AMERICAN HOME PRODUCTS CORPORATION
RESTRICTED STOCK PERFORMANCE AWARD AGREEMENT
UNDER THE 1999 STOCK INCENTIVE PLAN
DATE:
NUMBER OF SHARES SUBJECT
TO TARGET AWARD:
Name
Address
CityStateZip
Under the terms and conditions of this Agreement and of the Company's
1999 Stock Incentive Plan (the "Plan"), a copy of which has been delivered to
you and is made a part hereof, the Company hereby awards to you restricted stock
units (the "Units") representing shares of the Company's Common Stock (the
"Common Stock") subject to the restrictions set forth in this Agreement in the
amount set forth above (the "Target Award"). Upon the satisfaction by the
Company of certain performance criteria as described in Paragraph 3 of this
Agreement, the Units will be converted into shares of the Company's Common
Stock, on the terms and conditions set forth herein. Except as provided herein,
the terms used in this Agreement shall have the same meanings as in the Plan.
1. Rights as Stockholders. Prior to the satisfaction of the performance
criteria, no shares of the Company's Common Stock represented by the Units will
be earmarked for you or your account nor shall you have any of the rights of a
stockholder with respect to such shares. Upon issuance of the shares of Common
Stock as of the Conversion Date (as defined herein) or the Determination Date
(as defined herein), as the case may be, you will be the owner of record of such
shares and shall receive either (through book-entry form) a credit to an account
maintained on your behalf or a stock certificate representing such shares of
Common Stock and you shall be entitled to all of the rights of a stockholder of
the Company, including the right to vote and the right to receive dividends,
subject to the provisions of Paragraph 4.
2. Restricted Period. During the period (the "Restricted Period") from
the date of this Agreement through the Conversion Date (with respect to the
Units converted on such date) and the Determination Date (with respect to the
remaining Units, if any), you may not sell, transfer, assign, pledge, or
otherwise encumber or dispose of the Units granted hereunder.
3. Conversion to Common Stock. (a) At a meeting of the Committee to be
held within 60 days after the end of 2002 or at such other time or times as the
Committee in its discretion deems appropriate, the Committee shall compare the
EPS (as defined below) with the EPS Target (as defined below) for such year. If,
on the date of such meeting (the "Conversion Date"), the Committee determines
that:
(i) EPS is less than 90% of the EPS Target, then all rights with
respect to the Target Award shall be subject to subparagraph
3(b) below;
(ii) EPS is greater than or equal to 90% of the EPS Target and less
than or equal to 95% of the EPS Target, then Units
representing 75% of the Target Award shall be converted into
Common Stock and all rights with respect to the remaining
portion of such Target Award shall be subject to subparagraph
3(b) below;
(iii) EPS is greater than 95% of the EPS Target and less than or
equal to 105% of the EPS Target, then Units representing the
entire Target Award shall be converted into Common Stock; and
(iv) EPS is greater than 105% of the EPS Target, then Units
representing the entire Target Award shall be converted into
Common Stock and you shall be entitled to receive an
additional grant of Common Stock representing 25% of the
Target Award (a "Bonus Award"); such additional grant to be
made by the Committee at such meeting.
(b) In the event that all or a portion of the Target Award is not
converted to Common Stock on the Conversion Date pursuant to subparagraphs
3(a)(i) or (ii) above, or the Bonus Award is not earned pursuant to subparagraph
3(a)(iv) above (an "Unearned Bonus Award"), the Units represented by such Target
Award or portion thereof shall be eligible for subsequent conversion to shares
of Common Stock as provided in this subparagraph and the Unearned Bonus Award
shall also be eligible to be earned. At a meeting of the Committee to be held on
a date within 60 days after the end of 2004 or on such other date as the
Committee in its discretion deems appropriate (the "Determination Date"), the
Committee shall determine the Total Shareholder Return (as defined herein) of
the Company and of each member of the Peer Group (as defined herein), and shall
mark them comparatively, for the years 2002 through 2004 and, in the event that
the Company ranks within the highest three, then Units representing the Target
Award or portion thereof shall be converted to Common Stock on the applicable
Determination Date and/or you shall be entitled to receive the Unearned Bonus
Award, if any, which award shall be granted by the Committee at such meeting,
and if not, then such amounts shall be forfeited and all rights thereto shall be
surrendered to the Company.
(c) Notwithstanding anything to the contrary contained in this
Agreement, Units shall be converted into Common Stock, in whole numbers of
shares only and, if necessary, the calculations based upon such amounts in
subparagraphs 3(a)(ii) and 3(a)(iv) above shall be rounded up or down to the
nearest whole number.
(d) As used in this Agreement, the term:
(i) "EPS" means the earnings or net income per share of common
stock of the Company for 2002, adjusted to exclude the effect
of extraordinary or unusual items of income or expense, all as
determined in good faith by the Committee acting in its sole
discretion.
(ii) "EPS Target" shall be the amount established by the Committee
at a meeting to be held no later than March 1, 2002; provided,
however, that if for any reason the Committee shall determine
that the EPS Target is no longer a practicable or appropriate
measure of financial performance, the Committee may take
action to substitute another financial measure as it deems
appropriate under the circumstances.
(iii) "Peer Group" shall consist of those companies listed on Annex
A attached hereto which Annex may be amended from time to time
as a result of circumstances, e.g., merger, consolidations,
etc., deemed by the Committee in its sole discretion to
warrant such amendment.
(iv) "Total Shareholder Return" for any company for any period
shall mean the percentage change in the per share stock market
price of such company's common stock (or equivalent security)
during such period (assuming that each of such company's per
share dividends are reinvested in such security at the closing
market per share price as of the last trading day of the
calendar quarter in which the ex-dividend date for such
dividend occurs) which shall be calculated in good faith by
the Committee acting in its sole discretion.
4. Restricted Stock Trust. (a) Subject to Paragraph 4(b) below, you are
eligible to make a one-time irrevocable election to cause the Company to
contribute as of the Conversion Date and the Determination Date, the shares of
Common Stock issuable hereunder, to the Restricted Stock Trust (as defined
below) by completing the form set forth on Schedule A attached hereto wherein
such shares of stock shall be held, subject to claims of the Company's
creditors, until delivery to you under the terms of Paragraph 5 herein. Subject
to Paragraph 4(b), below, if you do not make such election, such shares shall be
delivered to you as provided in Paragraph 5(a)(i) of this Agreement.
(b) Notwithstanding anything to the contrary contained in this
Agreement, if you are or, in the judgment of the Committee, are expected to be a
Named Executive Officer with respect to the year in which the Conversion Date or
the Determination Date occurs, then you will be deemed to have made the election
under Paragraph 4(a) above to have the Common Stock issuable hereunder as of
such date and thereafter contributed to the Restricted Stock Trust.
(c) For purposes of this Agreement:
(i) "Named Executive Officer" shall mean the Chief Executive
Officer of the Company or any of the four highest compensated
officers (other than the Chief Executive Officer of the
Company) whose total compensation payable is required to be
reported to shareholders under the Securities Exchange Act of
1934, as amended (the "1934 Act"); and
(ii) "Restricted Stock Trust" means the trust fund established
under the Restricted Stock Trust Agreement, dated as of April
20, 1994 as amended (the "Trust Agreement"), to accommodate
the deferral of delivery of shares of Common Stock represented
by Units (and any dividends paid thereon) as provided in
Paragraph 5(a)(ii) of this Agreement, which trust fund is
subject to the claims of the Company's general creditors under
federal and state law in the event of insolvency of the
Company as described in the Trust Agreement.
5. Delivery of Shares of Common Stock. (a) Subject to Paragraphs 4 and
9 of this Agreement, as soon as practicable after each of the Conversion Date
and the Determination Date, all shares of Common Stock, if any, to be issued to
you as of any such date, shall be issued either (through book-entry form) by a
credit to an account maintained on your behalf or a certificate representing the
Common Stock free of any restrictive legend other than as may be required by
applicable state or federal securities law, with such Common Stock to be either
(i) so delivered to you promptly or (ii) if you have made or are deemed to have
made the election under Paragraph 4 above, contributed to the Restricted Stock
Trust, in which case such shares shall be maintained in the Restricted Stock
Trust and delivery shall be deferred in accordance with the election set forth
on Schedule A attached hereto, or if either (1) no such election is made or (2)
your employment with the Company is terminated prior to Retirement for any
reason (including death), delivery shall be made on the first business day of
the calendar year following your termination of employment or as otherwise
provided in the Trust Agreement.
(b) Notwithstanding any other provisions hereof, the number of shares
of Common Stock which shall be delivered to you pursuant to Paragraph 5(a)
either directly or from the Restricted Stock Trust shall be (i) the number of
such shares which would have been delivered in the absence of this Paragraph
5(b) minus (ii) the number of whole shares of Common Stock necessary to satisfy
the minimum federal, state and/or local income tax withholding obligations which
are imposed on the Company by applicable law in respect of the delivery of such
award as well as other withholding obligations (e.g. Social Security and
Medicare) which may be due and payable under applicable law as of the lapse of
the Restricted Period as defined in Paragraph 2, whether or not delivery of such
shares is deferred under Paragraph 4 (and which may be satisfied by the
reduction effected hereby in the number of deliverable shares), it being
understood that the value of the shares referred to in clause (ii) above shall
be determined, for the purposes of satisfying such withholding obligations, on
the basis of the average of the high and low per share prices for the Common
Stock as reported on the Consolidated Transaction Reporting System on the
designated date of delivery, or on such other reasonable basis for determining
fair market value as the Committee may from time to time adopt.
6. Termination of Employment. (a) Subject to Section 7(f) of the Plan,
in the event of your termination of employment during the Restricted Period for
any reason other than death, Disability or Retirement, you shall forfeit all
rights to all Units granted hereunder and you agree to assign, transfer, and
deliver such Units to the Company, provided, the Committee may provide for a
partial or complete exception to this requirement as it deems equitable in its
sole discretion.
(b) In the event that your employment is terminated due to Disability
or Retirement, or in the event of your death, vesting of Units relating to the
Target Award and any related Bonus Award and delivery of the shares of Common
Stock of the Company represented thereby will be made to you or your designated
beneficiary or your legal representative, legatee or such other person
designated by an appropriate court as entitled to receive the same, as the case
may be, on the terms and, subject to the conditions of this Agreement, including
Paragraph 3 above.
7. [Reserved].
8. Miscellaneous. This Agreement may not be amended except in writing
and neither the existence of the Plan and this Agreement nor the Target Award
granted hereby shall create any right to continue to be employed by the Company
or its subsidiaries and your employment will continue to be at will and
terminable at will by the Company. In the event of a conflict between this
Agreement and the Plan, the Plan shall govern.
9. Compliance With Laws. (a) This Agreement shall be governed by the
laws of the state of Delaware and any applicable laws of the United States.
Notwithstanding anything herein to the contrary, the Company shall not be
obligated to cause to be delivered any Units or shares of Common Stock of the
Company represented thereby pursuant to this Agreement unless and until the
Company is advised by its counsel that the issuance of such shares either
(through book-entry form) by a credit to an account maintained on your behalf or
by delivery of certificates representing such shares is in compliance with all
applicable laws and regulations of governmental authority. The Company shall in
no event be obliged to register any securities pursuant to the Securities Act of
1933 (as now in effect or as hereafter amended) or to take any other action in
order to cause the issuance of such shares either (through book-entry form) by a
credit to an account maintained on your behalf or by delivery of certificates
representing such shares to comply with any such law or regulation.
(b) If you are subject to Section 16 of the 1934 Act, transactions
under the Plan and this Agreement are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any
provision of the Plan, this Agreement or action by the Committee involving you
is deemed not to comply with an applicable condition of Rule 16b-3, such
provision or action shall be deemed null and void as to you, to the extent
permitted by law and deemed advisable by the Committee. Moreover, in the event
the Plan and/or this Agreement does not include a provision required by Rule
16b-3 to be stated therein, such provision (other than one relating to
eligibility requirements or the price and amount of awards as applicable) shall
be deemed automatically to be incorporated by reference into the Plan and/or
this Agreement insofar as you are concerned, with such incorporation to be
deemed effective as of the effective date of such Rule 16b-3 provision.
AMERICAN HOME PRODUCTS CORPORATION
By:
---------------------------------
Vice President and Corporate Treasurer
Accepted and agreed to:
Name (Please Print) Social Security Number
Signature Date of Birth
SCHEDULE A
ELECTION FORM
(To Be Completed in Conjunction with Your
Restricted Stock Performance Award Agreement)
I, , hereby make an election to defer distribution of all shares of Common
Stock issuable to me pursuant to the Restricted Stock Performance Award
Agreement (the "Agreement") less those shares necessary to satisfy any
applicable withholding obligation under Paragraph 5(b) of the Agreement and to
cause the Company to contribute such shares to the Restricted Stock Trust (with
any dividends thereon to be reinvested under the AHPC Master Investment Plan).
See Note Below
I, , hereby make an election to receive a distribution of such number of
shares in the Restricted Stock Trust under the Agreement to which I am
entitled in substantially equal annual installments over a period not to
exceed ten years as follows commencing, at the time indicated by my election
as set forth below, subject to the provisions of the Agreement, including
Paragraph 5, thereof (provided, however, that in the event of my death all
remaining installments shall be accelerated and distributed promptly):
Circle the number of annual installments:
2 3 4 5 6 7 8 9 10
Indicate your election:
Commencing after: ___ Retirement (as defined in the Plan)
___ Specific date to commence distribution
after my Retirement Date but in no event
shall any annual installment be made after
the tenth anniversary of my Normal
Retirement Date (age 65). Indicate
specific date: ____________________
month/day/year
These elections shall be irrevocable upon execution of the Agreement.
Signature of Executive
Dated:
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Witnessed:
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NOTE: 1. If you are or are expected to be a Named Executive Officer
with respect to any year in which a Conversion Date or Determination
Date occurs, you will be deemed to have elected deferred
distribution hereunder.
Beneficiary Designation
In the event of my death, I designate the following beneficiary (ies) to
receive any shares of the Company's Common Stock to be distributed to me or
which have been deferred on my behalf to the Restricted Stock Trust under this
Agreement together with any dividends thereon.
Beneficiary (ies)
Contingent Beneficiary (ies)
Signature of Executive
Dated:
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Witnessed:
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Annex A
Peer Group
▇▇▇▇▇▇ Laboratories
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Company
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ and Company
Merck & Co., Inc.
Pfizer Inc.
Schering-Plough Corporation
▇▇▇▇▇▇-▇▇▇▇▇▇▇ Company