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Exhibit 10(a)
FORM OF
EMPLOYEE BENEFITS AND
COMPENSATION ALLOCATION AGREEMENT
Between
MONSANTO COMPANY
and
[NEW CHEMICALS CORPORATION]
Dated as of ____________, 1997
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TABLE OF CONTENTS
Page
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I. Definitions...................................... 2
1.01 General.................................... 2
II. U.S. Plans and Stock Plans....................... 9
2.01 Retirement Plans........................... 9
2.02 The SIP.................................... 11
2.03 Welfare Plans.............................. 14
2.04 Stock Plans................................ 15
2.05 Stock Purchase Plans....................... 19
2.06 Nonqualified Plans and Programs............ 20
III. Foreign Plans and TCN Policy..................... 21
3.01 General Principles......................... 21
3.02 Exceptions to General Principles........... 22
3.03 TCN Policy................................. 22
IV. General Provisions............................... 22
4.01 Employment Transfers; Severance Pay........ 22
4.02 Other Liabilities ......................... 23
4.03 Recognition of Monsanto Employment
Service, etc............................. 24
4.04 Indemnification............................ 24
4.05 Transition Services........................ 24
4.06 Workers Compensation Excluded.............. 25
4.07 P4 Joint Venture........................... 25
V. Miscellaneous.................................... 25
5.01 Guarantee of Subsidiaries' Obligations..... 25
5.02 Audits and Disputes........................ 25
5.03 Sharing of Information..................... 26
5.04 Termination................................ 27
5.05 Rights to Amend or Terminate Plans;
No Third Party Beneficiaries............. 27
5.06 Complete Agreement......................... 27
5.07 Governing Law.............................. 27
5.08 Notices.................................... 28
5.09 Amendment and Modification................. 28
5.10 Successors and Assigns..................... 28
5.11 Counterparts............................... 28
5.12 Interpretation............................. 28
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Page
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5.13 Legal Enforceability....................... 28
5.14 References; Construction................... 28
Schedule I
Schedule II
Exhibit A
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EMPLOYEE BENEFITS AND COMPENSATION
ALLOCATION AGREEMENT
EMPLOYEE BENEFITS AND COMPENSATION ALLOCATION AGREEMENT,
dated as of _________ __, 1997, by and between Monsanto Company, a
Delaware corporation ("Monsanto"), and [NEW CHEMICALS CORPORATION], a
newly formed Delaware corporation ("Chemicals").
W I T N E S S E T H:
WHEREAS, the Board of Directors of Monsanto has determined
that it is appropriate and desirable to separate Monsanto and its
subsidiaries into two publicly traded organizations by: (1)
consolidating into Chemicals and its newly formed subsidiaries certain
of the businesses currently conducted by Monsanto directly and through
certain of its other subsidiaries and (2) distributing to the holders
of the issued and outstanding shares of common stock, par value $2.00
per share, of Monsanto all of the issued and outstanding shares of
common stock, par value $.01 per share, of Chemicals (the
"Distribution");
WHEREAS, the Distribution is intended to qualify as a
tax-free spin-off under Section 355 of the Internal Revenue Code of
1986, as amended;
WHEREAS, Monsanto and Chemicals are entering into a
Distribution Agreement of even date herewith (the "Distribution
Agreement"), which, among other things, sets forth the principal
corporate transactions required to effect the Distribution and sets
forth other agreements that will govern certain other matters prior to
and following the Distribution; and
WHEREAS, in connection with the Distribution and pursuant to
the Distribution Agreement, Monsanto and Chemicals desire to provide
for the allocation of assets and liabilities and other matters
relating to employee benefit plans and compensation arrangements;
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:
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ARTICLE I
DEFINITIONS
1.01 GENERAL. Any capitalized terms that are used in this
Agreement but not defined herein (other than the names of Monsanto
employee benefit plans) shall have the meanings set forth in the
Distribution Agreement, and as used herein, the following terms shall
have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
Agreement: this Employee Benefits and Compensation Allocation
Agreement, including the schedules and exhibits hereto.
Alternate Payee: an alternate payee under a domestic
relations order which has been determined by the appropriate Plan
administrator to be qualified under Section 414(p) of the Code and
Section 206(d) of ERISA and which creates or recognizes an
alternate payee's right to, or assigns to an alternate payee, all
or a portion of the benefits payable to a participant under any
Plan, or an alternate recipient under a medical child support order
which has been determined by the appropriate Plan administrator to
be qualified under Section 609(a) of ERISA and which creates or
recognizes the existence of an alternate recipient's right to, or
assigns to an alternate recipient the right to, receive benefits
for which a participant or beneficiary is eligible under any Plan.
Assigned Split Dollar Policies: defined in Section 2.03(c).
Audit Liability: defined in Section 5.02(a)(i).
Beneficiary: a beneficiary, dependent or Alternate Payee of a
participant in a Plan or the estate of a deceased participant in a
Plan, in each case in his, her or its capacity as such a
beneficiary, dependent, Alternate Payee or estate.
Cash Incentive Plan: a Plan providing annual and/or long-term
cash incentive compensation.
Chemicals: defined in the preamble.
Chemicals Benefits Group: the Chemicals Group, Advanced
Elastomers Systems, L.P. (U.S. operations) and Flexsys America L.P.
(U.S. operations).
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Chemicals Employee: any individual who is, as of the
Distribution Date, identified on the records of Chemicals as being
an Employee of any member of the Chemicals Benefits Group.
Chemicals ESOP Loan: defined in Section 2.02(c).
Chemicals ESOP Security: defined in Section 2.02(c).
Chemicals Foreign Plan: a Foreign Plan provided by,
contributed to or sponsored by one or more members of the Chemicals
Benefits Group.
Chemicals Former Employee: any individual who is, as of the
Distribution Date, identified on the records of Monsanto as being a
Chemicals Former Employee, which identification shall have been
made based upon a good faith determination by Monsanto and
Chemicals that (i) such individual was, at any time before the
Distribution Date, an employee of any member of the
Pre-Distribution Group, (ii) such individual is not a Monsanto
Employee or a Chemicals Employee, and (iii) such individual's most
recent active employment with any such member was with a Chemicals
Business or a Former Chemicals Business; provided that, if at any
time on or before December 31, 1997, Chemicals and Monsanto
determine that any one or more individuals were identified as
Chemicals Former Employees in error and should have been identified
as Monsanto Former Employees and agree to correct such error, such
individuals shall be considered Monsanto Former Employees and
Chemicals and Monsanto shall use their reasonable best efforts to
implement the terms of this Agreement as they apply to such
individuals as if such individuals had been correctly identified
as of the Distribution Date.
Chemicals Option: an option to purchase from Chemicals shares
of Chemicals Common Stock provided to a Chemicals Participant or
Monsanto Participant pursuant to Section 2.04.
Chemicals Participant: any individual who is a Chemicals
Employee, a Chemicals Former Employee, or a Beneficiary of such an
individual.
Chemicals Ratio: the amount obtained by dividing (i) the
average of the daily high and low trading prices on the NYSE
Composite Tape, as reported in the Wall Street Journal, for the
Monsanto Common Stock with due bills on each of the five trading
days prior to the Distribution Date by (ii) the average of the
daily high and low trading
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prices on the NYSE Composite Tape, as reported in the Wall
Street Journal, for the Chemicals Common Stock on a when-
issued basis on each of such five trading days.
Chemicals Restricted Stock: defined in Section 2.04(f).
Chemicals SAR: a stock appreciation right with respect to
shares of Chemicals Common Stock provided to a Chemicals
Participant or Monsanto Participant pursuant to Section 2.04.
Chemicals SIP: a Qualified Plan established by Chemicals
pursuant to Section 2.02(a).
Chemicals SIP Trust: defined in Section 2.02(a).
Chemicals U.S. Welfare Plan: a Chemicals Welfare Plan that is
a U.S. Plan.
Chemicals Welfare Plan: a Welfare Plan sponsored by one or
more members of the Chemicals Benefits Group.
Distribution: defined in the recitals.
Distribution Agreement: defined in the recitals.
Employee: with respect to any entity, an individual who is
considered, according to the payroll and other records of such
entity, to be employed by such entity, regardless of whether such
individual is, at the relevant time, actively at work or on leave
of absence (including vacation, holiday, sick leave, family and
medical leave, disability leave, military leave, jury duty, layoff
with rights of recall, and any other leave of absence or similar
interruption of active employment that is not considered,
according to the policies or practices of such entity, to have
resulted in a permanent termination of such individual's
employment).
Employer Securities: shares of Monsanto Common Stock
that are held in the Monsanto SIP immediately before the
Distribution Date and the shares of Chemicals Common Stock
distributed with respect thereto in the Distribution.
Enrolled Actuary: with respect to all U.S. Plans,
Towers Xxxxxx, and, with respect to all Foreign Plans, an
enrolled actuary or other party making actuarial or similar
determinations pursuant to this Agreement with respect to assets
or Liabilities relating to a particular employee
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benefit plan selected by Monsanto with the approval of
Chemicals, which approval shall not be unreasonably withheld.
ERISA: the Employee Retirement Income Security Act of 1974,
as amended, or any successor legislation, and the regulations
promulgated thereunder.
ESOP Shares: shares of Employer Securities that were acquired
with the proceeds of any loans or are otherwise governed by the
terms of Section 19 of the Monsanto SIP or the corresponding
provisions of the Chemicals SIP.
Existing Monsanto ESOP Security: each of the Monsanto ESOP
Notes, the Monsanto ESOP Debentures and the Monsanto ESOP Loans.
Foreign Plan: any Plan maintained outside of the United
States primarily for the benefit of individuals substantially all
of whom are nonresident aliens with respect to the United States,
other than the TCN Policy.
Fraction: the ratio of the aggregate unpaid principal amount
of the Chemicals ESOP Securities, determined immediately after the
restructuring provided for in Section 2.02(c), to the aggregate
unpaid principal amount of the Existing Monsanto ESOP Securities,
determined immediately before such restructuring.
Hourly Pension Plan: the Monsanto Company Hourly-Paid
Employees' Pension Plan.
Monsanto: defined in the preamble.
Monsanto Common Stock: defined in the recitals.
Monsanto Employee: any individual who is, as of the
Distribution Date, identified on the records of Monsanto as being
an Employee of any member of the Monsanto Group, other than those
individuals working through the Retiree Resources Corps.
Monsanto ESOP: the Monsanto Employee Stock Ownership Plan
component of the Monsanto SIP.
Monsanto ESOP Debentures: the 8.13% Guaranteed Amortizing
ESOP Debentures issued by the Monsanto SIP Trust.
Monsanto ESOP Loans: the $50,000,000 promissory note entered
into on December 16, 1991 between Monsanto and the
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Monsanto SIP Trust and the $3,675,800 promissory note entered
into on December 27, 1996 between Monsanto and the Monsanto SIP
Trust.
Monsanto ESOP Notes: the 7.09% Guaranteed Amortizing ESOP
Notes due December 15, 2000 issued by the Monsanto SIP Trust.
Monsanto ESOP Suspense Account: the ESOP Suspense Account
established pursuant to Section 19 of the Monsanto SIP.
Monsanto Foreign Plan: a Foreign Plan provided by,
contributed to or sponsored by one or more members of the Monsanto
Group.
Monsanto Former Employee: any individual who was, at any time
before the Distribution Date, an Employee of any member of the
Pre-Distribution Group, and who is not a Monsanto Employee, a
Chemicals Employee or a Chemicals Former Employee; provided that,
if at any time on or before December 31, 1997, Chemicals and
Monsanto determine that any one or more individuals were identified
as Monsanto Former Employees in error and should have been
identified as Chemicals Former Employees, and agree to correct
such error, such individuals shall be considered Chemicals Former
Employees, and Chemicals and Monsanto shall use their reasonable
best efforts to implement the terms of this Agreement as they apply
to such individuals as if such individuals had been correctly
identified as of the Distribution Date.
Monsanto Incentive Plans: the Monsanto Company Management
Incentive Plan of 1984, the Xxxxxx Monsanto Stock Option Plan of
1986, the Monsanto Company Management Incentive Plan of 1988/I, the
Monsanto Company Management Incentive Plan of 1988/II, the
NutraSweet/Monsanto Stock Plan of 1991, the Monsanto Company
Management Incentive Plan of 1994, the Xxxxxx/Monsanto Stock Plan
of 1994, the NutraSweet/Monsanto Stock Plan of 1994, the Monsanto
Management Incentive Plan of 1996 and the Monsanto Shared Success
Stock Option Plan.
Monsanto Option: an option to purchase shares of Monsanto
Common Stock granted pursuant to any of the Monsanto Incentive
Plans.
Monsanto Participant: any individual who is a Monsanto
Employee, a Monsanto Former Employee, or a Beneficiary of such an
individual.
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Xxxxxxxx Xxxxxxx Xxxx: the Monsanto Company Employees'
Pension Plan.
Monsanto Ratio: the amount obtained by dividing (i) the
average of the daily high and low trading prices on the NYSE
Composite Tape, as reported in the Wall Street Journal, for the
Monsanto Common Stock with due bills on each of the five trading
days prior to the Distribution Date, by (ii) the excess of (A) the
amount described in clause (i) over (B) one-fifth of the average
of the daily high and low trading prices on the NYSE Composite
Tape, as reported in the Wall Street Journal, for the Chemicals
Common Stock on a when-issued basis on each of such five trading
days.
Monsanto Restricted Stock: restricted shares of Monsanto
Common Stock granted pursuant to, and subject to forfeiture under,
any of the Monsanto Incentive Plans.
Monsanto SAR: a stock appreciation right with respect to
Monsanto Common Stock granted pursuant to any of the Monsanto
Incentive Plans.
Monsanto SIP: the Monsanto Savings and Investment Plan.
Monsanto SIP Trust: the Monsanto Defined Contribution and
Employee Stock Ownership Trust.
Monsanto U.S. Welfare Plan: any Monsanto Welfare Plan that is
a U.S. Plan.
Monsanto Welfare Plan: any Welfare Plan of one or more
members of the Monsanto Group.
Multiple Employer Plan: defined in Section 2.01(b)(i).
New Monsanto ESOP Security: defined in Section 2.02(c).
New Monsanto Option: defined in Section 2.04(b).
New Monsanto SAR: defined in Section 2.04(b).
Pension Plan Agreement: defined in Section 2.01(b)(i).
Plan: any written or unwritten plan, policy, program, payroll
practice, ongoing arrangement, trust, fund,
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contract, insurance policy or other agreement or funding vehicle
provided by, contributed to or sponsored by one or more members of
the Monsanto Group or the Chemicals Benefits Group, providing
benefits to Monsanto Participants or Chemicals Participants,
regardless of whether it is mandated under local law or negotiated
or agreed to as a term or condition of employment or otherwise,
and regardless of whether it is governmental, private, funded,
unfunded, financed by the purchase of insurance, contributory or
noncontributory.
Pre-Adjustment Option: defined in Sections 2.04(c) and (d).
Pre-Adjustment SAR: defined in Sections 2.04(c) and (d).
Pre-Distribution Group: the Monsanto Group and the Chemicals
Benefits Group.
Qualified Plan: a Plan that is an "employee pension benefit
plan" as defined in Section 3(2) of ERISA that constitutes, or is
intended in good faith to constitute, a qualified plan under
Section 401(a) of the Code.
Retained Chemicals Inactive Participant: any Chemicals Former
Employee who is (i) a retired or terminated vested salaried
participant in the Monsanto Pension Plan whose termination under
the Monsanto Pension Plan occurred after December 31, 1985 or (ii)
a retired or terminated vested hourly participant in the Monsanto
Pension Plan whose termination under the Monsanto Pension Plan
occurred after December 31, 1996, or a Beneficiary of any such
Chemicals Former Employee.
Special Effective Date: defined in Section 2.01(c).
Split Dollar Life Insurance Program: the Monsanto Executive
Life Insurance Program, including all individual life insurance
contracts, split dollar agreements and collateral assignments
thereunder.
Successor Plan: defined in Section 2.01(b)(i).
Supplemental Retirement Agreement: any agreement between any
member of the Pre-Distribution Group and any single Monsanto
Employee, Monsanto Former Employee, Chemicals Employee or
Chemicals Former Employee providing for post-retirement income,
pension or welfare benefits (other
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than pursuant to a Welfare Plan, a Qualified Plan, a Supplemental
Retirement Plan or the TCN Policy).
Supplemental Retirement Plan: a U.S. Plan that is (i) an
"employee pension benefit plan" within the meaning of Section 3(2)
of ERISA but is not a Qualified Plan, or (ii) an excess benefit
plan under ERISA, including the Monsanto Company ERISA Parity
Pension Plan, the Monsanto Company ERISA Parity Savings and
Investment Plan and the Monsanto Company Supplemental Retirement
Plan.
TCN Policy: The Monsanto Company Third Country National
Policy.
Transition Services Employee: defined in Section 4.05.
U.S. Deferred Compensation Plan: a U.S. Plan, other than a
Qualified Plan or a Supplemental Retirement Plan, providing
deferred compensation.
U.S. Plan: any Plan that is not a Foreign Plan, other than
the TCN Policy.
Welfare Plan: any Foreign Plan or U.S. Plan that is an
"employee welfare benefit plan" as defined in Section 3(1) of
ERISA (whether or not such plan is subject to ERISA).
ARTICLE II
U.S. PLANS AND STOCK PLANS
2.01 RETIREMENT PLANS. Monsanto and Chemicals shall take all
steps necessary or appropriate so that the provisions of this Section
2.01 are implemented in a timely fashion, as more fully set forth
below.
(a) ASSUMPTION OF HOURLY PENSION PLAN BY CHEMICALS. Effective
no later than as of the Distribution Date, and subject to Section
5.02(a): (i) all Liabilities to or with respect to Monsanto
Participants under the Hourly Pension Plan shall be transferred from
the Hourly Pension Plan to the Monsanto Pension Plan, and the Monsanto
Pension Plan shall assume and be solely responsible for such
Liabilities; (ii) there shall be transferred from the master trust
account for the Hourly Pension Plan to the master trust account for the
Monsanto Pension Plan a pro rata portion thereof, representing the
amount of assets required to be transferred as a result of such
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transfer and assumption of Liabilities, as reasonably and equitably
determined by the Enrolled Actuary in accordance with Section 414(l) of
the Code; and (iii) Chemicals shall assume sponsorship of the Hourly
Pension Plan. The steps taken pursuant to the foregoing shall include
the appointment or reappointment by Chemicals (by action of its Board
of Directors or its delegee after the Distribution Date to approve or
ratify such appointment or reappointment) of all trustees, custodians,
recordkeepers and other fiduciaries and service providers to the Hourly
Pension Plan, and the replacement of the existing named fiduciary of
the Hourly Pension Plan.
(b) SUCCESSOR PLAN.
(i) Monsanto and Chemicals shall enter into, on or
before the Distribution Date, one or more written agreements (the
"Pension Plan Agreement") providing for the transfer to and assumption
by a defined benefit pension plan that is a Qualified Plan (the
"Successor Plan") of certain assets and liabilities of the Monsanto
Pension Plan, as set forth in Section 2.01(b)(ii) below. The Successor
Plan may be a Plan of which both Monsanto and Chemicals are sponsors (a
"Multiple Employer Plan"), in which event the Pension Plan Agreement
shall also provide for its continued operation after the Distribution
Date. Alternatively, the Successor Plan may consist of one or more
Plans sponsored exclusively by Chemicals and/or any other member of the
Chemicals Benefits Group. All matters relating to the funding and
operation of the Multiple Employer Plan (if any) and to Liabilities and
obligations with respect to the Successor Plan shall be governed by the
Pension Plan Agreement, except as otherwise specified below.
(ii) Except as specifically set forth in Section 5.02(a),
subject to the completion of the asset transfer described in the next
sentence, and effective as of the Distribution Date: (A) the Monsanto
Pension Plan shall transfer to the Successor Pension Plan, and the
Successor Pension Plan and the members of the Chemicals Benefits Group
shall assume and be responsible for, (I) all Liabilities of the
Monsanto Pension Plan with respect to benefits accrued by Chemicals
Employees through the Distribution Date, and (II) all Liabilities of
the Monsanto Pension Plan with respect to Chemicals Former Employees,
other than Retained Chemicals Inactive Participants; and (B) if the
Successor Plan is not a Multiple Employer Plan, then the members of the
Monsanto Group shall have no responsibility for such Liabilities. As
soon as practicable after the Distribution Date, there shall be
transferred from the trust funding the Monsanto Pension Plan to the
trust designated to fund the Successor Pension Plan a pro rata portion
of each of the assets
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thereof, representing the amount of assets required to be transferred
as a result of such transfer and assumption of Liabilities, as
reasonably and equitably determined by the Enrolled Actuary in
accordance with Section 414(l) of the Code.
(c) TRANSITION FROM MULTIPLE EMPLOYER PLAN TO HOURLY PLAN. If
the Successor Pension Plan is a Multiple Employer Plan, then (i) from
and after the Distribution Date until the end of the calendar year in
which the Distribution Date occurs, the Chemicals Employees whose
accrued benefits are transferred to the Successor Pension Plan pursuant
to Section 2.01(b)(ii) shall be entitled to the accrual of benefits
under the Successor Pension Plan on the same terms and conditions as
were in effect for them under the Monsanto Pension Plan immediately
before the Distribution Date (including the accrual of a benefit equal
to four percent of their prior plan account balance under the Monsanto
Pension Plan as transferred to the Multiple Employer Plan), and (ii)
from and after the first day of the first calendar year beginning after
the Distribution Date (the "Special Effective Date"), the Chemicals
Employees whose accrued benefits are transferred to the Multiple
Employer Plan pursuant to Section 2.01(b)(ii) shall be entitled to the
accrual of benefits under the Hourly Pension Plan on the same terms and
conditions as were in effect for them under the Multiple Employer Plan
immediately before the Special Effective Date (including the continued
accrual of a benefit equal to four percent of their prior plan account
balance under the Multiple Employer Plan, although such balance will
not have been transferred to the Hourly Pension Plan).
(d) IMPLEMENTATION. Chemicals and Monsanto shall, in
connection with the actions taken pursuant to this Section 2.01,
cooperate in making any and all appropriate filings required under the
Code or ERISA, and the regulations thereunder and any applicable
securities laws, implementing all appropriate communications with
participants, transferring appropriate records, and taking all such
other actions as may be necessary and appropriate to implement the
provisions of this Section 2.01 in a timely manner.
2.02 THE SIP.
(a) Effective as of the Distribution Date, Chemicals shall
establish the Chemicals SIP and a related, separate trust (the
"Chemicals SIP Trust"), qualified in accordance with Section 401(a) of
the Code and exempt from taxation under Section 501(a) of the Code,
which Plan shall include an employee stock ownership plan, to assume
Liabilities of and receive the transfer of assets from the Monsanto SIP
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and the Monsanto SIP Trust as provided for in this Section 2.02.
(b) Monsanto and Chemicals shall take all actions as may be
necessary or appropriate in order to effect the transfer to the
Chemicals SIP and the Chemicals SIP Trust, on or as soon as practicable
after the Distribution Date, of the balances of all accounts
established pursuant to and/or governed by the Monsanto SIP of the
participants in the Monsanto SIP who are, as of the date of transfer,
Chemicals Participants other than Retained Chemicals Inactive
Participants. The transfer of such accounts shall be made (i) in kind,
to the extent the assets thereof consist of Employer Securities, and
(ii) otherwise in cash, securities, other property or a combination
thereof, as agreed by Monsanto and Chemicals, but shall be effected,
where practicable, in kind, so as to preserve each such participant's
investment elections as in effect on the date of such transfer. To the
extent the assets transferred to the Chemicals SIP in accordance with
the foregoing consist of Employer Securities, the portion of such
Employer Securities that shall be ESOP Shares shall equal the number of
such Employer Securities multiplied by a fraction, the numerator of
which is the number of ESOP Shares held in the Monsanto SIP immediately
before the Distribution Date and the denominator of which is the number
of Shares of Employer Securities held in the Monsanto SIP immediately
before the Distribution Date.
(c) Effective as of or as soon as practicable after the
Distribution Date, one or more of the Existing Monsanto ESOP Securities
shall be restructured into two separate obligations, with one of such
obligations (each, a "Chemicals ESOP Security") being assumable or
issued by the Chemicals SIP and the remainder thereof (each, a "New
Monsanto ESOP Security") being issued by the Monsanto SIP. The
aggregate principal amount of the Chemicals ESOP Securities shall be as
nearly as possible equal to 20 percent of the aggregate principal
amount of the Existing Monsanto ESOP Securities immediately before such
restructuring, and the aggregate principal amount of the New Monsanto
ESOP Securities and any Existing Monsanto ESOP Securities that are not
so restructured shall equal the excess of (i) the aggregate principal
amount of the Existing Monsanto ESOP Securities immediately before such
restructuring over (ii) the aggregate principal amount of the Chemicals
ESOP Securities. The Chemicals ESOP Securities may include one or more
loans from Chemicals and/or one or more loans from Monsanto that are
assignable to Chemicals (collectively, the "Chemicals ESOP Loan").
Monsanto and Chemicals shall use their reasonable best efforts to cause
the terms of the Chemicals ESOP Securities and New Monsanto ESOP
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Securities to be as favorable to Chemicals and the Chemicals SIP Trust
and to Monsanto and the Monsanto SIP Trust, respectively, as the terms
of the Existing Monsanto ESOP Securities, to the extent possible. As
soon as practicable after the Distribution Date: (i) the Chemicals SIP
Trust shall assume all obligations of the Monsanto SIP Trust (if any)
under the Chemicals ESOP Securities; (ii) Monsanto shall be released
from any guarantees it has given with respect to the Chemicals ESOP
Securities, and Chemicals shall provide such guarantees; and (iii)
Monsanto shall assign all of its rights (if any) under the Chemicals
ESOP Loan to Chemicals. Subject to and upon the completion of the
restructuring, assumption, release and assignment described in the
preceding sentences of this Section 2.02(c), the trustee of the
Monsanto SIP Trust shall transfer to the Chemicals SIP Trust a pro rata
portion of each of the assets held in each of the ESOP Interim Account,
the ESOP Payment Account and the Monsanto ESOP Suspense Account,
representing a percentage of such assets equal to the Fraction, and
such accounts shall be accepted by such plan and trust.
(d) Chemicals and Monsanto shall cooperate in making all
appropriate filings required under the Code or ERISA, and the
regulations thereunder and any applicable securities laws, implementing
all appropriate communications with participants, maintaining and
transferring appropriate records, and taking all such other actions as
may be necessary and appropriate to implement the provisions of this
Section 2.02 and to cause the transfers of assets pursuant to Sections
2.02(b) and 2.02(c) to take place as soon as practicable after the
Distribution Date; provided, however, that such transfers shall not
take place until as soon as practicable after the receipt of an opinion
of counsel satisfactory to Monsanto to the effect that the Chemicals
SIP is in form qualified under Section 401(a) of the Code and in
compliance with Section 4975 of the Code and the related trust is in
form exempt under Section 501(a) of the Code.
(e) Except as specifically set forth in this Section 2.02 or
in Section 5.02(a), subject to the completion of the transfer provided
for in Section 2.02(a), and effective as of the Distribution Date, the
members of the Chemicals Benefits Group and the Chemicals SIP shall
assume or retain, as the case may be, and shall be solely responsible
for, all Liabilities of the Pre-Distribution Group to or with respect
to Chemicals Participants other than Retained Chemicals Inactive
Participants under the Monsanto SIP. The members of the Chemicals
Benefits Group and the Chemicals SIP shall be solely responsible for
all Liabilities arising out of or relating to the Chemicals SIP.
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2.03 WELFARE PLANS.
(a) Except as specifically set forth in this Section 2.03,
Chemicals shall take, and shall cause the other members of the
Chemicals Benefits Group to take, all actions necessary or appropriate
to establish, on or before the Distribution Date, Chemicals U.S.
Welfare Plans to provide each Chemicals Participant in the United
States with benefits substantially similar to the benefits provided to
him or her under the Monsanto U.S. Welfare Plans. From and after the
Distribution Date, except as specifically set forth in Section 5.02(a),
the members of the Chemicals Benefits Group shall assume or retain, as
the case may be, and shall be solely responsible for, all Liabilities
of the Pre-Distribution Group in connection with claims by or in
respect of Chemicals Participants in the United States for benefits
under the Monsanto U.S. Welfare Plans and the Chemicals U.S. Welfare
Plans, whether incurred before, on or after the Distribution Date.
Monsanto agrees to provide Chemicals or its designated representative
with such information (in the possession of a member of the Monsanto
Group and not already in the possession of a member of the Chemicals
Benefits Group) as may be reasonably requested by Chemicals in order to
carry out the requirements of this Section 2.03.
(b) Prior to the Distribution Date, Chemicals shall establish
a flexible spending account Plan to assume Liabilities of and receive
the transfer of assets from the Monsanto Flexible Spending Account
Plan, and Monsanto and Chemicals shall take all other action necessary
or appropriate so that, effective as of the Distribution Date,
Chemicals shall assume and be solely responsible for all Liabilities to
Chemicals Employees under the Monsanto Flexible Spending Account Plan.
(c) Monsanto and Chemicals shall take all actions necessary
or appropriate to assign to Chemicals, effective as of the Distribution
Date, all of the rights and interests of the Pre-Distribution Group in
the split dollar life insurance policies insuring the lives of
Chemicals Participants pursuant to the Split Dollar Life Insurance
Program (such policies, the "Assigned Split Dollar Policies"). Such
actions shall include Chemicals' acceptance of any collateral
assignments, policy endorsements or such other documentation executed
by or on behalf of such Chemicals Participants or any trustee of any
trust to which any Chemicals Participant's policy rights or incidents
of ownership under the Assigned Split Dollar Policies have been
assigned, and Chemicals' entering into such agreements as may be
necessary to fulfill
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any obligations of Monsanto to any insurance company or insurance agent
or broker under the Assigned Split Dollar Policies. From and after the
date of the assignment of any Assigned Split Dollar Policy to
Chemicals, Chemicals shall assume and be solely responsible for all
Liabilities, and shall be entitled to all benefits, of the
Pre-Distribution Group to the applicable Chemicals Participant under
the Split Dollar Life Insurance Program, including under such policy
and any related agreements entered into by such Chemicals Participant
or any such trustee.
(d) Monsanto and Chemicals shall take all action necessary or
appropriate to cause Metropolitan Life Insurance Company to partition
between Monsanto and Chemicals, effective as of the Distribution Date,
the rate stabilization reserves maintained in connection with the
Monsanto Company Salaried and Non-Union Hourly Employees' Term Life
Insurance Plan, the Monsanto Company Salaried and Non-Union Employees'
Dependent Term Life Insurance Plan, the Monsanto Company Hourly-Paid
Employees' Group Life Insurance and Sickness Plan -- Union, and the
Monsanto Company Optional Life Insurance Plan -- Union, based upon the
relative dollar amount of premiums to be paid by each of them with
respect to the coverage to which such reserves relate, determined
immediately after the Distribution Date.
2.04 STOCK PLANS. Monsanto and Chemicals shall take all
action necessary or appropriate so that each Monsanto Option or
Monsanto SAR is adjusted and/or replaced as set forth below.
(a) This Section 2.04(a) sets forth the treatment in the
Distribution of each Monsanto Option and Monsanto SAR granted during
calendar year 1997 that is, as of the Distribution Date, outstanding
and held by a Chemicals Employee. Each such Monsanto Option and
Monsanto SAR shall be replaced with a Chemicals Option or Chemicals
SAR, as applicable, (i) with respect to a number of shares of Chemicals
Common Stock equal to the number of shares subject to such Monsanto
Option or Monsanto SAR, as applicable, immediately before such
replacement, times the Chemicals Ratio (and then, if any resultant
fractional share of Chemicals Common Stock exists, rounded up to the
nearest whole share), and (ii) with a per-share exercise price equal to
the per-share exercise price of such Monsanto Option or Monsanto SAR,
as applicable, immediately before such replacement, divided by the
Chemicals Ratio (and then, if necessary, rounded down to the nearest
whole cent).
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(b) This Section 2.04(b) sets forth the treatment in the
Distribution of each of the following Monsanto Options and Monsanto
SARs: (i) each Monsanto Option and Monsanto SAR granted during calendar
year 1997 that is, as of the Distribution Date, outstanding and held by
a Monsanto Participant; (ii) each other Monsanto Option and Monsanto
SAR held by a Monsanto Participant who is an Employee of a member of
the Monsanto Group other than Monsanto; and (iii) each Monsanto Option
that is held by a Monsanto Former Employee, a Chemicals Former Employee
or a Beneficiary of a Monsanto Former Employee or a Chemicals Former
Employee. Each such Monsanto Option and Monsanto SAR shall be adjusted
to constitute an option (a "New Monsanto Option") or stock appreciation
right (a "New Monsanto SAR"), as applicable, (i) with respect to a
number of shares of Monsanto Common Stock equal to the number of shares
subject to such Monsanto Option or Monsanto SAR, as applicable,
immediately before such adjustment, times the Monsanto Ratio (and then,
if any resultant fractional share of Monsanto Common Stock exists,
rounded up to the nearest whole share), and (ii) with a per-share
exercise price equal to the per-share exercise price of such Monsanto
Option or Monsanto SAR, as applicable, immediately before such
adjustment, divided by the Monsanto Ratio (and then, if necessary,
rounded down to the nearest whole cent).
(c) This Section 2.04(c) sets forth the treatment in the
Distribution of each Monsanto Option and Monsanto SAR granted before
calendar year 1997 that is, as of the Distribution Date, outstanding
and held by either (i) a Monsanto Participant who is an Employee of
Monsanto, or (ii) a Chemicals Employee who is not listed on Schedule I
hereto. Each such Monsanto Option or Monsanto SAR (each a
"Pre-Adjustment Option" or "Pre-Adjustment SAR," as applicable) shall
be replaced with two options or stock appreciation rights, as
applicable (one a New Monsanto Option or New Monsanto SAR, as
applicable, and the other a Chemicals Option or Chemicals SAR, as
applicable), as follows. With respect to each such New Monsanto Option
or New Monsanto SAR, as applicable, (i) the number of shares of
Monsanto Common Stock subject to such New Monsanto Option or New
Monsanto SAR, as applicable, shall equal the number of shares of
Monsanto Common Stock subject to the Pre-Adjustment Option or
Pre-Adjustment SAR, as applicable, and (ii) the per-share exercise
price of such New Monsanto Option or New Monsanto SAR, as applicable,
shall equal the per-share exercise price of such Pre-Adjustment Option
or Pre-Adjustment SAR, as applicable, divided by the Monsanto Ratio (if
necessary, rounded down to the nearest whole cent). With respect to
each such Chemicals Option or Chemicals SAR, as applicable, (i) the
number of shares of Chemicals Common Stock subject to such Chemicals
Option or
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Chemicals SAR, as applicable, shall equal one-fifth of the number of
shares of Monsanto Common Stock subject to the Pre-Adjustment Option or
Pre-Adjustment SAR, as applicable (if necessary, rounded up to the
nearest whole share), and (ii) the per-share exercise price of such New
Chemicals Option or New Chemicals SAR, as applicable, shall equal the
per-share exercise price of such Pre-Adjustment Option or
Pre-Adjustment SAR, as applicable, divided by the Chemicals Ratio (and
then, if necessary, rounded down to the nearest whole cent).
(d) This Section 2.04(d) sets forth the treatment in the
Distribution of each Monsanto Option and Monsanto SAR granted before
calendar year 1997 that is, as of the Distribution Date, outstanding
and held by a Chemicals Employee listed on Schedule I hereto. Each such
Monsanto Option or Monsanto SAR (each a "Pre-Adjustment Option" or
"Pre-Adjustment SAR," as applicable) shall be replaced with two options
or stock appreciation rights, as applicable (one a New Monsanto Option
or New Monsanto SAR, as applicable, and the other a Chemicals Option or
Chemicals SAR, as applicable), as follows. With respect to each such
New Monsanto Option or New Monsanto SAR, as applicable, (i) the number
of shares of Monsanto Common Stock subject to such New Monsanto Option
or New Monsanto SAR, as applicable, shall equal the number of shares of
Monsanto Common Stock subject to such Pre-Adjustment Option or
Pre-Adjustment SAR, as applicable, times the Monsanto Ratio times 0.76
(and then, if any resultant fractional share of Monsanto Common Stock
exists, rounded up to the nearest whole share) and (ii) the per-share
exercise price of such New Monsanto Option or New Monsanto SAR, as
applicable, shall equal the per-share exercise price of such
Pre-Adjustment Option or Pre-Adjustment SAR, as applicable, divided by
the Monsanto Ratio (and then, if necessary, rounded down to the nearest
whole cent). With respect to each such Chemicals Option or Chemicals
SAR, as applicable, (i) the number of shares of Chemicals Common Stock
subject to such Chemicals Option or Chemicals SAR, as applicable, shall
equal the number of shares of Monsanto Common Stock subject to such
Pre-Adjustment Option or Pre-Adjustment SAR, as applicable, times the
Chemicals Ratio times 0.24 (and then, if any resultant fractional share
of Chemicals Common Stock exists, rounded up to the nearest whole
share), and (ii) the per-share exercise price of such New Chemicals
Option or New Chemicals SAR, as applicable, shall equal the per-share
exercise price of such Pre-Adjustment Option or Pre-Adjustment SAR, as
applicable, divided by the Chemicals Ratio (and then, if necessary,
rounded down to the nearest whole cent).
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(e) The terms and conditions of each New Monsanto Option, New
Monsanto SAR, Chemicals Option and Chemicals SAR issued pursuant to
this Section 2.04 shall be the same as those of the Monsanto Option or
Monsanto SAR it replaces, except as otherwise specifically provided in
this Section 2.04 and except that in the case of such options and SARs
issued to Chemicals Employees, references to employment with or
termination of employment with Monsanto and its affiliates shall be
changed to references to employment with or termination of employment
with Chemicals and its affiliates. Chemicals may, in its discretion,
adjust any associated performance goals as may be appropriate to
reflect the effects of the Distribution.
(f) Effective as of the Distribution Date, (i) Chemicals
shall assume and be solely responsible for all Liabilities (whether
accrued, contingent or otherwise) of the Pre-Distribution Group with
respect to dividend equivalent units on New Monsanto Options, New
Monsanto SARs and awards of Monsanto Restricted Stock held by Chemicals
Participants (although such dividend equivalent units shall continue to
accrue based upon the payment of dividends by Monsanto), and (ii)
Monsanto shall assume or retain, as applicable, and be solely
responsible for all Liabilities (whether accrued, contingent or
otherwise) of the Pre-Distribution Group with respect to dividend
equivalent units on Chemicals Options and Chemicals SARs issued to
Monsanto Participants pursuant to this Section 2.04 and shares of
Chemicals Stock distributed with respect to awards of Monsanto
Restricted Stock ("Chemicals Restricted Stock") held by Monsanto
Participants (although such dividend equivalent units shall accrue
based upon the payment of dividends by Chemicals). Except as provided
in the preceding sentence, effective as of the Distribution Date,
Chemicals shall assume and be solely responsible for all Liabilities of
the Pre-Distribution Group with respect to Chemicals Options, Chemicals
SARs and Chemicals Restricted Stock, and Monsanto shall retain and be
solely responsible for all Liabilities of the Pre-Distribution Group to
or with respect to Monsanto Options, Monsanto SARs and Monsanto
Restricted Stock and New Monsanto Options and New Monsanto SARs.
(g) Notwithstanding the foregoing provisions of this Section
2.04, the number of shares subject to a Chemicals Option, Chemicals
SAR, New Monsanto Option or New Monsanto SAR issued to an individual
listed on Schedule II hereto shall be rounded to the nearest whole
share (whether up or down) rather than up to the nearest whole share.
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(h) Notwithstanding the foregoing provisions of this Section
2.04, if either Monsanto or Chemicals determines that because of legal,
accounting, tax, and/or regulatory rules or requirements applicable to
options or restricted stock in any jurisdiction outside the United
States, compliance with any of its obligations under this Section 2.04
with respect to options, stock appreciation rights or restricted stock
held by or to be issued to any individual employed outside the United
States would be impossible, illegal, impracticable or unreasonably
expensive, it shall so notify the other party, and Chemicals and
Monsanto shall use their best efforts to agree to appropriate
alternative arrangements.
2.05 STOCK PURCHASE PLANS.
(a) Monsanto has taken, or shall take as soon as practicable
after the date hereof, such actions as may necessary or appropriate to
accomplish the following with respect to the Monsanto Employee Stock
Purchase Plan.
(i) Monsanto has suspended the acceptance of
applications by Monsanto Employees and Chemicals Employees to
participate in the Monsanto Employee Stock Purchase Plan as of July 18,
1997, pending completion of the Distribution.
(ii) Each Monsanto Employee and each Chemicals Employee
who has any outstanding application under the Monsanto Employee Stock
Purchase Plan immediately before the record date for the Distribution
shall be given the opportunity to choose among the following
alternatives with respect to such application: (A) such application may
be settled in full before the record date for the Distribution if such
Employee pays the purchase price for the remaining unpurchased shares
of Monsanto Common Stock thereunder in full before the record date, in
which event such Employee shall become the owner of such Monsanto
Common Stock before the record date and will, accordingly, be entitled
to receive the Distribution with respect thereto (assuming such
Employee remains the owner of such Monsanto Common Stock as of the
record date for the Distribution); (B) such application may be
cancelled without penalty before the Distribution Date; or (C) such
application may continue in effect following the Distribution Date,
subject to adjustment as provided in the next sentence. Each
application under the Monsanto Employee Stock Purchase Plan that is
outstanding as of the Distribution Date shall be adjusted, immediately
after the Distribution Date, so that it (I) covers a number of shares
of Monsanto Common Stock equal to the number of shares covered by such
application immediately before such adjustment, times the Monsanto
Ratio (and then, if any resultant fractional share of Monsanto Common
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Stock exists, rounded up to the nearest whole share), and (II) has a
per-share purchase price equal to the per-share purchase price of such
application, immediately before such adjustment, divided by the
Monsanto Ratio (and then, if necessary, rounded down to the nearest
whole cent).
(iii) From and after the Distribution Date, Chemicals
Employees shall be permitted to complete the purchase of Monsanto
Common Stock pursuant to applications under the Monsanto Stock Purchase
Plan that continue in effect pursuant to clause (C) of Section
2.05(a)(ii), in accordance with the terms and conditions of such
applications and the Monsanto Employee Stock Purchase Plan, except that
(A) such terms and conditions shall be adjusted pursuant to the last
sentence of said Section 2.05(a)(ii) and (B) employment with any member
of the Chemicals Benefits Group shall be treated as if it were
employment with Monsanto. From and after the Distribution Date,
Chemicals shall make all payroll deductions required with respect to
such applications of Chemicals Employees and shall remit such
deductions to Monsanto on their behalf in satisfaction of the purchase
price of shares of Monsanto Common Stock after the Distribution Date.
(b) Notwithstanding any other provision of this Agreement,
for purposes of the Monsanto Executive Stock Purchase Incentive Plan,
the Distribution shall be considered to result in a termination of the
employment of Chemicals Employees effective as of the Distribution
Date, and Monsanto shall retain and be solely responsible for all
Liabilities under such plan.
2.06 NONQUALIFIED PLANS AND PROGRAMS.
(a) Except as specifically set forth in Section 5.02(a) and
effective as of the Distribution Date, the members of the Chemicals
Benefits Group shall assume and be solely responsible for all
Liabilities of the Pre-Distribution Group to or relating to Chemicals
Participants under all Cash Incentive Plans. Chemicals and Monsanto
shall cooperate in taking all actions necessary or appropriate to
adjust the performance goals and other terms and conditions of awards
under the Cash Incentive Plans for performance periods that begin
before and end after the Distribution Date as appropriate to reflect
the Distribution, including amending any Cash Incentive Plan or grant
thereunder, and obtaining any necessary consents of affected
participants.
(b) Except as specifically set forth in Section 5.02(a) and
effective as of the Distribution Date, Chemicals shall assume and be
solely responsible for all Liabilities of
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the Pre-Distribution Group to or relating to (i) Chemicals Participants
under the Supplemental Retirement Plans, except for Liabilities with
respect to benefits under the Monsanto Company ERISA Pension Parity
Plan and the Monsanto Company ERISA Parity Savings and Investment Plan
of Retained Chemicals Inactive Participants, and (ii) Supplemental
Retirement Agreements with Chemicals Employees. Chemicals and Monsanto
shall cooperate in taking all actions necessary or appropriate to
implement the foregoing, including amending any Supplemental Retirement
Plan or Supplemental Retirement Agreement and obtaining any necessary
consents of affected individuals.
(c) Except as specifically set forth in Section 5.02(a) and
effective as of the Distribution Date, Chemicals shall assume and be
solely responsible for all Liabilities of the Pre-Distribution Group to
or relating to Chemicals Participants under all U.S. Deferred
Compensation Plans.
ARTICLE III
FOREIGN PLANS AND TCN POLICY
3.01 GENERAL PRINCIPLES. This Section 3.01 sets forth certain
general principles relating to Foreign Plans; however, exceptions may
be made to those general principles as set forth in Section 3.12.
Monsanto and Chemicals shall take all actions necessary or appropriate
so that, effective no later than the Distribution Date, all Foreign
Plans have been divided and/or new Foreign Plans established (to the
extent necessary) so that all benefits of Monsanto Participants under
Foreign Plans (whether accrued or payable before, on or after the
Distribution Date) are provided by Monsanto Foreign Plans, and all
benefits of Chemicals Participants under Foreign Plans (whether accrued
or payable before, on or after the Distribution Date) are provided by
Chemicals Foreign Plans. If any Foreign Plan that is separated into a
Monsanto Foreign Plan and a Chemicals Foreign Plan in connection with
or in anticipation of the Distribution is funded through a trust,
insurance contract or other funding vehicle, then such funding vehicle
shall be divided between such Monsanto Foreign Plan and Chemicals
Foreign Plan in proportion to the relative projected benefit
obligations of such two Plans, determined immediately after such
separation takes place. Except as specifically provided in Section
5.02(a), from and after the Distribution Date: (i) the members of the
Monsanto Group and the Monsanto Foreign Plans shall assume or retain,
as applicable, and shall be solely responsible for, all Liabilities of
the Pre-Distribution Group arising out of or relating to the Monsanto
Foreign Plans; and (ii) the members of the Chemicals Benefits Group and
the Chemicals Foreign Plans shall assume or retain, as applicable,
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and shall be solely responsible for, all Liabilities arising out of or
relating to the Chemicals Foreign Plans.
3.02 EXCEPTIONS TO GENERAL PRINCIPLES. Monsanto and Chemicals
recognize that it is possible that, in certain cases, applicable law
may prohibit the implementation of the general principles set forth in
Section 3.01, or that there may be special circumstances making such
implementation inadvisable or impractical. In all such cases, such
general principles shall not be implemented and Monsanto and Chemicals
shall use best efforts to develop and implement an alternative
approach, and shall enter into such additional agreements as may be
necessary or appropriate in connection therewith. Exhibit A hereto also
sets forth certain exceptions to the general principles set forth in
Section 3.01.
3.03 TCN POLICY. From and after the Distribution Date, the
members of the Chemicals Benefits Group shall assume and be solely
responsible for all Liabilities of the Pre-Distribution Group to or
relating to benefits accrued through the Distribution Date by or with
respect to Chemicals Employees under the TCN Policy, and the members of
the Monsanto Group shall retain and be solely responsible for all other
Liabilities under the TCN Policy.
ARTICLE IV
GENERAL PROVISIONS
4.01 EMPLOYMENT TRANSFERS; SEVERANCE PAY.
(a) Chemicals and Monsanto shall take all steps necessary and
appropriate so that, on or immediately after the Distribution Date, all
individuals who have been selected to be Chemicals Employees are
employed, or (where employment does not continue by operation of law)
are offered employment, by a member of the Chemicals Benefits Group,
and all individuals who have been selected to be Monsanto Employees are
employed, or (where employment does not continue by operation of law)
are offered employment, by a member of the Monsanto Group. Such steps
shall include, where necessary or appropriate under local law, making
employment offers and/or transferring contracts of employment.
(b) Chemicals and Monsanto agree that, except as specifically
provided by law or otherwise in this Agreement, individuals who, in
connection with the Distribution, cease to be Monsanto Employees and
become Chemicals Employees shall not be deemed to have experienced a
termination or severance of employment from Monsanto and its
subsidiaries for purposes of any
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Monsanto Plan that provides for the payment of severance, redundancy,
salary continuation or similar benefits.
(c) Chemicals and the other members of the Chemicals Benefits
Group shall assume and be solely responsible for all Liabilities of the
Pre-Distribution Group in connection with claims made by or on behalf
of the following individuals in respect of severance, redundancy and
similar pay, salary continuation and similar obligations relating to
the termination or alleged termination of any such individual's
employment before, on or after the Distribution Date: (i) Chemicals
Employees and Chemicals Former Employees; and (ii) Employees who have
been designated as employed in the Chemicals Business who do not become
Chemicals Employees because they exercise their rights, under local
law, to refuse to transfer to the employment of a member of the
Chemicals Benefits Group. Notwithstanding any other provision of this
Agreement, individuals described in clause (ii) of the preceding
sentence shall be considered to be Chemicals Former Employees from and
after the date they cease to be Employees of Monsanto and/or the other
members of the Monsanto Group.
4.02 OTHER LIABILITIES. If at any time after the Distribution
Date, as a result of any increase or improvement by the Monsanto Group
or the Chemicals Group (the "Improving Party") after the Distribution
Date to the benefits that it provides to any Monsanto Former Employees
or Chemicals Former Employees or any Beneficiaries thereof pursuant to
any Plan (other than such an increase or improvement required by any
agreement in effect on the Distribution Date or by applicable law or
regulation) (a "Benefit Uplift"), any Chemicals Participant or Monsanto
Participant asserts a claim that he or she is entitled to a
corresponding Benefit Uplift for which the Chemicals Group or the
Monsanto Group (the "Other Party") would, absent this Section 4.02, be
responsible pursuant to this Agreement, then notwithstanding any other
provision of this Agreement, the Improving Party shall indemnify the
Other Party and hold it harmless from and against any Liabilities
resulting from such claim, which Liabilities shall be an Indemnifiable
Loss governed by Article IV of the Distribution Agreement; provided,
that the Improving Party and the Other Party shall cooperate in
satisfying any such Liabilities and accomplishing such indemnification
in a reasonable, tax-efficient manner wile at the same time keeping the
Other Party whole on a net after-tax basis, taking into account the
effect of any tax benefits and tax detriments to the Improving Party
and the Other Party as a result of the manner in which such Liabilities
are satisfied and such indemnification is accomplished.
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4.03 RECOGNITION OF MONSANTO EMPLOYMENT SERVICE, ETC. The
Chemicals Plans shall, to the extent permitted by applicable law,
recognize service before the Distribution with the Pre-Distribution
Group as service with the Chemicals Benefits Group. Each Chemicals
Welfare Plan shall, to the extent permitted by applicable law, provide
benefits to Chemicals Participants without interruption or change
solely as a result of the transition from the corresponding Monsanto
Welfare Plans, and, without limiting the generality of the foregoing:
(i) shall, to the extent applicable, recognize all amounts applied to
deductibles, out-of-pocket maximums and lifetime maximum benefits with
respect to Chemicals Participants under the corresponding Monsanto
Welfare Plan for the plan year that includes the Distribution Date and
for prior periods (if applicable); (ii) shall, to the extent
applicable, not impose any limitations on coverage of preexisting
conditions of Chemicals Participants except to the extent such
limitations applied to such Chemicals Participants under the
corresponding Monsanto Welfare Plan immediately before such Chemicals
Welfare Plan became effective; and (iii) shall not impose any other
conditions (such as proof of good health, evidence of insurability or a
requirement of a physical examination) upon the participation by
Chemicals Participants who were participating in the corresponding
Monsanto Welfare Plan immediately before such Chemicals Welfare Plan
became effective.
4.04 INDEMNIFICATION. All Liabilities retained or assumed by
or allocated to Chemicals or any other members of the Chemicals
Benefits Group pursuant to this Agreement shall be deemed to be
Chemicals Liabilities pursuant to the Distribution Agreement, and all
Liabilities retained or assumed by or allocated to Monsanto or any
other members of the Monsanto Group pursuant to this Agreement shall be
deemed to be Monsanto Liabilities pursuant to the Distribution
Agreement, and, in each case, shall be subject to the indemnification
provisions set forth in Article IV of the Distribution Agreement.
4.05 TRANSITION SERVICES. Certain Monsanto Employees and
certain Chemicals Employees ("Transition Services Employees") will be
employed, after the Distribution, in providing transition services to
the Chemicals Benefits Group and the Monsanto Group, respectively,
pursuant to certain transition services agreements between Monsanto and
Chemicals. If any Transition Services Employee terminates employment
with Monsanto or Chemicals, as applicable, during or at the expiration
of the term of the applicable transition services agreement as a result
of the elimination of his or her position, and becomes an employee of
any member of the Chemicals Benefits Group or any member of the
Monsanto Group, as applicable, within 90 days
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after such termination of employment, then Monsanto and Chemicals shall
use reasonable best efforts to provide such Transition Services
Employee with a smooth transition with respect to such Transition
Services Employee's employee benefits. Without limiting the generality
of the foregoing, Section 4.03 shall apply to each Transition Services
Employee described in the preceding sentence as if he or she had been a
Chemicals Employee or a Monsanto Employee, as applicable.
4.06 WORKERS COMPENSATION EXCLUDED. Notwithstanding any other
provision of this Agreement, this Agreement shall have no application
to, and shall not govern the allocation of, any Liabilities for or
relating to workers' compensation, which are governed by the
Distribution Agreement.
4.07 P4 JOINT VENTURE. To the extent that any provision of
this Agreement is inconsistent with the provisions of the P4 Joint
Venture Agreement as it relates to Employees or former Employees of the
P4 Joint Venture and their compensation and benefits under Plans, the
P4 Joint Venture Agreement shall prevail.
ARTICLE V
MISCELLANEOUS
5.01 GUARANTEE OF SUBSIDIARIES' OBLIGATIONS. Each of the
parties hereto shall cause to be performed, and hereby guarantees the
performance and payment of, all actions, agreements, obligations and
liabilities set forth herein to be performed or paid by any subsidiary
of such party which is contemplated by the Distribution Agreement to be
a subsidiary of such party on or after the Distribution Date.
5.02 AUDITS AND DISPUTES.
(a) (i) If any audit, examination or similar proceeding with
respect to any Monsanto Plan by the U.S. Internal Revenue Service, the
U.S. Department of Labor or any other governmental authority, or any
litigation arising out of such an audit, examination or similar
proceeding, that pertains (in whole or in part) to a period before the
Distribution Date results in the imposition of any Liability, then the
portion of such Liability that pertains to a period before the
Distribution Date (an "Audit Liability") shall be allocated between
Chemicals and Monsanto as set forth in this Section 5.02, provided that
the term "Audit Liability" shall not include any portion of such a
Liability that results from the loss of any
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compensation deduction or any related interest or penalties (which
shall be governed by the Tax Sharing Agreement).
(ii) To the extent that an Audit Liability takes the form
of a payment to any Chemicals Participant or of a benefit under a Plan
or a contribution to a trust or other funding vehicle relating to a
Plan, or interest on such a payment or contribution, there shall be
allocated to Chemicals the portion of such Audit Liability that is
attributable to Chemicals Participants.
(iii) Any Audit Liability that takes the form of a
penalty, fine or other liability imposed as a result of the manner in
which a Plan was administered (including as a result of the failure to
make a required filing or participant communication) and that is not
described in Section 5.02(a)(ii) shall be allocated between Chemicals
and Monsanto in accordance with their past practice before the
Distribution.
(iv) If an Audit Liability arises, the allocation of
which is not addressed in Section 5.02(a)(ii) or (iii), or if there
arises any other dispute concerning the allocation of Audit
Liabilities, such allocation or dispute shall be subject to Article VII
of the Distribution Agreement.
(b) In any case in which Chemicals or Monsanto shall disagree
with the determination of an amount which this Agreement requires to be
made by the Enrolled Actuary, each such disagreeing party shall have
the right, within 30 days after receipt of notice of such
determination, to engage, at its own expense, an independent expert to
make the determination of such amount. If the amount determined by such
independent experts should differ, such amount shall be reasonably and
equitably determined by another independent expert selected by
agreement between or among the Enrolled Actuary and such independent
experts.
(c) Any other dispute, controversy or claim arising out of or
relating to this Agreement shall be governed by Article VII of the
Distribution Agreement.
5.03 SHARING OF INFORMATION. Each of Monsanto and Chemicals
shall, and shall cause each of the other members of their respective
Groups to, provide to the other all such information in its possession
as the other may reasonably request to enable it to administer its
employee benefit plans and programs, and to determine the scope of, and
fulfill, its obligations under this Agreement. Such information shall,
to the extent reasonably practicable, be provided in the format and at
the times and places requested, but in no event shall
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the party providing such information be obligated to incur any direct
expense not reimbursed by the party making such request, nor to make
such information available outside its normal business hours and
premises. The right of the parties to receive information hereunder
shall, without limiting the generality of the foregoing, extend to any
and all reports, and the data underlying such reports, prepared by the
Enrolled Actuary in making any determination under this Agreement or by
any third party engaged pursuant to Section 5.02, and to information
necessary to determine whether performance goals and other terms and
conditions relating to awards adjusted pursuant to Section 2.04 have
been satisfied after the Distribution.
5.04 TERMINATION. This Agreement shall be terminated in the
event that the Distribution Agreement is terminated and the
Distribution abandoned prior to the Distribution Date. In the event of
such termination, neither party shall have any liability of any kind to
the other party.
5.05 RIGHTS TO AMEND OR TERMINATE PLANS; NO THIRD PARTY
BENEFICIARIES. No provision of this Agreement shall be construed (i) to
limit the right of Monsanto, any other member of the Monsanto Group,
Chemicals or any other member of the Chemicals Benefits Group to amend
any Plan or terminate any Plan, or (ii) to create any right or
entitlement whatsoever in any Employee, former Employer or Beneficiary,
including a right to continued employment or to any benefit under a
Plan or any other compensation. This Agreement is solely for the
benefit of the parties hereto and their respective subsidiaries and
should not be deemed to confer upon third parties any remedy, claim,
liability, reimbursement, claim of action or other right in excess of
those existing without reference to this Agreement.
5.06 COMPLETE AGREEMENT. This Agreement, the Schedules hereto
and the agreements and other documents referred to herein shall
constitute the entire agreement between the parties hereto with respect
to the subject matter hereof and shall supersede all previous
negotiations, commitments and writings with respect to such subject
matter.
5.07 GOVERNING LAW. Subject to applicable U.S. federal law,
this Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware (other than the laws regarding choice
of laws and conflicts of laws) as to all matters, including matters of
validity, construction, effect, performance and remedies.
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5.08 NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be given in accordance with the
provisions of Section 10.05 of the Distribution Agreement.
5.09 AMENDMENT AND MODIFICATION. This Agreement may be
amended, modified or supplemented only by a written agreement signed by
both of the parties hereto.
5.10 SUCCESSORS AND ASSIGNS. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their successors and permitted assigns, but neither
this Agreement nor any of the rights, interests and obligations
hereunder shall be assigned by any party hereto without the prior
written consent of the other party (which consent shall not be
unreasonably withheld or delayed).
5.11 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
5.12 INTERPRETATION. The Article and Section headings
contained in this Agreement are solely for the purpose of reference,
are not part of the agreement of the parties hereto and shall not in
any way affect the meaning or interpretation of this Agreement.
5.13 LEGAL ENFORCEABILITY. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.
Any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. Each party acknowledges that money damages would be an
inadequate remedy for any breach of the provisions of this Agreement
and agrees that the obligations of the parties hereunder shall be
specifically enforceable.
5.14 REFERENCES; CONSTRUCTION. References to any "Article,"
"Schedule" or "Section," without more, are to Articles, Schedules and
Sections to or of this Agreement. Unless otherwise expressly stated,
clauses beginning with the term "including" set forth examples only and
in no way limit the generality of the matters thus exemplified.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the day and year first above written.
MONSANTO COMPANY
By:
-------------------------
Name:
Title:
NEW CHEMICALS CORPORATION
By:
-------------------------
Name:
Title:
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