or with the
President, one or more of the Vice Chairmen of the Board, and/or the
Secretary shall sign and send out reports and other messages which are to
be sent to stockholders from time to time. The Chairman shall also
perform such other duties as may be assigned to the Chairman by these
By-Laws, the Board of Directors or, if applicable, the Chief Executive
Officer.
39. President
The President shall, in the absence of the Chairman of the Board,
preside at all meetings of the stockholders and of the Board of
Directors. The President shall perform such other duties as may be
assigned to the President by these By-Laws, the Board of Directors or,
if applicable, the Chief Executive Officer.
40. Chief Executive Officer
The Chief Executive Officer shall have the general and active management
and supervision of the business of the Company. The Chief Executive
Officer shall see that all orders and resolutions of the Board of
Directors are carried into effect. The Chief Executive Officer shall also
perform such other duties as may be assigned to the Chief Executive
Officer by these By-Laws or the Board of Directors. The Chief Executive
Officer shall designate who shall perform the duties of the Chief
Executive Officer in the Chief Executive Officer's absence.
41. Vice Chairmen of the Board
The Vice Chairmen of the Board shall, in the absence of the Chairman of
the Board and the President, and in such order as may be designated by the
Chairman of the Board, preside at all meetings of the stockholders and of
the Board of Directors. They shall perform such other duties as may be
assigned to them by these By-Laws, the Board of Directors or the Chief
Executive Officer.
<PAGE> 16
42. Executive, Senior, Group and other Vice Presidents
Each Executive Vice President, Senior Vice President, Group Vice
President and each other Vice President shall perform the duties and
functions and exercise the powers assigned to such officer by the Board
of Directors or the Chief Executive Officer.
43. Secretary
The Secretary shall attend all meetings of the Board of Directors
and of the stockholders and record all votes and the minutes of all
proceedings in a book to be kept for that purpose. The Secretary shall
give, or cause to be given, notice of all meetings of the stockholders
and special meetings of the Board of Directors and, when appropriate,
shall cause the corporate seal to be affixed to any instruments executed
on behalf of the Company. The Secretary shall also perform all duties
incident to the office of Secretary and such other duties as may be
assigned to the Secretary by these By-Laws, the Board of Directors, the
Chairman of the Board or the Chief Executive Officer.
44. Assistant Secretaries
The Assistant Secretaries shall, during the absence of the Secretary,
perform the duties and functions and exercise the powers of the Secretary.
Each Assistant Secretary shall perform such other duties as may be
assigned to such Assistant Secretary by the Board of Directors, the
Chairman of the Board, the Chief Executive Officer or the Secretary.
45. Treasurer
The Treasurer shall have the custody of the funds and securities
of the Company and shall deposit them in the name and to the credit of
the Company in such depositories as may be designated by the Board of
Directors or by any officer or officers authorized by the Board of
Directors to designate such depositories; disburse funds of the Company
when properly authorized by vouchers prepared and approved by the
Controller; and invest funds of the Company when authorized by the Board
of Directors or a committee thereof. The
<PAGE> 17
Treasurer shall render to the Board of Directors, the Chief Executive
Officer, the Senior Vice President-Finance or the Vice President-Finance,
whenever requested, an account of all transactions as Treasurer and shall
also perform all duties incident to the office of Treasurer and such other
duties as may be assigned to the Treasurer by these By-Laws, the Board of
Directors, the Chief Executive Officer, the Senior Vice President-Finance
or the Vice President-Finance.
46. Assistant Treasurers
The Assistant Treasurers shall, during the absence of the Treasurer,
perform the duties and functions and exercise the powers of the Treasurer.
Each Assistant Treasurer shall perform such other duties as may be
assigned to the Assistant Treasurer by the Board of Directors, the
Chief Executive Officer, the Senior Vice President-Finance, the Vice
President-Finance or the Treasurer.
47. Controller
The Controller shall serve as the principal accounting officer of
the Company and shall keep full and accurate account of receipts
and disbursements in books of the Company and render to the
Board of Directors, the Chief Executive Officer, the Senior Vice
President-Finance or the Vice President-Finance, whenever requested, an
account of all transactions as Controller and of the financial condition
of the Company. The Controller shall also perform all duties incident
to the office of Controller and such other duties as may be assigned to
the Controller by these By-Laws, the Board of Directors, the Chief
Executive Officer, the Senior Vice President-Finance or the Vice
President-Finance.
48. Assistant Controllers
The Assistant Controllers shall, during the absence of the Controller,
perform the duties and functions and exercise the powers of the
Controller. Each Assistant Controller shall perform such other duties
as may be assigned to such officer by the Board of Directors, the
Chief Executive Officer, the Senior Vice President-Finance, the Vice
President-Finance or the Controller.
<PAGE> 18
COMPANY CHECKS, DRAFTS AND PROXIES
----------------------------------
49. Checks, Drafts
All checks, drafts or other orders for the payment of money by the
Company shall be signed by such person or persons as from time to time
may be designated by the Board of Directors or by any officer or
officers authorized by the Board of Directors to designate such signers;
and the Board of Directors or such officer or officers may determine
that the signature of any such authorized signer may be facsimile.
50. Proxies
Except as otherwise provided by resolution of the Board of Directors, the
Chairman of the Board, the President, any Vice Chairman of the Board, any
Vice President, the Treasurer and any Assistant Treasurer, the Controller
and any Assistant Controller, the Secretary and any Assistant Secretary of
the Company, shall each have full power and authority, in behalf of the
Company, to exercise any and all rights of the Company with respect to any
meeting of stockholders of any corporation in which the Company holds
stock, including the execution and delivery of proxies therefor, and to
consent in writing to action by such corporation without a meeting.
CAPITAL STOCK
-------------
51. Stock Certificates
Each holder of stock in the Company shall be entitled to have a
certificate signed by, or in the name of the Company by, the Chairman of
the Board, the President, any Vice Chairman of the Board, any Executive
Vice President, any Senior Vice President, any Group Vice President or
any other Vice President, and by the Secretary or any Assistant
Secretary of the Company, certifying the number of shares owned by such
holder in the Company. Any of or all the signatures on the certificate
may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the
Company with the same effect as if such person were such officer,
<PAGE> 19
transfer agent or registrar at the date of issue.
52. Record Ownership
The Company shall be entitled to treat the person in whose name any
share, right or option is registered as the owner thereof, for all
purposes, and shall not be bound to recognize any equitable or other
claim to or interest in such share, right or option on the part of any
other person, whether or not the Company shall have notice thereof,
except as otherwise provided by the law of Delaware.
53. Record Dates
(a) In order that the Company may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment
thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for
the purpose of any other lawful action, the Board of Directors may fix a
record date, which shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors and which
shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action.
(b) In order that the Company may determine the stockholders
entitled to consent to corporate action in writing without a meeting,
the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted by the Board of Directors, and which record date shall not be
more than ten days after the date upon which the resolution fixing the
record date is adopted by the Board of Directors. Any stockholder of
record seeking to have the stockholders authorize or take corporate
action by written consent shall, by written notice to the Secretary,
request the Board of Directors to fix a record date. The Board of
Directors shall promptly, but in all events within ten days after the
date on which such a request is received, adopt a resolution fixing the
record date (unless a record date has previously been
<PAGE> 20
fixed by the Board of Directors pursuant to the first sentence of this
paragraph). If no record date has been fixed by the Board of Directors
pursuant to the first sentence of this paragraph or otherwise within ten
days of the date on which such a request is received, the record date
for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the Board of
Directors is required by applicable law, shall be the first date on
which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the corporation by delivery to its
registered office in the State of Delaware, its principal place of
business, or any officer or agent of the corporation having custody of
the book in which proceedings of meetings of stockholders are recorded.
Delivery shall be by hand or by certified or registered mail, return
receipt requested. If no record date has been fixed by the Board of
Directors, and prior action by the Board of Directors is required by
applicable law, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting shall be at the
close of business on the date on which the Board of Directors adopts the
resolution taking such prior action.
(c) In the event of the delivery, in the manner provided by
paragraph (b) of this By-Law, to the Company of the requisite written
consent or consents to take corporate action, the Company may engage
inspectors of elections for the purpose of promptly performing a
ministerial review of the validity of the consents and any revocations
with respect to such consents. For the purpose of permitting the
inspectors to perform such review, no action by written consent without
a meeting shall be effective until such date as the inspectors certify
to the Company that the consents delivered to the Company in accordance
with paragraph (b) of this By-Law represent at least the minimum number
of votes that would be necessary to take the corporate action. Nothing
contained in this paragraph (c) shall in any way be construed to suggest
or imply that the Board of Directors or any stockholder shall not be
entitled to contest the validity of any consent or revocation thereof,
whether before or after such certification by the independent
inspectors, or to take any other action (including, without limitation,
the commencement, prosecution or defense of any litigation with
<PAGE> 21
respect thereto, and the seeking of injunctive relief in such litigation).
54. Transfer of Stock
Transfers of shares of stock of the Company shall be made only on
the books of the Company by the registered holder thereof, or by the
registered holder's attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary or a transfer agent of the
Company, and on surrender of the certificate or certificates for such
shares properly endorsed and the payment of all taxes thereon.
55. Lost, Stolen or Destroyed Certificates
The Board of Directors may authorize a new certificate or certificates to
be issued in place of any certificate or certificates theretofore issued
by the Company alleged to have been lost, stolen or destroyed, upon the
making of an affidavit of the fact by the person claiming the certificate
of stock to be lost, stolen or destroyed. When authorizing such issue of
a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed certificate or certificates,
or the owner's legal representative, to give the Company a bond sufficient
to indemnify it against any claim that may be made against the Company on
account of the alleged loss, theft or destruction of such certificate or
the issuance of such new certificate.
56. Terms of Preferred Stock
The provisions of these By-Laws, including those pertaining to voting
rights, election of Directors and calling of special meetings of
stockholders, are subject to the terms, preferences, rights and
privileges of any then outstanding class or series of Preferred Stock as
set forth in the Certificate of Incorporation and in any resolutions of
the Board of Directors providing for the issuance of such class or
series of Preferred Stock; provided, however, that the provisions of any
such Preferred Stock shall not affect or limit the authority of the
Board of Directors to fix, from
<PAGE> 22
time to time, the number of Directors which shall constitute the whole
Board as provided in Section 15 above, subject to the right of the holders
of any class or series of Preferred Stock to elect additional Directors as
and to the extent specifically provided by the provisions of such
Preferred Stock.
INDEMNIFICATION
---------------
57. Indemnification
(a) The Company shall indemnify and hold harmless, to the fullest
extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to
be made a party or is otherwise involved in any claim, action, suit, or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") by reason of the fact that the person, or a person for
whom he or she is the legal representative, is or was a Director,
officer, employee or agent of the Company or is or was serving at the
request of the Company as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
non-profit entity, or other enterprise, including service with respect
to employee benefit plans, against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person. The right to indemnification
conferred in this By-Law shall be a contract right. Except as provided
in paragraph (c) of this By-Law with respect to proceedings seeking to
enforce rights to indemnification, the Company shall indemnify a person
in connection with a proceeding initiated by such person or a claim made
by such person against the Company only if such proceeding or claim was
authorized by the Board of Directors of the Company.
(b) The Company shall pay the expenses incurred in defending any
proceeding in advance of its final disposition, provided, however,
-------- -------
that if and to the extent required by law the payment of expenses
incurred by any person covered hereunder in advance of the final
disposition of the proceeding shall be made only upon receipt of
an undertaking by or on behalf
<PAGE> 23
of the affected person to repay all amounts advanced if it should
ultimately be determined that such person is not entitled to be
indemnified under this By-Law or otherwise.
(c) If a claim for indemnification or payment of expenses under this
By-Law is not paid in full within thirty days, or such other period
as might be provided pursuant to contract, after a written claim
therefor has been received by the Company, the claimant may file suit to
recover the unpaid amount of such claim or may seek whatever other
remedy might be provided pursuant to contract. In any such action the
Company shall have the burden of proving that the claimant was not
entitled to the requested indemnification or payment of expenses under
applicable law. If successful in whole or in part, claimant shall be
entitled to be paid the expense of prosecuting such claim. Neither the
failure of the Company (including its Board of Directors, independent
legal counsel or stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is
proper in the circumstances because the claimant has met the applicable
standard of conduct set forth in the General Corporation Law of the
State of Delaware, nor an actual determination by the Company (including
its Board of Directors, independent legal counsel or stockholders) that
the claimant has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the claimant has not
met the applicable standard of conduct.
(d) Any determination regarding whether indemnification of any
person is proper in the circumstances because such person has met the
applicable standard of conduct set forth in the General Corporation Law
of the State of Delaware shall be made by independent legal counsel
selected by such person with the consent of the Company (which consent
shall not unreasonably be withheld).
(e) The rights conferred on any person by this By-Law shall not be
exclusive of any other rights which such person may have or hereafter
acquire under any statute, provision of the Certificate of
Incorporation, these By-Laws, agreement, vote of stockholders or
disinterested Directors or otherwise.
(f) Any repeal or modification of the foregoing provisions
<PAGE> 24
of this By-Law 57 shall not adversely affect any right or protection
hereunder of any person with respect to any act or omission occurring
prior to or at the time of such repeal or modification.
MISCELLANEOUS
-------------
58. Corporate Seal
The seal of the Company shall be circular in form, containing the
words "Monsanto Company" and the word "Delaware" on the circumference
surrounding the word "Seal." Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any other manner
reproduced.
59. Fiscal Year
The fiscal year of the Company shall begin on the first day of
January in each year.
60. Auditors
The Board of Directors shall select certified public accountants
to audit the books of account and other appropriate corporate records
of the Company annually and at such other times as the Board shall
determine by resolution.
61. Waiver of Notice
Whenever notice is required to be given pursuant to the law of
Delaware, the Certificate of Incorporation or these By-Laws, a written
waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting of stockholders or the Board of
Directors or a committee thereof shall constitute a waiver of notice of
such meeting, except when the stockholder or Director attends such
meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders
or the Board of Directors or
<PAGE> 25
committee thereof need be specified in any written waiver of notice unless
so required by the Certificate of Incorporation or by these By-Laws.
AMENDMENT TO BY-LAWS
--------------------
62. Amendments
These By-Laws may be altered, amended or repealed by the affirmative vote
of a majority of the stock issued and outstanding and entitled to vote,
cast at any annual or special meeting of the stockholders or by the
affirmative vote of a majority of the whole Board of Directors at any
regular or special meeting of the Board of Directors.
----------------------------
EMERGENCY BY-LAWS
-----------------
These Emergency By-Laws, notwithstanding any different provision
in the Certificate of Incorporation or By-Laws, shall be operative
during any emergency resulting from an attack on the United States or on
a locality in which the Company conducts its business or customarily
holds meetings of the Board of Directors or its stockholders, or
during any nuclear or atomic disaster, or during the existence of any
catastrophe, or other similar emergency condition, as a result of which
a quorum of the Board of Directors or a committee thereof cannot be
readily convened for action. These Emergency By-Laws shall cease to be
operative upon termination of such emergency.
During any such emergency:
(a) A meeting of the Board of Directors or a committee thereof may
be called by any officer or Director. Notice of the time and place
of the meeting shall be given by the person calling the meeting to only
such of the Directors as it may be feasible to reach at the time and by
such means as may be feasible at the time. Such notice shall be given
at such time in advance of the meeting as circumstances permit in the
judgment of the person calling the meeting.
<PAGE> 26
(b) The officers or other persons designated on a list approved
by the Board of Directors before the emergency, all in such order or
priority and subject to such conditions and for such period of time (not
longer than reasonably necessary after the termination of the emergency)
as may be provided in the resolution approving the list, shall, to the
extent required to constitute a quorum at any meeting of the Board of
Directors during the emergency, be deemed Directors for such meeting.
If at the time of the emergency the Board of Directors has not approved
such a list of persons, then to the extent required to constitute a
quorum at any meeting of the Board of Directors during the emergency,
the officers of the Company who are present shall be deemed, in order of
rank and within the same rank in order of seniority, Directors for such
meeting. Two Directors (including persons deemed to be Directors) in
attendance at the meeting shall constitute a quorum.
(c) The Board of Directors, either before or during any such
emergency, may provide, and from time to time modify, lines of
succession in the event that during such an emergency any or all
officers or agents of the Company shall for any reason be rendered
incapable of discharging their duties.
(d) The Board of Directors, either before or during any such emergency,
may, effective in the emergency, change the General Offices or designate
several alternative General Offices or regional offices, or authorize an
officer, or officers, so to do.
No officer, Director or employee acting in accordance with these
Emergency By-Laws shall be liable except for willful misconduct.
These Emergency By-Laws shall be subject to repeal or change by further
action of the Board of Directors or by action of the stockholders, but no
such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action taken prior to the time of such repeal or
change. Any amendment of these Emergency By-Laws may make any further or
different provision that may be practical and necessary for the
circumstances of the emergency.
<PAGE> 1
-1-
Exhibit 10.1
Monsanto Management Incentive Plan of 1984
(As Amended)
I. General Provisions
1. Purposes
The Monsanto Management Incentive Plan of 1984 is designed to attract
and retain for the Company and its Subsidiaries personnel of
exceptional ability; to motivate such personnel through added
incentives to make a maximum contribution to greater profitability;
to develop and maintain a highly competent management team; and to
be competitive with other companies in the executive compensation
area. This Incentive Plan is composed of (a) the 1984 Stock Option
Plan and (b) the 1984 Performance Incentive Plan, and shall be
effective January 1, 1984 ("Effective Date"), subject to the approval
of this Incentive Plan by the stockholders of the Company.
2. Definitions
Except where the context otherwise indicates, the following
definitions apply:
"Associated Company" means any corporation (or partnership),
joint venture, or other enterprise), of which the Company
owns or controls, directly or indirectly, 10% or more, but
less than 50% of the outstanding shares of stock normally
entitled to vote for the election of directors (or comparable
equity participation and voting power).
"Board" means Board of Directors of the Company.
"Committee" means the Executive Compensation and Development
Committee or such other committee consisting of three or more
members of the Board as may be appointed by the Board to
<PAGE> 2
-2-
administer this Incentive Plan pursuant to Section 3(a) of
this Article I.
"Company" means Monsanto Company, a Delaware corporation.
"Eligible Participant" means any officer or other salaried
employee (including a director who is a salaried employee) of
the Company or a Subsidiary.
"Fair Market Value" shall mean, with respect to any given
day, the average of the highest and lowest prices of the
Shares reported as the New York Stock Exchange-Composite
Transactions for such day, or if the Shares were not traded
on such day, then on the next preceding day on which the
Shares were traded, all as reported by such source as the
Committee may select.
"Incentive Plan" means the Monsanto Management Incentive Plan
of 1984, as amended, set forth herein.
"Incentive Stock Option" or "Incentive Option" means an
option meeting the definition of that term as set forth in
Section 3 of Article II of this Incentive Plan.
"1974 Plan" means the Monsanto Management Incentive Plan of
1974, as amended.
"Non-Qualified Stock Option" or "Non-Qualified Option" means
an option referred to in Section 4 of Article II of this
Incentive Plan.
"Option Plan" or "1984 Stock Option Plan" means the 1984
Stock Option Plan set forth in Article II of this Incentive
Plan.
"Participant" means an Eligible Participant to whom a Stock
Option
<PAGE> 3
-3-
or a Stock Appreciation Right has been granted, a
bonus commitment made or a bonus awarded pursuant to this
Incentive Plan.
"Performance Incentive Plan" or "1984 Performance Incentive
Plan" means the bonus plan set forth in Article III of this
Incentive Plan.
"Performance Year" means the year or years for which a bonus
is awarded or a bonus commitment is made under the 1984
Performance Incentive Plan.
"Restricted Shares" means Shares that were made subject to
restrictions in accordance with Article IV of this Incentive
Plan.
"Shares" means shares of common stock of the Company and any
shares of stock or other securities received as a result of a
Share adjustment as set forth in Section 4 of this Article I.
"Stock Appreciation Right" means a right referred to in
Section 5 of Article II of this Incentive Plan.
"Stock Appreciation Right Fair Market Value" or "SAR Fair
Market Value" shall mean a value established by the Committee
for the exercise of a Stock Appreciation Right. If such
exercise occurs during any quarterly "window period" as
specified by Rule 16b-3 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended from
time to time, or any law, rule, regulation or other provision
that may hereafter replace such Rule, the Committee may
establish a common value for exercises during such window
period.
"Stock Option" or "Option" shall mean Incentive Stock Options
and/or Non-Qualified Stock Options.
"Subsidiary" means: (i) for the purpose of an Incentive Stock
<PAGE> 4
-4-
Option, any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if,
at the time of the granting of the Option, each of the
corporations other than the last corporation in the unbroken
chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other
corporations in such chain; and (ii) for the purposes of a
Non-Qualified Stock Option, a Stock Appreciation Right, and
the 1984 Performance Incentive Plan, any corporation (or
partnership, joint venture, or other enterprise) of which the
Company owns or controls, directly or indirectly, 50% or more
of the outstanding shares of stock normally entitled to vote
for the election of directors (or comparable equity
participation and voting power).
"Termination of Employment" means the discontinuance of
employment of a Participant for any reason other than a
Transfer.
"Transfer" means: (i) for the purpose of an Incentive Stock
Option, a change of employment of a Participant within the
group consisting of the Company and its Subsidiaries; and
(ii) for the purpose of a Non-Qualified Stock Option, a Stock
Appreciation Right and the 1984 Performance Incentive Plan, a
change of employment of a Participant within the group
consisting of the Company, its Subsidiaries and Associated
Companies.
3. Administration
(a) This Incentive Plan shall be administered by the
Committee. No person shall be eligible or continue to serve
as a member of such Committee unless such person is a
"disinterested person" within the meaning of Rule l6b-3 of
the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended from time to time, or any
law, rule, regulation or other provision that may hereafter
replace such Rule, and no person shall be eligible for
<PAGE> 5
-5-
the grant of a Stock Option or Stock Appreciation Right, the
receipt of a bonus commitment or the award of a bonus
(including, without limitation, Restricted Shares) under this
Incentive Plan while serving as a member of such Committee.
(b) The Committee shall have the exclusive right to
interpret this Incentive Plan, to select the persons who are
to receive Stock Options, Stock Appreciation Rights, bonus
commitments and bonus awards, and to act in all matters
pertaining to the granting of Options, Stock Appreciation
Rights, the making of bonus commitments and the awarding of
bonuses under this Incentive Plan including, without
limitation, the determination of the number of Shares to be
subject to and the form, terms, conditions and duration of
each Stock Option and Stock Appreciation Right, and the
amount, form, terms and conditions of each bonus commitment
and bonus award, and the amendment thereof consistent with
the provisions of this Incentive Plan. All acts and
decisions of the Committee with respect to any questions
arising in connection with the administration and
interpretation of this Incentive Plan, including the
severability of any and all of the provisions thereof, shall
be conclusive, final and binding upon all Participants.
(c) The Committee may adopt rules and regulations of
general application for the administration of this Incentive
Plan.
(d) Without limiting the foregoing Sections 3(a), (b) and
(c) of this Article I (and notwithstanding any other
provisions of this Incentive Plan), the Committee is
authorized to take such action as it determines to be
necessary or advisable, and fair and equitable to
Participants, with respect to Options, Stock Appreciation
Rights, bonus commitments and bonus awards (including,
without limitation, awards of Restricted Shares) in the event
of: a merger of the Company with, consolidation of the
<PAGE> 6
-6-
Company into, or the acquisition of the Company by, another
corporation; a sale or transfer of all or substantially all
of the assets of the Company to another corporation or any
other person or entity, a tender or exchange offer for Shares
made by any corporation, person or entity (other than the
Company); or other reorganization in which the Company will
not survive as an independent, publicly owned corporation.
Such action may include (but shall not be limited to)
establishing, amending or waiving the forms, terms,
conditions and duration of Stock Options, Stock Appreciation
Rights, bonus commitments and bonus awards (including,
without limitation, awards of Restricted Shares) so as to
provide for earlier, later, extended or additional times for
exercise or payments, differing methods for calculating
payments, alternate forms and amounts of payment, accelerated
release of restrictions or other modifications. The
Committee may take such actions pursuant to this Section 3(d)
by adopting rules and regulations of general applicability to
all Participants or to certain categories of Participants, by
including, amending or waiving terms and conditions in Option
and Stock Appreciation Right grants, bonus commitments and
bonus awards (including, without limitation, agreements with
respect to Restricted Shares), or by taking action with
respect to individual Participants. The Committee may take
such actions as part of the grants, commitments or awards, or
before or after the public announcement of any such merger,
consolidation, acquisition, sale or transfer of assets,
tender or exchange offer or other reorganization.
4. Share Adjustments
In the event that at any time or from time to time a stock
dividend, stock split, recapitalization, merger, consolidation,
or other change in capitalization, or a sale by the Company of
all or part of its assets, or any distribution to stockholders
other than a cash dividend results in (a) the outstanding
Shares, or any securities exchanged therefor or
<PAGE> 7
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received in their place, being exchanged for a different number or
class of shares of stock or other securities of the Company, or
for shares of stock or other securities of any other corporation;
or (b) new, different or additional shares or other securities of
the Company or of any other corporation being received by the
holders of outstanding Shares, then:
(i) the limitation of 2,000,000 Shares set forth in Section
l(a) of Article II and Section 2(b) of Article III of this
Incentive Plan;
(ii) the number and class of Shares (A) that may be subject
to Stock Options or Stock Appreciation Rights, (B) which
have not been issued or transferred under outstanding
Stock Options or Stock Appreciation Rights, and (C) which
are subject to a bonus commitment or have been awarded but
are undelivered under the 1984 Performance Incentive Plan;
and
(iii) the purchase price to be paid per Share under
outstanding Stock Options and the number of Shares to be
transferred in settlement of outstanding Stock
Appreciation Rights;
shall in each case be equitably adjusted; provided, however,
that all adjustments made as the result of the foregoing in
respect of each Stock Option which is granted as an Incentive
Stock Option shall be made so that such Stock Option shall
continue to be an Incentive Stock Option as defined in Section
422A of the Internal Revenue Code of 1954, as amended from time
to time, or any provisions that may hereafter be enacted in lieu
thereof.
II. 1984 Stock Option Plan
1. Option Shares
(a) (i) The total number of Shares for which Options may be
granted
<PAGE> 8
-8-
under this Option Plan shall not exceed 2,000,000
Shares, subject to: (A) the adjustments provided for in
Section 4 of Article I of this Incentive Plan; (B) the
provisions of Section l(b) of this Article II; and (C)
reduction by the number of Shares committed or awarded
pursuant to Article III of this Incentive Plan. Such
Shares may be authorized but unissued, or treasury
Shares, or both.
(ii) The total number of Shares for which Options may be
granted under this Incentive Plan to any one Eligible
Participant shall not exceed in the aggregate 5% of the
total number of Shares for which Options may be granted
under this Incentive Plan, subject to the adjustments
provided for in Section 4 of Article I of this Incentive
Plan.
(b) In the event that any unexercised Stock Option granted
hereunder lapses or ceases to be exercisable for any reason
other than a surrender of the Option pursuant to Section l(c) of
this Article II or the exercise of a Stock Appreciation Right
under Section 5 of this Article II, the Shares subject to such
Option shall again be available for Option grants under this
Option Plan without again being charged against the limitation
of 2,000,000 Shares set forth in Section 1(a) of this Article
II. Any amendment of any Option or Stock Appreciation Right by
the Committee pursuant to Article I, Section 3 of this Incentive
Plan shall not be considered the grant of a new Option for the
purpose of Section 1(a) of this Article II.
(c) In the event of Termination of Employment or disability,
hardship or unusual circumstances as determined by the
Committee, the Committee may, with the consent of the
Participant, his legal representative, or in the event of death,
a beneficiary designated in writing by the Participant during
his lifetime, authorize
<PAGE> 9
-9-
payment, in cash or in Shares, or partly in cash and partly in
Shares, as the Committee may direct, of an amount equal to the
difference at the time between the Fair Market Value of the Shares
subject to an Option and the Option price in consideration of the
surrender of the Option. In such an event the Shares subject to
the Option so surrendered shall be charged against the limitations
set forth in Section 1(a) of this Article II.
2. Incidents of Options and Stock Appreciation Rights
(a) Each Stock Option and Stock Appreciation Right shall be granted
subject to such terms and conditions, if any, not inconsistent
with this Incentive Plan, as shall be determined by the
Committee, including any provisions as to continued employment
as consideration for the grant or exercise of such Option or
Stock Appreciation Right and any provisions which may be
advisable to comply with applicable laws, regulations or rulings
of any governmental authority.
(b) A Stock Option or Stock Appreciation Right shall not be
transferable by the Participant otherwise than by will, by the
laws of descent and distribution or pursuant to a written
beneficiary designation, and shall be exercisable during the
lifetime of the Participant only by him or by his guardian or
legal representative.
(c) Shares purchased upon exercise of a Stock Option shall be paid
for in such amounts, at such times and upon such terms as shall
be determined by the Committee and specified in the grant of the
Option. Without limiting the foregoing, the Committee may
establish payment terms for the exercise of Stock Options which
permit the Participant to deliver Shares (or other evidence of
ownership of Shares satisfactory to the Company), including, at
the Committee's option, Restricted Shares, with a Fair Market
<PAGE> 10
-10-
Value equal to the Option price as payment.
(d) No cash dividends shall be paid on Shares subject to
unexercised Stock Options. The Committee may provide, however,
that a Participant to whom an Option has been granted which is
exercisable in whole or in part at a future time for Shares
(including Restricted Shares) shall be entitled to receive an
amount per Share equal in value to the cash dividends, if any,
paid per Share on issued and outstanding Shares, as of the
dividend record dates occurring during the period between the
date of the grant and the time each such Share is delivered
pursuant to exercise of such Stock Option or the related
Stock Appreciation Right. Such amounts (herein called
"dividend equivalents") may, in the discretion of the Committee,
be:
(i) paid in cash or Shares either from time to time prior
to, or at the time of the delivery of, such Shares,
or upon expiration of the Option if it shall not have
been fully exercised; or
(ii) converted into contingently credited Shares (with
respect to which dividend equivalents may accrue)
in such manner, at such value, and deliverable at such
time or times, as may be determined by the Committee.
Such Shares (whether delivered or contingently credited) shall be
charged against the limitations set forth in Section l(a) of this
Article II.
(e) The Committee, in its discretion, may authorize payment of
interest equivalents on dividend equivalents which are payable
in cash at a future time.
3. Incentive Options
<PAGE> 11
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An Incentive Option shall be an "Incentive Stock Option" as that term
is defined in Section 422A of the Internal Revenue Code of 1954, as
amended from time to time, as in effect at the time of the grant of
any such Option, or any statutory provision that may be enacted to
replace such Section. Each provision of this Option Plan and of each
Incentive Stock Option granted hereunder shall be construed so that
each such Option shall be an Incentive Stock Option, and any
provision thereof that cannot be so construed shall be disregarded.
The total number of Shares for which Incentive Stock Options may be
granted under this Option Plan shall not exceed the total specified
in Section l(a) of this Article II. Incentive Stock Options shall be
granted only to purchase unrestricted Shares and only to Eligible
Participants, each of whom may be granted one or more such Options at
such time or times determined by the Committee following the
Effective Date until December 31, 1993, subject to the following
conditions:
(a) The Option price per Share shall be set by the grant but shall
not be less than 100% of the Fair Market Value at the time of
the grant.
(b) The Option and its related Stock Appreciation Right, if any,
may be exercised in full or in part from time to time within
ten (10) years from the date of the grant, or such shorter
period as may be specified by the Committee in the grant,
provided that in any event each shall lapse and cease to be
exercisable upon, or within such period following, Termination
of Employment as shall have been determined by the Committee and
as specified in the Option or Stock Appreciation Right;
provided, however, that such period following Termination of
Employment shall not exceed three months unless employment shall
have terminated:
(i) as a result of retirement pursuant to, and as
defined in, the applicable pension plan of the Company,
its Subsidiary or Associated Company or total and
permanent disability as
<PAGE> 12
-12-
determined by the Committee, in which event such period
shall not exceed--
(A) in the case of an Option, the original term of
the Option; and
(B) in the case of a Stock Appreciation Right, one
year after such retirement or disability or
after resignation as an officer or director of
the Company, whichever shall last occur (unless
earlier terminated pursuant to Section 5(b)
of this Article II);
or
(ii) as a result of death or death shall have occurred
following Termination of Employment and while the
Option or Stock Appreciation Right was still
exercisable;
and provided, further, that such period
following Termination of Employment shall in no event
extend the original exercise period of the Option or
related Stock Appreciation Right, if any.
(c) The aggregate Fair Market Value (determined at the time the
Option is granted) of the Shares with respect to which Incentive
Stock Options are first exercisable during any calendar year by
any eligible Participant shall not exceed $100,000.
(d) Any other terms and conditions which the Committee determines,
upon advice of counsel, should be imposed for the Option to
qualify as an Incentive Stock Option and any other terms and
conditions not inconsistent with this Option Plan as determined
by the Committee.
4. Non-Qualified Options
<PAGE> 13
-13-
One or more Options may be granted as Non-Qualified Options to
purchase unrestricted Shares or Restricted Shares to an Eligible
Participant at such time or times determined by the Committee,
following the Effective Date, subject to the following terms and
conditions:
(a) The Option price per Share shall be established by the grant
but shall not be less than 100% of the Fair Market Value at
the time of the grant.
(b) The Option and its related Stock Appreciation Right, if any,
may be exercised in full or in part from time to time within
ten (10) years and thirty (30) days from the date of the grant,
or such shorter period as may be specified by the Committee in
the grant, provided that in any event each shall lapse and cease
to be exercisable upon, or within such period following,
Termination of Employment as shall have been determined by the
Committee and as specified in the Option or Stock Appreciation
Right; provided, however, that such period following Termination
of Employment shall not exceed three months unless employment
shall have terminated:
(i) as a result of retirement pursuant to, and as defined
in, the applicable pension plan of the Company, its
Subsidiary or Associated Company or total and permanent
disability as determined by the Committee, in which
event such period shall not exceed--
(A) in the case of an Option, the original term of
the Option; and
(B) in the case of a Stock Appreciation Right, one
year after such retirement or disability or
after resignation as an officer or director of
the Company,
<PAGE> 14
-14-
whichever shall last occur (unless earlier
terminated pursuant to Section 5(b) of
this Article II);
or
(ii) as a result of death or death shall have occurred
following Termination of Employment and while the
Option or Stock Appreciation Right was still
exercisable; and provided, further, that such period
following Termination of Employment shall in no event
extend the original exercise period of the Option or
related Stock Appreciation Right, if any.
(c) The Option shall meet all of the conditions, other than the
date of issuance, of a "Restricted Stock Option" as defined in
Section 424(b) of the Internal Revenue Code of 1954, as amended
from time to time, as in effect at the time of grant of such
Option, or any statutory provision that may be enacted to
replace such Section.
(d) The Option grant may include any other terms and conditions not
inconsistent with this Option Plan as determined by the
Committee, including provisions making the Shares subject to
such Option Restricted Shares.
5. Stock Appreciation Rights
A Stock Appreciation Right may be granted to an Eligible Participant
in connection with (and only in connection with) an Incentive Stock
Option or a Non-Qualified Option granted under this Option Plan or a
Non-Qualified Option granted under the 1974 Stock Option Plan which
constitutes part of the 1974 Plan, subject to the following terms and
conditions:
(a) Such Stock Appreciation Right shall entitle a holder of an
Option
<PAGE> 15
-15-
within the period specified for the exercise of the Option
in the related Option grant to surrender the unexercised
Option (or a portion thereof) and to receive in exchange
therefor a payment in cash or Shares having an aggregate value
equal to the product of (i) the amount by which (A) the SAR Fair
Market Value of each Share exceeds (B) the Option price per
Share, times (ii) the number of Shares under the Option, or
portion thereof, which is surrendered.
(b) Each Stock Appreciation Right granted hereunder shall be
subject to the same terms and conditions as the related Option.
It shall be exercisable only to the extent such Option is
exercisable and shall terminate or lapse and cease to be
exercisable when the related Option terminates or lapses. The
Committee may grant Stock Appreciation Rights concurrently with
grants of Options or in connection with previously granted
Options under this Incentive Plan or the 1974 Stock Option Plan
which are unexercised and have not terminated or lapsed. With
respect to Stock Appreciation Rights granted in connection with
such previously granted Options, the Committee shall provide
that such Stock Appreciation Rights shall not be exercisable
until the holder completes six (6) months (or such longer period
as the Committee shall determine) of service with the Company, a
Subsidiary, or an Associated Company immediately following
the date of the grant of such Stock Appreciation Rights.
(c) The Committee shall have sole discretion to determine in each
case whether the payment will be in the form of all cash, all
Shares (which may, at the Committee's discretion, be Restricted
Shares), or any combination thereof. If payment is to be made
in Shares, the number of Shares shall be determined as follows:
the amount payable in Shares shall be divided by the SAR Fair
Market Value of Shares. The payments to be made, in whole or in
part, in cash upon the exercise of Stock Appreciation Rights by
any officer of
<PAGE> 16
-16-
the Company shall be made in accordance with the provisions
relating to the exercise of stock appreciation rights
of Rule l6b-3 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect at the time of
such exercise, or any law, rule, regulation or other provision
that may hereafter replace such Rule.
(d) Upon exercise of a Stock Appreciation Right, the number of
Shares subject to exercise under the related Option shall
automatically be reduced by the number of Shares represented
by the Option or portion thereof which is surrendered. To the
extent that a Stock Appreciation Right shall be exercised, any
Shares transferred upon such exercise shall not be charged
against the maximum limitations upon the grant of Options set
forth in the Plan under which such Option shall have been
granted but the Option in connection with which a Stock
Appreciation Right shall have been granted shall be deemed to
have been exercised for the purpose of such maximum limitations.
(e) The Committee shall have sole discretion as to the timing of
any payment made in cash, Shares, or a combination thereof upon
exercise of Stock Appreciation Rights hereunder, whether in a
lump sum, in annual installments or otherwise deferred and the
Committee shall have sole discretion to determine whether such
payments may bear amounts equivalent to interest or cash
dividends.
(f) For purposes of this paragraph 5(f) of Article II:
(i) "Unrelated Party" means any party or group of
parties acting together other than (A) the Company, its
directors and officers, or (B) any nominee holder for any
stock exchange;
<PAGE> 17
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(ii) "Offer" means any tender or exchange offer made by
an Unrelated Party for the Shares and shall be deemed to
occur upon the first purchase or exchange of such Shares;
(iii) "Change of Control" means any acquisition,
beneficially or otherwise, by any Unrelated Party of 25%
or more of the combined voting power of the common and
preferred stock of the Company and shall be deemed to
occur upon the date that the Unrelated Party attains
control of said 25% or more of the combined voting
power;
(iv) "Change of Control Market Value" of the Shares
means the higher of--
(A) the value for which such Shares may be exchanged
or offered under any Offer pursuant to which
Shares are actually exchanged or purchased; or
(B) the Fair Market Value of such Shares on the date
of exercise of a Stock Appreciation Right.
Notwithstanding the foregoing provisions of this Section 5 of
Article II and without limiting the provisions of Section 3 of
Article I of this Incentive Plan, in the event of an Offer or
Change of Control, a Participant holding an unexercised Stock
Appreciation Right may exercise such Stock Appreciation Right and
elect to be paid solely in cash in an amount equal to the
difference between the Option price and the Change of Control
Market Value of the Shares, unless within five (5) business days
after receipt of notification of such election by the Secretary of
the Company, the Committee acts to disapprove the cash election.
Unless it acts to disapprove, the Committee's consent shall be
deemed to be given at the close of business on the fifth
business day after the Secretary's receipt of notification of such
election and payment shall be made as soon as practicable after
expiration
<PAGE> 18
-18-
of such five (5) business day period. The election provided
herein shall apply only: (x) during the thirty (30) day period
following the first exchange or purchase of Shares pursuant
to an Offer; or (y) during the thirty (30) day period following
the date on which sufficient Shares are acquired to constitute a
Change of Control.
(g) For purposes of this paragraph 5(g) of Article II:
(i) "Unrelated Party" means any party or group of
parties acting together other than (A) the Company, its
directors and officers, or (B) any nominee holder for
any stock exchange;
(ii) "Alternate Change of Control" means any
acquisition, beneficially or otherwise, by any Unrelated
Party of a percentage of the combined voting power of the
common and preferred stock of the Company specified by the
Committee (but not less than 10%) and shall be deemed to
occur upon the date that the Unrelated Party attains
control of said percentage of the combined voting power;
(iii) "Change of Control Termination of Employment"
means the termination of employment of a Participant
by the Company, the Subsidiaries or the Associated
Companies without cause (as defined by the Committee) or
by the Participant for good reason (as defined by the
Committee) within a period of time specified by the
Committee following an Alternate Change of Control;
(iv) "Alternate Change of Control Market Value" of
the Shares means the Fair Market Value of such Shares
on the date of exercise of a Stock Appreciation Right.
<PAGE> 19
-19-
Notwithstanding the foregoing provisions of this Section 5 of
Article II and without limiting the provisions of Section 3 of
Article I of this Incentive Plan, in the event of an Alternate
Change of Control and a Change of Control Termination of
Employment, a Participant holding an unexercised Stock
Appreciation Right who is selected by the Committee may exercise
such Stock Appreciation Right and elect to be paid solely in
cash in an amount equal to the difference between the Option
price and the Alternate Change of Control Market Value of the
Shares, unless within five (5) business days after receipt of
notification of such election by the Secretary of the Company,
the Committee acts to disapprove the cash election. Unless it
acts to disapprove, the Committee's consent shall be deemed to
be given at the close of business on the fifth business day
after the Secretary's receipt of notification of such election
and payment shall be made as soon as practicable after
expiration of such five (5) business day period. The election
provided herein shall apply only during the thirty (30) day
period following a Change of Control Termination of Employment.
III. 1984 Performance Incentive Plan
1. Bonus Commitments and Awards
(a) Bonus Commitments
A commitment to award a bonus at a future date for all or part
of any Performance Year may be made at such time or times
determined by the Committee following the Effective Date to any
person who is an Eligible Participant at the time of such
commitment. The Committee shall have full discretion to determine
the terms and conditions of the commitment including, without
limitation, whether the corresponding bonus award shall be
contingent upon the attainment of prescribed goals as to net
earnings per share or
<PAGE> 20
-20-
otherwise and provisions with respect to the rights of the
Participant's legal representative in the event of his death.
(b) Bonus Awards
A bonus may be awarded at such time or times determined by the
Committee following the Effective Date to any person who was an
Eligible Participant during all or part of any Performance Year,
payable either wholly in cash or wholly in Shares, or partially in
cash and partially in Shares. The Committee shall have full
discretion to determine the terms and conditions of payment of any
award, including without limitation, what part of such award shall
be paid in cash, unrestricted Shares and Restricted Shares, the
time or times of payment of any award, and the time or times of
the lapse of the restrictions on Restricted Shares. Any Eligible
Participant may receive more than one bonus award for a
Performance Year and any bonus award may be made pursuant to or
without a prior commitment to make such award.
2. Bonus Shares--Source, Limit and Valuation
(a) Shares used for bonus purposes may be authorized but unissued
Shares, treasury Shares, or any combination thereof. Any Shares
held by the Company for use under this Performance Incentive Plan
shall, unless and until transferred in payment of an award in
accordance with this Performance Incentive Plan, remain the
property of the Company, irrespective of whether such Shares are
entered in a special bonus account, and such Shares shall at all
times be available, unless and until so transferred, for any
corporate purpose.
(b) The total number of Shares which may be awarded pursuant to
bonus awards under this Performance Incentive Plan shall not
exceed 2,000,000 shares, subject to:
<PAGE> 21
-21-
(i) the adjustments provided for in Section 4 of Article I
of this Incentive Plan; and
(ii) reduction by the number of Shares for which Stock Options
have been granted pursuant to Article II of this Incentive
Plan (except as provided in Section l(b) of said Article
II).
(c) For the purpose of determining the number of Shares to
be used in payment of an award, the amount of the award payable in
Shares shall be divided by the Fair Market Value of the Shares on
the date of the determination of the amount of the award by the
Committee.
3. Awards
(a) Subject to the provisions of Section 3(f) of this Article III,
bonus commitments and bonus awards may be made by the Committee at
such time or times as may be determined by the Committee. The
Committee may, in its discretion, allow any Participant who
receives a bonus award or bonus commitment under this Incentive
Plan to elect to defer payment of such award, or of any award to
be made pursuant to such bonus commitment, in accordance with such
terms and conditions and in such manner as the Committee may
prescribe. Any amendment of any bonus commitment and bonus award
by the Committee pursuant to Article I, Section 3 of this
Incentive Plan shall not be considered the grant of a new bonus
commitment or bonus award for purposes of Section 2(b) of this
Article III.
(b) Commitments to make payment on account of bonuses for a
Performance Year may be made by the Committee in advance of the
close of such Performance Year upon such terms and conditions as
the Committee may determine.
<PAGE> 22
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(c) The portion of a bonus award payable in cash or unrestricted
Shares or both may, in the discretion of the Committee, be paid or
delivered in whole or in part at such time or times and under such
terms and conditions as may be determined by the Committee
including, but not limited to, the following times:
(i) in full at the time of the award; or
(ii) in any number of annual installments,
equal or unequal, during employment or following
Termination of Employment; or
(iii) in full after a period of time.
(d) In the event that any bonus commitment or bonus award or
installment thereof which is to be paid in Shares ceases to be
payable for any reason, the Shares subject to such bonus
commitment or bonus award shall again be available for bonus
purposes without again being charged against the limitation of
2,000,000 Shares set forth in Section 2(b) of this Article III.
(e) The portion of an award payable in Restricted Shares shall be
paid at the time of the award by delivering to the Participant,
or a custodian or escrow designated by the Committee and the
Participant, a certificate or certificates for such Restricted
Shares, registered in the name of such Participant who shall have
all of the rights of a stockholder with respect to such Shares,
subject to such terms and conditions, including forfeitures or
resale to the Company, if any, as may be determined by the
Committee and to the restrictions and provisions pursuant to
Article IV of this Incentive Plan. The Committee and the
Participant may designate the Company or one or more of its
employees to act as custodian or escrow for the certificates.
<PAGE> 23
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(f) Anything in this Incentive Plan to the contrary notwithstanding,
no bonus awards shall be made for any Performance Year during
which no dividend on the outstanding Shares has been paid; bonus
awards covering more than one Performance Year and made pursuant
to a bonus commitment shall be reduced by the ratio of the
number of such Performance Years during which no dividends
were paid to the number of Performance Years covered by the bonus
awards.
4. Dividends, Dividend Equivalents and Interest Equivalents
(a) No cash dividends shall be paid on Shares which have been
awarded but not delivered. The Committee may provide, however,
that a Participant to whom a bonus has been awarded which is
payable in whole or in part at a future time in Shares shall be
entitled to receive an amount per Share, equal in value to the
cash dividends, if any, paid per Share on issued and outstanding
Shares, as of the dividend record dates occurring during the
period between the date of the award and the time each such Share
is delivered. Such amounts (herein called "dividend equivalents")
may, in the discretion of the Committee, be:
(i) paid in cash or Shares either from time to time prior to
or at the time of the delivery of such Shares; or
(ii) converted into contingently credited Shares (with respect
to which dividend equivalents shall accrue) in such
manner, at such value, and deliverable at such time or
times, as may be determined by the Committee.
Such Shares (whether delivered or contingently credited) shall be
charged against the limitations set forth in Section 2(b) of this
Article III.
(b) The Committee, in its discretion, may authorize payment of
<PAGE> 24
-24-
interest equivalents on any portion of any award payable at a
future time in cash, and interest equivalents on dividend
equivalents which are payable in cash at a future time.
5. Death of Participant
Following the death of a Participant, all unpaid cash awards and all
undelivered unrestricted Share awards to such Participant hereunder,
together with all dividend equivalents and interest equivalents, if
any, payable in connection with any such award or awards, which have
not been cancelled and which are not then cancellable shall be paid
and delivered to his legal representative at the time or times
provided for in the award unless the Committee shall otherwise
direct. The Committee may, in its discretion, permit a Participant
to designate a beneficiary or beneficiaries to receive such award or
awards. Restricted Shares held by such Participant at the time of
his death shall be governed by the provisions of Article IV of this
Incentive Plan.
IV. Restricted Shares
Restricted Shares shall be subject to such terms and conditions,
including forfeiture, if any, and to such restrictions against sale,
transfer or other disposition as may be determined by the Committee
at the time a Non-Qualified Option for the purchase of Restricted
Shares is granted, at the time a Stock Appreciation Right to be
settled with Restricted Shares is granted or at the time of making a
bonus award of Restricted Shares. Any new or additional or different
Shares or other securities resulting from any adjustment of such
Shares of the type described in Section 4 of Article I shall be
subject to the same terms, conditions, and restrictions as the
Restricted Shares prior to such adjustment. The Committee may, in
its discretion, remove, modify or accelerate the release of
restrictions on any Restricted Shares in the event of hardship or
disability of the Participant while employed, or for such other
reasons as the Committee may deem appropriate in the
<PAGE> 25
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event that the Participant ceases to be an employee of the Company, a
Subsidiary or Associated Company, as the result of death or otherwise, or
in the event of a Transfer of the Participant requiring his relocation to
another country. In the event of the death of a Participant following the
transfer of Restricted Shares to him, the legal representative of the
Participant, the beneficiary designated in writing by the Participant
during his lifetime, or the person receiving such Shares under his will or
under the laws of descent and distribution shall take such Shares subject
to the same restrictions, conditions and provisions in effect at the time
of his death, to the extent applicable.
V. Miscellaneous Provisions
1. Neither a Stock Option, Stock Appreciation Right, bonus
commitment nor an unpaid bonus award or any installment thereof,
shall be transferable except as provided for herein in the case of
death. If any Participant makes such a transfer in violation
hereof, any obligation of the Company shall forthwith terminate.
2. Nothing in this Incentive Plan or any booklet or other document
describing or referring to this Incentive Plan shall be deemed to
confer on any employee or Participant the right to continue in the
employ of his employer or affect the right of his employer to
terminate the employment of any such person with or without cause.
3. Nothing contained herein shall require the Company to segregate
any monies from its general funds, or to create any trusts, or to
make any special deposits for any immediate or deferred amounts
payable to any Participant.
4. This Incentive Plan and all actions taken hereunder shall be
governed by the laws of the State of Delaware.
5. The Company may make such provisions and take such steps as it
may
<PAGE> 26
-26-
deem necessary or appropriate for the withholding of any taxes
which the Company is required by any law or regulation of any
governmental authority, whether federal, state or local, domestic
or foreign, to withhold in connection with any Stock Option or
the exercise thereof, any Stock Appreciation Right or the
exercise thereof, or the payment of any bonus award, including,
but not limited to, the withholding of payment of all or any
portion of such award or another award under this Incentive Plan
until the Participant reimburses the Company for the amount the
Company is required to withhold with respect to such taxes, or
cancelling any portion of such award or another award under this
Incentive Plan in an amount sufficient to reimburse itself for
the amount it is required to so withhold, or selling any property
contingently credited by the Company for the purpose of paying
such award or another award under this Incentive Plan, in order
to withhold or reimburse itself for the amount it is required to
so withhold.
6. Notwithstanding any other provision of this Incentive Plan, for
purposes of any award that is outstanding as of the date that the
Company spins off the Company's chemical businesses into a new
publicly traded company ("Chemicals") and is held by a Participant
who in connection with such spinoff becomes an employee of
Chemicals (or a subsidiary or associated company of Chemicals)
rather than an employee of the Company (or a Subsidiary or
Associated Company of the Company), such change of employment
shall not constitute a Termination of Employment. With respect
to any such award held by such a Participant, Termination of
Employment shall mean such Participant's termination of
employment with Chemicals other than a Transfer, with Transfer
defined as a change of employment of a Participant within the
group consisting of Chemicals and its subsidiaries, or, if the
Committee so determines, a change of employment of a Participant
within the group consisting of Chemicals, its subsidiaries, and
its associated companies. For purposes of this section, a
subsidiary
<PAGE> 27
-27-
of Chemicals means any corporation (or partnership, joint venture,
or other enterprise) of which Chemicals owns or controls, directly
or indirectly, 50% or more of the outstanding shares of stock
normally entitled to vote for the election of directors (or
comparable equity participation and voting power) and an
associated company of Chemicals means any corporation (or
partnership, joint venture, or other enterprise), of which
Chemicals owns or controls, directly or indirectly, 10% or more,
but less than 50% of the outstanding shares of stock normally
entitled to vote for the election of directors (or comparable
equity participation and voting power).
VI. Amendments
1. The Board, upon recommendation of the Committee but not
otherwise, may from time to time amend or modify this Incentive
Plan, including, but not limited to, an amendment which would
authorize the Committee to make bonus commitments and bonus awards
payable in other securities or other forms of property of a kind
to be determined by the Committee, in addition to cash,
unrestricted Shares and Restricted Shares, and such other
amendments as may be necessary or desirable to implement such
commitments and awards, or discontinue this Incentive Plan or any
provision thereof, provided that no amendments or modifications to
this Incentive Plan shall, without the prior approval of the
stockholders normally entitled to vote for the election of
directors of the Company:
(a) change the number of Shares for which Stock Options may
be granted, or the percentage thereof which may be made
subject to Options to any one Eligible Participant, as set
forth in Section 1(a) of Article II of this Incentive
Plan;
(b) change the total number of Shares which may be awarded
<PAGE> 28
-28-
pursuant to bonus awards as provided for in Section 2(b)
of Article III of this Incentive Plan;
(c) make any member of the Committee eligible for the grant
of a Stock Option, Stock Appreciation Right or a bonus
commitment or a bonus award;
(d) limit or restrict the powers of the Committee with
respect to the administration of this Incentive Plan;
(e) change the definition of an Eligible Participant for the
purpose of an Incentive Stock Option or increase the
limit or the value of Shares for which an Eligible
Participant may be granted an Incentive Stock Option;
(f) materially increase the benefits accruing to Participants
under this Incentive Plan;
(g) materially modify the requirements as to eligibility for
participation in this Incentive Plan; or
(h) change any of the provisions of this Article VI.
2. No amendment to or discontinuance of this Incentive Plan or any
provision thereof by the Board or the stockholders of the Company
shall, without the written consent of the Participant, adversely
affect any Stock Option or Stock Appreciation Right theretofore
granted or bonus commitment or bonus award theretofore made to
such Participant under this Incentive Plan.
VII. Interpretation
1. Except as authorized herein with respect to Stock Appreciation
Rights, this Incentive Plan is not intended to and shall not
<PAGE> 29
-29-
affect any option or stock appreciation right grant or bonus
commitment or award under the 1974 Plan (or any other incentive
plan of the Company, its Subsidiaries and Associated Companies).
No stock options or stock appreciation rights shall be granted
under the 1974 Plan after the Effective Date. No bonus
commitments or bonus awards shall be made under the 1974 Plan
after the Effective Date and no bonus commitments or bonus awards
shall be made under this Incentive Plan with respect to
Performance Years prior to the Effective Date hereof, except that
bonus awards may be made under the 1974 Plan (a) with respect to
Performance Years ending prior to the Effective Date or (b)
pursuant to bonus commitments made on or prior to December 31,
1983.
2. This Incentive Plan is not intended to and shall not preclude
the establishment or operation by the Company or any Subsidiary of
(a) any thrift, savings and investment, achievement award, stock
purchase, employee recognition or other benefit plan or
arrangement for any group of employees, or (b) any other incentive
or bonus plan or arrangement for any employees (hereinafter "Other
Plan"), and any such Other Plan may be authorized and payments
made thereunder independently of this Incentive Plan; provided,
however, that (i) no director of the Company and no officer of the
Company elected by the Board (other than assistant officers) shall
participate in any Other Plan, except the Monsanto Management
Incentive Plan of 1988/I, and (ii) no such Other Plan, other than
a stock option plan for G. D. Searle & Co., the Monsanto
Management Incentive Plan of 1988/I or the Monsanto Management
Incentive Plan of 1988/II shall provide for the granting of
options or stock appreciation rights to purchase or receive the
appreciation on the shares of any class of stock of the Company,
or the making of bonus commitments or bonus awards payable
in any class of stock of the Company, which in either form or
substance are comparable to those authorized under this 1984
Incentive Plan,
<PAGE> 30
-30-
unless such Other Plan is established or operated in connection
with the assumption by the Company or a Subsidiary of the plans,
options, stock appreciation rights, bonus commitments or bonus
awards of another corporation, or the substitution of an Other
Plan or options, stock appreciation rights, bonus commitments or
bonus awards under such Other Plan in lieu of the plans, options,
stock appreciation rights, bonus commitments or bonus awards of
such other corporation, arising out of a merger or consolidation
with, or the acquisition of assets or stock of, such other
corporation, or other transaction described in Section 425(a) of
the Internal Revenue Code of 1954, as amended from time to time,
as in effect at the time.
<PAGE> 31
MONSANTO MANAGEMENT INCENTIVE PLAN
OF 1984
(As Amended)
[This Plan was originally approved by the Company's Stockholders on April 27,
1984. Amendments were approved by the Board of Directors on February 27, 1987,
March 25, 1988, September 22, 1989, April 25, 1997 and July 25, 1997 and by the
Stockholders on April 24, 1987.]
<PAGE> 1
-1-
Exhibit 10.2
SEARLE MONSANTO STOCK OPTION PLAN OF 1986
(Restated as in effect as of April 1, 1995 and Further Amended
April 25, 1997 and July 25, 1997)
ARTICLE I. GENERAL PROVISIONS
SECTION 1. PURPOSES. The SEARLE MONSANTO STOCK OPTION PLAN OF 1986
("Plan") is designed to attract and retain for the Company and its
Subsidiaries personnel of exceptional ability; to motivate such personnel
through added incentives to make a maximum contribution to greater
profitability; to develop and maintain a highly competent management team; and
to be competitive with other pharmaceutical companies in the executive
compensation area.
SECTION 2. DEFINITIONS. Except where the context otherwise indicates,
the following definitions apply:
"Associated Company" means any corporation (or partnership, joint
venture, or other enterprise) of which the Company owns or controls, directly
or indirectly, 10% or more, but less than 50% of the outstanding shares of
stock normally entitled to vote for the election of directors (or comparable
equity participation and voting power), but which is not a Subsidiary.
"Board" means Board of Directors of the Company.
"Committee" means the Special Stock Option Grant Committee and, to
the extent delegated by the Special Stock Option Grant Committee, the ECDC.
"Company" means G. D. Searle & Co.
"ECDC" means the Executive Compensation and Development Committee
of the Board.
"Effective Date" means October 24, 1986.
"Eligible Participant" means any officer or other salaried
employee (including a director who is a salaried employee) of the Company or a
Subsidiary.
"Fair Market Value" means, with respect to any given day, the
average of the highest and lowest sales prices of the Shares reported as the
New York Stock Exchange-Composite Transactions for such day, or if the Shares
were not traded on such day, then on the next preceding day on which the
Shares were traded, all as reported by such source as the Committee may
<PAGE> 2
-2-
select.
"Monsanto" means Monsanto Company, a Delaware corporation and the
parent corporation of the Company.
"Participant" means an Eligible Participant to whom a Stock
Option, Stock Appreciation Right, or Restricted Stock Grant (as those terms
are hereinafter defined) has been granted.
"Restricted Shares" means Shares that were made subject to
restrictions in accordance with Article III of this Plan.
"Shares" means shares of $2 par value common stock of Monsanto,
and any shares of stock or other securities received as a result of a Share
adjustment as set forth in Section 4 of this Article I.
"Special Stock Option Grant Committee" means the committee
consisting of three or more members as may be appointed by the Board to
administer this Plan who may or may not be members of the Board, but who are
"disinterested persons" within the meaning of Rule 16b-3 issued pursuant to
the Securities Exchange Act of 1934, or any law, rule, regulation or other
provision that may hereafter replace Rule 16b-3.
"Stock Appreciation Right" means a right referred to in Section 4
of Article II of this Plan.
"Stock Appreciation Right Fair Market Value" or "SAR Fair Market
Value" shall mean a value established by the Committee for the exercise of a
Stock Appreciation Right. If such exercise occurs during any quarterly
"window period" as specified by Rule 16b-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended from time to
time, or any law, rule, regulation or other provision that may hereafter
replace such Rule, the Committee may establish a common value for exercises
during such window period.
"Stock Option" or "Option" means a non-qualified stock option
granted pursuant to this Plan.
"Subsidiary" means any corporation (or partnership, joint venture,
or other enterprise) (i) of which the Company owns or controls, directly or
indirectly, 50% or more of the outstanding shares of stock normally entitled
to vote for the election of directors (or comparable equity participation and
voting power) or (ii) which the Company otherwise controls (by contract or any
other means). "Control" means the power to direct or cause the direction of
the management and policies of a corporation, partnership, joint venture, or
other enterprise.
<PAGE> 3
-3-
"Termination of Employment" means the discontinuance of employment
of a Participant for any reason other than a Transfer.
"Transfer" means a change of employment of a Participant within
the group consisting of the Company, its Subsidiaries and Associated Companies
and Monsanto, its subsidiaries and associated companies.
SECTION 3. ADMINISTRATION.
(a) This Plan shall be administered by the Special Stock Option Grant
Committee except that the Special Stock Option Grant Committee may delegate a
portion of the administration of this Plan to the ECDC as set forth in
paragraph (b) below.
(b) The Special Stock Option Grant Committee shall have the exclusive
right to interpret this Plan and to select the persons who are to receive
Stock Options, Stock Appreciation Rights and Restricted Stock Grants under
this Plan, including, without limitation, the determination of the number of
Shares to be subject to and the form, terms, conditions and duration of each
Stock Option, Stock Appreciation Right and Restricted Stock Grant and the
amendment thereof, consistent with the provisions of this Plan; provided,
however, that the Special Stock Option Grant Committee may delegate to the
ECDC the right to select those persons who are not officers or directors of
Monsanto (as defined in Section 16(b) of the Securities Exchange Act of 1934
and the rules of the Securities and Exchange Commission issued pursuant to
such Act) who are to receive Options, Stock Appreciation Rights and Restricted
Stock Grants under this Plan, including, without limitation, the determination
of the number of Shares to be subject to and the form, terms, conditions and
duration of each Option, Stock Appreciation Right and Restricted Stock Grant
granted to such Participants (and the amendment thereof), consistent with the
provisions of this Plan, and to authorize payment in respect of an Option
(pursuant to Article II, Section 1(c)) or a Stock Appreciation Right (pursuant
to Article II, Section 4(c), (e) and (f)), involving such a Participant. All
acts and decisions of the Committee with respect to any questions arising in
connection with the administration and interpretation of this Plan, including
the severability of any and all of the provisions hereof, shall be conclusive,
final and binding upon all Participants.
(c) The Committee may adopt and amend, from time to time, rules and
regulations of general application for the administration of this Plan,
including terms and conditions related to the receipt and exercise of Options,
Stock Appreciation Rights and Restricted Stock Grants. Such rules and
regulations may include, at the Committee's discretion, the provision by the
Company of loans for the purpose of financing the exercise of Options, and the
amount of taxes payable in connection therewith.
<PAGE> 4
-4-
(d) Without limiting the foregoing Sections 3(a), (b) and (c) of this
Article I (and notwithstanding any other provisions of this Plan), the
Committee is authorized to take such action as it determines to be necessary
or advisable, and fair and equitable to Participants, with respect to Options,
Stock Appreciation Rights and Restricted Stock Grants in the event of: a
merger of Monsanto with, consolidation of Monsanto into, or the acquisition of
Monsanto by, another corporation; a sale or transfer of all or substantially
all of the assets of Monsanto to another corporation or any other person or
entity; a tender or exchange offer for Shares made by any corporation, person
or entity (other than Monsanto); or other reorganization in which Monsanto
will not survive as an independent, publicly owned corporation. Such action
may include (but shall not be limited to) establishing, amending or waiving
the forms, terms, conditions and duration of Stock Options, Stock Appreciation
Rights and Restricted Stock Grants so as to provide for earlier, later,
extended or additional times for exercise or payments, differing methods for
calculating payments, alternate forms and amounts of payment, or other
modifications. The Committee may take such actions pursuant to this Section
3(d) by adopting rules and regulations of general applicability to all
Participants or to certain categories of Participants, by including, amending
or waiving terms and conditions in Option, Stock Appreciation Right and
Restricted Stock grants, or by taking action with respect to individual
Participants. The Committee may take such actions as part of the grants or
before or after the public announcement of any such merger, consolidation,
acquisition, sale or transfer of assets, tender or exchange offer or other
reorganization.
SECTION 4. SHARE ADJUSTMENTS. In the event that at any time or from
time to time a stock dividend, stock split, recapitalization, merger,
consolidation, or other change in capitalization, or a sale by Monsanto of all
or part of its assets, or any distribution to shareholders other than a cash
dividend results in (a) the outstanding Shares, or any securities exchanged
therefor or received in their place, being exchanged for a different number or
class of shares of stock or other securities of Monsanto, or for shares of
stock or other securities of any other corporation; or (b) new, different or
additional shares or other securities of Monsanto or of any other corporation
being received by the holders of outstanding Shares, then:
(i) the limitation of 1,500,000 Shares set forth in Section 1(a)
of Article II and in Article III of this Plan;
(ii) the number and class of Shares (A) that may be subject to
Stock Options, Stock Appreciation Rights or Restricted Stock Grants and (B)
which have not been issued or transferred under Stock Options, Stock
Appreciation Rights or Restricted Stock
<PAGE> 5
-5-
Grants; and
(iii) the purchase price to be paid per Share under unexercised
Stock Options and the number of Shares to be transferred in settlement of
outstanding Stock Appreciation Rights;
shall in each case be equitably adjusted as determined by the Committee in its
sole discretion.
ARTICLE II. PLAN
SECTION 1. OPTION SHARES.
(a) (i) The total number of Shares for which Options may be granted
under this Plan shall not exceed 1,500,000 Shares, subject to: (A) the
adjustments provided for in Section 4 of Article I of this Plan; (B) the
provisions of Section 1(b) of this Article II; and (C) reduction by the number
of shares committed or awarded pursuant to Article III of this Plan. Such
Shares may be authorized but unissued Shares, or treasury Shares, or both.
Options may be granted for restricted or unrestricted Shares.
(ii) The total number of Shares for which Options may be granted
under this Plan to any one Eligible Participant shall not exceed in any one
calendar year 5% of the total number of Shares for which Options may be
granted under this Plan, subject to the adjustments provided for in Section 4
of Article I of this Plan.
(b) In the event that any unexercised Stock Option granted hereunder
lapses or ceases to be exercisable for any reason other than a surrender of
the Option pursuant to Section 1(c) of this Article II or the exercise of a
Stock Appreciation Right under Section 4 of this Article II, the Shares
subject to such Option shall again be available for Option grants under this
Plan without again being charged against the limitation of 1,500,000 Shares
set forth in Section 1(a) of this Article II. Any amendment of any Option or
Stock Appreciation Right by the Committee pursuant to Article I, Section 3 of
this Plan shall not be considered the grant of a new Option.
(c) In the event of Termination of Employment for death, disability,
hardship or unusual circumstances as determined by the Committee, the
Committee may, with the consent of the Participant or his or her legal
representative, authorize payment, in cash or in Shares, or partly in cash and
partly in Shares, as the Committee may direct, of an amount equal to the
difference at the time between the Fair Market Value of the Shares subject to
an Option and the Option exercise price in consideration of the surrender of
the Option. In such an event the Shares subject to the Option so surrendered
shall be charged against the limitations
<PAGE> 6
-6-
set forth in Section 1(a) of this Article II.
SECTION 2. INCIDENTS OF OPTIONS AND STOCK APPRECIATION RIGHTS.
(a) Each Stock Option and Stock Appreciation Right shall be granted
subject to such terms and conditions, if any, not inconsistent with this Plan,
as shall be determined by the Committee, including any provisions as to
continued employment as consideration for the grant or exercise of such Option
or Stock Appreciation Right and any provisions which may be advisable to
comply with applicable laws, regulations or rulings of any governmental
authority. Unless otherwise provided at the time of any Option grant and
except as otherwise specifically provided in this Plan, Options shall only be
exercisable by a Participant as follows:
<TABLE>
<CAPTION>
Percentage
of Total
Shares Per
Option Grant
Option Exercise Dates Exercisable
--------------------- -----------
<S> <C>
1. On and after twelve (12) months from
the Option grant date................... 33-1/3%
2. On and after twenty-four (24) months
from the Option grant date.............. 66-2/3%
3. On and after thirty-six (36) months
from the Option grant date.............. 100%
</TABLE>
If the application of the foregoing vesting schedule would result
in a fractional Share being issuable upon the exercise of an Option, the
number of Options vested shall be rounded up to the next full Share, but not
to exceed in the aggregate the original grant total.
(b) A Stock Option or Stock Appreciation Right shall not be
transferable by the Participant otherwise than by will or by the laws of
descent and distribution, and shall be exercisable during the lifetime of the
Participant only by him or her or by his or her guardian or legal
representative.
SECTION 3. CONDITIONS OF OPTIONS. Options may be granted to Eligible
Participants at such time or times determined by the Committee, subject to the
following terms and conditions:
(a) The Option exercise price per Share shall be established by the
grant but shall not be less than 100% of the Fair Market Value at the time of
the grant (or such later date as the
<PAGE> 7
-7-
Committee shall determine).
(b) The Option and its related Stock Appreciation Right, if any, may
be exercised in full or in part from time to time prior to Termination of
Employment and within ten (10) years and thirty (30) days from the date of the
grant, or such shorter period as may be specified by the Committee in the
grant, provided that Options or Stock Appreciation Rights exercisable as of
the date of Termination of Employment shall remain exercisable for a period of
up to three (3) months following Termination of Employment (up to five (5)
years if Employment shall have terminated as a result of total and permanent
disability as determined by the Committee or retirement pursuant to, and as
defined in, the applicable pension plan of the Company, its Subsidiary or
Associated Company, and up to twelve (12) months in the event of death);
provided, further, that no such period following Termination of Employment
shall extend the original exercise period of the Option or the Stock
Appreciation Right.
(c) In the event of Termination of Employment due to retirement (as
defined in (b) above), death or total and permanent disability (as determined
by the Committee), all Options or Stock Appreciation Rights granted more than
twelve (12) months prior to such event shall, notwithstanding Article II,
Section 2, become immediately exercisable.
(d) The Option grant may include any other terms and conditions not
inconsistent with this Plan, as determined by the Committee.
SECTION 4. CONDITIONS OF STOCK APPRECIATION RIGHTS. A Stock
Appreciation Right may be granted to an Eligible Participant in connection
with (and only in connection with) an Option granted under this Plan, subject
to the following terms and conditions:
(a) Such Stock Appreciation Right shall entitle a holder of an Option
within the period specified for the exercise of the Option in the related
Option grant to surrender the unexercised Option (or a portion thereof) and to
receive in exchange therefor a payment in cash or Shares having an aggregate
value equal to the product of (i) the amount by which (A) the SAR Fair Market
Value of each Share exceeds (B) the Option price per Share, times (ii) the
number of Shares under the Option, or portion thereof, which is surrendered.
(b) Each Stock Appreciation Right granted hereunder shall be subject
to the same terms and conditions as the related Option. It shall be
exercisable only to the extent such Option is exercisable and shall terminate
or lapse and cease to be exercisable when the related Option terminates or
lapses. The Committee may grant Stock Appreciation Rights concurrently with
<PAGE> 8
-8-
grants of Options or in connection with previously granted Options under this
Plan which are unexercised and have not terminated or lapsed. With respect to
Stock Appreciation Rights granted in connection with such previously granted
Options, the Committee shall provide that such Stock Appreciation Rights shall
not be exercisable until the holder completes six (6) months (or such longer
period as the Committee shall determine) of service with the Company, a
Subsidiary, or an Associated Company immediately following the date of the
grant of such Stock Appreciation Rights.
(c) The Committee shall have sole discretion to determine in each case
whether the payment will be in the form of all cash, all Shares or any
combination thereof. If payment is to be made in Shares, the number of Shares
shall be determined as follows: the amount payable in Shares shall be divided
by the SAR Fair Market Value of Shares. The payments to be made, in whole or
in part, in cash upon the exercise of Stock Appreciation Rights by any officer
of Monsanto shall be made in accordance with the provisions relating to the
exercise of stock appreciation rights of Rule 16b-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect at the
time of such exercise, or any law, rule, regulation or other provision that
may hereafter replace such Rule.
(d) Upon exercise of a Stock Appreciation Right, the number of Shares
subject to exercise under the related Option shall automatically be reduced by
the number of Shares represented by the Option or portion thereof which is
surrendered. To the extent that a Stock Appreciation Right shall be
exercised, any Shares transferred upon such exercise shall not be charged
against the maximum limitations upon the grant of Options set forth in the
Plan under which such Option shall have been granted but the Option in
connection with which a Stock Appreciation Right shall have been granted shall
be deemed to have been exercised for the purpose of such maximum limitations.
(e) The Committee shall have the sole discretion as to the timing of
any payment made in cash, Shares, or a combination thereof upon exercise of
Stock Appreciation Rights hereunder, whether in a lump sum, in annual
installments or otherwise deferred and the Committee shall have sole
discretion to determine whether such payments may bear amounts equivalent to
interest or cash dividends.
(f) For purposes of this Section 4 of Article II:
(i) "Unrelated Party" means any party or group of parties acting
together other than (A) Monsanto, its directors and officers, or (B) any
nominee holder for any stock exchange;
(ii) "Offer" means any tender or exchange offer made by
<PAGE> 9
-9-
an Unrelated Party for the Shares and shall be deemed to occur upon the first
purchase or exchange of such Shares;
(iii) "Change of Control" means any acquisition, beneficially or
otherwise, by any Unrelated Party of 25% or more of the combined voting power
of the common and preferred stock of Monsanto and shall be deemed to occur
upon the date that the Unrelated Party attains control of said 25% or more of
the combined voting power;
(iv) "Change of Control Market Value" of the Shares means the
higher of --
(A) the value for which such Shares may be exchanged
or offered under any Offer pursuant to which Shares are actually exchanged or
purchased; or
(B) the Fair Market Value of such Shares on the date
of exercise of a Stock Appreciation Right.
Notwithstanding the foregoing provisions of this Section 4 of Article II
and without limiting the provisions of Section 3 of Article I of this Plan, in
the event of an Offer or Change of Control, a Participant holding an
unexercised Stock Appreciation Right may exercise such Stock Appreciation
Right and elect to be paid solely in cash in an amount equal to the difference
between the Option price and the Change of Control Market Value of the Shares,
unless within five (5) business days after receipt of notification of such
election by the Secretary of Monsanto, the Committee acts to disapprove the
cash election. Unless it acts to disapprove, the Committee's consent shall be
deemed to be given at the close of business on the fifth business day after
the Secretary's receipt of notification of such election and payment shall be
made as soon as practicable after expiration of such five (5) business day
period. The election provided herein shall apply only: (x) during the thirty
(30) day period following the first exchange or purchase of Shares pursuant to
an Offer; or (y) during the thirty (30) day period following the date on which
sufficient Shares are acquired to constitute a Change of Control.
ARTICLE III. RESTRICTED SHARES
The Committee may make awards of Restricted Shares to Eligible
Participants. The Committee shall have full discretion to determine the terms
and conditions of such awards. The total number of Shares which may be used
for such awards under this Plan shall not exceed 1,500,000 Shares, subject to:
(A) the adjustments provided for in Section 4 of Article I of this Plan; and
(B) reduction by the number of Shares for which Stock Options have been
granted pursuant to Article II of this Plan (except as provided in Section
1(b) of Article II).
<PAGE> 10
-10-
Restricted Shares shall be subject to such terms and conditions,
including forfeiture, if any, and to such restrictions against sale, transfer
or other disposition as may be determined by the Committee at the time a
Non-qualified Option for the purchase of Restricted Shares is granted, at the
time a Stock Appreciation Right to be settled with Restricted Shares is
granted, at the time of making a bonus award of Restricted Shares or at any
other time as reasonably determined by the Committee (collectively a
"Restricted Stock Grant"). Any new or additional or different Shares or other
securities resulting from any adjustment of such Shares of the type described
in Section 4 of Article I shall be subject to the same terms, conditions, and
restrictions as the Restricted Shares prior to such adjustment. The Committee
may, in its discretion, remove, modify or accelerate the release of
restrictions on any Restricted Shares in the event of hardship or disability
of the Participant while employed, in the event that the Participant ceases to
be an employee of the Company, a Subsidiary or Associated Company, as the
result of death or otherwise, in the event of a relocation of a Participant to
another country or for such other reasons as the Committee may deem
appropriate. In the event of the death of a Participant following the
transfer of Restricted Shares to him, the legal representative of the
Participant, the beneficiary designated in writing by the Participant during
his lifetime, or the person receiving such Shares under his will or under the
laws of descent and distribution shall take such Shares subject to the same
restrictions, conditions and provisions in effect at the time of his death, to
the extent applicable.
ARTICLE IV. MISCELLANEOUS PROVISIONS
SECTION 1. TRANSFER. Neither a Stock Option nor a Stock Appreciation
Right shall be transferable except as provided for herein in the case of
death. If any Participant makes such a transfer in violation hereof, any
obligation of the Company with respect to such Option or Stock Appreciation
Right shall forthwith terminate.
SECTION 2. CONTINUED EMPLOYMENT. Nothing in this Plan or any booklet
or other document describing or referring to this Plan shall be deemed to
confer on any employee or Participant the right to continue in the employ of
his or her employer or affect the right of his or her employer to terminate
the employment of any such person with or without cause.
SECTION 3. SEGREGATED FUND. Nothing contained herein shall require the
Company to segregate any monies from its general funds, or to create any
trusts, or to make any special deposits for any immediate or deferred amounts
payable to any Participant, nor require Monsanto to segregate any treasury
Shares.
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SECTION 4. GOVERNING LAW. This Plan and all actions taken hereunder
will be governed by the laws of the State of Illinois.
SECTION 5. WITHHOLDING. The Company may make such provisions and take
such steps as it may deem necessary or appropriate for the withholding of any
taxes which the Company is required by any law or regulation of any
governmental authority, whether federal, state or local, domestic or foreign,
to withhold in connection with any Stock Option or the exercise thereof or any
Stock Appreciation Right or the exercise thereof.
SECTION 6. EFFECT OF SPINOFF. Notwithstanding any other provision of
this Plan, for purposes of any award that is outstanding as of the date that
the Company spins off the Company's chemical businesses into a new publicly
traded company ("Chemicals") and is held by a Participant who in connection
with such spinoff becomes an employee of Chemicals (or a subsidiary or
associated company of Chemicals) rather than an employee of the Company (or a
Subsidiary or Associated Company of the Company), such change of employment
shall not constitute a Termination of Employment. With respect to any such
award held by such a Participant, Termination of Employment shall mean such
Participant's termination of employment with Chemicals other than a Transfer,
with Transfer defined as a change of employment of the Participant within the
group consisting of Chemicals, its subsidiaries and its associated companies.
For purposes of this section, a subsidiary of Chemicals means any corporation
(or partnership, joint venture, or other enterprise) of which Chemicals owns
or controls, directly or indirectly, 50% or more of the outstanding shares of
stock normally entitled to vote for the election of directors (or comparable
equity participation and voting power) and an associated company of Chemicals
means any corporation (or partnership, joint venture, or other enterprise), of
which Chemicals owns or controls, directly or indirectly, 10% or more, but
less than 50% of the outstanding shares of stock normally entitled to vote for
the election of directors (or comparable equity participation and voting
power).
ARTICLE V. AMENDMENTS
SECTION 1. AMENDMENT OR TERMINATION OF PLAN. The Board or the Special
Stock Option Grant Committee may, from time to time, amend this Plan, or
discontinue this Plan or any provision thereof, provided that no amendments or
modifications to this Plan shall, without the prior approval of the
shareholders normally entitled to vote for the election of directors of
Monsanto:
(a) change the number of Shares for which Stock Options may be
granted, or the percentage thereof which may be made subject to Options
granted to any one Eligible Participant, as set forth in
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Section 1(a) of Article II of this Plan;
(b) make any member of the Committee eligible for the grant of a Stock
Option, Stock Appreciation Right or Restricted Stock Grant;
(c) limit or restrict the powers of the Committee with respect to the
administration of this Plan except as may be required by any law, regulation
or governmental order;
(d) materially increase the benefits accruing to Participants under
this Plan;
(e) materially modify the requirements as to eligibility for
participation under the Plan; or
(f) change any of the provisions of this Article V.
SECTION 2. EFFECT ON OPTIONS OR STOCK APPRECIATION RIGHTS. No
amendment or discontinuance of this Plan or any provision thereof shall,
without the written consent of the Participant, adversely affect any Stock
Option, Stock Appreciation Right, or Restricted Stock Grant theretofore
granted to such Participant under this Plan.
ARTICLE VI. MISCELLANEOUS
SECTION 1. OTHER PLANS. This Plan is not intended to and shall not
preclude the establishment or operation by the Company or any Subsidiary of
any thrift, savings and investment, achievement award, stock purchase,
incentive, employee recognition or other benefit plan or arrangement for any
employees and any such other plan may be authorized and payments made
thereunder independently of this Plan.
<PAGE> 1
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Exhibit 10.3
MONSANTO MANAGEMENT INCENTIVE PLAN OF 1988/I
(AS AMENDED EFFECTIVE JULY 25, 1997)
I. GENERAL PROVISIONS
1. PURPOSES
The Monsanto Management Incentive Plan of 1988/I is designed to attract
and retain for the Company and its Subsidiaries and Associated Companies
personnel of exceptional ability; to motivate such personnel through
added incentives to make a maximum contribution to greater
profitability; to develop and maintain a highly competent management
team; and to be competitive with other companies in the executive
compensation area. This Incentive Plan is composed of (a) the 1988
Stock Option Plan and (b) the 1988 Bonus Plan, and shall be effective
January 1, 1988 ("Effective Date"), subject to the approval of this
Incentive Plan by the stockholders of the Company.
2. DEFINITIONS
Except where the context otherwise indicates, the following definitions
apply:
"Associated Company" means any corporation (or partnership,
joint venture, or other enterprise), of which the Company owns
or controls, directly or indirectly, 10% or more, but less than
50% of the outstanding shares of stock normally entitled to vote
for the election of directors (or comparable equity
participation and voting power).
"Board" means Board of Directors of the Company.
"Bonus Plan" or "1988 Bonus Plan" means the bonus plan set forth
in Article III of this Incentive Plan.
"Committee" means the Executive Compensation and Development
Committee or such other committee consisting of three or more
members of the Board as may be appointed by the Board to
administer this Incentive Plan pursuant to Section 3(a) of this
Article I.
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"Company" means Monsanto Company, a Delaware corporation.
"Eligible Participant" means any officer or other salaried
employee (including a director who is a salaried employee) of
the Company, a Subsidiary or an Associated Company.
"Incentive Plan" means the Monsanto Management Incentive Plan of
1988/I, set forth herein.
"Fair Market Value" shall mean, with respect to any given day,
the average of the highest and lowest prices of the Shares
reported as the New York Stock Exchange-Composite Transactions
for such day, or if the Shares were not traded on the New York
Stock Exchange on such day, then on the next preceding day on
which the Shares were traded, all as reported by such source as
the Committee may select.
"Incentive Stock Option" or "Incentive Option" means an option
meeting the definition of that term as set forth in Section 3 of
Article II of this Incentive Plan.
"1974 Plan" means the Monsanto Management Incentive Plan of
1974, as amended.
"1984 Plan" means the Monsanto Management Incentive Plan of
1984, as amended.
"1988/II Incentive Plan" means the Monsanto Management Incentive
Plan of 1988/II.
"Non-Qualified Stock Option" or "Non-Qualified Option" means an
option referred to in Section 4 of Article II of this Incentive
Plan.
"Option Plan" or "1988 Stock Option Plan" means the 1988 Stock
Option Plan set forth in Article II of this Incentive Plan.
"Participant" means an Eligible Participant to whom a Stock
Option or a Stock Appreciation Right has been granted, a bonus
commitment made or a bonus awarded pursuant to this Incentive
Plan.
"Performance Year" means the year or years for which a bonus is
awarded or a bonus commitment is made under the
<PAGE> 3
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1988 Bonus Plan.
"Restricted Shares" means Shares that were made subject to
restrictions in accordance with Article IV of this Incentive
Plan.
"Shares" means shares of common stock of the Company and any
shares of stock or other securities received as a result of a
Share adjustment as set forth in Section 4 of this Article I.
"Stock Appreciation Right" means a right referred to in Section
5 of Article II of this Incentive Plan.
"Stock Appreciation Right Fair Market Value" or "SAR Fair Market
Value" shall mean a value established by the Committee for the
exercise of a Stock Appreciation Right. If such exercise occurs
during any quarterly "window period" as specified by Rule 16b-3
of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended from time to time, or any law,
rule, regulation or other provision that may hereafter replace
such Rule, the Committee may establish a common value for
exercises during such window period.
"Stock Option" or "Option" shall mean Incentive Stock Options
and/or Non-Qualified Stock Options.
"Subsidiary" means: (i) for the purpose of an Incentive Stock
Option, any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if, at the time
of the granting of the Option, each of the corporations other
than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain;
and (ii) for the purposes of a Non-Qualified Stock Option, a
Stock Appreciation Right, and the 1988 Bonus Plan, any
corporation (or partnership, joint venture, or other enterprise)
of which the Company owns or controls, directly or indirectly,
50% or more of the outstanding shares of stock normally entitled
to vote for the election of directors (or comparable equity
participation and voting power).
"Termination of Employment" means the discontinuance of
employment of a Participant for any reason other than a
Transfer.
<PAGE> 4
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"Transfer" means: (i) for the purpose of an Incentive Stock
Option, a change of employment of a Participant within the group
consisting of the Company and its Subsidiaries; and (ii) for the
purpose of a Non-Qualified Stock Option, a Stock Appreciation
Right and the 1988 Bonus Plan, a change of employment of a
Participant within the group consisting of the Company and its
Subsidiaries, or, if the Committee so determines, a change of
employment of a Participant within the group consisting of the
Company, its Subsidiaries and Associated Companies.
3. ADMINISTRATION
(a) This Incentive Plan shall be administered by the
Committee. No person shall be eligible or continue to serve as
a member of such Committee unless such person is a
"disinterested person" within the meaning of Rule l6b-3 of the
General Rules and Regulations under the Securities Exchange Act
of 1934, as amended from time to time, or any law, rule,
regulation or other provision that may hereafter replace such
Rule, and no person shall be eligible for the grant of a Stock
Option or Stock Appreciation Right, the receipt of a bonus
commitment or the award of a bonus (including, without
limitation, Restricted Shares) under this Incentive Plan while
serving as a member of such Committee.
(b) The Committee shall have the exclusive right to
interpret this Incentive Plan, to select the persons who are
to receive Stock Options, Stock Appreciation Rights, bonus
commitments and bonus awards, and to act in all matters
pertaining to the granting of Options, Stock Appreciation
Rights, the making of bonus commitments and the awarding of
bonuses under this Incentive Plan including, without limitation,
the determination of the number of Shares to be subject to and
the form, terms, conditions and duration of each Stock Option
and Stock Appreciation Right, and the amount, form, terms and
conditions of each bonus commitment and bonus award, and the
amendment thereof consistent with the provisions of this
Incentive Plan. No Eligible Participant shall have any right to
be considered for or to receive any Stock Options, Stock
Appreciation Rights, bonus commitments or bonus awards. All
acts and decisions of the Committee with respect to any
questions arising in connection with the administration and
interpretation of this Incentive Plan, including the
severability of any and all of the
<PAGE> 5
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provisions thereof, shall be conclusive, final and binding upon all
Eligible Participants.
(c) The Committee may adopt rules and regulations of
general application for the administration of this Incentive
Plan.
(d) Without limiting the foregoing Sections 3(a), (b)
and (c) of this Article I (and notwithstanding any other
provisions of this Incentive Plan), the Committee is authorized
to take such action as it determines to be necessary or
advisable, and fair and equitable to Participants, with respect
to Options, Stock Appreciation Rights, bonus commitments and
bonus awards (including, without limitation, awards of
Restricted Shares) in the event of: a merger of the Company
with, consolidation of the Company into, or the acquisition of
the Company by, another corporation; a sale or transfer of all
or substantially all of the assets of the Company to another
corporation or any other person or entity, a tender or exchange
offer for Shares made by any corporation, person or entity
(other than the Company); or other reorganization in which the
Company will not survive as an independent, publicly owned
corporation. Such action may include (but shall not be limited
to) establishing, amending or waiving the forms, terms,
conditions and duration of Stock Options, Stock Appreciation
Rights, bonus commitments and bonus awards (including, without
limitation, awards of Restricted Shares) so as to provide for
earlier, later, extended or additional times for exercise or
payments, differing methods for calculating payments, alternate
forms and amounts of payment, accelerated release of
restrictions or other modifications. The Committee may take
such actions pursuant to this Section 3(d) by adopting rules and
regulations of general applicability to all Participants or to
certain categories of Participants, by including, amending or
waiving terms and conditions in Option and Stock Appreciation
Right grants, bonus commitments and bonus awards (including,
without limitation, agreements with respect to Restricted
Shares), or by taking action with respect to individual
Participants. The Committee may take such actions as part of
the grants, commitments or awards, or before or after the public
announcement of any such merger, consolidation, acquisition,
sale or transfer of assets, tender or exchange offer or other
reorganization.
<PAGE> 6
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4. SHARE ADJUSTMENTS
In the event that at any time or from time to time a stock dividend,
stock split, recapitalization, merger, consolidation, or other change
in capitalization, or a sale by the Company of all or part of its
assets, or any distribution to stockholders other than a cash dividend
results in (a) the outstanding Shares, or any securities exchanged
therefor or received in their place, being exchanged for a different
number or class of shares of stock or other securities of the Company,
or for shares of stock or other securities of any other corporation;
or (b) new, different or additional shares or other securities of the
Company or of any other corporation being received by the holders of
outstanding Shares, then:
(i) the limitation of 4,400,000 Shares set forth in Section l(a)
of Article II and Section 2(b) of Article III of this
Incentive Plan;
(ii) the number and class of Shares (A) that may be subject to
Stock Options or Stock Appreciation Rights, (B) which have not
been issued or transferred under outstanding Stock Options or
Stock Appreciation Rights, and (C) which are subject to a
bonus commitment or have been awarded but are undelivered
under the 1988 Bonus Plan; and
(iii) the purchase price to be paid per Share under outstanding
Stock Options and the number of Shares to be transferred in
settlement of outstanding Stock Appreciation Rights;
shall in each case be equitably adjusted; provided, however,
that all adjustments made as the result of the foregoing in
respect of each Stock Option which is granted as an Incentive
Stock Option shall be made so that such Stock Option shall
continue to be an Incentive Stock Option as defined in Section
422A of the Internal Revenue Code of l986, as may be amended
from time to time, or any provisions that may hereafter be
enacted in lieu thereof.
II. 1988 STOCK OPTION PLAN
1. OPTION SHARES
(a) (i) The total number of Shares for which Options may be granted
under this Option Plan shall not exceed 4,400,000 Shares,
subject to: (A) the adjustments
<PAGE> 7
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provided for in Section 4 of Article I of this Incentive
Plan; (B) the provisions of Section l(b) of this Article
II; and (C) reduction by the number of Shares committed or
awarded pursuant to Article III of this Incentive Plan.
Such Shares may be authorized but unissued, or treasury
Shares, or both.
(ii) The total number of Shares for which Options may be granted
under this Incentive Plan to any one Eligible Participant
shall not exceed in any one calendar year 15% of the total
number of Shares for which Options may be granted under this
Incentive Plan, subject to the adjustments provided for in
Section 4 of Article I of this Incentive Plan.
(b) In the event that any unexercised Stock Option granted hereunder
lapses or ceases to be exercisable for any reason other than a
surrender of the Option pursuant to Section l(c) of this Article II
or the exercise of a Stock Appreciation Right under Section 5 of
this Article II, the Shares subject to such Option shall again be
available for Option grants under this Option Plan without again
being charged against the limitation of 4,400,000 Shares set forth
in Section 1(a) of this Article II. Any amendment of any Option or
Stock Appreciation Right by the Committee pursuant to Article I,
Section 3 of this Incentive Plan shall not be considered the grant
of a new Option for the purpose of Section 1(a) of this Article II.
(c) In the event of death or total and permanent disability as
determined by the Committee, the Committee may, with
the consent of the Participant, his legal representative,
or in the event of death, a beneficiary designated in writing by
the Participant during his lifetime, authorize payment, in cash
or in Shares, or partly in cash and partly in Shares, as the
Committee may direct, of an amount equal to the difference at
the time between the Fair Market Value of the Shares subject to
an Option and the Option price in consideration of the surrender
of the Option. In such an event the Shares subject to the
Option so surrendered shall be charged against the limitations
set forth in Section 1(a) of this Article II.
2. INCIDENTS OF OPTIONS AND STOCK APPRECIATION RIGHTS
<PAGE> 8
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(a) Each Stock Option and Stock Appreciation Right shall be granted
subject to such terms and conditions, if any, not
inconsistent with this Incentive Plan, as shall be determined
by the Committee, including any provisions as to continued
employment as consideration for the grant or exercise of such
Option or Stock Appreciation Right and any provisions which may
be advisable to comply with applicable laws, regulations or
rulings of any governmental authority.
(b) A Stock Option or Stock Appreciation Right shall not be
transferable by the Participant otherwise than by will, by
the laws of descent and distribution or pursuant to a written
beneficiary designation, and shall be exercisable during the
lifetime of the Participant only by him or by his guardian or
legal representative.
(c) Shares purchased upon exercise of a Stock Option shall
be paid for in such amounts, at such times and upon such
terms as shall be determined by the Committee and specified in
the grant of the Option. Without limiting the foregoing, the
Committee may establish payment terms for the exercise of Stock
Options which permit the Participant to deliver Shares (or other
evidence of ownership of Shares satisfactory to the Company),
including, at the Committee's option, Restricted Shares, with a
Fair Market Value equal to the Option price as payment.
(d) No cash dividends shall be paid on Shares subject to unexercised
Stock Options. The Committee may provide, however, that a
Participant to whom an Option has been granted which is exercisable
in whole or in part at a future time for Shares (including
Restricted Shares) shall be entitled to receive an amount per Share
equal in value to the cash dividends, if any, paid per Share on
issued and outstanding Shares, as of the dividend record dates
occurring during the period between the date of the grant and the
time each such Share is delivered pursuant to exercise of such Stock
Option or the related Stock Appreciation Right. Such amounts
(herein called "dividend equivalents") may, in the discretion of the
Committee, be:
(i) paid in cash or Shares either from time to time prior
to, or at the time of the delivery of, such Shares, or
upon expiration of the Option if it shall not have been
fully
<PAGE> 9
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exercised; or
(ii) converted into contingently credited Shares (with
respect to which dividend equivalents may accrue) in
such manner, at such value, and deliverable at such time
or times, as may be determined by the Committee.
Such Shares (whether delivered or contingently credited) shall be
charged against the limitations set forth in Section 1(a) of this
Article II.
(e) The Committee, in its discretion, may authorize
payment of interest equivalents on dividend equivalents which
are payable in cash at a future time.
3. INCENTIVE OPTIONS
An Incentive Option shall be an "Incentive Stock Option" as that
term is defined in Section 422A of the Internal Revenue Code of
1986, as may be amended from time to time, as in effect at the
time of the grant of any such Option, or any statutory provision
that may be enacted to replace such Section. Each provision of
this Option Plan and of each Incentive Stock Option granted
hereunder shall be construed so that each such Option shall be
an Incentive Stock Option, and any provision thereof that cannot
be so construed shall be disregarded. Incentive Stock Options
shall be granted only to purchase unrestricted Shares and only
to Eligible Participants, each of whom may be granted one or
more such Options at such time or times determined by the
Committee following the Effective Date until December 31, 1997,
subject to the following conditions:
(a) The Option price per Share shall be set by the grant but
shall not be less than 100% of the Fair Market Value at
the time of the grant.
(b) The Option and its related Stock Appreciation Right,
if any, may be exercised in full or in part from time
to time within ten (10) years from the date of the grant, or
such shorter period as may be specified by the Committee in
the grant, provided that in any event each shall lapse and
cease to be exercisable upon, or within such period
following, Termination of Employment as shall have been
determined by the Committee and as specified in the Option
or Stock Appreciation Right; provided, however, that such
period following
<PAGE> 10
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Termination of Employment shall not exceed three months unless
employment shall have terminated:
(i) as a result of retirement pursuant to, and as defined
in, the applicable pension plan of the Company, its
Subsidiary or Associated Company or total and permanent
disability as determined by the Committee, in which
event such period shall not exceed--
(A) in the case of an Option, the original
term of the Option; and
(B) in the case of a Stock Appreciation
Right, one year after such retirement or
disability or after resignation as an
officer or director of the Company,
whichever shall last occur (unless
earlier terminated pursuant to Section
5(b) of this Article II);
or
(ii) as a result of death or death shall have occurred
following Termination of Employment and while the Option
or Stock Appreciation Right was still exercisable; and
provided, further, that such period following Termination of
Employment shall in no event extend the original exercise period
of the Option or related Stock Appreciation Right, if any.
(c) The aggregate Fair Market Value (determined at the time the Option
is granted) of the Shares with respect to which Incentive Stock
Options are first exercisable during any calendar year by any
Eligible Participant shall not exceed $100,000.
(d) Incentive Stock Options shall be granted only to an Eligible
Participant who, at the time the Option is granted, does not own
stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company.
(e) Any other terms and conditions which the Committee determines, upon
advice of counsel, should be imposed for the Option to qualify as an
Incentive Stock Option
<PAGE> 11
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and any other terms and conditions not inconsistent with this Option
Plan as determined by the Committee.
4. NON-QUALIFIED OPTIONS
One or more Options may be granted as Non-Qualified Options to
purchase unrestricted Shares or Restricted Shares to an Eligible
Participant at such time or times determined by the Committee,
following the Effective Date, subject to the following terms and
conditions:
(a) The Option price per Share shall be established by the grant but
shall not be less than 100% of the Fair Market Value at the time of
the grant (or such later date as the Committee shall determine).
(b) The Option and its related Stock Appreciation Right, if any, may be
exercised in full or in part from time to time within ten (10) years
and thirty (30) days from the date of the grant, or such shorter
period as may be specified by the Committee in the grant, provided
that in any event each shall lapse and cease to be exercisable upon,
or within such period following, Termination of Employment as shall
have been determined by the Committee and as specified in the Option
or Stock Appreciation Right; provided, however, that such period
following Termination of Employment shall not exceed twelve months
unless employment shall have terminated:
(i) as a result of retirement pursuant to, and as defined
in, the applicable pension plan of the Company, its
Subsidiary or Associated Company or total and permanent
disability as determined by the Committee, in which
event such period shall not exceed--
(A) in the case of an Option, the original
term of the Option; and
(B) in the case of a Stock Appreciation
Right, one year after such retirement or
disability or after resignation as an
officer or director of the Company,
whichever shall last occur (unless
earlier terminated pursuant to Section
5(b) of this Article II);
or
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(ii) as a result of death or death shall have occurred
following Termination of Employment and while the
Option or Stock Appreciation Right was still
exercisable; and
provided, further, that such period following Termination of
Employment shall in no event extend the original exercise period
of the Option or related Stock Appreciation Right, if any.
(c) The Option grant may include any other terms and
conditions not inconsistent with this Option Plan as determined
by the Committee, including provisions making the Shares subject
to such Option Restricted Shares.
5. STOCK APPRECIATION RIGHTS
A Stock Appreciation Right may be granted to an Eligible
Participant in connection with (and only in connection with) an
Incentive Stock Option or a Non-Qualified Option granted under
this Option Plan, the 1988/II Incentive Plan, the 1984 Plan or
the 1974 Plan, subject to the following terms and conditions:
(a) Such Stock Appreciation Right shall entitle a holder of
an Option within the period specified for the exercise of the
Option in the related Option grant to surrender the unexercised
Option (or a portion thereof) and to receive in exchange
therefor a payment in cash or Shares having an aggregate value
equal to the product of (i) the amount by which (A) the SAR Fair
Market Value of each Share exceeds (B) the Option price per
Share, times (ii) the number of Shares under the Option, or
portion thereof, which is surrendered.
(b) Each Stock Appreciation Right granted hereunder shall
be subject to the same terms and conditions as the related
Option. It shall be exercisable only to the extent such Option
is exercisable and shall terminate or lapse and cease to be
exercisable when the related Option terminates or lapses. The
Committee may grant Stock Appreciation Rights concurrently with
grants of Options or in connection with previously granted
Options under this Option Plan, the 1988/II Incentive Plan, the
1984 Plan or the 1974 Plan which are unexercised and have not
terminated or lapsed. With respect to Stock Appreciation Rights
granted in connection with such
<PAGE> 13
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previously granted Options, the Committee shall provide that such
Stock Appreciation Rights shall not be exercisable until the holder
completes six (6) months (or such longer period as the Committee
shall determine) of service with the Company, a Subsidiary, or an
Associated Company immediately following the date of the grant of
such Stock Appreciation Rights.
(c) The Committee shall have sole discretion to determine
in each case whether the payment will be in the form
of all cash, all Shares (which may, at the Committee's
discretion, be Restricted Shares), or any combination thereof.
If payment is to be made in Shares, the number of Shares shall
be determined as follows: the amount payable in Shares shall be
divided by the SAR Fair Market Value of Shares. The payments to
be made, in whole or in part, in cash upon the exercise of Stock
Appreciation Rights by any officer of the Company shall be made
in accordance with the provisions relating to the exercise of
stock appreciation rights of Rule l6b-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in
effect at the time of such exercise, or any law, rule,
regulation or other provision that may hereafter replace such
Rule.
(d) Upon exercise of a Stock Appreciation Right, the number
of Shares subject to exercise under the related Option
shall automatically be reduced by the number of Shares
represented by the Option or portion thereof which is
surrendered. To the extent that a Stock Appreciation Right
shall be exercised, any Shares transferred upon such exercise
shall not be charged against the maximum limitations upon the
grant of Options set forth in the Incentive Plan under which
such Option shall have been granted but the Option in connection
with which a Stock Appreciation Right shall have been granted
shall be deemed to have been exercised for the purpose of such
maximum limitations.
(e) The Committee shall have sole discretion as to the timing
of any payment made in cash, Shares, or a combination
thereof upon exercise of Stock Appreciation Rights hereunder,
whether in a lump sum, in annual installments or otherwise
deferred and the Committee shall have sole discretion to
determine whether such payments may bear amounts equivalent to
interest or cash dividends.
(f) For purposes of this paragraph 5(f) of Article II:
<PAGE> 14
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(i) "Unrelated Party" means any party or group of parties
acting together other than (A) the Company, its
directors and officers, or (B) any nominee holder for
any stock exchange;
(ii) "Offer" means any tender or exchange offer made by an
Unrelated Party for the Shares and shall be deemed to
occur upon the first purchase or exchange of such
Shares;
(iii) "Change of Control" means any acquisition, beneficially
or otherwise, by any Unrelated Party of 25% or more of
the combined voting power of the common and preferred
stock of the Company and shall be deemed to occur upon
the date that the Unrelated Party attains control of
said 25% or more of the combined voting power;
(iv) "Change of Control Market Value" of the Shares means the
higher of--
(A) the value for which such Shares may be
exchanged or offered under any Offer
pursuant to which Shares are actually
exchanged or purchased; or
(B) the Fair Market Value of such Shares on
the date of exercise of a Stock
Appreciation Right.
Notwithstanding the foregoing provisions of this Section 5 of
Article II and without limiting the provisions of Section 3 of
Article I of this Incentive Plan, in the event of an Offer or
Change of Control, a Participant holding an unexercised Stock
Appreciation Right may exercise such Stock Appreciation Right
and elect to be paid solely in cash in an amount equal to the
difference between the Option price and the Change of Control
Market Value of the Shares, unless within five (5) business days
after receipt of notification of such election by the Secretary
of the Company, the Committee acts to disapprove the cash
election. Unless it acts to disapprove, the Committee's consent
shall be deemed to be given at the close of business on the
fifth business day after the Secretary's receipt of notification
of such election and payment shall be made as soon as
<PAGE> 15
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practicable after expiration of such five (5) business day
period. The election provided herein shall apply only: (x)
during the thirty (30) day period following the first exchange
or purchase of Shares pursuant to an Offer; or (y) during the
thirty (30) day period following the date on which sufficient
Shares are acquired to constitute a Change of Control.
(g) For purposes of this paragraph 5(g) of Article II:
(i) "Unrelated Party" means any party or group of parties acting
together other than (A) the Company, its directors and
officers, or (B) any nominee holder for any stock exchange;
(ii) "Alternate Change of Control" means any acquisition,
beneficially or otherwise, by any Unrelated Party of a
percentage of the combined voting power of the common and
preferred stock of the Company specified by the Committee (but
not less than 10%) and shall be deemed to occur upon the date
that the Unrelated Party attains control of said percentage of
the combined voting power;
(iii) "Change of Control Termination of Employment" means the
termination of employment of a Participant by the Company,
the Subsidiaries or the Associated Companies without
cause (as defined by the Committee) or by the Participant for
good reason (as defined by the Committee) within a period of
time specified by the Committee following an Alternate Change
of Control;
(iv) "Alternate Change of Control Market Value" of the Shares means
the Fair Market Value of such Shares on the
date of exercise of a Stock Appreciation Right.
Notwithstanding the foregoing provisions of this Section 5 of
Article II and without limiting the provisions of Section 3 of
Article I of this Incentive Plan, in the event of an Alternate
Change of Control and a Change of Control Termination of
Employment, a Participant holding an unexercised Stock
Appreciation Right who is selected by the Committee may exercise
such Stock Appreciation Right and elect to be paid solely in
cash in an amount equal to the difference between the Option
price and the Alternate Change of Control Market Value of the
Shares,
<PAGE> 16
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unless within five (5) business days after receipt of notification
of such election by the Secretary of the Company, the Committee acts
to disapprove the cash election. Unless it acts to disapprove, the
Committee's consent shall be deemed to be given at the close of
business on the fifth business day after the Secretary's receipt of
notification of such election and payment shall be made as soon as
practicable after expiration of such five (5) business day period.
The election provided herein shall apply only during the thirty (30)
day period following a Change of Control Termination of Employment.
III. 1988 BONUS PLAN
1. BONUS COMMITMENTS AND AWARDS
(a) Bonus Commitments
A commitment to award a bonus at a future date for all or part
of any Performance Year may be made at such time or times
determined by the Committee following the Effective Date to any
person who is an Eligible Participant at the time of such
commitment. The Committee shall have full discretion to
determine the terms and conditions of the commitment including,
without limitation, whether the corresponding bonus award shall
be contingent upon the attainment of prescribed goals and
provisions with respect to the rights of the Participant upon
Termination of Employment.
(b) Bonus Awards
A bonus may be awarded at such time or times determined by the
Committee following the Effective Date to any person who was an
Eligible Participant during all or part of any Performance Year,
payable either wholly in cash or wholly in Shares, or partially
in cash and partially in Shares. The Committee shall have full
discretion to determine the terms and conditions of payment of
any award, including without limitation, what part of such award
shall be paid in cash, unrestricted Shares and Restricted
Shares, the time or times of payment of any award, and the time
or times of the lapse of the restrictions on Restricted Shares.
Any Eligible Participant may receive more than one bonus award
for a Performance Year and any bonus award may be made pursuant
to or without a prior commitment to make such
<PAGE> 17
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award.
2. BONUS SHARES--SOURCE, LIMIT AND VALUATION
(a) Shares used for bonus purposes may be authorized but unissued
Shares, treasury Shares, or any combination thereof. Any
Shares held by the Company for use under this Bonus Plan
shall, unless and until transferred in payment of an award in
accordance with this Bonus Plan, remain the property of the
Company, irrespective of whether such Shares are entered in a
special bonus account, and such Shares shall at all times be
available, unless and until so transferred, for any corporate
purpose.
(b) The total number of Shares which may be awarded pursuant to bonus
awards under this Bonus Plan shall not exceed 4,400,000 Shares,
subject to:
(i) the adjustments provided for in Section 4 of Article I
of this Incentive Plan; and
(ii) reduction by the number of Shares for which Stock
Options have been granted pursuant to Article II of this
Incentive Plan (except as provided in Section 1(b) of
said Article II).
(c) For the purpose of determining the number of Shares to be used in
payment of an award, the amount of the award payable in Shares shall
be divided by the Fair Market Value of the Shares on the date of the
determination of the amount of the award by the Committee.
3. AWARDS
(a) Subject to the provisions of Section 3(f) of this Article III,
bonus commitments and bonus awards may be made by the
Committee in such amount and at such time or times as may be
determined solely by the Committee. An Eligible Participant
shall have no right to be considered for or to receive any bonus
commitment or bonus award. The Committee may, in its
discretion, allow any Participant who receives a bonus award or
bonus commitment under this Incentive Plan to elect to defer
payment of such award, or of any award to be made pursuant to
such bonus commitment, in accordance with such terms and
conditions and in such manner as the Committee may prescribe.
Any amendment of any bonus
<PAGE> 18
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commitment and bonus award by the Committee pursuant to Article I,
Section 3 of this Incentive Plan shall not be considered the grant
of a new bonus commitment or bonus award for purposes of Section
2(b) of this Article III.
(b) Commitments to make payment on account of bonuses for a Performance
Year may be made by the Committee in advance of the close of such
Performance Year upon such terms and conditions as the Committee may
determine.
(c) The portion of a bonus award payable in cash or unrestricted Shares
or both may, in the discretion of the Committee, be paid or
delivered in whole or in part at such time or times and under such
terms and conditions as may be determined by the Committee
including, but not limited to, the following times:
(i) in full at the time of the award; or
(ii) in any number of annual installments, equal or
unequal, during employment or following Termination
of Employment; or
(iii) in full after a period of time.
(d) In the event that any bonus commitment or bonus award or installment
thereof which is to be paid in Shares ceases to be payable for any
reason, the Shares subject to such bonus commitment or bonus award
shall again be available for bonus purposes without again being
charged against the limitation of 4,400,000 Shares set forth in
Section 2(b) of this Article III.
(e) The portion of an award payable in Restricted Shares shall
be paid at the time of the award by delivering to the
Participant, or a custodian or escrow designated by the
Committee and the Participant, a certificate or certificates for
such Restricted Shares, registered in the name of such
Participant who shall have all of the rights of a stockholder
with respect to such Shares, subject to such terms and
conditions, including forfeitures or resale to the Company, if
any, as may be determined by the Committee and to the
restrictions and provisions pursuant to Article IV of this
Incentive Plan. The Committee and the Participant may designate
the Company or one or more of its employees to act as custodian
or escrow for the certificates.
<PAGE> 19
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(f) Anything in this Incentive Plan to the contrary notwithstanding, no
bonus awards shall be made for any Performance Year during which no
dividend on the outstanding Shares has been paid; bonus awards
covering more than one Performance Year and made pursuant to a bonus
commitment shall be reduced by the ratio of the number of such
Performance Years during which no dividends were paid to the number
of Performance Years covered by the bonus awards.
4. DIVIDENDS, DIVIDEND EQUIVALENTS AND INTEREST EQUIVALENTS
(a) No cash dividends shall be paid on Shares which have been awarded
but not delivered. The Committee may provide, however, that a
Participant to whom a bonus has been awarded which is payable in
whole or in part at a future time in Shares shall be entitled to
receive an amount per Share, equal in value to the cash dividends,
if any, paid per Share on issued and outstanding Shares, as of the
dividend record dates occurring during the period between the date
of the award and the time each such Share is delivered. Such
amounts (herein called "dividend equivalents") may, in the
discretion of the Committee, be:
(i) paid in cash or Shares either from time to time prior to
or at the time of the delivery of such Shares; or
(ii) converted into contingently credited Shares (with
respect to which dividend equivalents shall accrue) in
such manner, at such value, and deliverable at such time
or times, as may be determined by the Committee.
Such Shares (whether delivered or contingently credited) shall
be charged against the limitations set forth in Section 2(b) of
this Article III.
(b) The Committee, in its discretion, may authorize payment of interest
equivalents on any portion of any award payable at a future time in
cash, and interest equivalents on dividend equivalents which are
payable in cash at a future time.
5. DEATH OF PARTICIPANT
Following the death of a Participant, all unpaid cash awards and all
undelivered unrestricted Share awards to such
<PAGE> 20
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Participant hereunder, together with all dividend equivalents
and interest equivalents, if any, payable in connection with any
such award or awards, which have not been cancelled and which
are not then cancellable shall be paid and delivered to his
legal representative at the time or times provided for in the
award unless the Committee shall otherwise direct. The
Committee may, in its discretion, permit a Participant to
designate a beneficiary or beneficiaries to receive such award
or awards. Restricted Shares held by such Participant at the
time of his death shall be governed by the provisions of Article
IV of this Incentive Plan.
IV. RESTRICTED SHARES
Restricted Shares shall be subject to such terms and conditions,
including forfeiture, if any, and to such restrictions against
sale, transfer or other disposition as may be determined by the
Committee at the time a Non-Qualified Option for the purchase of
Restricted Shares is granted, at the time a Stock Appreciation
Right to be settled with Restricted Shares is granted or at the
time of making a bonus award of Restricted Shares. Any new or
additional or different Shares or other securities resulting
from any adjustment of such Shares of the type described in
Section 4 of Article I shall be subject to the same terms,
conditions, and restrictions as the Restricted Shares prior to
such adjustment. The Committee may, in its discretion, remove,
modify or accelerate the release of restrictions on any
Restricted Shares in the event of hardship or disability of the
Participant while employed, in the event that the Participant
ceases to be an employee of the Company, a Subsidiary or
Associated Company, as the result of death or otherwise, in the
event of a relocation of a Participant to another country or for
such other reasons as the Committee may deem appropriate. In
the event of the death of a Participant following the transfer
of Restricted Shares to him, the legal representative of the
Participant, the beneficiary designated in writing by the
Participant during his lifetime, or the person receiving such
Shares under his will or under the laws of descent and
distribution shall take such Shares subject to the same
restrictions, conditions and provisions in effect at the time of
his death, to the extent applicable.
V. MISCELLANEOUS PROVISIONS
1. Neither a Stock Option, Stock Appreciation Right, bonus commitment
nor an unpaid bonus award or any installment
<PAGE> 21
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thereof, shall be transferable except as provided for herein in
the case of death. If any Participant makes such a transfer in
violation hereof, any obligation of the Company shall forthwith
terminate.
2. Nothing in this Incentive Plan or any booklet or other document
describing or referring to this Incentive Plan shall be deemed to
confer on any employee or Participant the right to continue in the
employ of his employer or affect the right of his employer to
terminate the employment of any such person with or without cause.
3. Nothing contained herein shall require the Company to segregate any
monies from its general funds, or to create any trusts, or to make
any special deposits for any immediate or deferred amounts payable
to any Participant.
4. This Incentive Plan and all actions taken hereunder shall be
governed by the laws of the State of Delaware.
5. The Company may make such provisions and take such steps as
it may deem necessary or appropriate for the withholding
of any taxes which the Company is required by any
law or regulation of any governmental authority, whether
federal, state or local, domestic or foreign, to withhold in
connection with any Stock Option or the exercise thereof, any
Stock Appreciation Right or the exercise thereof, or the payment
of any bonus award, including, but not limited to, the
withholding of payment of all or any portion of such award or
another award under this Incentive Plan until the Participant
reimburses the Company for the amount the Company is required to
withhold with respect to such taxes, or cancelling any portion
of such award or another award under this Incentive Plan in an
amount sufficient to reimburse itself for the amount it is
required to so withhold, or selling any property contingently
credited by the Company for the purpose of paying such award or
another award under this Incentive Plan, in order to withhold or
reimburse itself for the amount it is required to so withhold.
6. Notwithstanding any other provision of this Incentive Plan, for
purposes of any award that is outstanding as of the date that the
Company spins off the Company's chemical businesses into a new
publicly traded company ("Chemicals") and is held by a Participant
who in
<PAGE> 22
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connection with such spinoff becomes an employee of Chemicals (or a
subsidiary or associated company of Chemicals) rather than an
employee of the Company (or a Subsidiary or Associated Company of
the Company), such change of employment shall not constitute a
Termination of Employment. With respect to any such award held by
such a Participant, Termination of Employment shall mean such
Participant's termination of employment with Chemicals other than a
Transfer, with Transfer defined as a change of employment of a
Participant within the group consisting of Chemicals and its
subsidiaries, or, if the Committee so determines, a change of
employment of a Participant within the group consisting of
Chemicals, its subsidiaries, and its associated companies. For
purposes of this section, a subsidiary of Chemicals means any
corporation (or partnership, joint venture, or other enterprise) of
which Chemicals owns or controls, directly or indirectly, 50% or
more of the outstanding shares of stock normally entitled to vote
for the election of directors (or comparable equity participation
and voting power) and an associated company of Chemicals means
any corporation (or partnership, joint venture, or other
enterprise), of which Chemicals owns or controls, directly or
indirectly, 10% or more, but less than 50% of the outstanding
shares of stock normally entitled to vote for the election of
directors (or comparable equity participation and voting power).
VI. AMENDMENTS
1. The Board, upon recommendation of the Committee but not
otherwise, may from time to time amend or modify this
Incentive Plan, including, but not limited to, an amendment
which would authorize the Committee to make bonus commitments
and bonus awards payable in other securities or other forms of
property of a kind to be determined by the Committee, in
addition to cash, unrestricted Shares and Restricted Shares, and
such other amendments as may be necessary or desirable to
implement such commitments and awards, or discontinue this
Incentive Plan or any provision thereof, provided that no
amendments or modifications to this Incentive Plan shall,
without the prior approval of the stockholders normally entitled
to vote for the election of directors of the Company:
(a) change the number of Shares for which Stock Options
<PAGE> 23
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may be granted, or the percentage thereof which may be made
subject to Options to any one Eligible Participant, as set
forth in Section 1(a) of Article II of this Incentive Plan;
(b) change the total number of Shares which may be awarded
pursuant to bonus awards as provided for in Section 2(b)
of Article III of this Incentive Plan;
(c) make any member of the Committee eligible for the grant of a
Stock Option, Stock Appreciation Right or a bonus commitment
or a bonus award;
(d) limit or restrict the powers of the Committee with respect to
the administration of this Incentive Plan;
(e) change the definition of an Eligible Participant for the
purpose of an Incentive Stock Option or increase the limit
or the value of Shares for which an Eligible Participant may
be granted an Incentive Stock Option;
(f) materially increase the benefits accruing to Participants
under this Incentive Plan;
(g) materially modify the requirements as to eligibility for
participation in this Incentive Plan; or
(h) change any of the provisions of this Article VI.
2. No amendment to or discontinuance of this Incentive Plan
or any provision thereof by the Board or the stockholders
of the Company shall, without the written consent of the
Participant, adversely affect any Stock Option or Stock
Appreciation Right theretofore granted or bonus commitment or
bonus award theretofore made to such Participant under this
Incentive Plan.
VII. INTERPRETATION
1. Except as authorized herein with respect to Stock Appreciation
Rights, this Incentive Plan is not intended to and shall not affect
any option or stock appreciation right grant or bonus commitment or
award under the 1974 Plan, the 1984 Plan or the 1988/II Incentive
Plan (or any other incentive plan of the Company, its Subsidiaries
and Associated Companies). No stock
<PAGE> 24
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options or stock appreciation rights shall be granted under the
1984 Plan after September 15, 1988. No bonus commitments or
bonus awards shall be made under the 1984 Plan after the
Effective Date and no bonus commitments or bonus awards shall be
made under this Incentive Plan with respect to Performance Years
prior to January 1, 1988, except that bonus awards may be made
under the 1984 Plan (a) with respect to Performance Years ending
prior to January 1, 1988 or (b) pursuant to bonus commitments made
on or prior to December 31, 1987.
2. This Incentive Plan is not intended to and shall not preclude
the establishment or operation by the Company or any
Subsidiary of (a) any thrift, savings and investment,
achievement award, stock purchase, employee recognition or other
benefit plan or arrangement for any group of employees, or (b)
any other incentive or bonus plan or arrangement for any
employees (hereinafter "Other Plan"), and any such Other Plan
may be authorized and payments made thereunder independently of
this Incentive Plan; provided, however, that (i) no director of
the Company and no officer of the Company elected by the Board
(other than assistant officers) shall participate in any Other
Plan, other than the 1984 Plan, and (ii) no such Other Plan,
other than the 1984 Plan, a stock option plan for G. D. Searle &
Co., a stock option plan for The NutraSweet Company and the
1988/II Incentive Plan, shall provide for the granting of
options or stock appreciation rights to purchase or receive the
appreciation on the shares of any class of stock of the Company,
or the making of bonus commitments or bonus awards payable in
any class of stock of the Company, which in either form or
substance are comparable to those authorized under this
Incentive Plan, unless such Other Plan is established or
operated in connection with the assumption by the Company or a
Subsidiary of the plans, options, stock appreciation rights,
bonus commitments or bonus awards of another corporation, or the
substitution of an Other Plan or options, stock appreciation
rights, bonus commitments or bonus awards under such Other Plan
in lieu of the plans, options, stock appreciation rights, bonus
commitments or bonus awards of such other corporation, arising
out of a merger or consolidation with, or the acquisition of
assets or stock of, such other corporation, or other transaction
described in Section 425(a) of the Internal Revenue Code of
1986, as may be amended from time to time, as in effect at the time.
<PAGE> 25
MONSANTO MANAGEMENT INCENTIVE PLAN
OF 1988/I
(As Amended Effective July 25, 1997)
[This Plan was originally approved by the Company's Stockholders on April 22,
1988. Amendments were approved by the Board of Directors on March 25, 1988,
September 22, 1989, February 22, 1991, April 25, 1997 and July 25, 1997, and by
the Stockholders at the April 26, 1991 Annual Meeting.]
<PAGE> 1
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Exhibit 10.4
MONSANTO MANAGEMENT INCENTIVE PLAN OF 1988/II
(AS AMENDED EFFECTIVE JULY 25, 1997)
I. GENERAL PROVISIONS
1. PURPOSES
The Monsanto Management Incentive Plan of 1988/II is designed to
attract and retain for the Company and its Subsidiaries and Associated
Companies personnel of exceptional ability; to motivate such personnel
through added incentives to make a maximum contribution to Company
objectives; and to be competitive with other companies. This Incentive
Plan is composed of (a) the 1988 Stock Option Plan and (b) the 1988
Bonus Plan, and shall be effective January 1, 1988 ("Effective Date"),
subject to the approval of this Incentive Plan by the stockholders of
the Company.
2. DEFINITIONS
Except where the context otherwise indicates, the following definitions
apply:
"Associated Company" means any corporation (or partnership, joint
venture, or other enterprise), of which the Company owns or
controls, directly or indirectly, 10% or more, but less than 50%
of the outstanding shares of stock normally entitled to vote for
the election of directors (or comparable equity participation and
voting power).
"Board" means Board of Directors of the Company.
"Bonus Plan" or "1988 Bonus Plan" means the bonus plan set forth
in Article III of this Incentive Plan.
"Committee" means the ECDC and, to the extent delegated by the
ECDC, one or more Unit Compensation Committees.
"Company" means Monsanto Company, a Delaware corporation.
"ECDC" means the Executive Compensation and Development Committee
or such other committee consisting of three or more members of
the Board as may be appointed by the
<PAGE> 2
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Board to administer this Incentive Plan pursuant to Section 3(a) of
this Article I.
"Eligible Participant" means any employee of the Company, a
Subsidiary or an Associated Company.
"Fair Market Value" shall mean, with respect to any given day,
the average of the highest and lowest prices of the Shares
reported as the New York Stock Exchange-Composite Transactions
for such day, or if the Shares were not traded on the New York
Stock Exchange on such day, then on the next preceding day on
which the Shares were traded, all as reported by such source as
the Committee may select.
"Incentive Plan" means the Monsanto Management Incentive Plan of
1988/II, set forth herein.
"Incentive Stock Option" or "Incentive Option" means an option
meeting the definition of that term as set forth in Section 3 of
Article II of this Incentive Plan.
"1984 Plan" means the Monsanto Management Incentive Plan of 1984,
as amended.
"1988/I Incentive Plan" means the Monsanto Management Incentive
Plan of 1988/I.
"Non-Qualified Stock Option" or "Non-Qualified Option" means an
option referred to in Section 4 of Article II of this Incentive
Plan.
"Option Plan" or "1988 Stock Option Plan" means the 1988 Stock
Option Plan set forth in Article II of this Incentive Plan.
"Participant" means an Eligible Participant to whom a Stock
Option has been granted, a bonus commitment made or a bonus
awarded pursuant to this Incentive Plan.
"Performance Year" means the year or years for which a bonus is
awarded or a bonus commitment is made under the 1988 Bonus Plan.
"Restricted Shares" means Shares that were made subject to
restrictions in accordance with Article IV of this Incentive
Plan.
<PAGE> 3
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"Shares" means shares of common stock of the Company and any
shares of stock or other securities received as a result of a
Share adjustment as set forth in Section 4 of this Article I.
"Stock Option" or "Option" shall mean Incentive Stock Options
and/or Non-Qualified Stock Options.
"Subsidiary" means: (i) for the purpose of an Incentive Stock
Option, any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if, at the time
of the granting of the Option, each of the corporations other
than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain;
and (ii) for the purposes of a Non-Qualified Stock Option and the
1988 Bonus Plan, any corporation (or partnership, joint venture,
or other enterprise) of which the Company owns or controls,
directly or indirectly, 50% or more of the outstanding shares of
stock normally entitled to vote for the election of directors (or
comparable equity participation and voting power).
"Termination of Employment" means the discontinuance of
employment of a Participant for any reason other than a Transfer.
"Transfer" means: (i) for the purpose of an Incentive Stock
Option, a change of employment of a Participant within the group
consisting of the Company and its Subsidiaries; and (ii) for the
purpose of a Non-Qualified Stock Option and the 1988 Bonus Plan,
a change of employment of a Participant within the group
consisting of the Company and its Subsidiaries, or, if the
Committee so determines, a change of employment of a Participant
within the group consisting of the Company, its Subsidiaries and
Associated Companies.
"Unit Compensation Committee" means one or more committees
appointed by the ECDC composed of management employees of the
Company or a Subsidiary to whom the ECDC may delegate its powers
(or a portion thereof) to administer this Incentive Plan pursuant
to Section 3(a) of this Article I.
3. ADMINISTRATION
<PAGE> 4
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(a) This Incentive Plan shall be administered by the ECDC. The
ECDC may delegate all or a portion of the administration of this
Incentive Plan to one or more Unit Compensation Committees. No
person serving as a member of the Committee shall be eligible for
the grant of a Stock Option, the receipt of a bonus commitment or
the award of a bonus (including, without limitation, Restricted
Shares) under this Incentive Plan while serving as a member of
such Committee.
(b) The Committee shall have the exclusive right to interpret
this Incentive Plan, to select the persons who are to receive
Stock Options, bonus commitments and bonus awards, and to act in
all matters pertaining to the granting of Options, the making of
bonus commitments and the awarding of bonuses under this
Incentive Plan including, without limitation, the determination
of the number of Shares to be subject to and the form, terms,
conditions and duration of each Stock Option, and the amount,
form, terms and conditions of each bonus commitment and bonus
award, and the amendment thereof consistent with the provisions
of this Incentive Plan. No Eligible Participant shall have any
right to be considered for or to receive any Stock Options, bonus
commitments or bonus awards. All acts and decisions of the
Committee with respect to any questions arising in connection
with the administration and interpretation of this Incentive
Plan, including the severability of any and all of the provisions
thereof, shall be conclusive, final and binding upon all Eligible
Participants.
(c) The Committee may adopt rules and regulations of general
application for the administration of all or any portion of this
Incentive Plan.
(d) Without limiting the foregoing Sections 3(a), (b) and (c)
of this Article I (and notwithstanding any other provisions of
this Incentive Plan), the Committee is authorized to take such
action as it determines to be necessary or advisable, and fair
and equitable to Participants, with respect to Options, bonus
commitments and bonus awards (including, without limitation,
awards of Restricted Shares) in the event of: a merger of the
Company with, consolidation of the Company into, or the
acquisition of the Company by, another corporation; a sale or
transfer of all or substantially all of the assets of the Company
to another corporation or any other person or entity, a tender or
exchange offer for
<PAGE> 5
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Shares made by any corporation, person or entity (other than the
Company); or other reorganization in which the Company will not
survive as an independent, publicly owned corporation. Such action
may include (but shall not be limited to) establishing, amending or
waiving the forms, terms, conditions and duration of Stock Options,
bonus commitments and bonus awards (including, without limitation,
awards of Restricted Shares) so as to provide for earlier, later,
extended or additional times for exercise or payments, differing
methods for calculating payments, alternate forms and amounts of
payment, accelerated release of restrictions or other modifications.
The Committee may take such actions pursuant to this Section 3(d) by
adopting rules and regulations of general applicability to all
Participants or to certain categories of Participants, by
including, amending or waiving terms and conditions in Option
grants, bonus commitments and bonus awards (including, without
limitation, agreements with respect to Restricted Shares), or by
taking action with respect to individual Participants. The
Committee may take such actions as part of the grants,
commitments or awards, or before or after the public announcement
of any such merger, consolidation, acquisition, sale or transfer
of assets, tender or exchange offer or other reorganization.
4. SHARE ADJUSTMENTS
In the event that at any time or from time to time a stock
dividend, stock split, recapitalization, merger, consolidation,
or other change in capitalization, or a sale by the Company of
all or part of its assets, or any distribution to stockholders
other than a cash dividend results in (a) the outstanding Shares,
or any securities exchanged therefor or received in their place,
being exchanged for a different number or class of shares of
stock or other securities of the Company, or for shares of stock
or other securities of any other corporation; or (b) new,
different or additional shares or other securities of the Company
or of any other corporation being received by the holders of
outstanding Shares, then:
(i) the limitation of 7,900,000 Shares set forth in
Section l(a) of Article II and Section 2(b) of
Article III of this Incentive Plan;
(ii) the number and class of Shares (A) that may be
<PAGE> 6
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subject to Stock Options, (B) which have not
been issued or transferred under outstanding
Stock Options, and (C) which are subject to a
bonus commitment or have been awarded but are
undelivered under the 1988 Bonus Plan; and
(iii) the purchase price to be paid per Share under
outstanding Stock Options;
shall in each case be equitably adjusted; provided, however, that
all adjustments made as the result of the foregoing in respect of
each Stock Option which is granted as an Incentive Stock Option
shall be made so that such Stock Option shall continue to be an
Incentive Stock Option as defined in Section 422A of the Internal
Revenue Code of 1986, as may be amended from time to time, or any
provisions that may hereafter be enacted in lieu thereof.
II. 1988 STOCK OPTION PLAN
1. OPTION SHARES
(a) (i) The total number of Shares for which Options may be
granted under this Option Plan shall not exceed 7,900,000
Shares, subject to: (A) the adjustments provided for in
Section 4 of Article I of this Incentive Plan; (B) the
provisions of Section l(b) of this Article II; and (C)
reduction by the number of Shares committed or awarded
pursuant to Article III of this Incentive Plan. Such
Shares may be authorized but unissued, or treasury Shares,
or both.
(ii) The total number of Shares for which Options may be
granted under this Incentive Plan to any one Eligible
Participant shall not exceed in any one calendar year 15%
of the total number of Shares for which Options may be
granted under this Incentive Plan, subject to the
adjustments provided for in Section 4 of Article I of this
Incentive Plan.
(b) In the event that any unexercised Stock Option granted
hereunder lapses or ceases to be exercisable for any reason other
than a surrender of the Option pursuant to Section l(c) of this
Article II, the Shares subject to such Option shall again be
available for Option grants under this Option Plan without again
being charged against the limitation of 7,900,000 Shares set
forth in
<PAGE> 7
-7-
Section 1(a) of this Article II. Any amendment of any
Option by the Committee pursuant to Article I, Section 3 of this
Incentive Plan shall not be considered the grant of a new Option
for the purpose of Section 1(a) of this Article II.
(c) In the event of death or total and permanent disability as
determined by the Committee, the Committee may, with the consent
of the Participant, his legal representative, or in the event of
death, a beneficiary designated in writing by the Participant
during his lifetime, authorize payment, in cash or in Shares, or
partly in cash and partly in Shares, as the Committee may direct,
of an amount equal to the difference at the time between the Fair
Market Value of the Shares subject to an Option and the Option
price in consideration of the surrender of the Option. In such
an event the Shares subject to the Option so surrendered shall be
charged against the limitations set forth in Section 1(a) of this
Article II.
2. INCIDENTS OF OPTIONS
(a) Each Stock Option shall be granted subject to such terms
and conditions, if any, not inconsistent with this Incentive
Plan, as shall be determined by the Committee, including any
provisions as to continued employment as consideration for the
grant or exercise of such Option and any provisions which may
be advisable to comply with applicable laws, regulations or
rulings of any governmental authority.
(b) A Stock Option shall not be transferable by the Participant
otherwise than by will, by the laws of descent and distribution
or pursuant to a written beneficiary designation, and shall be
exercisable during the lifetime of the Participant only by him or
by his guardian or legal representative.
(c) Shares purchased upon exercise of a Stock Option shall be
paid for in such amounts, at such times and upon such terms as
shall be determined by the Committee and specified in the grant
of the Option. Without limiting the foregoing, the Committee may
establish payment terms for the exercise of Stock Options which
permit the Participant to deliver Shares (or other evidence of
ownership of Shares satisfactory to the Company), with a Fair
Market Value equal to the Option price as payment.
<PAGE> 8
-8-
(d) No cash dividends shall be paid on Shares subject to
unexercised Stock Options.
3. INCENTIVE OPTIONS
An Incentive Option shall be an "Incentive Stock Option" as that
term is defined in Section 422A of the Internal Revenue Code of
1986, as may be amended from time to time, as in effect at the
time of the grant of any such Option, or any statutory provision
that may be enacted to replace such Section. Each provision of
this Option Plan and of each Incentive Stock Option granted
hereunder shall be construed so that each such Option shall be an
Incentive Stock Option, and any provision thereof that cannot be
so construed shall be disregarded. Incentive Stock Options shall
be granted only to purchase unrestricted Shares and only to
Eligible Participants, each of whom may be granted one or more
such Options at such time or times determined by the Committee
following the Effective Date until December 31, 1997, subject to
the following conditions:
(a) The Option price per Share shall be set by the grant but
shall not be less than 100% of the Fair Market Value at the time
of the grant.
(b) The Option may be exercised in full or in part from time to
time within ten (10) years from the date of the grant, or such
shorter period as may be specified by the Committee in the grant,
provided that in any event each shall lapse and cease to be
exercisable upon, or within such period following, Termination of
Employment as shall have been determined by the Committee and as
specified in the Option; provided, however, that such period
following Termination of Employment shall not exceed three months
unless employment shall have terminated:
(i) as a result of retirement pursuant to, and as
defined in, the applicable pension plan of the
Company, its Subsidiary or Associated Company or
total and permanent disability as determined by the
Committee, in which event such period shall not
exceed the original term of the Option; or
(ii) as a result of death or death shall have
occurred following Termination of Employment
<PAGE> 9
-9-
and while the Option was still exercisable; and
provided, further, that such period following Termination of
Employment shall in no event extend the original exercise period
of the Option.
(c) The aggregate Fair Market Value (determined at the time the
Option is granted) of the Shares with respect to which Incentive
Stock Options are first exercisable during any calendar year by
any Eligible Participant shall not exceed $100,000.
(d) Incentive Stock Options shall be granted only to an
Eligible Participant who, at the time the Option is granted, does
not own stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company.
(e) Any other terms and conditions which the Committee
determines, upon advice of counsel, should be imposed for the
Option to qualify as an Incentive Stock Option and any other
terms and conditions not inconsistent with this Option Plan as
determined by the Committee.
4. NON-QUALIFIED OPTIONS
One or more Options may be granted as Non-Qualified Options to
purchase unrestricted Shares or Restricted Shares to an Eligible
Participant at such time or times determined by the Committee,
following the Effective Date, subject to the following terms and
conditions:
(a) The Option price per Share shall be established by the
grant but shall not be less than 100% of the Fair Market Value at
the time of the grant (or such later date as the Committee shall
determine).
(b) The Option may be exercised in full or in part from time to
time within ten (10) years and thirty (30) days from the date of
the grant, or such shorter period as may be specified by the
Committee in the grant, provided that in any event each shall
lapse and cease to be exercisable upon, or within such period
following, Termination of Employment as shall have been
determined by the Committee and as specified in the Option;
provided, however, that such period following Termination of
Employment shall not exceed twelve months
<PAGE> 10
-10-
unless employment shall have terminated:
(i) as a result of retirement pursuant to, and as
defined in, the applicable pension plan of the
Company, its Subsidiary or Associated Company or
total and permanent disability as determined by the
Committee, in which event such period shall not
exceed the original term of the Option; or
(ii) as a result of death or death shall have
occurred following Termination of Employment and
while the Option was still exercisable; and
provided, further, that such period following Termination of
Employment shall in no event extend the original exercise period
of the Option.
(c) The Option grant may include any other terms and conditions
not inconsistent with this Option Plan as determined by the
Committee, including provisions making the Shares subject to such
Option Restricted Shares.
III. 1988 BONUS PLAN
1. BONUS COMMITMENTS AND AWARDS
(a) Bonus Commitments
A commitment to award a bonus at a future date for all or
part of any Performance Year may be made at such time or
times determined by the Committee following the Effective
Date to any person who is an Eligible Participant at the
time of such commitment. The Committee shall have full
discretion to determine the terms and conditions of the
commitment including, without limitation, whether the
corresponding bonus award shall be contingent upon the
attainment of prescribed goals and provisions with respect
to the rights of the Participant upon Termination of
Employment.
(b) Bonus Awards
A bonus may be awarded at such time or times determined by
the Committee following the Effective Date to any person who
was an Eligible Participant during all or
<PAGE> 11
-11-
part of any Performance Year, payable either wholly in cash or
wholly in Shares, or partially in cash and partially in Shares. The
Committee shall have full discretion to determine the terms
and conditions of payment of any award, including without
limitation, what part of such award shall be paid in cash,
unrestricted Shares and Restricted Shares, the time or times
of payment of any award, and the time or times of the lapse
of the restrictions on Restricted Shares. Any Eligible
Participant may receive more than one bonus award for a
Performance Year and any bonus award may be made pursuant to
or without a prior commitment to make such award.
2. BONUS SHARES--SOURCE, LIMIT AND VALUATION
(a) Shares used for bonus purposes may be authorized but
unissued Shares, treasury Shares, or any combination thereof.
Any Shares held by the Company for use under this Bonus Plan
shall, unless and until transferred in payment of an award in
accordance with this Bonus Plan, remain the property of the
Company, irrespective of whether such Shares are entered in a
special bonus account, and such Shares shall at all times be
available, unless and until so transferred, for any corporate
purpose.
(b) The total number of Shares which may be awarded pursuant to
bonus awards under this Bonus Plan shall not exceed 7,900,000
Shares, subject to:
(i) the adjustments provided for in Section 4 of
Article I of this Incentive Plan; and
(ii) reduction by the number of Shares for which
Stock Options have been granted pursuant to Article
II of this Incentive Plan (except as provided in
Section l(b) of said Article II).
(c) For the purpose of determining the number of Shares to be
used in payment of an award, the amount of the award payable in
Shares shall be divided by the Fair Market Value of the Shares on
the date of the determination of the amount of the award by the
Committee.
3. AWARDS
(a) Subject to the provisions of Section 3(f) of this
<PAGE> 12
-12-
Article III, bonus commitments and bonus awards may be made by the
Committee in such amount and at such time or times as may be
determined solely by the Committee. An Eligible Participant
shall have no right to be considered for or to receive any bonus
commitment or bonus award. The Committee may, in its discretion,
allow any Participant who receives a bonus award or bonus
commitment under this Incentive Plan to elect to defer payment of
such award, or of any award to be made pursuant to such bonus
commitment, in accordance with such terms and conditions and in
such manner as the Committee may prescribe. Any amendment of any
bonus commitment and bonus award by the Committee pursuant to
Article I, Section 3 of this Incentive Plan shall not be
considered the grant of a new bonus commitment or bonus award for
purposes of Section 2(b) of this Article III.
(b) Commitments to make payment on account of bonuses for a
Performance Year may be made by the Committee in advance of the
close of such Performance Year upon such terms and conditions as
the Committee may determine.
(c) The portion of a bonus award payable in cash or
unrestricted Shares or both may, in the discretion of the
Committee, be paid or delivered in whole or in part at such time
or times and under such terms and conditions as may be determined
by the Committee including, but not limited to, the following
times:
(i) in full at the time of the award; or
(ii) in any number of annual installments, equal or
unequal during employment or following Termination of
Employment; or
(iii) in full after a period of time.
(d) In the event that any bonus commitment or bonus award or
installment thereof which is to be paid in Shares ceases to be
payable for any reason, the Shares subject to such bonus
commitment or bonus award shall again be available for bonus
purposes without again being charged against the limitation of
7,900,000 Shares set forth in Section 2(b) of this Article III.
(e) The portion of an award payable in Restricted Shares shall
be paid at the time of the award by delivering to the
Participant, or a custodian or escrow designated by
<PAGE> 13
-13-
the Committee and the Participant, a certificate or certificates for
such Restricted Shares, registered in the name of such Participant
who shall have all of the rights of a stockholder with respect to
such Shares, subject to such terms and conditions, including
forfeitures or resale to the Company, if any, as may be
determined by the Committee and to the restrictions and
provisions pursuant to Article IV of this Incentive Plan. The
Committee and the Participant may designate the Company or one or
more of its employees to act as custodian or escrow for the
certificates.
(f) Anything in this Incentive Plan to the contrary
notwithstanding, no bonus awards shall be made for any
Performance Year during which no dividend on the outstanding
Shares has been paid; bonus awards covering more than one
Performance Year and made pursuant to a bonus commitment shall be
reduced by the ratio of the number of such Performance Years
during which no dividends were paid to the number of Performance
Years covered by the bonus awards.
4. DIVIDENDS, DIVIDEND EQUIVALENTS AND INTEREST EQUIVALENTS
(a) No cash dividends shall be paid on Shares which have been
awarded but not delivered. The Committee may provide, however,
that a Participant to whom a bonus has been awarded which is
payable in whole or in part at a future time in Shares shall be
entitled to receive an amount per Share, equal in value to the
cash dividends, if any, paid per Share on issued and outstanding
Shares, as of the dividend record dates occurring during the
period between the date of the award and the time each such Share
is delivered. Such amounts (herein called "dividend
equivalents") may, in the discretion of the Committee, be:
(i) paid in cash or Shares either from time to time prior
to or at the time of the delivery of such Shares; or
(ii) converted into contingently credited Shares (with
respect to which dividend equivalents shall accrue) in such
manner, at such value, and deliverable at such time or
times, as may be determined by the Committee.
Such Shares (whether delivered or contingently credited) shall be
charged against the limitations set forth in
<PAGE> 14
-14-
Section 2(b) of this Article III.
(b) The Committee, in its discretion, may authorize payment of
interest equivalents on any portion of any award payable at a
future time in cash, and interest equivalents on dividend
equivalents which are payable in cash at a future time.
5. DEATH OF PARTICIPANT
Following the death of a Participant, all unpaid cash awards
and all undelivered unrestricted Share awards to such Participant
hereunder, together with all dividend equivalents and interest
equivalents, if any, payable in connection with any such award or
awards, which have not been cancelled and which are not then
cancellable shall be paid and delivered to his legal
representative at the time or times provided for in the award
unless the Committee shall otherwise direct. The Committee may,
in its discretion, permit a Participant to designate a
beneficiary or beneficiaries to receive such award or awards.
Restricted Shares held by such Participant at the time of his
death shall be governed by the provisions of Article IV of this
Incentive Plan.
IV. RESTRICTED SHARES
Restricted Shares shall be subject to such terms and conditions,
including forfeiture, if any, and to such restrictions against
sale, transfer or other disposition as may be determined by the
Committee at the time a Non-Qualified Option for the purchase of
Restricted Shares is granted or at the time of making a bonus
award of Restricted Shares. Any new or additional or different
Shares or other securities resulting from any adjustment of such
Shares of the type described in Section 4 of Article I shall be
subject to the same terms, conditions, and restrictions as the
Restricted Shares prior to such adjustment. The Committee may,
in its discretion, remove, modify or accelerate the release of
restrictions on any Restricted Shares in the event of hardship or
disability of the Participant while employed, in the event that
the Participant ceases to be an employee of the Company, a
Subsidiary or Associated Company, as the result of death or
otherwise, or in the event of a relocation of a Participant to
another country, or for such other reasons as the Committee may
deem appropriate. In the event of the death of a Participant
following the transfer of Restricted Shares to him, the legal
representative of the Participant, the beneficiary designated in
writing by the
<PAGE> 15
-15-
Participant during his lifetime, or the person receiving such Shares under
his will or under the laws of descent and distribution shall take such
Shares subject to the same restrictions, conditions and provisions in
effect at the time of his death, to the extent applicable.
V. MISCELLANEOUS PROVISIONS
1. Neither a Stock Option, bonus commitment nor an unpaid
bonus award or any installment thereof, shall be transferable
except as provided for herein in the case of death. If any
Participant makes such a transfer in violation hereof, any
obligation of the Company shall forthwith terminate.
2. Nothing in this Incentive Plan or any booklet or other
document describing or referring to this Incentive Plan shall be
deemed to confer on any employee or Participant the right to
continue in the employ of his employer or affect the right of his
employer to terminate the employment of any such person with or
without cause.
3. Nothing contained herein shall require the Company to
segregate any monies from its general funds, or to create any
trusts, or to make any special deposits for any immediate or
deferred amounts payable to any Participant.
4. This Incentive Plan and all actions taken hereunder shall
be governed by the laws of the State of Delaware.
5. The Company may make such provisions and take such steps as
it may deem necessary or appropriate for the withholding of any
taxes which the Company is required by any law or regulation of
any governmental authority, whether federal, state or local,
domestic or foreign, to withhold in connection with any Stock
Option or the exercise thereof or the payment of any bonus award,
including, but not limited to, the withholding of payment of all
or any portion of such award or another award under this
Incentive Plan until the Participant reimburses the Company for
the amount the Company is required to withhold with respect to
such taxes, or cancelling any portion of such award or another
award under this Incentive Plan in an amount sufficient to
reimburse itself for the amount it is required to so withhold, or
selling any property contingently credited by the Company for the
purpose of paying such award or
<PAGE> 16
-16-
another award under this Incentive Plan, in order to withhold or
reimburse itself for the amount it is required to so withhold.
6. Notwithstanding any other provision of this Incentive Plan,
for purposes of any award that is outstanding as of the date that
the Company spins off the Company's chemical businesses into a
new publicly traded company ("Chemicals") and is held by a
Participant who in connection with such spinoff becomes an
employee of Chemicals (or a subsidiary or associated company of
Chemicals) rather than an employee of the Company (or a
Subsidiary or Associated Company of the Company), such change of
employment shall not constitute a Termination of Employment.
With respect to any such award held by such a Participant,
Termination of Employment shall mean such Participant's
termination of employment with Chemicals other than a Transfer,
with Transfer defined as a change of employment of a Participant
within the group consisting of Chemicals and its subsidiaries,
or, if the Committee so determines, a change of employment of a
Participant within the group consisting of Chemicals, its
subsidiaries, and its associated companies. For purposes of this
section, a subsidiary of Chemicals means any corporation (or
partnership, joint venture, or other enterprise) of which
Chemicals owns or controls, directly or indirectly, 50% or more
of the outstanding shares of stock normally entitled to vote for
the election of directors (or comparable equity participation and
voting power) and an associated company of Chemicals means any
corporation (or partnership, joint venture, or other enterprise),
of which Chemicals owns or controls, directly or indirectly, 10%
or more, but less than 50% of the outstanding shares of stock
normally entitled to vote for the election of directors (or
comparable equity participation and voting power).
VI. AMENDMENTS
1. The Board, upon recommendation of the ECDC but not
otherwise, may from time to time amend or modify this Incentive
Plan, including, but not limited to, an amendment which would
authorize the Committee to make bonus commitments and bonus
awards payable in other securities or other forms of property of
a kind to be determined by the ECDC, in addition to cash,
unrestricted Shares and Restricted Shares, and such
<PAGE> 17
-17-
other amendments as may be necessary or desirable to implement such
commitments and awards, or discontinue this Incentive Plan or any
provision thereof, provided that no amendments or modifications
to this Incentive Plan shall, without the prior approval of the
stockholders normally entitled to vote for the election of
directors of the Company:
(a) change the number of Shares for which Stock Options
may be granted, or the percentage thereof which may be made
subject to Options to any one Eligible Participant, as set
forth in Section 1(a) of Article II of this Incentive Plan;
(b) change the total number of Shares which may be
awarded pursuant to bonus awards as provided for in Section
2(b) of Article III of this Incentive Plan;
(c) make any member of the Committee eligible for the
grant of a Stock Option or a bonus commitment or a bonus
award under this Incentive Plan;
(d) change the definition of an Eligible Participant for
the purpose of an Incentive Stock Option or increase the
limit or the value of Shares for which an Eligible
Participant may be granted an Incentive Stock Option; or
(e) change any of the provisions of this Article VI.
2. No amendment to or discontinuance of this Incentive Plan or
any provision thereof by the Board or the stockholders of the
Company shall, without the written consent of the Participant,
adversely affect any Stock Option theretofore granted or bonus
commitment or bonus award theretofore made to such Participant
under this Incentive Plan.
VII. INTERPRETATION
1. This Incentive Plan is not intended to and shall not affect
any option or stock appreciation right grant or bonus commitment
or award under the 1984 Plan or the 1988/I Incentive Plan (or any
other incentive plan of the Company, its Subsidiaries and
Associated Companies).
2. This Incentive Plan is not intended to and shall not
preclude the establishment or operation by the Company or any
Subsidiary of (a) any thrift, savings and
<PAGE> 18
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investment, achievement award, stock purchase, employee recognition
or other benefit plan or arrangement for any group of employees, or
(b) any other incentive or bonus plan or arrangement for any
employees (hereinafter "Other Plan"), and any such Other Plan may be
authorized and payments made thereunder independently of this
Incentive Plan; provided, however, that no such Other Plan, other
than the 1984 Plan, the 1988/I Incentive Plan, a stock option
plan for G. D. Searle & Co., or a stock option plan for The
NutraSweet Company, shall provide for the granting of options or
stock appreciation rights to purchase or receive the appreciation
on the shares of any class of stock of the Company, or the making
of bonus commitments or bonus awards payable in any class of
stock of the Company, which in either form or substance are
comparable to those authorized under this Incentive Plan, unless
such Other Plan is established or operated in connection with the
assumption by the Company or a Subsidiary of the plans, options,
stock appreciation rights, bonus commitments or bonus awards of
another corporation, or the substitution of an Other Plan or
options, stock appreciation rights, bonus commitments or bonus
awards under such Other Plan in lieu of the plans, options, stock
appreciation rights, bonus commitments or bonus awards of such
other corporation, arising out of a merger or consolidation with,
or the acquisition of assets or stock of, such other corporation,
or other transaction described in Section 425(a) of the Internal
Revenue Code of 1986, as may be amended from time to time, as in
effect at the time.
<PAGE> 19
MONSANTO MANAGEMENT INCENTIVE PLAN
OF 1988/II
(As Amended Effective July 25, 1997)
[This Plan was originally approved by the Company's Stockholders
on April 22, 1988. Amendments were approved by the Board of
Directors on September 22, 1989, February 22, 1991, April 25,
1997 and July 25, 1997 and by the Stockholders at the April 26,
1991 Annual Meeting.]
<PAGE> 1
Exhibit 10.5
MONSANTO MANAGEMENT INCENTIVE PLAN OF 1994
AS AMENDED APRIL 25, 1997 AND JULY 25, 1997
I. GENERAL PROVISIONS
1. PURPOSES
The Monsanto Management Incentive Plan of 1994 is designed:
- to attract, motivate and retain for the Company and its
Subsidiaries and Associated Companies personnel of
exceptional ability,
- to encourage ownership of Monsanto common stock by
management,
- to align management interests with those of stockholders,
and
- to provide a competitive executive compensation program.
This Incentive Plan shall be effective February 1, 1994
("Effective Date"), subject to the approval of this Incentive Plan
by the stockholders of the Company.
2. DEFINITIONS
Except where the context otherwise indicates, the following
definitions apply:
"Associated Company" means any corporation (or partnership, joint
venture, or other enterprise), of which the Company owns or
controls, directly or indirectly, 10% or more, but less than 50%
of the outstanding shares of stock normally entitled to vote for
the election of directors (or comparable equity participation and
voting power).
"Award" means any Stock Option, Stock Appreciation Right,
Restricted Share, unrestricted Share, dividend equivalent unit or
other award granted under this Incentive Plan.
"Board" means Board of Directors of the Company.
"Committee" means the ECDC, or its permitted delegate.
"ECDC" means the Executive Compensation and Development Committee
or such other committee consisting of two or
<PAGE> 2
more members of the Board as may be appointed by the Board to
administer this Incentive Plan pursuant to Section 3(a) of this
Article I.
"Company" means Monsanto Company, a Delaware corporation.
"Eligible Participant" means any officer or other salaried
employee (including a director who is a salaried employee) of the
Company, a Subsidiary or an Associated Company.
"Incentive Plan" means the Monsanto Management Incentive Plan of
1994, set forth herein.
"Fair Market Value" shall mean, with respect to any given day,
the average of the highest and lowest sales prices of the Shares
reported as the New York Stock Exchange-Composite Transactions for
such day, or if the Shares were not traded on the New York Stock
Exchange on such day, then on the next preceding day on which the
Shares were traded, all as reported by The Wall Street Journal,
mid-west edition, under the heading New York Stock
Exchange-Composite Transactions or by such other source as the
Committee may select.
"Incentive Stock Option" or "Incentive Option" means an option
meeting the definition of that term as set forth in Section 3 of
Article II of this Incentive Plan.
"1984 Plan" means the Monsanto Management Incentive Plan of 1984,
as amended.
"1988/I Plan" means the Monsanto Management Incentive Plan of
1988/I, as amended.
"1988/II Plan" means the Monsanto Management Incentive Plan of
1988/II, as amended.
"Non-Qualified Stock Option" or "Non-Qualified Option" means an
option referred to in Section 4 of Article II of this Incentive
Plan.
"Participant" means an Eligible Participant to whom a Stock
Option or a Stock Appreciation Right has been granted, a bonus
commitment made or a bonus awarded pursuant to this Incentive
Plan.
"Reporting Person" means a person subject to the reporting
requirements of Section 16(a) of the Securities Exchange Act of
1934 (or any law, rule, regulation or other provision that may
replace such statute) with respect to Shares.
<PAGE> 3
"Restricted Shares" means Shares that were made subject to
restrictions in accordance with Section 6 of Article II of this
Incentive Plan.
"Shares" means shares of common stock of the Company and any
shares of stock or other securities received as a result of a
Share adjustment as set forth in Section 4 of this Article I.
"Stock Appreciation Right" means a right referred to in Section 5
of Article II of this Incentive Plan.
"Stock Appreciation Right Fair Market Value" or "SAR Fair Market
Value" shall mean a value established by the Committee for the
exercise of a Stock Appreciation Right. If such exercise occurs
during any quarterly "window period" as specified by Rule 16b-3
of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended from time to time, or any law,
rule, regulation or other provision that may hereafter replace
such Rule, the Committee may establish a common value for
exercises during such window period.
"Stock Option" or "Option" shall mean Incentive Stock Options
and/or Non-Qualified Stock Options.
"Subsidiary" means: (i) for the purpose of an Incentive Stock
Option, any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if, at the time
of the granting of the Option, each of the corporations other than
the last corporation in the unbroken chain owns stock possessing
50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain; and (ii) for
the purposes of a Non-Qualified Stock Option, a Stock Appreciation
Right or an Award of Shares (restricted or not), any corporation
(or partnership, joint venture, or other enterprise) of which the
Company owns or controls, directly or indirectly, 50% or more of
the outstanding shares of stock normally entitled to vote for the
election of directors (or comparable equity participation and
voting power).
"Termination of Employment" means the discontinuance of employment
of a Participant for any reason other than a Transfer.
"Transfer" means: (i) for the purpose of an Incentive Stock
Option, a change of employment of a Participant within the group
consisting of the Company and its Subsidiaries; and (ii) for the
purpose of a Non-Qualified Stock Option, a Stock Appreciation
Right
<PAGE> 4
or an Award of Shares (restricted or not), a change of
employment of a Participant within the group consisting of the
Company and its Subsidiaries, or, if the Committee so determines,
a change of employment of a Participant within the group
consisting of the Company, its Subsidiaries and Associated
Companies.
"Unit Compensation Committee" means one or more committees
appointed by the ECDC composed of one or more senior managers of
the Company or a Subsidiary to whom the ECDC may delegate its
powers (or a portion thereof) to administer this Incentive Plan
pursuant to Section 3(a) of this Article I.
3. ADMINISTRATION
(a) This Incentive Plan shall be administered by the ECDC,
except to the extent the ECDC delegates administration
pursuant to this paragraph. The ECDC may delegate all or a
portion of the administration of this Incentive Plan to one or
more Unit Compensation Committees and may authorize further
delegation by the Unit Compensation Committees to senior
managers of the Company or its Subsidiaries; provided that
determinations regarding the timing, pricing, amount and
terms of any Award to a Reporting Person shall be made only by
the ECDC. No person shall be eligible or continue to serve as
a member of the ECDC unless such person is a "disinterested
person" within the meaning of Rule 16b-3 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as
amended from time to time, or any law, rule, regulation or
other provision that may hereafter replace such Rule, and no
person shall be eligible for the grant of an Award under this
Incentive Plan while serving as a member of the ECDC.
(b) The Committee shall have the exclusive right to interpret
this Incentive Plan, to select the persons who are to receive
Awards, and to act in all matters pertaining to the granting
of Awards under this Incentive Plan including, without
limitation, the timing, pricing, amount and terms of any
Award and the amendment thereof consistent with the provisions
of this Incentive Plan. No Eligible Participant shall have
any right to be considered for or to receive any Awards. All
acts and decisions of the Committee with respect to any
questions arising in connection with the administration and
interpretation of this Incentive Plan, including the
severability of any and all of
<PAGE> 5
the provisions thereof, shall be conclusive, final and binding
upon all Eligible Participants.
(c) The Committee may adopt and amend from time to time rules
and regulations of general application for the administration
of this Incentive Plan.
(d) Without limiting the foregoing Sections 3(a), (b) and (c) of
this Article I (and notwithstanding any other provisions of
this Incentive Plan), the Committee is authorized to take such
action as it determines to be necessary or advisable, and fair
and equitable to Participants, with respect to Awards in the
event of: a merger of the Company with, consolidation of the
Company into, or the acquisition of the Company by, another
corporation; a sale or transfer of all or substantially all of
the assets of the Company to another corporation or any other
person or entity, a tender or exchange offer for Shares made
by any corporation, person or entity (other than the Company);
or other reorganization in which the Company will not survive
as an independent, publicly-owned corporation. Such action
may include (but shall not be limited to) establishing,
amending or waiving the forms, terms, conditions and duration
of Stock Options, Stock Appreciation Rights, Awards of
Restricted Shares and other Awards so as to provide for
earlier, later, extended or additional times for exercise or
payments, differing methods for calculating
payments, alternate forms and amounts of payment, accelerated
release of restrictions or other modifications. The Committee
may take such actions pursuant to this Section 3(d) by
adopting rules and regulations of general applicability to all
Participants or to certain categories of Participants, by
including, amending or waiving terms and conditions in Awards
(including, without limitation, agreements with respect to
Restricted Shares), or by taking action with respect to
individual Participants. The Committee may take such actions
as part of the Awards, or before or after the public
announcement of any such merger, consolidation, acquisition,
sale or transfer of assets, tender or exchange offer or other
reorganization.
4. SHARE ADJUSTMENTS
In the event that at any time or from time to time a stock
dividend, stock split, recapitalization, merger, consolidation, or
other change in capitalization, or a
<PAGE> 6
sale by the Company of all or part of its assets, or any
distribution to stockholders other than a cash dividend results in
(a) the outstanding Shares, or any securities exchanged therefor or
received in their place, being exchanged for a different number or
class of shares of stock or other securities of the Company, or for
shares of stock or other securities of any other corporation; or (b)
new, different or additional shares or other securities of the
Company or of any other corporation being received by the holders of
outstanding Shares, then:
(i) the total number of Shares authorized for Awards under
this Incentive Plan;
(ii) the number and class of Shares (A) that may be
subject to Stock Options or Stock Appreciation Rights, (B)
which have not been issued or transferred under outstanding
Stock Options or Stock Appreciation Rights, and (C) which
have been awarded but are undelivered under this Incentive
Plan; and
(iii) the purchase price to be paid per Share under
outstanding Stock Options and the number of Shares to be
transferred in settlement of outstanding Stock Appreciation
Rights;
shall in each case be equitably adjusted as determined by the
Committee in its discretion; provided, however, that all
adjustments made as the result of the foregoing in respect of each
Stock Option which is granted as an Incentive Stock Option shall
be made so that such Stock Option shall continue to be an
Incentive Stock Option as defined in Section 422 of the Internal
Revenue Code of 1986, as may be amended from time to time, or any
provisions that may hereafter be enacted in lieu thereof.
5. SHARES AUTHORIZED
The total number of Shares for which awards may be granted under
this Incentive Plan shall not exceed 3,000,000 Shares; provided
that if during the term of this Incentive Plan the Company
repurchases shares of Common Stock, on the open market or
otherwise and in compliance with the rules and regulations of the
Securities and Exchange Commission, additional Shares may be used
for awards up to the lesser of (a) 2,820,000 and (b) the number of
Shares repurchased. Notwithstanding the foregoing, the total
number of Shares that shall be available for Awards of Restricted
or unrestricted Shares shall be 1/2 of 1% of the total
<PAGE> 7
number of Shares outstanding. The limitations in this Section 5 are
subject to the adjustments provided for in Section 4 of this
Article I; the provisions of Section 1(b) of Article II of this
Incentive Plan; and the provisions of Section 3(d) of Article III of
this Incentive Plan.
The total number of Shares for which Awards may be granted under
this Incentive Plan to any one Eligible Participant shall not
exceed in any three-year period 15% of the total number of Shares
for which Awards may be made under this Incentive Plan, subject to
the adjustments provided for in Section 4 of this Article I.
II. AWARDS
1. SHARES USED FOR AWARDS
(a) The Shares for which Options may be granted under this
Option Plan may be authorized but unissued Shares, or treasury
Shares, or both.
(b) In the event that any unexercised Stock Option granted
hereunder lapses or ceases to be exercisable for any reason
other than a surrender of the Option pursuant to Section l(c)
of this Article II or the exercise of a Stock Appreciation
Right under Section 5 of this Article II, the Shares subject
to such Option shall again be available for Option grants
under this Option Plan without again being charged against the
authorized Shares set forth in Section 5 of Article I,
provided the Participant whose Stock Option has lapsed or
ceased to be exercisable has received no benefits of ownership
from the Shares. Any amendment of any Option or Stock
Appreciation Right by the Committee pursuant to Article I,
Section 3 of this Incentive Plan shall not be considered the
grant of a new Option for the purpose of Section 5 of Article
I.
(c) In the event of death or total and permanent disability as
determined by the Committee, the Committee may, with the
consent of the Participant, his legal representative, or in
the event of death, a beneficiary designated in writing by the
Participant during his lifetime, authorize payment, in cash
or in Shares, or partly in cash and partly in Shares, as the
Committee may direct, of an amount equal to the difference at
the time between the Fair Market Value of the Shares subject
to an Option and the Option price in consideration of the
surrender of the Option. In such an event
<PAGE> 8
the Shares subject to the Option so surrendered shall be
charged against the limitations set forth in Section 5 of
Article I.
(d) In the event that any Award or installment thereof ceases to
be payable for any reason, the Shares subject to such Award
shall again be available for Award without again being charged
against the limitations on the number of Shares set forth in
Section 5 of Article I, provided the Participant whose Award
ceases to be payable has received no benefits of ownership
from the Shares.
2. INCIDENTS OF OPTIONS AND STOCK APPRECIATION RIGHTS
(a) An Award of Stock Options or Stock Appreciation Rights may
be made at such time or times determined by the Committee
following the Effective Date to any Eligible Participant,
except that Incentive Options may not be awarded to employees
of Associated Companies. Each Stock Option and Stock
Appreciation Right shall be granted subject to such terms and
conditions, if any, not inconsistent with this Incentive
Plan, as shall be determined by the Committee, including any
provisions as to continued employment as consideration for the
grant or exercise of such Option or Stock Appreciation Right,
provisions as to performance conditions and any provisions
which may be advisable to comply with applicable laws,
regulations or rulings of any governmental authority.
(b) An Incentive Stock Option or Stock Appreciation Right shall
not be transferable by the Participant otherwise than by
will, by the laws of descent and distribution, or pursuant to
a written beneficiary designation, and shall be exercisable
during the lifetime of the Participant only by him or by his
guardian or legal representative. A Non-Qualified Stock
Option or Stock Appreciation Right shall not be transferrable
except by will, by the laws of descent and distribution,
pursuant to a written beneficiary designation, pursuant to a
qualified domestic relations order as defined by the Internal
Revenue Code of 1986, as amended, or Title I of the Employee
Retirement Income Security Act or the rules thereunder, or in
such circumstances as would not result in the failure to
comply with Rule 16b-3 under the Securities Exchange Act of
1934 (or any successor rule or provision) if the transferor
were a Reporting Person.
<PAGE> 9
(c) Shares purchased upon exercise of a Stock Option shall be
paid for in such amounts, at such times and upon such terms
as shall be determined by the Committee and specified in the
grant of the Option. Without limiting the foregoing, the
Committee may establish payment terms for the exercise of
Stock Options which permit the Participant to deliver Shares
(or other evidence of ownership of Shares satisfactory to the
Company), including, at the Committee's option, Restricted
Shares, with a Fair Market Value equal to the Option price as
payment.
(d) The Option price per share shall be established by the grant
and shall not be decreased thereafter except pursuant to
Section 4 of Article I of this Incentive Plan.
(e) The Committee, in its discretion, may provide for the
escalation of the Option price per Share over all or part of
the term of the Option.
(f) The Committee, in its discretion, may offer Participants
the opportunity to elect to receive an Option grant in lieu
of a salary increase or a bonus or may offer Participants the
opportunity to purchase Options for cash or such other
consideration as the Committee in its discretion determines.
3. INCENTIVE OPTIONS
An Incentive Option shall be an "Incentive Stock Option" as that
term is defined in Section 422 of the Internal Revenue Code of
1986, as may be amended from time to time, as in effect at the
time of the grant of any such Option, or any statutory provision
that may be enacted to replace such Section. Each provision of
this Incentive Plan and of each Incentive Stock Option granted
hereunder shall be construed so that each such Option shall be an
Incentive Stock Option, and any provision thereof that cannot be
so construed shall be disregarded. Incentive Stock Options shall
be granted only to purchase unrestricted Shares and only to
Eligible Participants, each of whom may be granted one or more
such Options at such time or times determined by the Committee
following the Effective Date until January 31, 2004, subject to
the following conditions:
(a) The Option price per Share shall be set by the grant but
shall not be less than 100% of the Fair Market Value at the
time of the grant.
<PAGE> 10
(b) The Option and its related Stock Appreciation Right, if
any, may be exercised in full or in part from time to time
within ten (10) years from the date of the grant, or such
shorter period as may be specified by the Committee in the
grant, provided that in any event each shall lapse and cease
to be exercisable upon, or within such period following,
Termination of Employment as shall have been determined by the
Committee and as specified in the Option or Stock Appreciation
Right; provided, however, that such period following
Termination of Employment shall not exceed twelve months
unless employment shall have terminated:
(i) as a result of retirement pursuant to, and as defined
in, an applicable pension plan of the Company, its
Subsidiary or Associated Company or total and permanent
disability as determined by the Committee, in which
event such period shall not exceed--
(A) in the case of an Option, the original term of
the Option; and
(B) in the case of a Stock Appreciation Right, one
year after such retirement or disability or after
resignation as an officer or director of the
Company, whichever shall last occur (unless
earlier terminated pursuant to Section 5(b) of
this Article II);
or
(ii) as a result of death or death shall have occurred
following Termination of Employment and while the
Option or Stock Appreciation Right was still
exercisable; and
provided, further, that such period following Termination of
Employment shall in no event extend the original exercise
period of the Option or related Stock Appreciation Right, if
any.
(c) The aggregate Fair Market Value (determined at the time the
Option is granted) of the Shares with respect to which
Incentive Stock Options are first exercisable during any
calendar year by any Eligible Participant shall not exceed
$100,000; however, if the Fair Market Value of Incentive Stock
Option Shares (at date of grant) exceeds $100,000 in the
calendar year in which Incentive Stock Options are first
exercisable, Shares with a
<PAGE> 11
Fair Market Value at date of grant exceeding $100,000 shall
not be deemed to be Incentive Stock Options.
(d) Incentive Stock Options shall be granted only to an
Eligible Participant who, at the time the Option is granted,
does not own stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company.
(e) Any other terms and conditions which the Committee
determines, upon advice of counsel, should be imposed for the
Option to qualify as an Incentive Stock Option and any other
terms and conditions not inconsistent with this Incentive Plan
as determined by the Committee; including provisions making
the Shares subject to such Option Restricted Shares or
provisions making vesting or the ability to exercise subject
to performance conditions.
4. NON-QUALIFIED OPTIONS
One or more Options may be granted as Non-Qualified Options to
purchase unrestricted Shares or Restricted Shares to an Eligible
Participant at such time or times determined by the Committee,
following the Effective Date, subject to the following terms and
conditions:
(a) The Option price per Share shall be established by the grant
but shall not be less than 100% of the Fair Market Value at
the time of the grant (or such later date as the Committee
shall determine to be the grant date).
(b) The Option and its related Stock Appreciation Right, if
any, may be exercised in full or in part from time to time
within ten (10) years from the date of the grant, or such
shorter period as may be specified by the Committee in the
grant, provided that in any event each shall lapse and cease
to be exercisable upon, or within such period following,
Termination of Employment as shall have been determined by the
Committee and as specified in the Option or Stock Appreciation
Right; provided, however, that such period following
Termination of Employment shall not exceed twelve months
unless employment shall have terminated:
(i) as a result of retirement pursuant to, and as defined
in, the applicable pension plan of the Company, its
Subsidiary or Associated Company or total and permanent
disability as determined by the Committee, in which
event
<PAGE> 12
such period shall not exceed--
(A) in the case of an Option, the original term of
the Option; and
(B) in the case of a Stock Appreciation Right, one
year after such retirement or disability or after
resignation as an officer or director of the
Company, whichever shall last occur (unless
earlier terminated pursuant to Section 5(b) of
this Article II);
or
(ii) as a result of death or death shall have occurred
following Termination of Employment and while the Option
or Stock Appreciation Right was still exercisable; and
provided, further, that such period following Termination of
Employment shall in no event extend the original exercise
period of the Option or related Stock Appreciation Right, if
any.
(c) The Option grant may include any other terms and conditions
not inconsistent with this Incentive Plan as determined by the
Committee, including provisions making the Shares subject
to such Option Restricted Shares or provisions making vesting
or the ability to exercise subject to the satisfaction of
performance conditions.
5. STOCK APPRECIATION RIGHTS
A Stock Appreciation Right may be granted to an Eligible
Participant in connection with (and only in connection with) an
Incentive Stock Option or a Non-Qualified Option granted under
this Incentive Plan, or under any other incentive plan of the
Company or its Subsidiaries which was approved by the
stockholders, subject to the following terms and conditions:
(a) Such Stock Appreciation Right shall entitle a holder of an
Option within the period specified for the exercise of the
Option in the related Option grant to surrender the
unexercised Option (or a portion thereof) and to receive in
exchange therefor a payment in cash or Shares having an
aggregate value equal to the product of (i) the amount by
which (A) the SAR Fair Market Value of each Share exceeds (B)
the Option price per Share, times (ii) the number of Shares
under the Option, or portion thereof, which is surrendered.
<PAGE> 13
(b) Except as expressly provided herein, each Stock Appreciation
Right granted hereunder shall be subject to the same terms
and conditions as the related Option. It shall be exercisable
only to the extent such Option is exercisable and shall
terminate or lapse and cease to be exercisable when the
related Option terminates or lapses. The Committee may grant
Stock Appreciation Rights concurrently with grants of Options
or in connection with previously granted Options under this
Incentive Plan, or under any other incentive plan of the
Company or its Subsidiaries which was approved by the
stockholders, which are unexercised and have not terminated or
lapsed. With respect to Stock Appreciation Rights granted in
connection with such previously granted Options, the Committee
shall provide that such Stock Appreciation Rights shall not be
exercisable until the holder completes six (6) months (or such
longer period as the Committee shall determine) of service
with the Company, a Subsidiary, or an Associated Company
immediately following the date of the grant of such Stock
Appreciation Rights.
(c) The Committee shall have sole discretion to determine in
each case whether the payment will be in the form of all cash,
all Shares (which may, at the Committee's discretion, be
Restricted Shares), or any combination thereof. If payment is
to be made in Shares, the number of Shares shall be determined
as follows: the amount payable in Shares shall be divided by
the SAR Fair Market Value of Shares. The payments to be made,
in whole or in part, in cash upon the exercise of Stock
Appreciation Rights by any officer of the Company shall be
made in accordance with the provisions relating to the
exercise of stock appreciation rights of Rule 16b-3 of the
General Rules and Regulations under the Securities
Exchange Act of 1934, as in effect at the time of such
exercise, or any law, rule, regulation or other provision that
may hereafter replace such Rule.
(d) Upon exercise of a Stock Appreciation Right, the number of
Shares subject to exercise under the related Option shall
automatically be reduced by the number of Shares represented
by the Option or portion thereof which is surrendered. To the
extent that a Stock Appreciation Right shall be exercised,
any Shares transferred upon such exercise shall not be
charged against the maximum limitations upon the grant of
Options set forth in
<PAGE> 14
this Incentive Plan under which such Option shall have been
granted but the Option in connection with which a Stock
Appreciation Right shall have been granted shall be deemed to
have been exercised for the purpose of such maximum
limitations.
(e) The Committee shall have sole discretion as to the timing of
any payment made in cash, Shares, or a combination thereof
upon exercise of Stock Appreciation Rights hereunder, whether
in a lump sum, in annual installments or otherwise deferred
and the Committee shall have sole discretion to determine
whether such payments may bear amounts equivalent to interest
or cash dividends.
(f) For purposes of this paragraph 5(f) of Article II:
(i) "Unrelated Party" means any party or group of parties
acting together other than (A) the Company, its
directors and officers, or (B) any nominee holder for
any stock exchange;
(ii) "Offer" means any tender or exchange offer made by an
Unrelated Party for the Shares and shall be deemed to
occur upon the first purchase or exchange of such
Shares;
(iii) "Change of Control" means any acquisition,
beneficially or otherwise, by any Unrelated Party of
25% or more of the combined voting power of the common
and preferred stock of the Company and shall be deemed
to occur upon the date that the Unrelated Party attains
control of said 25% or more of the combined voting
power;
(iv) "Change of Control Market Value" of the Shares means
the higher of--
(A) the value for which such Shares may be
exchanged or offered under any Offer pursuant to
which Shares are actually exchanged or purchased;
or
(B) the Fair Market Value of such Shares on the date
of exercise of a Stock Appreciation Right.
Notwithstanding the foregoing provisions of this Section 5 of
Article II and without limiting the provisions of Section 3
of Article I of this Incentive Plan, in the event of an Offer
or Change of Control, a Participant holding an unexercised
<PAGE> 15
Stock Appreciation Right may exercise such Stock Appreciation
Right and elect to be paid solely in cash in an amount equal
to the difference between the Option price and the Change of
Control Market Value of the Shares, unless within five (5)
business days after receipt of notification of such election
by the Secretary of the Company, the Committee acts to
disapprove the cash election. Unless it acts to disapprove,
the Committee's consent shall be deemed to be given at the
close of business on the fifth business day after the
Secretary's receipt of notification of such election
and payment shall be made as soon as practicable after
expiration of such five (5) business day period. The election
provided herein shall apply only: (x) during the thirty (30)
day period following the first exchange or purchase of Shares
pursuant to an Offer; or (y) during the thirty (30) day
period following the date on which sufficient Shares are
acquired to constitute a Change of Control.
(g) For purposes of this paragraph 5(g) of Article II:
(i) "Unrelated Party" means any party or group of parties
acting together other than (A) the Company, its
directors and officers, or (B) any nominee holder for
any stock exchange;
(ii) "Alternate Change of Control" means any acquisition,
beneficially or otherwise, by any Unrelated Party of a
percentage of the combined voting power of the common
and preferred stock of the Company specified by the
Committee (but not less than 10%) and shall be deemed
to occur upon the date that the Unrelated Party attains
control of said percentage of the combined voting power;
(iii) "Change of Control Termination of Employment" means
the termination of employment of a Participant by the
Company, the Subsidiaries or the Associated Companies
without cause (as defined by the Committee) or by the
Participant for good reason (as defined by the
Committee) within a period of time specified by the
Committee following an Alternate Change of Control;
(iv) "Alternate Change of Control Market Value" of the
Shares means the Fair Market Value of such Shares
on the date of exercise of a Stock Appreciation Right.
<PAGE> 16
Notwithstanding the foregoing provisions of this Section 5 of
Article II and without limiting the provisions of Section 3
of Article I of this Incentive Plan, in the event of an
Alternate Change of Control and a Change of Control
Termination of Employment, a Participant holding an
unexercised Stock Appreciation Right who is selected by the
Committee may exercise such Stock Appreciation Right and elect
to be paid solely in cash in an amount equal to the difference
between the Option price and the Alternate Change of Control
Market Value of the Shares, unless within five (5) business
days after receipt of notification of such election by the
Secretary of the Company, the Committee acts to disapprove the
cash election. Unless it acts to disapprove, the Committee's
consent shall be deemed to be given at the close of business
on the fifth business day after the Secretary's receipt of
notification of such election and payment shall be made as
soon as practicable after expiration of such five (5) business
day period. The election provided herein shall apply
only during the thirty (30) day period following a Change of
Control Termination of Employment.
6. BONUS SHARES AND RESTRICTED SHARES
(a) An Award of Shares or Restricted Shares may be made at such
time or times determined by the Committee following the
Effective Date to any person who is an Eligible Participant.
The Committee shall have full discretion to determine the
terms and conditions of payment of any award, including
without limitation, what part of such award shall be paid in
unrestricted Shares and Restricted Shares, the time or times
of payment of any Award, and the time or times of the lapse
of the restrictions on Restricted Shares.
(b) For the purpose of determining the number of Shares to be
used in payment of an Award, the amount of the Award payable
in Shares shall be divided by the Fair Market Value of the
Shares on the date of the determination of the amount of the
Award by the Committee, or if the Committee so directs, the
date immediately preceding the date the Award is paid.
(c) The portion of an Award payable in Restricted Shares shall
be paid at the time of the award either by book-entry
registration or by delivering
<PAGE> 17
to the Participant, or a custodian or escrow designated by the
Committee and the Participant, a certificate or certificates
for such Restricted Shares, registered in the name of such
Participant. The Participant shall have all of the rights of
a stockholder with respect to such Shares, subject to such
terms and conditions, including forfeitures or resale to the
Company, if any, as may be determined by the Committee. The
Committee and the Participant may designate the Company or one
or more of its employees to act as custodian or escrow for the
certificates.
(d) Restricted Shares shall be subject to such terms and
conditions, including forfeiture, if any, and to such
restrictions against sale, transfer or other disposition as
may be determined by the Committee at the time a Non-Qualified
Option for the purchase of Restricted Shares is granted, at
the time a Stock Appreciation Right to be settled with
Restricted Shares is granted or at the time of making a bonus
award of Restricted Shares. Any new or additional or
different Shares or other securities resulting from any
adjustment of such Shares of the type described in Section 4
of Article I shall be subject to the same terms, conditions,
and restrictions as the Restricted Shares prior to such
adjustment. The Committee may, in its discretion,
remove, modify or accelerate the release of restrictions on
any Restricted Shares in the event of hardship or disability
of the Participant while employed, in the event that the
Participant ceases to be an employee of the Company, a
Subsidiary or Associated Company, as the result of death or
otherwise, in the event of a relocation of a Participant to
another country or for such other reasons as the Committee may
deem appropriate. In the event of the death of a Participant
following the transfer of Restricted Shares to him, the legal
representative of the Participant, the beneficiary designated
in writing by the Participant during his lifetime, or the
person receiving such Shares under his will or under the laws
of descent and distribution shall take such Shares subject to
the same restrictions, conditions and provisions in effect at
the time of his death, to the extent applicable.
7. DIVIDENDS, DIVIDEND EQUIVALENTS AND INTEREST EQUIVALENTS
(a) No cash dividends shall be paid on Shares which have been
awarded but not delivered. The
<PAGE> 18
Committee may provide, however, that a Participant to whom an
Option has been awarded which is exercisable in whole or in
part at a future time for Shares or a Participant who has been
awarded Shares payable in whole or in part at a future time,
shall be entitled to receive an amount per Share, equal in
value to the cash dividends, if any, paid per Share on issued
and outstanding Shares, as of the dividend record dates
occurring during the period between the date of the award
and the time each such Share is delivered. Such amounts
(herein called "dividend equivalents") may, in the discretion
of the Committee, be:
(i) paid in cash or Shares either from time to time prior
to or at the time of the delivery of such Shares or upon
expiration of the Option if it shall not have been fully
exercised (except that payment of the dividend
equivalents on Incentive Options may not be made prior
to exercise); or
(ii) converted into contingently credited Shares (with
respect to which dividend equivalents shall accrue)
in such manner, at such value, and deliverable at such
time or times, as may be determined by the Committee.
Such Shares (whether delivered or contingently credited)
shall be charged against the limitations set forth in Section
5 of Article I.
(b) The Committee, in its discretion, may authorize payment of
interest equivalents on any portion of any Award payable at a
future time in cash, and interest equivalents on dividend
equivalents which are payable in cash at a future time.
(c) The Committee, in its discretion, may provide that dividends
paid on restricted Shares shall, during the applicable
restricted period, be held by the Company to be paid upon the
lapse of restrictions or to be forfeited upon forfeiture of
the Shares.
III. MISCELLANEOUS PROVISIONS
1. Neither a Stock Option nor a Stock Appreciation Right shall
be transferable except as provided for herein. If any Participant
makes such a transfer in violation hereof, any obligation of the
Company with respect to such Stock Option or Stock Appreciation
Right shall forthwith terminate.
2. Nothing in this Incentive Plan or any booklet or other
<PAGE> 19
document describing or referring to this Incentive Plan shall be
deemed to confer on any employee or Participant the right to
continue in the employ of his employer or affect the right of his
employer to terminate the employment of any such person with or
without cause.
3. Nothing contained herein shall require the Company to
segregate any monies from its general funds, or to create any
trusts, or to make any special deposits for any immediate or
deferred amounts payable to any Participant.
4. This Incentive Plan and all actions taken hereunder shall be
governed by the laws of the State of Delaware.
5. The Company may make such provisions and take such steps as
it may deem necessary or appropriate for the withholding of any
taxes which the Company is required by any law or regulation of
any governmental authority, whether federal, state or local,
domestic or foreign, to withhold in connection with any Stock
Option or the exercise thereof, any Stock Appreciation Right or
the exercise thereof, or the payment of any bonus award,
including, but not limited to, the withholding of cash or Shares
which would be paid or delivered pursuant to such exercise or
award or another exercise or award under this Incentive Plan until
the Participant reimburses the Company for the amount the Company
is required to withhold with respect to such taxes, or cancelling
any portion of such award or another award under this Incentive
Plan in an amount sufficient to reimburse itself for the amount it
is required to so withhold, or selling any property contingently
credited by the Company for the purpose of paying such award or
another award under this Incentive Plan, in order to withhold or
reimburse itself for the amount it is required to so withhold.
The Committee may permit a Participant (or any beneficiary or
other person authorized to act) to elect to pay a portion or all
of any amounts required or permitted to be withheld to satisfy
federal, state, local or foreign tax obligations by directing the
Company to withhold a number of whole Shares which would otherwise
be distributed and which have a fair market value sufficient to
cover the amount of such required or permitted withholding taxes.
6. Notwithstanding any other provision of this Incentive Plan,
for purposes of any Award that is outstanding as of the date that
the Company spins off the Company's chemical businesses into a new
publicly traded company ("Chemicals") and is held by a Participant
who in connection with such spinoff becomes an employee of
Chemicals (or a subsidiary or associated company of
<PAGE> 20
Chemicals) rather than an employee of the Company (or a Subsidiary
or Associated Company of the Company), such change of employment
shall not constitute a Termination of Employment. With respect to
any such Award held by such a Participant, Termination of
Employment shall mean such Participant's termination of employment
with Chemicals other than a Transfer, with Transfer defined as a
change of employment of a Participant within the group consisting
of Chemicals and its subsidiaries, or, if the Committee so
determines, a change of employment of a Participant within the
group consisting of Chemicals, its subsidiaries, and its
associated companies. For purposes of this section, a subsidiary
of Chemicals means any corporation (or partnership, joint venture,
or other enterprise) of which Chemicals owns or controls, directly
or indirectly, 50% or more of the outstanding shares of stock
normally entitled to vote for the election of directors (or
comparable equity participation and voting power) and an
associated company of Chemicals means any corporation (or
partnership, joint venture, or other enterprise), of which
Chemicals owns or controls, directly or indirectly, 10% or more,
but less than 50% of the outstanding shares of stock normally
entitled to vote for the election of directors (or comparable
equity participation and voting power).
IV. AMENDMENTS
1. The Board, upon recommendation of the Committee but not
otherwise, may from time to time amend or modify this Incentive
Plan, including, but not limited to, an amendment which would
authorize the Committee to make Awards payable in other
securities or other forms of property of a kind to be determined
by the Committee, and such other amendments as may be necessary or
desirable to implement such Awards, or discontinue this Incentive
Plan or any provision thereof, provided that no amendments or
modifications to this Incentive Plan shall, without the prior
approval of the stockholders normally entitled to vote for the
election of directors of the Company:
(a) permit the Company to decrease the Option price on any
outstanding Option;
(b) permit any change which would require the approval of
stockholders under Section 16 of the Securities Exchange Act
of 1934 or the rules thereunder or under Section 422 of the
Internal Revenue Code of 1986, or the rules thereunder (or any
law, rule, regulation or other provision that may replace such
statutes or rules); or
<PAGE> 21
(c) change any of the provisions of this Article IV.
2. No amendment to or discontinuance of this Incentive Plan or
any provision thereof by the Board or the stockholders of the
Company shall, without the written consent of the Participant,
adversely affect any Stock Option or Stock Appreciation Right
theretofore granted or bonus commitment or bonus award theretofore
made to such Participant under this Incentive Plan.
V. INTERPRETATION
1. Except as authorized herein with respect to Stock
Appreciation Rights, this Incentive Plan is not intended to and
shall not affect any option or stock appreciation right grant or
bonus commitment or award under the 1984 Plan, the 1988/I Plan or
the 1988/II Plan (or any other incentive plan of the Company, its
Subsidiaries and Associated Companies). No stock options or stock
appreciation rights or Awards of Restricted or unrestricted Shares
shall be granted under either the 1988/I Plan or the 1988/II Plan
after February 1, 1994.
2. This Incentive Plan is not intended to and shall not
preclude the establishment or operation by the Company or any
Subsidiary of (a) any thrift, savings and investment, achievement
award, stock purchase, employee recognition or other benefit plan
or arrangement for any group of employees, or (b) any other
incentive or bonus plan or arrangement for any employees
(hereinafter "Other Plan"), and any such Other Plan may be
authorized and payments made thereunder independently of this
Incentive Plan; provided, however, that no such Other Plan, other
than a plan for G. D. Searle & Co. and a plan for The NutraSweet
Company, shall provide for the granting of options or stock
appreciation rights to purchase or receive the appreciation on
the shares of any class of stock of the Company, or the making of
bonus commitments or bonus awards payable in any class of stock of
the Company, which in either form or substance are comparable to
those authorized under this Incentive Plan, unless such Other Plan
is established or operated in connection with the assumption by
the Company or a Subsidiary of the plans, options, stock
appreciation rights, bonus commitments or bonus awards of another
corporation, or the substitution of an Other Plan or options,
stock appreciation rights, bonus commitments or bonus awards under
such Other Plan in lieu of the plans, options, stock appreciation
rights, bonus commitments or bonus awards of such other
corporation, arising out of a merger or consolidation with, or the
acquisition of assets or stock of, such
<PAGE> 22
other corporation, or other transaction described in Section 424(a)
of the Internal Revenue Code of 1986, as may be amended from time to
time, as in effect at the time.
<PAGE> 23
MONSANTO MANAGEMENT INCENTIVE PLAN
OF 1994
(As Amended April 25, 1997 and July 25, 1997)
<PAGE> 1
Exhibit 10.6
SEARLE/MONSANTO STOCK PLAN OF 1994
AS AMENDED APRIL 25, 1997 AND JULY 25, 1997
I. GENERAL PROVISIONS
1. PURPOSES
The Searle/Monsanto Stock Plan of 1994 is designed:
- to attract, motivate and retain for the Company and its
Subsidiaries and Associated Companies personnel of exceptional
ability,
- to encourage ownership of Monsanto common stock by management,
- to align management interests with those of stockholders, and
- to provide a competitive executive compensation program.
This Incentive Plan shall be effective February 1, 1994 ("Effective
Date"), subject to the approval of this Incentive Plan by the
stockholders of Monsanto Company.
2. DEFINITIONS
Except where the context otherwise indicates, the following
definitions apply:
"Associated Company" means any corporation (or partnership, joint
venture, or other enterprise), of which the Company owns or
controls, directly or indirectly, 10% or more, but less than 50% of
the outstanding shares of stock normally entitled to vote for the
election of directors (or comparable equity participation and
voting power).
"Award" means any Stock Option, Stock Appreciation Right,
Restricted Share, unrestricted Share, dividend equivalent unit, or
other award awarded under this Incentive Plan.
"Board" means Board of Directors of the Company.
"Committee" means the Executive Compensation and Development
Committee of the Board, or its permitted delegate.
"Company" means G. D. Searle & Co.
<PAGE> 2
"Eligible Participant" means any officer or other salaried
employee (including a director who is a salaried employee) of the
Company, a Subsidiary or an Associated Company except that no
Reporting Person shall be an Eligible Participant.
"Incentive Plan" means the Searle/Monsanto Stock Plan of 1994, set
forth herein.
"Fair Market Value" shall mean, with respect to any given day, the
average of the highest and lowest sales prices of the Shares
reported as the New York Stock Exchange-Composite Transactions for
such day, or if the Shares were not traded on the New York Stock
Exchange on such day, then on the next preceding day on which the
Shares were traded, all as reported by The Wall Street Journal,
mid-west edition, under the heading New York Stock
Exchange-Composite Transactions or by such other source as the
Committee may select.
"Incentive Stock Option" or "Incentive Option" means an option
meeting the definition of that term as set forth in Section 3 of
Article II of this Incentive Plan.
"Monsanto" means Monsanto Company, a Delaware corporation.
"Non-Qualified Stock Option" or "Non-Qualified Option" means an
option referred to in Section 4 of Article II of this Incentive
Plan.
"Participant" means an Eligible Participant to whom an Award has
been granted pursuant to this Incentive Plan.
"Reporting Person" means a person subject to the reporting
requirements of Section 16(a) of the Securities Exchange Act of
1934 (or any law, rule, regulation or other provision that may
replace such statute) with respect to Shares.
"Restricted Shares" means Shares that were made subject to
restrictions in accordance with Section 6 of Article II of this
Incentive Plan.
"Shares" means shares of common stock of Monsanto and any shares
of stock or other securities received as a result of a Share
adjustment as set forth in Section 4 of this Article I.
"Stock Appreciation Right" means a right referred to in Section 5
of Article II of this Incentive Plan.
"Stock Appreciation Right Fair Market Value" or "SAR
<PAGE> 3
Fair Market Value" shall mean a value established by the Committee
for the exercise of a Stock Appreciation Right.
"Stock Option" or "Option" shall mean Incentive Stock Options
and/or Non-Qualified Stock Options.
"Subsidiary" means: (i) for the purpose of an Incentive Stock
Option, any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if, at the time of
the granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50% or
more of the total combined voting power of all classes of stock in
one of the other corporations in such chain; and (ii) for the
purposes of a Non-Qualified Stock Option, an Award of Shares
(restricted or not), or a Stock Appreciation Right, any corporation
(or partnership, joint venture, or other enterprise) of which the
Company owns or controls, directly or indirectly, 50% or more of
the outstanding shares of stock normally entitled to vote for the
election of directors (or comparable equity participation and
voting power).
"Termination of Employment" means the discontinuance of employment
of a Participant for any reason other than a Transfer.
"Transfer" means: (i) for the purpose of an Incentive Stock
Option, a change of employment of a Participant within the group
consisting of Monsanto and its Subsidiaries; and (ii) for the
purpose of a Non-Qualified Stock Option, a Stock Appreciation Right
or an Award of Shares (restricted or not), a change of employment
of a Participant within the group consisting of Monsanto and its
Subsidiaries, or, if the Committee so determines, a change of
employment of a Participant within the group consisting of
Monsanto, its Subsidiaries and Associated Companies.
3. ADMINISTRATION
(a) This Incentive Plan shall be administered by the Executive
Compensation and Development Committee of the Board (the
"ECDC"), except to the extent the ECDC delegates
administration pursuant to this paragraph. The ECDC may
delegate all or a portion of the administration of this
Incentive Plan to any Committee consisting of one or more
senior managers of the Company or its Subsidiaries.
(b) The Committee shall have the exclusive right to
<PAGE> 4
interpret this Incentive Plan, to select from among the
Eligible Participants the persons who are to receive Awards,
and to act in all matters pertaining to the granting of Awards
under this Incentive Plan including, without limitation, the
timing, pricing, amount and terms of any Award and the
amendment thereof consistent with the provisions of this
Incentive Plan. No Eligible Participant shall have any right
to be considered for or to receive any Awards. All acts and
decisions of the Committee with respect to any questions
arising in connection with the administration and
interpretation of this Incentive Plan, including the
severability of any and all of the provisions thereof, shall
be conclusive, final and binding upon all Eligible
Participants.
(c) The Committee may adopt and amend from time to time rules and
regulations of general application for the administration of
this Incentive Plan.
(d) Without limiting the foregoing Sections 3(a), (b) and (c) of
this Article I (and notwithstanding any other provisions of
this Incentive Plan), the Committee is authorized to take such
action as it determines to be necessary or advisable, and fair
and equitable to Participants, with respect to Options, Stock
Appreciation Rights, Awards of Restricted Shares and other
Awards in the event of: a merger of Monsanto with,
consolidation of Monsanto into, or the acquisition of
Monsanto by, another corporation; a sale or transfer of all or
substantially all of the assets of Monsanto to another
corporation or any other person or entity, a tender or
exchange offer for Shares made by any corporation, person or
entity (other than Monsanto); or other reorganization in which
Monsanto will not survive as an independent, publicly-owned
corporation. Such action may include (but shall not be
limited to) establishing, amending or waiving the forms,
terms, conditions and duration of Stock Options, Stock
Appreciation Rights, Awards of Restricted Shares and other
Awards so as to provide for earlier, later, extended or
additional times for exercise or payments, differing methods
for calculating payments, alternate forms and amounts of
payment, accelerated release of restrictions or other
modifications. The Committee may take such actions pursuant
to this Section 3(d) by adopting rules and regulations of
general applicability to all Participants or to certain
categories of Participants, by including, amending or waiving
<PAGE> 5
terms and conditions in Option and Stock Appreciation Right
grants, other Awards (including, without limitation,
agreements with respect to Restricted Shares), or by taking
action with respect to individual Participants. The Committee
may take such actions as part of the grants, commitments or
awards, or before or after the public announcement of any such
merger, consolidation, acquisition, sale or transfer of
assets, tender or exchange offer or other reorganization.
4. SHARE ADJUSTMENTS
In the event that at any time or from time to time a stock
dividend, stock split, recapitalization, merger, consolidation, or
other change in capitalization, or a sale by Monsanto of all or
part of its assets, or any distribution to stockholders other than
a cash dividend results in (a) the outstanding Shares, or any
securities exchanged therefor or received in their place, being
exchanged for a different number or class of shares of stock or
other securities of Monsanto, or for shares of stock or other
securities of any other corporation; or (b) new, different or
additional shares or other securities of Monsanto or of any other
corporation being received by the holders of outstanding Shares,
then:
(i) the total number of Shares authorized for Awards under
this Incentive Plan;
(ii) the number and class of Shares (A) that may be subject
to Stock Options or Stock Appreciation Rights,
(B) which have not been issued or transferred under
outstanding Stock Options or Stock Appreciation
Rights, and (C) which have been awarded but are
undelivered under this Incentive Plan; and
(iii) the purchase price to be paid per Share under
outstanding Stock Options and the number of Shares to
be transferred in settlement of outstanding Stock
Appreciation Rights;
shall in each case be equitably adjusted as determined by the
Committee in its discretion; provided, however, that all
adjustments made as the result of the foregoing in respect of each
Stock Option which is granted as an Incentive Stock Option shall
be made so that such Stock Option shall continue to be an
Incentive Stock Option as defined in Section 422 of the Internal
Revenue Code of 1986, as may be amended from time to time, or any
provisions that may hereafter be
<PAGE> 6
enacted in lieu thereof.
5. SHARES AUTHORIZED
The total number of Shares for which Awards may be granted under
this Incentive Plan shall not exceed 1,430,000 Shares.
Notwithstanding the foregoing, the total number of Shares that
shall be available for Awards of Restricted or unrestricted Shares
shall be 1/2 of 1% of the total number of Shares outstanding. The
limitations in this Section 5 are subject to the adjustments
provided for in Section 4 of this Article I and the provisions of
Sections 1(b) and 1(d) of Article II of this Incentive Plan.
The total number of Shares for which Awards may be granted under
this Incentive Plan to any one Eligible Participant shall not
exceed in any one calendar year 5% of the total number of Shares
for which Awards may be made under this Incentive Plan, subject to
the adjustments provided for in Section 4 of this Article I.
II. AWARDS
1. SHARES USED FOR AWARDS
(a) The Shares for which Awards may be granted under this
Incentive Plan may be authorized but unissued Shares, or
treasury Shares, or both.
(b) In the event that any unexercised Stock Option granted
hereunder lapses or ceases to be exercisable for any reason
other than a surrender of the Option pursuant to Section l(c)
of this Article II or the exercise of a Stock Appreciation
Right under Section 5 of this Article II, the Shares subject
to such Option shall again be available for award without
again being charged against the authorized Shares set forth in
Section 5 of Article I, provided the Participant whose Stock
Option has lapsed or ceased to be exercisable has received no
benefits of ownership from the Shares. Any amendment of any
Option or Stock Appreciation Right by the Committee pursuant
to Article I, Section 3 of this Incentive Plan shall not be
considered the grant of a new Option for the purpose of
Section 5 of Article I.
(c) In the event of death or total and permanent disability as
determined by the Committee, the Committee may, with the
consent of the Participant, his legal representative, or in
the event of death, a beneficiary designated in writing by the
<PAGE> 7
Participant during his lifetime, authorize payment, in cash
or in Shares, or partly in cash and partly in Shares, as the
Committee may direct, of an amount equal to the difference at
the time between the Fair Market Value of the Shares subject
to an Option and the Option price in consideration of the
surrender of the Option. In such an event the Shares subject
to the Option so surrendered shall be charged against the
limitations set forth in Section 5 of Article I.
(d) In the event that any Restricted or unrestricted Share Award
or installment thereof ceases to be payable for any reason,
the Shares subject to such Award shall again be available for
award without again being charged against the limitations on
the number of Shares set forth in Section 5 of Article I,
provided the Participant whose Award ceases to be payable has
received no benefits of ownership from the Shares.
2. INCIDENTS OF OPTIONS AND STOCK APPRECIATION RIGHTS
(a) An award of Stock Options or Stock Appreciation Rights may
be made at such time or times determined by the Committee
following the Effective Date to any Eligible Participant,
except that Incentive Options may not be awarded to employees
of Associated Companies. Each Stock Option and Stock
Appreciation Right shall be granted subject to such terms and
conditions, if any, not inconsistent with this Incentive Plan,
as shall be determined by the Committee, including any
provisions as to continued employment as consideration for the
grant or exercise of such Option or Stock Appreciation Right,
provisions as to performance conditions and any provisions
which may be advisable to comply with applicable laws,
regulations or rulings of any governmental authority.
(b) An Incentive Stock Option shall not be transferable by the
Participant except by will, by the laws of descent and
distribution,or pursuant to a written beneficiary designation,
and shall be exercisable during the lifetime of the
Participant only by him or by his guardian or legal
representative. A Non-Qualified Stock Option or Stock
Appreciation Right shall not be transferable except by will,
by the laws of descent and distribution, pursuant to a
written beneficiary designation, pursuant to a qualified
domestic relations order as defined by the Internal Revenue
Code of 1986, as amended, or
<PAGE> 8
Title I of the Employee Retirement Income Security Act or the
rules thereunder, or in such circumstances as would not result
in the failure to comply with Rule 16b-3 under the Securities
Exchange Act of 1934 (or any successor rule or provision) if
the transferor were a Reporting Person.
(c) Shares purchased upon exercise of a Stock Option shall be
paid for in such amounts, at such times and upon such terms as
shall be determined by the Committee and specified in the
grant of the Option. Without limiting the foregoing, the
Committee may establish payment terms for the exercise of
Stock Options which permit the Participant to deliver Shares
(or other evidence of ownership of Shares satisfactory to the
Company), including, at the Committee's option, Restricted
Shares, with a Fair Market Value equal to the Option price as
payment.
(d) The Option price per share shall be established by the grant
and shall not be decreased thereafter except pursuant to
Section 4 of Article I of this Incentive Plan.
(e) The Committee, in its discretion, may provide for the
escalation of the Option price per Share over all or
part of the term of the Option.
(f) The Committee, in its discretion, may offer Participants the
opportunity to elect to receive an Option grant in lieu of a
salary increase or a bonus or may offer Participants the
opportunity to purchase Options for cash or such other
consideration as the Committee in its discretion determines.
(g) The Committee, in its discretion, may require as a condition
to the grant or vesting of Options, the deposit of Shares
owned by the Participant receiving such grant, and the
forfeiture of such Options, if such deposit is not made or
maintained during the required holding period. Such deposited
Shares may not be otherwise sold, pledged or disposed of
during the applicable holding period.
3. INCENTIVE OPTIONS
An Incentive Option shall be an "Incentive Stock Option" as that
term is defined in Section 422 of the Internal Revenue Code of
1986, as may be amended from time to time, as in effect at the
time of the grant of any such Option, or any statutory provision
that may be
<PAGE> 9
enacted to replace such Section. Each provision of this Incentive
Plan and of each Incentive Stock Option granted hereunder shall be
construed so that each such Option shall be an Incentive Stock
Option, and any provision thereof that cannot be so construed shall
be disregarded. Incentive Stock Options shall be granted only to
purchase unrestricted Shares each of whom may be granted one or more
such Options at such time or times determined by the Committee
following the Effective Date until January 31, 2004, subject to the
following conditions:
(a) The Option price per Share shall be set by the grant but
shall not be less than 100% of the Fair Market Value at the
time of the grant.
(b) The Option and its related Stock Appreciation Right, if any,
may be exercised in full or in part from time to time within
ten (10) years from the date of the grant, or such shorter
period as may be specified by the Committee in the grant,
provided that in any event each shall lapse and cease to be
exercisable upon, or within such period following,
Termination of Employment as shall have been determined by
the Committee and as specified in the Option or Stock
Appreciation Right; provided, however, that such period
following Termination of Employment shall not exceed twelve
months unless employment shall have terminated:
(i) as a result of retirement pursuant to, and as defined
in an applicable pension plan of Monsanto, its
Subsidiary or Associated Company or total and permanent
disability as determined by the Committee; or
(ii) as a result of death or death shall have occurred
following Termination of Employment and while the
Option or Stock Appreciation Right was still
exercisable; and
provided, further, that such period following Termination of
Employment shall in no event extend the original exercise
period of the Option or related Stock Appreciation Right, if
any.
(c) The aggregate Fair Market Value (determined at the time the
Option is granted) of the Shares with respect to which
Incentive Stock Options are first exercisable during any
calendar year by any Eligible Participant shall not exceed
$100,000; however, if the Fair Market Value of Incentive Stock
Option Shares (at date of grant) exceeds $100,000 in the
calendar year in which Incentive
<PAGE> 10
Stock Options are first exercisable, Shares with a Fair Market
Value at date of grant exceeding $100,000 shall not be deemed
to be Incentive Stock Options.
(d) Incentive Stock Options shall be granted only to an Eligible
Participant who, at the time the Option is granted, does not
own stock possessing more than 10% of the total combined
voting power of all classes of stock of Monsanto.
(e) Any other terms and conditions which the Committee determines,
upon advice of counsel, should be imposed for the Option to
qualify as an Incentive Stock Option and any other terms and
conditions not inconsistent with this Incentive Plan as
determined by the Committee; including provisions making the
Shares subject to such Option Restricted Shares or provisions
making vesting or the ability to exercise subject to
performance conditions.
4. NON-QUALIFIED OPTIONS
One or more Options may be granted as Non-Qualified Options to
purchase unrestricted Shares or Restricted Shares to an Eligible
Participant at such time or times determined by the Committee,
following the Effective Date, subject to the following terms and
conditions:
(a) The Option price per Share shall be established by the grant
but shall not be less than 100% of the Fair Market Value at
the time of the grant (or such later date as the Committee
shall determine to be the grant date).
(b) The Option and its related Stock Appreciation Right, if any,
may be exercised in full or in part from time to time within
ten (10) years from the date of the grant, or such shorter
period as may be specified by the Committee in the grant,
provided that in any event each shall lapse and cease to be
exercisable upon, or within such period following,
Termination of Employment as shall have been determined by
the Committee and as specified in the Option or Stock
Appreciation Right; provided, however, that such period
following Termination of Employment shall not exceed twelve
months unless employment shall have terminated:
(i) as a result of retirement pursuant to, and as defined
in, the applicable pension plan of Monsanto, its
Subsidiary or Associated Company or total and permanent
disability as
<PAGE> 11
determined by the Committee; or
(ii) as a result of death or death shall have occurred
following Termination of Employment and while the Option
or Stock Appreciation Right was still exercisable; and
provided, further, that such period following Termination of
Employment shall in no event extend the original exercise
period of the Option or related Stock Appreciation Right, if
any.
(c) The Option grant may include any other terms and conditions
not inconsistent with this Incentive Plan as determined by the
Committee, including provisions making the Shares subject to
such Option Restricted Shares or provisions making vesting or
the ability to exercise subject to the satisfaction of
performance conditions.
5. STOCK APPRECIATION RIGHTS
A Stock Appreciation Right may be granted to an Eligible
Participant in connection with (and only in connection with) an
Incentive Stock Option or a Non-Qualified Option granted under
this Plan, or under any other incentive plan of Monsanto or its
Subsidiaries which was approved by the Monsanto shareholders,
subject to the following terms and conditions:
(a) Such Stock Appreciation Right shall entitle a holder of an
Option within the period specified for the exercise of the
Option in the related Option grant to surrender the
unexercised Option (or a portion thereof) and to receive in
exchange therefor a payment in cash or Shares having an
aggregate value equal to the product of (i) the amount by
which (A) the SAR Fair Market Value of each Share exceeds (B)
the Option price per Share, times (ii) the number of Shares
under the Option, or portion thereof, which is surrendered.
(b) Except as otherwise expressly provided herein, each Stock
Appreciation Right granted hereunder shall be subject to the
same terms and conditions as the related Option. It shall be
exercisable only to the extent such Option is exercisable and
shall terminate or lapse and cease to be exercisable when the
related Option terminates or lapses. The Committee may grant
Stock Appreciation Rights concurrently with grants of Options
or in connection with previously granted Options under this
Incentive Plan which are
<PAGE> 12
unexercised and have not terminated or lapsed. With respect to
Stock Appreciation Rights granted in connection with such
previously granted Options, the Committee shall provide that
such Stock Appreciation Rights shall not be exercisable until
the holder completes six (6) months (or such longer period as
the Committee shall determine) of service with the Company, a
Subsidiary, or an Associated Company immediately following the
date of the grant of such Stock Appreciation Rights.
(c) The Committee shall have sole discretion to determine in each
case whether the payment will be in the form of all cash,
all Shares (which may, at the Committee's discretion, be
Restricted Shares), or any combination thereof. If payment is
to be made in Shares, the number of Shares shall be determined
as follows: the amount payable in Shares shall be divided by
the SAR Fair Market Value of Shares.
(d) Upon exercise of a Stock Appreciation Right, the number of
Shares subject to exercise under the related Option shall
automatically be reduced by the number of Shares represented
by the Option or portion thereof which is surrendered. To the
extent that a Stock Appreciation Right shall be exercised, any
Shares transferred upon such exercise shall not be charged
against the maximum limitations upon the grant of Options set
forth in this Incentive Plan under which such Option shall
have been granted but the Option in connection with which a
Stock Appreciation Right shall have been granted shall be
deemed to have been exercised for the purpose of such maximum
limitations.
(e) The Committee shall have sole discretion as to the timing of
any payment made in cash, Shares, or a combination thereof
upon exercise of Stock Appreciation Rights hereunder, whether
in a lump sum, in annual installments or otherwise deferred
and the Committee shall have sole discretion to determine
whether such payments may bear amounts equivalent to interest
or cash dividends.
(f) For purposes of this paragraph 5(f) of Article II:
(i) "Unrelated Party" means any party or group of parties
acting together other than (A) Monsanto, its directors
and officers, or (B) any nominee holder for any stock
exchange;
(ii) "Offer" means any tender or exchange offer
<PAGE> 13
made by an Unrelated Party for the Shares and shall be
deemed to occur upon the first purchase or exchange of
such Shares;
(iii) "Change of Control" means any acquisition, beneficially
or otherwise, by any Unrelated Party of 25% or more of
the combined voting power of the common and preferred
stock of Monsanto and shall be deemed to occur upon the
date that the Unrelated Party attains control of said
25% or more of the combined voting power;
(iv) "Change of Control Market Value" of the Shares means
the higher of--
(A) the value for which such Shares may be exchanged or
offered under any Offer pursuant to which Shares are
actually exchanged or purchased; or
(B) the Fair Market Value of such Shares on the date of
exercise of a Stock Appreciation Right.
Notwithstanding the foregoing provisions of this Section 5 of
Article II and without limiting the provisions of Section 3 of
Article I of this Incentive Plan, in the event of an Offer or
Change of Control, a Participant holding an unexercised Stock
Appreciation Right may exercise such Stock Appreciation Right
and elect to be paid solely in cash in an amount equal to the
difference between the Option price and the Change of Control
Market Value of the Shares, unless within five (5) business
days after receipt of notification of such election by the
Secretary of Monsanto, the Committee acts to disapprove the
cash election. Unless it acts to disapprove, the Committee's
consent shall be deemed to be given at the close of business
on the fifth business day after the Secretary's receipt of
notification of such election and payment shall be made as
soon as practicable after expiration of such five (5) business
day period. The election provided herein shall apply only: (x)
during the thirty (30) day period following the first exchange
or purchase of Shares pursuant to an Offer; or (y) during the
thirty (30) day period following the date on which sufficient
Shares are acquired to constitute a Change of Control.
(g) For purposes of this paragraph 5(g) of Article II:
<PAGE> 14
(i) "Unrelated Party" means any party or group of parties
acting together other than (A) Monsanto, its directors
and officers, or (B) any nominee holder for any stock
exchange;
(ii) "Alternate Change of Control" means any acquisition,
beneficially or otherwise, by any Unrelated Party of a
percentage of the combined voting power of the common
and preferred stock of Monsanto specified by the
Committee (but not less than 10%) and shall be deemed to
occur upon the date that the Unrelated Party attains
control of said percentage of the combined voting power;
(iii) "Change of Control Termination of Employment" means the
termination of employment of a Participant by Monsanto,
the Subsidiaries or the Associated Companies without
cause (as defined by the Committee) or by the
Participant for good eason (as defined by the Committee)
within a period of time specified by the Committee
following an Alternate Change of Control;
(iv) "Alternate Change of Control Market Value" of the Shares
means the Fair Market Value of such Shares on the date
of exercise of a Stock Appreciation Right.
Notwithstanding the foregoing provisions of this Section 5 of
Article II and without limiting the provisions of Section 3 of
Article I of this Incentive Plan, in the event of an Alternate
Change of Control and a Change of Control Termination of
Employment, a Participant holding an unexercised Stock
Appreciation Right who is selected by the Committee may
exercise such Stock Appreciation Right and elect to be paid
solely in cash in an amount equal to the difference between
the Option price and the Alternate Change of Control Market
Value of the Shares, unless within five (5) business days
after receipt of notification of such election by the
Secretary of Monsanto, the Committee acts to disapprove the
cash election. Unless it acts to disapprove, the Committee's
consent shall be deemed to be given at the close of business
on the fifth business day after the Secretary's receipt of
notification of such election and payment shall be made as
soon as practicable after expiration of such five (5) business
day period. The election provided herein
<PAGE> 15
shall apply only during the thirty (30) day period following a
Change of Control Termination of Employment.
6. BONUS SHARES AND RESTRICTED SHARES
(a) An Award of Shares or Restricted Shares may be made at such
time or times determined by the Committee following the
Effective Date to any Eligible Participant. The Committee
shall have full discretion to determine the terms and
conditions of payment of any Award, including without
limitation, what part of such Award shall be paid in
unrestricted Shares and Restricted Shares, the time or times
of payment of any Award, and the time or times of the lapse
of the restrictions on Restricted Shares.
(b) For the purpose of determining the number of Shares to be used
in payment of an Award, the amount of the Award payable in
Shares shall be divided by the Fair Market Value of the Shares
on the date of the determination of the amount of the Award by
the Committee, or if the Committee so directs, the date
immediately preceding the date the Award is paid.
(c) The portion of an Award payable in Restricted Shares shall
be paid at the time of the Award either by book-entry
registration or by delivering to the Participant, or a
custodian or escrow designated by the Committee and the
Participant, a certificate or certificates for such Restricted
Shares, registered in the name of such Participant. The
Participant shall have all of the rights of a stockholder with
respect to such Shares, subject to such terms and conditions,
including forfeitures or resale to the Company, if any, as may
be determined by the Committee. The Committee and the
Participant may designate the Company, Monsanto or one or more
employees to act as custodian or escrow for the certificates.
(d) The Committee, in its discretion, may require as a condition
to the grant of any Shares or Restricted Shares, the deposit
of Shares owned by the Participant receiving such grant, and
the forfeiture of the Award of Shares or Restricted Shares, if
such deposit is not made or maintained during any applicable
restricted period. Such deposited Shares may not be otherwise
sold, pledged or disposed of during any applicable restricted
period.
<PAGE> 16
(e) Restricted Shares shall be subject to such terms and
conditions, including forfeiture, if any, and to such
restrictions against sale, transfer or other disposition as
may be determined by the Committee at the time a Non-Qualified
Option for the purchase of Restricted Shares is granted, at
the time a Stock Appreciation Right to be settled with
Restricted Shares is granted or at the time of making an Award
of Restricted Shares. Any new or additional or different
Shares or other securities resulting from any adjustment of
such Shares of the type described in Section 4 of Article I
shall be subject to the same terms, conditions, and
restrictions as the Restricted Shares prior to such
adjustment. The Committee may, in its discretion, remove,
modify or accelerate the release of restrictions on any
Restricted Shares in the event of hardship or disability of
the Participant while employed, in the event that the
Participant ceases to be an employee of Monsanto, a Subsidiary
or Associated Company, as the result of death or otherwise, in
the event of a relocation of a Participant to another country
or for such other reasons as the Committee may deem
appropriate. In the event of the death of a Participant
following the transfer of Restricted Shares to him, the legal
representative of the Participant, the beneficiary designated
in writing by the Participant during his lifetime, or the
person receiving such Shares under his will or under the laws
of descent and distribution shall take such Shares subject to
the same restrictions, conditions and provisions in effect at
the time of his death, to the extent applicable.
7. DIVIDENDS, DIVIDEND EQUIVALENTS AND INTEREST EQUIVALENTS
(a) No cash dividends shall be paid on Shares which have been
awarded but not delivered or on Shares subject to unexercised
Options. The Committee may provide, however, that a
Participant to whom an Option has been awarded which is
exercisable in whole or in part at a future time for Shares or
a Participant who has been awarded Shares payable in whole or
in part at a future time, shall be entitled to receive an
amount per Share, equal in value to the cash dividends, if
any, paid per Share on issued and outstanding Shares, as of
the dividend record dates occurring during the period between
the date of the Award and the time each such Share is
delivered. Such amounts (herein
<PAGE> 17
called "dividend equivalents") may, in the discretion of the
Committee, be:
(i) paid in cash or Shares either from time to time prior
to or at the time of the delivery of such Shares or upon
expiration of the Option if it shall not have been fully
exercised (except that payment of dividend equivalents
on Incentive Options may not be made prior to exercise);
or
(ii) converted into contingently credited Shares (with
respect to which dividend equivalents shall accrue) in
such manner, at such value, and deliverable at such time
or times, as may be determined by the Committee.
Such Shares (whether delivered or contingently credited) shall
be charged against the limitations set forth in Section 5 of
Article I.
(b) The Committee, in its discretion, may authorize payment of
interest equivalents on any portion of any Award payable at
a future time in cash, and interest equivalents on dividend
equivalents which are payable in cash at a future time.
(c) The Committee, in its discretion, may provide that dividends
paid on Restricted Shares shall, during the applicable
restricted period, be held by the Company to be paid upon the
lapse of restrictions or to be forfeited upon forfeiture of
the Shares.
III. MISCELLANEOUS PROVISIONS
1. Neither a Stock Option nor Stock Appreciation Right shall be
transferable except as provided for herein. If any Participant
makes such a transfer in violation hereof, any obligation of the
Company with respect to such Stock Option or Stock Appreciation
Right shall forthwith terminate.
2. Nothing in this Incentive Plan or any booklet or other document
describing or referring to this Incentive Plan shall be deemed to
confer on any employee or Participant the right to continue in the
employ of his employer or affect the right of his employer to
terminate the employment of any such person with or without cause.
3. This Incentive Plan and all actions taken hereunder shall be
governed by the laws of the State of Delaware.
4. The Company may make such provisions and take such
<PAGE> 18
steps as it may deem necessary or appropriate for the withholding of
any taxes which the Company is required by any law or regulation of
any governmental authority, whether federal, state or local,
domestic or foreign, to withhold in connection with any Stock Option
or the exercise thereof, any Stock Appreciation Right or the
exercise thereof, or the grant of any other Award, including, but
not limited to, the withholding of cash or Shares which would be
paid or delivered pursuant to such exercise or Award or another
exercise or Award under this Incentive Plan until the Participant
reimburses the Company for the amount the Company is required to
withhold with respect to such taxes, or cancelling any portion of
such Award or another Award under this Incentive Plan in an amount
sufficient to reimburse itself for the amount it is required to so
withhold, or selling any property contingently credited by the
Company for the purpose of paying such award or another award under
this Incentive Plan, in order to withhold or reimburse itself for
the amount it is required to so withhold. The Committee may permit a
Participant (or any beneficiary or other person authorized to act)
to elect to pay a portion or all of any amounts required or
permitted to be withheld to satisfy federal, state, local or foreign
tax obligations by directing the Company to withhold a number of
whole Shares which would otherwise be distributed and which have a
Fair Market Value sufficient to cover the amount of such required or
permitted withholding taxes.
5. Notwithstanding any other provision of this Incentive Plan,
for purposes of any Award that is outstanding as of the date that
the Company spins off the Company's chemical businesses into a new
publicly traded company ("Chemicals") and is held by a Participant
who in connection with such spinoff becomes an employee of
Chemicals (or a subsidiary or associated company of Chemicals)
rather than an employee of the Company (or a Subsidiary or
Associated Company of the Company), such change of employment shall
not constitute a Termination of Employment. With respect to any
such Award held by such a Participant, Termination of Employment
shall mean such Participant's termination of employment with
Chemicals other than a Transfer, with Transfer defined as a change
of employment of a Participant within the group consisting of
Chemicals and its subsidiaries, or, if the Committee so determines,
a change of employment of a Participant within the group consisting
of Chemicals, its subsidiaries, and its associated companies. For
purposes of this section, a subsidiary of Chemicals means any
corporation (or partnership, joint venture, or other enterprise) of
which Chemicals
<PAGE> 19
owns or controls, directly or indirectly, 50% or more of the
outstanding shares of stock normally entitled to vote for the
election of directors (or comparable equity participation and voting
power) and an associated company of Chemicals means any corporation
(or partnership, joint venture, or other enterprise), of which
Chemicals owns or controls, directly or indirectly, 10% or more, but
less than 50% of the outstanding shares of stock normally entitled
to vote for the election of directors (or comparable equity
participation and voting power).
IV. AMENDMENTS
1. The Board may from time to time amend or modify this Incentive Plan,
provided that no amendments or modifications to this Incentive Plan
shall, without the prior approval of the stockholders normally
entitled to vote for the election of directors of Monsanto:
(a) permit the Company to decrease the Option price on any
outstanding Option;
(b) permit any change which would require the approval of
stockholders of Monsanto under Section 16 of the Securities
Exchange Act of 1934 or the rules thereunder or under Section
422 of the Internal Revenue Code of 1986, or the rules
thereunder (or any laws, rules, regulations or other
provisions that may replace such statutes or rules); or
(c) change any of the provisions of this Article IV.
2. No amendment to or discontinuance of this Incentive Plan or
any provision thereof by the Board or the stockholders of Monsanto
shall, without the written consent of the Participant, adversely
affect any Stock Option or Stock Appreciation Right theretofore
granted or other Award theretofore made to such Participant under
this Incentive Plan.
V. INTERPRETATION
1. Except as authorized herein with respect to Stock Appreciation
Rights, this Incentive Plan is not intended to and shall not affect
any option or stock appreciation right grant or other award under
any other incentive plan of Monsanto, its Subsidiaries and
Associated Companies. No stock options, stock appreciation rights or
Restricted Share awards shall be granted under the Searle Monsanto
Stock Option Plan of 1986 after February 1, 1994.
<PAGE> 20
2. This Incentive Plan is not intended to and shall not preclude the
establishment or operation by the Company or any Subsidiary of (a)
any thrift, savings and investment, achievement award, stock
purchase, employee recognition or other benefit plan or arrangement
for any group of employees, or (b) any other incentive or bonus plan
or arrangement for any employees (hereinafter "Other Plan"), and any
such Other Plan may be authorized and payments made thereunder
independently of this Incentive Plan.
<PAGE> 21
SEARLE/MONSANTO STOCK PLAN
OF 1994
(As Amended April 25, 1997 and July 25, 1997)
<PAGE> 1
Exhibit 10.7
MONSANTO MANAGEMENT INCENTIVE PLAN OF 1996
As Amended April 25, 1997 and July 25, 1997
I. GENERAL PROVISIONS
1. PURPOSES
The Monsanto Management Incentive Plan of 1996 is designed to:
* focus management on business performance that creates stockholder
value,
* encourage innovative approaches to the business of the Company,
* reward for results,
* encourage ownership of Monsanto common stock by management, and
* encourage taking higher risks with an opportunity for higher
reward.
This Incentive Plan shall be effective April 15, 1996 ("Effective
Date"), subject to the approval of this Incentive Plan by the
stockholders of the Company.
2. DEFINITIONS
Except where the context otherwise indicates, the following
definitions apply:
"Associated Company" means any corporation (or partnership, joint
venture, or other enterprise), of which the Company owns or controls,
directly or indirectly, 10% or more, but less than 50% of the
outstanding shares of stock normally entitled to vote for the election
of directors (or comparable equity participation and voting power).
"Award" means any Stock Option, Stock Appreciation Right, Restricted
Share, unrestricted Share, dividend equivalent unit or other award
granted under this Incentive Plan.
"Board" means Board of Directors of the Company.
"Committee" means the ECDC, or its permitted delegate.
"Compensation Committee" means one or more committees appointed by the
ECDC composed of one or more senior managers of the Company or a
Subsidiary to whom the ECDC may delegate its powers (or a portion
thereof) to administer this Incentive Plan pursuant to Section 3(a) of
this Article I.
"ECDC" means the Executive Compensation and Development Committee or
such other committee consisting of two or more members of the Board as
may be appointed by the Board to administer this Incentive Plan pursuant
to Section 3(a) of this Article I.
"Company" means Monsanto Company, a Delaware corporation.
A-1
<PAGE> 2
"Eligible Participant" means any officer or other salaried employee
(including a director who is a salaried employee) of the Company, a
Subsidiary, or an Associated Company.
"Incentive Plan" means the Monsanto Management Incentive Plan of 1996,
set forth herein.
"Fair Market Value" shall mean, with respect to any given day, the
average of the highest and lowest sales prices of the Shares reported as
the New York Stock Exchange-Composite Transactions for such day, or if
the Shares were not traded on the New York Stock Exchange on such day,
then on the next preceding day on which the Shares were traded, all as
reported by The Wall Street Journal, mid-west edition, under the heading
New York Stock Exchange-Composite Transactions or by such other source
as the Committee may select.
"Incentive Stock Option" or "Incentive Option" means an option meeting
the definition of that term as set forth in Section 3 of Article II of
this Incentive Plan.
"1984 Plan" means the Monsanto Management Incentive Plan of 1984, as
amended.
"1986 Plan" means the Searle Monsanto Stock Option Plan of 1986, as
amended.
"1988/I Plan" means the Monsanto Management Incentive Plan of 1988/I, as
amended.
"1988/II Plan" means the Monsanto Management Incentive Plan of 1988/II,
as amended.
"1991 Plan" means the NutraSweet/Monsanto Stock Plan of 1991, as
amended.
"1994 NutraSweet/Monsanto Plan" means the NutraSweet/Monsanto Stock
Plan of 1994, as amended.
"1994 Plan" means the Monsanto Management Incentive Plan of 1994,
as amended.
"1994 Searle/Monsanto Plan" means the Searle/Monsanto Stock Plan of
1994, as amended.
"Non-Qualified Stock Option" or "Non-Qualified Option" means an option
referred to in Section 4 of Article II of this Incentive Plan.
"Participant" means an Eligible Participant to whom a Stock Option or a
Stock Appreciation Right has been granted, a bonus commitment made or a
bonus awarded pursuant to this Incentive Plan.
"Reporting Person" means a person subject to the reporting requirements
of Section 16(a) of the Securities Exchange Act of 1934 (or any law,
rule, regulation or other provision that may replace such statute) with
respect to Shares.
"Restricted Shares" means Shares that were made subject to restrictions
in accordance with Section 6 of Article II of this Incentive Plan.
A-2
<PAGE> 3
"Shares" means shares of common stock of the Company and any shares of
stock or other securities received as a result of a Share adjustment as
set forth in Section 4 of this Article I.
"Stock Appreciation Right" means a right referred to in Section 5 of
Article II of this Incentive Plan.
"Stock Appreciation Right Fair Market Value" or "SAR Fair Market Value"
shall mean a value established by the Committee for the exercise of a
Stock Appreciation Right. If such exercise occurs during any quarterly
"window period" as specified by Rule 16b-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended from
time to time, or any law, rule, regulation or other provision that may
hereafter replace such Rule, the Committee may establish a common value
for exercises during such window period.
"Stock Option" or "Option" shall mean Incentive Stock Options and/or
Non-Qualified Stock Options.
"Subsidiary" means: (i) for the purpose of an Incentive Stock Option,
any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the time of the granting
of the Option, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain; and (ii) for the purposes of a Non-Qualified
Stock Option, a Stock Appreciation Right or an Award of Shares
(restricted or not), any corporation (or partnership, joint venture, or
other enterprise) of which the Company owns or controls, directly
or indirectly, 50% or more of the outstanding shares of stock normally
entitled to vote for the election of directors (or comparable equity
participation and voting power).
"Termination of Employment" means the discontinuance of employment of a
Participant for any reason other than a Transfer.
"Transfer" means: (i) for the purpose of an Incentive Stock Option, a
change of employment of a Participant within the group consisting of the
Company and its Subsidiaries; and (ii) for the purpose of a
Non-Qualified Stock Option, a Stock Appreciation Right or an Award of
Shares (restricted or not), a change of employment of a Participant
within the group consisting of the Company and its Subsidiaries, or, if
the Committee so determines, a change of employment of a Participant
within the group consisting of the Company, its Subsidiaries
and Associated Companies.
3. ADMINISTRATION
(a) This Incentive Plan shall be administered by the ECDC, except to
the extent the ECDC delegates administration pursuant to this
paragraph. The ECDC may delegate all or a portion of the
administration of this Incentive Plan to one or more Compensation
Committees and may authorize further delegation by the
Compensation Committees to senior managers of the Company or its
Subsidiaries; provided that determinations regarding the timing,
pricing, amount and terms of any Award to a Reporting Person shall
be made only by the ECDC. No person
A-3
<PAGE> 4
shall be eligible or continue to serve as a member of the ECDC
unless such person is (i) a "disinterested person" within the
meaning of Rule 16b-3 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended from time to time,
or any law, rule, regulation or other provision that may hereafter
replace such Rule and (ii) an "outside director" within the
meaning of Section 162(m) of the Internal Revenue Code of 1986, as
may be amended from time to time, and no person shall be eligible
for the grant of an Award under this Incentive Plan while serving
as a member of the ECDC.
(b) The Committee shall have the exclusive right to interpret this
Incentive Plan, to select the persons who are to receive Awards,
and to act in all matters pertaining to the granting of Awards
under this Incentive Plan including, without limitation, the
timing, pricing, amount and terms of any Award and the amendment
thereof consistent with the provisions of this Incentive Plan. No
Eligible Participant shall have any right to be considered
for or to receive any Awards. All acts and decisions of the
Committee with respect to any questions arising in connection with
the administration and interpretation of this Incentive Plan,
including the severability of any and all of the provisions
thereof, shall be conclusive, final and binding upon all
Eligible Participants.
(c) The Committee may adopt and amend from time to time rules and
regulations of general application for the administration of
this Incentive Plan.
(d) Without limiting the foregoing Sections 3(a), (b) and (c) of this
Article I (and notwithstanding any other provisions of this
Incentive Plan), the Committee is authorized to take such action
as it determines to be necessary or advisable, and fair and
equitable to Participants, with respect to Awards in the event of:
a merger of the Company with, consolidation of the Company into,
or the acquisition of the Company by, another corporation; a
sale or transfer of all or substantially all of the assets of the
Company to another corporation or any other person or entity; a
separation from the Company, including any spin-off or other
distribution to stockholders other than an ordinary cash dividend;
a tender or exchange offer for Shares made by any corporation,
person or entity (other than the Company); or other reorganization
in which the Company will not survive as an independent,
publicly-owned corporation. Such action may include (but shall
not be limited to) establishing, amending or waiving the forms,
terms, conditions and duration of Stock Options, Stock
Appreciation Rights, Awards of Restricted Shares and other Awards
so as to provide for earlier, later, extended or additional times
for exercise or payments, differing methods for calculating
payments, alternate forms and amounts of payment, accelerated
release of restrictions or other modifications. The Committee may
take such actions pursuant to this Section 3(d) by adopting rules
and regulations of general applicability to all Participants or to
certain categories of Participants, by including, amending or
waiving terms and conditions in Awards (including, without
limitation, agreements with respect to Restricted Shares), or by
taking action with respect to individual Participants. The
Committee may take such actions as part of the Awards, or before
or after the public announcement of any such merger,
consolidation, acquisition, sale or transfer of assets,
separation, tender or exchange offer or other reorganization.
A-4
<PAGE> 5
4. SHARE ADJUSTMENTS
In the event that at any time or from time to time a stock dividend,
stock split, recapitalization, merger, consolidation, or other change in
capitalization, or a sale by the Company of all or part of its assets,
or a separation from the Company, including any spin-off or other
distribution to stockholders other than an ordinary cash dividend,
results in (a) the outstanding Shares, or any securities exchanged
therefor or received in their place, being exchanged for a different
number or class of shares of stock or other securities of the Company,
or for shares of stock or other securities of any other corporation; or
(b) new, different or additional shares or other securities of the
Company or of any other corporation being received by the holders of
outstanding Shares, then:
(i) the total number of Shares authorized for Awards under
this Incentive Plan;
(ii) the number and class of Shares (A) that may be subject to
Stock Options or Stock Appreciation Rights, (B) which have not
been issued or transferred under outstanding Stock Options or
Stock Appreciation Rights, and (C) which have been awarded but
are undelivered under this Incentive Plan; and
(iii) the purchase price to be paid per Share under outstanding
Stock Options and the number of Shares to be transferred in
settlement of outstanding Stock Appreciation Rights;
shall in each case be appropriately adjusted by the Committee
in its discretion; provided, however, that all adjustments made
as the result of the foregoing in respect of each Stock Option
which is granted as an Incentive Stock Option shall be made so
that such Stock Option shall continue to be an Incentive Stock
Option as defined in Section 422 of the Internal Revenue Code of
1986, as may be amended from time to time.
5. SHARES AUTHORIZED
The total number of Shares for which awards may be granted under this
Incentive Plan shall not exceed 9,250,000 Shares. Notwithstanding the
foregoing, the total number of Shares that shall be available for
Awards of Restricted or unrestricted Shares shall be 1/2 of 1% of the
total number of Shares outstanding. The limitations in this Section 5
are subject to the adjustments provided for in Section 4 of this Article
I; the provisions of Section 1(b) of Article II of this Incentive Plan;
and the provisions of Section 3(d) of Article III of this Incentive
Plan.
The total number of Shares for which Awards may be granted under this
Incentive Plan to any one Eligible Participant shall not exceed in any
three-year period 15% of the total number of Shares for which Awards
may be made under this Incentive Plan, subject to the adjustments
provided for in Section 4 of this Article I.
II. AWARDS
1. SHARES USED FOR AWARDS
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(a) The Shares for which Options may be granted under this
Option Plan may be authorized but unissued Shares, or treasury
Shares, or both.
(b) In the event that any unexercised Stock Option granted
hereunder lapses or ceases to be exercisable for any reason other
than a surrender of the Option pursuant to Section l(c) of this
Article II or the exercise of a Stock Appreciation Right under
Section 5 of this Article II, the Shares subject to such Option
shall again be available for Option grants under this Option
Plan without again being charged against the authorized Shares set
forth in Section 5 of Article I if not prohibited by Rule 16b-3
under the Securities Exchange Act of 1934 (or any successor rule
or provision). Any amendment of any Option or Stock Appreciation
Right by the Committee pursuant to Article I, Section 3 of this
Incentive Plan shall not be considered the grant of a new Option
for the purpose of Section 5 of Article I.
(c) In the event of death or total and permanent disability as
determined by the Committee, the Committee may, with the consent
of the Participant, his legal representative, or in the event of
death, a beneficiary designated in writing by the Participant
during his lifetime, authorize payment, in cash or in Shares, or
partly in cash and partly in Shares, as the Committee may direct,
of an amount equal to the difference at the time between the Fair
Market Value of the Shares subject to an Option and the Option
price in consideration of the surrender of the Option. In such an
event the Shares subject to the Option so surrendered shall be
charged against the limitations set forth in Section 5 of Article
I.
(d) In the event that any Award or installment thereof ceases to
be payable for any reason, the Shares subject to such Award shall
again be available for Award without again being charged against
the limitations on the number of Shares set forth in Section 5 of
Article I if not prohibited by Rule 16b-3 under the Securities
Exchange Act of 1934 (or any successor rule or provision).
2. INCIDENTS OF OPTIONS AND STOCK APPRECIATION RIGHTS
(a) An Award of Stock Options or Stock Appreciation Rights may
be made at such time or times determined by the Committee
following the Effective Date to any Eligible Participant, except
that Incentive Options may not be awarded to employees of
Associated Companies. Each Stock Option and Stock Appreciation
Right shall be granted subject to such terms and conditions, if
any, not inconsistent with this Incentive Plan, as shall be
determined by the Committee, including any provisions as to
continued employment as consideration for the grant or exercise of
such Option or Stock Appreciation Right, provisions as to
performance conditions and any provisions which may be advisable
to comply with applicable laws, regulations or rulings of any
governmental authority.
(b) An Incentive Stock Option or Stock Appreciation Right shall
not be transferable by the Participant otherwise than by will,
by the laws of descent and distribution, or pursuant to a
written beneficiary designation, and shall be exercisable during
the lifetime of the Participant only by him or by his guardian or
legal representative. A Non-Qualified Stock Option or Stock
Appreciation Right shall not be transferable except by will, by
the laws of descent and distribution, pursuant to a written
beneficiary designation,
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pursuant to a qualified domestic
relations order as defined by the Internal Revenue Code of 1986,
as amended, or Title I of the Employee Retirement Income Security
Act or the rules thereunder, or in such circumstances as would not
result in the failure to comply with Rule 16b-3 under the
Securities Exchange Act of 1934 (or any successor rule or
provision) if the transferor were a Reporting Person.
(c) Shares purchased upon exercise of a Stock Option shall be
paid for in such amounts, at such times and upon such terms as
shall be determined by the Committee and specified in the grant of
the Option. Without limiting the foregoing, the Committee may
establish payment terms for the exercise of Stock Options which
permit the Participant to deliver Shares (or other evidence of
ownership of Shares satisfactory to the Company), including, at
the Committee's option, Restricted Shares, with a Fair Market
Value equal to the Option price as payment.
(d) The Option price per share shall be established by the grant
and shall not be decreased thereafter except pursuant to Section 4
of Article I of this Incentive Plan.
(e) The Committee, in its discretion, may provide for the
escalation of the Option price per Share over all or part of the
term of the Option.
(f) The Committee, in its discretion, may offer Participants the
opportunity to elect to receive an Option grant in lieu of a
salary increase or a bonus or may offer Participants the
opportunity to purchase Options for cash or such other
consideration as the Committee in its discretion determines.
3. INCENTIVE OPTIONS
An Incentive Option shall be an "Incentive Stock Option" as that term is
defined in Section 422 of the Internal Revenue Code of 1986, as may be
amended from time to time, as in effect at the time of the grant of any
such Option, or any statutory provision that may be enacted to replace
such Section. Each provision of this Incentive Plan and of each
Incentive Stock Option granted hereunder shall be construed so that each
such Option shall be an Incentive Stock Option, and any provision
thereof that cannot be so construed shall be disregarded. Incentive
Stock Options shall be granted only to purchase unrestricted Shares and
only to Eligible Participants, each of whom may be granted one or more
such Options at such time or times determined by the Committee following
the Effective Date until April 14, 2006, subject to the following
conditions:
(a) The Option price per Share shall be set by the grant but
shall not be less than 100% of the Fair Market Value at the time
of the grant.
(b) The Option and its related Stock Appreciation Right, if any,
may be exercised in full or in part from time to time within
ten (10) years from the date of the grant, or such shorter period
as may be specified by the Committee in the grant, provided that
in any event each shall lapse and cease to be exercisable upon, or
within such period following, Termination of Employment as shall
have been determined by the Committee and as specified in the
Option or Stock Appreciation Right; provided, however, that such
period following
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Termination of Employment shall not exceed twelve
months unless employment shall have terminated:
(i) as a result of retirement as defined by the Committee or
total and permanent disability as determined by the
Committee, in which event such period shall not exceed--
(A) in the case of an Option, the original term of the
Option; and
(B) in the case of a Stock Appreciation Right, one year
after such retirement or disability or after
resignation as an officer or director of the Company,
whichever shall last occur (unless earlier terminated
pursuant to Section 5(b) of this Article II);
or
(ii) as a result of death, or death shall have occurred following
Termination of Employment and while the Option or Stock
Appreciation Right was still exercisable; and
provided, further, that such period following Termination of
Employment shall in no event extend the original exercise period
of the Option or related Stock Appreciation Right, if any.
(c) The aggregate Fair Market Value (determined at the time the
Option is granted) of the Shares with respect to which
Incentive Stock Options are first exercisable during any calendar
year by any Eligible Participant shall not exceed $100,000;
however, if the Fair Market Value of Incentive Stock Option Shares
(at date of grant) exceeds $100,000 in the calendar year in which
Incentive Stock Options are first exercisable, Shares with a Fair
Market Value at date of grant exceeding $100,000 shall not be
deemed to be Incentive Stock Options.
(d) Incentive Stock Options shall be granted only to an Eligible
Participant who, at the time the Option is granted, does not own
stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company.
(e) Any other terms and conditions which the Committee
determines, upon advice of counsel, should be imposed for the
Option to qualify as an Incentive Stock Option and any other terms
and conditions not inconsistent with this Incentive Plan as
determined by the Committee; including provisions making the
Shares subject to such Option Restricted Shares or provisions
making vesting or the ability to exercise subject to performance
conditions.
4. NON-QUALIFIED OPTIONS
One or more Options may be granted as Non-Qualified Options to purchase
unrestricted Shares or Restricted Shares to an Eligible Participant at
such time or times determined by the Committee, following the Effective
Date, subject to the following terms and conditions:
(a) The Option price per Share shall be established by the grant
but shall not be less than 100% of the Fair Market Value at the
time of the grant (or such later date as the Committee shall
determine to be the grant date).
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(b) The Option and its related Stock Appreciation Right, if any,
may be exercised in full or in part from time to time within
ten (10) years from the date of the grant, or such shorter period
as may be specified by the Committee in the grant, provided that
in any event each shall lapse and cease to be exercisable upon, or
within such period following Termination of Employment as shall
have been determined by the Committee and as specified in the
Option or Stock Appreciation Right; provided, however, that such
period following Termination of Employment shall not exceed twelve
months unless employment shall have terminated:
(i) as a result of retirement as defined by the Committee or
total and permanent disability as determined by the
Committee, in which event such period shall not exceed--
(A) in the case of an Option, the original
term of the Option; and
(B) in the case of a Stock Appreciation Right, one year
after such retirement or disability or after
resignation as an officer or director of the Company,
whichever shall last occur (unless earlier terminated
pursuant to Section 5(b) of this Article II);
or
(ii) as a result of death, or death shall have occurred following
Termination of Employment and while the Option
or Stock Appreciation Right was still exercisable; and
provided, further, that such period following Termination of
Employment shall in no event extend the original exercise period
of the Option or related Stock Appreciation Right, if any.
(c) The Option grant may include any other terms and conditions
not inconsistent with this Incentive Plan as determined by the
Committee, including provisions making the Shares subject to such
Option Restricted Shares or provisions making vesting or the
ability to exercise subject to the satisfaction of performance
conditions.
5. STOCK APPRECIATION RIGHTS
A Stock Appreciation Right may be granted to an Eligible
Participant in connection with (and only in connection with) an
Incentive Stock Option or a Non-Qualified Option granted under
this Incentive Plan, or under any other incentive plan of the
Company or its Subsidiaries which was approved by the
stockholders, subject to the following terms and conditions:
(a) Such Stock Appreciation Right shall entitle a holder of an
Option within the period specified for the exercise of the Option
in the related Option grant to surrender the unexercised Option
(or a portion thereof) and to receive in exchange therefor a
payment in cash or Shares having an aggregate value equal to the
product of (i) the amount by which (A)
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the SAR Fair Market Value of each Share exceeds (B) the Option
price per Share, times (ii) the number of Shares under the Option,
or portion thereof, which is surrendered.
(b) Except as expressly provided herein, each Stock Appreciation
Right granted hereunder shall be subject to the same terms and
conditions as the related Option. It shall be exercisable only to
the extent such Option is exercisable and shall terminate or lapse
and cease to be exercisable when the related Option terminates or
lapses. The Committee may grant Stock Appreciation Rights
concurrently with grants of Options or in connection with
previously granted Options under this Incentive Plan, or under any
other incentive plan of the Company or its Subsidiaries which was
approved by the stockholders, which are unexercised and have not
terminated or lapsed. With respect to Stock Appreciation Rights
granted in connection with such previously granted Options, the
Committee shall provide that such Stock Appreciation Rights shall
not be exercisable until the holder completes six (6) months (or
such longer period as the Committee shall determine) of service
with the Company, a Subsidiary, or an Associated Company
immediately following the date of the grant of such Stock
Appreciation Rights.
(c) The Committee shall have sole discretion to determine in
each case whether the payment will be in the form of all cash, all
Shares (which may, at the Committee's discretion, be Restricted
Shares), or any combination thereof. If payment is to be made in
Shares, the number of Shares shall be determined as follows: the
amount payable in Shares shall be divided by the SAR Fair Market
Value of Shares. The payments to be made, in whole or in part, in
cash upon the exercise of Stock Appreciation Rights by any officer
of the Company shall be made in accordance with the provisions
relating to the exercise of stock appreciation rights of Rule
16b-3 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as in effect at the time of such exercise,
or any law, rule, regulation or other provision that may hereafter
replace such Rule.
(d) Upon exercise of a Stock Appreciation Right, the number of
Shares subject to exercise under the related Option shall
automatically be reduced by the number of Shares represented by
the Option or portion thereof which is surrendered. To the extent
that a Stock Appreciation Right shall be exercised, any Shares
transferred upon such exercise shall not be charged against the
maximum limitations upon the grant of Options set forth in this
Incentive Plan under which such Option shall have been granted but
the Option in connection with which a Stock Appreciation Right
shall have been granted shall be deemed to have been exercised for
the purpose of such maximum limitations.
(e) The Committee shall have sole discretion as to the timing of
any payment made in cash, Shares, or a combination thereof upon
exercise of Stock Appreciation Rights hereunder, whether in a
lump sum, in annual installments or otherwise deferred and the
Committee shall have sole discretion to determine whether such
payments may bear amounts equivalent to interest or cash
dividends.
(f) For purposes of this paragraph 5(f) of Article II:
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(i) "Unrelated Party" means any party or group of parties acting
together other than (A) the Company, its directors and
officers, or (B) any nominee holder for any stock exchange;
(ii) "Offer" means any tender or exchange offer made by an
Unrelated Party for the Shares and shall be deemed to
occur upon the first purchase or exchange of such Shares;
(iii) "Change of Control" means any acquisition, beneficially or
otherwise, by any Unrelated Party of 25% or more of the
combined voting power of the common and preferred stock of
the Company and shall be deemed to occur upon the date that
the Unrelated Party attains control of said 25% or more of
the combined voting power;
(iv) "Change of Control Market Value" of the Shares means the
higher of--
(A) the value for which such Shares may be exchanged or
offered under any Offer pursuant to which Shares are
actually exchanged or purchased; or
(B) the Fair Market Value of such Shares on the date of
exercise of a Stock Appreciation Right.
Notwithstanding the foregoing provisions of this Section 5 of
Article II and without limiting the provisions of Section 3 of
Article I of this Incentive Plan, in the event of an Offer or
Change of Control, a Participant holding an unexercised Stock
Appreciation Right may exercise such Stock Appreciation Right and
elect to be paid solely in cash in an amount equal to the
difference between the Option price and the Change of Control
Market Value of the Shares, unless within five (5) business
days after receipt of notification of such election by the
Secretary of the Company, the Committee acts to disapprove the
cash election. Unless it acts to disapprove, the Committee's
consent shall be deemed to be given at the close of business on
the fifth business day after the Secretary's receipt of
notification of such election and payment shall be made as
soon as practicable after expiration of such five (5) business
day period. The election provided herein shall apply only: (x)
during the thirty (30) day period following the first exchange
or purchase of Shares pursuant to an Offer; or (y) during the
thirty (30) day period following the date on which sufficient
Shares are acquired to constitute a Change of Control.
(g) For purposes of this paragraph 5(g) of Article II:
(i) "Unrelated Party" means any party or group of parties
acting together other than (A) the Company, its directors
and officers, or (B) any nominee holder for any stock
exchange;
(ii) "Alternate Change of Control" means any acquisition,
beneficially or otherwise, by any Unrelated Party of a
percentage of the combined voting power of the common and
preferred stock of the Company specified by the Committee
(but not less than 10%) and shall be deemed to occur upon
the date that the Unrelated Party attains control of said
percentage of the combined voting power;
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(iii) "Change of Control Termination of Employment" means
the termination of employment of a Participant by the
Company, the Subsidiaries or the Associated Companies
without cause (as defined by the Committee) or by the
Participant for good reason (as defined by the Committee)
within a period of time specified by the Committee following
an Alternate Change of Control;
(iv) "Alternate Change of Control Market Value" of the
Shares means the Fair Market Value of such Shares on the
date of exercise of a Stock Appreciation Right.
Notwithstanding the foregoing provisions of this Section 5 of
Article II and without limiting the provisions of Section 3 of
Article I of this Incentive Plan, in the event of an Alternate
Change of Control and a Change of Control Termination of
Employment, a Participant holding an unexercised Stock
Appreciation Right who is selected by the Committee may exercise
such Stock Appreciation Right and elect to be paid solely in cash
in an amount equal to the difference between the Option price and
the Alternate Change of Control Market Value of the Shares, unless
within five (5) business days after receipt of notification of
such election by the Secretary of the Company, the Committee acts
to disapprove the cash election. Unless it acts to disapprove, the
Committee's consent shall be deemed to be given at the close of
business on the fifth business day after the Secretary's receipt
of notification of such election and payment shall be made as soon
as practicable after expiration of such five (5) business day
period. The election provided herein shall apply only during the
thirty (30) day period following a Change of Control Termination
of Employment.
6. BONUS SHARES AND RESTRICTED SHARES
(a) An Award of Shares or Restricted Shares may be made at such
time or times determined by the Committee following the Effective
Date to any person who is an Eligible Participant. The Committee
shall have full discretion to determine the terms and conditions
of payment of any Award, including without limitation, what part
of such Award shall be paid in unrestricted Shares or Restricted
Shares, the time or times of payment of any Award, and the time or
times of the lapse of the restrictions on Restricted Shares.
(b) For the purpose of determining the number of Shares to be
used in payment of an Award, the amount of the Award payable in
Shares shall be divided by the Fair Market Value of the Shares on
the date of the determination of the amount of the Award by the
Committee, or if the Committee so directs, the date immediately
preceding the date the Award is paid.
(c) The portion of an Award payable in Restricted Shares shall
be paid at the time of the Award either by book-entry registration
or by delivering to the Participant, or a custodian or escrow
designated by the Committee and the Participant, a certificate or
certificates for such Restricted Shares, registered in the name of
such Participant. The Participant shall have all of the rights of
a stockholder with respect to such Shares, subject to such terms
and conditions, including withholding of dividends, forfeitures or
resale to the Company, if any, as may be determined by the
Committee. The Committee and the Participant may designate the
Company or one or more of its employees to act as custodian or
escrow for the certificates.
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(d) Restricted Shares shall be subject to such terms and
conditions, including forfeiture, if any, and to such restrictions
against sale, transfer or other disposition as may be determined
by the Committee at the time a Non-Qualified Option for the
purchase of Restricted Shares is granted, at the time a Stock
Appreciation Right to be settled with Restricted Shares is granted
or at the time of making a bonus award of Restricted Shares. Any
new or additional or different Shares or other securities
resulting from any adjustment of such Shares of the type described
in Section 4 of Article I shall be subject to the same terms,
conditions, and restrictions as the Restricted Shares prior to
such adjustment. The Committee may, in its discretion, remove,
modify or accelerate the release of restrictions on any Restricted
Shares in the event of hardship or disability of the Participant
while employed, in the event that the Participant ceases to be an
employee of the Company, a Subsidiary or Associated Company, as
the result of death or otherwise, in the event of a relocation of
a Participant to another country or for such other reasons as the
Committee may deem appropriate. In the event of the death of a
Participant following the transfer of Restricted Shares to him,
the legal representative of the Participant, the beneficiary
designated in writing by the Participant during his lifetime, or
the person receiving such Shares under his will or under the laws
of descent and distribution shall take such Shares subject to the
same restrictions, conditions and provisions in effect at the time
of his death, to the extent applicable.
7. DIVIDENDS, DIVIDEND EQUIVALENTS AND INTEREST EQUIVALENTS
(a) No cash dividends shall be paid on Shares which have been
awarded but not registered or delivered. The Committee may
provide, however, that a Participant to whom an Option has been
awarded which is exercisable in whole or in part at a future
time for Shares or a Participant who has been awarded Shares
payable in whole or in part at a future time, shall be entitled to
receive an amount per Share, equal in value to the cash
dividends, if any, paid per Share on issued and outstanding
Shares, as of the dividend record dates occurring during the
period between the date of the award and the time each such Share
is delivered. Such amounts (herein called "dividend equivalents")
may, in the discretion of the Committee, be:
(i) paid in cash or Shares either from time to time prior
to or at the time of the delivery of such Shares or upon
expiration of the Option if it shall not have been fully
exercised (except that payment of the dividend equivalents
on Incentive Options may not be made prior to exercise); or
(ii) converted into contingently credited Shares (with
respect to which dividend equivalents shall accrue) in such
manner, at such value, and deliverable at such time or
times, as may be determined by the Committee.
Such Shares (whether delivered or contingently credited)
shall be charged against the limitations set forth in Section 5 of
Article I.
(b) The Committee, in its discretion, may authorize payment of
interest equivalents on any portion of any Award payable at a
future time in cash, and interest equivalents on dividend
equivalents which are payable in cash at a future time.
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(c) The Committee, in its discretion, may provide that dividends
paid on restricted Shares shall, during the applicable
restricted period, be held by the Company to be paid upon the
lapse of restrictions or to be forfeited upon forfeiture of the
Shares.
III. MISCELLANEOUS PROVISIONS
1. Neither a Stock Option nor a Stock Appreciation Right shall
be transferable except as provided for herein. If any Participant
makes such a transfer in violation hereof, any obligation of the
Company with respect to such Stock Option or Stock Appreciation
Right shall forthwith terminate.
2. Nothing in this Incentive Plan or any booklet or other
document describing or referring to this Incentive Plan shall be
deemed to confer on any employee or Participant the right to
continue in the employ of his employer or affect the right of
his employer to terminate the employment of any such person with
or without cause.
3. Nothing contained herein shall require the Company to
segregate any monies from its general funds, or to create any
trusts, or to make any special deposits for any immediate or
deferred amounts payable to any Participant.
4. This Incentive Plan and all actions taken hereunder shall be
governed by the laws of the State of Delaware.
5. The Company may make such provisions and take such steps as
it may deem necessary or appropriate for the withholding of any
taxes which the Company is required by any law or regulation of
any governmental authority, whether federal, state or local,
domestic or foreign, to withhold in connection with any Stock
Option or the exercise thereof, any Stock Appreciation Right or
the exercise thereof, or the payment of any bonus award,
including, but not limited to, the withholding of cash or Shares
which would be paid or delivered pursuant to such exercise or
award or another exercise or award under this Incentive Plan until
the Participant reimburses the Company for the amount the Company
is required to withhold with respect to such taxes, or cancelling
any portion of such award or another award under this Incentive
Plan in an amount sufficient to reimburse itself for the amount it
is required to so withhold, or selling any property contingently
credited by the Company for the purpose of paying such award or
another award under this Incentive Plan, in order to withhold or
reimburse itself for the amount it is required to so withhold. The
Committee may permit a Participant (or any beneficiary or other
person authorized to act) to elect to pay a portion or all of any
amounts required or permitted to be withheld to satisfy federal,
state, local or foreign tax obligations by directing the Company
to withhold a number of whole Shares which would otherwise be
distributed and which have a fair market value sufficient to cover
the amount of such required or permitted withholding taxes.
6. Notwithstanding any other provision of this Incentive Plan,
for purposes of any Award that is outstanding as of the date that
the Company spins off the Company's chemical businesses into a new
publicly traded company ("Chemicals") and is held by a Participant
who in connection with such spinoff becomes an employee of
Chemicals (or a subsidiary or associated company of Chemicals)
rather than an employee of the Company (or a Subsidiary or
Associated Company
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of the Company), such change of employment shall not constitute a
Termination of Employment. With respect to any such Award held by such a
Participant, Termination of Employment shall mean such Participant's
termination of employment with Chemicals other than a Transfer, with
Transfer defined as a change of employment of a Participant within the
group consisting of Chemicals and its subsidiaries, or, if the Committee
so determines, a change of employment of a Participant within the
group consisting of Chemicals, its subsidiaries, and its
associated companies. For purposes of this section, a subsidiary
of Chemicals means any corporation (or partnership, joint venture,
or other enterprise) of which Chemicals owns or controls, directly
or indirectly, 50% or more of the outstanding shares of stock
normally entitled to vote for the election of directors (or
comparable equity participation and voting power) and an
associated company of Chemicals means any corporation (or
partnership, joint venture, or other enterprise), of which
Chemicals owns or controls, directly or indirectly, 10% or more,
but less than 50% of the outstanding shares of stock normally
entitled to vote for the election of directors (or comparable
equity participation and voting power).
IV. AMENDMENTS
1. The Board, upon recommendation of the Committee but not
otherwise, may from time to time amend or modify this Incentive
Plan, including, but not limited to, an amendment which would
authorize the Committee to make Awards payable in other securities
or other forms of property of a kind to be determined by the
Committee, and such other amendments as may be necessary or
desirable to implement such Awards, or discontinue this
Incentive Plan or any provision thereof, provided that no
amendments or modifications to this Incentive Plan shall, without
the prior approval of the stockholders normally entitled to vote
for the election of directors of the Company:
(a) permit the Company to decrease the Option price
on any outstanding Option;
(b) permit any change which would require the approval of stockholders
under Section 16 of the Securities Exchange Act of 1934 or the
rules thereunder or under Section 422 of the Internal Revenue Code
of 1986, or the rules thereunder (or any law, rule, regulation or
other provision that may replace such statutes or rules); or
(c) change any of the provisions of this Article IV.
2. No amendment to or discontinuance of this Incentive Plan or
any provision thereof by the Board or the stockholders of the
Company shall, without the written consent of the Participant,
adversely affect any Stock Option or Stock Appreciation Right
theretofore granted or bonus commitment or bonus award theretofore
made to such Participant under this Incentive Plan.
V. INTERPRETATION
1. This Incentive Plan is not intended to and shall not affect
any option or stock appreciation right grant or bonus commitment
or award under the 1984 Plan, the 1986 Plan, the 1988/I Plan, the
1988/II Plan, the 1991 Plan, the 1994 Plan, the 1994
Searle/Monsanto Plan, or the 1994 NutraSweet/Monsanto Plan (or any
other incentive plan of the Company, its Subsidiaries, and
Associated
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Companies). No stock options or stock appreciation
rights or Awards of Restricted or unrestricted Shares shall be
granted under the 1994 Plan, the 1994 Searle/Monsanto Plan, or the
1994 NutraSweet/Monsanto Plan after April 14, 1996.
2. This Incentive Plan is not intended to and shall not
preclude the establishment or operation by the Company or any
Subsidiary of (a) any thrift, savings and investment, achievement
award, stock purchase, employee recognition or other benefit plan
or arrangement for any group of employees, or (b) any other
incentive or bonus plan or arrangement for any employees
(hereinafter "Other Plan"), and any such Other Plan may be
authorized and payments made thereunder independently of this
Incentive Plan; provided, however, that no such Other Plan shall
provide for the granting of options or stock appreciation rights
to purchase or receive the appreciation on the shares of any class
of stock of the Company, or the making of bonus commitments or bonus
awards payable in any class of stock of the Company, which in either
form or substance are comparable to those authorized under this
Incentive Plan, unless (i) such Other Plan is established or operated
in connection with the assumption by the Company or a Subsidiary of
the plans, options, stock appreciation rights, bonus commitments
or bonus awards of another corporation, or the substitution of an
Other Plan or options, stock appreciation rights, bonus
commitments or bonus awards under such Other Plan in lieu of the
plans, options, stock appreciation rights, bonus commitments or
bonus awards of such other corporation, arising out of a merger or
consolidation with, or the acquisition of assets or stock of, such
other corporation, or other transaction described in Section
424(a) of the Internal Revenue Code of 1986, as may be amended
from time to time, as in effect at the time, or (ii) such Other
Plan provides for grants of options, stock appreciation rights,
bonus commitments or bonus awards to employees substantially all
of whom are not Participants.
A-16
<PAGE> 1
Exhibit 10.8
RESOLUTION OF MONSANTO COMPANY BOARD OF DIRECTORS
adopted April 25, 1997
RESOLVED that, effective immediately, Article II of the Non-Employee Directors
Stock Plan shall be amended to add a new Section 5 as follows:
Section 5. Suspension of Grants. Notwithstanding anything to the contrary
herein, no Grants of Shares shall be made on or after April 25, 1997,
until further action by the Board.
<PAGE> 1
EXHIBIT 23
CONSENT OF COMPANY COUNSEL
I hereby consent to the incorporation by reference in Monsanto Company's
Registration Statements on Form S-8 (Nos. 2-36636, 2-76696, 2-90152, 33-13197,
33-21030, 33-39704, 33-39705, 33-39706, 33-39707, 33-49717, 33-53363, 33-53365,
33-53367, 333-02783, 333-02961, and 333-02963) and on Form S-3 (No. 33-60189) of
the reference to Company counsel in Note 5 to the Notes to Financial Statements
in the Company's Form 10-Q Report for the quarter ended June 30, 1997. In giving
this consent I do not thereby admit that I am within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933.
R. WILLIAM IDE III
General Counsel
Monsanto Company
Saint Louis, Missouri
August --, 1997
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF CONSOLIDATED INCOME OF MONSANTO COMPANY AND SUBSIDIARIES FOR THE
SIX MONTHS ENDED JUNE 30, 1997, AND THE STATEMENT OF CONSOLIDATED
FINANCIAL POSITION AS OF JUNE 30, 1997. SUCH INFORMATION IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 176
<SECURITIES> 0
<RECEIVABLES> 2,884
<ALLOWANCES> 0
<INVENTORY> 1,452
<CURRENT-ASSETS> 5,445
<PP&E> 7,790
<DEPRECIATION> 4,650
<TOTAL-ASSETS> 12,613
<CURRENT-LIABILITIES> 4,485
<BONDS> 1,551
<COMMON> 1,644
0
0
<OTHER-SE> 2,445
<TOTAL-LIABILITY-AND-EQUITY> 12,613
<SALES> 5,426
<TOTAL-REVENUES> 5,426
<CGS> 2,727
<TOTAL-COSTS> 2,727
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 98
<INCOME-PRETAX> 858
<INCOME-TAX> 260
<INCOME-CONTINUING> 598
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 598
<EPS-PRIMARY> 0.99
<EPS-DILUTED> 0
<FN>
RECEIVABLES ARE STATED NET OF ALLOWANCES OF $93.
</TABLE>
<PAGE> 1
EXHIBIT 99
<TABLE>
<CAPTION>
MONSANTO COMPANY AND SUBSIDIARIES
COMPUTATION OF THE RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
---------------- --------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Income from continuing
operations before provision
for income taxes.............. $858<F*> $ 905 $540<F*> $1,087 $ 895 $729 $(174)<F*>
Add
Fixed charges................. 129 117 232 245 182 184 231
Less capitalized interest..... (8) (4) (14) (11) (10) (12) (16)
Dividends from
affiliated companies........ 1 9 14 9 2 5 5
Less equity income (add equity
loss) of affiliated
companies..................... (44) (4) 24 (17) (21) (20) (1)
---- ------ ---- ------ ------ ---- -----
Income as adjusted.......... $936 $1,023 $796 $1,313 $1,048 $886 $ 45
==== ====== ==== ====== ====== ==== =====
Fixed charges
Interest expense.............. $ 98 $ 91 $171 $ 190 $ 131 $129 $ 169
Capitalized interest.......... 8 4 14 11 10 12 16
Portion of rents
representative of interest
factor...................... 23 22 47 44 41 43 46
---- ------ ---- ------ ------ ---- -----
Fixed charges............. $129 $ 117 $232 $ 245 $ 182 $184 $ 231
==== ====== ==== ====== ====== ==== =====
Ratio of earnings to fixed
charges....................... 7.26 8.74 3.43 5.36 5.76 4.82 0.19
==== ====== ==== ====== ====== ==== =====
<FN>
- - -------
<F*>Includes charges for acquired in-process research and development,
restructuring and other unusual items of $173 million, $716 million and
$699 million in 1997, 1996 and 1992, respectively. Excluding these items,
the ratio of earnings to fixed charges would have been 8.60, 6.52 and 3.22
in 1997, 1996 and 1992, respectively. The ratio was not materially affected
by these items in 1995, 1994 and 1993.
</TABLE>
14
