<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
CARTER-WALLACE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
CARTER-WALLACE, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
Set forth the amount on which the filing fee is calculated and state how it was
determined:
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
CARTER-WALLACE, INC.
1345 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10105
NOTICE AND CONSENT SOLICITATION STATEMENT
FOR ACTION TO BE TAKEN BY WRITTEN CONSENT
IN LIEU OF A MEETING OF STOCKHOLDERS
To Our Stockholders:
Attached hereto is a Consent Solicitation Statement which solicits the
written consent of the stockholders of Carter-Wallace, Inc., a Delaware
corporation (the "Company"), to authorize and approve the adoption of the 1996
Long-Term Incentive Plan of the Company.
The Board of Directors has approved the 1996 Long-Term Incentive Plan and
is asking for stockholder approval by written consent in lieu of a meeting at
this time. Attached to the Consent Solicitation Statement as Exhibit A is a copy
of the 1996 Long-Term Incentive Plan.
In order to ensure your representation in the action to be taken by written
consent, you are requested to sign and date the consent card enclosed in the
attached Consent Solicitation Statement as promptly as possible and return it in
the enclosed envelope (to which no postage need be affixed if mailed in the
United States). The consent solicitation period will end at 4:30 p.m., EST, on
February 15, 1996.
By Order of the Board of Directors,
RALPH LEVINE
Secretary
New York, New York
January 22, 1996
<PAGE> 3
CARTER-WALLACE, INC.
1345 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10105
---------------------
CONSENT SOLICITATION STATEMENT FOR STOCKHOLDER ACTION BY
WRITTEN CONSENT
---------------------
This Consent Solicitation Statement is furnished to the stockholders by the
Board of Directors of Carter-Wallace, Inc., a Delaware corporation (the
"Company"), for solicitation of the written consent of stockholders to authorize
and approve the adoption of the 1996 Long-Term Incentive Plan (the "Plan") of
the Company. On December 7, 1995, the Board of Directors adopted the proposed
Plan, subject to approval by the stockholders by written consent in lieu of a
meeting of stockholders. Attached to the Consent Solicitation Statement as
Exhibit A is a copy of the Plan. The date of mailing of this Consent
Solicitation Statement and the accompanying consent card is on or about January
22, 1996.
SOLICITATION OF WRITTEN CONSENTS
Pursuant to the Company's bylaws and Delaware law, any action which may be
taken at any annual or special meeting of the stockholders may be taken without
a meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, is signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or to take such action at a meeting at which all shares entitled to
vote thereon were present and voted. The matter being considered by the
stockholders is being submitted for action by written consent, rather than by
votes cast at a meeting.
Attached to this Consent Solicitation Statement as Exhibit A is the text of
the Plan being submitted for stockholder approval and adoption by written
consent, which is more fully described under the caption "PROPOSAL TO APPROVE
THE 1996 LONG-TERM INCENTIVE PLAN" below. The discussion and description of the
Plan in this Consent Solicitation Statement is qualified in its entirety by
reference to the full text of the Plan which is attached as Exhibit A. The Plan
became effective on December 7, 1995 subject to the approval of shareholders.
Written consents must be received by the Company on or before 4:30 p.m., EST, on
February 15, 1996 (the "Effective Date").
Stockholders are being requested to indicate approval of and consent to the
adoption of the Plan by executing the enclosed consent card and by checking the
box that corresponds to the action the stockholder wishes to take. FAILURE TO
CHECK ANY OF THE BOXES WILL, IF THE CONSENT CARD HAS BEEN SIGNED, CONSTITUTE
APPROVAL AND CONSENT TO THE ADOPTION OF THE PLAN.
Execution of the consent card will constitute your approval, as a
stockholder of the Company, of the Plan unless the "Consent Withheld" is marked.
Marking the "Abstain" box will have the same effect as having marked the
"Consent Withheld" box. Stockholders who do not approve and consent to the
adoption of the Plan by execution of the consent card will receive prompt notice
of the approval of the Plan by Consent if a sufficient number of written
consents to approve the Plan are received by the Company on or before the
Effective Date.
Brokers who hold shares for the accounts of their clients may execute
consents as directed by their clients. Broker non-votes will have the same
effect as a consent card marked "Consent Withheld".
The Board of Directors requests that each stockholder execute, date and
mail or deliver the consent card to THE BANK OF NEW YORK, the transfer agent of
the Company, at the following address:
THE BANK OF NEW YORK
101 Barclay Street
New York, New York 10286
Atten: Proxy Department
<PAGE> 4
An addressed envelope is provided for your convenience in returning the
consent card. The consent card should be returned as soon as possible for
receipt no later than 4:30 p.m., EST, on February 15, 1996.
REVOCATION OF WRITTEN CONSENTS
Any consent card executed and delivered by a stockholder may be revoked by
delivering written notice of such revocation to the transfer agent at the
address set forth below prior to the Effective Date. Consent Cards may not be
revoked after the Effective Date.
THE BANK OF NEW YORK
101 Barclay Street
New York, New York 10286
Atten: Proxy Department
METHOD AND COST OF SOLICITATION
The Company will pay the entire cost of the preparation and mailing of this
Consent Solicitation Statement, and all other costs of this solicitation. The
Company has retained Corporate Investor Communications, Inc. ("CIC") to assist
in the solicitation of consents for a fee of approximately $7,000 plus
reimbursement for all reasonable out-of-pocket expenses. In addition, the
Company will pay brokers, nominees, fiduciaries, or other custodians their
reasonable expenses for sending consent solicitation materials to, and obtaining
instructions from, persons for whom they hold stock of the Company.
Solicitation of consents is being made by the Company, with the aid of CIC,
through the mail, in person and by telecommunications. Consents may also be
solicited in person or by telephone or telegram by the Directors, executive
officers or other employees of the Company, who will not receive any
compensation for such activities.
VOTING RIGHTS
Each holder of common stock, par value $1.00 per share, of the Company
("Common Stock") is entitled to one (1) vote for each such share registered in
his or her name at the close of business on January 12, 1996 (the "Record
Date"); and each holder of Class B Common Stock, par value $1.00 per share, of
the Company ("Class B Common Stock") is entitled to ten (10) votes for each such
share registered in his or her name at the close of business on the Record Date.
As of the Record Date, the Company had 33,701,279 shares of Common Stock
outstanding and entitled to vote and 12,466,976 shares of Class B Common Stock
outstanding and entitled to vote. Holders of Common Stock and holders of Class B
Common Stock give their consent together as a single class with regard to the
adoption of the 1996 Long-Term Incentive Plan. On the Record Date, officers and
directors of the Company and members of their immediate families beneficially
owned an aggregate of 11,944,876 shares of Common Stock, representing 35.44% of
the outstanding shares of Common Stock and an aggregate of 11,802,135 shares of
Class B Common Stock, representing 94.67% of the outstanding shares of Class B
Common Stock; such holdings represent 82.06%, in the aggregate, of the voting
power of shares entitled to consent to the adoption of the 1996 Long-Term
Incentive Plan. See "PRINCIPAL STOCKHOLDERS."
PRINCIPAL STOCKHOLDERS
As used in this Consent Solicitation Statement, "beneficial ownership"
means the sole or shared power to vote, or to direct the voting of, a security,
or the sole or shared investment power with respect to a security (that is, the
power to dispose of, or to direct the disposition of, a security). In addition,
for purposes of this Consent Solicitation Statement, a person is deemed as of
any date to have "beneficial ownership" of any security that such person has the
right to acquire within 60 days after such date through the exercise of an
option or similar right or otherwise and of any security held in the name of
such person's spouse or minor children.
2
<PAGE> 5
As of the Record Date, the only persons known to the Company who
beneficially owned more than 5% of either the outstanding shares of Common Stock
or the outstanding shares of Class B Common Stock were Scudder, Stevens & Clark,
Inc., 345 Park Avenue, New York, New York 10158, State of Wisconsin Investment
Board, P.O. Box 7842, Madison, Wisconsin 53707, and The CPI Development
Corporation, 229 South State Street, Dover, Delaware 19901 ("CPI") and its
directors and stockholders. CPI is a personal holding company, the assets of
which consist of 11,754,000 shares of Common Stock, which represent 34.88% of
the outstanding shares of Common Stock, and 11,754,000 shares of Class B Common
Stock, which represent 94.28% of the outstanding shares of Class B Common Stock.
The directors of CPI are Henry H. Hoyt, Jr., Chairman of the Board of Directors
and Chief Executive Officer of the Company, Richard L. Cruess and Suzanne H.
Garcia. Henry H. Hoyt, Jr., Richard L. Cruess and Suzanne H. Garcia are the
beneficial owners of substantially all the outstanding voting securities of CPI.
Certain information as to such stockholders and the number of shares of Common
Stock and of Class B Common Stock beneficially owned by all officers and
directors of the Company as a group as of the Record Date is set forth on the
following page.
3
<PAGE> 6
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-------------------------------------------------------------
CLASS B
COMMON PERCENT COMMON PERCENT
NAME AND ADDRESS STOCK OF CLASS(1) STOCK OF CLASS(1)
- ---------------------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
THE CPI DEVELOPMENT CORPORATION......... 11,754,000 34.88% 11,754,000 94.28%
229 South State Street
Dover, Delaware 19901(5)
HENRY H. HOYT, JR....................... 11,886,509(2)(3) 35.27% 11,785,560(2)(3) 94.53%
1345 Avenue of the Americas
New York, New York 10105(5)
RICHARD L. CRUESS, M.D.................. 11,754,300(2) 34.88% 11,754,300(2) 94.28%
Center for Medical Education
McGill University
Montreal, Quebec, Canada
SUZANNE H. GARCIA....................... 11,776,500(2)(3) 34.94% 11,776,500(2)(3) 94.46%
P.O. Box 5040
Santa Fe, New Mexico 87502(5)
SCUDDER, STEVENS & CLARK, INC. ......... 1,893,500 5.62% -- --
345 Park Avenue
New York, New York 10158(5)
STATE OF WISCONSIN INVESTMENT BOARD..... 2,540,000 7.54% -- --
P.O. Box 7842
Madison, Wisconsin 53707(5)
All officers and directors of the
Company as a group (21 persons)....... 11,944,876(3)(4) 35.44% 11,802,135(3) 94.67%
</TABLE>
- ---------------
(1) Computed on the basis of 33,701,279 shares of Common Stock and 12,466,976
shares of Class B Common Stock, as the case may be, outstanding on the
Record Date.
(2) Includes the number of shares of Common Stock and of Class B Common Stock,
as the case may be, owned of record by CPI and as to which Henry H. Hoyt,
Jr., Richard L. Cruess and Suzanne H. Garcia are deemed beneficial owners
by virtue of their relationships with CPI. Henry H. Hoyt, Jr., Richard L.
Cruess and Suzanne H. Garcia disclaim beneficial ownership of such shares.
(3) Includes an additional 132,509 and 22,500 shares of Common Stock and 31,560
and 22,500 shares of Class B Common Stock which are beneficially owned by
Henry H. Hoyt, Jr., and Suzanne H. Garcia, respectively. In no case do
these additional shares constitute more than 1/2 of 1% of the shares of
Common Stock or Class B Common Stock, as the case may be, outstanding and
they do not change the approximate percentage of ownership reflected in the
table. Henry H. Hoyt, Jr. disclaims beneficial ownership of 9,000 of these
additional shares of Common Stock and 9,000 of these additional shares of
Class B Common Stock that are held in testamentary trusts of which he is a
trustee and/or remainderman. Suzanne H. Garcia disclaims beneficial
ownership of 9,000 of these additional shares of Common Stock and 9,000 of
these additional shares of Class B Common Stock.
(4) Does not include 130,129 shares of Common Stock issuable to certain officers
at a future date pursuant to the Company's Restricted Stock Award Plan.
(5) Based solely on a review of the reports of ownership and changes in their
ownership filed with the Securities and Exchange Commission and the New
York Stock Exchange and representations furnished to the Company during the
last fiscal year by officers, directors and more than 5% beneficial owners
of a registered class of the Company's equity securities, the Company
believes that each of these persons is in compliance with all applicable
filing requirements.
4
<PAGE> 7
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
The Summary Compensation Table shows certain information for the Company's
Chief Executive Officer and each of the four other most highly compensated
executive officers of the Company for services rendered in all capacities during
the fiscal years ended March 31, 1995, 1994 and 1993. The information includes
the dollar value of base salaries, bonus awards and long-term incentive plan
awards and payouts and certain other compensation, if any, whether paid or
deferred.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------------------
ANNUAL COMPENSATION ALL
--------------------------------------- RESTRICTED OTHER
FISCAL STOCK COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OTHER AWARDS(2) (1)
- ------------------------------------ ------ -------- -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Henry H. Hoyt, Jr. ................. 1995 $978,000 $550,200 $ 80,662(3) -0- $ 40,752
Chairman of the Board, 1994 889,100 666,800 79,766 -0- 36,823
Chief Executive Officer and 1993 808,300 687,100 100,808 -0- 25,432
Director
Daniel J. Black..................... 1995 $978,000 $550,200 $109,387(3) -0- $ 36,105
President, Chief Operating 1994 889,100 666,800 111,008 -0- 32,176
Officer and Director 1993 808,300 687,100 128,780 -0- 20,784
Ralph Levine........................ 1995 $448,800 $249,500 $ 67,129(3) -0- $ 20,814
Vice President, Secretary, 1994 410,000 308,000 58,596 -0- 20,038
General Counsel and Director 1993 343,750 280,000 87,434 -0- 16,790
Paul A. Veteri...................... 1995 $448,800 $249,500 $ 61,064(3) -0- $ 16,362
Vice President, Finance, 1994 410,000 308,000 62,953 -0- 15,586
Chief Financial Officer and 1993 340,100 280,000 57,228 -0- 12,302
Director
Herbert Sosman...................... 1995 $437,400 $229,700 $ 71,931(3) -0- $ 23,894
Vice President, 1994 405,000 283,500 67,962 -0- 22,881
Pharmaceuticals 1993 375,000 262,500 66,058 -0- 19,469
</TABLE>
- ---------------
(1) Includes Company contributions vested pursuant to the Supplemental
Retirement and Savings Plan and the Executive Pension Benefits Plan and
Company paid premiums in connection with supplemental death benefit
agreements with each executive officer. The vested contributions to the
Supplemental Retirement and Savings Plan and the Executive Pension Benefits
Plan for each executive officer for the fiscal year ended March 31, 1995 are
as follows: Henry H. Hoyt, Jr. -- $20,265; Daniel J. Black -- $20,265; Ralph
Levine -- $8,976; Paul A. Veteri -- $8,976; and Herbert Sosman -- $9,113.
The premiums paid with respect to the supplemental death benefit agreement
for each executive officer for the fiscal year ended March 31, 1995 are as
follows: Henry H. Hoyt, Jr. -- $20,487; Daniel J. Black -- $15,840; Ralph
Levine -- $11,838; Paul A. Veteri -- $7,386; and Herbert Sosman -- $14,781.
(2) Henry H. Hoyt, Jr. and Daniel J. Black each received awards of 166,566
shares on May 10, 1990 which vested on May 10, 1995. The market value of
these shares was $1,998,792 on March 31, 1995. Ralph Levine received an
award of 45,768 shares on November 22, 1990 which vested on November 22,
1995. The market value of these shares was $549,216 on March 31, 1995. Paul
A. Veteri received an award of 45,684 shares on November 22, 1990 which
vested on November 22, 1995. The market value of these shares was $548,208
on March 31, 1995. Herbert Sosman received an award of 55,113 shares on
December 18, 1990 which vested on December 18, 1995. The market value of
these shares was $661,356 on March 31, 1995.
If there is a change in control of the Company, the shares shall become
fully vested. Dividends accumulated since the date of grant are paid to the
recipient of the award at vesting.
(3) Included in this amount is $25,861, $45,741, $29,260, $24,334 and $25,625
for Henry H. Hoyt, Jr., Daniel J. Black, Ralph Levine, Paul A. Veteri and
Herbert Sosman, respectively related to withholding taxes paid by the
Company on the employee's behalf.
5
<PAGE> 8
PENSION PLAN TABLE FOR ANNUAL PROXY STATEMENT
<TABLE>
<CAPTION>
COVERED 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
COMPENSATION SERVICE SERVICE SERVICE SERVICE SERVICE
- ---------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
$ 300,000 $ 85,522 $114,029 $142,536 $172,536 $ 202,536
$ 400,000 $115,522 $154,029 $192,536 $232,536 $ 272,534
$ 500,000 $145,522 $194,029 $242,536 $292,536 $ 342,536
$ 600,000 $175,522 $234,029 $292,536 $352,536 $ 412,536
$ 700,000 $205,522 $274,029 $342,536 $412,536 $ 482,536
$ 800,000 $235,522 $314,029 $392,536 $472,536 $ 552,536
$ 900,000 $265,522 $354,029 $442,536 $532,536 $ 622,536
$1,000,000 $295,522 $394,029 $492,536 $592,536 $ 692,536
$1,100,000 $325,522 $434,029 $542,536 $652,536 $ 762,536
$1,200,000 $355,522 $474,029 $592,536 $712,536 $ 832,536
$1,300,000 $385,522 $514,029 $642,536 $772,536 $ 902,536
$1,400,000 $415,522 $554,029 $692,536 $832,536 $ 972,536
$1,500,000 $445,522 $594,029 $742,536 $892,536 $1,042,536
$1,600,000 $475,522 $634,029 $792,536 $952,536 $1,112,536
</TABLE>
The Employees' Retirement Plan of Carter-Wallace, Inc. (the "Retirement
Plan") is a noncontributory defined benefit plan. The Retirement Plan provides
for a pension payable upon retirement at age 65 in an amount calculated on the
basis of the number of years of credited service and the individual's average
salary during the five consecutive highest paid years in the ten year period
immediately preceding the individual's retirement date. Covered compensation
does not include deferred compensation or other incentive compensation. The
Retirement Plan permits early retirement and deferred retirement under specified
conditions.
The above table shows the estimated annual benefits payable on retirement
to eligible employees, including officers and directors, under the Retirement
Plan as in effect on March 31, 1995. Amounts shown are based on the assumptions
that the Retirement Plan remains in effect without change, and that the
individual receives a straight life benefit with no reduction to allow for
payment to a surviving spouse, as is permitted by the Retirement Plan.
The above computation of benefits assumes continued employment to age 65
and covered compensation as described above. Amounts shown are before applicable
federal and state income taxes payable by the recipient and are net of a portion
of applicable Social Security benefits received. The portion of the benefits
accrued as of September 30, 1980 is subject to annual cost-of-living
adjustments.
Current covered remuneration and credited years of service for purposes of
the Retirement Plan and the Executive Pension Benefits Plan (the "Executive
Pension Plan") for each executive officer named in the Summary Compensation
Table are $1,528,200 and 34 years for Daniel J. Black, $1,528,200 and 43 years
for Henry H. Hoyt, Jr., $698,300 and 31 years for Ralph Levine, $698,300 and 18
years for Paul A. Veteri and $667,100 and 16 years for Herbert Sosman. Amounts
payable under the Retirement Plan may not exceed the limitation imposed by
Section 415 of the Internal Revenue Code (currently $120,000, but subject to
periodic cost-of-living adjustments, or the individual's average covered
compensation for his three highest paid years, whichever is less) and the amount
of credited compensation which may be taken into account in the computation of
pension benefits may not exceed the amount permitted under Section 401(a)(17) of
the Code (currently $150,000, subject to cost-of-living adjustments). Amounts
shown in the above table include benefits in excess of such limitations that are
payable under the Executive Pension Plan described below.
The Executive Pension Plan is an unfunded plan which provides for the
payment of vested pension benefits, which would otherwise be payable under the
Retirement Plan but for the limitations of Sections 415 and 401(a)(17) of the
Code and the exclusion from covered compensation of amounts deferred under the
Executive Savings Plan, and which mitigates the reduction in retirement benefits
of corporate officers who elect early retirement. Corporate officers' covered
compensation used in calculating Executive Pension Plan benefits include accrued
bonuses.
6
<PAGE> 9
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Mr. Black, Mr.
Sosman, Mr. Levine and Mr. Veteri.
Mr. Black's employment agreement, as amended from time to time, provides
for his employment initially as President and Chief Operating Officer of the
Company at a salary of not less than $1,056,300 per year for a period commencing
April 24, 1992 and continuing for a period of five (5) years from December 31st
of any year in which the Board of Directors desires to terminate Mr. Black's
agreement, and requires the Company to pay the premium on a $500,000 insurance
policy on Mr. Black's life and certain federal, state and city income taxes on
such premium amount and taxes. The employment agreement provides for the Company
to use its best efforts to cause Mr. Black to be elected a director of the
Company.
Mr. Sosman's employment agreement provides for his employment as a Vice
President of the Company and President of the Company's Wallace Laboratories
Division at a salary of not less than $347,200 per year and a bonus to be
determined under the Company's Profit Sharing Plan for a five-year period
commencing October 31, 1992.
Mr. Levine's employment agreement provides for his employment as Vice
President, Secretary and General Counsel of the Company for a period commencing
April 10, 1992 and terminating July 2, 2001. Mr. Veteri's employment agreement
provides for his employment as Vice President, Finance of the Company for a
period commencing April 10, 1992 and continuing for a period of five years from
April 1st of any year in which the Board of Directors desires to terminate Mr.
Veteri's agreement. The cash compensation received by Mr. Levine and Mr. Veteri
pursuant to the employment agreements is included in the amounts disclosed in
the Summary Compensation Table.
COMPENSATION OF DIRECTORS
Directors, other than those who are salaried employees of the Company,
received an annual fee of $35,000 for serving on the Board of Directors and a
fee of $500 for each meeting of the Audit Committee that they attended, but did
not receive a fee for attendance at meetings of the Board of Directors or
meetings of any committee other than the Audit Committee. Directors who are
salaried employees of the Company received a fee of $250 for each meeting of the
Board of Directors that they attended.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended March 31, 1995, the Compensation Committee of
the Board of Directors of the Company consisted of Richard L. Cruess, M.D.,
Chairman, Herbert M. Rinaldi and David M. Baldwin. None of such persons was,
during such fiscal year or formerly, an officer of the Company or any of its
subsidiaries or had any relationship with the Company other than serving as a
director of the Company. In addition, during the fiscal year ended March 31,
1995, no executive officer of the Company served as a director or a member of
the compensation committee of another entity, one of whose executive officers
served as a Director or on the Compensation Committee of the Company.
PROPOSAL TO APPROVE THE 1996 LONG-TERM INCENTIVE PLAN
The Board of Directors is submitting the Plan to the stockholders for their
approval. The purpose of the Plan is to advance the interests of the Company and
its stockholders by providing corporate officers of the Company with a larger
personal and financial interest in the success of the Company through the grant
of stock-based incentive compensation. The Board of Directors believes that the
Plan will benefit the Company and its stockholders and, thus, recommends
approval of the Plan.
GENERAL INFORMATION
Effective Date and Duration of the Plan. The Plan became effective on
December 7, 1995, subject to shareholder approval by the affirmative vote or
consent of holders of a majority of the issued and outstanding
7
<PAGE> 10
shares of Common Stock, and will terminate 10 years from the date of its
adoption, or such earlier date as the Board of Directors may determine.
Administration. The Plan is to be administered by a committee of the Board
of Directors (the "Committee") that consists of at least two directors and that
satisfies the provisions of Rule 16b-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act") or any successor rule, and Section
162(m)(4)(C)(i) of the Internal Revenue Code of 1986, as amended (the "Code").
Such Committee will select persons to receive awards under the Plan, determine
the amount of each award and the terms and conditions governing such award,
interpret the Plan and any awards granted thereunder, establish rules and
regulations for the administration of the Plan and take any other action
necessary or desirable for the administration of the Plan.
Underlying Shares Awarded Under the Plan. It is not possible to state, in
advance, the number or identities of any grantees under the Plan, or any amounts
to be awarded under the Plan. The maximum number of shares that could be
delivered or purchased under the Plan is 4,500,000 shares of Common Stock,
subject to adjustment to preserve the value of an award in the event of any
change in the outstanding Common Stock by reason of any stock dividend, stock
split, combination of shares, recapitalization, or other similar change in the
capital stock of the Company, or in the event of the merger or consolidation of
the Company into or with any other corporation or the reorganization of the
Company.
The shares of Common Stock may be authorized but unissued shares that are
not reserved for any other purpose, or previously issued shares acquired by the
Company and held in its treasury. If, as a result of the termination, expiration
or forfeiture of an award or otherwise, certain shares were no longer subject to
an award under the Plan, such shares would again be available for future awards
under the Plan.
Amendment of the Plan. The Plan may be amended by the Board as the Board
deems advisable; provided, however, that no amendment will become effective
unless approved by affirmative vote of the Company's shareholders if such
approval is necessary for the continued validity of the Plan or if the failure
to obtain such approval would adversely affect the compliance of the Plan with
Rule 16b-3 under the Exchange Act or any other rule or regulation. No amendment
may, without the consent of a participant, impair such participant's rights
under any Option previously granted under the Plan.
AWARDS AVAILABLE UNDER THE PLAN
Pursuant to the Plan, awards may be granted to any employee, whether or not
a director, who is a corporate officer of the Company. Awards shall consist of a
combination of (i) options to purchase Common Stock of the Company ("Options")
and (ii) restricted stock and/or deferred stock. 80% of the shares of Common
Stock covered by an award will be in the form of an Option and 20% will be in
the form of Restricted Stock and/or Deferred Stock.
Options. Any Options awarded under the Plan, which will be evidenced by
option agreements, will be either Options intended to qualify as incentive stock
options under Section 422 of the Code ("Incentive Stock Options") or Options not
intended to so qualify ("Nonstatutory Stock Options").
The aggregate fair market value of Common Stock for which a participant is
granted Incentive Stock Options that first become exercisable during any given
calendar year will be limited to $100,000. To the extent such limitation is
exceeded, an Option will be treated as a Nonstatutory Stock Option.
No corporate officer may be granted Options during any consecutive 60-month
period on more than 1,000,000 shares of Common Stock, subject to adjustment in
the event of any change in the outstanding Common Stock by reason of any stock
dividend, stock split, combination of shares, recapitalization, or other similar
change in the capital stock of the Company, or in the event of the merger or
consolidation of the Company into or with any other corporation or the
reorganization of the Company.
An Option may be granted for a term not to exceed 10 years from the date
such Option is granted. An Incentive Stock Option awarded to an employee who
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company may not, in any event, be exercisable after the
8
<PAGE> 11
expiration of five years from the date such Incentive Stock Option is granted.
All Options will be exercisable in accordance with the terms and conditions set
forth in the option agreements evidencing the grant of such Options. Except
under limited circumstances involving termination of employment due to death or
disability, a participant may not exercise any Option granted under the Plan
within the first year after the date of the grant of such Option.
The price for which shares of Common Stock may be purchased upon the
exercise of an Option will be the fair market value of such shares on the date
of the grant of such Option; provided, however, that an Incentive Stock Option
granted to an employee who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company shall have a
purchase price for the underlying shares equal to 110% of the fair market value
of the Common Stock on the date of grant. For purposes of the Plan, the fair
market value of a share of Common Stock on a specified date will be the closing
price of the Common Stock on such date on the New York Stock Exchange or, if no
such sale of Common Stock occurs on such date, the fair market value of the
Common Stock as determined by the Committee in good faith.
Full payment of the purchase price for shares of Common Stock purchased
upon the exercise, in whole or in part, of an Option granted under the Plan must
be made at the time of such exercise. The Plan provides that the purchase price
may be paid in cash or in shares of Common Stock valued at their fair market
value on the date of purchase. Alternatively, an Option may be exercised in
whole or in part by delivering a properly executed exercise notice, together
with irrevocable instructions to a broker to deliver promptly to the Company the
amount of sale or loan proceeds necessary to pay the purchase price and
applicable withholding taxes, and any other documents that the Committee deems
necessary.
During a participant's lifetime, Options granted under the Plan will be
exercisable only by such participant. Furthermore, any Options granted under the
Plan may not be transferred, other than by will or by the laws of descent and
distribution. Notwithstanding the foregoing, a participant may transfer a
Nonstatutory Stock Option granted under the Plan to his or her spouse, children
and/or grandchildren, or to one or more trusts for the benefit of such family
members, if the agreement evidencing such Option so provides and the participant
does not receive any consideration for the transfer. Any Option so transferred
will be subject to the same terms and conditions that applied to such Option
immediately prior to its transfer, except that it will not be further
transferable by the transferee during the transferee's lifetime.
If the Company terminates a participant's employment for "cause" (as
defined in the Plan), such participant may not exercise any Options received
under the Plan. If a participant's employment terminates by reason of
retirement, such participant's Options may be exercised at any time prior to
their expiration, with respect only to such number of shares of Common Stock as
to which the right of exercise had accrued at the time of termination of
employment. If a participant's employment terminates by reason of death or
permanent disability, such participant's Options may be exercised at any time
prior to their expiration, with respect to all shares of Common Stock subject
thereto. If a participant's employment terminates under any other circumstances,
the Options will be exercisable for a period of three months following the date
of such termination, with respect only to such number of shares as to which the
right of exercise had accrued at the time of termination of employment. Except
in the event of a participant's death, an Incentive Stock Option exercised more
than three months (or one year if the participant is permanently disabled)
following the participant's termination of employment will be treated as a
Nonstatutory Stock Option.
Restricted Stock. Restricted stock will be evidenced by restricted stock
agreements that set forth the award and reflect the conditions of such award.
Participants who receive a restricted stock award will be issued a certificate
in respect of the shares of Common Stock covered by such award. Such certificate
will be registered in the name of such participant and will bear an appropriate
legend referring to the terms, conditions and restrictions of the award. Such
certificate will, in the Committee's discretion, be placed in escrow pending the
vesting or forfeiture of such restricted stock.
A participant who is awarded restricted stock will, subject to certain
limitations, have all of the rights of a shareholder of the Company, including
the right to vote shares. Cash dividends paid with respect to shares of
restricted stock will be deferred and will be paid to the participant, without
any interest thereon and less any amounts due to the Company, upon the vesting
of such restricted stock.
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<PAGE> 12
Prior to the vesting of shares of restricted stock, a participant will not
be permitted to sell, transfer, pledge, or assign shares of restricted stock,
and any attempt to so sell, transfer, pledge, or assign such shares will be
ineffective.
Restricted stock will vest only at the end of the four-year period
commencing with the date of such award, and only if the participant shall have
remained in the employ of the Company throughout such period; provided, however,
that under certain limited circumstances involving the termination of employment
due to retirement, death or permanent disability, or certain other limited
cases, such restricted stock may vest earlier. If a participant's employment
terminates by reason of retirement, any restricted stock award held by such
participant will vest with respect to a number of shares determined by
multiplying the total number of shares covered by the restricted stock award by
a fraction, the numerator of which is equal to the number of days from the date
of the award to the date of retirement, and the denominator of which is 1,461;
any remaining shares of restricted stock shall be forfeited. If employment is
terminated by reason of death or permanent disability of the participant, his or
her restricted stock will vest immediately. If a participant, other than one who
is retiring, voluntarily terminates employment or is terminated by the Company
for "cause" (as defined in the Plan), restricted stock held by such participant
will be forfeited. If a participant's employment terminates under any other
circumstances, any restricted stock award held by such participant will vest
with respect to a number of shares determined by multiplying the total number of
shares covered by the restricted stock award by a fraction, the numerator of
which is equal to the number of days from the date of the award to the date of
termination, and the denominator of which is 1,461; any remaining shares of
restricted stock shall be forfeited.
Deferred Stock. Deferred stock, representing the Company's unfunded
promise to transfer shares of Common Stock in the future, will be evidenced by
deferred stock agreements that set forth the deferred stock award and reflect
the conditions of such award. Upon the vesting of a deferred stock award, a
participant will be issued a stock certificate for a number of shares of Common
Stock equal to the number of shares of deferred stock.
The rights of a participant with respect to deferred stock will be no
greater than those of a general creditor of the Company.
An amount equal to any cash dividends paid with respect to the number of
shares of Common Stock covered by a deferred stock award will be paid to a
participant, without any interest thereon and less any amounts due to the
Company, upon the vesting of such deferred stock.
Prior to the vesting of shares of deferred stock, a participant will not be
permitted to sell, transfer, pledge, or assign shares of deferred stock, and any
attempt to so sell, transfer, pledge, or assign such shares will be ineffective.
Deferred stock will vest only at the end of the four-year period commencing
with the date of such award, and only if the participant shall have remained in
the employ of the Company throughout such period; provided, however, that under
certain limited circumstances involving the termination of employment due to
retirement, death or permanent disability, or certain other limited cases,
deferred stock may vest earlier. If employment is terminated by reason of
retirement, any deferred stock award held by such participant will vest with
respect to a number of shares determined by multiplying the total number of
shares covered by the deferred stock award by a fraction, the numerator of which
is equal to the number of days from the date of the award to the date of
retirement, and the denominator of which is 1,461; any remaining shares of
deferred stock shall be forfeited. If a participant's employment terminates by
reason of death or permanent disability, such participant's deferred stock will
immediately vest. If a participant, other than one who is retiring, voluntarily
terminates employment or is terminated by the Company for "cause" (as defined in
the Plan), any deferred stock held by such participant will be forfeited. If a
participant's employment is terminated under any other circumstances, a deferred
stock award held by such participant will vest with respect to a number of
shares determined by multiplying the total number of shares covered by the
deferred stock award by a fraction, the numerator of which is equal to the
number of days from the date of the award to the date of termination, and the
denominator of which is 1,461; any remaining shares of deferred stock shall be
forfeited.
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<PAGE> 13
CHANGE IN CONTROL
Upon the occurrence of a Change in Control (as defined below), outstanding
awards of restricted stock or deferred stock will become fully vested, and
outstanding Options will become immediately exercisable. An Option held by a
participant upon his or her termination of employment following a Change in
Control will remain exercisable for the balance of its term. Upon the exercise
of an Option within one year after the occurrence of a Change in Control, a
participant will be entitled to receive, in addition to the shares of Common
Stock thereby purchased, a cash payment equal to the excess of (i) the aggregate
Change in Control Price (as defined below) of the number of shares of Common
Stock purchased upon such exercise (or which would have been so purchased but
for the substitution or addition of other shares or securities pursuant to the
adjustment provisions of Section 11 of the Plan) over (ii) the fair market value
on the date of exercise of the shares of Common Stock (or other securities)
purchased upon such exercise.
As used in the Plan, a "Change in Control" means the acquisition by any
person (including an individual, a corporation, a partnership, an association, a
joint-stock company, a trust, or any unincorporated organization, but excluding
a member of the Hoyt Family or a trust primarily for the benefit of members of
the Hoyt Family or parties controlled by members of the Hoyt Family) in one
transaction or in a series of transactions of (i) shares of stock which would,
alone or aggregated with shares of stock already owned by such person, result in
such person owning more than 50 percent of the voting power of the securities of
the Company possessing the right to vote on the election of directors and all
other matters which require the approval of stockholders generally; (ii) all or
substantially all of the properties and assets of the Company; or (iii) the
power, whether direct or indirect, whether exercised or not, to direct or cause
the direction of the management or policies of the Company, whether through
record or beneficial ownership of voting securities or other equity or debt
interests, by contract, by proxy or otherwise. For purposes of this definition,
the "Hoyt Family" means the family of Henry H. Hoyt, Sr., his descendants, and
members of such descendants' families.
The "Change in Control Price" means the highest price per share paid in any
transaction reported on the New York Stock Exchange Composite Index, or paid or
offered in any bona fide transaction related directly, or in any way indirectly,
to a Change in Control, at any time during the six-month period immediately
preceding the occurrence of the Change in Control.
The foregoing summary is qualified in its entirety by reference to the full
text of the Plan, which is set forth as Exhibit A to this Consent Solicitation
Statement.
On January 15, 1996, the closing price of the Company's common stock on the
New York Stock Exchange was $11.78 per share.
The adoption of this proposal to approve the Plan requires that the number
of votes cast in favor of the proposal constitute at least a majority of the
outstanding shares of Common Stock and Class B Common Stock voting as one class.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR APPROVAL
OF THE 1996 LONG-TERM INCENTIVE PLAN.
By Order of the Board of Directors,
RALPH LEVINE
Secretary
New York, New York
January 22, 1996
11
<PAGE> 14
EXHIBIT A
CARTER-WALLACE, INC.
1996 LONG-TERM INCENTIVE PLAN
1. Purpose. The purpose of this Carter-Wallace, Inc. 1996 Long-Term
Incentive Plan (the "Plan") is to advance the interests of Carter-Wallace, Inc.
(the "Company") and its shareholders by providing corporate officers of the
Company with a larger personal and financial interest in the success of the
Company through the grant of stock-based incentive compensation.
2. Administration. The Plan shall be administered by a committee (the
"Committee") consisting of at least two members of the Board of Directors of the
Company (the "Board"). The Committee shall be constituted in such a manner as to
satisfy the requirements of applicable law, the provisions of Rule 16b-3 under
the Securities Exchange Act of 1934 (the "Exchange Act") or any successor rule,
and the provisions of Section 162(m)(4)(C)(i) of the Internal Revenue Code of
1986, as amended (the "Code"). The Committee shall be appointed, and vacancies
shall be filled, by the Board. The Committee shall have full power and authority
to (i) select the individuals to whom awards may be granted under the Plan; (ii)
determine the amount of each award and the terms and conditions, not
inconsistent with the provisions of the Plan, governing such award; (iii)
interpret the Plan and any award granted thereunder; (iv) establish such rules
and regulations as it deems appropriate for the administration of the Plan; and
(v) take such other action as it deems necessary or desirable for the
administration of the Plan. Any action of the Committee with respect to the
administration of the Plan shall be taken by majority vote. The Committee's
interpretation and construction of any provision of the Plan or the terms of any
award shall be conclusive and binding on all parties.
3. Participants. Awards may be granted under the Plan to any employee,
whether or not a director, who is a corporate officer of the Company.
4. The Shares. The shares that may be delivered or purchased under the
Plan shall not exceed an aggregate of 4,500,000 shares (subject to adjustment
pursuant to Section 11) of common stock, par value $1 per share, of the Company
(the "Common Stock"). Such shares of Common Stock may be set aside out of the
authorized but unissued shares of Common Stock not reserved for any other
purpose or out of previously issued shares acquired by the Company and held in
its treasury. Any shares of Common Stock which, by reason of the termination,
expiration, or forfeiture of an award or otherwise, are no longer subject to an
award granted under the Plan may again be subjected to an award under the Plan.
5. Awards. Awards under the Plan shall consist of a combination of (i)
Options and (ii) Restricted Stock and/or Deferred Stock. The total number of
shares of Restricted Stock and/or Deferred Stock granted to a participant as
part of an award shall equal 25 percent of the number of shares of Common Stock
covered by the Option granted to the participant as part of the same award.
6. Options. Options to purchase Common Stock ("Options") shall be
evidenced by option agreements which shall be subject to the terms and
conditions set forth in the Plan and such other terms and conditions not
inconsistent herewith as the Committee may approve.
(a) Types of Options. Options granted under the Plan shall, as
determined by the Committee at the time of grant, be either Options
intended to qualify as incentive stock options under Section 422 of the
Code ("Incentive Stock Options") or Options not intended to so qualify
("Nonstatutory Stock Options"). Each option agreement shall identify the
Option as an Incentive Stock Option or as a Nonstatutory Stock Option.
(b) Price. The price at which shares of Common Stock may be purchased
upon the exercise of an Option granted under the Plan shall be the fair
market value of such shares on the date of grant of such Option; provided,
however, that an Incentive Stock Option granted to an employee who owns
stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company shall
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<PAGE> 15
have a purchase price for the underlying shares equal to 110% of the fair
market value of the Common Stock on the date of grant.
For purposes of the Plan, the fair market value of a share of Common
Stock on a specified date shall be the closing price on such date of the
Common Stock on the New York Stock Exchange or, if no such sale of Common
Stock occurs on such date, the fair market value of the Common Stock as
determined by the Committee in good faith.
(c) Per-Participant Limit. No participant may be granted Options
during any consecutive 60-month period on more than 1,000,000 shares of
Common Stock (subject to adjustment pursuant to Section 11).
(d) Limitation on Incentive Stock Options. The aggregate fair market
value (determined on the date of grant) of Common Stock for which a
participant is granted Incentive Stock Options that first become
exercisable during any given calendar year shall be limited to $100,000. To
the extent such limitation is exceeded, an Option shall be treated as a
Nonstatutory Stock Option.
(e) Nontransferability. Options granted under the Plan shall not be
transferable other than by will or by the laws of descent and distribution,
and, during a participant's lifetime, shall be exercisable only by the
participant. Notwithstanding the foregoing, a participant may transfer any
Nonstatutory Option granted under the Plan to the participant's spouse,
children and/or grandchildren, or to one or more trusts for the benefit of
such family members, if the agreement evidencing such Option so provides
and the participant does not receive any consideration for the transfer.
Any Option so transferred shall continue to be subject to the same terms
and conditions that applied to such Option immediately prior to its
transfer (except that such transferred Option shall not be further
transferable by the transferee during the transferee's lifetime).
(f) Term and Exercisability of Options. Options may be granted for
terms of not more than 10 years and shall be exercisable in accordance with
such terms and conditions as are set forth in the option agreements
evidencing the grant of such Options. In no event shall an Incentive Stock
Option granted to an employee who owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company be
exercisable after the expiration of five years from the date such Incentive
Stock Option is granted.
Except as otherwise provided in Section 6(g), no Option granted under
the Plan shall be exercisable by a participant during the first year after
the date of grant of such Option.
(g) Termination of Employment. An Option may not be exercised
following a participant's termination of employment except as set forth in
this Section 6(g).
(i) Retirement. If a participant's employment terminates by reason
of retirement under the Company's pension plan at or after age 62, the
participant's Options may be exercised at any time prior to their
expiration with respect only to such number of shares of Common Stock as
to which the right of exercise had accrued at the time of termination of
employment.
(ii) Death or Disability. If a participant's employment terminates
by reason of death or permanent disability (within the meaning of
Section 22(e)(3) of the Code), the participant's Options may be
exercised at any time prior to their expiration with respect to all
shares of Common Stock subject thereto (whether or not the right of
exercise had accrued at the time of termination of employment).
(iii) Termination for Cause. No Options may be exercised following
a participant's termination of employment by the Company for Cause. For
purposes of the Plan, "Cause" shall mean conduct justifying immediate
dismissal, consisting of theft, conviction of a felony, breach of any
non-competition or confidentiality covenant contained in an employment
agreement between the participant and the Company, habitual drunkenness,
or excessive absenteeism not related to illness.
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<PAGE> 16
(iv) Other Circumstances. If a participant's employment terminates
under circumstances not described in clause (i), (ii), or (iii) above,
such participant's Options may only be exercised within three months
following the date of such termination and with respect only to such
number of shares as to which the right of exercise had accrued at the
time of termination of employment.
In no event may an Option be exercised after the expiration of the term of such
Option. Except in the event of a participant's death, an Incentive Stock Option
exercised more than three months (one year if the participant is permanently
disabled) following the participant's termination of employment will be treated
as a Nonstatutory Stock Option.
(h) Payment. Full payment of the purchase price for shares of Common
Stock purchased upon the exercise, in whole or in part, of an Option
granted under the Plan shall be made at the time of such exercise. The
purchase price may be paid in cash or in shares of Common Stock valued at
their fair market value on the date of purchase. Alternatively, an Option
may be exercised in whole or in part by delivering a properly executed
exercise notice together with irrevocable instructions to a broker to
deliver promptly to the Company the amount of sale or loan proceeds
necessary to pay the purchase price and applicable withholding taxes, and
such other documents as the Committee may determine.
7. Restricted Stock. Restricted Stock shall be evidenced by restricted
stock agreements which shall be subject to the terms and conditions set forth in
the Plan and such other terms and conditions not inconsistent herewith as the
Committee may approve.
(a) Awards and Certificates. As a condition to receiving any
Restricted Stock award, the participant shall execute an agreement
evidencing the award and reflecting the conditions imposed upon such award.
Each participant receiving Restricted Stock shall be issued a certificate
in respect of the shares of Common Stock covered by such award. Such
certificate shall be registered in the name of such participant, shall bear
an appropriate legend referring to the terms, conditions, and restrictions
applicable to such award, and shall, in the Committee's discretion, be
placed in escrow pending the vesting or forfeiture of such Restricted
Stock.
(b) Rights as Shareholder. Except as otherwise provided in this
Section 7, a participant shall have, with respect to shares of Restricted
Stock, all of the rights of a shareholder of the Company, including the
right to vote shares. Cash dividends paid with respect to shares of
Restricted Stock shall be deferred and shall be paid to the participant,
without any interest thereon and less any amounts due to the Company, upon
the vesting of such Restricted Stock.
(c) Vesting of Restricted Stock. Except as otherwise provided in this
Section 7 and in Section 9, Restricted Stock shall vest only at the end of
the four-year period commencing with the date of such award, and only if
the participant shall have remained employed by the Company throughout such
period. Prior to the vesting of shares of Restricted Stock, the participant
shall not be permitted to sell, transfer, pledge, or assign such shares of
the Restricted Stock, and any attempt to so sell, transfer, pledge, or
assign such shares shall be ineffective.
(i) Retirement. If a participant's employment terminates by reason
of retirement under the Company's pension plan at or after age 62, any
Restricted Stock award held by such participant shall vest with respect
to a number of shares determined by multiplying the total number of
shares covered by the Restricted Stock award by a fraction, the
numerator of which is equal to the number of days from the date of the
award to the date of retirement, and the denominator of which is 1,461;
any remaining shares of Restricted Stock shall be forfeited.
(ii) Death or Disability. If a participant's employment terminates
by reason of death or permanent disability (within the meaning of
Section 22(e)(3) of the Code), the participant's Restricted Stock shall
immediately vest.
(iii) Voluntary Termination or Termination for Cause. If a
participant not described in clause (i) voluntarily terminates
employment, or if such participant's employment is terminated by the
Company for Cause, any shares of Restricted Stock held by the
participant shall be forfeited.
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<PAGE> 17
(iv) Other Circumstances. If a participant's employment terminates
under circumstances not described in clause (i), (ii), or (iii) above,
any Restricted Stock award held by such participant shall vest with
respect to a number of shares determined by multiplying the total number
of shares covered by the Restricted Stock award by a fraction, the
numerator of which is equal to the number of days from the date of the
award to the date of termination, and the denominator of which is 1,461;
any remaining shares of Restricted Stock shall be forfeited.
For purposes hereof, any fraction of a share shall be disregarded and
restrictions shall lapse on Restricted Stock in accordance with the
foregoing to the nearest whole number of shares.
8. Deferred Stock. Deferred Stock, representing the Company's unfunded
promise to transfer shares of Common Stock in the future, shall be evidenced by
deferred stock agreements which shall be subject to the terms and conditions set
forth in the Plan and such other terms and conditions not inconsistent herewith
as the Committee may approve. A participant shall have no rights with respect to
Deferred Stock that are greater than those of a general creditor of the Company.
(a) Awards and Certificates. As a condition to receiving any Deferred
Stock award, the participant shall execute an agreement evidencing the
award and reflecting the conditions imposed upon such award. Upon the
vesting of a Deferred Stock award, the participant shall be issued a stock
certificate for a number of shares of Common Stock equal to the number of
shares of Deferred Stock.
(b) Deferred Dividends. An amount equal to any cash dividends paid
with respect to the number of shares of Common Stock covered by a deferred
stock award shall be paid to the participant, without any interest thereon
and less any amounts due to the Company, upon the vesting of such Deferred
Stock.
(c) Vesting of Deferred Stock. Except as otherwise provided in this
Section 8 and in Section 9, Deferred Stock shall vest only at the end of
the four-year period commencing with the date of such award and only if the
participant shall have remained employed by the Company throughout such
period. Prior to the vesting of shares of Deferred Stock, the participant
shall not be permitted to sell, transfer, pledge, or assign such Deferred
Stock, and any attempt to so sell, transfer, pledge, or assign such
Deferred Stock shall be ineffective.
(i) Retirement. If a participant's employment terminates by reason
of retirement under the Company's pension plan at or after age 62, any
Deferred Stock award held by such participant shall vest with respect to
a number of shares determined by multiplying the total number of shares
covered by the Deferred Stock award by a fraction, the numerator of
which is equal to the number of days from the date of the award to the
date of retirement, and the denominator of which is 1,461; any remaining
shares of Deferred Stock shall be forfeited.
(ii) Death or Disability. If a participant's employment terminates
by reason of death or permanent disability (within the meaning of
Section 22(e)(3) of the Code), the participant's Deferred Stock shall
immediately vest.
(iii) Voluntary Termination or Termination for Cause. If a
participant not described in clause (i) voluntarily terminates
employment, or if such participant's employment is terminated by the
Company for Cause, any Deferred Stock held by the participant shall be
forfeited.
(iv) Other Circumstances. If a participant's employment terminates
under circumstances not described in clause (i), (ii), or (iii) above,
any Deferred Stock award held by such participant shall vest with
respect to a number of shares determined by multiplying the total number
of shares covered by the Deferred Stock award by a fraction, the
numerator of which is equal to the number of days from the date of the
award to the date of termination, and the denominator of which is 1,461;
any remaining shares of Deferred Stock shall be forfeited.
For purposes hereof, any fraction of a share shall be disregarded and
restrictions shall lapse on Deferred Stock in accordance with the foregoing
to the nearest whole number of shares.
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<PAGE> 18
9. Change in Control. In the event of a Change in Control (as defined in
Section 9(c)), the provisions of this Section 9 shall apply notwithstanding any
contrary provision in the Plan.
(a) Options. Upon the occurrence of a Change in Control, each
outstanding Option shall become immediately exercisable, and upon a
participant's termination of employment following such Change in Control
any Option held by such participant shall remain exercisable for the
balance of its term. Upon the exercise of an Option within one year after
the occurrence of a Change in Control, the participant shall be entitled to
receive, in addition to the shares of Common Stock thereby purchased, a
cash payment equal to the excess of (i) the aggregate Change in Control
Price (as defined in Section 9(d)) of the number of shares of Common Stock
purchased upon such exercise (or which would have been so purchased but for
the substitution or addition of other shares or securities pursuant to
Section 11) over (ii) the fair market value on the date of exercise of the
shares of Common Stock (or other securities) purchased upon such exercise.
(b) Restricted Stock and Deferred Stock. Upon the occurrence of a
Change in Control, any outstanding awards of Restricted Stock or Deferred
Stock shall become fully vested.
(c) Change in Control Defined. As used herein, a "Change in Control"
shall mean the acquisition by any person (including an individual, a
corporation, a partnership, an association, a joint-stock company, a trust,
or any unincorporated organization, but excluding a member of the Hoyt
Family, a trust primarily for the benefit of members of the Hoyt Family or
parties controlled by members of the Hoyt Family) in one or in a series of
transactions of (i) shares of stock which would, alone or aggregated with
shares of stock already owned by such person, result in such person owning
more than 50 percent of the voting power of the securities of the Company
possessing the right to vote on the election of directors and all other
matters which require the approval of shareholders generally; (ii) all or
substantially all of the properties and assets of the Company; or (iii) the
power, whether direct or indirect, whether exercised or not, to direct or
cause the direction of the management or policies of the Company, whether
through record or beneficial ownership of voting securities or other equity
or debt interests, by contract, by proxy or otherwise. For purposes of this
definition, the "Hoyt Family" shall mean the family of Henry H. Hoyt, Sr.,
his descendants, and members of such descendants' families.
(d) Change in Control Price. The "Change in Control Price" shall mean
the highest price per share paid in any transaction reported on the New
York Stock Exchange Composite Index, or paid or offered in any bona fide
transaction related directly, or in any way indirectly, to a Change in
Control, at any time during the six-month period immediately preceding the
occurrence of the Change in Control.
10. Withholding. No later than the date as of which an amount first
becomes includible in the gross income of a participant for Federal income tax
purposes with respect to any award under the Plan, the participant shall pay to
the Company, or make arrangement satisfactory to the Committee regarding the
payment of, any Federal, state, or local taxes required by law to be withheld
with respect to such amount. Unless otherwise determined by the Committee,
withholding obligations may be settled with Common Stock, including Common Stock
that is part of the award that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditional on such payment
or arrangements and the Company shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind due to the
participant. Any election made by a participant subject to Section 16(b) of the
Exchange Act to have shares of Common Stock withheld in satisfaction of the
withholding requirement with respect to such participant's award shall be
subject to the approval of the Committee and shall be in accordance with the
requirements of Rule 16b-3 under such Act.
11. Changes in Capital Structure, etc. In the event of any change in the
outstanding Common Stock by reason of any stock dividend, stock split,
combination of shares, recapitalization, or other similar change in the capital
stock of the Company, or in the event of the merger or consolidation of the
Company into or with any other corporation or the reorganization of the Company,
the number of shares covered by each outstanding award granted under the Plan,
the option price per share of each Option granted under the Plan, the total
number of shares for which awards may be granted under the Plan, and the maximum
number of shares for
A-5
<PAGE> 19
which Options may be granted to a single participant, shall be appropriately
adjusted by the Board to preserve the value of the award.
12. Effective Date and Termination of Plan. The Plan shall become
effective on the date of its adoption by the Board, subject to the ratification
of the Plan by the affirmative vote or consent of holders of a majority of the
issued and outstanding shares of Common Stock. The Plan shall terminate 10 years
from the date of its adoption or such earlier date as the Board may determine.
Any award outstanding under the Plan at the time of its termination shall remain
in effect in accordance with its terms and conditions and those of the Plan.
13. Amendment. The Board may amend the Plan in any respect from time to
time; provided, however, that no amendment shall become effective unless
approved by affirmative vote of the Company's shareholders if such approval is
necessary for the continued validity of the Plan or if the failure to obtain
such approval would adversely affect the compliance of the Plan with Rule 16b-3
under the Exchange Act or any other rule or regulation. No amendment may,
without the consent of a participant, impair such participant's rights under any
Option previously granted under the Plan.
14. Legal and Regulatory Requirements. No Option shall be exercisable and
no shares will be delivered under the Plan except in compliance with all
applicable federal and state laws and regulations including, without limitation,
compliance with withholding tax requirements and with the rules of all domestic
stock exchanges on which the Common Stock may be listed. Any share certificate
issued to evidence shares for which an Option is exercised may bear such legends
and statements as the Committee shall deem advisable to assure compliance with
federal and state laws and regulations. No Option shall be exercisable, and no
shares shall be delivered under the Plan, until the Company has obtained consent
or approval from regulatory bodies, federal or state, having jurisdiction over
such matters as the Committee may deem advisable.
15. General Provisions.
(a) Nothing contained in the Plan, or in any award granted pursuant to the
Plan, shall confer upon any employee any right to the continuation of the
employee's employment or services.
(b) The Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of New York.
A-6
<PAGE> 20
CARTER-WALLACE, INC.
WRITTEN CONSENT OF STOCKHOLDERS
IN LIEU OF A MEETING
THIS WRITTEN CONSENT IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned stockholders of CARTER-WALLACE, INC., a Delaware
Corporation (the "Company"), in accordance with Section 228 of the Delaware
General Corporation Law and the bylaws of the Company, take the following action
by written consent in lieu of a meeting:
[CONTINUED AND TO BE SIGNED ON REVERSE SIDE]
<PAGE> 21
/X/ Please mark votes as in this example
RESOLVED: That the stockholders of the Company hereby ratify, confirm and
approve in all respects the adoption by the Board of Directors of the Company
of the 1996 Long-Term Incentive Plan of the Company.
This written consent is effective as of the date indicated below.
THIS IS AN ACTION BY WRITTEN CONSENT. THE SHARES REPRESENTED BY THIS
WRITTEN CONSENT WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATION MADE HEREIN.
IF YOU WISH TO AUTHORIZE THE RESOLUTION ABOVE, MARK THE BOX BELOW LABELED
"CONSENT GRANTED". IF YOU WISH NOT TO AUTHORIZE THE RESOLUTION, MARK THE BOX
LABELED "CONSENT WITHHELD". PLEASE MARK, SIGN, DATE AND RETURN THIS WRITTEN
CONSENT PROMPTLY USING THE ENCLOSED ENVELOPE.
<TABLE>
<S> <C> <C>
/ / Consent Granted / / Consent Withheld / / Abstain
</TABLE>
Note: Please sign exactly as the
name appears on your stock
certificate. If the stock is
registered in the names of
two or more persons, each
should sign. Executors,
administrators, trustees,
guardians, attorneys and
corporate officers should
insert their titles.
Signature: Date:
-------- --------
Signature: Date:
-------- --------
