Exhibit 10.12
AMERICAN HOME PRODUCTS CORPORATION
RESTRICTED STOCK PERFORMANCE AWARD AGREEMENT
UNDER THE 1993 STOCK INCENTIVE PLAN
DATE
NUMBER OF SHARES SUBJECT
TO TARGET AWARD
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Name
Home Address
City, State, Zip
Under the terms and conditions of this Agreement
and of the Company's 1993 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
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 entitling the holder to all of
the rights of a stockholder as described herein but
subject to the restrictions set forth in this Agreement
(the "Restricted Stock"). Except as provided herein,
the terms used in this Agreement shall have the same
meanings as in the Plan.
1. Rights as Stockholders. During the period
from the date of this Agreement through the Conversion
Date (as defined herein), 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 Restricted Stock as of the
Conversion Date, you will be the owner of record of the
shares of Common Stock represented by the Restricted
Stock and 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
restrictions stated in this Agreement and referred to
in the legend described in Paragraph 7 below. If you
receive any additional shares by reason of being the
holder of Restricted Stock under this Agreement, all
the additional shares shall be subject to the
provisions of this Agreement and all certificates
evidencing ownership of the additional shares shall
bear the legend.
2. Restricted Period. During the period from
the date of this Agreement through the date which is
three years after such date (the "Restricted Period"),
you may not sell, transfer, assign, pledge, or
otherwise encumber or dispose of any Units or
Restricted Stock granted hereunder.
3. Conversion to Restricted Stock. (a) At
meetings of the Committee to be held within 60 days
after the end of each of the current year and the two
immediately succeeding years or at such other time or
times as the Committee in its discretion deems
appropriate, the Committee shall determine the EPS
Growth Rate (as defined below) of each of the Peer
Group Companies (as defined below) for the preceding
year and shall prepare a ranking of the Peer Group
Companies on the basis of their relative EPS Growth
Rates for such year, assigning them to Quartiles (as
defined below) (the date on which each such
determination is made being referred to herein as a
"Conversion Date"). If, on the date of such meeting
the Committee determines that, with respect to the
preceding year:
(i) the Company falls into the fourth
Quartile, then all rights with respect
to one-third of the Target Award (the
"Annual Target Amount") shall thereupon
be forfeited;
(ii) the Company falls into the third
Quartile, then Units representing 75% of
the Annual Target Amount shall be
converted into Restricted Stock and all
rights with respect to the remaining
portion of such Annual Target Amount
shall thereupon be forfeited;
(iii) the Company falls into the second
Quartile, then Units representing
the entire Annual Target Amount
shall be converted into Restricted
Stock; and
(iv) the Company falls into the first
Quartile, then Units representing the
entire Annual Target Amount shall be
converted into Restricted Stock and you
shall be entitled to receive an
additional grant of Restricted Stock
representing 25% of the Annual Target
Amount (a "Bonus Award"), such
additional grant to be made by the
Committee at such meeting.
(b) Notwithstanding anything to the contrary
contained in this Agreement, Units shall be converted
into Restricted Stock in whole numbers of shares only
and, if necessary, (i) the Annual Target Amount shall
be rounded up or down (A) to the nearest whole number
for the first two years and (B) for the third year to
equal, together with the Annual Target Amounts for the
first two years, the Target Award; and (ii) 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.
(c) As used in this Agreement, the term:
(i) "EPS" means the earnings or net income
per share of common stock of the Company
or one of the Peer Group Companies, as
the case may be, for such year based
upon publicly disseminated earnings
releases or such other publicly
available information as the Committee
in its sole discretion shall determine,
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 Growth Rate" for any year means (a)
the EPS for such year minus EPS for the
prior year divided by (b) EPS for the
prior year; provided, however, that if
for any reason the Committee shall
determine that relative EPS Growth Rate
is no longer a practicable or
appropriate measure of comparative
financial performance, the Committee may
take such action, including without
limitation substitution of another
measure of financial comparison, as it
deems appropriate under the
circumstances.
(iii) "Peer Group Companies" means a
group including the Company and not
less than seven nor more than ten
other companies selected by the
Committee as appropriate companies
for purposes of financial
performance comparisons, such other
companies initially consisting of
the following with such additions
and deletions from time to time as
the Committee, in its sole
discretion, deems appropriate:
Abbott Laboratories, American
Cyanamid Company, Bristol-Myers
Squibb Company, Johnson & Johnson,
Eli Lilly and Company, Merck & Co.,
Inc., Pfizer Inc., Schering-Plough
Corporation, The Upjohn Company and
Warner-Lambert Company.
(iv) "Quartiles" means, for each year with
respect to which the Peer Group
Companies are ranked on the basis of
their relative EPS Growth Rates, the
following four groups, assuming no
additions or deletions to the Peer Group
Companies included: (A) fourth Quartile
-- the three Peer Group Companies ranked
lowest; (B) third Quartile -- the three
Peer Group Companies ranked immediately
above the fourth Quartile; (C) second
Quartile -- the three Peer Group
Companies ranked immediately above the
third Quartile; and (D) first Quartile -
-the two Peer Group Companies ranked
first and second. In the event of any
additions or deletions to the Peer Group
Companies, the composition of the
Quartiles will be determined in
accordance with Exhibit I attached
hereto.
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 deposit as of
each Conversion Date the shares of
Restricted Stock into which Units shall
be converted on such date, together with
a stock power to be executed by you, to
an account in your name in the
Restricted Stock Trust (as defined
below) by completing the form set forth
on Schedule A attached hereto. 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 any year in which a
Conversion Date occurs, then you will be deemed to have
made the election under Paragraph 4(a) above to have
the Restricted Stock into which Units shall be
converted on such date and thereafter deposited into
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; and
(ii) "Restricted Stock Trust" means the trust
fund established or to be established by
a trust agreement (the "Trust
Agreement") to accommodate the deferral
of delivery of shares of Common Stock
represented by Units and/or Restricted
Stock (and dividends paid thereon) until
your termination of employment for any
reason or as otherwise provided in the
Trust Agreement, such trust fund to be
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 the Restricted Period (or six
months after the last Conversion Date with respect to a
Bonus Award made on the final Conversion Date), all
shares of Restricted Stock granted hereunder shall be
cancelled and replaced with certificates representing
Common Stock free of any restrictive legend other than
as may be required by applicable state or federal
securities law, such certificates to be either (i)
delivered to you promptly or (ii) if you have made or
are deemed to have made the election under Paragraph 4
above, deposited on your behalf in the Restricted Stock
Trust, in which case delivery of such shares shall be
deferred as provided in the Trust Agreement until 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 the 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 (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.
Any other withholding obligations (e.g. social security
and Medicare) with respect to such award will be
satisfied by separate arrangements between the Company
and you but will not in any event involve a reduction
in the number of shares that you are to receive.
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
and Restricted Stock granted hereunder and you agree
(i) to assign, transfer, and deliver the Restricted
Stock to the Company and (ii) that you shall cease to
be a shareholder of the Company with respect to such
shares, 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 death, disability or retirement,
vesting of all shares of Restricted Stock covered by
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. Legend on Certificates. Each certificate
evidencing ownership of Restricted Stock issued during
the Restricted Period shall bear the following legend:
"These shares have been issued or transferred
subject to a Restricted Stock Performance Award
and are subject to substantial restrictions,
including a prohibition against transfer and a
provision requiring transfer of these shares to
the Company without payment in the event of
termination of the employment of the registered
owner under certain circumstances all as more
particularly set forth in a Restricted Stock
Performance Award Agreement dated May 26, 1994, a
copy of which is on file with the Company."
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 Corporation or its subsidiaries and
your employment will continue to be at will and
terminable at will by the Corporation. In the event of
a conflict between this Agreement and the Plan, the
Plan shall govern.
9. The state of Delaware and any applicable laws
of the United States.
10. Compliance With Laws. (a) Notwithstanding
anything herein to the contrary, the Corporation shall
not be obligated to cause to be delivered any
Restricted Stock 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 and delivery of such certificates is
in compliance with all applicable laws and regulations
of governmental authority. The Corporation 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 and delivery of such certificates
to comply with any such law or regulation.
(b) If you are subject to Section 16 of the
Securities Exchange Act of 1934, as amended (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. In
addition, the Committee in its discretion may cause the
Company to retain custody of the certificates
representing the Common Stock to be delivered under
Paragraph 5 above so long as necessary or appropriate
to ensure that any minimum holding period under Rule
16b-3 is satisfied.
AMERICAN HOME PRODUCTS CORPORATION
By:
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Corporate Treasurer
Accepted and agreed to:
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Name (Please Print) Social Security
Number
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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
----------------
(PRINT NAME)
distribution of all shares of Restricted Stock and to
cause the Company to deposit such shares to an account
in my name in the Restricted Stock Trust (with any
dividends thereon to be reinvested under the AHPC
Master Investment Plan) together with a stock power to
be executed by me.
See Note Below
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This election shall be irrevocable upon execution of
the Agreement.
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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 occurs, you will be
deemed to have elected deferred distribution
hereunder.
Beneficiary Designation
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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.
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Beneficiary (ies)
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Contingent Beneficiary (ies)
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Signature of Executive
Dated:
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Witnessed:
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