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As filed with the Securities and Exchange Commission on November 2, 1995
Registration No. 33-_____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
Pharmacia & Upjohn, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
98-0155411
(I.R.S. Employer Identification No.)
Fleming Way, Crawley, Sussex RH10 2LZ, England
(Address of Principal Executive Offices) (Zip Code)
Management Incentive Program of 1982
Management Incentive Program of 1987
Management Incentive Program of 1992
(Full Title of Plans)
Kenneth M. Cyrus
Fleming Way, Crawley,
Sussex RH10 2LZ England
(Name and Address of Agent For Service)
011 (44-123) 953-1133
Telephone Number, Including Area Code, of Agent For Service.
CALCULATION OF REGISTRATION FEE
Title of Proposed Proposed
Securities Offering Aggregate
to be Amount to be Price Per Offering Amount of
Registered Registered Share(1) Price(1) Registration Fee
Common Stock,
par value
$.01 per share 15,757,512 $11.70 $184,362,890 $63,573.41
(1) The price shown is the pro forma book value per share of the
Common Stock on June 30, 1995, in accordance with Rule 457(h)(i), and is
being utilized solely for the purpose of calculating the registration fee.
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PART I
INFORMATION REQUIRED IN THE PROSPECTUS
Item 1. Plan Information
Effective as of November 2, 1995, Pharmacia & Upjohn, Inc. (the
"Company") assumed the outstanding stock options (the "Upjohn Options"), of
The Upjohn Company ("Upjohn") issued pursuant to the Upjohn Management
Incentive Program of 1982 (the "Upjohn 1982 Program"), the Upjohn
Management Incentive Program of 1987 (the "Upjohn 1987 Program") and the
Upjohn Management Incentive Program of 1992 (the "Upjohn 1992 Program", and
together with the Upjohn 1982 Program and 1987 Program, the "Programs").
Each outstanding Upjohn Option issued under the Programs has been converted
into an option (each a "Company Option") to purchase the number of shares
of Common Stock, par value $.01 per share, of the Company (the "Company
Common Stock") as shall be equal to the number of shares of Upjohn Common
Stock, par value $1 per share, which could have been purchased immediately
prior to November 2, 1995 (the effective time of the merger of Pharmacia &
Upjohn Subsidiary, Inc. and Upjohn) under such Upjohn Option, multiplied by
1.45, and at an option exercise price per share, of Company Common Stock
equal to the per share option exercise price specified in such Upjohn
Option, divided by 1.45. All references in the Programs to Upjohn are, as
a result of such assumption, deemed to refer to the Company. All other
information required by Part I to be contained in the Section 10(a)
prospectus is omitted from this Registration Statement in accordance with
Rule 428 under the Securities Act of 1933, as amended (the "Securities
Act") and the "Note" to Part I of Form S-8.
Item 2. Registrant Information and Employee Plan Annual
Information
Any documents which the Company has agreed to provide are
available by contacting the Company at Fleming Way, Crawley, Fleming,
Sussex RH10 2LZ, England (011) (44-123) 953-1133. All other information
required by Part I to be contained in the Section 10(a) prospectus is
omitted from this Registration Statement in accordance with Rule 428 under
the Securities Act and the "Note" to Part I of Form S-8.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The documents listed on (a) through (c) below are incorporated
herein by reference.
(a) Prospectus dated September 15, 1995 filed as part of the
Company's Registration Statement on Form S-4 (File No. 33-61969).
(b) None.
(c) The description of the Company's Common Stock contained
in the Company's Registration Statement on Form 8-A (File No. 1-11557)
filed with the Securities and Exchange Commission on October 24, 1995.
All documents subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
as amended, prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters
all securities then remaining unsold, shall be deemed to be incorporated by
reference in the Registration Statement and to be part thereof from the
date of filing of such documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not Applicable.
Item 6. Indemnification of Officers and Directors.
Section 145 of the Delaware General Corporation Law authorizes
a court to award, or a corporation's board of directors to grant, indemnity
to directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of
1933. The Company's Certificate of Incorporation and By-laws provide for
indemnification of its directors, officers, employees and other agents to
the maximum extent permitted by the Delaware General Corporation Law. In
addition, the Company has entered into indemnification agreements with its
executive officers and directors. The Company also intends to purchase and
maintain insurance for its officers, directors, employees or agents against
liabilities which an officer, a director, an employee or an agent may incur
in his capacity as such.
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For a period of six years after November 2, 1995, the Company
will cause to be maintained in effect the current directors' and officers'
liability insurance policies maintained by Upjohn and Pharmacia Aktiebolag
("Pharmacia") (provided that the Company may, and in the event of the
cancellation or termination of such policies, the Company will, substitute
therefore policies reasonably satisfactory to the indemnified parties of at
least the same coverage containing terms and conditions which are no less
advantageous) with respect to claims arising from facts or events that
occurred prior to November 2, 1995.
The Company has agreed that it will indemnify and hold harmless
each present and former director and officer of Upjohn or Pharmacia,
determined as of November 2, 1995, against any Costs (as defined in the
Combination Agreement among Pharmacia, Upjohn, the Company and Pharmacia &
Upjohn Subsidiary, Inc. (the "Combination Agreement")) incurred in
connection with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative, arising out of or
pertaining to matters existing or occurring at or prior to November 2,
1995, whether asserted or claimed prior to, at or after November 2, 1995,
to the fullest extent that Upjohn or Pharmacia would have been permitted
under Delaware or Swedish law, as the case may be, and their charter
documents (each as in effect on August 20, 1995) to indemnify such
indemnified parties (and the Company will also advance expenses as incurred
to the fullest extent permitted under applicable law, provided that such
indemnified party to whom expenses are advanced provides an undertaking to
repay such advances if it is ultimately determined that such indemnified
party is not entitled to indemnification); and provided, further, that any
determination required to be made with respect to whether an officer's or
director's conduct complies with the standards set forth under Delaware or
Swedish law and Upjohn's or Pharmacia's charter documents will be made by
independent counsel selected by the Company.
To the extent the foregoing provision does not serve to
indemnify and hold harmless an Indemnified Party (as defined in the
Combination Agreement), for a period of six years after the date of the
Combination Agreement, the Combination Agreement provides that the Company
will, subject to the terms set forth in the Combination Agreement,
indemnify and hold harmless, to the fullest extent permitted under
applicable law (and the Company will also advance expenses as incurred to
the fullest extent permitted under applicable law; provided that the
Indemnified Party to whom expenses are advanced provides an undertaking to
repay such advances if it is ultimately determined that such Indemnified
Party is not entitled to indemnification), each Indemnified Party against
any Costs incurred in connection with any claim, action, suit, proceeding
or investigation, whether civil, criminal, administrative or investigative,
arising out of or pertaining to the transactions contemplated by the
Combination Agreement; provided, however, that the Company will not be
required to indemnify any Indemnified Party if it is determined that the
Indemnified Party acted in bad faith and not in a manner such Indemnified
Party believed to be in or not opposed to the best interests of Upjohn or
Pharmacia, as the case may be.
Item 7. Exemption from Registration Claim.
Not Applicable.
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Item 8. Exhibits.
The following exhibits are filed as part of this Registration
Statement:
Exhibit No. Description
3.1 Form of Restated Certificate of Incorporation of the
Company (incorporated by reference to Exhibit 3(a) to the
Company's Registration Statement on Form S-4 (File No.
33-61969)).
3.2 Form of by-laws of the Company (incorporated by reference
to Exhibit 3(b) to the Company's Registration Statement
on Form S-4 (file No. 33-61969)).
4.1 Specimen Common Stock Certificate (incorporated by
reference to Exhibit 5 to the Company's Registration
Statement on Form 8-A (File No. 1-11557).
4.2 The Company Management and Incentive Program of 1992
(incorporated by reference to Exhibit 10(d) to Upjohn's
Annual Report on Form 10-K for the year ended December
31, 1994 (File No. 1-4147) and amendment dated August 19,
1995.
4.3 Portions of the Company Management and Incentive Program
of 1987 relating to the 1987 Stock Option Plan and amendment
dated August 19, 1995.
4.4 Portions of the Company Management and Incentive Program
of 1982 relating to the 1982 Stock Option Plan and amendment
dated August 19, 1995.
5(a) Opinion of Sullivan & Cromwell as to the validity of the
Company Common Stock.
5(b) Opinion of Shearman & Sterling as to the validity of the
Company Common Stock.
23.1 Consent of Sullivan & Cromwell (contained in Exhibit 5.1
attached hereto).
23.2 Consent of Shearman & Sterling (contained in Exhibit 5.2
attached hereto).
23.3 Consent of Coopers and Lybrand, LLP.
23.4 Consent of Ohrlings Coopers and Consent
of KPMG Bohlins AB.
23.5 Consent of KPMG Peat Marwick LLP.
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Item 9. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration statement
to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof; and
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933,
each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is incorporated
by reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provision,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of London, England, on this 2nd day
of November, 1995.
PHARMACIA & UPJOHN, INC.
By: /s/ Robert C. Salisbury
Robert C. Salisbury
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following
persons in the indicated capacities on November 2, 1995.
Signature Title
/s/ Mats Pettersson Chairman of the Board
Mats Pettersson
/s/ Robert C. Salisbury Chief Executive Officer and
Robert C. Salisbury Director
/s/ Mats Lidgard Chief Accounting Officer and
Mats Lidgard Director
/s/ Kenneth M. Cyrus Chief Financial Officer and
Kenneth M. Cyrus Director
/s/ Goran Ando Director
Goran Ando
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/s/ Philip Carra Director
Philip Carra
/s/ Don W. Schmitz Director
Don W. Schmitz
/s/ Anna Rogmark Director
Anna Rogmark
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Exhibit 4.2
AMENDMENT TO THE
UPJOHN MANAGEMENT INCENTIVE PROGRAM OF 1992
Effective immediately prior to the consummation of the merger
contemplated by the Combination Agreement, dated August 20, 1995, among the
Company, Pharmacia Aktiebolag, Pharmacia & Upjohn, Inc. and Pharmacia &
Upjohn Subsidiary, Inc., Section 7.09(c) of The Upjohn Management Incentive
Program of 1992 is hereby amended by the addition of the paragraph below
immediately following the end of the first sentence thereof:
Notwithstanding anything in the foregoing to the
contrary, for purposes of Sections 6.04(k), 6.05(d) and 7.09(a)
and (b), no change in control shall be deemed to have occurred
by virtue of the occurrence of any of the following events:
(i) the consummation of the merger contemplated by the
Combination Agreement, dated August 20, 1995, among the
Company, Pharmacia Aktiebolag ("Pharmacia"), Pharmacia &
Upjohn, Inc. and Pharmacia & Upjohn Subsidiary, Inc., or any
other related transaction with Pharmacia (the "Transaction"),
(ii) any report filed on Form 8-K as a result of the
Transaction or (iii) any change in the Board of Directors of
the Company as a result of the Transaction; provided, however,
that each outstanding Option shall vest and be exercisable
immediately prior to the effective date of the Transaction
(other than Options held by officers of the Company subject to
Section 16 of the Exchange Act, which shall vest and become
exercisable if the employment of any such officer terminates
other than for cause, prior to the date the Option becomes
exercisable in full).
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Exhibit 4.3
THE UPJOHN MANAGEMENT INCENTIVE PROGRAM OF 1987
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THE UPJOHN MANAGEMENT INCENTIVE PROGRAM OF 1987
1. Purposes. The purposes of this Program are (a) to
provide additional incentive and reward to executives and key personnel who
contribute to the success of the Company and its subsidiaries by their
invention, ability, industry, loyalty or exceptional service, through
making them participants in that success; (b) to attract to and retain in
the employ of the Company and its subsidiaries, individuals of outstanding
competence; and (c) to encourage the ownership by such individuals of stock
of the Company or otherwise further the identity of their interests with
those of the Company's stockholders generally. The Program is composed of
the Incentive Compensation Plan of 1987, the 1987 Stock Option Plan and the
1987 Performance Share Plan.
2. Definitions. Unless otherwise required by the context,
the terms used in this Program shall have the meanings set forth in this
Section 2.
2.01 ADJUSTED EARNINGS BEFORE TAX: The Net Earnings of the
Company for a Compensation Year (a) before deduction of or allowance for
any of the following:
(i) federal taxes of the United States and foreign go-
vernments (including, but without limitation thereto, excess profits
taxes) based upon or measured, in whole or in part, by income of the
Company and its Subsidiaries but exclusive of state and territorial
taxes and taxes imposed by political subdivisions thereof;
(ii) incentive compensation awards under the Program for such
Compensation Year and for any prior Compensation Years;
(iii) all items of capital or non-recurring loss or other
extraordinary charge which, by reason of size, character or other
factors, do not arise in the ordinary and usual course of business of
the Company or its Subsidiaries, including, without limitation,
losses due to fluctuations in foreign currency or currencies; except
that, when computing Adjusted Earnings Before Tax of the Company for
purposes of this section for any Compensation Year, the Board of
Directors in its discretion shall have
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power, on or before December 31 of such Compensation Year, to direct that
any such item of loss or charge shall be deducted, in whole or in part, in
determining Adjusted Earnings Before Tax of the Company for such
Compensation Year;
and (b) after deduction of and allowance for all of the following if and to
the extent not theretofore fully deducted or allowed for in computing Net
Earnings of the Company;
(i) all items of capital gain, non-recurring profit or other
extraordinary credit which, by reason of size, character or other
factors, do not arise in the ordinary and usual course of the
business of the Company or its Subsidiaries including, without
limitation, profits due to fluctuations in foreign currency or
currencies; except that, when computing adjusted before-tax profits
of the Company for purposes of this section for any Compensation
Year, if the Board of Directors finds in its discretion that the
Incentive Compensation Group has been instrumental in producing any
such item of gain, profit or credit, the Board shall have power, on
or before December 31 of such Compensation Year, to direct that such
item shall be included, in whole or in part, in determining Adjusted
Earnings Before-Tax of the Company for such Compensation Year;
(ii) such special write-offs and reserves as the independent
accounting firm employed by the Company as its auditors may recommend
or the Board of Directors may, in its discretion, deem advisable, so
that the Board may exercise the fullest degree of conservative
prudent judgment in making write-offs and in setting up reserves
against contingencies and for all other purposes, including (but
without limitation thereto) write-offs of inventory and special
reserves against unremitted foreign earnings based on currency
restrictions, devaluation or other similar or dissimilar factors;
provided, however, that, for the purpose of computing Aggregate
Incentive Compensation for any Compensation Year, the Board of
Directors in its discretion shall have power, on or before December
31 of such Compensation Year, to direct that any such write-off or
reserve shall be excluded, in whole or in part, in determining
Adjusted Earnings Before-Tax of the Company for such Compensation
Year;
(iii) unearned portions or installments of incentive
compensation awards credited to income of the Company.
2.02 AGGREGATE INCENTIVE COMPENSATION: The aggregate amount
available for incentive compensation awards for a particular Compensation
Year, composed of the Aggregate Target Fund, as adjusted, and the
Supplemental Fund, as determined by the Board of Directors on
recommendation of the Incentive Committee, which shall in no event
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exceed for any Compensation Year, five percent (5%) of the amount, if any,
by which the Adjusted Earnings Before Tax of the Company exceeds an amount
which is 15% of Shareholders' Equity (consolidated total assets less
consolidated total liabilities) as reported in the audited consolidated
balance sheets of the Company as of December 31 of the preceding
Compensation Year.
2.03 AGGREGATE TARGET FUND: The sum of the Target Awards for
each participant in the Incentive Compensation Group.
2.04 BENEFICIARY: As applied to a Participant, a person or
entity (including a trust or the estate of the Participant) designated
pursuant to rules of general application of the Incentive Committee, in a
written document executed by the Participant in such form as shall be
approved by the Incentive Committee, to receive, in the event of the death
of the Participant, the unpaid balance of an award of incentive
compensation, Options, Stock Appreciation Rights or of a Performance Share
Award. If, at the time when an unpaid balance of an Incentive Compensation
Award or Performance Share Award shall be or become payable or an Option or
Stock Appreciation Right shall be exercisable, at or after the death of the
Participant, there shall not be any living person or any entity in
existence so designated, the term "Beneficiary" shall mean the executors or
administrators of the Participant's estate.
2.05 BOARD or BOARD OF DIRECTORS: The Board of Directors of
the Company.
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2.06 COMMON STOCK: The common stock of the Company, par value
$1.00 per share, or such other class of shares or other securities as may
be applicable pursuant to the provisions of Section 4 below.
2.07 COMPANY: The Upjohn Company, a Delaware corporation.
2.08 COMPENSATION YEAR: A calendar year for which the Program
is in effect.
2.09 DIVIDEND EQUIVALENT: As applied to a Participant who has
elected to receive payment of the unpaid portion of an award in or measured
by the value of shares of Common Stock, an amount equal to each dividend,
other than a dividend in Common Stock, which would have been received by
the Participant in respect of shares of the Common Stock (giving effect to
any adjustments under Section 4 below) in which such unpaid portion of his
award shall at the time be payable or by the value of which payment of such
unpaid portion shall be measured, if such shares of Common Stock had been
transferred to such Participant on the date on which the award was made and
had been retained by him up to and including the record date for payment of
such dividend.
2.10 ELIGIBLE EMPLOYEE: An officer of the Company or other
salaried Employee including a director who is such an officer or salaried
Employee.
2.11 EMPLOYEE: An individual employed by the Company or a
Subsidiary.
2.12 FAIR MARKET VALUE: As applied to a specific date, the
average of the highest and lowest quoted selling prices of Common Stock on
sales, regular way, reported for such date for New York Stock Exchange
issues on the consolidated stock exchange
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network or, if Common Stock was not traded on such date, on the next
preceding day on which the Common Stock was so traded.
2.13 INCENTIVE COMMITTEE: The Incentive Committee to
administer the Program appointed pursuant to Section 3 below.
2.14 (a) INCENTIVE COMPENSATION GROUP: As applied to a
Compensation Year, the Employees selected by the Incentive Committee for
such Compensation Year pursuant to 6.02 below.
(b) INCENTIVE STOCK OPTION: A form of Option which meets all
of the requirements set forth under Section 422A(b) of the Internal Revenue
Code of 1954, as amended.
2.15 INTEREST EQUIVALENT RATE: As applied to a calendar year,
the arithmetic average of annualized rates payable on six month money
market certificates as reported in the consumer savings rates table in the
Wall Street Journal on the date nearest the last business day of each
calendar month during such calendar year.
2.16 NET EARNINGS OF THE COMPANY: The net earnings of the
Company and its Subsidiaries for a Compensation Year, as determined for the
purpose of the annual statement of consolidated earnings for such
Compensation Year by the independent accounting firm employed by the
Company as its auditors, and in any event (a) after provision for federal
taxes of the United States and foreign governments (including, but without
limitation thereto, excess profits taxes) based upon, or measured, in whole
or in part, by income of the Company and its subsidiaries; (b) after
provision for incentive compensation
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awards for such Compensation Year; and (c) after provision for any pension,
excess benefit, profit-sharing or thrift plan for Employees.
2.17 OPTIONS: The options granted from time to time under the
Program.
2.18 PARTICIPANT: An Employee to whom an incentive compen-
sation award has been made or to whom Options, Stock Appreciation Rights or
Performance Share Awards have been granted under the Program.
2.19 PROGRAM: The Upjohn Management Incentive Program of 1987
set forth in these pages, as it may be amended from time to time.
2.20 (a) RESTRICTED SHARES: Shares of Common Stock
transferred subject to restrictions precluding a sale or other disposition
for a period of time and requiring, as a condition to retention, compliance
with any other terms and conditions imposed by the Incentive Committee.
(b) RETIREMENT: Termination of employment at or after
attainment of age 65.
2.21 SALARY: The total compensation currently paid to an
Employee by the Company and its Subsidiaries and designated "salary" and in
any event exclusive of any Christmas bonus, of incentive compensation
awards under the Program, of any payments to or for the account of the
Employee under any pension, excess benefit, profit-sharing or thrift or
savings plan, and of fringe benefits.
2.22 SERVICE: Employment as a regular Employee of the Company
(including any Subsidiary of the Company). Service shall not be considered
to have been
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terminated by disability, whether temporary or permanent, during any period
that the Participant shall be entitled to receive at least one-half the
salary paid to him immediately prior to his disability. A Participant who
is rendering advisory services at a salary of less than one-half of the
salary that he was being paid as a full-time Employee of the Company or a
Subsidiary shall be considered to have terminated his service.
2.23 STOCK APPRECIATION RIGHT: A right to receive a number
of shares of Common Stock, or cash in lieu thereof, based upon the increase
in value of Common Stock, as more particularly set forth in 7.08 below.
2.24 SUBSIDIARY: A corporation the financial results of which
for the Compensation Year are consolidated with those of the Company for
purposes of the financial statement of consolidated earnings for such
Compensation Year included in the Company's annual report to stockholders.
2.25 SUPPLEMENTAL FUND: An amount equal to a percentage
determined by the Incentive Committee, of the Aggregate Target Fund, as
such fund may be adjusted pursuant to Section 6.01(a).
2.26 TARGET AWARD: An amount established by the Incentive
Committee for each participant in the Incentive Compensation Group.
2.27 TREASURY STOCK: All shares of capital stock of the
Company and of any Subsidiary issued but held in the treasury of such
corporation including, without limitation, any shares held by the Company
for the purpose of the Program.
2.28 UNUSED LIMIT CARRYOVER: The unused limit carryover as
defined under Section 422A(c)(4) of the Internal Revenue Code of 1954, as
amended.
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4. Adjustments Upon Changes in Capitalization. In the event
of a reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger, consolidation, rights offering or any other
change in the corporate structure of the Company affecting shares of its
Common Stock, the Incentive Committee shall recommend and the Board of
Directors shall make appropriate adjustment (a) in respect of the unpaid
balance of any award of incentive compensation payable in or measured by
the value of shares of Common Stock, (b) in respect of any Restricted
Shares or Performance Share Awards authorized, transferred or granted under
the Program and (c) in the number and kind of shares authorized by the 1987
Stock Option Plan, in the aggregate and to any individual Employee or group
of Employees, in the number and kind of shares subject to unexercised
Options and Stock Appreciation Rights theretofore granted and in the price
of such shares.
5. Term of the Program. Grants of Performance Share Awards
or incentive compensation awards may be made under the Program for each of
the five (5) calendar years 1987 to 1991, both inclusive, or any portion
thereof, and Options may be granted under the Program at any time or from
time to time during each of such five years. Unless the Program shall be
readopted by the stockholders of the Company, no awards of incentive
compensation shall be made under the Program for any calendar year
subsequent to 1991 and no Options or Stock Appreciation Rights or
Performance Share Awards shall be granted after December 31, 1991;
provided, however, that the Incentive Committee may establish, with respect
to Performance Share Awards, an Award Period, as defined in Section 8.01,
which includes Compensation Years beginning after December 31, 1991 if the
earliest Compensation Year in such Award Period ends no later than December
31, 1991.
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7. The 1987 Stock Option Plan
7.01 Stock Subject to Stock Option Plan. The shares for which
Options and Stock Appreciation Rights may be granted under the 1987 Stock
Option Plan shall be shares of the Common Stock of the Company. Subject to
Section 8.01, the number of shares which may be purchased upon exercise of
Options that may from time to time be granted under the Program or which
may be transferred in respect of Stock Appreciation Rights shall not
exceed, in the aggregate, 1,250,000 shares of such Common Stock, a number
which shall be subject to adjustment as provided in Section 4 above. If an
Option, or a Stock Appreciation Right, after having been granted under this
Program, shall for any reason expire or terminate without having been
exercised in full and shares shall not have been transferred nor cash paid
in respect of a Stock Appreciation Right relating to an Option so granted,
the shares theretofore subject to such Option or Stock Appreciation Right,
as the case may be, and not purchased or transferred shall be added to the
shares otherwise available for Options and Stock Appreciation Rights which
may thereafter be granted, and such shares not so purchased or transferred
shall not be deemed to increase the aggregate number of shares for which
Options and Stock Appreciation Rights may be granted. The shares to be
transferred upon exercise of Options granted under the Program or in
respect of Stock Appreciation Rights may be made available, at the
discretion of the Board of Directors, from authorized but unissued shares
of the Company, from stock at any time held in the treasury of the Company
or from shares acquired by the Company for the purpose of the Program,
including shares purchased at any time or from time to time in the open
market. Subject to the limitations set forth under Section 7.02 below, all
Options granted under the Program may be Incentive Stock Options.
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<PAGE> 11
7.02 Number of Shares Subject to Individual Incentive Stock
Options. There shall be no limit on the number of shares of the Common
Stock which may be purchased upon exercise of an Option or Options or which
may be transferred upon exercise of Stock Appreciation Rights granted under
the Program to any individual Employee. The aggregate fair market value
(determined as of the time such Option is granted) of, as applicable, (i)
Common Stock for which any Employee may be granted Incentive Stock Options
in any calendar year, or (ii) Common Stock with respect to which Incentive
Stock Options granted to any Employee become, in accordance with procedures
to be established by the Committee, exercisable for the first time by such
Employee during any calendar year, (in the case of both (i) and (ii) under
the Program and all other plans, if any, which provide for the granting of
Incentive Stock Options and which are maintained by the Company, a
Subsidiary or any other affiliated corporation) shall not exceed the
maximum amount permitted by the Internal Revenue Code as it may be amended
from time to time.
7.03 Factors to be Considered in Granting Options. An Option
and a Stock Appreciation Right shall be granted only to an Eligible
Employee and only for a reason or reasons connected with employment. An
Eligible Employee may be granted more than one Option and Stock
Appreciation Right subject, however, to the provisions of 7.02 above, but
only during the term of the Program. In making any determination as to
Employees to whom Options shall be granted and as to the number of shares
for which any Option or Stock Appreciation Right shall be granted, the
Incentive Committee shall in each case take into account the duties of the
Employee, his present and potential contributions to the success of
<PAGE>
<PAGE> 12
the Company, his compensation, and such other factors as the Incentive
Committee shall deem relevant to the accomplishment of one or more purposes
of the Program.
7.04 Option Price. The purchase price of the shares of the
Common Stock upon exercise of an Option granted under the Program shall be
not less than the Fair Market Value of such shares on the date the Option
is granted and in no event less than the par value thereof.
7.05 Exercise of Options. (a) An Option shall not be
exercisable until the optionee has completed one year of employment with
the Company or a Subsidiary from the date of grant of the Option, and shall
be exercisable after the completion of that year of employment as may be
determined by the Incentive Committee; provided, that an Incentive Stock
Option shall be subject to the sequential exercise limitation applicable to
Incentive Stock Options as set forth under 7.05(f) below. After an Option
shall have become exercisable, all or any part of the shares subject to the
Option may be purchased at any time or from time to time thereafter during
the remainder of the term of the Option; provided, however, that except as
otherwise set forth in 7.07 below, an Option may not be exercised unless
the holder thereof shall at the time of such exercise be an Employee.
(b) The purchase price of the shares as to which an Option
shall be exercised shall be paid in full in cash at the time of exercise.
Alternatively, in lieu of cash, an optionee may exercise his option by
tendering to the Company shares of the Common Stock of the Company, owned
by him, and having a Fair Market Value equal to the cash exercise price
applicable to his Option, with the Fair Market Value of such stock to be
determined in such appropriate manner as may be provided for by the
Incentive Committee or as may be required
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<PAGE> 13
in order to comply with or to conform to the requirements of any applicable
or relevant laws or regulations; provided, that the Incentive Committee may
determine that an Option shall provide that the optionee may not tender
shares of the Common Stock of the Company unless such shares have been held
by the optionee for a minimum period of time specified by the Incentive
Committee.
(c) The holder of an Option shall not have any of the rights
of a stockholder with respect to any share subject to such Option unless
and until he shall become the holder of record of such share.
(d) No Option granted under the Program shall in any event,
and notwithstanding any provision of 7.05(a) above or 7.07 and 9.06 below,
be exercisable after the expiration of ten (10) years from the date on
which the Option shall have been granted.
(e) Each Option granted under the Program may be made
exercisable upon such other terms and conditions consistent with the
Program as shall be determined by the Incentive Committee, including
provisions to the effect that the shares subject to the Option shall be
Restricted Shares.
(f) Notwithstanding any other provision of the Program,
including without limitation Section 7.05(a) and Section 7.07, an Incentive
Stock Option granted to an Employee on or prior to December 31, 1986 shall
not be exercisable at any time while there is outstanding any Incentive
Stock Option previously granted to such Employee (1) to purchase Common
Stock, (2) to purchase stock of any corporation which, at the time of
granting such option, was a parent or Subsidiary of the Company or (3) to
purchase stock of a predecessor of any such corporations or of the Company.
For these purposes an Incentive Stock Option
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<PAGE> 14
shall be treated as outstanding until it is exercised in full or expires by
lapse of time as such events are determined under the applicable provisions
of the Internal Revenue Code of 1954, as amended, and any regulations,
rulings or other official pronouncements promulgated thereunder.
7.06 Non-Transferability and Other Matters Pertaining to
Options and Stock Appreciation Rights. An Option and any Stock
Appreciation Rights granted under the Program shall not be transferable
otherwise than by will or the laws of descent and distribution and shall be
exercisable, during the lifetime of the Employee, only by him or by his
guardian or legal representative; provided, however, that nothing in this
Program shall prevent the designation of a Beneficiary or prevent the grant
of an option or options with a readily ascertainable fair market value at
the time of grant and to that end, without limiting the generality of the
foregoing, such an option or options may be made transferable or may be
made exercisable by a person or persons other than the Employee, upon such
terms and conditions as the Incentive Committee may approve, but no option
that is so transferable or exercisable shall be deemed to have been granted
under this Program.
7.07 Termination of Employment. In case the employment of an
Employee to whom an Option shall have been granted shall be terminated
otherwise than as a result of death, the Option may be exercised (but,
except as otherwise provided in 7.07(b), only to the extent that the
Employee shall have been entitled to exercise the Option on the termination
of his employment) during such period after the date on which he shall have
ceased to be an Employee as shall be prescribed in the option grant.
Subject to 7.05(d) above, such period shall be three (3) years following
termination of employment by Retirement and three (3)
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<PAGE> 15
months following other termination of employment unless, prior to the
expiration of such three (3) months' period, the Incentive Committee in the
case of an officer or director of the Company, or an appropriate officer of
the Company authorized by the Chief Executive Officer of the Company in the
case of other Employees, shall have determined that such other termination
of employment is not adverse to the interests of the Company and shall have
authorized in writing a three (3) year period following such termination
for exercise of the Option; provided, however, that a lesser period or
periods for exercise following Retirement or other termination of
employment may be prescribed by the Incentive Committee upon or prior to
the option grant. Subject to 7.05(d) above, if an Employee to whom an
Option shall have been granted shall die while he shall be employed by the
Company or one of its Subsidiaries or during the period after the
termination of his employment within which the Option shall be exercisable
pursuant to this 7.07 (a), the Option may be exercised (but only to the
extent that the Employee shall have been entitled to exercise the Option
immediately prior to his death) within one (1) year from the date of the
Employee's death, unless a lesser period for such exercise shall have been
prescribed in the option grant.
7.08 Stock Appreciation Rights. (a) Stock Appreciation Rights
may be granted in connection with any Option granted under the Program,
either at the time of the grant of such Option or at any time thereafter
during the term of the Option, or may be granted independently of the grant
of an Option. Stock Appreciation Rights may also be granted in connection
with any option heretofore or hereafter granted under any prior stock
option plans of the Company, or as an addition to or substitution for
options or stock appreciation rights granted under such plans or under the
Program.
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<PAGE> 16
(b) If granted in connection with an Option, Stock
Appreciation Rights shall entitle the holder of the related Option, upon
exercise of such Stock Appreciation Rights, to surrender the Option, or any
portion thereof, to the extent unexercised, and to receive a number of
shares of Common Stock, or cash, determined pursuant to clause (c)(iii) of
this paragraph 7.08. Such Option shall, to the extent so surrendered,
thereupon cease to be exercisable. If granted independently of an Option,
Stock Appreciation Rights shall entitle the holder of the Stock
Appreciation Rights to receive a number of shares of Common Stock, or cash,
determined pursuant to clause (c)(iii) of this paragraph 7.08.
(c) Stock Appreciation Rights shall be subject to the
following terms and conditions and to such other terms and conditions not
inconsistent with the Program as shall from time to time be approved by the
Incentive Committee:
(i) If granted in connection with an Option, Stock
Appreciation Rights shall be exercisable at such time or times and to
the extent, but only to the extent, that the Option to which they
relate shall be exercisable. If granted independently of an Option,
Stock Appreciation Rights shall be exercisable at such time or times
as shall be determined by the Incentive Committee at the time of the
grant of the Stock Appreciation Rights but in no event later than the
period provided in 7.07(a) for exercise of an Option.
(ii) Stock Appreciation, Rights shall in no event be
exercisable unless and until the holder of the Stock Appreciation
Rights shall have completed at least twelve months of continuous
Service with the Company or a Subsidiary, or both, immediately
following the date upon which the Stock Appreciation Rights shall
have been granted. Whether authorized leaves of absence or absence
for military or government service shall constitute termination of
employment or interruption of continuous employment for purposes of
the Program shall be determined by the Incentive Committee.
(iii) Upon exercise of Stock Appreciation Rights, the holder
thereof shall be entitled to receive a number of shares equal in Fair
Market Value to the amount by which the Fair Market Value of one
share of Common Stock on the date of such exercise shall exceed the
Fair Market Value of a share of Common Stock on the date of grant of
the related Option if such Stock Appreciation Rights were granted in
connection with an Option or on the date of grant of such Stock
Appreciation Rights if
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<PAGE> 17
such Stock Appreciation Rights were granted independently of an
Option, multiplied by the number of shares in respect of which the
Stock Appreciation Rights shall have been exercised. The Incentive
Committee may authorize settlement of all or any part of the
Company's obligation arising out of an exercise of Stock Appreciation
Rights by the payment of cash equal to the aggregate value of shares
of Common Stock (or a fraction of a share) that the Company would
otherwise be obligated to deliver under the preceding sentence of
this Section 7.08(c)(iii).
(d) To the extent that Stock Appreciation Rights shall be
exercised, an option in connection with which such Stock Appreciation
Rights shall have been granted shall be deemed to have been exercised for
the purpose of the maximum limitations set forth in the Program. In the
case of Stock Appreciation Rights granted independently of an option, the
number of shares of Common Stock in respect of which such Stock
Appreciation Rights shall be exercised shall be charged against such
maximum limitations.
(e) If so directed by the Incentive Committee, the grant of
Stock Appreciation Rights may provide for payment from time to time to the
holder of the Stock Appreciation Rights, either in cash or in shares of
Common Stock, of amounts not exceeding the cash dividends, as and when
declared or paid, which would have been paid in respect of a number of
shares of Common Stock equal to the number of shares subject to the Stock
Appreciation Rights if such shares have been issued or transferred to the
holder of the Stock Appreciation Rights from the time the Stock
Appreciation Rights were granted to such holder to the time when they shall
be exercised or shall lapse or otherwise terminate.
(f) An Employee and, in the event of his death, his
Beneficiary or the person or persons to whom the related Option or Stock
Appreciation Rights shall have been transferred by will or the laws of
descent and distribution, shall have no rights as a
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<PAGE> 18
shareholder with respect to any shares subject to Stock Appreciation Rights
until the date of issuance to him of a stock certificate for such shares.
7.09 Cash Payment for options upon Change in Control. (a)
Notwithstanding any other provision of the program or of any outstanding
Option, in the event of a change in control the Company shall pay to each
optionee with respect to each Option held by the optionee, excluding (1)
Incentive Stock Options outstanding on June 21, 1988 and (2) options held
by officers of the Company elected by the Board of Directors which are not
exercisable on the date of such change in control, an amount in cash, which
shall be payable within ten days after the change in control, equal to the
difference between (i) the result of multiplying (A) the number of shares
of Common Stock subject to each Option which have not been exercised by (B)
the market value of the Common Stock and (ii) the aggregate purchase price
for such shares. Upon such payment, all Options for which such cash
payment is made (and any related Stock Appreciation Rights) shall be
cancelled.
(b) If an officer of the Company elected by the Board of
Directors holds an Option (other than an Incentive Stock Option outstanding
on June 21, 1988) which is not exercisable in full on the date of a change
in control and such officer remains in employment with the Company or a
Subsidiary until the date such Option becomes exercisable, then,
notwithstanding any other provision of the Program or of the Option, the
Company shall pay to such officer on each date on which all or a portion of
such Option becomes exercisable an amount equal to the difference between
(1) the result of multiplying (i) the number of shares of Common Stock
subject to such Option that first become exercisable on that date by (ii)
the market value of the Common Stock and (2) the aggregate purchase price
for such shares. If
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<PAGE> 19
the employment of such officer terminates other than for cause, prior to
the date all shares of Common Stock subject to such option becomes
exercisable, the Company shall pay to such officer (or, in the event of the
officer's death, to the estate of the officer) within ten days following
termination of employment an amount equal to the difference between (A) the
result of multiplying (x) the number of shares of Common Stock subject to
such Option that were not exercisable upon termination of employment by (v)
the market value of the Common Stock and (B) the aggregate purchase price
for such shares. Upon payment, pursuant to this paragraph, all options for
which such cash payment is made (and any related Stock Appreciation Rights)
shall be cancelled.
(c) The Incentive Committee may, in its discretion, amend the
terms of Incentive Stock Options outstanding on June 21, 1988 to include
provisions for cash payments similar to the provisions of 7.09(a) and (b)
above.
(d) For purposes of this Section, a "change in control" shall
mean a change in control of a nature that would be required to be reported
in response to Item 1(a) of the Current Report on Form 8-K, as in effect on
June 21, 1988, pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934 (the "Exchange Act"), provided that, without limitation, such a
change in control shall be deemed to have occurred at such time as (1) any
"person", within the meaning of Section 14(d) of the Exchange Act, other
than the Company or any employee benefit plan(s) sponsored by the Company,
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 25% or more of the Common Stock,
or (2) individuals who constitute the Board of Directors of the Company on
June 21, 1988 (the "Incumbent Board") cease for any reason to constitute at
least
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<PAGE> 20
a majority thereof, provided that any person becoming a director subsequent
to such date whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is
named as a nominee for director, without objection to such nomination)
shall be, for purposes of this clause (d), considered as though such person
were a member of the Incumbent Board. In addition, for purposes of this
Section, "market value" shall mean (i) in the event the change in control
is the result of a cash tender offer for all of the Common Stock, the cash
paid to shareholders in such tender offer or (ii) otherwise, the highest
Fair Market Value of the Common Stock during the ten trading day period
preceding the change in control. For purposes of this Section, "cause"
means (a) the willful and continued failure by an officer of the Company
elected by the Board of Directors to substantially perform his duties for
the Company (other than such failure resulting from incapacity due to
physical or mental illness) after a written demand for substantial
performance is delivered to the officer by the Chairman of the Board of
Directors or President of the Company which specifically identifies the
manner in which such executive believes that the officer has not
substantially performed his duties, or (b) the willful engaging by the
officer in illegal conduct which is materially and demonstrably injurious
to the Company.
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<PAGE> 21
9. General Provisions
9.01 Neither the adoption of the Program nor its operation,
nor any booklet or other document describing or referring to the Program,
or any part thereof, shall confer upon any Employee any right to continue
in the employ of the Company or any Subsidiary, or shall in any way affect
the right and power of the Company or any Subsidiary to dismiss or
otherwise terminate the employment of any Employee at any time for any
reason with or without cause. If the Company shall terminate the
employment of a Participant for any reason, whether or not for cause, the
Company shall incur no liability to the Participant due to the inability of
the Participant by reason of such termination to exercise thereafter any
Option or Stock Appreciation Right theretofore granted to the Participant
by the Company or to receive payment of any award under the Program or to
be eligible thereafter for any award or grant of an Option or Stock
Appreciation Right under the Program.
9.02 By accepting participation in or any benefits under the
Program, each member of the Incentive Compensation Group, each Participant,
and each person claiming under or through him, shall be conclusively deemed
to have indicated his acceptance and ratification of, and consent to, any
action or decision taken or made or to be taken or made under the Program
by the Company, the Board of Directors and the Incentive Committee.
9.03 Appropriate provision shall be made for all taxes
required to be withheld from incentive compensation awards, and in
connection with Options and Stock Appreciation Rights and the exercise
thereof and in connection with payment of Performance Share Awards, under
the applicable laws or other regulations of any governmental authority,
whether Federal, state or local and whether domestic or foreign, including,
but not limited to, the withholding
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<PAGE> 22
of payment of all or any portion of such award or the transfer of shares
pursuant to exercise of an Option or a Stock Appreciation Right until the
Participant reimburses the Company for the amount the Company believes to
be required to be withheld with respect to such taxes, or cancelling any
portion of an award in an amount sufficient to reimburse itself for the
amount it believes to be required to be so withheld, or selling any
property contingently credited by the Company for the purpose of paying
such award, in order to withhold or reimburse itself for the amount it
believes to be required to be so withheld.
9.04 The place of administration of the Program shall be
conclusively deemed to be within the State of Delaware and the validity,
construction, interpretation and administration of the Program and of any
rules and regulations or determinations or decisions made thereunder, and
the rights of any and all persons having or claiming to have any interest
therein or thereunder shall be governed by, and determined exclusively and
solely in accordance with, the laws of the State of Delaware. Without
limiting the generality of the foregoing, the period within which any
action arising under or in connection with the Program, or any payment or
award made or purportedly made under or in connection therewith, must be
commenced shall be governed by the laws of the State of Delaware,
irrespective of the place where the act or omission complained of took
place and of the residence of any party to such action and irrespective of
the place where the action may be brought.
9.05 Any communication under the Program to the Board of
Directors shall be deemed to have been delivered to the Board when
delivered to the Secretary of the Company for transmission to the Board,
irrespective of whether the Board shall then be in
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<PAGE> 23
session. Any communication under the Program to the Incentive Committee
shall be deemed to have been delivered to the Incentive Committee when
delivered to the Secretary of the Incentive Committee for transmission to
the Incentive Committee, irrespective of whether the Incentive Committee
shall then be in session.
9.06 If any day on or before which action under the Program
must be taken falls on a Saturday, Sunday or legal holiday, such action may
be taken on the next succeeding day not a Saturday, Sunday or legal
holiday.
10. Amendment or Repeal. The Program, subject to the
provisions of 10.01 and 10.02 below, may be amended or repealed by the
stockholders of the Company or, if, as and when the Inventive Committee
shall recommend, but not otherwise, by the Board of Directors.
10.01 Only the stockholders of the Company may amend the
provisions of the Program
(a) so as to increase Aggregate Incentive Compensation for
any Compensation Year above that authorized by the provisions of the
Program, but amendment of the Program so as to change the form or terms of
payment of incentive compensation awards from those provided in the Program
shall not be deemed to increase Aggregate Incentive Compensation provided
the Fair Market Value of all property transferred in payment of Incentive
Compensation Awards shall not exceed Aggregate Incentive Compensation, nor
shall Aggregate Incentive Compensation be deemed increased as the result of
an increase in value of capital stock or other property in which an award
under the Program shall be payable or by
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<PAGE> 24
which payment of an award shall be measured or of any dividends, Dividend
Equivalents, interest, interest equivalents or similar increment paid or
payable in respect of any award;
(b) so as to increase the maximum number of shares which may
be purchased upon exercise of Options granted under the Program,
transferred in respect of Stock Appreciation Rights or transferred or paid
in respect of Performance Share Awards, except as authorized by Section 4
above, or so as to decrease the minimum option price provided for in 7.04
above, except as so authorized;
(c) so as materially to increase the benefits accruing to
Participants under the Program or materially to modify the requirements as
to the eligibility for Participants in the Program;
(d) so as to extend the term of the Program or the period
during which options may be exercised;
(e) so as to change the provisions of 3.01 above relating to
the Incentive Committee; or
(f) so as to change the provisions of this Section 10.
10.02 The provisions of the Program, as in effect on November
15 of any Compensation Year, shall in all respects remain in effect with
respect to any incentive compensation award, or installment thereof, made
or to be made or payable for such Compensation Year, notwithstanding the
amendment or repeal of the Program subsequent to November 15 of such
Compensation Year by either the Board of Directors or the stockholders.
Neither the termination of the Program by expiration or otherwise, nor any
amendment thereof shall, without the consent of the Participant, adversely
affect his rights under an unexpired
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<PAGE> 25
Option, Stock Appreciation Right or Performance Share Award granted to him,
or under an incentive compensation award made to him, prior to such
termination or amendment.
<PAGE>
<PAGE> 1
AMENDMENT TO THE
UPJOHN MANAGEMENT INCENTIVE PROGRAM OF 1987
Effective immediately prior to the consummation of the merger
contemplated by the Combination Agreement, dated August 20, 1995, among the
Company, Pharmacia Aktiebolag, Pharmacia & Upjohn, Inc. and Pharmacia &
Upjohn Subsidiary, Inc., Section 7.09(d) of The Upjohn Management Incentive
Program of 1987 is hereby amended by the addition of the paragraph below
immediately following the end of the first sentence thereof:
Notwithstanding anything in the foregoing to the
contrary, for purposes of 7.09(a) and (b), no change in control
shall be deemed to have occurred by virtue of the occurrence of
any of the following events: (i) the consummation of the
merger contemplated by the Combination Agreement, dated
August 20, 1995, among the Company, Pharmacia Aktiebolag
("Pharmacia"), Pharmacia & Upjohn, Inc. and Pharmacia & Upjohn
Subsidiary, Inc., or any other related transaction with
Pharmacia (the "Transaction"), (ii) any report filed on Form 8-
K as a result of the Transaction or (iii) any change in the
Board of Directors of the Company as a result of the
Transaction.
<PAGE> 1
Exhibit 4.4
THE UPJOHN MANAGEMENT INCENTIVE PROGRAM OF 1982
<PAGE>
<PAGE> 2
THE UPJOHN MANAGEMENT INCENTIVE PROGRAM OF 1982
1. Purposes
The purposes of this Program are (a) to provide additional
incentive and reward to executives and key personnel who contribute to the
success of the Company and its subsidiaries by their invention, ability,
industry, loyalty or exceptional service, through making them participants
in that success; (b) to attract to and retain in the employ of the Company
and its subsidiaries, individuals of outstanding competence; and (c) to
encourage the ownership by such individuals of stock of the Company or
otherwise further the identity of their interests with those of the
Company's stockholders generally. The Program is composed of the Incentive
Compensation Plan of 1982 and the 1982 Stock Option Plan.
2. Definitions
Unless otherwise required by the context, the terms used in
this Program shall have the meanings set forth in this Section 2.
2.01 AGGREGATE INCENTIVE COMPENSATION: The aggregate amount
available for incentive compensation awards for a particular Compensation
Year computed as set forth in 6.01 below.
2.02 BENEFICIARY: As applied to a Participant, a person or
entity (including a trust or the estate of the Participant) designated
pursuant to rules of general application of the Incentive Committee, in a
written document executed by the Participant in such form as shall be
approved by the Incentive
<PAGE>
<PAGE> 3
Committee, to receive, in the event of the death of the Participant, the
unpaid balance of an award of incentive compensation or an Option or Stock
Appreciation Rights. If at the time when an unpaid balance of an award
shall be or become payable or an Option or Stock Appreciation Rights shall
be exercisable, at or after the death of the Participant, there shall not
be any living person or any entity in existence so designated, the term
"Beneficiary" shall mean the executors or administrators of the
Participant's estate.
2.03 BOARD or BOARD OF DIRECTORS: The Board of Directors of the
Company.
2.04 COMMON STOCK: The common stock of the Company, par value
$1.00 per share, or such other class of shares or other securities as may
be applicable pursuant to the provisions of Section 4 below.
2.05 COMPANY: The Upjohn Company, a Delaware corporation.
2.06 COMPENSATION YEAR: A calendar year for which the Program
is in effect.
2.07 DIVIDEND EQUIVALENT: As applied to a Participant who has
elected to receive payment of the unpaid portion of an award in or measured
by the value of shares of Common Stock, an amount equal to each dividend,
other than a dividend in Common Stock, which would have been received by
the Participant in respect of shares of the Common Stock (giving effect to
any adjustments under Section 4 below) in which such unpaid portion
<PAGE>
<PAGE> 4
of his award shall at the time be payable or by the value of which payment
of such unpaid portion shall be measured, if such shares of Common Stock
had been transferred to such Participant on the date on which the award was
made and had been retained by him up to and including the record date for
payment of such dividend.
2.08 ELIGIBLE EMPLOYEE: An officer of the Company or other
salaried Employee including a director who is such an officer or salaried
Employee.
2.09 EMPLOYEE: An individual employed by the Company or a
Subsidiary.
2.10 FAIR MARKET VALUE: As applied to a specific date, the
average of the highest and lowest quoted selling prices of Common Stock on
sales, regular way, reported for such date for New York Stock Exchange
issues on the consolidated stock exchange network or, if Common Stock was
not traded on such date, on the next preceding day on which the Common
Stock was so traded.
2.11 INCENTIVE EASE: The amount by which the total consolidated
assets of the Company and its Subsidiaries (including net assets of foreign
Subsidiaries) other than Treasury Stock exceed the total liabilities of the
Company and its Subsidiaries other than capital stock, as computed by the
independent accounting firm employed by the Company as its auditors
pursuant to the provisions of 6.01(c) below.
2.12 INCENTIVE COMMITTEE: The Incentive Committee to administer
the Program appointed pursuant to Section 3 below.
<PAGE>
<PAGE> 5
2.13 (a) INCENTIVE COMPENSATION GROUP: As applied to a
Compensation Year, the Employees selected by the Incentive Committee for
such Compensation Year pursuant to 6.02 below.
(b) INCENTIVE STOCK OPTION: A form of Option which
meets all of the requirements set forth under Section 422A(b) of the
Internal Revenue Code of 1954, as amended.
2.14 (a) INCREASE IN INCENTIVE BASE: The amount by which the
Incentive Base at the close of business on December 31 of the calendar year
next preceding the Compensation Year for which incentive compensation
awards are to be made shall exceed the Incentive Base at the close of
business on December 31, 1980.
(b) INTEREST EQUIVALENT RATE: As applied to a calendar
year, the higher of (a) the highest annual rate that mutual savings banks
shall have been permitted to pay, under the Regulations of the Federal
Deposit Insurance Corporation, on regular savings accounts at any time
during such calendar year, or (b) the arithmetic average of annualized
rates payable on six month money market certificates as reported in the
Wall Street Journal for the last business day of each calendar month during
such calendar year.
2.15 NET BEFORE-TAX PROFITS OF THE COMPANY: The Net Earnings of
the Company for a Compensation Year (a) before deduction of or allowance
for any of the following:
(i) federal taxes of the United States and foreign
governments (including, but without limitation thereto, excess
profits taxes) based upon or measured, in whole or in part, by income
of the Company and its
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<PAGE> 6
Subsidiaries but exclusive of state and territorial taxes and taxes
imposed by political subdivisions thereof;
(ii) incentive compensation awards under the Program for
such Compensation Year and for any prior Compensation Years;
(iii) all items of capital or non-recurring loss or other
extraordinary charge which, by reason of size, character or other
factors, do not arise in the ordinary and usual course of business of
the Company or its Subsidiaries, including, without limitation,
losses due to fluctuations in foreign currency or currencies; except
that, for the purpose of computing Aggregate Incentive Compensation
for any Compensation Year, the Board of Directors in its discretion
shall have power, on or before December 31 of such Compensation Year,
to direct that any such item of loss or charge shall be deducted, in
whole or in part, in determining Net Before-Tax Profits of the
Company for such Compensation Year;
and (b) after deduction of and allowance for all of the following if and to
the extent not theretofore fully deducted or allowed for in computing Net
Earnings of the Company;
(i) all items of capital gain, non-recurring profit or
other extraordinary credit which, by reason of size, character or
other factors, do not arise in the ordinary and usual course of the
business of the Company or its Subsidiaries including, without
limitation, profits due to fluctuations in foreign currency or
currencies; except that, for the purpose of computing Aggregate
Incentive Compensation for any Compensation Year, if the Board of
Directors finds in its discretion that the Incentive Compensation
Group has been instrumental in producing any such item of gain,
profit or credit, the Board shall have power, on or before December
31 of such Compensation Year, to direct that such item shall be
included, in whole or in part, in determining Net Before-Tax Profits
of the Company for such Compensation Year;
(ii) such special write-offs and reserves as the
independent accounting firm employed by the Company as its auditors
may recommend or the Board of Directors may, in its discretion, deem
advisable, so that the Board may exercise the fullest degree of
conservative prudent judgment in making write-offs and in setting up
reserves against contingencies and for all other purposes, including
(but without limitation thereto) write-offs of inventory and
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<PAGE> 7
special reserves against unremitted foreign earnings based on
currency restrictions, devaluation or other similar or dissimilar
factors; provided, however, that, for the purpose of computing
Aggregate Incentive Compensation for any Compensation Year, the Board
of Directors in its discretion shall have power, on or before
December 31 of such Compensation Year, to direct that any such write-
off or reserve shall be excluded, in whole or in part, in determining
Net Before-Tax Profits of the Company for such Compensation Year;
(iii) unearned portions or installments of incentive
compensation awards credited to income of the Company.
2.16 NET EARNINGS OF THE COMPANY: The net earnings of the
Company and its Subsidiaries for a Compensation Year, as determined for the
purpose of the annual statement of consolidated earnings for such
Compensation Year by the independent accounting firm employed by the
Company as its auditors, and in any event (a) after provision for federal
taxes of the United States and foreign governments (including, but without
limitation thereto, excess profits taxes) based upon or measured, in whole
or in part, by income of the Company and its Subsidiaries; (b) after
provision for incentive compensation awards for such Compensation Year; and
(c) after provision for any pension, excess benefit, profit-sharing or
thrift plan for Employees.
2.17 OPTIONS: The options granted from time to time under the
Program.
2.18 PARTICIPANT: An Employee to whom an incentive compensation
award has been made or to whom an Option has been granted under the
Program.
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<PAGE> 8
2.19 PROGRAM: The Upjohn Management Incentive Program of 1982
set forth in these pages, as it may be amended from time to time.
2.20 (a) RESTRICTED SHARES: Shares of Common Stock
transferred subject to restrictions precluding a sale or other disposition
for a period of time and requiring as a condition to retention compliance
with any other terms and conditions imposed by the Incentive Committee.
(b) RETIREMENT: Termination of employment at or after
attainment of age 65.
2.21 SALARY: The total compensation currently paid to an
Employee by the Company and its Subsidiaries and designated "salary" and in
any event exclusive of any Christmas bonus, of incentive compensation
awards under the Program, of any payments to or for the account of the
Employee under any pension, excess benefit, profit-sharing or thrift or
savings plan, and of fringe benefits.
2.22 SERVICE: Employment as a regular Employee of the Company
(including any Subsidiary of the Company). Service shall not be considered
to have been terminated by disability, whether temporary or permanent,
during any period that the Participant shall be entitled to receive at
least one-half the salary paid to him immediately prior to his disability.
A Participant who is rendering advisory services at a salary of less than
one-half of the salary that he was being paid as a full-time Employee of
the
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<PAGE> 9
Company or a Subsidiary shall be considered to have terminated his service.
2.23 STOCK APPRECIATION RIGHT: A right to receive a number of
shares of Common Stock, or cash in lieu thereof, based upon the increase in
value of Common Stock, as more particularly set forth in 7.08 below.
2.24 SUBSIDIARY: A corporation the financial results of which
for the Compensation Year are consolidated with those of the Company for
purposes of the financial statement of consolidated earnings for such
Compensation Year included in the Company's annual report to stockholders.
2.25 TREASURY STOCK: All shares of capital stock of the Company
and of any Subsidiary issued but held in the treasury of such corporation
including, without limitation, any shares held by the Company for the
purpose of the Program.
2.26 UNUSED LIMIT CARRYOVER: The unused limit carryover as
defined under Section 422A(c)(4) of the Internal Revenue Code of 1954, as
amended
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Page 12
4. Adjustments Upon Changes in Capitalization
In the event of a reorganization, recapitalization, stock
split, stock dividend, combination of shares, merger, consolidation, rights
offering or any other change in the corporate structure of the Company
affecting shares of its Common Stock, the Incentive Committee shall
recommend and the Board of Directors shall make appropriate adjustment (a)
in respect of the unpaid balance of any award of incentive compensation
payable in or measured by the value of shares of Common Stock, (b) in
respect of any Restricted Shares transferred under the Program and (c) in
the number and kind of shares authorized by the 1982 Stock Option Plan, in
the aggregate and to any individual Employee or group of Employees, in the
number and kind of shares subject to unexercised Options and Stock
Appreciation Rights theretofore granted and in the price of such shares.
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Page 28
7. The 1982 Stock Option Plan
7.01 Stock Subject to Stock Option Plan
The shares for which Options and Stock Appreciation Rights
may be granted under the 1982 Stock Option Plan shall be shares of the
Common Stock of the Company. The number of shares which may be purchased
upon exercise of Options that may from time to time be granted under the
Program or which may be transferred in respect of Stock Appreciation Rights
shall not exceed, in the aggregate, 800,000 shares of such Common Stock, a
number which shall be subject to adjustment as provided in Section 4 above.
If an Option, or a Stock Appreciation Right, after having been granted
under this Program, shall for any reason expire or terminate without having
been exercised in full and shares shall not have
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<PAGE> 12
Pages 29-
been transferred nor cash paid in respect of a Stock Appreciation Right
relating to an Option so granted, the shares theretofore subject to such
Option or Stock Appreciation Right, as the case may be, and not purchased
or transferred shall be added to the shares otherwise available for
(options and Stock Appreciation Rights which may thereafter be granted, and
such shares not so purchased or transferred shall not be deemed to increase
the aggregate number of shares for which options and Stock Appreciation
Rights may be granted. The shares to be transferred upon exercise of
Options granted under the Program or in respect of Stock Appreciation
Rights may be made available, at the discretion of the Board of Directors,
from authorized but unissued shares of the Company, from stock at any time
held in the treasury of the Company or from shares acquired by the Company
for the purpose of the Program, including shares purchased at any time or
from time to time in the open market. Subject to the limitations set forth
under Section 7.02 below, all Options granted under the Program may be
Incentive Stock Options, and Incentive Stock Options may be substituted for
or converted from outstanding but unexercised stock options theretofore
granted by the Company under the Program, the 1977 Stock Option Plan or the
1972 Stock Option Plan, with the consent of the holders of such options;
shares purchased under such substituted or converted Incentive Stock
Options shall be charged only against the number of shares authorized by
the stock option
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<PAGE> 13
plan under which such outstanding but unexercised stock options were
granted.
7.02 Number of Shares Subject to Individual Options
The number of shares of the Common Stock which may be
purchased upon exercise of an Option or Options or which may be transferred
upon exercise of Stock Appreciation Rights granted under the Program to any
individual Employee shall not exceed in the aggregate 20,000, a number
which shall be subject to adjustment as provided in Section 4 above. With
respect to any Incentive Stock Option granted after December 31, 1980, the
aggregate fair market value (determined as of the time such Option is
granted) of Common Stock for which any Employee may be granted Incentive
Stock Options in any calendar year under the Program (and under all other
plans, if any, which provide for the granting of Incentive Stock Options
and which are maintained by the Company, a Subsidiary or any other
affiliated corporation) shall not exceed $100,000 plus any Unused Limit
Carryover to such year.
7.03 Factors to be Considered in Granting Options
An Option and a Stock Appreciation Right shall be granted
only to an Eligible Employee and only for a reason or reasons connected
with employment. An Eligible Employee may be granted more than one Option
and Stock Appreciation Right subject, however, to the provisions of 7.02
above, but only during the term of the Program. In making any
determination as to Employees to whom Options shall be granted and as to
the
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<PAGE> 14
number of shares for which any Option or Stock Appreciation Right shall be
granted, the Incentive Committee shall in each case take into account the
duties of the Employee, his present and potential contributions to the
success of the Company, his compensation, and such other factors as the
Incentive Committee shall deem relevant to the accomplishment of one or
more purposes of the Program.
7.04 Option Price
The purchase price of the shares of the Common Stock upon
exercise of an option granted under the Program shall be not less than the
Fair Market Value of such shares on the date the Option is granted and in
no event less than the par value thereof.
7.05 Exercise of Options
(a) An Option shall not be exercisable until the
optionee has completed one year of employment with the Company or a
Subsidiary from the date of grant of the Option, and shall be exercisable
in full after the completion of that year of employment; provided, that an
Incentive Stock Option shall be subject to the sequential exercise
limitation applicable to Incentive Stock Options as set forth under 7.05(f)
below. After an Option shall have become exercisable, all or any part of
the shares subject to the Option may be purchased at any time or from time
to time thereafter during the remainder of the term of the Option;
provided, however, that except as otherwise set forth in
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<PAGE> 15
7.07 below, an Option may not be exercised unless the holder thereof shall
at the time of such exercise be an Employee.
(b) The purchase price of the shares as to which an
Option shall be exercised shall be paid in full in cash at the time of
exercise. Alternatively, in lieu of cash, an optionee may exercise his
option by tendering to the Company shares of the Common Stock of the
Company, owned by him, and having a Fair Market Value equal to the cash
exercise price applicable to his Option, with the Fair Market Value of such
stock to be determined in such appropriate manner as may be provided for by
the Incentive Committee or as may be required in order to comply with or to
conform to the requirements of any applicable or relevant laws or
regulations; provided, that the Incentive Committee may determine that an
Option shall provide that the optionee may not tender shares of the Common
Stock of the Company unless such shares have been held by the optionee for
a minimum period of time specified by the Incentive Committee.
(c) The holder of an Option shall not have any of the
rights of a stockholder with respect to any share subject to such Option
unless and until he shall become the holder of record of such share.
(d) No Option granted under the Program shall in any
event, and notwithstanding any provision of 7.05(a) above or 7.07 and 8.06
below, be exercisable after the expiration of ten (10) years from the date
on which the Option shall have been granted.
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<PAGE> 16
(e) Each Option granted under the Program may be made
exercisable upon such other terms and conditions consistent with the
Program as shall h)e determined by the Incentive Committee, including
provisions to the effect that the shares subject to the Option shall be
Restricted Shares.
(f) Notwithstanding any other provision of the Program,
including without limitation Section 7.05(a) and Section 7.07, an Incentive
Stock option granted to an Employee shall not be exercisable at any time
while there is outstanding any Incentive Stock Option previously granted to
such Employee (1) to purchase Common Stock, (2) to purchase stock of any
corporation which at the time of granting such option, was a parent or
Subsidiary of the Company or (3) to purchase stock of a predecessor of any
such corporations or of the Company. For these purposes an Incentive Stock
Option shall be treated as outstanding until it is exercised in full or
expires by lapse of time as such events are determined under the applicable
provisions of the Internal Revenue Code of 1954, as amended, and any
regulations, rulings or other official pronouncements promulgated
thereunder.
7.06 Non-Transferability and Other Matters Pertaining to Options
and Stock Appreciation Rights
An Option and any Stock Appreciation Rights granted under
the Program shall not be transferable otherwise than by will or the laws of
descent and distribution and shall be exercisable, during the lifetime of
the Employee, only by him or
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<PAGE> 17
by his guardian or legal representative; provided, however, that nothing in
this Program shall prevent the designation of a Beneficiary or prevent the
grant of an option or options with a readily ascertainable fair market
value at the time of grant and to that end, and, without limiting the
generality of the foregoing, such an option or options may be made
transferable or may be made exercisable by a person or persons other than
the Employee, upon such terms and conditions as the Incentive Committee may
approve, but no option that is so transferable or exercisable shall be
deemed to have been granted under this Program.
7.07 Termination of Employment
(a) In case the employment of an Employee to whom an
Options shall have been granted shall be terminated otherwise than as a
result of death, the Option may be exercised [but, except as otherwise
provided in 7.07(b), only to the extent that the Employee shall have been
entitled to exercise the Option on the termination of his employment]
during such period after the date on which he shall have ceased to be an
Employee as shall be prescribed in the option grant. Subject to 7.05(d)
above, such period shall be three (3) years following termination of
employment by Retirement and three (3) months following other termination
of employment unless, prior to the expiration of such three (3) months'
period, the Incentive Committee in the case of an officer or director of
the Company, or an appropriate officer of the Company authorized by the
Chief Executive Officer of the
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<PAGE> 18
Company in the case of other Employees, shall have determined that such
other termination of employment is not adverse to the interests of the
Company and shall have authorized in writing a three (3) year period
following such termination for exercise of the Option; provided, however,
that a lesser period or periods for exercise following Retirement or other
termination of employment may be prescribed by the Incentive Committee upon
or prior to the option grant. Subject to 7.05(d) above, if an Employee to
whom an Option shall have been granted shall die while he shall be employed
by the Company or one of its Subsidiaries or during the period after the
termination of his employment within which the Option shall be exercisable
pursuant to this 7.07(a), the Option may be exercised (but only to the
extent that the Employee shall have been entitled to exercise the Option
immediately prior to his death) within one (1) year from the date of the
Employee's death, unless a lesser period for such exercise shall have been
prescribed in the option grant.
(b) Notwithstanding the provisions of 7.05(a) to the
extent prescribed by the Incentive Committee upon or prior to the option
grant, an Option held by a Participant, to the extent unexercised and
outstanding, may be accelerated, so that during the period provided in
7.07(a) it shall be exercisable as to all installments and in its entirety,
following Retirement of the Participant and, if and to the extent
authorized in writing:
(i) by the Incentive Committee in the case of an
officer or director of the Company, or
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<PAGE> 19
(ii) by an appropriate officer of the Company authorized
by the Chief Executive Officer of the Company in the case of other
Employees, following other termination of employment of the
Participant, provided that the Incentive Committee or such officer,
as the case may be, shall have determined such termination of
employment not to be adverse to the interests of the Company.
7.08 Stock Appreciation Rights
(a) Stock Appreciation Rights may be granted in
connection with any Option granted under the Program, either at the time of
the grant of such Option or at any time thereafter during the term of the
Option, or may be granted independently of the grant of an Option. Stock
Appreciation Rights may also be granted under any prior stock option plans
of the Company, or as an addition to or substitution for options or stock
appreciation rights granted under such plans or under the Program.
(b) If granted in connection with an Option, Stock
Appreciation Rights shall entitle the holder of the related Option, upon
exercise of such Stock Appreciation Rights, to surrender the Option, or any
portion thereof, to the extent unexercised, and to receive a number of
shares of Common Stock, or cash, determined pursuant to clause (c)(iii) of
this para- graph 7.08. Such Option shall, to the extent so surrendered,
thereupon cease to be exercisable. If granted independently of an Option,
Stock Appreciation Rights shall entitle the holder of the Stock
Appreciation Rights to receive a number of shares of Common Stock, or cash,
determined pursuant to clause (c)(iii) of this paragraph 7.08.
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(c) Stock Appreciation Rights shall be subject to the
following terms and conditions and to such other terms and conditions not
inconsistent with the Program as shall from time to time be approved by the
Incentive Committee:
(i) If granted in connection with an Option, Stock
Appreciation Rights shall be exercisable at such time or times and to
the extent, but only to the extent, that the Option to which they
relate shall be exercisable. If granted independently of an Option,
Stock Appreciation Rights shall be exercisable at such time or times
as shall be determined by the Incentive Committee at the time of the
grant of the Stock Appreciation Rights but in no event later than the
period provided in 7.07(a) for exercise of an Option.
(ii) Stock Appreciation Rights shall in no event be
exercisable unless and until the holder of the Stock Appreciation
Rights shall have completed at least twelve months of continuous
Service with the Company or a Subsidiary, or both, immediately
following the date upon which the Stock Appreciation Rights shall
have been granted. Whether authorized leaves of absence or absence
for military or government service shall constitute termination of
employment or interruption of continuous employment for purposes of
the Program shall be determined by the Incentive Committee.
(iii) Upon exercise of Stock Appreciation Rights, the
holder thereof shall be entitled to receive a number of shares equal
in Fair Market Value to the amount by which the Fair Market Value of
one share of Common Stock on the date of such exercise shall exceed
the Fair Market Value of a share of Common Stock on the date of grant
of the related Option if such Stock Appreciation Rights were granted
in connection with an Option or on the date of grant of such Stock
Appreciation Rights if such Stock Appreciation Rights were granted
independently of an Option, multiplied by the number of shares in
respect of which the Stock Appreciation Rights shall have been
exercised. The Incentive Committee may authorize settlement of all
or any part of the Company's obligation arising out of an exercise of
Stock Appreciation Rights by the payment of cash equal to the
aggregate value of shares of Common Stock (or a fraction of a share)
that the Company would otherwise be obligated to deliver under the
preceding sentence of this Section 7.08(c)(iii).
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<PAGE> 21
(d) To the extent that Stock Appreciation Rights shall
be exercised, an option in connection with which such Stock Appreciation
Rights shall have been granted shall be deemed to have been exercised for
the purpose of the maximum limitations set forth in the Program. In the
case of Stock Appreciation Rights granted independently of an Option, the
number of shares of Common Stock in respect of which such Stock
Appreciation Rights shall be exercised shall be charged against such
maximum limitations.
(e) If so directed by the Incentive Committee, the grant
of Stock Appreciation Rights may provide for payment from time to time to
the holder of the Stock Appreciation Rights, either in cash or in shares of
Common Stock, of amounts not exceeding the cash dividends, as and when
declared or paid, which would have been paid in respect of a number of
shares of Common Stock equal to the number of shares subject to the Stock
Appreciation Rights if such shares have been issued or transferred to the
holder of the Stock Appreciation Rights from the time the Stock
Appreciation Rights were granted to such holder to the time when they shall
be exercised or shall lapse or otherwise terminate.
(f) An Employee and, in the event of his death, his
Beneficiary or the person or persons to whom the related Option or Stock
Appreciation Rights shall have been transferred by will or the laws of
descent and distribution, shall have no rights as a shareholder with
respect to any shares subject to
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<PAGE> 22
Stock Appreciation Rights until the date of issuance to him of a stock
certificate for such shares.
7.09 Cash Payment for Options Upon Change in Control
(a) Notwithstanding any other provision of the program
or of any outstanding Option, in the event of a change in control the
Company shall pay to each optionee with respect to each Option held by the
optionee, excluding (1) Incentive Stock Options outstanding on June 21,
1988 and (2) Options held by officers of the Company elected by the Board
of Directors which are not exercisable on the date of such change in
control, an amount in cash, which shall be payable within ten days after
the changed in control, equal to the difference between (i) the result of
multiplying (A) the number of shares of Common Stock subject to each Option
which have not been exercised by (B) the market value of the Common Stock
and (ii) the aggregate purchase price for such shares. Upon such payment,
all Options for which such cash payment is made (and any related Stock
Appreciation Rights) shall be cancelled
(b) If an officer of the Company elected by the Board of
Directors holds an Option (other than an Incentive Stock Option outstanding
on June 21, 1988) which is not exercisable in full on the date of a change
in control and such officer remains in employment with the Company or a
Subsidiary until the date such Option becomes exercisable, then,
notwithstanding any other provision of the Program or of the Option, the
Company shall pay to such officer on each date of which all or portion of
such
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<PAGE> 23
Option becomes exercisable an amount equal to the difference between (1)
the result of multiplying (i) the number of shares of Common Stock subject
to such Option that first become exercisable on that date by (ii) the
market value of the Common Stock and (2) the aggregate purchase price for
such shares. If the employment of such officer terminates other than for
cause, prior to the date all shares of Common Stock subject to such Option
becomes exercisable, the Company shall pay to such officer (or, in the
event of the officer's death, to the estate of the officer) within ten days
following termination of employment an amount equal to the difference
between (A) the result of multiplying (x) the number of shares of Common
Stock subject to such Option that were not exercisable upon termination of
employment by (v) the market value of the Common Stock and (B) the
aggregate purchase price for such shares. Upon payment, pursuant to this
paragraph, all Options for which such cash payment is made (and any related
Stock Appreciation Rights) shall be cancelled.
(c) The Incentive Committee may, in its discretion,
amend the terms of Incentive Stock Options outstanding on June 21, 1988 to
include provisions for cash payments similar to the provisions of 7.09(a)
and (b) above.
(d) For purposes of this Section, a "change in control"
shall mean a change of control of a nature that would be required to be
reported in response to Item 1(a) of the Current Report on Form 8-K, as in
effect on June 31, 1988, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the
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<PAGE> 24
"Exchange Act"), provided that, without limitation, such a change in
control shall be deemed to have occurred at such time as (1) any "person",
within the meaning of Section 14(d) of the Exchange Act, other than the
Company or any employee benefit plan(s) sponsored by the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 25% or more of the Common Stock, or
(2) individuals who constitute the Board of Directors of the Company on
June 21, 1988 (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to such date whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least three-quarters
of the directors comprising the Incumbent Board (either by a specific vote
or by approval of the proxy statement of the Company in which such person
is named as a nominee for director, without objection to such nomination)
shall be, for purposes of this clause (d), considered as though such person
were a member of the Incumbent Board. In addition, for purposes of this
Section, "market value" shall mean (i) in the event the change in control
is the result of a cash tender offer for all of the Common Stock, the cash
paid to shareholders in such tender offer or (ii) otherwise, the highest
Fair Market Value of the Common Stock during the ten trading day period
preceding the change in control. For purposes of this Section, "cause"
means (a) the willful and continued failure by an officer of the Company
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<PAGE> 25
elected by the Board of Directors to substantially perform his duties for
the Company (other than such failure resulting from incapacity due to
physical or mental illness) after a written demand for substantial
performance is delivered to the officer by the Chairman of the Board of
Directors or President of the Company which specifically identifies the
manner in which such executive believes that the officer has not
substantially performed his duties, or (b) the willful engaging by the
officer in illegal conduct which is materially and demonstrably injurious
to the Company.
8. General Provisions
8.01 Neither the adoption of the Program nor its operation, nor
any booklet or other document describing or referring to the Program, or
any part thereof, shall confer upon any Employee any right to continue in
the employ of the Company or any Subsidiary, or shall in any way affect the
right and power of the Company or any Subsidiary to dismiss or otherwise
terminate the employment of any Employee at any time for any reason with or
without cause. If the Company shall terminate the employment of a
Participant for any reason, whether or not for cause, the Company shall
incur no liability to the Participant due to the inability of the
Participant by reason of such termination to exercise thereafter any Option
or Stock Appreciation Right theretofore granted to the Participant by the
Company or to receive payment of any award under the Program or
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<PAGE> 26
to be eligible thereafter payment of any award or grant of an Option or
Stock Appreciation Right under the Program.
8.02 By accepting participation in or any benefits under the
Program, each member of the Incentive Compensation Group, each Participant,
and each person claiming under or through him, shall be conclusively deemed
to have indicated his acceptance and ratification of, and consent to, any
action or decision taken or made or to be taken or made under the Program
by the Company, the Board of Directors and the Incentive Committee.
8.03 Appropriate provision shall be made for all taxes required
to be withheld from incentive compensation awards, and in connection with
Options and Stock Appreciation Rights and the exercise thereof, under the
applicable laws or other regulations of any governmental authority, whether
Federal, state or local and whether domesticor foreign, including, but not
limited to, the withholding of payment of all or any portion of such award
or the transfer of shares pursuant to exercise of an Option or a Stock
Appreciation Right until the Participant reimburses the Company for the
amount the Company believes to be required to be withheld with respect to
such taxes, or cancelling any portion of an award in an amount sufficient
to reimburse itself for the amount it believes to be required to be so
withheld, or selling any property contingently credited by the Company for
the purpose of paying such award, in order to withhold or reimburse itself
for the amount it believes to be required to be so withheld.
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8.04 The place of administration of the Program shall be
conclusively deemed to be within the State of Delaware and the validity,
construction, interpretation and administration of the Program and of any
rules and regulations or determinations or decisions made thereunder, and
the rights of any and all persons having or claiming to have any interest
therein or thereunder shall be governed by, and determined exclusively and
solely in accordance with, the laws of the State of Delaware. Without
limiting the generality of the foregoing, the period within any action
arising under or in connection with the Program, or any payment or award
made or purportedly made under or in connection therewith, must be
commenced shall be governed by the laws of the State of Delaware,
irrespective of the place where the act or omission complained of took
place and of the residence of any party to such action and irrespective of
the place where the action may be brought.
8.05 Any communication under the Program to the Board of
Directors shall be deemed to have been delivered to the Board when
delivered to the Secretary of the Company for transmission to the Board,
irrespective of whether the Board shall then be in session. Any
communication under the Program to the Incentive Committee shall be deemed
to have been delivered to the Incentive Committee when delivered to the
Secretary of the Incentive Committee for transmission to the Incentive
Committee, irrespective of whether the Incentive Committee shall then be in
session.
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<PAGE> 28
8.06 If any day on or before which action under the Program must
be taken falls on a Saturday, Sunday or legal holiday, such action may be
taken on the next succeeding day not a Saturday, Sunday or legal holiday.
8.07 Headings are given to the sections of the Program solely as
a convenience to facilitate reference; neither such headings nor numbering
or paragraphing shall be deemed in any way material or relevant to the
construction of the Program or any provisions thereof.
8.08 The use of the masculine gender shall also include within
its meaning the feminine. The use of the singular shall also include
within its meaning the plural, and vice versa.
9. Conforming Amendments to Prior Stock Option Plans
The 1972 Stock Option Plan and the 1977 Stock Option Plan
of the Company may be amended by the Board of Directors to authorize the
amendment of options heretofore granted under such Plans, and, in the case
of the 1977 Stock Option Plan of any options hereafter granted, to conform
to the provisions set forth in 2.02, 7.06, 7.07 and, to the extent
applicable, 7.08(f).
10. Amendment or Repeal
The Program, subject to the provisions of 10.01 and 10.02
below, may be amended or repealed by the stockholders of the Company or,
if, as and when the Incentive Committee shall recommend, but not otherwise,
by the Board of Directors.
10.01 Only the stockholders of the Company may amend the
provisions of the Program (a) so as to increase Aggregate
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<PAGE> 29
Incentive Compensation for any Compensation Year above that authorized by
the provisions of the Program, but amendment to the Program so as to change
the form or terms of payment of incentive compensation awards from those
provided in the Program shall not be deemed to increase Aggregate Incentive
Compensation provided the Fair Market Value of all property transferred in
payment of awards shall not exceed Aggregate Incentive Compensation, nor
shall Aggregate Incentive Compensation be deemed increased as the result of
an increase in value of capital stock or other property in which an award
under the Program shall be payable or by which payment of an award shall be
measured or of any dividends, Dividend Equivalents, interest, interest
equivalents or similar increment paid or payable in respect of any award;
(b) so as to increase the maximum number of shares which
may be purchased upon exercise of Options granted under the Program or
which may be transferred in respect of Stock Appreciation Rights either in
the aggregate or to any individual Employee, except as authorized by
Section 4 above, or so as to decrease the minimum option price provided for
in 7.04 above, except as so authorized;
(c) so as materially to increase the benefits accruing
to Participants under the Program or materially to modify the requirements
as to the eligibility for Participants in the Program, provided that
amendment of the Program in any respect required to authorize the grant of
Incentive Stock Options, whether in substitution for options theretofore or
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<PAGE> 30
thereafter granted or otherwise, shall not be deemed materially to increase
the benefits accruing to the holders of such options;
(d) so as to extend the term of the Program or the
period during which Options may be exercised;
(e) so as to change the provisions of 3.01 above
relating to the Incentive Committee; or
(f) so as to change the provisions of this Section 10.
10.02 The provisions of the Program, as in effect on November 15
of any Compensation Year, shall in all respects remain in effect with
respect to any incentive compensation award, or installment thereof, made
or to be made or payable for such Compensation Year, notwithstanding the
amendment or repeal of the Program subsequent to November 15 of such
Compensation Year be either the Board of Directors or the stockholders.
Neither the termination of the Program by expiration or otherwise, nor any
amendment thereof shall, without the consent of the Participant, adversely
affect his right under an unexpired Option or Stock Appreciation Right
granted to him, or under an incentive compensation award made to him, prior
to such termination or amendment.
****
<PAGE>
<PAGE> 1
AMENDMENT TO THE
UPJOHN MANAGEMENT INCENTIVE PROGRAM OF 1982
Effective immediately prior to the consummation of the merger
contemplated by the Combination Agreement, dated August 20, 1995, among the
Company, Pharmacia Aktiebolag, Pharmacia & Upjohn, Inc. and Pharmacia &
Upjohn Subsidiary, Inc., Section 7.09(d) of The Upjohn Management Incentive
Program of 1982 is hereby amended by the addition of the paragraph below
immediately following the end of the first sentence thereof:
Notwithstanding anything in the foregoing to the
contrary, for purposes of Sections 7.09(a) and (b), no change
in control shall be deemed to have occurred by virtue of the
occurrence of any of the following events: (i) the
consummation of the merger contemplated by the Combination
Agreement, dated August 20, 1995, among the Company, Pharmacia
Aktiebolag ("Pharmacia"), Pharmacia & Upjohn, Inc. and
Pharmacia & Upjohn Subsidiary, Inc. or any other related
transaction with Pharmacia (the "Transaction"), (ii) any report
filed on Form 8-K as a result of the Transaction or (iii) any
change in the Board of Directors of the Company as a result of
the Transaction.
<PAGE> 1
Exhibit 5(a)
November 2, 1995
Pharmacia & Upjohn, Inc.,
Fleming Way,
Crawley, Sussex RH10 2LZ,
England.
Dear Sirs:
In connection with the registration under the Securities Act of
1933 (the "Act") of 15,757,512 shares (the "Securities") of Common Stock,
par value $.01 per share, of Pharmacia & Upjohn, Inc. (the "Company"), a
Delaware corporation, to be offered to employees under certain incentive
plans which have been assumed by the Company from The Upjohn Company
("Upjohn"), a Delaware corporation, pursuant to the merger of Pharmacia &
Upjohn Subsidiary, Inc., a Delaware corporation wholly owned by the
Company, with and into Upjohn, we, as your special counsel, have examined
such corporate records, certificates and other documents, and such
questions of law, as we have considered necessary or appropriate for the
purposes of this opinion. Upon the basis of such examination, we advise
you that, in
<PAGE>
<PAGE> 2
our opinion, when the Registration Statement on Form S-8 (the "Registration
Statement") has become effective under the Act, the issue and sale of the
Securities to be sold by the Company has been duly authorized by the
Company's board of directors and the Securities have been duly issued and
sold upon the exercise of options by the employees as contemplated by the
Registration Statement, the Securities being sold by the Company will be
validly issued, fully paid and nonassessable.
The foregoing opinion is limited to the Federal laws of the
United States, the laws of the State of New York and the General
Corporation Law of the State of Delaware, and we are expressing no opinion
as to the effect of the laws of any other jurisdiction.
Also, we have relied as to certain matters on information
obtained from public officials, officers of the Company and other sources
believed by us to be responsible.
<PAGE>
<PAGE> 3
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement. In giving such consent, we do not thereby
admit that we are in the category of persons whose consent is required
under Section 7 of the Act.
Very truly yours,
/s/ SULLIVAN & CROMWELL
<PAGE> 1
Exhibit 5(b)
November 2, 1995
Pharmacia & Upjohn, Inc.
Fleming Way
Crawley, Sussex RH10 2LZ
England
Ladies and Gentlemen:
We have acted as counsel for Pharmacia & Upjohn, Inc., a Delaware
corporation (the "Company"), and Pharmacia Aktiebolag, a corporation
organized under the laws of the Kingdom of Sweden ("Pharmacia"), in
connection with the filing by the Company with the United States Securities
and Exchange Commission of a Registration Statement on Form S-8 to which
this opinion is attached as an exhibit (the "Registration Statement")
covering the registration under the Securities Act of 1933, as amended (the
"Act"), of 15,757,512 shares (the "Shares") of the Company's common stock,
par value $.01 per share. The Shares are to be issued by the Company
pursuant to certain outstanding options to purchase common stock par value
$1.00 per share, of The Upjohn Company ("Upjohn") issued pursuant to stock
option plans of Upjohn which have been assumed by the Company pursuant to
Section 2.04(b) of the Combination Agreement dated, as of August 20, 1995,
among the Company, Pharmacia, Upjohn and Pharmacia & Upjohn Subsidiary,
Inc. (such assumed options, the "Assumed Options").
In connection with the foregoing, we have examined originals, or
copies certified or otherwise identified to our satisfaction, of such
documents and corporate and public records as we have deemed necessary as a
basis for the opinion hereinafter expressed. In our examination, we have
assumed the genuineness of all signatures, the authenticity of all
documents presented to us as originals, the conformity to the originals of
all documents presented to us as copies, and the authenticity of the
originals of such documents. In rendering our opinion, we have relied as to
factual matters upon certificates of public officials and certificates and
representations of officers of the Company.
Our opinion expressed herein is limited to the General Corporation
Law of the State of Delaware.
Based on the foregoing and having regard for such legal
considerations as we deem relevant, we are of the opinion that when the
Shares have been duly issued and delivered in accordance with the terms of
the Assumed Options, the Shares will be validly issued, fully paid and non-
assessable.
We hereby consent to the use of this opinion as Exhibit 5(b) to the
Registration Statement. In giving such consent, we do not thereby admit
that we are in the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
/s/ SHEARMAN & STERLING
<PAGE> 1
Exhibit 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement of Form S-8 of our report dated January 26, 1995, on our audits of
the consolidated financial statements of The UpJohn Company and of our report
dated August 21, 1995, on our audit of the consolidated balance sheet of
Pharmacia & Upjohn, Inc. which reports appear in the registration statement
on Form S-4 of Pharmacia & Upjohn, Inc.
/s/ COOPERS & LYBRAND L.L.P.
Chicago, Illinois
October 27, 1995
<PAGE> 1
Exhibit 23.4
CONSENT OF JOINT INDEPENDENT ACCOUNTANTS
The Board of Directors
Pharmacia AB
We consent to the incorporation by reference in the registration
statement of Pharmacia & Upjohn, Inc. on Form S-8 of our report dated
March 20, 1995, on our audits of the consolidated balance sheets of
Pharmacia AB and subsidiaries as of December 31, 1994 and 1993 and
the related consolidated statements of income and cash flows for each
of the three years in the period ended December 31, 1994 which report
appears in the December 31, 1994, annual report on Form 20-F of
Pharmacia AB.
/s/ HANS KARLSSON /s/ GORAN TIDSTROM
Hans Karlsson Goran Tidstrom
Authorized Public Accountant Authorized Public Accountant
KPMG Bohlins AB Ohrlings Coopers & Lybrand AB
Member of KPMG International Member of Coopers & Lybrand
International
Stockholm, Sweden
October 27, 1995
<PAGE> 1
Exhibit 23.5
INDEPENDENT AUDITOR'S CONSENT
To the Board of Directors of
Pharmacia & Upjohn, Inc.:
We consent to the incorporation by reference in the Registration
Statement on Form S-8 of Pharmacia & Upjohn, Inc. of our report dated
August 21, 1995 relating to the consolidated balance sheet of Pharmacia &
Upjohn, Inc. as of August 21, 1995 which report appears in the Registration
Statement on Form S-4 of Pharmacia & Upjohn, Inc.
/s/ KPMG Peat Marwick LLP
Short Hills, New Jersey
October 27, 1995
