-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, mbh9V3LaordSBu8GCJ9j32OJb+khXBKayyNMBi1pruVUkWmi9hiv7LzxYybanzbd ublKus6GpDDh9+wlWVx03g== 0000950114-95-000083.txt : 19950511 0000950114-95-000083.hdr.sgml : 19950511 ACCESSION NUMBER: 0000950114-95-000083 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950509 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MONSANTO CO CENTRAL INDEX KEY: 0000067686 STANDARD INDUSTRIAL CLASSIFICATION: CHEMICALS & ALLIED PRODUCTS [2800] IRS NUMBER: 430420020 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-02516 FILM NUMBER: 95535734 BUSINESS ADDRESS: STREET 1: 800 N LINDBERGH BLVD CITY: ST LOUIS STATE: MO ZIP: 63167 BUSINESS PHONE: 3146941000 FORMER COMPANY: FORMER CONFORMED NAME: MONSANTO CHEMICAL CO DATE OF NAME CHANGE: 19711003 10-Q 1 MONSANTO COMPANY 10-Q 1 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 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, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 1-2516 ------ MONSANTO COMPANY ---------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 43-0420020 -------- ---------- (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 800 NORTH LINDBERGH BLVD., ST. LOUIS, MISSOURI 63167 ---------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (314) 694-1000 -------------- (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 --- ---- 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, 1995 ----- -------------- COMMON STOCK, $2 PAR VALUE 114,214,294 SHARES - -------------------------- ------------------ - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 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, 1995 and 1994, the Statement of Consolidated Financial Position as of March 31, 1995 and December 31, 1994, the Statement of Consolidated Cash Flow for the three months ended March 31, 1995 and 1994 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. MONSANTO COMPANY AND SUBSIDIARIES STATEMENT OF CONSOLIDATED INCOME (DOLLARS IN MILLIONS, EXCEPT PER SHARE)
THREE MONTHS ENDED MARCH 31, ------------------------------------ 1995 1994 ---- ---- Net Sales.................................................................................. $2,318 $2,001 Cost of Goods Sold......................................................................... 1,324 1,108 ------ ------ Gross Profit............................................................................... 994 893 Marketing Expenses......................................................................... 296 276 Administrative Expenses.................................................................... 158 127 Technological Expenses..................................................................... 154 151 Amortization of Intangible Assets.......................................................... 25 20 ------ ------ Operating Income........................................................................... 361 319 Interest Expense........................................................................... (42) (32) Interest Income............................................................................ 11 6 Other Income (Expense)-Net................................................................. 7 1 ------ ------ Income Before Income Taxes................................................................. 337 294 Income Taxes............................................................................... 108 100 ------ ------ Net Income................................................................................. $ 229 $ 194 ------ ------ Earnings per Share......................................................................... $ 2.02 $ 1.63 ------ ------ Dividends per Share........................................................................ $ 0.63 $ 0.58 ------ ------ Weighted Average Number of Common and Common Equivalent Shares (in millions)............... 113.7 118.7 ------ ------
1 3 MONSANTO COMPANY AND SUBSIDIARIES STATEMENT OF CONSOLIDATED FINANCIAL POSITION (DOLLARS IN MILLIONS, EXCEPT PER SHARE)
MARCH 31, DECEMBER 31, 1995 1994 --------- ------------ ASSETS Current Assets: Cash and cash equivalents.................................................................. $ 259 $ 507 Receivables, net of allowances of $53 in 1995 and $57 in 1994.............................. 2,144 1,530 Miscellaneous receivables and prepaid expenses............................................. 332 313 Deferred income tax benefit................................................................ 331 321 Inventories................................................................................ 1,423 1,212 ------- ------- Total Current Assets................................................................... 4,489 3,883 ------- ------- Property, Plant and Equipment................................................................ 7,982 7,555 Less Accumulated Depreciation................................................................ 4,900 4,738 ------- ------- Net Property, Plant and Equipment.......................................................... 3,082 2,817 ------- ------- Investments in Affiliates.................................................................... 301 279 Intangible Assets, net of accumulated amortization of $547 in 1995 and $522 in 1994................................................................................ 1,823 1,134 Other Assets................................................................................. 780 778 ------- ------- Total Assets................................................................................. $10,475 $ 8,891 ------- ------- LIABILITIES AND SHAREOWNERS' EQUITY Current Liabilities: Accounts payable........................................................................... $ 648 $ 629 Accrued liabilities........................................................................ 1,614 1,494 Short-term debt............................................................................ 1,028 312 ------- ------- Total Current Liabilities.............................................................. 3,290 2,435 ------- ------- Long-Term Debt............................................................................... 1,780 1,405 Deferred Income Taxes........................................................................ 71 65 Postretirement Liabilities................................................................... 1,350 1,341 Other Liabilities............................................................................ 762 697 Shareowners' Equity: Common stock (authorized, 200,000,000 shares, par value $2) Issued, 164,394,194 shares in 1995 and 1994.............................................. 329 329 Additional contributed capital........................................................... 853 849 Treasury stock, at cost (52,588,842 shares in 1995 and 52,859,031 shares in 1994).............................................................. (2,731) (2,744) Reserve for ESOP debt retirement........................................................... (197) (199) Net unrealized investment holding gains.................................................... 3 19 Accumulated currency adjustment............................................................ 146 33 Reinvested earnings........................................................................ 4,819 4,661 ------- ------- Total Shareowners' Equity.............................................................. 3,222 2,948 ------- ------- Total Liabilities and Shareowners' Equity.................................................... $10,475 $ 8,891 ------- -------
2 4 MONSANTO COMPANY AND SUBSIDIARIES STATEMENT OF CONSOLIDATED CASH FLOW (DOLLARS IN MILLIONS)
THREE MONTHS ENDED MARCH 31, ------------------------------------ 1995 1994 ---- ---- Increase (Decrease) in Cash and Cash Equivalents Operating Activities: Net income................................................................................. $ 229 $ 194 Add income taxes........................................................................... 108 100 ------- ----- Income before income taxes................................................................. 337 294 Adjustments to reconcile to Cash Used in Continuing Operations: Income tax payments...................................................................... (36) (36) Items that did not use (provide) cash: Depreciation and amortization.......................................................... 146 137 Incremental SFAS No. 106 expenses...................................................... 12 13 Other.................................................................................. (9) 3 Working capital changes that provided (used) cash: Accounts receivable.................................................................... (552) (419) Inventories............................................................................ (107) (9) Accounts payable and accrued liabilities............................................... (35) (164) Other.................................................................................. 56 29 Other items.............................................................................. 73 (31) ------- ----- Total Cash Used in Operations................................................................ (115) (183) ------- ----- Investing Activities: Property, plant and equipment purchases.................................................... (88) (67) Acquisition of Kelco....................................................................... (1,062) Investment payments........................................................................ (17) (57) Investment and property disposal proceeds.................................................. 6 68 ------- ----- Cash Used in Investing Activities............................................................ (1,161) (56) ------- ----- Financing Activities: Net change in short-term financing......................................................... 1,116 294 Long-term debt proceeds.................................................................... 41 Long-term debt reductions.................................................................. (33) (39) Treasury stock purchases................................................................... (58) Dividend payments.......................................................................... (72) (67) Other financing activities................................................................. 17 45 ------- ----- Cash Provided by Financing Activities........................................................ 1,028 216 ------- ----- Decrease in Cash and Cash Equivalents........................................................ (248) (23) Cash and Cash Equivalents: Beginning of year.......................................................................... 507 273 ------- ----- End of period.............................................................................. $ 259 $ 250 ------- ----- The effect of exchange rate changes on cash and cash equivalents was not material. Cash payments for interest (net of amounts capitalized) were $42 million in 1995 and $31 million in 1994.
3 5 MONSANTO COMPANY AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (DOLLARS IN MILLIONS) 1. On February 20, 1995, Monsanto completed its acquisition of the worldwide business of Kelco, the specialty chemicals division of Merck and Co., Inc., for a purchase price of approximately $1,075 million. The acquisition was accounted for as a purchase and, accordingly, the results of operations for Kelco were included in the Statement of Consolidated Income from the date of acquisition. The estimated fair value of assets acquired and liabilities assumed totaled approximately $1.15 billion and $75 million, respectively. The allocation of purchase price is based on preliminary assumptions and is subject to revision. The excess of the purchase price over the estimated fair value of net assets acquired is being amortized over 30 years. On an unaudited, proforma basis, assuming the acquisition of Kelco had occurred at the beginning of 1994, net sales, net income and earnings per share for the three months ended March 31, 1995 and 1994 would not have been significantly different from the reported amounts. In conjunction with the acquisition of Kelco, Monsanto issued approximately $975 million in commercial paper. Monsanto has the ability and intent to renew a certain portion of these obligations past March 1996 and into future periods or replace these borrowings with long- or intermediate-term debt. Accordingly, commercial paper balances of $550 million as of March 31, 1995, have been classified as long- term. On April 5, 1995, Monsanto issued $150 million in 8.20% debentures due 2025. The proceeds were used to pay down commercial paper balances related to the Kelco acquisition. 2. In December 1994, Monsanto agreed to merge its rubber chemicals and instruments businesses with the rubber chemicals business of Akzo Nobel N. V. to form a 50/50 joint venture. In the first quarter of 1995, final governmental approvals were granted and on April 12, 1995, the joint venture, known as Flexsys, was formed. The joint venture began operations on May 1, 1995. Accordingly, Monsanto's share of Flexsys' earnings will be reflected in "Other income (expense)-net" in the Statement of Consolidated Income after that date. Upon formation, each partner agreed to bear one-time costs to integrate its contribution into the operations of the joint venture. For Monsanto, this cost totaled a pretax $40 million ($25 million aftertax, or $0.22 per share), primarily for the cost of workforce reductions related to approximately 120 people, and for special termination benefits for approximately 300 people transferring employment from Monsanto to the joint venture. The charge related to this reserve was recorded in cost of goods sold in the Statement of Consolidated Income. 3. In March 1995, Monsanto received payments arising from several insurance-related settlements with Talegen Holdings, Inc. (previously Crum and Forster, Inc.) and several related entities. The settlements resulted in a $40 million gain ($25 million aftertax, or $0.22 per share). The settlements were recorded in cost of goods sold in the Statement of Consolidated Income. 4. Earnings per share were computed using the weighted average number of common shares and common share equivalents outstanding each period (113,689,795 and 118,689,732 in 1995 and 1994, respectively). Common share equivalents (2,013,308 and 2,557,993 in 1995 and 1994, 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. 5. Components of inventories at March 31, 1995 and December 31, 1994 were as follows:
MARCH 31, DECEMBER 31, 1995 1994 --------- ------------ Finished goods............................................. $ 912 $ 751 Goods in process........................................... 318 285 Raw materials and supplies................................. 487 459 ------ ------ Inventories, at FIFO cost.................................. 1,717 1,495 Excess of FIFO over LIFO cost.............................. (294) (283) ------- ------- Total.................................................... $1,423 $1,212 ------ ------
4 6 MONSANTO COMPANY AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) 6. On April 20, 1994, a federal court jury verdict was returned against Monsanto in a lawsuit related to the MOTCO Superfund site in La Marque, Texas. The lawsuit was brought by IT Corporation ("IT"), a subsidiary of International Technology Corporation, claiming fraud, negligent misrepresentation and breach of a contract calling for IT to perform incineration and remediation work at the site. The verdict awarded IT $52.8 million in compensatory damages, $28.6 million in punitive damages and $2.6 million in attorneys' fees. On December 13, 1994, the federal trial judge set aside the jury's findings of fraud and negligent misrepresentation but upheld the finding on breach of contract. The court set aside the punitive damage award and reduced the amount of compensatory damages to $43.8 million. On May 5, 1995, the trial court entered judgment for IT in the amount of $63.2 million, representing the compensatory damages and $19.4 million in prejudgment interest, and $2.6 million in attorneys' fees. The Company believes, based on the advice of counsel, that it has meritorious defenses to all of IT's claims. The Company will appeal the judgment and will continue to defend this matter vigorously. No provision has been made in the Company's consolidated financial statements with respect to this matter. 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. 7. Segment data for the three months ended March 31, 1995 and 1994 were as follows:
THREE MONTHS ENDED MARCH 31, ----------------------------------------------------------- 1995 1994 -------------------------- -------------------------- OPERATING OPERATING NET INCOME NET INCOME SALES (LOSS) SALES (LOSS) ----- -------- ----- -------- Segment: Agricultural Products...................................... $ 753 $236 $ 635 $206 Chemicals.................................................. 974 95 853 85 Pharmaceuticals............................................ 386 17 343 8 Food Ingredients........................................... 205 28 170 33 Corporate.................................................. (15) (13) ------ ----- ------ ----- Total........................................................ $2,318 $361 $2,001 $319 ------ ---- ------ ----
As of February 1, 1995, Monsanto created a new organization structure that assigns primary business responsibilities to individual business units. As a result of those changes and the acquisition of Kelco, Monsanto has realigned its segment structure. The Food Ingredients segment now reflects the operations of the following business units: NutraSweet Consumer Products, comprised of Equal(R), Canderel(R), NutraSweet(R) Spoonful(TM) tabletop sweeteners, and other consumer products; NutraSweet Ingredient, comprised of NutraSweet(R) brand sweetener and other consumer products; and Kelco. The Pharmaceutical segment reflects the operations of Searle, after the transfer of the Canderel tabletop sweetener business to NutraSweet Consumer Products. Segment information for prior periods has been reclassified to conform to the current presentation. Financial information for the first quarter of 1995 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. 5 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Note 7 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 1995 COMPARED WITH THE FIRST QUARTER 1994 Net income for the first quarter of 1995 was $229 million, or $2.02 per share, compared with net income of $194 million, or $1.63 per share, in the first quarter of last year. Net sales of $2,318 million were 16 percent higher than the comparable figure in 1994. Net sales for Agricultural Products were 19 percent higher compared with those in the first quarter of 1994. Net sales in 1995 benefited from higher worldwide sales volumes for Roundup(R) herbicide and from sales of recently-introduced products, such as Posilac(R) bovine somatotropin, and Harness(R) and Harness(R) Xtra herbicides. Operating income in 1995 increased $30 million, or 15 percent, compared with first-quarter 1994 results. Worldwide sales volumes for Roundup herbicide improved significantly over the same period last year, reflecting strong demand in most key worldwide markets. Sales and operating income of the Solaris lawn-and-garden group decreased modestly from those in the prior year, primarily because of the timing of shipments to distributors. Sales and operating income of the acetanilide family of products, which include Lasso(R) herbicide and newly-introduced Harness and Harness Xtra herbicides, increased slightly from those in the prior year. Net sales for Chemicals increased 14 percent compared with those in the same period last year as sales were strong for all key products. Sales volumes improved over those in the first quarter of 1994 primarily because of increased demand in the North American and Western European automotive markets. Sales benefited from higher selling prices, primarily for plastics and fibers. Operating income improved 12 percent compared with operating income in the first quarter of 1994 and benefited from higher sales volumes, improved worldwide capacity utilization levels, and savings from continuing cost reduction efforts. However, continued increases in the cost of key raw materials in 1995, compared with those in the first quarter of 1994, more than offset the effect of selected selling price increases. Pharmaceutical net sales for the first quarter of 1995 were 13 percent higher than those in the same period last year, largely because of increased sales of recently-introduced products, such as Ambien(R), a short-term treatment for insomnia, and Daypro(R) and Arthrotec(R) arthritis treatments. Operating income was $17 million for the first quarter of 1995, compared with earnings of $8 million for the same period in 1994. The growth in earnings was attributed principally to sales of recently-introduced products, partially offset by higher new- product introduction costs in 1995, compared with those in the first quarter of 1994, for the launch of several products in European markets. Food Ingredient net sales increased 21 percent for 1995 compared with the amounts for the first quarter of 1994. However, sales for the first quarter of 1995 include sales from the Kelco business from the acquisition date. After excluding these sales, net sales for Food Ingredients were essentially the same as those for the first quarter of 1994. Aspartame sales volumes for the quarter decreased slightly compared with those of last year's first quarter due primarily to lower shipments to major customers in the United States, offset by growth in volumes internationally. Sales of tabletop sweeteners increased modestly over those in the first quarter of 1994, primarily because of growth in international markets. Operating income was lower in 1995 because of lower aspartame volumes and from the timing of marketing expenditures. Operating income benefited from the inclusion of Kelco's earnings and from savings from cost reduction efforts. For Monsanto, marketing and administrative expenses for the first quarter of 1995 were higher than the comparable period in 1994, primarily because of higher costs associated with various employee incentive programs and the aforementioned new-product launch costs for Pharmaceuticals. Interest expense increased because of higher short- term debt levels in the first quarter of 1995 related to the Kelco acquisition. CHANGES IN FINANCIAL CONDITION-MARCH 31, 1995 COMPARED WITH DECEMBER 31, 1994 Working capital at March 31, 1995 decreased to $1,199 million from $1,448 million at December 31, 1994, primarily because of higher short- term debt related to the Kelco acquisition offset, in part, by a seasonal 6 8 increase in trade receivables. The current ratio was 1.4 at March 31, 1995 and 1.6 at year-end 1994. The percent of total debt to total capitalization increased to 47 percent at quarter-end compared with 37 percent at year-end 1994, because of the increase in short-term debt. The Statement of Consolidated Financial Condition at March 31, 1995, reflects the estimated fair value of assets acquired and liabilities assumed of Kelco, totaling approximately $1.15 billion and $75 million, respectively. The allocation of purchase price is based on preliminary assumptions and is subject to revision. The increase in intangibles is primarily due to the excess of the Kelco purchase price over the estimated fair value of net assets acquired. Cash used in operations totaled a net $115 million in 1995, compared with $183 million of net cash used in 1994 operations. The improvement in cash flow resulted primarily from higher net income, offset by higher seasonal working capital levels for Agricultural Products. Investing activities in 1995 used $1,161 million, principally for the purchase of Kelco. The increase in short-term financing was due primarily to short-term debt incurred to finance the Kelco acquisition and higher seasonal working capital levels for Agricultural Products. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company's Report on Form 10-K for the year ended December 31, 1994, described a lawsuit filed by IT Corporation (IT), a remediation contractor at the MOTCO site, an 11 acre waste site in La Marque, Texas. On May 5, 1995, the trial court entered judgment for IT in the amount of $63.2 million representing $43.8 million in compensatory damages and $19.4 million in prejudgment interest, and $2.6 million in attorneys' fees. The Company intends to appeal the judgment and will continue to defend this matter vigorously. No provision for loss has been made in the Company's consolidated financial statements. The Company's Report on Form 10-K for the year ended December 31, 1994, described a number of product liability lawsuits arising out of the sales by G. D. Searle & Co. ("Searle"), a subsidiary of the Company acquired in 1985, of the Cu-7(R), an intrauterine device. As of May 1, 1995, there were approximately 42 cases pending in various U.S. state and federal courts. Searle believes it has meritorious defenses and is vigorously defending each of these lawsuits. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits-See the Exhibit Index at page 9 of this report. (b) Reports on Form 8-K during the quarter ended March 31, 1995: A Form 8-K as of February 17, 1995, was filed by the Company regarding the purchase of the Kelco specialty chemicals division of Merck & Co., Inc. A Form 8-K/A as of February 17, 1995, was filed by the Company to add the following financial statements and exhibits: (i) Financial statements of Kelco, together with the related Independent Auditors' Report, for the year ended December 31, 1994 (pages 2 through 11) (ii) Unaudited Pro Forma Condensed Combined Statement of Financial Position of Monsanto Company and Kelco as of December 31, 1994, including notes thereto (pages 12 and 13) (iii) Unaudited Pro Forma Condensed Combined Statement of Income of Monsanto Company and Kelco for the year ended December 31, 1994, including notes thereto (pages 14 and 15) (iv) Consent of Independent Auditors (v) Consent of Counsel 7 9 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) BRUCE R. SENTS ...................................... Bruce R. Sents Vice President and Controller (On behalf of the Registrant and as Principal Accounting Officer) Date: May 9, 1995 8 10 EXHIBIT INDEX These Exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.
EXHIBIT NUMBER DESCRIPTION ------ ----------- 2 Omitted - Inapplicable 4 Omitted - Inapplicable 10 1. Searle Phantom Stock Option Plan of 1986, as amended in 1990, 1991, 1992 and 1995 2. Searle Monsanto Stock Option Plan of 1986, as amended in 1988, 1989, 1990, 1991 and 1995 3. Searle/Monsanto Stock Plan of 1994, as amended in 1995 4. G. D. Searle & Co. Supplemental Medical Reimbursement Plan, as amended in 1995 11 Omitted - Inapplicable; see Note 4 of Notes to 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 Omitted - Inapplicable
9 11 APPENDIX TO FORM 10-Q Throughout the narrative of the printed Form 10-Q, trademarks are initially designated on each page by the letter "R" in a circle or by the letters "TM". EX-10.1 2 SEARLE PHANTOM STOCK OPTION PLAN OF 1986 1 EXHIBIT 10.1 SEARLE PHANTOM STOCK OPTION PLAN OF 1986 ARTICLE I. GENERAL PROVISIONS - ------------------------------ SECTION 1. Purposes. The SEARLE PHANTOM STOCK OPTION PLAN -------- of 1986 ("Plan") is designed to attract and retain for the Company and its Subsidiaries personnel of exceptional ability; to motivate such personnel through added incentives to make a maximum contribution to greater profitability; to develop and maintain a highly competent management team; and to be competitive with other pharmaceutical companies in the executive compensation area. SECTION 2. Definitions. Except where the context otherwise ----------- indicates, the following definitions apply: "Associated Company" means any corporation (or partnership, joint venture, or other enterprise), of which the Company owns or controls, directly or indirectly, 10% or more, but less than 50% of the outstanding shares of stock normally entitled to vote for the election of directors (or comparable equity participation and voting power), but which is not a Subsidiary. 2 "Base Value" means the value per Share on the date of the grant of an option with respect to a Share, as such value is determined by the Committee pursuant to Article II, Section 3(e). As of October 24, 1986, the Base Value per Share is $10.53. "Board" means Board of Directors of the Company. "Committee" means the Executive Compensation and Development Committee of the Board or any successor committee ("ECDC"), such committee consisting of three or more members of the Board as may be appointed by the Board to administer this Plan, or such other body (whether or not consisting of members of the Board) to whom the ECDC or other Board Committee may delegate its powers (or a part thereof) to administer this Plan. "Company" means G. D. Searle & Co. "Eligible Participant" means any regular full-time employee (including any director who is an employee) of the Company or a Subsidiary. "Option" shall mean an option granted pursuant to this Plan to receive the difference between the Base Value and Surrender Value of a Share. -2- 3 "Participant" means an Eligible Participant to whom an option has been granted. "Phantom Share" or "Share" means a unit of value in the Company created solely for purposes of calculating payments to be made to Participants under this Plan, Phantom Shares are not securities and neither the grant nor the exercise of an option with respect to such Phantom Shares will entitle a Participant to any rights except the right to receive appreciation in the value of such Phantom Shares, if any, as provided in this Plan. "Subsidiary" means any corporation (or partnership, joint venture, or other enterprise) (i) of which the Company owns or controls, directly or indirectly, 50% or more of the outstanding shares of stock normally entitled to vote for the election of directors (or comparable equity participation and voting power) or (ii) which the Company otherwise controls by contract or any other means. "Control" means the power to direct or cause the direction of the management and policies of a corporation, partnership, joint venture, or other enterprise. "Surrender Value" means the most recent published value per Share as of the date of exercise of an option with respect to such Share, as such value is determined by -3- 4 the Committee pursuant to Article II, Section 3(e). "Published" means that the notification to Participants required by Article II, Section 3(d) has been given as of the date of exercise of the applicable option. "Termination of Employment" means the discontinuance of employment of a Participant for any reason other than a Transfer. "Transfer" means a change of employment of a Participant within the group consisting of the Company, its Subsidiaries and Associated Companies, and Monsanto Company, its subsidiaries, and associated companies. SECTION 3. Administration -------------- (a) This Plan shall be administered by the Committee, which shall have the right to interpret this Plan and to select the persons who are to receive options 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. All acts and decisions of the Committee with respect to any questions arising in connection with the administration and interpretation of this Plan, including the severability of any and all of the provisions hereof, shall be conclusive, final and binding upon all Participants. -4- 5 (b) The Committee may adopt and amend, from time to time, rules and regulations of general application for the administration of this Plan, including terms and conditions related to the receipt and exercise of Options. (c) Without limiting the foregoing (and notwithstanding any other provisions of this Plan), the Committee is authorized to take such action as it determines to be necessary or advisable, and fair and equitable to Participants, with respect to Options, in the event of: a cash dividend paid by the Company, 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 any significant part of the assets of the Company to another corporation or any other person or entity; issuance or sale of common stock of the Company (other than to the Company's parent corporation, Monsanto Company, or its affiliated corporations ("Monsanto")); or other reorganization in which the Company will not survive as a separate corporation. Such action may include (but shall not be limited to) revising the number of Phantom Shares subject to the Plan and/or outstanding options, or establishing, amending or waiving the forms, terms, conditions and duration of Options so as to provide for earlier, later, extended or additional times for Share valuations, Option exercises or payments, differing -5- 6 methods for calculating payments, alternate forms and amounts of payment, or other modifications. The Committee may take such actions pursuant to this Section 3 by adopting rules and regulations of general applicability to all Participants or to certain categories of Participants, by including, amending or waiving terms and conditions in Option grants, 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 dividend, merger, consolidation, acquisition, sale or transfer of assets, issuance or sale of shares or other reorganization. ARTICLE II. PLAN - ----------------- SECTION 1. Phantom Shares. -------------- (a) (i) Solely for purposes of valuations under this Plan, there shall be deemed to be a total of 100,000,000 Phantom Shares outstanding at all times (subject to any contrary determination pursuant to Article I, Section 3(c)), whether or not Options for the full amount thereof have been issued hereunder. (ii) The total number of Shares for which options may be granted under this 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 Plan. -6- 7 (b) The total number of Shares for which Options may be granted under this Plan shall not exceed 100,000,000 Shares; provided that, Shares as to which Options have lapsed unexercised shall not be counted against such total number. SECTION 2. Incidents of Options. -------------------- (a) Each Option shall be granted subject to such terms and conditions, if any, not inconsistent with this Plan, as shall be determined by the Committee, including any provisions as to continued employment as consideration for the grant or exercise of such Option 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:
Percentage of Total Options Option Exercise Dates Per Grant Exercisable --------------------- --------------------- 1. On and after twelve (12) 33 1/3% months from the Option grant date 2. On and after twenty-four (24) 66 2/3% months from the Option grant date 3. On and after thirty-six (36) 100% months from the Option grant date
If the application of the foregoing vesting schedule would result in appreciation on a fractional Share -7- 8 being payable 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) An Option 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. The initial grant of --------------------- Options under this Plan shall be made on October 24, 1986 and additional Options may be granted to Eligible Participants at such time or times determined by the Committee, subject to the following terms and conditions (except as may be varied by the Committee pursuant to Article II, Section 2): (a) The Option may be exercised in full or in part from time to time prior to Termination of Employment and within ten (10) years from the date of the grant, or such shorter period as may be specified by the Committee in the respective grant, provided that options exercisable as of the date of Termination of Employment shall remain exercisable for a period of up to three (3) months following Termination of Employment (up to five (5) years if employment shall have terminated as a result of total and permanent -8- 9 disability as determined by the Committee; retirement pursuant to, and as defined in, the applicable pension plan of the Company, its Subsidiary or Associated Company; or death and up to twelve (12) months if employment shall have terminated as a result of involuntary termination due to conditions beyond the employee's control); provided, further, that no such period following Termination of Employment shall extend the original exercise period of the Option. (b) In the event of Termination of Employment due to retirement (as defined in (a) above), death, total and permanent disability (as determined by the Committee), or involuntary termination due to conditions beyond the employee's control, all Options granted more than twelve (12) months prior to such event shall, notwithstanding Article II, Section 2, become immediately exercisable. (c) The Base Value of a Share subject to an Option shall be determined by the Committee on the date of the grant of the Option, The Surrender Value of Shares subject to Options shall be determined by the Committee from time to time but in no event less frequently than once each eighteen (18) months. The Committee may, in its sole discretion, determine the Surrender Value on a more frequent basis. Written notice (addressed as provided in (d) below) of the date of any determination shall be -9- 10 given to all Participants not less than thirty (30) days prior to such date. (d) The applicable Base Value shall be shown on the certificates or other documents issued at the time of the grant of each Option, and notice of each Surrender Value shall be delivered to Participants promptly following determination by the Committee (but in no event later than thirty (30) days following such determination), addressed to each Participant's last known residence as shown on the records of the Company. (e) Base Values and Surrender Values shall be determined based on the committees valuation of the Company which in turn shall be based on such factors and methods as the Committee shall deem appropriate. Such factors and methods may, but need not, include use of appraisers, investment banker analyses or other independent sources, and may result in valuations different from those which would be obtained using book value, investment banker, appraised value or other methods commonly used to value pharmaceutical companies. The decision of the Committee as to such valuations of the Company shall be final and binding on all Participants and the Company. The Committee need not make known its methods of valuation, nor need the Committee be consistent from valuation to valuation in the methods used. Each valuation of the Company shall be divided -10- 11 by 100,000,000 to yield the per Share Base Value or Surrender Value, as applicable. (f) Upon the exercise and surrender to the Company of an Option, the Participant shall be entitled to receive the amount, if any, by which the Surrender Value exceeds the Base Value of the Shares subject to such Option, less applicable withholding taxes. (g) Each Option grant may include any other terms and conditions not inconsistent with this Plan, as determined by the Committee. ARTICLE III. MISCELLANEOUS PROVISIONS - -------------------------------------- SECTION 1. Transfer. No Option 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 shall forthwith terminate. SECTION 2. Continued Employment. Nothing in this Plan or -------------------- any booklet or other document describing or referring to this Plan shall be deemed to confer on any employee or Participant the right to continue in the employ of his or her employer or affect the right of his or her employer to terminate the employment of any such person with or without cause. -11- 12 SECTION 3. Segregated Fund. Nothing contained herein shall --------------- require the Company to segregate any monies from its general funds, or to create any trusts, or to make any special deposits for any immediate or deferred amounts payable to any Participant. Each Participant is a general unsecured creditor of the Company. SECTION 4. Governing Law. This Plan and all actions taken ------------- hereunder shall be governed by the laws of the State of Illinois. SECTION 5. Withholding. The Company may make such ----------- provisions and take such steps as it may deem necessary or appropriate for the withholding of any taxes which the Company is required by any law or regulation of any governmental authority, whether federal, state or local, domestic or foreign, to withhold in connection with any option or the exercise thereof. ARTICLE IV. AMENDMENTS - ----------------------- The Board, the ECDC or any other duly authorized committee of the Board may from time to time amend this Plan, or discontinue this Plan or any provision thereof, provided that no amendment to this Plan shall, without the written consent of the Participant, adversely affect any option theretofore granted to such Participant under this Plan. ARTICLE V. MISCELLANEOUS - ------------------------- SECTION 1. Effective Date. The effective date of this Plan -------------- shall be October 24, 1986. -12- 13 SECTION 2. Other Plans. This Plan is not intended to and ----------- shall not preclude the establishment or operation by the Company or any Subsidiary of any thrift, savings and investment, achievement award, stock purchase, 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. -13- EX-10.2 3 SEARLE MONSANTO STOCK OPTION PLAN OF 1986 1 EXHIBIT 10.2 SEARLE MONSANTO STOCK OPTION PLAN OF 1986 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 Monsanto Company, a Delaware corpora- tion. "ECDC" means any Committee consisting of one or more senior managers of the Company or its Subsidiaries, or its permitted delegate. "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. 2 -2- "Monsanto" means Monsanto Company, a Delaware corpora- tion. "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 Executive Compensation and Development Committee of the Board. "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 and Associated Companies and Monsanto, its subsidiaries and associated companies. 3 -3- 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 (and may authorize further delegation by the ECDC to senior managers of the Company and its Subsidiaries) the right to select those persons who are not offi- cers or directors of Monsanto (as defined in Section 16(b) of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission issued pursuant to such Act) who are to receive Options, Stock Appreciation Rights and Restricted Stock Grants under this Plan, including, without limitation, the determination of the number of Shares to be subject to and the form, terms, conditions and duration of each Option, Stock Appreciation Right and Restricted Stock Grant granted to such Participants (and the amendment thereof), consistent with the provisions of this Plan, and to authorize payment in respect of an Option (pursuant to Article II, Section 1(c)) or a Stock Appreciation Right (pursuant to Article II, Section 4(c), (e) and (f)), involving such a Participant. All acts and decisions of the Committee with respect to any questions arising in connection with the administration and interpretation of this Plan, includ- ing the severability of any and all of the provisions hereof, shall be conclusive, final and binding upon all Participants. No person shall be eligible for the grant of an Award under this Plan while serving as a member of the Special Stock Option Grant Committee. (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 4 -4- of this Plan), the Committee is authorized to take such action as 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 calcu- lating payments, alternate forms and amounts of payment, or other modifications. The Committee may take such actions pursuant to this Section 3(d) by adopting rules and regulations of general applicability to all Participants or to certain categories of Participants, by including, amending or waiving terms and condi- tions in Option, Stock Appreciation Right and Restricted Stock grants, or by taking action with respect to individual Partici- pants. 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 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. 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:
Percentage of Total Shares Per Option Grant Option Exercise Dates Exercisable --------------------- ------------ 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%
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). 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 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; 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 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 restrictions as the Restricted Shares prior to such adjustment. The Committee may, in its discretion, remove, modify or accelerate the release of restrictions on any Restricted Shares in the event of hardship or disability of the Participant while employed, in the event that the Participant ceases to be an employee of the Company, a Subsidiary or Associated Company, as the result of death or otherwise, in the event of a relocation of a Participant to another country or for such other reasons as the Committee may deem appropriate. In the event of the death of a Participant following the transfer of Restricted Shares to him, the legal representative of the Participant, the beneficiary designated in writing by the Participant during his lifetime, or the person receiving such Shares under his will or under the laws of descent and distribution shall take such Shares subject to the same restrictions, conditions and provisions in effect at the time of his death, to the extent applicable. ARTICLE IV. MISCELLANEOUS PROVISIONS SECTION 1. TRANSFER. Neither a Stock Option nor a Stock Appreciation Right shall be transferable except as provided for herein in the case of death. If any Participant makes such a transfer in violation hereof, any obligation of the Company with respect to such Option or Stock Appreciation Right shall 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 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. 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; (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. 12 -12- 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. EX-10.3 4 SEARLE/MONSANTO STOCK PLAN OF 1994 1 EXHIBIT 10.3 SEARLE/MONSANTO STOCK PLAN OF 1994 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 Monsanto Company, a Delaware corporation. 1 2 "Eligible Participant" means any officer or other salaried employee (including a director who is a salaried employee) of the Company, a Subsidiary or an Associated Company except that no Reporting Person shall be an Eligible Participant. "Incentive Plan" means the Searle/Monsanto Stock Plan of 1994, set forth herein. "Fair Market Value" shall mean, with respect to any given day, the average of the highest and lowest sales prices of the Shares reported as the New York Stock Exchange-Composite Transactions for such day, or if the Shares were not traded on the New York Stock Exchange on such day, then on the next preceding day on which the Shares were traded, all as reported by The Wall Street Journal, mid-west edition, under the heading New York Stock Exchange-Composite Transactions or by such other source as the Committee may select. "Incentive Stock Option" or "Incentive Option" means an option meeting the definition of that term as set forth in Section 3 of Article II of this Incentive Plan. "Monsanto" means Monsanto Company, a Delaware corporation. "Non-Qualified Stock Option" or "Non-Qualified Option" means an option referred to in Section 4 of Article II of this Incentive Plan. "Participant" means an Eligible Participant to whom an Award has been granted pursuant to this Incentive Plan. "Reporting Person" means a person subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934 (or any law, rule, regulation or other provision that may replace such statute) with respect to Shares. "Restricted Shares" means Shares that were made subject to restrictions in accordance with Section 6 of Article II of this Incentive Plan. "Shares" means shares of common stock of Monsanto and any shares of stock or other securities received as a result of a Share adjustment as set forth in Section 4 of this Article I. "Stock Appreciation Right" means a right referred to in Section 5 of Article II of this Incentive Plan. 2 3 "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 corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain; and (ii) for the purposes of a Non-Qualified Stock Option, an Award of Shares (restricted or not), or a Stock Appreciation Right, any corporation (or partnership, joint venture, or other enterprise) of which the Company owns or controls, directly or indirectly, 50% or more of the outstanding shares of stock normally entitled to vote for the election of directors (or comparable equity participation and voting power). "Termination of Employment" means the discontinuance of employment of a Participant for any reason other than a Transfer. "Transfer" means: (i) for the purpose of an Incentive Stock Option, a change of employment of a Participant within the group consisting of Monsanto and its Subsidiaries; and (ii) for the purpose of a Non-Qualified Stock Option, a Stock Appreciation Right or an Award of Shares (restricted or not), a change of employment of a Participant within the group consisting of Monsanto and its Subsidiaries, or, if the Committee so determines, a change of employment of a Participant within the group consisting of Monsanto, its Subsidiaries and Associated Companies. 3. ADMINISTRATION (a) This Incentive Plan shall be administered by the Executive Compensation and Development Committee of the Board (the "ECDC"), except to the extent the ECDC delegates administration pursuant to this paragraph. The ECDC may delegate all or a portion of the administration of this Incentive Plan to any Committee consisting of one or more senior managers of the Company or its Subsidiaries and may authorize further delegation by such Committee 3 4 to senior managers of the Company or its Subsidiaries. No person shall be eligiable 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 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 4 5 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, 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; 5 6 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 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 6 7 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 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 consider- ation for the grant or exercise of such Option or Stock Appreciation Right, provisions as to performance conditions and any provisions which may be advisable to comply with applicable laws, regulations or rulings of any governmental authority. (b) An Incentive Stock Option shall not be transferable by the Participant except by will, by the 7 8 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. (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 8 9 Options, if such deposit is not made or maintained during the required holding period. Such deposited Shares may not be otherwise sold, pledged or disposed of during the applicable holding period. 3. INCENTIVE OPTIONS An Incentive Option shall be an "Incentive Stock Option" as that term is defined in Section 422 of the Internal Revenue Code of 1986, as may be amended from time to time, as in effect at the time of the grant of any such Option, or any statutory provision that may be 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 9 10 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 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). 10 11 (b) The Option and its related Stock Appreciation Right, if any, may be exercised in full or in part from time to time within ten (10) years from the date of the grant, or such shorter period as may be specified by the Committee in the grant, provided that in any event each shall lapse and cease to be exercisable upon, or within such period following, Termination of Employment as shall have been determined by the Committee and as specified in the Option or Stock Appreciation Right; provided, however, that such period following Termination of Employment shall not exceed twelve months unless employment shall have terminated: (i) as a result of retirement pursuant to, and as defined in, the applicable pension plan of Monsanto, its Subsidiary or Associated Company or total and permanent disability as 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 11 12 (or a portion thereof) and to receive in exchange therefor a payment in cash or Shares having an aggregate value equal to the product of (i) the amount by which (A) the SAR Fair Market Value of each Share exceeds (B) the Option price per Share, times (ii) the number of Shares under the Option, or portion thereof, which is surrendered. (b) Except as otherwise expressly provided herein, each Stock Appreciation Right granted hereunder shall be subject to the same terms and conditions as the related Option. It shall be exercisable only to the extent such Option is exercisable and shall terminate or lapse and cease to be exercisable when the related Option terminates or lapses. The Committee may grant Stock Appreciation Rights concurrently with grants of Options or in connection with previously granted Options under this Incentive Plan which are 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 12 13 exercised for the purpose of such maximum limitations. (e) The Committee shall have sole discretion as to the timing of any payment made in cash, Shares, or a combination thereof upon exercise of Stock Appreciation Rights hereunder, whether in a lump sum, in annual installments or otherwise deferred and the Committee shall have sole discretion to determine whether such payments may bear amounts equivalent to interest or cash dividends. (f) For purposes of this paragraph 5(f) of Article II: (i) "Unrelated Party" means any party or group of parties acting together other than (A) Monsanto, its directors and officers, or (B) any nominee holder for any stock exchange; (ii) "Offer" means any tender or exchange offer 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 13 14 the Option price and the Change of Control Market Value of the Shares, unless within five (5) business days after receipt of notification of such election by the Secretary of Monsanto, the Committee acts to disapprove the cash election. Unless it acts to disapprove, the Committee's consent shall be deemed to be given at the close of business on the fifth business day after the Secretary's receipt of notification of such election and payment shall be made as soon as practicable after expiration of such five (5) business day period. The election provided herein shall apply only: (x) during the thirty (30) day period following the first exchange or purchase of Shares pursuant to an Offer; or (y) during the thirty (30) day period following the date on which sufficient Shares are acquired to constitute a Change of Control. (g) For purposes of this paragraph 5(g) of Article II: (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 14 15 provisions of Section 3 of Article I of this Incentive Plan, in the event of an Alternate Change of Control and a Change of Control Termination of Employment, a Participant holding an unexercised Stock Appreciation Right who is selected by the Committee may exercise such Stock Appreciation Right and elect to be paid solely in cash in an amount equal to the difference between the Option price and the Alternate Change of Control Market Value of the Shares, unless within five (5) business days after receipt of notification of such election by the Secretary of Monsanto, the Committee acts to disapprove the cash election. Unless it acts to disapprove, the Committee's consent shall be deemed to be given at the close of business on the fifth business day after the Secretary's receipt of notification of such election and payment shall be made as soon as practicable after expiration of such five (5) business day period. The election provided herein 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 15 16 Shares, registered in the name of such Participant. The Participant shall have all of the rights of a stockholder with respect to such Shares, subject to such terms and conditions, including forfeitures or resale to the Company, if any, as may be determined by the Committee. The Committee and the Participant may designate the Company, Monsanto or one or more employees to act as custodian or escrow for the certificates. (d) The Committee, in its discretion, may require as a condition to the grant of any Shares or Restricted Shares, the deposit of Shares owned by the Participant receiving such grant, and the forfeiture of the Award of Shares or Restricted Shares, if such deposit is not made or maintained during any applicable restricted period. Such deposited Shares may not be otherwise sold, pledged or disposed of during any applicable restricted period. (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 16 17 same restrictions, conditions and provisions in effect at the time of his death, to the extent applicable. 7. DIVIDENDS, DIVIDEND EQUIVALENTS AND INTEREST EQUIVALENTS (a) No cash dividends shall be paid on Shares which have been awarded but not delivered or on Shares subject to unexercised Options. The Committee may provide, however, that a Participant to whom an Option has been awarded which is exercisable in whole or in part at a future time for Shares or a Participant who has been awarded Shares payable in whole or in part at a future time, shall be entitled to receive an amount per Share, equal in value to the cash dividends, if any, paid per Share on issued and outstanding Shares, as of the dividend record dates occurring during the period between the date of the Award and the time each such Share is delivered. Such amounts (herein 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. 17 18 III. MISCELLANEOUS PROVISIONS 1. Neither a Stock Option nor Stock Appreciation Right shall be transferable except as provided for herein. If any Participant makes such a transfer in violation hereof, any obligation of the Company with respect to such Stock Option or Stock Appreciation Right shall forthwith terminate. 2. Nothing in this Incentive Plan or any booklet or other document describing or referring to this Incentive Plan shall be deemed to confer on any employee or Participant the right to continue in the employ of his employer or affect the right of his employer to terminate the employment of any such person with or without cause. 3. This Incentive Plan and all actions taken hereunder shall be governed by the laws of the State of Delaware. 4. The Company may make such provisions and take such 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. 18 19 IV. AMENDMENTS 1. The Board may from time to time amend or modify this Incentive Plan, provided that no amendments or modifica- tions 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. 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. 19 EX-10.4 5 G.D. SEARLE & CO. SUPPLEMENTAL MEDICAL REIMBURSEMENT PLAN 1 EXHIBIT 10.4 G. D. SEARLE & CO. SUPPLEMENTAL MEDICAL REIMBURSEMENT PLAN ---------------------------------------------------------- DESCRIPTION: - ----------- The Supplemental Medical Reimbursement Plan is an insured plan designed to reimburse eligible employees and their family members for medical and dental expenses not payable under Searle's basic health benefits programs. Such expenses include deductibles, coinsurance and expenses in excess of reasonable and customary (R&C) levels. ELIGIBLE EXPENSES: - ----------------- Generally, covered medical expenses will be those allowed as a personal income tax deduction (under section 213 of the Internal Revenue Code) to the extent that such expenses are not reimbursable under any other insurance in force, including Workers' Compensation or government programs. Note that cosmetic surgery is not reimbursable. DEPENDENTS: - ---------- Eligible dependents will include all dependents who are covered under the regular group medical plan. MAXIMUM BENEFIT: - --------------- The maximum benefit per family will be $12,000 per calendar year, for eligible out-of-pocket expenses incurred during that calendar year. ADMINISTRATION: - -------------- This plan is insured by Aetna Insurance Company. Claims should be submitted for coverage under the regular Flexcel medical or dental plans. Anything not reimbursed under these plans will automatically be submitted to the Supplemental Plan. Any questions regarding the Plan should be directed to: Mary Rose Arnold Executive Benefits Administrator, Human Resources OOI-2, X-3697 EX-23 6 CONSENT OF COMPANY COUNSEL 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, and 33-53367) of the reference to Company counsel in Note 6 to the Notes to Financial Statements in the Company's Form 10-Q Report for the quarter ended March 31, 1995. 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. RICHARD W. DUESENBERG RICHARD W. DUESENBERG General Counsel Monsanto Company Saint Louis, Missouri May 9, 1995 EX-27 7 FINANCIAL DATA SCHEDULE
5 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, 1995, AND THE STATEMENT OF CONSOLIDATED FINANCIAL POSITION AS OF MARCH 31, 1995. SUCH INFORMATION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS. 1,000,000 3-MOS DEC-31-1995 MAR-31-1995 259 0 2,144 0 1,423 4,489 7,982 4,900 10,475 3,290 1,780 329 0 0 2,893 10,475 2,318 2,318 1,324 1,324 0 0 42 337 108 229 0 0 0 229 2.02 0 RECEIVABLES ARE STATED NET OF ALLOWANCES OF $53.
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