AMERICAN HOME PRODUCTS CORPORATION
STOCK OPTION AGREEMENT
(Transferable Option)
UNDER: 1996 STOCK INCENTIVE PLAN
DATED:
OPTION PRICE:
INCENTIVE STOCK OPTION SHARES:
[Name/Address] NON-QUALIFIED STOCK OPTION SHARES:
1. Under the terms and conditions of this Agreement and of the
American Home Products Corporation (the "Company") 1996 Stock
Incentive Plan (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) 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 had 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 upon and after which
this Option may be exercised will be accelerated upon a Change in
Control (as defined in the Plan) of the Company 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
years from the date of Optionee's death, Disability or Retirement,
(ii) 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 (iii)
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, 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 a Transferee (as
defined in paragraph 7, below), 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) 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
(or permitted Transferee'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 Optionee except
that the Optionee may irrevocably transfer all or a portion of the
non-qualified stock options represented hereby to (i) the spouse
(current or former), children, stepchildren, grandchildren or step-
grandchildren of the Optionee ("Immediate Family Members"), (ii) a
trust or trusts for the exclusive benefit of such Immediate Family
Members, or (iii) a general or limited partnership or other entity
in which such Immediate Family Members are the only partners or
beneficial owners, provided that (x) there may be no consideration
for any such transfer, (y) the Optionee submits to the Company an
Option Transfer Form duly completed and executed by the Optionee
and Transferee in the form attached as Exhibit A hereto, and (z)
subsequent transfers shall be prohibited except by will or the laws
of descent and distribution. Following transfer, any such Option
shall continue to be subject to the same terms and conditions as
were applicable immediately prior to transfer, provided that for
purposes of the Plan the term "Optionee" shall be deemed to include
a permitted transferee hereunder (the "Transferee"), provided,
however, that (i) the events of death, Disability, Retirement or
other termination of employment (and any other provision regarding
employment) described in paragraphs 2 and 3 of this Agreement and
Sections 5(f) and 5(g) of the Plan shall continue to be applied
with respect to the Optionee, and following any such events, the
transferred Option shall be exercisable by the Transferee only to
the extent, and for the periods specified in the Plan, (ii) the
cashless exercise program referred to in Section 5(d) of the Plan
shall not apply to Transferee unless specifically permitted by the
Committee, and (iii) Section 6A of the Plan shall not apply to
Transferee. If such Option is transferred to a Transferee, upon
exercise of such Option, if any taxes are withheld from the
proceeds remitted (in cash or stock) to Transferee or if the
Transferee separately satisfies any withholding tax obligation, the
amount of the withholding tax shall be deemed to be a loan from
Transferee to Optionee.
8. 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 or, subject to paragraph 7 above, by other
Transferees. The Option may be exercised after the Optionee's
death by any permitted distributee or Transferee only to the extent
that he or she was entitled to exercise it at the time of
Optionee's death.
9. 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, provided, however, that any permitted transfer of an
Option, in accordance with paragraph 7 hereof, shall result in the
automatic termination of any SARs in tandem with such Option.
10. 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.
11. 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 PRODUCT CORPORATION
/s/ Xxxx X. Xxxxxxxx
Chairman of the Board
Accepted and agreed to:
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Optionee's Signature
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Optionee's Social Security Number
EXHIBIT A
OPTION TRANSFER FORM
Reference is made to the Stock Option Agreement dated
_____________________ (the "Agreement") under which American Home
Products Corporation (the "Company") granted to the undersigned
transferor ("Optionee") non-qualified stock options covering
________ shares of the Company's Common Stock under the 1996
Stock Incentive Plan (the "Plan"). Capitalized terms used herein
without definition are used as defined in the Agreement and the
Plan. The Optionee hereby transfers non-qualified stock options
covering ________ shares of the Company's Common Stock (the
"Options") granted under the Plan pursuant to the Agreement to
the following transferee (the "Transferee"):
------------------------ --------------------------------
Name of person or entity Social security or tax ID number
-----------------------------
Type of entity (if applicable)
------------------------ --------------------------------
Relationship to Optionee Address
The Optionee and, by its execution of this form, the Transferee,
hereby represent and warrant to the Company that the Transferee
is a permitted transferee in accordance with paragraph 7 of the
Agreement and under Section 5(h) of the Plan. It is understood
and agreed by Optionee and Transferee that (i) the Committee
shall be entitled, in its sole discretion, to determine whether
such transfer is in accordance with such requirements, and (ii)
the Company and the Committee shall be under no obligation to
notify the Transferee of the termination date of any Option
transferred hereunder.
The Transferee hereby agrees, subject to paragraph 7 of the
Agreement, to be bound by all of the terms, conditions and
limitations set forth in the Agreement and the Plan binding upon
the Optionee under the Agreement, and specifically understands
that (i) the events of death, Disability, Retirement or other
termination of employment (and any other provisions regarding
employment) described in paragraphs 2 and 3 of the Agreement and
Sections 5(f) and 5(g) of the Plan shall continue to be applied
with respect to the Optionee, and following any such events, the
transferred Options shall be exercisable by the Transferee only
to the extent, and for the periods specified in the Plan, and
(ii) the Options may not, without the consent of the Committee,
be transferred by the Transferee except by will or pursuant to
the laws of descent and distribution. The Transferee understands
and acknowledges that any shares of Common Stock purchased by the
Transferee pursuant to the Options may not be registered under
the Securities Act of 1933, as amended, and that such shares may
contain a restrictive legend in substantially the form as set
forth below (in addition to any legend required under applicable
state securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE
SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
In order to enforce the foregoing, the Company may impose stop-
transfer instructions with respect to such securities until such
time as the Company is reasonably satisfied that such
restrictions are no longer applicable to the sale of such
securities.
The Optionee further represents and warrants to the Company and
the Transferee that (i) Optionee has delivered to the Transferee
a copy of the Agreement, (ii) Optionee has consulted with
qualified income and estate tax advisors in determining to
transfer the Options to the Transferee or waives any such
requirement to do so and (iii) Optionee has considered and
understands each of the following:
1. The transfer to the Transferee is irrevocable.
2. Optionee will not control the exercise of the Options
once they have been transferred.
3. Optionee is assuming all of the risks and possible
consequences associated with the transfer of the Options,
and acknowledges that the Company and its representatives
are not responsible or liable for any tax, penalty, judgment
or outcome resulting from the transfer of the Options.
OPTIONEE: TRANSFEREE:
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