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<SEC-DOCUMENT>0000950116-97-000605.txt : 19970329
<SEC-HEADER>0000950116-97-000605.hdr.sgml : 19970329
ACCESSION NUMBER: 0000950116-97-000605
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 19
CONFORMED PERIOD OF REPORT: 19961231
FILED AS OF DATE: 19970328
SROS: NONE
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: PFIZER INC
CENTRAL INDEX KEY: 0000078003
STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834]
IRS NUMBER: 135315170
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-03619
FILM NUMBER: 97567735
BUSINESS ADDRESS:
STREET 1: 235 E 42ND ST
CITY: NEW YORK
STATE: NY
ZIP: 10017
BUSINESS PHONE: 2125732323
MAIL ADDRESS:
STREET 1: 235 E 42ND ST
CITY: NEW YORK
STATE: NY
ZIP: 10017
FORMER COMPANY:
FORMER CONFORMED NAME: PFIZER CHARLES & CO INC
DATE OF NAME CHANGE: 19710908
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
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<TEXT>
<PAGE>
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM 10 - K
----------------------------
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 1-3619
PFIZER INC.
(Exact name of registrant as specified in its charter)
Delaware 13-5315170
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
235 East 42nd Street
New York, New York 10017
(Address of principal executive offices) (Zip Code)
(212) 573-2323
(Registrant's telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act:
=========================================================================
Title of each class Name of each exchange
on which registered
- -------------------------------------------------------------------------
Common Stock, $.05 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
=========================================================================
Securities registered pursuant to Section 12(g) of the Act:
None
------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in the definitive proxy or information
statement incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /X/
The aggregate market value of the voting stock held by non-affiliates
of the registrant computed by reference to the closing price at which the stock
was sold as of February 28, 1997 was approximately $59.1 billion.
The number of shares outstanding of each of the registrant's classes of
common stock as of February 28, 1997 was 646,441,139 shares of common stock, all
of one class.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1996 Annual Report to Shareholders Parts I, II and IV
Portions of the Proxy Statement for the 1997
Annual Meeting of Shareholders Parts I, III, and IV
- -------------------------------------------------------------------------------
<PAGE>
PART I
ITEM 1. BUSINESS
General
Pfizer Inc. (the "Company") is a research-based global health care
company. The Company discovers, develops, manufactures and sells innovative
technology-intensive products in three business segments: Health Care, which
includes a broad range of prescription pharmaceuticals, orthopedic implants,
medical devices and surgical equipment; Animal Health, which includes animal
health products and feed supplements; and Consumer Health Care, which includes a
variety of nonprescription drugs and personal care products.
Business Segments
The Company's operations include three business segments: Health Care,
Animal Health and Consumer Health Care. The Company's businesses offer
complementary synergies in research, manufacturing and regulatory oversight,
which helps leverage the Company's investments and expertise in each area. A
description of the three business segments is set forth on page 58 of the
Company's 1996 Annual Report to Shareholders. Comparative segment sales, income
and related financial information for 1996, 1995 and 1994 are set forth in the
table entitled "Segment Information" on page 39 of that same Annual Report. A
graph captioned "Net Sales by Business Segment" and a table captioned
"Percentage Change in Net Sales" on pages 30 and 31, respectively, of the Annual
Report present segment sales information over the same three years. All such
sections from the Annual Report are incorporated herein by reference.
Health Care
The Health Care segment is comprised of two business groups: the Pfizer
Pharmaceuticals Group and the Hospital Products Group.
Pfizer Pharmaceuticals Group
Effective January 1997, the Company combined its previously separate
U.S. and international pharmaceutical organizations into a single integrated
organization called "Pfizer Pharmaceuticals Group." Management is in the process
of bringing together the operations of the two formerly separate groups.
The Company's worldwide pharmaceutical products are comprised primarily
of drugs in the following major therapeutic classes: cardiovascular diseases,
infectious diseases and central nervous system disorders. The Company also has
significant products for treatment of diabetes, allergies and
arthritis/inflammation. In 1996, pharmaceuticals contributed 72% of the
Company's consolidated revenues, as compared to 71% in 1995 and 73% in 1994.
Pharmaceutical revenues in 1996 were principally from products launched since
the late 1980s, including Norvasc (amlodipine besylate), Cardura (doxazosin
mesylate), Diflucan (fluconazole), Zithromax (azithromycin) and Zoloft
(sertraline).
Cardiovascular disease products are the Company's largest therapeutic
product line, accounting for roughly 30% of the Company's consolidated net sales
for each of the past three years. Sales of both Norvasc, a once-a-day calcium
channel blocker for hypertension and angina, as well as Cardura, an alpha
blocker for hypertension and benign prostatic hyperplasia, grew substantially in
1996. Sales of Procardia XL, a once-a-day calcium channel blocker for
hypertension and angina, decreased during 1996, reflecting the product's
maturity and the Company's increasing emphasis on Norvasc, but still exceeded
one billion dollars.
Worldwide infectious disease product sales increased mainly on the
strength of Diflucan and Zithromax. Diflucan, an anti-fungal agent, is indicated
for use in a variety of fungal infections including vaginal candidiasis and
certain infections that afflict AIDS and immunosuppressed cancer patients.
Zithromax is an oral antibiotic which drew significant growth in 1996 from its
approval for use in new indications.
2
<PAGE>
Zoloft, for treatment of depression and obsessive compulsive disorder,
experienced substantial growth again in 1996. During 1996, the Company
introduced Zyrtec in the U.S. for the treatment of seasonal and perennial
allergic rhinitis and chronic urticaria. Zyrtec, the most widely-prescribed
antihistamine in Europe, has been marketed worldwide by the Belgian company, UCB
S.A. Zyrtec is licensed to the Company for sales in the U.S. and Canada, and the
Company and a subsidiary of UCB S.A. copromote Zyrtec in the U.S.
Hospital Products Group
The Hospital Products Group consists of two divisions - Howmedica and
the Medical Devices Division. Howmedica manufactures and markets orthopedic
implants and related reconstructive products. The Medical Devices Division
consists of three core businesses - Schneider/NAMIC, Valleylab and American
Medical Systems. The Group's four major business lines are musculoskeletal
products, interventional cardiology and radiology products, surgical
instrumentation and urology products. In each of 1996 and 1995, the sales of the
Hospital Products Group accounted for thirteen percent of the Company's
consolidated net sales, compared with fourteen percent in 1994.
Howmedica's musculoskeletal products, including reconstructive hip and
knee implants, bone cement, trauma products and internal and external fixation
devices, were complemented by the 1996 acquisition of the Leibinger companies.
Leibinger produces implantable devices used in oral and craniomaxillofacial
surgery and specialty surgical instruments. Schneider/NAMIC is a worldwide
manufacturer and supplier of angioplasty catheters, stents for vascular and
non-vascular applications and single-patient-use medical products, primarily for
use in the diagnosis and treatment of atherosclerotic cardiovascular disease.
Valleylab manufactures electrosurgical and ultrasonic surgical equipment used in
open and minimally invasive surgical procedures. American Medical Systems
manufactures impotence and incontinence implants.
The Hospital Products Group was also strengthened by the 1996
acquisitions of Corvita Corporation and Vesta Medical, Inc. Corvita develops,
manufactures and markets synthetic vascular grafts and is developing stent-graft
devices for diseased or damaged arteries. Vesta Medical, Inc. has developed
technology for treatment of dysfunctional uterine bleeding.
Animal Health
The Animal Health Group discovers, develops, manufactures and sells
animal health products for the prevention and treatment of diseases in
livestock, poultry, companion animals and other animals. The Company is a
significant manufacturer of antibiotics, antiparasitics and anticoccidial
products for food animals, as well as vaccines and various companion animal
products. In 1995, the Company acquired the SmithKline Beecham Animal Health
business, a major producer of animal vaccines and companion animal products.
This operation essentially doubled the revenues of the Animal Health Group and
complemented the Company's existing animal health business in terms of product,
species and geographic sales coverage. In 1996, Animal Health Group sales
accounted for eleven percent of the Company's consolidated net sales, compared
with twelve percent in 1995 and eight percent in 1994.
In 1996, the Company received U.S. Food and Drug Administration ("FDA")
approval of Dectomax (doramectin), a treatment for internal and external
parasites, primarily in cattle. Dectomax was already available in many countries
outside the U.S. and is a major Animal Health Group product. It provides a
long duration of activity against a broader spectrum of parasites than other
currently available injectable products. Also in 1996, the Company received U.S.
regulatory approval for Rimadyl, a non-steroidal anti-inflammatory for treatment
of osteo-arthritis in dogs, Domitor and Antisedan, a sedative and reversing
agent for use in dogs, and Aviax, an ionophore anticoccidial for poultry.
The principal products of the Animal Health Group are Dectomax; Stafac
(virginiamycin), a feed additive anti-infective for poultry, cattle and swine;
Terramycin LA-200 (oxytetracycline), an injectable version of the Terramycin
broad spectrum antibiotic used for a variety of animal diseases; the Banminth
(pyrantel tartrate), Nemex (pyrantel pamoate), Valbazen (albendazole) and
Paratect (morantel tartrate) anthelmintics for internal parasites; Coxistac
(salinomycin) and Aviax (semduramicin) anticoccidials primarily for poultry;
Mecadox (carbadox), an antibacterial for pigs; and Advocin (danofloxacin), for
treating respiratory and enteric diseases in livestock and poultry. The Company
also manufactures and sells an extensive line of cattle, swine and companion
animal vaccines including BoviShield, Leukocell, RespiSure and Vanguard.
3
<PAGE>
Consumer Health Care
The Company's Consumer Health Care products include proprietary
non-prescription health items, baby care products and toiletries, and a number
of products sold only in selected international markets. Among the Group's
better-known over-the-counter ("OTC") brands in the U.S. are Visine eyedrops,
Ben-Gay topical analgesics, Desitin ointments, Unisom sleep aids, Plax
pre-brushing dental rinse, Rid anti-lice products, Bain de Soleil skin care
products and Barbasol shave creams and gels. Several line extensions building on
these brands have been introduced in recent years. In 1996, the Company acquired
the Cortizone and Hemorid brands to expand this product portfolio. Cortizone is
a hydrocortisone skin care product and Hemorid is the only brand of hemorrhoidal
preparation expressly designed for women. In both 1996 and 1995, sales of the
Consumer Health Group accounted for four percent of the Company's consolidated
net sales, compared with five percent in 1994.
The Consumer Health Care business provides a platform for expanded
commercialization of certain prescription medications through the evolution to
OTC medications. For example, an OTC formulation of Feldene for treatment of
chronic shoulder and back pain was launched under the brand name "Juscoat" in
Japan in February 1996. Similarly, Diflucan One was marketed in the U.K. as a
treatment for vaginal candidiasis and Zyrtec is sold in Canada under the
Reactine brand name. Also in 1996, the Company acquired the rights to an
antihistimine eye drop formulation that previously had been available only by
prescription. Using that technology, the Company launched a new product,
OcuHist, as an extension of its OTC ophthalmic product line. Subject to
applicable regulatory approval and market conditions, the Company expects to
pursue similar launches for other products over time.
Research and Product Development
Innovation fueled by the Company's research and development operations
is key to the continued commercial success of all its businesses. The Company's
strategic focus on discovering, developing and bringing to market innovative
products that address major unmet health care needs has been supported by
substantial research and development investments. The Company spent
approximately $1.7 billion in 1996, $1.4 billion in 1995, and $1.1 billion in
1994 on Company-sponsored research and development. For 1997, the Company has
increased its annual worldwide research and development budget to approximately
$2.0 billion.
The Company conducts research internally, through contracts with third
party researchers, through collaborations with organizations such as
universities and biotechnology companies, and in cooperation with other
pharmaceutical and medical products firms. The Company also seeks out innovative
technologies developed by third parties to acquire or incorporate into Company
product lines through licensing or other arrangements.
Drug and medical product development is time consuming, expensive and
unpredictable. On average, only one out of several thousand chemical compounds
discovered by researchers proves to be both medically effective and safe enough
to receive regulatory approval. The process from discovery to regulatory
approval can take more than ten years. Efficiency in the development process so
as to be the first to market with an innovative new pharmaceutical compound or
medical product is important. As a result, the management of the Company's
research and development organization strives for efficient handling of product
candidates as a potential competitive advantage.
The Company currently has a number of pharmaceutical compounds and new
therapies in all stages of development that is unprecedented in its history. In
1996, the Company's discovery scientists delivered seventeen new drug candidates
to the early development stage. While each of those candidates is far from
regulatory approval and faces a number of hurdles, these and other drug
candidates are the foundation for potential new products in coming years. A
table and discussion of existing major pharmaceutical products, supplemental
filings for those products, and drug candidates in late and early stage
development is set out under the heading "Major Pfizer Products and Selected
Candidates in Development" on pages 8 and 9 of the Company's 1996 Annual Report
to Shareholders. That table and discussion are incorporated herein by reference.
The Company's research operations also strive to add extra value to
existing products. The 1996 FDA approval of Zoloft for the treatment of
obsessive compulsive disorder is one example. Also in 1996, the FDA approved a
new once-a-week form of Zithromax for prevention of Mycobacterium avium
infections in AIDS patients and a pediatric dosage form of Zyrtec. Altogether,
the Company has filed more than twenty Supplemental New Drug Applications with
the FDA in the past five years to expand markets for its existing products.
4
<PAGE>
The Company's competitors also devote substantial resources to research
and development. This competition can result in product obsolescence for the
Company as patient therapies improve. Consequently, the continual development of
new and innovative products is important to the Company's businesses.
Marketing
In the Company's global prescription pharmaceuticals and hospital
products businesses, products are promoted to health care providers as well as
to Managed Care Organizations ("MCOs"). The Company also devotes significant
resources to marketing directly to consumers in the United States, primarily
through direct-to-consumer print and TV advertising. The Company's U.S.
operations have several pharmaceutical and hospital products sales organizations
that represent different groups of products. In 1996, an additional U.S.
pharmaceutical sales organization was created to help market the portfolio of
existing products and represent new products. This raised the number of U.S.
pharmaceutical sales representatives to more than 3,300. Similar sales
organizations are used in overseas operations. Through these marketing
organizations, the Company endeavors to gain access to MCO formularies by
demonstrating unique qualities of its pharmaceutical and hospital products. The
Company also works with MCOs to assist them with disease management and other
tools.
Marketing of prescription pharmaceuticals depends to a degree on
complex decisions about the scope of clinical trials made years before product
approval. All drugs must complete basic clinical trials required by regulatory
authorities to show they are safe and effective for treating a particular
medical problem. A manufacturer may choose, however, to undertake additional
studies in order to demonstrate additional advantages of a compound, such as a
better safety profile or improved cost effectiveness, but such studies can be
costly and take years to complete. Decisions about whether and when to undertake
such additional studies can have a major impact on later marketing claims and
strategies.
Separate sales organizations are used by the Company's Animal Health
and Consumer Health Care businesses to promote their particular products. The
Animal Health business' advertising and promotion are generally targeted to
health professionals, directly and through medical journals. The Consumer Health
Care business uses substantial consumer advertising to promote its brand-name
products. In addition, the Company sponsors general advertising to educate the
public about the Company's innovative medical research.
The Company's pharmaceutical products are sold principally to wholesale
resellers, but the Company also sells directly to retailers, including
hospitals, clinics, government agencies and pharmacies. Hospital products are
generally sold directly to medical institutions, but distributors and dealers
provide a supplementary channel. Animal health and nutrition products are sold
through veterinarians, drug wholesalers, distributors, retail outlets and
directly to users, including feed manufacturers and animal producers. Consumer
health care products are promoted by heavy consumer advertising and sold through
a variety of retailers.
Apart from the Consumer Health Care Group's sales to WalMart, which
represents more than fifteen percent of its U.S. business, none of the Company's
business segments is dependent on a single customer, or a few customers, such
that a loss of any one or more would have a material adverse effect on the
particular business segment. No customer accounted for ten percent or more of
the Company's consolidated revenues in 1996. See, however, the discussion below
in the sections entitled "Competition" and "Government Regulation and Price
Constraints."
International Operations
Outside the United States, the Company has significant operations, both
direct and through distributors that, in general, parallel its United States
businesses. In 1996, the Company had net sales in excess of $100 million in each
of thirteen foreign countries and in excess of ten million dollars in each of 32
additional countries, with no single country other than the U.S. contributing
more than ten percent of total net sales. Japan is the Company's second largest
national market, with 1996 sales again exceeding one billion dollars, although
declining slightly from 1995 results due to lower valuations of the Japanese yen
versus the U.S. dollar. Growth in some European markets exceeded twenty percent,
while in selected emerging market nations, the growth rate was even higher. If
the world economy continues to grow and bring prosperity to more people in
emerging markets, the Company expects it could see the greatest rate of growth
of its health care businesses
5
<PAGE>
in those markets. The table "Geographic Data" on page 40 of the 1996 Annual
Report to Shareholders gives a breakdown of sales and other data by major
geographic areas, and is incorporated herein by reference.
The Company's international businesses are subject, in varying degrees,
to a number of risks inherent in carrying on business in certain countries,
including possible nationalization, expropriation and other restrictive
government actions such as capital regulations. In addition, the values of
currencies change and can either favorably or unfavorably affect the Company's
financial position and results of operations. It is impossible to predict future
changes in foreign exchange values or the effect they will have on the Company.
Further information with respect to the financial instruments used in the
Company's risk management programs is incorporated by reference from the Notes
entitled "Financial Instruments and Risk Management" and "Fair Value of
Financial Instruments" beginning on page 46 of the 1996 Annual Report to
Shareholders.
Patents and Intellectual Property Rights
Patent protection is of material importance in the Company's marketing
in the United States and in most major foreign markets. Various patents owned by
or licensed to the Company cover pharmaceutical and hospital products,
pharmaceutical formulations, processes for manufacturing products, and
intermediates useful in such manufacturing. Patent protection for individual
products extends for varying periods in accordance with the date of patent
filing or grant and the legal term of patents in the various countries where
patent protection is secured. The protection afforded, which may also vary from
country to country, depends upon the type of patent and the scope of its
coverage.
While the expiration of a product patent normally results in the loss
of marketing exclusivity for the covered product and a resulting dramatic
reduction in sales, in some cases commercial benefits may continue to be derived
from: (i) trade secret advantages pertaining to the manufacture of the product;
(ii) subsequent patents on processes and intermediates related to the economical
manufacture of the active ingredients; (iii) patents relating to special
formulations of the product or delivery mechanisms; and (iv) adaptation of the
active ingredient to over-the-counter products. The effect of product patent
expiration also depends upon other factors such as the nature of the market and
the position of the product in it, the growth of the market, the complexities
and economics of manufacture of the product, and the requirements of generic
drug laws administered by the Food and Drug Administration and similar laws in
other countries.
The Company owns or is licensed under a number of U.S. and foreign
patents relating to its products and manufacturing processes which, in the
aggregate, are of material importance in its businesses. Based on current
product sales, and in view of the vigorous competition with products sold by
others, the Company does not consider any single patent or related group of
patents to be significant in relation to its business as a whole, except for the
Procardia XL, Zithromax, Diflucan, Zoloft and Norvasc patents. Procardia XL
(nifedipine GITS) employs a novel drug delivery system developed and patented by
Alza Corporation. The Company holds an exclusive license to use this delivery
system with nifedipine until 2003. Other forms of sustained-release nifedipine
using different delivery systems from the patented technology used in Procardia
XL have been approved or are reported to be in various stages of development by
other companies. The one drug that has been approved has not been AB-rated by
the FDA as therapeutically equivalent to Procardia XL. It is not possible to
predict the timing and impact on sales of Procardia XL of competition from such
products. Zithromax (azithromycin) is a novel, broad spectrum macrolide
antibiotic patented by and sourced in crude bulk form from Pliva, a Croatian
company that is one of the largest pharmaceutical companies in eastern Europe.
Zithromax is exclusively licensed to the Company for sales and marketing in all
major countries of the world. Pliva's U.S. patent on Zithromax expires in 2005.
The Company's basic patents relating to Diflucan, Zoloft and Norvasc expire in
the U.S. between 2004 and 2007. The patent on Cardura, the Company's alpha
blocker for hypertension and benign prostatic hyperplasia, expires in 2000.
The Company's products are sold around the world under brand-name
trademarks that are considered in the aggregate to be of material importance.
Trademark protection continues in some countries as long as used; in other
countries, as long as registered. Registrations generally are for fixed, but
renewable, terms.
Competition in research, involving the development of new products and
processes and the improvement of existing products and processes, is intense,
and can result from time to time in unforecast patented product and process
obsolescence as patient treatment therapies improve. The ongoing development of
innovative new products, and the protection of the intellectual property behind
those products, are important to the Company's success in all areas of its
business.
6
<PAGE>
Under international agreements over recent years, protection of
intellectual property rights has been improving somewhat in emerging market
nations. As noted above, the Company is experiencing the greatest rates of
growth in its business in some of those nations. Its continued business in those
countries is dependent to a large degree on continuing improvement of
intellectual property rights. Pursuant to the North American Free Trade
Agreement, Mexico improved its patent law to provide patent protection to
pharmaceutical products. The General Agreement on Tariffs and Trade ("GATT")
also requires countries to amend their intellectual property laws to provide
patent protection for pharmaceutical products by the end of no more than a
ten-year transition period. A number of countries are in this process of
amending their patent laws. The Company is hopeful this will result eventually
in strong enforcement of intellectual property rights in more international
markets.
Neither the amounts paid by the Company for license rights, nor amounts
received by the Company in connection with licenses granted by it to third
parties, are considered material to the operations of the Company as a whole.
Competition
The competition is intense in all of the Company's business segments
and includes many competitors. No single entity competes with the Company in all
of its businesses, but each of the Company's businesses faces substantial
competition in its respective markets. The principal methods of competition vary
from one product category and business group to another, but technological
innovation in efficacy, safety, patients' ease of use and cost effectiveness are
the foundations of competitive advantage. The industry is noteworthy for its
technological focus on unmet medical needs and improving therapies. This has led
to the Company's multi-billion dollar research and development investments over
the past decade.
In recent years, the comparison of the total cost of treatment
therapies incorporating pharmaceuticals versus treatments for the same condition
using other therapies has become an important basis of competition. Even
breakthrough technologies are often marketed by comparing their total treatment
cost with the costs of alternative therapies.
The Company's pharmaceutical sales organization has proven to be a
valuable competitive asset. The ability of the Company's product representatives
to reach the medical community and communicate information about the Company's
products is important in responding to competitive efforts and launching new
products.
The Company's Hospital Products Group faces intense competition in its
markets. Many companies of various sizes and with various resources compete
against practically all of the Company's products. Consolidations of
complementary firms in this business have increased the market position of some
competitors in recent years, but the Company has also broadened its product
lines.
The principal methods of competition with respect to animal health
products vary somewhat, but include product innovation, service, price, quality
and effective transfer of technological advances to veterinary professionals and
consumers through advertising and promotion. A substantial number of other
companies manufacture and sell one or more competitive products. There are
hundreds of producers of animal health products throughout the world.
Many other companies, large and small, manufacture and sell one or more
products that are similar to the Company's consumer health products. The Company
is a competitor in the OTC market, and its principal methods of competition
include product quality, product innovation, customer satisfaction, broad
distribution capabilities, significant advertising and promotion efforts and
price. In general, achieving consumer acceptance of the Company's consumer
products involves heavy expenditures for advertising, promotion and marketing.
In this environment of growing competitive pressures on profit margins,
the Company has continued measures to control its expenses. Although research
and development budgets have grown significantly, in other areas such as
manufacturing, distribution and sales administration, the Company has
restructured and consolidated facilities. These measures have been designed to
adopt new manufacturing and logistics efficiencies and reduce or contain
operating expenses. See the Note, "Restructuring Program" in the Notes to
Consolidated Financial Statements on page 49 and the discussion in the second
paragraph under the heading "Operating Activities" on page 35 of the 1996 Annual
Report to Shareholders, which are incorporated herein by reference. In
furtherance of such efforts, in 1996 the Company announced the consolidation of
its previously separate U.S. and international pharmaceutical sales and
operating divisions into a single unified "Pfizer Pharmaceuticals Group" and
combined certain businesses in its Hospital Products Group.
7
<PAGE>
Managed Care Organizations
The growth of Managed Care Organizations ("MCOs") in the past decade
has been a major factor in the changing health care marketplace. Well over half
the U.S. population now participates in some version of managed care. Marketing
of prescription drugs to MCOs and Pharmacy Benefit Managers ("PBMs") that serve
many of those organizations have become more and more important to the Company's
business.
MCOs include medical insurance companies, health-maintenance
organizations, alliances of physicians, and medical plan administrators. The
market power of MCOs has been increasing in recent years due to the growing
numbers of patients enrolled in these organizations. At the same time, these
organizations have been consolidating into fewer, even larger entities. This
further enhances their bargaining strength and importance as sales channels for
the Company.
A major objective of MCOs is to contain and, where possible, reduce
health care expenditures. Among other measures, they typically use volume and
long-term contracts to negotiate discounts from pharmaceutical and medical
device providers. They control cost by using their purchasing power to bargain
for lower supplier prices, and by emphasizing primary and preventive care,
out-patient treatment, and procedures performed at doctors' offices and clinics.
Hospitalization and surgery, typically the most expensive forms of treatment,
are carefully managed.
As a means of reducing their cost for medications and hospital
products, MCOs and PBMs develop formularies, which are lists of products
compiled by boards of physicians and pharmacists. Formularies can be based on
the prices and therapeutic benefits of the available products. Due to their
lower basic price, generic medicines may be favored. The breadth of the products
covered by their formularies can vary considerably from one MCO to another, and
many formularies include alternative and competitive products for treatment of
particular medical problems. MCOs employ a variety of means to encourage the use
of products listed on their formularies.
Exclusion of a product from a formulary can lead to sharply reduced
usage of the product in the MCO patient population. Consequently, pharmaceutical
and hospital products companies compete aggressively to have their products
included on these formularies. Where possible, companies compete for inclusion
based upon unique features of their products, such as greater efficacy, better
patient ease of use or fewer side effects. A lower overall cost of therapy is
also a method of competition. Products that demonstrate fewer therapeutic
advantages must compete for inclusion based primarily on price.
In contrast to the effect MCOs have had on prices, they have also led
to greater usage of some drugs. Certain drugs can avert the need for more costly
treatments such as hospitalization, professional therapy, or even surgery, and
become favored first-line treatments for MCOs. In addition, the trend of
Medicare patients to opt for alternatives to those traditional programs and
convert to forms of managed care may increase overall pharmaceutical usage among
that population.
The effect of these developments has not only created pressure on
prices, but also has raised volumes for products that are successful in being
included on formularies. To date, the Company has been generally, although not
universally, successful in having its products included on MCO formularies.
As another means of addressing the interests of MCOs, some
pharmaceutical manufacturers, including the Company, have been developing
disease management programs, which aid MCOs in managing their patient
populations. These programs can help MCOs effectively address various aspects of
certain disease categories, including prevention, diagnosis and treatment
concomitant with pharmaceutical use. The programs can provide a comprehensive
treatment program, including pharmaceutical products and communication tools for
patients, that not only improves the quality of care but lowers costly
complications of chronic diseases. Disease management programs can be attractive
to MCOs by enhancing patient communications and compliance, which is important
to effective treatment.
Generic Products
One of the biggest competitive challenges faced by the Company in the
United States is posed by generic pharmaceutical manufacturers. Upon the
expiration of patents on important products (such as Feldene in the U.S. in
1992) the Company can lose the major portion of U.S. sales of such products
within a year. Generic competitors operate without the large research and
development expenses that the Company bears. For example, the approximately $2
billion the Company expects to spend in 1997 on research to develop new and
better medical treatments will constitute a significant
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portion of its total expenses. Generic manufacturers do not incur most of these
expenses, and generally can afford to charge much less for those products whose
U.S. patent protection has expired.
As noted above, MCOs that focus merely on the immediate cost of drugs
may favor generics to brand-name drugs. Governments also encourage the use of
generics as alternatives to brand-name drugs for their Medicaid and Medicare
programs. Laws in the U.S. generally allow, and in some cases require,
pharmacists to substitute a generic drug that has been rated under appropriate
government procedures to be therapeutically equivalent for a branded drug unless
the prescribing physician expressly forbids the substitution in accordance with
applicable procedures.
Further supporting generic competition, the FDA approval process often
exempts generic drugs from costly and time-consuming clinical trials. Generics
typically do not have to demonstrate their safety or efficacy, and need only
demonstrate bio-equivalence to the pioneer drug to obtain approval. Some
pharmaceutical firms that had concentrated solely on the manufacture of patented
drugs have entered the generic market in recent years. Some offer generic
versions of their own brand-name products. The Company has not followed that
strategy, choosing instead to focus on developing and marketing innovative new
products and treatments.
Raw Materials
Raw materials essential to the Company's businesses are purchased
worldwide in the ordinary course of business from numerous suppliers. In
general, these materials are widely available from multiple sources and no
serious shortages or delays have been encountered, nor are any anticipated in
1997. There is a trend towards the development and use of more complicated
pharmaceutical compounds, however, which may tend to increase manufacturing
costs and plant and process development in the future.
Government Regulation and Price Constraints
Pharmaceutical and hospital products companies are subject to heavy
regulation by a number of country, state and local agencies. Of particular
importance is the Food and Drug Administration ("FDA") in the United States,
which has jurisdiction bearing on all the Company's businesses. The FDA
administers requirements covering the testing, approval, safety, effectiveness,
manufacturing, labeling and marketing of pharmaceuticals and medical products.
In some cases, FDA requirements and/or reviews have increased the amount of time
and money necessary to develop new products and bring them to market in the
United States. Such requirements can be costly and extend the time it takes to
launch innovative new products.
The FDA also regulates consumer health and, along with the U.S.
Department of Agriculture and the Environmental Protection Agency, animal health
products. Certain regulatory actions pertaining to Company products are
discussed in Item 3 herein.
In 1995, the new European Medicines Evaluation Agency ("EMEA")
instituted a new "centralized" drug-approval process for the member states of
the European Union ("EU"). This centralized procedure supplements the
traditional decentralized approach and allows for a single central approval that
is valid in all EU member countries. While it is expected that it will take
several years for the EMEA to be fully operational, a harmonized, centralized
regulatory agency in Europe could benefit the Company's businesses.
In recent years, various legislative proposals have been offered in
Congress and in some state legislatures that would effect major changes in the
health care system. Some states have passed such legislation, and further
federal and state proposals are expected. These could include pharmaceutical
price constraints and restrictions on access to certain products. Similar issues
have also arisen in recent years in various foreign countries. The Company
cannot predict the outcome of such initiatives, but will work to maintain
patient access to its products and to oppose unwarranted pricing constraints.
Also in the U.S., additional proposals have called for substantial
changes in the Medicare and Medicaid programs. If such changes are enacted, they
may require significant reductions from currently projected expenditures. Driven
by budget concerns, Medicaid managed care systems have been under consideration
in several states. If the Medicare and Medicaid programs implement changes that
severely restrict the access of a significant population of program participants
to innovative new medicines, this could have a significant adverse effect on the
Company. On the other hand, relatively little pharmaceutical use is currently
covered by Medicare. As noted above, if changes to these programs shift patients
to MCOs that cover pharmaceuticals, patient usage of pharmaceuticals potentially
could increase.
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Under existing legislation in the U.S. applicable to pharmaceutical
companies, the Company is obliged to extend rebates to state Medicaid agencies
based on each state's reimbursement of pharmaceutical products under the
Medicaid program. The Company is also obliged to provide discounts on purchases
of pharmaceutical products by the Department of Veterans Affairs and by certain
entities funded by the Public Health Service. See the discussion regarding
rebates on page 31 of the Company's 1996 Annual Report for details on the cost
to the Company of such discounts and rebates, which is incorporated herein by
reference.
The Company encounters similar regulatory and legislative issues in
most of the foreign countries where it does business. Moreover, in many
international markets, prices of pharmaceuticals are controlled by the
government. As in the U.S., the primary thrust of governmental inquiry and
action is toward determining drug safety and effectiveness, but also with
mechanisms for controlling the prices of prescription drugs and the profits of
prescription drug companies. The EU has adopted directives concerning the
classification, labeling, advertising and wholesale distribution of medical
products for human use. The Company's policies and procedures are already
consistent with the substance of these directives. Consequently, it is believed
that they will not have any material effect on the Company's business.
The Company is also subject to the jurisdiction of various other
regulatory agencies, such as the Federal Trade Commission in the U.S., and is,
therefore, subject to potential administrative proceedings and actions by those
agencies. Such actions may include product recalls and seizures and other civil
and criminal sanctions. Under certain circumstances, the Company has deemed it
advisable to initiate product recalls voluntarily.
Although it is difficult to predict the future effect of these broad
and expanding legislative and regulatory requirements, the Company believes that
its development of new and improved products should enable it to compete
effectively within this environment. See, also, the discussion below under the
heading "Environmental Law Compliance."
Environmental Law Compliance
Most of the Company's manufacturing and certain research operations are
affected by federal, state and local laws relating to the discharge of materials
into the environment or otherwise relating to the protection of the environment.
The Company has made and intends to continue to make the necessary expenditures
for compliance with these laws. The Company is also remediating environmental
contamination resulting from past industrial activity at certain sites (see Item
3, "Legal Proceedings"). As a consequence, the Company incurred capital and
operational expenditures in 1996 for environmental protection and remediation of
certain past industrial activity as follows: environment-related capital
expenditures, $42 million; other environmental-related expenses, $56 million.
While it is not feasible to predict with certainty the future costs related to
such remediation activities or capital expenditures and operating costs for such
environmental compliance, the Company does not believe that they will have a
material effect on the capital expenditures, earnings or competitive position of
the Company.
Corporate/Financial Subsidiaries
The Company conducts international banking operations through a
subsidiary, Pfizer International Bank Europe ("PIBE"), based in Dublin, Ireland.
PIBE, incorporated under the laws of Ireland, operates under a banking license
from the Central Bank of Ireland. It makes loans and accepts deposits in a
number of currencies in international markets. PIBE is an active Euromarket
lender through its portfolio of loans and money market instruments to high
quality corporations and sovereigns. Loans are made on a short and medium term
basis, typically with floating market-based interest rates. The Company also
owns an insurance operation, The Kodiak Company Limited, which reinsures certain
assets, inland transport and marine cargo of the Company's international
operations. Combined financial data and segment information for these
subsidiaries are set out in the Note "Financial Subsidiaries" on page 46 of the
Company's 1996 Annual Report to Shareholders, and are incorporated herein by
reference.
Tax Matters
The discussions of tax-related matters (including certain U.S. and
overseas assessments relating to prior years) set out under the heading "Tax
Legislation" in the Financial Review section on page 37 of the Company's 1996
Annual Report to
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Shareholders and under the Note therein entitled "Taxes on Income" in the Notes
to the Consolidated Financial Statements on pages 49 and 50 of the Annual Report
are incorporated herein by reference. The proposed IRS adjustments relating to
the tax accounting treatment of certain swaps and related transactions
undertaken by the Company in 1987 and 1988 have been settled with no material
effect on the financial position or the results of operations of the Company.
Employees
In the Company's innovation-intensive business, the performance of its
employees is the foundation to its success. As of December 31, 1996, the Company
employed approximately 46,500 persons in its operations throughout the world.
Geographically, this total breaks down as follows: United States, 19,400;
Europe, 13,300; Asia, 7,300; Canada/Latin America, 5,000; and Africa/Middle
East, 1,500. The Company has a good relationship with its employees.
CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS
(Cautionary Statements Under the Private Securities Litigation Reform Act
of 1995)
The disclosure and analysis set forth herein and in the Company's 1996
Annual Report to Shareholders contain certain forward-looking statements,
particularly statements relating to future actions, performance or results of
current and anticipated products, sales efforts, expenditures, and financial
results. From time to time, the Company also provides forward-looking statements
in other publicly-released materials, both written and oral. Forward-looking
statements provide current expectations or forecasts of future events such as
new products, product approvals, revenues and financial performance. These
statements are identified as any statement that does not relate strictly to
historical or current facts. They use words such as "plans", "expects", "will"
and other words and phrases of similar meaning. In all cases, a broad variety
of risks and uncertainties, both known and unknown, as well as inaccurate
assumptions can affect the realization of the expectations or forecasts in those
statements. Consequently, no forward-looking statement can be guaranteed. Actual
future results may vary materially.
The Company undertakes no obligation to update any forward-looking
statements, but investors are advised to consult any further disclosures by the
Company on this subject in its subsequent filings pursuant to the Securities
Exchange Act of 1934. Furthermore, as permitted by the Private Securities
Litigation Reform Act of 1995, the Company provides these cautionary statements
identifying factors that could cause the Company's actual results to differ
materially from expected and historical results. It is not possible to foresee
or identify all such factors. Consequently, this list should not be considered
an exhaustive statement of all potential risks, uncertainties and inaccurate
assumptions.
In the U.S., many of the Company's pharmaceutical products are subject
to increasing price pressures as managed care groups, institutions and
government agencies seek price discounts. Federal and state government efforts
to reduce Medicare and Medicaid expenses are expected to increase the use of
managed care and to offer incentives to beneficiaries to join these plans. This
may result in managed care influencing prescription decisions for a larger
segment of the population. International operations are also subject to
increasing degrees of government regulations. It is expected that pressures on
pricing and operating results will continue in 1997 as a result of market
competition and environment.
The Company's products Feldene and Glucotrol have been subject to
generic competition since 1992 and 1994, respectively. The combined U.S. net
sales of these products were $59, $95 and $203 million in 1996, 1995 and 1994,
respectively.
In mid-1993, the FDA approved a New Drug Application for a competitor's
sustained-release form of nifedipine for the treatment of hypertension. This
product uses a different delivery system from the patented technology used in
Procardia XL, the Company's product, which is approved for the treatment of
hypertension and angina and has a delivery system that is patent-protected until
2003. Other forms of sustained-release nifedipine have been reported to be in
various stages of development by other companies. It is not possible to predict
the timing and impact of possible future competition on sales of Procardia XL.
Net sales of Procardia XL were $1,005 million in 1996, $1,133 million in 1995,
and $1,177 million in 1994.
During 1995, the authors of several nonclinical studies questioned the
safety of calcium channel blockers, including the Company's immediate-release
nifedipine capsules. Although the clinical evidence supported the safety of
these medications, the FDA convened an advisory panel to review their safety. In
January 1996, the advisory panel recommended that labeling for immediate-release
nifedipine capsules (approved only to treat a form of angina) be clarified.
However, the advisory panel specifically noted that there were no data which
questioned the safety of the newer sustained-release and intrinsically
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long-acting calcium channel blockers, such as the Company's Procardia XL and
Norvasc, which are approved for both hypertension and angina and are prescribed
for the vast majority of American patients on calcium channel blockers. The
safety and effectiveness of these new long-acting calcium channel blockers in
lowering blood pressure and controlling angina are supported by a large body of
data from numerous studies and the daily clinical experiences of physicians
around the world. It is not possible to predict the impact, if any, of these
nonclinical studies or the FDA panel's findings and recommendations on its
future sales, but the Company does not believe that any impact will have a
material adverse effect on its financial position or results of operations.
Sales and earnings growth could be impacted by changes in foreign
exchange rates. The Company manages its foreign exchange risk through a variety
of techniques. For further details, see the footnote "Financial Instruments and
Risk Management" beginning on page 46 of the 1996 Annual Report to Shareholders.
Pursuant to the Small Jobs Protection Act of 1996, Section 936 of the
Internal Revenue Code (the possessions corporation income tax credit) was
repealed for tax years beginning after December 31, 1995. That Act provided that
existing credit claimants, such as the Company, are eligible to continue using
the credit against the tax arising from manufacturing income earned in a U.S.
possession for an additional ten-year period. The amount of manufacturing income
eligible for the credit during this additional period is subject to a cap based
on prior years' income earned by the Company in Puerto Rico. This ten-year
extension period does not apply to investment income earned in a possession, the
credit on which expired as of July 1, 1996. This legislation does not affect the
amendments made to Section 936 by the Omnibus Budget Reconciliation Act of 1993
which provided for a five-year phase-down of the possession tax credit from 100%
to 40%. In addition, the 1996 Act extended the R&D tax credit for eleven months
effective July 1, 1996.
In October 1996, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of Position
("SOP") 96-1, Environmental Remediation Liabilities, which will be effective in
1997. SOP 96-1 provides guidance on accounting for the recognition, measurement,
display and disclosure of environmental liabilities. The Company's adoption of
SOP 96-1 is not expected to have a material impact on its financial position,
results of operations, or cash flows.
In July 1996, the Emerging Issues Task Force of the Financial
Accounting Standards Board reached a consensus on Issue 96-14, Accounting for
the Costs Associated with Modifying Computer Software for the Year 2000, which
provides that costs associated with modifying computer software for the year
2000 be expensed as incurred. The Company is assessing the extent of the
necessary modifications to its computer software.
Issuance of new or revised accounting standards and rules in addition
to those specified above could affect reported financial results.
Risks and uncertainties particularly apply with respect to
product-related forward-looking statements. In view of the many considerations
that bear upon regulatory approval and marketing of pharmaceutical and hospital
products around the world, it is always possible that current expectations in
these areas may not be realized. The outcome of the lengthy and complex process
of new product development is inherently uncertain. A candidate can fail at any
stage of the process and one or more late-stage product candidates could fail to
receive regulatory approval. Regulatory delays, the inability to identify viable
new chemical compounds or successfully complete clinical trials, claims and
concerns about safety and efficacy, new discoveries and products by competitors,
and claims about adverse side effects are a few of the factors that could
adversely affect the realization of product-related forward-looking statements.
Difficulties or delays in pharmaceutical product manufacturing or
marketing including, but not limited to, the inability to build up production
capacity commensurate with demand, or the failure to gain market acceptance of
approved products could affect future results. Similar difficulties or delays
can also affect the development of the Company's other businesses, namely
hospital products, animal health and consumer health care.
The Company currently has several products whose annual sales approach
or exceed one billion dollars. Three products alone (Norvasc, Procardia XL and
Zoloft) accounted for approximately half of the Company's 1996 pharmaceutical
sales. If any of the Company's major products were to become subject to a
controversy that affects doctor or patient confidence, or subject to increased
pressure from competitive products, or if a new, more effective treatment
regimen should be introduced, the impact on the Company's revenues could be
significant.
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As discussed above under the heading "Marketing", decisions about
research studies made early in the development process of a drug candidate can
have a substantial impact on marketing strategy once it receives approval. The
Company endeavors to plan clinical trials prudently, but there is no guarantee
that a proper balance of speed and testing will be made in each case.
Factors mentioned in the discussions above about product obsolescence,
generic competition, marketing issues, government regulations and the
competitive environment generally will be important to future results.
Changing business conditions, including inflation and fluctuations in
interest rates and foreign currency exchange rates, in the many countries where
the Company does business directly or through subsidiaries will affect future
results. For example, in 1997, in accordance with generally accepted accounting
principles, the Company will change the functional currency of its Mexican
operations to the U.S. dollar since the cumulative rate of Mexico's inflation
exceeded 100% for the three-year period ending December 31, 1996. This change is
not expected to have a material effect on the Company's financial position or
results of operations.
Competitive factors including managed care organizations, institutions,
government agencies and retailers seeking price discounts, technological
advances attained by competitors, patents granted to competitors, and generic
competition as the Company's products mature, could affect prices, revenues and
expenses.
Government laws and regulations affecting domestic and international
operations, including trade, monetary and fiscal policies, taxes, price
controls, unstable governments and legal systems and intergovernmental disputes,
possible nationalization, as well as actions affecting approvals of products and
licensing could affect revenue opportunities, expenses and capital movements.
Growth in costs and expenses, changes in product mix and the impact of
divestitures, restructuring and other unusual items that could result from
evolving business strategies, evaluation of asset realization, and
organizational restructuring could affect future results. For example, the
Company may be unable to continue or maintain the margin improvements achieved
in recent years.
Changing governmental or social conditions could affect utilization of
some Company products.
Claims have been brought against the Company and its subsidiaries for
various legal, environmental and tax matters. In addition, the Company's
operations are subject to international, federal, state and local environmental
laws and regulations. See the discussion of "Legal Proceedings" in Item 3 and
the tax assessment discussion in Item 1 under the caption "Tax Matters", and
updates of such matters in subsequent reports to the SEC.
Business combinations among the Company's competitors could affect the
Company's competitive position in the pharmaceutical, hospital products, animal
health and consumer health care businesses. Similarly, combinations among the
Company's major customers could increase their purchasing power in dealing with
the Company.
Investments in new product introductions and research could exceed
corresponding sales growth, thereby producing higher costs without a
proportional increase in revenues.
ITEM 2. PROPERTIES
The Company's world headquarters are located in New York City,
comprised of a 33-story office building plus adjacent and nearby buildings.
Altogether, they include over one million square feet of office space, the
majority of which is owned.
The Company's major research and development facilities are located in
manufacturing/R&D complexes containing multiple buildings in Groton, Connecticut
and Sandwich, England. The Groton and Sandwich facilities, respectively, contain
over three million square feet and several hundred thousand square feet of floor
space. Other important research facilities are located in Japan and France. A
number of smaller research and development operations around the world focus
principally on their local markets. Research and development facilities have
been expanding in recent years.
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Principal manufacturing facilities within the United States and its
territories are located in Groton, Connecticut; Brooklyn, New York; Vigo County,
Indiana; Barceloneta, Puerto Rico; Lee's Summit, Missouri; Lincoln, Nebraska and
Parsippany and Rutherford, New Jersey. Outside the U.S., major manufacturing
facilities are located in a number of locations in Europe, Latin America, Asia,
Australia and Canada. Smaller plants in the U.S. and various countries serve
local or specialized markets. The Company's manufacturing facilities have
capacities that the Company considers appropriate to its needs.
The Company also owns and leases space for distribution,
customer-service, sales and marketing and administrative operations around the
world. Most facilities housing research and manufacturing are owned. In general,
the Company's properties are well maintained, adequate and suitable to their
purposes. For example, a modern distribution facility in Memphis, Tennessee
consolidated that function and serves the U.S. through advanced systems. The
Note "Property, Plant and Equipment" on page 48 of the Company's Annual Report
to Shareholders, which discloses amounts invested in land, buildings and
equipment, and the discussion in the third paragraph under the heading
"Investing Activities" on page 35 of that Report, which describes capital
expenditures of the Company, are incorporated herein by reference. See, also,
the discussion under the Note entitled "Lease Commitments" on page 52 of the
Company's 1996 Annual Report to Shareholders, which is also incorporated herein
by reference.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in a number of claims and litigations,
including product liability claims and litigations considered normal in the
nature of its businesses. These include suits involving various pharmaceutical
and hospital products that allege either reaction to or injury from use of the
product.
As previously disclosed, numerous claims have been brought against the
Company and Shiley Incorporated, a wholly owned subsidiary, alleging either
personal injury from fracture of 60 degree or 70 degree Shiley Convexo Concave
("C/C") heart valves, or anxiety that properly functioning implanted valves
might fracture in the future, or personal injury from a prophylactic replacement
of a functioning valve.
In an attempt to resolve all claims alleging anxiety that properly
functioning valves might fracture in the future, the Company entered into a
settlement agreement in January 1992 in Bowling v. Shiley, et al., a case
brought in the United States District Court for the Southern District of Ohio,
that establishes a worldwide settlement class of people with C/C heart valves
and their spouses, except those who elect to exclude themselves. The settlement
provides for a Consultation Fund of $90 to $140 million (depending on the number
of claims filed) from which valve recipients who make claims will receive
payments that are intended to cover their cost of consultation with
cardiologists or other health care providers with respect to their valves. The
number of claims filed fixes the fund amount at $90 million. The settlement
agreement establishes a second fund of at least $75 million to support C/C
valve-related research, including the development of techniques to identify
valve recipients who may have significant risk of fracture, and to cover the
unreimbursed medical expenses that valve recipients may incur for certain
procedures related to the valves. The Company's obligation as to coverage of
these unreimbursed medical expenses is not subject to any dollar limitation.
Following a hearing on the fairness of the settlement, it was approved by the
court on August 19, 1992. An appeal of the court's approval of the settlement
was dismissed on December 21, 1993 by the United States Court of Appeals for the
Sixth Circuit. A motion for rehearing en banc was denied on March 4, 1994, and
the U.S. Supreme Court denied a writ of certiorari on October 3, 1994. On August
8, 1994, the Sixth Circuit dismissed an appeal from the denial of a motion by
the same appellants to vacate the judgment approving the settlement, and the
U.S. Supreme Court denied a writ of certiorari on January 9, 1995. Another
appeal to the Sixth Circuit by the same appellants regarding the denial of their
earlier motion to intervene affirmed the denial and all judgments entered by the
District Court, and denied all pending motions, on December 16, 1996. A motion
for a rehearing en banc before the Sixth Circuit filed by the same appellants
was denied. It is expected that most of the costs arising from the Bowling class
settlement will be covered by insurance and the proceeds of the sale of certain
product lines of the Shiley businesses in 1992. Of approximately 900 implantees
(and spouses of some of them) who opted out of the Bowling settlement class,
eight have cases pending; approximately 792 have been resolved; and
approximately 100 have never filed a case or claim.
Several claims relating to elective reoperations of valve recipients
are currently pending. Some of these claims relate to elective reoperations
covered by the Bowling class settlement described above, and, therefore, the
claimants are entitled to certain benefits in accordance with the settlement.
Such claimants, if they irrevocably waive all of the benefits of the settlement,
may pursue separate litigation to recover damages in spite of the class
settlement. The Company is defending these claims.
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Generally, the plaintiffs in all of the pending heart valve litigations
discussed above seek money damages. Based on the experience of the Company in
defending these claims to date, including available insurance and reserves, the
Company is of the opinion that these actions should not have a material adverse
effect on the financial position or the results of operations of the Company.
On September 30, 1993, Dairyland Insurance Co., a carrier providing
excess liability coverage ("excess carrier") in the early 1980s, commenced an
action in the California Superior Court in Orange County, seeking a declaratory
judgment that it was not obligated to provide insurance coverage for Shiley
heart valve liability claims. On October 8, 1993, the Company filed
cross-complaints against Dairyland and filed third-party complaints against 73
other excess carriers who sold excess liability policies covering periods from
1979 to 1985, seeking damages and declaratory judgments that they are obligated
to pay for defense and indemnity to the extent not paid by other carriers. A
significant portion of such claims has been resolved and the remainder is
involved in pretrial discovery. On April 26, 1996, the trial court entered an
order stating that implanting an allegedly defective heart valve is not an
appropriate trigger of insurance coverage in at least one and perhaps all
working valve lawsuits. This decision, even if it is applied to all claims
alleging anxiety that properly functioning valves might fracture in the future,
does not deal with fracture claims, which are also part of the Company's claims,
and as to which a further motion by the carriers is pending.
The Company's operations are subject to federal, state, local and
foreign environmental laws and regulations. Under the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended
("CERCLA" or "Superfund"), the Company has been designated as a potentially
responsible party by the United States Environmental Protection Agency with
respect to certain waste sites with which the Company may have had direct or
indirect involvement. Similar designations have been made by some state
environmental agencies under applicable state superfund laws. Such designations
are made regardless of the extent of the Company's involvement. There are also
claims that the Company may be a responsible party or participant with respect
to several waste site matters in foreign jurisdictions. Such claims have been
made by the filing of a complaint, the issuance of an administrative directive
or order, or the issuance of a notice or demand letter. These claims are in
various stages of administrative or judicial proceedings. They include demands
for recovery of past governmental costs and for future investigative or remedial
actions. In many cases, the dollar amount of the claim is not specified. In most
cases, claims have been asserted against a number of other entities for the same
recovery or other relief as was asserted against the Company. The Company is
currently participating in remedial action at a number of sites under federal,
state, local and foreign laws.
To the extent possible with the limited amount of information available
at this time, the Company has evaluated its responsibility for costs and related
liability with respect to the above sites and is of the opinion that the
Company's liability with respect to these sites should not have a material
adverse effect on the financial position or the results of operations of the
Company. In arriving at this conclusion, the Company has considered, among other
things, the payments that have been made with respect to the sites in the past;
the factors, such as volume and relative toxicity, ordinarily applied to
allocate defense and remedial costs at such sites; the probable costs to be paid
by the other potentially responsible parties; total projected remedial costs for
a site, if known; existing technology; and the currently enacted laws and
regulations. The Company anticipates that a portion of these costs and related
liability will be covered by available insurance.
Through the early 1970s, Pfizer Inc. (Minerals Division) and Quigley
Company, Inc. ("Quigley"), a wholly owned subsidiary, sold a minimal amount of
one construction product and several refractory products containing some
asbestos. These sales were discontinued thereafter. Although these sales
represented a minor market share, the Company has been named as one of a number
of defendants in numerous lawsuits. These actions, and actions related to the
Company's sale of talc products in the past, claim personal injury resulting
from exposure to asbestos-containing products, and nearly all seek general and
punitive damages. In these actions, the Company or Quigley is typically one of a
number of defendants, and both are members of the Center for Claims Resolution
(the "CCR"), a joint defense organization of twenty defendants that is defending
these claims. The Company and Quigley are responsible for varying percentages of
defense and liability payments for all members of the CCR. Prior to September
1990, the cases involving talc products were defended by the CCR, but the
Company is now overseeing its own defense of these actions. A number of cases
alleging property damage from asbestos-containing products installed in
buildings have also been brought against the Company.
On January 15, 1993, a class action complaint and settlement agreement
were filed in the United States District Court for the Eastern District of
Pennsylvania involving all personal injury claims by persons who have been
exposed to asbestos-containing products but who have not yet filed a personal
injury action against the members of the CCR (Future Claims Settlement). The
Future Claims Settlement agreement establishes a claims-processing mechanism
that will provide historic settlement values upon proof of impaired medical
condition as well as claims-processing rates over ten years. In addition,
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the shares allocated to the CCR members eliminate joint and several liability.
The court has determined that the Future Claims Settlement is fair and
reasonable. Subsequently, the court entered an injunction enforcing its
determination. Plaintiffs filed an appeal from that injunction in the United
States Court of Appeals for the Third Circuit and on May 10, 1996, a panel of
the Third Circuit reversed the order of the District Court and directed that the
preliminary injunction be vacated. Although the Third Circuit subsequently
denied the motion of the CCR members including the Company and Quigley, for
rehearing of that determination, it agreed to stay its mandate while review is
sought in the United States Supreme Court. On November 1, 1996, the United
States Supreme Court granted a writ of certiorari to hear the appeal, which was
argued February 18, 1997. In the event that the Future Claims Settlement is not
upheld, it is not expected to have a material impact on the Company's exposure
or on the availability of insurance for the vast majority of such cases. It is
expected, too, that the CCR will attempt to resolve such cases outside of the
Future Claims Settlement in the same manner as heretofore.
At approximately the time it filed the Future Claims Settlement class
action, the CCR settled approximately 16,360 personal injury cases on behalf of
its members, including the Company and Quigley. The CCR has continued to settle
remaining and opt-out cases and claims on a similar basis to past settlements.
The total pending number of active personal injury claims, exclusive of those
covered by the Future Claims Settlement preliminary injunction and those which
are inactive or have been settled in principle as of December 28, 1996, is
11,415 asbestos cases against Quigley; 3,882 asbestos cases against the Company;
and 68 talc cases against the Company.
Costs incurred by the Company in defending the asbestos personal injury
claims and the property damage claims, as well as settlements and damage awards
in connection therewith, are largely insured against under policies issued by
several primary insurance carriers and a number of excess carriers.
The Company believes that its costs incurred in defending and
ultimately disposing of the asbestos personal injury claims, whether or not the
Future Claims Settlement is eventually upheld, as well as the property damage
claims, will be largely covered by insurance policies issued by carriers that
have agreed to provide coverage, subject to deductibles, exclusions, retentions
and policy limits. In connection with the Future Claims Settlement, the
defendants commenced a third-party action against their respective excess
insurance carriers that have not agreed to provide coverage seeking a
declaratory judgment that (a) the Future Claims Settlement is fair and
reasonable as to the carriers; (b) the carriers had adequate notice of the
Future Claims Settlement; and (c) the carriers are obligated to provide coverage
for asbestos personal injury claims. Even if the Future Claims Settlement is not
eventually upheld, it is expected that the insurance coverage action against the
insurance carriers that have not agreed to provide coverage for asbestos
personal injury claims will be pursued. Based on the Company's experience in
defending the claims to date and the amount of insurance coverage available, the
Company is of the opinion that the actions should not ultimately have a material
adverse effect on the financial position or the results of operations of the
Company.
The United States Environmental Protection Agency - Region I and the
Department of Justice have informed the Company that the federal government is
contemplating an enforcement action arising primarily out of a December 1993
multimedia environmental inspection, as well as certain state inspections, of
the Company's Groton, Connecticut facility. The Company is engaged in
discussions with the governmental agencies and does not believe that an
enforcement action, if brought, will have a material adverse effect on the
financial position or the results of operations of the Company.
The Company has been named, together with numerous other manufacturers
of brand name prescription drugs and certain companies that distribute brand
name prescription drugs, in suits in federal and state courts brought by various
groups of retail pharmacy companies. The federal cases consist principally of a
class action by retail pharmacies (including approximately 30 named
plaintiffs)(the "Federal Class Action"), as well as additional actions by
approximately 3,500 individual retail pharmacies and a group of chain and
supermarket pharmacies (the "individual actions"). These cases, which have been
transferred to the United States District Court for the Northern District of
Illinois and coordinated for pretrial purposes, allege that the defendant drug
manufacturers violated the Sherman Act by unlawfully agreeing with each other
(and, as alleged in some cases, with wholesalers) not to extend to retail
pharmacy companies the same discounts allegedly extended to mail order
pharmacies, managed care companies and certain other customers, and by
unlawfully discriminating against retail pharmacy companies by not extending
them such discounts. On November 15, 1994, the federal court certified a class
(the Federal Class Action) consisting of all persons or entities who, since
October 15, 1989, bought brand name prescription drugs from any manufacturer or
wholesaler defendant, but specifically excluding government entities, mail order
pharmacies, HMOs, hospitals, clinics and nursing homes. Fifteen manufacturer
defendants, including the Company, agreed to settle the Federal Class Action
subject to court approval. The Company's share pursuant to an Agreement as of
January 31, 1996, was $31.25 million, payable in four annual installments
without interest. The Company continues to believe that there was no conspiracy
and specifically denied liability in the Settlement Agreement,
16
<PAGE>
but had agreed to settle to avoid the monetary and other costs of litigation.
The settlement was filed with the Court on February 9, 1996 and went through
preliminary and final fairness hearings. By orders of April 4, 1996, the Court:
(1) rejected the settlement; (2) denied the motions of the manufacturers
(including the Company) for summary judgment; (3) granted the motions of the
wholesalers for summary judgment; and (4) denied the motion to exclude purchases
by other than direct purchasers. The decision on the wholesalers has been made
final, and been appealed. The decision on the indirect purchasers has been
certified, and accepted, for appeal. The Court has put off setting a trial date
while these matters are pending.
In May 1996, thirteen manufacturer defendants, including the Company,
entered into an Amendment to the Settlement Agreement which was filed with the
Court on May 6, 1996. The Company's financial obligations under the Settlement
Agreement will not be increased. The Settlement Agreement, as amended, received
final approval June 21, 1996. An appeal of that approval is pending.
In addition, consumer class actions have been filed in state courts and
the District of Columbia, alleging injury to consumers as well as retail
pharmacies from the failure to give discounts to retail pharmacy companies. Both
a consumer class and a retailer class have been certified in separate California
actions. Consumer class actions filed in Colorado, New York and Washington have
been dismissed; Washington and New York are now on appeal. The Company was
dismissed from a consumer class action in Wisconsin. Consumer class actions are
also pending in Alabama, Arizona, Florida, Kansas, Maine, Michigan, Minnesota
and the District of Columbia. On February 3, 1997, the District Court for the
District of Columbia certified a limited consumer class. Retailer class actions
are also pending in Alabama and Minnesota.
The Company believes that these brand name prescription drug antitrust
cases, which generally seek damages and certain injunctive relief, are without
merit, and has moved to have them dismissed.
The Federal Trade Commission is conducting an investigation focusing on
the pricing practices at issue in the above pharmacy antitrust litigation. In
July 1996, the Commission issued a subpoena for documents to the Company, among
others, to which the Company has responded.
Schneider (USA) Inc. and Schneider (Europe) AG have been named,
together with Advanced Cardiovascular Systems, Inc., in a federal antitrust
action brought on January 2, 1996, by Boston Scientific Corporation and SciMed
Life Systems, Inc. (a subsidiary of Boston Scientific) in the U.S. District
Court, District of Massachusetts. The suit alleges that the defendants
unlawfully obtained and enforced certain patents covering rapid exchange
angioplasty catheters and conspired against the plaintiffs by, among other
allegations, their settlement of patent infringement litigation in December of
1991. The suit seeks unspecified treble damages and injunctive relief. The
Company believes that the case is without merit, and has moved to have it
dismissed.
FDA administrative proceedings relating to Plax are pending,
principally an industry-wide call for data on all anti-plaque products by the
FDA. The call for data notice specified that products that have been marketed
for a material time and to a material extent may remain on the market pending
FDA review of the data, provided the manufacturer has a good faith belief that
the product is generally recognized as safe and effective and is not misbranded.
The Company believes that Plax satisfied these requirements and prepared a
response to the FDA's request, which was filed on June 17, 1991. This filing, as
well as the filings of other manufacturers, is still under review and is
currently being considered by an FDA Advisory Committee.
On January 15, 1997, an action was filed in Circuit Court, Chambers
County, Alabama, and certified by an ex parte order as a class action,
purportedly on behalf of a class of consumers, variously defined by the laws or
types of laws governing their rights and encompassing residents of up to 47
states. The complaint alleges that the Company's claims for Plax were untrue,
entitling them to a refund of their purchase price for purchases since 1988. The
action was removed to the U.S. District Court for the Northern District of
Alabama, which vacated the class certification order. A motion to remand to
state court is pending. The Company believes the complaint is without merit.
In April 1996, the Company received a Warning Letter from the FDA
relating to the timeliness and completeness of required post marketing reports
for pharmaceutical products. The letter did not raise any safety issue about
Pfizer drugs. The Company has been implementing remedial actions designed to
remedy the issues raised in the letter.
In August 1996, the Company received a Warning Letter from the FDA
relating to certain promotional materials used in the marketing of Zoloft. The
Company has been in communication with the FDA on this matter and the
discussions are proceeding. Two purported consumer class actions involving
Zoloft were filed, in Circuit Court, Dallas County, Texas, on
17
<PAGE>
December 3, and in Superior Court, San Diego County, California, on December 26,
1996. Each complaint alleges that Pfizer's promotional materials improperly
implied that the FDA had approved Zoloft as safe and effective for certain
indications, and that patients for whom Zoloft was prescribed as a result of the
promotion were entitled to a refund of their purchase price. Both suits have
been removed to federal court; the plaintiffs in the Texas suit have moved to
remand the case to state court. The Company believes the suits are without
merit.
A consolidated class action on behalf of persons who allegedly
purchased Pfizer common stock during the March 24, 1989 through February 26,
1990 period is pending in the U.S. District Court for the Southern District of
New York. This lawsuit, which commenced on July 13, 1990, alleges that the
Company and certain officers and former directors and officers violated federal
securities law by failing to disclose potential liability arising out of
personal injury suits involving Shiley heart valves and seeks damages in an
unspecified amount. Even though it is believed that this suit is without merit,
in order to avoid the monetary and other costs of litigation, the Company has
entered into an agreement to settle this action for $9.75 million, subject to a
court determination of the fairness of the settlement. Following a fairness
hearing held December 13, 1996, the court affirmed the settlement and dismissed
the action. A derivative action commenced on April 2, 1990 against certain
directors and officers and former directors and officers alleging breaches of
fiduciary duty and other common law violations in connection with the
manufacture and distribution of Shiley heart valves is pending in the Superior
Court, Orange County, California. The complaint seeks, among other forms of
relief, damages in an unspecified amount. Even though it is believed that the
suit is without merit, in order to avoid the monetary and other costs of
litigation, the Company has entered into an agreement to settle this action by
way of a $15 million payment by the Company's insurance carrier to the Company
with an attorneys' fee to be paid by the Company out of the proceeds of the
settlement to the shareholders' attorneys who brought the case. The settlement
is subject to court approval and a fairness hearing is scheduled for April 11,
1997.
A purported class action entitled Bradshaw v. Pfizer Inc. and Howmedica
Inc. is pending in the U.S. District Court, Northern District of Ohio. The
action sought monetary and injunctive relief, including medical monitoring, on
behalf of patients implanted with the Howmedica P.C.A. one-piece acetabular hip
component, which was manufactured by Howmedica from 1983 to 1990. The complaint
alleges that the prostheses were defectively designed and manufactured and posed
undisclosed risks to implantees. The federal magistrate judge has recommended
that the district court deny the plaintiffs' motion to certify the case as a
class action. The Company believes that the suit is without merit. On February
4, 1997, the Company was served with fifteen separate actions in the United
States District Court for the District of New Jersey, brought by some of the
same individuals previously identified as members of the purported class in the
Bradshaw action, represented by the same lawyers, and making the same
allegations. The Company believes that most if not all of these cases are
without merit.
The Company and/or Howmedica, along with other device manufacturers and
numerous orthopedic surgeons, have been named as defendants in approximately 700
cases (among over 1,600 pending) in numerous state and federal courts seeking
damages relating to alleged improper design, manufacture, and/or promotion of
bone screws for unapproved use in spinal pedicles. Neither Howmedica nor the
Company manufactured or sold pedicle screws in the U.S., but the claims allege a
conspiracy among all of the defendants to over-promote the devices. The federal
cases have been consolidated by the Multidistrict Panel in the U.S. District
Court in Philadelphia, which ruled on April 8, 1996 that all claims against the
manufacturers except express warranty and improper promotion are preempted. The
recent decisions of the United States Supreme Court in Lohr v. Medtronic may
impact the availability of the pre-emption defense in this case (and in other
medical device cases). The Company believes the cases are without merit and
during the fourth quarter over 150 of the cases against Howmedica and/or the
Company have been dismissed, leaving a year-end total of 617.
From 1994 to 1995, seven purported class actions were filed against
American Medical Systems ("AMS") in federal courts in South Carolina
(subsequently transferred to Minnesota), California, Minnesota (2), Indiana,
Ohio and Louisiana. The California, Ohio and Indiana suits and one Minnesota
suit also name Pfizer Inc. as a defendant, based on its ownership of AMS. The
suits seek monetary and injunctive relief on the basis of allegations that
implantable penile prostheses are prone to unreasonably high rates of mechanical
failure and/or various autoimmune diseases as a result of silicone materials. On
September 30, 1994, the federal Judicial Panel on Multidistrict Litigation
denied the various plaintiffs' motions to consolidate or coordinate the cases
for pretrial proceedings. On February 28, 1995, the Court in the Ohio suit
conditionally granted plaintiffs' motion for class certification; on March 3,
1995, the court in the California suit denied plaintiffs' motion for class
certification; and on October 25, 1995, the court in the Indiana suit denied
plaintiffs' motion for class certification; on February 15, 1996, the United
States Court of Appeals for the Sixth Circuit reversed the Ohio Court's
conditional certification; on May 15, 1996, the purported Minnesota class
actions were dismissed without prejudice (following which plaintiffs' counsel
have filed several actions in Minnesota State Court on behalf of over 200
individuals); and a motion to
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<PAGE>
strike the class allegations in the Louisiana case was granted by the Court on
July 23, 1996. The Company believes the suits are without merit.
During late 1996, over 300 individual suits alleging injuries from
penile implants were filed in Circuit Court in Minneapolis by individuals who
were allegedly members of one or more of the discontinued purported class
actions described above and/or who are represented by the same lawyers. The
Company believes that most if not all of these cases are without merit.
In June 1993, the Ministry of Justice of the State of Sao Paulo, Brazil
commenced a civil public action against the Company's Brazilian subsidiary,
Laboratorios Pfizer Ltda. ("Pfizer Brazil") asserting that during a period in
1991, Pfizer Brazil withheld sale of the pharmaceutical product Diabinese in
violation of antitrust and consumer protection laws. The action seeks the award
of moral, economic and personal damages to individuals and the payment to a
public reserve fund. On February 8, 1996, the trial court issued a decision
holding Pfizer Brazil liable. The award of damages to individuals and the
payment into the public reserve fund will be determined in a subsequent phase of
the proceedings. The trial court's opinion sets out a formula for calculating
the payment into the public reserve fund which could result in a sum of
approximately $88 million. The total amount of damages payable to eligible
individuals under the decision would depend on the number of persons eventually
making claims. Pfizer Brazil is appealing this decision. The Company believes
that this action is without merit and should not have a material adverse effect
on the financial position or the results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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EXECUTIVE OFFICERS OF THE COMPANY
The following executive officers of the Company as of March 10, 1997
hold the offices indicated until their successors have been chosen and qualified
after the next annual meeting of shareholders.
<TABLE>
Name Age Position
- ---- --- --------
<S> <C> <C>
Brian W. Barrett 57 Vice President; President - Animal Health Group
M. Kenneth Bowler 54 Vice President, Federal Government Relations
C. L. Clemente 59 Senior Vice President, Corporate Affairs; Secretary and Corporate
Counsel; Member of the Corporate Management Committee
Donald F. Farley 54 Vice President; President, Consumer Health Care Group
George A. Forcier 58 Vice President, Quality Control
P. Nigel Gray 58 Vice President; President - Hospital Products Group
Gary N. Jortner 51 Vice President; Vice President, Product Development-Pfizer
Pharmaceuticals Group
Karen L. Katen 48 Vice President; Executive Vice President - Pfizer Pharmaceuticals
Group and President - U.S. Pharmaceuticals; Member of the
Corporate Management Committee
J. Patrick Kelly 39 Vice President; Senior Vice President, Disease Management - U.S.
Pharmaceuticals
Alan G. Levin 34 Vice President; Treasurer
Henry A. McKinnell 54 Executive Vice President; President - Pfizer Pharmaceuticals Group;
Member of the Corporate Management Committee
Brower A. Merriam 62 Vice President - Animal Health Policy
Victor P. Micati 57 Vice President; Executive Vice President - Pfizer Pharmaceuticals
Group and Area President, Europe; Member of the Corporate
Management Committee
Paul S. Miller 57 Senior Vice President; General Counsel; Member of the Corporate
Management Committee
George M. Milne, Jr. 53 Vice President; President, Central Research; Member of the Corporate
Management Committee
John F. Niblack 58 Executive Vice President; Member of the Corporate Management
Committee
William J. Robison 61 Senior Vice President - Employee Resources; Member of the Corporate
Management Committee
Herbert V. Ryan 59 Vice President; Controller
Craig Saxton 54 Vice President; Executive Vice President, Central Research
David L. Shedlarz 48 Senior Vice President and Chief Financial Officer; Member of the
Corporate Management Committee
Mohand Sidi Said 58 Vice President; Senior Vice President - Pfizer Pharmaceuticals Group
and Area President, Asia/Africa/Middle East
William C. Steere, Jr. 60 Chairman of the Board and Chief Executive Officer; Chair of the
Corporate Management Committee
Frederick W. Telling 45 Vice President, Corporate Strategic Planning and Policy
</TABLE>
Information concerning Messrs. Steere and Miller and Drs. McKinnell and Niblack
is contained in, and incorporated herein by reference from, the discussion under
the captions "Directors Whose Terms Expire in 1998" and "Named Executive
Officers Who Are Not Directors" in the Company's Proxy Statement for its 1997
Annual Meeting of Shareholders.
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<PAGE>
Brian W. Barrett
Mr. Barrett joined Pfizer Canada in 1966, where he served in various financial
positions, including Chief Financial Officer of the Canadian subsidiary. In
1971, he was appointed Assistant Controller of Pfizer International in New York;
in 1973, Director of International Planning and in 1976, Director of Planning.
In 1980, Mr. Barrett was appointed Vice President - Corporate Strategic
Planning; in 1983, he became Vice President - Finance for Pfizer International;
in 1985, President - Africa/Middle East; and in 1991, President - Asia/Canada.
In 1992, Mr. Barrett was elected Vice President of the Company and in 1993
became President, Northern Asia, Australasia and Canada - International
Pharmaceuticals Group. Mr. Barrett was named Executive Vice President,
International Pharmaceuticals Group, in 1995 and President - Animal Health Group
in April 1996.
M. Kenneth Bowler
Mr. Bowler joined the Company in 1989, and has been Vice President - Federal
Government Relations since 1990. He formerly served as Staff Director for the
House Ways and Means Committee.
C. L. Clemente
Mr. Clemente joined the Company in 1964 and has served in a number of domestic
and international positions, including Vice President; General Counsel and
Secretary, Pfizer International, Inc. and Vice President of Coty, formerly
Pfizer's fragrance and cosmetic division. In 1983, he was named Associate
General Counsel of Pfizer Inc. In 1986, he was elected Vice President; General
Counsel and Secretary of the Company. He became a member of the Corporate
Management Committee of the Company in 1991. In 1992, he was elected Senior Vice
President - Corporate Affairs; Secretary and Corporate Counsel.
Donald F. Farley
Mr. Farley joined the Company in 1965 as Production Engineer for the Chemical
Division. After serving in a number of positions of increasing responsibility
within the Chemical Division, he was named its Vice President, Operations in
1982. In 1986, he became Senior Vice President of the Division, and in 1988,
Executive Vice President - Specialty Chemicals. In 1992, Mr. Farley was named
President of the Specialty Chemicals Group, later named the Food Science Group.
In 1993 he was elected a Vice President of the Company. In 1996, Mr. Farley was
named President of the Company's Consumer Health Care Group.
George A. Forcier
Dr. Forcier joined the Company in 1966 as Analytical Research Chemist for the
Company's Medical Research Laboratories. In 1970, he was named Project Leader,
in 1979 Manager, and in 1981, Assistant Director, of the Analytical Research
Department. In 1986 he was named Director of the Analytical Research and
Development Department and in 1991, he became Group Director. In 1994, Dr.
Forcier became Vice President - Quality Control of the Company.
P. Nigel Gray
Mr. Gray joined the Company in 1975 as Export Sales Manager for Howmedica U.K.,
Ltd. in England, and progressed through a number of positions of increasing
responsibility before being named Vice President, Marketing for Howmedica Europe
in 1983. In 1987, Mr. Gray became Senior Vice President and General Manager of
Howmedica International in Staines, England, then President of Howmedica
International in 1992. In 1993, he came to New York as Executive Vice President
of the Company's Hospital Products Division and President of the Medical Devices
Division, and in 1994, he was elected a Vice President of the Company. In 1995,
Mr. Gray assumed his current position as President of the Company's Hospital
Products Group.
Gary N. Jortner
Mr. Jortner joined the Company in 1973 as a Systems Analyst for Pfizer
Pharmaceuticals. In 1974, he transferred to product management and progressed
through a series of promotions that resulted in his being named Group Product
Manager for Pfizer Labs in 1978. In 1981, he became Vice President of Marketing
for Pfizer Labs. In 1986, he was promoted to Vice President of Operations for
Pfizer Labs. In 1991, he was named Vice President and General Manager, Pfizer
Labs Division. In 1992, Mr. Jortner was elected Vice President of the Company.
In 1994, he was named Vice President; Group Vice President, Disease Management -
U.S. Pharmaceuticals Group. Effective January 1, 1997, he was named Vice
President, Product Development - Pfizer Pharmaceuticals Group.
Karen L. Katen
Ms. Katen joined the Company in 1974 as a Marketing Associate for Pfizer
Pharmaceuticals. Beginning in 1975, she progressed through a number of positions
of increasing responsibility in the Roerig product management group which
resulted in her being named Group Product Manager in 1978. In 1980, she
transferred to Pfizer Labs as a Group Product Manager and later became Director,
Product Management. In 1983, she returned to Roerig as Vice President-Marketing.
In 1986, she was named Vice President and General Manager-Roerig Division. In
1992, she was elected Vice President of the Company. In 1993, Ms. Katen became
Executive Vice President of the U.S. Pharmaceuticals Group and, in 1995, Ms.
Katen assumed her present position as
21
<PAGE>
President of the U.S. Pharmaceuticals Group. Effective January 1, 1997, she was
named Executive Vice President - Pfizer Pharmaceuticals Group.
J. Patrick Kelly
Mr. Kelly joined Pfizer in 1981 as a Marketing Research Associate in the
Pharmaceuticals Division. He became Product Analyst in 1982 and in 1983 was made
Marketing Associate in the Roerig Division. He progressed through a series of
positions of increasing responsibility and became Group Product Manager in
Roerig in 1989. In 1992, he was named Vice President - Marketing, Roerig in the
U.S. Pharmaceuticals Group and in 1994 became its Group Vice President - Disease
Management. In 1996, he was elected a Vice President of the Company.
Alan G. Levin
Mr. Levin joined the Company in 1987 as Senior Operations Auditor for the
Controllers Division. In 1988 he joined the Treasurer's Division as Controller
of the Pfizer International Bank in San Juan, Puerto Rico. He returned to New
York in 1991 as Director-Finance, Asia, and in 1993 was named Senior
Director-Finance, Asia. In 1995, Mr. Levin was elected Treasurer of the Company.
In 1997, he was elected Vice President, Treasurer.
Brower A. Merriam
Mr. Merriam joined the Company in 1969 as Country Manager for Peru, and in 1971,
he was appointed Country Manager for Argentina. In 1973, he was appointed
President of Pfizer Latin America. He was appointed Director of Pfizer
International in 1984, and in 1988 assumed the position of President for Latin
America, Southeast Asia, Indo-Pacific and Canada. In 1990, he was appointed
Executive Vice President of Pfizer International. In 1991, he became Executive
Vice President of the Animal Health Group and in 1992 was appointed its
President. Mr. Merriam was elected a Vice President of the Company in 1992. In
1996, Mr. Merriam was named Vice President - Animal Health Policy.
Victor P. Micati
Mr. Micati joined the Company in 1965 as a Management Candidate for Pfizer Labs.
Beginning in 1966, he progressed through a number of positions of increasing
responsibility in the Pfizer Labs division, which resulted in his being named
Vice President - Marketing in 1971. In 1972, he became Vice President of
Pharmaceutical Development for International Pharmaceuticals. In 1980, he was
named Executive Vice President of Pfizer Europe. Mr. Micati returned to the
International Pharmaceutical Division in 1984 as Senior Vice President, and in
1990 was named President, Europe. In 1992, he was elected Vice President of the
Company. Mr. Micati was named Executive Vice President, International
Pharmaceuticals Group, in 1996, and in 1997 was named Executive Vice President
of the newly-created Pfizer Pharmaceuticals Group.
George M. Milne, Jr.
Dr. Milne joined the Company in 1970 as a Research Scientist. In 1973, he was
named Senior Research Scientist and progressed through a number of positions of
increasing responsibility which resulted in his being named Vice President,
Research and Development Operations in 1985. In 1988, Dr. Milne became Senior
Vice President, Research and Development, and in 1993, he was elected Vice
President of the Company and President, Central Research.
William J. Robison
Mr. Robison joined the Company in 1961 as a Sales Representative for Pfizer
Labs. After serving in a number of positions of increasing responsibility in the
Labs division, he was appointed Vice President of Sales in 1980, and Senior Vice
President Pfizer Labs in 1986. In 1990, he was appointed Vice President and
General Manager of Pratt Pharmaceuticals. In 1992, he was named President of the
Consumer Health Care Group, and was elected Vice President of the Company. In
1996, Mr. Robison was elected Senior Vice President - Employee Resources.
Herbert V. Ryan
Mr. Ryan joined Pfizer in 1962 as Supervisor, Capital Assets. In 1964 he was
named Supervisor, Corporate Ledger, and in 1966 became Director, Corporate
Accounting. In 1981 he was appointed Assistant Controller, Corporate Accounting,
and in 1993, Mr. Ryan was elected Corporate Controller. In 1997, Mr. Ryan was
elected Vice President; Controller.
Craig Saxton
Dr. Saxton joined the Company in 1976 as Clinical Projects Director for the
Central Research Division of Pfizer Limited in Sandwich, England. In 1981, he
was named Senior Associate Medical Director for the International Division of
Pfizer Inc., and in 1982 became the Division's Vice President, Medical Director.
Dr. Saxton became Senior Vice President, Clinical Research and Development for
the Central Research Division in 1988. In 1993, he was named Executive Vice
President - Central Research and was elected a Vice President of the Company.
22
<PAGE>
David L. Shedlarz
Mr. Shedlarz joined the Company in 1976 as Senior Financial Analyst for the
Pharmaceuticals Division. After serving in a number of positions of increasing
responsibility, he was named Production Controller in 1979 and Assistant Group
Controller in 1981. In 1984, he became Group Controller and in 1989 was named
Vice President of Finance for the Pharmaceuticals Group. In 1992, Mr. Shedlarz
was elected Vice President - Finance of the Company. In 1995, Mr. Shedlarz
became Chief Financial Officer of the Company. In 1996, Mr. Shedlarz was made
Senior Vice President and Chief Financial Officer effective January 1, 1997 with
responsibility for the worldwide Hospital Products Group.
Mohand Sidi Said
Mr. Sidi Said first joined Pfizer in Algeria in 1965 as a professional sales
representative. During his career with the Company, he has held a variety of
management assignments in Morocco, Kenya, Egypt, France, Belgium, and the United
States. He was elected an executive officer of the Company in 1996, when he
became a Vice President of the Company and was also named Senior Vice President
- - Pfizer Pharmaceuticals Group and Area President - Asia/Africa/Middle
East/Japan.
Frederick W. Telling
Dr. Telling joined the Company in 1977 as Associate Personnel Manager for the
Pharmaceuticals Division, and progressed through a number of positions of
increasing responsibility before being named Director of Planning for the
Pharmaceuticals Division in 1981. In 1987, he was named Vice President of
Planning and Policy, and in 1994, Senior Vice President of Planning and Policy
for USPG. In 1994, Dr. Telling was elected Vice President, Corporate Strategic
Planning and Policy.
23
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The principal market for the Company's Common Stock is the New York Stock
Exchange. It is also listed on the London, Paris, Brussels, and Swiss Stock
Exchanges. The Company's Common Stock is also traded on various United States
regional stock exchanges. Additional information required by this item is
incorporated by reference from the table "Quarterly Consolidated Statement of
Income" found on page 59 of the 1996 Annual Report to Shareholders.
ITEM 6. SELECTED FINANCIAL DATA
Historical financial information is incorporated by reference from the
"Financial Summary" on page 60 of the 1996 Annual Report to Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Information required by this item is incorporated by reference from the
"Financial Review" on pages 30 through 37 of the 1996 Annual Report to
Shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item is incorporated by reference from the
"Independent Auditors' Report" found on page 38 and from the consolidated
financial statements and supplementary data found on pages 39 through 58 of the
1996 Annual Report to Shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with regard to the Directors of the Company is incorporated
herein by reference from the discussion under Item 1 of the Company's Proxy
Statement for its 1997 Annual Meeting of Shareholders. The balance of the
response to this item is contained in the discussion entitled "Executive
Officers of the Company" in Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION
Information with regard to executive compensation is incorporated herein by
reference from the discussion under the heading "Compensation of Executive
Officers" in the Company's Proxy Statement for its 1997 Annual Meeting of
Shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with regard to security ownership of certain beneficial owners
and management is incorporated by reference from the discussion under the
heading "Security Ownership of Management" and the following tables in the
Company's Proxy Statement for its 1997 Annual Meeting of Shareholders.
24
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with regard to certain relationships and related transactions
is incorporated herein by reference from the discussion under the heading
"Related Transactions" in the Company's Proxy Statement for its 1997 Annual
Meeting of Shareholders.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
14 (a)(1) Financial Statements
The following consolidated financial statements, related notes and
independent auditors' report, from the 1996 Annual Report to Shareholders, are
incorporated herein by reference into Item 8 of Part II of this report:
Page in the 1996
Annual Report to
Shareholders
------------
Independent Auditors' Report......................... 38
Segment Information.................................. 39
Geographic Data...................................... 40
Consolidated Statement of Income..................... 41
Consolidated Statement of Shareholders' Equity....... 42
Consolidated Balance Sheet........................... 43
Consolidated Statement of Cash Flows................. 44
Notes to Consolidated Financial Statements........... 45-58
Quarterly Consolidated Statement of Income........... 59
14(a)(2) Financial Statement Schedules
Schedules are omitted because they are not required or the information is
given elsewhere in the financial statements. The financial statements of
unconsolidated subsidiaries are omitted because, considered in the aggregate,
they would not constitute a significant subsidiary.
14(a)(3) Exhibits
3(i) - Restated Certificate of Incorporation of the Company as of
April 28, 1995 is incorporated herein by reference from the
Company's quarterly report on form 10-Q for the period ended
April 2, 1995. The Certificate of Correction thereto filed with
the Secretary of State of Delaware on May 12, 1995 is filed
herewith.
3(ii) - By-laws of the Company as amended June 23, 1994 are incorporated
herein by reference from Exhibit 3(ii) of the Company's Form 8-K
Current Report dated June 23, 1994.
4(i) - The Rights Agreement dated as of September 24, 1987 between
the Company and The Chase Manhattan Bank, N.A. and the First
Amendment thereto dated as of May 25, 1989 are filed herewith.
10(i) - Stock and Incentive Plan is filed herewith.
10(ii) - Pfizer Retirement Annuity Plan is filed herewith.
10(iii) - The form of severance agreement with the Company's Named
Executive Officers disclosed in the Proxy Statement for its 1997
Annual Meeting of Shareholders is incorporated herein by
reference from Exhibit 10.1 to the Company's Report on Form 10-K
for its 1994 fiscal year.
10(iv) - Nonfunded Deferred Compensation and Supplemental Savings Plan is
filed herewith.
10(v) - Executive Annual Incentive Plan (proposed) is incorporated
herein by reference from the exhibit to the Company's Proxy
Statement for its 1997 Annual Meeting of Shareholders.
10(vi) - Performance-Contingent Share Award Program is incorporated
herein by reference from Exhibit 10.3 to the Company's Report on
form 10-Q for the period ended September 29, 1996.
10(vii) - Nonfunded Supplemental Retirement Plan is filed herewith.
10(viii) - The form of Indemnification Agreement with Directors is filed
herewith.
10(ix) - The form of Indemnification Agreement with Named Executive
Officers is filed herewith.
25
<PAGE>
10(x) - Non-Employee Directors' Retirement Plan [frozen as of
October 1996] is filed herewith.
10(xi) - Annual Retainer Unit Award Plan (for non-employee Directors) is
incorporated herein by reference from Exhibit 10.1 to the
Company's Report on form 10-Q for the period ended September 29,
1996.
10(xii) - Pfizer Inc. Nonfunded Deferred Compensation and Unit Award
Plan for Non-Employee Directors is incorporated herein by
reference from Exhibit 10.2 to the Company's Report on Form 10-Q
for the period ended September 29, 1996.
10(xiii) - Restricted Stock Plan for Non-Employee Directors is filed
herewith.
11 - Computation of Earnings Per Common Share and Fully Diluted
Earnings Per Common Share.
12 - Computation of Ratio of Earnings to Fixed Charges.
13(a) - The 1996 Annual Report to Shareholders, which, except for
those portions expressly incorporated herein by reference, is
furnished solely for the information of the Commission and is
not to be deemed "filed".
13(b) - Annual Report of the Pfizer Savings and Investment Plan on Form
11-K for the fiscal year ended December 31, 1996.
13(c) - Annual Report of the Pfizer Savings and Investment Plan for
Employees Resident in Puerto Rico on Form 11-K for the fiscal
year ended December 31, 1996.
21 - Subsidiaries of the Registrant.
23 - Consent of KPMG Peat Marwick LLP, independent certified public
accountants.
27 - Financial Data Schedule
(b) Reports on Form 8-K
The Company filed no report on Form 8-K during the last quarter of 1996.
Exhibits to the Form 10-K are available upon request at a charge of ten
cents per page. Requests should be directed to C. L. Clemente, Secretary, Pfizer
Inc., 235 East 42nd Street, New York, NY 10017.
26
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Pfizer Inc.
By /s/ C.L. Clemente,
-------------------------------------------
Dated: March 27, 1997 C.L. Clemente, Senior Vice President,
Secretary and Corporate Counsel
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C> <C>
/s/ William C. Steere, Jr.) Chairman of the Board, Director (Principal Executive Officer) March 27, 1997
- -----------------------------------
(William C. Steere, Jr.)
/s/ (David L. Shedlarz) Senior Vice President and Chief Financial Officer (Principal
----------------------------------- Financial Officer) March 27, 1997
(David L. Shedlarz)
/s/ (Herbert V. Ryan)
- ------------------------------------ Vice President - Controller (Principal Accounting Officer) March 27, 1997
(Herbert V. Ryan)
/s/ (Michael S. Brown)
- ------------------------------------ Director March 27, 1997
(Michael S. Brown)
/s/ (M. Anthony Burns)
- ------------------------------------ Director March 27, 1997
(M. Anthony Burns)
/s/ (W. Don Cornwell)
- ------------------------------------ Director March 27, 1997
(W. Don Cornwell)
/s/ (George B. Harvey)
- ------------------------------------ Director March 27, 1997
(George B. Harvey)
/s/ (Constance J. Horner)
- ------------------------------------ Director March 27, 1997
(Constance J. Horner)
/s/ (Stanley O. Ikenberry)
- ------------------------------------ Director March 27, 1997
(Stanley O. Ikenberry)
/s/ (Harry P. Kamen)
- ------------------------------------ Director March 27, 1997
(Harry P. Kamen)
/s/ (Thomas G. Labrecque)
- ------------------------------------ Director March 27, 1997
(Thomas G. Labrecque)
/s/ (Felix G. Rohatyn)
- ------------------------------------ Director March 27, 1997
(Felix G. Rohatyn)
/s/ (Ruth J. Simmons)
- ------------------------------------ Director March 27, 1997
(Ruth J. Simmons)
/s/ (Jean-Paul Valles)
- ------------------------------------ Director March 27, 1997
(Jean-Paul Valles)
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3
<SEQUENCE>2
<DESCRIPTION>EXHIBIT 3(I)
<TEXT>
<PAGE>
CERTIFICATE OF CORRECTION
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
PFIZER INC.
PFIZER INC., a corporation organized and existing under the General Corporation
Law of the State of Delaware, DOES HEREBY CERTIFY:
1. The name of the corporation is Pfizer Inc.
2. That a Restated Certificate of Incorporation of the
Corporation (the "Restated Certificate") was filed with
the Secretary of State of Delaware on April 28, 1995 and
that said Certificate requires correction as permitted by
Section 103(f) of the General Corporation Law of the State
of Delaware.
3. The inaccuracy or defect in said Restated Certificate to
be corrected is that the par value per share of the
Corporation's common stock stated in Article FOURTH,
Paragraph D, Section 2 (A) (i) of the Restated Certificate
inadvertently was not amended to reflect the Corporation's
present par value per share and, therefore, is corrected
to read as follows:
"(i) in the event the Board of Directors of the Company
shall, at any time after the issuance of any share of
Series A Preferred Stock, declare a cash dividend payable
on the Common Stock, $.05 par value per share, of the
Company (the "Common Stock"), a preferential cash dividend
in an amount per share (rounded to the nearest cent) equal
to 100 times the per share amount of such cash dividend
declared on a share of the Common Stock and..."
IN WITNESS WHEREOF, said PFIZER INC. has caused this Certificate of Correction
to be signed by Eileen R. Walton, its Assistant Secretary, this 11th day of May,
1995.
PFIZER INC.
By: /s/ Eileen R. Walton
--------------------------
Eileen R. Walton
Assistant Secretary
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4
<SEQUENCE>3
<DESCRIPTION>EXHIBIT 4(I)
<TEXT>
<PAGE>
RIGHTS AGREEMENT
This Agreement, dated as of September 24, 1987, between PFIZER
INC., a Delaware corporation (the "Company"), and THE CHASE MANHATTAN BANK,
N.A., a national banking association (the "Rights Agent").
W I T N E S S E T H :
WHEREAS, on September 24, 1987, the Board of Directors of the
Company authorized the issuance of, and declared a dividend payable in, one
right (a "Right") for each share of Common Stock, $0.10 par value per share, of
the Company outstanding as of the close of business on October 5, 1987 (the
"Record Date"), each such Right representing the right to purchase one
one-hundredth of a share of Series A Junior Participating Preferred Stock
("Preferred Stock") of the Company having the rights and preferences set forth
in the form of Certificate of Designations attached hereto as Exhibit A, upon
the terms and subject to the conditions hereinafter set forth: and
WHEREAS, the Board of Directors of the Company presently
intends to authorize the issuance of one Right with respect to each share of
Common Stock which may be issued between the Record Date and the Expiration Date
(as such terms are hereinafter defined);
1
<PAGE>
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as
such term is hereinafter defined) and Associates (as such term is
hereinafter defined) of such Person, shall be the Beneficial Owner as
such term is hereinafter defined) of 20% or more of the shares of
Common Stock of the Company then outstanding; provided, however, that
an Acquiring Person shall not include an Exempt Person (as such term is
hereinafter defined).
(b) "Affiliate" shall have the meaning ascribed to such term
in Rule 12b-2 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), as in effect on the
date hereof.
2
<PAGE>
(c) "Associate" of a Person (as such term is hereinafter
defined) shall mean (i) with respect to a corporation, any officer or
director thereof or of any Sub-sidiary (as such term is hereinafter
defined) thereof, or any Beneficial Owner (as such term is hereinafter
defined) of 10% or more of any class of equity security thereof, (ii)
with respect to an association, any officer or director thereof or of a
Subsidiary thereof, (iii) with respect to a partnership, any general
partner thereof or any limited partner thereof who is directly or
indirectly, the Beneficial Owner of a 10% ownership interest therein,
(iv) with respect to a business trust, any officer or trustee thereof
or of any Subsidiary thereof, (v) with respect to any other trust or an
estate, any trustee, executor or similar fiduciary or any Person who
has a 20% or greater interest as a beneficiary in the income from or
principal of such trust or estate or who otherwise has a substantial
beneficial interest in such trust or estate, (vi) with respect to a
natural person, any relative or spouse of such person, or any relative
of such spouse, who has the same home as such person, and (vii) any
Affiliate of such Person.
(d) A person shall be deemed the "Beneficial Owner" of, or to
"Beneficially Own", any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly, for purpose of Section 13(d) of the Exchange Act
and Regulation 13D-G thereunder (or any comparable or
successor law or regulation), in each case as in effect on the
date hereof; and
3
<PAGE>
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether
such right is exercisable immediately or only after the
passage of time or the fulfillment of a condition or both)
pursuant to any agreement, arrangement or understanding, or
upon the exercise of conversion rights, exchange rights, other
rights (other than these Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "Beneficially Own",
securities tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange or (B) the right to vote, alone or in
concert with others, pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however,
that a Person shall not be deemed the "Beneficial Owner" of,
or to "Beneficially Own", any securities if the agreement,
arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given in response to
a proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations under
the Exchange Act and (2) is not at the time reportable by such
Person on a Schedule 13D report under the Exchange Act (or any
comparable or successor report), other than by reference to a
proxy or consent solicitation being conducted by such Person;
or
4
<PAGE>
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any
of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for
the purpose of acquiring, holding, voting (except as described
in clause B of subparagraph (ii) of this paragraph (d)) or
disposing of any securities of the Company.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York
are authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00
P.M., New York time, on such date; provided, however, that if such date
is not a Business Day it shall mean 5:00 P.M., New York time, on the
next succeeding Business Day.
5
<PAGE>
(g) "Common Stock" shall mean the Common Stock (presently
$0.10 par value) of the Company. "Common Stock" when used with
reference to the Principal Party (as such term is hereinafter defined)
shall mean the capital stock or other equity security with the greatest
voting power of the Principal Party and, when used with reference to
any Person other than the Company or the Principal Party, shall mean
the capital stock or other equity security with the greatest voting
power of such Person or, if such Person is a Subsidiary of or is
controlled by another Person, the Person which ultimately controls such
first mentioned Person.
(h) "Distribution Date" shall have the meaning set forth in
Section 3(b) hereof.
(i) "Exchange Act" shall have the meaning set forth in Section
l(b) hereof.
(j) "Exempt Person" shall mean the Company, any Subsidiary of
the Company, any employee benefit plan or employee stock plan of the
Company or of any Subsidiary of the Company, or any trust or other
entity organized, appointed, established or holding Common Stock for or
pursuant to the terms of any such plan.
(k) "Exercise Price" shall have the meaning set forth in
Sections 4 and 7(b) hereof.
(1) "Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(m) "Fair Market Value" of any property shall mean the fair
market value of such property as determined in accordance with Section
ll(b) hereof.
(n) "Final Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
6
<PAGE>
(o) "Person" shall mean any individual, firm, corporation or
other entity.
(p) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(q) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(r) "Right Certificate" shall have the meaning set forth in
Section 3(b) hereof.
(s) "Stock Acquisition Date" shall mean the first date by
which both (i) an Acquiring Person has become such and (ii) a public
announcement of such fact has been made by either the Company or such
Acquiring Person.
(t) "Subsidiary" of a Person shall mean any corporation or
other entity of which securities or other ownership interests having
voting power sufficient to elect a majority of the board of directors
or other persons performing similar functions are beneficially owned,
directly or indirectly, by such Person or by any corporation or other
entity that is otherwise controlled by such Person.
(u) "Summary of Rights" shall have the meaning set forth in
Section 3(a) hereof.
(v) "Trading Day" shall have the meaning set forth in Section
ll(b) hereof.
(w) "Transfer Tax" shall mean any tax or charge, including any
documentary stamp tax, imposed or collected by any governmental or
regulatory authority in respect of any transfer of any security,
instrument or right, including Rights, shares of Common Stock and
shares of Preferred Stock.
7
<PAGE>
Any determination required to be made by the Board of Directors of the Company
for purposes of applying the definitions contained in this Section 1 shall be
made by the Board of Directors in its good faith judgment, which determination
shall be binding on the Rights Agent and the holders of the Rights.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights in accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable.
Section 3. Issuance of Right Certificates.
(a) On the Record Date (or as soon as practicable thereafter),
the Company or the Rights Agent shall send a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit C (the "Summary of Rights"),
by first class mail, postage prepaid, to each record holder of the Common Stock
as of the close of business on the Record Date, at the address of such holder
shown on the records of the Company.
8
<PAGE>
(b) Until the close of business on the tenth day after the
earlier to occur of (i) the Stock Acquisition Date or (ii) the date of the
commencement by any Person (other than an Exempt Person) of, or the first public
announcement of the intent of any Person (other than an Exempt Person) to
commence. a tender or exchange offer upon the successful consummation of which
such Person, together with its Affiliates and Associates, would be the
Beneficial Owner of 30% or more of the then outstanding shares of Common Stock
of the Company (irrespective of whether any shares are actually purchased
pursuant to any such offer) (the earlier of such dates being herein referred to
as the "Distribution Date"), (x) the Rights shall be evidenced (subject to the
provisions of Section 3(a)) by the certificates for Common Stock registered in
the name of the holders of the Common Stock (which certificates for Common Stock
shall also constitute certificates for Rights) and not by separate Right
certificates and the record holders of such certificates for Common Stock shall
be the record holders of the Rights represented thereby and (y) each Right shall
be transferable only simultaneously and together with the transfer of a share of
Common Stock (subject to adjustment as hereinafter provided). Until the
Distribution Date (or, if earlier, the Expiration Date or Final Expiration
Date), the surrender for transfer of any certificate for Common Stock shall
constitute the surrender for transfer of the Right of Rights associated with the
Common Stock evidenced thereby, whether or not a copy of the Summary of Rights
is transferred simultaneously with such share certificate.
(c) Certificates for Common Stock issued after the Record
Date but prior to the earliest of the Distribution Date, the Expiration Date, or
the Final Expiration Date shall' have impressed, printed, written or stamped
thereon or otherwise affixed thereto the following legend:
9
<PAGE>
This certificate also evidences and entitles the
holder hereof to the same number of Rights as the number of
shares of Common Stock represented by this certificate, such
Rights being on the terms provided under the Rights Agreement
between Pfizer Inc. and The Chase Manhattan Bank, N.A. (the
"Rights Agent"), dated as of September 24, 1987 (the "Rights
Agreement"), the terms of which are incorporated herein by
reference and a copy) of which is on file at the principal
executive offices of Pfizer Inc. Under certain circumstances,
as set forth in the Rights Agreement, such Rights shall be
evidenced by separate certificates and shall no longer be
evidenced by this certificate. Pfizer, Inc. shall mail to the
registered holder of this certificate a copy of the Rights
Agreement without charge within five days after receipt of a
written request therefor. Under certain circumstances as
provided in the Rights Agreement, Rights issued to or owned by
Acquiring Persons or their Affiliates or Associates (as
defined in the Rights Agreement) and any subsequent holder of
such Rights shall be null and void.
(d) As promptly as practicable after the Distribution Date,
the Rights Agent shall send, by first class mail, postage prepaid, to each
record holder of the Common Stock as of the close of business on the
Distribution Date, as shown by the records of the Company, at the address of
such holder shown on such records, a certificate in the form provided by Section
4 hereof (a "Right Certificate"), evidencing one Right for each share of Common
Stock so held. As of and after the Distribution Date, the Rights shall be
evidenced solely by Right Certificates and may be transferred by the transfer of
the Right Certificate as permitted hereby, separately and apart from any
transfer of one or more shares of Common Stock.
10
<PAGE>
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to
purchase shares, certificate and assignment to be printed on the reverse
thereof), when, as and if issued, shall be substantially in the form set forth
in Exhibit B hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which the Common Stock or the
Rights may from time to time be listed or as the Company may deem appropriate to
conform to usage or otherwise and as are not inconsistent with the provisions of
this Rights Agreement. Subject to the provisions of Section 22 hereof, Right
Certificates evidencing Rights whenever issued, (i) shall be dated as of the
date of issuance of the Rights they represent and (ii) subject to adjustment
from time to time as provided herein, on their face shall entitle the holders
thereof to purchase such number of shares (including fractional shares which are
integral multiples of one-hundredth of a share) of Preferred Stock as shall be
set forth therein at the price payable upon exercise of a Right provided by
Section 7(b) hereof as the same may from time to time be adjusted as provided
herein, (the "Exercise Price").
(b) Notwithstanding any other provision of this Rights
Agreement, any Right Certificate that represents Rights beneficially owned by an
Acquiring Person or any Affiliate or Associate thereof shall have impressed on,
printed on, written on or otherwise affixed to it (if the Company or the Rights
Agent has knowledge that such Person is an Acquiring Person or an Associate or
Affiliate or a nominee of any of the foregoing) the following legend:
11
<PAGE>
The Beneficial Owner of the Rights represented by
this Right Certificate is an Acquiring Person or an Affiliate
or an Associate of an Acquiring Person. Accordingly, this
Right Certificate and the Rights represented hereby may be or
become void in the circumstances specified in Section 7(e) of
the Rights Agreement.
Section 5. Countersignature and Registration.
(a) Each Right Certificate shall be executed on behalf of the
Company by its Chairman of the Board of Directors, President or any Vice
President, either manually or by facsimile signature, and have affixed thereto
the Company's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. Each Right Certificate shall be countersigned by the Rights
Agent either manually or by facsimile signature and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any Right Certificate shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and delivery of the
certificate by the Company, such Right Certificate, nevertheless, may be
countersigned by the Rights Agent and issued and delivered with the same force
and effect as though the person who signed such Right Certificates had not
ceased to be such officer of the Company. Any Right Certificate may be signed on
behalf of the Company by any person who, on the date of the execution of such
Right Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
12
<PAGE>
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its Shareholder Services Office or offices
designated in such state as the appropriate place for surrender of certificates
upon exercise or transfer books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Right Certificates, the number of Rights evidenced
on its face by each of the Right Certificates and the date of each of the Right
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
13
<PAGE>
(a) Subject to the provisions of Section 14(b) hereof, at any
time after the close of business on the Distribution Date, and at or prior to
the close of business on the earlier of the Expiration Date or the Final
Expiration Date, any Right Certificate, may be (i) transferred or (ii) split up,
combined or exchanged for one or more other Right Certificates, entitling the
registered holder to purchase a like number of shares of Preferred Stock as the
Right Certificate surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer any Right Certificate shall surrender the
Right Certificate at the shareholder services office of the Rights Agent with
the form of certificate and assignment on the reverse side thereof endorsed (or
with a written instrument of transfer in form satisfactory to the Company and
the Rights Agent enclosed with such Right Certificate), executed by the
registered holder thereof or his attorney authorized in writing, and with such
signature guaranteed by a commercial bank or brokerage firm registered with the
New York Stock Exchange. Any registered holder desiring to split up, combine or
exchange any Right Certificate shall make such request in writing delivered to
the Rights Agent, and shall surrender the Right Certificate to be split up,
combined or exchanged at the office of the Rights Agent designated for such
purpose. Thereupon, the Rights Agent shall countersign and deliver to the person
entitled thereto a Right Certificate or Right Certificates, as the case may be,
as so requested. The Company may require payment of a sum sufficient to cover
any Transfer Tax that may be imposed in connection with any transfer, split up,
combination or exchange of any Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them and, if requested by
the Company, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, or upon surrender to the Rights Agent and
cancellation of a mutilated Right Certificate, the Company shall issue and
deliver a new Right Certificate of like tenor to the Rights Agent for delivery
to the registered owner in lieu of the Right Certificate so lost, stolen,
destroyed or mutilated.
14
<PAGE>
Section 7. Exercise of Rights: Exercise Price; Expiration Date
of Rights.
(a) The Rights shall not be exercisable until, and shall
become exercisable on, the Distribution Date. The Rights may be exercised, in
whole or in part, at any time commencing with the Distribution Date upon
surrender of the Right Certificate, with the form of election to purchase and
certificate on the reverse side thereof duly executed (with signatures duly
guaranteed), to the Rights Agent at the office of the Rights Agent designated
for such purpose, together with payment of the Exercise Price with respect to
each Right exercised, subject to adjustment as hereinafter provided, at or prior
to the close of business on the earlier of (i) October 5, 1997 (the "Final
Expiration Date") or (ii) the date on which the Rights are redeemed as provided
in Section 23 hereof (such earlier date being herein referred to as the
"Expiration Date").
(b) The Exercise Price of $300 shall initially be for each one
one-hundredth (1/100) of a share of Preferred Stock issued pursuant to the
exercise of a Right. The Exercise Price and the number of shares of Preferred
Stock or other securities to be acquired upon exercise of a Right shall be
subject to adjustment from time to time as provided in Sections 11 and 13
hereof. The Exercise Price shall be payable in lawful money of the United States
of America, in accordance with paragraph (c) below.
15
<PAGE>
c) Upon receipt of a Right Certificate with the form of
election to purchase and certificate duly executed, accompanied by payment by
check or money order payable to the order of the Company or the Rights Agent of
the Exercise Price or so much thereof as is necessary for the purchase of shares
or other securities to be purchased upon exercise of the Rights and an amount
equal to any applicable Transfer Tax, the Rights Agent shall thereupon promptly
(i) requisition from the Company, as transfer agent of the Preferred Stock, (or
such other transfer agent, if applicable) one or more certificates representing
the number of shares of Preferred Stock to be so purchased, which requests the
Company hereby authorizes and directs itself, as transfer agent, (or such other
transfer agent, if applicable) to comply with, (ii) as provided in Section
14(b), at the election of the Company, cause depository receipts to be issued in
lieu of fractional shares of Preferred Stock, (iii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of issuing
fractional shares in accordance with Section 14(b) hereof and (iv) cause such
Preferred Stock certificates and/or depository receipts or cash payments to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, and, when appropriate, after receipt, promptly deliver such cash to or
upon the order of the registered holder of such Right Certificate; provided,
however, that in the case of a purchase of securities, other than Preferred
Stock, pursuant to Section 13 hereof, the Rights Agent shall promptly take the
appropriate action corresponding in such case to that referred to in the
foregoing clauses (i) through (iv)of this section 7(c). Notwithstanding the
foregoing provisions of this Section 7(c), the Company may suspend the issuance
of shares of Preferred Stock upon exercise of a Right for a reasonable period,
not in excess of 90 days, during which the Company seeks to register under the
Securities Act of 1933, as amended, and any applicable securities law of any
other jurisdiction the shares of Preferred Stock to be issued pursuant to the
Rights; provided, however, that nothing contained in this Section 7(c) shall
relieve the Company of its obligations under Section 9(c) hereof.
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(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or his assign, subject to the provisions of Section 14(b) hereof.
(e) Notwithstanding any provision of this Rights Agreement to
the contrary, upon the occurrence of any of the events described in subparagraph
(A) or (B) of Section 11(a)(ii) hereof, any Rights that are at the time of the
occurrence of such event Beneficially Owned by an Acquiring Person or by any
Associate or Affiliate of such Acquiring Person (which Acquiring Person or
Affiliate or Associate engages in, or realizes any benefit of, one or more of
the transactions described in subparagraph (A) of Section 11(a)(ii) hereof or
realizes any of the benefits referred to in subparagraph (B) of Section
11(a)(ii) hereof, as the case may be) shall become null and void and no holder
of such Rights shall have any right with respect to such Rights under any
provision of this Rights Agreement from and after the occurrence of such event
nor may any Person subsequently become a holder of such Rights.
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(f) The Company shall not effect any amendment to the
Certificate of Designations for the Preferred Stock which would materially
affect the rights, privileges or powers of the Preferred Stock, without the
prior approval of the holders of two-thirds or more of the then outstanding
shares of Preferred Stock and the prior written consent of the holders of
two-thirds or more of the then outstanding Rights.
(g) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate following the form of
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
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Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall
cancel and retire, any Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of Preferred
Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
preferred stock or out of authorized and issued shares of Preferred Stock held
in its treasury, such number of shares of Preferred Stock as will from time to
time be sufficient to permit the exercise in full of all outstanding Rights. The
Company shall take such action as may be required for it to comply with the
foregoing sentence of this Section 9(a).
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(b) The Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares of Preferred Stock
issued or reserved for issuance in accordance with this Rights Agreement to be
listed, upon official notice of issuance, upon the principal national securities
exchange, if any, upon which the Common Stock is listed or, if the principal
market for the Common Stock is not on any national securities exchange, to be
eligible for quotation in the National Association of Securities Dealers'
Automated Quotation System or any successor thereto or other comparable
quotation system.
(c) The Company covenants and agrees that it will take all
such action as may be necessary to insure that all shares of Preferred Stock
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Exercise Price in
respect thereof), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(d) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state Transfer Taxes which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any shares of Preferred Stock issued or delivered upon the exercise of Rights.
The Company shall not, however, be required to pay any Transfer Tax which may be
payable in respect of any transfer or delivery of a Right Certificate to a
Person other than, or the issuance or delivery of certificates for Preferred
Stock upon exercise of Rights in a name other than that of, the registered
holder of the Right Certificate, and the Company shall not be required to issue
or deliver a Right Certificate or certificate for Preferred Stock to a person
other than such registered holder until any such Transfer Tax shall have been
paid (any such Transfer Tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such Transfer Tax is due.
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Section 10. Preferred Stock Record Date. Each Person in whose
name any certificate for shares of Preferred Stock is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of the Preferred Stock represented thereby on, and such certificate shall be
dated as of, the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Exercise Price (and any applicable
Transfer Taxes) was made; provided, however, that, if the date of such surrender
and payment is a date upon which the Preferred Stock transfer books of the
Company are closed, such person shall be deemed to have become the record holder
of such shares on, and such certificate shall be dated as of, the next
succeeding Business Day on which the Preferred Stock transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate, as such shall not be entitled to any rights of a
stockholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
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Section 11. Adjustment of Exercise Price or Number of Shares.
The Exercise Price, the number of shares which may be purchased upon exercise of
a Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Rights Agreement (A) declare or pay any dividend
on Common Stock payable in shares of Common Stock, (B)
subdivide or split the outstanding shares of Common Stock into
a greater number of shares or (C) combine or consolidate the
outstanding shares of Common Stock into a smaller number of
shares or effect a reverse split of the outstanding shares of
Common Stock, then and in each such event the number of shares
of preferred Stock issuable upon the exercise of a Right after
the record date for such event (if one shall have established
or, if not, after the date of such event) shall be the number
of shares of Preferred Stock issuable immediately prior to
such event multiplied by a fraction the numerator of which is
the number of Rights outstanding immediately prior to such
event and the denominator of which is the number of Rights
outstanding immediately after such event and the Exercise
Price after such event shall be the Exercise Price in effect
immediately prior to such event multiplied by such fraction.
If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(ii).
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(ii) In the event that
(A) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after the date
of this Agreement, shall, directly or indirectly, (1)
consolidate with or merge with and into the Company or any of
its Subsidiaries or otherwise combine with the Company or any
of its Subsidiaries and the Company or such Subsidiary shall
be the continuing or surviving corporation of such
consolidation, merger or combination and the Common Stock of
the Company shall remain outstanding and no shares thereof
shall be changed into or exchanged for stock or other
securities of the Company or of any other Person or cash or
any other property, or (2) in one or more transactions, other
than in connection with the exercise of a Right or Rights and
other than in connection with the exchange or conversion of
securities exchangeable for or convertible into securities of
the Company or of any Subsidiary of the Company, transfer any
assets or property to the Company or any of its Subsidiaries
in exchange (in whole or in part) for any shares of any class
of capital stock of the Company or any of its Subsidiaries or
any securities exchangeable for or convertible into shares of
any class of capital stock of the Company or any Subsidiary of
the Company, or otherwise obtain from the Company or any of
its Subsidiaries, with or without consideration, any
additional shares of any class of capital stock of the Company
or any of its Subsidiaries or any securities exchangeable for
or convertible into shares of any class of capital stock of
the Company or any Subsidiary of the Company (other than as
part of a pro rata distribution by the Company or such
Subsidiary to all holders of such shares), or (3) sell,
purchase, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, to, from or with, as the case may be,
the Company or any of its Subsidiaries, assets (including
securities) on terms and conditions less favorable to the
Company or such Subsidiary than the Company or such Subsidiary
would be able to obtain in arm's length negotiation with an
unaffiliated third party, or (4) receive any compensation from
the Company or any of the Company's Subsidiaries for services,
other than compensation for employment as a regular employee
or fees for serving as a director at rates in accordance with
the Company's (or its Subsidiary's) past practices, or (5)
receive the benefit (except proportionately as a stockholder)
of any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantage provided
by the Company or any of its Subsidiaries; or
23
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(B) during such time as there is an
Acquiring Person, there shall be any reclassification of
securities (including any reverse stock split), or any
recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or
any other transaction or series of transactions involving the
Company or any of its Subsidiaries (whether or not with or
into or otherwise involving an Acquiring Person or any
Affiliate or Associate of such Acquiring Person) which has the
effect, directly or indirectly, of increasing by more than 1%
the proportionate share of the outstanding shares of any class
of equity securities of the Company or any of its Subsidiaries
or securities exercisable for or convertible into equity
securities of the Company or any of its Subsidiaries which is
directly or indirectly beneficially owned by any Acquiring
Person or any Affiliate and/or Associate of any Acquiring
Person, then, on the first occurrence of any such event
referred to in Sections 11(a)(ii)(A) or (B) hereof, proper
provision shall be made so that each holder of a Right, except
as provided in Section 7(e) hereof, shall thereafter have a
right to receive for each Right, upon exercise thereof in
accordance with the terms of this Rights Agreement and payment
of the Exercise Price, the greater of (1) the number of shares
of Preferred Stock for which such Right was exercisable
immediately prior to such event or (2) such number of shares
of Preferred Stock as, based on the Fair Market Value of the
Preferred Stock (determined pursuant to Section 11(b) hereof)
on the date of the occurrence of such event, have a value
equal to twice the Exercise Price; provided, however, that if
the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of
Section 13 hereof, then only the provisions of Section 13
hereof shall apply and no adjustment shall be made pursuant to
this Section 11(a)(ii).
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(iii) In the event that the Company does not have
available sufficient authorized but unissued Preferred Stock
to permit the adjustments required pursuant to the foregoing
subparagraph (i) or the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), the Company
shall take all such action as may be necessary to authorize
and reserve for issuance such number of additional shares of
Preferred Stock as may from time to time be required to be
issued upon the exercise in full of all Rights from time to
time outstanding and, if necessary, shall use its best efforts
to obtain stockholder approval thereof.
(b) For the purpose of this Rights Agreement, the "Fair Market
Value" of any share of Preferred Stock, Common Stock or any other stock
or any Right or other security or any other property on any date shall
be determined as provided in this Section 11(b). In the case of a
publicly-traded stock or other security, the Fair Market Value on any
date shall be deemed to be the average of the daily closing prices per
share of such stock or per unit of such other security for the 30
consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event
that the Fair Market Value per share of any share of common stock is
determined during a period which includes any date that is within 30
Trading Days after (i) the ex-dividend date for a dividend or
distribution on such stock payable in shares of Common Stock or
securities convertible into shares of Common Stock, or (ii) the
effective date of any subdivision, split, combination, consolidation,
reverse stock split or reclassification of such stock, then, and in
each such case, the Fair Market Value shall be appropriately adjusted
by the Board of Directors of the Company to take into account
ex-dividend or post-effective date trading. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked
prices, regular way (in either case, as reported in the applicable
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange), or, if the
securities are not listed or admitted to trading on the New York Stock
Exchange, as reported in the applicable transaction reporting system
with respect to securities listed on the principal national securities
exchange on which such security is listed or admitted to trading; or,
if not listed or admitted to trading on any national securities
exchange, the last quoted price (or, if not so quoted, the average of
the high bid and low asked prices) in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or such other system then in use;
or, if no bids for such security are quoted by any such organization,
the average of the closing bid and asked prices as furnished by a
professional market maker making a market in such security selected by
the Board of Directors of the Company. The term "Trading Day" shall
mean a day on which the principal national securities exchange on which
such security is listed or admitted to trading is open for the
transaction of business or, if such security is not listed or admitted
to trading on any national securities exchange, a Business Day. If a
security is not publicly held or not so listed or traded, "Fair Market
Value" shall mean the fair value per share of stock or per other unit
of such other security, as determined by an independent investment
banking firm experienced in the valuation of securities selected in
good faith by the Board of Directors of the Company, or, if no such
investment banking firm is, in the good faith judgment of the Board of
Directors, available to make such determination, in good faith by the
Board of Directors of the Company; provided, however, that for purposes
of making the adjustment provided for by Section 11(a)(ii) hereof, the
Fair Market Value of a share of Preferred Stock shall not be less than
100% of the product of the Fair Market Value of a share of Common Stock
multiplied by the higher of the then Dividend Multiple or Vote Multiple
applicable to the Preferred Stock (as defined in the Certificate of
Designations relating to the Preferred Stock) and shall not exceed 105%
of the product of the then Fair Market Value of a share of Common Stock
multiplied by the higher of the then Dividend Multiple or Vote Multiple
applicable to the Preferred Stock. In the case of property other than
securities, the "Fair Market Value" thereof shall be determined in good
faith by the Board of Directors of the Company based upon such
appraisals or valuation reports of such independent experts as the
Board of Directors of the Company shall in good faith determine to be
appropriate in accordance with good business practices and the
interests of the holders of Rights. Any such determination of Fair
Market Value shall be described in a statement filed with the Rights
Agent and shall be binding upon the Rights Agent.
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(c) All calculations under this Section 11 shall be made to
the nearest cent or to the nearest one-thousandth of a share, as the
case may be.
(d) Irrespective of any adjustment or change in the Exercise
Price or the number of shares of Preferred Stock issuable upon the
exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Exercise Price and the
number of shares to be issued upon exercise of the Rights as in the
initial Right Certificates issued hereunder but, nevertheless, shall
represent the Rights as so adjusted.
(e) Anything in this Section 11 to the contrary
notwithstanding, in the event of any reclassification of stock of the
Company or any recapitalization, reorganization or partial liquidation
of the Company or similar transaction, the Company shall be entitled to
make such further adjustments in the number of shares of Preferred
Stock which may be acquired upon exercise of the Rights, and such
adjustments in the purchase price per share therefor, in addition to
those adjustments expressly required by the other paragraphs of this
Section 11, as the Board of Directors of the Company shall determine to
be necessary or appropriate in order for the holders of the Rights in
such event to be treated equitably and n accordance with the purpose
and intent of this Rights Agreement or in order that any such event
shall not, but for such adjustment, in the opinion of counsel to the
Company, result in the stockholders of the Company being subject to any
United States federal income tax liability by reason thereof.
26
<PAGE>
(f) In the event the Company shall at any time after the
Record Date make any distribution on the shares of Common Stock of the
Company, whether by way of a dividend or a reclassification of stock, a
recapitalization, reorganization or partial liquidation of the Company
or otherwise, in cash or any debt security, debt instrument, real or
personal property or any other property (other than any shares of
Common Stock or other capital stock of the Company and other than any
right or warrant to acquire any such shares, including any debt
security convertible into or exchangeable for any such share, at less
than the Fair Market Value of such shares) and the amount of such cash
dividend or the Fair Market Value of such debt security, debt
instrument or property exceeds 150% of the aggregate amount of the cash
dividends declared or paid on the Common Stock of the Company in the
15-month period immediately preceding such distribution, then and in
each such event, unless such distribution is part of or is made in
connection with a transaction to which Section 11(a)(ii) or Section 13
hereof applies, the Exercise Price shall be reduced by an amount equal
to the cash or the Fair Market Value of such distribution, as the case
may be, per share of Common Stock of the Company. For purposes hereof,
the Fair Market Value of any property distributed to the holder of
shares of Common Stock of the Company shall be the fair market value of
such property as determined by an independent investment banking firm
experienced in the valuation of securities or the other property so
distributed, as the case may be, selected in good faith by the Board of
Directors of the Company, or, if no such investment banking firm is in
the good faith judgment of the Board of Directors available to make
such determination, in good faith by the Board of Directors of the
Company, whose determination shall be final and binding on the Company,
the Rights Agent and the holders of Rights.
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Section 12. Certification of Adjusted Exercise Price or Number
of Shares. Whenever an adjustment is made as provided in Sections 11, 13, or
23(c), the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts giving rise to such adjustment,
(b) promptly file with the Rights Agent and with the Company as transfer agent
for the Preferred Stock (or such other transfer agent, if applicable) a copy of
such certificate and (c) mail a brief statement of the effect of such adjustment
to each holder of a Right Certificate in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the Company to make such
certification or give such notice shall not affect the validity of or the force
or effect of the requirement for such adjustment, and any adjustment to be made
pursuant to Sections 11, 13 or 23(c) of this Rights Agreement shall be effective
as of the date of the event giving rise to such adjustment. The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of any
adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) In the event that, at any time on or after the
Distribution Date, (x) the Company shall, directly or indirectly, consolidate
with, or merge with and into; any other Person or Persons and the Company shall
not be the surviving or continuing corporation of such consolidation or merger,
or (y) any Person or Persons shall, directly or indirectly, consolidate with, or
merge with and into, the Company, and the Company shall be the continuing or
surviving corporation of such consolidation or merger and, in connection with
such consolidation or merger, all or part of the outstanding shares of Common
Stock shall be changed into or exchanged for stock or other securities of any
other Person or of the Company or cash or any other property, or (z) the Company
or one or more of its Subsidiaries shall, directly or indirectly, sell or
otherwise transfer to any other Person or any Affiliate or Associate of such
Person, in one or more transactions, or the Company or one or more of its
Subsidiaries shall sell or otherwise transfer to any Persons in one or a series
of related transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole), then, on the first occurrence of any such event, proper provision shall
be made so that (i) each holder of record of a Right shall thereafter have the
right to receive, upon the exercise thereof and payment of the Exercise Price in
accordance with the terms of this Rights Agreement, such number of shares of
validly issued, fully paid and non-assessable Common Stock of the Principal
Party (as defined herein) as shall, based on the Fair Market Value of the Common
Stock of the Principal Party on the date of consummation of such consolidation,
merger, sale or transfer equal twice the Exercise Price; (ii) such Principal
Party shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties of the
Company pursuant to this Rights Agreement; (iii) the term "Company" for all
purposes of this Rights Agreement shall thereafter be deemed to refer to such
Principal Party; and (iv) such Principal Party shall take such steps (including,
but not limited to, the reservation of a sufficient number of shares of its
Common Stock in accordance with the provisions of Section 9 hereof applicable to
the reservation of Preferred Stock) in connection with such consummation as may
be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its shares of Common
Stock thereafter deliverable upon the exercise of the Rights; provided, however,
that, upon the subsequent occurrence of any merger, consolidation, sale of all
or substantially all of the assets, recapitalization, reclassification of
shares, reorganization or other extraordinary transaction in respect of such
Principal Party, each holder of a Right shall thereupon be entitled to receive,
upon exercise of a Right and payment of the Exercise Price, such cash, shares,
rights, warrants and other property which such holder would have been entitled
to receive had it, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stack) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property.
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(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or (y) of
the first sentence of Section 13(a) hereof: (A) the Person that is the issuer of
the securities into which shares of Common Stock of the Company are converted in
such merger or consolidation, or, if there is more than one such issuer, the
issuer the Common Stock of which has the greatest market value or (B) if no
securities are so issued, (x) the Person that is the other party to the merger
or consolidation and that survives such merger or consolidation, or, if there is
more than one such Person, the Person the Common Stock of which has the greatest
market value or (y) if the Person that is the other party to the merger or
consolidation does not survive the merger or consolidation, the Person that does
survive the merger or consolidation (including the Company if it survives); and
(ii) in the case of any transaction described in (z) of the
first sentence in Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such Persons as is
the issuer of Common Stock having the greatest market value of shares
outstanding; provided, however, that in any such case, if the Common Stock of
such Person is not at such time and has not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act and such Person
is a direct or indirect Subsidiary of another Person the Common Stock of which
is and has been so registered, the term "Principal Party" shall refer to such
other Person, or if such Person is a Subsidiary, directly or indirectly, of more
than one person, the Common Stocks of all of which are and have been so
registered, the term "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Stock having the greatest market value of shares
outstanding.
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(c) The Company shall not consummate any consolidation, merger
or sale or transfer of assets or earning power referred to in Section 13(a)
unless prior thereto the Company and the Principal Party involved therein shall
have executed and delivered to the Rights Agent an agreement confirming that the
Principal Party shall, upon consummation of such consolidation, merger or sale
or transfer of assets or earning power, assume this Rights Agreement in
accordance with Sections 13(a) and (b) hereof and that all rights of first
refusal or preemptive rights in respect of the issuance of shares of Common
Stock of the Principal Party upon exercise of outstanding Rights have been
waived and that such transaction shall not result in a default by the Principal
Party under this Rights Agreement, and further providing that, as soon as
practicable after the date of any consolidation, merger or sale or transfer of
assets or earning power referred to in Section 13(a) hereof, the Principal Party
will
(i) prepare and file a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Rights and the securities purchasable upon exercise of the Rights on an
appropriate form, use its best efforts to cause such registration statement to
become effective as soon as practicable after such filing and use its best
efforts to cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the date of expiration of the Rights, and similarly comply with applicable state
securities laws;
(ii) use its best efforts to list (or continue the listing of)
the Rights and the securities purchasable upon exercise of the Rights on a
national securities exchange or to meet the eligibility requirements for
quotation on NASDAQ; and
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(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act.
In the event that any of the transactions described in Section 13(a) hereof
shall occur at any time after the occurrence of a transaction described in
Section 11(a)(ii) hereof, the Rights which have not theretofore been exercised
shall, subject to the provisions of Section 7(e) hereof, thereafter be
exercisable in the manner described in Section 13(a) (without taking into
account any prior adjustment required by Section 11(a)(ii)).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional Rights
(i.e., Rights to acquire less than one one-hundredth of a share of Preferred
Stock), unless such fractional Rights result from a transaction referred to in
Section 11(a)(i) hereof. If the Company shall determine not to issue such
fractional Rights, then, in lieu of such fractional Rights, there shall be paid
to the holders of record of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to the
same fraction of the Fair Market Value of a whole Right.
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(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one-hundredth of a share) upon exercise of the Rights or to distribute
certificates which evidence fractional shares (other than fractions which are
integral multiples of one-hundredth of a share). In lieu of issuing fractions of
shares of Preferred Stock, the Company may, at its election, issue depository
receipts evidencing fractions of shares pursuant to an appropriate agreement
between the Company and a depository selected by it, provided that such
agreement shall provide that the holders of such depository receipts shall have
all of the rights, privileges and preferences to which they would be entitled as
owners of the Preferred Stock. With respect to fractional shares that are not
integral multiples of one-hundredth of a share, if the Company does not issue
such fractional shares or depository receipts in lieu thereof, there shall be
paid to the holders of record of Right Certificates at the time such Right
Certificates are exercised as herein provided an amount in cash equal to the
same fraction of the Fair Market Value of a share of Preferred Stock.
(c) The holder of a Right by the acceptance of a Right
expressly waives his right to receive any fractional Right or any fractional
shares (other than fractions which are integral multiples of one-hundredth of a
share) upon exercise of a Right.
Section 15. Rights of Action. All rights of action in respect
of this Rights Agreement, except the rights of action given to the Rights Agent
in Section 18 hereof, are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the hold-ers of record
of the Common Stock); and any holder of record of any Right Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of the
Rights Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Rights Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Rights Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this Rights
Agreement.
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Section 16. Agreement of Right Holders. Each holder of a Right
by accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be
evidenced (subject to the provisions of Section 3(b) hereof) by the
certificates for Common Stock registered in the name of the holders of
the Common Stock (which certificates for Common Stock shall also
constitute certificates for Rights) and not by separate Right
Certificates, and each Right shall be transferable only simultaneously
and together with the transfer of shares of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of
transfer; and
(c) the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the associated Common Stock certificate made by
anyone to other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Preferred Stock or any
other securities which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof (except as provided in Section 7(f) hereof), or to give or
withhold consent to any corporate action (except as provided in Section 7(f)
hereof), or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
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Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
to be done by the Rights Agent in connection with the acceptance and
administration of this Rights Agreement, including the cost and expenses of
defending against any claim of liability relating to the Rights or this Rights
Agreement.
(b) The Rights Agent shall be protected against, and shall
incur no liability for or in respect of, any action taken, suffered or omitted
by it in connection with its administration of this Rights Agreement in reliance
upon any Right Certificate or certificate for Preferred Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other document or paper believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons.
Section 19. Merger or Consolidation of, or Change in Name of,
the Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Rights Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Rights Agreement any of the
Rights Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and in case at that
time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.
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(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; in case at
that time any of the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in its prior name or
in its changed name; in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Rights Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Rights Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the President or
any Vice President and by the Treasurer or any Assistant Treasurer or the
Secretary or any Assistant Secretary of the Company and delivered to the Rights
Agent. Any such certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions of this
Rights Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Rights Agreement or
in the Right Certificates (except its countersignature thereof) or be required
to verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
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(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any covenant or
condition contained in this Rights Agreement or in any Right Certificate; nor
shall it be responsible for any adjustment required under the provisions of
Sections 11 or 13 hereof or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after receipt of a certificate describing any such
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Preferred Stock to be issued pursuant to this Rights Agreement or any Right
Certificate or as to whether any shares of Preferred Stock will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of the Rights Agreement.
g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board of Directors, the President or any Vice President or
the Secretary or any Assistant Secretary or the Treasurer or any Assistant
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer. Any application by the Rights Agent for
written instructions from the Company may; at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent with respect to its duties or obligations under this Rights Agreement and
the date on and/or after which such action shall be taken or omitted and the
Rights Agent shall not be liable for any action taken or omitted in accordance
with a proposal included in any such application on or after the date specified
therein (which date shall not be less than three business days after the date
any such officer actually receives such application, unless any such officer
shall have consented in writing to an earlier date) unless, prior to taking or
omitting any such action, the Rights Agent has received written instructions in
response to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Rights Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.
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(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail. The Company may remove the Rights Agent or any successor Rights
Agent (with or without cause) upon 30 days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to the Company,
as transfer agent of the Common Stock, (or such other transfer agent or agents,
if applicable) and the Preferred Stock by registered or certified mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent.
Notwithstanding the foregoing provisions of this Section 21, in no event shall
the resignation or removal of a Rights Agent be effective until a successor
Rights Agent shall have been appointed and have accepted such appointment. If
the Company shall fail to make such appointment within a period of 30 days after
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the incumbent Rights Agent or the holder of
record of any Right Certificate may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of any state thereof,
in good standing, having its office in the State of New York, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination in the conduct of its corporate
trust or stock transfer business by federal or state authorities and which has
at the time of its appointment as Rights Agent a combined capital and surplus of
at least $50,000,000. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed, but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and Preference Stock, and mail a notice thereof in writing by
mail to the registered holders of the Right Certificates. Failure to give any
notice provided for in this Section 21, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Notwithstanding the foregoing provisions, in the event of resignation, removal
or incapacity of the Rights Agent, the Company shall have the authority to act
as the Rights Agent until a successor Rights Agent shall have assumed the duties
of the Rights Agent hereunder.
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Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Rights Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect an adjustment or change in the Exercise Price per share and the number
or kind or class of shares of stock or other securities or property purchasable
under the Right Certificates made in accordance with the provisions of this
Rights Agreement.
Section 23. Redemption.
(a) The Board of Directors of the Company may, at its option,
redeem all but not less than all the then outstanding Rights, at any time prior
to the close of business on the earlier of (i) the tenth day following the Stock
Acquisition Date or (ii) the Final Expiration Date, at a redemption price of
$.05 per Right, subject to adjustments as provided in subsection (c) below (the
"Redemption Price").
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights, and without any further
action and without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Within 10 days after the action of Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the holders of the then outstanding Rights by mailing such notice to all such
holders at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each notice of redemption will state the method by which the payment of
the Redemption Price will be made.
(c) In the event the Company shall at any time after the date
of this Rights Agreement (A) pay any dividend on Common Stock in shares of
Common Stock, (B) subdivide or split the outstanding shares of Common Stock into
a greater number of shares or (C) combine or consolidate the outstanding shares
of Common Stock into a smaller number of shares or effect a reverse split of the
outstanding shares of Common Stock, then and in each such event the Redemption
Price shall be adjusted so that Redemption Price after such event shall equal
the Redemption Price immediately prior to such event multiplied by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock outstanding immediately prior to such event; provided,
however, that in each case such adjustment to the Redemption Price shall be made
only if the amount of the Redemption Price shall be reduced or increased by $.01
per Right.
38
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Section 24. Notice of Proposed Actions.
(a) In case the Company, after the Distribution Date, shall
propose (i) to effect any of the transactions referred to in Section 11(a)(i) or
to pay any dividend to the holders of record of its Common Stock payable in
stock of any class or to make any other distribution to the holders of record of
its Common Stock (other than a regular periodic cash dividend at a rate not in
excess of 125% of the rate of the last cash dividend theretofore paid), or (ii)
to offer to the holders of record of its Common Stock options, warrants, or
other rights to subscribe for or to purchase shares of Common Stock (including
any security convertible into or exchangeable for Common Stock) or shares of
stock of any class or any other securities, options, warrants, convertible or
exchangeable securities or other rights, or (iii) to effect any reclassification
of its Preferred Stock or Common Stock or any recapitalization or reorganization
of the Company, or (iv) to effect any consolidation or merger with or into, or
to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions,
of more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person or Persons, or (v) to
effect the liquidation, dissolution or winding up of the Company, then, in each
such case, the Company shall give to each holder of record of a Right
Certificate, in accordance with Section 25, notice of such proposed action,
which shall specify the record date for the purposes of such transaction
referred to in Section 11(a)(i) or such dividend or distribution, or the date on
which such reclassification, recapitalization, reorganization, consolidation,
merger, sale or transfer of assets, liquidation, dissolution, or winding up is
to take place and the record date for determining participation therein by the
holders of record of Common Stock or Preferred Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least 10 days prior to the record date for
determining holders of record of the Preferred Stock for purposes of such
action, and in the case of any such other action, at least 10 days prior to the
date of the taking of such proposed action or the date or participation therein
by the holders of record of Common Stock or Preferred Stock, whichever shall be
the earlier. The failure to give notice required by this Section 24 or any
defect therein shall not affect the legality or validity of the action taken by
the Company or the vote upon any such action.
(b) In case any of the transactions referred to in either
Section 11(a)(ii) or Section 13 of this Rights Agreement are proposed, then, in
any such case, the Company shall give to each holder of Rights, in accordance
with Section 25 hereof, notice of the proposal of such transaction at least 10
days prior to consummating such transaction, which notice shall specify the
proposed event and the consequences of the event to holders of Rights under
Section 11(a)(ii) or Section 13 hereof, as the case may be, and, upon
consummating such transaction, shall similarly give notice thereof to each
holder of Rights.
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Section 25. Notices. Notices or demands authorized by this
Rights Agreement to be given or made by the Rights Agent or by the holder of
record of any Right Certificate or Right to or on the Company shall be
sufficiently given or made if sent by mail, postage prepaid, addressed (until
another address is filed in writing with the Rights Agent) as follows:
Chase Manhattan Bank
One New York Plaza
14th Floor
New York, New York 10081
Attn.: Vice President,
Shareholder Services Division
Subject to the provisions of Section 21, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of record
of any Right Certificate or Right to or on the Rights Agent shall be
sufficiently given or made if sent by mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:
Pfizer Inc.
225 East 42nd Street
New York, New York 10019
Attn.: Secretary
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of record of any Right Certificate
or right shall be sufficiently given or made if sent by mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 26. Supplements and Amendments. The Company and the
Rights Agent, if the Company so directs, may from time to time supplement or
amend this Rights Agreement without the approval of any holders of Right
Certificates (i) in order to cure any ambiguity, (ii) to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein, (iii) prior to the Distribution Date, to otherwise
amend or supplement in any respect any provision herein which the Company may
deem necessary or desirable, or (iv) subsequent to the Distribution Date, to
amend or supplement in any respect any provision herein which the Company may
deem necessary or desirable and which shall not adversely affect the interest of
the holders of Rights.
Section 27. Successors. All of the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the bene-fit of their respective successors and assigns
hereunder.
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Section 28. Benefits of this Agreement. Nothing in this Rights
Agreement shall be construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Stock) any legal or equitable
right, remedy or claim under this Rights Agreement; but this Rights Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent and
the holders of record of the Right Certificates (and, prior to the Distribution
Date, the Common Stock).
Section 29. Delaware Contract. This Rights Agreement and each
Right Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed and enforced in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state.
Section 30. Counterparts. This Rights Agreement may be
executed in any number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 31. Descriptive Headings. Descriptive headings of the
several Sections of this Rights Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
Section 32. Severability. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
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IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, all as of the day and year first above written.
PFIZER INC.
By: /s/ Edmund T. Pratt, Jr.
-------------------------------
Edmund T. Pratt, Jr.
Chairman and Chief Executive
Officer
Attest: /s/ Terence J. Gallagher
----------------------------
Assistant General Counsel
(seal)
THE CHASE MANHATTAN BANK, N.A.
By: /s/ John E. Strain
-----------------------------
John E. Strain
Vice President
Attest: /s/ Robert C. Devlin
-----------------------------
Vice President
(seal)
42
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FIRST AMENDMENT
TO
RIGHTS AGREEMENT
First Amendment, dated as of May 25, 1989, to the Rights
Agreement, dated as of September 24, 1987 (the "Rights Agreement"), between
Pfizer Inc., a Delaware corporation (the "Company"), and The Chase Manhattan
Bank, N.A., a national banking association (the "Rights Agent").
W T T N E S S T H :
WHEREAS, the Company and the Rights Agent executed and
delivered the Rights Agreement specifying the terms of the Rights (as defined
therein); and
WHEREAS, the Board of Directors of the Company deems it
desirable to amend the Rights Agreement pursuant to the provisions of Section 26
of the Rights Agreement to make certain modifications to the Rights Agreement
and the terms of the Preferred Stock to be issued by the Company upon the
exercise of Rights, all upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
1
<PAGE>
1. All references herein to the Rights Agreement shall mean
the copy thereof appearing as an exhibit to the Company's Registration Statement
on Form 8-A with respect to the Rights filed with the Securities and Exchange
Commission on October 5, 1987 pursuant to the "EDGAR" system.
2. a. The definition of the term "Acquiring Person" set forth
in Section l(a) of the Rights Agreement hereby is amended to read in its
entirety as follows:
"'Acquiring Person' shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of 15% or more of the shares of Voting Stock (as such term is hereinafter
defined) of the Company then outstanding; provided, however, that an Acquiring
Person shall not include an Exempt Person (as such term is hereinafter defined),
or any Person, together with all Affiliates and Associates of such Person, who
or which would be an Acquiring Person by reason of (i) being the Beneficial
Owner of shares of Voting Stock of the Company, the Beneficial Ownership of
which was acquired by such Person (or his or its predecessor) pursuant to a
transaction or series of related transactions approved by the Continuing
Directors (as such term is hereinafter defined) of the Company and effected
before such Person (or his or its predecessor) otherwise became an Acquiring
Person, (ii) a reduction in the number of issued and outstanding shares of
Voting Stock of the Company pursuant to a transaction or a series of related
transactions approved by the Continuing Directors of the Company, or (iii) any
action or transaction deemed by a resolution of the Continuing Directors of the
Company not to cause such Person to become an Acquiring Person which resolution
is passed prior to such Person (or his or its predecessor) otherwise becoming an
Acquiring Person; provided, further, however, that in the event such Person does
not become an Acquiring Person by reason of clause (i), (ii) or (iii) of this
Section l(a), such Person shall become an Acquiring Person in the event such
Person thereafter acquires Beneficial Ownership of an additional 1% of the
Voting Stock of the Company unless such Person would not become an Acquiring
Person by reason of any provision of this Agreement, including clause (i), (ii)
or (iii) of this Section l(a)."
b. The definition of the term "Beneficial Owner" set forth in
Section l(d) of the Rights Agreement hereby is amended by adding the following
at the end of clause (iii) thereof:
"; provided, however, that for purposes of determining beneficial
ownership of securities under this Rights Agreement, officers and directors of
the Company shall not constitute a group (notwithstanding that they may be
Associates of one another or may be deemed to constitute a group for purposes of
the Exchange Act) and shall not be deemed to own shares owned by another officer
or director of the Company."
c. The definition of the term "Right Certificate" set forth in
Section l(r) of the Rights Agreement hereby is amended by deleting the reference
therein to "Section 3(b)" and inserting in its place "Section 3(d)."
d. Section 1 of the Rights Agreement hereby is amended by the
insertion of the following new defined terms in the appropriate alphabetical
order:
"'Continuing Director' shall mean any member of the Board of
Directors, while such person is a member of the Board of Directors, who is not
an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or
representative or nominee of an Acquiring Person or of any such Affiliate or
Associate, and who either (i) was a member of the Board of Directors prior to
the Stock Acquisition Date, or (ii) subsequently became a member of the Board of
Directors, and whose nomination for election or election to the Board of
Directors was recommended or approved by a majority of the Continuing Directors
then on the Board of Directors."
2
<PAGE>
"'Voting Stock' shall mean (i) the Common Stock of the Company
and (ii) any other shares of capital stock of the Company entitled to vote
generally in the election of directors or entitled to vote together with the
Common Stock in respect of any merger, consolidation, sale of all or
substantially all of the Company's assets, liquidation, dissolution or windinq
up."
3. Section 3(b) of the Rights Agreement hereby is amended to
read in its entirety as follows:
"(b) Until the close of business on the earlier to occur of
(i) the tenth day after the Stock Acquisition Date or (ii) the tenth day (or
such later date as may be determined by action of the Board of Directors prior
to such time as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than an Exempt Person) of, or the first public
announcement of the intent of any Person (other than an Exempt Person) to
commence, a tender or exchange offer upon the successful consummation of which
such Person, together with its Affiliates and Associates, would be the
Beneficial Owner of 30% or more of the then outstanding shares of Voting Stock
of the Company (irrespective of whether any shares are actually purchased
pursuant to any such offer) (the earlier of such dates being herein referred to
as the 'Distribution Date'), (x) the Rights shall be evidenced (subject to the
provisions of Section 3(a)) by the certificates for Common Stock registered in
the name of the holders of the Common Stock (which certificates for Common Stock
shall also constitute certificates for Rights) and not by separate Right
certificates and the record holders of such certificates for Common Stock shall
be the record holders of the Rights represented thereby and (y) each Right shall
be transferable only simultaneously and together with the transfer of a share of
Common Stock (subject to adjustment as hereinafter provided). Until the
Distribution Date (or, if earlier, the Expiration Date or Final Expiration
date), the surrender for transfer of any certificate for Common Stock shall
constitute the surrender for transfer of the Right or Rights associated with the
Common Stock evidenced thereby, whether or not a copy of the Summary of Rights
is transferred simultaneously with such share certificate."
4. Section 3(c) of the Rights Agreement hereby is amended by
modifying the fifth line of the legend appearing therein to read in its entirety
as follows:
"Agent, dated as of September 24, 1987, as amended by the First
Amendment To Rights Agreement, dated as of May 25, 1989 (as amended, the "Rights
Agreement"), the terms"
5. Section 4(a) of the Rights Agreement hereby is amended by
deleting therefrom the parenthetical language appearing in lines 14 and 15
thereof.
3
<PAGE>
6. Section 7(a) of the Rights Agreement hereby is amended by
deleting the period at the end of the first sentence thereof and inserting in
its place the following:
"(unless otherwise provided herein, including, without
limitation, the restrictions on exercisability set forth in Section 23(a)
hereof)."
7. Section 7(e) of the Rights Agreement hereby is amended to
read in its entirety as follows:
"(e) Notwithstanding any provision of this Rights Agreement to
the contrary, upon the occurrence of the event described in Section ll(a)(ii)
hereof, any Rights that are at the time of the occurrence of such event
Beneficially Owned by an Acquiring Person or by any Associate or Affiliate of
such Acquiring Person shall become null and void and no holder of such Rights
shall have any right with respect to such Rights under any provision of this
Rights Agreement from and after the occurrence of such event nor may any Person
subsequently become a holder of such Rights."
8. Section 7 of the Rights Agreement hereby is amended by
deleting subsection (f) thereof in its entirety, without redesignating the
remaining subsection of such Section 7.
9. Section ll(a)(ii) of the Rights Agreement hereby is amended
to read in its entiretY as follows:
"(ii) In the event that any Person, alone or together with its
Affiliates and Associates, shall become an Acquiring Person, except pursuant to
a transaction approved in advance by a majority of the Continuing Directors
provided the Continuing Directors constitute a majority of the Board of
Directors (the "Trigger Event"), then, within ten days after occurrence of the
Trigger Event, proper provision shall be made so that each holder of a Right,
except as provided in Section 7(e) hereof, shall thereafter have a right to
receive for each Right, upon exercise thereof in accordance with the terms of
this Rights Agreement and payment of the Exercise Price, the greater of (1) the
number of shares of Preferred Stock for which such Right was exercisable
immediately prior to such event or (2) such number of shares of Preferred Stock,
based on the Fair Market Value of the Preferred Stock (determined pursuant to
Section ll(b) hereof) on the date of the occurrence of such event, having a
value equal to twice the Exercise Price; provided, however, that if the
transaction that would otherwise give rise to the foregoing adjustment is also
subject to the provisions of Section 13 hereof, then only the provisions of
Section 13 hereof shall apply and no adjustment shall be made pursuant to this
Section ll(a)(ii)."
10. Section ll(a)(iii) of the Rights Agreement hereby is
amended by adding the following three new sentences at the end thereof:
4
<PAGE>
"In lieu of issuing shares of Preferred Stock in accordance
with the foregoing subparagraphs (i) and (ii), the Company may, if a majority of
the Continuing Directors determines that such action is necessary or appropriate
and not contrary to the interests of holders of Rights, elect to issue or pay,
upon the exercise of the Rights, cash, property, shares of Preferred or Common
Stock, or any combination thereof, having an aggregate Fair Market Value equal
to the Fair Market Value of the shares of Preferred Stock which otherwise would
have been issuable pursuant to Section ll(a)(ii), which Fair Market Value shall
be determined by an investment banking firm selected by a majority of the
Continuing Directors. For purposes of the preceding sentence, the Fair Market
Value of the Preferred Stock shall be as determined pursuant to Section ll(b).
Subject to Section 23 hereof, any such election by a majority of the Continuing
Directors of the Company must be made and publicly announced within thirty (30)
days after the date on which the event described in Section ll(a)(ii) occurs."
11. Section 11 of the Rights Agreement hereby is further
amended by adding the following new subsection (g) thereto:
"(g) Before taking any action that would cause an adjustment
reducing the purchase price per whole share of Preferred Stock upon exercise of
the Rights below the then par value, if any, of the shares of Preferred Stock,
the Company shall use its best efforts to take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and non-assessable shares of such Preferred
Stock at such adjusted purchase price per share."
12. Section 13(a) hereby is amended by adding the following
words at the beginning thereof and changing the capital "I" in the word "In"
(formerly the first word there-of) to a lower case "i":
"Except pursuant to a transaction approved in advance by a
majority of the Continuing Directors,"
13. Section 14 of the Rights Agreement hereby is amended by
modifying subsections (b) and (c) thereof to read in their entirety as follows:
"(b) The Company shall not be required to issue fractions of
shares of Preferred Stock upon exercise of the Rights or to distribute
certificates which evidence fractional shares. In lieu of issuing fractions of
shares of Preferred Stock, the Company may, at its election, deposit the number
of whole shares of Preferred Stock which such fractional shares would aggregate
(rounded to the lowest near whole number) with a depositary selected by it
pursuant to an appropriate agreement between the Company and such depositary and
cause such depositary to issue depositary receipts representing interests in the
shares of Preferred Stock so deposited. If the Company does not cause depositary
receipts to be issued in lieu of fractional shares of Preferred Stock, or if
depositary receipts issued to one or more holders do not fully represent an
interest in the fraction of share that such a holder would have otherwise been
entitled to, there shall be paid to the holders of record of Right Certificates
at the time such Right Certificates are exercised as herein provided an amount
in cash equal to the product of (i)(A) the fraction of a share of Preferred
Stock which each such holder would otherwise have been entitled to upon the
exercise of his Rights (if no depository receipts are issued) or (B), if
depository receipts are issued, the fraction, if any, resulting from the
difference between the fraction in clause A and the fraction of a share
represented by the depository receipts issued to such holder and (ii) the Fair
Market Value of a share of Preferred Stock."
5
<PAGE>
"(c) The holder of a Right by the acceptance of a Right
expressly waives his right to receive any fractional Right or any fractional
shares upon exercise of a Riqht."
14. Section 17 hereby is amended by deleting the parenthetical
language appearing in lines nine and ten and ten and eleven thereof.
15. Section 23(a) of the Rights Agreement hereby is amended by
inserting the following parenthetical language immediately after the word "Date"
in clause (i) thereof:
"(or such later date as a majority of the Continuing Directors
in office may determine)"
16. Section 23(a) of the Rights Agreement hereby is further
amended by adding the following new sentence at the end thereof:
"Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable pursuant to Section ll(a)(ii)
prior to the expiration of the Company's right of redemption hereunder."
17. Section 26 of the Rights Agreement hereby is amended by
deleting the period at the end thereof and inserting in its place the following:
"(other than an Acquiring Person or any Affiliate or Associate of an
Acquiring Person), provided, however, that this Agreement may be amended or
supplemented following the Distribution Date only with the approval of a
majority of the Continuing Directors and only if the Continuing Directors
constitute a majority of the number of directors then in office."
18. Exhibits A and B to the Rights Agreement hereby are
amended to read in their entirety as set forth on Exhibits A-l and B-l attached
hereto, respectively. All references in the Rights Agreement to the "Series A
Junior Participating Preferred Stock" or the "Preferred Stock" shall be deemed
to refer to the Series A Junior Preferred Stock, the terms and provisions of
which are set forth in Exhibit A-1 hereto.
19. This First Amendment may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
20. Except as specifically provided in this First Amendment to
the Rights Agreement, the Rights Agreement shall remain in full force and effect
and shall in no way be amended, modified or affected.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to the Rights Agreement to be duly executed, all as of the day and
year first above written.
PFIZER INC.
By:
------------------------------
Edmund T. Pratt, Jr.
Chairman of the Board
Attest:
---------------------------
(seal)
THE CHASE MANHATTAN BANK, N.A.
By:
-----------------------------
Attest:
---------------------------
(seal)
7
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<DESCRIPTION>EXHIBIT 10.(I)
<TEXT>
<PAGE>
EXHIBIT 10(i)
PFIZER INC.
STOCK AND INCENTIVE PLAN
(As amended through 1/97)
1. Purpose
The purpose of the Stock and Incentive Plan (known as the "Stock Option
and Incentive Plan of 1965 as amended" prior to the 1980 amendment thereof and
hereinafter called the "Plan") is to furnish a material incentive to employees
of the Company and its subsidiaries by making available to them the benefits of
a larger Common Stock ownership in the Company through stock options and
otherwise. It is believed that these increased incentives will not only induce
the continued service of employees but will also stimulate their efforts towards
the continued success of the Company and its subsidiaries, as well as assist in
the recruitment of new employees.
2. Administration
Except to the extent otherwise provided in Section 4, the Plan shall be
administered by the Employee Compensation and Management Development Committee,
which is authorized, subject to the provisions of the Plan, to promulgate such
rules and regulations as it deems necessary for the proper administration of the
Plan and to make such determinations and to take all action in connection
therewith or in relation to the Plan as it deems necessary or advisable.
3. Total Number of Shares
Subject to the provisions of Section 6(h), the maximum amount of stock
which may be issued under the Plan is 169,000,000* shares of the Common Stock of
the Company (comprised of 12,000,000* shares authorized in 1965, 12,000,000*
shares authorized in 1969, 12,000,000** shares authorized in 1972, 12,000,000**
shares authorized in 1975, 12,000,000** shares authorized in 1980, 20,000,000***
shares authorized in 1983, 22,000,000*** shares authorized in 1986,
22,000,000*** shares authorized in 1989, 22,000,000**** shares authorized in
1992, and 23,000,000 shares authorized in 1996). No participant shall be granted
(i) options which would result in such participant receiving more than 240,000*
shares of the total number of shares authorized in 1965, more than 240,000*
shares of the total number of shares authorized in 1969, or more than 240,000**
shares of the total number of shares authorized in 1972, or (ii) options or
awards which would result in such participant receiving more than 240,000**
shares of the total number of shares authorized in 1975, more than 400,000**
shares of the total number of shares authorized in 1980, more than 400,000***
shares of the total number of shares authorized in 1983, more than 600,000***
shares of the total number of shares authorized in 1986, more than 600,000***
shares of the total number of shares authorized in 1989, more than 600,000****
shares of the total number of shares authorized in 1992, more than 600,000
shares of the total number of shares authorized in 1996, or (iii) any option,
stock award or performance unit award which would result in ownership by such
participant of more than five percent of the stock of the Company within the
meaning of Section 422(b)(7) of the Internal Revenue Code, or (iv) [i] any
incentive
- ----------
See footnotes on next page.
<PAGE>
stock option, as defined in Section 422A(b) of the Internal Revenue Code,
granted on or before December 31, 1986, which would result in such participant
receiving a grant of incentive stock options in any calendar year for stock
exceeding $100,000, in aggregate fair market value, determined as of the time
the option is granted, plus any unused limit carryover, as defined in Section
422A(c)(4) of the Internal Revenue Code, to the year in which such option is
granted or [ii] any incentive stock option granted after December 31, 1986,
which would result in such participant receiving a grant of incentive stock
options for stock that would have an aggregate fair market value in excess of
$100,000, determined as of the time that the option is granted, that would be
exercisable for the first time by such participant during any calendar year. No
option with respect to any shares authorized in 1975 shall be granted to the
extent that shares authorized in 1972 are available therefor, or with respect to
any shares authorized in 1980 to the extent that shares authorized in 1972 or
shares authorized in 1975 are available therefor, or with respect to any shares
authorized in 1983 to the extent that shares authorized in 1972, 1975 or 1980
are available therefor, or with respect to any shares authorized in 1986 to the
extent that shares authorized in 1972, 1975, 1980 or 1983 are available
therefor, or with respect to any shares authorized in 1989 to the extent that
shares authorized in 1972, 1975, 1980, 1983, or 1986 are available therefor, or
with respect to any shares authorized in 1992 to the extent that shares
authorized in 1972, 1975, 1980, 1983, 1986 or 1989 are available therefor or
with respect to any shares authorized in 1996 to the extent that shares
authorized in 1972, 1975, 1980, 1983, 1986, 1989, or 1992 are available
therefor. With respect to all options and stock awards granted on or after
January 1, 1972, the records of the Company shall specify the number of shares
authorized in 1965, the number of shares authorized in 1969, the number of
shares authorized in 1972, the number of shares authorized in 1975, the number
of shares authorized in 1980, the number of shares authorized in 1983, the
number of shares authorized in 1986, the number of shares authorized in 1989,
the number of shares authorized in 1992 and the number of shares authorized in
1996 covered by such options or awards. None of the shares authorized in 1965,
1969 or 1972 shall be available for stock awards.
- ----------
* Adjusted for the three-for-one stock split in 1970, the two-for-one
stock split in 1983 and the two-for-one stock split in 1991, and the
two-for-one stock split in 1995.
** Adjusted for the two-for-one stock split in 1983, and the two-for-one
stock split in 1991, and the two-for-one stock split in 1995.
*** Adjusted for the two-for-one stock split in 1991, and the two-for-one
stock split in 1995.
**** Adjusted for the two-for-one stock split in 1995.
2
<PAGE>
4. Participation in Plan
All employees of the Company or its subsidiaries shall be eligible to
participate in this Plan. From time to time, the Employee Compensation and
Management Development Committee shall determine the employees who shall be
granted options under the Plan, the number of shares of Common Stock to be
optioned to each such employee, and whether such options shall be "Qualified
Stock Options" as defined in Section 422 of the Internal Revenue Code,
"incentive stock options" as defined in Section 422A of the Internal Revenue
Code, or non-qualified stock options, or Tandem Options as defined herein; and
shall determine the individual employees who shall be granted stock appreciation
rights under the Plan pursuant to Section 7; and who shall be awarded shares
under the Plan pursuant to Section 8, as well as the number of shares of Common
Stock to be so awarded, and the restrictions, if any, to be placed thereon and
who shall be granted performance unit awards under the Plan pursuant to Section
9 and tandem awards under the Plan pursuant to Section 10; provided, however,
that in the case of employees who are also directors of the Company or officers
of the Company in categories designated by the Executive Compensation and
Management Development Committee, the Executive Compensation and Management
Development Committee shall make these determinations; and provided further,
that the Executive Compensation and Management Development Committee, or such
other Committee as the Board of Directors may appoint, shall make all
determinations with respect to all stock appreciation rights that are
exercisable in cash or partly in stock and partly in cash and with respect to
all options related thereto.
5. Term of Plan
No option with respect to shares authorized in or prior to 1969 under
this Plan shall be granted pursuant to this Plan after December 31, 1978, no
option with respect to shares authorized in 1972 shall be granted pursuant to
this Plan after December 31, 1992, no option, stock appreciation right or stock
award, with respect to shares authorized in 1975 shall be granted pursuant to
this Plan after December 31, 1992, no option, stock appreciation right, stock
award, performance unit award or tandem award with respect to shares authorized
in 1980 shall be granted pursuant to this Plan after December 31, 1992, no
option, stock appreciation right, stock award, performance unit award or tandem
award with respect to shares authorized in 1983 shall be granted pursuant to
this Plan after December 31, 1992, no option, stock appreciation right, stock
award, performance unit award or tandem award with respect to shares authorized
in 1986 shall be granted pursuant to this Plan after December 31, 1995, no
option, stock appreciation right, stock award, performance unit award or tandem
award with respect to shares authorized in 1989 shall be granted pursuant to
this Plan after December 31, 1998, no option, stock appreciation right, stock
award, performance unit award or tandem award with respect to shares authorized
in 1992 shall be granted pursuant to this Plan after December 31, 2001, no
option, stock appreciation right, stock award, performance unit award or tandem
award with respect to shares authorized in 1996 shall be granted pursuant to
this Plan after December 31, 2005, but options, stock appreciation rights,
performance unit awards, tandem awards and restrictions on awards may extend
beyond such dates.
3
<PAGE>
6. Terms and Conditions of Options
All options under the Plan shall be subject to the following terms and
conditions:
(a) Option Price. The option price per share shall be not less than the
fair market value of the Common Stock on the date the option is granted, as
determined by the Committee in accordance with applicable provisions of the
Internal Revenue Code and Treasury Department rulings and regulations
thereunder.
(b) Number of Shares. The option shall state the number of shares of
Common Stock covered thereby.
(c) Payment. At the time of the exercise of the option the option price
shall be payable in cash and/or, if the option so provides, in shares of Common
Stock valued at the market price at the time the option is exercised. The
Committee may in its discretion require or permit payroll deductions or other
suitable means to enable optionees to accumulate sufficient funds to exercise
their options and pay the option price.
(d) Term of Option. A qualified option shall provide that it shall not
be exercisable after the expiration of five years from the date such option is
granted. An incentive stock option shall provide that it shall not be
exercisable after the expiration of ten years from the date such option is
granted. A non-qualified option may be exercisable for a period greater than ten
years if so provided in the terms of the option.
(e) Exercise of Option. No option may be exercised during the first
year of its term or such longer period as may be specified in the option;
provided, however, in the event of a "Change of Control" of the Company, as that
term is defined in Section 11(e), the Board may in its discretion make any
options that are not yet exercisable immediately exercisable, and further
provided the Committee may in its discretion make any options that are not yet
exercisable immediately exercisable in cases where (i) an optionee's employment
is to be terminated due to a divestiture or downsizing of a business, (ii) in
the case of a retiring optionee who holds options with extended vesting
provisions, or (iii) otherwise, where the Committee determines that such action
is appropriate to prevent inequities with respect to an optionee. Thereafter, an
optionee, subject to the terms of the option, may exercise the option in whole
at any time or in part from time to time by giving written notice thereof
addressed to the Treasurer of the Company, specifying the number of shares to be
purchased and accompanied by payment of the option price therefor. In the event
of death, the person designated in the optionee's Will, or in the absence of
such designation, the legal representative of an optionee, or if a legal
representative of the optionee has not been appointed, the optionee's surviving
spouse, may in like manner exercise the option provided the same was exercisable
by the optionee at the time of his death, but such privilege shall expire,
subject to Section 6(d) and 6(g) (iii) hereof, (i) with respect to options
granted on or before January 23, 1975, six months after the death of the
optionee, unless the option shall be amended to substitute a one year period for
such six month period or (ii) with respect to options granted after January 23,
1975,
4
<PAGE>
one year after the death of the optionee; provided, however, in any event that
if the option is not exercised by the last day in which it is exercisable, the
option shall be exercised and the proceeds paid to the deceased optionee's
estate.
(f) Outstanding Options. Any qualified option (referred to in this
paragraph as "new Qualified Option") shall provide that it may not be exercised
while there is outstanding any qualified stock option or restricted stock option
which was granted to the optionee to purchase stock in the Company or a parent
or subsidiary corporation of the Company (as defined, respectively, by sections
425(e) and (f) of the Internal Revenue Code of 1954) or in a predecessor
corporation of any of such corporations, before the granting of said new
Qualified Option. This limitation on exercise shall not apply during such time
as such outstanding qualified or restricted options are to purchase Common Stock
and the option price thereunder (determined as of the date of grant of the new
option) is not more than the option price of the new Qualified Option.
(g) Termination of Option. The option, to the extent not exercised,
shall terminate upon its expiration as set forth in Section 6(d) hereof, its
surrender as set forth in Section 11(c) hereof, or upon breach by the optionee
of any provision of the option, or when the optionee ceases to be an employee
for any reason including retirement, whichever event shall first occur; however,
if the option so provides, the Committee in its discretion may permit the
optionee to exercise the option for reasons of hardship up to twelve months
after termination, assuming that the option was otherwise exercisable; further
except that, subject to Section 6(d) hereof (i) the optionee, if his employment
is terminated as a result of a disability, and provided the option was
exercisable at the time of termination of employment, may elect to exercise the
option, subject to Section 6(e) hereof, within twelve months after the date of
termination, (ii) in the event of his death while an employee, the option shall
terminate as provided in Section 6(e) hereof, and (iii) notwithstanding
subsections (i) and (ii) above, if the option so provides, in the event that the
optionee has retired or is eligible for retirement under Sections 4a., b. or d.
of the Company's Retirement Annuity Plan, or as the same may be amended from
time to time, or under any pension or retirement plan maintained by the Company
or any of its subsidiaries, the optionee, or in the event of death, the person
designated in the optionee's Will, or in the absence of such designation, the
legal representative of such optionee, or if a legal representative of the
optionee has not been appointed, the optionee's surviving spouse, may elect to
exercise the option at any time until such option expires by its terms;
provided, however, in any event that if the option is not exercised by the last
day in which it is exercisable, the option shall be exercised and the proceeds
paid to the deceased optionee's estate; any subsequent reemployment of the
optionee by the Company shall not affect such optionee's right to exercise the
option as provided in this subsection (iii).
(h) Recapitalization. In the event of any change in the number or kind
of outstanding shares of Common Stock of the Company by reason of a
recapitalization, merger, consolidation, reorganization, separation,
liquidation, stock split, stock dividend, combination of shares or any other
change in the corporate structure or shares of stock of the Company, an
appropriate adjustment will be made automatically, in accordance with applicable
provisions of the Internal Revenue Code and Treasury Department rulings and
regulations thereunder, in the number and kind of shares for which options may
thereafter be granted both in the aggregate and as to each
5
<PAGE>
optionee, as well as in the number and kind of shares subject to options
theretofore granted and the option price payable upon exercise of such options.
(i) Transferability. The option shall provide that it will not be
transferable by the optionee other than by Will or the laws of descent and
distribution and shall be exercisable, during the optionee's lifetime, only by
him; provided, however, that the Committee in its discretion may grant (or
sanction by way of an amendment to an existing grant) non-qualified stock
options which may be transferred by the optionee, solely as gifts during the
optionee's lifetime, to any member of the optionee's immediate family or to a
trust established for the exclusive benefit of one or more members of the
optionee's immediate family, in which case the terms of such option shall so
state. A transfer of an option pursuant to this subjection may be effected only
by the Company at the written request of an optionee and shall become effective
only when recorded in the Company's record of outstanding options. In the event
an option is transferred as contemplated in this subsection, such option may not
be subsequently transferred by the transferee other than by Will or the laws of
descent and distribution, such option shall continue to be governed by and
subject to the terms and conditions of this Plan and the relevant grant, and the
transferee shall be entitled to the same rights as the optionee as if no
transfer had taken place. As used in this subsection, "immediate family" shall
mean any spouse, child, stepchild or grandchild, and shall include relationships
arising from legal adoption.
(j) Applicable Law. The option shall contain a provision that it may
not be exercised at a time when the exercise thereof or the issuance of shares
thereunder would constitute a violation of any federal or state law or listing
requirements of the New York Stock Exchange for such shares.
(k) Incorporation by Reference. The option shall contain a provision
that all the applicable terms and conditions of this Plan are incorporated by
reference therein.
(l) Tandem Award. Any option constituting a part of a tandem award
authorized by Section 10 hereof shall be subject to the terms and conditions of
such award.
(m) Other Provisions. The option shall contain such provisions as the
Committee shall deem advisable consistent with the terms of the Plan as herein
set forth. In addition, the qualified stock options and the incentive stock
options shall contain such other provisions as may be necessary to meet the
requirements of the Internal Revenue Code and the Treasury Department rulings
and regulations issued thereunder with respect to qualified stock options and
incentive stock options.
7. Stock Appreciation Rights
The Committee may, in its discretion, grant stock appreciation rights
to the holder of any qualified or non-qualified stock option granted by the
Company. Such appreciation rights shall be subject to such terms and conditions
consistent with the Plan as the Committee shall impose from time to time,
including the following:
6
<PAGE>
(a) An appreciation right may be made part of any such option at the
time of its grant or at any time thereafter prior to its expiration;
(b) Upon exercise of an appreciation right the holder shall be entitled
to receive:
(i) a number of shares of the Common Stock of the Company
determined by dividing:
(1) the number of shares which the optionee selects,
not to exceed the total number of shares that the
optionee is eligible to purchase as of the exercise
date under the related option, multiplied by the
amount, if any, by which the fair market value of a
share of the Common Stock of the Company on the
exercise date exceeds the option price provided in
the related option, by
(2) the fair market value of a share of the Common
Stock of the Company on the exercise date; provided,
however, that the total number of shares which may be
received pursuant to the exercise of an appreciation
right shall not exceed the total number of shares
subject to the related option; or
(ii) if so provided in the award, (a) payment of cash equal to
the aggregate fair market value on the date of such exercise
of the number of shares of Common Stock determined under
clause (i); or (b) in part cash and in part shares; all as
determined by the Committee in its sole discretion;
(c) No fractional share or cash in lieu thereof will be issued upon the
exercise of any such right; and
(d) Exercise of an appreciation right, in whole or in part, shall
exhaust and terminate the related option with respect to the number of shares
used in the calculation under subsection (b)(i)(1) of this Section 7 in
determining the number of shares issued upon such exercise of the appreciation
right (or which would have been issued but for any cash payment). Upon such
exercise of an appreciation right, the number of shares subject to reallocation
under Section 13 shall be equal to the difference between the number of shares
used in the calculation under subsection (b)(i)(1) of this Section 7 and the
number of shares issued to the optionee pursuant to such exercise (or which
would have been issued but for any cash payment).
8. Stock Awards
Stock awards will consist of shares of Common Stock of the Company
issued to participating employees as additional compensation for their services
to the Company. Stock awards shall be subject to the provisions of Section 3,
this Section 8, Section 11(a), (c) and (d) and, during the period in which the
restrictions or the Company's right of reacquisition hereinafter referred to are
in effect, Section 11(b). Other than for stock awards determined in accordance
with the Company's Performance-Contingent Award Program and paid out under this
Plan, as to which
7
<PAGE>
there shall be no waiting period, each stock award to a participant shall
provide that the shares subject to such award may not be transferred or
otherwise disposed of by the participant prior to the expiration of a period or
periods specified therein, which shall not occur earlier than one year following
the date of the award (except that the award may permit the earlier lapse of
such restriction in the event of the participant's death or disability or
retirement pursuant to any pension or retirement plan maintained by the Company
or any of its subsidiaries), and that the Company shall have the right to
reacquire such shares upon termination of the participant's employment with the
Company while such restriction is in effect, such reacquisition to be upon the
terms and conditions provided in the award. Stock awards shall also be subject
to such other terms and conditions, not inconsistent therewith, as the Committee
determines to be appropriate.
9. Performance Unit Awards
Performance unit awards will consist of performance units credited to
participating employees. Each award shall specify the initial value of each
performance unit, such value to be determined by reference to the book or market
value of the Common Stock of the Company or to the Company's earnings or such
other criteria related to the Company's performance as the Committee may deem
appropriate. The award shall be payable in cash and/or Common Stock of the
Company as the Committee shall determine in its sole discretion.
Subject to the provisions of this Section 9 and of Section 11, the
Committee shall have exclusive authority to determine additional terms and
conditions of each performance unit award. Such terms and conditions may
include, without limitation, provisions under which:
(1) On the payment date prescribed in the award a participant shall
become entitled to receive the full value of each such unit on such date, or
such other amount as such award may specify;
(2) Each unit may accrue earnings determined by reference to earnings
per share or dividends paid per share on the Common Stock of the Company, or to
the prime or another specified lending rate, or to other criteria specified in
the award and payable at such time or times as may be specified therein;
(3) The right of a participant to receive payments in respect of a
performance unit may be made subject in whole or in part to the Company's
attainment of earnings or other objectives specified in the award; and
(4) The determination of all relevant valuation and other data
pertaining to the award shall be in the sole judgment of the Committee. Without
limitation of the foregoing, in the event that an amount payable in respect of
an award is based in whole or in part on the Company's earnings or the book
value of its Common Stock, the Committee may make such adjustments to the
publicly reported amounts of the Company's consolidated earnings or of such book
value as it deems appropriate for changes in accounting practices or principles,
for material acquisitions or dispositions of stock or property, for
recapitalizations or reorganizations or for any other events
8
<PAGE>
with respect to which the Committee determines such an adjustment to be
appropriate in order to avoid distortion in the operation of the Plan.
Each award shall be evidenced by a written instrument which shall set
forth the number of performance units covered thereby, the initial dollar value
of each such unit, the terms and conditions, if any, under which such value may
change prior to the vesting of the unit, the terms and conditions under which
each such unit will vest and such other matters as the Committee in its sole
discretion may deem appropriate. The Committee may from time to time establish
such rules as it deems appropriate regarding the manner and timing of payments
of amounts due in respect of vested units.
No performance unit award shall provide for the vesting in a
participating employee of any performance unit covered thereby prior to the
expiration of a period of one year after the date of the award, except that the
award may provide for such vesting in the event of death or disability or
retirement of the employee pursuant to a pension or retirement plan maintained
by the Company or one of its subsidiaries prior to the expiration of such
period. Each award shall provide that prior to the vesting of the units covered
thereby they shall be subject to forfeiture (A) upon the termination of the
recipient's employment with the Company, (B) as contemplated by Section 10
hereof, if such award is part of a tandem award, and (C) as may otherwise be
specified in the award.
No participant shall be entitled to receive in respect of a performance
unit payments of amounts exceeding twice the original value established for such
unit.
The maximum dollar value of performance units which may be initially
awarded to participants may not exceed 1,500,000 "Reference Units" in the
aggregate for all participants, and 50,000 Reference Units for any one
participant. For purposes of this paragraph:
(1) A Reference Unit shall be the equivalent of the greater of (a) the
fair market value of one share of the Common Stock of the Company on the date as
of which a particular award of performance units is made, or (b) the book value
of a share of such Common Stock as at the end of the last completed fiscal year
of the Company prior to such award date plus the cash dividends paid per share
on such stock during such fiscal year; and
(2) Crediting of an award of performance units shall exhaust and
terminate a number of Reference Units equal to the number obtained by dividing
the credited dollar value of such performance units by the greater of the
amounts referred to in subclauses (a) and (b) of Clause 1 above, and except as
provided in the following sentence, such terminated Reference Units shall not be
utilized for subsequent awards.
In the event that an award of performance units is forfeited or for any
other reason the cash amount or the value of the shares of the Common Stock of
the Company (as determined by the Committee in its sole judgment) ultimately
delivered to a participant in payment for an award of performance units (other
than amounts paid to the participant as earnings on the performance units) is
less than the Reference Units originally exhausted and terminated upon the
crediting of such
9
<PAGE>
award, a number of Reference Units equal to the dollar amount of such shortfall
divided by the value originally assigned to such Reference Units shall be
restored and become available for subsequent awards under the Plan.
Nothing contained herein shall be deemed to limit the right of the
Board of Directors or a duly appointed committee thereof to authorize the
payment or award of compensation other than in stock to any employee otherwise
than pursuant to the Plan, regardless of the fact that a particular form of
compensation may be the same as or similar to that which the Committee may pay
or award to participants under Section 9 of the Plan.
10. Tandem Awards
The Committee may, in its discretion, grant tandem awards to
participating employees. A tandem award shall consist of a right of election by
the employee among two or more of the following: (A) an option, which may
include a stock appreciation right with respect thereto, (B) a performance unit
award, and (C) a stock award. Subject to the provisions of Section 11, such
right of election shall be upon such terms and conditions as the Committee may
specify in the tandem award, which shall include the following:
(a) The number of shares of the Common Stock of the Company covered by
the option, the number of shares covered by the stock award and the number of
performance units covered by the performance unit award;
(b) Provisions establishing the number of shares and performance units
which will remain subject to each portion of the tandem award upon the exercise
of the right of election in whole or in part; and
(c) The date on which the right of election shall terminate unless
earlier exercised or terminated pursuant to the terms of the tandem award.
11. Conditions Applicable to All Awards
(a) Recapitalization. In the event of any change in the number or kind
of outstanding shares of Common Stock of the Company by reason of a
recapitalization, merger, consolidation, reorganization, separation,
liquidation, stock split, stock dividend, combination of shares or any other
change in the corporate structure or shares of stock of the Company, an
appropriate adjustment will be made automatically, in accordance with applicable
provisions of the Internal Revenue Code and Treasury Department rulings and
regulations thereunder, in the number and kind of shares and performance units
subject to Sections 8, 9 and 10 and the maximum dollar value of performance
units subject to Sections 9 and 10.
(b) Transferability. Each award to a participant under Section 8, 9 or
10 shall provide that neither the award nor any right or interest of a
participant therein shall be transferable by the
10
<PAGE>
participant other than by Will or the laws of descent and distribution, and that
such award shall be exercisable, during the participant's lifetime, only by him.
(c) Surrender. The Committee may require the surrender of an option,
stock appreciation right, stock award or performance unit award granted under
this Plan as a condition precedent to a grant of a new option, stock
appreciation right, stock award or performance unit award for the same or a
different number of shares or having the same or a different initial value in
Reference Units as the option, stock appreciation right, stock award or
performance unit award surrendered; provided that a qualified option or
incentive stock option which is so surrendered shall, solely for the provisions
of Section 6(f) hereof, be deemed to be an outstanding qualified option or
incentive stock option until such surrendered qualified option or incentive
stock option would have expired by reason of the lapse of time, notwithstanding
the fact that it had been surrendered and was no longer exercisable. Such new
option, stock appreciation right, stock award or performance unit award shall be
subject to the terms or conditions specified by the Committee at the time the
new option, stock appreciation right, stock award or performance unit award is
granted, all determined in accordance with the provisions of this Plan without
regard to the price, period of exercise, or any other terms or conditions of the
option, stock appreciation right, stock award or performance unit award
surrendered.
(d) Leave of Absence. If approved by the Committee, an employee's
absence or leave because of military or governmental service, disability or
other reason shall not be considered an interruption of employment for any
purpose of the Plan.
(e) Change of Control shall mean the occurrence of any of the following
events: (a) at any time during the two-year period following the Effective Date,
or the beginning of a renewal term as the case may be, at least a majority of
the Company's Board of Directors shall cease to consist of "Continuing
Directors" (meaning directors of the Company who either were directors at the
beginning of such two-year period or who subsequently became directors and whose
election, or nomination for election by the Company's stockholders, was approved
by a majority of the then Continuing Directors); or (b) any "person" or "group"
(as determined for purposes of Section 13(d)(3) of the Securities Exchange Act
of 1934), except any majority-owned subsidiary of the Company or any employee
benefit plan of the Company or any trust or investment manager thereunder, shall
have acquired "beneficial ownership" (as determined for purposes of Securities
and Exchange Commission ("SEC") Regulation 13d-3) of shares of Common Stock of
the Company having 20% or more of the voting power of all outstanding shares of
capital stock of the Company, unless such acquisition is approved by a majority
of the directors of the Company in office immediately preceding such
acquisition; or (c) a merger or consolidation occurs to which the Company is a
party, whether or not the Company is the surviving corporation, in which
outstanding shares of Common Stock of the Company are converted into shares of
another company (other than a conversion into shares of voting common stock of
the successor corporation or a holding company thereof representing 80% of the
voting power of all capital stock thereof outstanding immediately after the
merger or consolidation) or other securities (of either the Company or another
company) or cash or other property; or (d) the sale of all, or substantially
all, of the Company's
11
<PAGE>
assets occurs; or (e) the stockholders of the Company approve a plan of complete
liquidation of the Company.
12. Definitions
(a) Company. The term "Company" shall mean Pfizer Inc, a Delaware
corporation.
(b) Board of Directors. The term "Board of Directors" shall mean the
Board of Directors of Pfizer Inc.
(c) Employee Compensation and Management Development Committee. The
term "Employee Compensation and Management Development Committee" shall mean the
Employee Compensation and Management Development Committee of Pfizer Inc as
constituted by resolution of the Board of Directors.
(d) Executive Compensation and Management Development Committee. The
term "Executive Compensation and Management Development Committee" shall mean
the Executive Compensation and Management Development Committee of Pfizer Inc as
constituted by resolution of the Board of Directors.
(e) Committee. The term "Committee" shall mean the Employee
Compensation and Management Development Committee or such other committee
referred to in the second proviso of the last sentence of Section 4 hereof, as
may be appropriate.
(f) Subsidiary. The term "subsidiary" shall mean a subsidiary
corporation of the Company as defined in Section 425(f) of the Internal Revenue
Code of 1954.
(g) Common Stock. The term "Common Stock" shall mean the $.10 par value
Common Stock of the Company, authorized but unissued, or issued and reacquired
by the Company and held as Treasury Stock, or held by any trust established by
the Company for the purpose of satisfying the Company's obligations for the
issuance of Common Stock under the Plan.
(h) Tandem Options. A "Tandem Option" shall mean a qualified option or
incentive stock option and a non-qualified option granted to an optionee,
subject to the provision that the exercise of all or any part of either option
will result in a reduction in the other option.
13. Reallocation of Unused Shares
Any shares which are not purchased or awarded under an option,
performance unit award or right of election which has terminated or lapsed,
either by its terms or pursuant to the exercise, in whole or in part, of an
award or right granted under the Plan, or shares which are reacquired by the
Company pursuant to Section 8 hereof, may be used for the further grant of
options or, if such shares were authorized in 1975, stock awards under the Plan,
or if such shares were authorized in 1980 or after, stock awards, performance
unit awards or tandem awards under the Plan. For
12
<PAGE>
purposes of this Section 13 the number of shares subject to a tandem award under
Section 10 hereof which shall be deemed not to have been purchased or awarded as
of the time such award terminated or lapsed shall equal the excess, if any, of
(i) the maximum number of shares which the participant was entitled to receive
under the tandem award over (ii) the number of shares which he in fact had
received as of the time of such termination or lapse.
14. Use of Proceeds
The proceeds received by the Company from the sale of stock under the
Plan shall be added to the general funds of the Company and shall be used for
such corporate purposes as the Board of Directors shall direct.
15. Amendment and Revocation
The Board of Directors shall have the right to alter, amend or revoke
the Plan or any part thereof at any time and from time to time, provided,
however, that without the consent of the participants affected no change may be
made in any option or award theretofore granted, which will impair the rights of
participants under outstanding options or awards; and provided further, that the
Board of Directors may not, without the approval of the holders of a majority of
the outstanding Common Stock, make any alteration or amendment to the Plan which
increases the maximum number of shares of Common Stock which may be issued under
the Plan or the number of shares of such stock which may be issued to any one
participant, extends the term of the Plan or of options granted thereunder,
reduces the option price below that now provided for in the Plan, or changes the
conditions of exercise of options specified in Sections 6(e) and 6(f). The
Committee may make non-substantive administrative changes to the Plan so as to
conform with or take advantage of governmental requirements, statutes or
regulations.
16. Special Provisions Applicable to Employees in the United Kingdom
1. Administration; Operation and Effect
This Amendment to the Plan, which is effective as of June 26, 1986 sets
forth the Employee Share Option (UK) Scheme (hereinafter referred to as "the
Scheme"). In all respects, the Scheme will be administered by the Committee as
provided in Section 2 of the Plan. No amendment to the Plan shall have effect in
relation to the Scheme and no amendment to the Scheme shall have effect without
the prior approval of the Board of Inland Revenue in the UK. The Committee shall
be responsible for ensuring that all matters relating to the Scheme are in
compliance with UK tax laws and codes.
2. Stock
Options granted under this Scheme shall be to purchase shares of the
Company's authorized, but unissued or reacquired Common Stock (hereinafter
referred to as "Scheme Shares") satisfying
13
<PAGE>
the requirements of paragraphs 7 to 11 of Schedule 10 to the Finance Act of 1984
(hereinafter referred to as "Schedule 10"). The total number of such shares with
respect to which options may be granted under the Scheme is subject to the
limits set out in the Plan* and the limits set out below.
3. Eligibility
Persons eligible to receive options under the Scheme shall be salaried
employees of the Company's UK subsidiaries who are employed at the time of the
grant of the option and whom the Committee selects from time to time PROVIDED
ALWAYS that:
(a) they are contracted to work not less than 20 hours (or, in the
case of directors, 25 hours) per week excluding meal breaks
for the Company's UK subsidiaries; and
(b) at the date of the grant or exercise of the option, they are
not ineligible to participate in the Scheme by virtue of
paragraph 4(1)(b) of Schedule 10.
An option holder may hold more than one option.
4. Terms and Conditions of Options
Options granted under the Scheme shall be evidenced by agreements with
option holders in such form as the Committee may determine. Each such agreement
shall be subject to the following terms and conditions:
(a) Grants of Options
Offers of options may be sent as soon as practicable after approval of
the Scheme by the UK Board of Inland Revenue, and thereafter at any time. All
offers of options shall be made on the basis that participation in the Scheme
will be deemed to constitute acceptance of the provisions set forth or
incorporated by reference in this Amendment to the Plan. The sum of one pound
sterling shall be payable by the option holder as consideration for the grant of
the option to him.
(b) Number of Shares
The number of Scheme Shares subject to each option shall be stated.
Such number shall be determined by the Committee, but their aggregate Market
Value, as that term is defined in Schedule 10, and number of Shares shall not at
any time exceed either:
(i) the aggregate fair market value or the number of Shares as
is determined for such option holder by the Committee in
accordance with Section 3 of the Plan; or
(ii) in total with subsisting options over Scheme Shares
granted under any scheme approved by the Board of Inland
Revenue under Schedule 10 the greater of:
14
<PAGE>
(a) (pound)100,000; and
(b) four times the amount of the eligible employee's
Relevant Emoluments (as defined in Schedule 10,
paragraph 5, sub-paragraph 5), for the current or
preceding Year of Assessment (defined as commencing
on April 6 and ending on the following April 5)
whichever of those years gives the greater amount or,
if there were no Relevant Emoluments for the
preceding Year of Assessment, four times the amount
of the Relevant Emoluments for the period of 12
months beginning with the first day during the
current Year of Assessment in respect of which there
are Relevant Emoluments.
In calculating the limits stated above and the Market Value, sums
denominated in US dollars shall be converted to sterling at the rate of
exchange published by the Company's bankers (being a United Kingdom
clearing bank) at 11 o'clock a.m. on the date of the grant of the
relevant option.
(c) Option Price and Payment of Option Price
(i) The option price per share shall be no less than the mean
between the high and the low selling prices on the composite
tape of the New York Stock Exchange as reported by the New
York Times for the date the option is granted.
(ii) Upon the exercise of an option, the option price shall be
payable in lawful money of the United States and may be paid
in cash or by certified check or by bank draft.
(d) Terms and Exercise of Options
The times at which and the terms under which any option shall be
exercisable shall (unless otherwise stated in accordance with the determination
of the Committee and with prior approval of the Board of Inland Revenue) be as
stated in Section 6(d), 6(e) and 6(g)** of the Plan provided that the reference
to Section 11(c) in Section 6 of the Plan shall be replaced by a reference to
Clause 4(f) of the Scheme and in no event may an option be exercised more than
12 months after an option holder's death.***
(e) Recapitalization
Section 6(h) of the Plan shall apply to the Scheme provided that any
adjustments made pursuant to that Section shall be subject to the prior approval
of the Board of Inland Revenue pursuant to Schedule 10 to the Finance Act 1984.
15
<PAGE>
(f) Surrender
The Committee may require the surrender of an option granted under the
Scheme as a condition precedent to a grant of a new option for the same or a
different number of shares surrendered. Such new options shall be subject to the
terms and conditions specified by the Committee at the time the new option is
granted, determined in accordance with the provisions of the Plan and the Scheme
without regard to the price, period of exercise or any other terms or conditions
of the options surrendered.
(g) Transferability, Applicable Law and Leave of
Absence
Sections 6(i), 6(j) and, subject to Clause 3 hereof, 11(d) of the Plan
shall apply to the Scheme.
(h) Incorporation by Reference
The option agreement shall contain a provision that all the terms and
conditions of the Scheme are incorporated by reference therein.
5. Reallocation of Unused Shares
Any shares which are not purchased under an option which has terminated
or lapsed, either by its terms or pursuant to the exercise in whole or in part,
may be used for the further grant of options, provided always that no options
shall be granted to an employee at a time when his employment is interrupted.
6. Amendment and Revocation
Section 15 of the Plan shall apply to the Scheme but no amendment may
be made so as to have effect with respect to the Scheme or the Scheme Shares
without the prior approval of the Board of Inland Revenue.****
7. Definitions
(a) In the Scheme, the term the "Plan" shall mean the Company's Stock
Option and Incentive Plan of 1965 as amended.
(b) Section 12 of the Plan other than sub-sections (d) and (h) shall
apply to the Scheme.
16
<PAGE>
Footnotes for UK Plan
- ----------
* Section 3 of the Plan was amended by resolution of the shareholders on
April 26, 1990 and has effect in relation to the Scheme with the approval
of the Board of Inland Revenue in the UK given June 14, 1990.
** Section 6(e), 6(g) and 11 were amended with the approval of the
shareholders on April 26, 1990. These amendments have effect in relation to
the Scheme with the approval of the Board of Inland Revenue in the UK given
on June 14, 1990 provided that the amendment to Section 6(e) to give the
Board power to "make any options that are not yet exercisable immediately
exercisable" shall not have effect with regard to subsisting options
granted before June 14, 1990.
*** Section 6(e) was further amended with the approval of the shareholders on
April 22, 1993 by the insertion of the following words "and further
provided the Committee may in its discretion make any options that are not
yet exercisable immediately exercisable in cases where (i) an optionee's
employment is to be terminated due to a divestiture or downsizing of a
business, (ii) in the case of a retiring optionee who holds options with
extended vesting provisions, or (iii) otherwise, where the Committee
determines that such action is appropriate to prevent inequities with
respect to an optionee" at the end of the second sentence. The amendment
has effect in relation to the Scheme with the approval of the Board of
Inland Revenue in the UK given on August 5, 1993 provided that the
discretionary power conferred on the Committee "to make any options that
are not yet exercisable immediately exercisable" shall not have effect with
regard to subsisting options granted before August 5, 1993.
**** Section 15 of the Plan was amended by resolution of the Board of Directors
on December 18, 1989 and has effect in relation to the Scheme with the
approval of the Board of Inland Revenue in the UK given June 14, 1990.
17
<PAGE>
17. Special Provisions Applicable to Employees in the Republic of Ireland
1. Administration; Operation and Effect
This amendment to the Plan, which is effective as of June 25, 1987,
sets forth the Employee Share Option (Republic of Ireland) Scheme (hereinafter
referred to as "the Scheme"). The Scheme will be administered in all respects by
the Committee, as provided for by Section 2 of the Plan.
No amendment to the Plan shall have effect in relation to the Scheme,
and no amendment to the Scheme shall have effect without the prior approval of
the Revenue Commissioners.
The Committee shall be responsible for ensuring that all matters
relating to the Scheme comply with Irish Tax law and practice.
2. Stock
Options granted under the Scheme shall be to purchase shares of the
Company's authorized, but unissued or re-acquired Common Stock (hereinafter
referred to as "Scheme Shares") which satisfy the requirements of paragraphs 6
to 11 of the Second Schedule to the Finance Act, 1986.
The total number of such shares in respect of which options may be
granted is subject to the limits set out in the Plan.
3. Eligibility
Persons eligible to receive options under the Scheme shall be salaried
employees of any existing or future Irish subsidiaries and any existing or
future Irish branches established by Pfizer Inc or by any of its subsidiaries or
branches who are employed at the time of the grant and whom the Committee
selects from time to time provided always that:
(a) the employee is contracted to work for not less than 20 hours
per week for any of the Company's Irish branches or
subsidiaries (as defined above) (or in the case of a director
of an Irish subsidiary, is a full-time director of such
subsidiary), and
(b) at the date of the grant or exercise of an option is not
ineligible to participate in the Scheme by virtue of paragraph
5 (1) (b) of the Second Schedule to the Finance Act, 1986.
An option holder may hold more than one option.
4. Terms and Conditions of Options
18
<PAGE>
An option granted in accordance with the Scheme shall be evidenced by
an agreement with the option holder in such form as the Committee may determine.
Each such agreement shall be subject to the following terms and conditions:
(a) Grant of an Option
An offer of an option may be issued at any time. All offers of options
shall be made on the basis that participation in the Scheme will be deemed to
constitute acceptance of the provisions set forth in, or incorporated by
reference to this amendment to, the Plan.
The sum of one pound (IRL1) shall be payable by an option holder as
consideration for the grant of an option to him.
(b) Number of Shares
The number of Scheme Shares subject to each option shall be stated.
Such number shall be determined by the Committee.
(c) Option Price and Payment of Option Price
(i) The option price per share shall be the mean between the
high and the low selling prices on the composite tape of The
New York Stock Exchange as reported by the New York Times for
the day on which the option is granted.
(ii) Upon the exercise of an option, the option price shall be
payable in lawful money of the United States of America and
may be paid in cash or by certified check or by bank draft.
(d) Terms and Exercise of Options
The times at which and the terms under which an option shall be
exercisable shall (unless otherwise stated in accordance with a determination of
the Committee and with the prior approval of the Revenue Commissioners) be as
stated in Section 6(d), 6(e) and 6(g) of the Plan provided that the reference to
Section 11(c) in Section 6 of the Plan shall be replaced by a reference to
clause 4(f) of the Scheme and in no event may an option be exercised more than
12 months after an option holder's death.
19
<PAGE>
(e) Recapitalization
Section 6(h) of the Plan shall apply to the Scheme provided that any
adjustment made pursuant to that Section shall be subject to the prior approval
of the Revenue Commissioners pursuant to the Second Schedule to the Finance Act,
1986.
(f) Surrender
The Committee may require the surrender of an option granted under the
Scheme as a condition precedent to a grant of a new option for the same or a
different number of shares surrendered. Such new options shall be subject to the
terms and conditions specified by the Committee at the time the new option is
granted, determined in accordance with the provisions of the Plan and the Scheme
without regard to the price, period of exercise or any other terms or conditions
of the options surrendered.
(g) Transferability, Applicable Law and Leave of Absence
Sections 6(i), 6(j) and, subject to Clause 3 hereof, 11(d) of the Plan
shall apply to the Scheme.
(h) Incorporation by Reference
The option agreement shall contain a provision that all the terms and
conditions of the Scheme are incorporated by reference therein.
5. Reallocation of Unused Shares
Any shares which are not purchased under an option which has terminated
or lapsed, either by its terms or pursuant to the exercise in whole or in part,
may be used for the further grant of options, provided always that no options
shall be granted to any employee at a time when his employment is interrupted.
6. Amendment and Revocation
Section 15 of the Plan shall apply to the Scheme but no amendment may
be made so as to have effect with respect to the Scheme or the Scheme Shares
without the prior approval of the Revenue Commissioners.
7. Definitions
(a) In the Scheme, the term Plan shall mean the Company's Stock
and Incentive Plan.
(b) Section 12 of the Plan other than sub-sections (d) and (h)
shall apply to the Scheme.
20
<PAGE>
18. Compliance with Section 16
With respect to Members subject to Section 16 of the Securities
Exchange Act of 1934, transactions under the Plan are intended to comply with
all applicable conditions of Rule 16b-3 or its successors under the 1934 Act. To
the extent that compliance with any Plan provision applicable solely to such
Members is not required in order to bring a transaction by such Member into
compliance with Rule 16b-3, it shall be deemed null and void as to such
transaction, to the extent permitted by law and deemed advisable by the Plan
administrators. To the extent any provision of the Plan or action by the Plan
administrators involving such Members is deemed not to comply with an applicable
condition of Rule 16b-3, it shall be deemed null and void as to such Members, to
the extent permitted by law and deemed advisable by the Plan administrators.
21
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>5
<DESCRIPTION>EXHIBIT 10(II)
<TEXT>
<PAGE>
EXHIBIT 10(ii)
PFIZER
RETIREMENT ANNUITY PLAN
(As Amended through 1/97)
SECTION 1
Definitions
Wherever used in this Plan:
"Anniversary Year" means 1) the twelve-month period following the date
on which an employee first begins his employment with an employer, as well as
successive twelve-month periods thereafter, and 2) the twelve-month period
following the date on which an employee returns to the employ of the Company or
an Associate Company after incurring a one-year break in service, as well as
successive twelve-month periods thereafter. No anniversary year shall be
credited for purposes of vesting unless in such anniversary year the employee
has completed 1,000 or more hours of service for an employer.
"Annuitant" means a person receiving annuity payments under this Plan.
"Annuity trust fund" means the trust fund created by the Company to
finance annuities under this Plan.
"Associate Company" means any corporation which adopts this Plan and
executes the Trust Agreement pursuant to the provisions of Section 11 hereof and
when action is required to be taken hereunder by an Associate Company such
action shall be authorized by its Executive Committee or its Board of Directors.
"Career Earnings" means the member's aggregate earnings, excluding any
severance payments, during his period of Creditable Service, except that
1) his earnings for each calendar year prior to 1995 shall be the
average of the member's earnings during the five consecutive
calendar years prior to 1995, during which he rendered
Creditable Service, which yield the highest average provided
his earnings are not reduced thereby; and
2) only his earnings during his last 35 calendar years of
Creditable Service shall be counted; provided that, such a
calculation shall not lessen said member's Career Earnings
below the result of a prior calculation; and provided,
further, that earnings attributable to severance payments
shall be counted towards years of Creditable Service, for the
purposes of this paragraph only, on the basis of one year, or
part thereof, for each year of earnings, or part thereof, paid
out as severance.
3) Notwithstanding the foregoing, effective January 1, 1989, the
amount of earnings taken into account for any calendar year in
determining an employee's career earnings shall not exceed
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$200,000, adjusted in accordance with Section 401(a)(17) of
the Internal Revenue Code and the regulations and other
guidance issued thereunder, and effective January 1, 1994, the
amount of earnings taken into account for any calendar year in
determining an employee's career earnings shall not exceed
$150,000, adjusted in accordance with Section 401(a)(17) of
the Internal Revenue Code and the regulations and other
guidance issued thereunder. Such dollar limitation shall be
prorated if, and only to the extent, required by applicable
regulations. The amount of any member's normal retirement
benefit shall be determined after December 31, 1988 and before
January 1, 1994 either by (i) applying the $200,000 limitation
to all applicable calendar years (including calendar years
beginning before January 1, 1989), provided that the member's
normal retirement benefit is not less than his normal
retirement benefit determined as of December 31, 1988, or (ii)
by applying the $200,000 limitation only to calendar years
commencing on and after January 1, 1989, and adding the
amounts accrued during such post-1988 calendar years to the
member's normal retirement benefit determined as of December
31, 1988, whichever method results in a higher normal
retirement benefit to the member; and the amount of any
member's normal retirement benefit shall be determined after
December 31, 1993 either by (i) applying the $150,000
limitation to all applicable calendar years (including
calendar years beginning before January 1, 1994), provided
that the member's normal retirement benefit is not less than
his normal retirement benefit determined as of December 31,
1993, or (ii) by applying the $150,000 limitation only to
calendar years commencing on and after January 1, 1994, and
adding the amounts accrued during such post-1993 calendar
years to the member's normal retirement benefit determined as
of December 31, 1993, whichever method results in a higher
normal retirement benefit to the member. For purposes of the
limitations under Section 401(a)(17) of the Internal Revenue
Code, the family aggregation rules of Section 414(q)(6) of the
Internal Revenue Code shall apply, except that in applying
such rules, the term "family" shall include only the spouse of
the employee and any lineal descendants of the employee that
have not attained age 19 before the close of the applicable
year.
"Company" means Pfizer Inc, a Delaware corporation, and any predecessor
or successor corporation and when action is required to be taken hereunder by
the Company, such action shall be authorized by the Executive Committee or the
Board of Directors of the Company.
"Earnings" means the actual salary, wages, bonus, or other remuneration
earned by an employee from an employer for his service with the employer, as
determined by such employer, provided that no part of the cost of any employee
benefit, including without limitation stock options, perquisites and group
insurance, shall constitute earnings hereunder; and further provided that any
remuneration received in the form of salary continuation by an employee while no
longer performing services for the Company as an employee shall not be credited
hereunder. No part of any bonus or other remuneration forming part of the
compensation of any employee shall be used as a basis for a retirement annuity
under this Plan, if such bonus should cause such annuity to become
discriminatory under the applicable provisions of the Internal Revenue Code.
"Employee" means a person who is employed by an employer.
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"Employer" means the Company or any Associate Company. For purposes of
sections 410 and 411 of the Internal Revenue Code, "Employer" also shall mean
any corporation or other trade or business that is treated under the first
sentence of section 414(b) or under section 414(c), 414(m) or 414(o) of the
Internal Revenue Code as constituting the same "employer" as the Company or an
Associate Company, with respect to any period of such affiliated status.
"Disability Leave Status" means the status of a member who has been
determined, pursuant to Section 4e. hereof, to be totally and permanently
disabled and who has fully utilized his benefits under the employer's short-term
disability program.
"Hours of Service" means all hours for which an employee is directly or
indirectly paid, or entitled to payment (including back pay for periods for
which such awards pertain), by the employer, or any company which is a member of
the same control group of corporations as the Company at the time of such
service within the meaning of section 1563(a) of the Internal Revenue Code for
the performance of duties, or for reasons other than the performance of duties,
such as vacation, accident, injury, sickness, short-term disability or
authorized leave of absence. In the case of a payment which is made or due on
account of a period during which an employee performs no duties, hours of
service will be determined in accordance with Department of Labor regulations
ss. 2530.200b-2(b) and (c).
"Leased Employee" means any person who is not an employee of the
employer and who provides services to the employer if such services are provided
pursuant to an agreement between the employer and another, such person has
performed such services for the employer on a substantially full-time basis for
a period of at least one year, and such services are of a type historically
performed in the business field of the employer, by employees.
"Member" means an employee or former employee to whom an annuity is
credited under the Plan.
"One-year break in service" shall be an anniversary year in which the
member does not perform more than five hundred hours of service.
"Primary Social Security Benefit" means the annual amount available to
the member at age 65 under the Old Age Insurance provisions of Title II of the
Social Security Act in effect at the time of his termination of employment,
without regard to any increases in the wage base or benefit levels that take
effect after the date of termination of employment, subject to the following. If
any employee terminates service prior to age 65, his Primary Social Security
Benefit shall be estimated by assuming continuation of his earnings until age 65
at the same rate in effect at termination of employment; provided however, that,
if the employee retires pursuant to Section 4d.(ii), his Primary Social Security
Benefit shall be estimated by assuming that he will not receive any income after
retirement which would be treated as wages for purposes of the Social Security
Act. The Retirement Committee may adopt rules governing the computation of such
amounts, and the fact that an employee does not actually receive such amount
because of failure to apply or continuance of work, or for any other reason,
shall be disregarded. Notwithstanding the foregoing, actual salary history will
be used to calculate the Primary Social Security Benefit if this will result in
a larger benefit under the Plan for the employee but only if documentation of
such history is provided by the employee within two years after the later of his
termination of employment or the date the employee receives notice of his
benefits under the Plan.
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"Retire" means to terminate service by a Member who is an Employee in
the service of an Employer after meeting the requirements of Sections 4a., b. or
d., respectively, for normal retirement, late retirement or early retirement
hereunder.
"Retirement Annuity" means the payments made pursuant to Section 4a.,
b. or d. of the Plan to retired members or their beneficiaries.
"Trustee" means the trustee appointed by the Company to hold and invest
the annuity trust fund.
"Vest" means to acquire, in accordance with the express provisions of
the Plan, an interest in an annuity under the Plan.
"Vested Annuity" means the payments made pursuant to Section 4c. of the
Plan.
The masculine pronoun shall include the feminine pronoun and the
feminine pronoun shall include the masculine.
SECTION 2
Eligibility for Membership
a. Employees of the Company: All persons who were in the regular
service of the Company on January 1, 1943 shall be included in the membership of
the Plan as of January 1, 1943. All persons who entered the regular service of
the Company after January 1, 1943 and prior to September 1, 1961, became members
of the Plan as of the date of employment. All employees who enter the service of
the Company on or after September 1, 1961 become members of the Plan as of the
date of their employment provided they are: (1) included in a group or class
designated by the Company as eligible for membership in the Plan and (2) in the
service of an employer within the United States of America or United States
citizens in the service of an employer outside of the continental limits of the
United States of America. An employee who is a United States citizen and who is
employed outside the continental limits of the United States of America in the
service of a foreign subsidiary (including foreign subsidiaries of such foreign
subsidiary) of the Company shall be included in the membership of the Plan,
provided that the Company has entered into an agreement under section 3121(1) of
the Internal Revenue Code which applies to the foreign subsidiary of which such
person is an employee and provided further, that contributions under a funded
plan of deferred compensation (whether or not a plan described in section
401(a), 403(a), or 405(a), of said Code) are not provided by any other person
with respect to the remuneration paid to such individual by the foreign
subsidiary. The groups and classes designated by the Company are set forth in
Schedule A.
b. Employees of Associate Companies: Wherever a corporation became an
Associate Company prior to September 1, 1961, all persons, who were in the
regular service of such corporation on the date it became an Associate Company,
became members of the Plan as of such date. Subject to Section 2a. hereof,
wherever a corporation becomes an Associate Company after September 1, 1961, all
employees who are in the service of such corporation on the date it becomes an
Associate Company become members of the Plan as of such date and all employees
who enter the service of a corporation after it has become an Associate Company
become members of the Plan as of the date of employment.
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c. Leased Employees: No leased employee shall be eligible to become a
member of the Plan. However, if a leased employee becomes an employee of the
Company, all years of service completed while a leased employee shall be
credited solely for purposes of vesting pursuant to Section 4c. of the Plan.
SECTION 3
Service Credited Under Plan
a. Prior Service: Service rendered by a person who is in the service of
an employer, before the date on which he becomes a member (in the case of an
employee becoming a member after December 12, 1951), who continues in service on
and after the date he becomes a member shall be known as "Prior Service" except
as provided in Section 4a. and Section 11.
b. Membership Service: Service rendered by an employee for an employer
after the date he becomes a member shall be known as "Membership Service."
c. Special Service: Service rendered outside the United States, by a
person employed by a corporation which is a subsidiary or affiliate of the
Company, but not an Associate Company, at the time of such service (1) before
the date on which he becomes a member, who continues in service on and after the
date he becomes a member, or (2) during a period of interrupted Membership
Service followed by a return to such Service, shall be known as "Special
Service."
d. Creditable Service: Membership Service plus Prior Service and
Special Service, if any, shall be known as "Creditable Service" under the Plan.
A member shall be credited with a full year of Creditable Service under the Plan
only if he completes at least 1,000 hours of service within an Anniversary Year
and no fractional years will be credited under the Plan; provided, however, that
for purposes only of 1) determining the Social Security calculation used in
Section 4a.2 and 2) determining a member's Career Earnings, and his eligibility
for early retirement under clauses (i) and (ii) of Section 4d. below, the
member's Creditable Service shall be determined on the basis of his number of
months of Membership Service plus Prior Service and Special Service without
regard to whether he completes at least 1,000 hours of service within an
Anniversary Year.
e. Military Service: For the purpose of this Plan, those employees who
were in the service of the Armed Forces of the United States, at the time they
would have become eligible for membership under the Plan except for such
service, or who subsequently enlisted in or were inducted into said Armed
Forces, shall be credited with all the benefits under this Plan for service
actually rendered to an employer prior to their entrance into said Armed Forces,
and shall be credited with time spent on active duty in said Armed Forces for
the purposes of computing length of service and benefits payable under the Plan;
provided that such employees return to active service with an employer within
the time limits provided by law after their separation or discharge from active
duty from said Armed Forces, having satisfactorily completed their period of
training and service.
f. Leave of Absence: Interruption of active service on account of leave
of absence authorized by the employer, leave of absence taken under the Family
and Medical Leave Act of 1993, as it may be amended from time to time, and any
regulations and other official guidance issued thereunder ("FMLA"), or transfer
5
<PAGE>
on Special Service shall not be considered termination of service. Time spent on
authorized leave of absence shall be credited for the purpose of computing
length of service and benefits payable under the Plan on the following basis:
members shall receive credit for each full year spent on authorized leave of
absence for each full year of Creditable Service that they render to an employer
following return to active service, except that time spent on authorized leave
of absence for medical reasons or under the FMLA shall be credited without
requirement of subsequent Creditable Service and time spent on Civic Leave shall
be credited after the member has returned to active service for three (3)
months. Notwithstanding the foregoing, in the case of Maternity/Paternity Leave,
as defined below, up to 501 hours of service shall be credited in the
anniversary year in which the Maternity/Paternity Leave begins, if the employee
would otherwise have incurred a one-year break in service in that anniversary
year, otherwise up to 501 hours of service shall be credited in the following
anniversary year to prevent a one-year break in service. Maternity/Paternity
Leave means an absence from work (1) by reason of the pregnancy of an employee,
(2) by reason of the birth of a child of an employee, (3) by reason of the
placement of a child with the employee in connection with the adoption of the
child, or (4) for the purposes of caring for the child during the period
immediately following the birth or placement for adoption.
g. Termination of Service: On termination of service, and after he has
subsequently incurred a one-year break in service, a person shall forfeit all
credit for service previously credited under the Plan unless
(1) He is reemployed before incurring five consecutive one-year
breaks in service; or
(2) He is reemployed after his termination of service and
thereafter completes at least 24 consecutive months of
Creditable Service; or
(3) He is eligible to receive a retirement benefit or a vested
annuity under Section 4c.
If a reemployed employee does not forfeit his service credit as
provided above, for purposes only of determining his "Career Earnings," the last
calendar year in which he rendered Creditable Service shall be treated as being
consecutive with the first calendar year in which he renders Creditable Service
after his reemployment.
h. General: For the purpose of this Plan, length of service shall be
computed in accordance with the employment records of the employer, or of a
subsidiary or affiliated corporation of the Company, as the case may be. No
employee may voluntarily terminate his status as an active participant in the
Plan during his period of employment. The period over which an employee receives
remuneration in the form of salary continuation while no longer performing
services for the Company as an employee shall not be credited hereunder.
SECTION 4
Benefits to Employees
a. Normal Retirement: Each member who attains his normal retirement
date, i.e., age 65, shall be eligible for normal retirement as of the first day
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of the month following, and if permitted under the provisions of the Age
Discrimination in Employment Act, as amended, and other applicable law, shall be
retired as of the first day of the month following.
Upon normal retirement, a member shall receive a retirement annuity,
subject to the provisions of and payable in the form described in Section 4f.
hereof, which shall accrue and be equal to the greatest of:
1. 1.4 per cent of his Career Earnings; or
2. 1.75 per cent of his Career Earnings, less 1.50 per cent of
his Primary Social Security Benefit multiplied by his years of
Creditable Service, but in no event more than 35 years; or
3. The accrued benefit as of December 31, 1977 payable to him
under the provisions of the Plan as of that date.
(1) In the case of any group or class which is designated as eligible
for membership in the Plan commencing as of a date after September 1,1961, the
employer may limit the Prior Service of persons included in such group or class
to service rendered on and after a date to be determined by the employer.
(2) Except in the case of a person in the service of a corporation
which becomes an Associate Company after September 1, 1961, the Prior Service
benefits of any employee who is a member of the Plan, but who was absent from
the employer during all or part of the calendar year next preceding the date he
becomes a member, because of sickness, disability, service in the Armed Forces
of the United States, or like reasons beyond his control, and who entered the
service of the employer prior to such calendar year, shall be computed by
crediting to him as earnings for such calendar year -
(i) All earnings actually received by such employee in such calendar
year before or after the period of absence from the employer, and
(ii) The earnings he would have received in such calendar year during
the period of absence based on a forty-hour week at his straight-time rate of
pay at the time of leaving the employer and any increased rate to which he would
have been entitled as a result of automatic length-of-service increases or a
general increase, and any bonuses or other payments made in such calendar year
during such period of absence to which he would normally have been entitled.
b. Late Retirement: In the event that a member remains in service after
attainment of his normal retirement date, he may retire on his own application
setting forth a date for retirement which shall be the first of the month not
less than 30 days following the filing of the application.
c. Vesting: Upon the completion of 5 Anniversary Years of Creditable
Service, a member shall acquire a vested interest in an annuity under the Plan.
Upon termination of service such a member shall be entitled to receive a vested
annuity at age 65, equal to the amount which his Creditable Service up to the
date of his termination would then provide; or, at any time prior to age 65,
such a member may elect to receive such an annuity on the first day of any month
following such election, which shall be computed by applying the percentages set
forth in Schedule B hereof to the amount of the annuity computed in accordance
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with Section 4a., provided he is at least 55 years of age. Notwithstanding
anything herein to the contrary, a member who is not otherwise vested, shall
become vested upon attaining his normal retirement date, i.e., age 65.
d. Early Retirement: Any member may retire before the attainment of age
65 provided he has reached age 55 and (i) has 10 years or more of Creditable
Service; or (ii) his attained age when added to his years of Creditable Service
equals or exceeds 90. On early retirement, a member shall receive a retirement
annuity commencing at age 65, equal to the annuity to which his Creditable
Service up to the date of his retirement would then produce, or, at his election
made at any time prior to age 65, a retirement annuity commencing on the first
day of any month following his earlier retirement and prior to age 65, which
shall be computed by applying the percentages set forth in Schedule C hereof to
the amount of the annuity computed in accordance with Section 4a.; provided
that, if a member's attained age when added to his years of Creditable Service
equals or exceeds 90, his retirement annuity shall be computed by so applying
the percentage set forth in Schedule D hereof.
e. Disability Leave Status: Upon total and permanent disability as
determined on or after January 1, 1974 by a physician appointed by the employer,
a member who has completed at least 5 years of Creditable Service will be
eligible for Disability Leave Status. Such status may be terminated or suspended
by the Retirement Committee if at any time before age 65 the member again
engages in regular full-time employment, fails or refuses to undergo any medical
examination ordered by the Retirement Committee, or the Retirement Committee
determines on the basis of medical examination that the member has sufficiently
recovered to engage in regular full-time employment. While on Disability Leave
Status, a member will be credited with Membership Service, and with earnings at
the same rate as he had earned in the calendar year prior to the calendar year
in which he became totally and permanently disabled, until the member retires,
or his Disability Leave Status is sooner terminated or suspended.
8
<PAGE>
f. Form of Benefit Payments:
(1) Normal Form: If a member is married on the date his benefits
commence, such member shall receive a benefit payable in the form of a joint and
survivor annuity which shall provide for an amount actuarially reduced from the
amount computed under Section 4a. to be paid to the member for his lifetime; and
for an annuity in an amount equal to one-half of such reduced amount to be paid
to the member's spouse to whom he was married on the date his benefits commence,
for her lifetime, if surviving at the time of the member's death. The form of
benefit shall also provide that if the member dies after retirement but prior to
the date on which his benefit becomes payable, his surviving spouse will
nevertheless be entitled to receive the lifetime annuity to which she would
otherwise be entitled beginning at the date that the member's annuity would have
become payable and under such circumstances, at her option, the surviving spouse
may elect to have benefits commence prior to the date on which the member's
annuity would have become payable on an appropriately reduced actuarial basis.
The benefit payable to the member and his spouse shall have the equivalent
actuarial value of the benefits determined under Section 4a. above. In lieu of
such a joint and survivor annuity, such a member may, in accordance with section
417 of the Internal Revenue Code, elect in writing, with the consent of his
spouse, at any time prior to the commencement of his benefits, to receive his
benefits in the form of a single annuity payable for his lifetime as computed
under Section 4a. above, or may revoke any such election previously made by him.
Notwithstanding the foregoing, if a member becomes divorced from his spouse
after his benefits commence, such member may elect in writing to cancel such
joint and survivor annuity and to receive his benefits thereafter in any form
permitted under the Plan; provided that, (1) the member obtains a valid written
release from his former spouse releasing the Plan from any claim the former
spouse may have against the Plan and (2) the member's benefit is adjusted
actuarially, including, but not limited to, adjustments for the value of
benefits previously paid and for the value of the protection provided by the
canceled joint and survivor annuity while in was in effect.
A member who is not married at the time that his benefits commence will
receive his benefits in the form of a single annuity payable for his lifetime as
computed under Section 4a. above.
(2) Optional Forms: At any time within 90 days prior to the
commencement of his retirement benefits, a member who is eligible for a
retirement annuity under Section 4a., b., or d. of the Plan may, in accordance
with section 417 of the Internal Revenue Code, elect, with the written and
witnessed consent of his spouse in the case of a married member, to convert the
benefits otherwise payable after retirement into a retirement benefit of
equivalent actuarial value in accordance with one of the options named below, or
may revoke any such election previously made by him; provided, however, that if
one of the options named below shall be so elected and the other named person or
persons shall die before the payment of any part of such benefit, then and in
that event the benefit shall be restored to the amount of the retirement annuity
as provided in Section 4a., b., or d. hereof, as if no such election had been
made; and provided further, that if one of the options named below shall be so
elected and the member shall die before the date of his retirement then the
election shall be of no effect and no payments shall be due under the option.
Option 1: A reduced retirement annuity commencing at or after the
member's retirement payable during his life, with the provision that after his
death it shall continue during the life of and shall be paid to the person
(including his spouse) nominated by him by written designation duly acknowledged
9
<PAGE>
and filed with the Retirement Committee at the time such election is made,
provided that if the member dies after retirement but prior to the date on which
his benefit becomes payable, his surviving beneficiary will nevertheless be
entitled to receive such a lifetime annuity beginning at the date that the
member's annuity would have become payable and also provided that under such
circumstances at his option, the surviving beneficiary may elect to have
benefits commence prior to the date on which the member's annuity would have
become payable on an appropriately reduced actuarial basis.
Option 2: A reduced retirement annuity commencing at or after the
member's retirement payable during his life, with the provision that after his
death an allowance of one-half the rate of his reduced allowance shall be
continued during the life of, and it shall be paid to, the person [other than
his spouse for whom this is the normal form of benefit provided in Section 4f.,
(1) above] nominated by him by written designation duly acknowledged and filed
with the Retirement Committee at the time such election is made, provided that
if the member dies after retirement but prior to the date his benefit becomes
payable, his surviving beneficiary will nevertheless be entitled to receive such
a lifetime annuity beginning at the date that the member's annuity would have
become payable and also provided that under such circumstances, at his option,
the surviving beneficiary may elect to have benefits commence prior to the date
on which the member's annuity would have become payable on an appropriately
reduced actuarial basis.
Option 3: A retirement benefit in a single lump sum that shall be the
actuarial equivalent of the benefit which would otherwise be payable to him,
provided that such benefit must be elected by the member prior to the date of
receipt of his first benefit payment.
(3) A member may, at the time he elects one of the options described
above, name a second person, who, in the event the first named person shall die
before the commencement of the annuity to the member, shall acquire all the
rights which the first named person would otherwise have had.
(4) Optional benefit payments shall commence at the end of the month
following the month in which the last payment to the deceased annuitant was
made.
(5) Notwithstanding any other provision of this Section 4f., an
optional form of retirement benefit which provides for payments to any person
other than the member may be elected by a member, and may be approved by the
Retirement Committee, only if the payments to such other person will be merely
incidental to the payment or payments made to the member.
(6) Where a member is entitled to or elects to receive a reduced
retirement annuity commencing after the member's retirement under which an
allowance would have been paid to such member's spouse or other beneficiary
after the member's death, and, prior to the date his benefit becomes payable,
the member elects any other form of benefit, then and in that event the benefit
so payable on his account shall be reduced actuarially to reflect any cost
attributable to the benefit earlier so provided to his spouse or other
beneficiary as the case may be.
(7) Notwithstanding anything to the contrary in the Plan, effective
January 1, 1989, in accordance with Section 401(a)(9) of the Internal Revenue
Code and the regulations and other official guidance issued thereunder, the
benefit of each member will be distributed or commence to be distributed to him
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<PAGE>
not later than April 1 of the calendar year next following the calendar year in
which he attains age 70 1/2; provided, however, that if a member is not a 5%
owner and shall have attained age 70 1/2 before January 1, 1988, his benefit
shall be distributed or commence to be distributed not later than the April 1
following the later of the calendar year in which he retires. Payment shall be
made as follows: If a member is married on the date his benefits commence, such
member shall receive a benefit payable in the form of a joint and survivor
annuity which shall provide for an amount actuarially reduced from the amount
computed under Section 4a. to be paid to the member for his lifetime; and for an
annuity in an amount equal to one-half of such reduced amount to be paid to the
member's spouse to whom he was married on the date his benefits commence, for
her lifetime, if surviving at the time of the member's death. A member who is
not married at the time that his benefits commence will receive his benefits in
the form of a single annuity payable for his lifetime as computed under Section
4a. above. The member's beneficiary shall receive benefits, if any, only to the
extent provided under the applicable form of payment, and such beneficiary shall
not be entitled to receive death benefits under Section 4h. As of each following
January 1 the member's benefit shall be adjusted to reflect any additional
benefits accrued as of the immediately preceding December 31; and further
provided that any additional accruals for any twelve consecutive month period
shall be offset (but not below zero) by the actuarial value (determined in
accordance with applicable law) of benefits received by the member for such
period. All distributions under this Plan shall comply with the incidental death
benefit requirements of Section 401(a)(9)(G) of the Internal Revenue Code and
the regulations (including Treas. Reg. ss.1.401(a)(9)-2) and other official
guidance issued thereunder.
With respect to payments to a spouse of a member, the following
distribution limitations shall apply:
(A) Where distribution has commenced to the member prior to his death,
distribution to the surviving spouse shall be over a period that is no longer
than the period under which the member was receiving benefits;
(B) Where distribution has not commenced to the member at the time of
his death, distribution to the surviving spouse shall begin no later than the
date upon which the member would have attained age 70 1/2, and shall be payable
over the life of the surviving spouse or over a period not extending beyond the
life expectancy of the surviving spouse. (If the surviving spouse dies before
distribution of her benefit commences, the limitations applicable to the
distribution of any benefit remaining payable under the Plan shall be determined
hereunder as if the surviving spouse were the member.)
With respect to payments to a designated beneficiary of a member (other
than the spouse), the following distribution limitations shall apply:
(A) Where distribution has commenced to the member prior to his death,
distribution to the designated beneficiary shall be over a period that is no
longer than the period under which the member was receiving benefits;
(B) Where distribution has not commenced to the member at the time of
his death, distribution to the designated beneficiary shall begin no later than
one year after the date of the member's death, or such later date as may be
permitted by Treasury Regulations, and shall be payable over the life of the
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designated beneficiary or over a period not extending beyond the life expectancy
of the designated beneficiary.
In all other cases where distribution has not commenced to the member
at the time of his death, no benefit remaining payable under the Plan shall be
distributed over a period that exceeds five years after the member's death.
Nothing in this Section 4f.(7) shall affect the ability of a member,
upon retirement, to select a form of benefit as provided otherwise by Section 4.
g. Adjustment For Federal Old Age Benefits: If a member who is eligible
for a retirement annuity under Section 4a., b., or d. of the Plan retires before
his Federal Old Age Benefit is payable, he may, at any time or from time to
time, elect to have the retirement benefit otherwise payable after retirement to
him for his lifetime under the normal form of benefit, or under an optional
benefit payment, whichever is applicable, actuarially adjusted to provide, so
far as practicable, a constant total retirement income inclusive of the
estimated Federal Old Age Benefit, both before and after the Federal benefit is
scheduled to begin.
h. Benefits To Surviving Spouse: In the event a member, who has
performed at least one hour of service on or after January 1, 1976, dies on or
after August 1, 1984, after having become vested under the Plan, leaving a
surviving spouse to whom the member was legally married for one year or more
prior to his death, an annuity at one-half the rate of the annuity which the
member would have been entitled to receive under Section 4f.(1) had he retired
and commenced receipt of benefits as of the first of the month following the
date of his death, if the member was eligible for retirement at the time of his
death, or an annuity at one-half the rate of the annuity which the member would
have been entitled to receive under Section 4f.(1) had he retired and commenced
receipt of benefits on the date he first would have been eligible to do so, if
the member was not eligible for retirement at the time of his death, shall be
paid to such spouse, commencing at the end of the month following the month in
which the member would have attained his normal retirement date or earlier if
the spouse so elects, but not earlier than the date the member first would have
reached age 55, as the case may be, for the life of such spouse.
i. (1) All annuities shall be payable in monthly installments.
[Effective August 1, 1994, the previous sentence shall read as follows: All
annuities shall be payable in monthly installments provided that any annuity
which has an actuarially computed present value at the time of termination of
service which is less than $3,500 shall be paid in a lump sum of equivalent
actuarial value.] In determining the amount of a lump sum payment payable under
this paragraph, (i) equivalent actuarial value shall mean a benefit, in the case
of a lump sum benefit payable prior to a member's normal retirement date, of
equivalent value to the benefit which would otherwise have been provided
commencing at the member's normal retirement date, and (ii) the interest rate to
be used shall be an interest rate no greater than that which would be used by
the Pension Benefit Guaranty Corporation ("PBGC") for valuing lump sums for
single employer plans that terminate three months preceding the date of
termination. For this lump sum equivalent actuarial value, the PBGC mortality
table shall be used. Monthly installment payments shall commence at the end of
the month in which retirement occurs and continue until death. Full payment will
be made for the month in which death occurs. In the event a member terminates
employment at a time when he is not entitled to any retirement benefit or vested
annuity, such member shall be deemed to have received a single sum payment of a
zero accrued benefit, and his entire accrued benefit shall immediately be
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forfeited. In the event such a member is restored to service as an employee, he
shall be deemed to have immediately repaid to the Plan the amount which was
deemed to have been distributed upon his prior termination.
(2) If any person to whom a retirement annuity, vested annuity or other
benefit under this Plan is payable shall not have provided evidence satisfactory
to the Retirement Committee of his continued life and address for a period of
two years after or during which such annuity or other benefit is payable, the
Retirement Committee shall send by registered mail a notice addressed to such
person at his last address known to the Committee describing the annuity or
other benefit payable to him and stating that unless he communicates with the
Committee within 30 days from the date of such notice, the Retirement Committee
may suspend payments of the annuity or other benefit to such person while it
causes an investigation to be made as to the continued life and address of such
person.
(3) If any person to whom a benefit is payable hereunder is an infant,
or if the Retirement Committee determines that any person to whom a retirement
annuity or other benefit is payable is incompetent by reason of physical or
mental disability, the Committee shall have power to cause the payments becoming
due to such person to be made to another for his benefit without responsibility
of the Committee or the Trustee to see to the application of such payments.
Payments made pursuant to such power shall operate as a complete discharge of
the annuity trust fund, the Trustee and the Retirement Committee.
(4) Notwithstanding the other provisions of this Section, a member who
retires or becomes entitled to a vested annuity shall receive an annuity
computed as provided for under the provisions of the Plan in effect on the date
of his termination of service or retirement, except that: (a) effective for
payments made under Section 4a., b., or d. of the Plan on and after October 1,
1990, the Retirement Annuity of a member who retired or was eligible for normal
or late retirement under the Plan prior to January 1, 1990 shall be increased by
the greater of the increase attributable to paragraph (b) below or 10%, provided
that any increase attributable to this paragraph (a) shall be a minimum of $35
per month for any eligible member who at retirement had either (i) completed at
least 25 years of Creditable Service, or (ii) attained his normal retirement
date and completed at least 10 years of Creditable Service; and (b) effective on
and after January 1, 1981, except for those members who on and after January 2,
1994 elect a retirement benefit in a single lump sum as described in Option 3
under Section f.(2) hereof, any change in the years used in calculating Career
Earnings under Section l of the Plan that would improve the benefits payable to
a member who had retired prior to the effective date of such change or changes,
but on or after January 1, 1981 shall be applied to calculate the Career
Earnings of such member; and (c) effective for such payments made on and after
July 1, 1994, the retirement annuity of a member who retired or was eligible for
normal or late retirement under the Plan prior to January 1, 1994 shall be
increased by the greater of $500 or the amount of increase attributable to the
amendment to Section 1 adopted on May 26, 1994.
(5) The annual benefit for a calendar year shall be defined and
adjusted as provided in section 415(b)(2) of the Internal Revenue Code and no
annual annuity shall be payable in excess of the lesser of the maximum dollar
amount permitted by section 415(b)(1)(A) of the Internal Revenue Code, or 100%
of the average compensation of the member for the three consecutive calendar
years which yield the highest average during which the participant was an active
participant in the Plan, subject to the following conditions:
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(a) For purposes of determining the percentage limitations in Section
4i.(5), the term "compensation" shall mean compensation as defined under Section
415(c)(3) of the Internal Revenue Code and the Treasury Regulations issued
thereunder.
(b) If benefits begin prior to or following the social security
retirement age (as defined in section 415(b)(8) of the Internal Revenue Code),
the maximum annual dollar amount will be adjusted in accordance with Regulations
issued by the Secretary of the Treasury.
(c) If the member has fewer than ten years of Creditable Service at
retirement, the maximum benefit payable as a result of the compensation
limitation hereunder shall be multiplied by a fraction, of which the numerator
is his Creditable Service and the denominator is 10. If the member has fewer
than ten years of participation in the Plan, the maximum benefit payable as a
result of the dollar limitation hereunder shall be multiplied by a fraction, of
which the numerator is his years of participation and the denominator is 10.
(d) Effective as of January 1 of each calendar year, the maximum annual
dollar amount referred to in Section 4i.(5) shall increase to the maximum annual
dollar amount as determined by the Commissioner of the Internal Revenue Service
for such calendar year pursuant to section 415(d)(1)(A) of the Internal Revenue
Code. Notwithstanding Section 4i.(4), such increased maximum dollar amount shall
also be applicable to participants who have retired under Section 4a., b., or d.
of the Plan regardless of whether they have actually begun to receive such
benefits.
(e) With respect to a member who was a participant in the Plan before
October 3, 1973, in lieu of the foregoing the maximum computed under this
subsection shall be the annuity payable under the Plan provision in effect as of
October 2, 1973 based upon (a) his aggregate creditable earnings on such date
plus (b) his rate of earnings under the Plan in effect as of such date times his
years of Creditable Service after such date.
(f) Notwithstanding the foregoing, in the case of an employee who
participates in this Plan and in the Company's Savings and Investment Plan or
any other defined contribution plan maintained by the employer, the sum of the
defined benefit plan fraction and the defined contribution plan fraction for any
year shall not exceed 1. In the event the sum of such fractions exceeds 1, the
Retirement Committee shall reduce the pension provided under this Plan in order
that none of the Plans shall be disqualified under the Internal Revenue Code.
For purposes of applying the limitations of this Section, the following rules
shall apply:
(I) The "defined benefit plan fraction" for any year shall mean the
projected annual pension payable under this Plan (determined as of the close of
the calendar year, and determined under the assumptions that his employment will
continue until his normal retirement age (i.e., age 65) (or his current age, if
greater), that his earnings will continue at the same rate as in effect in the
calendar year under consideration, and that all other relevant factors used to
determine benefits under the Plan will remain constant for all future years),
over the lesser of (i) 1.25 multiplied by the maximum dollar limitation in
effect under Section 415(b)(1)(A) of the Internal Revenue Code for such calendar
year, or (ii) 1.4 multiplied by the projected annual benefit that would be
payable to the member under the Plan (determined as of the close of the calendar
year) if the Plan provided the maximum benefit allowable under section
415(b)(1)(B) of the Internal Revenue Code as adjusted by section 235(g)(4) of
the Tax Equity and Fiscal Responsibility Act of 1982; provided, however, that
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<PAGE>
the defined benefit plan fraction with respect to a member whose pension is
described in subsection 5(d) hereof shall never be deemed to exceed 1.
(II) The "defined contribution plan fraction" for any calendar year
shall mean the actual aggregate annual additions, as hereinafter defined, to the
defined contribution plan determined as of the close of the year, over the sum
of the lesser of the following amounts determined for the calendar year under
consideration and each prior year of service: (i) 1.25 multiplied by the maximum
dollar limitation in effect under section 415(c)(1)(A) of the Internal Revenue
Code (without regard to section 415(c)(6) of the Internal Revenue Code), or (ii)
1.4 multiplied by the maximum amount of annual additions which could have been
credited to such member under section 415(c)(1)(B) of the Internal Revenue Code
for such year, taking into account the transition rules for years ending before
January 1, 1983 prescribed thereunder and under the Employee Retirement Income
Security Act of 1974 and the Tax Equity and Fiscal Responsibility Act of 1982,
including the rules of section 415(e)(3) of the Internal Revenue Code, as
amended by the Tax Equity and Fiscal Responsibility Act of 1982, and as adjusted
by section 235(g)(3) of the Tax Equity and Fiscal Responsibility Act of 1982,
unless the Committee elects to apply the rules of section 415(e)(6) of the
Internal Revenue Code, as added by the Tax Equity and Fiscal Responsibility Act
of 1982; provided, however, that the defined contribution plan fraction shall
never be deemed to exceed 1 with respect to years prior to January 1, 1976.
(III) The term "annual addition" shall mean for any calendar year the
sum of the Company contributions, Qualified Deferred Earnings Contributions
under the Company's Savings and Investment Plan, forfeitures, if any, and (a)
for years prior to January 1, 1987, the lesser of employee contributions in
excess of 6% of the member's compensation or one-half of the member's total
contribution allocated to a member's account in the defined contributions plan,
and (b) for years beginning after December 31, 1986, all employee contributions;
provided, however, that in computing such annual addition for any year prior to
January 1, 1976, the amount of a member's contributions taken into account for
such year shall be deemed to be an amount equal to the excess of the aggregate
of the member's contributions to the Plan prior to January 1, 1976 (without
regard to contributions made on or after October 2, 1973, which exceed the rate
of employee contributions prescribed under the terms of the Plan as of such
date) over 10% of his aggregate compensation for each year of his participation
in the defined contribution Plan prior to such date, multiplied by a fraction,
the numerator of which is 1 and the denominator of which is the number of the
member's years of participation prior to January 1, 1976.
(IV) The dollar limitation prescribed under Section 4i.(5) hereof shall
not apply [and shall not be used in computing the denominator of the defined
benefit plan fraction under Section 4i.(5)(e)(I)] in the case of any member who
was a member in the Plan on December 31, 1982 and whose annual benefit accrued
under the Plan as of such date determined in accordance with section 415(b)(2)
of the Internal Revenue Code, exceeds such limitation. In lieu thereof, the
member's annual accrued benefit as of December 31, 1982 shall be the applicable
dollar limitation.
(g) The limitations of subsection (f) shall not apply with respect to
any member who on September 2, 1974 participated in this Plan and a defined
contribution plan maintained by an employer, if the following conditions are
met:
(I) The defined benefit plan fraction with respect to the member is not
increased, by amendment or otherwise, after September 2, 1974, and
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<PAGE>
(II) No contributions are made under the defined contribution plan
after such date.
(h) The limitation of this Section with respect to any member who at
any time has participated in any other defined benefit plan, or in more than one
defined contribution plan, maintained by an employer or by a corporation which
is a member of a controlled group of corporations [within the meaning of section
1563(a), determined without regard to section 1563(a)(4) and (e)(3)(C), and
section 415(h) of the Internal Revenue Code], of which the employer is a member,
shall apply as if the total benefits payable under all defined benefit plans in
which the member has been a participant were payable from one plan, and as if
the total annual additions made to all defined contribution plans in which the
member has been a participant were made to one plan.
(6) The benefits provided under this Plan shall be reduced in the case
of any member or beneficiary under uniform rules adopted by the Committee, by
the amount of any benefits payable to such member or beneficiary under any other
qualified non-government pension plan or program or any retirement or pension
benefits payable to him under the laws of any foreign government, to the extent
that the benefits payable under such other plan or program are based on service
which is included in Prior Service, Membership Service or Special Service,
hereunder, and are not attributable to contributions made to such other plan or
program by the member.
(7) The benefits provided under this Plan shall be reduced, under
uniform rules adopted by the Retirement Committee, in the case of any member
reemployed by an employer to avoid duplication of any benefits previously paid
by this Plan to such member after a prior termination of service and with
respect to annuity payments, only to the extent prior to the member's attainment
of age 65. Such reduction shall not apply to the extent that the member shall,
upon reemployment, repay to the Trustee any amount received from the Trust with
interest thereon compounded annually, at the rate to be determined by the
Retirement Committee from the date or dates of receipt of such benefits to the
date of repayment to the Trust.
(8) Whenever the amount of a benefit under this Plan is to be
determined by an actuarial procedure, effective January 1, 1984, the following
actuarial assumptions will be used: The interest rate assumption for annuity
forms of benefit payments shall be 7 1/2% per annum and for the lump sum form of
payment shall be the applicable Pension Benefit Guaranty Corporation discount
rate for the month three months preceding the date of retirement if the election
is made before retirement, or for the month following an election for the lump
sum form of payment made after retirement. The mortality assumption for all
forms of benefit payments except for the lump sum form of payment shall be based
upon the latest Unisex Mortality Table prepared by the Plan's actuary and
adopted by the Committee. For lump sum payments, the Pension Benefit Guaranty
Corporation Immediate Annuity Lump Sum Factor shall be used.
j. Qualified Domestic Relations Order: Notwithstanding anything in the
Plan to the contrary, the payment of any benefit to which a member may be
entitled under this Section 4 shall be subject to a qualified domestic relations
order within the meaning of section 414(p) of the Internal Revenue Code.
k. Special Rules For Certain Members Who Are Not Eligible To Retire
Under Sections 4.a. or 4.d.: Notwithstanding anything to the contrary in
Sections 4.c., 4.d., 4.f. or 4.h., this Section 4.k. provides special rules for
a member who (i) terminates service or dies on or after January 1, 1994, (ii)
16
<PAGE>
has completed at least 5 Anniversary Years of Creditable Service upon his
termination from service or death, and (iii) has accrued a portion of his Plan
benefit prior to January 1, 1994 (the "Pre-1994 benefit"). The otherwise
applicable provisions of the Plan shall apply to such member except to the
extent specifically modified herein.
(1) Except as provided below, a terminated member (other than a deceased
member) described in this Section 4.k. may elect to receive his
pre-1994 benefit at any time after his attainment of age 50 and on or
before attainment of age 65, commencing on the first day of the month
following such election. The member shall receive such benefit in the
normal form provided under Section 4.f.(1). If the member elects
commencement of his pre-1994 benefit before age 65, such benefit shall
be reduced for early commencement by applying the percentages set forth
in Schedule C.
(2) If a member (other than a deceased member) described in this Section
4.k. terminates service (A) between the ages 50 and 55 with at least 10
years of Creditable Service, and his attained age when added to his
years of Creditable Service equals or exceeds 65, he may elect to
receive his pre-1994 benefit before age 65, reduced for early
commencement by applying the percentages set forth in Schedule C; or
(B) when his attained age when added to his years of Creditable Service
equals or exceeds 90, he may elect to receive his pre-1994 benefit
before age 65, reduced for early commencement by applying the
percentages set forth in Schedule D. Such a member shall receive his
pre-1994 benefit in the normal form provided under Section 4.f.(1);
provided, however, he may elect an optional form of payment in
accordance with the provisions of Section 4f.(2) or 4g.
(3) The surviving spouse of a deceased member described in this Section
4.k., who is entitled to benefits under Section 4.h., may elect to have
the amount attributable to the member's pre-1994 benefit commence prior
to the end of the month following the month in which the member would
have attained his normal retirement date, but not earlier than the date
the member first would have reached age 50.
(4) If a member's pre-1994 benefit is paid or commences to be paid pursuant
to (1), (2) or (3) above, the remaining portion of his benefit shall be
equal to his benefit, determined under the provisions of Section 4.a.
(taking into account all years of Creditable Service and all Career
Earnings), and expressed in the form of a single life annuity payable
at normal retirement date reduced by his pre-1994 benefit, expressed in
the form of a single life annuity payable at normal retirement date.
Such remaining benefit shall be payable under the otherwise applicable
provisions of this Plan.
(5) If receipt of the pre-1994 benefit of a member described in this
Section 4.k. commences after the member attains, or would have
attained, age 55, the remaining portion of his benefit shall commence
at the same time.
l. Suspension of Benefit Rules: If a member terminates employment or
retires and is reemployed by an employer before such member's normal retirement
date, the payment of any benefits he is then receiving shall be suspended. If a
member terminates employment or retires and is reemployed by an employer on or
after such member's normal retirement date, or if a member continues in
employment after the member's normal retirement date, payment of the member's
pension shall be suspended in accordance with the following provisions:
17
<PAGE>
(1) If the member is reemployed or continues in Suspendible
Employment, the payment of any benefits he is then receiving
or entitled to receive shall be suspended until his subsequent
retirement. The Retirement Committee will notify the member of
the suspension of benefits in the manner, form and at such
time as is required by applicable law.
(2) If the member is reemployed, or continues in employment other
than Suspendible Employment, the payment of any benefits he is
then receiving shall be suspended, and the amount of his
resumed benefit payments upon subsequent retirement shall be
the amount in effect immediately before the suspension,
increased actuarially to reflect the delayed commencement of
payments, but only to the extent the value of such actuarial
increase exceeds the value of any additional pension earned
during the period employment after normal retirement date.
(3) For purposes of this Section 4.(l), "Suspendible Employment"
means the completion of 40 or more hours of service with the
employer during any calendar month (or four or five week
payroll period).
m. Direct Rollover Rules: Effective for distributions under the Plan on
or after January 1, 1993, at the written request of a distributee (which shall
mean a member, a surviving spouse of a member, or a spouse or former spouse of a
member that is an alternative payee under a Qualified Domestic Relations Order),
and upon receipt of the written consent of the Retirement Committee, the Trustee
shall effectuate a direct rollover distribution of the amount requested by the
distributee in accordance with Section 401(a)(31) of the Internal Revenue Code,
to an eligible retirement plan (as defined in Section 401(a)(31)(D) of the
Internal Revenue Code). Such amount shall constitute all or part of any
distribution otherwise to be made hereunder to the distributee, provided that
such distribution constitutes an "eligible rollover distribution," as defined in
Section 402(c) of the Internal Revenue Code and the regulations and other
guidance issued thereunder. All direct rollover distributions shall be made in
accordance with the following:
(1) The term "eligible rollover distribution" means any
distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover
distribution does not include: any distribution that is one of
a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life
expectancy) of the distributee or for a specified period of
ten years or more; or any distribution to the extent such
distribution is required under Section 401(a)(9) of the
Internal Revenue Code; or any distribution to the extent such
distribution is not includible in gross income (determined
without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(2) The term "eligible retirement plan" means an individual
retirement account described in Section 408(a) of the Internal
Revenue Code, an individual retirement annuity described in
Section 408(b) of the Internal Revenue Code, or (to the extent
provided in Section 401(a)(31)(D) of the Internal Revenue
Code) a qualified trust described in Section 401(a) of the
Internal Revenue Code that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible
18
<PAGE>
rollover distribution to a surviving spouse, an eligible
retirement plan is an individual retirement account or
individual retirement annuity.
(3) A direct rollover distribution shall be made to only one
eligible retirement plan; a distributee may not elect to have
a direct rollover distribution apportioned between more than
one eligible retirement plan.
(4) Direct rollover distributions shall be made in cash in the
form of a check made payable to the trustee or custodian of
the eligible retirement plan, in accordance with procedures
established by the Retirement Committee.
(5) No direct rollover distribution shall be made unless the
distributee furnishes the Retirement Committee with such
information as the Committee shall require, including but not
limited to: the name of the recipient eligible retirement
plan, and any account number or other identifying information.
(6) A distributee may have a portion of an eligible rollover
distribution distributed directly to him and a portion
directly rolled over to an eligible retirement plan as such
distributee may determine.
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<PAGE>
SECTION 5
Contributions
All of the retirement annuity payments provided under this Plan shall
be financed entirely by means of contributions made by the Company and Associate
Companies, subject to conditions set forth under Sections 9 and 12.
a. Service Contributions: Subject to the future financial needs and
condition of the business as determined by its Board of Directors, it is the
intention of the employer to continue the Plan and, within the time allowed by
law for filing of its federal income tax return for each fiscal year, to make
regular contributions each year in such amounts as are necessary to maintain the
Plan on a sound actuarial basis, and to meet minimum funding standards
prescribed by any applicable law. Upon transfer from Special Service to service
with an employer, appropriate contributions shall be made with respect to each
employee so transferred to provide the benefits for such Special Service.
b. Actuarial Calculations: The Company shall adopt from time to time,
service and mortality tables and the rates of interest to be used in actuarial
calculations required in connection with the Plan. As an aid to the Company in
adopting such tables the actuary designated by the Company shall from time to
time submit recommendations to the Company as to possible changes affecting such
tables. The actuary shall, in addition, make annual valuations of the contingent
assets and liabilities of the Plan and establish the rate of Company
contributions payable to the Plan.
c. Continuation of Plan: The continuation of this Plan and the payment
of contributions are not assumed as contractual obligations of the employer.
SECTION 6
Funding the Plan
a. Trust Fund: All contributions made by the employer to provide the
benefits under this Plan shall be paid into a trust fund. The trust fund will be
held and invested as described in the trust agreement, a brief description of
the provisions of which is given in Section 7 hereof. No part of the fund may be
used for, or diverted to, purposes other than for the exclusive benefit of
employees or their beneficiaries, nor may any part of the fund be remitted to
the Company, except as otherwise permitted under ERISA, provided, however, that
the reasonable expenses of the Trustee in the administration of this trust as
well as fees and other charges incurred for investment counseling and for
actuarial services and expenses of the Retirement Committee and the Plan Assets
Committee will be paid out of the trust fund.
b. Annuities: Notwithstanding anything herein to the contrary, if the
Retirement Committee shall find that any benefit prescribed in this Plan can be
provided with equal security to the members at the same or less cost, or at an
increased cost, provided the Company shall approve, through the purchase of
immediate or deferred annuities from any governmental agency or insurance
company or companies, approved by the Company, the Retirement Committee is
authorized and empowered to provide for the payment of such benefits by purchase
thereof from such agency or company or companies.
20
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SECTION 7
Administration of the Trust Fund - The Trust Agreement
The Company has entered into a Trust Agreement with The Northern Trust
Company, providing for the administration of the annuity trust fund by that bank
as Trustee thereof, which includes provisions with respect to the powers and
authority of the Trustee (in its discretion and/or as directed by an Investment
Adviser appointed by the Plan Assets Committee) as to the investment and
reinvestment of the trust fund and the income therefrom provided, however, the
Company specifically reserves unto itself or its delegate the Plan Assets
Committee, through the Proxy Voting Committee, the right to vote any shares of
securities held in the Trust Fund or, alternatively, may permit the Investment
Adviser to exercise such responsibility and provisions with respect to the
administration of the trust fund, the limitations on the liability of the
Trustee, authority of the Company to settle the accounts of the Trustee and of
the Retirement Committee on behalf of all persons having any interest in the
trust fund, and from time to time, to appoint a new Trustee in place of any then
acting Trustee to the trust fund, and that, with respect to any payments to or
for the benefit of any employee or beneficiary under this Plan, the Trustee
shall follow the directions of the Retirement Committee. The Trust Agreement
further provides that the Company shall have the right, from time to time, to
modify or amend the Trust Agreement in whole or in part, provided that no such
amendment shall divert any part of the annuity trust fund to purposes other than
the exclusive benefit of employees or their beneficiaries; provided, however,
that the reasonable expenses of the Trustee in the administration of this trust
as well as fees and other charges incurred for investment counseling (including
any Investment Adviser) and for actuarial services and expenses of the
Retirement Committee and of the Plan Assets Committee will be paid out of the
trust fund. The Trust Agreement shall be deemed to form a part of this Plan, and
any and all rights or benefits which may accrue to any person under this Plan
shall be subject to all the terms and provisions of said Trust Agreement.
SECTION 8
Committees
a. (1) Retirement Committee: This Plan is administered by a Retirement
Committee consisting of at least three persons appointed by the Board of
Directors of the Company. Members of the Retirement Committee may resign at any
time upon due notice in writing. The Board of Directors of the Company may
remove any Retirement Committee members and appoint others in their places. The
Retirement Committee may act by a majority of its members.
(2) The Retirement Committee shall be the Plan Administrator and shall
have fiduciary responsibility under the Employee Retirement Income Security Act
of 1974 for the general operation of the Plan, except that the Retirement
Committee shall have no responsibility for or control over the investment of the
Plan assets, other than the authority to provide for the purchase of annuities
pursuant to Section 6b. of the Plan and to give written directions to the
Trustee to retain cash as provided in Article II Section 2.1(a)i of the Trust
Agreement to meet contemplated payments under the Plan. The Retirement Committee
may appoint or employ such persons as it deems necessary to render advice with
respect to any responsibility of the Retirement Committee under the Plan. The
Retirement Committee may allocate to any one or more of its members any
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<PAGE>
responsibility it may have under the Plan and may designate any other person or
persons to carry out any responsibility of the Retirement Committee under the
Plan, other than its authority described above with respect to the retention of
cash and the purchase of annuities. Any person may serve in more than one
fiduciary capacity with respect to the Plan.
(3) Duties:
(a) The Retirement Committee will determine the names of annuitants and
joint annuitants and the amounts that are payable to them from the trust fund in
accordance with the provisions of this Plan.
(b) The Retirement Committee shall keep in convenient form such data as
shall be necessary for actuarial valuations of the contingent assets and
liabilities of the Plan and for checking the experience thereof.
(c) The Retirement Committee shall determine the manner in which the
funds of the Plan shall be dispensed including the form of voucher or waiver to
be used in making disbursements and the due notification of persons authorized
to approve and sign the same.
(d) The Retirement Committee shall determine whether a judgment, decree
or order, including approval of a property settlement agreement, made pursuant
to a state domestic relations law, including a community property law, that
relates to the provision of child support, alimony payments, or marital property
rights of a spouse, former spouse, child, or other dependent of the member is a
qualified domestic relations order within the meaning of section 414(p) of the
Internal Revenue Code, and shall give the required notices and segregate any
amounts that may be subject to such order if it is a qualified domestic
relations order, and shall administer the distributions required by any such
qualified domestic relations order.
(4) Administration of Plan: The Retirement Committee is authorized to
make such rules and regulations as may be necessary to carry out the provisions
of the Plan and will determine any questions arising in the administration,
interpretation and application of the Plan, which determination shall be
conclusive and binding on all parties. The Retirement Committee is also
authorized to adopt such rules and regulations as in its opinion may be
necessary to prevent inequities with respect to any employees whose total annual
compensation did not exceed $7,500 in any year during which such inequity
occurred and the determination of the Committee on such inequity and the
correction thereof shall be conclusive and binding on all parties. The
Retirement Committee is also authorized to provide for accelerated vesting and
to purchase or arrange for payment of an appropriate annuity or any other form
of payment or to permit the immediate distribution of Plan benefits in those
cases involving groups of employees involuntarily terminated, including, but not
limited to, cases involving groups of employees who involuntarily cease to
render Creditable Service due to a liquidation, sale, or other means of
terminating the parent-subsidiary or controlled group relationship with the
Employer or the sale or other transfer to a third party of all or substantially
all of the assets used by the Employer in a trade or business conducted by the
Employer, when the Retirement Committee determines that such action is
appropriate to prevent inequities with respect to such employees, and the
determination of the Committee in such matters shall be conclusive and binding
on all parties. For the purpose of the preceding sentence, Employer includes the
definition of controlled group contained in Section 1c. hereof. Further, the
Retirement Committee, upon the written request of the Company's Vice
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President-Personnel, is authorized, with respect to a member of the Plan who has
five or more years of Credited Service and who is transferred to the purchaser
of a portion of the Company's operations, effective the day after the Closing
Date of the Sale, to grant additional Creditable Service and additional credit
for age under the Plan, in each case up to one percent for each year of
Creditable Service, and to advance the date through which a member's earnings
are calculated pursuant to Section 1q. hereof, so as to prevent hardship with
respect to his participation in said purchaser's pension plan. The Retirement
Committee, upon written request of the Company's Vice-President-Personnel, is
also authorized to waive, either in whole or in part, the percentage reductions
for early commencement of retirement benefits set forth in Section 4d. and/or to
grant additional years of Creditable Service and additional credit for age under
the Plan, or a combination thereof, up to a total of five (5), in those cases
where groups of employees have terminated employment either as a result of a
reduction in the work force or early retirement incentive programs or for
similar economic reasons, and the determination of the Retirement Committee
shall be conclusive and binding on all parties. The Retirement Committee is also
authorized to adopt such rules and regulations as it may consider necessary or
desirable for the conduct of its affairs and the transaction of its business,
including, but not limited to, the power on the part of the Retirement Committee
to act without formally convening and to provide that action of the Retirement
Committee may be expressed by written instrument signed by a majority of its
members. It shall elect a Secretary, who need not of necessity be a member of
the Retirement Committee, who shall record the Minutes of its proceedings and
shall perform such other duties as may from time to time be assigned to him. The
Retirement Committee may retain legal counsel (who may be counsel for the
Company) when and if it be found necessary to do so and may also employ such
other assistants, clerical or otherwise, as may be requisite, and expend such
monies as may be requisite in their work. All of these expenses of the
Retirement Committee and the reasonable expenses of the Trustee in the
administration of this trust as well as for actuarial services will be paid out
of the trust fund.
b. (1) Plan Assets Committee: A Plan Assets Committee consisting of at
least three persons appointed by the Board of Directors of the Company shall
have exclusive authority and fiduciary responsibility under the Employee
Retirement Income Security Act of 1974 (i) to appoint and remove Investment
Advisers, if any, under the Plan and the Trust Agreement, (ii) to direct the
segregation of assets of the Retirement Annuity Trust Fund into an Investment
Adviser account or accounts at any time, and from time to time to add to or
withdraw assets from such Investment Adviser account or accounts as it deems
desirable or appropriate and also to direct the Company's contribution or any
portion thereof into any of the accounts maintained under the trust, (iii) to
direct the Trustee to enter into an agreement or agreements with an insurance
company or companies designated by the Plan Assets Committee as provided in
Article II Section 2.6 of the Trust Agreement, (iv) to establish investment
guidelines for areas other than those set forth above and, within such
guidelines, to direct the Trustee to purchase and sell securities or to enter
into one or more agreements with one or more companies, partnerships or joint
ventures and to transfer assets of the Retirement Annuity Trust Fund to such
entities for purposes of investment therein; provided however, that, except as
expressly set forth herein, the Plan Assets Committee shall have no
responsibility for or control over the investment of the Plan assets held in the
fund established hereunder. Notwithstanding the foregoing, the Company
specifically reserves unto itself or its delegate, the Plan Assets Committee,
through the Proxy Voting Committee, the right to vote any shares of securities
held in the Trust Fund or, alternatively, may permit the Investment Adviser to
exercise such responsibility. In addition, the Plan Assets Committee shall
receive the reports and recommendations of the actuary designated by the Company
under Section 5b. hereof concerning actuarial assumptions to be adopted on
subjects including, but not limited to, employee turnover, rate of mortality,
23
<PAGE>
disability rate, ages at actual retirement, rate of pay increases, investment
income and size of participant group, and make such recommendations and
determinations based upon such reports and recommendations as it may deem
necessary or appropriate. The Plan Assets Committee may appoint or employ such
persons as it deems necessary to render advice with respect to any
responsibility of the Plan Assets Committee under the Plan. The Plan Assets
Committee may allocate to any one or more of its members any responsibility that
it may have under the Plan and may designate any other person or persons to
carry out any responsibility of the Plan Assets Committee under the Plan. Any
person may serve in more than one fiduciary capacity with respect to the Plan.
Members of the Plan Assets Committee may resign at any time upon due notice in
writing. The Board of Directors of the Company may remove any Plan Assets
Committee members and appoint others in their places. The Plan Assets Committee
may act by a majority of its members.
(2) The Plan Assets Committee is authorized to make such rules and
regulations as may be necessary to carry out its duties under the Plan. The Plan
Assets Committee is also authorized to adopt such rules and regulations as it
may consider necessary or desirable for the conduct of its affairs and the
transaction of its business, including, but not limited to, the power on the
part of the Plan Assets Committee to act without formally convening and to
provide that action of the Plan Assets Committee may be expressed by written
instrument signed by a majority of its members. It shall elect a Secretary, who
need not of necessity be a member of the Plan Assets Committee, who shall record
the Minutes of its proceedings and shall perform such other duties as may from
time to time be assigned to him. The Plan Assets Committee may retain legal
counsel (who may be counsel for the Company) when and if it be found necessary
to do so and may also employ such other assistants, clerical or otherwise, as
may be requisite, and expend such monies as may be requisite in their work. All
of these expenses of the Plan Assets Committee as well as expenses for
investment counseling will be paid out of the trust fund.
c. To the extent permitted by law, the Retirement Committee, the Plan
Assets Committee, the Trustee, the Boards of Directors of the employers, and the
employers and their respective officers shall not be liable for the directions,
actions or omissions of any agent, legal or other counsel, accountant or any
other expert who has agreed to the performance of administrative duties in
connection with the Plan or Trust. The Committees, the Trustee, the Boards of
Directors of the employers, and the employers and their respective officers
shall be entitled to rely upon all certificates, reports, data, statistics,
analyses and opinions which may be made by such experts and shall be fully
protected in respect to any action taken or suffered by them in good faith
reliance upon any such certificates, reports, data, statistics, analyses or
opinions; all action so taken or suffered shall be conclusive upon each of them
and upon all persons having or claiming to have any interest in or under the
Plan.
d. Indemnification: Each member of the Retirement Committee and each
member of the Plan Assets Committee shall be indemnified by the Company against
all costs and expenses (including counsel fees but excluding any amount
representing a settlement unless such settlement be approved by the Board of
Directors of the Company) reasonably incurred by or imposed upon him, in
connection with or resulting from any action, suit or proceeding, to which he
may be made a party by reason of his being or having been a member of the
Retirement Committee or the Plan Assets Committee, as applicable (whether or not
he continues to be a member of such Committee at the time when such cost or
expense is incurred or imposed), to the full extent permitted by law. The
foregoing rights of indemnification shall not be exclusive of other rights to
which any member of the Retirement Committee or the Plan Assets Committee may be
entitled as a matter of law.
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<PAGE>
SECTION 9
Amendments and Changes in Plan and Coverage
Because of the uncertainty as to future conditions, including the
possibility that Federal Social Security Benefits may be extended and
liberalized, the Company necessarily reserves the right, through its Board of
Directors, at any time to modify, suspend or discontinue this Plan or the
annuity trust fund and to change the Trustee. Any such amendment may effect a
substantial change in the Plan, and may include (but shall not be limited to)
provisions for disability pensions, provisions permitting or requiring employees
to make contributions to the trust, provisions for the participation in the Plan
of any corporation or any change deemed by the Company to be necessary or
desirable to make the Plan conform to, or to obtain tax benefits under, any
existing or future laws or rules or regulations thereunder, and a change in the
class or classes of persons to whom any retirement annuity may be or become
payable or in the amount of any such annuity. An employer may at any time, or
from time to time, change the designation of a group or class of employees with
respect to the eligibility or non-eligibility of such group or class for
membership in the Plan, as well as change, modify, consolidate or redefine any
and all groups or classes of employees for purposes of such designation. Any
such amendment or change shall not reduce any retirement annuities which shall
have already been granted and which are then in force and shall not so operate
as to divert substantial amounts of trust funds from one group of employees to
any other group of employees. No such amendment or change shall discriminate in
favor of employees who are officers, stockholders, persons whose principal
duties consist of supervising the work of other employees, or highly compensated
employees or their beneficiaries, provided, however, that changes shall not be
considered discriminatory, because of readjustment of the Plan to integrate
benefits in accordance with present or future Social Security Laws of the United
States or any State or States.
The Committee may make non-substantive administrative changes to the
Plan so as to conform with or take advantage of governmental requirements,
statutes or regulations.
SECTION 10
Non-Alienation of Benefits
No benefit payable under the provisions of the Plan shall be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt so to anticipate, alienate, sell,
transfer, assign, pledge, encumber or charge the same shall be void; nor shall
any such benefits be in any manner liable for or subject to the debts,
contracts, liabilities, engagements or torts of any member or beneficiary except
as specifically provided in the Plan, or by a qualified domestic relations order
within the meaning of section 414(p) of the Internal Revenue Code, or by any
other applicable law.
SECTION 11
Associate Companies
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a. Adoption of Plan: Any corporation, with the consent of the Company,
by taking appropriate corporate action may become an Associate Company and
secure the benefits of this Plan for its employees by adopting this Plan as its
Retirement Annuity Plan and by executing the Trust Agreement. As a condition to
such corporation becoming an Associate Company, the Company may require such
corporation to modify or amend any pension plan which such corporation may then
have so as to conform to the provisions of this Plan, or to limit Prior Service,
as defined in Section 3, to service rendered for such corporation on and after a
date to be determined by the Company. The Associate Company shall thereafter
promptly deliver to the Trustee a certified copy of the resolutions or other
documents evidencing its adoption of this Plan and also a written instrument
showing the consent by the Company to such adoption.
b. Employee Transfers: Any employee who is transferred from one
employer under this Plan to another employer under this Plan shall receive upon
retirement a retirement annuity based on his Creditable Service with all such
employers.
c. Withdrawal: The Company may upon thirty (30) days written notice
request an Associate Company to withdraw from the Plan and upon the expiration
of such thirty (30) day period, unless such Associate Company has taken the
appropriate corporate action to accomplish such withdrawal, such Associate
Company shall be deemed to have withdrawn from the Plan and the provisions of
Section 12 shall apply. The Retirement Committee shall give written notice to
the Trustee of any such withdrawal.
SECTION 12
Withdrawal from Plan
Any employer may withdraw from the Plan by giving the Retirement
Committee thirty (30) days written notice of its intention to withdraw. In the
event any employer withdraws from the Plan, the Retirement Committee shall
thereupon determine, on the basis of actuarial valuation, that portion of the
annuity trust fund held on account of the employees of such employer not yet
retired. The Retirement Committee shall thereupon instruct the Trustee to set
aside such assets in the annuity trust fund, as the Retirement Committee shall
specify, which equal in value that portion of the annuity trust fund so
determined by the Retirement Committee. The Retirement Committee in its
discretion shall direct the Trustee either (1) to hold such assets so set aside
for the exclusive benefit of the employees of such withdrawing employer, who
were members under this Plan on the date of such withdrawals; or (2) to deliver
such assets to such trustee or trustees as shall be selected by such withdrawing
employer; or (3) to use such assets to purchase an appropriate retirement
annuity for each employee of such withdrawing employer who was a member on the
date of such withdrawal.
SECTION 13
Termination of Plan
a. Application of Funds: Upon complete or partial termination of the
Plan, the rights of all affected members to affected benefits accrued to the
date of such termination, to the extent then funded, shall be non-forfeitable.
If the Plan is terminated by an employer for any reason, the funds in the trust
shall be used and applied by the Retirement Committee, after expenses,
exclusively for the benefit of members and annuitants at the time of termination
26
<PAGE>
in accordance with the formula set forth below by either purchasing or arranging
for payment of an appropriate annuity or any other form of payment approved by
the Retirement Committee, and for no other purpose, and when so used and applied
the trust shall finally cease and be at an end. The funds shall be allocated for
distribution in the following order:
(1) In the case of a benefit, payable as an annuity to a member or
beneficiary, which was in pay status as of the beginning of the three-year
period ending on the termination date of the Plan, to each such benefit, based
on the provisions of the Plan (as in effect under the five-year period ending on
such date) under which such benefit would be the least.
(2) In the case of a benefit, payable as an annuity to a participant or
beneficiary, which would have been in pay status as of the beginning of such
three-year period if the participant had retired prior to the beginning of the
three-year period and if his benefits had commenced (in the normal form of
annuity under the Plan) as of the beginning of such period, to each such benefit
based on the provisions of the Plan (as in effect during the five-year period
ending on such date) under which such benefit would be the least.
(3) To all other benefits, if any, of individuals under the Plan
subject to the Pension Benefit Guaranty Corporation insurance guarantee and to
any additional benefits to a substantial owner, as that term is defined in
Section 4022(b)(6)(A) of the Employee Retirement Income Security Act of 1974,
which would be subject to the guarantee but for their "substantial owner"
status.
(4) To all other non-forfeitable benefits under the Plan and, if the
assets are not sufficient to cover all such remaining non-forfeitable benefits,
then to the benefits resulting from the Plan as in effect five years prior to
the date of termination, and if assets remain after satisfaction of such
benefits, then to each increase in benefits resulting from amendments during the
last five years in the order in which those amendments occurred.
(5) To all other benefits under the Plan.
(6) In the event that there remain additional funds available for
distribution after the funds have been distributed as provided in said
paragraphs (1), (2), (3), (4) and (5) above, any other provisions of this
Section 13 notwithstanding, any funds, remaining as a result of actuarial error
may be reclaimed by the employer. Any of such funds remaining, but not as a
result of actuarial error, and/or any of such funds remaining as a result of
actuarial error, but not reclaimed by the employer, shall be distributed in such
a manner that all the annuitants and members included in paragraphs (1), (2),
(3), (4) and (5) above shall receive an additional amount determined by
multiplying the total value of these remaining assets in the trust fund by a
percentage computed by dividing the value as of the date of termination of such
annuitant's remaining benefits or such member's benefits, as the case may be, by
the total value as of the date of termination of the remaining benefits, or the
benefits of all such annuitants or members under the Plan, as the case may be.
b. In the event of the termination of the Plan, the benefit of any one
of the twenty-five (25) most highly compensated employees (whether a current or
former employee) is limited to a benefit that is nondiscriminatory under Section
401(a)(4) of the Internal Revenue Code.
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<PAGE>
c. Unless an escrow or similar agreement is permitted and established
in accordance with IRS procedures, annual payments to any one of the twenty-five
(25) most highly compensated employees is restricted to the sum of:
(1) the amount that would be paid under a straight life annuity
that is the actuarial equivalent of the employee's accrued
benefit and other benefits to which the employee is entitled
under the Plan; and
(2) the amount the employee is entitled to receive under a social
security supplement.
However, none of the restrictions in this subsection (c) shall apply to
any one of the twenty-five (25) most highly compensated employees if any of the
conditions set forth in IRS Regulations Section 1.401(a)(4)-5(b)(3)(iv) are
satisfied with respect to such employee.
d. Excess Reserves: Any excess reserves resulting from the application
of the foregoing provisions of this Section shall be used and applied for the
benefit of other members who are employees of such employer, in accordance with
the provisions of the Plan.
e. Change in Law: In the event that it should subsequently be
determined by statute, court decision administrative ruling, or otherwise, that
the provisions of this Section applicable to the twenty-five (25) most highly
compensated employees are no longer necessary to qualify the Plan under the
Internal Revenue Code, such provisions shall be ineffective without the
necessity of further amendment of the Plan.
28
<PAGE>
SECTION 14
Plan Mergers and Consolidations
In the event of any merger or consolidation of the Plan with, or
transfer in whole or in part of the assets and liabilities of the trust fund to
another trust fund held under, any other plan of deferred compensation
maintained or to be established for the benefit of all or some of the members of
this Plan, the assets of the trust fund applicable to such members shall be
transferred to the other trust fund only if:
a. Each member would, if either this Plan or the other plan were to
terminate at such time, receive a benefit immediately after the merger,
consolidation or transfer which is equal to or greater than the benefit he would
have been entitled to receive immediately before the merger, consolidation or
transfer if this Plan had then terminated;
b. The employer and any new or successor employer of the affected
members shall authorize such transfer of assets; and
c. Such new or successor employer shall assume all liabilities with
respect to such members' inclusion in the new employer's plan.
SECTION 15
Claims Procedure
Any request by a member or any other person for any benefit alleged to
be due under the Plan shall be known as a "Claim" and the member or such other
person making a Claim shall be known as a "Claimant."
A Claim shall be filed when a written statement has been made by the
Claimant or his authorized representative and delivered to the Vice
President-Personnel, Pfizer Inc, 235 East 42nd Street, New York, New York 10017.
This statement shall include a general description of the benefit which the
Claimant believes is due and the reasons that the Claimant believes such benefit
to be due, to the extent this is within the knowledge of the Claimant. It shall
not be necessary for the Claimant to cite any particular Section or Sections of
the Plan, but only to set out the facts known to him which he believes
constitute a basis for a Claim.
Within 90 days of the receipt of the Claim by the Plan, the Vice
President-Personnel shall (i) notify the Claimant that the Claim has been
approved, (ii) notify the Claimant that the Claim has been partially approved
and partially denied, or (iii) notify the Claimant that the Claim has been
denied. Notice of the decision shall be in writing and shall be delivered to the
Claimant either personally or by first-class mail. Special circumstances may
require an extension of time for processing the claim. In such event, written
notice of the extension shall be furnished to the Claimant prior to the
termination of the initial 90 day period but in no event shall the extension
exceed a period of 90 days from the end of such initial period. The notice shall
indicate the special circumstances requiring an extension of time and the date
by which the Plan expects to render the final decision.
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<PAGE>
In the event a Claim is denied in whole or in part, the notice of
denial shall set forth (i) the specific reason or reasons for the denial, (ii)
specific reference to the pertinent Plan provisions on which the denial is
based, (iii) a description of any additional material or information necessary
for the Claimant to perfect the Claim and an explanation of why such material or
information is necessary, and (iv) an explanation of the Plan's claims review
procedure.
Within 60 days of the receipt of a notice of denial of a Claim in whole
or in part, a Claimant or his duly authorized representative (i) may request a
review upon written application to the Retirement Committee, (ii) may review
documents pertinent to the Claim, and (iii) may submit issues and comments in
writing to the Retirement Committee.
It shall be the duty of the Retirement Committee to review a Claim for
which a request for review has been made and to render a decision not later than
60 days after receipt of a request for review; provided, however, that if
special circumstances require an extension of time for processing, a decision
shall be rendered no later than 120 days after receipt of a request for review.
Written notice of any such extension shall be furnished to the Claimant within
60 days after receipt of request for review. The decision shall be in writing
and shall include the specific reasons for the decision and specific references
to the pertinent Plan provisions on which the decision is based. The decision
shall be delivered to the Claimant either personally or by first-class mail. If
the decision on review is not furnished within such time, the Claim shall be
deemed denied on review.
SECTION 16
Top-Heavy Rule
a. Notwithstanding any provision in the Plan to the contrary, if the
Plan is determined by the Retirement Committee to be top-heavy, as that term is
defined in section 416 of the Internal Revenue Code, in any calendar year,
commencing on or after January 1, 1984, then for that calendar year the vesting
schedule and minimum benefit rules, as set forth below, shall be applicable.
Determination of whether the Plan is top-heavy shall be made in accordance with
section 416(g)(2)(B) of the Internal Revenue Code.
b. Definitions solely applicable to this Section 16.
(1) "Compensation" shall mean the amount reportable by the
employer for federal income tax purposes as wages paid to the
member for such period.
(2) "Determination Date," the date for determining whether the
Plan is top-heavy, shall be the December 31 of the preceding
year.
(3) "Key Employee" shall have the same meaning as in section
416(i)(1) of the Internal Revenue Code.
(4) "Non-Key Employee" shall mean an employee other than a Key
Employee as defined in subsection b.(3) above.
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<PAGE>
(5) "Testing Period" shall mean the period of consecutive years,
not exceeding five (5), during which a member had the greatest
aggregate compensation from the employer, but not including
years beginning before January 1, 1984 or years in which this
Plan was determined not to be top-heavy.
(6) "Valuation Date," for minimum funding purposes, shall be a
date within the twelve-month period ending on the
Determination Date, regardless of whether a valuation for
minimum funding purposes is performed in that year.
c. For the purpose of determining whether this Plan is top-heavy, this
Plan, the Company's Savings and Investment Plan, and the Company's Employee
Stock Ownership Plan shall be aggregated, as provided in section 416(g)(2)(A) of
the Internal Revenue Code.
d. Vesting Schedule: Employees shall acquire a vested interest in an
annuity under the Plan in accordance with the following schedule:
20% of the accrued benefit under Section 4a. after two (2)
Anniversary Years of Creditable Service; 40% of the accrued
benefit under Section 4a. after three (3) Anniversary Years of
Creditable Service; 60% of the accrued benefit under Section
4a. after four (4) Anniversary Years of Creditable Service;
80% of the accrued benefit under Section 4a. after five (5)
Anniversary Years of Creditable Service; and 100% of the
accrued benefit under Section 4a. after six (6) Anniversary
Years of Creditable Service.
e. Minimum Benefit Rule: A Non-Key Employee's benefit shall not be less
than the lesser of: 2% of his average compensation during the testing period,
not exceeding the compensation limitation under section 416(d) of the Internal
Revenue Code and applicable regulations, multiplied by those years of service
with the employer on or after January 1, 1984 in which this Plan is determined
to be top-heavy or 20% of his average compensation during the testing period;
provided, however, that any minimum benefit provided under this Section 16 shall
be offset by the actuarial equivalent of the value of the employer's
contributions to the Company's Savings and Investment Plan and the Company's
Employee Stock Ownership Plan on the Non-Key Employee's behalf. Such actuarial
equivalent shall be calculated using the Pension Benefit Guaranty Corporation
immediate annuity lump sum factor, with male and female factors equally
weighted, in effect three (3) months prior to termination of employment. All
accruals derived from employer contributions, whether or not attributable to
years in which the Plan is top-heavy, may be used in determining whether the
minimum accrued benefit requirements for a Non-Key Employee has been satisfied.
f. If the Plan becomes subject to the adjustments pursuant to section
416(h) of the Internal Revenue Code, the defined benefit plan fraction described
in section 415(e)(2)(B) and the defined contribution fraction described in
section 415(e)(3)(B) shall be applied by substituting 1.0 for 1.25 in the
denominator of each fraction.
g. If the Plan becomes top-heavy and in a subsequent year ceases to be
top-heavy, the vesting schedule under Section 16d. shall revert to the vesting
schedule under Section 4c. of the Plan provided, however, that any employee who
has completed at least five (5) or more years of Creditable Service at the time
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<PAGE>
the Plan ceases to be top-heavy and who had at least one (1) hour of service
while the Plan was a top-heavy plan, shall be entitled to elect, within a
reasonable period (such period to be determined by the Retirement Committee when
relevant but in no event no earlier than 60 days following the latest of (i) the
date upon which the reversion to the prior vesting schedule became effective, or
(ii) the day the employee is issued written notice by the Retirement Committee
that the prior schedule is applicable), whether the vesting schedule in Section
16d. or in Section 4c. is applicable to his benefit.
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SCHEDULE A
List of Eligible Groups or Classes
Groups or Classes eligible for participation in the Retirement Annuity
Plan (except in each case employees covered by a collective bargaining agreement
that does not provide for coverage of such employees under the Plan):
1. All employees in the service of Pfizer Inc at the following locations:
New York Headquarters, New York, New York
Brooklyn Plant, Brooklyn, New York
Groton Plant and Research Laboratories, Groton, Connecticut
Vigo Plant and Research Laboratories, Terre Haute, Indiana
Washington Office, Washington, D.C.
Atlanta Branch, Doraville, Georgia
Chicago Branch, Hoffman Estates, Illinois
Clifton Branch, Clifton, New Jersey
Dallas Branch, Dallas, Texas
Parsippany Plant, Parsippany, New Jersey
Irvine Branch, Irvine, California
Lee's Summit Plant, Lee's Summit, Missouri
Aviation Department, West Trenton, New Jersey
Lincoln, Nebraska
West Chester, Pennsylvania
Exton, Pennsylvania
Miami, Florida
Omaha, Nebraska
White Hall, Illinois
Albany, New York
Arlington, Texas
Ashland, Virginia
Englewood, Colorado
Marietta, Georgia
Olive Branch, Mississippi
Orlando, Florida
Sacramento, California
South Bend, Indiana
Memphis, Tennessee
2. Headquarters Foreign Residents in the service of a foreign subsidiary (as
defined in section 3121(1)(8) of the Internal Revenue Code) of Pfizer Inc who
are United States citizens employed outside the continental limits of the United
States.
3. All Field Sales Personnel in the service of the following groups or divisions
of Pfizer Inc:
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Pfizer Laboratories
Animal Health Group
Roerig
Consumer Health Care Group
Pratt
National Health Care Operations
Specialty
Powers Rx
Pfizer Corporation Carolina
4. All employees in the service of the following Associate Companies:
Pfizer International Inc.
Howmedica, Inc.
Howmedica Management and Technical Services, Ltd.
Pfizer Pharmaceuticals, Inc.
Shiley Heart Valve Research Center
Valleylab, Inc.
Strato/Infusaid, Inc.
Schneider (USA) Inc., a Pfizer Company
American Medical Systems, Inc.
NAMIC USA Corporation
Corvita Corporation
Howmedica Leibinger Inc.
5. All employees employed in Puerto Rico by Pfizer Corporation, an
Associate Company.
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SCHEDULE B
Vested Benefit Table
The following table sets forth the percentages which will apply at the
ages indicated in the computation of vested benefits:
Age Percentage
----------------------------------------------
65 100
64 94
63 88
62 82
61 76
60 70
59 64
58 58
57 52
56 46
55 40
35
<PAGE>
SCHEDULE C
Early Retirement Table
The following table sets forth the percentages which will apply at the
ages indicated in the computation of early retirement benefits:
Age Percentage
------------------------------------------------
65 100
64 96
63 92
62 88
61 84
60 80
59 76
58 72
57 68
56 64
55 60
36
<PAGE>
SCHEDULE D
Alternate Early Retirement Table
The following table sets forth the percentages which will apply at the
ages indicated in the computation of early retirement benefits:
Age Service Percentage
----------------------------------------------
64 26 100
63 27 100
62 28 100
61 29 100
60 30 100
59 31 96
58 32 92
57 33 88
56 34 84
55 35 80
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>6
<DESCRIPTION>EXHIBIT 10(IV)
<TEXT>
<PAGE>
EXHIBIT 10(iv)
PFIZER INC
NONFUNDED DEFERRED
COMPENSATION AND SUPPLEMENTAL
SAVINGS PLAN
(As amended through 1/97)
1. Each employee who is a Member of the Pfizer Inc Savings and Investment Plan
and who is prevented, because of the restrictions of Section 415(c)(1)(A) or
Section 401(a)(17) of the Internal Revenue Code, from contributing further to
the Savings and Investment Plan may elect on or before the last day of any
calendar month, beginning with the following calendar month, to defer payment of
future compensation, in whole percents, at a rate not to exceed the greater of
6% or the rate of pre-tax contribution permitted under the Savings and
Investment Plan to "highly compensated employees," as that term is defined under
Section 414(q) of the Internal Revenue Code, until he ceases to be an employee
of the Company, unless before such time he dies or becomes totally disabled, as
determined by the Employee Compensation and Management Development Committee or
the Executive Compensation Committee, as appropriate, in which case all amounts
credited to his account shall become payable as soon as practicable thereafter
in a single sum payment. Notwithstanding the preceding sentence, an employee
cannot defer compensation under this Plan at a rate in excess of the employee's
combined rate of pre-tax and post-tax contribution under the Company's Savings
and Investment Plan. The deferrals by such employee under this Plan shall be
matched by the Company in accordance with the formula for Company matching
contributions under the Company's Savings and Investment Plan.
If the restrictions of Section 415 or Section 401(a)(17) of the Internal Revenue
Code prevent an employee from receiving any Company matching contributions or
employee forfeitures, any amount that would have been contributed on the
employee's behalf to the Company's Savings and Investment Plan by the Company as
a matching contribution and any amount that would have been credited to the
employee by way of forfeitures if it were not for such restrictions, shall be
credited to the employee hereunder.
Any election to defer shall be made by written notice directed to the Vice
President-Personnel of the Company. Any such election may be terminated, or may
be modified as to the amount of deferral (in whole percents of compensation
only) or as to the form of deferral (whether interest or units) with regard to
future compensation, commencing with the following calendar month, upon written
notice directed to the Vice President-Personnel of the Company on or before the
last day of the calendar month preceding the calendar month in which such
compensation would otherwise be payable. Switching the form of deferral of
monies previously deferred may be done, as of the first day of any calendar
month, by notice in writing to the Vice President-Personnel of the Company
before such date. With respect to a Member subject to Section 16 of the
Securities Exchange Act of 1934, an election to transfer into, or out of, the
unit account shall be permitted only if the Member has not elected to transfer
out of, or into, the unit account within this Plan, Fund C within the Pfizer
<PAGE>
Savings and Investment Plan or the unit account within the Pfizer Inc Nonfunded
Deferred Compensation and Unit Award Plan for Non-Employee Directors during the
prior six months.
2. All compensation deferred by the employee hereunder shall be held in the
general funds of the Company and shall be credited to the employee's account,
and, at the employee's election, the account shall be credited with (a) interest
at a rate equal to the rate of return for Fund A in the Savings and Investment
Plan, compounded monthly, (b) a number of units, calculated to the nearest
thousandth of a unit, produced by dividing the amount of compensation deferred,
on the date such compensation would otherwise have been paid, by the closing
market price of the Company's Common Stock as reported on the Consolidated Tape
of the New York Stock Exchange on the last business day prior to the date such
compensation would otherwise have been paid, or (c) a combination of (a) and
(b).
Company matching contributions and/or forfeitures shall be held in the general
funds of the Company and shall be credited to the employee's account in the form
of units only.
Whenever a dividend is declared, the number of units in the employee's account
shall be increased by the result of the following calculations: 1) the number of
units in the employee's account multiplied by any cash dividend declared by the
Company on a share of its Common Stock, divided by the closing market price of
such Common Stock on the related dividend record date; and/or 2) the number of
units in the employee's account multiplied by any stock dividend declared by the
Company on a share of its Common Stock. In the event of any change in the number
or kind of outstanding shares of Common Stock of the Company including a stock
split or splits, other than a stock dividend as provided above, an appropriate
adjustment shall be made in the number of units credited to the employee's
account.
3. At least ninety days before he ceases to be an employee of the Company, an
employee may elect, or may modify an election that he had previously made, to
receive payment of the balance credited to his account in a lump sum or in
annual installments, and he may elect the time that such payment or payments are
to be made; provided however, that no payments shall be made prior to the
employee's next taxable year following his termination of employment; and
further provided that, solely for the purposes of this subsection 3, in the case
of an employee who is transferring to a company which is at least 30% owned by
the Company, the employee shall not be deemed to cease to be an employee of the
Company until he ceases to be an employee of said company. In the absence of an
election, such payments will begin with the first month of the employee's next
taxable year following his termination of employment and will be made in five
annual installments, provided however that if the amount of the payment is less
than 10%, or such smaller percentage established by the Savings Plan Committee
of the Savings and Investment Plan (the "Committee"), of the employee's total
benefit from the Savings and Investment Plan and this supplemental plan, such
payment shall be made in a lump sum, unless at least ninety days before the
employee ceases to be an employee of the Company, the employee elects another
form of payment as provided in this subsection 3.
To the extent that the employee's account has been credited with units
calculated as provided in Section 2, the amount payable to the employee in each
instance shall be determined by multiplying the number of units by the closing
market price of the Company's Common Stock on the day prior to the date for
payment or the last business day prior to that date, if the day prior to the
date for payment is not a business day.
Where the employee receives the balance of his account in annual installments of
deferred compensation, the first installment shall be a fraction of the value of
the balance of the amount deferred and credited to the employee's account by way
2
<PAGE>
of interest and/or units calculated under Section 2 hereof, as the case may be,
on the date of such payment, the numerator of which is one (1) and the
denominator of which is the total number of installments remaining to be paid at
that time. Each subsequent installment shall be calculated in the same manner,
except that the denominator shall be reduced by the number of installments that
have been paid previously.
4. If an employee should become totally disabled, as determined by the Employee
Compensation and Management Development Committee or the Executive Compensation
Committee, as appropriate, before full payment of all amounts credited to his
account, such amounts shall be paid to him in a single sum payment to be made as
soon as practicable after such event. If an employee should die before full
payment of all amounts credited to his account, such amounts shall be paid to
his beneficiary or beneficiaries designated under the Savings and Investment
Plan in accordance with the participant's payment election on file at the time
of death or if no beneficiary or beneficiaries are named under that Plan or the
named beneficiary or beneficiaries have predeceased him, to his estate in a
single sum payment to be made as soon as practicable after his death. If an
employee wishes to designate a different beneficiary or beneficiaries than are
provided for by the method set forth above he may do so by written notice to the
Senior Vice President-Employee Resources of the Company. At any time, and from
time to time, any such designation may be changed or canceled by the employee
without the consent of any beneficiary. Any such designation, change or
cancellation must be by written notice filed with the Senior Vice
President-Employee Resources of the Company and shall not be effective until
received by the Senior Vice President-Employee Resources of the Company. If an
employee designates more than one beneficiary, any payments to such
beneficiaries shall be made in equal shares unless the employee has designated
otherwise.
5. An employee's election to defer receipt of his compensation shall continue
until he ceases to be an employee unless he earlier terminates such election
with respect to future compensation by written notice delivered to the Vice
President-Personnel of the Company. Any such notice shall become effective as of
the end of the calendar month in which such notice is received by the Vice
President-Personnel. Amounts credited to the account of an employee prior to the
effective date of such notice shall not be affected thereby and shall be paid to
him in accordance with Section 1, Section 3 or Section 4, as appropriate.
6. The right of an employee to any amounts credited to his account shall not be
subject to assignment by him. If an employee does assign his right to any
amounts credited to his account, the Company may disregard such assignment and
discharge its obligation hereunder by making payment as though no such
assignment had been made.
7. Notwithstanding anything contained in Section 1 or Section 5 to the contrary,
an employee who receives a hardship distribution under the Company's Savings and
Investment Plan shall not defer compensation hereunder for the period of 12
months commencing after receipt of the hardship distribution.
8. The Savings and Investment Plan Committee may make non-substantive
administrative changes to this Plan so as to conform with or take advantage of
governmental requirements, statutes or regulations.
3
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>7
<DESCRIPTION>EXHIBIT 10(VII)
<TEXT>
<PAGE>
EXHIBIT 10(vii)
PFIZER INC.
NONFUNDED SUPPLEMENTAL
RETIREMENT PLAN
(As amended through 1/96)
1. The Company shall make payments supplementing the amounts payable under the
Pfizer Retirement Annuity Plan (the Plan) to retiring employees whose benefits
under the Plan are limited, by reason of Section 415 and, on and after January
1, 1989, Section 401(a)(17) of the Internal Revenue Code, to amounts less than
would be payable under the provisions of said Plan if calculated without
reference to the limitations imposed by Section 415 and, on and after January 1,
1989, Section 401(a)(17) of the Internal Revenue Code.
2. To the extent practicable, such supplemental payments by the Company shall,
in the case of each such employee, be substantially equal to the difference
between the benefits payable under the Plan and the benefits that would be
payable under the provisions of the Plan if calculated without reference to the
limitations imposed by Section 415 and, on and after January 1, 1989, Section
401(a)(17) of the Internal Revenue Code, and further the Company shall make
payments supplementing the amounts payable under the Plan for employees who
elect to defer income under the "Pfizer Inc. Nonfunded Deferred Compensation and
Supplemental Savings Plan" by treating such deferred amounts as though they were
a part of the employee's Creditable Earnings under the Plan.
3. At least ninety days before an employee ceases to be an employee of the
Company, the employee may elect, or may modify an election that the employee had
previously made, to receive payment of such supplemental payments by the Company
in a lump sum or in monthly or annual installments, and the employee may elect
the time that such lump sum payment or installments are to be made, except that
no payment or payments shall be made prior to the employee's next taxable year
following termination of employment, and provided that in the absence of an
election, such supplemental payments by the Company shall be made in ten annual
installments commencing with the first month of the employee's next taxable year
following termination of employment, further provided that if the amount of the
supplemental payment is less than 10%, or such smaller percentage established by
the Retirement Committee of the Retirement Annuity Plan (the "Committee"), of
the employee's total retirement benefit from the Retirement Annuity Plan and
this supplemental plan, such payment shall be made in a lump sum, unless at
least ninety days before the employee ceases to be an employee of the Company,
the employee elects another form of payment as provided in this subsection 3.,
and still further provided that, solely for the purposes of this subsection 3.,
in the case of an employee who is transferring to a company which is at least
30% owned by the Company, the employee shall not be deemed to cease to be an
employee of the Company until he ceases to be an employee of said company.
4. An employee's right to supplemental payments hereunder may not be assigned.
If an employee does assign such right, the Company may disregard such assignment
and discharge its obligation by making payment as though no such assignment had
been made.
5. The Committee may make non-substantive administrative changes to this Plan so
as to conform with or take advantage of governmental requirements, statutes or
regulations.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>8
<DESCRIPTION>EXHIBIT 10(VIII)
<TEXT>
<PAGE>
AGREEMENT
This Agreement, made and entered into as of the ____ day of
_______, 199_ ("Agreement"), by and between Pfizer Inc. a Delaware corporation
("Company"), and [INSERT NAME] ("Indemnitee"):
WHEREAS, highly competent persons are becoming more reluctant
to serve publicly-held corporations as directors or in other capacities unless
they are provided with adequate protection through insurance or adequate
indemnification against inordinate risks of claims and actions against them
arising out of their service to and activities on behalf of the corporation; and
WHEREAS, the current impracticability of obtaining adequate
insurance and the uncertainties relating to indemnification have increased the
difficulty of attracting and retaining such persons;
WHEREAS, the Board of Directors of the Company (the "Board")
has determined that the inability to attract and retain such persons is
detrimental to the best interests of the Company's stockholders and that the
Company should act to assure such persons that there will be increased certainty
of such protection in the future; and
WHEREAS, it is reasonable, prudent and necessary for the
Company contractually to obligate itself to indemnify such persons to the
fullest extent permitted by applicable law so that they will serve or continue
to serve the Company free from undue concern that they will not be so
indemnified; and
1
<PAGE>
WHEREAS, Indemnitee is willing to serve, continue to serve and
to take on additional service for or on behalf of the Company on the condition
that he be so indemnified;
NOW, THEREFORE, in consideration of the premises and the
covenants contained herein, the Company and Indemnitee do hereby covenant and
agree as follows:
Section 1. Services by Indemnitee. Indemnitee agrees to serve
as a director of the Company. Indemnitee may at any time and for any reason
resign from such position (subject to any other contractual obligation or any
obligation imposed by operation of law), in which event the Company shall have
no obligation under this Agreement to continue Indemnitee in any such position.
Section 2. Indemnification - General. The Company shall
indemnify, and advance Expenses (as hereinafter defined) to Indemnitee as
provided in this Agreement and to the fullest extent permitted by applicable law
in effect on the date hereof and to such greater extent as applicable law may
thereafter from time to time permit. The rights of Indemnitee provided under the
preceding sentence shall include, but shall not be limited to, the rights set
forth in the other Sections of this Agreement.
Section 3. Proceedings Other Than Proceedings by or in the
Right of the Company. Indemnitee shall be entitled to the rights of
indemnification provided in this Section 3 if, by reason of his Corporate Status
(as hereinafter defined), he is, or is threatened to be made, a party to any
threatened, pending, or completed Proceeding (as hereinafter defined), other
than a Proceeding by or in the right of the Company. Pursuant to this Section 3,
Indemnitee shall be indemnified against Expenses, judgments, penalties, fines
and amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such Proceeding or any claim, issue or matter therein,
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
Proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 4. Proceedings by or in the Right of the Company.
Indemnitee shall be entitled to the rights of indemnification provided in this
Section 4 if, by reason of his Corporate Status, he is, or is threatened to be
made, a party to any threatened, pending or completed Proceeding brought by or
in the right of the Company to procure a judgment in its favor. Pursuant to this
Section, Indemnitee shall be indemnified against Expenses actually and
reasonably incurred by him or on his behalf in connection with such Proceeding
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company. Notwithstanding the foregoing, no
indemnification against such Expenses shall be made in respect of any claim,
issue or matter in such Proceeding as to which Indemnitee shall have been
adjudged to be liable to the Company if applicable law prohibits such
indemnification; provided, however, that, if applicable law so permits,
indemnification against Expenses shall nevertheless be made by the Company in
such event if and only to the extent that the Court of Chancery of the State of
Delaware, or the Court in which such Proceeding shall have been brought or is
pending, shall determine.
2
<PAGE>
Section 5. Indemnification for Expenses of a Party Who is
Wholly or Partly Successful. Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee is, by reason of his Corporate Status,
a party to and is successful, on the merits or otherwise, in any Proceeding, he
shall be indemnified against all Expenses actually and reasonably incurred by
him or on his behalf in connection therewith. If Indemnitee is not wholly
successful in such Proceeding but is successful, on the merits or otherwise, as
to one or more but less than all claims, issues or matters in such Proceeding,
the Company shall indemnify Indemnitee against all Expenses actually and
reasonably incurred by him or on his behalf in connection with each successfully
resolved claim, issue or matter. For purposes of this Section and without
limitation, the termination of any claim, issue or matter in such a Proceeding
by dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter.
Section 6. Indemnification for Expenses of a Witness.
Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding,
he shall be indemnified against all Expenses actually and reasonably incurred by
him or on his behalf in connection therewith.
Section 7. Advancement of Expenses. The Company shall advance
all reasonable Expenses incurred by or on behalf of Indemnitee in connection
with any Proceeding within twenty days after the receipt by the Company of a
statement or statements from Indemnitee requesting such advance or advances from
time to time, whether prior to or after final disposition of such Proceeding.
Such statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by an undertaking by
or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately
be determined that Indemnitee is not entitled to be indemnified against such
Expenses.
3
<PAGE>
Section 8. Procedure for Determination of Entitlement to
Indemnification.
(a) To obtain indemnification under this
Agreement, Indemnitee shall submit to the Company a written request, including
therein or therewith such documentation and information as is reasonably
available to Indemnitee and is reasonably necessary to determine whether and to
what extent Indemnitee is entitled to indemnification. The Secretary of the
Company shall, promptly upon receipt of such a request for indemnification,
advise the Board of Directors in writing that Indemnitee has requested
indemnification.
(b) Upon written request by Indemnitee for
indemnification pursuant to the first sentence of Section 8(a) hereof, a
determination, if required by applicable law, with respect to Indemnitee's
entitlement thereto shall be made in the specific case: (i) if a Change in
Control (as hereinafter defined) shall have occurred, by Independent Counsel (as
hereinafter defined) (unless Indemnitee shall request that such determination be
made by the Board of Directors or the stockholders, in which case by the person
or persons or in the manner provided for in clauses (ii) or (iii) of this
Section 8(b)) in a written opinion to the Board of Directors, a copy of which
shall be delivered to Indemnitee; (ii) if a Change of Control shall not have
occurred, (A) by the Board of Directors by a majority vote of a quorum
consisting of Disinterested Directors (as hereinafter defined), or (B) if a
quorum of the Board of Directors consisting of Disinterested Directors is not
obtainable or, even if obtainable, such quorum of Disinterested Directors so
directs, by Independent Counsel in a written opinion to the Board of Directors,
a copy of which shall be delivered to Indemnitee or (C) by the stockholders of
the Company; or (iii) as provided in Section 9(b) of this Agreement; and, if it
is so determined that Indemnitee is entitled to indemnification, payment to
Indemnitee shall be made within ten (10) days after such determination.
Indemnitee shall cooperate with the person, persons or entity making such
determination with respect to Indemnitee's entitlement to indemnification,
including providing to such person, persons or entity upon reasonable advance
request any documentation or information which is not privileged or otherwise
protected from disclosure and which is reasonably available to Indemnitee and
reasonably necessary to such determination. Any costs or expenses (including
attorneys' fees and disbursements) incurred by Indemnitee in so cooperating with
the person, persons or entity making such determination shall be borne by the
Company (irrespective of the determination as to Indemnitee's entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.
4
<PAGE>
(c) In the event the determination of entitlement
to indemnification is to be made by Independent Counsel pursuant to Section 8(b)
hereof, the Independent Counsel shall be selected as provided in this Section
8(c). If a Change of Control shall not have occurred, the Independent Counsel
shall be selected by the Board of Directors, and the Company shall give written
notice to Indemnitee advising him of the identity of the Independent Counsel so
selected. If a Change of Control shall have occurred, the Independent Counsel
shall be selected by Indemnitee (unless Indemnitee shall request that such
selection be made by the Board of Directors, in which event the preceding
sentence shall apply), and Indemnitee shall give written notice to the Company
advising it of the identity of the Independent Counsel so selected. In either
event, Indemnitee or the Company, as the case may be, may, within 7 days after
such written notice of selection shall have been given, deliver to the Company
or to Indemnitee, as the case may be, a written objection to such selection.
Such objection may be asserted only on the ground that the Independent Counsel
so selected does not meet the requirements of "Independent Counsel" as defined
in Section 17 of this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion. If such written objection is
made, the Independent Counsel so selected may not serve as Independent Counsel
unless and until a court has determined that such objection is without merit.
If, within 20 days after submission by Indemnitee of a written request for
indemnification pursuant to Section 8(a) hereof, no Independent Counsel shall
have been selected and not objected to, either the Company or Indemnitee may
petition the Court of Chancery of the State of Delaware or other court of
competent jurisdiction for resolution of any objection which shall have been
made by the Company or Indemnitee to the other's selection of Independent
Counsel and/or for the appointment as Independent Counsel of a person selected
by the Court or by such other person as the Court shall designate, and the
person with respect to whom an objection is so resolved or the person so
appointed shall act as Independent Counsel under Section 8(b) hereof. The
Company shall pay any and all reasonable fees and expenses of Independent
Counsel incurred by such Independent Counsel in connection with acting pursuant
to Section 8(b) hereof, and the Company shall pay all reasonable fees and
expenses incident to the procedures of this Section 8(c), regardless of the
manner in which such Independent Counsel was selected or appointed. Upon the due
commencement of any judicial proceeding or arbitration pursuant to Section
10(a)(iii) of this Agreement, Independent Counsel shall be discharged and
relieved of any further responsibility in such capacity (subject to the
applicable standards of professional conduct then prevailing).
Section 9. Presumptions and Effect of Certain Proceedings.
(a) If a Change of Control shall have occurred, in
making a determination with respect to entitlement to indemnification hereunder,
the person or persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement if Indemnitee has
submitted a request for indemnification in accordance with Section 8(a) of this
Agreement, and the Company shall have the burden of proof to overcome that
presumption in connection with the making by any person, persons or entity of
any determination contrary to that presumption.
5
<PAGE>
(b) If the person, persons or entity empowered or
selected under Section 8 of this Agreement to determine whether Indemnitee is
entitled to indemnification shall not have made a determination within 60 days
after receipt by the Company of the request therefor, the requisite
determination of entitlement to indemnification shall be deemed to have been
made and Indemnitee shall be entitled to such indemnification, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material fact
necessary to make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of such
indemnification under applicable law; provided, however, that such 60-day period
may be extended for a reasonable time, not to exceed an additional 30 days, if
the person, persons or entity making the determination with respect to
entitlement to indemnification in good faith requires such additional time for
the obtaining or evaluating of documentation and/or information relating
thereto; and provided, further, that the foregoing provisions of this Section
9(b) shall not apply (i) if the determination of entitlement to indemnification
is to be made by the stockholders pursuant to Section 8(b) of this Agreement and
if (A) within 15 days after receipt by the Company of the request for such
determination the Board of Directors has resolved to submit such determination
to the stockholders for their consideration at an annual meeting thereof to be
held within 75 days after such receipt and such determination is made thereat,
or (B) a special meeting of stockholders is called within 15 days after such
receipt for the purpose of making such determination, such meeting is held for
such purpose within 60 days after having been so called and such determination
is made thereat, or (ii) if the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 8(b) of this Agreement.
(c) The termination of any Proceeding or of any
claim, issue or matter therein, by judgment, order, settlement or conviction, or
upon a plea of nolo contendere or its equivalent, shall not (except as otherwise
expressly provided in this Agreement) of itself adversely affect the right of
Indemnitee to indemnification or create a presumption that Indemnitee did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Company or, with respect to any criminal
Proceeding, that Indemnitee had reasonable cause to believe that his conduct was
unlawful.
Section 10. Remedies of Indemnitee.
(a) In the event that (i) a determination is made
pursuant to Section 8 of this Agreement that Indemnitee is not entitled to
indemnification under this Agreement, (ii) advancement of Expenses is not timely
made pursuant to Section 7 of this Agreement, (iii) the determination of
entitlement to indemnification is to be made by Independent Counsel pursuant to
Section 8(b) of this Agreement and such determination shall not have been made
and delivered in a written opinion within 90 days after receipt by the Company
of the request for indemnification, or (iv) payment of indemnification is not
made pursuant to Section 6 of this Agreement within ten (10) days after receipt
by the Company of a written request therefor, or (v) payment of indemnification
is not made within ten (10) days after a determination has been made that
Indemnitee is entitled to indemnification or such determination is deemed to
have been made pursuant to Section 8 or 9 of this Agreement, Indemnitee shall be
entitled to an adjudication in an appropriate court of the State of Delaware, or
in any other court of competent jurisdiction, of his entitlement to such
indemnification or advancement of Expenses. Alternatively, Indemnitee, at his
option, may seek an award in arbitration to be conducted by a single arbitrator
pursuant to the rules of the American Arbitration Association. Indemnitee shall
commence such proceeding seeking an adjudication or an award in arbitration
within 180 days following the date on which Indemnitee first has the right to
commence such proceeding pursuant to this Section 10(a). The Company shall not
oppose Indemnitee's right to seek any such adjudication or award in arbitration.
6
<PAGE>
(b) In the event that a determination shall have
been made pursuant to Section 8 of this Agreement that Indemnitee is not
entitled to indemnification, any judicial proceeding or arbitration commenced
pursuant to this Section 10 shall be conducted in all respects as a de novo
trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by
reason of that adverse determination. If a Change of Control shall have
occurred, in any judicial proceeding or arbitration commenced pursuant to this
Section 10 the Company shall have the burden of proving that Indemnitee is not
entitled to indemnification or advancement of Expenses, as the case may be.
(c) If a determination shall have been made or
deemed to have been made pursuant to Section 8 or 9 of this Agreement that
Indemnitee is entitled to indemnification, the Company shall be bound by such
determination in any judicial proceeding or arbitration commenced pursuant to
this Section 10, absent (i) a misstatement by Indemnitee of a material fact, or
an omission of a material fact necessary to make Indemnitee's statement not
materially misleading, in connection with the request for indemnification, or
(ii) a prohibition of such indemnification under applicable law.
(d) The Company shall be precluded from asserting
in any judicial proceeding or arbitration commenced pursuant to this Section 10
that the procedures and presumptions of this Agreement are not valid, binding
and enforceable and shall stipulate in any such court or before any such
arbitrator that the Company is bound by all the provisions of this Agreement.
(e) In the event that Indemnitee, pursuant to this
Section 10, seeks a judicial adjudication of or an award in arbitration to
enforce his rights under, or to recover damages for breach of, this Agreement,
Indemnitee shall be entitled to recover from the Company, and shall be
indemnified by the Company against, any and all expenses (of the types described
in the definition of Expenses in Section 17 of this Agreement) actually and
reasonably incurred by him in such judicial adjudication or arbitration, but
only if he prevails therein. If it shall be determined in said judicial
adjudication or arbitration that Indemnitee is entitled to receive part but not
all of the indemnification or advancement or expenses sought, the expenses
incurred by Indemnitee in connection with such judicial adjudication or
arbitration shall be appropriately prorated.
Section 11. Non-Exclusivity; Survival of Rights; Insurance;
Subrogation.
(a) The rights of indemnification and to receive
advancement of Expenses as provided by this Agreement shall not be deemed
exclusive of any other rights to which Indemnitee may at any time be entitled
under applicable law, the Certificate of Incorporation, the By-Laws, any
agreement, a vote of stockholders or a resolution of directors, or otherwise. No
amendment, alteration or termination of this Agreement or any provision hereof
shall be effective as to any Indemnitee with respect to any action taken or
omitted by such Indemnitee in his Corporate Status prior to such amendment,
alteration or termination.
7
<PAGE>
(b) To the extent that the Company maintains an
insurance policy or policies providing liability insurance for directors,
officers, employees, agents or fiduciaries of the Company or of any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise which such person serves at the request of the Company, Indemnitee
shall be covered by such policy or policies in accordance with its or their
terms to the maximum extent of the coverage available for any such director,
officer, employee or agent under such policy or policies.
(c) In the event of any payment under this
Agreement, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who shall execute all papers required
and take all action necessary to secure such rights, including execution of such
documents as are necessary to enable the Company to bring suit to enforce such
rights.
(d) The Company shall not be liable under this
Agreement to make any payment of amounts otherwise indemnifiable hereunder if
and to the extent that Indemnitee has otherwise actually received such payment
under any insurance policy, contract, agreement or otherwise.
Section 12. Duration of Agreement. This Agreement shall
continue until and terminate upon the later of: (a) 10 years after the date that
Indemnitee shall have ceased to serve as a director, or (b) the final
termination of all pending Proceedings in respect of which Indemnitee is granted
rights of indemnification or advancement of Expenses hereunder and of any
proceeding commenced by Indemnitee pursuant to Section 10 of this Agreement
relating thereto. This Agreement shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of Indemnitee and his
heirs, executors and administrators.
Section 13. Severability. If any provision or provisions of
this Agreement shall be held to be invalid, illegal or unenforceable for any
reason whatsoever: (a) the validity, legality and enforceability of the
remaining provisions of this Agreement (including without limitation, each
portion of any Section of this Agreement containing any such provision held to
be invalid, illegal or unenforceable, that is not itself invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby; and (b) to
the fullest extent possible, the provisions of this Agreement (including,
without limitation, each portion of any Section of this Agreement containing any
such provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested by the provision held invalid, illegal or unenforceable.
Section 14. Exception to Right of Indemnification or
Advancement of Expenses. Notwithstanding any other provision of this Agreement,
Indemnitee shall not be entitled to indemnification or advancement of Expenses
under this Agreement with respect to any Proceeding, or any claim therein,
brought or made by him against the Company.
8
<PAGE>
Section 15. Identical Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall for all purposes be
deemed to be an original but all of which together shall constitute one and the
same Agreement. Only one such counterpart signed by the party against whom
enforceability is sought needs to be produced to evidence the existence of this
Agreement.
Section 16. Headings. The headings of the paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction thereof.
Section 17. Definitions. For purposes of this Agreement:
(a) "Change in Control" means a change in
control of the Company occurring after the Effective Date of a nature that would
be required to be reported in response to Item 5(f) of Schedule 14A of
Regulation 14A (or in response to any similar item on any similar schedule or
form) promulgated under the Securities Exchange Act of 1934 (the "Act"), whether
or not the Company is then subject to such reporting requirement; provided,
however, that, without limitation, such a Change in Control shall be deemed to
have occurred if after the Effective Date (i) any "person" (as such term is used
in Sections 13(d) and 14(d) of the Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of the
Company's then outstanding securities without the prior approval of at least
two-thirds of the members of the Board of Directors in office immediately prior
to such person attaining such percentage interest; (ii) the Company is a party
to a merger, consolidation, sale of assets or other reorganization, or a proxy
contest, as a consequence of which members of the Board of Directors in office
immediately prior to such transaction or event constitute less than a majority
of the Board thereafter; or (iii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors (including for this purpose any new director whose election or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds of the directors then still in office who were directors at
the beginning of such period) cease for any reason to constitute at least a
majority of the Board of Directors.
(b) "Corporate Status" describes the status of a
person who is or was a director, officer, employee, agent or fiduciary of the
Company or of any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise which such person is or was serving at the
request of the Company.
(c) "Disinterested Director" means a director of
the Company who is not and was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.
(d) "Effective Date" means May 23, 1996.
9
<PAGE>
(e) "Expenses" shall include all reasonable
attorneys' fees, retainers, court costs, transcript costs, fees of experts,
witness fees, travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other disbursements
or expenses of the types customarily incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, or being or
preparing to be a witness in a Proceeding.
(f) "Independent Counsel" means a law firm, or a
member of a law firm, that is experienced in matters of corporation law and
neither presently is, nor in the past five years has been, retained to
represent: (i) the Company or Indemnitee in any matter material to either such
party, or (ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term "Independent
Counsel" shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine
Indemnitee's rights under this Agreement.
(g) "Proceeding" includes any action, suit,
arbitration, alternate dispute resolution mechanism, investigation,
administrative hearing or any other proceeding whether civil, criminal,
administrative or investigative, except one initiated by an Indemnitee pursuant
to Section 10 of this Agreement to enforce his rights under this Agreement.
Section 18. Modification and Waiver. No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.
Section 19. Notice by Indemnitee. Indemnitee agrees promptly
to notify the Company in writing upon being served with any summons, citation,
subpoena, complaint, indictment, information or other document relating to any
Proceeding or matter which may be subject to indemnification or advancement of
Expenses covered hereunder.
10
<PAGE>
Section 20. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a) If to Indemnitee, to:
[INSERT NAME]
Pfizer Inc.
235 East 42nd Street
New York, NY 10017
(b) If to the Company to:
Pfizer Inc.
235 East 42nd Street
New York, New York 10017
Attn: Office of the Secretary
or such other address as may have been furnished to Indemnitee by the Company or
to the Company by Indemnitee, as the case may be.
Section 21. Governing Law. The parties agree that this
Agreement shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware.
Section 22. Miscellaneous. Use of the masculine pronoun shall
be deemed to include usage of the feminine pronoun where appropriate.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
ATTEST: PFIZER INC.
By By
----------------------------- ---------------------------------
INDEMNITEE
---------------------------------
Address: [INSERT NAME]
Pfizer Inc.
235 East 42nd Street
New York, NY 10017
12
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>9
<DESCRIPTION>EXHIBIT 10(IX)
<TEXT>
<PAGE>
AGREEMENT
This Agreement, made and entered into as of the ____ day of
_______, 199_ ("Agreement"), by and between Pfizer Inc. a Delaware corporation
("Company"), and [INSERT NAME] ("Indemnitee"):
WHEREAS, highly competent persons are becoming more reluctant
to serve publicly-held corporations as directors or in other capacities unless
they are provided with adequate protection through insurance or adequate
indemnification against inordinate risks of claims and actions against them
arising out of their service to and activities on behalf of the corporation; and
WHEREAS, the current impracticability of obtaining adequate
insurance and the uncertainties relating to indemnification have increased the
difficulty of attracting and retaining such persons;
WHEREAS, the Board of Directors of the Company (the "Board")
has determined that the inability to attract and retain such persons is
detrimental to the best interests of the Company's stockholders and that the
Company should act to assure such persons that there will be increased certainty
of such protection in the future; and
WHEREAS, it is reasonable, prudent and necessary for the
Company contractually to obligate itself to indemnify such persons to the
fullest extent permitted by applicable law so that they will serve or continue
to serve the Company free from undue concern that they will not be so
indemnified; and
1
<PAGE>
WHEREAS, Indemnitee is willing to serve, continue to serve and
to take on additional service for or on behalf of the Company on the condition
that he be so indemnified;
NOW, THEREFORE, in consideration of the premises and the
covenants contained herein, the Company and Indemnitee do hereby covenant and
agree as follows:
Section 1. Services by Indemnitee. Indemnitee agrees to serve
as a director of the Company. Indemnitee may at any time and for any reason
resign from such position (subject to any other contractual obligation or any
obligation imposed by operation of law), in which event the Company shall have
no obligation under this Agreement to continue Indemnitee in any such position.
Section 2. Indemnification - General. The Company shall
indemnify, and advance Expenses (as hereinafter defined) to Indemnitee as
provided in this Agreement and to the fullest extent permitted by applicable law
in effect on the date hereof and to such greater extent as applicable law may
thereafter from time to time permit. The rights of Indemnitee provided under the
preceding sentence shall include, but shall not be limited to, the rights set
forth in the other Sections of this Agreement.
Section 3. Proceedings Other Than Proceedings by or in the
Right of the Company. Indemnitee shall be entitled to the rights of
indemnification provided in this Section 3 if, by reason of his Corporate Status
(as hereinafter defined), he is, or is threatened to be made, a party to any
threatened, pending, or completed Proceeding (as hereinafter defined), other
than a Proceeding by or in the right of the Company. Pursuant to this Section 3,
Indemnitee shall be indemnified against Expenses, judgments, penalties, fines
and amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such Proceeding or any claim, issue or matter therein,
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
Proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 4. Proceedings by or in the Right of the Company.
Indemnitee shall be entitled to the rights of indemnification provided in this
Section 4 if, by reason of his Corporate Status, he is, or is threatened to be
made, a party to any threatened, pending or completed Proceeding brought by or
in the right of the Company to procure a judgment in its favor. Pursuant to this
Section, Indemnitee shall be indemnified against Expenses actually and
reasonably incurred by him or on his behalf in connection with such Proceeding
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company. Notwithstanding the foregoing, no
indemnification against such Expenses shall be made in respect of any claim,
issue or matter in such Proceeding as to which Indemnitee shall have been
adjudged to be liable to the Company if applicable law prohibits such
indemnification; provided, however, that, if applicable law so permits,
indemnification against Expenses shall nevertheless be made by the Company in
such event if and only to the extent that the Court of Chancery of the State of
Delaware, or the Court in which such Proceeding shall have been brought or is
pending, shall determine.
2
<PAGE>
Section 5. Indemnification for Expenses of a Party Who is
Wholly or Partly Successful. Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee is, by reason of his Corporate Status,
a party to and is successful, on the merits or otherwise, in any Proceeding, he
shall be indemnified against all Expenses actually and reasonably incurred by
him or on his behalf in connection therewith. If Indemnitee is not wholly
successful in such Proceeding but is successful, on the merits or otherwise, as
to one or more but less than all claims, issues or matters in such Proceeding,
the Company shall indemnify Indemnitee against all Expenses actually and
reasonably incurred by him or on his behalf in connection with each successfully
resolved claim, issue or matter. For purposes of this Section and without
limitation, the termination of any claim, issue or matter in such a Proceeding
by dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter.
Section 6. Indemnification for Expenses of a Witness.
Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding,
he shall be indemnified against all Expenses actually and reasonably incurred by
him or on his behalf in connection therewith.
Section 7. Advancement of Expenses. The Company shall advance
all reasonable Expenses incurred by or on behalf of Indemnitee in connection
with any Proceeding within twenty days after the receipt by the Company of a
statement or statements from Indemnitee requesting such advance or advances from
time to time, whether prior to or after final disposition of such Proceeding.
Such statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by an undertaking by
or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately
be determined that Indemnitee is not entitled to be indemnified against such
Expenses.
3
<PAGE>
Section 8. Procedure for Determination of Entitlement to
Indemnification.
(a) To obtain indemnification under this
Agreement, Indemnitee shall submit to the Company a written request, including
therein or therewith such documentation and information as is reasonably
available to Indemnitee and is reasonably necessary to determine whether and to
what extent Indemnitee is entitled to indemnification. The Secretary of the
Company shall, promptly upon receipt of such a request for indemnification,
advise the Board of Directors in writing that Indemnitee has requested
indemnification.
(b) Upon written request by Indemnitee for
indemnification pursuant to the first sentence of Section 8(a) hereof, a
determination, if required by applicable law, with respect to Indemnitee's
entitlement thereto shall be made in the specific case: (i) if a Change in
Control (as hereinafter defined) shall have occurred, by Independent Counsel (as
hereinafter defined) (unless Indemnitee shall request that such determination be
made by the Board of Directors or the stockholders, in which case by the person
or persons or in the manner provided for in clauses (ii) or (iii) of this
Section 8(b)) in a written opinion to the Board of Directors, a copy of which
shall be delivered to Indemnitee; (ii) if a Change of Control shall not have
occurred, (A) by the Board of Directors by a majority vote of a quorum
consisting of Disinterested Directors (as hereinafter defined), or (B) if a
quorum of the Board of Directors consisting of Disinterested Directors is not
obtainable or, even if obtainable, such quorum of Disinterested Directors so
directs, by Independent Counsel in a written opinion to the Board of Directors,
a copy of which shall be delivered to Indemnitee or (C) by the stockholders of
the Company; or (iii) as provided in Section 9(b) of this Agreement; and, if it
is so determined that Indemnitee is entitled to indemnification, payment to
Indemnitee shall be made within ten (10) days after such determination.
Indemnitee shall cooperate with the person, persons or entity making such
determination with respect to Indemnitee's entitlement to indemnification,
including providing to such person, persons or entity upon reasonable advance
request any documentation or information which is not privileged or otherwise
protected from disclosure and which is reasonably available to Indemnitee and
reasonably necessary to such determination. Any costs or expenses (including
attorneys' fees and disbursements) incurred by Indemnitee in so cooperating with
the person, persons or entity making such determination shall be borne by the
Company (irrespective of the determination as to Indemnitee's entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.
4
<PAGE>
(c) In the event the determination of entitlement
to indemnification is to be made by Independent Counsel pursuant to Section 8(b)
hereof, the Independent Counsel shall be selected as provided in this Section
8(c). If a Change of Control shall not have occurred, the Independent Counsel
shall be selected by the Board of Directors, and the Company shall give written
notice to Indemnitee advising him of the identity of the Independent Counsel so
selected. If a Change of Control shall have occurred, the Independent Counsel
shall be selected by Indemnitee (unless Indemnitee shall request that such
selection be made by the Board of Directors, in which event the preceding
sentence shall apply), and Indemnitee shall give written notice to the Company
advising it of the identity of the Independent Counsel so selected. In either
event, Indemnitee or the Company, as the case may be, may, within 7 days after
such written notice of selection shall have been given, deliver to the Company
or to Indemnitee, as the case may be, a written objection to such selection.
Such objection may be asserted only on the ground that the Independent Counsel
so selected does not meet the requirements of "Independent Counsel" as defined
in Section 17 of this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion. If such written objection is
made, the Independent Counsel so selected may not serve as Independent Counsel
unless and until a court has determined that such objection is without merit.
If, within 20 days after submission by Indemnitee of a written request for
indemnification pursuant to Section 8(a) hereof, no Independent Counsel shall
have been selected and not objected to, either the Company or Indemnitee may
petition the Court of Chancery of the State of Delaware or other court of
competent jurisdiction for resolution of any objection which shall have been
made by the Company or Indemnitee to the other's selection of Independent
Counsel and/or for the appointment as Independent Counsel of a person selected
by the Court or by such other person as the Court shall designate, and the
person with respect to whom an objection is so resolved or the person so
appointed shall act as Independent Counsel under Section 8(b) hereof. The
Company shall pay any and all reasonable fees and expenses of Independent
Counsel incurred by such Independent Counsel in connection with acting pursuant
to Section 8(b) hereof, and the Company shall pay all reasonable fees and
expenses incident to the procedures of this Section 8(c), regardless of the
manner in which such Independent Counsel was selected or appointed. Upon the due
commencement of any judicial proceeding or arbitration pursuant to Section
10(a)(iii) of this Agreement, Independent Counsel shall be discharged and
relieved of any further responsibility in such capacity (subject to the
applicable standards of professional conduct then prevailing).
Section 9. Presumptions and Effect of Certain Proceedings.
(a) If a Change of Control shall have occurred, in
making a determination with respect to entitlement to indemnification hereunder,
the person or persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement if Indemnitee has
submitted a request for indemnification in accordance with Section 8(a) of this
Agreement, and the Company shall have the burden of proof to overcome that
presumption in connection with the making by any person, persons or entity of
any determination contrary to that presumption.
5
<PAGE>
(b) If the person, persons or entity empowered or
selected under Section 8 of this Agreement to determine whether Indemnitee is
entitled to indemnification shall not have made a determination within 60 days
after receipt by the Company of the request therefor, the requisite
determination of entitlement to indemnification shall be deemed to have been
made and Indemnitee shall be entitled to such indemnification, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material fact
necessary to make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of such
indemnification under applicable law; provided, however, that such 60-day period
may be extended for a reasonable time, not to exceed an additional 30 days, if
the person, persons or entity making the determination with respect to
entitlement to indemnification in good faith requires such additional time for
the obtaining or evaluating of documentation and/or information relating
thereto; and provided, further, that the foregoing provisions of this Section
9(b) shall not apply (i) if the determination of entitlement to indemnification
is to be made by the stockholders pursuant to Section 8(b) of this Agreement and
if (A) within 15 days after receipt by the Company of the request for such
determination the Board of Directors has resolved to submit such determination
to the stockholders for their consideration at an annual meeting thereof to be
held within 75 days after such receipt and such determination is made thereat,
or (B) a special meeting of stockholders is called within 15 days after such
receipt for the purpose of making such determination, such meeting is held for
such purpose within 60 days after having been so called and such determination
is made thereat, or (ii) if the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 8(b) of this Agreement.
(c) The termination of any Proceeding or of any
claim, issue or matter therein, by judgment, order, settlement or conviction, or
upon a plea of nolo contendere or its equivalent, shall not (except as otherwise
expressly provided in this Agreement) of itself adversely affect the right of
Indemnitee to indemnification or create a presumption that Indemnitee did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Company or, with respect to any criminal
Proceeding, that Indemnitee had reasonable cause to believe that his conduct was
unlawful.
Section 10. Remedies of Indemnitee.
(a) In the event that (i) a determination is made
pursuant to Section 8 of this Agreement that Indemnitee is not entitled to
indemnification under this Agreement, (ii) advancement of Expenses is not timely
made pursuant to Section 7 of this Agreement, (iii) the determination of
entitlement to indemnification is to be made by Independent Counsel pursuant to
Section 8(b) of this Agreement and such determination shall not have been made
and delivered in a written opinion within 90 days after receipt by the Company
of the request for indemnification, or (iv) payment of indemnification is not
made pursuant to Section 6 of this Agreement within ten (10) days after receipt
by the Company of a written request therefor, or (v) payment of indemnification
is not made within ten (10) days after a determination has been made that
Indemnitee is entitled to indemnification or such determination is deemed to
have been made pursuant to Section 8 or 9 of this Agreement, Indemnitee shall be
entitled to an adjudication in an appropriate court of the State of Delaware, or
in any other court of competent jurisdiction, of his entitlement to such
indemnification or advancement of Expenses. Alternatively, Indemnitee, at his
option, may seek an award in arbitration to be conducted by a single arbitrator
pursuant to the rules of the American Arbitration Association. Indemnitee shall
commence such proceeding seeking an adjudication or an award in arbitration
within 180 days following the date on which Indemnitee first has the right to
commence such proceeding pursuant to this Section 10(a). The Company shall not
oppose Indemnitee's right to seek any such adjudication or award in arbitration.
6
<PAGE>
(b) In the event that a determination shall have
been made pursuant to Section 8 of this Agreement that Indemnitee is not
entitled to indemnification, any judicial proceeding or arbitration commenced
pursuant to this Section 10 shall be conducted in all respects as a de novo
trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by
reason of that adverse determination. If a Change of Control shall have
occurred, in any judicial proceeding or arbitration commenced pursuant to this
Section 10 the Company shall have the burden of proving that Indemnitee is not
entitled to indemnification or advancement of Expenses, as the case may be.
(c) If a determination shall have been made or
deemed to have been made pursuant to Section 8 or 9 of this Agreement that
Indemnitee is entitled to indemnification, the Company shall be bound by such
determination in any judicial proceeding or arbitration commenced pursuant to
this Section 10, absent (i) a misstatement by Indemnitee of a material fact, or
an omission of a material fact necessary to make Indemnitee's statement not
materially misleading, in connection with the request for indemnification, or
(ii) a prohibition of such indemnification under applicable law.
(d) The Company shall be precluded from asserting
in any judicial proceeding or arbitration commenced pursuant to this Section 10
that the procedures and presumptions of this Agreement are not valid, binding
and enforceable and shall stipulate in any such court or before any such
arbitrator that the Company is bound by all the provisions of this Agreement.
(e) In the event that Indemnitee, pursuant to this
Section 10, seeks a judicial adjudication of or an award in arbitration to
enforce his rights under, or to recover damages for breach of, this Agreement,
Indemnitee shall be entitled to recover from the Company, and shall be
indemnified by the Company against, any and all expenses (of the types described
in the definition of Expenses in Section 17 of this Agreement) actually and
reasonably incurred by him in such judicial adjudication or arbitration, but
only if he prevails therein. If it shall be determined in said judicial
adjudication or arbitration that Indemnitee is entitled to receive part but not
all of the indemnification or advancement or expenses sought, the expenses
incurred by Indemnitee in connection with such judicial adjudication or
arbitration shall be appropriately prorated.
Section 11. Non-Exclusivity; Survival of Rights; Insurance;
Subrogation.
(a) The rights of indemnification and to receive
advancement of Expenses as provided by this Agreement shall not be deemed
exclusive of any other rights to which Indemnitee may at any time be entitled
under applicable law, the Certificate of Incorporation, the By-Laws, any
agreement, a vote of stockholders or a resolution of directors, or otherwise. No
amendment, alteration or termination of this Agreement or any provision hereof
shall be effective as to any Indemnitee with respect to any action taken or
omitted by such Indemnitee in his Corporate Status prior to such amendment,
alteration or termination.
7
<PAGE>
(b) To the extent that the Company maintains an
insurance policy or policies providing liability insurance for directors,
officers, employees, agents or fiduciaries of the Company or of any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise which such person serves at the request of the Company, Indemnitee
shall be covered by such policy or policies in accordance with its or their
terms to the maximum extent of the coverage available for any such director,
officer, employee or agent under such policy or policies.
(c) In the event of any payment under this
Agreement, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who shall execute all papers required
and take all action necessary to secure such rights, including execution of such
documents as are necessary to enable the Company to bring suit to enforce such
rights.
(d) The Company shall not be liable under this
Agreement to make any payment of amounts otherwise indemnifiable hereunder if
and to the extent that Indemnitee has otherwise actually received such payment
under any insurance policy, contract, agreement or otherwise.
Section 12. Duration of Agreement. This Agreement shall
continue until and terminate upon the later of: (a) 10 years after the date that
Indemnitee shall have ceased to serve as a director, or (b) the final
termination of all pending Proceedings in respect of which Indemnitee is granted
rights of indemnification or advancement of Expenses hereunder and of any
proceeding commenced by Indemnitee pursuant to Section 10 of this Agreement
relating thereto. This Agreement shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of Indemnitee and his
heirs, executors and administrators.
Section 13. Severability. If any provision or provisions of
this Agreement shall be held to be invalid, illegal or unenforceable for any
reason whatsoever: (a) the validity, legality and enforceability of the
remaining provisions of this Agreement (including without limitation, each
portion of any Section of this Agreement containing any such provision held to
be invalid, illegal or unenforceable, that is not itself invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby; and (b) to
the fullest extent possible, the provisions of this Agreement (including,
without limitation, each portion of any Section of this Agreement containing any
such provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested by the provision held invalid, illegal or unenforceable.
Section 14. Exception to Right of Indemnification or
Advancement of Expenses. Notwithstanding any other provision of this Agreement,
Indemnitee shall not be entitled to indemnification or advancement of Expenses
under this Agreement with respect to any Proceeding, or any claim therein,
brought or made by him against the Company.
8
<PAGE>
Section 15. Identical Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall for all purposes be
deemed to be an original but all of which together shall constitute one and the
same Agreement. Only one such counterpart signed by the party against whom
enforceability is sought needs to be produced to evidence the existence of this
Agreement.
Section 16. Headings. The headings of the paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction thereof.
Section 17. Definitions. For purposes of this Agreement:
(a) "Change in Control" means a change in
control of the Company occurring after the Effective Date of a nature that would
be required to be reported in response to Item 5(f) of Schedule 14A of
Regulation 14A (or in response to any similar item on any similar schedule or
form) promulgated under the Securities Exchange Act of 1934 (the "Act"), whether
or not the Company is then subject to such reporting requirement; provided,
however, that, without limitation, such a Change in Control shall be deemed to
have occurred if after the Effective Date (i) any "person" (as such term is used
in Sections 13(d) and 14(d) of the Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of the
Company's then outstanding securities without the prior approval of at least
two-thirds of the members of the Board of Directors in office immediately prior
to such person attaining such percentage interest; (ii) the Company is a party
to a merger, consolidation, sale of assets or other reorganization, or a proxy
contest, as a consequence of which members of the Board of Directors in office
immediately prior to such transaction or event constitute less than a majority
of the Board thereafter; or (iii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors (including for this purpose any new director whose election or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds of the directors then still in office who were directors at
the beginning of such period) cease for any reason to constitute at least a
majority of the Board of Directors.
(b) "Corporate Status" describes the status of a
person who is or was a director, officer, employee, agent or fiduciary of the
Company or of any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise which such person is or was serving at the
request of the Company.
(c) "Disinterested Director" means a director of
the Company who is not and was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.
(d) "Effective Date" means May 23, 1996.
9
<PAGE>
(e) "Expenses" shall include all reasonable
attorneys' fees, retainers, court costs, transcript costs, fees of experts,
witness fees, travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other disbursements
or expenses of the types customarily incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, or being or
preparing to be a witness in a Proceeding.
(f) "Independent Counsel" means a law firm, or a
member of a law firm, that is experienced in matters of corporation law and
neither presently is, nor in the past five years has been, retained to
represent: (i) the Company or Indemnitee in any matter material to either such
party, or (ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term "Independent
Counsel" shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine
Indemnitee's rights under this Agreement.
(g) "Proceeding" includes any action, suit,
arbitration, alternate dispute resolution mechanism, investigation,
administrative hearing or any other proceeding whether civil, criminal,
administrative or investigative, except one initiated by an Indemnitee pursuant
to Section 10 of this Agreement to enforce his rights under this Agreement.
Section 18. Modification and Waiver. No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.
Section 19. Notice by Indemnitee. Indemnitee agrees promptly
to notify the Company in writing upon being served with any summons, citation,
subpoena, complaint, indictment, information or other document relating to any
Proceeding or matter which may be subject to indemnification or advancement of
Expenses covered hereunder.
10
<PAGE>
Section 20. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a) If to Indemnitee, to:
[INSERT NAME]
Pfizer Inc.
235 East 42nd Street
New York, NY 10017
(b) If to the Company to:
Pfizer Inc.
235 East 42nd Street
New York, New York 10017
Attn: Office of the Secretary
or such other address as may have been furnished to Indemnitee by the Company or
to the Company by Indemnitee, as the case may be.
Section 21. Governing Law. The parties agree that this
Agreement shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware.
Section 22. Miscellaneous. Use of the masculine pronoun shall
be deemed to include usage of the feminine pronoun where appropriate.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
ATTEST: PFIZER INC.
By By
----------------------------- ---------------------------------
INDEMNITEE
---------------------------------
Address: [INSERT NAME]
Pfizer Inc.
235 East 42nd Street
New York, NY 10017
12
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>10
<DESCRIPTION>EXHIBIT 10(X)
<TEXT>
<PAGE>
EXHIBIT 10(x)
PFIZER INC.
RETIREMENT PLAN FOR
NON-EMPLOYEE DIRECTORS
(Frozen as of October 1996)
Non-employee directors of the Company who satisfy the following requirements
will receive a pension after retirement from the Board:
(i) the directors must be at least sixty years of age at the time of
retirement,
(ii) the directors must have served a minimum of five years on the
Board and
(iii) the director must have years of service on the Board that, when
added to his or her age at the time of retirement, equal at least 70,
provided, however, that the foregoing requirements set forth in clauses (ii) and
(iii) shall not apply to any non-employee Director who leaves the Board to
accept a position with, or provide services to, a governmental, charitable or
educational institution the policies of which prohibit continued services as a
Director. The pension is an annuity equal to the director's annual cash retainer
at the time of the retirement. Payments will be made in monthly installments for
a period of time equal to the period that the director served on the board. A
survivor benefit is payable to the director's spouse after the director's death
until the full benefit is paid.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>11
<DESCRIPTION>EXHIBIT 10(XIII)
<TEXT>
<PAGE>
EXHIBIT 10(xiii)
PFIZER INC.
RESTRICTED STOCK PLAN
FOR NON-EMPLOYEE DIRECTORS
(As amended through 6/94)
1. Purpose and Effective Date of Plan
This plan shall be known as the Pfizer, Inc Restricted Stock Plan for
Non-Employee Directors. The purpose of this Plan is to enable Pfizer Inc ("the
Company") to attract and retain persons of outstanding competence to serve as
directors of the Company by paying such persons a portion of their compensation
in stock of the Company pursuant to the terms of this Plan. The Plan shall
become effective as of October 1, 1989, subject to the approval of the
shareholders of the Company.
2. Stock Available for the Plan
An aggregate of 50,000 shares of common stock of $0.10 par value of the Company
shall be available for delivery, pursuant to the provisions of this Plan. Such
shares shall be either previously unissued shares or reacquired shares. Any
restricted shares awarded under this Plan which become forfeited for any reason
shall again be available for other restricted awards under the Plan.
3. Eligibility for Participation in Plan
Participation in this Plan is limited to persons who serve as directors of the
Company and who are not "employees" of the Company (or its subsidiaries) within
the meaning of the Employee Retirement Income Security Act of 1974, as amended.
It is intended that all non-employee directors of the Company will be
participants to the Plan.
4. Awards of Restricted Common Stock Under the Plan
Upon the effective date of the Plan, each participant in the Plan shall receive
an award of 100 restricted shares of common stock. Thereafter, awards consisting
of 100 restricted shares of common stock will be made to each participant, who
is elected or who continues as a director, each year, effective as of the date
of the Annual Meeting of Shareholders. Upon the election of a director to fill a
vacancy, the director so elected shall be awarded 100 restricted shares of
common stock.
<PAGE>
Each award of restricted shares under this Plan shall be immediately registered
in the name of the participant but shall be expressly subject to the
restrictions, the service provisions, and the other, terms and conditions set
forth in Section 5 of this Plan.
5. Restrictions, Removal of Restrictions, and Terms and Conditions of
Awards of Restricted Shares
(a) Each participant shall have the right to receive all dividends and
other distributions made with respect to restricted shares registered in his or
her name and shall have the right to vote or execute proxies with respect to
such registered restricted shares, unless and until such shares are forfeited
pursuant to the provisions of this Plan. Each participant shall have the right
to defer receipt of said dividends or other such distributions.
Possession of the certificates of restricted shares shall be retained by the
Treasurer of the Company for the benefit of participants, but subject to the
restrictions of this Plan, until the provisions of the Plan relating to removal
of the restrictions have been satisfied.
(b) Shares of restricted stock may not be sold, assigned, pledged or
otherwise transferred by the participant unless and until all of the
restrictions imposed by this Plan have been removed pursuant to the provisions
of this Plan. Where the restrictions are removed from such shares within less
than six months of the date of grant, the participant shall not dispose of such
shares until six months have elapsed from the date of grant.
(c) None of the shares of restricted stock awarded under this Plan
shall become free of restrictions and non-forfeitable until the termination of
the participant's service as a director of the Company at the earliest of the
participant's:
(i) death or disability;
(ii) retirement-from the Board within one year of attaining age 70;
(iii) failure to be re-elected after being duly nominated; or
(iv) resignation to enter government service.
Subject to Section 5(d) below, any involuntary termination for cause effected by
Board or shareholder action, shall result in forfeiture of the restricted
shares.
(d) In the event of a "change of control" of the Company (as defined
below), the Board will accelerate the removal of all restrictions relating to
all or a portion of the outstanding restricted shares. Involuntary termination
of Board service, except for cause, following a change of control will result in
immediate lapse of the forfeiture provisions relating to all of the affected
director's restricted shares. In any situation involving acceleration of the
removal of restrictions relating to the awarded shares upon a change of control,
the Board will repurchase all such shares which were awarded more than six
months prior to the change of control at the then fair market price instead of
2
<PAGE>
releasing the shares to the participant owning such shares. For purposes of this
Plan, a "change of control" of the Company shall mean a change of control of a
nature that would be required to be reported in response to item 1(a) of Form
8-K promulgated under the Securities Exchange Act of 1934, as amended ("Exchange
Act"); provided that, without limitation, such a change of control shall be
deemed to have occurred if (a) any "person" (as such term is used in Sections
13(d) and 14(d)(2) of the Exchange Act) is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 20% or more of
the combined voting power of the Company's then outstanding securities, or (b)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board of Directors of the Company cease for any
reason to constitute at least a majority thereof unless the election, or the
nomination for election by shareholders of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
(e) All shares with respect to which the restrictions are not removed
in accordance with the provisions of this Plan shall be forfeited and shall
revert to the Treasury of the Company. All awarded shares shall remain subject
to the Plan's restrictions prohibiting sale or transfer of such shares during
the period of time while the participant continues to serve as a director of the
Company, and for a period of six (6) months thereafter. Notwithstanding any
other provision of this Plan, the issuance or delivery of any shares may be
postponed for such period as may be required to comply with any applicable
requirements of any national securities exchange or any requirements under any
other law or regulation applicable to the issuance or delivery of such shares,
and the Company shall not be obligated to issue or deliver any such shares if
the issuance or delivery thereof shall constitute a violation of any provision
of any law or of any regulation of any governmental authority or any national
securities exchange.
6. Amendment or Termination of Plan
The Company reserves the right to amend, modify or terminate this Plan at any
time by action of its Board of Directors, provided that such action shall not
adversely affect any participant's rights under the provisions of this Plan with
respect to awards of restricted stock which were made prior to such action, and
further provided that any change in eligibility under the Plan or in the number
of shares available for grant under the Plan will be subject to the approval of
the shareholders of the Company. In no event, however, shall the provision of
Section 5 be amended more than once every six months, other than to comport with
changes in the Internal Revenue Code, the Employee Retirement Income Security
Act, or the rules thereunder.
7. Administration of Plan
This Plan shall be administered by the Employee Compensation and Management
Development, Committee (hereinafter referred to as the "'Administrator") . All
decisions which are made by the Administrator with respect to interpretation of
the terms of the Plan, or with respect: to any questions or disputes arising
under this Plan, shall be final and binding on the Company and on the
participants and their heirs or beneficiaries.
3
<PAGE>
8. Recapitalization
In the event of any change in the number or kind of outstanding shares of common
stock of the Company by reason of a recapitalization, merger, consolidation,
dividend, combination of shares or any other change in the corporate structure
or shares of stock of the Company, the Board of Directors of the Company will
make appropriate adjustments in the number of shares available for delivery
pursuant to the provisions of this Plan and the number of shares to be awarded
to each participant under this Plan.
9. Compliance with Section 16
Transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any
provision of the plan or action by the plan administrators is deemed not to
comply with an applicable condition of Rule 16b-3, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Plan
administrators.
10. Cessation of Awards
Notwithstanding any other provision of the Plan, no further awards of restricted
stock shall be made under the Plan after June 23, 1994.
4
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-11
<SEQUENCE>12
<DESCRIPTION>EXHIBIT 11
<TEXT>
<PAGE>
EXHIBIT 11
PFIZER INC. AND SUBSIDIARY COMPANIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(Unaudited)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1996 1995 1994
------ ------ ------
(millions, except per share data)
<S> <C> <C> <C>
Earnings:
Income from continuing operations........................................................ $1,929 $1,554 $1,276
Discontinued operations.................................................................. - 19 22
------ ------ ------
Net income............................................................................... $1,929 $1,573 $1,298
====== ====== ======
Primary:
Weighted average shares:
Weighted average number of common shares outstanding................................ 624 615 611
Common share equivalents (a)........................................................ 20 15 9
------ ------ ------
Weighted average number of common shares and common share equivalents............... 644 630 620
====== ====== ======
Earnings per common share:
Income from continuing operations................................................... $2.99 $2.47 $2.05
Discontinued operations............................................................. - .03 .04
------ ------ ------
Net income per common share......................................................... $2.99 $2.50 $2.09
====== ====== ======
Fully Diluted:
Weighted average shares:
Weighted average number of common shares outstanding................................ 624 615 611
Common share equivalents and other dilutive securities.............................. 21 16 10
------ ------ ------
Weighted average number of common shares and common share equivalents............... 645 631 621
====== ====== ======
Earnings per common share:
Income from continuing operations................................................... $2.99 $2.46 $2.05
Discontinued operations............................................................. - .03 .04
------ ------ ------
Net income per common share......................................................... $2.99 $2.49 $2.09
====== ====== ======
</TABLE>
- -----------
(a) Common share equivalents applicable to stock options under the Stock
and Incentive Plan.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>13
<DESCRIPTION>EXHIBIT 12
<TEXT>
<PAGE>
EXHIBIT 12
PFIZER INC. AND SUBSIDIARY COMPANIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
(millions of dollars, except ratios)
<S> <C> <C> <C> <C> <C>
Determination of Earnings:
Income from continuing operations before provision for taxes on $2,804 $2,299 $1,830 $835 $1,541
income, minority interests and cumulative effect of
accounting changes.........................................
Less:
Minority interests......................................... 6 7 5 2 3
Undistributed earnings/(losses) of unconsolidated
subsidiaries............................................. 0 0 (1) 1 8
------ ------ ------ ---- ------
Adjusted income 2,798 2,292 1,826 832 1,530
Fixed charges.............................................. 206 232 158 136 130
------ ------ ------ ---- ------
Total earnings as defined................................ $3,004 $2,524 $1,984 $968 $1,660
====== ====== ====== ==== ======
Fixed charges
Interest expense (a).......................................... $165 $192 $127 $107 $103
Rents (b)..................................................... 41 40 31 29 27
------ ------ ------ ---- ------
Fixed charges.............................................. 206 232 158 136 130
Capitalized interest.......................................... 5 13 15 14 12
------ ------ ------ ---- ------
Total fixed charges........................................ $211 $245 $173 $150 $142
====== ====== ====== ==== ======
Ratio of earnings to fixed charges............................... 14.2 10.3 11.5 6.5 11.7
====== ====== ====== ==== ======
</TABLE>
- -----------
(a) Interest expense includes amortization of debt discount and expenses.
(b) Rents included in the computation consist of one-third of rental expense,
which the Company believes to be a conservative estimate of an interest
factor in its leases, which are not material.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>14
<DESCRIPTION>EXHIBIT 13(A)
<TEXT>
<PAGE>
Major Pfizer Products and Selected Candidates in Development
- -------------------------------------------------------------------------------
Cardiovascular Diseases -- Cardiovascular diseases are the leading cause of
death in most developed countries. About 64 million Americans suffer from
different forms of heart disease such as atherosclerosis, hypertension,
angina, congestive heart failure, and stroke. Many cardiovascular drugs are
available to treat these conditions. Catheters and stents are increasingly
used in interventional procedures to treat blocked arteries caused by
atherosclerosis.
- -------------------------------------------------------------------------------
Central Nervous System Disorders -- More than 100 million people worldwide
suffer from psychiatric and neurological disorders. Central nervous system
disorders include anxiety, depression, panic disorder, post-traumatic stress
disorder, schizophrenia, sleep disorders, migraine, and Alzheimer's disease
and other neuro-degenerative disorders. A common disease in the growing
elderly population, Alzheimer's is expected to be a major public health
concern in the next century.
- -------------------------------------------------------------------------------
Infectious Diseases -- Infectious diseases remain a leading cause of disability
and death worldwide. Routine infections are not always appropriately
treated, and resistant organisms are becoming more common. Aggressive
treatment and research into more powerful anti- infectives will improve care
while reducing cost. Today, novel antifungal drugs are especially important
in the fight against infections.
- -------------------------------------------------------------------------------
Arthritis/Inflammation -- Some form of arthritis and inflammation, from simple
but painful "tennis elbow" to severe rheumatoid arthritis, afflicts about 30
percent of the world's population. Although a growing health