AMERICAN HOME PRODUCTS CORPORATION
1994 RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
(Initially approved by stockholders on April 20, 1994 and as
amended by the Board of Directors on June 21, 2001)
Section 1. Purpose. The purpose of the Restricted Stock Plan for
Non-Employee Directors of American Home Products Corporation is to attract and
retain qualified persons who are not employees or former employees of the
Company or any of its subsidiaries or affiliates for service as members of the
Board of Directors by granting such Directors shares of the Company's Common
Stock, which are restricted in accordance with the terms and conditions set
forth below, and thereby encouraging ownership in the Company by non-employee
Directors.
Section 2. Definitions. Whenever used herein, unless the context otherwise
indicates, the following terms shall have the respective meaning set forth
below:
Act: The Securities Exchange Act of 1934, as amended.
Board Membership: The period of time during which a person serves on the
Board of Directors, regardless of whether occurring before or after the
Effective Date.
Board of Directors (or Board): The Board of Directors of the Company.
Committee: The Compensation and Benefits Committee of the Board of
Directors appointed to administer the Plan in accordance with Section 7 hereof.
Common Stock: Common Stock, par value $.33 1/3 per share, of American Home
Products Corporation.
Company: American Home Products Corporation or any successor to it in
ownership of substantially all of its assets, whether by merger, consolidation
or otherwise.
Director: Any member of the Board of Directors.
Disability: A medically determinable physical or mental impairment which
renders a participant substantially unable to function as a Director.
Effective Date: The date specified in Section 10 hereof.
Eligible Director (or Non-Employee Director): Any Director who is not an
employee or former employee of the Company or any of its subsidiaries or
affiliates.
Participant: Each Director to whom Restricted Stock is granted under the
Plan.
Plan: The 1994 Restricted Stock Plan for Non-Employee Directors of American
Home Products Corporation.
Restricted Period: The period of time from the date of grant of the
Restricted Stock until the earliest to occur of the events described in Section
4(b) hereof.
Retirement Benefit: A normal benefit payable under the Retirement Plan.
Retirement Plan: The American Home Products Corporation Retirement Plan for
Outside Directors, as amended.
Restricted Stock: Common Stock granted under the Plan which is subject to
restrictions in accordance with Section 4 hereof.
Year of Board Membership: 365 consecutive days of Board Membership.
Section 3. Eligibility and Grants.
(a) Grants. To be eligible to participate in the Plan, a Director must not
be an employee or former employee of the Company or any of its subsidiaries or
affiliates. Each Eligible Director on the Effective Date of the Plan shall
receive a grant of eight hundred (800) shares of Restricted Stock. In addition,
each person who becomes an Eligible Director for the first time after the
Effective Date of the Plan shall also receive a grant of eight hundred (800)
shares of Restricted Stock, effective as of the date of such person's election
as an Eligible Director. Thereafter, each Eligible Director shall be granted
eight hundred (800) shares of Restricted Stock for each subsequent Year of Board
Membership, up to a maximum of four thousand (4,000) shares of Restricted Stock
per Eligible Director. Notwithstanding anything to the contrary contained in
this Plan, if a Participant shall terminate service as a Director due to death
or Disability prior to having been granted the maximum number of shares of
Restricted Stock hereunder and provided the Participant is not then eligible for
a Retirement Benefit under the Retirement Plan, then such Participant, or such
Participant's beneficiary or estate, as the case may be, shall be granted
additional shares of Restricted Stock which together with the shares previously
granted under the Plan will equal such maximum number of shares and all
restrictions applicable to such shares shall lapse on the later of the date of
such termination of service or six months after the date of grant. If required
by the Committee, each grant of Restricted Stock shall be evidenced by a written
agreement duly executed by or on behalf of the Company and the Participant.
b) Number of Shares. The total number of shares of Restricted Stock which
may be granted under the Plan shall not exceed 100,000. The shares may be
authorized and unissued or issued and reacquired shares, as the Board of
Directors from time to time may determine. Shares of Restricted Stock that are
forfeited before the restrictions lapse shall be available for subsequent grants
of Restricted Stock under the Plan.
(c) Non-Consecutive Terms. An Eligible Director who is elected to
non-consecutive terms of Board Membership shall receive additional grants of
shares of Restricted Stock at the time of such re-election to the Board and
thereafter as provided in Section 3, provided that the amounts so granted, when
aggregated with the number of shares of Restricted Stock previously granted to
such Director with respect to which the restrictions thereon shall have lapsed,
does not exceed four thousand (4,000) shares.
Section 4. Terms and Conditions of Restricted Stock. The restrictions set
forth in this section shall apply to each grant of Restricted Stock for the
duration of the Restricted Period.
(a) Restrictions. A stock certificate representing the number of shares of
Restricted Stock granted shall be registered in the Participant's name but shall
be held in custody by the Company for the Participant's account. The Participant
shall have all rights and privileges of a stockholder as to such Restricted
Stock, including the rights to vote and to receive dividends, except that,
subject to the provisions of Sections 3(a) and 4(b), the following restrictions
shall apply: (i) the Participant shall not be entitled to delivery of the
certificate until the expiration of the Restricted Period; (ii) none of the
shares of Restricted Stock may be sold, transferred, assigned, pledged or
otherwise encumbered or disposed of during the Restricted Period; (iii) the
Participant shall, if requested by the Company, execute and deliver to the
Company, a stock power endorsed in blank. The Participant shall forfeit all
shares of Restricted Stock with respect to which such restrictions do not lapse
at the end of the Restricted Period. Upon the forfeiture (in whole or in part)
of shares of Restricted Stock, such forfeited shares shall become treasury
shares of the Company without further action by the Participant. The Participant
shall have the same rights and privileges, and be subject to the same
restrictions, with respect to any shares received pursuant to Section 6.
(b) Events. The Restricted Period shall end upon the first to occur of the
following events:
(i) Five Years of Service. The Participant completes at least five (5)
years of service from the date of the initial grant of Restricted
Stock to the Participant under the Plan.
(ii) Disability. The Participant ceases to be a Director by reason of
Disability; provided, however, that if the Participant is at such time
entitled to a Retirement Benefit, then the Restricted Period shall be
deemed not to have lapsed. In such case, all shares of Restricted
Stock will be forfeited.
(iii)Death. The Participant ceases to be a Director by reason of death;
provided, however, that if the Participant is at such time entitled to
a Retirement Benefit, then the Restricted Period shall be deemed not
to have lapsed. In such case, all shares of Restricted Stock will be
forfeited.
(c) Delivery of Restricted Shares. At the end of the Restricted Period as
herein provided, subject to Section 3(a), a stock certificate for the number of
shares of Restricted Stock with respect to which the restrictions have lapsed
shall be delivered, free of all such restrictions, to the Participant or the
Participant's beneficiary or estate, as the case may be, subject to the
withholding requirements of Section 9 hereof. The Company shall not be required
to deliver any fractional share of Common Stock but will pay, in lieu thereof,
the fair market value (measured as of the date the restrictions lapse) of such
fractional share to the Participant or the Participant's beneficiary or estate,
as the case may be. Notwithstanding the foregoing, a Participant may make an
irrevocable election to cause the Company to contribute such Restricted Shares
to the Restricted Stock Trust which he or she otherwise would have received from
the Plan by completing a deferral election form provided by the Company, wherein
such shares shall be held, subject to the claims of the Company's creditors,
until delivered to the Participant in accordance with such election.
Section 5. Regulatory Compliance and Listing. The issuance or delivery of
any shares of Restricted Stock may be postponed by the Company for such period
as may be required to comply with any applicable requirements under the federal
securities laws, any applicable listing requirements of any national securities
exchange or any requirements under any other law or regulation applicable to the
issuance or delivery of such shares and the Company shall not be obligated to
issue or deliver any such shares if the issuance or delivery thereof shall
constitute a violation of any provision of any law or any regulation of any
governmental authority or any national securities exchange.
Section 6. Adjustments. In the event of a recapitalization, stock split,
stock dividend, combination or exchange of shares, merger, consolidation, rights
offering, separation, reorganization or liquidation, or any other change in the
corporate structure or shares of the Company, the Committee may make such
equitable adjustments, to prevent dilution or enlargement of rights, as it may
deem appropriate in the number and class of shares authorized to be granted
hereunder.
Section 7. Administration. The Plan shall be administered by the
Compensation and Benefits Committee, consisting of three or more Directors each
of whom shall be a "disinterested Director" within the meaning of Rule 16b-3
under the Act. All determinations of the Committee shall be conclusive. The
Committee may obtain such advice or assistance as it deems appropriate from
persons not serving on the Committee.
Section 8. Termination or Amendment. The Board may at any time terminate
the Plan and may from time to time alter or amend the Plan or any part thereof
(including any amendment deemed necessary to ensure that the Company may comply
with any regulatory requirement referred to in Section 5), provided, however,
that, unless otherwise required by law, the rights of a Participant with respect
to shares of Restricted Stock granted prior to such termination, alteration or
amendment may not be impaired without the consent of such Participant and,
provided further, without the approval of the Company's stockholders, no
alteration or amendment may be made which would (i) increase the aggregate
number of shares of Restricted Stock that may be granted under the Plan (except
by operation of Section 6), or (ii) change the category of Directors eligible to
receive shares of Restricted Stock under the Plan. Notwithstanding the
foregoing, the Plan shall not be amended more than once every six months, other
than to comport with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act or the rules thereunder. The Company intends that
the Plan and the grants of Restricted Stock hereunder shall comply with the
conditions of Rule 16b-3 of the Act and qualify for the exemption from Section
16(b) of the Act as a "formula plan". Should any provisions hereof not be
necessary in order to comply with the requirements of such Rule or should any
additional provisions be necessary in order to so comply, the Board of Directors
may amend the Plan accordingly, without the necessity of obtaining the approval
of the Company's stockholders.
Section 9. Miscellaneous.
(a) Right to Re-election. Nothing in the Plan shall be deemed to create any
obligation on the part of the Board to nominate any Director for re-election by
the Company's stockholders, nor confer upon any Director the right to remain a
member of the Board of Directors.
(b) Withholding and Responsibility For Taxes. The Company shall satisfy any
tax withholding obligation required by law by reducing the number of shares of
Common Stock otherwise deliverable to the Participant or the Restricted Stock
Trust, as the case may be. To the extent no taxes are required to be withheld on
the delivery of the shares of Common Stock to the Participant or the Restricted
Stock Trust, the Participant shall be responsible for the payment of all
applicable taxes.
(c) Governing Law. This Plan shall be governed by the law of the State of
Delaware and in accordance with such federal laws as may be applicable.
(d) Construction. Wherever any words are used herein in the masculine
gender they shall be construed as though they were also used in the feminine
gender in all cases where they would so apply, and wherever any words are used
herein in the singular form they shall be construed as though they were also
used in the plural form in all cases where they would so apply.
Section 10. Effective Date. The Plan shall be submitted to the stockholders
of the Company for their approval at the Annual Meeting of Stockholders to be
held on April 20, 1994. The Plan shall become effective upon the affirmative
vote of the holders of a majority of the shares of Common Stock present, or
represented, and entitled to vote at the meeting.
Section 11. Change in Control. Upon the occurrence of a Change in Control,
Restricted Stock that was previously granted under the Plan (which has not
previously been forfeited) will become vested, and the Restricted Period with
respect to such Restricted Stock will be deemed to have ended. For purposes of
this provision, a Change in Control will be deemed to have occurred if:
(a) any person or persons acting in concert (excluding Company benefit
plans) becomes the beneficial owner of securities of the Company
having at least 20% of the voting power of the Company's then
outstanding securities (unless the event causing the 20% threshold to
be crossed is an acquisition of voting common securities directly from
the Company); or
(b) the consummation of any merger or other business combination of the
Company, sale or lease of the Company's assets or combination of the
foregoing transactions (the "Transactions") other than a Transaction
immediately following which the shareholders of the Company who owned
shares immediately prior to the Transaction (including any trustee or
fiduciary of any Company employee benefit plan) own, by virtue of
their prior ownership of the Company's shares, at least 65% of the
voting power, directly or indirectly, of (a) the surviving corporation
in any such merger or other business combination; (b) the purchaser or
lessee of the Company's assets; or (c) both the surviving corporation
and the purchaser or lessee in the event of any combination of
Transactions; or
(c) within any 24 month period, the persons who were directors immediately
before the beginning of such period (the "Incumbent Directors") shall
cease (for any reason other than death) to constitute at least a
majority of the Board or the board of directors of a successor to the
Company. For this purpose, any director who was not a director at the
beginning of such period shall be deemed to be an Incumbent Director
if such director was elected to the Board by, or on the recommendation
of or with the approval of, at least two-thirds of the directors who
then qualified as Incumbent Directors (so long as such director was
not nominated by a person who has expressed an intent to effect a
Change in Control or engage in a proxy or other control contest).