Exhibit 10.31
AMERICAN HOME PRODUCTS CORPORATION
RESTRICTED STOCK PERFORMANCE AWARD AGREEMENT
UNDER THE [Year] STOCK INCENTIVE PLAN
DATE: [Year]
NUMBER OF SHARES SUBJECT
TO TARGET AWARD: [ ]
______________________________
[Name/Address]
Under the terms and conditions of this Agreement and of the
Company's [Year] 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 compare the EPS (as defined
below) for such year with the EPS Target (as defined below) for
such year (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) EPS is less than 90% of the EPS Target, then all
rights with respect to one-third of the Target
Award (the "Annual Target Amount") shall thereupon
be forfeited;
(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 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) 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 Annual Target Amount
shall be converted into Restricted Stock; and
(iv) EPS is greater than 105% of the EPS Target, 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" for any year means the earnings or net income per
share of common stock of the Company for such year,
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 $2.88 for [Year] and, for [Next
Year] and [Following Year], shall be the amount
established by the Committee at a meeting to be held no
later than March 1 of each such year; 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.
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 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 [Date], 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. 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 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: ______________________________
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, [PRINT NAME] , hereby make an election to defer
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
This election shall be irrevocable upon execution of the
Agreement.
_________________________________
Signature of Executive
Dated: ______________________________________________________
Witnessed: __________________________________________________
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
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: ______________________________________________________
Witnessed: __________________________________________________