<PAGE>
As filed with the Securities and Exchange Commission on March __, 1999
Registration No. 333-**
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
---------------------------
PHARMACIA & UPJOHN, INC.
(Exact name of company as specified in its charter)
Delaware 98-0155411
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
95 Corporate Drive
Bridgewater, New Jersey 08807-0995
(Address of principal executive offices) (Zip Code)
Pharmacia & Upjohn, Inc.
Equity Compensation Plan
(Full title of the plan)
Don W. Schmitz
Vice President, Associate General Counsel &
Corporate Secretary
Pharmacia & Upjohn, Inc.
95 Corporate Drive
Bridgewater, New Jersey 08807-0995
(Name and address of agent for service)
(908) 306-4400
(Telephone number, including area code, of agent for service)
---------------------------
Copy of all communications to:
Robert J. Lichtenstein
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, Pennsylvania 19103-2921
(215) 963-5000
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=======================================================================================================================
Proposed maximum Proposed maximum
Title of securities Amount to be offering price aggregate Amount of
to be registered registered (1) per share (2) offering price (2) registration fee (2) (3)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Common Stock, $0.01 4,000,000 $56.65625 $226,625,000 $63,001.75
par value
=======================================================================================================================
</TABLE>
(1) This Registration Statement covers shares of Common Stock of Pharmacia
& Upjohn, Inc. which may be offered or sold pursuant to the Pharmacia &
Upjohn, Inc. Equity Compensation Plan. Pursuant to Rule 416 under the
Securities Act of 1933, as amended (the"Securities Act"), this
Registration Statement also covers such additional shares as may
hereinafter be offered or issued to prevent dilution resulting from
stock splits, stock dividends, recapitalizations or certain other
capital adjustments.
(2) Estimated pursuant to Paragraphs (c) and (h) of Rule 457 under the
Securities Act, solely for the purpose of calculating the registration
fee, based upon the average of the high and low sales prices of shares
of the Company's Common Stock on March 12, 1999, as reported on the New
York Stock Exchange.
(3) The registration fee of $63,001.75 is included in a wire of $220,506.13
from the Company.
================================================================================
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENTS
Item 3. Incorporation of Documents by Reference.
The following documents filed with the U.S. Securities and
Exchange Commission (the "Commission") by Pharmacia & Upjohn, Inc. (the
"Company") (File No. 1-11557) pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), are incorporated by reference in this Form S-8
Registration Statement (the "Registration Statement") and made a part hereof:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1997 (the "1997 10-K");
2. The Company's Quarterly Reports on Form 10-Q for the periods
ended March 31, 1998, June 30, 1998 and September 30, 1998; and
3. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed on October 24, 1995.
All documents and reports filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such documents or reports. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified shall not be deemed to
constitute a part of the Registration Statement except as so modified and any
statement so superseded shall not be deemed to constitute a part of this
Registration Statement.
Independent Public Accountants
The consolidated balance sheets of the Company as of December 31,
1997 and 1996, and the consolidated statements of earnings, shareholders' equity
and cash flows for each of the three years in the period ended December 31,
1997, which have been incorporated by reference in this Prospectus, have been
included and incorporated by reference herein in reliance on the report of
PricewaterhouseCoopers LLP, independent public accountants, given on the
authority of that firm as experts in auditing and accounting. With respect to
the unaudited interim financial information for the three-month periods ended
March 31, 1998 and 1997, the six-month periods ended June 30, 1998 and 1997 and
the nine-month periods ended September 30, 1998 and 1997, incorporated by
reference in this prospectus, the independent public accountants have reported
that they have applied limited procedures in accordance with
II-1
<PAGE>
professional standards for a review of such information. However, their separate
review reports included in the Company's quarterly reports on Form 10-Q for the
quarters ended March 31, 1998 and 1997, June 30, 1998 and 1997 and September 30,
1998 and 1997, and incorporated by reference herein, state that they did not
audit and they do not express opinions on that interim financial information.
Accordingly, the degree of reliance on their review reports on such information
should be restricted in light of the limited nature of the review procedures
applied. The accountants are not subject to the liability provisions of Section
11 of the Securities Act of 1933 for their reports on the unaudited interim
financial information because those reports are not a "report" or a "part" of
the registration statement prepared or certified by the accountants within the
meaning of Sections 7 and 11 of the Securities Act.
Item 4. Description of Securities.
Not Applicable
Item 5. Interests of Named Experts and Counsel.
Not Applicable
Item 6. Indemnification of Directors and Officers.
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. The
Company's Certificate of Incorporation and Bylaws 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 has also purchased and maintained 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.
Item 7. Exemption from Registration Claimed.
Not Applicable
Item 8. Exhibits.
<TABLE>
<CAPTION>
Exhibit Numbers Exhibit
- --------------------------------------------------------------------------------------------
<S> <C> <C>
4 Restated Certificate of Incorporation and Restated By-laws of
Pharmacia & Upjohn, Inc. (incorporated by reference to Exhibits 4.1
and 4.2 to Pharmacia & Upjohn, Inc.'s Registration Statement on
Form S-8 filed May 3, 1996)
5.1 Opinion of Morgan, Lewis & Bockius LLP
15 Awareness Letter from PricewaterhouseCoopers LLP
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Morgan, Lewis & Bockius LLP (included as part of
Exhibit 5.1)
</TABLE>
II-2
<PAGE>
24 Power of Attorney (included as part of the signature page)
99.1 Pharmacia & Upjohn, Inc. Equity Compensation Plan
Item 9. Undertakings.
The undersigned hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
(iii) 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;
provided, however, that subparagraphs (a)(1)(i) and (a)(1)(ii) of
this section do not apply if the information required to be
included in a post-effective amendment by those subparagraphs is
contained in periodic reports filed with or furnished to the
Commission by the Company pursuant to Section 13 or Section 15(d)
of the Exchange Act that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, 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.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain
unsold at the termination of the offering.
The undersigned company hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the Company's
annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act
that is incorporated by reference in this 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.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for
II-3
<PAGE>
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company 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 Company 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.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
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 Bridgewater, State of New Jersey on this 18th day of March, 1999.
PHARMACIA & UPJOHN, INC.
By: /s/Fred Hassan
---------------------------------------------
Name: Fred Hassan
Title: President and Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by or on behalf of the following persons in the
capacities and on the dates indicated.
Each person, in so signing, also makes, constitutes and appoints Fred
Hassan, Christopher Coughlin and Richard Collier, and each such officer acting
singly, his true and lawful attorney-in-fact, in his name, place and stead to
execute and cause to be filed with the Securities and Exchange Commission any or
all amendments to this Registration Statement, with all exhibits and any and all
documents required to be filed with respect thereto, and to do and perform each
and every act and thing necessary to effectuate the same.
<TABLE>
<CAPTION>
Name Title Date
- ---- ----- ----
<S> <C> <C>
/s/Fred Hassan President and Chief Executive March 18, 1999
- ----------------------------- Officer
Fred Hassan
- ----------------------------- Executive Vice President and March , 1999
Christopher Coughlin Chief Financial Officer
(Principal Financial Officer)
- ----------------------------- Senior Vice President (Principal March , 1999
Robert Thompson Accounting Officer)
/s/Richard H. Brown Director March 18, 1999
- -----------------------------
Richard H. Brown
- ----------------------------- Director March , 1999
Frank C. Carlucci
/s/Gustaf A.S. Douglas Director March 18, 1999
- -----------------------------
Gustaf A.S. Douglas
/s/M. Kathryn Eickhoff Director March 18, 1999
- -----------------------------
M. Kathryn Eickhoff
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
/s/J. Soren Gyll Director March 18, 1999
- -----------------------------
J. Soren Gyll
/s/R.L. Berthold Lindquist Director March 18, 1999
- -----------------------------
R.L. Berthold Lindquist
/s/Olf G. Lund Director March 18, 1999
- -----------------------------
Olf G. Lund
/s/C. Steven McMillan Director March 18, 1999
- -----------------------------
C. Steven McMillan
/s/William U. Parfet Director March 18, 1999
- -----------------------------
William U. Parfet
/s/Ulla B. Reinius Director March 18, 1999
- -----------------------------
Ulla B. Reinius
/s/Bengt Samuelsson Director March 18, 1999
- -----------------------------
Bengt Samuelsson
</TABLE>
II-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Numbers Exhibit
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
4 Restated Certificate of Incorporation and Restated By-laws of
Pharmacia & Upjohn, Inc. (incorporated by reference to Exhibits 4.1
and 4.2 to Pharmacia & Upjohn, Inc.'s Registration Statement of
Form S-8 filed May 3, 1996)
5.1 Opinion of Morgan, Lewis & Bockius LLP
15 Awareness Letter from PricewaterhouseCoopers LLP
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Morgan, Lewis & Bockius LLP (included as part of
Exhibit 5.1)
24 Power of Attorney (included as part of the signature page)
99.1 Pharmacia & Upjohn, Inc. Equity Compensation Plan
</TABLE>
II-7
<PAGE>
EXHIBIT 5.1
March 19, 1999
Pharmacia & Upjohn, Inc.
95 Corporate Drive
Bridgewater, New Jersey 08807-0995
Ladies and Gentlemen:
We have acted as counsel to Pharmacia & Upjohn, Inc., a Delaware corporation
(the "Company"), in connection with the preparation of a registration statement
on Form S-8 (the "Registration Statement") to be filed pursuant to the
Securities Act of 1933, as amended (the "Act") and relating to 4,000,000 shares
(the "Shares") of the Company's Common Stock, $0.01 par value per share (the
"Common Stock"). The Shares covered by this Registration Statement will be
issued pursuant to the Pharmacia & Upjohn, Inc. Equity Compensation Plan (the
"Plan").
We have examined the Registration Statement and such corporate records, statutes
and other documents as we have deemed relevant in rendering this opinion. As to
matters of fact, we have relied on representations of officers of the Company.
In our examination, we have assumed the genuineness of documents submitted to us
as originals and the conformity with originals of documents submitted to us as
copies thereof.
Based on the foregoing, it is our opinion that Shares originally issued by the
Company to participants in the Plan will be, when issued in accordance with the
terms of the Plan, validly issued, fully paid and nonassessable.
The opinion set forth above is limited to the General Corporation Law of the
State of Delaware.
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
come within the category of persons whose consent is required under Section 7 of
the Act or the rules or regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/Morgan, Lewis & Bockius LLP
<PAGE>
EXHIBIT 15
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Pharmacia & Upjohn, Inc.
Registration on Form S-8
We are aware that our reports dated April 27, 1998, July 27, 1998 and October
28, 1998 on our reviews of interim financial information of Pharmacia & Upjohn,
Inc. and Subsidiaries for the three month periods ended March 31, 1998 and 1997,
the three and six month periods ended June 30, 1998 and 1997 and for the three
and nine month periods ended September 30, 1998 and 1997, respectively, and
included in the Company's quarterly reports on Form 10-Q for the quarters then
ended are incorporated by reference in this registration statement on Form S-8
pertaining to the Pharmacia & Upjohn, Inc. Equity Compensation Plan. Pursuant to
Rule 436(c) under the Securities Act of 1933, these reports should not be
considered a "report" or a "part" of the registration statement prepared or
certified by us within the meaning of Sections 7 and 11 of that Act.
PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
March 19, 1999
<PAGE>
EXHIBIT 23.1
Consent of Independent Public Accountants
We consent to the incorporation by reference in this registration statement on
Form S-8 pertaining to the Pharmacia & Upjohn, Inc. Equity Compensation Plan of
our report dated February 17, 1998, on our audits of the consolidated financial
statements of Pharmacia & Upjohn, Inc. and its subsidiaries as of December 31,
1997 and 1996 and for each of the three years in the period ended December 31,
1997. We also consent to the reference to our firm under the caption
"Independent Public Accountants."
PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
March 19, 1999
<PAGE>
PHARMACIA & UPJOHN, INC.
EQUITY COMPENSATION PLAN
------------------------
The purpose of the Pharmacia & Upjohn, Inc. Equity Compensation Plan (the
"Plan") is to provide designated employees of Pharmacia & Upjohn, Inc. (the
"Company") and its subsidiaries with the opportunity to receive grants of
nonqualified stock options, stock appreciation rights and restricted stock. The
Company believes that the Plan will encourage the participants to contribute
materially to the growth of the Company, thereby benefitting the Company's
shareholders, and will align the economic interests of the participants with
those of the shareholders.
1. Administration
(a) Committee. The Plan shall be administered and interpreted by a
committee (the "Committee") appointed by the Board of Directors of the Company
(the "Board"). The Committee may delegate any or all of its powers hereunder to
the Chief Executive Officer of the Company (the "CEO"). If the CEO administers
the Plan, references in the Plan to the "Committee" shall be deemed to refer to
the CEO.
(b) Committee Authority. The Committee shall have the sole authority to (i)
determine the individuals to whom grants shall be made under the Plan, (ii)
determine the type, size and terms of the grants to be made to each such
individual, (iii) determine the time when the grants will be made and the
duration of any applicable exercise or restriction period, including the
criteria for exercisability and the acceleration of exercisability, (iv) amend
the terms of any previously issued grant, and (v) deal with any other matters
arising under the Plan.
(c) Committee Determinations. The Committee shall have full power and
authority to administer and interpret the Plan, to make factual determinations
and to adopt or amend such rules, regulations, agreements and instruments for
implementing the Plan and for the conduct of its business as it deems necessary
or advisable, in its sole discretion. The Committee's interpretations of the
Plan and all determinations made by the Committee pursuant to the powers vested
in it hereunder shall be conclusive and binding on all persons having any
interest in the Plan or in any awards granted hereunder. All powers of the
Committee shall be executed in its sole discretion, in the best interest of the
Company, not as a fiduciary, and in keeping with the objectives of the Plan and
need not be uniform as to similarly situated individuals.
2. Grants
Awards under the Plan may consist of grants of nonqualified stock options
as described in Section 5 ("Options"), restricted stock as described in Section
6 ("Restricted Stock") and stock appreciation rights as described in Section 7
("SARs") (hereinafter collectively referred to as
<PAGE>
"Grants"). All Grants shall be subject to the terms and conditions set forth
herein and to such other terms and conditions consistent with this Plan as the
Committee deems appropriate and as are specified in writing by the Committee to
the individual in a grant instrument or an amendment to the grant instrument
(the "Grant Instrument"). The Committee shall approve the form and provisions of
each Grant Instrument. Grants under a particular Section of the Plan need not be
uniform as among the grantees.
3. Shares Subject to the Plan
(a) Shares Authorized. Subject to adjustment as described below, the
aggregate number of shares of common stock of the Company ("Company Stock") that
may be issued or transferred under the Plan is 4,000,000 shares of Company
Stock. The shares may be authorized but unissued shares of Company Stock or
reacquired shares of Company Stock, including shares purchased by the Company on
the open market for purposes of the Plan. If and to the extent Options or SARs
granted under the Plan terminate, expire, or are canceled, forfeited, exchanged
or surrendered without having been exercised or if any shares of Restricted
Stock are forfeited, the shares subject to such Grants shall again be available
for purposes of the Plan. If shares of Company Stock are used to pay the
exercise price of an Option, only the net number of shares received by the
grantee pursuant to such exercise shall be considered to have been issued or
transferred under the Plan with respect to such Option, and the remaining number
of shares subject to the Option shall again be available for purposes of the
Plan.
(b) Adjustments. If there is any change in the number or kind of shares of
Company Stock outstanding (i) by reason of a stock dividend, spinoff,
recapitalization, stock split, or combination or exchange of shares, (ii) by
reason of a merger, reorganization or consolidation in which the Company is the
surviving corporation, (iii) by reason of a reclassification or change in par
value, or (iv) by reason of any other extraordinary or unusual event affecting
the outstanding Company Stock as a class without the Company's receipt of
consideration, or if the value of outstanding shares of Company Stock is
substantially reduced as a result of a spinoff or the Company's payment of an
extraordinary dividend or distribution, the maximum number of shares of Company
Stock available for Grants, the number of shares covered by outstanding Grants,
the kind of shares issued under the Plan, and the price per share or base price
of such Grants may be appropriately adjusted by the Committee to reflect any
increase or decrease in the number of, or change in the kind or value of, issued
shares of Company Stock to preclude, to the extent practicable, the enlargement
or dilution of rights and benefits under such Grants; provided, however, that
any fractional shares resulting from such adjustment shall be eliminated. Any
adjustments determined by the Committee shall be final, binding and conclusive.
4. Eligibility for Participation
All employees of the Company and its subsidiaries who are not executive
officers of the Company ("Employees") shall be eligible to participate in the
Plan. The Committee shall select the Employees to receive Grants and shall
determine the number of shares of Company Stock subject
2
<PAGE>
to a particular Grant in such manner as the Committee determines. Employees who
receive Grants under this Plan shall hereinafter be referred to as "Grantees".
5. Granting of Options
(a) Number of Shares. The Committee shall determine the number of shares of
Company Stock that will be subject to each Grant of Options to Employees.
(b) Type of Option and Price.
(i) All Options granted under the Plan shall be nonqualified stock
options, which are not intended to qualify as "incentive stock options" within
the meaning of section 422 of the Internal Revenue Code of 1986, as amended.
(ii) The purchase price (the "Exercise Price") of Company Stock
subject to an Option shall be determined by the Committee and shall not be less
than the Fair Market Value (as defined below) of a share of Company Stock on the
date the Option is granted.
(iii) "Fair Market Value" shall mean, per share of Company Stock,
the average of the highest and lowest prices of the Company Stock on the New
York Stock Exchange (the "NYSE"), or such other national securities exchange as
may be designated by the Committee, on the applicable date, or, if there are no
sales of Company Stock on the NYSE on such date, then the average of the highest
and lowest prices of the Company Stock on the last previous day on which a sale
on the NYSE is reported.
(c) Option Term. The Committee shall determine the term of each Option,
which shall not exceed ten years from the date of grant.
(d) Exercisability of Options. Options shall become exercisable in
accordance with such terms and conditions, consistent with the Plan, as may be
determined by the Committee at or after grant.
(e) Termination of Employment, Disability or Death.
(i) Unless the Committee determines otherwise, an Option may only
be exercised while the Grantee is employed by the Company (as defined below) as
an employee. The Committee shall determine whether, and under what
circumstances, an Option may be exercised after a Grantee's permanent
disability, death or other termination of employment. Except as otherwise
provided by the Committee, any of the Grantee's Options that are not otherwise
exercisable as of the date on which the Grantee ceases to be employed by the
Company shall terminate as of such date. For purposes of this Section 5(e) and
Sections 6, 7, 8 and 9, the term "Company" shall mean the Company and its
subsidiaries.
3
<PAGE>
(f) Exercise of Options. A Grantee may exercise an Option that has become
exercisable, in whole or in part, by delivering a notice of exercise to the
Company with payment of the Exercise Price. The Grantee shall pay the Exercise
Price for an Option as specified by the Committee (i) in cash, (ii) with the
approval of the Committee, by delivering shares of Company Stock owned by the
Grantee (including Company Stock acquired in connection with the exercise of an
Option, subject to such restrictions as the Committee deems appropriate) and
having a Fair Market Value on the date of exercise equal to the Exercise Price
or by attestation (on a form prescribed by the Committee) to ownership of shares
of Company Stock having a Fair Market Value on the date of exercise equal to the
Exercise Price, (iii) by payment through a broker in accordance with procedures
established by the Committee and permitted by Regulation T of the Federal
Reserve Board, or (iv) by such other method as the Committee may approve. Shares
of Company Stock used to exercise an Option shall have been held by the Grantee
for the requisite period of time to avoid adverse accounting consequences to the
Company with respect to the Option. The Grantee shall pay the Exercise Price and
the amount of any withholding tax due (pursuant to Section 9) at the time of
exercise.
(g) Replacement Options. Unless the Committee determines otherwise, if a
Grantee exercises an Option while the Grantee is an Employee and the Grantee
uses shares of Company Stock to exercise the Option, the Grantee shall
automatically receive, upon the date of exercise, an additional Option to
purchase a number of shares of Company Stock equal to the number of whole shares
used to pay the Exercise Price for the Option. The new Option shall be granted
with an Exercise Price equal to the Fair Market Value of the Company Stock on
the date of grant of the new Option, for a term not longer than the unexpired
term of the exercised Option and on such other terms as the Committee shall
determine.
6. Restricted Stock Grants
The Committee may issue or transfer shares of Company Stock to an Employee
under a Grant of Restricted Stock, upon such terms as the Committee deems
appropriate. The following provisions are applicable to Restricted Stock:
(a) General Requirements. Shares of Company Stock issued or transferred
pursuant to Restricted Stock Grants may be issued or transferred for
consideration or for no consideration, and subject to restrictions or no
restrictions, as determined by the Committee. The Committee may, but shall not
be required to, establish conditions under which restrictions on shares of
Restricted Stock shall lapse over a period of time or according to such other
criteria as the Committee deems appropriate, including, without limitation,
restrictions based upon the achievement of specific performance goals. The
period of time during which the Restricted Stock will remain subject to
restrictions will be designated in the Grant Instrument as the "Restriction
Period."
(b) Number of Shares. The Committee shall determine the number of shares of
Company Stock to be issued or transferred pursuant to a Restricted Stock Grant
and the restrictions applicable to such shares.
4
<PAGE>
(c) Requirement of Employment. If the Grantee ceases to be employed by the
Company during a period designated in the Grant Instrument as the Restriction
Period, or if other specified conditions are not met, the Restricted Stock Grant
shall terminate as to all shares covered by the Grant as to which the
restrictions have not lapsed, and those shares of Company Stock must be
immediately returned to the Company. The Committee may, however, provide for
complete or partial exceptions to this requirement as it deems appropriate.
(d) Restrictions on Transfer and Legend on Stock Certificate. During the
Restriction Period, a Grantee may not sell, assign, transfer, pledge or
otherwise dispose of the shares of Restricted Stock except to a Successor
Grantee under Section 10(a). Each certificate for a share of Restricted Stock
shall contain a legend giving appropriate notice of the restrictions in the
Grant. The Grantee shall be entitled to have the legend removed from the stock
certificate covering the shares subject to restrictions when all restrictions on
such shares have lapsed. The Committee may determine that the Company will not
issue certificates for shares of Restricted Stock until all restrictions on such
shares have lapsed, or that the Company will retain possession of certificates
for shares of Restricted Stock until all restrictions on such shares have
lapsed.
(e) Right to Vote and to Receive Dividends. During the Restriction Period,
the Grantee shall have the right to vote shares of Restricted Stock and to
receive any dividends or other distributions paid on such shares, subject to any
restrictions deemed appropriate by the Committee.
(f) Lapse of Restrictions. All restrictions imposed on Restricted Stock
shall lapse upon the expiration of the applicable Restriction Period and the
satisfaction of all conditions imposed by the Committee. The Committee may
determine, as to any or all Restricted Stock Grants, that the restrictions shall
lapse without regard to any Restriction Period.
7. Stock Appreciation Rights
(a) General Requirements. The Committee may grant SARs to an Employee
separately or in tandem with any Option (for all or a portion of the applicable
Option). Tandem SARs may be granted either at the time the Option is granted or
at any time thereafter while the Option remains outstanding. The Committee shall
establish the base amount of the SAR at the time the SAR is granted. Unless the
Committee determines otherwise, the base amount of each SAR shall be equal to
the per share Exercise Price of the related Option or, if there is no related
Option, the Fair Market Value of a share of Company Stock as of the date of
Grant of the SAR.
(b) Tandem SARs. In the case of tandem SARs, the number of SARs granted to
a Grantee that shall be exercisable during a specified period shall not exceed
the number of shares of Company Stock that the Grantee may purchase upon the
exercise of the related Option during such period. Upon the exercise of an
Option, the SARs relating to the Company Stock covered by such Option shall
terminate. Upon the exercise of SARs, the related Option shall terminate to the
extent of an equal number of shares of Company Stock.
5
<PAGE>
(c) Exercisability. An SAR shall be exercisable during the period specified
by the Committee in the Grant Instrument and shall be subject to such vesting
and other restrictions as may be specified in the Grant Instrument. The
Committee may accelerate the exercisability of any or all outstanding SARs at
any time for any reason. Unless the Committee determines otherwise, SARs may
only be exercised while the Grantee is employed by the Company or during the
applicable period after termination of employment as described in Section 5(e).
A tandem SAR shall be exercisable only during the period when the Option to
which it is related is also exercisable.
(d) Value of SARs. When a Grantee exercises SARs, the Grantee shall receive
in settlement of such SARs an amount equal to the value of the stock
appreciation for the number of SARs exercised, payable in cash, Company Stock or
a combination thereof. The stock appreciation for an SAR is the amount by which
the Fair Market Value of the underlying Company Stock on the date of exercise of
the SAR exceeds the base amount of the SAR as described in Subsection (a).
(e) Form of Payment. The Committee shall determine whether the appreciation
in an SAR shall be paid in the form of cash, shares of Company Stock, or a
combination of the two, in such proportion as the Committee deems appropriate.
For purposes of calculating the number of shares of Company Stock to be
received, shares of Company Stock shall be valued at their Fair Market Value on
the date of exercise of the SAR. If shares of Company Stock are to be received
upon exercise of an SAR, cash shall be delivered in lieu of any fractional
share.
8. Employees Subject to Taxation Outside the United States
With respect to Employees who are subject to taxation in countries other
than the United States, the Committee may make Grants on such terms and
conditions different from those specified in this Plan as may in the judgment of
the Committee be necessary or desirable to foster and promote achievement of the
purposes of the Plan, and, in furtherance of such purposes, the Committee may
make such modifications, amendments, procedures and subplans as may be necessary
or advisable to comply with the laws of countries in which the Company operates
or has employees.
9. Withholding of Taxes
Grants under the Plan shall be subject to all applicable tax withholding
requirements. Tax withholding requirements may be satisfied in any of the
following ways:
(a) The Company may deduct from all Grants paid in cash, or from other
wages paid to the Grantee, any taxes required by law to be withheld with respect
to such Grants;
(b) A Grantee may elect to satisfy the Company's tax withholding
obligations with respect to a Grant by having shares withheld up to an amount
that does not exceed the Grantee's minimum applicable withholding tax rate;
6
<PAGE>
(c) A Grantee may satisfy the Company's withholding tax obligations by
tendering shares of Company Stock owned by the Grantee; or
(d) A Grantee may satisfy the Company's withholding tax obligations by such
other method as the Committee may approve.
10. Transferability of Grants. Only the Grantee may exercise rights under a
Grant during the Grantee's lifetime. A Grantee may not transfer those rights
except upon death by will, by the laws of descent and distribution or pursuant
to a written beneficiary designation filed with the Company. When a Grantee
dies, the personal representative or other person entitled to succeed to the
rights of the Grantee ("Successor Grantee") may exercise such rights. A
Successor Grantee must furnish proof satisfactory to the Company of his or her
right to receive the Grant under the Grantee's will, under the applicable laws
of descent and distribution or under the applicable beneficiary designation.
11. Change of Control of the Company
As used herein, a "Change of Control" shall mean:
(a) The acquisition by any individual, entity or group ("Person"),
including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), of beneficial
ownership, within the meaning of Rule 13d-3 promulgated under the Exchange Act,
of 33% or more of either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the combined voting
power of the then outstanding securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that the following acquisitions of Outstanding
Company Common Stock or Outstanding Company Voting Securities shall not
constitute a Change in Control: (A) any acquisition by the Company, (B) any
acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or (C)
any acquisition by any corporation pursuant to a reorganization, merger or
consolidation involving the Company, if, immediately after such reorganization,
merger or consolidation, each of the conditions described in clauses (i), (ii)
and (iii) of subsection (c) of this Section 11 shall be satisfied; and provided
further that, for purposes of clause (A), if any Person (other than the Company
or any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company) shall become the
beneficial owner of 33% or more of the Outstanding Company Common Stock or 33%
or more of the Outstanding Company Voting Securities by reason of any
acquisition of Outstanding Company Common Stock or Outstanding Company Voting
Securities by the Company and such Person shall, after such acquisition by the
Company, become the beneficial owner of any additional shares of the Outstanding
Company Common Stock or any additional Outstanding Voting Securities and such
beneficial ownership is publicly announced, such additional beneficial ownership
shall constitute a Change in Control;
7
<PAGE>
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of
such Board; provided, however, that any individual who becomes a director of the
Company subsequent to the date hereof whose election, or nomination for election
by the Company's stockholders, was approved by the vote of at least
three-quarters of the directors then 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 deemed to have been a member of the Incumbent Board; and provided
further, that no individual who was initially elected as a director of the
Company as a result of an actual or threatened election contest, as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or
any other actual or threatened solicitation of proxies or consents by or on
behalf of any Person other than the Board shall be deemed to have been a member
of the Incumbent Board;
(c) Approval by the stockholders of the Company of a reorganization, merger
or consolidation involving the Company unless, in any such case, immediately
after such reorganization, merger or consolidation, (i) more than 50% of the
then outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and more than 50% of the combined voting
power of the then outstanding securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals or entities who were
the beneficial owners, directly or indirectly, of the Outstanding Company Common
Stock and the Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation and in substantially the same
proportions relative to each other as their ownership, immediately prior to such
reorganization, merger or consolidation, of the Outstanding Company Common Stock
and the Outstanding Company Voting Securities, as the case may be, (ii) no
Person (other than the Company, any employee benefit plan (or related trust)
sponsored or maintained by the Company or the corporation resulting from such
reorganization, merger or consolidation (or any corporation controlled by the
Company), or any Person which beneficially owned, immediately prior to such
reorganization, merger or consolidation, directly or indirectly, 33% or more of
the Outstanding Company Common Stock or the Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or indirectly, 33%
or more of the then outstanding shares of common stock of such corporation or
33% or more of the combined voting power of the then outstanding securities of
such corporation entitled to vote generally in the election of directors and
(iii) at least a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or consolidation were
members of the Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such reorganization, merger or
consolidation; or
(d) (i) Approval by the stockholders of the Company of a plan of complete
liquidation or dissolution of the Company or (ii) the sale or other disposition
of all or substantially all of the assets of the Company other than to a
corporation with respect to which, immediately after such sale or other
disposition, (A) more than 50% of the then outstanding shares of common stock
thereof and more than 50% of the combined voting power of the then outstanding
securities thereof entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or
8
<PAGE>
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such sale or other
disposition and in substantially the same proportions relative to each other as
their ownership, immediately prior to such sale or other disposition, of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities,
as the case may be, (B) no Person (other than the Company, any employee benefit
plan (or related trust) sponsored or maintained by the Company or such
corporation (or any corporation controlled by the Company), or any Person which
beneficially owned, immediately prior to such sale or other disposition,
directly or indirectly, 33% or more of the Outstanding Company Common Stock or
the Outstanding Company Voting Securities, as the case may be) beneficially
owns, directly or indirectly, 33% or more of the then outstanding shares of
common stock thereof or 33% or more of the combined voting power of the then
outstanding securities thereof entitled to vote generally in the election of
directors and (C) at least a majority of the members of the board of directors
thereof were members of the Incumbent Board at the time of the execution of the
initial agreement or action of the Board providing for such sale or other
disposition (or were approved directly or indirectly by the Incumbent Board).
12. Consequences of a Change of Control
(a) Acceleration. Upon a Change of Control, unless the Committee determines
otherwise, (i) all outstanding Options and SARs shall automatically accelerate
and become fully exercisable, and (ii) the restrictions and conditions on all
outstanding Restricted Stock shall immediately lapse.
(b) Assumption of Grants. Upon a Change of Control where the Company is not
the surviving corporation (or survives only as a subsidiary of another
corporation), unless the Committee determines otherwise, all outstanding Options
and SARs that are not exercised shall be assumed by, or replaced with comparable
options or rights by, the surviving corporation, and other outstanding Grants
shall be converted to similar grants of the surviving corporation.
(c) Other Alternatives. Notwithstanding the foregoing, subject to
subsection (d) below, in the event of a Change of Control, the Committee may
take one or both of the following actions with respect to any or all outstanding
Options and SARs: the Committee may (i) require that Grantees surrender their
outstanding Options and SARs in exchange for a payment by the Company, in cash
or Company Stock as determined by the Committee, in an amount equal to the
amount by which the then Fair Market Value of the shares of Company Stock
subject to the Grantee's unexercised Options and SARs exceeds the Exercise Price
of the Options or the base amount of the SARs, as applicable or (ii) after
giving Grantees an opportunity to exercise their outstanding Options and SARs,
terminate any or all unexercised Options and SARs at such time as the Committee
deems appropriate. Such surrender or termination shall take place as of the date
of the Change of Control or such other date as the Committee may specify.
(d) Limitations. Notwithstanding anything in the Plan to the contrary, in
the event of a Change of Control, the Committee shall not have the right to take
any actions described in the Plan (including without limitation actions
described in Subsection (c) above) that would make the Change
9
<PAGE>
of Control ineligible for pooling of interests accounting treatment or that
would make the Change of Control ineligible for desired tax treatment if, in the
absence of such right, the Change of Control would qualify for such treatment
and the Company intends to use such treatment with respect to the Change of
Control.
13. Requirements for Issuance or Transfer of Shares
No Company Stock shall be issued or transferred in connection with any
Grant hereunder unless and until all legal requirements applicable to the
issuance or transfer of such Company Stock have been complied with to the
satisfaction of the Committee. The Committee shall have the right to condition
any Grant made to any Grantee hereunder on such Grantee's undertaking in writing
to comply with such restrictions on his or her subsequent disposition of such
shares of Company Stock as the Committee shall deem necessary or advisable, and
certificates representing such shares may be legended to reflect any such
restrictions. Certificates representing shares of Company Stock issued or
transferred under the Plan will be subject to such stop-transfer orders and
other restrictions as may be required by applicable laws, regulations and
interpretations, including any requirement that a legend be placed thereon.
14. Amendment and Termination of the Plan
(a) Amendment. The Board may amend or terminate the Plan at any time.
(b) Termination of Plan. The Plan shall terminate on the day immediately
preceding the tenth anniversary of its effective date, unless the Plan is
terminated earlier by the Board or is extended by the Board with the approval of
the shareholders.
(c) Termination and Amendment of Outstanding Grants. A termination or
amendment of the Plan that occurs after a Grant is made shall not materially
impair the rights of a Grantee unless the Grantee consents or unless the
Committee acts under Section 20(b). The termination of the Plan shall not impair
the power and authority of the Committee with respect to an outstanding Grant.
Whether or not the Plan has terminated, an outstanding Grant may be terminated
or amended under Section 20(b) or may be amended by agreement of the Company and
the Grantee consistent with the Plan.
(d) Governing Document. The Plan shall be the controlling document. No
other statements, representations, explanatory materials or examples, oral or
written, may amend the Plan in any manner. The Plan shall be binding upon and
enforceable against the Company and its successors and assigns.
15. Funding of the Plan
This Plan shall be unfunded. The Company shall not be required to establish
any special or separate fund or to make any other segregation of assets to
assure the payment of any Grants under
10
<PAGE>
this Plan. In no event shall interest be paid or accrued on any Grant, including
unpaid installments of Grants.
16. Rights of Participants
Nothing in this Plan shall entitle any Employee or other person to any
claim or right to be granted a Grant under this Plan. Neither this Plan nor any
action taken hereunder shall be construed as giving any individual any rights to
be retained by or in the employ of the Company or any other employment rights.
17. No Fractional Shares
No fractional shares of Company Stock shall be issued or delivered pursuant
to the Plan or any Grant. The Committee shall determine whether cash, other
awards or other property shall be issued or paid in lieu of such fractional
shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.
18. Headings
Section headings are for reference only. In the event of a conflict between
a title and the content of a Section, the content of the Section shall control.
19. Effective Date of the Plan
The Plan shall be effective as of January 1, 1999.
20. Miscellaneous
(a) Grants in Connection with Corporate Transactions and Otherwise. Nothing
contained in this Plan shall be construed to (i) limit the right of the
Committee to make Grants under this Plan in connection with the acquisition, by
purchase, lease, merger, consolidation or otherwise, of the business or assets
of any corporation, firm or association, including Grants to employees thereof
who become Employees of the Company, or for other proper corporate purposes, or
(ii) limit the right of the Company to grant stock options or make other awards
outside of this Plan. Without limiting the foregoing, the Committee may make a
Grant to an employee of another corporation who becomes an Employee by reason of
a corporate merger, consolidation, acquisition of stock or property,
reorganization or liquidation involving the Company or any of its subsidiaries
in substitution for a stock option or restricted stock grant made by such
corporation. The terms and conditions of the substitute grants may vary from the
terms and conditions required by the Plan and from those of the substituted
stock incentives. The Committee shall prescribe the provisions of the substitute
grants.
(b) Compliance with Law. The Plan, the exercise of Options and SARs and the
obligations of the Company to issue or transfer shares of Company Stock under
Grants shall be subject to all
11
<PAGE>
applicable laws and to approvals by any governmental or regulatory agency as may
be required. The Committee may revoke any Grant if it is contrary to law or
modify a Grant to bring it into compliance with any valid and mandatory
government regulation. The Committee may also adopt rules regarding the
withholding of taxes on payments to Grantees. The Committee may, in its sole
discretion, agree to limit its authority under this Section.
(c) Governing Law. The validity, construction, interpretation and effect of
the Plan and Grant Instruments issued under the Plan shall be governed and
construed by and determined in accordance with the laws of the State of
Delaware, without giving effect to the conflict of laws provisions thereof.
12
