EXHIBIT 10.20
NEW FORM OF CHANGE-OF-CONTROL
EMPLOYMENT SECURITY AGREEMENT
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AGREEMENT, by and between Monsanto Company, a Delaware
corporation (the "Company"), and (the "Executive"),
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dated as of the day of , 200 (this "Agreement").
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The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued dedication
of the Executive, notwithstanding the possibility, threat or occurrence of a
Change of Control. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control
and to encourage the Executive's full attention and dedication to the
Company currently and in the event of any threatened or pending Change of
Control, and to provide the Executive with compensation and benefits
arrangements upon a Change of Control that ensure that the compensation and
benefits expectations of the Executive will be satisfied and are competitive
with those of other corporations. Therefore, in order to accomplish these
objectives, the Board has caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Effect of Agreement. (a) Unless and until there occurs,
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during the Term of this Agreement, either a Change of Control or a
termination of the Executive's employment in anticipation of a Change of
Control as contemplated by Section 3(d), (1) Sections 2, 3 and 4 of this
Agreement shall have no effect and shall not give rise to any rights of the
Executive, (2) the Executive's employment shall be "at will," except as may
be otherwise provided in any Employment Agreement, and (3) upon any
termination of the Executive's employment, the Executive shall have no
further rights under this Agreement. [THIS AGREEMENT, UPON ITS EXECUTION,
SUPERSEDES THE PRIOR CHANGE-OF-CONTROL EMPLOYMENT SECURITY AGREEMENTS.]
(b) From and after the first date during the Term of this
Agreement on which a Change of Control occurs, this Agreement shall
supersede any Employment Agreements, but shall have no effect on any Other
Agreement or Other Plan, except as specifically provided in Section 5;
provided, that any confidentiality and non-competition provisions in any
employment agreement shall continue in full force and effect.
2. Terms of Employment. This Section 2 sets forth the
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terms and conditions on which the Company agrees to employ the Executive
during the period (the "Protected Period") beginning on the first day during
the Term of this Agreement on which a Change of Control occurs and ending on
the third anniversary of
that date, or such earlier date as the Executive's employment terminates as
contemplated by Section 3.
(a) Position and Duties. (1) During the Protected Period,
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(A) the Executive's position (including status, offices, titles and
reporting requirements), authority, duties and responsibilities shall be at
least commensurate in all material respects with the most significant of
those held, exercised and assigned to the Executive at any time during the
120-day period immediately preceding the date of the Change of Control, and
(B) the Executive's services shall be performed at the office where the
Executive was employed immediately preceding the date of the Change of
Control or any office or location less than 35 miles from such office,
unless the Executive is on international assignment on the date of the
Change of Control and is relocated as a result of the Executive's being
repatriated pursuant to the terms of the Executive's international
assignment agreement as in effect before the date of the Change of Control.
(2) During the Protected Period, the Executive agrees to
devote reasonable attention and time during normal business hours (except
when on authorized vacation, holidays or sick leave) to the business and
affairs of the Company, and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities; provided, that the Executive may (A) serve on corporate,
civic or charitable boards and committees, (B) deliver lectures, fulfill
speaking engagements and teach at educational institutions, and (C) manage
personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement; and provided,
further, that to the extent that any such activities have been conducted by
the Executive before the date of the Change of Control, the continued
conduct of such activities or other activities similar in nature and scope
thereto after the date of the Change of Control shall not be deemed to
interfere with the performance of the Executive's responsibilities to the
Company.
(b) Compensation. (1) Base Salary. During the Protected
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Period, the Executive shall receive a base salary (the "Base Salary"), the
annual amount of which (the "Annual Base Salary Amount") shall be at least
equal to 12 times the highest monthly base salary paid or payable, including
any base salary that has been earned but deferred, to the Executive by the
Company and the Affiliated Companies for the 12-month period immediately
preceding the date of the Change of Control. The Base Salary shall be paid
at such intervals as the Company pays executive salaries generally. During
the Protected Period, the Annual Base Salary Amount shall be reviewed for
possible increase at least annually, beginning no more than 12 months after
the last such annual review prior to the date of the Change of Control. Any
increase in the Annual Base Salary Amount shall not serve to limit or reduce
any other obligation to the Executive under this Agreement. The Annual
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Base Salary Amount shall not be reduced after any such increase and the term
"Annual Base Salary Amount" shall refer to Annual Base Salary Amount as so
increased.
(2) Bonuses. In addition to the Base Salary, the Executive
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shall be awarded the following bonuses and incentive compensation. For each
fiscal year ending during the Protected Period, the Executive shall be
awarded an annual bonus in cash (the "Annual Bonus") at least equal to the
Average Pre-Change-of-Control Annual Bonus, which shall be paid no later
than the end of the third month of the fiscal year next following the fiscal
year for which the Annual Bonus is awarded, unless the Executive shall elect
to defer the receipt of such Annual Bonus pursuant to any Other Plan that
may permit such deferral. In addition, during the Protected Period, the
Executive shall be entitled to participate in all long-term, stock-based and
other incentive plans, practices, policies and programs generally applicable
to peer executives of the Company and the Affiliated Companies, but in no
event shall such plans, practices, policies and programs provide the
Executive with incentive opportunities less favorable, in the aggregate,
than the most favorable of those provided by the Company and the Affiliated
Companies to the Executive under such plans, practices, policies and
programs as in effect at any time during the 120-day period immediately
preceding the date of the Change of Control, or, if more favorable to the
Executive, those generally provided at any time after the date of the Change
of Control to peer executives of the Company and the Affiliated Companies.
(3) Savings and Retirement Plans. During the Protected
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Period, the Executive shall be entitled to participate in all savings and
retirement plans, practices, policies and programs generally applicable to
peer executives of the Company and the Affiliated Companies, but in no event
shall such plans, practices, policies and programs provide the Executive
with savings opportunities and retirement benefit opportunities, in each
case, less favorable, in the aggregate, than the most favorable of those
provided by the Company and the Affiliated Companies to the Executive under
such plans, practices, policies and programs as in effect at any time during
the 120-day period immediately preceding the date of the Change of Control,
or, if more favorable to the Executive, those generally provided at any time
after the date of the Change of Control to peer executives of the Company
and the Affiliated Companies. Without limiting the generality of the
foregoing, the Company and the Affiliated Companies shall continue to honor
any Individual SERP [,INCLUDING WITHOUT LIMITATION THE SERP LETTER].
(4) Welfare Benefit Plans. During the Protected Period,
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the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and
the Affiliated Companies (including without limitation medical, prescription
drug, dental, vision, disability, life insurance, accidental death and
dismemberment, and travel accident insurance plans
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and programs) to the extent generally applicable to peer executives of the
Company and the Affiliated Companies, but in no event shall such plans,
practices, policies and programs provide the Executive with benefits that
are less favorable, in the aggregate, than the most favorable of such plans,
practices, policies and programs in effect for the Executive at any time
during the 120-day period immediately preceding the date of the Change of
Control, or, if more favorable to the Executive, those generally provided at
any time after the date of the Change of Control to peer executives of the
Company and the Affiliated Companies.
(5) Expenses. During the Protected Period, the Executive
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shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the most favorable
policies, practices and procedures of the Company and the Affiliated
Companies in effect for the Executive at any time during the 120-day period
immediately preceding the date of the Change of Control, or, if more
favorable to the Executive, as in effect generally at any time after the
date of the Change of Control with respect to peer executives of the Company
and the Affiliated Companies.
(6) Fringe Benefits. During the Protected Period, the
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Executive shall be entitled to fringe benefits in accordance with the most
favorable plans, practices, programs and policies of the Company and the
Affiliated Companies in effect for the Executive at any time during the
120-day period immediately preceding the date of the Change of Control, or,
if more favorable to the Executive, as in effect generally at any time after
the date of the Change of Control with respect to peer executives of the
Company and the Affiliated Companies.
(7) Office and Support Staff. During the Protected Period,
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the Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to secretarial and other assistance,
at least equal to the most favorable of the foregoing provided to the
Executive by the Company and the Affiliated Companies at any time during the
120-day period immediately preceding the date of the Change of Control, or,
if more favorable to the Executive, as provided generally at any time after
the date of the Change of Control with respect to peer executives of the
Company and the Affiliated Companies.
(8) Vacation. During the Protected Period, the Executive
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shall be entitled to paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company and the Affiliated
Companies as in effect for the Executive at any time during the 120-day
period immediately preceding the date of the Change of Control, or, if more
favorable to the Executive, as in effect generally at any time after the
date of the Change of Control with respect to peer executives of the Company
and the Affiliated Companies.
3. Termination of Employment. (a) Death or Disability. The
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Executive's employment shall terminate automatically if the Executive dies
during the
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Protected Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Protected Period, it may
give to the Executive written notice in accordance with Section 10(b) of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the
30th day after receipt of such notice by the Executive, provided that the
Executive shall not have returned to full-time performance of the
Executive's duties before such day.
(b) By the Company. The Company may terminate the
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Executive's employment during the Protected Period for Cause or without
Cause. The termination of the Executive's employment shall not be deemed to
be for Cause, unless and until (1) the Executive has been given the
opportunity, on reasonable advance notice, to be heard before the Board,
together with counsel to the Executive, and (2) there shall have been
delivered to the Executive a copy of a resolution thereafter duly adopted by
the affirmative vote of not less than three-quarters of the entire
membership of the Board (excluding the Executive, if the Executive is a
member of the Board), finding that, in the good faith opinion of the Board,
the Executive is guilty of conduct constituting Cause, and specifying the
particulars thereof in detail.
(c) By the Executive. The Executive may terminate
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employment during the Protected Period for Good Reason or without Good
Reason. The Executive's mental or physical incapacity following the
occurrence of an event described in clauses (a) through (e) of the
definition of Good Reason shall not affect the Executive's ability to
terminate employment for Good Reason.
(d) Termination In Anticipation of a Change of Control.
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Anything in this Agreement to the contrary notwithstanding, if (1) a Change
of Control occurs, (2) the Executive's employment with the Company is
terminated by the Company before the Change of Control occurs in a manner
and under circumstances that would be considered a termination by the
Company without Cause if it had occurred during the Protected Period, and
(3) it is reasonably demonstrated by the Executive that such termination of
employment was at the request of a third party that had taken steps
reasonably calculated to effect the Change of Control or otherwise arose in
connection with or in anticipation of the Change of Control, then such
termination shall be treated for all purposes of this Agreement as a
termination by the Company without Cause during the Protected Period.
(e) Notice of Termination. Any termination of the
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Executive's employment by the Company or the Executive shall be communicated
by Notice of Termination to the other party hereto given in accordance with
Section 10(b). The failure by the Executive or the Company to set forth in
the Notice of Termination any fact or circumstance that contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive
or the Company, respectively, hereunder, or preclude the Executive or the
Company, respectively, from asserting such fact or circumstance in enforcing
their respective rights hereunder.
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4. Obligations of the Company upon Termination. (a) Other
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than for Cause, Death or Disability; Good Reason. If, during the Protected
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Period, the Company terminates the Executive's employment other than for
Cause or Disability or the Executive terminates employment for Good Reason
and the Executive executes a release substantially in the form attached
hereto as Exhibit A (a "Release"):
(1) the Company shall pay to the Executive, in a lump sum
in cash within 30 days after the Date of Termination, or if later, within 5
days after the Executive executes the Release, the aggregate of the
following amounts:
(A) the sum of the following amounts, to the
extent not previously paid to the Executive (the "Accrued
Obligations"): (i) the Base Salary through the Date of
Termination; (ii) a pro rata portion of the Annual Bonus
for the year in which the Date of Termination occurs,
computed as the product of (x) the Severance Annual Bonus
Amount, and (y) a fraction, the numerator of which is the
number of days in the current fiscal year through the Date
of Termination, and the denominator of which is 365; and
(iii) any accrued pay in lieu of unused vacation; and
(B) the product of (i) [TWO] [THREE], and (ii)
the sum of (x) the Annual Base Salary Amount, (y) the
Severance Annual Bonus Amount, and (z) the amount of the
employer matching contributions made or credited to the
Executive's accounts in the Savings Plans for the most
recent plan year that ended before the date of the Change
of Control or, if higher, for the most recent plan year
that ended after the date of the Change of Control (in
either case annualized to the extent such plan year
consisted of less than 12 months and/or the Executive was
not eligible to participate in such Savings Plan for the
full plan year); and
(C) an amount equal to the excess of (i) the
aggregate benefit under the Retirement Plan, the SERP and
any Individual SERP that the Executive would have accrued
(whether or not vested) if the Executive's employment had
continued for the Severance Period, based on the
assumption that the Executive's compensation during the
Severance Period was that required by Sections 2(b)(1) and
2(b)(2), over (ii) the actual vested benefit, if any, of
the Executive under the Retirement Plan, the SERP and any
Individual SERP, in each case, determined as a single lump
sum benefit amount as of the Date of Termination, on an
actuarial present value basis, using actuarial assumptions
no less favorable to the Executive than the most favorable
of those in effect for purposes of computing benefit
entitlements under the Retirement Plan and the SERP at any
time from the day before the date of the Change of
Control;
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(2) for the Severance Period, the Company shall continue
Specified Welfare Benefits to the Executive and/or the Executive's family;
provided, that if the Executive becomes reemployed with another employer and
is eligible to receive medical, dental, prescription drug and vision
benefits under another employer-provided plan during the Severance Period,
the comparable Specified Welfare Benefits shall be secondary to those
provided under such other plan while the Executive is so eligible;
(3) for purposes of determining the Executive's
eligibility for Retiree Welfare Benefits, the Executive shall be considered
to have remained employed until the end of the Severance Period and to have
retired on the last day of such period, and, if the Executive has reached
age 50 as of the Date of Termination, then the Executive shall be fully
vested in, and shall be entitled to receive, beginning at the end of the
Severance Period, lifetime retiree medical benefits at least as favorable as
those to which the Executive would have been entitled if the Executive had
retired with full eligibility for the Retiree Welfare Benefits in effect as
of the date of the Change of Control;
(4) the Company shall provide the Executive with
outplacement services, in accordance with its normal practice for its most
senior executives, as in effect before the date of the Change of Control,
from the outplacement firm or firms with which the Company has contracted as
of the Date of Termination or thereafter; and
(5) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any Other Benefits.
Notwithstanding the foregoing: (i) if the Company determines that it is not
possible to provide any of the Specified Welfare Benefits or Retiree Welfare
Benefits as required above through plans sponsored by the Company and the
Affiliated Companies under the terms thereof, or that providing any of the
Specified Welfare Benefits or Retiree Welfare Benefits through such plans
would have adverse tax consequences for the Executive, then the Company
shall provide such Specified Welfare Benefits or Retiree Welfare Benefits in
a manner that keeps the Executive in the same position, on an After-Tax
basis, as if the Executive had remained employed by the Company during the
Severance Period; provided, that if it is not reasonably practicable to so
provide such Specified Welfare Benefits or Retiree Welfare Benefits, then
the Company shall, instead, make a cash payment that is equal, on an
After-Tax basis, to the value of such Specified Welfare Benefits or Retiree
Welfare Benefits; and (ii) any disability benefits to which the Executive
might otherwise become entitled pursuant to any of the Specified Welfare
Benefits shall begin at the conclusion of the Severance Period.
(b) Death. If the Executive's employment is terminated
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because of the Executive's death during the Protected Period, the Company
shall pay the
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Accrued Obligations to the Executive's estate or beneficiaries, as applicable,
in a lump sum in cash within 30 days of the Date of Termination, shall
timely pay or deliver any of the Other Benefits, and shall have no other
severance obligations under this Agreement. For purposes of this Section
4(b), the term "Other Benefits" shall include without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to receive,
benefits at least equal to the most favorable benefits provided by the
Company and the Affiliated Companies to the estates and beneficiaries of
peer executives of the Company and the Affiliated Companies under such
plans, programs, practices and policies relating to death benefits, if any,
as in effect with respect to other peer executives and their beneficiaries
at any time during the 120-day period immediately preceding the date of the
Change of Control, or, if more favorable to the Executive's estate and/or
the Executive's beneficiaries, as in effect at any time after the date of
the Change of Control generally with respect to peer executives of the
Company and the Affiliated Companies and their beneficiaries.
(c) Disability. If the Executive's employment is
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terminated because of the Executive's Disability during the Protected
Period, the Company shall pay the Accrued Obligations to the Executive in a
lump sum in cash within 30 days of the Date of Termination, shall timely pay
or deliver any Other Benefits, and shall have no other severance obligations
under this Agreement. For purposes of this Section 4(c), the term "Other
Benefits" shall include, without limitation, and the Executive shall be
entitled to receive, disability and other benefits at least equal to the
most favorable of those generally provided by the Company and the Affiliated
Companies to disabled executives and/or their families in accordance with
such plans, programs, practices and policies relating to disability, if any,
as in effect generally with respect to peer executives and their families at
any time during the 120-day period immediately preceding the date of the
Change of Control, or, if more favorable to the Executive and/or the
Executive's family, as in effect at any time after the date of the Change of
Control generally with respect to peer executives of the Company and the
Affiliated Companies and their families.
(d) Cause; Other than for Good Reason. If the Executive's
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employment is terminated for Cause during the Protected Period, the Company
shall provide to the Executive the Base Salary through the Date of
Termination and any Other Benefits, in each case, to the extent theretofore
unpaid, and shall have no other severance obligations under this Agreement.
If the Executive voluntarily terminates employment during the Protected
Period, other than for Good Reason, the Company shall pay the Accrued
Obligations to the Executive in a lump sum in cash within 30 days of the
Date of Termination, shall timely pay or deliver any Other Benefits, and
shall have no other severance obligations under this Agreement.
5. Non-exclusivity of Rights. Nothing in this Agreement
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shall prevent or limit the Executive's continuing or future participation in
any Other Plan for which the Executive may qualify, nor shall anything
herein limit or otherwise
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affect such rights as the Executive may have under any Other Agreement.
Amounts that are vested benefits or that the Executive is otherwise entitled
to receive under any Other Plan or any Other Agreement shall be payable in
accordance with such Other Plan or Other Agreement, except as explicitly
modified by this Agreement. Notwithstanding the foregoing, if the Executive
receives payments and benefits pursuant to Section 4(a), then (a) the
Executive shall not be entitled to any severance pay or benefits under any
severance plan, program or policy of the Company and the Affiliated
Companies, unless otherwise specifically provided therein in a specific
reference to this Agreement, and (b) the Executive shall not be treated as
having any additional years of service or age for purposes of any Other Plan
or Other Agreement by virtue of receiving such payments and benefits, unless
such Other Plan or Other Agreement specifically so provides.
6. Full Settlement; Legal Fees. The Company's obligation
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to make the payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action that the
Company or any Affiliated Company may have against the Executive or others.
In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement, and, except as
specifically provided in Section 4(a)(2), such amounts shall not be reduced,
regardless of whether the Executive obtains other employment. The Company
agrees to pay as incurred, within 10 days following the Company's receipt of
an invoice from the Executive, to the full extent permitted by law, all
legal fees and expenses that the Executive may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of performance
thereof (whether such contest is between the Company and the Executive or
between either of them and any third party, and including as a result of any
contest by the Executive about the amount of any payment pursuant to this
Agreement), plus, in each case, interest on any delayed payment at the
applicable federal rate provided for in Section 7872(f)(2)(A) of the Code;
provided, that the Company shall not be required to pay any fees or expenses
charged by any accounting or consulting firm to perform calculations or make
determinations required to be carried out by the Accounting Firm pursuant to
Section 7.
7. Certain Additional Payments by the Company. (a) If any
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Payment is subject to the Excise Tax, then the Company shall pay the
Executive a Gross-Up Payment (regardless of whether the Executive's
employment has terminated). Notwithstanding the foregoing, if the Parachute
Value of all Payments does not exceed 110% of the Safe Harbor Amount, then
the Company shall not pay the Executive a Gross-Up Payment, and the Payments
due under this Agreement shall be reduced so that the Parachute Value of all
Payments, in the aggregate, equals the Safe Harbor Amount; provided, that if
even after all Payments due hereunder are reduced to zero, the Parachute
Value of all Payments would still exceed the Safe
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Harbor Amount, then no reduction of any Payments shall be made. The
reduction of the Payments due hereunder, if applicable, shall be made by
first reducing the payments under Section 4(a)(1)(B), unless an alternative
method of reduction is elected by the Executive, and in any event shall be
made in such a manner as to maximize the economic present value of all
Payments actually made to the Executive, determined by the Accounting Firm
as of the date of the change of control for purposes of Section 280G of the
Code using the discount rate required by Section 280G(d)(4) of the Code.
(b) All determinations required to be made under this
Section 7, including whether and when Gross-Up Payments are required and the
amount of such Gross-Up Payments, whether and in what manner any Payments
are to be reduced pursuant to the second sentence of Section 7(a), and the
assumptions to be utilized in arriving at such determinations, shall be made
by the Accounting Firm, and shall be binding upon the Company and the
Executive, except to the extent the Internal Revenue Service or a court of
competent jurisdiction makes a final and binding determination inconsistent
therewith. The Accounting Firm shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days
after receiving notice from the Executive that there has been a Payment or
such earlier time as may be requested by the Company. All fees and expenses
of the Accounting Firm shall be borne solely by the Company. Any Gross-Up
Payment that becomes due pursuant to this Section 7 shall be paid by the
Company to the Executive within five days of the receipt of the Accounting
Firm's determination, or, if later, at least 20 business days before the
Executive is obligated to pay the related Excise Tax. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments that will not have been made by the Company should
have been made (an "Underpayment"). In the event the Accounting Firm
determines that there has been an Underpayment or the Executive is required
to make a payment of any Excise Tax as a result of a claim described in
Section 7(c), then the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of a Gross-Up Payment. Such notification shall be
given as soon as practicable, but no later than 10 business days after the
Executive is informed in writing of such claim. The Executive shall apprise
the Company of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which the Executive
gives such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the Company
notifies the Executive in writing prior to the expiration of such period
that the Company desires to contest such claim, the Executive shall:
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(1) give the Company any information reasonably
requested by the Company relating to such claim,
(2) take such action in connection with contesting
such claim as the Company shall reasonably
request in writing from time to time, including
without limitation accepting legal representation
with respect to such claim by an attorney
reasonably selected by the Company,
(3) cooperate with the Company in good faith in order
effectively to contest such claim, and
(4) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest, and shall indemnify and hold the Executive
harmless, on an After-Tax basis, for any Excise Tax or Taxes imposed as a
result of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 7(c), the Company
shall control all proceedings taken in connection with such contest, and, at
its sole discretion, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the applicable taxing authority
in respect of such claim and may, at its sole discretion, either direct the
Executive to pay the Taxes claimed and ▇▇▇ for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company
shall determine; provided, however, that, if the Company directs the
Executive to pay such claim and ▇▇▇ for a refund, the Company shall advance
the amount of such payment to the Executive, on an interest-free basis, and
shall indemnify and hold the Executive harmless, on an After-Tax basis, from
any Excise Tax or Taxes imposed with respect to such advance or with respect
to any imputed income in connection with such advance; and provided,
further, that any extension of the relevant statute of limitations is
limited solely to such contested amount. Furthermore, the Company's control
of the contest shall be limited to issues with respect to which the Gross-Up
Payment would be payable hereunder, and the Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d) If, at any time after receiving a Gross-Up Payment or
an advance pursuant to Section 7(c), the Executive receives any refund of
the associated Excise Tax, the Executive shall (subject to the Company's
having complied with the requirements of Section 7(c), if applicable)
promptly pay to the Company the amount of such refund, together with any
interest paid or credited
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thereon net of all Taxes applicable thereto. If, after the Executive
receives an advance pursuant to Section 7(c), a determination is made that
the Executive is not entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required
to be repaid, and the amount of any Gross-Up Payment owed to the Executive
shall be reduced (but not below zero) by the amount of such advance.
(e) Notwithstanding any other provision of this Section 7,
the Company may, in its sole discretion, withhold and pay over to the
Internal Revenue Service or any other applicable taxing authority, for the
benefit of the Executive, all or any portion of any Gross-Up Payment, and
the Executive hereby consents to such withholding.
8. Confidential Information. (a) The Executive shall use
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the Executive's best efforts and diligence both during and after employment
by the Company and the Affiliated Companies to protect the confidential,
trade secret and/or proprietary character of all Confidential Information.
The Executive shall not, directly or indirectly, use (for the Executive or
another) or disclose any Confidential Information, for so long as it shall
remain proprietary or protectible as confidential or trade secret
information, except as may be necessary for the performance of the
Executive's duties with the Company and the Affiliated Companies. The
Executive shall promptly deliver to the Company, at the termination of the
Executive's employment, or at any other time at the Company's request,
without retaining any copies, all documents and other material in the
Executive's possession relating, directly or indirectly, to any Confidential
Information.
(b) Each of the Executive's obligations in this Section 8
shall also apply to the confidential, trade secret and proprietary
information learned or acquired by the Executive during the Executive's
employment from others with whom the Company or any Affiliated Company has a
business relationship. The Executive understands that the Executive is not
to disclose to the Company or any Affiliated Company, or use for its
benefit, any of the confidential, trade secret or proprietary information of
others, including any of the Executive's former employers.
(c) In no event shall an asserted violation of the
provisions of this Section 8 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.
9. Successors. (a) This Agreement is personal to the
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Executive, and, without the prior written consent of the Company shall not
be assignable by the Executive other than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
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(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. Except as provided
in Section 9(c), without the prior written consent of the Executive, this
Agreement shall not be assignable by the Company.
(c) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place.
10. Miscellaneous. (a) This Agreement shall be governed by
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and construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this Agreement
are not part of the provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified other than by a written
agreement that is specifically identified as an amendment of this Agreement
and executed by the Executive and by an authorized officer of the Company in
a single instrument.
(b) All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
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▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to the Company:
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▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Taxes as shall be required to be withheld pursuant
to any applicable law or regulation.
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(e) The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement or the failure
to assert any right the Executive or the Company may have hereunder,
including without limitation the right of the Executive to terminate
employment for Good Reason pursuant to Section 3(c), shall not be deemed to
be a waiver of such provision or right or any other provision or right of
this Agreement.
11. Certain Definitions. The following terms shall have
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the meanings set forth below for purposes of this Agreement.
"Accounting Firm" means the certified public accounting
firm that was serving as the Company's auditors immediately before the date
of the Change of Control.
"Accrued Obligations" has the meaning set forth in Section
4(a)(1)(A).
"Affiliated Company" means any company controlled by the
Company.
"After-Tax" means after taking into account all applicable
Taxes and Excise Tax.
"Agreement" has the meaning set forth in the first
paragraph of the Agreement.
"Annual Base Salary Amount" has the meaning set forth in
Section 2(b)(1).
"Annual Bonus" has the meaning set forth in Section
2(b)(2).
"Average Pre-Change-of-Control Annual Bonus" means a
bonus amount based upon the Executive's average annual bonuses earned for
fiscal years beginning before the date of the Change of Control under the
Company's annual incentive program as in effect from time to time,
calculated as follows. If, as of the date of the Change of Control, the
Executive has been employed by the Company and the Affiliated Companies and
Pharmacia Corporation (formerly known as Monsanto Company) and its
subsidiaries for at least the most recent three full fiscal years ending on
or before the date of the Change of Control, and was eligible to earn an
annual bonus under such programs for each such fiscal year, then the Average
Pre-Change-of-Control Annual Bonus means the average of the annual bonuses
earned by the Executive for each of such fiscal years. If, as of the date of
the Change of Control, the Executive has been employed by the Company and
the Affiliated Companies and Pharmacia Corporation and its subsidiaries for
less than the most recent three full fiscal years ending on or before the
date of the Change of Control, or was not eligible to earn an annual bonus
under such programs for each such fiscal year, then the Average
Pre-Change-of-Control Annual Bonus means the average of the annual bonuses
earned by the Executive for each of such fiscal years for
-14-
which the Executive was eligible to earn such an annual bonus. If the
Executive earned an annual bonus under such programs for a period of less
than 12 months, the amount of such annual bonus shall be annualized for
purposes of determining the Average Pre-Change-of-Control Annual Bonus. If
the Executive was not eligible to earn such an annual bonus for any fiscal
year ending on or before the date of the Change of Control, then the Average
Pre-Change-of-Control Annual Bonus shall be deemed to equal the Executive's
target annual bonus as in effect immediately before the date of the Change
of Control. Finally, if the amount of the annual bonus earned by the
Executive for any fiscal year ending on or before the date of the Change of
Control is less than the Executive's target annual bonus for such fiscal
year under the Company's annual incentive plan, then the Executive's target
annual bonus for such fiscal year shall be deemed to be the Executive's
annual bonus for such fiscal year in performing the calculation of the
Executive's Average Pre-Change-of-Control Annual Bonus.
"Base Salary" has the meaning set forth in Section
2(b)(1).
"Board" has the meaning set forth in the second paragraph
of this Agreement.
"Cause" means (a) the Executive's willful and continued
failure to perform substantially the Executive's duties as contemplated by
Section 2(a)(1)(A) (except as a result of the Executive's incapacity due to
physical or mental illness or injury, or following the Executive's delivery
of a Notice of Termination for Good Reason), after a written demand for
substantial performance is delivered to the Executive by the Board or the
Chief Executive Officer of the Company which specifically identifies the
manner in which the Board or Chief Executive Officer believes that the
Executive has not substantially performed the Executive's duties, or (b) the
Executive's willful engaging in illegal conduct or gross misconduct that is
materially and demonstrably injurious to the Company. For purposes of this
definition, no act or failure to act on the part of the Executive shall be
considered "willful" unless it is done, or omitted to be done, by the
Executive in bad faith or without reasonable belief that the Executive's
action or omission was in the best interests of the Company. Any act, or
failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer
of the Company or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company.
"Change of Control" means the happening of any of the
events described in sub-sections (a) through (d) below:
(a) the acquisition by any Person of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20 percent or more of either (1) the then-outstanding
shares of common stock of the
-15-
Company (the "Outstanding Company Common Stock") or (2) the combined
voting power of the then-outstanding voting securities of the
Company entitled to vote generally in the election of directors
(the "Outstanding Company Voting Securities"); provided, that for
purposes of this subsection (a), the following acquisitions shall
not constitute a Change of Control: (A) any acquisition directly
from the Company; (B) any acquisition by the Company or a
Subsidiary of the Company; (C) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or a Subsidiary of the Company; or (D) any acquisition by
any corporation pursuant to a transaction that complies with
clauses (1), (2) and (3) of subsection (c) of this definition;
(b) individuals who, as of the date of the initial public
offering of the common stock of the Company, constitute the Board
(the "Incumbent Board"), cease for any reason to constitute at
least a majority of the Board; provided, that any individual
becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board;
(c) consummation by the Company of a reorganization,
merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company or the acquisition
of assets or stock of another corporation (a "Business
Combination"), in each case, unless, following such Business
Combination, (1) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of,
respectively, the then-outstanding shares of common stock and the
combined voting power of the then-outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business
Combination (including without limitation a corporation that as a
result of such transaction owns the Company or all or substantially
all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (2) no Person (excluding the
Company, a Subsidiary of the Company, any corporation resulting
from a Business Combination or any employee benefit plan (or
related trust) thereof) beneficially owns, directly or indirectly,
20 percent or more of the then-outstanding shares of common stock
-16-
of the corporation resulting from such Business Combination or 20
percent or more of the combined voting power of the
then-outstanding voting securities entitled to vote generally in
the election of directors of such corporation, except to the extent
that such ownership existed prior to the Business Combination and
(3) at least a majority of the members of the board of directors of
the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for
such Business Combination;
(d) approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Company" has the meaning set forth in the first paragraph
of this Agreement, and shall include any successor to the Company pursuant
to Section 9(c).
"Confidential Information" means (a) all technical and
business information of the Company and the Affiliated Companies, whether
patentable or not, which is of a confidential, trade secret and/or
proprietary character and that is either developed by the Executive (alone
or with others) or to which the Executive has had access during the
Executive's employment, (b) all confidential evaluations, and (c) the
confidential use or non-use by the Company or any Affiliated Company of
technical or business information in the public domain.
"Date of Termination" means (a) if the Executive's
employment is terminated by the Company for Cause or by the Executive for
Good Reason, the date of receipt of the Notice of Termination or any later
date specified in the Notice of Termination (but not later than 30 days
after the giving of such notice), as the case may be, (b) if the Executive's
employment is terminated by the Company other than for Cause or Disability,
the date on which the Company notifies the Executive of such termination,
and (c) if the Executive's employment is terminated by reason of death or
Disability, the date on which the Executive's termination becomes effective
pursuant to Section 3(a).
"Disability" means the absence of the Executive from the
Executive's duties with the Company on a full-time basis for 180 consecutive
business days as a result of incapacity due to mental or physical illness or
injury that is determined to be total and permanent by a physician selected
by the Company or its insurers and acceptable to the Executive or the
Executive's legal representative.
"Employment Agreement" means any employment agreement
between the Company or any of the Affiliated Companies that may hereafter be
entered into.
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"Executive" has the meaning set forth in the first
paragraph of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Excise Tax" means the excise tax imposed by Section 4999
of the Code, together with any interest or penalties imposed with respect to
such excise tax.
"Good Reason" means (a) any change affecting the position
of the Executive (whether resulting from a transfer of the Executive to
another position, a change in the Company's business, or any other event)
such that the Executive no longer has a position substantially equivalent to
the Executive's position as contemplated by Section 2(a) for which the
Executive is qualified by education, training and experience, other than an
isolated, insubstantial and inadvertent change not taken in bad faith that
is remedied by the Company promptly after receipt of notice thereof given by
the Executive; (b) any failure by the Company to comply with any of the
provisions of Section 2(b), other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith that is remedied by the
Company promptly after receipt of notice thereof given by the Executive; (c)
the Company's requiring the Executive (1) to be based at any office or
location other than as provided in Section 2(a)(1)(B), (2) to be based at a
location other than the principal executive offices of the Company if the
Executive was employed at such location immediately preceding the date of
the Change of Control, or (3) to travel on Company business to a
substantially greater extent than required immediately prior to the date of
the Change of Control; provided, that if the Executive is on international
assignment on the date of the Change of Control, a relocation that results
from the Executive's being repatriated pursuant to the terms of his
international assignment agreement as in effect before the date of the
Change of Control shall not be "Good Reason"; (d) any purported termination
by the Company of the Executive's employment otherwise than as expressly
permitted by this Agreement; or (e) any failure by the Company to comply
with and satisfy Section 9(c).
"Gross-Up Payment" means an amount such that, after
payment by the Executive of all Taxes and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
"Individual SERP" means individual agreements between the
Executive and the Company or the Affiliated Companies regarding the
provisions of supplemental retirement benefits such as (but not limited to)
post-retirement income and/or welfare benefits.
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"Notice of Termination" means a written notice of the
termination of the Executive's employment that (a) indicates the specific
termination provision in this Agreement relied upon, (b) to the extent
applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
under the provision so indicated, and (c) specifies the Date of Termination
(which shall be not earlier than the date such notice is given and not later
than 30 days thereafter).
"Other Agreement" means any contract or agreement between
the Company or any of the Affiliated Companies and the Executive, excluding
any Employment Agreement and this Agreement and including without limitation
any Individual SERP.
"Other Benefits" means any amounts or benefits required to
be paid or provided or which the Executive is eligible to receive under any
Other Plan or Other Agreement.
"Other Plan" means any plan, program, policy or practice
provided by the Company or any of the Affiliated Companies, excluding this
Agreement, any Employment Agreement and any Other Agreements.
"Parachute Value" of a Payment means the present value as
of the date of the change of control for purposes of Section 280G of the
Code of the portion of such Payment that constitutes a "parachute payment"
under Section 280G(b)(2) of the Code, as determined by the Accounting Firm
for purposes of determining whether and to what extent the Excise Tax will
apply to such Payment.
"Payment" means any payment or distribution in the nature
of compensation (within the meaning of Section 280G(b)(2) of the Code) to or
for the benefit of the Executive, whether paid or payable pursuant to this
Agreement or otherwise.
"Person" means any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act.
"Prior Change-of-Control Employment Security Agreement"
means the Change-of-Control Employment Security Agreement _________________
between the Executive and Monsanto Company.
"Protected Period" has the meaning set forth in the first
sentence of Section 2.
"Release" has the meaning set forth in Section 4(a).
"Retiree Welfare Benefits" means retiree benefits pursuant
to any of the Specified Welfare Benefits.
-19-
"Retirement Plan" means the Monsanto Company Pension Plan
and any successor thereto, and any other qualified defined benefit
retirement plans of the Company and the Affiliated Companies, in each case
to the extent the Executive was entitled to participate therein immediately
before the Date of Termination.
"Safe Harbor Amount" means 2.99 times the Executive's
"base amount," within the meaning of Section 280G(b)(3) of the Code.
"Savings Plans" means the Monsanto Savings and Investment
Plan and Savings and Investment Parity Plan and any successors thereto, and
any other qualified defined contribution plans of the Company and the
Affiliated Companies, in each case, to the extent the Executive was entitled
to participate therein immediately before the Date of Termination.
"SERP" means the Monsanto Company ERISA Parity Pension
Plan, the Monsanto Company Supplemental Retirement Plan, and any successors
thereto, and any other "top hat," excess or supplemental defined benefit
retirement plans of the Company and the Affiliated Companies, in each case
to the extent the Executive is entitled to participate therein immediately
before the Date of Termination.
["SERP LETTER"] MEANS [INSERT REFERENCE TO INDIVIDUAL SERP
LETTER, IF ANY, TO WHICH THE EXECUTIVE IS A PARTY].
"Severance Annual Bonus Amount" means the higher of (a)
the Average Pre-Change-of-Control Annual Bonus and (b) the most recent
Annual Bonus paid or payable to the Executive pursuant to Section 2(b)(2)
after the date of the Change of Control, if any.
"Severance Period" means the period of [TWO] [THREE] years
beginning on the Date of Termination.
"Specified Welfare Benefits" means medical, prescription
drug, dental, vision, disability and life insurance benefits that are
substantially comparable to those that would have been provided to the
Executive and the Executive's family pursuant to Section 2(b)(4), if the
Executive had remained employed by the Company during the Severance Period.
Specified Welfare Benefits shall not include the benefit of making pre-tax
contributions to any cafeteria or flexible spending plan.
"Subsidiary" of any entity means any corporation,
partnership, joint venture, limited liability company, or other entity or
enterprise of which the first entity 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 of comparable equity participation
and voting power.
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"Taxes" means all federal, state, local and foreign
income, excise, social security and other taxes, other than the Excise Tax,
and any associated interest and penalties.
"Term of this Agreement" means the period beginning on the
date of this Agreement and ending on June 30, 2003; provided, however, that
beginning on June 30, 2003, and on each June 30 thereafter, the Term of this
Agreement shall be automatically extended so as to terminate on the first
anniversary of such June 30, unless the Company shall give notice to the
Executive before the immediately preceding May 1 that the Term of this
Agreement shall not be so extended.
"Underpayment" has the meaning set forth in Section 7(b).
-21-
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed in its name
on its behalf, all as of the day and year first above written.
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[Name of Executive]
MONSANTO COMPANY
By:
------------------------------------
Name:
Title:
-22-
EXHIBIT A
FORM OF RELEASE
THIS RELEASE MUST BE SIGNED AND RETURNED BY , 200 . YOU MAY NOT
--------- -
MAKE ANY CHANGES TO THIS FORM.
Monsanto Company, on its own behalf and on behalf of its subsidiaries,
affiliates, successors and predecessors (collectively, the "Company"), and I
agree as follows:
(a) Consideration: I will receive the severance pay and benefits provided
for in Section 4(a) of the attached Employment Agreement in exchange for
this Release.
(b) Employment Termination: My employment with the Company has ended and I
agree never to seek employment with the Company or its affiliates in the
future.
(c) Claims Released: I represent that I have not been the victim of age
discrimination or any other type of discrimination or wrongful act in
connection with my employment with the Company. Consistent with this, I
release the Company, its current and former subsidiaries and affiliates, and
their employees or agents and related parties from all known or unknown
claims, if any, that I presently could have arising out of my employment
with the Company or the termination of my employment, except (1) Age
Discrimination in Employment Act claims, of which I have none, (2) claims
for payments and benefits to which I am entitled under the attached Change
of Control Agreement and (3) claims for the Other Benefits (as defined in
the attached Employment Agreement) identified on Schedule I hereto.
(d) Promise Not to File Claims: I promise never to file any lawsuit based on
a released claim and I will withdraw with prejudice any such lawsuit that
may already be pending. I promise never to seek any damages, remedies, or
other relief for myself personally (any right to which I hereby waive) by
prosecuting a charge with any administrative agency with respect to any
claim released by this Release.
READ THIS RELEASE, AND CAREFULLY CONSIDER ALL OF ITS PROVISIONS BEFORE
SIGNING IT. YOU WILL HAVE DAYS IN WHICH TO CONSIDER IT. THIS RELEASE
--
INCLUDES A RELEASE OF KNOWN AND UNKNOWN CLAIMS. IF YOU WISH, YOU SHOULD
CONSULT YOUR ATTORNEY (AT YOUR OWN EXPENSE).
I have carefully read this Release, I fully understand what it means, and I
am entering into it voluntarily.
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Date Signature
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Printed Name