Exhibit 10.2.1
AMENDMENT TO THE
EMPLOYEE BENEFITS AND COMPENSATION
ALLOCATION AGREEMENT
AMENDMENT TO THE EMPLOYEE BENEFITS AND COMPENSATION ALLOCATION
AGREEMENT, dated as of September 1, 2000, by and between Pharmacia
Corporation, a Delaware corporation ("Pharmacia"), and Monsanto Company, a
newly formed Delaware corporation ("AgCo"). All capitalized words not
otherwise defined herein shall have the meaning attached to each such term
pursuant to the Employee Benefits and Compensation Allocation Agreement.
W I T N E S S E T H:
WHEREAS, AgCo and Pharmacia have entered into an Employee Benefits
and Compensation Allocation Agreement, dated as of September 1, 2000 (the
"Allocation Agreement"); and
WHEREAS, AgCo and Pharmacia desire to amend the Allocation
Agreement as provided in Section 5.8 thereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Section 2.1(b) of the Allocation Agreement is amended to
read as follows:
"(b) "PHARMACIA CASH BALANCE PENSION PLAN.
(i) As of January 1, 2002 (the "Pension Transfer Date")
Pharmacia shall establish a cash balance defined benefit pension plan
designed to be a qualified plan under Section 401(a) of the Code (the
"Pharmacia Cash Balance Pension Plan") to provide benefits to Pharmacia
Employees, and to accept the transfer of assets and assumption of
Liabilities provided for in Section 2.1(b)(ii). Initially, the Pharmacia
Cash Balance Pension Plan shall be identical in all material respects to the
Monsanto Pension Plan (excluding the DEKALB frozen benefits structure),
subject to such changes as Pharmacia may determine to be necessary or
appropriate to comply with the requirements of qualification under Section
401(a) of the Code. Pharmacia shall seek an opinion of counsel to Pharmacia
that the Pharmacia Cash Balance Pension Plan and Trust comply, in form, with
the requirements of Section 401(a) and 501(a) of the Code, subject to
receipt of an Internal Revenue Service determination letter stating that it
so qualifies ("IRS Determination Letter"), and a representation from
Pharmacia that (A) the Pharmacia Cash Balance Pension Plan will be submitted
for an IRS Determination Letter and (B) Pharmacia will make all
necessary amendments to such Plan and Trust Agreement in order to obtain
such letter and will make all required filings and submissions to
appropriate Governmental Authorities as soon as practicable (but in no event
later than twelve months) after the Pension Transfer Date. The Pharmacia
Employees shall cease to accrue benefits under the Monsanto Pension Plan and
shall begin to accrue benefits under the Pharmacia Cash Balance Pension Plan
on the Pension Transfer Date.
(ii) Except as specifically set forth in Section 2.1(b)(iii) and
Article IV, subject to the completion of the asset transfer described in the
next sentence, and effective as of the Pension Transfer Date: (A) the
Monsanto Pension Plan shall transfer to the Pharmacia Cash Balance Pension
Plan, and the Pharmacia Cash Balance Pension Plan and the members of the
Pharmacia Group shall assume and be responsible for, all Liabilities of the
Monsanto Pension Plan with respect to benefits accrued by Pharmacia
Participants through the Pension Transfer Date; (B) Pharmacia shall transfer
the sponsorship of the Monsanto Pension Plan to the members of the AgCo
Group and the members of the AgCo Group shall assume and be responsible for
all Liabilities of the Monsanto Pension Plan other than Liabilities
transferred to the Pharmacia Cash Balance Pension Plan in accordance with
Paragraph (A); (C) the members of the Pharmacia Group shall have no further
responsibility for the Liabilities described in Paragraph (B); and (D) the
members of the AgCo Group shall have no further responsibility for the
Liabilities described in Paragraph (A). As soon as administratively feasible
after the Pension Transfer Date, there shall be transferred from the trust
funding the Monsanto Pension Plan to the trust designated to fund the
Pharmacia Cash Balance Pension Plan (which may have the same trustee as the
former trust and which may be part of a master trust with the former trust)
assets thereof, having a value, as of the Pension Transfer Date, equal to
the Transfer Value, but in no event less than the amount required to be
transferred under Section 414(l) of the Code. The Investment Committee, or
one or more "Independent Fiduciaries" appointed by the Investment Committee,
shall reasonably and equitably determine the specific assets, or portions
thereof, that will be transferred pursuant to the preceding sentence. All
other determinations required to implement the foregoing transfer of assets
shall be reasonably and equitably made by the Enrolled Actuary in accordance
with Schedule III hereto. The Enrolled Actuary shall make an initial
estimate of the Transfer Value in advance of the Pension Transfer Date, and
an initial transfer of assets equal to such estimated Transfer Value shall
be made on the Pension Transfer Date or as soon as practicable thereafter.
The final calculation of the Transfer Value shall be completed as soon as
practicable, and true-up transfer will be made promptly following the
expiration of the 30-day period provided for in Section 2.1(c) and, if
applicable, the resolution of any disagreement pursuant to Section 2.1(c).
The true-up amount will include the pension fund's investment gains or
losses - from the Pension Transfer Date to the date of the transfer of the
true-up amount - on such true-up amount, as defined on Schedule III.
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(iii) Notwithstanding the foregoing, if Pharmacia determines
that the transfer of liabilities and assets in the manner provided in
Section 2.1(b)(ii) would violate any applicable requirements of the Code
or ERISA, or could reasonably be expected to result in the PBGC's taking
action to terminate the Monsanto Pension Plan, then Pharmacia and AgCo shall
cooperate to implement such transfer in a manner that reaches as close as
possible to the same results without any such violation."
2. Section 6.1 of the Allocation Agreement is amended by adding
thereto the following definition:
"Pharmacia Cash Balance Pension Plan: defined in Section 2.1(b)(i)."
3. Section 6.1 of the Allocation Agreement is amended by
deleting the following definition:
"AgCo Pension Plan."
4. Schedule III of the Allocation Agreement is amended in its
entirety:
SCHEDULE III
COMPUTATION OF TRANSFER VALUE
The "Transfer Value" means the sum of the assets allocated to Categories
3, 4, 5 and 6 for Active Employees, Vested Terminated Employees and Retired
Employees and Beneficiaries who are Pharmacia Participants in the Monsanto
Pension Plan on the Pension Transfer Date, together with a pro rata portion
of any excess assets, based on the following assumptions and procedures:
ASSUMPTIONS
o Interest Rate - is the rate or rates, in effect for the month
including the Pension Transfer Date, used by the PBGC - PBGC
Regulation 0000 Xxxxxxxx X - to determine the present values of
annuities in the event of a plan termination
o Mortality Table - The mortality table described in PBGC
Regulation 0000 Xxxxxxxx A, currently the 1983 GAM male table
with a six year setback used for females
o Expected Retirement Age (XRA) for those not in payment status
as of 1/1/2002
o For those eligible for a lump sum, the XRA is determined by using the
High Category table under PBGC Regulation 0000 Xxxxxxxx D, assuming
the
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earliest retirement age is the age on the Pension Transfer Date and
the unreduced retirement age is age 65
o For those not eligible for a lump sum, the XRA is determined by using
the Medium Category table assuming the earliest retirement age is the
greater of age 55 or the age on the Pension Transfer Date, and the
unreduced retirement age is age 65
o Valuation Date is 1/1/2002 and is the date as of which the Category
Liabilities defined below are determined
BENEFIT AT XRA
To determine the benefit payable at the XRA for those with account balances,
the account balances as of 1/1/2002 will be projected to the XRA assuming no
further contributions and interest credits of
o 8.5% annually to age 55 and 0.0% thereafter for the Prior Plan Account
o 5.32% (the rate in effect for 2002) annually for the Cash
Balance Account
The projected balance at XRA is then converted to a life annuity using the
plan's conversion factors
CATEGORY 3 LIABILITIES
----------------------
o For those in pay status who had commenced on 1/1/1999 or earlier - the
present value (using the above assumptions) of the actual benefit in
payment status
o For those in pay status who commenced between 1/1/1999 and 1/1/2002 -
the present value of the benefit that would have been in payment
status had the employee commenced on 1/1/1999
o For those vested on 1/1/1999 who were eligible to begin payments on
1/1/1999 - the present value of the benefit that would have been in
payment status had the employee commenced on 1/1/1999, but assuming
such benefit begins at the employee's XRA
CATEGORY 4 LIABILITIES
----------------------
o For those in pay status who commenced between 1/1/1999 and 1/1/2002 -
the present value of the lesser of the actual benefit in payment
status or the PBGC guaranteed benefit on 1/1/2002, less the Category
3 Liabilities
o For those vested as of 1/1/2002 but not in pay status - the present
value of the lesser of (a) the benefit earned through 1/1/2002 and
payable at XRA and (b) the PBGC guaranteed benefit at XRA, assuming
such benefit is payable at the employee's XRA, less the Category 3
Liabilities
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CATEGORY 5 LIABILITIES
----------------------
o For those in pay status who commenced between 1/1/1999 and 1/1/2002 -
the present value of the actual benefit in payment status less the
Category 3 and Category 4 Liabilities
o For those vested as of 1/1/2002 but not in pay status - the present
value of the actual benefit earned through 1/1/2002 assuming such
benefit is payable at the employee's XRA, less the Category 3 and
Category 4 Liabilities
CATEGORY 6 LIABILITIES
----------------------
o For those not vested as of 1/1/2002 - the present value of the actual
benefit earned through 1/1/2002 assuming such benefit is payable at
the employee's XRA
ASSET ALLOCATION
The assets of the Monsanto Pension Plan will be determined as of the Pension
Transfer Date and allocated between the Pharmacia Cash Balance Pension Plan
and the Monsanto Pension Plan as follows
o First to Category 3 Liabilities. If assets are not sufficient to
cover all Category 3 Liabilities, such assets will be allocated in
proportion to these liabilities.
o Second to Category 4 Liabilities. If such remaining assets are not
sufficient to cover all Category 4 Liabilities, such remaining
assets will be allocated in proportion to these liabilities.
o Third to Category 5 Liabilities. If such remaining assets are not
sufficient to cover all Category 5 Liabilities, such remaining
assets will be allocated in proportion to these liabilities.
o Fourth to Category 6 Liabilities. If such remaining assets are not
sufficient to cover all Category 6 Liabilities, such remaining
assets will be allocated in proportion to these liabilities.
If assets are sufficient to cover all liabilities in Categories 3 through 6,
any remaining assets will be allocated in proportion to the total of such
liabilities.
An initial allocation of assets and Transfer Value will be estimated in
advance of the Pension Transfer Date and the initial amount will be
transferred on the Pension Transfer Date or as soon as practicable
thereafter. After receiving and reviewing final data as of the Pension
Transfer Date, a true-up amount will be calculated. This true-up amount will
be transferred as soon as practicable and will include the pension fund's
investment gains or losses - from the Pension Transfer Date to the date of
the transfer of the true-up amount - on such true-up amount.
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The intent of this process is to allocate assets in accordance with PBGC
Section 4044 using PBGC assumptions at the Pension Transfer Date.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective duly authorized officers.
PHARMACIA CORPORATION
By: /s/ Xxxx Xxxxxx
-------------------------------
Name: Xxxx Xxxxxx
Title: Sr. V. P. H. R.
Date: January 4, 2002
MONSANTO COMPANY
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Senior Vice President-Human
Resources
Date: January 3, 2002
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