EXHIBIT 10.4

 

Form of

Terms and Conditions

Restricted Stock Unit Grant

 

You have received an Award of Restricted Stock Units (the “Units”) under the
[Monsanto Company Long-Term Incentive Plan][Monsanto Company 2005 Long-Term
Incentive Plan] (the “Plan”). The Grant Date and the number of Units initially
covered by this Award (the “Initial Number of Units”) are set forth in the
document you have received entitled “Restricted Stock Units Statement.” The
maximum number of Units that you may receive under this Award (the “Maximum
Number of Units”) is two times the Initial Number of Units. The Restricted Stock
Units Statement and these terms and conditions collectively constitute the Award
Certificate for the Units, and describe the provisions applicable to the Units.

1.            Definitions. Each capitalized term not otherwise defined herein
has the meaning set forth in the Plan or, if not defined in the Plan, in the
attached Restricted Stock Units Statement. The “Company” means Monsanto Company,
a Delaware corporation incorporated February 9, 2000.

2.            Nature of Units. The Units represent the right to receive, in
certain circumstances, a number of Shares determined in accordance with the
Restricted Stock Units Statement and these terms and conditions. Until such time
(if any) as Shares are delivered to you, you will not have any of the rights of
a common stockholder of the Company with respect to those Shares, your rights
with respect to the Units and those Shares will be those of a general creditor
of the Company, and you may not sell, assign, transfer, pledge, hypothecate,
give away, or otherwise dispose of the Units. Any attempt on your part to
dispose of the Units will result in their being forfeited. However, you shall
have the right to receive a Dividend Equivalent Payment with respect to the
Units (if any) that vest pursuant to this Award, subject to withholding pursuant
to paragraph 6 below. “Dividend Equivalents” means cash in an amount equal to
the aggregate cash dividends that would have been paid to you if you had been
the record owner, on each record date for a cash dividend during the period from
the Grant Date through the Nondeferred Settlement Date (as defined below) for
the Units, of a number of Shares equal to the number of Units that vest under
this Award. Dividend Equivalents shall be paid to you in cash on the Nondeferred
Settlement Date. You shall not be entitled to receive any payments with respect
to any non-cash dividends or other distributions that may be made with respect
to the Shares. The “Nondeferred Settlement Date” means (a) as to Units to which
a valid Deferral Election (as defined below) is not made, the date on which the
Units are settled by delivery of shares pursuant to Section 4(a) or Section 5
below, and (b) as to Units for which a valid Deferral Election is made, the date
on which the Units would have been settled by delivery of shares pursuant to
Section 4(a) or Section 5 below, if such Deferral Election had not been made.

3.           Vesting of Units. (a) 162(m) Performance Goal. In order to vest in
the Maximum Number of Units or any lesser number of Units under this Award, the
162(m) Performance Goal must be met (as determined and certified by the
Committee following August 31, 2009). The “162(m) Performance Goal” is that the
Company’s Net Income, as defined in the next sentence, must exceed zero for the
period September 1, 2007 through August 31, 2009. “Net Income” means gross
profit (i) minus (A) sales, general and administrative expenses, (B) research
and development expense, (C) amortization, (D) net interest expense, and (E)
income taxes and (ii) plus or minus other income and expense; all as reported in
the Company’s financial statements; but excluding positive or negative effects
of (I) restructuring charges and reversals, (II) the outcome of lawsuits, (III)
research and development write-offs on acquisitions, (IV) impact of liabilities,
expenses or settlements related to Solutia, Inc. or agreements associated with a
Solutia, Inc. plan of reorganization, (V) unbudgeted business sales and
divestitures; and (VI) the cumulative effects of changes in accounting
methodology made after August 31, 2007.

 

 

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(b)         EPS and Cash Flow Goals. If the Section 162(m) Performance Goal is
met, then the number of Units eligible for vesting under this Award will be
determined one-third based upon the Company’s achievement of cumulative earnings
per share (the “EPS Goal”), one-third based upon the Company’s achievement of
cumulative cash flow (the “Cash Flow Goal”), and one-third based upon the
Company’s achievement of return on capital (the “ROC Goal,” and, together with
the EPS Goal and the Cash Flow Goal, the “Goals” and each, singularly, a “Goal”)
for fiscal years 2008 and 2009 as compared to the goals set forth in Exhibit A
hereto. Not later than November 15, 2009, the Committee will determine the
extent to which the Goals have been met and the number of Units eligible for
vesting under this Award and the number of Units to be forfeited, as follows.

 

Below Threshold-Level Performance: For each Goal as to which performance is
below threshold level, one-third of the Initial Number of Units shall be
forfeited.

 

Above Threshold-Level/Below Target Performance: For each Goal as to which
performance is above threshold level but below target level, a number of Units
shall become eligible for vesting, equal to (i) one-third of the Initial Number
of Units times (ii) the percentage determined by interpolating between 50% and
100%, based on the relationship between actual performance and target-level
performance for that Goal.

Target-Level Performance: For each Goal as to which target-level performance is
achieved, one-third of the Initial Number of Units shall be eligible for
vesting.

Above Target-Level Performance: For each Goal as to which greater than
target-level performance is achieved, a number of Units shall become eligible
for vesting, equal to (i) one-third of the Initial Number of Units times (ii)
the percentage determined by interpolating between 100% and 200%, based on the
relationship between actual performance and target-level performance for that
Goal.

(c) Number of Units; Effect of Forfeiture. From the Grant Date through November
14, 2009, the number of Units subject to this Award shall be the Initial Number
of Units. If the 162(m) Performance Goal is not met, or if neither of the Goals
is met at the threshold level or above, all Units under this Award will be
forfeited as of November 15, 2009. Otherwise, the number of Units subject to
this Award from November 15, 2009 through August 31, 2010 shall be the number of
Units (if any) that are eligible for vesting after application of the foregoing
and those Units will vest effective as of August 31, 2010, except as otherwise
provided below.

(d) Effect of Termination of Service. If you incur a Termination of Service
before August 31, 2009 as a result of a Termination without Cause or your
Retirement, Disability or death, then effective as of August 31, 2009, a number
of Units shall vest, equal to (i) the number of Units (if any) that become
eligible for vesting, based upon the application of paragraphs (b) and (c)
above, times (ii) a fraction, the numerator of which is the number of days from
September 1, 2007 through your date of termination, and the denominator of which
is 730. If your employment terminates after August 31, 2009 and before August
31, 2010 as a result of a Termination without Cause or your Retirement,
Disability or death, effective as of August 31, 2009, a number of Units subject
to this Award shall vest, equal to the number of Units (if any) that become
eligible for vesting, based upon the application of paragraphs (b) and (c)
above. If your employment terminates before August 31, 2010 for any other
reason, all Units subject to this Award shall be forfeited as of the date of
your termination.

4.            Delivery of Shares. (a) Vested Units. The Company shall deliver to
you a number of Shares equal to the number of Units (if any) that vest pursuant
to this Award, subject to withholding as provided in paragraph 6 below. Such
delivery shall take place immediately after August 31, 2010, unless and to the
extent a valid Deferral Election (as defined below) applies; provided, however,
that in the event of

 

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your Termination of Service pursuant to Section 3(d) above, other than as a
result of your death or “disability” within the meaning of Section 409A(a)(2)(C)
of the Internal Revenue Code of 1986, as amended (the “Code”), to the extent
that you are considered a Key Employee at such time (for purposes of this
Agreement, “Key Employee” shall be defined as such term is defined under Section
416(i) of the Code), such delivery shall take place on the later of (i) August
31, 2010 or (ii) six months after your Termination of Service. During any period
from September 1, 2010 until such delivery occurs, for purposes of your
entitlement to Dividend Equivalents with respect to this Award, the number of
Units subject to this Award on any given date shall be the number of such Units
that have vested but with respect to which no such delivery has yet occurred as
of that date.

(b) Deferral Elections. You shall be permitted to elect to defer delivery of
Shares with respect to the Units (if any) that vest pursuant to this Award, in
accordance with the rules set forth below and any rules and procedures that may
hereafter be adopted by the Committee or its delegee (but in no event may you
elect to defer the payment of any Dividend Equivalents hereunder). Such
elections (“Deferral Elections”) must be made no later than August 31, 2008, and
will be irrevocable once made; provided, that any Deferral Elections that you
may have made shall become null and void upon your Termination of Service for
any reason on or before August 31, 2010. You may make a Retirement Election, a
Date Certain Election, or both. A “Retirement Election” means a Deferral
Election pursuant to which the vested Units to which it relates will be settled
by delivery of a number of Shares equal to the number of such vested Units,
either in a lump sum or in monthly installments over a period of up to ten (10)
years, with such lump sum or the first such installment to be delivered during
the January next following the date of your Retirement or any subsequent
January; provided, however, that to the extent that you are considered a Key
Employee at the time of your Retirement, and your Retirement does not result
from your death or “disability” within the meaning of Section 409A(a)(2)(C) of
the Code, such delivery shall in no event take place earlier than six months
after your Retirement. A “Date Certain Election” means a Deferral Election
pursuant to which the vested Units to which it relates will be settled by
delivery of a number of Shares equal to the number of such vested Units, in a
lump sum as soon as reasonably practicable following a specified date (the
applicable “Date Certain”), which must be later than August 31, 2010.

(c)          Settlement of Deferred Units. Any of your vested Units as to which
a Date Certain Election is in effect shall be settled in accordance with such
Date Certain Election, unless your Termination of Service occurs before the
applicable Date Certain; provided, however, that to the extent that you are
considered a Key Employee at the time of your Termination of Service, and your
Termination of Service does not result from your death or “disability” within
the meaning of Section 409A(a)(2)(C) of the Code, such delivery shall in no
event take place earlier than six months after your Termination of Service. Upon
your Retirement after August 31, 2010, any portion of your vested Units as to
which a Retirement Election is in effect shall be paid in accordance with that
Retirement Election, and the remaining balance (if any) of your vested Units
shall be settled by delivery of Shares in a single lump sum immediately
thereafter; provided, however, that to the extent that you are considered a Key
Employee at the time of your Retirement, and your Retirement does not result
from your death or “disability” within the meaning of Section 409A(a)(2)(C) of
the Code, such delivery shall in no event take place earlier than six months
after your Retirement. Upon your Termination of Service after August 31, 2009
for any reason other than a Retirement, any remaining vested Units that have not
yet been settled (whether subject to a Retirement Election or a Date Certain
Election) shall be settled by delivery of Shares in a single lump sum
immediately thereafter; provided, however, that to the extent that you are
considered a Key Employee at the time of your Termination of Service, and your
Termination of Services does not result from your death or “disability” within
the meaning of Section 409A(a)(2)(C) of the Code, such delivery shall in no
event take place earlier than six months after your Termination of Service.

(d)          Hardship Withdrawals. Upon your written request or that of your
legal representative, the Committee may (but shall not be required to) settle
all or a portion of your deferred vested Units by delivery

 

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of Shares on a date after August 31, 2010 but before the date otherwise provided
by the applicable Deferral Election, to the extent the Committee determines to
be necessary to alleviate a severe unforeseeable financial hardship to you as a
result of the illness or accidental injury of you, your spouse, or one of your
dependents as defined in Section 152 of the Code (without regard to Sections
152(b)(1), (b)(2) and (d)(1)(B)), a casualty loss of property not fully covered
by insurance, or other similar financial hardship caused by extraordinary and
unforeseeable circumstances beyond your control, provided that such
circumstances constitute in each case an “unforeseeable emergency” as defined
under Section 409A of the Code; provided, however, that the amounts distributed
to you pursuant to subclause (i) above shall not exceed the amounts that may be
distributed, if any, without the imposition of the excise tax provisions of
Section 409A of the Code to such distribution.

(e)          Fractional Shares. Whenever any Units are to be settled in
installments, the number of Units in any given installment shall be rounded to
the nearest whole number to avoid a requirement to deliver a fractional share.

5.            Change of Control. Upon the occurrence of a Change of Control that
qualifies as an event described in Section 409A(a)(2)(A)(v) of the Code and the
regulations thereunder, notwithstanding any other provision of this Award
Certificate other than paragraph 6, the number of Units subject to this Award
(subject to paragraph 6 below) shall vest in full and, except as provided below,
shall promptly be settled by delivery of Shares to you in a single lump sum. For
this purpose, (a) the number of Units subject to this Award shall be determined
pursuant to paragraph 3(c) above as of the date of such Change of Control,
except that if the date of the Change of Control is after August 31, 2009 and
before November 15, 2009, the adjustments to the number of Units pursuant to
paragraphs 3(a) and (b) shall apply effective as of the date of such Change of
Control, and (b) if you have had a Termination of Service before the date of
such Change of Control, the provisions of paragraph 3(d) shall also apply.

 

6.            Withholding. Notwithstanding any other provision of this Award
Certificate, your right to receive Dividend Equivalents and to receive Shares in
settlement of any Units is subject to withholding of all taxes that are required
to be paid or withheld in connection with the payment of those Dividend
Equivalents or the delivery of those Shares. With respect to the delivery of
Shares, you must make arrangements satisfactory to the Company for the payment
of any such taxes. While the Company reserves the right to modify the methods of
tax withholding that it deems acceptable, as of the time that this Award
Certificate is being delivered to you, such tax withholding may be satisfied by
(i) cash or check, (ii) delivery of previously owned Shares, or (iii)
withholding by the Company of Shares that would otherwise be delivered to you in
settlement of such Units. No more than the minimum required withholding will be
permitted under clauses (ii) and/or (iii) of the preceding sentence. If any
taxes are required to be withheld at a date earlier than when the Units are to
be settled (other than with respect to the payment of Dividend Equivalents in
cash), then notwithstanding any other provision of this Award Certificate, the
Company may (i) satisfy such obligation by causing the forfeiture a number of
Units having a Fair Market Value, on such earlier date, equal to the amount
necessary to satisfy the minimum required amount of such withholding, or (ii)
make such other arrangements with you for such withholding as may be
satisfactory to the Company in its sole discretion.

 

7.            No Right to Continued Employment or Service. This Award
Certificate shall not limit or restrict the right of the Company or any
Affiliate to terminate your employment or service at any time or for any reason.

8.            Effect of Award Certificate; Severability. This Award Certificate
shall be binding upon and shall inure to the benefit of any successor of the
Company. The invalidity or enforceability of any provision of this Award
Certificate shall not affect the validity or enforceability of any other
provision of this Award Certificate.

 

 

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9.            Amendment. The terms and conditions of this Award Certificate may
not be amended in any manner adverse to you without your consent.

10.         Plan Interpretation. This Award Certificate is subject to the
provisions of the Plan, and all of the provisions of the Plan are hereby
incorporated into this Award Certificate as provisions of the Units. If there is
a conflict between the provisions of this Award Certificate and the Plan, the
provisions of the Plan govern. If there is any ambiguity in this Award
Certificate, any term that is not defined in this Award Certificate, or any
matters as to which this Award Certificate is silent, the Plan shall govern,
including, without limitation, the provisions of the Plan addressing
construction and governing law, as well as the powers of the Committee, among
others, to (a) interpret the Plan, (b) prescribe, amend and rescind rules and
regulations relating to the Plan, (c) make appropriate adjustments to the Units
in the event of a corporate transaction, and (d) make all other determinations
necessary or advisable for the administration of the Plan.