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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 MARCH 31, 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
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(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.
OUTSTANDING AT
CLASS MARCH 31, 1997
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COMMON STOCK, $2 PAR VALUE 591,583,208 SHARES
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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 ended March 31, 1997 and 1996, the Statement of
Consolidated Financial Position as of March 31, 1997 and December 31, 1996, the
Statement of Consolidated Cash Flow for the three months ended March 31, 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
MARCH 31,
----------------------
1997 1996
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<S> <C> <C>
Net Sales.......................................................................... $2,574 $2,304
Cost of Goods Sold................................................................. 1,321 1,187
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Gross Profit....................................................................... 1,253 1,117
Marketing Expenses................................................................. 325 327
Administrative Expenses............................................................ 185 196
Technological Expenses............................................................. 220 158
Acquired In-Process Research and Development....................................... 101
Amortization of Intangible Assets.................................................. 36 31
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Operating Income................................................................... 386 405
Interest Expense................................................................... (43) (40)
Interest Income.................................................................... 11 11
Other Income (Expense) - Net....................................................... 40 6
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Income Before Income Taxes......................................................... 394 382
Income Taxes....................................................................... 120 122
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Net Income......................................................................... $ 274 $ 260
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Earnings per Share................................................................. $ 0.45 $ 0.43
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Dividends per Share................................................................ $0.150 $0.138
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Weighted Average Number of Common and
Common Equivalent Shares (in millions)........................................... 602.6 598.4
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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>
MARCH 31, DECEMBER 31,
1997 1996
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<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents...................................................... $ 106 $ 166
Receivables, net of allowances of $75 in
1997 and $53 in 1996......................................................... 2,583 1,930
Miscellaneous receivables and prepaid expenses................................. 508 382
Deferred income tax benefit.................................................... 406 386
Inventories.................................................................... 1,563 1,476
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Total Current Assets................................................... 5,166 4,340
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Property, Plant and Equipment...................................................... 7,707 7,588
Less Accumulated Depreciation...................................................... 4,590 4,575
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Net Property, Plant and Equipment.............................................. 3,117 3,013
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Investments in Affiliates.......................................................... 627 652
Intangible Assets, net of accumulated amortization
of $843 in 1997 and $807 in 1996................................................. 2,168 2,165
Other Assets....................................................................... 1,044 1,021
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Total Assets....................................................................... $12,122 $11,191
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LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities:
Accounts payable............................................................... $ 694 $ 715
Accrued liabilities............................................................ 1,776 2,032
Short-term debt................................................................ 1,773 654
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Total Current Liabilities.............................................. 4,243 3,401
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Long-Term Debt..................................................................... 1,552 1,608
Deferred Income Taxes.............................................................. 65 50
Postretirement Liabilities......................................................... 1,522 1,508
Other Liabilities.................................................................. 913 934
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............................................. 84 65
Treasury stock, at cost (235,740,687 shares in 1997
and 237,594,831 shares in 1996).......................................... (2,643) (2,661)
Reserve for ESOP debt retirement............................................... (172) (174)
Net unrealized investment holding gains........................................ 11 11
Accumulated currency adjustment................................................ (78) 10
Reinvested earnings............................................................ 4,981 4,795
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Total Shareowners' Equity.............................................. 3,827 3,690
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Total Liabilities and Shareowners' Equity.......................................... $12,122 $11,191
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</TABLE>
2
<PAGE> 4
<TABLE>
MONSANTO COMPANY AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOW
(DOLLARS IN MILLIONS)
<CAPTION>
THREE MONTHS ENDED
MARCH 31
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1997 1996
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<S> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents
Operating Activities:
Net income............................................................................... $ 274 $ 260
Add income taxes......................................................................... 120 122
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Income before income taxes............................................................... 394 382
Adjustments to reconcile to Cash Used in Operations:
Income tax payments.................................................................. (10) (103)
Items that did not use (provide) cash:
Depreciation and amortization.................................................... 148 146
Other............................................................................ (8) (7)
Working capital changes that provided (used) cash:
Accounts receivable.............................................................. (624) (528)
Inventories...................................................................... (10) 14
Accounts payable and accrued liabilities......................................... (430) 19
Other............................................................................ (138) (48)
Other items.......................................................................... 4 (128)
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Total Cash Used in Operations................................................................ (674) (253)
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Investing Activities:
Property, plant and equipment purchases.................................................. (157) (133)
Acquisition of seed companies............................................................ (227)
Acquisition and investment payments...................................................... (95) (319)
Investment and property disposal proceeds................................................ 35 102
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Cash Used in Investing Activities............................................................ (444) (350)
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Financing Activities:
Net change in short-term financing....................................................... 1,155 606
Long-term debt proceeds.................................................................. 2 109
Long-term debt reductions................................................................ (48) (133)
Treasury stock purchases................................................................. (171)
Dividend payments........................................................................ (88) (81)
Common stock issued under employee stock plans........................................... 18 76
Other financing activities............................................................... 19 45
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Cash Provided by Financing Activities........................................................ 1,058 451
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Decrease in Cash and Cash Equivalents........................................................ (60) (152)
Cash and Cash Equivalents:
Beginning of year........................................................................ 166 297
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End of period............................................................................ $ 106 $ 145
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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 $39 million in
1997 and $40 million in 1996.
3
<PAGE> 5
MONSANTO COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
1. In the first quarter of 1997, Monsanto completed the acquisition 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 does not
believe that the technological feasibility of the acquired in-process
technology has 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 April 1997, Monsanto announced a definitive agreement to acquire the
remaining shares of Calgene, Inc. ("Calgene") that Monsanto did not already
own for $8.00 per share in cash, or approximately $240 million. Monsanto
extended a tender offer for the remaining shares of Calgene that was
conditioned upon the tender of a majority of the outstanding shares of Calgene
not owned by Monsanto and certain other conditions. At the expiration of the
tender offer on May 2, 1997, approximately 26.8 million shares were tendered.
As a result, Monsanto now owns approximately 94 percent of the outstanding
Calgene shares. Monsanto expects to acquire the remaining shares at the same
$8.00 per share in cash. It is anticipated that a charge associated with
acquired research will be recorded in conjunction with the acquisition of these
shares.
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 (602,615,901
and 598,410,185 in 1997 and 1996, respectively). Common share equivalents
(17,105,134 and 17,709,740 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.
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 in 1997.
Pro forma earnings per share computed under the provisions of FAS 128 would
have been:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
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1997 1996
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<S> <C> <C>
Basic earnings per share $0.47 $0.45
Diluted earnings per share $0.45 $0.43
</TABLE>
4
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MONSANTO COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. Components of inventories at March 31, 1997 and December 31, 1996 were
as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
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<S> <C> <C>
Finished goods.................................... $ 950 $ 888
Goods in process.................................. 341 334
Raw materials and supplies........................ 482 461
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Inventories, at FIFO cost......................... 1,773 1,683
Excess of FIFO over LIFO cost..................... (210) (207)
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Total......................................... $1,563 $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 ended March 31, 1997 and 1996 were as
follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
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1997 1996
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OPERATING OPERATING
NET INCOME NET INCOME
SALES (LOSS) SALES (LOSS)
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<S> <C> <C> <C> <C>
Segment:
Agricultural Products...................... $1,067 $ 224 $ 825 $ 272
Chemicals.................................. 732 81 736 64
Pharmaceuticals............................ 515 55 477 60
Food Ingredients........................... 260 43 266 25
Corporate.................................. (17) (16)
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Total.......................................... $2,574 $ 386 $2,304 $ 405
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</TABLE>
Financial information for the first quarter of 1997 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.
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--FIRST QUARTER 1997 COMPARED WITH THE FIRST QUARTER 1996
Net income for the first quarter of 1997 was $274 million, or $0.45 per
share, compared with net income of $260 million, or $0.43 per share, in the
first quarter of last year. As further discussed in Notes 1 and 2, first
quarter results for 1997 included an aftertax charge of $63 million, or $0.10
per share, for acquired in-process research and development, principally
related to the acquisition of Asgrow, and an aftertax charge of $6 million, or
$0.01 per share associated with the adoption of SOP 96-1. Net sales of $2,574
million were 12 percent higher than the comparable figure in 1996.
5
<PAGE> 7
MONSANTO COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Net sales for Agricultural Products increased 29 percent from net sales in
the first quarter of 1996. All business units in the segment contributed to the
increase in net sales. The increase was driven by significantly higher
worldwide sales volumes of the family of Roundup(R) herbicides, with
particularly strong volume gains in Latin America, the U. S. and Japan. The
increased volume can be attributed principally to favorable weather conditions,
on balance, in many key markets. In addition, certain marketing and incentive
programs helped to support the sales increase. The sales increase also
benefited from higher sales of lawn-and-garden products and higher sales of
Posilac(R) bovine somatotropin. The consolidation of the results of operations
for Asgrow and Calgene also contributed to the sales increase. 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 Agricultural Products decreased 18 percent
compared with first quarter operating income in 1996. However, as further
described in Note 1, operating income includes $101 million of pretax charges
for acquired in-process research and development, primarily associated with the
acquisition of Asgrow. If these charges were excluded, operating income in the
first quarter of 1997 would have increased 19 percent compared with operating
income in the first quarter of 1996. 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 of $732 million were essentially even with net
sales in the first quarter of 1996. The effects of overall higher selling
prices were offset by lower sales volumes in the segment's growth business
units. Operating income for Chemicals increased 27 percent versus the first
quarter of 1996. 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 42 percent
compared with a weak operating income performance in the same quarter last
year. This increase in operating income was principally the result of higher
sales volumes and lower manufacturing costs for Saflex(R) plastic interlayer.
Higher sales of performance materials, primarily because of higher selling
prices, as well as improved manufacturing performance for the fibers business,
also contributed significantly to the increase in operating income.
Pharmaceuticals' net sales for the first quarter of 1997 increased $38
million compared with net sales in the same period last year. The sales
increase was the result of higher sales volumes and pricing. Sales of key
products continued to drive performance. Combined sales of Daypro(R) and
Arthrotec(R) arthritis treatments increased 22 percent in the first quarter of
1997 compared with the first quarter of last year, primarily because of higher
sales volumes. First quarter sales of Ambien(R), a short-term treatment for
insomnia, declined moderately compared to a very strong quarter in 1996,
primarily because of the timing of wholesaler buying patterns. Operating income
in the first quarter of 1997 for Pharmaceuticals declined slightly compared
with the first quarter last year. The positive effect of the sales increase on
operating earnings was offset by higher research and development expenses
associated with new product candidates advancing to later and more expensive
phases of development. In addition, last year's first quarter operating income
benefited from cost-sharing alliances.
Net sales for Food Ingredients decreased slightly in the first quarter of
1997 compared with sales for the first quarter last year. First quarter 1997
sales of tabletop sweeteners and aspartame 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 significantly in the first quarter of 1997 compared with
operating income in the same period last year, primarily because of lower
operating expenses.
For Monsanto, technological expenses in the first quarter of 1997 were
higher than the same period last year, principally because of higher research
and development expenses in the Agricultural Products and Pharmaceuticals
segments. "Other Income (Expense) - Net" increased primarily because of
significantly higher earnings from the DeKalb Genetics Corporation and
Flexsys, L.P. equity affiliates. In addition, "Other Income (Expense) - Net"
in the first quarter last year included an aftertax charge of $8 million for
Monsanto's share of the purchased research and development costs resulting from
the equity investments in Calgene and DeKalb Genetics Corporation.
6
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MONSANTO COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
CHANGES IN FINANCIAL CONDITION -- MARCH 31, 1997 COMPARED WITH DECEMBER 31,
1996
Working capital at March 31, 1997 decreased slightly to $923 million from
$939 million at December 31, 1996, primarily because of higher short-term
debt, which was partially offset by a seasonal increase in Agricultural
Products' trade receivables and lower accrued liabilities. The current ratio
was 1.2 at March 31, 1997 compared to 1.3 at year-end 1996. The percent of
total debt to total capitalization increased to 46 percent at quarter-end
compared with 38 percent at year-end 1996, primarily because of the increase in
short-term debt. The increase in "Net Property, Plant and Equipment" was
primarily the result of the Asgrow acquisition.
Operating activities used a net $674 million of cash in the first quarter
of 1997, compared with $253 million of net cash used by operations in 1996. The
increase in cash used in operations resulted primarily from higher seasonal
working capital levels 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
$444 million, which includes the acquisition of Asgrow. The increase in
short-term financing was primarily used to fund Agricultural Products' higher
seasonal working capital levels and the Asgrow acquisition.
7
<PAGE> 9
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company's Report on Form 10-K for the year ended December 31, 1996,
described a number of product liability lawsuits arising out of sales by G. D.
Searle & Co., a subsidiary of the Company acquired in 1985, of the
Cu-7(R), an intrauterine device. As of May 1, 1997, there were approximately
seven cases pending in various U.S. state and federal courts and approximately
405 cases filed outside the United States (the vast majority in Australia).
The Company's Report on Form 10-K for the year ended December 31, 1996,
described a consent agreement with the U. S. Environmental Protection Agency
("EPA") regarding alleged violations of certain sections of the Resource
Conservation and Recovery Act. The EPA has issued a Final Order approving the
consent agreement. Without admitting liability, the Company paid a settlement
of $105,515 pursuant to the consent agreement.
The Company's Report on Form 10-K for the year ended December 31, 1996,
described a consent agreement with the EPA regarding late reporting of
information required under the Toxic Substances Control Act. On April 21, 1997,
the EPA Environmental Appeals Board executed the consent order settling the
matter for the remaining $352,000 liability.
On March 20, 1997, the Georgia Environmental Protection Division ("EPD")
issued a Notice of Violation and Proposed Consent Order alleging violations by
the Company of certain sections of the Resource Conservation and Recovery Act.
The alleged violations relate to the waste heat recovery units at the Company's
NutraSweet(R) sweetener plant in Augusta, Georgia. EPD has proposed a penalty
in the amount of $615,000. The Company has responded to the Notice of Violation
and is vigorously challenging the allegations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits--See the Exhibit Index at page 9 of this report.
(b) No reports on Form 8-K were filed by the Company during the quarter
ended March 31, 1997.
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: May 15, 1997
8
<PAGE> 10
EXHIBIT INDEX
These Exhibits are numbered in accordance with the Exhibit Table of Item
601 of Regulation S-K.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2 Omitted--Inapplicable
3 1. Omitted--Inapplicable
2. By-Laws of the Company, as amended effective April 25, 1997
4 Omitted--Inapplicable
10 1. Monsanto Management Incentive Plan of 1984, as amended in 1987, 1988, 1989 and 1997
2. Searle Monsanto Stock Option Plan of 1986, as amended in 1988, 1989, 1990, 1991, 1995 and 1997
3. Monsanto Management Incentive Plan of 1988/I, as amended in 1988, 1989, 1991, 1992 and 1997
4. Monsanto Management Incentive Plan of 1988/II, as amended in 1989, 1991, 1992 and 1997
5. Monsanto Management Incentive Plan of 1994, as amended in 1997
6. Searle/Monsanto Stock Plan of 1994, as amended in 1995 and 1997
7. Monsanto Management Incentive Plan of 1996, as amended in 1997
8. Minutes of Meeting of Executive Compensation and Development Committee regarding termination of
Searle Phantom Stock Option Plan of 1986.
11 Omitted--Inapplicable; see Note 3 of Notes of Financial Statements on page 4
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>
9
<PAGE> 1
MONSANTO COMPANY
BY-LAWS
As Amended April 25, 1997
OFFICES
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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 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.
<PAGE> 2
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(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.
(c) Notwithstanding anything in these By-Laws to the con-
trary, 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 he should so determine, he 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. 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
<PAGE> 3
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the Securities and Exchange Commission pursuant to Section
13, 14 or 15(b) of the Exchange Act. 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
public notice 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
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 stock-
holder of record entitled to vote at the meeting by mailing
such notice in the United States mail, postage prepaid,
addressed to him at his 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
<PAGE> 4
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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 com-
plies 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 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 benefi-
cially 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.
<PAGE> 5
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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
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 he should so determine, he
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 stockholders entitled to vote in person
or by proxy at any meeting of stockholders, or to exercise
the rights in accordance with Delaware law to examine the
stock ledger, the list required by this By-Law or the books
<PAGE> 6
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and records of the Company.
10. Quorum
The holders of a majority of the stock issued and outstand-
ing 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 stock-
holders, except as otherwise provided by the law of
Delaware, by the Certificate of Incorporation or by these
By-Laws. The stockholders present at any duly organized
meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of sufficient stockholders to
constitute 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 stock-
holders may authorize another person or persons to act for
him 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.
<PAGE> 7
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13. Inspectors of Election; Polls
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 his 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 his 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 Direc-
tors 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 his successor is elected and qualified or until his
earlier death, resignation or removal. Directors need not
be stockholders of the Company or residents of the State of
Delaware.
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
<PAGE> 8
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the Directors then in office, although less than a quorum,
or by a sole remaining Director. Each such Director shall
hold office until his successor is elected and qualified or
until his 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 two or more Directors.
19. Notices
Notice of any special meeting of the Board of Directors
shall be addressed to each Director at his residence or
business address and shall be sent to him by mail,
electronic mail, telecopier, telegram or telex or telephoned
or delivered to him personally. If such notice is sent by
mail, it shall be sent not later than three 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
<PAGE> 9
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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 his 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 his 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.
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.
<PAGE> 10
- 10 -
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
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 Execu-
tive 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 he or they constitute a quorum, may
<PAGE> 11
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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 ipso facto 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
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
<PAGE> 12
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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 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 his successor is elected and
qualified or until his 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 his
successor is elected and qualified or until his 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.
<PAGE> 13
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38. Chairman of the Board
The Chairman of the Board shall preside at all meetings of
the stockholders and of the Board of Directors, except as
may be otherwise required under the law of Delaware. He
shall act in an advisory capacity with respect to matters of
policy and other matters of importance pertaining to the
affairs of the Company. He, 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. He
shall also perform such other duties as may be assigned to
him 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. He shall perform such other duties
as may be assigned to him 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. He shall see that all orders and resolutions of
the Board of Directors are carried into effect. He shall
also perform such other duties as may be assigned to him 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 his 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.
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
him by the Board of Directors or the Chief Executive
Officer.
<PAGE> 14
- 14 -
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. He 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 him 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 him 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
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 his transactions as Treasurer and shall also perform all
duties incident to the office of Treasurer and such other
duties as may be assigned to him by these By-Laws, the Board
of Directors, the Chief Executive Officer, the Senior Vice
President-Finance or the Vice President-Finance.
<PAGE> 15
- 15 -
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 him 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 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 his
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 him 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 him by
the Board of Directors, the Chief Executive Officer, the
Senior Vice President-Finance, the Vice President-Finance or
the Controller.
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
<PAGE> 16
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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 him 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 he or it were such
officer, 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
<PAGE> 17
- 17 -
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 stock-
holders 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 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 corpora-
tion 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
<PAGE> 18
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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 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 his 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
his 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
<PAGE> 19
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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
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 he, or a person for
whom he 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 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.
<PAGE> 20
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(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 he 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
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.
<PAGE> 21
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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 accoun-
tants 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
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
<PAGE> 22
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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.
(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,
<PAGE> 23
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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
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 and April 25, 1997 and by the Stockholders on
April 24, 1987.]
<PAGE> 2
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 out-
standing 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 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
<PAGE> 3
-2-
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 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.
<PAGE> 4
-3-
"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 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
<PAGE> 5
-4-
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.
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
<PAGE> 6
-5-
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.
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
-6-
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 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
<PAGE> 8
-7-
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 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.
<PAGE> 9
-8-
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 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:
<PAGE> 10
-9-
(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
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.
<PAGE> 11
-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 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.
<PAGE> 12
-11-
(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
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
<PAGE> 13
-12-
resignation as an officer or director of the
Company, whichever shall last occur (unless
earlier terminated pursuant to Section 5(b)
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 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
<PAGE> 14
-13-
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 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
<PAGE> 15
-14-
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;
(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
<PAGE> 16
-15-
(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;
<PAGE> 17
-16-
(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.
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
<PAGE> 18
-17-
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 other wise 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> 19
-18-
(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.
(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:
<PAGE> 20
-19-
(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.
(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.
<PAGE> 21
-20-
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 divi-
dends, 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
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
<PAGE> 22
-21-
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 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.
<PAGE> 23
-22-
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
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
<PAGE> 24
-23-
Associated Company of the Company), such change of
employment shall not constitute a Termination of
Employment.
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 stock-
holders 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, 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;
<PAGE> 25
-24-
(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 (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
<PAGE> 26
-25-
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, 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> 1
SEARLE MONSANTO STOCK OPTION PLAN OF 1986
(As Amended Effective April 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 competi-
tive with other pharmaceutical companies in the executive compen-
sation area.
SECTION 2. DEFINITIONS. Except where the context otherwise
indicates, the following definitions apply:
"Associated Company" means any corporation (or partner-
ship, 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 partici-
pation 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 Trans-
actions 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.
"Monsanto" means Monsanto Company, a Delaware corpora-
tion and the parent corporation of the Company.
<PAGE> 2
-2-
"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 Commit-
tee 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 outstand-
ing 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.
"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 Partici-
pant within the group consisting of the Company, its Subsidiaries
<PAGE> 3
-3-
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), consis-
tent 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 deci-
sions 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 Parti-
cipants.
(c) The Committee may adopt and amend, from time to time,
rules and regulations of general application for the administra-
tion 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.
(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
<PAGE> 4
-4-
it determines to be necessary or advisable, and fair and equit-
able 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 corpora-
tion 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 addition-
al times for exercise or payments, differing methods for cal-
culating payments, alternate forms and amounts of payment, or
other modifications. The Committee may take such actions pur-
suant to this Section 3(d) by adopting rules and regulations of
general applicability to all Participants or to certain catego-
ries 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 securi-
ties of any other corporation; or (b) new, different or addition-
al shares or other securities of Monsanto or of any other corpo-
ration 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 Grants; and
<PAGE> 5
-5-
(iii) the purchase price to be paid per Share under
unexercised Stock Options and the number of Shares to be trans-
ferred 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 amend-
ment 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 Parti-
cipant 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 limita-
tions set forth in Section 1(a) of this Article II.
<PAGE> 6
-6-
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 incon-
sistent with this Plan, as shall be determined by the Committee,
including any provisions as to continued employment as considera-
tion for the grant or exercise of such Option or Stock Appreci-
ation 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 estab-
lished 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).
<PAGE> 7
-7-
(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 Employ-
ment (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 Associ-
ated Company, and up to twelve (12) months in the event of
death); provided, further, that no such period following Termina-
tion 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 perma-
nent 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 Partici-
pant 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
grants of Options or in connection with previously granted
<PAGE> 8
-8-
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 immedi-
ately 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 deter-
mine whether such payments may bear amounts equivalent to inter-
est 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;
<PAGE> 9
-9-
(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, benefi-
cially 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
<PAGE> 10
-10-
have been granted pursuant to Article II of this Plan (except as
provided in Section 1(b) of Article II).
Restricted Shares shall be subject to such terms and condi-
tions, 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
restritions 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 forth-
with 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
<PAGE> 11
-11-
for any immediate or deferred amounts payable to any Participant,
nor require Monsanto to segregate any treasury Shares.
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 provi-
sions 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 out-
standing as of the date that the Company spins off the Company's
chemical businesses into a new publicly traded company ("Che-
micals") 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.
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 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 Partici-
pants under this Plan;
<PAGE> 12
-12-
(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, achieve-
ment 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
MONSANTO MANAGEMENT INCENTIVE PLAN
OF 1988/I
(As Amended Effective April 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, and April 25, 1997, and by the Stockholders at the April 26,
1991 Annual Meeting.]
<PAGE> 2
MONSANTO MANAGEMENT INCENTIVE PLAN OF 1988/I
(AS AMENDED EFFECTIVE APRIL 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 compensa-
tion 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 partner-
ship, 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 consist-
ing 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.
"Company" means Monsanto Company, a Delaware corpora-
tion.
"Eligible Participant" means any officer or other
salaried employee (including a director who is a
<PAGE> 3
-2-
salaried employee) of the Company, a Subsidiary or an
Associated Company.
"Incentive Plan" means the Monsanto Management Incen-
tive 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 1988 Bonus Plan.
"Restricted Shares" means Shares that were made subject
to restrictions in accordance with Article IV of this
Incentive Plan.
<PAGE> 4
-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 esta-
blish 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 corpora-
tion 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.
"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-Qual-
<PAGE> 5
-4-
ified Stock Option, a Stock Appreciation Right and the
1988 Bonus Plan, a change of employment of a Partici-
pant 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 Associ-
ated 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 provi-
sion 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 inter-
pret 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 provi-
sions 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 provisions thereof, shall be conclu-
sive, final and binding upon all Eligible Participants.
<PAGE> 6
-5-
(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 Appreci-
ation 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 Parti-
cipants, 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 reorganiza-
tion.
<PAGE> 7
-6-
4. SHARE ADJUSTMENTS
In the event that at any time or from time to time a stock
dividend, stock split, recapitalization, merger, consolida-
tion, 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 trans-
ferred 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 Incen-
tive 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.
<PAGE> 8
-7-
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
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 pro-
vided 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 con-
sidered 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 represen-
tative, or in the event of death, a beneficiary desig-
nated in writing by the Participant during his life-
time, 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
<PAGE> 9
-8-
subject to an Option and the Option price in considera-
tion 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 exer-
cisable 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
<PAGE> 10
-9-
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
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
<PAGE> 11
-10-
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 Termina-
tion 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 Termina-
tion of Employment shall in no event extend the origi-
nal 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.
<PAGE> 12
-11-
(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 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 exer-
cisable upon, or within such period following, Termina-
tion 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
<PAGE> 13
-12-
(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 Termina-
tion 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
<PAGE> 14
-13-
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 unexer-
cised 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 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.
<PAGE> 15
-14-
(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 Appreci-
ation 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
<PAGE> 16
-15-
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 acquisi-
tion, 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 follow-
ing 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> 17
-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 notifica-
tion 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 Employ-
ment.
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 Parti-
cipant at the time of such commitment. The Committee
shall have full discretion to determine the terms and
conditions of the commitment including, without limita-
tion, whether the corresponding bonus award shall be
contingent upon the attainment of prescribed goals and
provisions with respect to the rights of the Parti-
cipant upon Termination of Employment.
<PAGE> 18
-17-
(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 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 avail-
able, unless and until so transferred, for any cor-
porate purpose.
(b) The total number of Shares which may be awarded pur-
suant 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 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
<PAGE> 19
-18-
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
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 condi-
tions 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
<PAGE> 20
-19-
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 forfei-
tures 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 not-
withstanding, 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 EQUIVA-
LENTS
(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 divi-
dends, 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
<PAGE> 21
-20-
(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 equiva-
lents 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 equiva-
lents and interest equivalents, if any, payable in connec-
tion 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 benefici-
aries 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 condi-
tions, including forfeiture, if any, and to such restric-
tions 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,
<PAGE> 22
-21-
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, condi-
tions 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 Partici-
pant the right to continue in the employ of his
employer or affect the right of his employer to termi-
nate 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,
<PAGE> 23
-22-
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.
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 stock-
holders normally entitled to vote for the election of
directors of the Company:
<PAGE> 24
-23-
(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, 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 eligib-
ility 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
<PAGE> 25
-24-
Incentive 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 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 Perfor-
mance 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 (herein-
after "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 commit-
ments 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 corpora-
<PAGE> 26
-25-
tion, 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> 1
MONSANTO MANAGEMENT INCENTIVE PLAN
OF 1988/II
(As Amended Effective April 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, and April 25,
1997 and by the Stockholders at the april 26, 1991 Annual
Meeting.]
<PAGE> 2
MONSANTO MANAGEMENT INCENTIVE PLAN OF 1988/II
(AS AMENDED EFFECTIVE APRIL 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 excep-
tional ability; to motivate such personnel through added
incentives to make a maximum contribution to Company objec-
tives; 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 partner-
ship, 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 corpora-
tion.
"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
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.
<PAGE> 3
-2-
"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 Incen-
tive 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.
"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.
<PAGE> 4
-3-
"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 corpora-
tion 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 commit-
tees 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
(a) This Incentive Plan shall be administered by the ECDC.
The ECDC may delegate all or a portion of the adminis-
tration of this Incentive Plan to one or more Unit
Compensation Committees. No person serving as a member
<PAGE> 5
-4-
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 inter-
pret 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 conclu-
sive, 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 commit-
ments 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 corpora-
tion; 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
<PAGE> 6
-5-
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 Partici-
pants 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 reorganiza-
tion.
4. SHARE ADJUSTMENTS
In the event that at any time or from time to time a stock
dividend, stock split, recapitalization, merger, consolida-
tion, 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
subject to Stock Options, (B) which have not been
issued or transferred under outstanding Stock
Options, and (C) which are subject to a bonus
<PAGE> 7
-6-
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 Incen-
tive 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 pro-
vided 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
Section 1(a) of this Article II. Any amendment of any
Option by the Committee pursuant to Article I, Section
<PAGE> 8
-7-
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 represen-
tative, or in the event of death, a beneficiary desig-
nated in writing by the Participant during his life-
time, 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 considera-
tion 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 advis-
able to comply with applicable laws, regulations or
rulings of any governmental authority.
(b) A Stock Option shall not be transferable by the Parti-
cipant 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> 9
-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> 10
-9-
and while the Option was still exercisable;
and
provided, further, that such period following Termina-
tion 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, pro-
vided 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 Termina-
<PAGE> 11
-10-
tion 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 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 Termina-
tion 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 Parti-
cipant at the time of such commitment. The Committee
shall have full discretion to determine the terms and
conditions of the commitment including, without limita-
tion, whether the corresponding bonus award shall be
contingent upon the attainment of prescribed goals and
provisions with respect to the rights of the Partici-
pant upon Termination of Employment.
<PAGE> 12
-11-
(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 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 avail-
able, unless and until so transferred, for any cor-
porate purpose.
(b) The total number of Shares which may be awarded pur-
suant 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
<PAGE> 13
-12-
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
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 condi-
tions 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
<PAGE> 14
-13-
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
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 forfei-
tures 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 not-
withstanding, 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 EQUIVA-
LENTS
(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 divi-
dends, 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
<PAGE> 15
-14-
(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 equiva-
lents 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 equiva-
lents and interest equivalents, if any, payable in connec-
tion 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 benefici-
aries 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 condi-
tions, including forfeiture, if any, and to such restric-
tions 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 secur-
ities 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
<PAGE> 16
-15-
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
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 Partici-
pant the right to continue in the employ of his
employer or affect the right of his employer to termi-
nate 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,
<PAGE> 17
-16-
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.
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
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 stock-
holders 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
<PAGE> 18
-17-
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
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 (herein-
after "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
<PAGE> 19
-18-
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> 1
MONSANTO MANAGEMENT INCENTIVE PLAN
OF 1994
(As Amended April 25, 1997)
<PAGE> 2
MONSANTO MANAGEMENT INCENTIVE PLAN OF 1994
AS AMENDED APRIL 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 partner-
ship, 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
more members of the Board as may be appointed by the
1
<PAGE> 3
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 Incen-
tive 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.
2
<PAGE> 4
"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 esta-
blish 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 corpora-
tion 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-Qual-
3
<PAGE> 5
ified 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.
"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 provi-
sion 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
4
<PAGE> 6
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 substan-
tially 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.
5
<PAGE> 7
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 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 trans-
ferred 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
6
<PAGE> 8
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
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 con-
sidered 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 Partici-
pant, his legal representative, or in the event of
death, a beneficiary designated in writing by the
Participant during his lifetime, authorize
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<PAGE> 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 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
8
<PAGE> 10
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
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<PAGE> 11
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 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.
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<PAGE> 12
(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).
(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
11
<PAGE> 13
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
(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:
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<PAGE> 14
(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 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 unexer-
cised 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
13
<PAGE> 15
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:
(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--
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<PAGE> 16
(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 Appreci-
ation 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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<PAGE> 17
(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 Partici-
pant 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 and
Restricted Shares, the time or times of payment
16
<PAGE> 18
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 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 accel-
erate 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
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<PAGE> 19
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, condi-
tions and provisions in effect at the time of his
death, to the extent applicable.
7. DIVIDENDS, DIVIDEND EQUIVALENTS AND INTEREST EQUIVA-
LENTS
(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 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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<PAGE> 20
(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 Partici-
pant the right to continue in the employ of his
employer or affect the right of his employer to termi-
nate 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
19
<PAGE> 21
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 of the Company), such
change of employment shall not constitute a Termination
of Employment.
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.
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<PAGE> 22
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 (herein-
after "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 other corporation, or other
transaction described in Section 424(a) of the Internal
21
<PAGE> 23
Revenue Code of 1986, as may be amended from time to
time, as in effect at the time.
22
<PAGE> 1
SEARLE/MONSANTO STOCK PLAN
OF 1994
(As Amended April 25, 1997)
<PAGE> 2
SEARLE/MONSANTO STOCK PLAN OF 1994
AS AMENDED APRIL 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 partner-
ship, 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.
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<PAGE> 3
"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.
2
<PAGE> 4
"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.
"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 corpora-
tion 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-Qual-
ified 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.
3
<PAGE> 5
(b) The Committee shall have the exclusive right to
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 provi-
sions 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
4
<PAGE> 6
all Participants or to certain categories of
Participants, by including, amending or waiving
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 trans-
ferred 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
5
<PAGE> 7
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
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.
6
<PAGE> 8
(c) In the event of death or total and permanent
disability as determined by the Committee, the
Committee may, with the consent of the Partici-
pant, 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 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 trans-
ferable 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
7
<PAGE> 9
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
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.
8
<PAGE> 10
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 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.
9
<PAGE> 11
(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 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
10
<PAGE> 12
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
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.
11
<PAGE> 13
(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
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
12
<PAGE> 14
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
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 Appreci-
ation 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
13
<PAGE> 15
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)
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 Partici-
pant 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
14
<PAGE> 16
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
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
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<PAGE> 17
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.
(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 accel-
erate 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.
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<PAGE> 18
7. DIVIDENDS, DIVIDEND EQUIVALENTS AND INTEREST EQUIVA-
LENTS
(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
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.
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<PAGE> 19
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 Partici-
pant the right to continue in the employ of his
employer or affect the right of his employer to termi-
nate 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
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.
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<PAGE> 20
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.
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.
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<PAGE> 21
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 (herein-
after "Other Plan"), and any such Other Plan may be
authorized and payments made thereunder independently
of this Incentive Plan.
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<PAGE> 1
MONSANTO MANAGEMENT INCENTIVE PLAN OF 1996
As Amended April 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.
"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
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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.
"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.
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<PAGE> 3
"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 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.
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(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.
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;
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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
(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).
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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, 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
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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 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.
A-7
<PAGE> 8
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 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)
A-8
<PAGE> 9
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 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:
(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;
A-9
<PAGE> 10
(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;
(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;
A-10
<PAGE> 11
(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.
(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
A-11
<PAGE> 12
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.
(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.
A-12
<PAGE> 13
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 of the Company), such
change of employment shall not constitute a Termination
of Employment.
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
A-13
<PAGE> 14
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
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,
A-14
<PAGE> 15
bonus commitments or bonus awards to employees
substantially all of whom are not Participants.
A-15
<PAGE> 1
EXCERPT OF MINUTES OF MEETING
EXECUTIVE COMPENSATION & DEVELOPMENT COMMITTEE
FEBRUARY 27, 1997
. . . .
After ten years of operation, management recommends the
termination of the Searle Phantom Stock Option Plan in light of
the new organization structure designed to spin off the chemicals
business and create a life sciences organization of which Searle
will be a part. To terminate the plan for the 223 participants,
management recommends cash awards for the embedded value up to
$56 per option, and the grant of Monsanto Stock Options
(approximately 2.5 million options) for the value from $56 to
$60.
. . . . .
The Committee, after discussion and unanimous consent, approved
the termination of the Searle Phantom Stock Option Plan, and the
cash awards and grant of Monsanto Stock Options as outlined in
Exhibit I.
. . . .
<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 March 31,
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
May 15, 1997
<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
THREE MONTHS ENDED MARCH 31, 1997, AND THE STATEMENT OF CONSOLIDATED
FINANCIAL POSITION AS OF MARCH 31, 1997. SUCH INFORMATION IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 106
<SECURITIES> 0
<RECEIVABLES> 2,583
<ALLOWANCES> 0
<INVENTORY> 1,563
<CURRENT-ASSETS> 5,166
<PP&E> 7,707
<DEPRECIATION> 4,590
<TOTAL-ASSETS> 12,122
<CURRENT-LIABILITIES> 4,243
<BONDS> 1,552
<COMMON> 1,644
0
0
<OTHER-SE> 2,183
<TOTAL-LIABILITY-AND-EQUITY> 12,122
<SALES> 2,574
<TOTAL-REVENUES> 2,574
<CGS> 1,321
<TOTAL-COSTS> 1,321
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 43
<INCOME-PRETAX> 394
<INCOME-TAX> 120
<INCOME-CONTINUING> 274
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 274
<EPS-PRIMARY> 0.45
<EPS-DILUTED> 0
<FN>
RECEIVABLES ARE STATED NET OF ALLOWANCES OF $75.
</TABLE>
<PAGE> 1
EXHIBIT 99
<TABLE>
MONSANTO COMPANY AND SUBSIDIARIES
COMPUTATION OF THE RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, 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.............. $394 $382 $540<F*> $1,087 $ 895 $729 $(174)<F*>
Add
Fixed charges............... 56 52 232 245 182 184 231
Less capitalized interest..... (1) (1) (14) (11) (10) (12) (16)
Dividends from
affiliated companies........ -- 2 14 9 2 5 5
Less equity (income) loss of
affiliated companies.......... (23) 9 24 (17) (21) (20) (1)
---- ---- ---- ------ ------ ---- -----
Income as adjusted $426 $444 $796 $1,313 $1,048 $886 $ 45
==== ==== ==== ====== ====== ==== =====
Fixed charges
Interest expense.............. $ 43 $ 40 $171 $ 190 $ 131 $129 $ 169
Capitalized interest.......... 1 1 14 11 10 12 16
Portion of rents
representative of interest
factor...................... 12 11 47 44 41 43 46
---- ---- ---- ------ ------ ---- -----
Fixed charges............. $ 56 $ 52 $232 $ 245 $ 182 $184 $ 231
==== ==== ==== ====== ====== ==== =====
Ratio of earnings to fixed
charges....................... 7.61 8.54 3.43 5.36 5.76 4.82 0.19
==== ==== ==== ====== ====== ==== =====
<FN>
- -------
<F*>Includes restructuring and other unusual items of $716 million and $699
million in 1996 and 1992, respectively. Excluding restructuring and other
unusual items, the ratio of earnings to fixed charges would have been 6.52
and 3.22 in 1996 and 1992, respectively. The ratio was not materially
affected by the restructuring and other unusual items in 1995, 1994 and
1993.
</TABLE>
