EXHIBIT 10.15
NEW FORM OF CHANGE-OF-CONTROL
EMPLOYMENT SECURITY AGREEMENT
AGREEMENT, by and between Monsanto Company, a Delaware corporation (the
"Company"), and ___________ (the "Executive"), dated as of the ____day of _____,
2002 (this "Agreement").
The Board of Directors of the Company (the "Board"), has determined that it
is in the best interests of the Company and its shareholders to assure that the
Company will have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control. The Board believes it
is imperative to diminish the inevitable distraction of the Executive by virtue
of the personal uncertainties and risks created by a pending or threatened
Change of Control and to encourage the Executive's full attention and dedication
to the Company currently and in the event of any threatened or pending Change of
Control, and to provide the Executive with compensation and benefits
arrangements upon a Change of Control that ensure that the compensation and
benefits expectations of the Executive will be satisfied and that are
competitive with those of other corporations. Therefore, in order to accomplish
these objectives, the Board has caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Effect of Agreement. (a) Unless and until there occurs, during the Term
of this Agreement, either a Change of Control or a termination of the
Executive's employment in anticipation of a Change of Control as contemplated by
Section 3(d), (1) Sections 2, 3 and 4 of this Agreement shall have no effect and
shall not give rise to any rights of the Executive, (2) the Executive's
employment shall be "at will," except as may be otherwise provided in any
Employment Agreement, and (3) upon any termination of the Executive's
employment, the Executive shall have no further rights under this Agreement.
[This Agreement, upon its execution, supercedes the Prior Change-of-Control
Employment Security Agreements.]
(b) From and after the first date during the Term of this Agreement on
which a Change of Control occurs, this Agreement shall supersede any Employment
Agreements, but shall have no effect on any Other Agreement or Other Plan,
except as specifically provided in Section 5; provided, that [provide for
covenants in employment agreements to survive].
2. Terms of Employment. This Section 2 sets forth the terms and conditions
on which the Company agrees to employ the Executive during the period (the
"Protected Period") beginning on the first day during the Term of this Agreement
on which a Change of Control occurs and ending on the third anniversary of that
date, or such earlier date as the Executive's employment terminates as
contemplated by Section 3.
(a) Position and Duties. (1) During the Protected Period, (A) the
Executive's position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned to the Executive at any time during the 120-day period
immediately preceding the date of the Change of Control, and (B) the Executive's
services shall be performed at the office where the Executive was employed
immediately preceding the date of the Change of Control or any office or
location less than 35 miles from such office, unless the Executive is on
international assignment on the date of the Change of Control and is relocated
as a result of the Executive's being repatriated pursuant to the terms of the
Executive's international assignment agreement as in effect before the date of
the Change of Control.
(2) During the Protected Period, the Executive agrees to devote reasonable
attention and time during normal business hours (except when on authorized
vacation, holidays or sick leave) to the business and affairs of the Company,
and, to the extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's reasonable best efforts to perform
faithfully and efficiently such responsibilities; provided, that the Executive
may (A) serve on corporate, civic or charitable boards and committees, (B)
deliver lectures, fulfill speaking engagements and teach at educational
institutions, and (C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement; and provided, further, that to the extent that any such activities
have been conducted by the Executive before the date of the Change of Control,
the continued conduct of such activities or other activities similar in nature
and scope thereto after the date of the Change of Control shall not be deemed to
interfere with the performance of the Executive's responsibilities to the
Company.
(b) Compensation. (1) Base Salary. During the Protected Period, the
Executive shall receive a base salary (the "Base Salary"), the annual amount of
which (the "Annual Base Salary Amount") shall be at least equal to 12 times the
highest monthly base salary paid or payable, including any base salary that has
been earned but deferred, to the Executive by the Company and the Affiliated
Companies for the 12-month period immediately preceding the date of the Change
of Control. The Base Salary shall be paid at such intervals as the Company pays
executive salaries generally. During the Protected Period, the Annual Base
Salary Amount shall be reviewed for possible increase at least annually,
beginning no more than 12 months after the last such annual review prior to the
date of the Change of Control. Any increase in the Annual Base Salary Amount
shall not serve to limit or reduce any other obligation to the Executive under
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this Agreement. The Annual Base Salary Amount shall not be reduced after any
such increase and the term "Annual Base Salary Amount" shall refer to Annual
Base Salary Amount as so increased.
(2) Bonuses. In addition to the Base Salary, the Executive shall be awarded
the following bonuses and incentive compensation. For each fiscal year ending
during the Protected Period, the Executive shall be awarded an annual bonus in
cash (the "Annual Bonus") at least equal to the Average Pre-Change-of-Control
Annual Bonus, which shall be paid no later than the end of the third month of
the fiscal year next following the fiscal year for which the Annual Bonus is
awarded, unless the Executive shall elect to defer the receipt of such Annual
Bonus pursuant to any Other Plan that may permit such deferral. In addition,
during the Protected Period, the Executive shall be entitled to participate in
all long-term, stock-based and other incentive plans, practices, policies and
programs generally applicable to peer executives of the Company and the
Affiliated Companies, but in no event shall such plans, practices, policies and
programs provide the Executive with incentive opportunities less favorable, in
the aggregate, than the most favorable of those provided by the Company and the
Affiliated Companies to the Executive under such plans, practices, policies and
programs as in effect at any time during the 120-day period immediately
preceding the date of the Change of Control, or, if more favorable to the
Executive, those generally provided at any time after the date of the Change of
Control to peer executives of the Company and the Affiliated Companies.
(3) Savings and Retirement Plans. During the Protected Period, the
Executive shall be entitled to participate in all savings and retirement plans,
practices, policies and programs generally applicable to peer executives of the
Company and the Affiliated Companies, but in no event shall such plans,
practices, policies and programs provide the Executive with savings
opportunities and retirement benefit opportunities, in each case, less
favorable, in the aggregate, than the most favorable of those provided by the
Company and the Affiliated Companies to the Executive under such plans,
practices, policies and programs as in effect at any time during the 120-day
period immediately preceding the date of the Change of Control, or, if more
favorable to the Executive, those generally provided at any time after the date
of the Change of Control to peer executives of the Company and the Affiliated
Companies. Without limiting the generality of the foregoing, the Company and the
Affiliated Companies shall continue to honor any Individual SERP[, including
without limitation the SERP Letter].
(4) Welfare Benefit Plans. During the Protected Period, the Executive
and/or the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and the Affiliated
Companies (including without limitation medical, prescription drug, dental,
vision, disability, life insurance, accidental death and dismemberment, and
travel accident insurance plans and programs) to the extent generally applicable
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to peer executives of the Company and the Affiliated Companies, but in no event
shall such plans, practices, policies and programs provide the Executive with
benefits that are less favorable, in the aggregate, than the most favorable of
such plans, practices, policies and programs in effect for the Executive at any
time during the 120-day period immediately preceding the date of the Change of
Control, or, if more favorable to the Executive, those generally provided at any
time after the date of the Change of Control to peer executives of the Company
and the Affiliated Companies.
(5) Expenses. During the Protected Period, the Executive shall be entitled
to receive prompt reimbursement for all reasonable expenses incurred by the
Executive in accordance with the most favorable policies, practices and
procedures of the Company and the Affiliated Companies in effect for the
Executive at any time during the 120-day period immediately preceding the date
of the Change of Control, or, if more favorable to the Executive, as in effect
generally at any time after the date of the Change of Control with respect to
peer executives of the Company and the Affiliated Companies.
(6) Fringe Benefits. During the Protected Period, the Executive shall be
entitled to fringe benefits in accordance with the most favorable plans,
practices, programs and policies of the Company and the Affiliated Companies in
effect for the Executive at any time during the 120-day period immediately
preceding the date of the Change of Control, or, if more favorable to the
Executive, as in effect generally at any time after the date of the Change of
Control with respect to peer executives of the Company and the Affiliated
Companies.
(7) Office and Support Staff. During the Protected Period, the Executive
shall be entitled to an office or offices of a size and with furnishings and
other appointments, and to secretarial and other assistance, at least equal to
the most favorable of the foregoing provided to the Executive by the Company and
the Affiliated Companies at any time during the 120-day period immediately
preceding the date of the Change of Control, or, if more favorable to the
Executive, as provided generally at any time after the date of the Change of
Control with respect to peer executives of the Company and the Affiliated
Companies.
(8) Vacation. During the Protected Period, the Executive shall be entitled
to paid vacation in accordance with the most favorable plans, policies, programs
and practices of the Company and the Affiliated Companies as in effect for the
Executive at any time during the 120-day period immediately preceding the date
of the Change of Control, or, if more favorable to the Executive, as in effect
generally at any time after the date of the Change of Control with respect to
peer executives of the Company and the Affiliated Companies.
3. Termination of Employment. (a) Death or Disability. The Executive's
employment shall terminate automatically if the Executive dies during the
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Protected Period. If the Company determines in good faith that the Disability of
the Executive has occurred during the Protected Period, it may give to the
Executive written notice in accordance with Section 10(b) of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive, provided that the Executive shall not have returned to
full-time performance of the Executive's duties before such day.
(b) By the Company. The Company may terminate the Executive's employment
during the Protected Period for Cause or without Cause. The termination of the
Executive's employment shall not be deemed to be for Cause, unless and until (1)
the Executive has been given the opportunity, on reasonable advance notice, to
be heard before the Board, together with counsel to the Executive, and (2) there
shall have been delivered to the Executive a copy of a resolution thereafter
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board (excluding the Executive, if the Executive is a
member of the Board), finding that, in the good faith opinion of the Board, the
Executive is guilty of conduct constituting Cause, and specifying the
particulars thereof in detail.
(c) By the Executive. The Executive may terminate employment during the
Protected Period for Good Reason or without Good Reason. The Executive's mental
or physical incapacity following the occurrence of an event described in clauses
(a) through (e) of the definition of Good Reason shall not affect the
Executive's ability to terminate employment for Good Reason.
(d) Termination In Anticipation of a Change of Control. Anything in this
Agreement to the contrary notwithstanding, if (1) a Change of Control occurs,
(2) the Executive's employment with the Company is terminated by the Company
before the Change of Control occurs in a manner and under circumstances that
would be considered a termination by the Company without Cause if it had
occurred during the Protected Period, and (3) it is reasonably demonstrated by
the Executive that such termination of employment was at the request of a third
party that had taken steps reasonably calculated to effect the Change of Control
or otherwise arose in connection with or in anticipation of the Change of
Control, then such termination shall be treated for all purposes of this
Agreement as a termination by the Company without Cause during the Protected
Period.
(e) Notice of Termination. Any termination of the Executive's employment by
the Company or the Executive shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 10(b). The failure by
the Executive or the Company to set forth in the Notice of Termination any fact
or circumstance that contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, hereunder, or
preclude the Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing their respective rights hereunder.
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4. Obligations of the Company upon Termination. (a) Other than for Cause,
Death or Disability; Good Reason. If, during the Protected Period, the Company
terminates the Executive's employment other than for Cause or Disability or the
Executive terminates employment for Good Reason and the Executive executes a
release substantially in the form attached hereto as Exhibit A (a "Release"):
(1) the Company shall pay to the Executive, in a lump sum in cash within 30
days after the Date of Termination, or if later, within 5 days after the
Executive executes the Release, the aggregate of the following amounts:
(A) the sum of the following amounts, to the extent not previously
paid to the Executive (the "Accrued Obligations"): (i) the Base Salary
through the Date of Termination; (ii) a pro rata portion of the Annual
Bonus for the year in which the Date of Termination occurs, computed as the
product of (x) the Severance Annual Bonus Amount, and (y) a fraction, the
numerator of which is the number of days in the current fiscal year through
the Date of Termination, and the denominator of which is 365; and (iii) any
accrued pay in lieu of unused vacation; and
(B) the product of (i) [three] [two] and (ii) the sum of (x) the
Annual Base Salary Amount, (y) the Severance Annual Bonus Amount, and (z)
the amount of the employer matching contributions made or credited to the
Executive's accounts in the Savings Plans for the most recent plan year
that ended before the date of the Change of Control or, if higher, for the
most recent plan year that ended after the date of the Change of Control
(in either case annualized to the extent such plan year consisted of less
than 12 months and/or the Executive was not eligible to participate in such
Savings Plan for the full plan year); and
(C) an amount equal to the excess of (i) the aggregate benefit under
the Retirement Plan, the SERP and any Individual SERP that the Executive
would have accrued (whether or not vested) if the Executive's employment
had continued for the Severance Period, based on the assumption that the
Executive's compensation during the Severance Period was that required by
Sections 2(b)(1) and 2(b)(2), over (ii) the actual vested benefit, if any,
of the Executive under the Retirement Plan, the SERP and any Individual
SERP, in each case, determined as a single lump sum benefit amount as of
the Date of Termination, on an actuarial present value basis, using
actuarial assumptions no less favorable to the Executive than the most
favorable of those in effect for purposes of computing benefit entitlements
under the Retirement Plan and the SERP at any time from the day before the
date of the Change of Control;
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(2) for the Severance Period, the Company shall continue Specified Welfare
Benefits to the Executive and/or the Executive's family; provided, that if the
Executive becomes reemployed with another employer and is eligible to receive
medical, dental, prescription drug and vision benefits under another
employer-provided plan during the Severance Period, the comparable Specified
Welfare Benefits shall be secondary to those provided under such other plan
while the Executive is so eligible;
(3) for purposes of determining the Executive's eligibility for Retiree
Welfare Benefits, the Executive shall be considered to have remained employed
until the end of the Severance Period and to have retired on the last day of
such period, and, if the Executive has reached age 50 as of the Date of
Termination, then the Executive shall be fully vested in, and shall be entitled
to receive, beginning at the end of the Severance Period, lifetime retiree
medical benefits at least as favorable as those to which the Executive would
have been entitled if the Executive had retired with full eligibility for the
Retiree Welfare Benefits in effect as of the date of the Change of Control;
(4) the Company shall provide the Executive with outplacement services, in
accordance with its normal practice for its most senior executives, as in effect
before the date of the Change of Control, from the outplacement firm or firms
with which the Company has contracted as of the Date of Termination or
thereafter; and
(5) to the extent not theretofore paid or provided, the Company shall
timely pay or provide to the Executive any Other Benefits.
Notwithstanding the foregoing: (i) if the Company determines that it is not
possible to provide any of the Specified Welfare Benefits or Retiree Welfare
Benefits as required above through plans sponsored by the Company and the
Affiliated Companies under the terms thereof, or that providing any of the
Specified Welfare Benefits or Retiree Welfare Benefits through such plans would
have adverse tax consequences for the Executive, then the Company shall provide
such Specified Welfare Benefits or Retiree Welfare Benefits in a manner that
keeps the Executive in the same position, on an After-Tax basis, as if the
Executive had remained employed by the Company during the Severance Period;
provided, that if it is not reasonably practicable to so provide such Specified
Welfare Benefits or Retiree Welfare Benefits, then the Company shall, instead,
make a cash payment that is equal, on an After-Tax basis, to the value of such
Specified Welfare Benefits or Retiree Welfare Benefits; and (ii) any disability
benefits to which the Executive might otherwise become entitled pursuant to any
of the Specified Welfare Benefits shall begin at the conclusion of the Severance
Period.
(b) Death. If the Executive's employment is terminated because of the
Executive's death during the Protected Period, the Company shall pay the Accrued
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Obligations to the Executive's estate or beneficiaries, as applicable, in a lump
sum in cash within 30 days of the Date of Termination, shall timely pay or
deliver any of the Other Benefits, and shall have no other severance obligations
under this Agreement. For purposes of this Section 4(b), the term "Other
Benefits" shall include without limitation, and the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and the Affiliated Companies to the
estates and beneficiaries of peer executives of the Company and the Affiliated
Companies under such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
date of the Change of Control, or, if more favorable to the Executive's estate
and/or the Executive's beneficiaries, as in effect at any time after the date of
the Change of Control generally with respect to peer executives of the Company
and the Affiliated Companies and their beneficiaries.
(c) Disability. If the Executive's employment is terminated because of the
Executive's Disability during the Protected Period, the Company shall pay the
Accrued Obligations to the Executive in a lump sum in cash within 30 days of the
Date of Termination, shall timely pay or deliver any Other Benefits, and shall
have no other severance obligations under this Agreement. For purposes of this
Section 4(c), the term "Other Benefits" shall include, without limitation, and
the Executive shall be entitled to receive, disability and other benefits at
least equal to the most favorable of those generally provided by the Company and
the Affiliated Companies to disabled executives and/or their families in
accordance with such plans, programs, practices and policies relating to
disability, if any, as in effect generally with respect to peer executives and
their families at any time during the 120-day period immediately preceding the
date of the Change of Control, or, if more favorable to the Executive and/or the
Executive's family, as in effect at any time after the date of the Change of
Control generally with respect to peer executives of the Company and the
Affiliated Companies and their families.
(d) Cause; Other than for Good Reason. If the Executive's employment is
terminated for Cause during the Protected Period, the Company shall provide to
the Executive the Base Salary through the Date of Termination and any Other
Benefits, in each case, to the extent theretofore unpaid, and shall have no
other severance obligations under this Agreement. If the Executive voluntarily
terminates employment during the Protected Period, other than for Good Reason,
the Company shall pay the Accrued Obligations to the Executive in a lump sum in
cash within 30 days of the Date of Termination, shall timely pay or deliver any
Other Benefits, and shall have no other severance obligations under this
Agreement.
5. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any Other Plan for
which the Executive may qualify, nor shall anything herein limit or otherwise
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affect such rights as the Executive may have under any Other Agreement. Amounts
that are vested benefits or that the Executive is otherwise entitled to receive
under any Other Plan or any Other Agreement shall be payable in accordance with
such Other Plan or Other Agreement, except as explicitly modified by this
Agreement. Notwithstanding the foregoing, if the Executive receives payments and
benefits pursuant to Section 4(a), then (a) the Executive shall not be entitled
to any severance pay or benefits under any severance plan, program or policy of
the Company and the Affiliated Companies, unless otherwise specifically provided
therein in a specific reference to this Agreement, and (b) the Executive shall
not be treated as having any additional years of service or age for purposes of
any Other Plan or Other Agreement by virtue of receiving such payments and
benefits, unless such Other Plan or Other Agreement specifically so provides.
6. Full Settlement; Legal Fees. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action that the Company or any Affiliated
Company may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement, and, except as specifically provided in Section
4(a)(2), such amounts shall not be reduced, regardless of whether the Executive
obtains other employment. The Company agrees to pay as incurred, within 10 days
following the Company's receipt of an invoice from the Executive, to the full
extent permitted by law, all legal fees and expenses that the Executive may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Company, the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof (whether such contest is between the Company and the Executive or
between either of them and any third party, and including as a result of any
contest by the Executive about the amount of any payment pursuant to this
Agreement), plus, in each case, interest on any delayed payment at the
applicable federal rate provided for in Section 7872(f)(2)(A) of the Code;
provided, that the Company shall not be required to pay any fees or expenses
charged by any accounting or consulting firm to perform calculations or make
determinations required to be carried out by the Accounting Firm pursuant to
Section 7.
7. Certain Additional Payments by the Company. (a) If any Payment is
subject to the Excise Tax, then the Company shall pay the Executive a Gross-Up
Payment (regardless of whether the Executive's employment has terminated).
Notwithstanding the foregoing, if the Parachute Value of all Payments does not
exceed 110% of the Safe Harbor Amount, then the Company shall not pay the
Executive a Gross-Up Payment, and the Payments due under this Agreement shall be
reduced so that the Parachute Value of all Payments, in the aggregate, equals
the Safe Harbor Amount; provided, that if even after all Payments due hereunder
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are reduced to zero, the Parachute Value of all Payments would still exceed the
Safe Harbor Amount, then no reduction of any Payments shall be made. The
reduction of the Payments due hereunder, if applicable, shall be made by first
reducing the payments under Section 4(a)(1)(B), unless an alternative method of
reduction is elected by the Executive, and in any event shall be made in such a
manner as to maximize the economic present value of all Payments actually made
to the Executive, determined by the Accounting Firm as of the date of the change
of control for purposes of Section 280G of the Code using the discount rate
required by Section 280G(d)(4) of the Code.
(b) All determinations required to be made under this Section 7, including
whether and when Gross-Up Payments are required and the amount of such Gross-Up
Payments, whether and in what manner any Payments are to be reduced pursuant to
the second sentence of Section 7(a), and the assumptions to be utilized in
arriving at such determinations, shall be made by the Accounting Firm, and shall
be binding upon the Company and the Executive, except to the extent the Internal
Revenue Service or a court of competent jurisdiction makes a final and binding
determination inconsistent therewith. The Accounting Firm shall provide detailed
supporting calculations both to the Company and the Executive within 15 business
days after receiving notice from the Executive that there has been a Payment or
such earlier time as may be requested by the Company. All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment
that becomes due pursuant to this Section 7 shall be paid by the Company to the
Executive within five days of the receipt of the Accounting Firm's
determination, or, if later, at least 20 business days before the Executive is
obligated to pay the related Excise Tax. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments that
will not have been made by the Company should have been made (an
"Underpayment"). In the event the Accounting Firm determines that there has been
an Underpayment or the Executive is required to make a payment of any Excise Tax
as a result of a claim described in Section 7(c), then the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
(c) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of a Gross-Up Payment. Such notification shall be given as soon as
practicable, but no later than 10 business days after the Executive is informed
in writing of such claim. The Executive shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which the Executive gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Executive in writing prior to
the expiration of such period that the Company desires to contest such claim,
the Executive shall:
(1) give the Company any information reasonably requested by the
Company relating to such claim,
(2) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including
without limitation accepting legal representation with respect to such
claim by an attorney reasonably selected by the Company,
(3) cooperate with the Company in good faith in order effectively to
contest such claim, and
(4) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest, and shall indemnify and hold the Executive harmless, on an
After-Tax basis, for any Excise Tax or Taxes imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 7(c), the Company shall control all
proceedings taken in connection with such contest, and, at its sole discretion,
may pursue or forgo any and all administrative appeals, proceedings, hearings
and conferences with the applicable taxing authority in respect of such claim
and may, at its sole discretion, either direct the Executive to pay the Taxes
claimed and xxx for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that, if
the Company directs the Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis, and shall indemnify and hold the Executive harmless, on an
After-Tax basis, from any Excise Tax or Taxes imposed with respect to such
advance or with respect to any imputed income in connection with such advance;
and provided, further, that any extension of the relevant statute of limitations
is limited solely to such contested amount. Furthermore, the Company's control
of the contest shall be limited to issues with respect to which the Gross-Up
Payment would be payable hereunder, and the Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(d) If, at any time after receiving a Gross-Up Payment or an advance
pursuant to Section 7(c), the Executive receives any refund of the associated
Excise Tax, the Executive shall (subject to the Company's having complied with
the requirements of Section 7(c), if applicable) promptly pay to the Company the
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amount of such refund, together with any interest paid or credited thereon net
of all Taxes applicable thereto. If, after the Executive receives an advance
pursuant to Section 7(c), a determination is made that the Executive is not
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of 30 days after such determination, then such advance
shall be forgiven and shall not be required to be repaid, and the amount of any
Gross-Up Payment owed to the Executive shall be reduced (but not below zero) by
the amount of such advance.
(e) Notwithstanding any other provision of this Section 7, the Company may,
in its sole discretion, withhold and pay over to the Internal Revenue Service or
any other applicable taxing authority, for the benefit of the Executive, all or
any portion of any Gross-Up Payment, and the Executive hereby consents to such
withholding.
8. Confidential Information. (a) The Executive shall use the Executive's
best efforts and diligence both during and after employment by the Company and
the Affiliated Companies to protect the confidential, trade secret and/or
proprietary character of all Confidential Information. The Executive shall not,
directly or indirectly, use (for the Executive or another) or disclose any
Confidential Information, for so long as it shall remain proprietary or
protectible as confidential or trade secret information, except as may be
necessary for the performance of the Executive's duties with the Company and the
Affiliated Companies. The Executive shall promptly deliver to the Company, at
the termination of the Executive's employment, or at any other time at the
Company's request, without retaining any copies, all documents and other
material in the Executive's possession relating, directly or indirectly, to any
Confidential Information.
(b) Each of the Executive's obligations in this Section 8 shall also apply
to the confidential, trade secret and proprietary information learned or
acquired by the Executive during the Executive's employment from others with
whom the Company or any Affiliated Company has a business relationship. The
Executive understands that the Executive is not to disclose to the Company or
any Affiliated Company, or use for its benefit, any of the confidential, trade
secret or proprietary information of others, including any of the Executive's
former employers.
(c) In no event shall an asserted violation of the provisions of this
Section 8 constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement.
9. Successors. (a) This Agreement is personal to the Executive, and,
without the prior written consent of the Company shall not be assignable by the
Executive other than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
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(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns. Except as provided in Section 9(c),
without the prior written consent of the Executive, this Agreement shall not be
assignable by the Company.
(c) The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.
10. Miscellaneous. (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified other than by a written agreement that is specifically
identified as an amendment of this Agreement and executed by the Executive and
by an authorized officer of the Company in a single instrument.
(b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
-------------------
000 Xxxxx Xxxxxxxxx Xxxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
If to the Company:
-----------------
000 Xxxxx Xxxxxxxxx Xxxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
(d) The Company may withhold from any amounts payable under this Agreement
such Taxes as shall be required to be withheld pursuant to any applicable law or
regulation.
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(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including without
limitation the right of the Executive to terminate employment for Good Reason
pursuant to Section 3(c), shall not be deemed to be a waiver of such provision
or right or any other provision or right of this Agreement.
11. Certain Definitions. The following terms shall have the meanings set
forth below for purposes of this Agreement.
"Accounting Firm" means the certified public accounting firm that was
serving as the Company's auditors immediately before the date of the Change of
Control.
"Accrued Obligations" has the meaning set forth in Section 4(a)(1)(A).
"Affiliated Company" means any company controlled by the Company.
"After-Tax" means after taking into account all applicable Taxes and Excise
Tax.
"Agreement" has the meaning set forth in the first paragraph of the
Agreement.
"Annual Base Salary Amount" has the meaning set forth in Section 2(b)(1).
"Annual Bonus" has the meaning set forth in Section 2(b)(2).
"Average Pre-Change-of-Control Annual Bonus" means a bonus amount based
upon the Executive's average annual bonuses earned for fiscal years beginning
before the date of the Change of Control under the Company's annual incentive
program as in effect from time to time and under the Monsanto Annual Incentive
Program to the extent the Executive has participated therein for 2002 and prior
years, calculated as follows. If, as of the date of the Change of Control, the
Executive has been employed by the Company and the Affiliated Companies and
Pharmacia Corporation (formerly known as Monsanto Company) and its subsidiaries
for at least the most recent three full fiscal years ending on or before the
date of the Change of Control, and was eligible to earn an annual bonus under
such programs for each such fiscal year, then the Average Pre-Change-of-Control
Annual Bonus means the average of the annual bonuses earned by the Executive for
each of such fiscal years. If, as of the date of the Change of Control, the
Executive has been employed by the Company and the Affiliated Companies and
Pharmacia Corporation and its subsidiaries for less than the most recent three
full fiscal years ending on or before the date of the Change of Control, or was
not eligible to earn an annual bonus under such programs for each such fiscal
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year, then the Average Pre-Change-of-Control Annual Bonus means the average of
the annual bonuses earned by the Executive for each of such fiscal years for
which the Executive was eligible to earn such an annual bonus. If the Executive
was eligible to earn such an annual bonus for any fiscal year, but did not in
fact earn such an annual bonus, then the Executive's annual bonus for such
fiscal year shall be deemed to be zero for purposes of determining the Average
Pre-Change-of-Control Annual Bonus. If the Executive earned an annual bonus
under such programs for a period of less than 12 months, the amount of such
annual bonus shall be annualized for purposes of determining the Average
Pre-Change-of-Control Annual Bonus. Finally, if the Executive was not eligible
to earn such an annual bonus for any fiscal year ending on or before the date of
the Change of Control, then the Average Pre-Change-of-Control Annual Bonus shall
be deemed to equal the Executive's target annual bonus as in effect immediately
before the date of the Change of Control.
"Base Salary" has the meaning set forth in Section 2(b)(1).
"Board" has the meaning set forth in the second paragraph of this
Agreement.
"Cause" means (a) the Executive's willful and continued failure to perform
substantially the Executive's duties as contemplated by Section 2(a)(1)(A)
(except as a result of the Executive's incapacity due to physical or mental
illness or injury, or following the Executive's delivery of a Notice of
Termination for Good Reason), after a written demand for substantial performance
is delivered to the Executive by the Board [or the Chief Executive Officer of
the Company] which specifically identifies the manner in which the Board [or
Chief Executive Officer] believes that the Executive has not substantially
performed the Executive's duties, or (b) the Executive's willful engaging in
illegal conduct or gross misconduct that is materially and demonstrably
injurious to the Company. For purposes of this definition, no act or failure to
act on the part of the Executive shall be considered "willful" unless it is
done, or omitted to be done, by the Executive in bad faith or without reasonable
belief that the Executive's action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board [or upon the instructions of the Chief
Executive Officer of the Company] [or a senior officer of the Company] or based
upon the advice of counsel for the Company shall be conclusively presumed to be
done, or omitted to be done, by the Executive in good faith and in the best
interests of the Company. [Alternate versions depending upon the Executive's
position.]
"Change of Control" means the happening of any of the events
described in sub-sections (a) through (d) below:
(a) the acquisition by any Person of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20 percent or
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more of either (1) the then-outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (2) the combined voting
power of the then-outstanding voting securities of the Company entitled to
vote generally in the election of directors (the "Outstanding Company
Voting Securities"); provided, that for purposes of this subsection (a),
the following acquisitions shall not constitute a Change of Control: (A)
any acquisition directly from the Company; (B) any acquisition by the
Company or a Subsidiary of the Company; (C) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or a
Subsidiary of the Company; or (D) any acquisition by any corporation
pursuant to a transaction that complies with clauses (1), (2) and (3) of
subsection (c) of this definition;
(b) individuals who, as of the date of the initial public offering of
the common stock of the Company, constitute the Board (the "Incumbent
Board"), cease for any reason to constitute at least a majority of the
Board; provided, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office occurs
as a result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board;
(c) consummation by the Company of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of
the assets of the Company or the acquisition of assets or stock of another
corporation (a "Business Combination"), in each case, unless, following
such Business Combination, (1) all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly
or indirectly, more than 60% of, respectively, the then-outstanding shares
of common stock and the combined voting power of the then-outstanding
voting securities entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from such Business
Combination (including without limitation a corporation that as a result of
such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to
such Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (2) no Person
(excluding the Company, a Subsidiary of the Company, any corporation
resulting from a Business Combination or any employee benefit plan (or
related trust) thereof) beneficially owns, directly or indirectly, 20
percent or more of the then-outstanding shares of common stock of the
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corporation resulting from such Business Combination or 20 percent or more
of the combined voting power of the then-outstanding voting securities
entitled to vote generally in the election of directors of such
corporation, except to the extent that such ownership existed prior to the
Business Combination and (3) at least a majority of the members of the
board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination;
(d) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the first paragraph of this
Agreement, and shall include any successor to the Company pursuant to Section
9(c).
"Confidential Information" means (a) all technical and business information
of the Company and the Affiliated Companies, whether patentable or not, which is
of a confidential, trade secret and/or proprietary character and that is either
developed by the Executive (alone or with others) or to which the Executive has
had access during the Executive's employment, (b) all confidential evaluations,
and (c) the confidential use or non-use by the Company or any Affiliated Company
of technical or business information in the public domain.
"Date of Termination" means (a) if the Executive's employment is terminated
by the Company for Cause or by the Executive for Good Reason, the date of
receipt of the Notice of Termination or any later date specified in the Notice
of Termination (but not later than 30 days after the giving of such notice), as
the case may be, (b) if the Executive's employment is terminated by the Company
other than for Cause or Disability, the date on which the Company notifies the
Executive of such termination, and (c) if the Executive's employment is
terminated by reason of death or Disability, the date on which the Executive's
termination becomes effective pursuant to Section 3(a).
"Disability" means the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness or injury that is
determined to be total and permanent by a physician selected by the Company or
its insurers and acceptable to the Executive or the Executive's legal
representative.
"Employment Agreement" means any employment agreement between the Company
or any of the Affiliated Companies that may hereafter be entered into.
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"Executive" has the meaning set forth in the first paragraph of this
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excise Tax" means the excise tax imposed by Section 4999 of the Code,
together with any interest or penalties imposed with respect to such excise tax.
"Good Reason" means (a) any change affecting the position of the Executive
(whether resulting from a transfer of the Executive to another position, a
change in the Company's business, or any other event) such that the Executive no
longer has a position substantially equivalent to the Executive's position as
contemplated by Section 2(a) for which the Executive is qualified by education,
training and experience, other than an isolated, insubstantial and inadvertent
change not taken in bad faith that is remedied by the Company promptly after
receipt of notice thereof given by the Executive; (b) any failure by the Company
to comply with any of the provisions of Section 2(b), other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith that is
remedied by the Company promptly after receipt of notice thereof given by the
Executive; (c) the Company's requiring the Executive (1) to be based at any
office or location other than as provided in Section 2(a)(1)(B), (2) to be based
at a location other than the principal executive offices of the Company if the
Executive was employed at such location immediately preceding the date of the
Change of Control, or (3) to travel on Company business to a substantially
greater extent than required immediately prior to the date of the Change of
Control; provided, that if the Executive is on international assignment on the
date of the Change of Control, a relocation that results from the Executive's
being repatriated pursuant to the terms of his international assignment
agreement as in effect before the date of the Change of Control shall not be
"Good Reason"; (d) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or (e) any
failure by the Company to comply with and satisfy Section 9(c).
"Gross-Up Payment" means an amount such that, after payment by the
Executive of all Taxes and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
"Individual SERP" means individual agreements between the Executive and the
Company or the Affiliated Companies regarding the provisions of supplemental
retirement benefits such as (but not limited to) post-retirement income and/or
welfare benefits.
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"Notice of Termination" means a written notice of the termination of the
Executive's employment that (a) indicates the specific termination provision in
this Agreement relied upon, (b) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated, and
(c) specifies the Date of Termination (which shall be not earlier than the date
such notice is given and not later than 30 days thereafter).
"Other Agreement" means any contract or agreement between the Company or
any of the Affiliated Companies and the Executive, excluding any Employment
Agreement and this Agreement and including without limitation any Individual
SERP [and the Phantom Share Agreement dated as of ______, 2000 among the
Executive, the Company and Pharmacia Corporation].
"Other Benefits" means any amounts or benefits required to be
paid or provided or which the Executive is eligible to receive under any Other
Plan or Other Agreement.
"Other Plan" means any plan, program, policy or practice provided by the
Company or any of the Affiliated Companies, excluding this Agreement, any
Employment Agreement and any Other Agreements.
"Parachute Value" of a Payment means the present value as of the date of
the change of control for purposes of Section 280G of the Code of the portion of
such Payment that constitutes a "parachute payment" under Section 280G(b)(2) of
the Code, as determined by the Accounting Firm for purposes of determining
whether and to what extent the Excise Tax will apply to such Payment.
"Payment" means any payment or distribution in the nature of compensation
(within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of
the Executive, whether paid or payable pursuant to this Agreement or otherwise.
"Person" means any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act.
"Prior Change-of-Conrol Employment Security Agreements" means the
Change-of-Control Security Agreement dated __________ between the Executive and
Monsanto Company and the Change-of-Control Employment Security Agreement dated
___________ between the Executive and Monsanto Company.
"Protected Period" has the meaning set forth in the first sentence of
Section 2.
"Release" has the meaning set forth in Section 4(a).
"Retiree Welfare Benefits" means retiree benefits pursuant to any of the
Specified Welfare Benefits.
"Retirement Plan" means the Monsanto Company Pension Plan and any successor
thereto, and any other qualified defined benefit retirement plans of the Company
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and the Affiliated Companies, in each case to the extent the Executive was
entitled to participate therein immediately before the Date of Termination.
"Safe Harbor Amount" means 2.99 times the Executive's "base amount," within
the meaning of Section 280G(b)(3) of the Code.
"Savings Plans" means the Monsanto Company Savings and Investment Plan and
Savings and Investment Parity Plan and any successors thereto, and any other
qualified defined contribution plans of the Company and the Affiliated
Companies, in each case, to the extent the Executive was entitled to participate
therein immediately before the Date of Termination.
"SERP" means the Monsanto Company ERISA Parity Pension Plan, the Monsanto
Company Supplemental Retirement Plan, and any successors thereto, and any other
"top hat," excess or supplemental defined benefit retirement plans of the
Company and the Affiliated Companies, in each case to the extent the Executive
is entitled to participate therein immediately before the Date of Termination.
"SERP Letter" means [insert reference to individual SERP letter, if any, to
which the Executive is a party].
"Severance Annual Bonus Amount" means the higher of (a) the Average
Pre-Change-of-Control Annual Bonus and (b) the most recent Annual Bonus paid or
payable to the Executive pursuant to Section 2(b)(2) after the date of the
Change of Control, if any.
"Severance Period" means the period of [three] [two] years beginning on the
Date of Termination.
"Specified Welfare Benefits" means medical, prescription drug, dental,
vision, disability and life insurance benefits that are substantially comparable
to those that would have been provided to the Executive and the Executive's
family pursuant to Section 2(b)(4), if the Executive had remained employed by
the Company during the Severance Period. Specified Welfare Benefits shall not
include the benefit of making pre-tax contributions to any cafeteria or flexible
spending plan.
"Subsidiary" of any entity means any corporation, partnership, joint
venture, limited liability company, or other entity or enterprise of which the
first entity owns or controls, directly or indirectly, 50% or more of the
outstanding shares of stock normally entitled to vote for the election of
directors, or of comparable equity participation and voting power.
"Taxes" means all federal, state, local and foreign income, excise, social
security and other taxes, other than the Excise Tax, and any associated interest
and penalties.
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"Term of this Agreement" means the period beginning on the date of the
initial public offering of the common stock of the Company and ending on June
30, 2003; provided, however, that beginning on June 30, 2003, and on each June
30 thereafter, the Term of this Agreement shall be automatically extended so as
to terminate on the first anniversary of such June 30, unless the Company shall
give notice to the Executive before the immediately preceding May 1 that the
Term of this Agreement shall not be so extended.
"Underpayment" has the meaning set forth in Section 7(b).
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
------------------------------------
[name of Executive]
MONSANTO COMPANY
By:
---------------------------------
Name:
Title:
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Exhibit A
Form of Release
THIS RELEASE MUST BE SIGNED AND RETURNED BY _________, 200_. YOU MAY NOT MAKE
ANY CHANGES TO THIS FORM.
Monsanto Company, on its own behalf and on behalf of its subsidiaries,
affiliates, successors and predecessors (collectively, the "Company"), and I
agree as follows:
(a) Consideration: I will receive the severance pay and benefits provided for in
Section 4(a) of the attached Employment Agreement in exchange for this Release.
(b) Employment Termination: My employment with the Company has ended and I agree
never to seek employment with the Company or its affiliates in the future.
(c) Claims Released: I represent that I have not been the victim of age
discrimination or any other type of discrimination or wrongful act in connection
with my employment with the Company. Consistent with this, I release the
Company, its current and former subsidiaries and affiliates, and their employees
or agents and related parties from all known or unknown claims, if any, that I
presently could have arising out of my employment with the Company or the
termination of my employment, except (1) Age Discrimination in Employment Act
claims, of which I have none, (2) claims for payments and benefits to which I am
entitled under the attached Change of Control Agreement and (3) claims for the
Other Benefits (as defined in the attached Employment Agreement) identified on
Schedule I hereto.
(d) Promise Not to File Claims: I promise never to file any lawsuit based on a
released claim and I will withdraw with prejudice any such lawsuit that may
already be pending. I promise never to seek any damages, remedies, or other
relief for myself personally (any right to which I hereby waive) by prosecuting
a charge with any administrative agency with respect to any claim released by
this Release.
READ THIS RELEASE, AND CAREFULLY CONSIDER ALL OF ITS PROVISIONS BEFORE SIGNING
IT. YOU WILL HAVE __ DAYS IN WHICH TO CONSIDER IT. THIS RELEASE INCLUDES A
RELEASE OF KNOWN AND UNKNOWN CLAIMS. IF YOU WISH, YOU SHOULD CONSULT YOUR
ATTORNEY (AT YOUR OWN EXPENSE).
I have carefully read this Release, I fully understand what it means, and I am
entering into it voluntarily.
------------------ ---------------------------------------
Date Signature
---------------------------------------
Printed Name
