AMERICAN HOME PRODUCTS CORPORATION
STOCK OPTION AGREEMENT
(Phased Vesting)
UNDER: [Year] Stock Incentive Plan
DATED:
OPTION PRICE:
INCENTIVE STOCK OPTION SHARES:
NON-QUALIFIED STOCK OPTION SHARES:
1. Under the terms and conditions of this Agreement and of the American
Home Products Corporation (the "Company") Stock Incentive Plan set forth above
(the "Plan"), a copy of which is attached hereto and incorporated herein by
reference, the Company hereby grants to the Optionee an option or options
(together, the "Option") to purchase the number of shares of the Company's
Common Stock as specified above ("Option Shares") at the option price also above
specified. Capitalized terms not otherwise defined herein have the meanings
assigned to them in the Plan.
2. This Option may be exercised, in whole or in part from time to time in
any whole number of Option Shares, upon and after the earlier of (i) in the case
of the Incentive Stock Option, if any, and Non-Qualified Stock Option,
respectively, with respect to one-third of the Option Shares (rounded down), the
date that is one year from the date of grant of this Option, with respect to an
additional one-third of the Option Shares (rounded down), the date that is two
years from the date of grant of this Option and, with respect to the remaining
one-third of the Option Shares, the date that is three years from the date of
grant of this Option, or (ii) the date of the death, Disability or Retirement
(each as defined in the Plan) of Optionee, subject to the provisions of Section
5 of the Plan which generally requires that at the time of exercise or the date
of termination of Optionee's employment with the Company and its subsidiaries,
the Optionee is or was employed by the Company or one or more of its
subsidiaries and has been continuously employed by the Company or one or more of
its subsidiaries for at least two years and since the date of grant. Once this
Option becomes exercisable, it shall remain exercisable until its expiration as
described in paragraph 3 below. To the extent Option Shares have been purchased
pursuant to the exercise of this Option, such shares shall no longer be
available for purchase hereunder. The date after which this Option may be
exercised will be accelerated upon a Change in Control of the Company (as
defined in the Plan) and upon such occurrence may be cashed out at the
discretion of the Compensation and Benefits Committee on the terms described in
Section 9 of the Plan.
3. This Option shall expire upon the date that is ten years from the date
of grant or earlier as provided in Section 5 of the Plan which provides, among
other things, that Options shall expire upon the first to occur of the
following: (i) the date that is three months from the date of the termination of
Optionee's employment with the Company and its subsidiaries by the Company or
any of its subsidiaries for any reason other than death, Disability, Retirement
or deliberate gross misconduct (as determined by the Compensation and Benefits
Committee), or (ii) immediately upon the date of (A) the termination of
Optionee's employment with the Company and its subsidiaries by the Company or
any of its subsidiaries because of Optionee's deliberate gross misconduct (as
determined by the Compensation and Benefits Committee), (B) Optionee's voluntary
termination of employment with the Company and its subsidiaries other than for
Disability or Retirement, or (C) Optionee's violation of (x) the noncompetition,
or cooperation provisions of Section 5(g) of the Plan, or (y) the undertaking
not to deliberately cause substantial harm to the Company as set forth in
Section 5(g) of the Plan.
4. To the extent any Incentive Stock Option granted hereby becomes
exercisable for the first time in the aggregate amount of more than $100,000
(fair market value at time of grant) during any calendar year (including for
this purpose any other Incentive Stock Options previously granted to the
Optionee by the Company), such excess will be treated as a non-qualified stock
option under U.S. federal tax provisions, if applicable. In addition, any such
incentive stock option exercised by Optionee after three months after separation
from service to the Company (or after one year after total and permanent
disability) will be treated as a non-qualified stock option under applicable
U.S. federal tax provisions.
5. This Option may be exercised by sending the Treasurer of the Company an
option exercise notice indicating the number of Option Shares for which the
Option is to be exercised at that time and the form in which the certificates
are to be registered for Option Shares purchased (in the name of the Optionee or
in Optionee's name and that of another person(s) as joint tenants with the right
of survivorship). This notice shall be accompanied by payment of the Option
Price for the Option Shares being purchased in the form of (i) a personal or
bank check in U.S. Dollars payable to American Home Products Corporation and
drawn on or payable at a United States bank, and/or (ii) shares of the Company's
common stock issued in the Optionee's name and duly assigned to the Company, or
(iii) by any other form of consideration which has been approved by the
Compensation and Benefits Committee, as and to the extent provided and permitted
by Section 5(d) of the Plan. Notwithstanding anything to the contrary herein,
the Company or its subsidiaries, as appropriate, shall have the right to deduct
from the number of Option Shares to be delivered upon exercise such number of
Option Shares as may be necessary to satisfy all federal, state or local taxes
or other deductions legally required to be withheld or in the alternative may
require the Optionee to deliver to the Company or a subsidiary an amount of cash
or number of shares of common stock of the Company to satisfy such withholding.
6. This Agreement and this Option as well as the Company's obligation to
sell and deliver Option Shares covered by this Option is subject to all federal,
state and other laws, rules and regulations of the United States and/or of the
country wherein the Optionee resides or is employed. Compliance with any
recording, protocolization or registration requirements and payment of any fees
or taxes applicable to this Agreement or the transactions it contemplates are
the exclusive responsibility of the Optionee.
7. This Option is not transferable or assignable other than by will or by
the laws of descent and distribution and may be exercised during the Optionee's
lifetime only by him or her. After the Optionee's death, the Option may be
exercised only by the Optionee's legal representative or legatee or such other
person designated by an appropriate court as the person entitled to make such
exercise. The Option may be exercised after the Optionee's death only to the
extent that Optionee was entitled to exercise it at the time of Optionee's
death.
8. In the event that this Agreement also contains a grant of a Stock
Appreciation Right (an "SAR") in connection with the Option, the terms of the
SAR shall be governed by the provisions of Section 6 of the Plan.
9. Subject to the express provisions of the Plan, this Agreement and the
Plan are to be interpreted and administered by the Compensation and Benefits
Committee, whose determination will be final.
10. This Agreement shall be governed by the laws of the State of
Delaware and in accordance with such federal law as may be applicable.
AMERICAN HOME PRODUCTS CORPORATION
/s/ Xxxx X. Xxxxxxxx
Chairman of the Board
Accepted and agreed to:
_____________________
Optionee's Signature
_____________________
Optionee's Social Security Number
